EMC - Capital/Financing Update 2017

Important notice

NOT FOR DISTRIBUTION TO ANY PERSON OR ADDRESS IN THE UNITED STATES

IMPORTANT: You must read the following before continuing. The following applies to the Preliminary Offering Memorandum following this page, and you are therefore advised to read this carefully before reading, accessing or making any other use of the Preliminary Offering Memorandum. In accessing the Preliminary Offering Memorandum, you agree to be bound by the following terms and conditions, including any modifications to them any time you receive any information from us as a result of such access.

NOTHING IN THIS ELECTRONIC TRANSMISSION CONSTITUTES AN OFFER OF SECURITIES FOR SALE IN THE UNITED STATES OR ANY OTHER JURISDICTION WHERE IT IS UNLAWFUL TO DO SO AND ACCESS HAS BEEN LIMITED SO THAT IT SHALL NOT CONSTITUTE A GENERAL ADVERTISEMENT OR GENERAL SOLICITATION (AS THOSE TERMS ARE USED IN REGULATION D UNDER THE SECURITIES ACT) OR DIRECTED SELLING EFFORTS (WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT) IN THE UNITED STATES OR ELSEWHERE. THE SECURITIES HAVE NOT BEEN, AND WILL NOT BE, REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE “ SECURITIES ACT ” ) , OR THE SECURITIES LAWS OF ANY STATE OF THE U.S. OR OTHER JURISDICTION AND THE SECURITIES MAY NOT BE OFFERED OR SOLD WITHIN THE U.S. (AS DEFINED IN REGULATION S UNDER THE SECURITIES ACT), EXCEPT PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND APPLICABLE STATE OR LOCAL SECURITIES LAWS.

THE FOLLOWING PRELIMINARY OFFERING MEMORANDUM MAY NOT BE FORWARDED OR DISTRIBUTED TO ANY OTHER PERSON AND MAY NOT BE REPRODUCED IN ANY MANNER WHATSOEVER, AND IN PARTICULAR, MAY NOT BE FORWARDED TO ANY U.S. ADDRESS. ANY FORWARDING, DISTRIBUTION OR REPRODUCTION OF THIS DOCUMENT IN WHOLE OR IN PART IS UNAUTHORIZED. FAILURE TO COMPLY WITH THIS DIRECTIVE MAY RESULT IN A VIOLATION OF THE SECURITIES ACT OR THE APPLICABLE LAWS OF OTHER JURISDICTIONS.

Confirmation of your Representation: In order to be eligible to view this Preliminary Offering Memorandum or make an investment decision with respect to the securities, investors must be outside of the U.S. (within the meaning of Regulation S under the Securities Act). This Preliminary Offering Memorandum is being sent at your request and by accepting the e-mail and accessing this Preliminary Offering Memorandum, you shall be deemed to have represented to us that you are outside of the U.S., the electronic mail address that you gave us and to which this e-mail has been delivered is not located in the U.S. and that you consent to delivery of such Preliminary Offering Memorandum by electronic transmission.

You are reminded that this Preliminary Offering Memorandum has been delivered to you on the basis that you are a person into whose possession this Preliminary Offering Memorandum may be lawfully delivered in accordance with the laws of the jurisdiction in which you are located and you may not, nor are you authorized to, deliver this Preliminary Offering Memorandum to any other person.

The materials relating to the offering do not constitute, and may not be used in connection with, an offer or solicitation in any place where offers or solicitations are not permitted by law. If a jurisdiction requires that the offering be made by a licensed broker or dealer and the underwriter or any affiliate of the underwriter is a licensed broker or dealer in that jurisdiction, the offering shall be deemed to be made by the underwriter or such affiliate on behalf of the Issuer in such jurisdiction.

This Preliminary Offering Memorandum has been sent to you in an electronic form. You are reminded that documents transmitted via this medium may be altered or changed during the process of electronic transmission and consequently neither J.P. Morgan Securities plc and Credit Suisse (Hong Kong) Limited (the “ Initial Purchasers ”), the Trustee and the Agents (each as defined in the “Terms and Conditions of the Bonds”) nor any person who controls any of them nor any of their respective directors, officers, employees or agents or affiliate of any such person accepts any liability or responsibility whatsoever in respect of any difference between the Preliminary Offering Memorandum distributed to you in electronic format and the hard copy version available to you on request from the Initial Purchasers.

OFFERING MEMORANDUM

CONFIDENTIAL

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Evergreen Marine Corporation (Taiwan) Ltd.

(incorporated as a company limited by shares in Taiwan, the Republic of China)

US$300,000,000 Currency-Linked Zero Coupon Convertible Bonds Due 2025

Issue Price: 100%

We are offering US$300,000,000 aggregate principal amount of Currency Linked Zero Coupon Convertible Bonds due 2025 (the “ Bonds ”). Unless previously redeemed, repurchased and cancelled, or converted, the Bonds will mature, and we will redeem the Bonds, on September 29, 2025 (the “ Maturity Date ”) at the Settlement Equivalent (as defined herein) of 100.0% of the unpaid principal amount thereof. The Bonds will not bear any interest. The Bonds will be convertible into our common shares (the “ Shares ” or the “ Common Shares ”), par value NT$10.00 per share, during the period from and including December 29, 2020 to and including September 19, 2025, except during certain Closed Periods (as defined herein), at an initial conversion price of NT$18.20 per share with a fixed exchange rate of NT$28.9910 = US$1.00 applicable on conversion of the Bonds. The Shares are listed on the Taiwan Stock Exchange Corporation (the “ TWSE ”) under the stock code “2603” and are subject to certain restrictions on trading imposed by the rules and regulations of the TWSE. See “Risk Factors – Risk Relating to Ownership of the Bonds and Our Shares.” On September 22, 2020, the closing price of our Shares on the TWSE was NT$15.80.

At any time on or after September 29, 2023, we may redeem the Bonds, in whole or in part, at the Settlement Equivalent of the Early Redemption Amount (as defined herein) on the date of redemption if the Market Price (as defined herein) for 20 of 30 consecutive Trading Days, the last of which occurs not more than 10 days prior to the date on which notice of such redemption is given, is at least 130% of the prevailing Conversion Price (the “ Offering Circular ”). At any time, we may also redeem the Bonds then outstanding at the Settlement Equivalent of the Early Redemption Amount, in whole but not in part, if the principal amount of the Bonds that have been redeemed, repurchased and cancelled or converted is at least 90% of the principal amount originally issued. We may also redeem the Bonds then outstanding, in whole but not in part, at the Settlement Equivalent of the Early Redemption Amount, if, as a result of certain changes in the laws or regulations of the Republic of China (the “ ROC ”) occurring after September 29, 2020, we become obligated to pay Additional Amounts (as defined herein).

You may require us to repurchase the Bonds, in whole or in part (being US$200,000 in principal amount and integral multiples of US$100,000 in excess thereof), (i) at the Settlement Equivalent of 100.0% of the outstanding principal amount thereof on September 29, 2023, (ii) at the Settlement Equivalent of the Early Redemption Amount in the event of a Delisting (as defined herein) or (iii) at the Settlement Equivalent of the Early Redemption Amount in the event of a Change of Control (as defined herein).

The Bonds will be our direct, unconditional, unsubordinated, but subject to a negative pledge, as described in “Description of the Bonds – 3. Negative Pledge”, and unsecured obligations, and will rank pari passu without any preference or priority among themselves and with all of our other direct, unconditional, unsubordinated and unsecured obligations.

We have received approval-in-principle for the listing and quotation of the Bonds on the Singapore Exchange Securities Trading Limited (the “ SGX-ST ”). Such permission will be granted when the Bonds have been admitted to the Official List of the SGX-ST. The SGX-ST assumes no responsibility for the correctness of any statements made, opinions expressed or reports contained in this Offering Circular. Admission of the Bonds to the Official List of the SGX-ST and the quotation of the Bonds on the SGX-ST are not to be taken as an indication of the merits of our company, our subsidiaries, our associated companies, the Bonds or the Shares. Prior to this offering, there has been no market anywhere for the Bonds, or any market outside Taiwan for the Shares.

INVESTING IN THE BONDS INVOLVES RISKS THAT ARE DESCRIBED IN “RISK FACTORS” BEGINNING ON PAGE 14 OF THIS OFFERING CIRCULAR.

Neither the Bonds nor the Shares have been or will be registered under the U.S. Securities Act of 1933, as amended (the “ U.S. Securities Act ”) or any state securities laws, and are being offered and sold outside the United States in accordance with Regulation S under the U.S. Securities Act, and outside the ROC. The Bonds are sold subject to restrictions on transferability and resale and may not be transferred or resold except as permitted under the U.S. Securities Act and the applicable securities laws of any state or other jurisdiction pursuant to registration thereunder or exemption from registration. As a prospective purchaser, you should be aware that you may be required to bear the financial risks of this investment for an indefinite period of time. For a description of restrictions on transfers of the Bonds, see “Transfer Restrictions” and “Plan of Distribution.”

The Bonds will be represented by one or more global certificates (each a �Global Bond�) and will be fully issued in registered form in the name of Citivic Nominees Limited, as the nominee for, and shall be deposited with, Citibank Europe plc, as common depositary for Euroclear Bank S.A./N.V. (“ Euroclear ”) and Clearstream Banking, société anonyme (“ Clearstream ”). Beneficial interests in the Bonds will be shown on, and transfers thereof will be effected only through, records maintained by Euroclear and Clearstream and their participants. Except as described herein, individual definitive certificates for the Bonds will not be issued in exchange for interests in the Bonds. The Initial Purchasers expect to deliver the Bonds to purchasers on or about September 29, 2020.

Sole Global Coordinator

Joint Bookrunners

Offering Memorandum dated September 22, 2020

We accept full responsibility for the information contained in this offering memorandum (the “Offering Memorandum”), and having taken all reasonable care to ensure that such is the case, declare that the information contained in this Offering Memorandum is in accordance with the facts and contains no omission likely to affect its import. Information contained in each of the sections entitled “Appendix A – The Securities Market of the ROC” and “Appendix B – Foreign Investment and Exchange Controls in the ROC” has been derived from government and other public sources. Such information is sourced in the text or footnotes where it appears. This information has been accurately reproduced in the Offering Memorandum and, as far as we are aware and are able to ascertain from information published by that third party, no facts have been omitted which would render the reproduced information presented in this Offering Memorandum inaccurate or misleading. However, such information has not been verified by the Initial Purchasers or any of the Initial Purchasers’ affiliates or advisors in connection with this offering.

This Offering Memorandum, including the financial information included herein, is in compliance with the Prospectus Rules of the FSA, which comply with the provisions of Directive 2003/71/EC (the “Prospectus Directive”) for the purpose of giving information with regard to the Company and the Bonds.

Notification pursuant to Section 309B of the Securities and Futures Act, Chapter 289 of Singapore – The Bonds are prescribed capital markets products (as defined in the Securities and Futures (Capital Markets Products) Regulations 2018 of Singapore).

This Offering Memorandum does not constitute an offer to sell or the solicitation of an offer to buy the Bonds in any jurisdiction in which such offer or solicitation is unlawful. The distribution of this Offering Memorandum and the offer, sale and delivery of the Bonds in certain jurisdictions may be restricted by law. Persons into whose possession this Offering Memorandum comes are required by us and the Initial Purchasers to inform themselves about and to observe any such restrictions. No action is being taken to permit a public offering of the Bonds or the possession or distribution of this Offering Memorandum (in preliminary or final form) in any jurisdiction where additional action would be required for such purposes. The Bonds may not be offered or sold, directly or indirectly, in the ROC. For a further description of certain restrictions on offering and sales of the Bonds and what persons the Offering will be made to, see “Plan of distribution” and “Transfer restrictions.”

No person is authorized in connection with the issue, offering or sale of the Bonds to give any information or to make any representation not contained in this Offering Memorandum and any information or representation not contained herein must not be relied upon as having been authorized by us or the Initial Purchasers. Neither the delivery of this Offering Memorandum nor any sale or allotment made in connection with the issue of the Bonds shall, under any circumstances, constitute a representation or create any implication that there has been no change in our affairs since the date hereof or that the information contained herein is correct as of any time subsequent to its date.

The Bonds and the Common Shares have not been approved or disapproved by the U.S. Securities and Exchange Commission, any state securities commission in the United States or any other U.S. regulatory authority, nor have any of the foregoing authorities passed upon or endorsed the merits of this Offering or the accuracy or adequacy of this Offering Memorandum. Any representation to the contrary is a criminal offense in the United States.

No representation, warranty or undertaking, express or implied, is made and no responsibility is accepted by the Initial Purchasers, Citicorp International Limited as trustee (the “Trustee”), Citibank, N.A., London Branch, as the principal paying, transfer and conversion agent (the “Principal Agent”) and as the registrar (the “Registrar” and together with the Principal Agent, the “Agents”) or any person who controls any of them or any of their respective directors, officers, employees or agents as to the accuracy or completeness of the information contained in this Offering Memorandum or any other information supplied in connection with the Bonds or the Common Shares and nothing contained herein is, or shall be relied upon as, a promise or representation by the Initial Purchasers, the Trustee, the Agents or any person who controls any of them or any of their respective directors, officers, employees or agents as to the past or the future. Each person receiving this Offering Memorandum acknowledges that such person has not relied on the Initial Purchasers, the Trustee and the Agents in connection with its investigation of the accuracy of such information or any investment decision and each such person must rely on their own examination of the Company and the merits and risks involved in investing in the Bonds.

Each purchaser of the Bonds must comply with all applicable laws and regulations in each jurisdiction in which it purchases, offers or sells the Bonds or distributes this Offering Memorandum and must obtain any consent, approval or permission required by it for the purchase, offer or sale by it of the Bonds under the laws and regulations in force in any jurisdiction to which it is subject or in which it makes such purchases, offers or sales, and neither we nor the Initial Purchasers shall have any responsibility thereof.

Summary.....................................................................................................................................	1
The offering................................................................................................................................	4
Recent developments................................................................................................................	10
Summary financial and other data............................................................................................	12
Risk factors................................................................................................................................	14
Use of proceeds.........................................................................................................................	37
Dividends and dividend policy..................................................................................................	38
Capitalization..............................................................................................................................	39
Business.....................................................................................................................................	40
Regulation..................................................................................................................................	60
Management...............................................................................................................................	70
Transactions with related parties.............................................................................................	73
Share ownership........................................................................................................................	77
Changes in issued share capital...............................................................................................	79
Description of our share capital ...............................................................................................	80
Description of the bonds...........................................................................................................	85
Taxation......................................................................................................................................	122
Plan of distribution....................................................................................................................	124
Transfer restrictions..................................................................................................................	129
Legal matters..............................................................................................................................	130
Independent accountants..........................................................................................................	131
General information...................................................................................................................	132
Index to Financial Statements...................................................................................................	F-1
Appendix A – The securities market of the ROC.....................................................................	A-1
Appendix B – Foreign investment and exchange controls in the ROC..................................	B-1

Presentation of information

The references to “the Company,” “our Company” and “Evergreen Marine” in this Offering Memorandum refer to Evergreen Marine Corporation (Taiwan) Ltd., references to “the Group,” “we,” “us” and “our” in this Offering Memorandum refer to Evergreen Marine Corporation (Taiwan) Ltd. or Evergreen Marine Corporation (Taiwan) Ltd. and its subsidiaries, and references to “Evergreen Line” in this Offering Memorandum refer to the group of container shipping companies that comprise Evergreen Marine Corporation (Taiwan) Ltd., Greencompass Marine S.A., Italia Marittima S.p.A., Evergreen Marine (UK) Ltd., Evergreen Marine (Hong Kong) Ltd., Evergreen International S.A. and Evergreen Marine (Singapore) Pte Ltd., as the context requires, unless specifically indicated. The references to “Shares” refer to the common shares of the Company, par value NT$10 per common share. The references to “Taiwan” and “ROC” refer to Taiwan, the Republic of China. The references to “PRC” and “China” refer to the People’s Republic of China but not including Hong Kong and Macau Special Administration Regions. The references to “Panama” refer to the Republic of Panama. The references to “the ROC Company Act” refer to the Company Act of the ROC. The references to “FSC” refer to the Financial Supervisory Commission of the ROC. The references to “TWSE” refer to the Taiwan Stock Exchange Corporation.

Unless expressly stated otherwise, all financial information, description and other information regarding our financial condition and results of operations as of and for the years ended December 31, 2017, 2018 and 2019 included in this Offering Memorandum are presented on a consolidated basis. We prepared our audited consolidated financial statements as of and for the years ended December 31, 2017 and 2018 and for the years ended December 31, 2018 and 2019 in accordance with the International Financial Reporting Standards, International Accounting Standards, and relevant interpretations and interpretative bulletins endorsed by FSC (the “T-IFRSs”), which differs from U.S. GAAP, IFRS or the generally accepted accounting principles of certain other countries. Our audited consolidated financial statements as of and for the years ended December 31, 2017 and 2018 and for the years ended December 31, 2018 and 2019 have been audited.

The financial statements of the Company are published in New Taiwan dollars, the lawful currency of the ROC. All references to “United States dollars,” “US dollars,” “USD” and “US$” are to United States Dollars, all references to “New Taiwan dollars,” “NT dollars,” “NTD” and “NT$” are to New Taiwan Dollars, all references to “EUR” are to Euro, all references to “AUD” are to Australian Dollars, all references to “MYR” are to Malaysian Ringgit, all references to “INR” are to Indian Rupee, all references to “IDR” are to Indonesian Rupiah, all references to “THB” are to Thai Baht, all references to “ZAR” are to South African Rand, all references to “RUB” are to Russian Ruble, all references to “ARS” are to Argentine Peso, all references to “CNY” are to Chinese Yuan Renminbi, all references to “COP” are to Columbian Peso, all references to “ILS” are to Israel Shekel, all references to “VND” to Vietnamese Dong, all references to “KRW” are to South Korean Won, all references to “BRL” are to Brazilian Dollars, all references to “CLP” are to Chilean Peso, all references to “MXN” are to Mexican Peso, all references to “PEN” are to Peruvian Sol and all references to “HK$” are to Hong Kong dollars. Unless otherwise noted, all translations from NT dollars to US dollars were made at the exchange rate as set forth in the H.10 statistical release of the Federal Reserve Board (the “Noon Buying Rate”) as of June 30, 2020, which was NT$29.4400 = US$1.00. All amounts translated into US dollars in this Offering Memorandum are provided solely for your convenience and no representation is made that the NT dollar or US dollar amounts referred to herein could have been or could be converted into US dollars or NT dollars, as the case may be, at any particular rate or at all.

In this Offering Memorandum, where information has been presented in thousands, millions or billions of units, amounts may have been rounded up or down. Accordingly, the total of columns or rows of numbers in tables may not be equal to the apparent total of the individual items and actual numbers may differ from those contained herein due to rounding.

We have compiled all industry and market information and statistics contained in this Offering Memorandum from various published and private sources, which may be inconsistent with other information compiled elsewhere. Unless otherwise indicated, all industry and market information and statistics contained in this Offering Memorandum relate to Taiwan. We have reproduced such information correctly in this Offering Memorandum but neither we nor the Initial Purchasers, have independently verified the accuracy or completeness of any of such information.

iii

Special note regarding forward-looking statements

All statements contained in this Offering Memorandum, statements made in press releases and oral statements that may be made by us or our officers, directors or employees acting on our behalf that are not statements of historical fact may constitute “forward-looking statements.” You can identify some of these forward-looking statements by terms such as “expects,” “believes,” “plans,” “intends,” “estimates,” “anticipates,” “may,” “will,” “would” and “could” or similar words. However, you should note that these words are not the exclusive means of identifying forward-looking statements. All statements regarding our expected financial position, business strategy, plans and prospects are forward-looking statements.

Forward-looking statements include, but are not limited to, such matters as:

our future operating or financial results and future revenues and expenses;
statements about pending or recent acquisitions, business strategy and expected capital spending or operating expenses;
our ability to manage the expansion of our operations;
statements about shipping industry trends, including freight rates and factors affecting supply and demand;
our expectations about availability of vessels to purchase, the time that it may take to construct and deliver new vessels or the useful lives of our vessels;
expectations relating to dividend payments and ability to make such payments;
our financial condition and liquidity, including our ability to make required payments under our credit facilities, comply with our loan covenants and obtain additional financing to fund capital expenditures, acquisitions and other corporate activities;
anticipating developments with respect to litigation;
the risk factors discussed in “Risk factors” beginning on page 14; and
other matters described in this Offering Memorandum regarding matters that are not historical facts, are only forecasts.

Given the risks and uncertainties that may cause our actual future results, performance or achievements to be materially different than expected, expressed or implied by the forward-looking statements in this Offering Memorandum, we advise you not to place undue reliance on those statements. We are not representing or warranting to you that our actual future results, performance or achievements will be as discussed in those statements. Further, we disclaim any responsibility to update any of those forward-looking statements or publicly announce any revisions to those forwardlooking statements to reflect future developments, events or circumstances.

Enforceability of foreign judgments

The Company is a company limited by shares and incorporated under the ROC Company Act. Substantially all of its directors, supervisors and executive officers and certain of the experts named in this Offering Memorandum are residents of the ROC, and a significant portion of the Company’s assets and these persons are located in the ROC. As a result, it may not be possible for you to effect service of process upon the Company or any of these persons outside of the ROC, or to enforce against any of them judgments obtained in courts outside of the ROC. The Company’s ROC counsel has advised that any final judgment obtained against the Company or such persons in any court other than the courts of the ROC in respect of any legal suit or proceeding arising out of or relating to the Bonds or the Shares to be issued upon conversion of the Bonds will be enforced by the courts of the ROC without further review of the merits only if the court of the ROC in which enforcement is sought is satisfied with the following:

the court rendering the judgment has jurisdiction over the subject matter according to the laws of the ROC;
the judgment and the court procedure resulting in the judgment are not contrary to the public order or good morals of the ROC;
if the judgment was rendered by default by the court rendering the judgment, (i) the Company or such persons were duly served within a reasonable period of time within the jurisdiction of such court in accordance with the laws and regulations of such jurisdiction, or (ii) process was served on the Company or such persons with judicial assistance of the ROC; and
judgments of the courts of the ROC would be recognized and enforceable in the jurisdiction of the court rendering the judgment on a reciprocal basis.

A party seeking to enforce a foreign judgment in the ROC would, except under limited circumstances, be required to obtain foreign exchange approval from the Central Bank of the Republic of China (Taiwan), or CBC, for the remittance out of the ROC of any amounts recovered in respect of the judgment denominated in a currency other than NT dollars. See “Appendix B – Foreign investment and exchange controls in the ROC.”

Glossary of technical terms

Following are definitions of shipping terms used in this Offering Memorandum:

Annual Survey –The inspection of a vessel by a classification society, on behalf of a flag state, that takes place every year.

Bulk Vessels/Carriers –Vessels which are specially designed and built to carry large volumes of cargo in bulk cargo form.

Bunker fuel –Heavy fuel oil used to power a vessel’s engines.

Charter –The hire of a vessel for a specified period of time or to carry a cargo for a fixed fee from a loading port to a discharging port. The contract for a charter is called a charterparty.

Charterer –The individual or company hiring a vessel.

Classification Society –An independent organization which certifies that a vessel has been built and maintained in accordance with the rules of such organization and complies with the applicable rules and regulations of the country of such vessel and the international conventions of which that country is a member.

Draft –Vertical distance between the waterline and the bottom of the vessel’s keel.

Drydocking –The removal of a vessel from the water for inspection and/or repair of submerged parts.

Flag state –The country where the vessel is registered.

Freight –The price paid to a vessel owner for the transportation of goods or merchandise by sea from one specific port to another. Freight often applies to voyage charters.

Gross Ton –Unit of 100 cubic feet or 2.831 cubic meters used in arriving at the calculation of gross tonnage.

Hull –The shell or body of a vessel.

International Maritime Organization– “ IMO ”–A United Nations agency that issues international trade standards for shipping.

Intermediate Survey –The inspection of a vessel by a classification society surveyor which takes place between two and three years before and after each Special Survey for such vessel pursuant to the rules of international conventions and classification societies.

ISM Code –The International Management Code for the Safe Operation of Ships and for Pollution Prevention, as adopted by the IMO.

Newbuilding –A vessel under construction or newly constructed. Newbuilding Contract – A contract for the construction of a new vessel.

Order book –A reference to currently placed orders for the construction of vessels (e.g., the Panamax order book).

Scrapping –The disposal of old or damaged vessel tonnage by way of sale as scrap metal. Sister Ships – Vessels of the same type and specification which were built by the same shipyard.

Special Survey –The inspection of a vessel by a classification society surveyor which takes place a minimum of every four years and a maximum of every five years.

TEU –Twenty Foot Equivalent Unit is the unit of the capacity of a container ship, a container terminal and the statistics of the container transit in a port.

Time Charter –Contract for hire of a ship for a specified period of time. A charter under which the shipowner is paid charter hire rate on a per day basis for a certain period of time, the shipowner being responsible for providing the crew and paying operating costs while the charterer is responsible for paying the voyage costs. Any delays at port or during the voyages are the responsibility of the charterer, save for certain specific exceptions such as loss of time arising from vessel breakdown and routine maintenance.

Ton –A metric ton.

Summary

You should read the following summary together with the more detailed information regarding the Offering, the Company, the Bonds and the Common Shares issuable upon conversion of the Bonds and our consolidated financial statements and notes to those statements appearing elsewhere in this Offering Memorandum.

Overview

We are the largest publicly listed international container shipping company in Taiwan and one of the leading international shipping companies in terms of fleet operations, service quality and innovative shipbuilding concepts. Our business covers ocean-going and near-sea shipping line, shipping agency business, as well as container freight station business. We owned 59 vessels and chartered 75 vessels as of June 30, 2020. We also have a total of 61 newbuilding as of June 30, 2020, which are expected to be delivered between 2020 and 2022.

We earn revenue primarily from the shipment of goods. All of our service routes are running under a regular liner basis, also involving port stevedoring, inland transports and comprehensive logistics services. Our customers cover various areas such as manufacturing, trading companies and retailers located all over the world. We consider many pricing factors for our ocean freight rate. Such factors typically include prevailing market prices, costs associated with the given service routes and the nature of cargo being shipped, among other factors.

We formed a substantial part of Evergreen Line, a member of the OCEAN Alliance. Members of the OCEAN Alliance together operate 38 services on the East-West trades with 97 ports of call and almost 500 port pairs. Supported by a highly-efficient fleet of 330 vessels with approximately 3.8 million TEUs in total annual capacity, the OCEAN Alliance complies with the requirements of global supply chains while providing higher sailing frequencies, better transit times and greater coverage in terms of loops, ports of call and port pairs.

We were founded by our Founder Chang, Yung-Fa. Mr. Chang incorporated the Company in Taiwan in 1968. We have been listed on the Taiwan Stock Exchange since 1987 and trade under the stock code “2603.” As of September 22, 2020, our market capitalization, based on the closing price of NT$15.80 per Common Share on the Taiwan Stock Exchange, was approximately NT$76.0 billion (US$2.6 billion).

Competitive strengths

We believe that our historical success and future prospects are directly related to a combination of strengths, including the following:

Market-leading position in Transpacific and Intra-Asia routes supported by strong global network and cooperation agreements
Proven track record of financial resilience and operational stability over shipping cycles, brought about by extensive geographical coverage and diversified trade routes managed with “big data” analysis
Young and modern fleet with a balanced ownership profile providing operational flexibility
• Innovative eco-friendly and cost-saving initiatives and digitization that enhances our profitability and competitiveness
Strong management team with multi-disciplinary experience and international background

Strategy

We aim to be a global leader in the container shipping industries through the following business strategies:

Enhance competitiveness by building advanced ships with scale and fuel economy
• Pioneering digital capabilities to enhance connectivity and cloud shipping in order to enrich customer satisfaction
• Further improve long-term growth and profitability through new routes, network optimization, strengthening customer relationships and cost improvement initiatives
• Continue to strengthen the OCEAN Alliance cooperation • Proactively addressing Environmental, Social and Governance issues and being at the forefront of changes in the industry
• Further integrate business model into our operations to offer more integrated solutions and broader service offerings to our customers

Corporate and other information

The Company was incorporated on September 25, 1968 under the Company Act of the Republic of China. The Company’s principal executive offices are located at No. 166, Sec. 2, Minsheng East Road, Jhongshan Dist., Taipei City, Taiwan, and its telephone number is +886-2-2505-7766. The Company’s corporate website address is www.evergreen-marine.com. The information on the Company’s website is not a part of this Offering Memorandum.

Set forth below is an organizational chart depicting our principal subsidiaries as of June 30, 2020.

E	E			EMC	EMC	EMC	EMC	EMC	EMC	EMC	EMC	EMC	EMC	EMC	EMC	EMC	EMC	EMC	EMC	EMC	EMC	EMC	EMC	EMC	EMC	EMC	EMC	EMC	EMC	EMC	EMC	EMC	EMC	EMC	5.57%
		59%		EGH PEONY TTSC EVER 79% 100% 55% 94.43% 1% 1% 100% 100% 100% 100% 100% 100% 100% 100% 99.99% 51% 55% 55% 84.44% 85% 95% 95.03%
																																			Whitney PORT 100%
	E	IL

EM K 20% 20%
		51%			51%		55%		55%		84.44%		85%		95%		95.03%		99.99%		100%		100%		100%		100%		100%		100%		100%
	EM	U		ERU		EIT		ESA		EHIC (M)		EGT		EGB		MBPI		EGI		EGM		EGV		EMA		EES		GMS		EGK		EEU		CLOVE	Whitney
		20%		MBT EBR EGRC ECL EMX EPE ECO ELA EKH EVSQND EVSXZN EVSNBO EVSSHG 17.39% 72.95% % 60% 60% 60% 60% 60% 75% 100% 100% 100% 100% 100% 100%

	K	TIL

			52
		ECN

EES: Evergreen Shipping (Spain) S.L. EMA: Evergreen Shipping Agency (Australia) Pty. Ltd. EGV: Evergreen Shipping Agency (Vietnam) Corp. EGM: Evergreen Marine Corp. (Malaysia) Sdn. Bhd. EGI: Evergreen Shipping Agency (India) Pvt. Ltd. MBPI: PT. Multi Bina Pura International MBT: PT. Multi Bina Transport EGB: Evergreen Argentina S.A. EGT: Evergreen Shipping Agency (Thailand) Co., Ltd. EHIC(M): Evergreen Heavy Industrial Corp. (Malaysia) Berhad ESA: Evergreen Agency (South Africa) (Pty) Ltd. EIT: Evergreen Shipping Agency (Italy) S.p.A. ERU: Evergreen Shipping Agency (Russia) Ltd. EMU: Evergreen Marine (UK) Limited KTIL: Kingtrans Intl. Logistics (Tianjin) Co., Ltd. EVSSHG: Ever Shine (Shanghai) Enterprise Management Consulting Co., Ltd. EVSNBO: Ever Shine (Ningbo) Enterprise Management Consulting Co., Ltd. EVSXZN: Ever Shine (Shenzhen) Enterprise Management Consulting Co., Ltd. EVSQND: Ever Shine (Qingdao) Enterprise Management Consulting Co., Ltd. EKH: Evergreen Shipping Services (Cambodia) Co., Ltd. ELA: Evergreen Marine (Latin America), S.A. ECO: Evergreen Shipping Agency (Colombia) S.A.S. EPE: Evergreen Shipping Agency (Peru) S.A.C. EMX: Evergreen Shipping Agency Mexico S.A. de C.V. ECL: Evergreen Shipping Agency (Chile) SPA EGRC: Evergreen Shipping Agency (Greece) Anonimi Eteria EBR: Evergreen Shipping Agency (Brazil) S.A. ECN: Evergreen Shipping Agency (China) Co., Ltd.

The Offering

The following is only a summary and is qualified in its entirety by reference to the summary of the terms of the Bonds provided in this Offering Memorandum under “Description of the bonds.” Capitalized terms used herein and not defined have the meaning given to them in “Description of the bonds.”

Issuer ..........................................	Evergreen Marine Corporation (Taiwan)	Ltd.
Offering .......................................	US$300,000,000 aggregate principal amount of Currency Linked
	Zero Coupon Convertible Bonds due 2025, being offered outside
	the United States (in reliance on Regulation S under the U.S.
	Securities Act) and the ROC in offshore transactions.
Interest........................................	The Bonds will not bear any interest.
Lock-up .......................................	We and certain of our shareholders have agreed that for a period
	of 90 days after the date of this Offering	Circular (the “Lock-Up
	Period”), we will not, without the Initial Purchasers’ prior written
	consent, offer, sell, contract to sell or otherwise dispose of any of
	our securities that are substantially similar to the Bonds or Shares,
	including but not limited to any securities that are convertible into
	or exchangeable for, or that represent the right to receive, Shares
	or any such substantially similar securities (other than (A) the sale
	of the Bonds, (B) issuances of Common	Shares pursuant to the
	conversion or exchange of convertible or exchangeable securities
	or the exercise of warrants or options, in	each case outstanding on
	the date hereof, (C) grants of employee stock options and
	employee restricted Shares pursuant to the terms of an employee
	stock option plan in effect on the date hereof of, (D) issuances of
	Common Shares pursuant to the exercise of such employee stock
	options referred to in clause (C), or (E) the preparation work for
	the purpose of effecting the potential Rights Issuance in the ROC,
	including attending filing with relevant regulatory bodies in the
	ROC and the disclosure by way of public announcement(s)
	relating to such potential Rights Issuance as required by such
	relevant regulatory bodies or under relevant laws of the ROC,
	provided that the ex-rights date in respect of such potential Rights
	Issuance shall fall only after expiry of the Lock-Up Period. See
	“Plan of distribution.”
Issue Date...................................	September 29, 2020.
Maturity Date and Final	Unless previously redeemed, repurchased and cancelled, or
Redemption .............................	converted, the Bonds will mature, and the Issuer will redeem the
	Bonds, on September 29, 2025 at the Settlement Equivalent of
	100.0% of the unpaid principal amount thereof.
Issue Price ..................................	100% of the principal amount of the Bonds.

Ranking.......................................	Ranking.......................................	The Bonds will be our direct, unconditional, unsubordinated (but	The Bonds will be our direct, unconditional, unsubordinated (but
		subject to a negative pledge, as described in “Negative Pledge”
		below) and unsecured obligations, and will rank pari passu without
		any preference or priority among themselves and with all of our
		other direct, unconditional, unsubordinated and unsecured
		obligations.
Conversion..................................		Subject to certain conditions, each holder of the Bonds (a
		“Bondholder”) will have the right during the Conversion Period (as
		defined herein) to convert its Bonds, in whole or in part (being
		US$200,000 in principal amount and integral multiples of
		US$100,000 in excess thereof), into Common Shares at anytime
		from December 29, 2020 to September 19, 2025 (or if the Bonds
		are called for redemption prior to the Maturity Date, on the date
		five Trading Days prior to the redemption date), provided,
		however, that the Conversion Right during any Closed Period (as
		defined herein) shall be suspended and the Conversion Period
		shall not include any such Closed Period.
		See “Description of the bonds – 6. Conversion” and “Risk factors –
		Risks Relating to the Common Shares and the Bonds – There are
		limitations on the Bondholders’ ability to	exercise conversion
		rights.”
		Subject to changes to ROC laws and regulations, we shall as soon
		as practicable but in no event more than	five Trading Days (as
		defined herein) from the Conversion Date (as defined herein)
		deliver Shares in certificated or book-entry form to the converting
		Bondholders for the purpose of trading the Common Shares on the
		TWSE.
Conversion Price.........................		The conversion price will initially be NT$18.20 per share with a
		fixed exchange rate applicable on conversion of Bonds of
		NT$28.9910 = US$1.00. The conversion	price will be subject to
		adjustments for, among other things, subdivision or combination of
		shares, bond issues, right issues, distributions, stock dividends,
		and other dilutive events. See “Description of the bonds – 6.
		Conversion (C) Adjustments to Conversion Price.”
Early Redemption Amount	..........	The Early Redemption Amount for each US$100,000 of Bonds is
		determined so that it represents for the Bondholder a gross yield
		of 0.0% per annum on a semi-annual basis. See “Description of
		the bonds – 8. Redemption, Repurchase and Cancellation – (B)
		Redemption at the Option of the Company.”

Redemption at the option of the	At any time on or after September 29, 2023, we may redeem the	At any time on or after September 29, 2023, we may redeem the
Company .................................	Bonds, in whole or in part, at the Settlement Equivalent of the
	Early Redemption Amount (as defined herein) on the date of
	redemption if the Market Price (as defined herein) for 20 of 30
	consecutive Trading Days, the last of which occurs not more than
	10 days prior to the date on which notice of such redemption is
	given, is at least 130% of the prevailing Conversion Price.
	At any time, we may also redeem the Bonds then outstanding at
	the Settlement Equivalent of the Early Redemption Amount, in
	whole or in part, if the principal amount of the Bonds that have
	been redeemed, repurchased and cancelled or converted is at
	least 90% of the principal amount originally issued. See
	“Description of the bonds – 8. Redemption, Repurchase and
	Cancellation – (B) Redemption at the Option of the Company.”
Additional Amounts .....................	Payment of principal of and premium and other amounts on the
	Bonds will be made without withholding or deduction for or on
	account of any taxes imposed by the ROC or certain other relevant
	jurisdictions or such other jurisdictions in which the Issuer is then
	organized or resident for tax purposes unless such withholding or
	deduction is required by law or by regulation or governmental
	policy having the force of law. In the event that any such
	withholding or deduction is so required, the Issuer will, subject to
	certain exceptions, pay such additional amounts on the Bonds as
	will result in the receipt by the Bondholders of the amounts which
	would otherwise have been receivable in the absence of any such
	deduction or withholding. See “Description of the bonds – 9.
	Taxation.”
Tax Redemption..........................	If, as a result of certain changes relating	to the tax laws in the
	ROC or such other jurisdictions in which	the Issuer is then
	organized or resident for tax purposes, we become obligated to
	pay Additional Amounts, we may at our option redeem the Bonds,
	in whole but not in part, at the Settlement Equivalent of the Early
	Redemption Amount; provided that such	right cannot be exercised
	earlier than 60 days prior to the first date on which we would be
	obligated to pay Additional Amounts were a payment in respect of
	the Bonds then due. Notwithstanding the foregoing, Bondholders
	may elect not to have their Bonds redeemed and to forgo any
	Additional Amounts or reimbursement of	additional tax. See
	“Description of the bonds – 8. Redemption, Repurchase and
	Cancellation – (C) Redemption for Tax Reasons.”
Repurchase at the Option of	Unless the Bonds have been previously redeemed, repurchased
Holder ......................................	and canceled, or converted, each Holder shall have the right, at
	such Bondholder’s option, to require us to repurchase in US
	Dollars all (or any portion of the principal amount thereof which is
	US$200,000 or any integral multiples of US$100,000 in excess
	thereof) of such Holder’s Bonds, on September 29, 2023 at a
	repurchase price equal to the Settlement Equivalent of 100.0% of
	the outstanding principal amount thereof.

Repurchase in the Event of	Unless the Bonds have been previously redeemed, repurchased	Unless the Bonds have been previously redeemed, repurchased
Delisting...................................	and canceled or converted, in the event that the Shares cease to
	be listed or admitted to trading or are suspended from trading for a
	period equal to or exceeding 30 consecutive Trading Days (as
	defined herein) on the TWSE, each Bondholder shall have the
	right, at such Bondholder’s option, to require us to repurchase, in
	whole or in part (being US$200,000 in principal amount and
	integral multiples of US$100,000 in excess thereof), of such
	Bondholder’s Bonds on the Delisting Put Date, which shall not be
	less than 30 days nor more than 60 days after the Trustee
	receives sufficient information from the Company and delivers to
	each Bondholder a notice regarding such delisting at the
	Settlement Equivalent of the Early Redemption Amount. See
	“Description of the bonds – 8. Redemption, Repurchase and
	Cancellation – (F) Repurchase of the Bonds in the Event of
	Delisting.”
Repurchase in the Event of	Unless the Bonds have been previously redeemed, repurchased
Change of Control....................	and cancelled or converted, each Bondholder shall have the right,
	at such Bondholder’s option, to require us to repurchase, in whole
	or in part (being US$200,000 in principal amount and integral
	multiples of US$100,000 in excess thereof), of such Bondholder’s
	Bonds at the Settlement Equivalent of the Early Redemption
	Amount upon the occurrence of a Change of Control, as defined
	herein. See “Description of the bonds – 8. Redemption,
	Repurchase and Cancellation – (G) Repurchase of the Bonds in
	the Event of a Change of Control.”
Negative Pledge..........................	We will not, and will procure that none of our Principal
	Subsidiaries (as defined herein) will, create or permit to subsist
	any Security (as defined herein) upon the whole or any part of its
	property, assets or revenues, present or	future, to secure any
	International Investment Securities (as defined herein) or to
	secure any guarantee of or indemnity in	respect of any
	International Investment Securities without making effective
	provision to secure the Bonds (1) equally and ratably with such
	International Investment Securities with a similar Security or (2)
	with such other security, guarantee, indemnity or other
	arrangement as shall not be materially less beneficial to the
	Bondholders or as shall be approved by	an Extraordinary
	Resolution (as defined herein) of the Bondholders.
	See “Description of the bonds – 3. Negative Pledge.”

Form and Denomination..............	The Bonds will be issuable only in book-entry form and only in	The Bonds will be issuable only in book-entry form and only in
	denominations of US$200,000 or any integral multiples of
	US$100,000 in excess thereof. The Bonds will be represented by
	the Global Bond. On the closing date of the Offering, we will
	deliver the Global Bond to the Common Depositary. If (1) at any
	time the Common Depositary advises the Company in writing that
	it is at any time unwilling or unable to continue as a depository for
	the Global Bond and a successor depository is not appointed by
	the Company within 90 days, (2) either Euroclear or Clearstream
	or any alternative clearing system on behalf of which the Bonds
	evidenced by the Global Bond may be held is closed for business
	for a continuous period of 14 days (other than by reason of
	holidays, statutory or otherwise) or announces an intention
	permanently to cease business or in fact does so, or (3) an event
	of default has occurred and is continuing with respect to the Bonds
	and the Trustee notifies the Company in	writing that any of the
	Bonds have become immediately due and payable pursuant to the
	Indenture, the Company shall issue individual definitive bonds in
	registered form in exchange for the Global Bond in any authorized
	denominations and in an aggregate principal amount equal to the
	principal amount of the Global Bond.
	The Bonds will not be issuable in a bearer form.
Settlement...................................	The Bonds have been accepted for clearance through Euroclear
	and Clearstream on a book-entry system. Settlement of the Bonds
	may take place through Euroclear and Clearstream in accordance
	with the settlement procedures applicable to debt securities in the
	Euromarket.
Governing Law ............................	The Indenture and the Bonds will be governed by the laws of the
	State of New York.
Trustee........................................	Citicorp International Limited.
Principal Paying Agent,	Citibank, N.A., London Branch.
Conversion Agent, Transfer
Agent and Registrar.................
Listings........................................	We have received approval-in-principle for the listing and
	quotation of the Bonds on the SGX-ST. Such permission will be
	granted when the Bonds have been admitted to the Official List of
	the SGX-ST. Approval-in-principle from,	admission of the Bonds to
	the Official List of, or the listing and quotation of the Bonds on, the
	SGX-ST are not to be taken as an indication of the merits of our
	Company, our subsidiaries, our associated companies, the Bonds
	or the Shares. The Bonds will be traded	on the SGX-ST in a
	minimum board lot size of US$200,000 for so long as the Bonds
	are listed on SGX-ST. We have undertaken to list the shares
	issued upon the conversion of the Bonds on the TWSE. The
	shares will not be listed on the SGX-ST.

Trading Market for Our Shares....	The only trading market for the Shares is the TWSE. Our shares	The only trading market for the Shares is the TWSE. Our shares
	have been listed on the TWSE since September 21, 1987 under
	the stock code “2603.”
Use of Proceeds..........................	The net proceeds to be received by us from this offering of the
	Bonds will be approximately US$297.95	million. The net proceeds
	are calculated after deducting underwriting discounts and
	commissions and related expenses of approximately US$2.05
	million.
	We intend to use the net proceeds from this offering to purchase
	raw materials overseas (fuel), ships and	equipment and to lease
	ships.
Transfer Restrictions...................	This offering is being made pursuant to Regulation S under the
	U.S. Securities Act. The Bonds and our Shares have not been and
	will not be registered under the U.S. Securities Act or with any
	securities regulatory authority of any state in the United States or
	other jurisdiction. The Bonds may only be offered, sold or
	delivered outside the United States (as defined in Regulation S
	under the U.S. Securities Act) in offshore transactions in reliance
	on Regulation S, and outside the ROC, in each case in
	accordance with any other applicable law.
Delivery of the Bonds ..................	Delivery of the Bonds, against payment in same-day funds, is
	expected on or about September 29, 2020.

Recent Developments

Effects of COVID-19

In December 2019, a new coronavirus disease, commonly known as “COVID-19,” was first reported in Wuhan, Hubei Province, China. The outbreak was initially concentrated in China and caused significant disruptions to its economy. In January 2020, the World Health Organization declared the COVID-19 outbreak as a “Public Health Emergency of International Concern.” On March 11, 2020, the World Health Organization declared the COVID-19 outbreak as a pandemic.

In response to the COVID-19 pandemic, the governments of many countries have taken and are continuing to take preventative or reactive actions, such as imposing restrictions on travel and business operations and advising or requiring individuals to limit or forego their time outside of their homes.

In Taiwan, in a move to contain the COVID-19 outbreak, Taiwan Centers for Disease Control classified COVID-19 as a Category 5 communicable disease on January 15, 2020, to strengthen surveillance and containment of COVID-19. On February 25, 2020, a Special Act for Prevention, Relief and Revitalization Measures for Severe Pneumonia with Novel Pathogens was adopted to respond to the COVID-19. On February 27, 2020, Taiwan raised the Central Epidemic Command Center, or the CECC, to Level 1 due to the global epidemic situation. On March 22, 2020, the CECC announced that the transit of airline passengers through Taiwan would be suspended to reduce the risk of disease transmission. On April 10, 2020, crowd control measures had been imposed at public places where large crowds can gather. On May 2, 2020, the CECC announced that inbound travelers returning from overseas should complete the COVID-19 Health Declaration and Home Quarantine Notice and confirm if their residence satisfies the home quarantine requirements. On June 17, 2020, the CECC announced the conditions under which short-term business travelers can apply for a reduced amount of time of home quarantine. In terms of international collaboration, Taiwan has also shared information on the epidemic situation with other countries through the IHR mechanism.

Government authorities in other countries where we operate, such as the U.S., China, Indonesia, Malaysia, Panama, the United Kingdom, South Korea, have adopted more stringent measures, including lockdowns and closure of non-essential businesses, in an attempt to control the spread of the virus and mitigate the impact of the outbreak.

We are focused on the COVID-19 situation, and have taken steps to implement various stringent measures to mitigate the risks of COVID-19, such as:

developing a COVID-19 policy and recovery plans and constantly holding global meetings to monitor unforeseen circumstances or reduced services;
• enhancing our epidemic prevention and containment capabilities and educating employees on precautionary measures;
publishing marine circular on March 20, 2020 on “Company’s Emergency Instruction on COVID-19” regulating preventative measures on board; and
setting up COVID-19 contingency plans for vessels underway.

We are also communicating constantly with all relevant government agencies.

The immediate risks of COVID-19 to our business is expected to come in the form of a suspected virus spread within our facilities. If such an event occurs, there would be temporary isolation of certain pieces of equipment and employees, a shut-down of the billing areas or other commercial areas, and temporary stoppages of operations to isolate facilities and employees and ensure a safe environment for employees and the continued flow of goods. Macro risks include a reduction in volume at certain facilities due to a general slowdown in trade. See “Risk factors – Risks relating to our business – The outbreaks of COVID-19 and the governmental responses thereto may adversely affect our business.”

The impact of COVID-19 on our business operations is related to these potential interruptions or disruptions. The impact of volume slowdowns will be regional in nature and will depend on how global supply chains continue to be affected by COVID-19. Our operations in Taiwan and other terminals around the world remain fully operational with no operational disruptions recorded to date.

Liquidity

Managing our balance sheet prudently and maintaining appropriate liquidity are high priorities during this disruption. To strengthen our liquidity position, we availed of an aggregate of US$4,107 million of loans from our working capital facilities with various banks at the prevailing market rate in June 2020. In July 2020, to cope with the uncertainty brought by COVID-19 pandemic, we availed of a 24-month loan from Mega International Commercial Bank of NT$8,000 million (US$272 million) with interest based on the prevailing market rate. We may enter into additional credit facilities to bolster liquidity and provide additional financial flexibility in light of current uncertainty in the global economy resulting from the COVID-19 pandemic.

Estimates of Preliminary Unaudited Consolidated Operating Revenue

As announced on the Market Observation Post System, for July and August 2020, our preliminary unaudited consolidated operating revenue were NT$17.1 billion (US$580.4 million) and NT$18.9 billion (US$641.7 million), compared with NT$16.8 billion and NT$16.2 billion for the same periods in 2019, respectively.

Our preliminary unaudited consolidated operating revenue for July and August 2020 are subject to adjustment, based on, among other things, our normal closing procedures. Actual figures could differ materially from the financial data provided above.

Summary Financial and Other Data

The following tables present our summary financial information. The summary financial information as of and for the years ended December 31, 2017, 2018 and 2019 set forth below are qualified by reference to, and should be read in conjunction with, our audited consolidated financial statements included elsewhere in this Offering Memorandum. The summary financial information as of and for each of the six months ended June 30, 2019 and 2020 set forth below has been derived from, and should be read in conjunction with, the unaudited interim consolidated financial statements incorporated by reference into this Offering Memorandum. Our operating results for the six months ended June 30, 2020 are not necessarily indicative of the results to be expected for any future periods. Our audited consolidated financial statements as of and for the year ended December 31, 2017, 2018 and 2019 have been prepared and presented in accordance with the T-IFRSs. Our unaudited consolidated interim financial statements as of and for six-month ended June 30, 2019 and 2020 are presented in conformity with the “Regulations Governing the Preparation of Financial Reports by Securities Issuers” and IAS 34 “Interim Financial Reporting” endorsed by the FSC.

The Group adopted IFRS 16 – Leases on January 1, 2019. For the impact of the adoption of IFRS 16 on the Group, please refer to Note 3(1) of the audited consolidated financial statements of the Group as of and for the years ended December 31, 2018 and 2019 included in this Offering Memorandum. In adopting the IFRS 16 effective on January 1, 2019, the Group had elected to apply the modified retrospective approach whereby the cumulative impact of the adoption was recognized as right-of-use assets and lease liabilities as of January 1, 2019, and the financial statements as of and for the year ended December 31, 2018 were not restated. As a result, the consolidated financial information of the Group prior to January 1, 2019, extracted from the audited consolidated financial statements of the Group as of and for the years ended December 31, 2018 and 2019 may not be directly comparable with the audited consolidated financial information of the Group as of and for the year ended December 31, 2018 extracted from the audited consolidated financial statements of the Group as of and for the years ended December 31, 2018 and 2019.

Year Ended December 31, Six Months Ended June 30, 2017 2018 2019 2019 2020 NT$ NT$ NT$ US$ NT$ NT$ US$ (audited) (audited) (audited) (unaudited) (unaudited) (unaudited) (unaudited) (in thousands, except per share data) Summary Consolidated Statements of Comprehensive Income Data: Operating revenue ................. 150,582,692 169,236,653 190,589,281 6,473,821 92,808,793 87,346,001 2,966,916 Operating costs .................... (139,693,568)(161,771,163)(176,071,661) (5,980,695) (85,697,394) (76,837,670) (2,609,975) Gross profit......................... 10,889,124 7,465,490 14,517,620 493,126 7,111,399 10,508,331 356,941 Unrealized (profit) loss from sales ....................... (27,306) (8,131) 25,181 855 12,207 2,370 81 Realized profit on from sales ..... 12,469 13,509 12,220 415 6,396 5,417 184 Gross profit......................... 10,874,287 7,470,868 14,555,021 494,396 7,130,002 10,516,118 357,206 Operating expenses: Selling expenses .................. (1,386,988) (1,533,425) (1,585,738) (53,864) (756,560) (814,414) (27,664) General and administrative expenses ........................ (5,171,613) (6,520,083) (8,703,296) (295,628) (4,332,595) (4,012,006) (136,277) Impairment gain and reversal of impairment loss (impairment loss) determined in accordance with IFRS 9...................... – (1,473) 16,336 555 13,778 2,834 96 Operating expenses................ (6,558,601) (8,054,981) (10,272,698) (348,937) (5,075,377) (4,823,586) (163,845) Other gains – net................... 501,784 1,510,330 375,947 12,770 357,520 (1,932) (66) Operating profit .................... 4,817,470 926,217 4,658,270 158,229 2,412,145 5,690,600 193,295	Six Months Ended June 30,	Six Months Ended June 30,	Six Months Ended June 30,
		2020
		NT$ (unaudited) 87,346,001 (76,837,670) 10,508,331 2,370 5,417 10,516,118 (814,414) (4,012,006) 2,834 (4,823,586) (1,932) 5,690,600	US$
			(unaudited) 2,966,916 (2,609,975)
			356,941 81 184
			357,206 (27,664) (136,277) 96
			(163,845) (66)
			193,295

			Year Ended December 31,	Year Ended December 31,	Year Ended December 31,		Six Months Ended June	Six Months Ended June	Six Months Ended June	30,
		2017	2018		2019		2019	2020
		NT$	NT$	NT$		US$	NT$	NT$		US$
		(audited)	(audited)	(audited)		(unaudited)	(unaudited)	(unaudited)	(unaudited)
				(in thousands, except			per share data)
Other non-operating income and
expenses
Other income ......................		954,306	1,473,164	1,204,076		40,899	650,782	495,126		16,818
Other gains and losses ...........		572,894	(77,900)	(74,671)		(2,536)	(19,097)	104,889		3,563
Finance costs......................		(1,380,716)	(1,880,424)	(5,675,837)		(192,793)	(2,774,882)	(2,550,839)		(86,645)
Share of loss of associates and
joint ventures accounted for
using equity method ............		2,483,595	754,347	667,062		22,658	275,017	(69,059)		(2,346)
Total non-operating income and
expenses..........................		2,630,079	269,187	(3,879,370)		(131,772)	(1,868,180)	(2,019,883)		(68,610)
Profit before income tax...........		7,447,549	1,195,404	778,900		26,457	543,965	3,670,717		124,685
Income tax expense...............		(785,928)	(1,116,903)	(1,001,913)		(34,032)	(527,586)	(561,034)		(19,057)
Profit (loss) for the year...........		6,661,621	78,501	(223,013)		(7,575)	16,379	3,109,683		105,628
			As of December 31,					As of June 30,
		2017	2018		2019		2019	2020
		NT$	NT$	NT$		US$	NT$	NT$		US$
		(audited)	(audited)	(audited)		(unaudited)	(unaudited)	(unaudited)	(unaudited)
						(in thousands)
Consolidated Balance
Sheets Data:
Total current assets................		60,951,228	67,898,508	66,299,076		2,252,007	67,670,794	64,278,272		2,183,366
Total non-current assets ..........	139,128,669		161,113,447 240,296,562			8,162,247	233,198,861	242,996,063		8,253,942
Total assets.........................	200,079,897		229,011,955 306,595,638			10,414,254	300,869,655	307,274,335		10,437,308
Total current liabilities .............		44,760,401	50,061,985	63,449,644		2,155,219	64,078,442	67,833,566		2,304,129
Total non-current liabilities........		88,630,706	107,982,134 169,551,148			5,759,210	165,402,212	164,133,678		5,575,193
Total liabilities ......................	133,391,107		158,044,119 233,000,792			7,914,429	229,480,654	231,967,244		7,879,322
Total equity .........................		66,688,790	70,967,836	73,594,846		2,499,825	71,389,001	75,307,091		2,557,986

Risk Factors

An investment in the Bonds involves significant risks. You should carefully consider the risks described below and the other information in this Offering Memorandum, including our audited consolidated financial statements and related notes, before you decide to buy the Bonds. If any of the following risks actually occur, our business, prospects, financial condition and results of operations could be materially harmed, the trading price of the Bonds could decline and you could lose all or part of your investment. In particular, any potential investor in, or purchaser of, Bonds should pay particular attention to the fact that we are governed by the legal and regulatory environment in the Republic of Panama and the ROC, which in some respects, may differ from that which prevails in other countries.

Risks Relating to Our Business

The outbreaks of COVID-19 and the governmental responses thereto may adversely affect our business.

The recent outbreak of COVID-19, a disease causing potentially deadly respiratory tract infections, has already caused severe global disruptions and may negatively affect economic conditions regionally as well as globally and otherwise impact our operations and the operations of our customers and suppliers. Governments in affected countries are imposing travel bans, quarantines and other emergency public health measures. Those measures, though temporary in nature, may continue and increase depending on developments in the virus’ outbreak. In response to the outbreak, many countries have implemented lockdown measures, and other countries and local governments may enact similar policies. Companies are also taking precautions, such as requiring employees to work remotely, imposing travel restrictions and temporarily closing businesses. These restrictions, and future prevention and mitigation measures, are likely to have an adverse impact on global economic conditions, which could materially and adversely affect our future operations.

Uncertainties regarding the economic impact of the COVID-19 outbreak are likely to result in sustained market turmoil, which could also negatively impact our business, financial condition and cash flows. For example, although freight rate improved during the second quarter of 2020, a decrease in the freight volume affected our profit, and we recorded losses due to the decrease in demand as many countries locked down their businesses during the first quarter of 2020. As a result of these measures, our vessels may not be able to call on ports, or may be restricted from disembarking from ports, located in regions affected by the outbreak. In addition, we may experience severe operational disruptions and delays, unavailability of normal port infrastructure and services including limited access to equipment, critical goods and personnel, disruptions to crew change, quarantine of ships and/or crew, counterparty solidity, closure of ports and custom offices, as well as disruptions in the supply chain and industrial production, which may lead to reduced cargo demand, amongst other potential consequences attendant to the COVID-19 outbreak.

The extent of the COVID-19 outbreak’s effect on our operational and financial performance will depend on future developments, including the duration, spread and intensity of the outbreak, all of which are uncertain and difficult to predict considering the rapidly evolving landscape. As a result, although to our knowledge our operations have not been materially affected by the COVID-19 outbreak to date, the ultimate severity of the COVID-19 outbreak is uncertain at this time and therefore we cannot predict the impact it may have on our future operations. The impact could be material and adverse, particularly if the pandemic continues to further evolve and recirculate.

An increase in trade protectionism and the unraveling of multilateral trade agreements, combined with a decrease in the level of export of goods from emerging markets, could have a material adverse impact on our container shipping business and, in turn, could cause a material adverse impact on our results of operations, financial condition and cash flows.

Our operations expose us to the risk that increased trade protectionism will adversely affect our business. There is significant uncertainty about the future relationship between the United States and other exporting countries, including with respect to trade policies, treaties, government regulations and tariffs. Trade tensions between the U.S. and China since 2018 have resulted in both governments imposing tariffs. Moreover, the current economic slowdown in the economies of the U.S., the

European Union and other Asian countries may further adversely affect economic growth in China and elsewhere. Although the U.S. and China have successfully reached an interim trade deal in January 2020 that has de-escalated such trade tensions with both sides rolling back tariffs, the extent to which they will implement the deal is unpredictable, not to mention that either country may freely terminate the deal with advanced written notice according to the underlying trade agreement.

Our vessels may be deployed on routes involving trade in and out of emerging markets, and our customers’ shipping and business revenue may be derived from the shipment of goods from the Asia Pacific region to various overseas export markets, including the U.S. and Europe. Any reduction in or hindrance to the output of emerging market-based exporters could have a material adverse effect on the growth rate of these emerging markets and on our customers’ business, which in turn would adversely affect our result of operations.

Our business is highly dependent on regional and global economic trends.

The volume of containers we transport and the usage of other related services are influenced by the performance and growth of regional and international trading economies. Our core business is international container shipping, which is utilized by our customers to transport containerized goods by sea within the global and regional marketplace. As a result, there is a correlation between the condition of global and regional economies and the volume of containers we transport.

Our business is also influenced by other factors that impact regional and international trading economies, including economic and political conditions, trade restrictions, sanctions, embargoes, boycotts and other trade measures, exchange controls, currency fluctuations, unexpected changes in laws relating to tariffs or taxation policies, trade disputes, labor strikes and other work stoppages, acts of war, hostilities, epidemics, terrorism, changes in seaborne and other transportation patterns, weather patterns and crop yields, and the occurrence of natural disasters. Interruptions of the continuity of operations, decreases in imports and exports or reduced trading patterns caused by these or other causes may reduce the frequency of vessels calling at the ports at which we operate and may adversely affect our business and results of operations.

Continued economic slowdown in the Asia Pacific region, particularly in China, may exacerbate the effect on us, as we anticipate a significant number of the port calls made by our vessels will continue to involve ports in the Asia Pacific region. Our business, financial condition and results of operations, as well as our future prospects, will likely be materially and adversely affected by a further economic downturn in any of these countries.

We have little or no control over any of these risks and we may be unable to anticipate changes in economic and political conditions or anticipate extended disruptions of transport activity due to other factors. As a result, we may be unable to alter our business practice in time to avoid the adverse effects of any of these changes. Any further downturn in regional and international trading economies could impact the volume of containerized cargo trade due to these or any other extraneous factors and adversely affect our business, results of operations and financial condition.

Our international activities increase the compliance risks associated with economic and trade sanctions imposed by the United States, the European Union and other jurisdictions.

Our international operations could expose us to export controls, trade embargoes, economic sanctions and other trade restrictions imposed by the United States or other governments or organizations, including the United Nations, the European Union and their member states. For example, the U.S. Department of the Treasury’s Office of Foreign Assets Control, or “OFAC,” administers and enforces sanctions and trade embargoes that generally prohibit U.S. persons and certain other persons exposed to U.S. jurisdiction from engaging in any unlicensed dealings in, with, or relating to the certain sanctioned countries and territories, or with or relating to certain specified persons on lists maintained by OFAC, including but not limited to the Specially Designated Nationals and Blocked Persons (“SDN”) List. While we are not a “U.S. person” subject directly to U.S. sanctions, non-U.S. persons may also in certain instances be subject to liability for the violation of U.S. sanctions. The implementation, interpretation and impact of any export controls, trade embargoes, economic sanctions and other trade restrictions on our business and industry is uncertain and evolving, and

these regulations, or other regulatory changes now or in the future, as well as any inadvertent breach of applicable regulations or restrictions by us, could materially and adversely affect our business, financial condition, reputation, and results of operations. Furthermore, relevant sanctions authorities could seek to expand applicable regulations or impose modifications to our business practices and/or modifications to our compliance programs, which could increase compliance costs and subject us to fines, penalties and other sanctions if we do not effectively prevent future violations.

We actively monitor developments in the United States, the United Nations, the European Union and other jurisdictions that maintain sanctions programs, including developments in the implementation and enforcement of such sanctions programs. Expansion of sanctions programs, embargoes and other restrictions in the future (including, for example, the additional designation of countries or persons subject to sanctions), or modifications in how existing sanctions are interpreted or enforced, could increase our compliance costs, impact our business (such as preventing our vessels from calling on ports in sanctioned countries or limiting their cargoes), or subject us to sanctions liability if we do not effectively prevent future violations.

We maintain policies and procedures designed to comply with applicable export controls, trade embargoes, economic sanctions, trade restrictions and other similar laws and regulations imposed by the United States, the United Nations, the European Union and other jurisdictions. The preparation, implementation, updating, and oversight of such policies and procedures may be time consuming and expensive, and could result in the discovery of issues or violations with respect to the foregoing by us or our employees, independent contractors, subcontractors, or agents of which we were previously unaware. If we violate any of these regulations, significant administrative, civil, and criminal penalties could be assessed on us, and our growth and profitability could be adversely affected, which could have a material adverse effect on our business, results of operations and financial condition.

Supply and demand imbalances in the container shipping industry have depressed and may continue to cause fluctuation in freight rates and led to a prolonged period of challenging market conditions for global shipping carriers.

The container shipping industry has historically exhibited highly cyclical economic conditions, with high volatility in freight rates, primarily due to fluctuations in both the demand for container shipping services and the global supply of container shipping capacity. This can lead to periods of intense competition among carriers and depressed freight rates. Our profitability is strongly impacted by changes in freight rates, and such changes in freight rates can have a material effect on our financial performance.

Changes in the demand for container shipping are difficult to predict and are generally beyond our control, but are influenced by, among other factors, global and regional economic growth, inventory levels, exchange rates, the shift in manufacturing away from centers of consumption, the demand for consumer goods in North America, Europe and Asia and changes in the regulatory regimes affecting shipping, including tariff regimes and trade disputes. Freight rates can vary from service to service, and profitability of our business is affected by changes in the geographic mix of the services from which we generate revenue. Consequently, regional changes in demand can have a disproportionate impact on our results of operations in a given period, such as the change in our Far East to South American trade lane. Freight rates may decline in the future due to global trade deceleration and a resulting structural decline in demand for containerized transportation. We are and will remain highly exposed to changes in freight rates until we have established a more diversified business through the expansion of our non-ocean activities.

Demand for container shipping services is also impacted by global economic and geopolitical trends. The moderation in container demand growth in 2019 globally mirrors a global slowdown in macroeconomic growth and export orders, and the main risk to global container demand relates to a further cyclical slowing of the global economy. Emerging markets are particularly vulnerable to fluctuations in the U.S. dollar and to economic developments in the U.S. as a result of their financial leverage. Moreover, a further escalation of international trade tensions carries a significant risk to global trade. For example, the United States government has initiated, and is considering initiating further tariffs on certain imports and/or trade counterparties, including China and Europe, and certain

foreign governments, including China, have initiated, or are considering imposing, retaliatory tariffs on certain United States goods. As a result of the above, the outlook for international trade and the global economy, and thereby the relative demand for container shipping services, remains uncertain. Subdued regional and global demand in recent periods, due to these and other factors, have led to significant downward pressure on freight rates and industry revenues in recent years, and there can be no guarantee that freight rates will not decline further in the future.

Supply imbalances in the container shipping industry are also contributing to the challenging market for global carriers. The global supply of capacity is determined, among other factors, by the number and size of container vessels in the world (including the charter market), their deployment into trades, the delivery of new vessels, lay-ups at any given time, and the scrapping of older vessels, as well as by the availability of containers. Since the financial crisis, freight rates have decreased at fixed bunker prices. Carriers throughout the container shipping industry responded by investing in newer, bigger and more cost-efficient vessels to reduce costs per container shipped. However, vessels generally have an economic life of at least 20 years, must be ordered two to three years in advance and face a lengthy ordering and construction process.

The current imbalances in the container shipping industry also make it difficult for us to accurately project supply and demand for shipping services over the long term and align our newbuild programs accordingly. Because part of the orders of newbuilds are based on our current expectations of future demand, there is an inherent risk that we will order either too much or too little vessel capacity, and misallocate our capital expenditure. If we do not invest sufficiently in additional shipping capacities, we may be faced with the choice of either not being able to satisfy our customers’ demand for our services (leading to lost revenues and market share and, potentially, strained customer relations or even a loss of customers) or charter in additional vessels via the charter market at potentially higher charter rates during phases of strong demand. If, on the other hand, we overinvest in additional container shipping capacity that we are not able to fully utilize during weaker market conditions, this would increase our costs relative to the development of our revenues. Any of these scenarios could also have a material adverse effect on our business, financial condition and results of operations.

In the highly competitive international shipping industry, we may not be able to compete with established companies with greater resources or new entrants, and as a result, we may be unable to employ our vessels profitably.

We operate in a highly competitive market that is capital intensive and highly regulated. Competition arises primarily from other existing vessel owners, some of whom have substantially greater resources than we do or may be better positioned to adapt to changes in market or economic conditions, or new entrants. In addition, the worldwide shipping industry has been subject to high volatility and the unbalanced demand-and-supply for shipping services has been increasingly significant in the past several years due to various reasons, such as the overall global economic downturn and slowing global trade. There can be no assurance that the shipping market will be able to recover in the foreseeable future and shipping companies, including us, may be under continuing great pressure of reduced shipping rates, which could materially and adversely affect our results of operations and financial condition.

Competition for the transportation of container cargo by sea is intense and depends on price, location, size, age, condition and the acceptability of the vessel and its operators to the charterers. Products in the container shipping market are almost homogeneous because there is very little differentiation between shipping companies based on the capacity to carry seaborne cargoes. As the ships can easily be moved to any areas of the world, shipping companies may not be limited geographically and are thus competing for business on a worldwide scale. Due to this market structure, most of the shipping companies, including us, lack pricing power and accept the market price, which is influenced by economic and political events that are largely outside the control of shipping companies. When the market price is low, such lack of pricing power could lead to a decrease in our profitability and have a negative adverse impact on our results of operations. There can be no assurance that we will be able to deploy our vessels on economically attractive terms, maintain attractive freight rates, pass cost increases through to our customers or otherwise successfully compete against our competitors. Competitors with greater resources could enter the container shipping industry and operate larger

fleets through consolidations or acquisitions and may be able to offer lower freight rates than we are able to offer. If we are unable to successfully compete with other container shipping companies, our results of operations would be adversely affected.

There has been substantial consolidation in the international shipping industry over the last few years, which has led to stronger competitors and more intense competition. In particular, and reflecting the current prolonged period of challenging market conditions in the container shipping industry, recent years have seen substantial consolidation among carriers, with an increasingly small group of companies competing intensely to provide shipping services. In August 2016, Hanjin Shipping, a major carrier, filed for bankruptcy, the first such occurrence in the container shipping industry in nearly 30 years. In response to such developments, carriers are increasingly seeking out opportunities to combine or cooperate. A number of mergers and acquisitions between carriers has occurred over the last couple of years. CMA CGM completed its acquisition of Neptune Orient Lines and the two Chinese carriers COSCO and CSCL completed their merger in 2016. In 2017, Hapag-Lloyd and UASC completed their merger, along with Maersk’s acquisition of Hamburg Süd. COSCO acquired OOCL in 2018. The three Japanese carriers NYK, MOL and K Line have also entered into a joint venture, Ocean Network Express, which commenced trading in April 2018.

In addition, there has also been increasing cooperation among carriers. For example, in July 2014, Maersk entered into a 10-year Vessel Sharing Agreement (VSA) with Mediterranean Shipping Company (MSC) and started the “2M Alliance.” In April 2017, Evergreen Line, COSCO, CMA CGM and OOCL established the OCEAN Alliance. THE Alliance was also launched in 2017 by Hapag-Lloyd, ONE and Yang Ming.

Such consolidations and cooperation and the increasingly competitive environment could threaten revenues, increase the relative size, bargaining power and market share of our competitors, could result in groups of our competitors cooperating in concert, and may prevent us from charging freight rates that are necessary for us to return our cost of capital. Any of these developments could in turn have a material adverse effect on our business, financial condition and results of operations.

Container ship capacities have increased in recent years, leading to overload and/or overcapacity and congestion in certain ports and access to ports could be limited or unavailable for other reasons.

In recent years, container ship capacities have increased globally at a faster rate than the rate at which some container ports have increased their capacities. These factors have led to considerable delays in the processing of container shipments in affected ports, many of which (such as in the United States) cannot accommodate larger ships. As a result of longer load and unload times, increases in container ship capacities could lead to further port congestion, which could have a material adverse effect on container shipping traffic on affected services. Decisions on port expansions or port access (such as dredging for ultra-large vessels) are made by national or local governments and are outside of our control, determination or influence. Such decisions are made on the basis of local policies and concerns and the interests of the container shipping industry may not be taken into account. For example, on February 9, 2017, the German Federal Administrative Court in Leipzig ruled that plans to dredge the river Elbe in Hamburg must be improved before a stop order on the work can be lifted. The dredging would allow vessels with drafts of up to 14.5 meters to reach the Port of Hamburg (currently, the maximum is 13.5 meters) and alleviate congestion during low tide. The prolonged period of subdued demand and overcapacity in the container shipping industry has been a significant challenge for us and our competitors. We may experience substantial difficulties in operating our vessels at full capacity and maintaining the freight rates required for profitable margins. For the reasons discussed above, we may also encounter difficulties in accurately planning our longterm capital expenditures and gauging future levels of supply and demand in the container shipping industry, which are crucial to success and maintaining market share. Accordingly, any continuation or worsening of the current imbalances and challenging market conditions could have a material adverse effect on our business, financial condition and results of operations.

In addition, as industry capacity and demand for container shipping continue to grow, we could encounter difficulties in securing sufficient terminal slots to expand our operations according to our growth strategy, due to the limited availability of port facilities. While we seek to continue to secure

port access by directly investing in port terminals where we have significant operations, we may face political and administrative challenges in doing so, as ports are generally considered strategic assets. Furthermore, major ports could close for a shorter or longer period of time due to maintenance works, natural disasters or other reasons beyond our control. We cannot ensure that our efforts to secure port access will be successful. Any of these factors could have a material adverse effect on our business, financial condition and results of operations.

Our container shipping business is subject to seasonal fluctuations.

Our operating and financial performance is subject to seasonal fluctuations and relies to a large extent on the transported volume and freight rates. These fluctuations are largely due to the increased demand for container shipping services in the second and, in particular, third quarters of the year (socalled “peak season”) in advance of the festive season in Western countries. The first and fourth quarters generally show lower transport volumes due to a decrease in consumer spending in Western countries after the holidays and reduced manufacturing activities in China and Southeast Asia due to the Chinese New Year celebrations. Due to the seasonal effect, revenue and income, as well as cash flows in the individual quarters are not directly comparable. These figures therefore provide no reliable basis for projections regarding future results, and they cannot be cumulated to project the results for the entire financial year. In turn, because of the seasonal influences, the revenue and earnings of individual quarters can fluctuate significantly, which in turn may cause volatility in the market price of our shares.

In addition, the demand for our container shipping services is also driven by changes in demand for the goods transported by our fleet. Future seasonality in our turnover, operating income and working capital requirements may have an adverse effect on our business, results of operations and financial condition.

Fluctuations in fuel prices and costs, if not adequately anticipated and accounted for in our freight services, could adversely affect our profitability.

We experience fluctuations in our costs resulting from changes in the cost of fuel oil. Fuel prices are subject to fluctuation as a result of domestic and international events, including geopolitical developments, supply and demand for oil and gas, actions by the Organization of Petroleum Exporting Countries, or OPEC, and other oil and gas producers, war and unrest in oil-producing countries and regions, regional production patterns and environmental concerns. For example, towards the end of the first quarter of 2020, travel restrictions and other preventive measures to control the spread of COVID-19 resulted in a precipitous decline in oil demand. Lack of corresponding production and refinery cuts resulted in a supply glut of oil and refined petroleum products, which was exacerbated by extreme oil price volatility from the Russia-Saudi Arabia oil price war. The oversupply of petroleum products and contango in oil prices has led to record floating storage and arbitrage opportunities of both crude and refined petroleum products. These market conditions, which began in March 2020, have had a disruptive impact on the supply and demand balance of product tankers, resulting in significant and prolonged spikes in spot time charter equivalent (TCE) rates, defined as net profit or loss of operating a vessel per day, as vessel availability tightened. As of the date of this Offering Memorandum, oil price volatility has shown incipient signs of normalizing and spot TCE rates have abated to a certain degree, albeit still at robust levels.

We also experience fluctuations in our costs relating to crew expenses, port charges and currency exchange rates. For example, changes in marine regulatory regimes in the ports at which our vessels call also may increase our costs. When our costs incurred increased more significantly than our revenue, such fluctuations may adversely affect our profitability. As a result, we are exposed to high volatility in revenues. We cannot assure you that we will be able to adequately account for fuel validity and other costs in our freight services, which could lead to miscalculations in our pricing and would adversely affect our profitability.

Increases in bunker fuel prices, including as a result of the impact of IMO 2020, may significantly increase our costs of operations.

We are required to use higher quality bunker fuels on an increasing number of our services due to changing environmental requirements, which also increases our fuel costs. Furthermore, under the regulations for the Prevention of Air Pollution from Ships (Annex VI) promulgated by the International Maritime Organization, a global sulfur emission cap of 0.5% (from the current cap of 3.5%) became effective since January 1, 2020 (IMO 2020). We are in compliance with the new regulation through the use of compliant fuel for the majority of our fleet, but will also invest in exhaust gas cleaning systems (scrubbers). It is expected that compliant fuel will cost substantially more than current high sulfur fuel oil bunkers, which will lead to increased fuel costs. We may not be successful in passing on all, or any, future fuel price increases to customers in a timely manner. Installing scrubbers on vessels would enable today’s lower-cost fuels to be used but would also require substantial capital expenditure. As a result, a prolonged increase in crude oil and bunker fuel prices could lead to significant increases in operating costs and adversely affect our results of operations, especially if we are unable to raise rates or impose surcharges to recover these cost increases from customers. Conversely, decreasing bunker fuel prices have led to downward pressure on freight rates and erode our ability to compete on bunker efficiency, as our ability to efficiently use bunker fuels as compared with our competitors is less significant when bunker fuel prices are low.

The container logistics industry is becoming digitalized and our future results may suffer if we do not keep pace with or exceed the digital offerings of competitors.

Technological advancements and innovations in the container logistics industry have required us to make substantial investments in digitalization and automation, as customers seek new and more efficient ways to interact with their shipping and logistics providers. We may not be successful in the introduction or marketing of new digital services or product innovations, or be able to develop and introduce, in a timely manner, innovations to our existing products that satisfy our customers’ needs or achieve market acceptance. Growing our business in historically non-core channels, including in digital commerce, will place increased demands on our operational, managerial, administrative and other resources, which may be inadequate to support our expansion. Our future success will be determined, in part, on our ability to identify and capitalize on customer needs and competitive trends in digitalization. If we do not secure a digital competitive advantage through the development of a customer-centric, end-to-end digital offering, we may be unable to maintain or expand our customer base. We may also experience difficulty in establishing new digital products, receive more complaints from customers about them and face costly claims as a result of human or technical error, which would harm our brand and reputation as well as our business, financial condition or results of operations.

Security breaches or computer virus attacks could have a material adverse effect on our business prospects and operating results.

Any significant breach of security of our IT systems and digital platforms could significantly harm our business, reputation and operating results. As of the date of this Offering Memorandum, we have not experienced any significant breach of security of our IT systems and digital platforms. However, we cannot assure you that our IT systems and digital platforms will be completely secure from future security breaches or computer virus attacks. Anyone who is able to circumvent our security measures could misappropriate proprietary information, including the personal information of our customers. To cope with these circumventions, we have (i) established an “Information Security Management Committee” to set up information security policies, plans, measures, technical specifications, audits and coordination, to ensure data integrity and confidentiality, (ii) trained and educated all of our employees during our internal training at least once a year to improving their security awareness, (iii) performed daily information security monitoring, (iv) scanned and evaluated the systems for vulnerabilities and remedy the vulnerabilities discovered, (v) communicated closely with several external security organizations to acquire zero-day vulnerability information, (vi) purchased third-party security services, including vulnerability scanning services, and penetration and vulnerability testing every year and (vii) implemented proper backup plans and conduct recovery drill tests. Although we

have already taken such measures, any circumvention of these security measures may still cause interruptions in our operations or damage our brand image and reputation, which could have a material adverse effect on our business prospects and operating results.

The market values of our vessels may fluctuate significantly and we may incur losses when we sell vessels and may not comply with certain financial covenants, which may adversely affect our earnings.

The fair market values of our vessels may fluctuate significantly. If we sell vessels at a time when vessel prices have fallen and before we have recorded an impairment adjustment to our financial statements, the sale may be at less than the vessel’s carrying amount on our financial statements, resulting in a loss and a reduction in earnings.

The fair market value of our vessels may continue to fluctuate depending on a number of factors, including the types, sizes and ages of vessels, prevailing level of charter rates, the general economic and market conditions affecting the shipping industry, shipyards, cost of newbuildings, the need to upgrade vessels as a result of charterer requirements and technological advances in vessel design or equipment.

Conversely, if vessel values are elevated at a time when we wish to acquire additional vessels, the cost of acquisition may increase and this could adversely affect our business, results of operations, cash flow and financial condition.

If the fair market value of our vessels declines, we may not be in compliance with certain provisions of our credit facility and we may not be able to refinance our debt or obtain additional financing. If we are not able to comply with the covenants in our credit facility, and are unable to remedy the relevant breach, our lenders could accelerate our debt and foreclose on our fleet. Furthermore, if vessel values fall significantly we may have to record an impairment adjustment in our financial statements which could adversely affect our financial results.

Risks inherent in the operation of oceangoing vessels could affect our business and reputation.

The operation of oceangoing vessels carries inherent risks. These risks include the possibility of:

marine disaster;
environmental accidents, including oil and hazardous substance spills;
grounding, fire, explosions and collisions;
accidents resulting from the handling or transport of dangerous or hazardous goods;
cargo and property losses or damages (including total loss of vessels);
business interruptions caused by mechanical failure, IT system outages, cyber-attacks, human error, war, sabotage, terrorism, political action in various countries, or adverse sea or weather conditions;
work stoppages or other labor problems with staff serving on vessels and at ports, substantially all of whom are unionized or covered by collective bargaining agreements;
• piracy and terrorism;
search and rescue operations, which could lead to business interruption or interfere with the safety and security of a vessel; and
delays, restrictions or business interruption due to trading in areas affected by disease outbreaks.

Any of the above occurrences could result in death or injury to persons, loss of property or environmental damages, delays in the delivery of cargo, loss of revenues from or termination of charter contracts, governmental fines, penalties or restrictions on conducting business, higher insurance rates, and damage to our reputation and customer relationships generally. The involvement of one or more of our vessels in an environmental disaster could also harm our reputation as a safe and reliable containership owner and operator. For example, in 2002, one of our vessels struck a submerged dredging pipeline, gashing its outer shell plating and spilling approximately 12,500 gallons of bunker fuel oil into the Cooper River and the nearby areas in Charleston Harbor. As a result of the

accident, over 30 linear miles of shorelines were oiled and we entered into a group settlement agreement in 2012 with the relevant regulatory authorities, including the United States Department of the Interior, the United States Department of Commerce, the South Carolina Department of Health and Environmental Control and the South Carolina Department of Natural Resources. The amount of the settlement was US$941,685.27 in total.

Although we have implemented mandatory environmental protection training course and established internal safety and environmental management system to ensure our compliance with the relevant strict industry practice standards, we cannot assure you that similar accidents will not occur in the future. Any of these circumstances or events could have a material adverse effect on our business, results of operations and financial condition.

We may incur impairment charges for the vessels we owned if the carrying value exceeds the market value.

We evaluate the carrying amounts of our vessels to determine if events have occurred that would require an impairment of their carrying amounts. The recoverable amount of vessels is reviewed based on events and changes in circumstances that would indicate that the carrying amount of the assets might not be recovered. The review for potential impairment indicators and projection of future cash flows related to the vessels is complex and requires us to make various estimates, including future freight rates, earnings from the vessels and discount rates. All of these items have been historically volatile.

We evaluate the recoverable amount as the higher of fair value less costs to sell and value in use. If the recoverable amount is less than the carrying amount of the vessel, the vessel is deemed impaired. The carrying values of our vessels may not represent their fair market value in the future. Any impairment charges incurred as a result of declines in freight rates could have a material adverse effect on our business, results of operations, cash flows and financial condition.

Significant indebtedness could affect our ability to finance our operations, pursue desirable business opportunities and successfully run our business in the future, and; therefore, make it more difficult for us to fulfill our obligations under our indebtedness.

Conditions in our industry and our strategy will require the procurement of substantial new capital to finance our operations, acquisition of new vessels, future development and growth. Historically, on average and as is typical in our industry, a substantial portion of the acquisition price of the vessels in our fleet has been funded by borrowings. We also fund the installation of scrubbers on our vessels though borrowings. As of June 30, 2020, we had NT$25.2 billion (US$857 million) of current portion of long-term borrowings, NT$4.0 billion (US$136 million) of current portion of corporate bonds payable, non-current portion of long-term borrowings of NT$85.7 billion (US$2,910 million), non-current portion of corporate bonds payable of NT$6.0 billion (US$204 million) and shareholders’ equity of NT$75.3 billion (US$2,558 million). This substantial indebtedness and related interest expense could have important consequences to our company, including (i) limiting our ability to use a substantial portion of our cash flow from operations in other areas of our business, including for working capital, capital expenditures and other general business activities, (ii) requiring us to seek to incur further indebtedness in order to fund the capital expenditures and other expenses or investments planned by us to the extent our future cash flows are insufficient, (iii) limiting our flexibility and our ability to capitalize on business opportunities in container shipping business and to react to competitive pressures and adverse changes in government regulation, our business and our industry, (iv) increasing our vulnerability to a downturn in our business and to adverse economic and industry conditions generally and (v) placing us at a competitive disadvantage as compared to our competitors that are less leveraged.

Our ability to secure additional financing, if needed, may be substantially restricted by the existing level of our indebtedness and the restrictions contained in our credit facilities. Although we have never breached any financial covenants, and we are able to continue to borrow to the extent necessary for our business, the amount of indebtedness could in the future limit our flexibility in relation to our ability to borrow or expand our business, which could have a material adverse effect on our business, financial condition, results of operations, prospects, and ability to satisfy our obligations under our indebtedness.

We rely on revenues generated from a limited number of subsidiaries in certain regions, which could have a material adverse impact on our results of operations, financial condition and cash flows.

We are highly dependent on revenues generated from our subsidiaries in Panama, as well as subsidiaries in certain regions. Economic slowdowns, changes in laws and other restrictions or factors that affect the economic health of Panama may affect our business. In the six months ended June 30, 2020, approximately 38% of our revenues were derived from subsidiaries located in Panama. We have in the past derived, and may in the future derive, a significant portion of our revenues from a relatively limited number of subsidiaries. Consequently, if our top subsidiaries reduce their performance significantly, our business operations, results of operations and financial conditions may be materially and adversely affected.

We may decide to expand our business in the geographical areas and markets where we current operate and into new geographical areas and markets, which may subject us to new uncertainties and risks.

We may decide to expand our business in the geographic areas and markets where we currently operate and into new geographical areas and markets to further diversify our business. However, such expansion may present new challenges and risks to us. Our future expansion will depend upon a number of factors, both within and outside of our control, including but not limited to our ability to manage business, our ability to obtain any required financing, and our ability to achieve operational efficiencies, in addition to the cyclical or seasonal factors affecting the container shipping business. We may not successfully manage our growth or expand our operations at all. If we fail to manage such risks and achieve expected benefits, our business operation, results of operations and financial conditions may be materially and adversely affected.

Loss of our senior management or other key personnel could have an adverse effect on our business, financial condition and results of operations.

Our future success will depend, in significant part, upon the continued services of our senior management team and other key personnel who have substantial experience in the shipping industry. We believe that the experience of our senior management team is a vital component to maintain longterm relationships with our customers. The loss of the services of any of these individuals could adversely affect our future operating results, and we may have to incur significant costs to find sufficient replacements for them, if available.

We are subject to complex international and domestic laws and regulations, including environmental regulations and the failure to comply with these regulations may subject us to increased liability and may result in a denial of access to, or detention in, certain ports.

Our operations are subject to numerous laws and regulations in the form of international conventions and treaties, national, state and local laws and national and international regulations in force in the jurisdictions in which our vessels operate or are registered, which can significantly affect the ownership and operation of our vessels. Compliance with such laws, regulations and standards, where applicable, may require installation of costly equipment or operational changes and may affect the resale value or useful lives of our vessels. If any of our vessels are denied access to, or are detained in, certain ports, our revenues may be adversely impacted. We may also incur additional costs in order to comply with other existing and future regulatory obligations, including, but not limited to, costs relating to air emissions, the management of ballast waters, maintenance and inspection, development and implementation of emergency procedures and insurance coverage or other financial assurance of our ability to address pollution incidents.

For example, NOx Tier III requirements implemented by the International Maritime Organization have come into effect since January 2016, which has caused the increase in vessel construction costs. In addition, the International Maritime Organization has adopted the International Convention for the Control and Management of Ships’ Ballast Water and Sediments, or the BWM Convention, which is expected to come into force in late 2017. The BWM Convention will require all ships to implement a ballast water management plan and to carry out ballast water management procedures to a required standard. As a result, we may incur additional costs and expenses to improve our vessels to comply with the BWM Convention, in order to make them properly qualified and certified.

These costs could have a material adverse effect on our business, results of operations, cash flows and financial condition. A failure to comply with applicable laws and regulations may result in administrative and civil penalties, criminal sanctions or the suspension or termination of our operations. Environmental laws often impose strict liability for remediation of spills and releases of oil and hazardous substances, which could subject us to liability without regard to whether we were negligent or at fault.

Compliance with safety and other vessel requirements imposed by classification societies may be very costly and may adversely affect our business.

The hull and machinery of every commercial vessel must be classed by a classification society authorized by the vessel’s’ country of registry. The classification society certifies that a vessel is safe and seaworthy in accordance with the applicable rules and regulations of the country of registry of the vessel and the Safety of Life at Sea Convention and various UN conventions.

A vessel must undergo annual surveys, intermediate surveys and special surveys. Every vessel is also required to be dry-docked twice every five years for inspection of our underwater parts.

Compliance with the above requirements may result in significant expense. If any vessel does not maintain our class or fails any annual, intermediate or special survey, the vessel will be unable to trade between ports and will be unemployable, which could negatively impact our results of operations and financial condition.

Our business has inherent operational risks, which may not be adequately covered by insurance.

Our operation has certain unique risks. With a container carrier, the cargo itself and its interaction with the vessel can be an operational risk. By their nature, container cargoes are often heavy, dense, easily shifted, and react badly to water exposure. In addition, container carriers are often subjected to battering treatment during unloading operations with grabs, jackhammers (to pry encrusted cargoes out of the hold) and small bulldozers. This treatment may cause damage to the vessel. Vessels damaged due to treatment during unloading procedures may be more susceptible to breach to the sea. Hull breaches in container carriers may lead to the flooding of the vessels’ holds. If a container carrier suffers flooding in its forward holds, the container cargo may become so dense and waterlogged that its pressure may buckle the vessel’s leading to the loss of a vessel. If we are unable to adequately maintain our vessels we may be unable to prevent these events. In addition, we do not maintain business interruption insurance. Any of these circumstances or events could negatively impact our business, financial condition and results of operations. In addition, the loss of any of our vessels could harm our reputation as a safe and reliable vessel owner and operator.

Our vessels and their cargoes are at risk of being damaged or lost because of events such as marine disasters, bad weather, mechanical failures, human error, environmental accidents, war, terrorism, piracy and other circumstances or events. However, the vessel has an insurance coverage of up to 100% of its book value which is sufficient to cover the asset loss and related expense. Therefore, the aforementioned potential incidents would not have a material adverse effect to our financial condition as well as business operation. In addition, transporting cargoes across a wide variety of international jurisdictions creates a risk of business interruptions due to political circumstances in foreign countries, hostilities, labor strikes and boycotts, the potential for changes in tax rates or policies, and the potential for government expropriation of our vessels. Any of these events may result in loss of revenues, increased costs and decreased cash flows to our customers, which could impair their ability to make payments to us.

In the event of a casualty to a vessel or other catastrophic event, we will rely on our insurance to pay the insured value of the vessel or the damages incurred. We cannot assure you that we will be adequately insured against all risks or that we will be able to obtain adequate insurance coverage at reasonable rates for our vessels in the future. For example, in the past more stringent environmental regulations have led to increased costs for, and in the future may result in the lack of availability of, insurance against risks of environmental damage or pollution. Additionally, our insurers may refuse to pay particular claims. Any significant loss or liability for which we are not insured could have a material adverse effect on our financial condition.

Our shipping business is exposed to risks associated with the failure to declare or misdeclaration of illegal or dangerous cargo by our customers.

Our shipping business provides services including the shipping of certain illegal, dangerous or hazardous cargo. The shipping of illegal or dangerous cargo may potentially be a major hazard unless such cargo has been properly identified to us and packed and secured in accordance with the International Maritime Dangerous Goods Code (the “IMDG Code”). The IMDG Code was developed as a uniform international code for the transport of dangerous goods by sea covering such matters as packing, container traffic and stowage, with particular reference to the segregation of incompatible substances. Although we have put in place measures which aim to ensure that illegal or dangerous cargos are fully declared and stowed on our vessels in accordance with the IMDG Code, we cannot assure you that some customers will not misdeclare or fail to declare such illegal or dangerous cargo. The failure or misdeclaration of illegal or dangerous cargo could result in container explosions and fires, damage to or loss of vessels, equipment or cargo or loss of life. Any such event may expose us to losses and liabilities, loss of income, increased costs and damage to our reputation. In addition, we are required to comply with local laws and regulations regarding the declaration of illegal or dangerous cargo. In the event of any non-compliance with the IMDG code or relevant local laws and regulations, we may be exposed to fines, penalties or even litigation, which may have an adverse effect on our business, results of operations and financial condition.

Delays or cost overruns in building new vessels, including the failure to deliver new vessels, would adversely affect our business and results of operations.

Building new vessels is subject to risks of delay (including the failure to timely deliver new vessels to customers) or cost overruns caused by financial difficulties of the shipyard building a vessel, including bankruptcy, unforeseen quality or engineering problems, work stoppages, weather interference, unanticipated cost increases, delays in receipt of necessary materials or equipment, changes to design specifications and inability to obtain the requisite permits, approvals or certifications from governmental authorities and the applicable classification society upon completion of work.

Significant delays, cost overruns and failure to timely deliver new vessels to customers could adversely affect us in several ways, including delaying the implementation of our business strategies. If the delay is too long, buyers may cancel the contract. In such circumstances, we may incur increased costs or suffer losses that are not transferrable to our customers under the contract, which may exceed the amount of deposits paid or bank guarantees of our customers. In addition, we are typically subject to substantial amounts of payments before the newbuildings are delivered and start to generate revenue. To this end, delays in delivery may also adversely affect our liquidity and anticipated business prospect.

Declines in freight rates and other market deterioration could cause us to incur impairment charges.

We evaluate the recoverable amount as the higher of fair value less costs to sell and value in use. If the recoverable amount is less than the carrying amount of the vessel, the vessel is deemed impaired. The carrying values of our vessels may not represent their fair market value in the future because the new market prices of second-hand vessels tend to fluctuate with changes in freight rates and the cost of newbuildings. Any impairment charges incurred as a result of declines in freight rates could have a material adverse effect on our business, results of operations, cash flows and financial condition.

The aging of our fleet may result in increased operating costs in the future, which could adversely affect our earnings.

In general, maintaining a vessel in good operating condition increases with the age of the vessel. The average age of our fleet was 11 years as of June 30, 2020, as our fleet ages, we will incur increased costs. Older vessels are typically less fuel-efficient and more costly to maintain than more recently constructed vessels due to improvements in engine technology. Governmental regulations and safety or other equipment standards related to the age of vessels may also require expenditures for alterations or the addition of new equipment to our vessels and may restrict the type of activities in which our vessels may engage. As our vessels become older, we may have to replace such vessels upon the expiration of their useful lives. Unless we maintain reserves or are able to borrow or raise funds for vessel replacement, we will be unable to replace such older vessels. The inability to replace the vessels in our fleet upon the expiration of their useful lives could have a material adverse effect on our business, results of operations, cash flows and financial condition. Any reserves set aside for vessel replacement will not be available for the payment of dividends to shareholders. As a result, we cannot assure you that, as our vessels age, market conditions will justify those expenditures or enable us to operate our vessels profitably during the remainder of their useful lives.

We face periodic maintenance, repairing and dry-docking costs for our vessels, which can be substantial.

We are responsible for the repair and maintenance of our vessels, cost of which could be substantial. In particular, vessels must be dry-docked periodically for regulatory compliance and for maintenance and repair. Our dry-docking requirements are subject to associated risks, including delay and cost overruns, lack of necessary equipment, unforeseen engineering problems, employee strikes or other work stoppages, unanticipated cost increases, inability to obtain necessary certifications and approvals and shortages of materials or skilled labor. A significant delay in dry dockings could have an adverse effect on our contract commitments. The cost of repairs and renewals required at each dry dock are difficult to predict with certainty and can be substantial. Our insurance does not cover these costs.

Maritime claimants could arrest one or more of our vessels, which could interrupt our cash flow.

Crew members, suppliers of goods and services to a vessel, shippers of cargo and other parties may be entitled to a maritime lien against a vessel for unsatisfied debts, claims or damages. In many jurisdictions, a claimant may seek to obtain security for its claim by arresting a vessel through foreclosure proceedings. The arrest or attachment of one or more of our vessels could interrupt our cash flow and require us to pay large sums of money to have the arrest or attachment lifted. In addition, in some jurisdictions, such as South Africa, under the “sister ship” theory of liability, a claimant may arrest both the vessel which is subject to the claimant’s maritime lien and any “associated” vessel, which is any vessel owned or controlled by the same owner. Claimants could attempt to assert “sister ship” liability against one vessel in our fleet for claims relating to another of our vessels. Although currently we do not have any vessels under arrest, if our vessels are arrested, our operations and our cash flow could be adversely affected.

We are subject to certain litigations or investigations and may be subject to litigation or investigation that, if not resolved in our favor and not sufficiently insured against, could have an adverse effect on us.

We may be, from time to time, involved in various litigation matters. These matters may include, among other things, cargo damage claims, contract disputes, personal injury claims, environmental claims or proceedings, employment matters, governmental claims for taxes or duties, and other litigation that arises in the ordinary course of our business. We are currently involved in certain legal proceedings as respondent. See “Business-Legal proceedings and governmental investigations.” Although we do not expect such cases will have material and adverse impact on our business operations and we intend to defend such matters vigorously, we cannot predict with certainty the outcome or effect of any claim or other litigation matter, and the ultimate outcome of any litigation or the potential costs to resolve them may have any adverse effects on us.

Our business could be adversely affected by terrorist attacks, piracy and international hostilities that affect the transportation industry.

Terrorist attacks or piracy attacks against merchant ships, the outbreak of war, or the existence of international hostilities could damage the world economy, adversely affect the availability of and demand for transportation services, and adversely affect our ability to profitably operate and deploy our vessels. We operate in a sector of the economy that we believe is particularly likely to be adversely impacted by the effects of political instability, terrorist attacks, war, international hostilities or piracy.

Acts of piracy have historically affected ocean-going vessels trading in regions of the world such as the South China Sea, the Indian Ocean and in the Gulf of Aden off the coast of Somalia, with container vessels particularly vulnerable to such attacks. If these piracy attacks result in regions in which our vessels are deployed and characterized as “war risk” zones by insurers, as the Gulf of Aden temporarily was in May 2008, or Joint War Committee “war and strikes” listed areas, premiums payable for such coverage could increase significantly and such insurance coverage may be more difficult to obtain. In addition, crew costs, including due to employing onboard security guards, could increase in such circumstances. We may not be adequately insured to cover losses from these incidents, which could have a material adverse effect on us. In addition, any detention hijacking as a result of an act of piracy against our vessels, or an increase in cost or unavailability of insurance for our vessels, could have a material adverse impact on our business, financial condition and results of operations.

In response to piracy incidents, particularly in the Gulf of Aden off the coast of Somalia, following consultation with regulatory authorities, we may station guards on some of our vessels in some instances. While our use of guards is intended to deter and prevent the hijacking of our vessels, it may also increase our risk of liability for death or injury to persons or damage to personal property. If we do not have adequate insurance in place to cover such liability, it could adversely impact our business, results of operations, cash flows, and financial condition.

Our vessels may call on ports which are identified by the United States, the European Union, or other authorities as state sponsors of terrorism and are subject to export controls and economic sanctions, which could be viewed negatively by investors.

Vessels in our fleet may call on ports located in countries identified by the United States, the United Nations, the European Union, or other authorities as state sponsors of terrorism and subject to export controls.

Although state sponsors of terrorism designations and controls do not prevent our vessels from making calls to ports in these countries, potential investors could view such port calls negatively, which could adversely affect our reputation. Although we have never been subject to any investigations, sanctions or proceedings of similar nature by any country or authority as a result of our vessels calling on ports which have been identified as state sponsors of terrorism by the US or the other countries, investor perception of our value may be adversely affected by the consequences of war, the effects of terrorism, civil unrest and governmental actions in these and surrounding countries.

Governments could requisition our vessels during a period of war or emergency, resulting in a loss of earnings.

A government could requisition one or more of our vessels for title or for hire. Requisition for title occurs when a government takes control of a vessel and becomes her owner, while requisition for hire occurs when a government takes control of a vessel and effectively becomes her charterer at dictated charter rates. Generally, requisitions occur during periods of war or emergency, although governments may elect to requisition vessels in other circumstances. Although we would be entitled to compensation in the event of a requisition of our vessels, the amount and timing of such payments would be uncertain and there would be no guarantee that such amounts would be paid, or if paid, would fully satisfy lost profits associated with the requisition. Government requisition of one or more of our vessels may negatively impact our revenues.

We are subject to risks associated with operating internationally.

Our non-domestic operations are subject to varying degrees of regulations in each of the foreign jurisdictions in which we provide services. Local laws and regulations, and their interpretation and enforcement, differ significantly among those jurisdictions, and can change significantly overtime. Future regulatory, judicial and legislative changes or interpretations may have a material adverse effect on our ability to deliver services in foreign jurisdictions. Moreover, we are subject to risk of unilateral governmental or quasi-governmental action in different jurisdictions. Such risks include sanctions that prohibit trade in particular areas, restrictive actions such as vessel arrest, local ownership requirement, compulsory acquisition of our assets with no compensation or with compensation which is below market value.

In addition to these international regulatory risks, some of the other risks inherent in conducting business internationally include, among others: (i) economic, political and social instability; (ii) potential vessel seizure, terrorist attacks, piracy, kidnapping, the expropriation of assets and other governmental actions, many of which are not covered by our insurance; (iii) currency restrictions and exchange rate fluctuations; (iv) potential submission to the jurisdiction of a foreign court or arbitration panel; (v) pandemics or epidemics that disrupt worldwide trade or the movement of vessels; (vi) import and export quotas; (vii) additional U.S. and other regulation of non-domestic operations, and (viii) the imposition of unanticipated or increased taxes, increased environmental and safety regulations or other forms of public and governmental regulation that increase our operating expenses.

Furthermore, there is a risk that countries could respond to a global economic downturn and financial crisis by resorting to protectionist measures in order to preserve domestic industries. Such measures include the raising of import tariffs, provision of subsidies to domestic industries and the creation of other trade barriers. Due to the fact that a large portion of our business is conducted worldwide and the profitability of our business is affected by the volume of global trade, if a trend towards protectionism rises, our businesses and prospects are likely to be adversely affected as the level of world trade declines.

Many of these risks inherent in conducting shipping business are beyond our control, and we cannot predict the nature or the likelihood of the occurrence or corresponding effect of any such events, each of which could have an adverse effect on our financial condition and results of operations.

We are susceptible to severe weather and natural disasters.

Given the nature and scope of our operations, we are constantly vulnerable to disruption as a result of adverse weather conditions, including hurricanes, typhoons, earthquakes and other natural disasters. The natural disasters that we may encounter may, among other things, (i) hinder our ability to effectively and timely provide scheduled service to our customers whether due to damage to our properties, to our customers’ operations, or to dock or other transportation facilities; (ii) interfere with our terminal operations; (iii) damage our vessels and equipment; or (iv) result in injury or death to our employees. Any of these factors, especially to the extent not fully covered by insurance, could have an adverse effect on our business, financial condition and results of operations.

We may have difficulty properly managing our planned growth through acquisitions of additional vessels.

We intend to grow our business through the acquisition of our newbuildings. We may contract additional newbuild vessels. Our future growth will primarily depend on our ability to locate and acquire suitable vessels, enlarge our customer base, operate and supervise any newbuildings we may order and obtain required debt or equity financing on acceptable terms.

A shipyard could fail to deliver a newbuilding on time or at all because of work stoppages or other hostilities, political or economic disturbances that disrupt the operations of the shipyard, quality or engineering problems, bankruptcy or other financial crisis of the shipyard, a backlog of orders at the shipyard, disputes between us and the shipyard regarding contractual obligations, weather interference or catastrophic events, such as major earthquakes or fires, our requests for changes to the original vessel specifications or shortages of or delays in the receipt of necessary construction materials, such as steel, or equipment, such as main engines, electricity generators and propellers.

In addition, we may seek to terminate a vessel acquisition contract due to market conditions, financing limitations or other reasons. The outcome of contract termination negotiations may require us to forego deposits on construction or acquisition, as applicable, and pay additional cancellation fees.

As we expand our business, we may need to improve our operating and financial systems and will need to recruit suitable employees and crew for our vessels.

We plan to continue to expand our fleet size in order to expand our business. As of June 30, 2020, we had 61 newbuildings on order book, including both owned and chartered vessels, which will be delivered in 2020 to 2022. While we expect that our current operating and financial systems will be adequate to manage our current plans to expand our fleet size, we may need to upgrade our systems, in the longer term, which will require us to increase our capital expenditure and may cause temporary disruptions in the running of our fleet. We have no immediate plans to upgrade our financial systems, but we will continue to monitor these systems as we continue to expand our fleet in the longer term.

In addition, as we expand our fleet, we will need to recruit suitable additional seafarers and shore side administrative and management personnel. Although we have been increasing our shore staff as we expanded our fleet, we cannot guarantee that in the future we will be able to hire suitable employees as we continually expand our fleet. If we or our crewing agent encounters business or financial difficulties, we may not be able to adequately staff our vessels. If we are unable to recruit suitable employees as we expand our fleet, our financial performance may also be adversely affected.

We, or any of our subsidiaries, may become subject to tax in jurisdictions in which we are organized or operate, which would reduce our earnings and potentially cause certain shareholders to be subject to tax in such jurisdictions.

We intend that our affairs and the business of each of our subsidiaries will be conducted and operated in a manner that minimizes taxes imposed upon us and our subsidiaries. However, there is a risk that we will be subject to income tax in one or more jurisdictions, including the United States, if under the laws of any such jurisdiction, we or such subsidiary is considered to be carrying on a trade or business therein or earn income that is considered to be sourced therein and we do not or such subsidiary does not qualify for an exemption.

Failure to comply with competition laws to which we are subject could lead to the imposition of fines and constraints on our business practices.

Unless covered by special exemptions, the shipping industry is subject to general competition laws. These general competition laws are designed to preserve free and open competition in the marketplace in order to enhance competitiveness and economic efficiency. These laws generally prohibit agreements or concerted actions among competitors if they adversely affect competition, in particular, if they lead to the formation of cartels or anticompetitive foreclosure. The abuse of a dominant position also constitutes a violation of such laws.

Shipping companies could face fines, ordered remedies and damages claims if they fail to comply with applicable regulatory regimes. In the event that we are found not to be in compliance with the regulatory regime and sanctions are imposed on us, this could have a material adverse effect on our business, results of operations and financial condition. Our reputation could also be damaged if allegations of illegal behavior are made against us.

In May 2011, the European Commission’s Directorate General for Competition (“DG COMP”) carried out unannounced inspections at the premises of various carriers, including us, in order to investigate possible collusion among carriers on prices and capacities in the Asia-EU trade. The European Commission ultimately found that we are not in violation with the relevant regulation. However, in order to ease the European Commission’s concerns over potential risk in “price signal,” we committed to adjust our pricing practices and submitted four relevant reports to the European Commission. The final report was submitted in December 2019 and the case is closed.

In December 2015, the Federal Antimonopoly Service, or the FAS, accused that Maersk Line, CMA CGM, Hyundai Merchant Marine, Orient Overseas Container Line and us violated the Federal Law “On Protection of Competition.” The alleged violation was that the companies were exercising prohibited concerted actions that resulted in fixing mark-ups to the freight rate on the market of liner container shipping on the Far East/Southeast Asia, the Russian Federation (St Petersburg, Ust-Luga) route in 2012 to 2013. In response, we filed an appeal to reverse the FAS decision. The case against us was closed after we separately entered into a settlement with the FAS.

In 2016, the Taiwan Fair Trade Commission (the “TFTC”) received a whistleblower complaint that certain carriers were colluding to increase ocean freight rates by taking advantage of Hanjin’s bankruptcy. On September 20, 2019, the TFTC announced that no violation had been discovered against us and the investigation is closed.

In 2017, the United States Department of Justice (the “U.S. DOJ”) issued a subpoena to us with respect to an investigation of inappropriate communications, which was beyond the scope authorized by the United States Transportation Administration among carriers. After two years of investigation, the U.S. DOJ informed us that no violation was found and this case was closed in February 2019.

In May 2019, the Korean Fair Trade Commission (the “KFTC”) issued a notice to our office in South Korea, in which they requested us to provide certain materials and documents in relation to their investigation. We have appointed legal counsels to assist us in communication with the KFTC. The investigation is currently ongoing, and there can be no assurance as to the direction the KFTC’s investigation will take in the future or its outcome at this stage. Furthermore, no assurance as to the overall timing of the investigation can be given. If we ultimately become subject to sanctions under this investigation, we may be required to pay fines and/or to change our business practices. Any of the foregoing outcomes could have a material adverse effect on our business, results of operations and financial condition.

We do not control certain joint ventures or associated companies in which they hold interests or invests, which could limit our ability to identify and manage risks. In addition, failure of our business strategies through our subsidiaries, associated companies and other business alliance partners could negatively affect our financial condition, operating results and reputation.

We hold interests and have invested, and may continue to hold interests and invest, in joint ventures or associated companies in which we have non-controlling interest. For example, we currently hold approximately 40.4% and 16.0% of equity interest in Evergreen International Storage & Transportation Corporation and EVA Airways Corporations, respectively. In these cases, we have limited influence over, and limited or no control of, the governance, performance and cost of operations of such entities. Some of these entities may represent significant investments and potentially also use our brand. These entities that we do not control may make business, financial or investment decisions contrary to our interests or may make decisions different from those that we may have made. Additionally, our partners or members of joint ventures or associated companies may not be able to meet their financial or other obligations, which could expose us to additional financial or other obligations, as well as having a material adverse effect on the value of our investments in those entities or potentially subjecting us to additional claims.

In addition, we accounted for some of our investments in associated companies under the equity method. Therefore, net losses incurred by equity method investees may cause us to record our share of the net losses. For example, EVA Airways Corporations recorded a net loss of NT$1.8 billion (US$61.1 million) for the six months ended June 30, 2020. As a result, we recorded a net loss of NT$293 million (US$10.0 million) due to our investment in EVA Airways Corporations. Furthermore, we may lose the capital which we have invested in associated companies and other business alliances or may incur impairment losses on securities acquired in such alliances.

Foreign exchange and interest rate fluctuations could have a material adverse effect on our results of operations, and our attempts to hedge against such fluctuations may be ineffective and further deteriorate our financial condition.

We generate substantially all of our revenues in U.S. dollars. In the future, we may enter into new credit facilities or newbuilding contracts that are denominated in US dollar and permit conversion into New Taiwan dollar. The possibility of using different currencies could lead to fluctuations in our net income due to changes in the value of the New Taiwan dollar relative to other currencies.

Additionally, an increase in prevailing interest rates would have an effect on the interest rates charged on our variable rate debt, which rise and fall upon changes in interest rates. As of June 30, 2020, most of our short-term and long-term borrowings was at variable interest rates. If the prevailing interest rates or other factors result in higher interest rates, the increased interest expense would adversely affect our cash flow and our ability to service our debt. If interest rates are higher when our debt becomes due, we may be forced to borrow at the higher rates.

The impact of future exchange rate and interest rate fluctuations on our results of operations and financial condition cannot be accurately predicted, and there can be no assurance that our attempt to mitigate the adverse effects of exchange rate and interest rate fluctuations will be successful or that such fluctuations will not in the future have a material adverse effect on our results of operations and financial condition.

Risks Relating to the ROC

Disruptions in the ROC’s political environment could seriously harm our business.

Our headquarters and management are based in Taiwan. Accordingly, our financial condition and results of operations and the market price of our Common Shares or Bonds may be affected by changes in ROC governmental policies, taxation, inflation, interest rates, social instability and other political, economic, diplomatic or social developments in or affecting the ROC which are outside of our control.

In addition, Taiwan has a unique international political status. Since 1949, Taiwan and the Chinese mainland have been separately governed. The PRC government claims that it is the sole government of China and that Taiwan is part of China. Although significant economic and cultural relations have been established during recent years between Taiwan and the PRC, political relations have often been strained. The PRC government has refused to renounce the use of military force to gain control over Taiwan. Furthermore, the PRC government passed an Anti-Secession Law in March 2005, which authorizes non-peaceful means and other necessary measures should Taiwan move to gain independence from mainland China and the PRC government reiterated its stance in May 2020. Relations between Taiwan and the PRC may face uncertainty going forward. Past developments in relations between Taiwan and the PRC have on occasion depressed the market prices of the securities of companies in Taiwan. Relations between Taiwan and the PRC and other factors affecting military, political or economic conditions in Taiwan could materially and adversely affect our financial condition and results of operations, as well as the market price and the liquidity of the Common Shares. There can be no assurance that the present tensions will not worsen, which could have a significant adverse impact on our financial condition, results of operations and future prospects.

The value of the Common Shares and the Bonds may be adversely affected by the volatility of the Taiwan securities market.

The ROC securities market is smaller and more volatile than the securities markets in the United States and in certain European and other countries. The TWSE has experienced substantial fluctuations in the prices and volumes of sales of listed securities and has shown particular volatility following certain political events, market events, scandals, and there are currently limits on the range of daily price movements on the TWSE. The TWSE has experienced problems such as market manipulation, insider trading and payment defaults. The recurrence of these or similar problems and restrictions on price movements could adversely affect the market price and liquidity of the securities listed on the TWSE, including the Common Shares.

In response to major past declines and volatility in the securities markets in Taiwan, and in line with similar activities by other countries in Asia, the ROC government formed the National Stabilization Fund in 2000, which has purchased, and may from time to time purchase, shares listed on the TWSE to support these securities markets in Taiwan. In addition, other funds associated with the ROC government have in the past purchased, and may from time to time purchase, shares listed on the TWSE or other securities markets in Taiwan. In the future, market activity by government entities, or the perception that such activity is taking place, may take place or has ceased, may cause fluctuations in the market prices and liquidity of the Common Shares.

Foreign exchange approvals may be required.

Under existing ROC laws, foreign exchange approvals must be obtained from the CBC on a paymentby-payment basis for the conversion from NT dollars into foreign currencies in connection with the proceeds from the sale of subscription rights for newly issued Common Shares if the proceeds are in excess of US$100,000 per remittance. Although such approvals have been routinely granted in the past, there can be no assurance that in the future any such approvals will be obtained in a timely manner, or at all. In addition, foreign persons may, subject to certain required documents, but without foreign exchange approval of the CBC, remit outside and into the ROC foreign currencies of up to US$100,000 (or its equivalent) for each remittance. There can be no assurance that no requirement for approval of such remittance will continue being applicable in the future.

The imposition of foreign exchange restrictions may have an adverse effect on foreign investors’ abilities to acquire ROC securities, including the Common Shares, or to repatriate the interest, dividends or sale proceeds from those securities.

The ROC government may impose foreign exchange restrictions in certain emergency situations, including situations where there are sudden fluctuations in interest rates or exchange rates, where the ROC government experiences extreme difficulty in stabilizing the balance of payments or where there are substantial disturbances in the financial and capital markets in Taiwan. These restrictions may require foreign investors to obtain Taiwan government’s approval before acquiring ROC securities, repatriating the interest or dividends from those securities or repatriating the proceeds from the sale of those securities. There can be no assurance that these restrictions, if imposed, will not adversely affect, among other things, the secondary market price of the Bonds.

Financial reporting requirements and accounting standards in the ROC differ from those of other countries.

We are subject to financial reporting requirements in the ROC that differ in significant respects from those applicable to companies in certain other countries including the United States. In addition, our financial statements are prepared in accordance with Taiwan IFRS, which differs in certain significant respects from generally accepted accounting principles in certain other countries, such as U.S. GAAP or IFRS. The accounting treatment adopted by us under Taiwan IFRS may cause volatility of our revenue and/or profits. Potential investors should consult their own professional advisers for an understanding of such differences and how they might affect the financial information contained herein.

We publish monthly operating revenue information as part of our ongoing reporting obligations and such information is subject to change due to normal quarter-end closing procedures and excludes certain expenses and other information necessary to be indicative of actual financial results.

We post monthly sales information on the MOPS, as part of our ongoing reporting obligation as a listed company on the TWSE. Such information is preliminary, and is subject to change, upon adjustments and after the completion of our normal quarter-end closing process. Actual sales could differ materially from the preliminary information posted on MOPS. Furthermore, our preliminary operating revenue only reflects sales information up to August 2020 and may not be indicative of our net profit/loss for the months of August 2020. As a result, you should not place undue reliance on such information.

You may not be able to enforce a judgment of a foreign court in the ROC.

We are a company limited by shares and incorporated under the ROC Company Act. Substantially all of our directors and executive officers, and certain of the parties named herein, are residents of the ROC. As a result, it may be difficult for holders of the Common Shares or the Bonds to enforce against us or such persons the judgments obtained outside the ROC, including those predicated upon the civil liability provisions of the federal securities laws of the United States.

Risks Relating to the Common Shares and the Bonds

Non-ROC holders of the Bonds will be required to register with the Taiwan Stock Exchange and appoint several local agents in Taiwan if they convert the Bonds and become our shareholders, which may make ownership burdensome.

Under current ROC law, if non-ROC holders of the Bonds wish to convert any of their Bonds and to hold Common Shares, they will be required to register with the Taiwan Stock Exchange (the “TWSE”) for making investments in the ROC securities market prior to receiving Common Shares upon conversion of the Bonds. In addition, non-ROC converting holders of the Bonds will be required to appoint an eligible agent in the ROC to (i) open a securities trading account with a local brokerage firm (with qualification set by the FSC) and a bank account, (ii) pay ROC taxes, (iii) remit funds, (iv) exercise shareholders’ rights and (v) perform such other functions as holders of Bonds may designate upon such conversion. In addition, non-ROC converting holders of the Bonds will be required to appoint a custodian bank to hold the securities in safekeeping, make confirmation and settle trades and report all relevant information. Without meeting these requirements, the converting holder would be unable to hold or subsequently sell the Common Shares. In addition, these regulations may change from time to time. We cannot assure you that you will be able to register with the TWSE and open the requisite accounts in a timely manner or that current ROC law will remain in effect or that future changes in ROC law will not adversely affect your ability to convert the Bonds into our Common Shares.

Non-ROC holders of the Bonds who elect to exercise its conversion rights, receive Common Shares, and register as our shareholders are required under current ROC laws and regulations to appoint an agent (“Tax Guarantor”) in the ROC for filing tax returns and making tax payments on their behalf. A Tax Guarantor will be required to meet the qualifications set by the ROC Ministry of Finance and will act as the guarantor of the holder’s tax payment obligations. Evidence of the appointment of a Tax Guarantor and the approval of such appointment or tax clearance certification are required as conditions to repatriating the holder’s profits derived from the sale of Common Shares. There can be no assurance that non-ROC holders will be able to appoint and obtain approval for a Tax Guarantor in a timely manner.

There are legal restrictions on a PRC investor’s conversion of the Bonds into the Common Shares.

Under current ROC laws, regulations and policy, a PRC person is not permitted to hold the Common Shares upon conversion of the Bonds and to register as shareholders of our company unless (i) it is a qualified domestic institutional investor approved by competent PRC authorities (“QDII”) who will hold less than 10% of the Common Shares after conversion of the Bonds, or (ii) it otherwise obtains the approval of the Investment Commission of the Ministry of Economic Affairs if all the business items of the Company are within the positive list promulgated by the ROC government from time to time and it will hold 10% or more (or other threshold required by the regulators) of the Common Shares after conversion of the Bonds. In addition, there are restrictions on the amount remitted to Taiwan for investments by QDIIs, separately and jointly. Accordingly, the qualification criteria for a PRC person to make investment and the investment threshold imposed by the FSC and the TWSE might cause a Bonds holder who is a PRC person to be unable to hold the Common Shares upon conversion of the Bonds and to register as shareholders of our company. Under current ROC laws, “PRC person” means an individual holding a passport issued by the PRC, a resident of any area of China under the effective control or jurisdiction of the PRC (but not including a special administrative region of the PRC such as Hong Kong and Macau, if so excluded by applicable laws of the ROC), any agency or instrumentality of the PRC and any corporation, partnership or other entity organized under the laws of any such area or controlled by, or directly or indirectly having more than 30% of its capital owned by, or beneficially owned by any such person, resident, agency or instrumentality.

The returns of the Bondholders on the Bonds may depend on the value of the Common Shares.

The terms of the Bonds differ from those of ordinary debt securities because each Bond is convertible by the holder of the Bonds into the Common Shares. Accordingly, the Bonds may bear particular risks related to the Common Shares in addition to the risks of the debt securities. It is difficult to predict whether the price of the Common Shares will rise or fall. Trading prices of the Common Shares will be influenced by our operating results, and by complex and interrelated political, economic, financial and other factors that can affect the capital markets generally, the TWSE and the market segments of which we are a part.

Depending on these factors, the value of the Common Shares may become substantially lower than it is when the Bonds are initially purchased. In addition, the value of the securities to be delivered may vary substantially between the date on which conversion rights are exercised and the date on which such securities are delivered.

Investors may face difficulties in protecting their interests because we are incorporated under the Panama law and the Panama Islands law may provide different remedies to minority shareholders when compared with the laws of other jurisdictions.

Subject to the Companies Law of the Republic of Panama (the “Companies Law”) and the common law of the Panama Islands, our corporate affairs are governed by our Memorandum and Articles of Association. The laws of Panama Islands relating to the protection of the interests of minority shareholders (including the rights of our shareholders to bring shareholders’ suits against our board of directors under Panama laws) differ in some respects from those established under statutes or judicial precedents in some other jurisdictions. Such differences may mean that the remedies available to our minority shareholders may be different from those they would have under the laws of certain other jurisdictions. Therefore, our shareholders may face difficulties in protecting their interests in connection with actions taken by our management, members of our board of directors or controlling shareholders than they would as shareholders of corporations of certain other jurisdictions.

A liquid market for the Bonds may not develop and there are restrictions on the transfer of the Bonds.

Prior to this offering, there has been no market for the Bonds being offered. The Initial Purchasers may make a market for the Bonds. However, the Initial Purchasers are not obligated to make a market and may discontinue this market-making activity at any time without notice. Such market-making activity is limited by the anti-manipulation rules under the Securities Act and the Exchange Act. The Bonds are being offered pursuant to an exemption from registration under the Securities Act and, as a result, you will only be able to resell your Bonds in transactions that have been registered under the Securities Act or in transactions not subject to or exempt from registration under the Securities Act. Similarly, neither the Common Shares nor the Bonds are registered under the Exchange Act. Approval-in-principle has been received for the listing and quotation of the Bonds on the SGX-ST. However, there can be no assurance that we will obtain or be able to maintain such a listing on the SGX-ST, or that, if listed, a trading market for the Bonds will develop on the SGX-ST.

The Common Shares or the Bonds may not be publicly offered, sold, pledged or otherwise transferred in any jurisdiction where registration may be required. The Common Shares may only be publicly traded on the TWSE.

The value of your investment may be reduced by possible future sales of Common Shares or any securities that are substantially similar to the Common Shares by us or our stockholders.

Each of us, our chairman and his affiliates, certain of our directors and executive officers has agreed that it, she or he (as the case may be) will not, nor will any entity controlled by it, her or him (as the case may be) or any person acting on its, her or his (as the case may be) behalf, during the 90 day period commencing from the date of this Offering Memorandum, subject to certain specified exceptions, without the prior written consent of the Initial Purchasers, to offer, sell or otherwise dispose of any of the Common Shares or securities convertible into or exchangeable for Common Shares. See “Plan of distribution” for a more detailed discussion of restrictions that may apply to future sales of our Common Shares or securities convertible into the Common Shares.

While we are not aware of any other plans by any major stockholders to dispose of significant numbers of Common Shares, we cannot assure you that one or more existing stockholders or owners of securities convertible or exchangeable into or exercisable for our Common Shares will not dispose of significant numbers of Common Shares or such securities. We cannot predict the effect, if any, that future sales of Common Shares, or the availability of Common Shares for future sale, will have on the market price of the Bonds or Common Shares prevailing from time to time. Sales of substantial amounts of Common Shares or securities convertible or exchangeable into the Common Shares in the public market, or the perception that such sales may occur, could depress the prevailing market prices of our Bonds or Common Shares.

A holder of the Bonds or its designees requesting the conversion of the Bonds may be required to provide certain information to us or the Conversion Agent, and failure to provide such information may result in a delay of the conversion.

A holder of the Bonds or its designees requesting the conversion of the Bonds may be required to provide certain information to us or the Conversion Agent, including the name and nationality of the person to be registered as the stockholder and the number of Common Shares to be acquired by such person and the number of Common Shares acquired by such person in the past through the date of the Conversion Date. Under applicable ROC laws, we are required to report to the Securities and Futures Bureau if the person to be registered as a stockholder (1) is a “related party” of ours as defined in the Regulations Governing the Preparation of Financial Reports by Securities Issuers, or (2) will hold, immediately following such conversion, more than 10% of the total number of the Common Shares. Failure to provide such information may cause the delay of such conversion of the Bonds.

There are limitations on the Bondholders’ ability to exercise conversion rights.

The Bondholders will not be able to exercise conversion rights during any Closed Period (as defined in – Description of the bonds). Under the current ROC law, regulations and policy, PRC persons are not permitted to convert the Bonds or to register as our shareholders unless it is a QDII or otherwise obtains approval from the Investment Commission of Ministry of Economic Affairs.

Holders of the Bonds will bear the risk of fluctuations in the price of the Common Shares.

The market price of the Bonds at any time will be affected by fluctuations in the price of the Common Shares. It is impossible to predict how the price of the Common Shares will change. Trading prices of the Common Shares will be influenced by, among other things, our results of operations and political, economic, financial and other factors that affect capital markets generally. Any decline in the price of the Common Shares would adversely affect the market price of the Bonds.

Fluctuations in the exchange rate between the NT dollar and the US dollar may have a material adverse effect on the value of the Bonds in US dollar terms.

Although the principal amount of the Bonds is denominated in US dollars, the Common Shares are listed on the TWSE, which quotes and trades the Common Shares in NT dollars. As a result, fluctuations in the exchange rate between the NT dollar and the US dollar will affect, among other things, the market price of the Bonds and the US dollar equivalent of the Common Shares received upon conversion of the Bonds.

Holders of the Bonds will have no rights as shareholders until they acquire the Common Shares upon conversion of the Bonds.

Unless and until the holders of the Bonds acquire the Common Shares upon conversion of the Bonds, the holders of the Bonds will have no rights as shareholders, including any voting rights or rights to receive any dividends or other distributions with respect to the Common Shares. Subject to the indenture and other applicable Panama Islands and ROC laws, holders of the Bonds who acquire the Common Shares upon the exercise of their Conversion Rights will be entitled to exercise the rights of shareholders only as to actions for which the applicable record date occurs after the Conversion Date.

Our obligations under the Bonds will be junior in their right of payment to the secured indebtedness of our Company and our subsidiaries.

The Bonds will be our direct, unconditional, unsubordinated and unsecured obligations and will rank pari passu without any preference or priority among themselves and with all of our other senior, direct, unconditional unsubordinated and unsecured obligations. However, the Bonds are junior in their right of payment to all of our current and future secure indebtedness. In addition, our ability to make payments in respect of the Bonds depends largely upon the receipt of dividends, distributions, interest of advances from our subsidiaries. The ability of our subsidiaries to pay dividends and other amounts to us may be subject to their profitability and applicable laws. In the event of a winding up of our Company, although the Bonds would become immediately due and payable at the Early Redemption Amount, the assets of our Company would be available to pay such amounts only after all the secured indebtedness of our Company and our subsidiaries have been paid in full. Therefore, we may not be able to repay the Bonds in the event of a winding up of our Company, and you may suffer losses on your investment in the Bonds.

Use of Proceeds

We anticipate the net proceeds from this Offering, after deducting underwriting commission and estimated offering expenses payable by us for the Offering, to be approximately US$297.95 million. We intend to use the net proceeds to purchase raw materials overseas (fuel), ships, equipment and to lease ships.

Dividends and Dividend Policy

The following table sets forth the dividends per share declared, for the periods indicated:

2017 ....................................... 2018 ....................................... 2019 .......................................	Stock Dividend Per Share(1) 0.5 – –	Cash Dividend Per Share(2) 0.2 – –	Total Number of Shares Issued as Stock Dividend(3) 200,617,800 – –	Stock Dividend Amount	Stock Dividend Amount
				NT$(4) US$(5) (In thousands) 2,006,178 68,145 – – – –	US$(5)

Notes:

(1) Our stock dividend is declared in New Taiwan dollar amount per share. A shareholder receives as a stock dividend based on the number of Shares equal to the New Taiwan dollar amount per Share of dividend declared multiplied by the number of Shares owned by the shareholder and divided by the par value of NT$10 per Share.
(2) Our cash dividend is declared in New Taiwan dollar amount per Share. A shareholder receives as a cash dividend equal to the New Taiwan dollar amount per Share of dividend declared multiplied by the number of Shares owned by the shareholder.
(3) The total number of Shares issued as stock dividends include Shares issued from retained earnings and from capital reserve.
(4) The New Taiwan dollar amount of stock dividends paid is calculated based upon NT$10 per share times number of shares issued as stock dividend.
(5) The US dollar amount of stock dividends paid is calculated based upon the Noon Buying Rate as set forth in the weekly H.10 statistical release of the Federal Reserve Board for June 30, 2020 of NT$29.44 to US$1.00.

We are generally not permitted under the ROC Company Act to distribute dividends or to make any other distributions to shareholders for any fiscal year in which we have not generated net income. In addition, before distributing a dividend or making any other distribution to shareholders, we must pay all outstanding taxes, recover any past losses, and set aside a legal reserve equal to 10% of our net income. Apart from the aforesaid legal reserve, we also set aside a special reserve in accordance with applicable laws and regulations when necessary. See “Description of our share capital.”

Our Articles of Incorporation provide that, in principle, our net income, less prior years’ losses, outstanding taxes, the legal reserve and any special reserve may be distributed as dividends to shareholders upon proposal of the board of directors and approval of shareholders at a shareholders’ meeting. We may distribute dividends in way of cash or shares, provided that the cash dividends shall not be less than 10% of the total amount of dividends distributed to shareholders in that year. The ratio between cash dividend and stock dividend shall be proposed by our board of directors and then be approved by our shareholders at the shareholders’ meeting. In addition, pursuant to our Articles of Incorporation, prior to distributing any dividends to our shareholders, we were required to first distribute (i) not less than 0.5% of the distributable earnings to employees as compensation and (ii) not more than 2% of the distributable earnings to directors as compensation. The employees’ compensation may, subject to a resolution of the board of directors, be distributed to employees in way of cash or shares and the directors’ compensation should be distributed in way of cash.

For information relating to ROC withholding taxes payable on dividends, see “Taxation – ROC Taxation.”

Capitalization

The following table sets forth our actual consolidated capitalization as of June 30, 2020, and as adjusted to give effect to this offering. This table shall be read in conjunction with our unaudited consolidated interim financial statements as of and for the six months ended June 30, 2020, including the notes thereto, included elsewhere in this Offering Memorandum. We recently increased our authorized capital from NT$50 billion (US$1.7 billion) to NT$70 billion (US$2.4 billion) in July 2020. The amounts in US dollars are provided solely for the convenience of the reader.

The as adjusted basis gives effect to the issuance of the Bonds without taking into account the bifurcation of embedded derivatives, before deducting underwriting discount and concession and other offering expenses.

As of June 30, 2020	As of June 30, 2020	As of June 30, 2020
Actual (unaudited) As Adjusted for Offering of Bonds NT$ US$ NT$ US$ (in millions) 85,663.8 2,909.8 85,663.8 2,909.8 6,000.0 203.8 14,832.0 503.8 48,129.7 1,634.8 48,129.7 1,634.8 11,408.5 387.5 11,408.5 387.5 12,127.8 412.0 12,127.8 412.0 169.2 5.8 169.2 5.8 3,471.9 117.9 3,471.9 117.9 75,307.1 2,558.0 75,307.1 2,558.0 166,970.9 5,671.6 175,802.9 5,971.6	As Adjusted for Offering of Bonds
NT$ 85,663.8 6,000.0 48,129.7 11,408.5 12,127.8 169.2 3,471.9 75,307.1 166,970.9		US$
		2,909.8 503.8
		1,634.8 387.5 412.0 5.8 117.9 2,558.0
		5,971.6

Note:

(1) Total capitalization includes total long-term borrowings and total shareholders’ equity.

Business

Overview

Competitive Strengths

We believe that our historical success and future prospects are directly related to a combination of strengths, including the following:

Market-leading position in Transpacific and Intra-Asia routes supported by strong global network and cooperation agreements

According to Alphaliner, Evergreen Line is the seventh-largest operator with approximately 5% global market share by TEU. Evergreen Line has demonstrated a strong foothold and leadership by being the second-largest operator of Transpacific routes with approximately 12% market share, the third-largest operator of Intra-Asia routes with approximately 11% market share and the sixth-largest operator of Asia-Europe routes with approximately 10% market share. Evergreen Line operates a global container shipping network made up of 141 lines, composed of 59 main lines and 82 short sea and feeder lines as of June 30, 2020. Our global and diversified global network provides a key advantage for us in a market where scale helps to attract customers and has a positive impact on operating costs and profitability. As of June 30, 2020, Evergreen Line has an extensive global network with a presence in 117 countries with approximately 150 weekly loops, approximately 250 terminals and 320 global offices and agencies.

In April 2017, COSCO, CMA CGM and OOCL and Evergreen Line established the “OCEAN Alliance,” which is designed to enable its members to offer comprehensive service networks covering the AsiaEurope, Asia-Mediterranean, Asia-Red Sea, Asia-Middle East, Trans-Pacific, Asia-US East Coast and Trans-Atlantic trade routes. As of June 30, 2020, the OCEAN Alliance had 38 service routes, 330 vessels and a total operating capacity of approximately 3.8 million TEUs. As a member of the OCEAN Alliance, we focus on coordinating the members’ respective landside/terminal operations to generate additional cost benefits. Our participation in the OCEAN Alliance allows us to build on our

comprehensive and customer-focused service network by allowing our customers to take advantage of higher sailing frequencies, better transit times and greater coverage in terms of loops, ports of call and port pairs to more efficiently and reliably transport their goods. At the same time, the OCEAN Alliance allows us to improve our level of slot utilization on relevant lines as compared to our standalone operations and to take advantage of economies of scale to ensure competitive costs.

Proven track record of financial resilience and operational stability over shipping cycles,brought about by extensive geographical coverage and diversified trade routes managed with “big data” analysis

Evergreen Line benefits from a diversified and integrated business model, which includes wide geographical coverage and global trade routes. The broad geographical presence of our terminals reduces risk of business concentration and imbalance due to trade regulations in any particular country, region or industry. Our diversified revenue base supports our resilience and the stability of our business model. The geographic diversity reduces our reliance on any particular region and manages geographical imbalances occurred with trade regulations. For example, during the trade war between the United States and China, we experienced significant volume increases in Vietnam, Thailand and Malaysia, making up for a volume decrease in the United States and China due to the trade war. Evergreen Line plans to continue to add new routes and diversify our trade routes with extensive coverage of the intra-regions to provide a buffer against external disruptions, such as COVID-19 and US-China trade tensions.

Our diversified, integrated business model is also supported by our big data analysis. Our big data analysis with respect to routing has allowed us to optimize our sailing schedules and routes to account for currents and weather. The analysis also improves our fleet allocation to cater to our customers’ demand. We also use our big data analysis to manage trade flows within our trade routes, which allows the strategic allocation of fleet resources to enhance resilience and operational stability. Moreover, our business’s increasing overall resilience and operational stability as a result of technological advancements have helped us control our operating costs and improve our profitability. Since we started utilizing big data analysis in 2018, we have successfully enhanced the efficiency and performance of our Asia-Middle East routes as we made adjustments to our routes based on results from our analysis model. We believe big data analysis could help us systematically avoid “blind spots” and we expect more improvement to our operating efficiency based on further analysis.

Young and modern fleet with a balanced ownership profile providing operational flexibility

We operate our business through a young and modern fleet. Our fleet comprises vessels of the latest designs with various energy-saving measures, and employs some of the latest vessel technologies. As of June 30, 2020, our fleet of container vessels has an average age lower than 11 years, significantly lower than the typical useful life of container vessels ranging from 18 to 25 years. With our new orders of ships, the average age is expected to further reduce to approximately eight years. We believe that a modern fleet lowers our shipping costs, and improves operational efficiency and competitiveness in various trade routes.

Our fleet has a balanced fleet composition with vessels of different capacities, ages and ownership that provide us with a significant degree of operational flexibility in our operations. We are able to swiftly deploy our vessels on different trade lanes and actively manage and control the optimal use of the vessels, depending on the respective demand and slot allocation. The flexibility could also help us cope with fast-evolving environment regulations. As of June 30, 2020, our operating fleet comprised 134 container vessels, which we owned 59 vessels and chartered 75 vessels. We are targeting to have a balanced 44-56 ratio between owned and chartered fleet. Our balanced ownership profile is also shown by the age of our chartered fleets, which stands at 11 years as of June 30, 2020. Among all of our chartered fleets, approximately 61% are in long-term chartered agreement with a duration of seven to 15 years, while the remaining are in short-term chartered agreement with a duration of less than one year.

Innovative eco-friendly and cost-saving initiatives and digitization that enhances our profitability and competitiveness

We are at the forefront of operating environmentally compliant vessels in line with the latest emission guidelines by IMO. To ensure our compliance with the prescribed limit, we adopted various measures to reduce the sulfur bunker used by our vessels. As of June 30, 2020, 18.9% of our fleet by TEU was installed with scrubbers. In addition, as we were the first two shipping companies to start the installation of scrubbers, we were not affected by the backlog of installation of scrubbers due to the close-down of shipyards during the COVID-19 outbreak. Unlike us, our competitors on the AsiaEurope and transpacific routes might have been late in their scrubber adoption and had to shift to a more expensive Very Low Sulfur Fuel Oil (VLSFO) system in order to comply with the new IMO 2020 regulation. We believe our high exposure to scrubbers and strict compliance with the new IMO 2020 regulation gives us a cost advantage in long-haul routes and the opportunity to further gain market share.

We have also improved our profitability with other cost reduction initiatives. For example, in order to reduce maintenance costs, we intend to dispose of inefficient and old 4,000 to 6,000 TEU vessels. We have been phasing out our old vessels over the last three years, which are down from 12 vessels to six vessels. We also share the usage of terminals in the United States, Taiwan and Panama, namely Everport Terminal Services Inc., Taipei Port Container Terminal Corporation and Colon Container Terminal S.A., respectively. Sharing terminals allows us to operate at a lower cost.

In addition, the container shipping industry has been transformed by the ongoing trend towards innovation and digitalization, and we are at the forefront of digitalization in our industry and are wellpositioned to leverage our strong capabilities to compete in this trend. We are one of the first in the container shipping industry to provide digitized services. For example, since 2018, we have introduced two new intelligent services, the intelligent i-B/L (Bill of Lading) and i-Dispatch, the solutions that deliver documents associated with export/import transactions. These new services, provided in partnership with Bolero International Ltd., a multi-bank trade finance solutions company, will lower shippers’ costs while making data transfer more accurate, efficient, reliable and secure. With access to the ShipmentLink portal, customers can benefit from the ability to achieve paperless data exchange among all parties concerned in a shipment, and it will significantly simplify supply chain linkages. Evergreen i-B/L provides digitized Bill of Lading, which is legitimately initiated, activated, maintained and delivered afterward. The registered title to i-B/L will be legitimately secured and transferred in these new services. We have developed and deployed a global information system that consolidates information from across all our operations. With backyard service data, one-stop service and other technological infrastructure, we support our shipping agencies, individual lines and various head office departments. We will continue to seek benefit of digitalization in identifying and exploiting opportunities, and to spread best practices across our operations and streamline our operations to control costs. We plan to continue our significant technology system investments to provide convenient service and new digital capabilities for our customers. We are continuing to build our WEB service data exchange system, optimizing our operational ship information system, connecting our E-Payment system with eligible banks in several regions or countries and enhancing information technology security solutions for our overseas companies.

Strong management team with multi-disciplinary experience and international background

Our key management team has been working together for over 20 years and has a proven track record of managing us through the various shipping cycles. Each of our senior management team member has extensive experience, with an average of more than 20 years of experience in the shipping industry, much of which is with us. Our management team has been a key driver of our endeavor to develop data digitization and the creation of an efficient and responsive organization. We believe our management team’s experience gives us a competitive advantage and positions us favorably for future growth and profitability.

Our management team’s leadership has helped us acquire and retain a loyal customer base with an average customer tenure of approximately 15 years, with no attrition of major customers. Our customer portfolio is highly diversified by both the geography and industry sectors and includes meaningful customer relationships. In 2019 and for the six months ended June 30, 2020, revenues from our top ten customers represented 6.9% and 6.8% of our total revenues and we had no customer that accounted for more than 2% of total revenues. We believe that this diverse customer base helps reduce the adverse effects of downturns in a particular region or industry. Furthermore, our management team has continuously enhanced our service through constant fleet renewal and prudent capital allocation. Hands on approach to business facilitates quick decision-making to seize business opportunities in container shipping business and minimize the time required for problem resolution in challenging market conditions. In addition, we have also earned accreditation from international media and organizations. For example, we were awarded with the Green Ship Award 2018 by The Port Authority of New York & New Jersey, 2018 Blue Circle Award by Port of Vancouver and 2019 AGTC Annual Ocean Carrier Award by Agriculture Transportation Coalition.

Strategies

Enhance competitiveness by building advanced ships with scale and fuel economy

We plan to continue to expand our fleet with modern vessels that are well-suited for various trade routes and are fuel efficient and eco-friendly. As of June 30, 2020, we have a total of 61 newbuildings on order.

We believe modern, high-quality and cleaner vessels can deliver superior returns over the life of the vessel, with advantages in lower operating costs and higher utilization. As such, we have commissioned the construction of six 12,000 TEU F-type vessels in order to reduce fuel consumption and greenhouse gas emissions of our fleet.

We plan to continue to grow our fleet primarily through high quality newbuildings from reputable shipyards in Japan, Taiwan and South Korea, with a focus on modern, fuel-efficient vessels, commonly known as “eco-ships,” that combine a computerized engine management system with an aerodynamic design, including low friction paint, to improve energy efficiency. We believe such new additions to our fleet will help improve our overall operating efficiency and competitiveness of the various trade routes that we operate.

Pioneering digital capabilities to enhance connectivity and cloud shipping in order to enrich customer satisfaction

We aim to strengthen our leading digitalization capabilities and continue to lead the industry in pursuit of greater efficiency. We have developed and deployed a global information system that consolidates information from across all our operations using real-time internet-linked technologies and a common software platform. We will continue to leverage and improve our technological infrastructure to support our shipping agencies, individual lines and various head office departments. We will also seek to leverage digitalization to identify and exploit opportunities to incorporate best practices across our operations and streamline our operations to control costs. For example, we launched the “i-B/L (Bill of Lading)” and “i-Dispatch” systems to provide and facilitate paperless bill of lading transactions and alterations as well as encrypted document transfers to streamline the shipping process and efficiency of our customers. We are also a member of the Digital Container Shipping Association, an organization formed and comprised of nine major container shipping companies, to standardize container shipping protocols by working with governments and regulatory authorities to streamline international shipping processes and incorporate more efficient digitization practices. In addition, we are partnering with some of the leading international banks on our e-commerce platform to integrate business operations with digital financial services.

Further improve long-term growth and profitability through new routes, network optimization, strengthening customer relationships and cost improvement initiatives

We have built substantial expertise and a track record of quickly identifying and seizing upon opportunities in high growth and niche markets. We plan to continue to actively pursue opportunities on trades and in regions where opportunity for significant growth is available with scale and efficiency.

We are constantly reassessing the profitability of our network of service routes and configuring the network to meet the changing needs of our customers. We also intend to continue to reduce service overlaps to minimize related costs by optimizing our overall fleet schedule and implementing procedures to optimize our delivery network and reduce inefficiencies.

We also intend to continue to enhance the efficiency of our management of sales, operations and costs, which we believe will ultimately increase our revenue. At the same time, we will continue to build and cultivate long-term relationships with our customers through our business centers at major hubs around the world and maintain close contact with our key customers.

We will continue to deploy these cost improvement measures and fuel efficiency initiatives to maintain our leading position in the markets where we operate.

Continue to strengthen the OCEAN Alliance cooperation

As a member of the OCEAN Alliance, we believe we can benefit from various advantages, such as effectiveness of operation of our fleets and more significant exposure in long-haul routes and more resilience in responding to adverse industry changes. We may also benefit from other benefits, such as capacity optimization, joint terminal negotiation, transship cost reduction, productivity gains in ports, yard operations and inland rail operations.

We will continue to strengthen our cooperation with the members of the OCEAN Alliance and seek to expand the shipping network and product offerings under the Alliance. We will also remain attentive to opportunities to collaborate with other container shipping companies.

Proactively addressing Environmental, Social and Governance issues and being at the forefront of changes in the industry

We are committed to pollution prevention, energy conservation, and greenhouse gas reduction. As such we continue to not only comply with international environmental protection conventions and regulations but also actively seek ways to contribute to environmental sustainability. We aim to maintain strict standards and operational procedures for different aspects of environmental protection and pollution prevention and control of ships sailing at sea. We also aim to use the latest available technology to minimize the impact of container shipping operations both on marine life, on port communities and on humanity worldwide.

As part of our commitment to sustainability, we have built and entered into charter hire arrangements of 18 units of 12,000 TEU F-type vessels. We engaged in intensive discussions with shipyards on ship design optimization. Different hull designs were also put through hydrodynamic modeling and model basin testing when we were selecting hulls to minimize fuel consumption. We expect these new ships to be delivered between 2020 and 2022. With the delivery of these newbuilds, we will return older chartered ships upon expiry of their charter agreements to optimize our fleet structure, improve operational competitiveness and effectively reduce the environmental impact of our fleet.

Further expand business models to offer more integrated solutions and broader service offerings to our customers

We plan to expand our complementary support services and provide a more integrated and comprehensive offering of logistics solutions to our customers. We currently provide complementary services such as logistics services and inter-modal container transportation services that allow us to provide door-to-door and tailor-made transportation of cargo. We also operate port terminals in the

United States, Thailand and Panama through our sister companies. We believe that expanding these complementary services will enhance our position as a full-service provider, further diversify our sources of revenue and help us gain access to new customers searching for a simple and comprehensive transportation solution. By broadening and enhancing service offerings, we seek to provide a one-stop solution to satisfy our customers’ global logistics needs.

History

The Company was incorporated in 1968 in Taiwan and is now one of the leading international shipping companies in terms of fleet operations, service quality and innovative shipbuilding concepts. The line’s first full container service was launched in 1975, connecting the Far East and the US East Coast. In 1984, an unprecedented Round-the-World eastbound and westbound full container service was inaugurated. In 1999, to ensure the safe navigation of the line’s vessels, Evergreen Seafarer Training Center (ESTC) was established. In 2007, the Company and its consolidated subsidiaries, namely, Evergreen Marine (UK) Ltd, Greencompass Marine S.A. and Evergreen Marine (Hong Kong) Ltd. and its affiliates, namely, Italia Marittima S.p.A, Evergreen International S.A. and Evergreen Marine (Singapore) Pte. Ltd. adopted the unified common trading name “Evergreen Line.” As of June 30, 2020, Evergreen Line operated a fleet of 189 container vessels, with a total capacity of approximately 1.2 million TEUs. As a substantial part of Evergreen Line, we operated 134 container vessels, which we owned 59 vessels and chartered 75 vessels.

The following table sets forth a number of key milestones in our history:

Year 1968-1976.................... 1977-1986.................... 1987-1996.................... 1997-2001.................... 2002-2006.................... 2007-2011....................	Event/s
	• Established with capital of NT$2 million. • Evergreen Shipping Agency (Japan) Corporation was founded. • Evergreen Shipping Agency (America) Corporation was founded. • Launching of the first full-container liner service. • Evergreen Marine (UK) Limited was founded. • Launching of round-the-world eastbound and westbound regular full container services. • Evergreen Shipping Agency (Deutschland) GmbH was founded. • Listed on the Taiwan Stock Exchange with capital of NT$10 billion. • Evergreen Marine (Hong Kong) Ltd. was founded. • Issuance of Global Depository Receipts of a total value of US$115 million on the London Stock Exchange. • Establish the Evergreen Seafarer Training Center (ESTC). • Evergreen Shipping Agency Philippines Corporation was founded. • Colon Container Terminal S.A. in Panama becomes fully operational as a common user facility. • Evergreen Shipping Agency (Poland) SP.Z.O.O. was founded. • Evergreen Shipping Agency (France) S.A.S. was founded. • Evergreen Shipping Agency (Korea) Corporation was founded. • Evergreen Marine Corp. (Malaysia) Sdn. Bhd. was founded. • Evergreen Shipping Agency (Netherlands) B.V. was founded. • Evergreen Shipping Agency (Thailand) Co., Ltd. was founded. • Evergreen Shipping Agency (Singapore) Pte. Ltd. was founded. • Evergreen Shipping Agency (Australia) Pty. Ltd. was founded. • PT. Evergreen Shipping Agency Indonesia was founded. • Evergreen Shipping Agency (Vietnam) Corp. was founded. • Evergreen Shipping Agency (India) Pvt. Ltd. was founded. • Evergreen Shipping Agency (Italy) S.p.A. was founded. • Launch of ‘Evergreen Line,’ a common trading name for Evergreen Marine and other shipping companies in Evergreen Group, including Italia Marittima S.p.A., Evergreen Marine (UK), Evergreen Marine (Hong Kong) and Evergreen Marine (Singapore). • Evergreen Shipping Spain, S.L. was founded. • Evergreen Shipping Agency (Switzerland) AG was founded. • Evergreen Shipping (South Africa) (Pty) Ltd. was founded.

Year
1968-1976....................
1977-1986....................
1987-1996....................
1997-2001....................
2002-2006....................
2007-2011....................

Event/s

•
Established with capital of NT$2 million.
•
Evergreen Shipping Agency (Japan) Corporation was founded.
•
Evergreen Shipping Agency (America) Corporation was founded.
•
Launching of the first full-container liner service.
•
Evergreen Marine (UK) Limited was founded.
•
Launching of round-the-world eastbound and westbound regular full
container services.
•
Evergreen Shipping Agency (Deutschland) GmbH was founded.
•
Listed on the Taiwan Stock Exchange with capital of NT$10 billion.
•
Evergreen Marine (Hong Kong) Ltd. was founded.
•
Issuance of Global Depository Receipts of a total value of US$115
million on the London Stock Exchange.
•
Establish the Evergreen Seafarer Training Center (ESTC).
•
Evergreen Shipping Agency Philippines Corporation was founded.
•
Colon Container Terminal S.A. in Panama becomes fully operational as
a common user facility.
•
Evergreen Shipping Agency (Poland) SP.Z.O.O. was founded.
•
Evergreen Shipping Agency (France) S.A.S. was founded.
•
Evergreen Shipping Agency (Korea) Corporation was founded.
•
Evergreen Marine Corp. (Malaysia) Sdn. Bhd. was founded.
•
Evergreen Shipping Agency (Netherlands) B.V. was founded.
•
Evergreen Shipping Agency (Thailand) Co., Ltd. was founded.
•
Evergreen Shipping Agency (Singapore) Pte. Ltd. was founded.
•
Evergreen Shipping Agency (Australia) Pty. Ltd. was founded.
•
PT. Evergreen Shipping Agency Indonesia was founded.
•
Evergreen Shipping Agency (Vietnam) Corp. was founded.
•
Evergreen Shipping Agency (India) Pvt. Ltd. was founded.
•
Evergreen Shipping Agency (Italy) S.p.A. was founded.
•
Launch of ‘Evergreen Line,’ a common trading name for Evergreen
Marine and other shipping companies in Evergreen Group, including
Italia Marittima S.p.A., Evergreen Marine (UK), Evergreen Marine
(Hong Kong) and Evergreen Marine (Singapore).
•
Evergreen Shipping Spain, S.L. was founded.
•
Evergreen Shipping Agency (Switzerland) AG was founded.
•
Evergreen Shipping (South Africa) (Pty) Ltd. was founded.

Event/s

Year

2012-2020.................... • Launch of ‘ShipmentLink Mobile,’ an e-commerce app for mobile devices.
Evergreen Shipping Agency (Deutschland) GmbH renamed to Evergreen Shipping Agency (Europe) GmbH, and merger of Evergreen shipping agencies in the Netherlands, Belgium, France, Poland, Switzerland and Austria as branch offices.
Evergreen Line teamed up with CMA CMA, COSCO Container Line and OOCL to form the OCEAN Alliance, providing a comprehensive service network covering Asia-Europe/Mediterranean, Trans-Pacific, Asia-North America East Coast, Trans-Atlantic trades and Far EastMiddle East trades.
Introducing paperless Bill of Lading and dispatch documentation via ShipmentLink digital portal, Evergreen partners with Bolero International to provide advanced e-commerce solution.
Evergreen Shipping Services (Cambodia) Co., Ltd. was founded.
• Evergreen Shipping Agency (Peru) S.A.C. was founded.
Evergreen Shipping Agency (Chile) SPA was founded.
Evergreen Shipping Agency Mexico S.A. de C.V. was founded.
Evergreen Shipping Agency (Colombia) S.A.S. was founded.
Evergreen Shipping Agency (Greece) Anonimi Eteria was founded.
• Evergreen Shipping Agency (Israel) Ltd. was founded.
Evergreen Shipping Agency Lanka (Private) Limited was founded.
• Launch of ‘GreenX’, providing customer experience with instant quotes, secured space booking and online payment services on one single digital platform.
Evergreen Shipping Agency (Brazil) S.A. was founded.

Our Fleet Detail

As of June 30, 2020, we had a fleet of 134 containerships and 61 newbuildings, including our own vessels and chartered vessels, on order. This includes 18 12,000-TEU vessels, 10 23,000-TEU vessels, 14 2,500-TEU vessels and 19 1800-TEU vessels, which are expected to be delivered between 2020 and 2022. As of June 30, 2020, our existing fleet has an aggregate carrying capacity of 804,831 TEUs.

The table below sets forth certain information about our fleet as of June 30, 2020.

	Our operating fleet	Our operating fleet
Owned Number of vessels Capacity (TEUs) – – 2 24,236 16 141,728 15 93,348 – – 20 57,480 6 9,386 59 326,178	Charter Number of vessels Capacity (TEUs) 6 121,116 15 207,592 6 53,477 – – 1 3,534 17 41,919 30 51,015 75 478,653		Total
Number of vessels – 2 16 15 – 20 6 59	Number of vessels 6 15 6 – 1 17 30 75	Number of vessels 6 17 22 15 1 37 36 134	Capacity (TEUs) 121,116 231,828 195,205 93,348 3,534 99,399 60,401 804,831	Share of fleet capacity
				(%) 15.0 28.8 24.3 11.6 0.4 12.4 7.5
				100.0

The table below sets forth certain information about our fleet by capacity of the age as of June 30, 2020.

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6 -10 years
<5 years
24%
33%
11-15 years
13%
>15 years
30%
<5 years >15 years 11-15 years 6 -10 years
----- End of picture text -----

Summary of financing terms of our newbuildings

We entered into long-term loan agreements with various banks in Taiwan to finance the purchase of our 61 newbuildings. As of June 30, 2020, we had a total of NT$51 billion (US$1.7 billion) outstanding under such bank loans. These bank loans have a term of seven to 12 years and are secured by mortgage over the relevant vessel, which are customary for this type of financing arrangement on the market.

Newbuildings

We commission the construction of newbuildings primarily from leading shipyards in Japan, Taiwan and South Korea, including Imabari, CSBC Corporation and Samsung Heavy Industries. We believe modern and high quality and cleaner vessels can deliver superior returns over the life of the vessel, with advantages in lower operating costs and higher utilization. As such, we have commissioned the construction of six units of 12,000 TEU F-type vessels in order to reduce fuel consumption of ships and greenhouse gas emission. We aim to continue to grow our fleet primarily through newbuildings at high quality vessels from these companies, with a focus on modern, fuel-efficient vessels commonly termed eco-ships, which combine computerized engine management system with aerodynamic design, including low friction paint, to improve energy efficiency. These new ships are expected to be delivered between 2020 and 2022. All of our existing 61 newbuildings are eco-ships.

The typical lead time between placing an order for a newbuilding and its delivery is within two years, which depends on the specifications of the newbuilding and the availability of shipyards. The table below sets forth certain information on our newbuildings as of June 30, 2020.

Expected year of delivery 2020 2021 2022 Owned Charter Owned Charter Owned Charter – – 4 – 6 – 4 1 2 11 – – 1 3 3 1 – 6 – 4 4 6 – 5 5 8 13 18 6 11	Expected year of delivery 2020 2021 2022 Owned Charter Owned Charter Owned Charter – – 4 – 6 – 4 1 2 11 – – 1 3 3 1 – 6 – 4 4 6 – 5 5 8 13 18 6 11	Expected year of delivery 2020 2021 2022 Owned Charter Owned Charter Owned Charter – – 4 – 6 – 4 1 2 11 – – 1 3 3 1 – 6 – 4 4 6 – 5 5 8 13 18 6 11	Total	Total
2020 Owned Charter – – 4 1 1 3 – 4 5 8	2021 Owned Charter 4 – 2 11 3 1 4 6 13 18
Owned – 4 1 – 5	Owned 4 2 3 4 13	Owned 6 – – – 6	Owned 10 6 4 4 24	Charter
				– 12 10 15
				37

Our Business Model

Our core business is international container shipping, which covers ocean-going and near-sea shipping line, shipping agency business, as well as container freight station business. We earn revenue primarily from the shipment of goods. All of our service routes are running under a regular liner basis, also involving port stevedoring, inland transports, and comprehensive logistics services. Our customers cover various areas such as manufacturing, trading companies, and retailers located all over the world. We consider many pricing factors for our ocean freight rate. Such factors typically include prevailing market prices, costs associated with the given service routes and the nature of cargo being shipped, among other factors.

The table below sets forth the breakdown of our revenue by departments, for the periods indicated:

	Year Ended December 31,	Year Ended December 31,	Year Ended December 31,	Year Ended December 31,	Six Months Ended June 30,	Six Months Ended June 30,	Six Months Ended June 30,
2017	2018 % NT$ (in thousands, except 98.8 168,729,952 1.2 506,701 100.0 169,236,653	2018	2019 % NT$ for percentages) 99.7 188,686,820 0.3 1,902,461 100.0 190,589,281	2019	2019 2020 NT$ % NT$ % (unaudited) (unaudited) (unaudited)(unaudited) (in thousands, except for percentages) 91,834,933 99.0 86,847,201 99.4 973,860 1.0 498,800 0.6 92,808,793 100.0 87,346,001 100.0	2020
NT$ 148,746,685 1,836,007 150,582,692							%
							100.0

Freight Services

The table below sets forth the breakdown of our total shipment volume and freight revenue contribution by principal routes, for the periods indicated:

Year Ended December 31, 2017 2018 2019 Volume Freight revenue Volume Freight revenue Volume Freight revenue (% Total)(1) (% Total)(1) (% Total)(1) (% Total)(1) (% Total)(1) (% Total)(1) 28 39 29 43 27 41 23 28 20 21 21 22 39 22 39 22 40 23 10 11 12 14 12 14 100.0 100.0 100.0 100.0 100.0 100.0	Year Ended December 31, 2017 2018 2019 Volume Freight revenue Volume Freight revenue Volume Freight revenue (% Total)(1) (% Total)(1) (% Total)(1) (% Total)(1) (% Total)(1) (% Total)(1) 28 39 29 43 27 41 23 28 20 21 21 22 39 22 39 22 40 23 10 11 12 14 12 14 100.0 100.0 100.0 100.0 100.0 100.0	Year Ended December 31, 2017 2018 2019 Volume Freight revenue Volume Freight revenue Volume Freight revenue (% Total)(1) (% Total)(1) (% Total)(1) (% Total)(1) (% Total)(1) (% Total)(1) 28 39 29 43 27 41 23 28 20 21 21 22 39 22 39 22 40 23 10 11 12 14 12 14 100.0 100.0 100.0 100.0 100.0 100.0	Year Ended December 31, 2017 2018 2019 Volume Freight revenue Volume Freight revenue Volume Freight revenue (% Total)(1) (% Total)(1) (% Total)(1) (% Total)(1) (% Total)(1) (% Total)(1) 28 39 29 43 27 41 23 28 20 21 21 22 39 22 39 22 40 23 10 11 12 14 12 14 100.0 100.0 100.0 100.0 100.0 100.0	Year Ended December 31, 2017 2018 2019 Volume Freight revenue Volume Freight revenue Volume Freight revenue (% Total)(1) (% Total)(1) (% Total)(1) (% Total)(1) (% Total)(1) (% Total)(1) 28 39 29 43 27 41 23 28 20 21 21 22 39 22 39 22 40 23 10 11 12 14 12 14 100.0 100.0 100.0 100.0 100.0 100.0	Six Months Ended June 30,	Six Months Ended June 30,	Six Months Ended June 30,	Six Months Ended June 30,
	2018 Volume Freight revenue (% Total)(1) (% Total)(1) 29 43 20 21 39 22 12 14 100.0 100.0		2019		2019		2020 Volume Freight revenue (% Total)(1) (% Total)(1) 28 41 20 22 43 25 9 12 100.0 100.0
Freight revenue (% Total)(1)		Freight revenue (% Total)(1)	Volume (% Total)(1)	Freight revenue (% Total)(1)	Volume (% Total)(1	Freight revenue ) (% Total)(1) 40 23 23 14 100.0		Freight revenue (% Total)(1)
39 28 22 11		43 21 22 14	27 21 40 12	41 22 23 14	27 21 40 12			41 22 25 12
100.0		100.0	100.0	100.0	100.0			100.0

Note:

(1) Based on actual bill of lading.

Transpacific Routes

As a result of our participation in the OCEAN Alliance, our transpacific service now has a total of 22 service routes, including 15 routes between the Far East and the U.S. West Coast and seven routes between the Far East and the U.S. East Coast. We deploy 42 vessels for these services. In the six months ended June 30, 2020, Trans-pacific routes accounted for approximately 884 thousand TEUs of our total shipping volume and 41% of our shipping revenue.

Far East-Europe/Mediterranean Routes

We currently offer 12 European routes for our Far East-Europe services under the OCEAN Alliance, including one China-Europe shuttle service route that was added in April 2019. In addition, we currently offer five Asia-Mediterranean service routes every week via slot swap arrangement under the OCEAN Alliance. We deploy 21 vessels for these services. In the six months ended June 30, 2020, our Far East-Europe/Mediterranean routes accounted for approximately 629 thousand TEUs of our total shipping volume and contributed to 22% of our shipping revenue.

Intra-Asia Routes

We currently offer a total of 82 service routes for our Intra-Asia services and deploy 92 vessels for these services. In the six months ended June 30, 2020, our Intra-Asia routes accounted for approximately 1.36 million TEUs of our total shipping volume and contributed to 25% of our shipping revenue.

Others (including Far East-Latin America/Africa Routes/Australia Routes and others)

We currently offer a total of 32 Far East-Latin America/Africa/Australia/Other service routes and deploy 47 vessels for these services. Most of these services are operated under joint service with other shipping companies such as COSCO, X-press, ONE and PIL. We also operate certain services by entering into slot swapping arrangements with shipping companies, including CMA CGM, Emirates and COSCO. In the six months ended June 30, 2020, these routes accounted for approximately 321 thousand TEUs of our total shipping volume and contributed to 12% of our shipping revenue.

Terminal and Other Related Services

We, through our subsidiaries, Everport Terminal Services Inc., PT. Multi Bina Pura International, PT. Multi Bina Transport and Kingtrans Intl. Logistics (Tianjin) Co., Ltd., provide container stevedoring, inland transports, and comprehensive logistics services (collectively, “terminal services”) at terminals located in the United States, Indonesia and China.

We utilize the services of other third-party terminal operators at all of the other ports served by our vessels.

Fleet Management

Commercial management

Our senior management team consists of experienced shipping executives and our Taipei-based management team undertakes all of the commercial management of our fleet and provides these services to third parties. Commercial management of our fleet includes:

Identifying, purchasing, and selling vessels . We believe that we have an established reputation in the newbuilding and sales and purchase market. We believe our access to an extensive network of shipyards, ship brokers and vessel owners will provide us with an advantage in future transactions.
Obtaining booking for our containers . We believe that our commercial judgment on market trends and our reputation of extensive experience provide us with access to a broad range of customers and can manage our fleet efficiently under any market conditions.
Obtaining insurance coverage for our vessels . We have well-established relationships with reputable marine underwriters in the Norway and France insurance markets that provide our fleet with insurance coverage at competitive rates.

Technical management

As we are committed to providing our customers with the highest standards of service, we perform our technical management in-house to ensure that we achieve the highest standards and maintain the best industry practices in safety and quality management. We are qualified to perform technical management for container vessels. We are fully responsible for the maintenance and safety management of our owned fleet vessels.

We make every effort to prevent delays at sea or in port caused by malfunctions or breakdowns. We minimize operation costs through continuous onboard supervision of our vessels and use of the vessels’ crews for ship maintenance. We believe that our preventive maintenance practice has extended the lives of the vessels in our controlled fleet, minimized drydocking expenses and nearly eliminated downtimes and off-hire periods resulting from speed deficiencies, stoppages at sea and vessel breakdowns.

Daily operations

Our experienced managers supervise and monitor our daily operations, which include supervising the operations of our vessels, providing technical support to our vessels, arranging for ship supplies, appointing port agents and resolving incidental claims arising from vessel operations.

Our experienced staff will exercise due diligence to ensure that the vessel engine functions well, routine maintenance has been performed, qualified crew members have been recruited, proper insurance has been obtained, relevant regulations have been complied with and necessary qualifications have been obtained so that our vessels remain cargo worthy and are safe to enter into particular ports.

Repair and maintenance

We employ experienced and highly qualified staff to supervise repair and maintenance activities on our vessels. Our repair and maintenance programs can be broadly divided into three areas: shipboard maintenance, voyage and emergency maintenance and drydock maintenance. Shipboard maintenance includes the precautionary inspection of vessels and maintenance carried out by crew members during voyages. Voyage and emergency maintenance involve emergency repairs carried out by the crew and occasionally engine makers during voyages to maintain the smooth operation of the vessels. Drydock maintenance involves drydocking the vessel for a thorough inspection and repairing or replacing any components or equipment in order to satisfy the requirements of relevant classification societies. We have selected reliable ship servicing companies and have established long-term relationships with them for the provision of maintenance services to our vessels.

We conduct periodic survey for each of our vessels twice every five years for an “intermediate survey” and a “special survey,” respectively. If any defects are found, we take immediate action to repair the defects to ensure that our vessels remain in good condition and are in compliance with the classification society requirements.

We monitor the classification status of the vessels in our fleet on an ongoing basis as part of our basic ship management policy. In addition to the surveys required by the classification societies, we also periodically carry out a number of on-board surveys for each ship.

Crew training and management

We recruit most of our senior crew members from Taiwan, China and the Philippines, as we believe that senior crew members from these places have the requisite experience and qualifications to further improve the management of our ships. We typically recruit the other crew members from China, the Philippines, and occasionally Indonesia, Vietnam and Myanmar to benefit from a lower cost base.

We provide both introduction and continuous training to our crew, including training on safety, environmental protection and other emergency exercises. Potential crew recruits undergo a selection process in order for us to ensure that the crews we hire have the required skills and experience.

Arrangement of insurance coverage

The operation of any container vessel includes risks such as mechanical failure, collision, property loss, cargo loss or damage due to political circumstances in foreign countries, piracy, hostilities and labor strikes. In addition, there is always an inherent possibility of marine disasters, including oil spills and other environmental mishaps, and the liabilities arising from owning and operating vessels in international trade. In order to effectively manage our risks, we are committed to obtaining comprehensive insurance coverage for our operations, including the following:

Hull & Machinery and War Risks Insurance. We maintain marine hull and machinery and war risks insurances, which cover the risk of actual or constructive total loss, repair, damage for all of our vessels. For example, our vessels are each covered up to at least their book value or the balance of their outstanding loan with a deductible of US$125,000 or US$125,000 per vessel per incident.
Protection and Indemnity Insurance . Protection and indemnity insurance is provided by mutual protection and indemnity associations, or P&I Associations, which insure our third-party liabilities in connection with our shipping activities. This includes third-party liability and other related expenses resulting from the injury, illness or death of crew, passengers and other third parties, the loss or damage to cargo, claims arising from collisions with other vessels, damage to other third-party property, pollution arising from oil or other substances and salvage, towing and other related costs, including wreck removal. Protection and indemnity insurance is a form of mutual indemnity insurance, extended by protection and indemnity mutual associations, or “clubs.” As of June 30, 2020, the limits of cover available to us were US$3.1 billion in total.
Container Insurance. We also maintain additional insurance policies for our containers. As of June 30, 2020, the limits of cover available to us under these policies were US$20 million in total.

Our Customers

Our customers include manufacturing, trading companies, and retailers all over the world. In 2017, 2018 and 2019 and the six months ended June 30, 2020, our 10 largest freight customers together accounted for approximately 6.7%, 7.9%, 6.9% and 6.8% of our revenue, respectively. In general, our larger international customers contract with us on an ocean freight collect basis. Our smaller customers, which provide a majority of our business, generally contract with us on a prepaid cargo basis.

In response to the digitization in the container shipping industry, we launched the “i-B/L (Bill of Lading)” and “i-Dispatch” systems to provide and facilitate paperless bill of landing transaction and alteration as well as encrypted document transfer to streamline customer’s shipping process and efficiency. We also partner with some of the global leading banks on our e-commerce platform to integrate business operations with digital financial services.

We believe that we distinguish ourselves from our competition by offering proven reliability, stable operation and stellar reputation. Our business model is designed to enable us to respond rapidly to our customers’ changing demands, increasing the value of our services to them as we offer them high flexibility to schedule production and distribution.

Our Sales and Marketing

We maintain an integrated marketing presence in most of our customers’ key markets throughout the world. We believe that this extensive network not only helps us to serve and maintain strong relationships with existing customers but also enables us to identify potential new customers and business opportunities. Our regional business centers are supported by our wide global agency network. We have an extensive network of business centers in major hubs business hubs around the world. Most of our overseas agents have represented us for decades and we plan to acquire direct control and ownership of a majority of the agency offices in our key markets to further enhance our competitiveness.

Our Suppliers

Our principal suppliers include bunker fuel, lubricant, motor oil providers and terminal operators. Fees payable to our suppliers are usually agreed upon by contract parties after negotiation, taking into account factors such as the market rate and the reputation of suppliers. Our main bunker fuel and lubricant suppliers include Chimbusco Pan Nation Petro-chemical Co., Ltd. and Bunker One (Singapore) Pte Ltd.

Payments to the bunker fuel, lubricant and motor oil providers are usually made within 45 days after we receive the invoices from them.

Competition

The container shipping market is highly competitive. The products in the container shipping market are almost homogeneous because there is very little differentiation between shipping companies based on the capacity to carry seaborne cargoes. As the ships can easily be moved to any area of the world, shipping companies may not be limited geographically and are thus competing for business on a worldwide scale. In addition, although new investors may face technical challenges in terms of management and compliance, the comprehensive network of support services within the container shipping market enables them to subcontract most business functions, which makes it easier for new investors to enter into this market. Due to this market structure, most of the shipping companies are in lack of pricing power and accept the market price.

OCEAN Alliance. In April 2017, Evergreen Line formed the OCEAN Alliance with three other major container shipping companies, namely, COSCO, CMA CGM and OOCL, which is designed to enable the members to offer comprehensive service networks covering the Asia-Europe, Asia-Mediterranean, Asia-Red Sea, Asia-Middle East, Trans-Pacific, Asia-US East Coast and Trans-Atlantic trades. The OCEAN Alliance obtained clearance from the main competition and/or shipping authorities. The OCEAN Alliance operations started on April 1, 2017. Each member of the OCEAN Alliance provides ships for the services covered by the OCEAN Alliance’s operating agreement and agrees to share capacity on its ships with the other OCEAN Alliance members. Ships are matched to routes on a “best ship for the loop” rationale, which considers a number of factors of each vessel to determine which vessel is best suited for each service. In return, each member of the OCEAN Alliance is allocated slots on vessels contributed by other OCEAN Alliance members. Together, the members operate 38 services on the East-West trades with 97 ports of call and almost 500 port pairs. Supported by a highly-efficient fleet of 330 vessels with about 3.8 million TEUs in total annual capacity, the Alliance complies with the requirements of global supply chains while providing higher sailing frequencies, better transit times and greater coverage in terms of loops, ports of call and port pairs. As the main contributor to the Alliance, Evergreen Line has the substantial share within it, deploying a fleet of 81 vessels with a 23.3% capacity share. The Alliance allows us to share slots and vessels with other members and benefit from the competitive selection of sailing schedules and direct port pairs, fast transit times, and a highly efficient fleet of vessel, which ultimately will increase our competitiveness.

In 2019, Evergreen Line extended the OCEAN Alliance agreement to ten years until 2027, expecting to derive the following main benefits from being a member of the OCEAN Alliance:

the service and deployment of a large and far-reaching network;
capacity sharing and adjustment in line with the carriers’ demand;
unused capacity may be sold or sub-chartered to third parties;
substitution of containerships for regular and ad-hoc maintenance and repair;
capacity adjustment during slack periods;
financial compensation schemes ( e.g. , for void voyages during slack periods); and joint terminal selection and negotiation where legally permissible and focus on productivity gains in ports, shore/yard operations and inland rail operations.

Cooperation Agreements. Where the economic benefits justify the capital investment, we generally prefer to contribute owned ships into vessel-sharing agreements, rather than use slot purchase or swap agreements, as we believe that lower costs can be achieved by operating our own ships compared to chartering space from other carriers. Moreover, we aim to enter into vessel-sharing agreements only where our position in the relevant market enables us to have a decisive influence on the operation of the service, such as investments in new ships and service schedules.

Logistics Activities and Inter-Modal Container Transportation Services. We respond to changing customer expectations and increasingly competitive environment in the shipping industry by providing value-added services prior to and following transoceanic shipping with the use of various transportation solutions and by offering a single-contact for communication with the customer. The product portfolio is continuously expanding ( e . g ., hub solutions) and investments are being made worldwide in logistics assets ( e . g ., dry ports). These logistics services and investments allow our customers to outsource non-core activities and concentrate on their core business. We provide these logistics and supply chain activities to complement our transportation services and to generate additional revenue for us, as well as providing additional services for our customers.

Employees, Crew and Shore Employees

Each of our vessels is crewed with 18 to 23 officers and seamen. Our officers and seamen are primarily Taiwanese, Filipino and Chinese. We work with ten independent crewing agencies to staff our vessels. We work with ten independent crewing agencies to staff our vessels. The crewing agencies handle each seaman’s recruitment, training, travel and payroll. We ensure that all our seamen have the qualifications and licenses required to comply with international regulations and shipping conventions.

Since our inception, we have not experienced any strikes or other disruptions of employment. We believe our relationships with our employees are good.

As of June 30, 2020, the Company had 1,555 regular full-time employees on a consolidated basis. Set forth below is a breakdown of our employees by their main category of activity, for the periods indicated.

Department President.......................................................................................... Chief Executive Vice President ........................................................ Secretary ......................................................................................... Auditing Department ........................................................................ Legal Department (including Competition Compliance Team).......... Public Relations Department............................................................ Human Resources Department ........................................................ Finance Division............................................................................... Stock Department ............................................................................ General Affairs Department ............................................................. Occupational Safety & Health Department....................................... Project Department .......................................................................... Insurance & Claim Department ........................................................ Marketing Division............................................................................ Logistics Division ............................................................................. Customer Relationship Management Division.................................. Ship Division .................................................................................... Operation Department...................................................................... Operation Coordination Department ................................................ Kaohsiung Terminal Division............................................................ Total.................................................................................................	For the six months ended June, 2020	For the six months ended June, 2020
	Number 1 1 3 8 9 1 32 139 1 14 2 43 22 208 137 144 240 101 57 392 1,555	% 0.1 0.1 0.2 0.5 0.6 0.1 2.1 8.9 0.1 0.9 0.1 2.8 1.4 13.4 8.8 9.3 15.4 6.5 3.7 25.2
		100.0

Since the inception of our Company, we adopted a pension plan under the Labor Standards Act of the ROC. Pursuant to the Labor Pension Act of the ROC, which became effective on July 1, 2005, we make a monthly contribution up to the amount of 6% of the employee’s monthly wages to each employee’s personal retirement savings accounts. We do not set aside a fund or accrue any liabilities under this retirement plan.

For some of the employees of our Company who were previously employed by other companies that adopted a pension mechanism under the Labor Standards Act of the ROC, and who chooses to continue to be subject to the pension mechanism under the Labor Standards Act of the ROC, we maintain and fund a defined benefit retirement plan. We make a monthly contribution up to the amount of 9% or 15% of the employees’ monthly wages to the retirement fund deposited with Bank of Taiwan. Under the Labor Standards Law, payments of pension benefits are calculated based on the employees’ average monthly salary for the six months prior to approved retirement and base point (“b.p.”) entitlement. The b.p. earned by each employee is based on 2 b.p. for the first 15 years of services and 1 b.p. from the 16th year and thereafter. As of June 30, 2020, the total amount accrued under this pension mechanism is NT$621 million (US$21.1 million).

Affiliated Enterprises

Together with Evergreen International Storage & Transport Corporation (“EITC”) and EVA Airways Corporation (“EVA Air”), which are a part of the Evergreen Group, we have created the comprehensive transportation service worldwide. The Evergreen Group is one of the largest transportation business in the world. Our partnership with EITC and EVA Air is strategic and synergistic.

Evergreen International Storage & Transport Corporation. EITC is a leading comprehensive transportation network services provider in Taiwan. EITC has its vertical integration with an extensive business spectrum covering land, sea and air-related service fields, such as warehousing, inland haulage, logistics, marine terminal stevedoring, marine ships chartering, passenger transportation, motor vehicle inspection station, gas station, vehicle maintenance and repair. With its strong fleet of vehicles, EITC has formed a comprehensive transportation service network covering inland container terminal operations, port stevedoring, warehousing, trucking transportation and logistics operations.

As of June 30, 2020, the Company owned an approximate 40% equity interest of EITC, and EITC owned 0.52% of the Company’s equity interest. In each of 2017, 2018 and 2019 and for the six months ended June 30, 2020, we recorded an income of NT$354 million, NT$348 million, NT$340 million and NT$148 million due to our investment to EITC, respectively.

EVA Airways Corporation. EVA Air is a Taiwan-based passenger and cargo air transportation services provider. EVA Air provides passenger air transportation services and cargo air transportation services as well as other aviation-related services. EVA Air mainly conducts airline business in the Americas, Europe, Asia and Oceania. EVA Air also has a domestic and regional subsidiary, Uni Air.

As of June 30, 2020, the company owned an approximate 16% equity interest of EVA Air. In each of 2017, 2018 and 2019, we recorded an income of NT$938 million, NT$1,069 million and NT$642 million due to our investment to EVA Air, respectively. For the six months ended June 30, 2020, we recorded a loss of NT$293 million due to our investment in EVA Air.

We collaborate with EITC and EVA Airways in a number of areas, including: (i) jointly serving our consumers in many transportation scenarios and (ii) jointly developing world’s leading transportation services. Working with them as complementary partners allows us to best serve the broad range of needs of our businesses in Taiwan and globally.

Subsidiaries

We conduct substantially all of our operations through subsidiaries and associated companies. We also own or will own each of our vessels through a separate wholly-owned subsidiary. The following table sets forth information as of June 30, 2020 (except as otherwise indicated) regarding certain of our subsidiaries and associated companies. All amounts due from us for ownership of the capital stock held by us in all of these subsidiaries have been paid in full.

Subsidiary and Address Peony Investment S.A. East 53rd Street, Marbella, Humboldt Building, 2nd Floor, Panama, Republic of Panama . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Everport Terminal Services Inc. 1209 Orange Street in the City of Wilmington, County of New Castle. . . . . . . . Evergreen Marine (Hong Kong) Ltd. 22-23/F., Harcourt House, 39 Gloucester Road, Wanchai, Hong Kong . . Taiwan Terminal Services Corp. Ltd. No. 6, Qijin 1st Rd., Qijin Dist., Kaohsiung City 805, Taiwan (R.O.C.). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	Capital Stock USD476,500,000 USD105,900 USD1,033,993 NTD100,000,000	Issued Shares 4,765,000 1,059 8,000,000 10,000,000	Percentage Interest Held by us 100.00% 100.00% 80.00% 55.00%	Principal Business Investment holding company Terminal services Container shipping Cargo loading and discharging	Net Income/(Loss) of for the six months ended June 30, 2020
					(in thousands) USD53,590 USD3,935 USD32,905 (NTD2,366)

Subsidiary and Address Evergreen Shipping Agency (Israel) Ltd. 8 Habankim Street, Haifa, Israel, 3326301 . . . . . . . . . . . . . . . . . . . . . . . Clove Holding Ltd. Craigmuir Chambers, P. O. Box 71, Road Town, Tortola, B. V. I . . . . . . . . . . . . . . . . . . . . . . . . . Whitney Equipment LLC. 23864 Hawthorne Blvd., Suite 201, Torrance, CA 90505 . . . . . . . . . . . . . . . . . . . . . Evergreen Shipping Agency (Europe) GmbH Amsinckstrasse 55, 20097 Hamburg, Germany . . . . . . Evergreen Shipping Agency (Korea) Corporation 12F, 19, Saemunan-Ro 5-Gil, Jongno-Gu, Seoul, Republic of Korea . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Greencompass Marine S.A. 2nd Floor, Humboldt Tower, East 53rd Street, Urb. Marbella, Panama City, Republic of Panama . . . . . . . . . . . . . . . . . . . . . . . . . . . Evergreen Shipping (Spain) S.L. Calle Siete Aguas, 11-entlo., Valencia 46023, Spain. . . . . . . . . . . . . . . . . . . . Evergreen Shipping Agency (Australia) Pty. Ltd. Suite 1101, Level 11, 77 Pacific Highway, North Sydney, New South Wales 2060, Australia . . . . . . . . . . . . . . . . . . . Evergreen Shipping Agency (Vietnam) Corp. FL 30, Pearl Plaza, 561A Dien Bien Phu Str., Ward 25, Binh Thanh Dist., HCMC, Vietnam . . . . . . . . . . . . . . . . . . Evergreen Marine Corp. (Malaysia) Sdn. Bhd. NO. 7, Jalan Jurutera U1/23, Section U1, Hicom Glenmarie Industrial Park, 40150 Shah Alam, Selangor Darul Ehsan, Malaysia. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Evergreen Shipping Agency (India) Pvt. Ltd. Marathon Nextgen Innova ‘A’ G-01, Opp. Peninsula Corporate Park, Off G. K. Marg, Lower Parel (W), Mumbai – 400013, India. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . PT. Multi Bina Pura International Jl. Raya Cakung Cilincing, KM. 4 Jakarta Utara 14260, Indonesia. . . . . PT. Multi Bina Transport Jl. Raya Cakung Cilincing, KM. 4 Jakarta Utara 14260, Indonesia. . . . . . . . . . . . . . . Evergreen Argentina S.A. PJE. Carabelas 344 (ZIP code: C1009AAD) Buenos Aires, Argentina. . . . . . . . . . Evergreen Shipping Agency (Thailand) Co., Ltd. 3656/81, 24-25th Floor, Green Tower, Rama 4 Road, Klongton, Klongtoey, Bangkok 10110, Thailand. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Evergreen Heavy Industrial Corp. (Malaysia) Berhad Lot 139, Jalan Cecair, Phase 2, Free Trade Zone, Johor Port Authority, 81700 Pasir Gudang, Johor, Malaysia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Evergreen Agency (South Africa) (Pty) Ltd. 9B Riley Road, Bedfordview, Johannesburg 2007, South Africa . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Evergreen Shipping Agency (Italy) S.p.A. Scali Cerere 9 – 57122 Livorno, Italy. . . . . . . . . . . . . . . . . . . . . . . . . . . . .	Capital Stock ILS1,800,000 USD10,000 USD200,000 EUR61,355 KRW606,000,000 USD353,500,000 EUR600,000 AUD1,000 VND20,375,586,000 MYR500,000 INR55,423,000 IDR50,013,120,000 IDR10,350,000,000 IRS26,996,835 THB40,000,000 MYR65,640,550 ZAR10,000,000 EUR2,000,000	Issued Shares 1,800,000 10,000 – – 121,200 3,535,000 6,000 1,000 – 500,000 100,000 17,875 10,350 158,000 800,000 49,878,735 10,000,000 1,000	Percentage Interest Held by us 60.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 99.99% 95.03% 90.34% 95.00% 85.00% 84.44% 55.00% 55.00%	Principal Business Shipping agency Investment holding company Equipment Leasing Company Shipping agency Shipping agency Container shipping Shipping agency Shipping agency Shipping agency Shipping agency Shipping agency Cargo loading and discharging, inland transportation Repairs and cleaning of containers, inland transportation Leasing Shipping agency Container manufacturing Shipping agency Shipping agency	Net Income/(Loss) of for the six months ended June 30, 2020
					(in thousands) ILS1,954 USD70 USD325 EUR476 KRW501,061 USD39,244 EUR1,737 AUD1,424 VND69,166,870 MYR16,812 INR45,813 IDR20,345,563 (IDR2,072,635) (IRS3,082) THB26,580 MYR706 ZAR8,585 EUR11

Subsidiary and Address Evergreen Shipping Agency (Russia) Ltd. Business Centre Atrium, 3rd floor, office 316-B No. 1/25 litera A, Kazanskaya Street Saint-Petersburg, 191186 Russia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Evergreen Marine (UK) Limited 160 Euston Road, London NW1 2DX, U.K . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Kingtrans Intl. Logistics (Tianjin) Co., Ltd. NO. 295, Ji Yun East Road, Tianjin Port Container Logistics Center, Binhai New District, Tianjin, China . . . . . . . . . . Ever Shine (Shanghai) Enterprise Management Consulting Co., Ltd. 11th FL, No. 2, Lane 1199, Minsheng RD., Pudong New Area, Shanghai, China ZIP code: 200135. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Ever Shine (Ningbo) Enterprise Management Consulting Co., Ltd. 34F, Global Shipping Plaza, No. 269, Ningdong Road, Yinzhou District of Ningbo City, China . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Ever Shine (Shenzhen) Enterprise Management Consulting Co., Ltd. 16F, Golden Century Building, NO. 6033 Shennan Road, Futian District, Shenzhen, China . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Ever Shine (Qingdao) Enterprise Management Consulting Co., Ltd. NO. 31 Donghai West Road, Qingdao, China. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Evergreen Shipping Services (Cambodia) Co., Ltd. #292CD E2, street. Mao Tse Young (245) corner street. 205, Sangkat Tumnub Teuk, Khan Chamkarmorn, Phnom Penh, Cambodia. . . . . . . . . . . . . Evergreen Shipping Agency (Colombia) S.A.S. Calle 97 AN° 9A – 50 Piso 4to, Bogota, Colombia . . . . . . . . . Evergreen Shipping Agency (Peru) S.A.C. AV Javier Prado Este No. 480-488-492, Oficina 502 San Isidro, Lima, Peru Lima 27 . . . . . . . . . . . . . . . . . . . . . . . . . . Evergreen Shipping Agency Mexico S.A. de C.V. AV. Benjamin Franklin, 204, Piso 1, Escandon, Miguel Hidalgo, 11800, Ciudad de Mexico, Mexico. . . . . . . . . . Evergreen Shipping Agency (Chile) SPA Alcántara 200, of 501, Las Condes, Santiago, Chile . . . . . . . . . . . Evergreen Shipping Agency (Greece) Anonimi Eteria 3, K. Paleologou Str, GR 18535 Piraeus, Greece . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Evergreen Shipping Agency (China) Co., Ltd. 16F, Golden Century Building, NO. 6033 Shennan Road, Futian District, Shenzhen, China . . . . . . . . . . . . . . . . . . . . Evergreen Marine (Latin America), S.A. Evergreen Building 7th Floor, 5th B Ave and 78 East Street, San Francisco, Panama . . . . . . . . . . . . . . . . . . . . . . . . . . . . Evergreen Shipping Agency (Brazil) S.A. Rua Augusto Severo, n. 7, 4th floor, P.O.BOX 11010-919. Centro, Santos. São Paulo, Brazil. . . . . . . . . . . . . . . . . . . . . . . . . . .	Capital Stock RUB6,000,000 USD2,985,900 CNY77,929,315 CNY434,476,560 CNY43,000,000 CNY61,346,560 CNY49,740,010 USD200,000 COP106,668,000 PEN1,500,000 MXN7,400,000 CLP350,000,000 EUR400,000 CNY5,000,000 USD600,000 BRL2,000,000	Issued Shares – 1,500,000 – – – – – 200,000 106,668 1,500,000 74,000 2,500 4,000 – 600,000 2,000,000	Percentage Interest Held by us 51.00% 51.00% 60.00% 100.00% 100.00% 100.00% 100.00% 100.00% 75.00% 60.00% 60.00% 60.00% 60.00% 52.00% 100.00% 60.00%	Principal Business Shipping agency Container shipping Loading, discharging, storage, repairs and cleaning of containers Management consultancy, self-owned property leasing Management consultancy, self-owned property leasing Management consultancy, self-owned property leasing Management consultancy, self-owned property leasing Shipping agency Shipping agency Shipping agency Shipping agency Shipping agency Shipping agency Shipping agency Management consultancy Shipping agency	Net Income/(Loss) of for the six months ended June 30, 2020
					(in thousands) RUB105,945 USD5,314 CNY5,241 CNY3,973 CNY43 CNY484 CNY414 USD575 COP3,954,063 PEN5,321 MXN17,766 CLP610,786 EUR591 CNY5,044 USD14 –

Properties

Our headquarters are located in Taipei, Taiwan, at the following addresses: No. 166, Sec. 2, Minsheng East Road, Jhongshan Dist., Taipei, Taiwan.

In addition, the Company and its subsidiaries lease various pieces of land and buildings. The floor areas of the leased and owned properties of the Company and its principal subsidiaries as of June 30, 2020 are set forth below:

Evergreen Marine Corporation (Taiwan) Ltd.: Taipei Office ................................................................. Taichung Office (Dalong Rd) ........................................ Kaohsiung Office .......................................................... Evergreen Marine (Hong Kong) Ltd.: Hong Kong Office ......................................................... EVS-SHG Office ........................................................... EVS-NBO Office ........................................................... EVS-QND Office ........................................................... EVS-XZN Office............................................................ Evergreen Marine (UK) Limited: Birmingham Office ........................................................ Manchester Office ........................................................ Glasgow Office ............................................................. Dublin Office.................................................................	Leased Gross Floor Area 9,515.24 680.99 2,321.19 – 13,424.68 2,636.54 2,171.00 3,274.63 – 223.29 – 235.04	Owned Gross Floor Area 9,754.18 – 2,660.62 3,508.26 17,754.11 30.00 384.64 431.17 162.00 164.06 214.00 128.95	Total Gross Floor
			(square meters) 19,269.42 680.99 4,981.81 3,508.26 31,178.79 2,666.54 2,555.64 3,705.80 162.00 387.35 214.00 363.99

Most of the Group’s owned and leased properties are covered by insurance covering risks, including fire and other property related risks. We believe that our leased and owned properties are adequate for conducting our businesses for the foreseeable future.

Environmental Matters and Safety

Environmental Matters

With new IMO low Sulphur fuel regulations, we have ordered the Exhaust Gas Cleaning System (SOx scrubber) for nearly half of our fleet to save the cost for business sustainability. With our efforts, we transform our business model into a sustainable and environmental-friendly mode. We have also been certified by the American Bureau of Shipping, Nippon Kaiji Kyokai, China Corporation Register of Shipping and Maritime and Coastguard Agency, for our safety and environmental management system. We utilize such system to monitor every step of our operation that may impact the environment and identify risks to the environment. We continuously improve the environmental management skills of personnel ashore and aboard ships. We commit to fulfilling the compliance obligations of applicable national and international pollution prevention laws, regulations regarding air, water, and environment. We are currently applying for ISO14001:2015 Certification, which specifies the requirements for an environmental management system that an organization can use to enhance its environmental performance, to bring better communication with external parties.

We have installed shore power on total 47 vessels as of June 30, 2020 to reduce gas emission at port. We also installed or retrofitted SOx Scrubber System (Exhaust Gas Cleaning System, E.G.C.S.) on nearly half of our own fleet. With using this system, our ship’s emission is not causing acid rain and deforestation. We also have installed Selective Catalytic Reactor on our new F-Type vessels aiming to reduce the emission of NOx. Currently, we are working very closely with U.S. local government and engine makers to seek possibility to transfer our NOx Tier II vessel to comply with NOx Tier III.

In addition, we have devoted ourselves to planning the whole life cycle of our vessels, from design, construction, operation and, ultimately, to decommissioning in order to make the use of ships more environmentally sustainable. We demand the buyers of our decommissioned vessels choose only the

“Green-Ship Recycling” shipyards certified by Hong Kong Convention, which recycle vessels after their service lives and do not pose any unnecessary risks to human health, safety and to the environment.

We have implemented internal policies to supervise the disposal of waste oil and sludge. We only arrange qualified contractors to collect the ship’s waste oil and sludge, either by truck or barge.

Health and Safety

We have implemented a safety management system under the International Safety Management Code (“ISM Code”). Regular internal and external audits are designed to ensure compliance of all our vessels and our shore based organization with the ISM Code. Our safety management system is focused on safety at sea, preventive measures to protect health and life, cargo and the environment, as well as vessels and property against safety risks, accidents and emergency situations in connection with our operations.

We have also established an occupational safety and health management department which is responsible for formulating, planning, and promoting occupational safety and health related affairs, so as to eliminate hazards and reduce occupational safety and health risks. The relevant preventive measures are as follows: (i) establish codes of practice in safety and health based on the size of the Company according to the Occupational Safety and Health Act, publish it and require employees to comply with it, (ii) conduct education and training on safety and health for new and current employees in accordance with the Occupational Safety and Health Act, (iii) conduct education and training on fire safety for employees in accordance with the provisions of the Fire Services Act, (iv) provide and arrange regular health examinations and medical consultations for employees, and (v) establish a 24hour security force and implement round-the-clock access control for personnel to ensure the safety of Company property and personnel.

Governmental Regulations and Licenses

Our operations are subject to a variety of laws and regulations promulgated by the national and local governments of each jurisdiction in which we operate. See “Regulation.” We believe we are in compliance in all material respects with the applicable governmental regulations in each jurisdiction in which we operate. We are not aware of any governmental proceedings or investigations to which we might become a party and which may have a material adverse effect on our properties and operations. Various governmental, quasi-governmental, and regulatory agencies require the holding of certain licenses, concessions, and permits with respect to our shipping and shipping related operations. Our operations are conducted under valid licenses, concessions, permits, or certificates granted by the applicable regulatory body in that jurisdiction. We maintain regular dialog with local governments and regulatory authorities through their management teams or representatives in each jurisdiction, ensuring compliance with the requirements and conditions for obtaining and maintaining the aforementioned licenses, concessions, permits, or certificates. The key certificates which we require for operation of our vessels include:

Certificate of Classification;
International Air Pollution Prevention Certificate;
International Oil Pollution Prevention Certificate;
International Sewage Pollution Prevention Certificate;
International Ship Security Certificate;
International Load Line Certificate;
International Tonnage Certificate;
Interim Cargo Ship Safety Construction Certificate;
Cargo Ship Safety Radio Certificate;
Safety Management Certificate; and
Maritime Labor Certificate.

Legal Proceedings and Governmental Investigations

We and our subsidiaries are involved in certain legal actions and governmental investigations relating to our business from time to time. For example, we are involved in a governmental investigation filed by the Korea Fair Trade Commission in May 2019 regarding alleged cartels in the container shipping industry. Such investigation is still at a preliminary stage as of the date of this Offering Memorandum. We were fined by the Maritime Port Bureau of ROC in July 2019 for a total of NT$300,000 for oil leakage and harbor contamination in April, 2019 relating to our vessel, UNI-Promote. We already brought an administrative proceeding against such decision by the Maritime Port Bureau of ROC and such case is still ongoing as of the date of this Offering Memorandum.

We are involved in a claim filed by Nautical Challenge Limited regarding the collision between our vessel, Ever Smart, and their vessel, Alexandra 1, which occurred in February 2015. Such case is still ongoing as of the date of this Offering Memorandum. If we cannot obtain a favorable decision from the court, we may have to pay the plaintiff of up to US$9.5 million of damage, which is expected to be under insurance coverage. The overall cost we bear in the case will be USD85,000 in insurance deductible.

We are currently involved in a subrogation claim regarding container and cargo damage caused by the Typhoon Jebi in Japan filed by Shinkong Insurance Co., Ltd. The trial court ruled in favor of us and determined that we do not have to pay for the damage of JPY35.3 million claimed by Shinkong Insurance Co., Ltd. Shinkong Insurance Co., Ltd. already filed an appeal to reverse such decision and the case is currently before the appellate court. In addition to the litigation between Shinkong Insurance Co., Ltd. and us, we also initiated an arbitration process with the relevant ship owner involved in this accident in August 2018 to assert our right against such ship owner in case the courts rule in favor of Shinkong Insurance Co., Ltd.

In addition, we have also being involved in the lawsuits regarding the collision between our vessel, Ever Birth, and Cosco England at Port Klang in Malaysia, which occurred on April 21, 2019. The relevant cases are currently at an early stage and the total claims against us amount to approximately NT$12.2 million. The overall cost we bear in the case will be USD85,000 in the insurance deductible.

Save as described above, there are no governmental, legal or arbitration proceedings, including such proceedings which are pending or threatened of which the Company is aware, as of June 30, 2020, which may have, or have had a significant effect on the Company’s financial position or profitability.

Public Takeover or Exchange Offers of Shares

For the years ended December 31, 2017, 2018 and 2019 and the six months ended June 30, 2020, there have not been any public takeover or exchange offers by third parties in respect of our Common Shares, and we have not made any public exchange offers in respect of other companies’ shares.

Regulation

International Shipping Regulations

Our ships and their operation are significantly affected by a variety of laws and regulations, being subject to various international conventions and national, supranational, state and local laws and regulations in force in the countries in which our ships may operate or are registered.

A variety of governmental, quasi-governmental and private entities, such as the local port authorities, classification societies, flag state administration and terminal operators, subject our ships to both scheduled and unscheduled inspections. We are required to obtain and maintain permits, licenses and certificates for the operation of our ships by certain of these entities. We could incur administrative or civil penalties, criminal sanctions, substantial costs and liabilities or have our maritime operations suspended or terminated if we fail to comply and obtain and maintain the necessary permits, licenses or the requisite certificates.

We believe that the heightened level of environmental and quality concerns among insurance underwriters, regulators and charterers is leading to greater inspection and safety requirements on all ships. We are required to maintain operating standards for all of our ships, which emphasize operational safety, quality maintenance, prevention of pollution, continuous training of our officers and crews and compliance with international regulations.

We believe that the operation of our ships is in substantial compliance with environmental and safety laws and regulations applicable as of the date of this Offering Memorandum. Nevertheless, because such laws and regulations are frequently changed and more stringent requirements could be imposed in the future, it is possible that these may have a certain influence on our operation.

International Maritime Organization

The International Maritime Organization (the “IMO”) is the United Nations specialized agency for maritime regulation. The IMO is responsible for creating an international regulatory framework for the shipping industry, covering the prevention of pollution by ships (including bunker spills and air pollution) and setting standards for maritime safety and security and has negotiated and adopted a number of international conventions.

The IMO continues to review existing regulations and to introduce new ones. Additional or new conventions, laws and regulations may be adopted by the IMO that could materially affect our ability to manage or operate our ships and/or increase the costs of such management or operation. It is impossible to predict what additional regulations, if any, may be passed by the IMO and what effect, if any, such regulations may have on our operations.

The 1982 United Nations Convention on the Law of the Sea provides that overall responsibility for the implementation and enforcement of international maritime regulations lies with the flag state. Noncompliance with the IMO regulations may subject a ship owner, operator or bareboat charterer to increased liability and, if the implementing legislation so provides, to criminal sanctions, a deduction in available insurance coverage for affected ships, invalidation of existing insurance cover or possible denial of access to or detention in some ports.

IMO Regulations Concerning Maritime Safety and Security

SOLAS Convention

The International Convention for the Safety of Life at Sea 1974, as amended and including the regulations and codes of practice that form part of its regime (the “SOLAS Convention”) is widely regarded as the most important international treaty concerning the safety of merchant ships. The SOLAS Convention provides rules for the construction, equipment and operation of ships, setting minimum safety standards. Although not directly concerned with the prevention of pollution, some of the SOLAS Convention’s safety provisions are intended to prevent pollution as well as promote safety of life and preservation of property.

Flag states are responsible for ensuring that ships under their jurisdictions comply with these requirements and therefore generally employ classification societies, which have incorporated SOLAS requirements into their class rules, to undertake surveys to confirm compliance. The SOLAS Convention has been and continues to be regularly amended by the IMO as new and higher safety standards are introduced.

ISM Code

An amendment of the SOLAS Convention which was introduced in 1993 is the International Management Code for the Safe Operation of Ships and for Pollution Prevention, as amended (the “ISM Code”). The purpose of the ISM Code is to set an international standard for the safe management and operation of ships and for pollution prevention. Ship owners, bareboat charterers and management companies are required to develop, implement and maintain an extensive Safety Management System (the “SMS”). The SMS should include a safety and environmental protection policy, preparation and response procedures for emergency situations, instructions and procedures to ensure safe operation of ships and protection of the environment in compliance with international and applicable flag state legislation.

The ISM Code requires that ship operators obtain a “Safety Management Certificate” from the government of a ship’s flag state, for each ship that they operate. The Safety Management Certificate evidences that the ship has an SMS and operates in compliance with it. No ship can obtain a Safety Management Certificate unless a document of compliance with the ISM Code has already been issued by a classification society under the authority of the relevant flag state to the ship’s manager. The document of compliance and Safety Management Certificate are renewed every five years. However, the document of compliance is subject to an audit verification each year and the Safety Management Certificate is subject to an audit verification at least every 2 and a half years.

The hull and machinery of all commercial ships must be classed by a classification society. Such classification society should be authorized by the relevant flag state and will certify that a ship is safe and seaworthy in accordance with the SOLAS Convention and the applicable rules and regulations of the relevant flag state.

ISPS Code

A further amendment of the SOLAS Convention, known as the International Ship and Port Facility Security Code (the “ISPS Code”) came into force in July 2004 following the terrorist attacks in the United States on September 11, 2001, which heightened awareness of the threat to ships and port facilities. The ISPS Code is a set of measures to enhance the security of ships and port facilities. Among the various requirements are:

(a) on-board installation of automatic information systems to enhance ship-to-ship and ship-to-shore communications;
(b) on-board installation of ship security alert systems;
(c) the development of ship security plans; and
(d) compliance with flag state security certification requirements.

Compliance of a ship with the SOLAS Convention’s security requirements and the ISPS Code is evidenced by an International Ship Security Certificate (“ISSC”).

Load Lines Convention

The 1966 International Convention on Load Lines, as amended (the “Load Lines Convention”) created uniform rules for the limits which ships on international voyages may be loaded with. Under the Load Lines Convention, all assigned load lines must be marked amidships on each side of the ship, together with the deck line and an “International Load Line Certificate” or “International Load Line Exemption Certificate” is required to be obtained.

SAR Convention

The International Convention on Maritime Search and Rescue 1979 (the “SAR Convention”) entered into force in 1985. The SAR Convention provides for an international system covering search and rescue operations.

STCW Convention

The IMO’s International Convention on Standards of Training, Certification and Watchkeeping for Seafarers 1978, as amended (the “STCW Convention”) was the first convention to establish basic requirements on training, certification and watchkeeping for seafarers at the international level. The STCW Convention is supported by a code which expands on the basic requirements set out in STCW Convention, containing mandatory minimum standards of competence required for crews and recommended guidance intended to assist the implementation of the convention by the parties to it. In 2015 the IMO adopted amendments to the STCW Convention setting out mandatory minimum requirements for the training and qualifications of masters, officers, ratings and other personnel on ships which are subject to the IGF Code (see below). These amendments entered into force on January 1, 2017. Earlier amendments to the STCW Convention included guidance on the training and experience of personnel operating dynamic positioning systems.

SOLAS Convention Container Weight Verification Requirement

On July 1, 2016, the SOLAS Convention was amended when new requirements to verify the gross mass of a packed container entered into force. Whilst there has always been a requirement in the SOLAS Convention to declare the gross mass of cargo and containers, the new requirement adds an extra level requiring verification of the mass. The verification of the gross mass is required to be provided by the shipper before the packed container can be loaded onto a ship. This is to ensure that the mass declared is a true reflection of the gross mass of the packed container so that containers carried on ships are optimally stowed, thereby helping to prevent injury, cargo damage and loss of containers overboard.

Convention for Safe Containers

The Convention for Safe Containers 1972 (the “CSC Convention”) was adopted in 1972 following the rapid increase since the 1950s in the use of freight containers for the shipment of goods by sea and applies to the vast majority of freight containers used internationally. The purpose of CSC Convention is to maintain a high level of safety of human life in the transport and handling of containers by providing generally acceptable test procedures and related strength requirements and to facilitate the international transport of containers by providing uniform international safety regulations.

IMDG Code

The International Maritime Dangerous Goods Code (the “IMDG Code”) was adopted in 1965 as per the SOLAS Convention and was formed to prevent all types of pollutions at sea and ensure that goods transported via sea are packaged in such a way that they can be safely transported. The IMDG Code is applicable for all cargo-carrying ships around the world. The IMDG Code also sets out specific rules for container ships when they carry containers commonly known as “IMO containers” (i.e. containers carrying some types of dangerous goods that must be segregated to prevent risks due to incompatibility between cargoes) by using a series of graphs and charts to establish the rules for segregating such IMO containers.

Code of Safe Practice for Cargo Stowage and Securing

The Code of Safe Practice for Cargo Stowage and Securing (the “CSS Code”) was adopted in November 1991. The purpose of the CSS Code is to provide an international standard to promote the safe stowage and securing of cargoes by, amongst other things, drawing the attention of ship owners and operators to the need to ensure that the ship is suitable for its intended purpose, providing advice to ensure that the ship is equipped with proper cargo securing means and proper stowage and securing of cargoes to minimize the risks to the ship and personnel and advising on actions which may be taken in heavy sea conditions or where cargo has shifted.

Other IMO conventions

Other IMO conventions relating to maritime safety and security include the Convention on the International Regulations for Preventing Collisions at Sea 1972, as amended, which sets out navigation rules to be followed by ships at sea to prevent collisions between two or more ships and the Convention on Facilitation of International Maritime Traffic 1965, as amended, which aims to prevent unnecessary delays in maritime traffic.

Other Conventions Concerning Maritime Safety

MLC Convention

The International Labour Organization’s Maritime Labour Convention, as amended (the “MLC Convention”) was adopted in 2006 and came into force in 2013. The MLC Convention aims to ensure comprehensive worldwide protection of the rights of seafarers (for example working and living conditions).

IMO Regulations and Conventions Relating to the Prevention of Marine Pollution

MARPOL Convention

The primary convention dealing with the prevention of pollution is the IMO’s International Convention for the Prevention of Pollution from Ships 1973 (as amended, including by the 1978 Protocol) (the “MARPOL Convention”). The MARPOL Convention entered into force in 1983 and has been adopted by over 150 nations. The MARPOL Convention imposes environmental standards on the shipping industry, which are set out in its Annexes I-VI, each of which regulates a different source of pollution. These relate to, among other things, the prevention of pollution by oil (Annex I), by noxious liquid substances in bulk (Annex II), by harmful substances in packaged forms within the scope of the IMDG Code (Annex III), by sewage (Annex IV), by garbage (Annex V) and by air emissions (Annex VI).

Under Annex Ito the MARPOL Convention, oil tankers of 150 gross tons and above and all ships of 400 gross tons and above must carry an approved “Shipboard Oil Pollution Emergency Plan.” Such a plan is also required to be carried on certain ships under the International Convention on Oil Pollution, Preparedness, Response and Co-operation 1990, as amended.

In 2012, the IMO’s Marine Environment Protection Committee (the “MEPC”) adopted amendments to the International Code for the Construction and Equipment of Vessels Carrying Dangerous Chemicals in Bulk 2004 (the “IBC Code”). The provisions of the IBC Code are mandatory under the MARPOL Convention and the SOLAS Convention. The amendments came into force in June 2014. They relate to revised international certificates of fitness for the carriage of dangerous chemicals in bulk and identify new products that fall under the IBC Code.

Anti-fouling Convention

The IMO adopted the International Convention on the Control of Harmful Anti-fouling Systems on Ships (the “Anti-fouling Convention”) in 2001, which entered into force in September 2008. The Antifouling Convention prohibits and/or restricts the use of organotin compounds in anti-fouling paints used on ships to prevent the attachment of sea-life to their hulls. Ships of over 400 gross tons which operate on international voyages must obtain an “International Anti-Fouling System Certificate” and undergo a survey before the ship can be put into service, before the Anti-fouling System Certificate is issued for the first time and whenever the antifouling systems are altered or replaced.

Removal of Wrecks Convention

On April 14, 2015 the Nairobi International Convention on the Removal of Wrecks 2007 (the “Wrecks Convention”) entered into force. The Wrecks Convention introduced a legal regime which provides for the payment of compensation (and associated costs incurred by the affected state) for the removal of wrecks and aims to ensure that proportionate action is taken for the prompt and effective removal of wrecks. The onus is also placed on ship owners and operators to report wrecks and provide all relevant information enabling the affected state to locate the wreck, determine whether the wreck poses a hazard and mark the wreck (should the affected state determine that the wreck constitutes a hazard). Subject to limited exceptions such as act of war or governmental negligence, the Wrecks Convention provides that the registered owner shall be liable for locating, marking and removing the wreck.

Ballast Water Management Convention

In 2004 the International Convention for the Control and Management of Ships’ Ballast Water and Sediments (the “Ballast Water Management Convention”) was adopted by the IMO and came into force on September 8, 2017. MEPC has decided that new vessels constructed after September 8, 2017 must comply with the Ballast Water Management Convention from delivery and existing ships must meet at least the D-1 (ballast water exchange) standard by September 8, 2017. However, full compliance with the D-2 (discharge) standard for existing ships will be phased in overtime for such ships and the date for compliance will depend on when and whether the ship undergoes the renewal for its International Oil Pollution Prevention Certificate and whether an earlier date for compliance is determined by its flag state, but such date shall be no later than September 8, 2024. The Ballast Water Management Convention aims to prevent the spread of harmful aquatic organisms from one region to another, by establishing standards and procedures for the management and control of ships’ ballast water and sediment. Ships in international traffic will be required to conduct ballast water and sediment management in accordance with the standards set out in the Ballast Water Management Convention, which include performance of ballast water exchange in accordance with the requirements set out in the relevant regulation and the gradual phasing in of a ballast water performance standard which requires ballast water treatment and the installation of ballast water treatment systems on board the ships. Under the Ballast Water Management Convention, ships are required to implement a ship-specific “Ballast Water and Sediments Management Plan” and to carry a “Ballast Water Record Book” and an “International Ballast Water Management Certificate.”

Recycling Convention

In 2009 the IMO adopted the Hong Kong International Convention for the Safe and Environmentally Sound Recycling of Ships (the “Recycling Convention”), which covers issues relating to ship recycling and aims to address occupational health and safety and environmental risks relating to ship recycling. The Recycling Convention, amongst other things, prohibits and/or restricts the installation or use of hazardous materials on ships and requires ships to have on board an inventory of hazardous materials specific to each ship.

The Recycling Convention is not yet in force. It will enter into force 24 months after it has been ratified by 15 states with a combined gross tonnage of 40% of the world’s gross tonnage and who have a combined maximum annual recycling volume which is not less than 3% of their combined tonnage.

Other IMO conventions

Other IMO conventions relating to the prevention of marine pollution include the International Convention Relating to Intervention on the High Seas in Cases of Oil Pollution Casualties 1969, which affirms a coastal state’s right to take such measures as may be necessary to prevent, mitigate or eliminate danger to its coastline from oil pollution or following a maritime casualty and the Convention on the Prevention of Marine Pollution by Dumping of Wastes and Other Matter 1972 (as amended, including by the 1996 Protocol) which restricts dumping of waste at sea (subject to permitted exceptions which require a permit).

Liability and Compensation

CLC Convention

Many countries have ratified and follow the liability scheme adopted by the IMO and set out in the International Convention on Civil Liability for Oil Pollution Damage 1969 (either in its original form or as amended by the 1992 Protocol to it) (the “CLC Convention”). Under the CLC Convention, a ship’s registered owner is strictly liable (subject to certain defenses and subject to the right to limit liability) for pollution damage caused in the territorial waters or, under the 1992 Protocol, in the exclusive economic zone or equivalent area, of a contracting state by discharge of persistent oil (for example, crude oil, fuel oil, heavy diesel oil or lubricating oil). The CLC Convention is supplemented by the International Convention for the Establishment of an International Fund for Compensation for Oil Pollution Damage of 1971, as amended (the “Fund Convention”), the purpose of which was the creation of a supplementary compensation fund (the International Oil Pollution Compensation Fund, or “IOPC Fund”) which provides additional compensation to victims of a pollution incident who are unable to obtain adequate or any compensation under the CLC Convention.

The countries that have ratified the CLC Convention as amended by the 1992 Protocol have increased the liability limits provided therein (such increased liability limits are set out in the 2000 amendments to the 1992 Protocol). The liability limits under the CLC Convention are based on the use of the International Monetary Fund currency unit of “Special Drawing Rights” (the “SDRs”), which varies according to a basket of currencies. At December 30, 2019, the exchange rate was 1 SDR = US$1.3828.

HNS Convention

The International Convention on Liability and Compensation for Damage in Connection with the Carriage of Hazardous and Noxious Substances by Sea 1996, as superseded by the 2010 Protocol (the “HNS Convention”), sets out a liability regime for loss or damage caused by hazardous or noxious substances carried on board a ship. These substances are listed in the convention itself or defined by reference to lists of substances included in various IMO conventions and codes.

The HNS Convention imposes strict liability (subject to certain defenses) on the registered owner of ships and covers loss or damage by contamination to the environment, costs of preventative measures and further damage caused by such measures, loss or damage to property outside a ship and loss of life or personal injury caused by such substances on board or outside a ship. It also provides for the owner’s right to limit its liability and requires compulsory insurance to be in place. If it is proved that the damage resulted from the owner’s personal act or omission, committed with the intent to cause such damage, or recklessly and with knowledge that such damage would probably result, the owner’s right to limit its liability is lost. The HNS Convention is not yet in force.

Bunker Spills Convention

The International Convention on Civil Liability for Bunker Oil Pollution Damage 2001 (the “Bunker Spills Convention”) came into force in November 2008. The Bunker Spills Convention covers liability and compensation for pollution damage caused by discharges of bunker oil and aims to ensure adequate, prompt and effective compensation for persons who suffer damage as a result. Under the Bunker Spills Convention, strict liability is, subject to certain defenses, imposed on the ship owner, which extends to include the registered owner, bareboat charterer, manager and operator of the ship.

Ships of greater than 1,000 gross tons are required under the Bunker Spills Convention to maintain insurance or other financial security, such as a bank guarantee, in an amount equal to the limits of liability under the applicable national or international limitation regime (but not exceeding the amount calculated in accordance with the Convention on Limitation of Liability for Maritime Claims 1976 (as amended, including by the 1996 Protocol to it).

In other jurisdictions which have not ratified the Bunker Spills Convention, liability for spills or releases of oil from ships’ bunkers continues to be determined by the national or other domestic laws in the jurisdiction where the events or damages occur.

Other Environmental Regulations and Initiatives

Climate change regulations

In February 2005 the Kyoto Protocol to the United Nations Framework Convention on Climate Change (the “UNFCCC”) came into force. Under the Kyoto Protocol, national programs to reduce emissions of certain greenhouse gases which are suspected of contributing to global warming are required to be implemented by adopting countries. In December 2009 more than 27 nations also entered into the Copenhagen Accord, which although non-binding, is intended to pave the way for a comprehensive, international treaty on climate change. Currently the greenhouse gas emissions from international shipping do not come under the ambit of the Kyoto Protocol, but the Kyoto Protocol does direct Annex I countries to pursue limitation and reduction measures through the IMO.

More recently in 2016, the Paris Agreement (which was adopted in 2015 by a large number of countries which are parties to the UNFCCC) entered into force. The Paris Agreement is the first legally binding agreement to set out a commitment to limit greenhouse gas emissions, with the aim of limiting global temperature increases to well below 2°C above pre-industrial levels and to pursue efforts to limit temperature increase even further to 1.5°C. Again, greenhouse gas emissions from global shipping fall outside the ambit of the Paris Agreement, but it is expected that the adoption of the Paris Agreement may lead to regulatory changes in relation to curbing greenhouse gas emissions from shipping.

In April 2018, the IMO announced that the MEPC had adopted an initial strategy on the reduction of greenhouse gas emissions from ships, which such initial strategy is due to be revised by 2023. The deal envisages a reduction in total greenhouse gas emissions from ships by at least 50% by 2050, compared to 2008 levels, whilst concurrently pursuing efforts towards phasing them out entirely as soon as possible. The initial strategy also includes a specific reference to “a pathway of carbon dioxide (“CO2”) emissions reduction consistent with the Paris Agreement temperature goals” and represents a framework for IMO member states, which sets out the future vision for international shipping, the levels of ambition to reduce greenhouse gas emissions, guiding principles and possible timelines and their impacts on its member states.

MARPOL’s Annex VI (“Annex VI”) contains regulations for the prevention of air pollution from ships. It came into force in May 2005. Annex VI prescribes limits on sulfur oxide, nitrogen oxide and particulate matter emissions from ship exhausts and prohibits “deliberate emissions” of “ozone-depleting substances” such as chlorofluorocarbons and halons. “Deliberate emissions” are not limited to when a ship is at sea and can include, for example, discharges which occur in the course of a ship’s maintenance and repair. Shipboard incineration of specific substances, is also regulated by Annex VI. Annex VI includes a global cap on the sulfur content in bunker fuel (currently 3.5% outside ECAs (as defined below) and 0.1% within ECAs). The IMO announced on October 27, 2016 that the global sulfur cap on marine fuels is to be reduced to 0.5% with effect from January 1, 2020. The new global cap will not affect the 0.1% sulfur emission cap already in place in the ECAs. In 2018 the IMO further agreed that after 2020, the carriage of non-compliant fuel for combustion purposes for propulsion or operation on board a ship, would be prohibited, unless a ship is fitted with an equivalent arrangement to meet the 0.5% sulfur limit, such as a scrubber. Annex VI provides for the creation of special areas with more stringent controls on sulfur emissions, known as Emission Control Areas (“ECAs”). ECAs which have already been established include the Baltic Sea, the North Sea, including the English Channel, the North American area and the U.S. Caribbean Sea area but additional geographical areas may be designated as ECAs in the future. China also established emission control areas in the Pearl River Delta, the Yangtze River Delta and the Bohai Bay rim area with restrictions, applicable from January 1, 2016, in the maximum sulfur content of the fuel to be used by ships within those areas, which restrictions are to become progressively stricter overtime.

Annex VI also provides for progressive reductions in nitrogen oxide (“NOx”) emissions from marine diesel engines of over 130 kW output power (other than those used solely for emergency purposes) installed in ships. These reductions are to occur in three tiers. The final tier (“Tier III”) is to apply to engines installed on ships constructed on or after January 1, 2016 and which operate in the North American ECA or the U.S. Caribbean Sea ECA. In October 2016 the MEPC approved the designation of the North Sea and the Baltic Sea as ECAs for NOx emissions. These two new NOx ECAs are expected to enter into effect on January 1, 2021.

Annex VI of MARPOL was amended in July 2011, by the adoption by the IMO of regulations imposing mandatory technical and operational measures to reduce greenhouse gas emissions. These regulations became effective in January 2013 and the new technical and operational measures imposed by them include the “Energy Efficiency Design Index” (mandatory for all newbuild ships) and the “Ship Energy Efficiency Management Plan” (mandatory for all ships). Under these amendments, by 2025, all new ships built will be 30% more energy-efficient than those built in 2014. In October 2016 the IMO adopted updated guidelines for the calculation of the Energy Efficiency Design Index. The IMO has been examining other mandatory measures for the reduction of greenhouse gas emissions from shipping. These may include market-based instruments or a carbon tax. On March 1, 2018, amendments to Chapter 4 of Annex VI of MARPOL entered into force. These amendments added new regulations for the mandatory collection and reporting of ship fuel oil consumption data. Ships of 5,000 gross tons and above (which account for approximately 85% of CO2 emissions from international shipping) will now need to collect consumption data for each type of fuel that they use and other data and report the aggregated data so collected to their flag state at the end of each calendar year, with the first reporting period being for the 2019 calendar year. Once the relevant flag state has determined that the data has been reported in accordance with the requirements, the flag state will issue a statement of compliance to the ship and will be required to subsequently transfer this data to an IMO Ship Fuel Oil Consumption Database. The IMO will produce an annual report to the MEPC, summarizing the data collected. The data collection system is intended to provide the IMO with concrete data on fuel consumption which in turn should assist IMO member states in making decisions about any further measures required to address greenhouse gas emissions from international shipping and enhance energy efficiency.

MARPOL has been and will continue to be regularly amended and supplemented as new and higher standards of pollution prevention are introduced. It is therefore possible that in order to comply with these regulations, emission control systems may need to be installed in the future.

The IMO and individual countries, as well as the European Union (the “EU”) may impose additional requirements on the emission of greenhouse gases from international shipping in the future. See “-European Union Regulations.” Any new climate control legislation or other regulatory initiatives by the IMO, the EU or other countries of states where we operate that restrict greenhouse gas emissions could have impact on our business through increased compliance costs or additional operational restrictions that we cannot predict with certainty at this time.

United States Regulations

OPA

The United States Oil Pollution Act 1990 (the “OPA”) establishes an extensive regulatory and liability regime for the protection and clean-up of the environment from oil spills. The OPA affects all owners, bareboat charterers and operators whose ships trade in the U.S., its territories and possessions or whose ships operate in U.S. waters (which includes the U.S. territorial sea and its 200 nautical mile exclusive economic zone) and applies to discharges of any oil from a ship, including discharges of fuel and lubricants. The OPA does not solely apply to oil tankers, but also to non-tanker ships that carry fuel oil, or bunkers, to power such ships.

Under the OPA, ship owners, operators and bareboat charterers are “responsible parties” and are jointly, severally and strictly liable (unless the spill results solely from the act or omission of a third party, an act of God or an act of war and the responsible party reports the incident and reasonably cooperates with the appropriate authorities) for all containment and clean-up costs and other damages arising from discharges or threatened discharges of oil from their ships within the 200-mile exclusive economic zone around the U.S. These other damages are defined broadly to include:

(a) natural resource damages and related assessment costs;
(b) real and personal property damages;
(c) net loss of taxes, royalties, rents, profits or earnings capacity;
(d) net cost of public services necessitated by a spill response, such as protection from fire, safety or health hazards; and
(e) loss of subsistence use of natural resources.

Owners and operators of all ships over 300 gross tons must also establish and maintain with the U.S. Coast Guard evidence of financial responsibility (such as insurance or surety bond) sufficient to meet the limit of their potential liabilities under the OPA. Under the OPA regulations, an owner or operator of more than one ship is required to demonstrate evidence of financial responsibility for the entire fleet in an amount equal only to the financial responsibility requirement of the ship having the greatest maximum strict liability under the OPA. An owner or operator can satisfy their financial responsibility obligations by providing a surety bond, guarantee or proof of insurance.

CERCLA

The U.S. Comprehensive Environmental Response, Compensation and Liability Act (the “CERCLA”), which applies to owners, bareboat charterers and operators of ships in respect of the discharge of hazardous substances (other than oil except in limited circumstances) whether on land or at sea, contains a similar liability regime and provides for clean-up, removal and natural resource damages.

The OPA and CERCLA do not prohibit individual states from imposing their own liability regimes with regard to oil pollution incidents occurring within their boundaries, provided they accept, at a minimum, the levels of liability established under the OPA and CERCLA. Some states have enacted legislation providing for unlimited strict liability for oil spills. We intend to comply with all applicable regulations in the ports where our ships call.

MTSA

On November 25, 2002, the Maritime Transportation Security Act of 2002 (the “MTSA”) came into effect in the U.S. To implement certain portions of the MTSA, in July 2003, the U.S. Coast Guard issued regulations requiring the implementation of certain security requirements aboard ships operating in waters subject to the jurisdiction of the U.S. U.S. Coast Guard regulations, intended to align with international maritime security standards, exempt non-U.S. ships from the MTSA ship security measures provided such ships have on board a valid ISSC that attests to the ship’s compliance with the SOLAS Convention’s security requirements and the ISPS Code.

Clean Water Act

The U.S. Clean Water Act 1972 (the “Clean Water Act”) prohibits the discharge of oil or hazardous substances in U.S. navigable water, imposing strict liability. Substantial liability for the costs of removal, remediation and damages are imposed which complement the remedies which are available under the OPA and CERCLA. Under the Clean Water Act, ships trading within U.S. waters must also obtain a “Vessel General Permit” and comply with a range of effluent limitations, best management practices, reporting, inspections and other requirements.

NISA

In 1996 the U.S. National Invasive Species Act (the “NISA”), which established a ballast water management program for ships entering U.S. waters, was established. Mid-ocean ballast water exchange is voluntary (subject to a few exceptions), however any ship bound for any port in the U.S. is required to comply with NISA’s reporting and record-keeping requirements.

European Union Regulations

The EU has been a driving force behind a number of amendments to the MARPOL Convention (particularly following an incident in 1999 where MT Erica broke in two off the coast of France whilst carrying heavy fuel oil) and has been prepared to legislate on a unilateral basis if dissatisfied either with the extent of amendments or with the timetable for introduction of amendments. In some instances where the EU has done so, international regulations have been subsequently amended to the same level of stringency as has been introduced in the EU. Conversely, the EU may adopt more stringent measures with respect to certain aspects than those adopted by the IMO.

Council Directive 1999/32/EC (as amended, most recently by Directive 2012/33/EU), requires that as from January 1, 2015, ships burn fuel with a sulfur content not exceeding 0.1% (the legislation does permit higher sulfur contents, but only if the appropriate exhaust cleaning systems are in place) while

within EU member states’ territorial seas, exclusive economic zones and pollution control zones falling within sulfur oxide Emission Control Areas (“SECAs”), such as the Baltic Sea and the North Sea, including the English Channel. Further sea areas may be designated as SECAs in the future.

In 2005, the EU adopted Council Directive 2005/35/EC on ship-source pollution, as amended, which imposes criminal liability for discharges of oil and other noxious substances from ships (regardless of their flag) sailing in its water, which are caused by intent, recklessness or serious negligence.

By Directive 2009/15/EC, as amended, the EU established measures to be followed by its member states for the exercise of authority and control over classification societies, including the ability to seek to suspend or revoke the authority of classification societies that are negligent in their duties.

Under Directive 2009/16/EC on Port State Control, as amended, EU member states are required to refuse access to their ports to certain sub-standard ships according to various factors (including the ship’s condition, flag and number of previous detentions within certain preceding periods). This Directive also provides for EU member port states to inspect minimum percentages of ships using their ports annually and provides for increased surveillance of ships which pose a high risk to maritime safety or the marine environment. The state is required to detain the ship or stop loading or unloading until deficiencies are addressed if any deficiencies are found that are clearly hazardous to safety, health or the environment. Member states are also required to implement their own separate systems of proportionate penalties for breaches of these standards.

Commission Regulation (EU) No 802/2010 introduced a ranking system in relation to the safety records of shipping companies operating in the EU (based on the results of the technical inspections carried out on ships owned by a particular shipping company), which is published on a public website and updated daily. Shipping companies that have the most positive safety records are subjected to fewer inspections, whilst those with the worst safety records or technical failings recorded upon inspection are subjected to a greater frequency of official inspections of their ships.

The EU has also adopted Regulation (EU) No 1257/2013 which lays down requirements for the recycling of ships in an environmentally sound manner and control and management of hazardous materials on ships, including the prohibition or restriction of the installation or use of certain hazardous materials on ships. The Regulation aims at facilitating the early ratification of the Recycling Convention which has not yet entered into force internationally (see above). It applies to ships flying the flag of a member state and certain provisions apply to ships calling at a port or anchorage of a member state flying the flag of a non-member state country. The Regulation will apply not later than December 31, 2018, although certain of its provisions are to apply at different stages, with some of them being applicable from December 31, 2020. Pursuant to this Regulation, the EU Commission has recently published the first version of a European List of approved ship recycling facilities meeting the requirements of the Regulation, as well as four further implementing decisions dealing with certification and other administrative requirements set out in the Regulation.

In 2015, the EU adopted Regulation (EU) 2015/757 (as amended by Delegated Regulation 2016/2071) on the monitoring, reporting and verification of CO2 emissions from ships (“the MRV Regulation”), which was published in the Official Journal on May 19, 2015 and which entered into force on July 1, 2015. The MRV Regulation applies to all ships over 5,000 gross tonnage calling at EU member states’ and the European Free Trade Association, which includes Norway and Iceland (collectively, the “EEA”) ports (except for a few types, such as warships and fish catching or processing ships), irrespective of flag or port of registry. Such ships will be required to monitor their CO2 emissions and other relevant information emitted on journeys to, from and between EEA ports of call, and also when in EEA ports of call. The first reporting period commenced on January 1, 2018 and will reoccur annually from January 1 to December 31. The monitoring, reporting and verification system adopted by the MRV Regulation may be the precursor to a market-based mechanism to be adopted in the future. In fact, the EU is currently considering a proposal for the inclusion of shipping in the EU Emissions Trading System as from 2021 in the absence of a comparable system operating under the IMO.

Management

General

The ROC Company Act and our Articles of Incorporation provide that our board of directors is elected by the shareholders and is responsible for the management of our business. The election of our directors by our shareholders is conducted by means of cumulative voting pursuant to the ROC Company Act. Our Articles of Incorporation provide for a board comprising seven to nine directors, including three independent directors. Directors serve up to a term of three years and may serve any number of consecutive terms. Directors may be removed from office at any time for a bona fide reason, including breach of duties, by a resolution adopted at a shareholders’ meeting. Our current directors were elected at the ordinary shareholders’ meeting held on June 24, 2020, and their terms expire on June 23, 2023. The next election for all of the directors is expected to be held in 2023. Pursuant to the ROC Company Act, a person may serve as our director in his/her personal capacity or as the representative of another legal entity (excluding independent directors, which should serve as our director in his/her personal capacity). Our board of directors is empowered to appoint executive officers to serve until appointed successors are qualified.

Each of our directors and senior executive officers listed below can be reached at our office at No. 166, Sec. 2, Minsheng East Road, Jhongshan Dist., Taipei City, Taiwan, R.O.C.

The following table shows information regarding all of our directors and executive officers as of June 30, 2020:

Name Chang, Cheng-Yung ........................ Hsieh, Huey-Chuan.......................... Chang, Kuo-Hua .............................. Ko, Lee-Ching .................................. Tai, Jiin-Chyuan............................... Yu, Fang-Lai .................................... Chang, Chia-Chee ........................... Li, Chang-Chou................................ Wu, Kuang-Hui................................. Chang, Chuan-Fu.............................	Position chairman director, president director director director independent director independent director independent director director, chief executive vice president (finance officer) finance division finance department junior vice president (accounting supervisor)	Number of Shares held as of June 30, 2020 – 229,752 319,646,157 92,563 92,436 – – – 102,219 10,000	Percentage of Shares held as of June 30, 2020
			– 0.01% 6.64% 0.00% 0.00% – – – 0.00% 0.00%

Chang, Cheng-Yung joined us in 1986. He has served as our chairman since October 2013. Currently, Mr. Chang also serves as chairman of Charng Yang Development Corp. and director of Evergreen International Storage & Transport Corp., Taipei Port Container Terminal Corp. and director and President of Greencompass Marine S.A., Gaining Enterprise S.A. separately. Previously, Mr. Chang served as our president. Mr. Chang received his bachelor’s degree in Business Administration Department from Chinese Culture University.

Hsieh, Huey-Chuan joined us in 1984. He has served as our president since April 2019 and director since 2016. Mr. Hsieh also serves as director of Taipei Port Container Terminal Corp., Greencompass Marine S.A., and Gaining Enterprise S.A., separately. Previously, Mr. Hsieh served as vice chairman of Italia Marittima S.p.A. Mr. Hsieh received his bachelor’s degree in Transportation And Logistics Management from National Chiao Tung University.

Chang, Kuo-Hua has served as our director since June 2014. Mr. Chang also serves as director of Evergreen International Storage & Transport Corp., Evergreen International Corp., Evergreen Steel Corp., Ever Reward Logistics Corp. and Evergreen Marine (Hong Kong) Ltd., separately. He also served as director and President of Evergreen International S.A. (Panama). Previously, Mr. Chang served as vice chairman of Evergreen Marine Corp. (Taiwan) Ltd. Mr. Chang received his bachelor’s degree in Marine Engineering from Taipei College of Maritime Technology.

Ko, Lee-Ching has served as our director since June 2014. Ms. Ko also serves as chairmen of Evergreen International Corp. and Evergreen Laured hotel (Shanghai), directors of EVA Airways Corp., Evergreen International Storage &Transport Corp., Taiwan High Speed Rail Corp., Evergreen Steel Corp., Evergreen Security Corp., Shun An Enterprise Corp., Charng Yang Development Corp., Greencompass Marine S.A. and Gaining Enterprise S.A. as well as supervisor of Ever Reward Logistics Corp., Evergreen Air Cargo Services Corp., Evergreen Airline Services Corp., Hsin Yung Enterprise Corp. and Ever Ecove Corporation, separately. She also served as vice group chairman of Evergreen Group. Ms. Ko received her high school diploma from Keelung Girls’ Senior High School.

Tai, Jiin-Chyuan has served as our director since June 2020. Mr. Tai also serves as directors of EVA Airways Corp., Central Reinsurance Corp., Evergreen International Storage & Transport Corp., Uni Airways Corp. and Evergreen Sky Catering Corp., separately. He also serves as director and President of Evergreen International Corp. He also served as director and president of Evergreen International S.A. (Panama). Mr. Tai received his master’s degree in Maritime Law from National Taiwan Ocean University.

Yu, Fang-Lai has served as our independent director since June 2017. Previously, Mr. Yu served as chairmen of Chunghwa Post Co., Ltd. and Political Deputy Minister of Ministry of Transportation & Communications. Mr. Lai received his MBA degree in Institute of Management Science from National Chiao Tung University.

Chang, Chia-Chee has served as our independent director since June 2014. Mr. Chang also serves as attorney-in-charge of Tai-Yang Life Science Business Law Office. Mr. Chang received his master’s degree in School of Law and College of Medicine of Molecular Medicine from National Taiwan University.

Li, Chang-Chou has served as our independent director since June 2017. Mr. Li also serves as partner of Zhi Cheng CPA Firm and independent director of Silicon Optronics, Inc., Kuen Ling machinery refrigerating Co., LTD. and Hotai Insurance Co., Ltd. Previously, Mr. Li served as partner of PricewaterhouseCoopers, Taiwan. Mr. Li received his master’s degree in Accounting from University of Illinois at Urbana-Champaign.

Wu, Kuang-Hui joined us in 1987. He has served as our chief executive vice president (finance officer) since July 2018. Currently, Mr. Wu also serves as director of Taipei Port Container Terminal Corp. Previously, Mr. Wu served as executive vice president of our Finance Division. Mr. Wu received his master’s degree in Business Management from National Sun Yat-Sen University.

Chang, Chuan-Fu joined us in 1998. He has served as our Finance Division Finance Department junior vice president (accounting supervisor) since January 2019. Previously, Mr. Chang served as deputy junior vice of our Finance Division Finance Department. Mr. Chang received his bachelor’s degree in Public Finance from National Chung Hsing University.

We have from time to time engaged in transactions with companies whose management members are principally the same as ours. See “Transactions With Related Parties” for additional information regarding the relationship and transactions between us and such companies.

Audit Committee

Prior to June 22, 2017, we had three supervisors, each of whom was elected by our shareholders for a three-year term at the shareholders’ meeting. On June 22, 2017, our shareholders’ meeting resolved to set up an audit committee, which replaced these two supervisors and is responsible for implementing the powers and functions of supervisors required by relevant laws and regulations, including but not limited to, investigation of our business and financial condition. Our audit committee currently consists of Mr. Li, Chang-Chou, Mr. Yu, Fang-Lai and Mr. Chang, Chia-Chee. Mr. Li, ChangChou is the convener of our audit committee. In 2019 and 2018, our audit committee held meetings both seven times, respectively.

Remuneration Committee

Our remuneration committee consists of Mr. Yu, Fang-Lai, Mr. Chang, Chia-Chee and Mr. Li, ChangChou. Mr. Yu, Fang-Lai is the chairman of our remuneration committee. All of our remuneration committee members are independent directors. Our remuneration committee is responsible for prescribing and periodically reviewing the performance review and remuneration policy, system, standards, and structure for directors and managerial officers. Our remuneration committee is also responsible for periodically evaluating and prescribing the remuneration of directors and managerial officers.

Compensation

The aggregate remuneration paid and benefits in kind granted by us to our directors in their capacity as such for the year ended December 31, 2017, 2018 and 2019 was NT$31 million, NT$17 million and NT$14 million (US$0.5 million), respectively.

The aggregate remuneration paid and benefits in kind granted by us to our executive officers in their capacity as such for the year ended December 31, 2017, 2018 and 2019 was NT$133 million, NT$106 million and NT$92 million (US$3.1 million), respectively.

As of June 30, 2020, except as otherwise disclosed in this Offering Memorandum, neither we nor any of our subsidiaries had made any loans or advances or guarantees in relation to loans or advances received by our directors and executive officers, and none of our directors and executive officers has or has had interests in transactions which are or were unusual in their nature or conditions or significant in relation to our business or any of our subsidiaries’ business during the current fiscal year or the 2017, 2018 and 2019 and remain, in any respect, outstanding or unperformed.

Transactions with Related Parties

General

We have from time to time engaged in a variety of transactions with our related parties (as defined under the Regulations Governing the Preparation of Financial Reports by Securities Issuers). Unless it can be established that no control or significant influence exists, a party falling within any of the following shall be deemed to have a substantive related party relationship:

An affiliated enterprise within the meaning given in Chapter VI-I of the ROC Company Act, and any of its directors, supervisors, and managerial officers.
A company or institution governed by the same general management office as the issuer, and any of its directors, supervisors, and managerial officers.
A person holding the position of manager or higher in the general management office.
A company or institution shown as an affiliated enterprise in the issuer’s publications or public announcements.

Under Chapter VI-1 of the ROC Company Act, the term “affiliated enterprises” as used in this Law shall refer to enterprises which are independent in existence but are interrelated in either of the following relations:

Companies having controlling and subordinate relation between them;
Companies having made investment in each other.

In considering whether a counterparty is a related party, attention shall be directed to the sub-stance of the relationship in addition to the legal form.

Transactions with Related Parties as of and for the Years Ended December 31, 2017, 2018 and 2019

Sales of services

In 2017, 2018 and 2019, we recognized sales of services to our associates and related parties in the aggregate amount of NT$13,883 million, NT$13,283 million and NT$15,632 million (US$531 million), respectively.

Purchases of services

In 2017, 2018 and 2019, we recognized purchases of services from our related parties in the aggregate amount of NT$11,416 million, NT$10,775 million and NT$11,197 million (US$380 million), respectively.

Receivables and payables

As of December 31, 2017, 2018 and 2019, accounts receivable and other receivables due from our related parties amounted to NT$1,008 million, NT$693 million and NT$801 million (US$27 million), respectively.

As of December 31, 2017, 2018 and 2019, accounts payable and other payables due to our related parties amounted to NT$329 million, NT$435 million and NT$593 million (US$20 million), respectively.

Acquisition of property, plant and equipment

In 2017, 2018 and 2019, payment for the acquisition of property, plant and equipment to our related parties amounted to NT$9 million, NT$5 million and NT$5 million (US$170 thousand), respectively.

Disposal of property, plant and equipment

In 2017, 2018 and 2019, proceeds from the disposal of property, plant and equipment from our related parties amounted to NT$5 million, nil and NT$149 thousand (US$5 thousand), respectively.

Lease arrangements

As of December 31, 2017, 2018 and 2019, the outstanding balance of lease liabilities to our related parties was nil, nil, NT$1,279 million (US$43 million), respectively.

As of December 31, 2017, 2018 and 2019, interest expense of lease liabilities to our related parties was nil, nil and NT$62 million (US$2 million), respectively.

As of December 31, 2017, 2018 and 2019, we had lease liabilities designated as hedges of nil, nil and NT$705 million (US$24 million), respectively.

Agency accounts

As of December 31, 2017, 2018 and 2019, we recognized the debit balance of agency accounts to our related parties of nil, nil and NT$436 million (US$15 million), respectively.

As of December 31, 2017, 2018 and 2019, we recognized the credit balance of agency accounts to our related parties of NT$1,970 million, NT$1,701 million and NT$708 million (US$24 million), respectively.

Shipowner’s accounts

As of December 31, 2017, 2018 and 2019, we recognized the debit balance of shipowner’s accounts to our related parties of NT$722 million, NT$625 million and NT$29 million (US$1 million), respectively.

As of December 31, 2017, 2018 and 2019, we recognized the credit balance of shipowner’s accounts to our related parties of NT$1,415 million, NT$1,804 million and NT$2,367 million (US$80 million), respectively.

Loans to/from related parties

As of December 31, 2017, 2018 and 2019, the outstanding balance of loans to our related parties was NT$272 million, NT$409 million and NT$723 million (US$25 million), respectively.

As of December 31, 2017, 2018 and 2019, interest income of loans to our related parties of NT$3 million, NT$10 million and NT$20 million (US$679 thousand), respectively.

The loans to related parties carry interest at floating rates for the years ended December 31, 2017, 2018 and 2019.

As of December 31, 2017, 2018 and 2019, the outstanding balance of loans from our related parties was NT$877 million, NT$1,003 million and NT$525 million (US$18 million), respectively.

As of December 31, 2017, 2018 and 2019, interest expense of loans from our related parties was NT$16 million, NT$40 million and NT$30 million (US$1 million), respectively.

The loans from related parties carry interest at floating rates for the years ended December 31, 2017, 2018 and 2019.

Endorsements and guarantees provided to related parties

As of December 31, 2017, 2018 and 2019, endorsements and guarantees provided to related parties amounted to NT$3,035 million, NT$3,647 million and NT$3,674 million (US$125 million), respectively.

Key management compensation

In 2017, 2018 and 2019, key management compensation amounted to NT$211 million, NT$154 million and NT$182 million (US$6 million), respectively.

Transactions with Related Parties as of and for the Six Months Ended June 30, 2020

Sales of services

For the six months ended June 30, 2019 and 2020, we recognized sales of services to our associates and related parties in the aggregate amount of NT$7,737 million and NT$6,778 million (US$230 million), respectively.

Purchases of services

For the six months ended June 30, 2019 and 2020, we recognized purchases of services from our related parties in the aggregate amount of NT$5,264 million and NT$4,963 million (US$169 million), respectively.

Receivables and payables

As of June 30, 2019 and 2020, accounts receivable and other receivables due from our related parties amounted to NT$1,442 million and NT$1,062 million (US$36 million), respectively.

As of June 30, 2019 and 2020, accounts payable and other payables due to our related parties amounted to NT$357 million and NT$664 million (US$23 million), respectively.

Acquisition of property, plant and equipment

For the six months ended June 30, 2019 and 2020, payment for the acquisition of property, plant and equipment to our related parties amounted to NT$2 million and NT$82 million (US$3 million), respectively.

Disposal of property, plant and equipment

For the six months ended June 30, 2019 and 2020, proceeds from the disposal of property, plant and equipment from our related parties amounted to NT$149 thousand and nil, respectively.

Lease arrangements

As of June 30, 2019 and 2020, the outstanding balance of lease liabilities to our related parties was NT$1,595 million and NT$956 million (US$32 million), respectively.

As of June 30, 2019 and 2020, interest expense of lease liabilities to our related parties was NT$33 million and NT$23 million (US$781 thousand), respectively.

As of June 30, 2019 and 2020, we had lease liabilities designated as hedges of NT$1,093 million and NT$494 million (US$17 million), respectively.

Agency accounts

As of June 30, 2019 and 2020, we recognized the debit balance of agency accounts to our related parties of NT$167 million and NT$1,814 million (US$62 million), respectively.

As of June 30, 2019 and 2020, we recognized the credit balance of agency accounts to our related parties of NT$561 million and NT$443 million (US$15 million), respectively.

Shipowner’s accounts

As of June 30, 2019 and 2020, we recognized the debit balance of shipowner’s accounts to our related parties of NT$1,358 million and NT$790 million (US$27 million), respectively.

As of June 30, 2019 and 2020, we recognized the credit balance of shipowner’s accounts to our related parties of NT$1,683 million and NT$2,260 million (US$77 million), respectively.

Loans to/from related parties

As of June 30, 2019 and 2020, the outstanding balance of loans to our related parties was NT$663 million and NT$797 million (US$27 million), respectively.

As of June 30, 2019 and 2020, interest income of loans to our related parties of NT$9 million and NT$8 million (US$272 thousand), respectively.

The loans to related parties carry interest at floating rates for the six months ended June 30, 2019 and 2020.

As of June 30, 2019 and 2020, the outstanding balance of loans from our related parties was NT$607 million and NT$10 million (US$340 thousand), respectively.

As of June 30, 2019 and 2020, interest expense of loans from our related parties was NT$18 million and NT$7 million (US$238 thousand), respectively.

The loans from related parties carry interest at floating rates for the six months ended June 30, 2019 and 2020.

Endorsements and guarantees provided to related parties

As of June 30, 2019 and 2020, endorsements and guarantees provided to related parties amounted to NT$3,173 million and NT$2,246 million (US$76 million), respectively.

Key management compensation

For the six months ended June 30, 2019 and 2020, key management compensation amounted to NT$84 million and NT$101 million (US$3 million), respectively.

For more information on the transactions with related parties, see Note 7 to our consolidated financial statements as of and for the years ended December 31, 2017 and 2018 and for the years ended December 31, 2018 and 2019 and Note 7 to our audited consolidated interim financial statements as of and for the six months ended June 30, 2019 and 2020, which appear in the F-pages of this Offering Memorandum.

Share Ownership

The following table sets forth, to the best of our knowledge, certain share ownership information with respect to the ten largest holders of record of our Common Shares and our board of directors and executive officers as a group as of June 30, 2020. As a result, the information below may not reflect the exact share ownership as of the date of this Offering Memorandum.

Name Evergreen International S.A. (Panama) ........................................... Chang, Kuo-Hua .............................................................................. Evergreen International Corp. .......................................................... Chang, Yung-Fa............................................................................... New Labor Pension Fund(3) ............................................................. Chang, Kuo-Ming(3).......................................................................... Cathay Life Insurance Co. Ltd(3) ...................................................... Chang, Kuo-Cheng(3) ....................................................................... Fu, Di-Chen(3) .................................................................................. Nan Shan Life Insurance Company, Ltd.(3) ...................................... Total................................................................................................ Directors(1) ....................................................................................... Executive Officers(2).........................................................................	Number of Common Shares (in thousand shares) 391,786.8 319,646.2 262,411.9 221,101.7 151,256.7 116,861.6 115,820.9 95,210.5 88,859.4 81,459.8 4,812,973.8 751,211,646 2,055,994	Percentage of Total Issued Common Shares
		% 8.14 6.64 5.45 4.59 3.14 2.43 2.41 1.98 1.85 1.69 100.00 15.61 0.05

Notes:

(1) The number of shares does not include the shares held by the connected persons (which includes their spouses, children under the age of 20 years and nominees) of our directors. As of June 30, 2020, our legal entity director HUI Corporation, chairman of the board of directors of the Company, owned 1,000,000 shares of the Company’s outstanding Common Shares. As of June 30, 2020, the legal representative of our legal entity director HUI Corporation, Mr. Chang, Cheng-Yung, owned 0 shares of the Company’s outstanding Common Shares. As of June 30, 2020, the legal representative of our legal entity director HUI Corporation, Mr. Tai, Jiin-Chyuan, owned 92,436 shares of the Company’s outstanding Common Shares. As of June 30, 2020, the director of Chang, Kuo-Hua owned 319,646,157 shares of the Company’s outstanding Common Shares. As of June 30, 2020, our legal entity director Evergreen International S.A. (Panama) owned 391,786,816 shares of the Company’s outstanding Common Shares. As of June 30, 2020, the legal representative of our legal entity director Evergreen International S.A. (Panama), Ms. Ko, Lee-Ching, owned 92,563 shares of the Company’s outstanding Common Shares. As of June 30, 2020, the legal representative of our legal entity director Evergreen International S.A. (Panama), Mr. Hsieh, Huey-Chuan, owned 229,752 shares of the Company’s outstanding Common Shares. As of June 30, 2020, our legal entity director Evergreen Steel Corp. owned 38,261,703 shares of the Company’s outstanding Common Shares. As of June 30, 2020, the legal representative of our legal entity director Evergreen Steel Corp., Mr. Wu, KuangHui, owned 102,219 shares of the Company’s outstanding Common Shares. None of the other directors, directly or indirectly, own any of the Company’s outstanding Common Shares.
(2) The number of shares does not include the shares held by the connected persons (which includes their spouses, children under the age of 20 years and nominees) of our executive officers. As of June 30, 2020, Mr. Hsieh, Huey-Chuan, President of our Company, owned 229,752 shares of the Company’s outstanding Common Shares. As of June 30, 2020, Mr. Wu, Kuang-Hui, chief executive vice president (finance officer), owned 102,219 shares of the Company’s outstanding Common Shares. As of June 30, 2020, Mr. Wei, Wei-Der, project department executive vice president, owned 150,291 shares of the Company’s outstanding Common Shares. As of June 30, 2020, Mr. Wang, Pei-Chun, marketing division executive vice president, owned 7,956 shares of the Company’s outstanding Common Shares. As of June 30, 2020, Mr. Lin, Wen-Kuei, logistics division executive vice president, owned 26,972 shares of the Company’s outstanding Common Shares. As of June 30, 2020, Ms. Fang, Yu-Yen, customer relationship management division executive vice president, owned 21,163 shares of the Company’s outstanding Common Shares. As of June 30, 2020, Mr. Huang, Tsung-Yung, ship division executive vice president, owned 105,000 shares of the Company’s outstanding Common Shares. As of June 30, 2020, Mr. Tseng, Neng-Fang, project department senior vice president, owned 50,000 shares of the Company’s outstanding Common Shares. As of June 30, 2020, Ms. Yang, Pi-Sao, human resources department senior vice president, owned 41,000 shares of the Company’s outstanding Common Shares. As of June 30, 2020, Mr. Mo, Cheng-Ping, finance division finance department senior vice president, owned 20,000 shares of the Company’s outstanding Common Shares. Mr. Mo and his

connected persons held in the aggregate 21,269 shares of the Company’s outstanding Common Shares. As of June 30, 2020, Mr. Su, Ming-Sung, marketing division Latin America department senior vice president, owned 32,086 shares of the Company’s outstanding Common Shares. As of June 30, 2020, Mr. Kuo, Yuan-Ping, logistics division equipment control department senior vice president, owned 22 shares of the Company’s outstanding Common Shares. As of June 30, 2020, Mr. Kung, Chir-Chieh, ship division maintenance department senior vice president, owned 215,823 shares of the Company’s outstanding Common Shares. As of June 30, 2020, Mr. Wang, Lin-Fa, ship division supply department senior vice president, owned 30,000 shares of the Company’s outstanding Common Shares. As of June 30, 2020, Mr. Hwang, Wen-Yau, operation coordination department senior vice president, owned 228,917 shares of the Company’s outstanding Common Shares. As of June 30, 2020, Mr. Jou, Kuen-Cheng, project department deputy senior vice president, owned 6,816 shares of the Company’s outstanding Common Shares. Mr. Jou and his connected persons held in the aggregate 7,040 shares of the Company’s outstanding Common Shares. As of June 30, 2020, Mr. Chen, Chun-Yen, project department deputy senior vice president, owned 140,000 shares of the Company’s outstanding Common Shares. As of June 30, 2020, Ms. Wu, Yu-Chi, auditing department deputy senior vice president, owned 15,216 shares of the Company’s outstanding Common Shares. As of June 30, 2020, Mr. Lin, Sheng-Chia, marketing division Europe & Africa department deputy senior vice president, owned 54,000 shares of the Company’s outstanding Common Shares. As of June 30, 2020, Mr. Hsu, Huan-Chang, marketing division near east department deputy senior vice president, owned 60,000 shares of the Company’s outstanding Common Shares. As of June 30, 2020, Mr. Yang, Hong-Ming, ship division maritech department deputy senior vice president, owned 95,550 shares of the Company’s outstanding Common Shares. As of June 30, 2020, Mr. Li, Hua-Lung, ship division seaman department deputy senior vice president, owned 110,190 shares of the Company’s outstanding Common Shares. As of June 30, 2020, Mr. Chen, Jenn-Hwang, ship division maintenance department deputy senior vice president, owned 50,000 shares of the Company’s outstanding Common Shares. As of June 30, 2020, Mr. Yeh, Ching-Rong, ship division maintenance department deputy senior vice president, owned 55,291 shares of the Company’s outstanding Common Shares. Mr. Yeh and his connected persons held in the aggregate 55,932 shares of the Company’s outstanding Common Shares. As of June 30, 2020, Mr. Chang, Chih-Chao, operation coordination department deputy senior vice president, owned 85,264 shares of the Company’s outstanding Common Shares. Mr. Chang and his connected persons held in the aggregate 85,903 shares of the Company’s outstanding Common Shares. As of June 30, 2020, Mr. Yeh, Cheng-Hung, operation coordination department deputy senior vice president, owned 21,000 shares of the Company’s outstanding Common Shares. As of June 30, 2020, Mr. Hwang, Ming-Ling, KSG terminal division deputy senior vice president, owned 91,466 shares of the Company’s outstanding Common Shares. As of June 30, 2020, Mr. Chang, ChuanFu, finance division finance department junior vice president (accounting supervisor), owned 10,000 shares of the Company’s outstanding Common Shares.

(3) The information is as of April 26, 2020.

None of the major holders of our Common Shares has different voting rights from those of the other holders of our Common Shares.

Changes in Issued Share Capital

According to our Articles of Incorporation, we have only one class of capital stock: Common Shares with a par value of NT$10 per share. Currently, our Articles of Incorporation provide that our authorized share capital is NT$70,000,000,000 divided into 7,000,000,000 Common Shares.

The following table shows the increases in our issued share capital since incorporation.

Record Date September 1968............... July 1988 ......................... October 1993 ................... August 1994..................... July 1995 ......................... June 1996 ........................ June 1997 ........................ July 1998 ......................... August 1999..................... August 2000..................... September 2001............... August 2002..................... August 2003..................... June 2004 ........................ September 2004............... December 2004................ March 2005 ...................... June 2005 ........................ August 2005..................... March 2006 ...................... August 2006..................... April 2007......................... June 2007 ........................ August 2007..................... October 2007 ................... December 2007................ March 2008 ...................... June 2008 ........................ August 2008..................... August 2009..................... August 2010..................... December 2010................ March 2011 ...................... April 2011......................... September 2011............... May 2012 ......................... May 2013 ......................... August 2013..................... September 2014............... August 2015..................... December 2017................ September 2018............... December 2018................ December 2019................	Type of Issue Initial issuance Capitalization of retained earnings and cash capital increase Capitalization of retained earnings Capitalization of retained earnings Capitalization of retained earnings Capitalization of retained earnings and capital surplus Capitalization of capital surplus Capitalization of retained earnings Capitalization of retained earnings Capitalization of retained earnings Capitalization of retained earnings Capitalization of retained earnings Capitalization of retained earnings Corporate bond conversion Capitalization of retained earnings and corporate bond conversion Corporate bond conversion Corporate bond conversion Corporate bond conversion Capitalization of retained earnings Corporate bond conversion Capitalization of retained earnings Corporate bond conversion Corporate bond conversion Corporate bond conversion Corporate bond conversion Corporate bond conversion Corporate bond conversion Corporate bond conversion Corporate bond conversion Corporate bond conversion Corporate bond conversion Corporate bond conversion Corporate bond conversion Corporate bond conversion Capitalization of retained earnings and corporate bond conversion Corporate bond conversion Corporate bond conversion Corporate bond conversion Corporate bond conversion Capitalization of retained earnings Cash subscription Capitalization of retained earnings Cash subscription Cash subscription	Number of Common Shares Issued 200,000 200,000,000 100,000,000 165,000,000 126,500,000 166,980,000 109,093,600 50,027,208 137,408,064 148,400,710 40,068,192 61,304,334 42,095,643 10,489 161,299,468 117,754,827 35,409,994 33,469 246,138,600 17,642,988 190,761,731 7,416,517 136,836 6,217,821 88,967,276 14,872,187 11,170,423 16,133,630 94,934 1,660,208 2,894,204 38,912,074 51,382,114 1,856,286 315,814,283 1,482,546 5,813 5,813 2,627,902 34,775,802 500,000,000 200,617,800 300,000,000 300,000,000	Cumulative Number of Common Shares Issued After Issuance
			200,000 1,000,000,000 1,100,000,000 1,265,000,000 1,391,500,000 1,558,480,000 1,667,573,600 1,717,600,808 1,855,008,872 2,003,409,582 2,043,477,774 2,104,782,108 2,146,877,751 2,146,888,240 2,308,187,708 2,425,942,535 2,461,352,529 2,461,385,998 2,707,524,598 2,725,167,586 2,915,929,317 2,923,345,834 2,923,482,670 2,929,700,491 3,018,667,767 3,033,539,954 3,044,710,377 3,060,844,007 3,060,938,941 3,062,599,149 3,065,493,353 3,104,405,427 3,155,787,541 3,157,643,827 3,473,458,110 3,474,940,656 3,474,946,469 3,474,952,282 3,477,580,184 3,512,355,986 4,012,355,986 4,212,973,786 4,512,973,786 4,812,973,786

Description of Our Share Capital

Set forth below is certain information relating to our capital stock, including brief summaries of certain provisions of our Articles of Incorporation, the Securities and Exchange Act of the ROC, or the ROC Securities and Exchange Act, and the regulations promulgated thereunder, and the Company Act of the ROC, or the ROC Company Act.

General

As of the date of this Offering Memorandum, our authorized share capital registered with the MOEA is NT$70,000,000,000, and our paid-in share capital is NT$48,129,737,860, divided into 4,812,973,786 Shares with a par value of NT$10 per share. Any change in the authorized share capital of a public company limited by shares, such as us, requires an amendment to our Articles of Incorporation (which requires approval at a shareholders’ meeting). Authorized but unissued shares may also be issued at such times and, subject to the provisions of the applicable laws and the approval of, or registration with, the MOEA and the FSC, upon terms that our board of directors may determine. Except as disclosed in this Offering Memorandum, we do not as of the date of this Offering Memorandum have any equity in any other form such as preference shares, preferential subscription rights, exchangeable debt securities or warrants other than the Shares.

All issued and outstanding Shares are fully paid and in registered form.

Pre-Emptive Rights and Issue of New Shares

The ROC Company Act provides that between 10% to 15% of any newly-issued shares must be offered first to the issuing company’s employees except in certain limited circumstances. In addition, the ROC Securities and Exchange Law and the relevant securities regulations require that if a public company listed on the TWSE or whose shares are traded on the Taipei Exchange, formerly known as GreTai Securities Market, intends to offer new Shares for cash, at least 10% of the issue must be offered to the public, except under certain circumstances or when exempted by the FSC. This percentage can be increased by a resolution passed at a shareholders’ meeting, which will reduce the number of new shares to which existing shareholders may have pre-emptive right. Unless the percentage of the shares offered to the public is increased by a resolution, our existing shareholders have a pre-emptive right to acquire the remaining 75% to 80% of the issue in proportion to their existing shareholdings. The shares not subscribed for by the employees or the shareholders at the expiration of the period for the exercise of their rights, may be freely offered by the Company (subject to ROC law) to the general public by means of a public offering or to specified persons at the direction of our board of directors.

Transfer of Shares

Shares (in registered form) are transferred by endorsement and delivery of the related share certificates. However, settlement of trading of share of a listed company, such as our company, is generally carried out on the book-entry system maintained by the Taiwan Depository & Clearing Corporation, or TDCC. Transferees must have their names and addresses registered on our shareholder’s register in order to assert shareholder’s rights against us. Shareholders are required to register their respective specimen seals or chops with our share registrar.

Shareholders’ Meetings

Our annual ordinary shareholders’ meetings are usually held in Taoyuan City, Taiwan, or an alternative location within the ROC as determined by our board of directors, within six months following the end of our fiscal year. Notice in writing of our annual ordinary shareholders’ meetings stating the place, time and agenda thereof must be dispatched to each shareholder at least 30 days prior to the date set for the meeting. Special meetings of our shareholders may be convened by resolution of our board of directors, or by our shareholders under certain circumstances. Special meetings of our shareholders may be convened on the written requisition of any shareholder or

shareholders entitled to attend and vote at general meetings holding at least 3% of the total number of issued Shares for a period of one year or a longer time to the board of directors or the competent authority. Any one or more shareholder(s) may summon a special meeting of shareholders, provided that such shareholder(s) shall hold more than 50% of the total issued Shares for a continuous period of no less than three months. Special meetings of our shareholders may also be convened by any of our independent directors when the board of directors does not or cannot convene a shareholders’ meeting and/or such a meeting is necessary for the benefit of the shareholders.

Notice in writing of such special meetings stating the place, time and agenda thereof must be dispatched to each shareholder at least 15 days prior to the date set for the meeting. Notice of the shareholders’ meetings shall also be published on the MOPS in accordance with the Taiwan Stock Exchange Corporation Regulations Governing Information Reporting by Listed Companies.

Voting Rights

Each Share is entitled to one vote. Except as otherwise provided by ROC law, a resolution may be adopted by the holders of a majority of our issued and outstanding Shares represented at a shareholders’ meeting at which a majority of the holders of our issued and outstanding Shares are present. Notwithstanding the above, in order to approve certain major corporate actions, including (a) any amendment to our Articles of Incorporation (which is required in respect of, inter alia, any increase in authorized share capital and any changes in the rights of different classes of shares), (b) entering into, modification or termination of any contract regarding leasing all our business, outsourcing our operations or forming joint operations with others, (c) our dissolution, amalgamation or spin-off, the transfer of all or a material part of our business or our property, (d) the taking over of the whole of the business or property of any other entity which would have a significant impact on our operations, and (e) the distribution of any stock dividend, a resolution has to be approved by the holders of at least a majority of our Shares represented at a meeting of shareholders with a quorum of holders of at least two-thirds of the issued and outstanding Shares.

Our shareholders may be represented at an ordinary or a special shareholders’ meeting by proxy if a valid proxy form is delivered to us at least five days before the date fixed for the ordinary or special shareholders’ meeting. Voting rights attached to our Shares exercised by our shareholders’ proxies are subject to the proxy regulations promulgated by the FSC.

Any shareholder who has a personal interest in a matter to be discussed at our shareholders’ meeting, the outcome of which may impair our interests, shall not vote or exercise voting rights on behalf of another shareholder on such matter.

Registration of Shareholders

Our register of shareholders is maintained by the database of the TDCC. For the purpose of determining certain rights, including right to dividends attached to the Shares, the ROC Company Act provides that the register of shareholders be closed for a period of 60 days, 30 days and five days immediately before the date of each ordinary shareholders’ meeting, each special shareholders’ meeting and the record date for dividend distribution, respectively.

Annual Financial Statements

Under the ROC Company Act, ten days before our ordinary shareholders’ meeting, the statements and records of accounts prepared by the board of directors and the report made by the audit committee must be made available at our registered office in Taipei City for inspection by our shareholders. According to the regulations of the FSC, we are required to publish our annual and quarterly financial statements on a consolidated basis.

Dividends and Distributions

Except under limited circumstances as permitted by the ROC Company Act, a ROC company is not permitted to distribute dividends or make any other distributions to shareholders for any year in which the company does not have current or retained earnings (excluding reserves). In addition, before distributing a dividend or making any other distribution to shareholders, a company must pay all outstanding taxes, recover any past losses, and set aside a reserve, referred to as the “Legal Reserve,” at 10% of its earnings until such time as its accumulated Legal Reserve equals the amount of its total paid-up capital. In addition, a company may set aside a special reserve in accordance with its articles of incorporation or resolutions of the shareholders’ meeting. Subject to compliance with these requirements, a company may pay dividends from its earnings or make other distributions from its reserves as set forth below.

In addition to permitting dividends to be paid out of current or retained earnings, the ROC Company Act also permits a company to make distributions to its shareholders in the form of additional shares of capital stock from recapitalization of reserves (including the Legal Reserve and the capital surplus of premium from issuing stocks and earnings from gifts received, referred to as the “Capital Reserve”). In the case of a company’s Capital Reserve, subject to the ROC Securities and Exchange Law and applicable FSC regulations, 100% of the Capital Reserves may be recapitalized through stock distributions to shareholders. In the case of a company’s Legal Reserve, however, the recapitalized portion payable out of such Legal Reserve can only be effected when the accumulated Legal Reserve exceeds 25% of the paid-in capital of the company.

Under the ROC Company Act, following approval at the shareholders’ meeting, dividends are paid to shareholders from a company’s current or retained earnings, Legal Reserves or Capital Reserve (subject to compliance with the above requirements), in proportion to the number of shares owned by each shareholder as listed on the register of shareholders as of the relevant record date. Dividends declared out of earnings may also be distributed either in cash or in the form of common stock or a combination thereof. Stock dividends are delivered to the persons whose names are recorded as shareholders in the shareholders’ register at the relevant record date. Notices of such persons’ entitlements to stock dividends are delivered by post notifying them of the place and date to collect the relevant share certificates or requesting them to designate an account under their names to which such stock dividends will be delivered. In respect of cash dividends, the company will notify the shareholders and make the payments in check or wire transfer to such accounts as may be designated by the shareholders.

No dividend or distribution shall bear interest against the Company. Upon the date of declaration, we typically remit dividends into a special bank account, and the bank agency will transfer dividends to each shareholder’s designated account. In limited cases, we also distribute dividends with nonnegotiable notes by registered mails. If a shareholder fails to provide the correct bank account or address for the wire transfer or registered mail and thus is unable to receive dividends, such dividends will remain as a debt due to the shareholder. Any dividend which remains unclaimed after five years from the date of declaration shall be forfeited and returned to us.

For information on the dividends paid by us in recent years, see “Dividends and Dividend Policy.” For information as to ROC taxes on dividends and distributions, see “Taxation – ROC Taxation.”

Acquisition of Our Shares by Us

With minor exceptions, we cannot acquire our own Shares under the ROC Company Act. However, under the ROC Securities and Exchange Law, we may by a board resolution adopted by majority consent at a meeting with two-thirds of our directors present, purchase up to 10% of our issued and outstanding Shares on the TWSE or by a tender offer, in accordance with the procedures prescribed by the FSC, for the following purposes:

(i) to transfer Shares to our employees;
(ii) to convert bonds with warrants, preferred shares with warrants, convertible bonds, convertible preferred shares or certificates of warrants issued by us into the Shares; and
(iii) if necessary, to maintain our credit and our shareholders’ equity provided that the Shares so purchased shall be cancelled thereafter.

Share purchased by us pursuant to (i) and (ii) above shall be transferred to the intended transferees within five years after the purchase date; otherwise, such Shares shall be cancelled. Shares purchased by us pursuant to (iii) above must be canceled and we are required to complete an amendment registration for such cancelation within six months after the purchase date.

In addition, we may not spend more than the aggregate amount of the retained earnings, the premium from issuing Shares and the realized portion of the Capital Reserve to purchase our Shares.

We may not pledge or hypothecate any purchased Shares. In addition, we may not exercise any shareholders’ rights attached to such Shares. In the event that we purchase our Shares on the TWSE, our affiliates, directors, managers, shareholder holding more than 10% of the Shares and their respective spouses and minor children and/or nominees are prohibited from selling any of our Shares during the period in which we purchase our Shares.

Substantial Shareholders and Transfer Restrictions

Under the ROC Securities and Exchange Act, our directors, managers and shareholders (together with their spouses, minor children and nominees) holding more than 10% of the Shares are required to report to us, on a monthly basis, any changes in their shareholding in the Company. Unless under limited circumstances, the number of Shares that they may sell or transfer on the TWSE on any trading day is limited by ROC laws. In addition, they may only sell or transfer such Shares on the TWSE at least three days after they have filed a notification with the FSC in connection with such sale or transfer, provided that such notification is not required if the number of Shares to be sold or transferred within one trading day does not exceed 10,000.

Liquidation Rights

Pursuant to the ROC Company Act, in the event of our liquidation, the assets remaining after payment of all debts, liquidation expenses, taxes and distributions to holders of preferred shares, if any, will be distributed pro rata to our shareholders.

Other Rights of Shareholders

Under the ROC Company Act and the ROC Business Mergers and Acquisitions Act, dissenting shareholders are entitled to appraisal rights in the event of a spin-off or a merger and various other major corporate actions. Dissenting shareholders may request us to redeem all their shares at a fair price to be determined by mutual agreement. If no agreement can be reached, the valuation will be determined by a court. Subject to applicable law, dissenting shareholders may, among other things, exercise their appraisal rights by notifying us before the related shareholders’ meeting and/or by raising and registering their dissent at the shareholders’ meeting.

The ROC Company Act allows shareholders holding 1% or more of the total issued shares of a company to submit, during the period of time prescribed by the company, one proposal in writing for discussion at the ordinary meeting of shareholders. The ROC Company Act also provides that a company may adopt a nomination procedure for election of directors. If a company wishes to adopt the nomination procedure, it must be stipulated in its articles of incorporation. With such provision in the articles of incorporation of a company, shareholders representing 1% or more of the total issued shares of such company may submit a candidate list along with relevant information to the company within the period prescribed by the company. Our Articles of Incorporation currently offer such nomination procedure.

Description of the Bonds

The following is a description of the terms and conditions of the Bonds (except for the sentences in italics), which includes summaries of, and is subject to, the more detailed provisions of the Indenture referred to below.

The issue of the US$300,000,000 aggregate principal amount of currency linked zero coupon convertible bonds due 2025 (the “ Bonds ”, which shall include, unless the context requires otherwise, any further Bonds issued in accordance with the Indenture (as defined below) and consolidated and forming a single series therewith) of Evergreen Marine Corporation (Taiwan) Ltd. (the “ Company ” or the “ Issuer ”) was authorized by a resolution of the board of directors of the Company adopted on July 9, 2020. The Bonds will be constituted by an indenture (the “ Indenture ”) dated on or about September 29, 2020 (the “ Issue Date ”) between the Company and Citicorp International Limited, as trustee (the “ Trustee ”, which term shall include all persons for the time being appointed as trustee or trustees under the Indenture) for the holders of the Bonds. The Company will also enter into a paying, conversion and transfer agency agreement (the “ Agency Agreement ”) dated the Issue Date with Citibank, N.A., London Branch, as the registrar (the “ Registrar ”) and as the principal paying agent, conversion agent and transfer agent (the “ Principal Agent ”) and any other paying agents, conversion agents and transfer agents appointed thereunder (each a “ Paying Agent ,” “ Conversion Agent ” and “ Transfer Agent ” and together with the Principal Agent and the Registrar, the “ Agents ”) in relation to the Bonds. The registrar, principal paying agent, conversion agent and transfer agent, paying agents, conversion agents and transfer agents for the time being are referred to below as the “ Registrar ”, the “ Principal Agent ”, the “ Paying Agents ” (which expression shall include the Principal Agent), the “ Conversion Agents ” (which expression shall include the Principal Agent) and the “ Transfer Agents ” (which expression shall include the Principal Agent and the Registrar), respectively. Approval-inprinciple has been received for the listing and quotation of the Bonds on the Singapore Exchange Securities Trading Limited (the “ SGX-ST ”). Copies of the Indenture and the Agency Agreement are available for inspection upon written request and proof of holding to the satisfaction of the Trustee, during normal business hours at the principal office of the Trustee. The holders of the Bonds are entitled to the benefit of the Indenture and are bound by, and are deemed to have notice of, all of the provisions of the Indenture and the Agency Agreement.

1. STATUS

The Bonds constitute direct, unconditional, unsubordinated and, subject to the negative pledge provisions of Condition 3, unsecured obligations of the Company and shall at all times rank pari passu and without any preference or priority among themselves and, subject to the negative pledge provisions of Condition 3, with all other present and future direct, unconditional, unsubordinated and unsecured obligations of the Company, except as may be required by mandatory provisions of law. In addition, the common shares of the Company, par value NT$10 per share (the “ Shares ”) issuable upon conversion of the Bonds will rank pari passu with all of our Shares outstanding as of the date of conversion of the Bonds.

2. FORM, DENOMINATION AND TITLE

(A) Form and Denomination

The Bonds will be issuable only in registered book-entry form and only in minimum denominations if US$200,000 and in integral multiples of US$100,000 in excess thereof. The Bonds shall initially be represented by the Global Bond and only under the limited circumstances described in Condition 18, the Global Bond and the Indenture shall definitive bond certificates (each a “ Certificated Bond ”) be issued to the Bondholders to represent their individual holdings. Each Certificated Bond, if issued, will have an identifying number which will be recorded on the relevant Certificated Bond and in the register of Bondholders that the Company will cause to be kept by the Registrar.

(B) Title

The Bonds will be registered instruments, title to which will pass only by registration in the register of the Bonds (the “ Bond Register ”). Each Bondholder will be treated as the owner for all purposes

(whether or not it is overdue and regardless of any notice of ownership, trust or any interest or any writing on, or the theft or loss of, the Bond) and neither the Company nor the Trustee nor the Agents nor any agent thereof shall be affected by notice to the contrary. In these Conditions, “ Bondholder ” and “ Holder ” in relation to a Bond means the person in whose name a Bond is registered on the Bond Register.

3. NEGATIVE PLEDGE

So long as any of the Bonds remain outstanding (as defined in the Indenture), neither the Company nor any of its Principal Subsidiaries shall create or permit to subsist any mortgage, charge, pledge, lien or other form of encumbrance or security interest (“ Security ”) upon the whole or any part of its property, assets or revenues, present or future, to secure any International Investment Securities (as defined below) or to secure any guarantee of or indemnity in respect of any International Investment Securities unless, at the same time or prior thereto, the Company’s or the Principal Subsidiary’s obligations under the Bonds and the Indenture (i) are secured equally and ratably therewith, or (ii) have the benefit of such other security, guarantee, indemnity or other arrangement as shall not be materially less beneficial to the Bondholders or as shall be approved by an Extraordinary Resolution (as defined in the Indenture) of the Bondholders.

For the purposes of these Conditions:

“ Principal Subsidiary ” means any Subsidiary (as defined below) of the Company:

(i) whose gross revenues or (in the case of a Subsidiary which has subsidiaries) consolidated gross revenues as shown by its latest audited income statement exceed 5% of the consolidated gross revenues as shown by the then latest published audited consolidated income statement of the Company and its Subsidiaries;
(ii) whose gross assets or (in the case of a Subsidiary which has subsidiaries) gross consolidated assets (as consolidated into the latest published audited consolidated balance sheet of the Company and its Subsidiaries) as shown by its latest audited balance sheet exceed 5% of the gross consolidated assets of the Company and its Subsidiaries as shown by the then latest published audited consolidated balance sheet of the Company and its Subsidiaries; or
(iii) to which is transferred the whole or substantially the whole of the assets and undertaking of a Subsidiary which immediately prior to such transfer is a Principal Subsidiary, provided that, in such a case, the Subsidiary so transferring its assets and undertaking shall thereupon cease to be a Principal Subsidiary unless such Subsidiary would continue to be a Principal Subsidiary on the basis of such accounts by virtue of the provisions of paragraph (i) above.

References to the audited income statement and balance sheet of a Subsidiary which has subsidiaries shall be construed as references to the audited consolidated income statement and consolidated balance sheet of such Subsidiary and its subsidiaries, if such are required by law to be produced, or if no such income statement or balance sheet is required by law to be produced or is not produced when the Subsidiary becomes a Principal Subsidiary, to a pro forma income statement or balance sheet, prepared by the Auditors (as defined in the Indenture) for the purpose of such determination.

“ International Investment Securities ” means any present or future indebtedness in the form of, or represented by, bonds, notes, debentures (debentures for this purpose shall exclude, for the avoidance of doubt, fixed or floating charges, loan agreements or other documents creating or evidencing indebtedness that are not commonly known as securities), loan stock or other similar securities that (i) either are, by their terms, payable, or confer a right to receive payments, in any currency other than NT Dollars or are denominated in NT Dollars and more than 50% of the aggregate principal amount thereof is initially distributed outside the ROC by or with the authorization of the Company or any of its Principal Subsidiaries thereof and (ii) are for the time being, or are capable of being, quoted, listed or ordinarily dealt in on any stock exchange, over the counter or other securities market but excluding any such indebtedness that has a stated maturity of not exceeding one year.

“ Subsidiary ” means any company or other business entity more than 50% of the issued share capital or other ownership interest of which is for the time being owned, directly or indirectly, by the Company.

4. TRANSFERS OF BONDS; ISSUE OF CERTIFICATED BOND

(A) Transfer

A Bond may be transferred as follows: (i) in the case of a Bond represented by a Certificated Bond, by depositing such Certificated Bond during normal business hours at the specified offices of any Transfer Agent, with the form of transfer on the back of such Certificated Bond duly completed and signed, or (ii) in the case of a Bond represented by the Global Bond, by delivery at such specified office of the Registrar or any of the Transfer Agents a form of transfer duly completed and executed, and any other evidence that such Transfer Agent may require. The Registrar and any Transfer Agent may decline to effect any exchange or transfer of a Bond (i) during the period of 15 days ending on (and including) the due date for any payment of the principal of and premium and other amounts of such Bond, (ii) after such Bond has been drawn for redemption under, and notice thereof is given pursuant to, Condition 8(D) or (iii) in respect of which a Conversion Notice (as defined in Condition 6(B)) has been delivered in accordance with Condition 6(B).

(B) Delivery of New Certificated Bonds

Each new Certificated Bond to be issued on the transfer of a Bond will, within five business days of receipt by the Registrar or the relevant Transfer Agent of the original Certificated Bond and the form of transfer, be mailed at the risk of the Bondholder entitled to the Bond to the address specified in the form of transfer. Where some but not all the Bonds in respect of which a Certificated Bond is issued are to be transferred, converted or redeemed, a new Certificated Bond in respect of the Bonds not so transferred, converted or redeemed will, within five business days of deposit or surrender of the original Certificated Bond with or to the Registrar or the relevant Transfer Agent, Conversion Agent or Paying Agent, be mailed at the risk of the Bondholder of the Bonds not so transferred, converted or redeemed to the address of such Bondholder appearing on the Bond Register.

For the purposes of this Condition 4, “ business day ” means a day other than a Saturday or Sunday on which banks are open for business in the city in which the specified office of the Registrar, the relevant Transfer Agent, Conversion Agent or Paying Agent with whom a Certificated Bond is deposited or surrendered in connection with a transfer, conversion or redemption is located.

(C) Formalities Free of Charge

No service charge shall be made for any registration of transfer or exchange of Bonds, provided that the Company or any of the Transfer Agents may require payment of a sum sufficient to cover any tax or other governmental charges that may be imposed and such transfer shall not be made unless and until the required payment described herein is made.

(D) Regulations

All transfers of Bonds and entries on the register of Bondholders will be made subject to the detailed regulations concerning transfer of Bonds attached as a schedule to the Agency Agreement. A copy of the current regulations will be made available (free of charge to the Bondholder and at the Issuer’s expense) by the Registrar to any Bondholder upon written request and proof of holding and identity satisfactory to the Registrar.

(E) Change of Transfer Agent

The Company reserves the right at any time, with the prior written approval of the Trustee, to vary or terminate the appointment of any Transfer Agent and to appoint additional or other Transfer Agents, in each case in accordance with the Agency Agreement. The Company will, so long as the Bonds are listed on the Singapore Exchange Securities Trading Limited (the “ SGX-ST ”) and the rules of that exchange so require, maintain a Transfer Agent having an office in Singapore. Notice of any such termination or appointment and of any changes in the specified offices of the Transfer Agents will be given promptly by the Company to the Trustee and the Bondholders in accordance with Condition 15.

5. INTEREST

The Bonds do not bear any interest.

6. CONVERSION

(A) Conversion Right

(i) Conversion Period

At any time during the Conversion Period referred to below on and subject to the terms set forth herein (the “ Conversion Right ”) and the terms of the Agency Agreement, each Bondholder has the right hereunder to convert its Bonds into Shares.

Subject to and upon compliance with the provisions of this Condition 6, the Conversion Right attaching to any Bond may be exercised, at the option of the Bondholder and as and to the extent provided herein, at any time on or after December 29, 2020, which is the 91st calendar day after the Issue Date, up to and including the close of business (at the place where such Bond is deposited for conversion) on September 19, 2025, which is the 10th calendar day prior to the Maturity Date, then up to and including the close of business (at the place aforesaid) on the fifth business day prior to the date fixed for redemption thereof (or if such day shall not be a business day at such place, on the immediately preceding business day at such place, but in no event thereafter), or, if such Bond shall have been called for redemption prior to September 19, 2025, which is the 10th calendar day prior to the Maturity Date (or if such day shall not be a business day at such place, on the immediately preceding business day at such place) (the “ Conversion Period ”); provided , however , that the Conversion Right during any Closed Period (as defined below) shall be suspended and the Conversion Period shall not include any such Closed Period.

“ Closed Periods ” or a “ Closed Period ” mean (i) the 60-day period prior to the date of any of the Company’s annual general shareholders’ meetings; (ii) the 30-day period prior to the date of any of the Company’s special shareholders’ meetings; (iii) the period beginning on the 15th Trading Day (as defined below) prior to the 5th day before the record date for the distribution of stock or cash dividends or subscription of new shares to the date ending on (and including) such record date; (iv) the period beginning on the record date of a capital reduction to one day prior to the Trading Day on which the shares of the Company are reissued after such capital reduction; (v) the period beginning from one business day before the Company’s application with the Ministry of Economic Affairs for the change of par value of its shares to one day prior to the first Trading Day of the Shares reissued after the change of par value; and (vi) such other periods during which the Company may be required to close its stock transfer books or not to issue new shares under ROC laws and regulations applicable from time to time.

For the purposes of this Condition 6:

“ business day ” means a day other than Saturday or Sunday on which banks are open for business in New York, London, Hong Kong or the city in which (1) the specified office of the Registrar, if a Certificated Bond is deposited in connection with a transfer, is located, (2) the relevant Transfer Agent, Conversion Agent or Paying Agent, if a Certificated Bond is deposited, in connection with a transfer, or a notice of conversion is deposited in connection with a conversion, is located, or (3) the Company and the ROC share registry of the Company, if a notice of conversion is deposited in connection with a conversion or for the purpose of calculating the Closed Period, is located.

The Company shall procure that the Bondholders are given at least seven days’ prior notice of any Closed Period in accordance with Condition 15.

(ii) Number of Shares Delivered on Conversion

The number of Shares to be delivered upon conversion of any Bond will be determined by the Company by dividing the NTD Equivalent (as defined in Condition 7(A)) of the principal amount of the Bonds by the Conversion Price (as defined below) then in effect on the Conversion Date (as defined in Condition 6(B)(ii)). If more than one Bond shall be deposited for conversion at any one time by the same holder of the Bonds, the number of Shares to be issued upon

conversion thereof shall be calculated on the basis of the aggregate principal amount of the Bonds so deposited. On conversion, the right of the converting Bondholder to repayment of the principal and other amounts of the Bond to be converted shall be extinguished and released.

(iii) Fractions of Shares

Fractions of Shares will not be issued on conversion, and the Company will, upon conversion of the Bonds, pay cash in U.S. Dollars in a sum equal to such portion of the principal amount of the Bond or Bonds deposited for conversion as corresponds to any fraction of a Share not delivered as aforesaid, net of remittance and other processing fees, rounding to 1 U.S. Dollar with 0.5 being rounded upwards. For the purpose of calculating the amount of such payment, the Company shall use the Fixed Exchange Rate.

(iv) Conversion Price

The price used by the Company in determining the number of Shares to be issued upon conversion (the “ Conversion Price ”) will initially be NT$18.20 per Share. The Conversion Price will be subject to adjustment in the manner provided in Condition 6(C).

(v) Revival on Default

Notwithstanding the provisions of Condition 6(A)(i), if the Company defaults in making payment in full in respect of any Bond that has been called for redemption prior to the Maturity Date on the date fixed for redemption thereof, the Conversion Right attaching to such Bond will continue to be exercisable up to, and including, the close of business (at the place where the Certificated Bond evidencing such Bond is deposited for conversion) on the date upon which the full amount of the monies payable in respect of such Bond has been duly received by the Trustee and the Principal Paying Agent and notice of such receipt has been duly given to the Bondholders.

(B) Conversion Procedure

(i) Conversion Notice

To exercise the Conversion Right attaching to any Bond, a Bondholder must complete, execute and deposit at his own expense between 9:00 a.m. and 3:00 p.m. (local time at the specified office referred to below) on any business day during the Conversion Period at the specified office of any Conversion Agent outside the ROC at which the Bond is presented for conversion a notice of conversion (a “ Conversion Notice ”) in duplicate, duly completed and signed, in the then current form obtainable from the specified office of any Conversion Agent, together with the relevant Bond and any certificates and other documents as may be required under the law of the ROC or the jurisdiction in which such Conversion Agent shall be located.

A Conversion Notice once deposited may not be withdrawn without the consent in writing of the Company. Bondholders who deposit a Conversion Notice during a Closed Period will not be permitted to convert their Bonds until the business day following the last day of that Closed Period which (if all other conditions to conversion have been fulfilled) will be deemed as the Conversion Date (as defined below) for such Bonds. A converting Bondholder shall retain the rights of a Bondholder with respect to the Bonds until the Conversion Date. The price at which such Bonds will be converted will be the Conversion Price then in effect on the Conversion Date.

No Shares or beneficial interests therein will be delivered to a converting Bondholder unless such Holder satisfies the foregoing conditions. If such Bondholder is unable or otherwise fails to satisfy the foregoing conditions, such Bondholder may transfer its Bond or beneficial interest therein subject to compliance with the transfer restrictions set forth in the Agency Agreement. See “Transfer restrictions.”

(ii) Taxes and Expenses; Deposit Date and Conversion Date

As conditions precedent to conversion, a Bondholder must pay directly to the relevant tax authorities all stamp, issue, registration and similar taxes and duties (if any) arising on conversion in the jurisdiction in which the Bond is deposited for conversion, or payable in any jurisdiction consequent upon the issuance of Shares or payment of any other property or cash upon conversion of the Bonds to, or to the order of a person other than, the converting Bondholder. Except as aforesaid, the Company will pay the expenses arising in the ROC on the issue of Shares on conversion of Bonds and all charges of the Conversion Agents in connection therewith as provided in the Agency Agreement.

The date on which any Bond and the Conversion Notice (in duplicate) relating thereto are deposited with a Conversion Agent and the payments, if any, required to be paid by the Bondholder are made is hereinafter referred to as the “ Deposit Date .” The “ Conversion Date ” applicable to a Bond means the day next following the Deposit Date, which day both is a Trading Day (as hereinafter defined in Condition 6(C)) and falls during the Conversion Period.

(iii) Holders of Record

With effect from the opening of business in the ROC on the Conversion Date, the Company will deem the person designated in the Conversion Notice to have become the holder of record of the number of Shares to be delivered upon such conversion (disregarding any retroactive adjustment of the Conversion Price referred to below prior to the time such retroactive adjustment shall have become effective) and at such time, subject to Condition 6(B)(iv) – Delivery of Shares, the rights of such converting Bondholder as a Bondholder with respect to the Bonds deposited for conversion shall cease (except rights arising under Condition 6(B)(v) – Retroactive Adjustment of Conversion Price).

(iv) Delivery of Shares

On the Conversion Date, the Company shall register the converting Holder (or its designee) in the Company’s register of shareholders as the owner of the number of Shares to be issued upon conversion of such Bonds and, subject to any applicable limitations then imposed by ROC laws and regulations, according to the request made in the relevant Conversion Notice, procure that, as soon as practicable, and in any event within five Trading Days from the Conversion Date (subject to changes to applicable laws and regulations), there be delivered to the local agent appointed by the converting Holder through book-entry system maintained by the Taiwan Depositary and Clearing Corporation for the relevant Shares, registered in the name specified for that purpose in the relevant Conversion Notice, together with any other property or cash required to be delivered upon conversion and such assignments or other documents (if any) as may be required by law to effect the delivery thereof.

(v) Retroactive Adjustment of Conversion Price

If (a) the Conversion Date in relation to any Bond shall be on or after a date with effect from which an adjustment to the Conversion Price takes retroactive effect pursuant to Condition 6(C) and the provisions of the Indenture; and (b) the relevant Conversion Date falls on a date when the relevant adjustment has not been reflected in the Conversion Price, the Company shall, within 20 days after the effective date of such adjustment of the Conversion Price, issue and deliver such number of Shares to the person designated in the Conversion Notice as is equal to the excess of the number of Shares that would have been required to be issued and delivered on conversion of such Bond if the relevant retroactive adjustment had been made as at the said Conversion Date over the number of Shares previously transferred pursuant to such conversion, and in such event and in respect of such number of Shares referenced in Condition 6(B)(iv) (Delivery of Shares) to the Conversion Date shall be deemed to refer to the date upon which such retroactive adjustment becomes effective (disregarding the fact that it becomes effective retroactively).

(vi) Dividends and Other Entitlements

Each Bondholder will not have any right to receive or be paid any dividends declared on the Shares unless such Bondholder has exercised the Conversion Right in accordance with the procedures set forth in Conditions 6(B)(i) (Conversion Notice) and 6(B)(ii) (Taxes and Expenses; Deposit Date and Conversion Date). A converting Bondholder’s right to receive dividends declared on the Shares which are delivered to the person designated in the Conversion Notice upon conversion of a Bond or Bonds will begin on the Conversion Date. The Shares issued on conversion of the Bonds will in all respects rank pari passu with the Shares outstanding on the date on the relevant Conversion Date (except for any right or distribution the record date for which falls on or precedes such Conversion Date and except for any other right excluded by mandatory provisions of applicable law).

(vii) Restrictions on Shareholding of PRC persons

Under current ROC laws, regulations and policy, a PRC person is not permitted to convert the Bonds and to register as a shareholder of the Issuer unless (i) it is a qualified domestic institutional investor approved by competent PRC authorities (“QDII”) who will hold less than 10% of the Issuer’s issued shares after conversion of the Bonds, or (ii) it otherwise obtains the approval of the Investment Commission of the Ministry of Economic Affairs if all the business items are within the positive list promulgated by the ROC government from time to time and it will hold 10% or more (or other threshold required by the regulators) of the Issuer’s issued shares after conversion of the Bonds. In addition, there are restrictions on the amount remitted to Taiwan for investments by QDIIs, separately and jointly. Accordingly, the qualification criteria for a PRC person to make investment and the investment threshold imposed by the FSC and the TWSE might cause a Bondholder who is a PRC person to be unable to convert and hold the Common Shares issuable upon conversion of the Bonds. Under current ROC laws, “PRC person” means an individual holding a passport issued by the PRC, a resident of any area of China under the effective control or jurisdiction of the PRC (but not including a special administrative region of the PRC such as Hong Kong and Macau, if so excluded by applicable laws of the ROC), any agency or instrumentality of the PRC and any corporation, partnership or other entity organized under the laws of any such area or controlled by, or directly or indirectly having more than 30% of its capital owned by, or beneficially owned by any such person, resident, agency or instrumentality.

(viii) ROC Procedures for Foreign Nationals Holding the Shares

Under the existing ROC law, a non-ROC converting Bondholder, before exercising the Conversion Right, is required to register with the TWSE for making investments in the ROC securities market. Such non-ROC converting Bondholder is also required to appoint a local agent in Taiwan which meets the qualifications that are set from time to time by the FSC to open a securities trading account with a local brokerage firm and a bank account to remit funds, pay taxes, exercise shareholders’ rights and perform such other functions as may be designated by such Holder. In addition, such non-ROC converting Bondholder must also appoint a custodian bank in Taiwan to hold the securities and any cash proceeds for safekeeping, to make confirmation and settlement of trades and to report all relevant information. Furthermore, such non-ROC converting Bondholder is required to appoint a tax guarantor, in Taiwan which meets the qualifications that are set from time to time by the Ministry of Finance of the ROC for filing tax returns and making tax payments on their behalf. Without meeting such requirements, such non-ROC converting Bondholder would not be able to hold or sell or otherwise transfer the Shares into which the Bonds may be converted on the TWSE or otherwise.

(C) Adjustments to Conversion Price

(i) Antidilution Adjustments

The Conversion Price shall be subject to adjustment as follows:

(a) Declaration of Dividend in Shares or Free Distribution or Bonus Issue of Shares

(i) If the Company shall declare a dividend in Shares or make a free distribution or bonus issue of Shares which is treated as a capitalization issue for accounting purposes (including but not limited to capitalization of capital reserves but excluding the issuance of employee stock bonus), then the Conversion Price in effect on the date when such dividend and/or distribution is declared (or, if the Company has fixed a prior record date for the determination of shareholders entitled to receive such dividend and/or distribution, on such record date) shall be adjusted in accordance with the following formula:

NCP = OCP x [N/(N + n)]

where:

NCP = the Conversion Price after such adjustment.

OCP = the Conversion Price before such adjustment.

  - N = the number of Shares outstanding (having regard in this case and in each subsection mentioned below to subsection (q) below) at the time of distribution of such dividend, free distribution and/or bonus issue.

  - n = the number of Shares to be distributed to the shareholders as a dividend, free distribution and/or bonus issue.

(ii) An adjustment made pursuant to this subsection (a) shall become effective on the record date for determination of shareholders entitled to receive such dividend and/or distribution; provided that in the case of a bonus issue of Shares or capitalization of reserves which must, under applicable law of the ROC, be submitted for approval to a general meeting of shareholders of the Company before being legally paid or made, and which is so approved after the record date fixed for the determination of shareholders entitled to receive such dividend and/or distribution, such adjustment shall, immediately upon such approval being given by such meeting, become effective retroactively to immediately after such record date.
(b) Reduction of Share Capital
(i) If the Company shall reduce its share capital other than by means of canceling any Shares held in treasury or repurchasing any Shares for the purpose of holding such Shares in treasury, the Conversion Price then in effect on the record date for the determination of the shareholders participating in such capital reduction shall be adjusted in accordance with the following formula:

NCP = OCP x (N/n)

where:

NCP and OCP have the meanings ascribed thereto in subsection (a) above.

N = the number of Shares outstanding immediately prior to such capital reduction.
n = the number of Shares outstanding immediately after such capital reduction.

For the avoidance of doubt, no adjustment to the Conversion Price under this subsection (b) will be required if the Company cancels any Shares held in treasury or repurchases any Shares for the purpose of holding such Shares in treasury.

(ii) If the Company shall reduce its share capital other than by means of canceling any Common Shares or repurchasing any Common Shares and for the purpose of holding such Common Shares in treasury and distributes cash in connection with such share capital reduction, the Conversion Price then in effect on the record date for the determination of the shareholders participating in such capital reduction shall be adjusted in accordance with the following formula:

NCP = (OCP – C) x (N/n)

where:

NCP and OCP have the meanings ascribed thereto in subsection (i) above.

N and n have the meanings ascribed thereto in clause (a) of this subsection above.

C = the amount of cash distributed per Common Share.

For the avoidance of doubt, no adjustment to the Conversion Price under this subsection will be required if the Company cancels any Common Shares or repurchases any Common Shares for the purposes of holding such Common Shares in treasury.

(iii) Such adjustment shall become effective immediately on the record date for the determination of the shareholders participating in such capital reduction.
(c) Sub-division, Combination, Paid-in Capital Reduction and Reclassification of Shares
(i) If the Company shall (1) sub-divide its outstanding Shares, (2) combine its outstanding Shares into a smaller number of Shares, or (3) re-classify any of its Shares into other securities of the Company, then the Conversion Price shall be appropriately adjusted so that the holder of any Bond on the Conversion Date which occurs after the coming into effect of the adjustment described in this paragraph (i) shall be entitled to receive the number of Shares and/or other securities of the Company which it would have held or have been entitled to receive after the happening of any of the events described above had such Bond been converted immediately prior to the happening of such event (or, if the Company has fixed a prior record date for the determination of shareholders entitled to receive any such securities issued upon any such sub-division, combination or re-classification, immediately prior to such record date), but without prejudice to the effect of any other adjustment to the Conversion Price made with effect from the date of the happening of such event (or such record date) or any time thereafter.
(ii) An adjustment made pursuant to paragraph (i) above shall become effective immediately on the relevant event referred to above becoming effective or, if a record date is fixed therefor, immediately after such record date.

(d) Concurrent Adjustment Events

If the Company shall declare a dividend in, or make a free distribution or bonus issue of, Shares which dividend, issue or distribution is to be paid or made to shareholders as of a record date which is also:

(i) the record date for the issue of any rights or warrants which requires an adjustment of the Conversion Price pursuant to subsections (e), (f) or (g) below;
(ii) the day immediately before the date of issue of any securities convertible into or exchangeable for Shares which requires an adjustment of the Conversion Price pursuant to subsection (i) below;

(iii) the day immediately before the date of issue of any Shares which requires an adjustment of the Conversion Price pursuant to subsection (l) below;
(iv) the day immediately before the date of issue of any rights, options or warrants which requires an adjustment of the Conversion Price pursuant to subsection (m) below; or
(v) determined by the Company to be the relevant date for an event or circumstance which requires an adjustment to the Conversion Price pursuant to subsection (n) below,

then no adjustment of the Conversion Price in respect of such dividend, bonus issue or free distribution shall be made under subsection (a), but in lieu thereof an adjustment shall be made under subsection (e), (f), (g), (i), (l) or (m) below (as the case may require) by including in the denominator of the fraction described therein the aggregate number of Shares to be issued pursuant to such dividend, bonus issue or free distribution and, in the case of such dividend, including in the numerator of the fraction described therein the number of Shares which the aggregate par value of Shares to be so distributed would purchase at the Current Market Price per Share.

(e) Rights Issues to Shareholders

(i) If the Company shall grant, issue or offer to the holders of Shares rights entitling them to subscribe for or purchase Shares (a “ Rights Issue ”, which expression shall exclude those Shares offered to employees as employee bonus shares) at a consideration per Share receivable by the Company (determined as provided in subsection (p) below) which is fixed on or prior to the record date and is less than the Current Market Price per Share with respect to the record date, then the Conversion Price in effect on the record date shall be adjusted in accordance with the following formula:

NCP = OCP x [(N + v)/(N + n)]

where:

NCP and OCP have the meanings ascribed thereto in subsection (a) above (which may be further adjusted pursuant to the provisions of subsections (b) and (c) above).

N = the number of Shares outstanding (having regard to subsection (q) below) at the close of business in the ROC on the record date.
n = the number of Shares to be issued in connection with such Rights Issue at the said consideration.
v = the number of Shares which the aggregate consideration receivable by the Company would purchase at such Current Market Price per Share specified above.

After the record date, the consideration per Share shall not be changed in any event.

(ii) Subject as provided below, such adjustment shall become effective immediately after the date the consideration for such Shares are received in full but retroactively to immediately after the record date.

(f) Warrants and Options Issued to Shareholders
(i) If the Company shall grant, issue or offer to the holders of Shares warrants or options entitling them to subscribe for or purchase Shares at a consideration per Share receivable by the Company (determined as provided in subsection (p) below) which is fixed on or prior to the record date and is less than the Current Market Price per Share with respect to the record date, then the Conversion Price in effect shall be adjusted in accordance with the following formula:

NCP = OCP x [(N + v)/(N + n)]

where:

NCP and OCP have the meanings ascribed thereto in subsection (a) above (which may be further adjusted pursuant to the provisions of subsections (b) and (c) above).

N = the number of Shares outstanding (having regard to subsection (q) below) at the close of business in the ROC on the record date.
n = the number of Shares initially to be issued upon exercise of such warrants or options at the said consideration where no applications by shareholders entitled to such warrants or options are required. Where applications by shareholders entitled to such warrants or options are required, n = the number of such Shares that equals (A) the number of warrants or options which underwriters have agreed to underwrite as referred to below or, as the case may be, (B) the number of warrants or options for which applications are received from shareholders as referred to below save to the extent already adjusted for under (A).
v = the number of Shares which the aggregate consideration receivable by the Company (determined as provided in subsection (p) below) would purchase at such Current Market Price per Share specified above.
(ii) Subject as provided below, such adjustment shall become effective (1) where no applications for such warrants or options are required from shareholders entitled to the same, upon their issue and (2) where applications by shareholders entitled to the same are required as aforesaid, immediately after the latest date for the submission of such applications or (if later) immediately after the Company fixes the said consideration, but in all cases retroactively to immediately after the record date.
(iii) If, in connection with a grant, issue or offer to the holders of Shares of warrants or options entitling them to subscribe for or purchase Shares where applications by shareholders entitled to the same are required, any warrants or options which are not subscribed for or purchased by the shareholders entitled thereto are agreed to be underwritten by others prior to the latest date for the submission of applications for such warrants or options, an adjustment shall be made to the Conversion Price in accordance with the above provisions which shall become effective immediately after the date the underwriters agree to underwrite the same or (if later) immediately after the Company fixes the said consideration but retroactively to immediately after the record date. If, in connection with a grant, issue or offer to the holders of Shares of warrants or options entitling them to subscribe for or purchase Shares where applications by shareholders entitled to the same are required, any warrants or options which are not subscribed for or purchased by the underwriters who have agreed to underwrite as referred to above or by the shareholders entitled thereto (or persons to whom shareholders have transferred the right to purchase such warrants) who have submitted applications for such warrants as referred to above are offered to and/or subscribed by others, no further adjustment shall be made to the Conversion Price by reason of such offer and/or subscription.

(g) Issues of Rights or Warrants for Equity-Related Securities to Shareholders
(i) If the Company shall grant, issue or offer to the holders of Shares options, rights or warrants entitling them to subscribe for or purchase any securities convertible into or exchangeable for Shares or which carry rights to subscribe for or purchase Shares at a consideration per Share receivable by the Company (determined as provided in subsection (p) below) which is fixed on or prior to the record date mentioned below and is less than the Current Market Price per Share with respect to the record date; then the Conversion Price in effect on the record date shall be adjusted in accordance with the following formula:

NCP = OCP x [(N + v)/(N + n)]

where:

NCP and OCP have the meanings ascribed thereto in subsection (a) above (which may be further adjusted pursuant to the provisions of subsections (b) and (c) above).

N = the number of Shares outstanding (having regard to subsection (q) below) at the close of business in the ROC on the record date.
n = the number of Shares initially to be issued upon exercise of such rights or warrants and conversion or exchange of such convertible or exchangeable securities at the said consideration which, in the case of rights, equals (A) the number of Shares initially to be issued upon conversion or exchange of the number of such convertible or exchangeable securities which the underwriters have agreed to underwrite as referred to below or, as the case may be, (B) the number of Shares initially to be issued upon conversion or exchange of the number of such convertible or exchangeable securities for which applications are received from shareholders as referred to below save to the extent already adjusted for under (A), and which, in the case of warrants where no applications by shareholders entitled to such warrants are required, equals such number of Shares initially to be issued upon such exercise and conversion or exchange. Where applications by shareholders entitled to such warrants are required, n = the number of such Shares that equals (x) the number of warrants which underwriters have agreed to underwrite as referred to below or, as the case may be, (y) the number of warrants for which applications are received from shareholders as referred to below save to the extent already adjusted for under (x).
v = the number of Shares which the aggregate consideration receivable by the Company (determined as provided in subsection (p) below) would purchase at such Current Market Price per Share specified.
(ii) Subject as provided below, such adjustment shall become effective (1) where no applications for such warrants are required from shareholders entitled to the same, upon their issue and (2) in the case of rights and where applications by shareholders entitled to the warrants are required as aforesaid, immediately after the latest date for the submission of applications or (if later) immediately after the Company fixes the said consideration, but in all cases retroactively to immediately after the record date.

(iii) If, in connection with a grant, issue or offer to the holders of Shares of rights or of warrants entitling them to subscribe for or purchase securities convertible into or exchangeable for Shares where applications by shareholders entitled to the same are required, any convertible or exchangeable securities or warrants which are not subscribed for or purchased by the shareholders entitled thereto are agreed to be underwritten by others prior to the latest date for the submission of applications for such convertible or exchangeable securities or warrants, an adjustment shall be made to the Conversion Price in accordance with the above provisions which shall become effective immediately after the date the underwriters agree to underwrite the same or (if later) immediately after the Company fixes the said consideration but retroactively to immediately after the record date. If, in connection with a grant, issue or offer to the holders of Shares of rights or of warrants entitling them to subscribe for or purchase securities convertible into or exchangeable for Shares where applications by shareholders entitled to the same are required, any convertible or exchangeable securities or warrants which are not subscribed for or purchased by the underwriters who have agreed to underwrite as referred to above or by the shareholders entitled thereto (or persons to whom shareholders have transferred such rights or the right to purchase such warrants) who have submitted applications for such convertible or exchangeable securities or warrants as referred to above are offered to and/or subscribed by others, no further adjustment shall be made to the Conversion Price by reason of such offer and/or subscription.

(h) Capital Distribution, Other Distributions to Shareholders

(i) If the Company shall make any Capital Distribution or the distribution to the holders of Shares of evidences of indebtedness of the Company or of shares of capital stock of the Company (other than Shares) or of assets or of options, rights or warrants to subscribe for or purchase shares (other than Shares) or securities (other than those mentioned in (e), (f) or (g) above):

NCP = OCP x [(CMP – fmv)/CMP]

where:

NCP and OCP have the meanings ascribed thereto in subsection (a) above (which may be further adjusted pursuant to the provisions of subsections (b) and (c) above).

CMP = the Current Market Price.

fmv = the amount of such distribution or the fair market value (as determined by the Company or, if pursuant to applicable law of the ROC such determination is to be made by application to a court of competent jurisdiction, as determined by such court or by an appraiser appointed by such court) of the portion of the evidences of indebtedness, shares of capital stock, assets, rights or warrants so distributed applicable to one Share, less any consideration payable for the same by the relevant Shareholder. In making a determination of the fair market value of any such evidences of indebtedness, shares of capital stock, assets, rights or warrants, the Company shall consult a leading independent securities company or bank in Taipei selected by the Company and shall take fully into account the advice received from such company or bank.

(ii) Such adjustment shall become effective immediately after the record date for the determination of shareholders entitled to receive such Capital Distribution or distribution, provided that (1) in the case of such a Capital Distribution or distribution which must, under applicable law of the ROC, be submitted for approval to a general meeting of shareholders of the Company before such Capital Distribution or distribution may legally be made and is so approved after the record date fixed for the determination of shareholders entitled to receive such Capital Distribution or distribution, such adjustment shall, immediately upon such approval being given by such meeting, become effective retroactively to immediately after the record date and (2) if the fair market value of the evidences of indebtedness, shares of capital stock, assets, rights or warrants so distributed cannot be determined until after the record date fixed for the determination of shareholders entitled to receive such distribution, such adjustment shall, immediately upon such fair market value being determined, become effective retroactively to immediately after the record date.
(iii) Notwithstanding anything provided herein to the contrary, no adjustment to the Conversion Price shall be made if the Company reduces its share capital by purchasing and canceling its shares.
(i) Issue of Convertible or Exchangeable Securities Generally
(i) If the Company shall issue any securities convertible into or exchangeable for Shares (other than the Bonds, or in any of the circumstances described in subsection (g) above and subsection (m) below) and the consideration per Share receivable by the Company (determined as provided in subsection (p) below) either through a public offering or a private placement shall be less than the Current Market Price per Share on the date in the ROC on which the Company makes a public record following the pricing of such securities, then the Conversion Price in effect immediately prior to the date of issue of such convertible or exchangeable securities shall be adjusted in accordance with the following formula:

NCP = OCP x [(N + v)/(N + n)]

where:

NCP and OCP have the meanings ascribed thereto in subsection (a) above (which may be further adjusted pursuant to the provisions of subsections (b) and (c) above).

N = the number of Shares outstanding (having regard to subsection (q) below) at the close of business in the ROC on the day immediately prior to the date of such issue.
n = the number of Shares initially to be issued upon conversion or exchange of such convertible or exchangeable securities at the initial conversion or exchange price or rate.
v = the number of Shares which the aggregate consideration receivable by the Company (determined as provided in subsection (p) below) would purchase at such Current Market Price per Share.
(ii) Such adjustment shall become effective as of the calendar day in the ROC corresponding to the calendar day at the place of issue on which such convertible or exchangeable securities are issued.

(j) Tender or Exchange Offers
(i) In case a tender or exchange offer made by the Company or any Subsidiary of the Company for all or any portion of the Shares shall expire and such tender or exchange offer shall involve the payment by the Company or such Subsidiary of consideration per Share having a fair market value (as determined by an independent financial institution selected by the Company at the expense of the Company) at the last time (the “ Expiration Date ”) tenders or exchanges could have been made pursuant to such tender or exchange offer (as it shall have been amended) that exceeds the Current Market Price per Share, as of the Expiration Date, the Conversion Price shall be adjusted in accordance with the following formula:

NCP = OCP x [N x M/(a + [(N – n) x M])]

where:

NCP and OCP have the meanings ascribed thereto in subsection (a) above.

N = the number of Shares outstanding (including any tendered or exchanged Shares) on the Expiration Date.
M = Current Market Price per Share as of the Expiration Date.
a = the fair market value of the aggregate consideration payable to the holders of Shares based on the acceptance (up to a maximum specified in the terms of the tender or exchange offer) of all Shares validly tendered or exchanged and not withdrawn as of the Expiration Date (the Shares deemed so accepted up to any such maximum, being referred to as the “ Purchased Shares ”).
n = the number of Purchased Shares,

such reduction to become retroactively effective immediately prior to the opening of business on the day following the Expiration Date.

(ii) If the Company is obligated to purchase Shares pursuant to any such tender or exchange offer, but the Company is permanently prevented by applicable law from effecting any such purchase or all such purchases are rescinded, the Conversion Price shall again be adjusted to be the Conversion Price which would then be in effect if such tender or exchange offer had not been made.

(k) Merger

In case of a Merger of the Company (as defined in Condition 6(D)), each Bond then Outstanding shall, without the consent of any Bondholders, become convertible only into the kind and amount of securities, cash and other property receivable upon such Merger by a holder of the number of Shares, into which such Bonds could have been converted immediately prior to such Merger. The corporation formed by such Merger on the Person that acquired such properties and assets shall enter into a supplemental indenture with the Trustee to provide for the continuation of the Conversion Right to continue after such Merger and such supplemental indenture shall provide for adjustments to the Conversion Price which shall be as nearly equivalent as practicable to the adjustments provided in this Condition 6. Where there has been a Change of Control pursuant to such a Merger, a Holder may exercise its Change of Control Put Right as set forth herein.

(l) Other Issues of Shares
(i) If the Company shall issue any Shares (other than Shares issued upon conversion or exchange of any convertible or exchangeable securities (including the Bonds) issued by the Company or upon exercise of any rights or warrants granted, offered or issued by the Company or in any of the circumstances described in subsection (a), (b), (c) or (d) above or the issuance of Shares or restricted share units pursuant to an employee bonus arrangement) for a consideration per Share receivable by the Company (determined as provided in subsection (p) below) either through a public offering or a private placement less than the Current Market Price per Share on the record date or on which the Company fixes the said consideration if no closed period is set forth for such issuance, then the Conversion Price in effect immediately prior to the issue of such additional Shares shall be adjusted in accordance with the following formula:

NCP = OCP x [(N + v)/(N + n)]

where:

NCP and OCP have the meanings ascribed thereto in subsection (a) above (which may be further adjusted pursuant to the provisions of subsections (b) and (c) above).

N = the number of Shares outstanding (having regard to subsection (q) below) at the close of business in the ROC on the day immediately prior to the date of such issue.
n = the number of additional Shares issued as aforesaid.
v = the number of Shares which the aggregate consideration receivable by the Company (determined as provided in subsection (p) below) would purchase at such Current Market Price per Share.

It being understood that, for the avoidance of doubt, in the case of the issuance of Shares pursuant to an employee bonus arrangement, the aggregate consideration receivable by the Company shall be the product of the number of Shares issued pursuant thereto and the closing price of the Shares on the date immediately preceding the date of the meeting of the shareholders approving such issuance (after taking into account the effect of any dividend payment).

(ii) Such adjustment shall become effective as of the calendar day in the ROC corresponding to the calendar day at the place of issue on which such additional Shares are issued.
(m) Issue of Equity Related Securities
(i) If the Company shall grant, issue or offer options, rights or warrants to subscribe for or purchase Shares (other than in any of the circumstances described in subsections (e) and (f)) or securities convertible into or exchangeable for Shares and the consideration per Share receivable by the Company (determined as provided in subsection (p) below) shall be less than the Current Market Price per Share on the record date (or, if the offer, grant or issue of such rights, options or warrants is subject to approval by a general meeting of shareholders, on the date on which the Board of Directors of the Company fixes the consideration to be recommended at such meeting), then the Conversion Price in effect immediately prior to the date of the offer, grant or issue of such options, rights or warrants shall be adjusted in accordance with the following formula:

NCP = OCP x [(N + v)/(N + n)]

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where:

NCP and OCP have the meanings ascribed thereto in subsection (a) above (which may be further adjusted pursuant to the provisions of subsections (b) and (c) above).

N = the number of Shares outstanding (having regard to subsection (q) below) at the close of business in the ROC on the day immediately prior to the date of such issue.
n = the number of Shares initially to be issued on exercise of such options, rights or warrants and (if applicable) conversion or exchange of such convertible or exchangeable securities.
v = the number of Shares which the aggregate consideration receivable by the Company (determined as provided in subsection (p) below) would purchase at such Current Market Price per Share.
(ii) Such adjustment shall become effective as of the calendar day in the ROC corresponding to the calendar day at the place of issue on which such rights or warrants are issued.

(n) Analogous Events

If the Company determines that any other event or circumstance has occurred which has or would have an effect on the position of the Bondholders as a class compared with the position of the holders of all the securities (and options and rights relating thereto) of the Company, taken as a class which is analogous to any of the events referred to in subsections (a) through (m), then, in any such case, the Company shall notify the Trustee in writing thereof and the Company shall consult with a leading independent securities company or commercial bank in Taipei selected by the Company as to what adjustment, if any, should be made to the Conversion Price to preserve the value of the Conversion Right of Bondholders and will make any such adjustment. Any such adjustment, where possible, shall be made using methodology similar in nature to one or more of the adjustments described above in this Condition 6(C), and may consist of a combination of such adjustments where appropriate.

(o) Simultaneous Issues of Different Classes of Shares

In the event of simultaneous issues of two or more classes of share capital comprising Shares or rights or warrants in respect of, or securities convertible into or exchangeable for, two or more classes of share capital comprising Shares, then, for the purposes of this Condition 6(C), the formula:

NCP = OCP x [(N + v)/(N + n)] shall be restated as NCP = OCP x [(N + v1 + v2 + v3)/(N + n1 + n2 + n3)]

where v1 and n1 shall have the same meanings as “v” and “n” but by reference to one class of Shares, v2 and n2 shall have the same meanings as “v” and “n” but by reference to a second class of Shares, v3 and n3 shall have the same meanings as “v” and “n” but by reference to a third class of Shares and so on.

(p) Consideration Receivable by the Company

For the purposes of any calculation of the consideration receivable by the Company pursuant to this Condition 6(C), the following provisions shall be applicable:

(i) in the case of the issue of Shares for cash, the consideration shall be the amount of such cash, provided that in no such case shall any deduction be made for any commissions or any expenses paid or incurred by the Company for any underwriting of the issue or otherwise in connection therewith;

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(ii) in the case of the issue of Shares for a consideration in whole or in part other than cash, the consideration other than cash shall be deemed to be the fair value thereof as determined by the Company (and in making such determination the Company shall consult a leading independent securities company or bank in Taipei selected by the Company and shall take fully into account the advice received from such company or bank) or, if pursuant to applicable law of the ROC such determination is to be made by application to a court of competent jurisdiction, as determined by such court or an appraiser appointed by such court, irrespective of the accounting treatment thereof;
(iii) in the case of the issue (whether initially or upon the exercise of rights or warrants) of securities convertible into or exchangeable for Shares, the aggregate consideration receivable by the Company shall be deemed to be the consideration received by the Company for such securities and (if applicable) rights or warrants plus the additional consideration (if any) to be received by the Company upon (and assuming) the conversion or exchange of such securities at the initial conversion or exchange price or rate and (if applicable) the exercise of such rights or warrants at the initial subscription or purchase price (the consideration in each case to be determined in the same manner as provided in paragraphs (i) and (ii) above) and the consideration per Share receivable by the Company shall be such aggregate consideration divided by the number of Shares to be issued upon (and assuming) such conversion or exchange at the initial conversion or exchange price or rate and (if applicable) the exercise of such rights or warrants at the initial subscription or purchase price;
(iv) in the case of the issue of rights or warrants to subscribe for or purchase Shares, the aggregate consideration receivable by the Company shall be deemed to be the consideration received by the Company for any such rights or warrants plus the additional consideration to be received by the Company upon (and assuming) the exercise of such rights or warrants at the initial subscription or purchase price (the consideration in each case to be determined in the same manner as provided in paragraphs (i) and (ii) above) and the consideration per Share receivable by the Company shall be such aggregate consideration divided by the number of Shares to be issued upon (and assuming) the exercise of such rights or warrants at the initial subscription or purchase price;
(v) if any of the consideration referred to in any of the preceding paragraphs of this subsection (p) is receivable in a currency other than New Taiwan Dollars, such consideration shall, in any case where there is a fixed rate of exchange between the New Taiwan Dollar and the relevant currency for the purposes of the issue of the Shares, the conversion or exchange of such securities or the exercise of such rights or warrants, be translated into New Taiwan Dollars for the purposes of this subsection (p) at such fixed rate of exchange and shall, in all other cases, be translated into New Taiwan Dollars at the mean of the exchange rate quotations (being quotations for the cross rate through U.S. Dollars if no direct rate is quoted) by a leading bank in the ROC for buying and selling spot units of the relevant currency by telegraphic transfer against New Taiwan Dollars on the date as of which the said consideration is required to be calculated as aforesaid; and
(vi) in the case of the issue of Shares credited as fully paid out of retained earnings or capitalization or reserves at their par value, the aggregate consideration receivable by the Company shall be deemed to be zero (and accordingly the number of Shares which such aggregate consideration receivable by the Company could purchase at the relevant Current Market Price per Share shall also be deemed to be zero).

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(q) Cumulative Adjustments

If, at the time of computing an adjustment (the “ later adjustment ”) of the Conversion Price pursuant to any of subsections above, the Conversion Price already incorporates an adjustment (the “ earlier adjustment ”) made (or taken or to be taken into account pursuant to the proviso to subsection (r) below) to reflect an issue of Shares or of securities convertible into or exchangeable for Shares or of rights or warrants to subscribe for or purchase Shares or securities, to the extent that the number of such Shares or securities taken into account for the purposes of calculating the earlier adjustment exceeds the number of such Shares in issue at the time relevant for ascertaining the number of outstanding Shares for the purposes of computing the later adjustment, such excess Shares shall be deemed to be outstanding for the purposes of making such computation.

(r) Reference to “fix”

Any reference herein to the date on which a consideration is “fixed” shall, where the consideration is originally expressed by reference to a formula which cannot be expressed as an actual cash amount until a later date, be construed as a reference to the first day on which such actual cash amount can be ascertained.

(i) No adjustment will be made where such adjustment would be less than 1% of the Conversion Price then in effect; provided, however , that any adjustment that otherwise would be required to be made will be carried forward and taken into account (as if such adjustment had been made at the time when it would have been made but for the provisions of this subsection (ii)) in determining any subsequent adjustment. The Company will promptly notify the Bondholders, the Trustee and the Conversion Agent in writing of any adjustment in accordance with Condition 15. Neither the Trustee nor the Conversion Agent will be responsible for verifying the information in the notice. Any such notice relating to an adjustment in the Conversion Price should set forth the event giving rise to the adjustment, the Conversion Price prior to the adjustment, the effective date of such adjustment and the Conversion Price after the adjustment.

For the purposes of the Conditions:

“ Capital Distribution ” means any cash dividend, distribution of cash or distribution of assets in specie made by the Company for any fiscal year unless it comprises a purchase or redemption of share capital of the Company;

“ Current Market Price ” on any date means (i) in the case of Shares, the average of the Market Prices of the Shares for the most recent 30 Trading Days, (ii) in the case of capital stock (other than Shares) which is listed on the relevant stock exchange, the average of the Market Prices of such capital stock (other than Shares) for the most recent 30 Trading Days and (iii) in the case the market value cannot be determined pursuant to the procedures above, the market value determined by an opinion of an independent, internationally recognized investment banking firm selected by the Company;

“ Market Price ” means for any Trading Day (a) with respect to the Shares, the closing sales price of the Shares on the TWSE on such day or, if no reported sales take place on such day, the average of the reported closing bid and offered prices, in either case as reported by the TWSE for such day as furnished by a leading independent securities firm in Taiwan selected from time to time by the Company, and (b) with respect to capital stock of the Company (other than Shares), the closing bid price for such capital stock (other than Shares) on the relevant stock exchange; and

“ Trading Day ” means with respect to the Shares, a day when the TWSE is open for business; provided, however, if no transaction price or closing bid and offered prices are reported by the TWSE in respect of the Shares for one or more Trading Days (or furnished by a reputable independent securities firm in Taiwan as aforesaid), such day or days will be disregarded in any relevant calculation and will be deemed not to have existed when ascertaining any period of consecutive Trading Days.

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(D) Mergers; Disposals

So long as the Bonds remain outstanding, the Company will not merge, amalgamate or consolidate with or into any other corporation or entity, (provided that the Company is not the surviving entity) or sell, convey, transfer, lease or otherwise dispose of all, or substantially all, of the assets of the Company (each event a “ Merger ”), whether as a single transaction or a number of transactions, related or not, to any corporation, entity or person or to one or more members of any group under the common control of any corporation, entity or person unless:

(i) the corporation formed by such Merger, or the Person that acquired such properties and assets, shall expressly assume, by an indenture supplemental hereto, all obligations of the Issuer under this Indenture and the performance of every covenant and agreement applicable to it contained herein;
(ii) immediately after giving effect to any such Merger, no Default or Event of Default shall have occurred or be continuing or would result therefrom;
(iii) the Company at least 20 Business Days prior to the Merger has delivered to the Trustee an Officer’s Certificate stating that such Merger complies with this Condition and that all conditions precedent herein provided for or relating to such Merger have been complied with;
(iv) the corporation formed by such Merger, or the Person that acquired such properties and assets, shall expressly agree to:
(a) indemnify each holder of a Bond against any tax, assessment or governmental charge imposed on such holder solely as a consequence of such Merger with respect to the Bonds; and
(b) if organized under the laws of a jurisdiction other than the ROC, deliver a substitute undertaking to the Trustee to pay any additional amounts as may be necessary in order that the net amounts of principal of and premium and other amounts on the Bonds received by the Holders of the Bonds, after any withholding or deduction of any tax, assessment or other governmental charge imposed by such jurisdiction or any taxing authority thereof or therein shall equal the respective amounts, which would have been receivable in respect of the Bonds in the absence of such Merger. No successor corporation or other Person shall have the right to redeem the Bonds unless the Issuer would have been entitled to redeem the Bonds pursuant to the Indenture in the absence of the Merger; and
(v) the Company shall as soon as practicable on or prior to the Merger, deliver an opinion satisfactory to the Trustee of counsel(s) of recognized standing as to the legality and validity of the Merger.

The Trustee shall not be responsible for verifying or confirming the information in any Officer’s Certificate required pursuant to the above provisions.

Upon any Merger in accordance with Condition 6(D), the successor corporation formed by such Merger shall succeed to and be substituted for, and may exercise every right and power of, the Company under the Indenture with the same effect as if such successor corporation had been named as the Company herein, and thereafter, the predecessor corporation shall be relieved of all obligations and covenants under the Indenture and the Bonds.

(E) Conversion Undertakings

The Company undertakes that:

(i) it will use its best efforts to ensure that all Closed Periods during any 365-day period shall not be in the aggregate more than 120 calendar days, having taken into account the applicable ROC laws and regulations;
(ii) it will procure sufficient Shares for transfer and delivery to the person designated on the Conversion Notice upon conversion of the Bonds, by way of increasing the Company’s paid-in share capital and, if necessary, its authorized capitalization for the issuance of new Shares, if approval of the ROC FSC is obtained and future changes to ROC laws and regulations permit the Company to issue new Shares for delivery upon conversion of the Bonds. The Company acknowledges that the undertaking above may involve amending the Company’s Articles of Incorporation, which requires the approval of its board of directors and its shareholders; and
(iii) it will use its best efforts to obtain and maintain a listing on the TWSE for the Shares to be issued upon the conversion of the Bonds.

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7. PAYMENTS

(A) U.S. Dollar Settlement

All amounts due under, and all claims arising out of or pursuant to, the Bonds and/or the Indenture or the Agency Agreement from or against the Company shall be payable and settled in U.S. Dollars only.

For the purposes of the Conditions:

“ Business Day ” means a day (other than a Saturday or Sunday) on which commercial banks are open for general business (including dealings in foreign exchange) in Taipei, New York, Hong Kong and London;

“ Fixed Exchange Rate ” means the fixed rate of US$1.00 = NT$28.9910.

“ Independent Investment Bank ” means (i) an independent investment bank of international repute or (ii) leading independent securities company or bank in the ROC (in each case of (i) and (ii), acting as an expert) selected by the Company.

“ NT Dollars ” or “ NT$ ” means the lawful currency for the time being of the ROC.

“ NTD Equivalent ” means in respect of any U.S. Dollar-denominated amount in respect of the Bonds, or in respect of the Conversion Price then in effect, such U.S. Dollar amount converted into NT Dollar amount using the Fixed Exchange Rate.

“ Prevailing Rate ,” for each Rate Calculation Date, means a rate determined by the Principal Agent as follows:

(a) the fixing rate at 11:00 a.m., expressed as the number of NT Dollars per one U.S. Dollar, quoted by Taipei Forex Inc., which rate shall be provided by the Company to the Principal Agent;
(b) if no such rate is available under sub-paragraph (a), the prevailing rate determined by the Principal Agent on the basis of quotations provided by the Company that are obtained from Reference Dealers (as defined below) of the specified exchange rate for the Rate Calculation Date as obtained in accordance with the provisions below; and
(c) if fewer than two quotations are provided under sub-paragraph (b), the exchange rate for the Rate Calculation Date as shall be determined by an Independent Investment Bank in good faith.

In determining the prevailing rate under sub-paragraph (b), the Taipei office of each of the Reference Dealers will provide to the Principal Agent a quotation of what the specified screen rate would have been had it been published, reported or available for the Rate Calculation Date, based upon each Reference Dealer’s experience in the foreign exchange market for NTD and general activity in such market on the Rate Calculation Date. The quotations used to determine the Prevailing Rate for a Rate Calculation Date will be determined in each case for such Rate Calculation Date, and will be provided at 3:30 p.m. (Taipei time) on such Rate Calculation Date or as soon as practicable after it is determined that the specified screen rate was not available. All quotations shall be provided by the Company to the Principal Agent in writing and the Principal Agent shall not be responsible for requesting or obtaining the quotations.

If four quotations are provided, the rate for a Rate Calculation Date will be the arithmetic mean of the rates, without regard to the rates having the highest and lowest value. For this purpose, if more than one quotation has the same highest value or lowest value, then the rate of only one of such quotations shall be disregarded. If two or three quotations are provided, the rate for a Rate Calculation Date will be the arithmetic mean of the rates provided.

All notifications, opinions, determinations, certificates, calculations, quotations and decisions given, expressed, made or obtained for the purposes of the provisions of this Condition 7, whether by the Reference Dealers (or any of them), the Company or the Independent Investment Bank, will (in the absence of fraud, willful misconduct or gross negligence) be binding on the Company, the Trustee, the Agents and all Bondholders.

“ Rate Calculation Date ” means the day which is the fifth Business Days before the due date of the relevant amount under the Conditions.

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“ Reference Dealers ” means four leading dealers engaged in the foreign exchange market of the relevant currency selected by the Company.

“ Settlement Equivalent ” for the relevant Rate Calculation Date in respect of any U.S. Dollardenominated amount payable in respect of the Bonds, means such U.S. Dollar amount converted into NT Dollar amount using the Fixed Exchange Rate, and then converted back to U.S. Dollar amount using the applicable Prevailing Rate on such date.

“ U.S. Dollars ” or “ US$ ” means the lawful currency for the time being of the United States of America.

(B) Method of Payment

Payment of principal of and premium and other amounts on the Bonds will be in U.S. Dollar and will be made (i) with respect to a Holder of a Bond, by wire transfer of immediately available funds to the registered account of the Holder of such Bond or (ii) in the case of a Holder of a Certificated Bond where the Registrar has advised that payments cannot be made via wire transfer, by U.S. Dollar check mailed to the registered address of the Bondholder. Payments of principal and premium and other amounts will only be made against surrender of the relevant Certificated Bond at the specified office of the Principal Paying Agent or any of the other Paying Agents.

(C) Fiscal Laws

All payments are subject in all cases to any applicable fiscal or other laws and regulations, but without prejudice to the provisions of Condition 9. No commissions or expenses shall be charged to the Bondholders in respect of such payments.

(D) Business Days

If the due date for payment of any amount of principal or premium or any other amount in respect of any Bond (or any later date on which a Bond could otherwise be presented for payment) is not, in the relevant place of presentation, a business day, the Holder of the relevant Bond shall not be entitled to payment at such place of the amount due until the next following business day at such place and shall not be entitled to any interest or other payment in respect of such delay. In this Condition 7(D), “ business day ” means any day on which banks are open for business in the Taipei, London, Hong Kong and in the relevant place of presentation and, unless the following sentence applies, in the case of payment by transfer to a U.S. Dollar account as referred to above, on which dealings in foreign currency may be carried on both in New York, London, Hong Kong and in such place of presentation. If a Bond is presented for payment at a time when, as a result of differences in time zones, it is not practicable to transfer the relevant amount to an account as referred to above for value on the relevant date, the Company shall not be obliged to do so but shall be obliged to transfer the relevant amount to the account for value on the first practicable date thereafter.

(E) Paying Agents

The names of the initial Principal Paying Agent and the other initial Paying Agents and their specified offices are set out in the Agency Agreement. The Company reserves the right at any time with the prior written approval of the Trustee to vary or terminate the appointment of any Paying Agent and to appoint additional or other Paying Agents, in each case in accordance with the Agency Agreement, provided that the Company will at all times maintain a Principal Paying Agent, Conversion Agent and a Paying Agent having a specified office in London and, so long as the Bonds are listed on the SGX-ST and the rules of that exchange so require, a specified office in Singapore. The Paying Agent may resign at any time by giving written notice to the Company and the Trustee not less than 60 days in advance. Notice of any such termination or appointment and of any changes in the specified offices of the Principal Paying Agent and the Paying Agents will be given promptly by the Company to the Bondholders in accordance with Condition 15.

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(F) Default Interest

If the Company fails to pay any sum in respect of the Bonds when due, default interest will accrue on the overdue Settlement Equivalent of principal amount at the rate of 3% per annum from the due date and ending on the date the Trustee determines to be the date on and after which the overdue payment is to be made to the Bondholders as stated in a notice given to the Bondholders in accordance with Condition 15 (both dates inclusive). The default interest will accrue on the basis of the actual number of days elapsed calculated on the basis of a year of 360 days consisting of 12 months of 30 days each and the amount payable will be equal to the Settlement Equivalent of such default interest amount.

8. REDEMPTION, REPURCHASE AND CANCELLATION

(A) Final Redemption

Unless previously redeemed, repurchased and canceled or converted as herein provided, the Company will redeem the Bonds at the Settlement Equivalent of 100.0% of their principal amount on September 29, 2025 (the “ Maturity Date ”). The Company may not redeem or repurchase the Bonds prior to that date except as provided in paragraph (B), (C), (E) or (F) below (but without prejudice to Condition 10).

(B) Redemption at the Option of the Company

Notwithstanding the foregoing, the Company may redeem the Bonds, in whole but not in part, at any time, on not less than 30 nor more than 60 days’ notice, at the Settlement Equivalent of the Early Redemption Amount on the date of redemption date if at least 90% in principal amount of the Bonds originally issued has been redeemed, repurchased and canceled, or converted; provided that the applicable date of redemption does not fall within a Closed Period.

“ Conversion Ratio ” means US$100,000 divided by the Conversion Price then in effect (translated into U.S. Dollars at the fixed exchange rate).

“ Early Redemption Amount ” means, for each US$100,000 principal amount of Bonds, the amount calculated in accordance with the following formula, rounded (if necessary) to two decimal places with 0.005 being rounded upwards. Early Redemption Amount = Previous Redemption Amount x (1 + r/2)[d/p] .

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Previous Redemption Amount = the Early Redemption Amount for each US$100,000 principal amount on the Semi-annual Date immediately preceding the date fixed for redemption as set out below (or if the Bonds are to be redeemed prior to March 29, 2021, US$100,000):

Semi-annual Date March 29, 2021 ............................................................................................................ September 29, 2021..................................................................................................... March 29, 2022 ............................................................................................................ September 29, 2022..................................................................................................... March 29, 2023 ............................................................................................................ September 29, 2023..................................................................................................... March 29, 2024 ............................................................................................................ September 29, 2024..................................................................................................... March 29, 2025 ............................................................................................................	Early Redemption Amount
	(in U.S. Dollars) 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000

Semi-annual Date
March 29, 2021 ............................................................................................................
September 29, 2021.....................................................................................................
March 29, 2022 ............................................................................................................
September 29, 2022.....................................................................................................
March 29, 2023 ............................................................................................................
September 29, 2023.....................................................................................................
March 29, 2024 ............................................................................................................
September 29, 2024.....................................................................................................
March 29, 2025 ............................................................................................................

Early
Redemption
Amount

(in U.S.
Dollars)
100,000
100,000
100,000
100,000
100,000
100,000
100,000
100,000
100,000

r = 0.0% expressed as a fraction

d = number of days from and including the immediately preceding Semi-annual Date (or if the Bonds are to be redeemed on or before March 29, 2021, from and including the Issue Date) to, but excluding, the date fixed for redemption, calculated on the basis of a 360-day year consisting of 12 months of 30 days each and, in the case of an incomplete month, the number of days elapsed.

p = 180

Upon the expiry of any such notice, the Company will be bound to redeem the Bonds to which such notice relates at the price aforesaid applicable at the date fixed for redemption.

For the avoidance of doubt, neither the Trustee nor the Agents shall be responsible for calculating or verifying the Early Redemption Amount.

“ Prevailing Rate ” means, for each relevant Trading Day, the fixing rate at 11:00 a.m. (Taipei time), expressed as the number of NT Dollars per one U.S. Dollar, as quoted by Taipei Forex Inc.

(C) Redemption for Tax Reasons

If, as a result of any change in, amendment or non-renewal of, or judicial decision relating to, the laws of the ROC, or such other jurisdictions in which the Issuer is then organized or resident for tax purposes, or any political subdivision or taxing authority or legislative body thereof or therein, or any treaty to which the ROC is party, or any change in the official application or interpretation of any such laws or treaty, in any such case, occurring after the Issue Date, or as a result of any action taken or proposed by the ROC or any political subdivision or any taxing authority or legislative body thereof or therein, or brought in a court of competent jurisdiction in the ROC or any political subdivision thereof (each, a “ Change in Tax Law ”), whether or not such action was taken or brought with respect to the Company but which, in any such case, becomes effective or generally known after the Issue Date, on the occasion of the next payment due in respect of any Bond, the Company has or will become required to pay Additional Amounts as provided in Condition 9 and such obligation cannot be avoided by the Company taking reasonable measures available to it, the Company may at its option, having given not less than 30 nor more than 60 days’ notice (in accordance with Conditions 8(C) and 15) to the Bondholders (which notice will be irrevocable) redeem, in whole but not in part, the Bonds on the expiry date of the notice of redemption (the “ Tax Call Date ”) at the Settlement Equivalent of the Early Redemption Amount, provided that no notice of redemption shall be given earlier than 60 days before the earliest date on which the Company would be required to pay the Additional Amounts were a payment in respect of the Bonds then due. Prior to the publication of any notice of redemption pursuant to this paragraph, the Company shall deliver to the Trustee a certificate in form and substance reasonably acceptable to the Trustee signed by two authorized officers of the Company stating that the Company is entitled to effect such redemption and setting forth a statement of facts

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showing the conditions precedent to the right of the Company so to redeem have occurred, and an opinion addressed to the Trustee in form and substance reasonably acceptable to the Trustee by an independent law firm of recognized standing admitted to practice in the ROC to the effect that the Company has or will become obliged to pay such Additional Amounts as a result of such Change in Tax Law and the Trustee shall be entitled to accept and fully rely on such certificate (without verification by it) as sufficient evidence of the conditions precedent referred to in this Condition 8(C) in which event it shall be conclusive and binding on the Bondholders.

If the Company gives a notice of redemption of the Bonds under this Condition 8(C), each Bondholder shall have the right (the “ Non-Redemption Right ”) to elect that all or a portion (being US$200,000 in principal amount or integral multiples of US$100,000 in excess thereof) of its Bonds not be redeemed by giving the notice to such effect to the Company (with a copy to the Trustee) no later than 15 days prior to the redemption date fixed by the Company. If a Bondholder exercises the Non-Redemption Right with respect to such Bonds, no Additional Amounts referred to in Condition 9 and that gave rise to the Company’s redemption of the Bonds under this Condition 8(C) shall be payable on the payments due after the relevant date (as defined in Condition 9) in respect of such Bonds and such payments shall be made subject to the deduction or withholding required by the Change in Tax Law. For the avoidance of doubt, the Company shall continue to be responsible to such Bondholders for any Additional Amount that is payable in respect of the Bonds under Condition 9 as a result of the laws, treaties or regulations (or the interpretation or administration thereof) of a relevant taxing jurisdiction in effect on the Issue Date.

(D) Redemption Procedures

In the case of a redemption, the Company will furnish the Trustee with a notice of redemption in sufficient time to permit the Trustee, within not less than 30 days nor more than 60 days prior to any such Redemption Date, to deliver to each Holder such notice of redemption, which notice will specify:

(i) the date of Redemption in connection with Condition 8(B) or the Tax Call Date (the “ Redemption Date ”);
(ii) the price at which such Bonds will be redeemed and the method by which such amount will be paid;
(iii) that, in the case of Bondholders that hold Certificated Bonds, payment will be made upon presentation and surrender of the Certificated Bond(s) to be redeemed;
(iv) the names and addresses of all Paying Agents;
(v) the Conversion Right of the Bondholders and the then current Conversion Price;
(vi) the Market Price on the most recent practicable Trading Day for which such Market Price can be provided; and
(vii) that the right to convert such Bonds will expire seven days prior to the Redemption Date.

No notice of redemption given under the above Conditions 8(B) and 8(C) shall be effective if the Redemption Date specified therein is during a Closed Period or within 30 days following the last day of a Closed Period.

Upon the expiration of such notice, the Company will be bound to redeem the Bonds at the applicable redemption price on the Redemption Date, except as otherwise indicated in these Conditions or the Indenture.

Payment of the relevant redemption price for any Bond will be made on the Redemption Date, provided , however , that (i) if such Bond is a Certificated Bonds and has not been so delivered on or prior to the Redemption Date, payment will only be made at the time of delivery of such Certificated Bonds (together with the necessary endorsements), (ii) if the Redemption Date falls on a day other than a Business Day, payment shall be made on the next immediate Business Day and (iii) money sufficient for payment of the relevant redemption price has been deposited with the Paying Agents at least one Business Day prior to the Redemption Date. If the Company has deposited with the Trustee and the Paying Agents, in accordance with the terms of the Indenture and the Agency Agreement, cash sufficient to pay the relevant redemption price of a Bond on the Redemption Date, then, immediately after such Redemption Date, whether or not such Bond is delivered to a Paying Agent, (i)

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such Bond will cease to be outstanding; (ii) the interest (if any) on such Bond will cease to accrue; (iii) such Bond will be deemed paid; and (iv) all other rights of the Holder will terminate (other than the right to receive the relevant redemption price).

(E) Repurchase of the Bonds at the Option of the Bondholder

Unless the Bonds have been previously redeemed, repurchased and canceled, or converted, each Bondholder shall have the right (the “ Investor Put Right ”), at such Bondholder’s option, to require the Company to repurchase in US dollars all (or any portion of the principal amount thereof which is US$200,000 or integral s of US$100,000 in excess thereof) of such Bondholder’s Bonds, on September 29, 2023 (the “ Investor Put Date ”) at a redemption price equal to the Settlement Equivalent of 100.0% of the outstanding principal amount thereof (the “ Investor Put Price ”).

(F) Repurchase of the Bonds in the Event of Delisting

In the event that the Shares officially cease to be listed or admitted for trading or are suspended from trading for a period equal to or exceeding 30 consecutive Trading Days on the TWSE (a “ Delisting ”), each Bondholder shall have the right (the “ Delisting Put Right ”), at such Bondholder’s option, to require the Company to repurchase, in whole or in part (being US$200,000 in principal amount or integral multiples of US$100,000 in excess thereof), such Bondholder’s Bonds on the date set by the Company for such repurchase (the “ Delisting Put Date ”), which shall be not less than 30 days nor more than 60 days following the date on which the Trustee delivers to each Bondholder a notice regarding the Delisting referred to under Condition 8(H) below, at the Settlement Equivalent of the Early Redemption Amount (the “ Delisting Put Price ”).

(G) Repurchase of the Bonds in the Event of a Change of Control

If a Change of Control (as defined below) occurs, each Bondholder shall have the right (the “ Change of Control Put Right ”), at such Bondholder’s option, to require the Company to repurchase, in whole or in part (being US$200,000 in principal amount or integral multiples of US$100,000 in excess thereof), such Bondholder’s Bonds on the date set by the Company for such repurchase (the “ Change of Control Put Date ”), which shall not be less than 30 nor more than 60 days following the date on which the Company notifies the Trustee of the Change of Control, at the Settlement Equivalent of the Early Redemption Amount (the “ Change of Control Put Price ”).

A “ Change of Control ” will be deemed to have occurred when (i) Control of the Company is acquired or deemed to be held by any Person or Persons acting together if such Person or Persons does not or do not have, and would not be deemed to have, Control of the Company on the Issue Date, (ii) the Company consolidates with or merges into or sells or transfers all or substantially all of its assets to any other Person, unless the consolidation, merger, sale or transfer will not result in such other Person or Persons acquiring Control over the Company or the successor entity; or (iii) one or more other Persons acquires the legal or beneficial ownership of all or substantially all of the capital stock of the Company. Notwithstanding anything in the Indenture to the contrary, for the purposes of this definition, the term “ Person ” includes any individual, company, corporation, firm, partnership, joint venture, undertaking, association, organization, trust, state or agency of a state (in each case whether or not being a separate legal entity) but does not include the Company’s Board of Directors or any other governing board of the Company and does not include the Company’s wholly-owned direct or indirect Subsidiaries.

“ Control ” means the right to appoint and/or remove all or the majority of the members of the Issuer’s Board of Directors or other governing body, whether obtained directly or indirectly, and whether obtained by ownership of share capital, the possession of voting rights, contract or otherwise.

The Trustee shall not be required to take any steps to ascertain whether a Change of Control or any event which could lead to the occurrence of a Change of Control has occurred and shall not be liable to any person for any failure to do so. The Trustee shall be entitled to assume that no such event has occurred until it has received written notice to the contrary from the Issuer. The Trustee shall not be required to take any steps to ascertain whether the condition for the exercise of the rights herein has occurred. The Trustee shall not be responsible for determining or verifying whether a Bond is to be

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accepted for redemption and will not be responsible to the Holders for any loss arising from any failure by it to do so. The Trustee shall not be under any duty to determine, calculate or verify the redemption amount payable hereunder and will not be responsible to the Holders for any loss arising from any failure by it to do so.

(H) Repurchase Procedures

Not less than 30 nor more than 60 days prior to the Investor Put Date and promptly after becoming aware of, and in any event within seven days of, a Delisting or a Change of Control, the Company will provide sufficient information promptly to the Trustee in sufficient time to permit the Trustee to mail to each Bondholder a notice regarding such Investor Put Right, Delisting Put Right or Change of Control Put Right, as the case may be. Notwithstanding the foregoing, so long as the Bonds are represented by the Global Bond and the Global Bond is held on behalf of Euroclear and Clearstream, notice to Bondholders may be given by delivery of the relevant notice to Euroclear and Clearstream, for communication by them to entitled accountholders in substitution for notification as required by the foregoing sentence. Such notice shall state, as appropriate:

(i) The Investor Put Date, the Delisting Put Date or the Change of Control Put Date, as the case may be (each, a “ Repurchase Date ”);
(ii) in the case of a Delisting, the date of such Delisting and, briefly, the events causing such Delisting;
(iii) in the case of a Change of Control, the date of such Change of Control and, briefly, the events causing such Change of Control;
(iv) the date by which the Repurchase Notice (as defined below) must be given;
(v) the Investor Put Price, the Delisting Put Price or the Change of Control Put Price, as the case may be, and the method by which such amount will be paid;
(vi) the names and addresses of all Paying Agents;
(vii) the Conversion Right of the Bondholders and the Conversion Price then in effect;
(viii) the Market Price on the most recent practicable Trading Day for which such Market Price can be provided;
(ix) the procedures that Bondholders must follow and the requirements that Holders must satisfy in order to exercise their repurchase rights and Conversion Right, as the case may be; and
(x) that a Repurchase Notice, once validly given, may not be withdrawn.

To exercise its right to require the Company to purchase the Bonds, the Bondholder must deliver a written irrevocable notice of the exercise of such right (a “ Repurchase Notice ”) together with the applicable Certificated Bonds (if applicable) to any Paying Agent on any Business Day prior to the close of business at the location of such Paying Agent on such day and which day is not less than five Business Days prior to the Repurchase Date.

Payment of the Investor Put Price upon exercise of the Investor Put Right, the Delisting Put Price upon exercise of the Delisting Put Right or of the Change of Control Put Price upon exercise of the Change of Control Put Right, for any Bond for which a Repurchase Notice has been delivered is conditioned upon delivery of such Bond (including any Certificated Bonds, together with any necessary endorsements) to any Paying Agent on any Business Day together with the delivery of such Repurchase Notice, and shall be made promptly following the later of the Repurchase Date and the time of delivery of such Bond. If the Paying Agent holds on the Repurchase Date money sufficient to pay the Investor Put Price, the Delisting Put Price or the Change of Control Put Price, as the case may be (such money shall be deposited with the Paying Agents at least one Business Day prior to the applicable Repurchase Date), of Bonds for which Repurchase Notices have been delivered in accordance with the provisions of the Indenture, then, whether or not such Bond is delivered to the Paying Agent, on and after such Repurchase Date, (i) such Bond will cease to be outstanding; (ii) the interest (if any) on such Bond will cease to accrue; (iii) such Bond will be deemed paid; and (iv) all other rights of the Bondholder shall terminate (other than the right to receive the Investor Put Price, the Delisting Put Price or the Change of Control Put Price, as the case may be).

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(I) Purchase and Cancellation

The Company or any Subsidiary may at any time and from time to time purchase Bonds in the open market or otherwise at any price. If purchases are made by tender, tenders must be available to all Bondholders alike. Any Bonds so purchased by the Company or any Subsidiary will be surrendered to the Principal Paying Agent for cancellation and will not be reissued.

9. TAXATION

Subject to Condition 8(C), all payments of principal and premium and other amounts on the Bonds and all issuance of Shares on conversion of the Bonds will be made after any deduction or withholding for or on account of any present or future taxes, duties, assessments or governmental charges of whatever nature (“ Taxes ”) imposed or levied by or on behalf of (i) the government of the ROC or any taxing authority thereof or therein, (ii) any jurisdiction in which the Company is, for tax purposes, incorporated, organized or resident or doing business or (iii) any jurisdiction from or through which payment is made or deemed made, unless such deduction or withholding is required by law or by regulation or governmental policy having the force of law. In the event that any such deduction or withholding from any such payment is so required, the Company will pay such additional amounts (“ Additional Amounts ”) as will result in the receipt by the Bondholders of the amounts which would otherwise have been receivable in the absence of any such deduction or withholding, except that no Additional Amounts shall be payable in respect of any Bond:

(i) to a Bondholder or beneficial owner (or to a third party on behalf of a Bondholder or beneficial owner) where such Bondholder or beneficial owner is liable for such Taxes in respect of such Bond by reason of its being connected with the relevant taxing jurisdiction otherwise than merely by holding such Bond or by the receipt of principal or premium or any other amount in respect of any Bond or the enforcement of payment on such Bond;
(ii) to or on behalf of a Bondholder or beneficial owner to the extent that such Bondholder or beneficial owner would not be liable for or subject to such deduction or withholding by making a declaration of non-residence or other claims for exemption or deduction to the relevant tax authorities if such Bondholder or beneficial owner is eligible to make such declaration or claim and, after a written request from the Company, such Bondholder or beneficial owner fails to timely do so;
(iii) presented for payment more than 30 days after the relevant date except to the extent that the Bondholder or beneficial owner thereof would have been entitled to the Additional Amounts on presenting the same for payment on the last day of such 30-day period; or
(iv) to or on behalf of a Bondholder or beneficial owner if such Bondholder or beneficial owner would have been able to avoid the withholding or deduction by the presentation (where presentation is required) of the relevant Bond to, or otherwise accepting payment from, another paying agent in a member state of the European Union.

For this purpose the “ relevant date ” in relation to any Bond means (a) the due date for payment in respect thereof, or (b) if the full amount of the moneys payable on such due date has not been received by the Trustee and the Principal Paying Agent on or prior to such due date, the date on which notice is duly given to the Bondholders that such moneys have been so received.

Additionally, the obligation to pay such Additional Amounts shall not apply with respect to (i) any estate, inheritance, gift, sales, transfer or personal property tax or any similar taxes, duties, assessments or other governmental charges of similar nature or (ii) any taxes, duties, assessments or other governmental charges that are payable otherwise than by deduction or withholding from payments on the Bonds or issuance of Shares on conversion of the Bonds.

References in these Conditions to principal, premium and/or any other amounts which may be payable pursuant hereto or pursuant to the Indenture shall be deemed also to refer to any Additional Amounts which may be payable under this Condition or any undertaking given in addition to or substitution for it under the Indenture.

The Company will provide to the Trustee and Agents a certified copy of an official receipt (or, if official receipts are not obtainable, other documentation reasonably satisfactory to the Trustee) evidencing the payment of any applicable Taxes deducted or withheld. Copies of those receipts or other documentation, as the case may be, will be made available to the Bondholders upon written request.

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Neither the Trustee nor any Agent shall be responsible for paying any tax, duty, charges, withholding or other payment referred to in this Condition 9 or in connection with the Bonds or for determining whether such amounts are payable or the amount thereof, and none of them shall be responsible or liable for any failure by the Issuer, any Bondholder or any other person to pay such tax, duty, charges, withholding or other payment in any jurisdiction or to provide any notice or information that would permit, enable or facilitate the payment of any principal, premium (if any) or other amount under or in respect of the Bonds without deduction or withholding for or on account of any tax, duty, charge, withholding or other payment imposed by or in any jurisdiction.

The above obligations will survive termination, defeasance or discharge of the Indenture and will apply to any successor of the Company.

Any premium paid on redemption of the bonds will be deemed interest income for the purpose of ROC taxation.

10. EVENTS OF DEFAULT

(A) Events of Default

The Trustee, if so requested in writing by the Bondholders of not less than 25% in principal amount of the Bonds then outstanding or if so directed by an Extraordinary Resolution, shall (subject in each case to being indemnified and/or secured and/or pre-funded by the Bondholders to its satisfaction), give notice to the Company that the Bonds are immediately due and repayable at an amount equal to the principal amount of and premium (if any) on the Bonds as of the date of payment, if any of the following events shall have occurred and be continuing. An “ Event of Default ” occurs if:

(i) a default is made for more than three business days in the payment of principal or premium (if any) in respect of any of the Bonds when due;
(ii) a default is made by the Company in failing to give effect to a Conversion Right exercised by a Bondholder in accordance with the Indenture and such failure conditions continue for more than five business days;
(iii) a default is made by the Company in the performance or observance of any covenant, condition or provision contained in the Indenture or in the Bonds on its part to be performed or observed (other than (i) the covenant to pay the principal amount or premium (if any) or any other amount, in respect of any of the Bonds and (ii) the covenant to give effect to a Conversion Right) and the default continues for the period of 30 days next following the service by the Trustee (acting on the instructions of the Holders) on the Company of written notice requiring such default to be remedied;
(iv) (a) any other present or future indebtedness of the Company or any Principal Subsidiary for or in respect of money borrowed or raised becomes (or becomes capable of being declared) due and payable prior to its stated maturity by reason of an event of default (however called) or (b) any such indebtedness is not paid when due or, as the case may be, within any applicable grace period originally provided for, or (c) the Company or any Principal Subsidiary fails to pay when due any amounts payable by it under any present or future guarantee, indemnity or similar obligation for any monies borrowed or raised, provided that the aggregate amount of the relevant indebtedness or amount payable in respect of which one or more of the events mentioned above in this paragraph (iv) have occurred equals or exceeds US$20 million (as reasonably determined on the basis of the middle spot rate for the relevant currency against the U.S. Dollar as quoted by any leading bank selected by the Company on the day on which such indebtedness becomes due and payable or is not paid or any such amount becomes due and payable or is not paid under any such guarantee or indemnity);
(v) a final judgment in an aggregate amount in excess of US$20 million is entered against the Company or any of its Principal Subsidiaries which results in a distress, attachment, execution or other legal process being levied, enforced or sued out on or against any part of the property, assets or revenues of the Company or any of its Principal Subsidiaries and is not discharged or stayed within 60 days;

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(vi) a final judgment in an aggregate amount in excess of US$20 million is entered against the Company or any of its Principal Subsidiaries which results in any mortgage, charge, pledge, lien or other encumbrance, present or future, created or assumed by the Company or any of its Principal Subsidiaries becoming enforceable and any step is taken to enforce it (including the taking of possession or the appointment of a receiver, manager or other similar person);
(vii) the Company or any of its Principal Subsidiaries is (or is, or could be, deemed by law or a court to be) insolvent or bankrupt or unable to pay its debts, stops, suspends or threatens to stop or suspend payment of all or a material part of its debts, proposes or makes any agreement for the deferral, rescheduling or other readjustment of all of its debts (or of any part which it will or might otherwise be unable to pay when due), proposes or makes a general assignment or an arrangement or composition with or for the benefit of the relevant creditors in respect of any of such debts or a moratorium is agreed or declared in respect of or affecting all or any part of the debts of the Company or any of its Principal Subsidiaries; or an administrator or liquidator of the Company or any of its Principal Subsidiaries or the whole or any material part of the assets and turnover of the Company or any of its Principal Subsidiaries is appointed (or application for any such appointment is made);
(viii) an order is made or an effective resolution passed for the winding-up or dissolution, judicial management or administration of the Company or any of its Principal Subsidiaries (except for a members’ voluntary solvent winding up of a Principal Subsidiary), or the Company or any of its Principal Subsidiaries ceases or threatens to cease to carry on all or a material part of its business or operations, except for the purpose of and followed by a reconstruction, amalgamation, reorganization, merger or consolidation (a) on terms approved by a resolution of holders holding not less than 75% of the principal amount of the outstanding Bonds or in the case of amalgamation, merger or consolidation, the Company or the Principal Subsidiary is the surviving entity, or (b) in the case of a Principal Subsidiary, whereby the undertaking and assets of such Principal Subsidiary are transferred to or otherwise vested in the Company or another of its Principal Subsidiaries;
(ix) any step is taken by any authorized person with a view to the seizure, compulsory acquisition, expropriation or nationalization of all or a material part of the assets of the Company or any of its Principal Subsidiaries (and if capable of being remedied, is not remedied within 60 days);
(x) any action, condition or thing (including the obtaining or effecting of any necessary consent, approval, authorization, exemption, filing, license, order, recording or registration) at any time required to be taken, fulfilled or done in order (a) to enable the Company lawfully to enter into, exercise its rights and perform and comply with its obligations under the Bonds and the Indenture, (b) to ensure that those obligations are legally binding and enforceable, and (c) to make the Bonds and the Indenture admissible in evidence in the courts of the ROC is not taken, fulfilled or done (and if capable of being remedied, is not remedied within 60 days); and
(xi) it is or will become unlawful for the Company to perform or comply with any one or more of its obligations under any of the Bonds, the Indenture or the Agency Agreement (and if capable of being remedied, is not remedied within 60 days).

The Company will promptly notify the Trustee in writing of the occurrence of any Event of Default, specifying each such default and the nature and status thereof. The Trustee will not be deemed to have knowledge of the occurrence of any Event of Default. In addition, the Company will be required to furnish to the Trustee annually, and within 14 days at the request of the Trustee, a statement concerning the performance and observance of its obligations under the Bonds or the Indenture.

For the purposes of (iv) above, any indebtedness or obligation which is in a currency other than U.S. Dollars shall be translated into U.S. Dollars at the spot rate for the sale of U.S. Dollars against the purchase of the relevant currency quoted by any leading bank in the relevant market selected by the Company on any day when the Company requests such a quotation for such purposes.

For the purposes of (vi) above, “ Lien ” means any mortgage, charge, pledge, lien or other encumbrance, present or future, created or assumed by the Company or any Subsidiary.

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If any event specified in this Condition 10(A) shall occur upon the date on which notice as first mentioned in this Condition is given by the Trustee to the Company (the “ Default Notice Date ”), the principal of, interest and premium (if any) and other amounts on Bonds will become immediately due and payable on the Default Notice Date.

In case of (i) above, the amount due should be the principal of, and premium (if any) and other amounts on such Bonds as of the original due date and the default interest in accordance with Condition 7(F).

(B) Other Provisions

Subject to the provisions of the following five paragraphs, the Conversion Right attached to any Bonds shall survive the provision of the default notice and the acceleration of the payment of the Bonds pursuant to clause (ii) of this Condition 10.

Notwithstanding receipt of such payment, a Bondholder may exercise its Conversion Right by depositing a Conversion Notice with a Conversion Agent during the period from and including the Default Notice Date (as defined below) with respect to an event specified in this Condition 10 (at which time the Company will notify the Bondholders of the number of Shares per Bond to be delivered upon conversion, assuming all the then outstanding Bonds are converted) to and including the seventh business day thereafter.

If a converting Bondholder deposits a Conversion Notice pursuant to this Condition 10 on the business day prior to, or during, a Closed Period, the Bondholder’s Conversion Right shall continue until the business day following the last day of the Closed Period which shall be deemed the Conversion Date, for the purposes of such Bondholder’s exercise of its Conversion Right pursuant to this Condition 10.

If the Conversion Right attached to any Bond is exercised pursuant to this Condition 10, the Company will issue Shares (which number will be disclosed to such Bondholders as soon as practicable after the Conversion Notice is given) in accordance with Condition 6(B)(iv), except that the Company shall have 12 business days before it is required to register the person designated in the Conversion Notice in the Company’s register of shareholders as the owner of the number of Shares to be transferred pursuant to Condition 6(B)(iii).

For the purposes of this Condition 10, “ business day ” shall mean a day other than a Saturday or Sunday on which banks are open for business in Taipei, London and Hong Kong.

11. PRESCRIPTION

Claims against the Company for payment of principal and premium and other amounts in respect of the Bonds will become prescribed unless made within 10 years from the relevant date for payment in respect thereof.

12. ENFORCEMENT

At any time after the Bonds shall have become immediately due and repayable, the Trustee may, at the written direction of the Bondholders holding not less than 25% in principal amount of the Bonds then outstanding, and without further notice, take such proceedings against the Company as it may think fit to enforce repayment of the Bonds together with premium, if any, with respect thereto and to enforce the provisions of the Indenture, but it will not be bound to take any such proceedings unless (a) it shall have been so requested in writing by the Bondholders of not less than 25% in principal amount of the Bonds then outstanding or so directed by an Extraordinary Resolution and (b) it shall have indemnified and/or secured and/or pre-funded to its satisfaction. No Bondholder will be entitled to proceed directly against the Company unless the Trustee, having become bound to do so, fails to do so for 60 days and such failure shall be continuing.

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13. MEETINGS OF BONDHOLDERS, MODIFICATION AND WAIVER

(A) Meetings; Modifications Requiring Extraordinary Resolution

The Indenture contains provisions for convening meetings of Bondholders to consider any matter affecting their interests, including without limitation the sanctioning by Extraordinary Resolution of a modification of any of these Conditions or any provisions of the Indenture or the Agency Agreement. Such a meeting may be convened by the Company or the Trustee and shall be convened by the Trustee if requested in writing to do so by Bondholders holding not less than 10 per cent. in aggregate principal amount of the Bonds for the time being outstanding and subject to the Trustee being indemnified and/or secured and/or pre-funded to its satisfaction against all costs and expenses. The quorum at any such meeting for passing an Extraordinary Resolution will be two or more persons holding or representing over 50% in principal amount of the Bonds for the time being outstanding or, at any adjourned such meeting, two or more persons being or representing Bondholders whatever the principal amount of the Bonds so held or represented.

Modifications and amendments of the Indenture or the Bonds may be made by the Company and the Trustee with the written consent of the Bondholders of not less than a majority in aggregate principal amount of the outstanding Bonds (and notice of such change shall be given to the Bondholders in accordance with Condition 15), unless the proposed modifications include, inter alia, (i) to modify the due date for any payment in respect of the Bonds, (ii) to change the Investor Put Date, (iii) to reduce or cancel the principal amount or premium or any other amount payable in respect of the Bonds, or Settlement Equivalent payable in respect of the Bonds or changing the method of calculation of interest or Settlement Equivalent, (iv) to change the place or currency of payment of the Bonds, (v) to modify or cancel the Conversion Rights, or (vi) to modify the provisions concerning the quorum required at any meeting of the Bondholders or the majority required to pass an Extraordinary Resolution, in which case the necessary quorum for passing an Extraordinary Resolution will be two or more persons holding or representing not less than 66%, or at any adjourned such meeting not less than 33%, in principal amount of the Bonds for the time being outstanding. An Extraordinary Resolution passed at any meeting of Bondholders will be binding on all Bondholders, whether or not they are present at the meeting. The Indenture provides that a written resolution signed by or on behalf of the Bondholders of not less than 90% of the aggregate principal amount of Bonds outstanding shall be as valid and effective as a duly passed Extraordinary Resolution.

The Indenture defines “ Extraordinary Resolution ” to mean a resolution passed at a meeting of the Bondholders duly convened and held in accordance with the provisions of the Indenture by a majority consisting of not less than three-quarters of the votes cast thereon.

(B) Modifications without Consent

The Company, the Trustee and the Principal Paying Agent may enter into one or more indenture or indentures supplemental to the Indenture or the Agency Agreement for any of the following purposes: (i) to evidence the succession of another corporation to the Company and the assumption by such successor of the covenants and obligations of the Company under the Indenture and in, or with respect to, the Bonds, in the event of any merger, consolidation or other action in accordance with Condition 6(D) and Article 6 of the Indenture; or (ii) to add to the covenants of the Company for the benefit of the Holders of Bonds; or (iii) to surrender any right or power conferred upon the Company; or (iv) to reduce the Conversion Price then in effect; or (v) to cure any ambiguity, to correct or supplement any provision in the Indenture which may be inconsistent with any other provision therein or which is otherwise defective, or to make any other provisions with respect to matters or questions arising under the Indenture which shall not be inconsistent with the provisions of the Indenture, provided, such action pursuant to this clause (v) shall not adversely affect the interest of the Bondholders; or (vi) to make any modification of the Bonds, the Indenture or the Agency Agreement of a formal, minor or technical nature or necessary in the opinion of the Trustee to correct a manifest error or, upon advice of counsel, to comply with mandatory provisions of ROC law, provided, such action pursuant to this clause (vi) shall not adversely affect the interest of the Bondholders. Any such modification, waiver or authorization will be binding on all of the Bondholders and upon all future Bondholders and, unless the Trustee agrees otherwise, any such modification will be notified to the Bondholders by the Company in accordance with Condition 15 as soon as practicable thereafter.

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(C) In connection with the exercise by it of any of its trusts, powers, authorities or discretions (including, without limitation, any modification, waiver, authorization or determination), the Trustee shall have regard to the general interests of the Bondholders as a class but shall not have regard to any interests arising from circumstances particular to individual Bondholders (whatever their number) and, in particular but without limitation, shall not have regard to the consequences of the exercise of its trusts, powers, authorities or discretions for individual Bondholders (whatever their number) resulting from their being for any purpose domiciled or resident in, or otherwise connected with, or subject to the jurisdiction of, any particular territory and the Trustee shall not be entitled to require, nor shall any Bondholder be entitled to claim, from the Company, the Trustee or any other person any indemnification or payment in respect of any tax consequence of any such exercise upon individual Bondholders except to the extent already provided for in Condition 9 and/or any undertaking given in addition to, or in substitution for, Condition 9 pursuant to the Indenture. The Trustee is entitled to obtain and rely on a legal opinion or officers’ certificate regarding the compliance of this Condition 13(C).

14. REPLACEMENT OF CERTIFICATED BONDS

The Indenture includes provisions for the replacement of any mutilated, defaced, destroyed, stolen or lost Certificated Bonds at the specified office of the Registrar or at the specified office of any Paying Agent, including, so long as the Bonds are listed on the SGX-ST and the rules of that exchange so require, the Singapore office of a Paying Agent, upon payment by the claimant of such costs as may be incurred in connection therewith and on such terms as to evidence and indemnity as the Company and the Registrar may require. Mutilated or defaced Certificated Bonds must be surrendered before replacements will be issued.

In the event any such mutilated, destroyed, lost or stolen Certificated Bond has become or is about to become due and payable, the Company in its discretion may, instead of issuing a new Certificated Bond, pay such Bond.

15. NOTICES

Notices to Bondholders shall be validly given if in writing in English and mailed by first class mail to them at their respective addresses in the Bond Register. Notwithstanding the foregoing, so long as the Bonds are represented by the Global Bond and the Global Bond is held on behalf of Euroclear or Clearstream, or the Alternative Clearing System (as defined in Condition 18(F)), notices to holders of the Bonds will be given by delivery of the relevant notice to Euroclear or Clearstream or the Alternative Clearing System, for communication by it to entitled accountholders in substitution for notification as required by the foregoing sentence. Any such notice shall be deemed to have been given on the later of such delivery and the seventh day after being so mailed.

In addition, so long as the Bonds are listed on the SGX-ST and the rules of that exchange so require, notice shall be published, at the Company’s expense, either in a newspaper having general or wide circulation in Singapore or on the Internet site of the SGX-ST ( www.sgx.com ). Any such notice shall be deemed to have been given on the date of such publication.

The Company shall cause to be filed with the Trustee, and shall cause to be given to all Bondholders (A) at least seven days prior to the applicable record date (or date of submission to a meeting of the shareholders or directors of the Company for their approval, if such approval is required), if the Company shall (i) declare a dividend (or other distribution) on its Shares payable otherwise than in cash out of its retained earnings, or (ii) authorize the grant to the holders of its Shares of options, rights or warrants to subscribe for or purchase any Shares in the authorized capital of any class or of any other rights, (B) at least 20 days prior to the applicable record date, upon (i) a reclassification of the Shares (other than a subdivision or combination of its outstanding Shares), or of any consolidation, merger or share exchange to which the Company is a party and for which approval of any shareholders of the Company is required, or of any tender or exchange offer by the Company or any Subsidiary for all or any of the Shares, or of the conveyance, lease, sale or transfer of all or substantially all of the assets of the Company, or (ii) the voluntary or involuntary dissolution, liquidation or winding up of the Company, a notice stating (x) the date on which a record is to be taken

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for the purpose of such dividend, distribution, rights, options or warrants, or, if a record is not to be taken, the date as of which the holders of Shares of record to be entitled to such dividend, distribution, rights, options or warrants are to be determined, or (y) the date on which such reclassification, consolidation, merger, share exchange, tender or exchange offer, conveyance, lease, sale, transfer, dissolution, liquidation or winding up is expected to become effective, and the date as of which it is expected that holders of Shares of record shall be entitled to exchange their Shares for securities, cash or other property deliverable upon such reclassification, consolidation, merger, share exchange, tender or exchange offer, conveyance, lease, sale, transfer, dissolution, liquidation or winding up, and (C) within five business days of the occurrence of an event after which the Company is obligated to provide notice pursuant to Condition 6(A).

For the purposes of this Condition, “ business day ” means a day other than a Saturday or Sunday on which banks are open for business in Taipei.

16. INDEMNIFICATION

The Indenture contains provisions for the indemnification of the Trustee, its officers, employees and agents and for its relief from responsibility, including provisions relieving it from taking any steps and/or actions and/or instituting proceedings to enforce its rights under the Indenture, the Agency Agreement and/or these Conditions and in respect of the Bonds and to enforce repayment or taking other actions, steps and/or proceedings unless first indemnified and/or secured and/or pre-funded to its satisfaction and to be paid or reimbursed for its fees, costs, expenses and indemnity payments and any liabilities incurred by it in priority to the claims of Bondholders.

17. GOVERNING LAW AND JURISDICTION

The Indenture, the Agency Agreement and the Bonds are governed by, and shall be construed in accordance with, the laws of the State of New York. In relation to any legal action or proceedings arising out of or in connection with the Indenture, the Agency Agreement and the Bonds, the Company has in the Indenture or the Agency Agreement, as the case may be, irrevocably submitted to the jurisdiction of the State of New York and United States Federal courts sitting in the Borough of Manhattan, the City of New York. The Company has appointed Law Debenture Corporate Services, as its agent for service of process.

18. THE GLOBAL BOND

The Global Bond contains provisions which apply to the Bonds in respect of which the Global Bond is issued, some of which modify the effect of the Conditions. The following is a summary of those provisions.

(A) Meetings

The registered Holders of the Global Bond will have one vote in respect of each US$100,000 in principal amount of Bonds for which the Global Bond are issued. The Trustee may allow a person with an interest in Bonds in respect of which the Global Bond has been issued to attend and speak at a meeting of Bondholders on appropriate proof of its identity and interest.

(B) Cancellation

Cancellation of any Bond following its redemption, repurchase, conversion or purchase by the Company will be effected by a reduction in the principal amount of the Bonds in the register of Bondholders.

(C) Trustee’s Powers

In considering the interests of Bondholders, while the Global Bond is registered in the name of a nominee for a clearing system, the Trustee may, without being obliged to do so, have regard to any information provided to it by such clearing system or its operator as to the identity (either individually or by category) of its accountholders with entitlements to Bonds and may consider such interests as if such accountholders were the Bondholders.

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(D) Conversion

Subject to the requirements of Euroclear and Clearstream, the Conversion Right attaching to a Bond in respect of which the Global Bond is issued may be exercised by the presentation to or to the order of the Principal Conversion Agent or to any Conversion Agent of one or more Conversion Notices duly completed by or on behalf of a Holder of a book-entry interest in the Bond. Such Conversion Notice is obtainable at, or may be delivered by, the Principal Conversion Agent or any Conversion Agent. Deposit of the Global Bond with the Conversion Agent together with the relevant Conversion Notice shall not be required. The Principal Conversion Agent or such other Conversion Agent shall notify the Registrar and the Holder of the Global Bond of the exercise of the Conversion Right.

(E) Payment

Payments in respect of Bonds, including the principal amount and any premium or other amount, represented by the Global Bond will be made without presentation or, if no further payment is to be made in respect of the Bonds, against presentation and surrender of the Global Bond to or to the order of the Principal Paying Agent or such other Paying Agent as shall have been notified to the Bondholders for such purpose.

(F) Notices

So long as the Bonds are represented by the Global Bond and the Global Bond is held on behalf of Euroclear, Clearstream or any Alternative Clearing System as shall have been designated by the Trustee (the “ Alternative Clearing System ”), notices to Bondholders may be given by delivery of the relevant notice to Euroclear, Clearstream, or the Alternative Clearing System, for communication by it to entitled accountholders in substitution for notification as required by the Conditions except that, so long as the Bonds are listed on the SGX-ST and the rules of that exchange so require, notices shall also be published either in a newspaper having general or wide circulation in Singapore or on the Internet site of the SGX-ST ( www.sgx.com ).

(G) Certificated Bonds

Certificated Bonds will not be issued in exchange for interests in Bonds in respect of which the Global Bond is issued, except where (i) the Common Depositary or any successor to the Common Depositary notifies us in writing that it is at any time unwilling or unable to continue as a depositary or if at any time it is no longer eligible to act as the Common Depositary for the Global Bond and a successor depositary is not appointed by us within 90 days, (ii) either Euroclear or Clearstream (or the Alternative Clearing System in which the Bonds evidenced by the Global Bond may be held) is closed for business for a continuous period of 14 days (other than by reason of holidays, statutory or otherwise) or announces an intention permanently to cease business or does in fact do so, or (iii) if any of the Bonds shall have become due and payable in accordance with Condition 10.

(H) Transfers

Transfers of interests in the Bonds will be effected through the records of Euroclear or Clearstream and their respective participants in accordance with the rules and procedures of Euroclear or Clearstream and their respective direct and indirect participants.

(I) Enforcement

For the purposes of enforcement of the provisions of the Indenture against the Trustee, the persons named in a certificate of the Holder of the Bonds in respect of which the Global Bond is issued shall be recognized as the beneficiaries of the trusts set out in the Indenture, to the extent of the principal amount of their interest in the Bonds set out in the certificate of the Holder, as if they were themselves the Bondholders in such principal amounts.

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Trustee and Agents

Citicorp International Limited is the Trustee and Citibank, N.A., London Branch is the Registrar and Principal Agent. Citicorp International Limited and Citibank, N.A., London Branch, in each of its respective capacities, including without limitation as Trustee, Registrar and Principal Agent, assumes no responsibility for the accuracy or completeness of the information concerning us or our affiliates or any other party contained in this document or the related documents or for any failure by us or any other party to disclose events that may have occurred and may affect the significance or accuracy of such information.

Except during the continuance of an Event of Default, the Trustee will not be liable, except to the extent of its own gross negligence, bad faith or willful misconduct, for the performance of such duties as are specifically set forth in the Indenture and no implied covenant or obligation shall be read into the Indenture against the Trustee. If an Event of Default has occurred and is continuing, the Trustee will use the same degree of care and skill in its exercise of the rights and powers vested in it under the Indenture as a prudent person would exercise under the circumstances in the conduct of such person’s own affairs.

The Trustee will be under no obligation to exercise any of its discretions, rights or powers under the indenture at the request of any holder, unless such holder shall have offered to the Trustee security and/or indemnity and/or pre-funding satisfactory to it against any loss, liability, tax, cost or expense. The Trustee may refrain from taking any action in any jurisdiction if the taking of such action in that jurisdiction would, in its opinion based upon legal advice in the relevant jurisdiction, be contrary to any law of that jurisdiction. Furthermore, the Trustee may refrain from taking any action if it would render it liable to any person in any jurisdiction or if, in its opinion based upon legal advice, it would not have the power to take such action in that jurisdiction by virtue of any applicable law or if it is determined by any court or other competent authority in that jurisdiction that it does not have the power to take such action.

Whenever the Trustee is required or entitled by the terms of the Indenture, the Agency Agreement or these Conditions to exercise any discretion or power, take any action, make any decision or give any direction, the Trustee is entitled, prior to exercising any such discretion or power, taking or refraining from taking any such action, making any such decision or giving any such direction, to seek directions from the Bondholders by way of Extraordinary Resolution or clarification of any directions, and the Trustee shall be entitled to rely on any such directions or clarification and shall not be responsible or liable for any loss or liability incurred by the Issuer, the Bondholders or any other person as a result of any delay in it exercising such discretion or power, taking or refraining from taking such action, making such decision or giving such direction as a result of seeking such direction or clarification of any directions from the Bondholders or in the event that no direction or clarification is given to the Trustee by the Bondholders.

The Trustee and the Agents may rely conclusively without liability to Bondholders, the Issuer or any other person on any report, confirmation, certificate or information from or any advice or opinion of any legal counsel, accountants, financial advisers, financial institution or any other expert, whether or not obtained by or addressed to it and whether their liability in relation thereto is limited (by its terms or by any engagement letter relating thereto entered into by the Trustee or any other person in any other manner) by reference to a monetary cap, methodology or otherwise. The Trustee and the Agents may accept and shall be entitled to rely conclusively on any such report, confirmation, certificate, information, advice or opinion, in which event such report, confirmation, certificate, information, advice or opinion shall be binding on the Issuer and the Bondholders.

The Trustee and the Agents shall be entitled to rely conclusively on any direction, request or resolution of Bondholders given by holders of the requisite principal amount of Bonds outstanding or passed at a meeting of Bondholders convened and held in accordance with the Indenture or passed as further provided in the Indenture. Neither the Trustee nor any of the Agents shall be under any obligation to ascertain whether any Event of Default has occurred or to monitor compliance by the Issuer with the provisions of the Indenture, the Agency Agreement or these Conditions and shall not be liable to the Bondholders or any other person for not doing so.

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None of the Trustee or any of the Agents shall be responsible for the performance by the Issuer and any other person appointed by the Issuer in relation to the Bonds of the duties and obligations on their part expressed in respect of the same and, unless it has written notice from the Issuer to the contrary, the Trustee and each Agent shall be entitled to assume that the same are being duly performed. None of the Trustee or any Agent shall be liable to any Bondholder, the Issuer or any other person for any action taken by the Trustee or such Agent in accordance with the instructions of the Bondholders.

Each Bondholder shall be solely responsible for making and continuing to make its own independent appraisal and investigation into the financial condition, creditworthiness, condition, affairs, status and nature of the Issuer and their respective Subsidiaries, and the Trustee shall not at any time have any responsibility or liability for the same and each Bondholder shall not rely on the Trustee in respect thereof.

Pursuant to the terms of the Indenture, we will reimburse the Trustee, Registrar and Principal Agent for all fees, costs, taxes and expenses. The Indenture contains limitations on the rights of the Trustee, should it become our creditor, to obtain payment of claims in certain cases or to realize on certain property received by it in respect of any such claims, as security or otherwise. The Trustee and its affiliates are entitled and permitted to engage in other transactions with the Issuer and/or any entity related (directly or indirectly) to the Issuer, including normal banking and trustee relationships, without accounting for any profit. With respect to notices to holders of a beneficial interest in the Global Bond, such notices would be deemed to have been provided to such holders if the notices are sent to the clearing systems for dispatching to the holder.

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Taxation

Prospective purchasers of the Bonds should consult their tax advisors concerning the tax consequences of owning the Bonds or Common Shares and the laws of any other relevant taxing jurisdiction to which they are subject.

ROC

The following summary addresses the principal ROC tax consequences of the ownership and disposition of the Bonds or Shares by a non-resident individual or non-resident entity that holds such Bonds or Shares (each a “Non-ROC Holder”). A “non-resident individual” (a “Non-ROC Individual Holder”) is a foreign national individual who is not physically present in the ROC for 183 days or more during any calendar year in which he or she owns the Bonds or Shares and a “non-resident entity” (a “Non-ROC Entity Holder”) is a corporation or a non-corporate body that is organized under the laws of a jurisdiction other than the ROC and does not have a fixed place of business or business agent in the ROC.

Conversion of Bonds

The conversion of Bonds into Shares will not be taxable to Non-ROC Holders under ROC income tax law, i.e., you will generally not recognize gain or loss on the conversion of your Bonds into the Shares except to the extent of cash received in lieu of a fractional Share. The amount of gain or loss you recognize on the receipt of cash in lieu of a fractional Share will be equal to the difference between the amount of cash you receive in respect of the fractional Share and the portion of your adjusted tax basis in the Bonds allocable to the fractional Share. The tax basis of the Shares received upon a conversion of a Bond will equal the adjusted tax basis of the Bond that was converted (excluding the portion of the tax basis allocable to any fractional Share).

In addition, securities transaction tax, gift tax and/or income tax may be imposed in relation to the converting holder’s designation of other person to be the holder of Shares upon conversion of the Bonds.

Dividends

Dividends (whether in cash or Shares) declared by the Company out of its retained earnings and distributed to a Non-ROC Holder in respect of the Shares are ROC sourced income and; therefore, subject to ROC withholding tax, currently at the rate of 21%, on the amount of the distribution (in the case of cash dividends) or on the par value of the Shares (in the case of stock dividends) unless a lower withholding rate is provided under an applicable tax treaty between the ROC and the jurisdiction where the Non-ROC Holder is a resident. A 10% undistributed earnings tax was imposed on an ROC company for its after-tax earnings generated after January 1, 1998 which were not distributed in the following year. The undistributed earnings tax was reduced to 5% on January 1, 2018. The undistributed earnings tax so paid will further reduce the retained earnings available for future distribution. Distributions of stock dividends declared by the Company out of its Capital Reserves are not subject to withholding tax, except under limited circumstances.

Capital Gains

Sales of the Bonds by Non-ROC Holders are regarded as transactions relating to property located outside the ROC and thus any resultant gains are currently not subject to ROC income tax. Non-ROC Holders are exempt from income tax on capital gains from the sale or disposal of the Shares. Payments of principal on the Bonds made by the Company will not be subject to ROC withholding tax. Payments of premium (if any ever becomes payable on the Bonds) to a Non-ROC holder constitute interest income derived from the ROC and, therefore, are subject to ROC withholding tax at a rate of 15% at the time of payment unless a lower withholding rate is provided under a tax treaty between ROC and the jurisdiction where the Non-ROC holder is a resident. The Company has agreed to pay Additional Amounts in respect of the withholding tax on such payments. See “Description of the bonds – Taxation.”

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Securities Transaction Tax

Securities transaction tax will be withheld at the rate of 0.3% of the transaction price upon a sale of the Shares. Nevertheless, transfers of the Bonds by Non-ROC Holders are not subject to ROC securities transaction tax.

Pre-emptive Rights

Distributions of statutory subscription rights for the Shares in compliance with the ROC Company Act are not subject to ROC tax. Proceeds derived from sales of statutory subscription rights evidenced by securities are subject to securities transaction tax, currently at the rate of 0.3% of the gross amount received. Non-ROC Holders remain exempt, after January 1, 2013, from income tax on capital gains from such sale. Proceeds derived from sales of statutory subscription rights which are not evidenced by securities are subject to income tax at the rate of 20% of the gains realized. Subject to compliance with ROC laws, the Company has the sole discretion to determine whether statutory subscription rights shall be evidenced by the issuance of securities.

Estate Tax and Gift Tax

Subject to allowable exclusions, deductions and exemptions, ROC estate tax is payable on any property located within the ROC of a deceased Non-ROC Individual Holder, and ROC gift tax is payable on any property located within the ROC donated by a Non-ROC Individual Holder. Estate tax and gift tax are currently imposed at the progressive rates of 10%, 15% and 20%. Under ROC estate and gift tax law, the Shares are deemed located within the ROC regardless of the location of the owner. Nevertheless, it is unclear whether a holder of the Bonds will be considered to own the Shares for this purpose.

Tax Treaties

At present, the ROC has income tax treaties with Singapore, Indonesia, South Africa, Australia, New Zealand, Vietnam, Gambia, Eswatini, Malaysia, North Macedonia, the Netherlands, UK, Senegal, Sweden, Belgium, Denmark, Israel, Paraguay, Hungary, France, India, Slovakia, Switzerland, Germany, Thailand, Kiribati, Luxembourg, Austria, Italy, Japan, Canada, and Poland, which limit the rate of withholding tax on dividends or interest paid by ROC companies to residents of these countries. Holders of the Bonds or Shares should consult their own tax advisers concerning their eligibility for benefits under an income tax treaty with respect to the Bonds or Shares.

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Plan of Distribution

J.P. Morgan Securities plc and Credit Suisse (Hong Kong) Limited are acting as the joint bookrunners of the Offering and as the representative of the Initial Purchasers set forth below. Subject to the terms and conditions stated in the purchase agreement dated the date of the Offering Memorandum, the Initial Purchasers have agreed to purchase, and we have agreed to sell to the Initial Purchasers, the principal amount of Bonds set forth opposite each Initial Purchaser’s name.

Initial Purchasers J.P. Morgan Securities plc ....................................................................................... Credit Suisse (Hong Kong) Limited .......................................................................... Total.........................................................................................................................	Principal amount of Bonds
	US$225,000,000 US$75,000,000
	US$300,000,000

The purchase agreement provides that the obligations of the Initial Purchasers to purchase the Bonds included in this offering are subject to approval of legal matters by counsel and to other conditions. The Initial Purchasers must purchase all the Bonds if it purchases any of the Bonds.

The Initial Purchasers have agreed to purchase the Bonds at the offering price set forth on the cover page of this Offering Memorandum. We have been advised that the Initial Purchasers propose to resell the Bonds at the offering price set forth on the cover page of this Offering Memorandum outside the ROC and the United States in reliance on Regulation S. See “Transfer restrictions.” The price at which the Bonds are offered may be changed at any time without notice.

The Bonds and the issuance of the Common Shares have not been, and will not be, registered under the U.S. Securities Act, and may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons except in certain transactions exempt from, or not subject to, the registration requirements of the Securities Act. See “Transfer restrictions.”

We, and certain of shareholders have agreed that, for a period of 90 days from the date of the Offering Memorandum, we and they will not, without the prior written consent of J.P. Morgan Securities plc and Credit Suisse (Hong Kong) Limited, offer, sell, contract to sell or otherwise dispose of or hedge any of the Common Shares or any securities convertible into or exchangeable for the Common Shares. J.P. Morgan Securities plc and Credit Suisse (Hong Kong) Limited in their sole discretion may release any of the securities subject to these lock-up agreements at any time without notice.

The Bonds will constitute new classes of securities with no established trading market. Approval-inprinciple has been received for the listing and quotation of the Bonds on the SGX-ST. However, neither we nor the Trustee, the Paying Agent, the Transfer Agent, the Conversion Agent or the Registrar can assure you that the prices at which the Bonds will sell in the market after this Offering will not be lower than the initial offering price or that an active trading market for the Bonds will develop and continue after this Offering. The Initial Purchasers have advised us that they currently intend to make a market in the Bonds. However, they are not obligated to do so and any marketmaking activities with respect to the Bonds may be discontinued at any time without notice. In addition, such market-making activity will be subject to the limits imposed by the U.S. Securities Act and the U.S. Securities Exchange Act of 1934, as amended. Accordingly, neither we nor the Trustee, the Paying Agent, the Transfer Agent, the Conversion Agent or the Registrar can assure you as to the liquidity of, or trading market for, the Bonds.

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The Initial Purchasers have not performed commercial banking, investment banking and advisory services for us from time to time for which they have received customary fees and reimbursement of expenses. The Initial Purchasers may, from time to time, engage in transactions with and perform services for us in the ordinary course of its business for which it may receive customary fees and reimbursement of expenses. In addition, affiliates of the Initial Purchasers are currently not lenders, and managers for the lenders, under our credit facilities. Apart from the lending facilities, the affiliates of J.P. Morgan Securities plc and Credit Suisse (Hong Kong) Limited may also provide foreign exchange, cash management and trade-related services to us.

We have agreed to indemnify the Initial Purchasers against certain liabilities, including liabilities under the Securities Act, or to contribute to payments that the initial purchasers may be required to make because of any of those liabilities.

Notice to Prospective Investors in the ROC and Restriction on Related Party Subscription Under ROC Law

The Bonds may not be offered or sold directly or indirectly in the ROC, or to, or for the account or benefit of, any ROC person.

Under applicable ROC laws and regulations, we and the Initial Purchasers are prohibited from offering and selling the Bonds to the “related parties” as defined in the Regulations Governing the Preparation of Financial Reports by Securities Issuers and further specified in Section 36 of the ROC Securities Association Rules Governing Underwriting and Resale of Securities by Securities Firms. Therefore, each subscriber or purchaser of the Bonds described in the Offering Memorandum will be deemed to have acknowledged and represented to us and the Initial Purchasers that he, she or it is not: (a) a related party to us, (b) a business entity that is invested by us using equity method in our accounting reporting, (c) a business entity that invests in our company and uses equity method in its accounting reporting, (d) a company whose chairperson of the board or president is the same as that of our company or is the spouse thereof, (e) a foundation with one-third of its total paid-in funds donated by us, (f) our director, president, vice-president, assistant vice president, and other department head under the immediate supervision by our president, (g) a spouse of our director or president, (h) a director or employee of any member of the underwriting syndicate or a spouse thereto, and (i) a person subscribing for the Bonds on behalf of or for the benefit of any person set forth in items (b) to (h) above.

Notice to Prospective Investors in the European Economic Area

In relation to each member state of the European Economic Area that has implemented the Offering Memorandum Directive (each, a “Relevant Member State”) an offer to the public of any securities which are subject of the Offering may not be made in that Relevant Member State, except that an offer to the public in that Relevant Member State of any securities may be made at any time under the following exemptions under the Prospectus Directive, if they have implemented in that Relevant Member State:

to legal entities which are authorized or regulated to operate in the financial markets or, if not so authorized or regulated, whose corporate purpose is solely to invest in securities;
to any legal entity that has two or more of (1) an average of at least 250 employees during the last financial year; (2) a total balance sheet of more than C = 43,000,000, and (3) an annual net turnover of more than C = 50,000,000, as shown in its last annual or consolidated accounts;
to fewer than 100 natural or legal persons (other than qualified investors as defined below) subject to obtaining the prior consent of the representatives for any such offer; or
in any other circumstances falling within Article 3(2) of the Prospectus Directive, provided that no such offer of securities shall result in a requirement for the publication of a prospectus pursuant to Article 3.

Each purchaser of securities described in the Offering Memorandum located within a relevant member state will be deemed to have represented, acknowledged and agreed that it is a “qualified investor” within the meaning of Article 2(1)(e) of the Prospectus Directive.

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For purposes of this provision, the expression an “offer to the public” in relation to any securities in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the offer and the securities to be offered so as to enable an investor to decide to purchase or subscribe the securities, as the expression may be varied in that Relevant Member State by any measure implementing the Prospectus Directive in that Relevant Member State, and the expression “Prospectus Directive” means Directive 2003/71/EC (and amendments thereto, including the 2010 PD Amending Directive, to the extent implemented in the Relevant Member State), and includes any relevant implementing measure in each Relevant Member State, and the expression 2010 PD Amending Directive means Directive 2010/73/EU.

The sellers of the securities have not authorized and do not authorize the making of any offer of securities through any financial intermediary on their behalf, other than offers made by the Initial Purchasers with a view to the final placement of the securities as contemplated in the Offering Memorandum. Accordingly, no purchasers of the securities, other than the Initial Purchasers, are authorized to make any further offer of the securities on behalf of the sellers or the Initial Purchasers.

Notice to Prospective Investors in the United Kingdom

The Initial Purchasers have represented and agreed that: (i) it has only communicated or caused to be communicated and will only communicate or cause to be communicated any invitation or inducement to engage in investment activity (within the meaning of section 21 of the FSMA) received by it in connection with the issue or sale of any Bonds in circumstances in which section 21(1) of the FSMA does not apply; and (ii) it has complied and will comply with all applicable provisions of the FSMA with respect to anything done by it in relation to the Bonds in, from or otherwise involving the United Kingdom.

Notice to Prospective Investors in France

Neither the Offering Memorandum nor any other offering material relating to the securities described in the Offering Memorandum has been submitted to the clearance procedures of the Autorite des Marches Financiers or of the competent authority of another member state of the European Economic Area and notified to the Autorite des Marches Financiers. The securities have not been offered or sold and will not be offered or sold, directly or indirectly, to the public in France.

Neither the Offering Memorandum nor any other offering material relating to the securities has been or will be:

released, issued, distributed or caused to be released, issued or distributed to the public in France; or
used in connection with any offer for subscription or sale of the securities to the public in France;
such offers, sales and distributions will be made in France only:
to qualified investors (investisseurs qualifiés) and/or to a restricted circle of investors (cercle restreint d’investisseurs), in each case investing for their own account, all as defined in, and in accordance with, articles L.411-2, D.411-1, D.411-2, D.734-1, D.744-1, D.754-1 and D.764-1 of the French Code monetaire et financier;
to investment services providers authorized to engage in portfolio management on behalf of third parties; or
in a transaction that, in accordance with article L.411-2-II-1° – or -2°– or 3° of the French Code monétaire et financier and article 211-2 of the General Regulations (Règlement Général) of the Autorite des Marches Financiers, does not constitute a public offer (appel public à l’épargne).

The securities may be resold directly or indirectly, only in compliance with articles L.411-1, L.411-2, L.412-1 and L.621-8 through L.621-8-3 of the French Code monétaire et financier.

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Notice to Prospective Investors in the United States

The Bonds and the Common Shares have not been and will not be registered under the U.S. Securities Act for offer or sale as part of their distribution and may not be offered or sold in the United States or to, or for the account or benefit of, U.S. persons except, in either case, pursuant to an effective registration statement or in accordance with an applicable exemption from the registration requirements of the U.S. Securities Act. The Bonds are being offered and sold by the Initial Purchasers only outside the United States in reliance upon Regulation S under the Securities Act. The Initial Purchasers have agreed that it will not offer, sell or deliver any Bonds as part of its distribution at any time within the United States or to, or for the account or benefit of, U.S. persons except, in either case, in accordance with Regulation S.

Notice to Prospective Investors in the People’s Republic of China

The Offering Memorandum does not constitute a public offer of the Bonds, whether by sale or by subscription, in the People’s Republic of China, or PRC. The Offering Memorandum is not being and will not be circulated or distributed in the PRC. The Bonds are not being offered or sold, and will not be offered or sold, directly or indirectly, to any person for re-offering or resale to any resident of the PRC. For the purposes of this paragraph, PRC does not include Hong Kong, Macau and Taiwan.

Notice to Prospective Investors in Hong Kong

The securities may not be offered or sold in Hong Kong by means of any document other than (i) in circumstances which do not constitute an offer to the public within the meaning of the Companies Ordinance (Cap. 32, Laws of Hong Kong), (ii) to “professional investors” within the meaning of the Securities and Futures Ordinance (Cap. 571, Laws of Hong Kong), and any rules made thereunder, or (iii) in other circumstances which do not result in the document being a “prospectus” within the meaning of the Companies Ordinance (Cap. 32, Laws of Hong Kong) and no advertisement, invitation or document relating to the securities may be issued or may be in the possession of any person for the purpose of issue (in each case whether in Hong Kong or elsewhere), which is directed at, or the contents of which are likely to be accessed or read by, the public in Hong Kong (except if permitted to do so under the laws of Hong Kong) other than with respect to securities which are or are intended to be disposed of only to persons outside Hong Kong or only to “professional investors” within the meaning of the Securities and Futures Ordinance (Cap. 571, Laws of Hong Kong) and any rules made thereunder.

Notice to Prospective Investors in Japan

The securities offered in the Offering Memorandum have not been registered under the Securities and Exchange Law of Japan. The securities have not been offered or sold and will not be offered or sold, directly or indirectly, in Japan or to or for the account of any resident of Japan, except (i) pursuant to an exemption from the registration requirements of the Securities and Exchange Law, and (ii) in compliance with any other applicable requirements of Japanese law.

Notice to Prospective Investors in Singapore

This Offering Memorandum has not been, and will not be, registered as a prospectus with the Monetary Authority of Singapore. Accordingly, this Offering Memorandum or any other document or material in connection with the offer or sale, or invitation for subscription or purchase, of the Bonds may not be circulated or distributed, nor may the Bonds be offered or sold, or be made the subject of an invitation for subscription or purchase, whether directly or indirectly, to any person in Singapore other than (i) to an institutional investor (as defined in Section 4A of the SFA) pursuant to Section 274 of the SFA, (ii) to a relevant person (as defined in Section 275(2) of the SFA) pursuant to Section 275(1) of the SFA, or any person pursuant to Section 275(1A) of the SFA, and in accordance with the conditions specified in Section 275 of the SFA and (where applicable) Regulation 3 of the Securities and Futures (Classes of Investors) Regulations 2018 of Singapore or (iii) otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the SFA.

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Where the Bonds are subscribed or purchased in reliance of an exemption under Section 274 or 275 of the SFA, the Bonds shall not be sold within the period of six (6) months from the date of the initial acquisition of the Bonds, except to any of the following persons:

(i) an institutional investor (as defined in Section 4A of the SFA);
(ii) a relevant person (as defined in Section 275(2) of the SFA); or
(iii) any person pursuant to an offer referred to in Section 275(1A) of the SFA,

unless expressly specified otherwise in Section 276(7) of the SFA or Regulation 37A of the Securities and Futures (Offers of Investments) (Securities and Securities-based Derivatives Contracts) Regulations 2018 of Singapore.

Where the Bonds are subscribed or purchased under Section 275 of the SFA by a relevant person which is:

(a) a corporation (which is not an accredited investor (as defined in Section 4A of the SFA)) the sole business of which is to hold investments and the entire share capital of which is owned by one or more individuals, each of whom is an accredited investor; or
(b) a trust (where the trustee is not an accredited investor) whose sole purpose is to hold investments and each beneficiary of the trust is an individual who is an accredited investor,

securities or securities-based derivatives contracts (each term as defined in Section 2(1) of the SFA) of that corporation or the beneficiaries’ rights and interest (howsoever described) in that trust shall not be transferred within six (6) months after that corporation or that trust has acquired the Bonds pursuant to an offer made under Section 275 of the SFA except:

(1) to an institutional investor or to a relevant person as defined in Section 275(2) of the SFA, or (in the case of such corporation) where the transfer arises from an offer referred to in Section 276(3)(i)(B) of the SFA or (in the case of such trust) where the transfer arises from an offer referred to in Section 276(4)(i)(B) of the SFA;
(2) where no consideration is or will be given for the transfer;
(3) where the transfer is by operation of law;
(4) as specified in Section 276(7) of the SFA; or
(5) as specified in Regulation 37A of the Securities and Futures (Offers of Investments) (Securities and Securities-based Derivatives Contracts) Regulations 2018 of Singapore.

Any reference to the SFA is a reference to the Securities and Futures Act, Chapter 289 of Singapore and a reference to any term as defined in the SFA or any provision in the SFA is a reference to that term as modified or amended from time to time including by such of its subsidiary legislation as may be applicable at the relevant time.

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Transfer Restrictions

Because of the following restrictions, purchasers are advised to consult with legal counsel prior to making any resale, pledge or transfer of the Bonds or the Common Shares.

This Offering is being made pursuant to Regulation S under the Securities Act. The Bonds and the Common Shares represented thereby have not been registered under the Securities Act or with any securities regulatory authority of any state in the United States or other jurisdiction and may only be offered, sold or delivered outside the United States (as defined in Regulation S under the Securities Act) to persons other than U.S. persons (as defined in Regulation S under the Securities Act) in offshore transactions in reliance on Regulation S, and in each case in accordance with any other applicable law.

Each owner of the Bonds, by its acceptance thereof will be deemed to have acknowledged, represented to and agreed as follows (terms used that are defined in Regulation S are used as so defined):

The Bonds and the Common Shares have not been, and are not expected to be, registered under the Securities Act or with any securities regulatory authority of any state of the United States.
Each owner purchasing as part of the distribution of the Bonds is a non-U.S. person purchasing the Bonds in an offshore transaction meeting the requirements of Regulation S.
Such owner will not offer, sell, pledge or otherwise transfer any interest in the Bonds and the Common Shares, except as permitted by the applicable legend set forth in paragraph (4) below.
The Bonds will bear a legend to the following effect, unless we determine otherwise in compliance with applicable law, and that it will observe the restrictions contained therein:

THE BONDS IN RESPECT OF WHICH THIS CERTIFICATE IS ISSUED AND THE SHARES OF COMMON STOCK (THE “SHARES”) OF EVERGREEN MARINE CORPORATION (TAIWAN) LTD. ISSUABLE UPON CONVERSION THEREOF HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND SUCH SECURITIES MAY NOT BE OFFERED, SOLD, PLEDGED, DELIVERED OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND ALL APPLICABLE SECURITIES LAWS. TERMS USED ABOVE HAVE THE MEANINGS GIVEN TO THEM IN REGULATION S UNDER THE SECURITIES ACT. EACH HOLDER AND BENEFICIAL OWNER, BY ITS ACCEPTANCE OF THE BONDS EVIDENCED HEREBY, REPRESENTS THAT IT UNDERSTANDS AND AGREES TO THE FOREGOING RESTRICTIONS.

Each purchaser of Bonds that may wish to resell any Bonds pursuant to Regulation S is advised that approval-in-principle has been received for the listing and quotation of the Bonds on the SGX-ST. The SGX-ST is a “designated offshore securities market” (within the meaning of Regulation S) and accordingly, a resale transaction could be effected in, on or through the facilities of such exchange in reliance upon the safe harbor provided by Rule 904 of Regulation S, subject to compliance with the conditions of Rule 904.

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Legal Matters

Certain legal matters in connection with the offering of the Bonds will be passed upon for us by Baker & McKenzie as to ROC law. Certain legal matters in connection with the offering of the Bonds will be passed upon for the Initial Purchasers by Simpson Thacher & Bartlett as to United States federal law and New York state law.

130

Independent Accountants

The audited consolidated financial statements of Evergreen Marine Corporation (Taiwan) Ltd. as of and for the years ended December 31, 2017 and 2018 and for the years ended December 31, 2018 and 2019, prepared in accordance with T-IFRSs included in this Offering Memorandum, have been audited by PricewaterhouseCoopers, Taiwan, independent auditors, as stated in their report appearing herein. The audit reports of PricewaterhouseCoopers, Taiwan for the years ended December 31, 2017 and 2018 and for the years ended December 2018 and 2019 state that certain subsidiaries and investments accounted for under the equity method were audited by other auditors.

With respect to the unaudited interim consolidated financial statements of Evergreen Marine Corporation (Taiwan) Ltd. and its subsidiaries as of June 30, 2019 and 2020 and for the six months ended June 30, 2019 and 2020 included in this Offering Memorandum, PricewaterhouseCoopers, Taiwan, independent auditors, have applied limited procedures in accordance with ROC statement of Auditing Standards No. 65, Review of Financial Information Performed by the Independent Auditor of the Entity, for a review of such information. However, as stated in their report included herein, they did not audit and they do not express an opinion on that interim consolidated financial statements and certain subsidiaries and investments accounted for under the equity method were reviewed by other auditors. Accordingly, the degree of reliance on their report on such information should be restricted in light of the limited nature of the review procedures applied.

The office of PricewaterhouseCoopers, Taiwan is located at 27F, No. 333, Sec. 1, Keelung Rd., Xinyi Dist., Taipei 11012, Taiwan.

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General Information

We began with the establishment of Evergreen Marine Corporation (EMC) by Dr. Yung-Fa Chang on September 1, 1968. As of the date of this Offering Memorandum, according to our Articles of Incorporation, our authorized share capital is NT$70,000,000,000, and our paid-in share capital was authorized share capital is NT$48,129,737,860, divided into 4,812,973,786 Shares, NT$10 par value. Our registered and principal executive office is located at No. 166, Sec. 2, Minsheng East Road, Jhongshan Dist., Taipei City, Taiwan, and our telephone number at the above address is +886-22505-7766. We are registered with the Taiwan Ministry of Economic Affairs and our registration number is 11337775. Our Legal Entity Identifier Code is 254900EIJA0A39C5SO15. We currently act as our Common Share registrar and maintain our register of shareholders at our offices in Taipei, Taiwan, and enter transfers of Common Shares in such register upon presentation of, among other documents, certificates in respect of the transferred Common Shares. The registered office of our share registrar is at 2F, No.166, Sec. 2, Minsheng East Road, Jhongshan Dist., Taipei, Taiwan. The Company accepts responsibility for the information contained in this Offering Memorandum. To the best of the knowledge and belief of the Company (whom has taken all reasonable care to ensure that such is the case), the information contained in this Offering Memorandum is in accordance with the facts and does not omit anything likely to affect the import of such information.

The Offering and the issue of the Bonds were authorized and approved by the Board of Directors of the Company on July 9, 2020 and by the FSC on August 26, 2020.

There has been neither significant change in the financial or trading position since December 31, 2019 nor any material adverse change in the financial position or prospects since December 31, 2019 of the Company and its subsidiaries, the date of the latest financial statements contained herein.

The Indenture and the Purchase Agreement are governed by the laws of the State of New York.

The Bonds have been accepted for clearance through the facilities of Euroclear and Clearstream. Certain information about the Bonds is set forth below:

Bonds...............................................................	ISIN number XS2231396040	Common Code number 223139604	SEDOL
			BM8HV81

Approval-in-principle has been received for the listing and quotation of the Bonds on the SGX-ST. As long as the Bonds are listed on the SGX-ST and the rules of the SGX-ST so require, the Company shall appoint and maintain a paying agent in Singapore, where the Bonds may be presented or surrendered for payment or redemption, in the event that the Global Bond is exchanged for certificates in definitive form. In addition, in the event that the Global Bond is exchanged for certificates in definitive form, announcement of such exchange shall be made by or on behalf of the Company through the SGX-ST and such announcement will include all material information with respect to the delivery of the Certificates in definitive form, including details of the paying agent in Singapore.

Except as disclosed in this Offering Memorandum, neither the Company nor any members of the Company is, or has been involved in any legal or arbitration proceedings (including any such proceedings which are pending or threatened of which the Company is aware) which may have, or have had during the preceding 12 months a significant effect on the financial position of the Company. See “Business – Legal proceedings and governmental investigations”.

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Index to Financial Statements

Consolidated Financial Statements for the Six Months Ended June 30, 2019 and 2020

Consolidated Financial Statements for the Six Months Ended June 30, 2019 and 2020
Independent Auditors’ Review Report .........................................................................................	F-3
Consolidated Balance Sheets as of June 30, 2019 and 2020 .....................................................	F-6
Consolidated Statements of Comprehensive Income for the Six Months Ended June 30, 2019 and
2020 .........................................................................................................................................	F-8
Consolidated Statements of Changes in Equity for the Six Months Ended June 30, 2019 and
2020 ........................................................................................................................................	F-10
Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2019 and 2020 .....	F-12
Notes to Consolidated Financial Statements ...............................................................................	F-14
Consolidated Financial Statements for the Year Ended December 31, 2018 and 2019
Independent Accountants’ Review Report ..................................................................................	F-140
Consolidated Balance Sheets as of December 31, 2018 and 2019 .............................................	F-149
Consolidated Statements of Comprehensive Income for the Year Ended December 31, 2018 and
2019 .........................................................................................................................................	F-151
Consolidated Statements of Changes in Equity for the Year Ended December 31, 2018 and
2019 ........................................................................................................................................	F-153
Consolidated Statements of Cash Flows for the Year Ended December 31, 2018 and 2019 .........	F-155
Notes to Consolidated Financial Statements ...............................................................................	F-157
Consolidated Financial Statements for the Year Ended December 31, 2017 and 2018
Independent Accountants’ Review Report ..................................................................................	F-267
Consolidated Balance Sheets as of December 31, 2017 and 2018 .............................................	F-275
Consolidated Statements of Comprehensive Income for the Year Ended December 31, 2017 and
2018 .........................................................................................................................................	F-277
Consolidated Statements of Changes in Equity for the Year Ended December 31, 2017 and
2018 ........................................................................................................................................	F-279
Consolidated Statements of Cash Flows for the Year Ended December 31, 2017 and 2018 .........	F-280
Notes to Consolidated Financial Statements ...............................................................................	F-282

F-1

EVERGREEN MARINE CORPORATION (TAIWAN) LTD. AND SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS AND INDEPENDENT AUDITORS’ REVIEW REPORT JUNE 30, 2019 AND 2020

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

~1~

F-2

INDEPENDENT AUDITORS' REVIEW REPORT (TRANSLATED FROM CHINESE)

To the Board of Directors and Shareholders of Evergreen Marine Corporation (Taiwan) Ltd.

Introduction

We have reviewed the accompanying consolidated balance sheets of Evergreen Marine Corporation (Taiwan) Ltd. and subsidiaries (the “Group”) as at June 30, 2019 and 2020, and the related consolidated statements of comprehensive income for the three-month and six-month periods then ended as well as the consolidated statements of changes in equity and of cash flows for the six-month periods then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies. Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with Regulations Governing the Preparation of Financial Reports by Securities Issuers and International Accounting Standard 34, “Interim Financial Reporting” as endorsed by the Financial Supervisory Commission. Our responsibility is to express a conclusion on these consolidated financial statements based on our reviews.

Scope of Review

Except as explained in the following paragraph, we conducted our reviews in accordance with the Statement of Auditing Standards No. 65 “Review of Financial Information Performed by the Independent Auditor of the Entity” in the Republic of China. A review of consolidated financial statements consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

~2~

F-3

Basis for Qualified Conclusion

As explained in Note 6(7), we did not review the financial statements of certain investments accounted for using equity method, which statements reflect investments accounted for using equity method of NT$1,911,729 thousand and NT$1,589,393 thousand, constituting 0.64% and 0.52% of the consolidated total assets as of June 30, 2019 and 2020, respectively, and comprehensive income and loss under the equity method of NT$35,331 thousand, NT$32,833 thousand, NT$66,019 thousand and NT$55,784 thousand, constituting (16.58%), 0.84%, 15.78% and 2.72% of the consolidated total comprehensive income and loss for the three-month and six-month periods then ended. These amounts and the related information disclosed in Note 13 were based on the unreviewed financial statements of such investee companies.

Qualified Conclusion

Based on our reviews and the reports of other independent accountants, except for the possible effects on the consolidated financial statements, if any, as might have been determined to be necessary had the financial statements of certain investments accounted for using equity method and the related information disclosed in Note 13 been reviewed by independent accountants as explained in the preceding paragraph, nothing has come to our attention that causes us to believe that the accompanying consolidated financial statements do not present fairly, in all material respects, the consolidated financial position of the Group as at June 30, 2019 and 2020, and of its consolidated financial performance for the three-month and six-month periods then ended and its consolidated cash flows for the six-month periods then ended in accordance with Regulations Governing the Preparation of Financial Reports by Securities Issuers and International Accounting Standard 34, “Interim Financial Reporting” as endorsed by the Financial Supervisory Commission.

~3~

F-4

Other Matter – Review Reports of Other Independent Accountants

We did not review the financial statements of certain consolidated subsidiaries and investments accounted for using equity method. Those financial statements were reviewed by other independent accountants, whose reports thereon have been furnished to us, and our report expressed herein, insofar as it relates to the amounts included in the financial statements and the information disclosed in Note 13 was based solely on the review reports of other independent accountants. These consolidated subsidiaries reflect total assets of NT$65,620,826 thousand and NT$61,198,837 thousand, constituting 21.81% and 19.92% of the consolidated total assets as at June 30, 2019 and 2020, and total operating revenues of NT$10,379,442 thousand, NT$8,672,549 thousand, NT$21,096,388 thousand and NT$16,754,411 thousand, constituting 22.03%, 19.77%, 22.73% and 19.18% of the consolidated total operating revenues for the three-month and six-month periods then ended. The investments accounted for using equity method amounted to NT$16,921,381 thousand and NT$17,439,601 thousand, constituting 5.62% and 5.68% of the consolidated total assets as at June 30, 2019 and 2020, and the comprehensive income and loss under equity method was (NT$331,280) thousand, NT$410,601 thousand, (NT$143,973) thousand and (NT$219,985) thousand, constituting 155.48%, 10.49%, (34.41%) and (10.74%) of the consolidated total comprehensive income and loss for the three-month and six-month periods then ended.

Lee, Hsiu-Ling Chih, Ping-Chiun For and on behalf of PricewaterhouseCoopers, Taiwan August 13, 2020

------------------------------------------------------------------------------------------------------------------------------------------------The accompanying consolidated financial statements are not intended to present the financial position and results of operations and cash flows in accordance with accounting principles generally accepted in countries and jurisdictions other than the Republic of China. The standards, procedures and practices in the Republic of China governing the audit of such financial statements may differ from those generally accepted in countries and jurisdictions other than the Republic of China. Accordingly, the accompanying consolidated financial statements and independent auditors’ review 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.

~4~

F-5

EVERGREEN MARINE CORPORATION (TAIWAN) LTD. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS

JUNE 30, 2019, DECEMBER 31, 2019 AND JUNE 30, 2020

(Expressed in thousands of New Taiwan dollars) (The balance sheets as of June 30, 2019 and 2020 are reviewed, not audited)

Assets	Notes	June 30, 2019December 31, 2019 June 30, 2020 NT$ NT$ NT$ US$ (Unaudited) (Note 4) � �� �� � �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� � �� �� � �� ��	June 30, 2020
Current assets 1100 Cash and cash equivalents 1136 Current financial assets at amortised cost, net 1140 Current contract assets 1150 Notes receivable, net 1170 Accounts receivable, net 1180 Accounts receivable, net - related parties 1200 Other receivables 1210 Other receivables - related parties 1220 Current income tax assets 130X Inventories 1410 Prepayments 1470 Other current assets 11XX Current assets Non-current assets 1517 �on-current financial assets at fair value through other comprehensive income 1535 Non-current financial assets at amortised cost, net 1550 Investments accounted for using equity method 1600 Property, plant and equipment, net 1755 Right-of-use assets 1760 Investment property, net 1780 Intangible assets 1840 Deferred income tax assets 1900 Other non-current assets 15XX Non-current assets 1XXX Total assets	6(1) 6(3) and 8 6(21) 6(4) 6(4) 6(4) and 7 7 6(5) 6(6) and 8 6(2) 6(3) 6(7) 6(8), 8 and 9 6(9) 6(10) and 8 6(4)(11) and 8

(Continued)

~5~

F-6

EVERGREEN MARINE CORPORATION (TAIWAN) LTD. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS

JUNE 30, 2019, DECEMBER 31, 2019 AND JUNE 30, 2020

(Expressed in thousands of New Taiwan dollars)

(The balance sheets as of June 30, 2019 and 2020 are reviewed, not audited)

Liabilities and Equity	Notes	June 30,2019 December 31,2019 June 30,2020 NT$ NT$ NT$ US$ (Unaudited) (Note 4) �� �� �� �� �� �� �� �� � � �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� ��	June 30,2020
Current liabilities 2126 Current financial liabilities for hedging 2130 Current contract liabilities 2150 Notes payable 2170 Accounts payable 2180 Accounts payable - related parties 2200 Other payables 2220 Other payables - related parties 2230 Current income tax liabilities 2280 Current lease liabilities 2300 Other current liabilities 21XX Current liabilities Non-current liabilities 2511 Non-current financial liabilities for hedging 2530 Corporate bonds payable 2540 Long-term loans 2570 Deferred income tax liabilities 2580 Non-current lease liabilities 2600 Other non-current liabilities 25XX Non-current liabilities 2XXX Total liabilities Equity attributable to owners of the parent Capital 3110 Common stock Capital surplus 3200 Capital surplus Retained earnings 3310 Legal reserve 3350 Unappropriated retained earnings Other equity interest 3400 Other equity interest 31XX Equity attributable to owners of the parent 36XX Non-controlling interest 3XXX Total equity Significant Contingent Liabilities And Unrecognized Contract Commitments Significant Events After The Balance Sheet Date 3X2X Total liabilities and equity	6(9) and 7 6(21) 7 7 6(9) and 7 6(12) 6(9) and 7 6(13) 6(14) 6(9) and 7 6(15)(16) 6(17) 6(18) 6(19) 6(20) 9 11

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

~6~

F-7

EVERGREEN MARINE CORPORATION (TAIWAN) LTD. AND SUBSIDIARIES	EVERGREEN MARINE CORPORATION (TAIWAN) LTD. AND SUBSIDIARIES	CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME	SIX MONTHS ENDED JUNE 30, 2019 AND 2020	SIX MONTHS ENDED JUNE 30, 2019 AND 2020	(Expressed in thousands of New Taiwan dollars, except earnings (loss) per share)	(Reviewed, not audited)	Three-month periods ended June 30 Six-month periods ended June 30	2019 2020 2019 2020 2020	Items Notes NT$ NT$ NT$ NT$ US$	(Unaudited)	(Note 4)	Operating revenue 6(21) and 7 � �� � �� � �� � �� � ��	Operating costs 6(27)(28) and 7 � �� �� �� �� � ��	Gross profit �� �� �� �� ��	Unrealized loss (profit)from sales �� �� �� �� ��	Unrealized loss (profit)from sales �� �� �� �� ��	Realized profit on from sales �� �� �� �� ��	Gross profit �� �� �� �� ��	Operating expenses 6(27)(28) and 7	Selling expenses � �� �� �� �� � ��	General and administrative expenses � �� �� �� �� � ��	Impairment gain and reversal of impairment loss determined in	accordance with IFRS 9 �� �� �� �� ��	Operating expenses � �� �� �� �� � ��	Other gains(losses) - net 6(22) and 7 �� �� �� �� � ��	Operating profit �� �� �� �� ��	Other non-operating income and expenses	Interest income 6(23) �� �� �� �� ��	Other income 6(24) �� �� �� �� ��	Other gains and losses 6(25) � �� �� �� �� ��	Finance costs 6(26) and 7 � �� �� �� �� � ��	Share of profit or loss of associates and joint ventures accounted for	using equity method � �� �� �� �� � ��	Total non-operating income and expenses � �� �� �� �� � ��	(Loss) profit before income tax � �� �� �� �� ��	Income tax expense 6(29) � �� �� �� �� � ��	(Loss) profit for the period �� �� �� � �� � �� � ��	(Continued)	~7~
												4000	5000	5900	5910		5920	5950		6100	6200	6450		6000	6500	6900		7100	7010	7020	7050	7060		7000	7900	7950	8200

F-8

EVERGREEN MARINE CORPORATION (TAIWAN) LTD. AND SUBSIDIARIES	EVERGREEN MARINE CORPORATION (TAIWAN) LTD. AND SUBSIDIARIES	CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME	SIX MONTHS ENDED JUNE 30, 2019 AND 2020	SIX MONTHS ENDED JUNE 30, 2019 AND 2020	(Expressed in thousands of New Taiwan dollars, except earnings (loss) per share)	(Reviewed, not audited)	Three-month periods ended June 30 Six-month periods ended June 30	Three-month periods ended June 30 Six-month periods ended June 30	2019 2020 2019 2020 2020	Items Notes NT$ NT$ NT$ NT$ US$	(Unaudited)	(Note 4)	Other comprehensive income (loss)	Components of other comprehensive income that will not be reclassified to profit or loss	Components of other comprehensive income that will not be reclassified to profit or loss	Unrealised gains (losses) on valuation of investments in equity 6(2)(20)	instruments measured at fair value through other comprehensive income � �� � �� � �� �� �� �� �	Share of other comprehensive (loss) income of associates and joint	ventures accounted for using the equity method, components of other	comprehensive income that will not be reclassified to profit or loss � �� �� �� �� � �� �	Income tax related to components of other comprehensive (loss) income 6(29)	that will not be reclassified to profit or loss � �� �� �� �� ��	Components of other comprehensive income (loss) that will not be	reclassified to profit or loss �� �� �� �� � �� �	Components of other comprehensive income that will be reclassified to	profit or loss	Exchange differences on translating the financial statements of foreign	operations �� �� �� �� � �� �	(Losses)gains on hedging instrument 6(9)(20) � �� �� �� �� ��	Share of other comprehensive income (loss) of associates and joint	ventures accounted for using the equity method �� �� �� �� � �� �	Income tax relating to the components of other comprehensive income 6(29)	(loss) �� �� �� �� � �� �	Components of other comprehensive income (loss) that will be	reclassified to profit or loss �� �� �� �� � �� �	Other comprehensive income (loss) for the period, net of income tax � �� � �� � �� �� �� �� �	Total comprehensive (loss) income for the period �� �� �� � �� � �� � ��	(Loss) profit, attributable to:	Owners of the parent �� �� �� � �� � �� � ��	Non-controlling interest �� �� �� �� �� � ��	Comprehensive (loss) income attributable to:	Owners of the parent �� �� �� � �� � �� � ��	Non-controlling interest �� �� �� �� �� � ��	Basic (loss) earnings per share (in dollars) 6(30)	Basic (loss) earnings per share �� �� �� � �� � �� � ��	Diluted (loss) earnings per share �� �� �� � �� � �� � ��	The accompanying notes are an integral part of these consolidated financial statements.	~8~
																8316		8320			8349		8310				8361		8368	8370		8399		8360		8300	8500		8610	8620		8710	8720		9750	9850

F-9

													Non-controlling	Total interest Total equity		�� ��	�� �� ��	�� �� ��	�� �� ��		� � �		�� � � ��	�� �� ��	�� ��		�� ��	�� �� ��	�� �� ��	�� �� ��		�� � ��	�� � ��	� � �� ��	�� ��
EVERGREEN MARINE CORPORATION (TAIWAN) LTD. AND SUBSIDIARIES	CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY	SIX MONTHS ENDED JUNE 30, 2019 AND 2020	(Expressed in thousands of New Taiwan dollars)	(Reviewed, not audited)	Equity attributable to owners of the parent	Retainedearnings Other equity interest	Unrealised gains	(losses) from	Financial financial assets	statements measured at fair	translation value through Gains (losses) on	Capital surplus, differences of other effective portion	additional paid-in Unappropriated foreign comprehensive of cash flow	Common stock capital Legal reserve retained earnings operations income hedges		�� �� �� �� �� ��	� � � �� � � �	� � � � �� �� ��	� � � �� �� �� ��		� � �� � �� � � �		� � �� � � � � � � � �	� � �� � � � � � �	�� �� �� ��		�� �� �� ��	� � � �� � � �	� � � �� �� � �� ��	� � � �� �� � �� ��		� �� � � � � �	� �� � � � � �	� � � � � � �	�� �� �� ��	(Continued)
														Notes		6(20)		6(20)				6(18)(20)					6(20)		6(20)		6(18)(20)		6(18)
															Six-month period ended June 30, 2019— NT dollars	Balance at January 1, 2019	Profit (loss) for the period	Other comprehensive income (loss) for the period	Total comprehensive income (loss)	Distribution of 2018 earnings:	Legal capital reserve	Adjustments to share of changes in equity of associates and	joint ventures	Net changes in non-controlling interests	Balance at June 30, 2019	Six-month period ended June 30, 2020— NT dollars	Balance at January 1, 2020	Profit for the period	Other comprehensive income (loss) for the period	Total comprehensive income (loss)	Adjustments to share of changes in equity of associates and	joint ventures	Other changes in capital surplus	Net changes in non-controlling interests	Balance at June 30, 2020

F-10

EVERGREEN MARINE CORPORATION (TAIWAN) LTD. AND SUBSIDIARIES	EVERGREEN MARINE CORPORATION (TAIWAN) LTD. AND SUBSIDIARIES	CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY	CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY	SIX MONTHS ENDED JUNE 30, 2020 AND 2019	SIX MONTHS ENDED JUNE 30, 2020 AND 2019	(Expressed in thousands of New Taiwan dollars)	Equity attributable to owners of the parent	Retained earnings Other equity interest	Unrealised gains	(losses) from	Financial financial assets	statements measured at fair	translation value through Gains (losses) on	Capital surplus, differences of other effective portion	additional paid-in Unappropriated foreign comprehensive of cash flow Non-controlling	Common stock capital Legal reserve retained earnings operations income hedges Total interest Total equity			�� � �� �� �� �� � �� �� �� ��	� � � �� � � � �� �� ��	� � � �� �� � �� �� �� �� ��	� � � �� �� � �� �� �� �� ��		� �� � � � � � �� � ��	� � � � � � � � � �	� � � � � � � � � �� ��	�� � �� �� �� �� � �� �� �� ��	The accompanying notes are an integral part of these consolidated financial statements.	~10~
																Notes	Six-month period ended June 30, 2020— US dollars (Unaudited)(Note 4)		Balance at January 1, 2020 6(20)	Profit for the period	Other comprehensive income (loss) for the period 6(20)	Total comprehensive income (loss)	Adjustments to share of changes in equity of associates and 6(18)(20)	joint ventures	Other changes in capital surplus 6(18)	Changes in non-controlling interests	Balance at June 30, 2020

F-11

EVERGREEN MARINE CORPORATION (TAIWAN) LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS

SIX MONTHS ENDED JUNE 30, 2020 AND 2019

(Expressed in thousands of New Taiwan dollars)

(Reviewed, not audited)

CASH FLOWS FROM OPERATING ACTIVITIES
Profit before tax
Adjustments
Income and expenses having no effect on cash flows
Depreciation

Amortization

Expected credit loss

Rental expense
Other income
Interest income

Interest expense

Dividend income

Share of profit or loss of associates and joint ventures
accounted for using equity method
Gains arising from lease modification

Net (gain) loss on disposal of property, plant and equipment
Net gain on disposal of right-of-use assets

Net gain on disposal of investments

Realized income with affliated companies
Unrealized loss with affliated companies
Changes in assets/liabilities relating to operating activities
Changes in operating assets
Financial assets at fair value through profit or loss
Current contract assets
Notes receivable, net
Accounts receivable, net
Accounts receivable, net - related parties
Other receivables
Other receivables - related parties
Inventories
Prepayments
Other current assets
Other non-current assets
Net changes in liabilities relating to operating activities
Current contract liabilities
Notes payable
Accounts payable
Accounts payable - related parties
Other payables
Other payables - related parties
Other current liabilities
Other non-current liabilities
Cash inflow generated from operations
Interest received
Interest paid
Income tax paid
Net cash flows from operating activities

Six-monthperiods ended June 30
2019
2020
Notes
NT$ NT$ US$ (Unaudited)
(Note 4)
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(Continued)

~11~

F-12

EVERGREEN MARINE CORPORATION (TAIWAN) LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS SIX MONTHS ENDED JUNE 30, 2020 AND 2019

(Expressed in thousands of New Taiwan dollars)

(Reviewed, not audited)

CASH FLOWS FROM INVESTING ACTIVITIES
Decrease in financial assets at amortised cost
(Increase) decrease in other receivables - related parties
Acquisition of investments accounted for using the equity method
Proceeds from disposal of investments accounted for using equity
method
Acquisition of property, plant and equipment

Proceeds from disposal of property, plant and equipment
Acquisition of right-of-use assets
Proceeds from disposal of right-of-use assets
Acquisition of intangible assets
Increase in guarantee deposits paid
Increase in other non-current assets

Effect of initial consolidation of subsidiaries
Cash dividend received
Net cash flows used in investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
Increase in short-term loans
Decrease in short-term loans
Decrease in other payables - related parties
Increase in long-term loans

Decrease in long-term loans

Payments of lease liabilities

Net change in non-controlling interest
Decrease in guarantee deposits received

Other financing activities
Net cash flows from (used in) financing activities
Effect of exchange rate changes
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period

Six-monthperiods ended June 30

2019
2020
Notes
NT$ NT$ US$
(Unaudited)
(Note 4)
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The accompanying notes are an integral part of these consolidated financial statements.

~12~

F-13

EVERGREEN MARINE CORPORATION (TAIWAN) LTD. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

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

1. HISTORY AND ORGANISATION

Evergreen Marine Corporation (Taiwan) Ltd. (the “Company”) was established in the Republic of China. The Company and its subsidiaries (collectively referred herein as the “Group”) are mainly engaged in domestic and international marine transportation, shipping agency services, and the distribution of containers. The Company was approved by the Securities and Futures Bureau (SFB), Financial Supervisory Commission, Executive Yuan, R.O.C. to be a public company on November 2, 1982 and was further approved by the SFB to be a listed company on July 6, 1987. The Company’s shares have been publicly traded on the Taiwan Stock Exchange since September 21, 1987.

THE DATE OF AUTHORISATION FOR ISSUANCE OF THE CONSOLIDATED FINANCIAL STATEMENTS AND PROCEDURES FOR AUTHORISATION

These consolidated financial statements were authorised by the Board of Directors on August 13, 2020.

APPLICATION OF NEW STANDARDS, AMENDMENTS AND INTERPRETATIONS
(1) Effect of the adoption of new issuances of or amendments to International Financial Reporting Standards (“IFRS”) as endorsed by the Financial Supervisory Commission (“FSC”)

New standards, interpretations and amendments endorsed by FSC effective from 2020 are as follows:

NewStandards,Interpretations and Amendments	Effective date by International Accounting Standards Board
Amendments to IAS 1 and IAS 8, ‘Disclosure initiative-definition of material’ Amendments to IFRS 3, ‘Definition of a business’ Amendments to IFRS 9, IAS 39 and IFRS7 ,‘Interest rate benchmark reform’ Amendment to IFRS 16, ‘Covid-19-related rent concessions’	January 1, 2020 January 1, 2020 January 1, 2020 June 1, 2020

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

A. Amendments to IAS 1 and IAS 8, ‘Disclosure initiative-definition of material’

The amendments clarify the definition of material that information is material if omitting, misstating or obscuring it could reasonably be expected to influence the decisions that the primary users of general purpose financial statements make on the basis of those financial statements, which provide financial information about a specific reporting entity.

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B. Amendments to IFRS 3, ‘Definition of a business’

The amendments clarify the definition of a business that to be considered a business, an acquired set of activities and assets must include, at a minimum, an input and a substantive process that together; narrow the definitions of a business and of outputs by focusing on goods and services provided to customers and by removing the reference to an ability to reduce costs. Remove the assessment of whether market participants are capable of replacing any missing inputs or processes and continuing to produce outputs. Besides, add an optional concentration test that permits a simplified assessment of whether an acquired set of activities and assets is not a business. Related impact assessment is provided in Note 4(3).

C. Amendments to IFRS 9, IAS 39 and IFRS 7, ‘Interest rate benchmark reform’

The reliefs relate to hedge accounting and have the effect that IBOR reform should not generally cause hedge accounting to terminate. Also, the amendment requires disclosure about how the entity is impacted by IBOR reform and is managing the transition process.

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

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

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

Related impact assessment is provided in Note 6(9).

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

the Group

None.

(3) Effect of 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,InterpretationsandAmendments	Effective date by International Accounting StandardsBoard
Amendments to IFRS 4, ‘Extension of the temporary exemption from applying IFRS 9’ Amendments to IFRS 3, ‘Reference to the conceptual framework’ Amendments to IFRS 10 and IAS 28, ‘Sale or contribution of assets between an investor and its associate or joint venture’ IFRS 17, ‘Insurance contracts’ Amendments to IFRS 17, 'Insurance contracts'	January 1, 2021 January 1, 2022 To be determined by International Accounting Standards Board January 1, 2021 January 1, 2023

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New Standards,Interpretations and Amendments	Effective date by International Accounting Standards Board
Amendments to IAS 1, ‘Classification of liabilities as current or non- current’ Amendments to IAS 16, ‘Property, plant and equipment:proceeds before intended use’ Amendments to IAS 37, ‘Onerous contracts—cost of fulfilling a Annual improvements to IFRS Standards 2018–2020	January 1, 2022 January 1, 2022 January 1, 2022 January 1, 2022

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

A. Amendments to IFRS 3, ‘Reference to the conceptual framework’

The amendments were made to IFRS 3, 'Business combinations' to update the references to the 2018 Conceptual Framework for Financial Reporting, in determining what constitutes an asset or a liability in a business combination. In addition, the amendments added an exception in IFRS 3 for the recognition of liabilities and contingent liabilities. The exception specifies that, for some types of liabilities and contingent liabilities, an entity applying IFRS 3 should instead refer to IAS 37, 'Provisions, Contingent Liabilities and Contingent Assets' or IFRIC 21, 'Levies', rather than the 2018 Conceptual Framework. The amendments also confirmed that contingent assets, as defined in IAS 37, should not be recognised by the acquirer at the acquisition date.

B. Amendments to IFRS 10 and IAS 28, ‘Sale or contribution of assets between an investor and its associate or joint venture’

The amendments resolve a current inconsistency between IFRS 10 and IAS 28. The gain or loss resulting from a transaction that involves sales or contribution of assets between an investor and its associates or joint ventures is recognised either in full or partially depending on the nature of the assets sold or contributed:

(a) If sales or contributions of assets constitute a ‘business’, the full gain or loss is recognised;
(b) If sales or contributions of assets do not constitute a ‘business’, the partial gain or loss is recognised only to the extent of unrelated investors’ interests in the associate or joint venture.
C. Amendments to IAS 1, ‘Classification of liabilities as current or non-current’

The amendments clarify that classification of liabilities depends on the rights that exist at the end of the reporting period. An entity shall classify a liability as current when it does not have a right at the end of the reporting period to defer settlement of the liability for at least twelve months after the reporting period. Also, the amendments define ‘settlement’ as the extinguishment of a liability with cash, other economic resources or an entity’s own equity instruments.

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D. Amendments to IAS 16, ‘Property, plant and equipment: proceeds before intended use’ This amendment to IAS 16 prohibits an entity from deducting from the cost of an item of property, plant and equipment any proceeds received from selling items produced while the entity is preparing the asset for its intended use (for example, the proceeds from selling samples produced when testing a machine to see if it is functioning properly). The proceeds from selling such samples and the costs relating to items produced are now recognised in profit or loss. This amendment also clarifies that an entity is ‘testing whether the asset is functioning properly’ when it assesses the technical and physical performance of the asset. The financial performance of the asset is not relevant to this assessment.
E. Amendments to IAS 37, ‘Onerous contracts—cost of fulfilling a contract’ The amendments clarify that the cost of fulfilling a contract comprises the costs that relate directly to the contract. Costs that relate directly to a contract consist of the incremental costs of fulfilling the contract and an allocation of other costs directly related to fulfilling contracts.

The impact of the above standards and interpretations is still under management's assessment.

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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

(1) Compliance statement

The consolidated financial statements of the Group have been prepared in accordance with the“Regulations Governing the Preparation of Financial Reports by Securities Issuers” and the International Accounting Standard 34, ‘Interim Financial Reporting’ as endorsed by the FSC.

(2) Basis of preparation
A. Except for the following items, the consolidated financial statements have been prepared under the historical cost convention:
- (a) Financial assets and financial liabilities (including derivative instruments) at fair value through profit or loss.
- (b) Financial assets at fair value through other comprehensive income.
- (c) Defined benefit liabilities recognised based on the net amount of pension fund assets less present value of defined benefit obligation.
B. The preparation of financial statements in conformity with International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations, and SIC Interpretations as endorsed by the FSC (collectively referred herein as the “IFRSs”) requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in Note 5.

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(3) Basis of consolidation

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

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B. Subsidiaries included in the consolidated financial statements:

Name of Investor The Company The Company The Company The Company The Company Peony Peony Peony Peony Peony Peony Peony Peony	Name of Subsidiary TTSC Peony ETS EGH EIL GMS Clove EMU EHIC(M) Armand N.V. KTIL MBPI MBT	Main business activities Cargo loading and discharging Investments in transport-related business Terminal Services Container shipping and agency services dealing with port formalities Agency services dealing with port formalities Container shipping Investments in container yards and port terminals Container shipping Manufacturing of dry steel containers and container parts Investments in container yards and port terminals Loading, discharging, storage, repairs and cleaning of containers Containers storage and inspections of containers at the customs house Inland transportation, repairs and cleaning of containers	Ownership (%)	Ownership (%)	June 30, 2020 55.00 100.00 94.43 79.00 59.00 100.00 100.00 51.00 84.44 - 20.00 95.03 17.39	Description
			June 30, 2019 55.00 100.00 94.43 79.00 - 100.00 100.00 51.00 84.44 70.00 20.00 95.03 17.39	December 31, 2019 55.00 100.00 94.43 79.00 59.00 100.00 100.00 51.00 84.44 70.00 20.00 95.03 17.39
						(b) (f)

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Name of Investor Peony Peony Peony Peony Peony Peony Peony Peony Peony Peony Peony Peony Peony EGH EGH	Name of Subsidiary EGK EGT EGI EMA EIT EES ERU EEU ESA EGB EGM EGH EGV Ever shine (Shanghai) Ever shine (Ningbo)	Main business activities Agency services dealing with port formalities Agency services dealing with port formalities Agency services dealing with port formalities Agency services dealing with port formalities Agency services dealing with port formalities Agency services dealing with port formalities Agency services dealing with port formalities Agency services dealing with port formalities Agency services dealing with port formalities Real estate leasing Agency services dealing with port formalities Container shipping and agency services dealing with port formalities Agency services dealing with port formalities Management consultancy and self-owned property leasing Management consultancy and self-owned property leasing	Ownership (%)	Ownership (%)	June 30, 2020 100.00 85.00 99.99 100.00 55.00 100.00 51.00 100.00 55.00 95.00 100.00 1.00 100.00 100.00 100.00	Description
			June 30, 2019 100.00 85.00 99.99 100.00 55.00 100.00 51.00 100.00 55.00 95.00 100.00 1.00 100.00 100.00 100.00	December 31, 2019 100.00 85.00 99.99 100.00 55.00 100.00 51.00 100.00 55.00 95.00 100.00 1.00 100.00 100.00 100.00

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Name of Investor EGH EGH EGH EGH EGH EGH EGH EGH EGH EGH EGH EGH EGH EGH	Name of Subsidiary EKH EPE ECO ECL EMX EGRC HMH Ever shine (Shenzhen) Ever shine (Qingdao) ECN KTIL EIL ELA EBR	Main business activities Agency services dealing with port formalities Agency services dealing with port formalities Agency services dealing with port formalities Agency services dealing with port formalities Agency services dealing with port formalities Agency services dealing with port formalities Agency services dealing with port formalities Management consultancy and self-owned property leasing Management consultancy and self-owned property leasing Agency services dealing with port formalities Loading, discharging, storage, repairs and cleaning of containers Agency services dealing with port formalities Management consultancy Agency services dealing with port formalities	Ownership (%)	Ownership (%)	June 30, 2020 100.00 60.00 75.00 60.00 60.00 60.00 - 100.00 100.00 52.00 20.00 1.00 100.00 60.00	Description
			June 30, 2019 100.00 60.00 75.00 60.00 60.00 60.00 - 100.00 100.00 49.00 20.00 - 16.50 -	December 31, 2019 100.00 60.00 75.00 60.00 60.00 60.00 - 100.00 100.00 52.00 20.00 1.00 16.50 -
						(a) (a) (a) (a)�(c) (a) (b) (d) (e)

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Name of Investor ETS EMU Clove Armand N.V. MBPI	Name of Subsidiary Whitney KTIL ETS Armand B.V. MBT	Main business activities Investments and leases of operating machinery and equipment of port terminals Loading, discharging, storage, repairs and cleaning of containers Terminal Services Investments in container yards and port terminals Inland transportation, repairs and cleaning of containers	Ownership (%)	Ownership (%)	June 30, 2020 100.00 20.00 5.57 - 72.95	Description
			June 30, 2019 100.00 20.00 5.57 100.00 72.95	December 31, 2019 100.00 20.00 5.57 100.00 72.95
						(g)

(a) On August 13, 2018, shareholders of the subsidiary, EGH, during their meeting resolved to make an equity transaction. EGH acquired a 100% equity interest of HMH and its indirect investees, wholly-owned Ever Shine (Shenzhen), wholly-owned Ever Shine (Qingdao), 49% owned MAC and 20% owned KTIL from other related party, Chestnut Estate B.V.. The transaction amount was US $105,808. The applicable transactions were approved by the Investment Commission of the Ministry of Economic Affairs. The acquisition date was December 14, 2018. On December 21, 2018, shareholders of EGH during their meeting resolved to merge its subsidiary, HMH. EGH will be the surviving company and HMH will be dissolved after the merger. The liquidation process of HMH was completed by January 10, 2020.
(b) On March 22, 2019, the Board of Directors of the Company and the subsidiary, EGH, resolved to establish a subsidiary, EIL, in Israel. The capital for establishment is ILS 1,800 (approx. USD 500), and the subsidiary is primarily engaged in container shipping and agency services dealing with port formalities.
(c) On October 28, 2019, shareholders of the subsidiary, EGH, during their meeting resolved to make an equity transaction. EGH acquired the 3% ownership of MAC from Ningbo Jiang Dong Ever Elite Investment Consulting Ltd.. The transaction amount was CNY $150. The applicable transactions were approved by the Investment Commission of the Ministry of Economic Affairs. The acquisition date was December 10, 2019.

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(d) On December 20, 2019, the Board of Directors of the subsidiary, EGH, approved the ELA equity transaction and acquired 83.50% equity interests from EMC � EMU and other related parties, the transaction date was March 1, 2020 and the transaction amount was USD 544. After the transaction, the shareholding ratio which was the equity of ELA held by EGH increase from 16.50% to 100%. The company primarily engaged in management consultancy in Latin America. Because the transaction did not meet the requirements of IFRS 3, ‘Definition of a business’, the accounting treatment of this equity transaction would be accounted as acquired assets and liabilities based on the principle.
(e) On August 13, 2019, the Board of Directors of the subsidiary, EGH, approved to establish a subsidiary, EBR, in Brazil, the initial capital amounted to BRL 1,200 (approx. USD 247), the date of the capital injection completion was March 16, 2020, this company primarily engaged in freight and shipping agent.
(f) On March 18, 2020, the shareholders of the subsidiary, Armand N.V., during their meeting approved the accelerated liquidation. At the same day, the investment amount returned to the shareholder, Peony Investment S.A, and non-controlling interests amounted to $339,638 (approx. USD 11,237) and $145,909 (approx. USD 4,827), respectively, based on local regulations. The liquidation process of Armand N.V. was completed by June 30, 2020.
(g) On March 17, 2020, the shareholders of the subsidiary, Armand B.V., during their meeting approved the accelerated liquidation. At the same day, the investment amount returned to Armand N.V. amounted to $491,294 (approx. USD16,257) based on local regulations. The liquidation process of Armand B.V. was completed by June 25, 2020.
C. Subsidiary not included in the consolidated financial statements: None.
D. Adjustments for subsidiaries with different balance sheet dates: None.
E. Significant restrictions: None.
F. Subsidiaries that have non-controlling interests that are material to the Group: As of June 30, 2019, December 31, 2019 and June 30, 2020, the non-controlling interest amounted to $3,878,204, $3,549,067 and $3,471,865, respectively. The information of non-controlling interest and respective subsidiaries is as follows:

Name of subsidiary	Ownership Ownership Amount (%) Amount (%) 1,157,178 $ 49% 768,414 $ 49% 1,977,450 20% 2,021,999 20% Non-controllinginterest June 30,2019 December 31,2019	Ownership Ownership Amount (%) Amount (%) 1,157,178 $ 49% 768,414 $ 49% 1,977,450 20% 2,021,999 20% Non-controllinginterest June 30,2019 December 31,2019
	Ownership Amount (%) 1,157,178 $ 49% 1,977,450 20% June 30,2019
	Amount 1,157,178 $ 1,977,450	Amount 768,414 $ 2,021,999
EMU EGH

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Name of subsidiary	Principal place of business U.K. Hong Kong	Ownership Amount (%) 830,366 $ 49% 2,073,073 20% Non-controllinginterest June 30,2020	Description
		Amount 830,366 $ 2,073,073
EMU EGH

Summarised financial information of the subsidiaries:

Balance sheets

Summarised financial information of the subsidiaries: Balance sheets EMU U.K. 830,366 $ 49% EGH Hong Kong 2,073,073 20%	830,366 $ 2,073,073	49% 20%
June 30,2019 December 31,2019 June 30,2020 Current assets 7,534,587 $ 6,866,440 $ 6,457,266 $ Non-current assets 48,835,466 46,043,283 44,310,045 Current liabilities 16,622,642) ( 16,584,869) ( 15,677,761) ( Non-current liabilities 37,385,823) ( 34,756,663) ( 33,394,926) ( Total net assets 2,361,588 $ 1,568,191 $ 1,694,624 $ EMU June 30,2019 December 31,2019 June 30,2020 Current assets 9,099,921 $ 12,300,364 $ 11,452,030 $ Non-current assets 27,694,228 29,181,330 32,944,372 Current liabilities 11,728,553) ( 12,496,762) ( 12,458,777) ( Non-current liabilities 15,694,044) ( 19,659,040) ( 21,990,763) ( Total net assets 9,371,552 $ 9,325,892 $ 9,946,862 $ EGH	EMU
		June 30,2020
		9,946,862 $

Statements of comprehensive income

EMU

	Three-month period ended	Three-month period ended	Three-month period ended	Three-month period ended
		June 30,2019		June 30,2020
Revenue	$	10,466,207	$	9,093,521
(Loss) profit before income tax	($	224,640)	$	810,926
Income tax expense	(	4,933)	(	6,123)
(Loss) profit for the period from
continuing operations	(	229,573)		804,803
Other comprehensive (loss) income,
net of tax	(	1,927)		209
Total comprehensive (loss) income
for the period	($	231,500)	$	805,012
Comprehensive (loss) income
attributable to non-controlling interest	($	113,435)	$	394,456

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				EMU	EMU	EMU
			Six-month period ended			Six-month period ended
				June 30,2019			June 30,2020
Revenue		$		21,014,448		$	17,548,751
(Loss) profit before income tax		($		654,954)		$	172,734
Income tax expense		(		9,541)		(	13,316)
(Loss) profit for the period from
continuing operations		(		664,495)			159,418
Other comprehensive loss, net of tax		(		189)		(	1,240)
Total comprehensive (loss) income
for the period		($		664,684)		$	158,178
Comprehensive (loss) income
attributable to non-controlling interest		($		325,695)		$	77,507
				EGH
	Three-month period ended				Three-month period ended
				June 30,2019			June 30,2020
Revenue		$		6,859,907		$	8,460,509
(Loss) profit before income tax	($			117,041)		$	1,150,598
Income tax expense	(			133,857)	(		103,967)
(Loss) profit for the period
from continuing operations	(			250,898)			1,046,631
Other comprehensive income, net of tax				-			-
Total comprehensive (loss) income
for the period	($			250,898)		$	1,046,631
Comprehensive (loss) income
attributable to non-controlling interest	($			50,180)		$	209,326
				EGH
		Six-month period ended				Six-month period ended
				June 30,2019			June 30,2020
Revenue		$		12,513,107		$	15,474,660
Profit before income tax		$		268,836		$	1,082,307
Income tax expense	(			245,605)	(		148,147)
Profit for the period from
continuing operations				23,231			934,160
Other comprehensive income, net of tax				-			-
Total comprehensive income
for the period		$		23,231		$	934,160
Comprehensive income
attributable to non-controlling interest		$		4,646		$	186,832

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F-25

Statements of cash flows

Statements of cash flows
			EMU
		Six-month period ended			Six-month period ended
			June 30,2019			June 30,2020
Net cash provided by operating activities	$		556,533	$		2,184,322
Net cash used in investing activities	(		17,573)	(		883,804)
Net cash used in financing activities	(		841,211)	(		1,390,893)
Effect of exchange rates on cash
and cash equivalents			18,315	(		28,407)
Decrease in cash and cash equivalents	(		283,936)	(		118,782)
Cash and cash equivalents,
beginning of period			1,787,358			1,610,984
Cash and cash equivalents,
end of period	$		1,503,422	$		1,492,202
			EGH
		Six-month period ended			Six-month period ended
			June 30,2019			June 30,2020
Net cash provided by operating activities	$		3,457,310	$		3,967,986
Net cash used in investing activities	(		6,719,613)	(		2,380,134)
Net cash provided by (used in)
financing activities			2,460,742	(		2,312,254)
Effect of exchange rates on cash
and cash equivalents			28,755	(		70,645)
Decrease in cash and cash equivalents	(		772,806)	(		795,047)
Cash and cash equivalents,
beginning of period			3,166,065			4,542,951
Cash and cash equivalents,
end of period	$		2,393,259	$		3,747,904

(4) Foreign currency translation

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

A. Foreign currency transactions and balances

(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, except when deferred in other comprehensive income as qualifying cash flow hedges and qualifying net investment hedges.

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F-26

(b) Monetary assets and liabilities denominated in foreign currencies at the period end are retranslated at the exchange rates prevailing at the balance sheet date. Exchange differences arising upon re-translation 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 re-translated at the exchange rates prevailing at the balance sheet date; their translation differences are recognised in other comprehensive income. However, nonmonetary assets and liabilities denominated in foreign currencies that are not measured at fair value are translated using the historical exchange rates at the dates of the initial transactions.
(d) All other foreign exchange gains and losses based on the nature of those transactions are presented in the statement of comprehensive income within ‘other gains and losses’.
B. Translation of foreign operations
(a) The operating results and financial position of all the group entities and associates that have a functional currency different from the presentation currency are translated into the presentation currency as follows:
- i. Assets and liabilities for each balance sheet presented are translated at the closing exchange rate at the date of that balance sheet;
- ii. Income and expenses for each statement of comprehensive income are translated at average exchange rates of that period; and
- iii. All resulting exchange differences are recognised in other comprehensive income.
(b) When the foreign operation partially disposed of or sold is an associate, exchange differences that were recorded in other comprehensive income are proportionately reclassified to profit or loss as part of the gain or loss on sale. In addition, even when the Group retains partial interest in the former foreign associate after losing significant influence over the former foreign associate, such transactions should be accounted for as disposal of all interest in these foreign operations.
(c) When the foreign operation partially disposed of or sold is a subsidiary, cumulative exchange differences that were recorded in other comprehensive income are proportionately transferred to the non-controlling interest in this foreign operation. In addition, even when the Group retains partial interest in the former foreign subsidiary after losing control of the former foreign subsidiary, such transactions should be accounted for as disposal of all interest in the foreign operation.
(d) Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing exchange rates at the balance sheet date.

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(5) Classification of current and non-current items
A. Assets that meet one of the following criteria are classified as current assets; otherwise they are classified as non-current assets:
- (a) Assets arising from operating activities that are expected to be realised, or are intended to be sold or consumed within the normal operating cycle;
- (b) Assets held mainly for trading purposes;
- (c) Assets that are expected to be realised within twelve months from the balance sheet date;
- (d) Cash and cash equivalents, excluding restricted cash and cash equivalents and those that are to be exchanged or used to settle liabilities more than twelve months after the balance sheet date.
B. Liabilities that meet one of the following criteria are classified as current liabilities; otherwise they are classified as non-current liabilities:
- (a) Liabilities that are expected to be settled within the normal operating cycle;
- (b) Liabilities arising mainly from trading activities;
- (c) Liabilities that are to be settled within twelve months from the balance sheet date;
- (d) Liabilities for which the repayment date cannot be extended unconditionally to more than twelve months after the balance sheet date. Terms of a liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not affect its classification.
(6) Cash equivalents

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

(7) Financial assets at fair value through profit or loss
A. Financial assets at fair value through profit or loss are financial assets that are not measured at amortised cost or fair value through other comprehensive income.
B. On a regular way purchase or sale basis, financial assets at fair value through profit or loss are recognised and derecognised using trade date accounting.
C. At initial recognition, the Group measures the financial assets at fair value and recognises the transaction costs in profit or loss. The Group subsequently measures the financial assets at fair value, and recognises the gain or loss in profit or loss.
D. The Group recognises the dividend income when the right to receive payment is established, future economic benefits associated with the dividend will flow to the Group and the amount of the dividend can be measured reliably.

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(8) Financial assets at fair value through other comprehensive income

A. Financial assets at fair value through other comprehensive income comprise equity securities which are not held for trading, and for which the Group has made an irrevocable election at initial recognition to recognise changes in fair value in other comprehensive income and debt instruments which meet all of the following criteria:
(a) The objective of the Group’s business model is achieved both by collecting contractual cash flows and selling financial assets; and
(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 fair value through other comprehensive income are recognised and derecognised using trade date accounting.
C. At initial recognition, the Group measures the financial assets at fair value plus transaction costs. The Group subsequently measures the financial assets at fair value:
(a) The changes in fair value of equity investments that were recognised in other comprehensive income are reclassified to retained earnings and are not reclassified to profit or loss following the derecognition of the investment. Dividends are recognised as other income when the right to receive payment is established, future economic benefits associated with the dividend will flow to the Group and the amount of the dividend can be measured reliably.
(b) Except for the recognition of impairment loss, interest income and gain or loss on foreign exchange which are recognised in profit or loss, the changes in fair value of debt instruments are taken through other comprehensive income. When the financial asset is derecognised, the cumulative gain or loss previously recognised in other comprehensive income is reclassified from equity to profit or loss.

(9) 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.
D. The Group’s time deposits which do not fall under cash equivalents are those with a short maturity period and are measured at initial investment amount as the effect of discounting is immaterial.

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(10) Notes, accounts and other receivables

A. Notes and account receivable entitle the Group a legal right to receive consideration in exchange for transferred goods or rendered services. Receivables arising from transactions other than the sale of goods or service are classified as other receivables.
B. The short-term notes receivable, accounts receivable and other receivable without bearing interest are subsequently measured at initial invoice amount as the effect of discounting is immaterial.

(11) Impairment of financial assets

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

(12) Derecognition of financial assets

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

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

- (13) Operating leases (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.

(14) Inventories

Inventories refer to fuel inventories and steel inventories. Fuel inventories are physically measured by the crew of each ship and reported back to the Head Office through telegraph for recording purposes at balance sheet date. Valuation of inventories is based on the exchange rate prevailing at balance sheet date.

The perpetual inventory system is adopted for steel inventory recognition. Steel 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 realisable value, and the individual item approach is used in the comparison of cost and net realisable value. The calculation of net realisable value should be based on the estimated selling price in the normal course of business, net of estimated costs of completion and estimated selling expenses.

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(15) Investments accounted for using equity method / associates

A. Associates are all entities over which the Group has significant influence but not control. In general, it is presumed that the investor has significant influence, if an investor holds, directly or indirectly 20 percent or more of the voting power of the investee. Investments in associates are accounted for using the equity method and are initially recognised at cost.
B. The Group’s share of its associates’ post-acquisition profits or losses is recognised in profit or loss, and its share of post-acquisition movements in other comprehensive income is recognised in other comprehensive income. When the Group’s share of losses in an associate equals or exceeds its interest in the associate, including any other unsecured receivables, the Group does not recognise further losses, unless it has incurred legal or constructive obligations or made payments on behalf of the associate.
C. When changes in an associate’s equity that are not recognised in profit or loss or other comprehensive income of the associate and such changes not affecting the Group’s ownership percentage of the associate, the Group recognises the Group’s share of change in equity of the associate in ‘capital surplus’ in proportion to its ownership.
D. Unrealised gains and loss on transactions between the Group and its associates are eliminated to the extent of the Group’s interest in the associates. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of associates have been adjusted where necessary to ensure consistency with the policies adopted by the Group.
E. In the case that an associate issues new shares and the Group does not subscribe or acquire new shares proportionately, which results in a change in the Group’s ownership percentage of the associate but maintains significant influence on the associate, then ‘capital surplus’ and ‘investments accounted for using equity method’ shall be adjusted for the increase or decrease of its share of equity interest. If the above condition causes a decrease in the Group’s ownership percentage of the associate, in addition to the above adjustment, the amounts previously recognised in other comprehensive income in relation to the associate are reclassified to profit or loss proportionately on the same basis as would be required if the relevant assets or liabilities were disposed of.
F. Upon loss of significant influence over an associate, the Group remeasures any investment retained in the former associate at its fair value. Any difference between fair value and carrying amount is recognised in profit or loss.
G. When the Group disposes its investment in an associate and 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 retains significant influence over this associate, 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.

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H. When the Group disposes its investment in an associate and loses significant influence over this associate, the amounts previously recognised as capital surplus in relation to the associate are transferred to profit or loss. If it still retains significant influence over this associate, then the amounts previously recognised as capital surplus in relation to the associate are transferred to profit or loss proportionately.
(16) Property, plant and equipment
A. Property, plant and equipment are initially recorded at cost. Borrowing costs incurred during the construction period are capitalised.
B. Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are charged to profit or loss during the financial period in which they are incurred.
C. Land is not depreciated. Other property, plant and equipment apply cost model and are depreciated using the straight-line method to allocate their cost over their estimated useful lives. Each part of an item of property, plant, and equipment with a cost that is significant in relation to the total cost of the item must be depreciated separately.
D. The assets’ residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each financial year-end. 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:

Buildings 20 ~ 135 years Loading and unloading equipment 5 ~ 20 years Ships (Except for docking repair and scrubber) 18 ~ 25 years Ship (Docking repair) 2.5 ~ 5 years Ship (Scrubber) 7 ~10 years Transportation equipment 5 ~ 10 years Other equipment 2 ~ 20 years

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

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

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

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

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

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

D. For lease modifications that decrease the scope of the lease, the lessee shall decrease the carrying amount of the right-of-use asset to reflect the partial or full termination of the lease, and recognise the difference between remeasured lease liability in profit or loss.

(18) Investment property

An investment property is stated initially at its cost and measured subsequently using the cost model. Except for land, investment property is depreciated on a straight-line basis over its estimated useful life of 20 ~ 60 years.

(19) Intangible assets

A. Computer software

Computer software is stated at cost and amortised on a straight-line basis over its estimated useful life of 3 years.

B. Goodwill

Goodwill arises in a business combination accounted for by applying the acquisition method.

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C. Customer relationship

Customer relationship arises from the business combination is measured initially at their fair values at the acquisition date. Customer relationship has a finite useful life and are amortised on a straight-line basis over their estimated useful lives of 8.05 to 10 years.

(20) Impairment of non-financial assets

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

(21) Borrowings

A. Borrowings comprise long-term and short-term bank borrowings and other long-term and shortterm loans. 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.
B. Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw-down occurs. To the extent there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalised as a pre-payment for liquidity services and amortised over the period of the facility to which it relates.

(22) Accounts payable

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

(23) Financial liabilities at fair value through profit or loss

A. Financial liabilities are classified in this category of held for trading if acquired principally for the purpose of repurchasing in the short-term. Derivatives are also categorised as financial liabilities held for trading unless they are designated as hedges or financial liabilities at fair value through profit or loss. Financial liabilities that meet one of the following criteria are designated as at fair value through profit or loss at initial recognition:
(a) Hybrid (combined) contracts; or
(b) They eliminate or significantly reduce a measurement or recognition inconsistency; or
(c) They are managed and their performance is evaluated on a fair value basis, in accordance with a documented risk management policy.

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B. At initial recognition, the Group measures the financial liabilities at fair value. All related transaction costs are recognised in profit or loss. The Group subsequently measures these financial liabilities at fair value with any gain or loss recognised in profit or loss.
(24) Bonds payable

Ordinary corporate bonds issued by the Group are initially recognised at fair value less transaction costs. Any difference between the proceeds (net of transaction costs) and the redemption value is presented as an addition to or deduction from bonds payable, which is amortised to profit or loss over the period of bond circulation using the effective interest method as an adjustment to ‘finance costs’.

(25) Derecognition of financial liabilities
A financial liability is derecognised when the obligation specified in the contract is either discharged or cancelled or expires.
(26) Offsetting financial instruments

Financial assets and liabilities are offset and reported in the net amount 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.

(27) Hedge accounting
A. At the inception of the hedging relationship, there is formal designation and documentation of the hedging relationship and the Group’s risk management objective and strategy for undertaking the hedge. That documentation shall include identification of the hedging instrument, the hedged item, the nature of the risk being hedged and how the Group will assess whether the hedging relationship meets the hedge effectiveness requirements.
B. The Group designates the hedging relationship as follows: Cash flow hedge:
- A hedge of the exposure to variability in cash flows that is attributable to a particular risk associated with a recognised asset or liability or a highly probable forecast transaction.
C. Cash flow hedges
- (a)The cash flow hedge reserve associated with the hedged item is adjusted to the lower of the following (in absolute amounts):
  - i. the cumulative gain or loss on the hedging instrument from inception of the hedge; and
  - ii. the cumulative change in fair value of the hedged item from inception of the hedge.
- (b)The effective portion of the gain or loss on the hedging instrument is recognised in other comprehensive income. The gain or loss on the hedging instrument relating to the ineffective portion is recognised in profit or loss.

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(c)The amount that has been accumulated in the cash flow hedge reserve in accordance with item(a) is accounted for as follows:
i. If a hedged forecast transaction subsequently results in the recognition of a non-financial asset or non-financial liability, or a hedged forecast transaction for a non-financial asset or non-financial liability becomes a firm commitment for which fair value hedge accounting is applied, the Group shall remove that amount from the cash flow hedge reserve and include it directly in the initial cost or other carrying amount of the asset or liability.
ii. For cash flow hedges other than those covered by item i. above, that amount shall be reclassified from the cash flow hedge reserve to profit or loss as a reclassification adjustment in the same period or periods during which the hedged expected future cash flows affect profit or loss.
iii. If that amount is a loss and the Group expects that all or a portion of that loss will not be recovered in one or more future periods, it shall immediately reclassify the amount that is not expected to be recovered into profit or loss as a reclassification adjustment.
(d) When the hedging instrument expires, or is sold, terminated, exercised or when the hedging relationship ceases to meet the qualifying criteria, if the forecast transaction is still expected to occur, the amount that has been accumulated in the cash flow hedge reserve shall remain in the cash flow hedge reserve until the forecast transaction occurs; if the forecast transaction is no longer expected to occur, the amount shall be immediately reclassified from the cash flow hedge reserve to profit or loss as a reclassification adjustment.

(28) 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 expense in that period when the employees render service.

B. Pensions

(a) Defined contribution plans

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

(b) Defined benefit plans

i. Net obligation under a defined benefit plan is defined as the present value of an amount of pension benefits that employees will receive on retirement for their services with the Group in current period or prior periods. The liability recognised in the balance sheet in respect of defined benefit pension plans is the present value of the defined benefit obligation at the balance sheet date less the fair value of plan assets. The net defined benefit 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 high-quality corporate bonds

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that are denominated in the currency in which the benefits will be paid, and that have terms to maturity approximating to the terms of the related pension liability; when there is no deep market in high-quality corporate bonds, the Group uses interest rates of government bonds (at the balance sheet date) instead.

ii. Remeasurements 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.
iv. Pension cost for the interim period is calculated on a year-to-date basis by using the pension cost rate derived from the actuarial valuation at the end of the prior financial year, adjusted for significant market fluctuations since that time and for significant curtailments, settlements, or other significant one-off events. And, the related information is disclosed accordingly.
C. Termination benefits

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

D. Employees’ compensation and directors’ remuneration

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

(29) Income tax
A. The tax expense for the period comprises current and deferred tax. Tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income or items recognised directly in equity, in which cases the tax is recognised in other comprehensive income or equity.
B. The current income tax expense is calculated on the basis of the tax laws enacted or substantively enacted at the balance sheet date in the countries where the Company and its subsidiaries operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in accordance with applicable tax regulations. It establishes provisions where appropriate based on the amounts expected to be paid to the tax authorities. An additional tax is levied on the unappropriated retained earnings and is recorded as income tax expense in

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the year the stockholders resolve to retain the earnings.

C. Deferred income tax is recognised, using the balance sheet liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated balance sheet. Deferred income tax is provided on temporary differences arising on investments in subsidiaries and associates, except where the timing of the reversal of the temporary difference is controlled by the Group and it is probable that the temporary difference will not reverse in the foreseeable future. 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 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 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.
G. The interim period income tax expense is recognised based on the estimated average annual effective income tax rate expected for the full financial year applied to the pretax income of the interim period, and the related information is disclosed accordingly.
H. If a change in tax rate is enacted or substantively enacted in an interim period, the Group recognises the effect of the change immediately in the interim period in which the change occurs. The effect of the change on items recognised outside profit or loss is recognised in other comprehensive income or equity while the effect of the change on items recognised in profit or loss is recognised in profit or loss.
(30) Dividends

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

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(31) Revenue recognition

A. Sales of services
Revenue from delivering services is recognised under the percentage-of-completion method when the outcome of services provided can be estimated reliably. The stage of completion of a service contract is measured by the percentage of the actual services performed as of the financial reporting date to the total services to be performed. If the outcome of a service contract cannot be estimated reliably, contract revenue should be recognised only to the extent that contract costs incurred are likely to be recoverable. 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. Rental revenue

The Group leases ships and shipping spaces under IFRS 16, ‘Leases’. Lease assets are classified as finance leases or operating leases based on the transferred proportion of the risks and rewards incidental to ownership of the leased asset, and recognised in revenue over the lease term.

(32) Business combinations
A. The Group uses the acquisition method to account for business combinations. The consideration transferred for an acquisition is measured as the fair value of the assets transferred, liabilities incurred or assumed and equity instruments issued at the acquisition date, plus the fair value of any assets and liabilities resulting from a contingent consideration arrangement. All acquisitionrelated costs are expensed as incurred. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. For each business combination, the Group measures at the acquisition date components of non-controlling interests in the acquiree that are present ownership interests and entitle their holders to the proportionate share of the entity’s net assets in the event of liquidation at either fair value or the present ownership instruments’ proportionate share in the recognised amounts of the acquiree’s identifiable net assets. All other non-controlling interests should be measured at the acquisition-date fair value.
B. The excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and the fair value of any previous equity interest in the acquiree over the fair value of the identifiable assets acquired and the liabilities assumed is recorded as goodwill at the acquisition date. If the total of consideration transferred, non-controlling interest in the acquiree recognised and the fair value of previously held equity interest in the acquiree is less than the fair value of the identifiable assets acquired and the liabilities assumed, the difference is recognised directly in profit or loss on the acquisition date.

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(33) Operating segments

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

(34) Convenience conversion into U.S dollars

The Group maintains its accounting records and prepares its financial statements in New Taiwan (“NT”) dollars. The United States (“US”) dollar amounts disclosed in the financial statements are presented solely for the convenience of the reader and were translated to US dollars at the rate of NT$29.44 : US $1.00, the noon buying rate in effect as of Federal Reserve Board on June 30, 2020 , as uniformly applied for all the financial statements accounts. Such translation amounts are unaudited and should not be construed as a representations that the NT dollar amounts represent, have been, or could in the future be converted into US dollars at that or any other rate.

5. CRITICAL ACCOUNTING JUDGEMENTS, ESTIMATES AND KEY SOURCES OF

ASSUMPTION UNCERTAINTY

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

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

None.

(2) Critical accounting estimates and assumptions

A. Revenue recognition

Revenue from freight services of the Group is recognised under the percentage-of-completion method for each vessel of which the service has been provided during the reporting period. The adjustments to the estimated amount may be required as the transit days and the freight revenue are subject to estimation.

B. Impairment assessment of tangible assets

The Group assesses impairment based on its subjective judgement and determines the separate cash flows of a specific group of assets, useful lives of assets and the future possible income and expenses arising from the assets depending on how assets are utilized and industrial characteristics. Any changes of economic circumstances or estimates due to the change of Group strategy might cause material impairment on assets in the future.

As of June 30, 2020, the Group recognised property, plant, equipment and cargo handling equipment, transport equipment and ship equipment, which are recognised in right-of-use asset, amounting to $103,481,284 and $67,298,884, respectively.

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6. DETAILS OF SIGNIFICANT ACCOUNTS

(1) Cash and cash equivalents

TAILS OF SIGNIFICANT ACCOUNTS Cash and cash equivalents
Cash on hand and petty cash Checking accounts and demand deposits Time deposits	June 30,2019 December 31,2019 30,769 $ 28,964 $ 7,646,771 6,903,864 29,485,610 30,939,061 37,163,150 $ 37,871,889 $	June 30,2020
		30,939 $ 8,142,358 30,085,435
		38,258,732 $

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

(2) Financial assets at fair value through other comprehensive income

Items Non-current items: Equity instruments Listed (TSE) stocks Unlisted stocks Valuation adjustment	June 30,2019 December 31,2019 490,801 $ 490,801 $ 212,636 208,570 703,437 699,371 1,194,278 1,020,052 1,897,715 $ 1,719,423 $	June 30,2020
		490,801 $ 206,403
		697,204 761,213
		1,458,417 $

A. The Group has elected to classify these investments that are considered to be strategic investments as financial assets at fair value through other comprehensive income. The fair value of such investments amounted to $1,897,715, $1,719,423 and $1,458,417 at June 30, 2019, December 31, 2019 and June 30, 2020, respectively.
B. Amounts recognised in profit or loss and other comprehensive income in relation to the financial assets at fair value through other comprehensive income are listed below:

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Three-month period ended Three-month period ended June 30, 2019 June 30, 2020

	June 30,2019 June 30,2020
Equity instruments at fair value through other comprehensive income Fair value change recognised in other comprehensive income Income tax recognised in other comprehensive income Dividend income recognised in profit or loss - Held at end of period	230,571 $ 16,190 $ 8,967) ($ 3,316 $ 89,638 $ 73,247 $ Six-month period ended Six-month period ended June 30,2019 June 30,2020

comprehensive income Dividend income recognised in profit or loss - Held at end of period	8,967) ($ 3,316 $ 89,638 $ 73,247 $ Six-month period ended Six-month period ended June 30,2019 June 30,2020
Equity instruments at fair value through other comprehensive income Fair value change recognised in other comprehensive income Income tax recognised in other comprehensive income Dividend income recognised in profit or loss - Held at end of period	240,821 $ 254,166) ($ 7,125) ($ 10,198 $ 89,638 $ 73,247 $

C. Information relating to fair value of financial assets at fair value through other comprehensive income is provided in Note 12(3).

(3) Financial assets at amortised cost

income is provided in Note 12(3). Financial assets at amortised cost
Items Current items: Time deposits exceeding 3 months Pledged time deposits Non-current items: Financial bonds	June 30,2019 December 31,2019 1,825,075 $ 1,727,796 $ 293,748 290,740 2,118,823 $ 2,018,536 $ 100,000 $ 100,000 $	June 30,2020
		423,185 $ 239,295
		662,480 $
		100,000 $

A. Amounts recognised in profit or loss in relation to financial assets at amortised cost are listed below:

below:
	Three-month period ended		Three-month period ended
		June 30,2019		June 30,2020
Interest income	$	9,062	$	4,561
	Six-month period ended		Six-month period ended
		June 30,2019		June 30,2020
Interest income	$	32,087	$	23,047

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B. As at June 30, 2019, December 31, 2019 and June 30, 2020, without taking into account any collateral held or other credit enhancements, the maximum exposure to credit risk in respect of the amount that best represents the financial assets at amortised cost held by the Group was $2,218,823, $2,118,536 and $762,480, respectively.
C. Details of the Group’s financial assets at amortised cost pledged to others as collateral are provided in Note 8.
D. Information relating to credit risk of financial assets at amortised cost is provided in Note 12(2).
(4) Notes and accounts receivable

Notes receivable Less: Allowance for bad debts Accounts receivable (including related parties) Less: Allowance for bad debts Overdue receivables (recorded as other non-current assets) Less: Allowance for bad debts	June 30,2019 December 31,2019 90,185 $ 129,547 $ 2) ( 2) ( 90,183 $ 129,545 $ 15,303,988 $ 14,772,158 $ 16,308) ( 12,345) ( 15,287,680 $ 14,759,813 $ 278,585 $ 269,506 $ 278,585) ( 269,506) ( - $ - $	June 30,2020 95,133 $ 9) ( 95,124 $ 14,655,262 $ 9,481) ( 14,645,781 $ 264,667 $ 264,667) ( - $

A. The ageing analysis of accounts receivable and notes receivable are as follows:

Not past due Up to 30 days 31 to 180 days Over 180 days Not past due Up to 30 days 31 to 180 days	June 30,2019 Accounts receivable 10,625,541 $ 3,501,570 1,176,877 278,585 15,582,573 $ June 30,2019 Notes receivable 90,185 $ - - 90,185 $	December 31,2019 Accounts receivable 12,094,901 $ 2,450,297 226,960 269,506 15,041,664 $ December 31,2019 Notes receivable 129,547 $ - - 129,547 $	June 30,2020
			Accounts receivable
			12,411,939 $ 2,030,759 141,699 335,532
			14,919,929 $
			June 30,2020
			Notes receivable
			95,133 $ - -
			95,133 $

The above ageing analysis was based on past due date.

B. As of January 1, 2019, June 30, 2019, December 31, 2019 and June 30, 2020, the balances of receivables (including notes receivable) from contracts with customers amounted to $14,202,068, $13,205,755, $13,084,484 and $13,601,225, respectively.

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F-43

C. The Group has no notes and accounts receivable held by the Group pledged to others.
D. As at June 30, 2019, December 31, 2019 and June 30, 2020, without taking into account any collateral held or other credit enhancements, the maximum exposure to credit risk in respect of the amount that best represents the Group’s notes receivable were $90,183, $129,545 and $95,124, respectively; and the amount that best represents the Group’s accounts receivable were $15,287,680, $14,759,813 and $14,645,781, respectively.
E. Information relating to credit risk of notes receivable and accounts receivable is provided in Note 12(2).

(5) Inventories

12(2). Inventories
Other current assets Ship fuel Steel and others Ship fuel Steel and others Ship fuel Steel and others Shipowner's accounts Agency accounts Temporary debits		June 30,2019
	Cost 4,370,815 $ 378,698 4,749,513 $	Allowance for valuation loss - $ - - $ December 31,2019	Book value
			4,370,815 $ 378,698
			4,749,513 $

	Cost 4,273,258 $ 274,661 4,547,919 $	Allowance for valuation loss - $ - - $ June 30,2020	Book value
			4,273,258 $ 274,661
			4,547,919 $

	Cost 2,294,431 $ 351,207 2,645,638 $ June 30,2019 1,357,669 $ 1,186,767 1,075,994 3,620,430 $	Allowance for valuation loss - $ - - $ December 31,2019 28,957 $ 1,502,487 837,183 2,368,627 $	Book value
			2,294,431 $ 351,207
			2,645,638 $
			June 30,2020
			789,879 $ 2,357,361 804,702
			3,951,942 $

(6) Other current assets

A. Shipowner’s accounts:

Temporary accounts, between the Group and other related parties – Evergreen International S.A., Gaining Enterprise S.A., Italia Marittima S.p.A., and Evergreen Marine (Singapore) Pte. Ltd. incurred due to foreign port formalities and pier rental expenses.

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F-44

B. Agency accounts:

The Group entered into agency agreements with its related parties, whereby the related parties act as the Group’s agents to deal with domestic and foreign port formalities, such as arrival and departure of the Group’s ships, cargo stevedoring and forwarding, freight collection, and payment of expenses incurred in domestic and foreign ports.

C. Temporary debits are mainly subject to the account of settlements between other carriers and the OCEAN Alliance, which the Group formed in response to market competition and enhancement of global transportation network to provide better logistics services to customers with Cosco Container Lines Co., Ltd., CMA CGM, Ltd., and the Orient Overseas Container Line, Ltd. on March 31, 2017 for trading of shipping space.

(7) Investments accounted for using equity method

A. Details of long-term equity investments accounted for using equity method are set forth below:

Evergreen International Storage and Transport Corporation EVA Airways Corporation Taipei Port Container Terminal Corporation Charng Yang Development Co., Ltd. Luanta Investment (Netherlands) N.V. Balsam Investment (Netherlands) N.V. Colon Container Terminal S.A. Others	June 30,2019 9,010,267 $ 10,665,767 1,544,108 518,498 1,954,792 228,779 3,273,425 1,069,753 28,265,389 $	December 31,2019 9,039,677 $ 11,399,909 1,583,427 553,210 1,884,647 525,226 3,193,300 1,221,529 29,400,925 $	June 30, 2020
			8,891,012 $ 10,959,263 1,481,822 522,864 1,849,171 407,923 3,130,412 1,166,201
			28,408,668 $

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F-45

B. Associates

(a) The basic information of the associates that are material to the Group is as follows:

Companyname	Principal place of business	Ownership(%)	Ownership(%)	Ownership(%)	Nature of relationship	Methods of measurement
Evergreen International Storage and Transport Corporation EVA Airways Corporation	TW TW	June 30, 2019	December 31,2019	June 30, 2020	With a right over 20% to vote Have a right to vote in the Board of Directors	Equity method Equity method
		40.36% 16.00%	40.36% 16.00%	40.36% 16.00%

(b) The summarised financial information of the associates that are material to the Group is as follows:

Balance sheet

follows: Balance sheet
		Evergreen International Storage and Transport Corporation
		June 30,2019	December 31,2019			June 30,2020
Current assets	$	5,815,106	$	6,121,815	$	5,826,424
Non-current assets		29,336,203		28,889,987		27,985,138
Current liabilities	(	3,202,673)	(	2,703,450)	(	3,987,072)
Non-current liabilities	(	9,152,926)	(	9,485,576)	(	7,539,570)
Total net assets	$	22,795,710	$	22,822,776	$	22,284,920
Share in associate's net assets	$	9,088,507	$	9,098,692	$	8,942,240
Unrealized income with
affiliated companies	(	78,240)	(	59,015)	(	51,228)
Carrying amount of the associate	$	9,010,267	$	9,039,677	$	8,891,012
		EVA Airways Corporation
		June 30,2019	December 31,2019			June 30,2020
Current assets	$	78,366,845	$	77,199,776	$	58,764,144
Non-current assets		277,348,200		279,051,918		273,917,530
Current liabilities	(	76,813,237)	(	82,441,715)	(	58,997,524)
Non-current liabilities	(	205,687,710)	(	195,667,963)	(	198,798,761)
Total net assets	$	73,214,098	$	78,142,016	$	74,885,389
Share in associate's net assets	$	10,665,767	$	11,399,909	$	10,959,263

~45~

F-46

Statement of comprehensive income

Statement of comprehensive income
Revenue Profit for the period Other comprehensive income, net of tax Total comprehensive income Dividends received from associates Revenue Profit for the period Other comprehensive income (loss), net of tax Total comprehensive income (loss) Dividends received from associates Revenue Profit (loss) for the period Other comprehensive (loss) income, net of tax Total comprehensive (loss) income Dividends received from associates Revenue Profit (loss) for the period Other comprehensive (loss) income, net of tax Total comprehensive income (loss) Dividends received from associates	Evergreen InternationalStorage and TransportCorporation
	Three-month period ended Three-month period ended June 30,2019 June 30,2020 1,977,258 $ 1,704,030 $ 254,346 $ 205,252 $ 51,374 4,210 305,720 $ 209,462 $ 150,742 $ 129,208 $ Evergreen InternationalStorage and TransportCorporation
	Six-month period ended Six-month period ended June 30,2019 June 30,2020 3,895,130 $ 3,492,829 $ 448,264 $ 366,002 $ 189,952 433,956) ( 638,216 $ 67,954) ($ 150,742 $ 129,208 $ Three-month period ended Three-month period ended June 30,2019 June 30,2020 43,864,832 $ 19,288,932 $ 284,757 $ 705,895) ($ 735,485) ( 2,326,445 450,728) ($ 1,620,550 $ 376,987 $ 194,135 $ Six-month period ended Six-month period ended June 30,2019 June 30,2020 88,177,559 $ 49,522,030 $ 2,387,247 $ 1,800,477) ($ 669,471) ( 287,483 1,717,776 $ 1,512,994) ($ 376,987 $ 194,135 $ EVA AirwaysCorporation EVA AirwaysCorporation

(c) The carrying amount of the Group’s interests in all individually immaterial associates and the Group’s share of the operating results are summarised below:

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F-47

As of June 30, 2019, December 31, 2019 and June 30, 2020, the carrying amount of the Group’s individually immaterial associates amounted to $8,589,355, $8,961,339 and $8,558,393, respectively.

$8,558,393, respectively.
Six-month period ended June 30,2019 (Loss) income for the period 303,056) ($ Other comprehensive income, net of tax - Total (loss) comprehensive 303,056) ($	Six-month period ended June 30,2020
	303,272 $ -
	303,272 $

C. Above stated certain investments accounted for using equity method are based on the financial statements of associates which were not reviewed by the independent accountants or reviewed by the associates’ independent accountants.
D. The fair value of the Group’s associates which have quoted market price was as follows:

Evergreen International Storage and Transport Corporation EVA Airways Corporation	June 30,2019 6,137,364 $ 11,271,926 17,409,290 $	December 31,2019 6,180,433 $ 10,677,440 16,857,873 $	June 30,2020
			5,878,948 $ 8,697,260
			14,576,208 $

E. To integrate the investment structure, on November 13, 2019, the shareholders of the subsidiary, Armand B.V., during their meeting approved to dispose 9.73% equity interests of Taipei Port Container Terminal Corporation. On February 7, 2020, the Company acquired 6.81% equity interests at par value of NT$9.941 per share, consisting of 35,421 thousand shares, the transaction amounting to $352,123. Additionally, other related party, EIS, also acquired 2.92% equity interests at par value of NT$9.941 per share, consisting of 15,181 thousand shares, the transaction amounting to $150,464. After the transaction, the shareholding ratio of the Group to Taipei Port Container Terminal Corporation decreased from 30.76% to 27.84%, still valued using equity method.
F. The Board of Directors of the Company during its meeting on December 21, 2018 adopted a resolution to participate in the capital increase raised by EVA Airways Corporation amounting to 39,150 thousand shares, subscription price of NT$13 (in dollars) per share, whose total price of $508,944. In addition, the effective date was set on January 24, 2019 and after the acquisition, the Company’s share interest was decreased to 16.10%. Moreover, the Company purchased 70 thousand shares as specific person, the purchasing proceeds amounted to $700, and the share interest further decreased to 16% as of June 30, 2020 after many conversions from corporate bonds to stocks took place in EVA Airways Corporation for the year ended December 31, 2019.
G. On November 10, 2019, the Board of Directors of the subsidiary, Peony, has resolved to participate in the capital increase of the investee, Balsam Investment (Netherlands) N.V., as the original shareholder. The amount of capital increase was USD 24,500. After the capital increase, Peony’s shareholding ratio is still 49%.

~47~

F-48

			Total		191,961,393 $		74,742,208) (	117,219,185 $			117,219,185 $	4,925,948	539,354) (	10,294,315) (	4,042,280) (		686,097			107,955,281 $		173,533,194 $		65,577,913) (	107,955,281 $
			Others		166,460 $		7,011) (	159,449 $			159,449 $	65,057	-	30,707) (	2,138) (		416			192,077 $		201,227 $		9,150) (	192,077 $
		Leasehold	improvements		605,782 $		480,658) (	125,124 $			125,124 $	6,940	-	223,791	45,906) (		402			310,351 $		841,546 $		531,195) (	310,351 $
		Lease	assets		20,242,368 $		6,703,192) (	13,539,176 $			13,539,176 $	-	-	13,539,176) (	-		-			- $		- $		-	- $
		Office	equipment		543,931 $		423,622) (	120,309 $			120,309 $	14,419	236) (	12,879	21,594) (		2,001			127,778 $		569,788 $		442,010) (	127,778 $
2019			Ships		126,866,151 $		50,041,877) (	76,824,274 $			76,824,274 $	144,653	530,394) (	2,835,137	2,508,681) (		465,926			77,230,915 $		123,217,723 $		45,986,808) (	77,230,915 $
		Transportation	equipment		22,567,926 $		7,371,302) (	15,196,624 $			15,196,624 $	4,611,610	7,114) (	-	1,005,690) (		114,160			18,909,590 $		27,326,997 $		8,417,407) (	18,909,590 $
	Computer and	communication	equipment		1,245,653 $		617,547) (	628,106 $			628,106 $	10,205	467) (	16,173	114,620) (		5,744			545,141 $		1,269,170 $		724,029) (	545,141 $
	Loading and	unloading	equipment		10,823,844 $		7,327,291) (	3,496,553 $			3,496,553 $	4,174	946) (	99,426	259,414) (		16,715			3,356,508 $		10,968,504 $		7,611,996) (	3,356,508 $
		Machinery	equipment		640,766 $		511,626) (	129,140 $			129,140 $	319	197) (	-	6,772) (		1,841			124,331 $		648,060 $		523,729) (	124,331 $
			Land Buildings	At January 1	Cost 822,076 $ 7,436,436 $	Accumulated	depreciation - 1,258,082) (	822,076 $ 6,178,354 $	Opening net book	amount as at	January 1 822,076 $ 6,178,354 $	Additions - 68,571	Disposals - -	Reclassifications - 88,162	Depreciation - 77,465) (	Net exchange	differences 7,880 71,012	Closing net book	amount as at	June 30 829,956 $ 6,328,634 $	At June 30	Cost 829,956 $ 7,660,223 $	Accumulated	depreciation - 1,331,589) (	829,956 $ 6,328,634 $

F-49

2020	Loading and Computer and	Machinery unloading communication Transportation Office Leasehold	Land Buildings equipment equipment equipment equipment Ships equipment improvements Others Total	At January 1	Cost 823,377 $ 7,589,613 $ 653,005 $ 11,587,972 $ 1,317,804 $ 28,726,237 $ 122,361,439 $ 581,306 $ 852,610 $ 221,576 $ 174,714,939 $	Accumulated	depreciation - 1,420,875) ( 518,595) ( 8,182,213) ( 807,079) ( 9,328,119) ( 45,014,883) ( 454,356) ( 583,950) ( 11,358) ( 66,321,428) (	823,377 $ 6,168,738 $ 134,410 $ 3,405,759 $ 510,725 $ 19,398,118 $ 77,346,556 $ 126,950 $ 268,660 $ 210,218 $ 108,393,511 $	Opening net book	amount as at	January 1 823,377 $ 6,168,738 $ 134,410 $ 3,405,759 $ 510,725 $ 19,398,118 $ 77,346,556 $ 126,950 $ 268,660 $ 210,218 $ 108,393,511 $	Additions - 6,975 510 15,625 103,023 2,822,688 381,183 25,739 635,228 21,755 4,012,726	Disposals - - - 117) ( 29) ( 14,187) ( 770,969) ( 231) ( - - 785,533) (	Reclassifications 18,209 10,132 - - 5,938 116,295 5,989,593 14,639 510,292 21,085) ( 6,644,013	Depreciation - 76,967) ( 7,143) ( 260,132) ( 136,263) ( 1,341,124) ( 2,462,479) ( 23,076) ( 74,377) ( 2,221) ( 4,383,782) (	Net exchange	differences 10,093) ( 138,841) ( 8,055) ( 30,283) ( 8,418) ( 279,089) ( 836,153) ( 4,489) ( 13,999) ( 5,099) ( 1,334,519) (	Closing net book	amount as at	June 30 831,493 $ 5,970,037 $ 119,722 $ 3,130,852 $ 474,976 $ 20,702,701 $ 79,647,731 $ 139,532 $ 1,325,804 $ 203,568 $ 112,546,416 $	At June 30	Cost 831,493 $ 7,427,254 $ 613,498 $ 11,499,572 $ 1,398,339 $ 31,178,076 $ 120,140,039 $ 601,703 $ 1,981,414 $ 217,148 $ 175,888,536 $	Accumulated	depreciation - 1,457,217) ( 493,776) ( 8,368,720) ( 923,363) ( 10,475,375) ( 40,492,308) ( 462,171) ( 655,610) ( 13,580) ( 63,342,120) (	831,493 $ 5,970,037 $ 119,722 $ 3,130,852 $ 474,976 $ 20,702,701 $ 79,647,731 $ 139,532 $ 1,325,804 $ 203,568 $ 112,546,416 $

F-50

� (9) Leasing arrangements lessee/ Financial liabilities for hedging

A. The Group leases various assets including land, buildings, loading and unloading equipment, transportation equipment, ships, and business vehicles. Rental contracts are typically made for periods of 1 to 90 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.
B. Short-term leases with a lease term of 12 months or less comprise buildings and ships. Low-value assets comprise office equipment and other equipment.
C. The carrying amount of right-of-use assets and the depreciation charge are as follows:

Land Buildings Loading and unloading equipment Transportation equipment Ships Office equipment Other equipment Land Buildings Loading and unloading equipment Transportation equipment Ships Office equipment Other equipment Land Buildings Loading and unloading equipment Transportation equipment Ships Office equipment Other equipment	June 30,2019 December 31,2019 June 30,2020 Carryingamount Carryingamount Carryingamount 13,562,696 $ 12,228,498 $ 11,091,284 $ 916,096 865,940 734,233 431,126 101,493 49,811 3,282,506 2,230,717 1,707,473 60,174,602 67,134,641 65,541,600 38,418 39,930 32,392 35,598 22,967 11,318 78,441,042 $ 82,624,186 $ 79,168,111 $ Three-month period ended Three-month period ended June 30,2019 June 30,2020 Depreciation charge Depreciation charge 488,668 $ 475,776 $ 65,846 71,021 38,796 25,268 265,652 168,079 2,072,173 2,221,805 4,506 4,303 5,933 5,695 2,941,574 $ 2,971,947 $ Six-month period ended Six-month period ended June 30,2019 June 30,2020 Depreciation charge Depreciation charge 969,805 $ 953,895 $ 131,271 143,285 77,200 50,726 532,795 350,817 4,105,164 4,516,357 8,557 8,756 11,806 11,433 5,836,598 $ 6,035,269 $	June 30,2019 December 31,2019 June 30,2020 Carryingamount Carryingamount Carryingamount 13,562,696 $ 12,228,498 $ 11,091,284 $ 916,096 865,940 734,233 431,126 101,493 49,811 3,282,506 2,230,717 1,707,473 60,174,602 67,134,641 65,541,600 38,418 39,930 32,392 35,598 22,967 11,318 78,441,042 $ 82,624,186 $ 79,168,111 $ Three-month period ended Three-month period ended June 30,2019 June 30,2020 Depreciation charge Depreciation charge 488,668 $ 475,776 $ 65,846 71,021 38,796 25,268 265,652 168,079 2,072,173 2,221,805 4,506 4,303 5,933 5,695 2,941,574 $ 2,971,947 $ Six-month period ended Six-month period ended June 30,2019 June 30,2020 Depreciation charge Depreciation charge 969,805 $ 953,895 $ 131,271 143,285 77,200 50,726 532,795 350,817 4,105,164 4,516,357 8,557 8,756 11,806 11,433 5,836,598 $ 6,035,269 $	June 30,2020
			Carryingamount
			11,091,284 $ 734,233 49,811 1,707,473 65,541,600 32,392 11,318
			79,168,111 $
		Depreciation charge
		475,776 $ 71,021 25,268 168,079 2,221,805 4,303 5,695
		2,971,947 $
		Six-month period ended June 30,2020
		Depreciation charge
		953,895 $ 143,285 50,726 350,817 4,516,357 8,756 11,433
		6,035,269 $

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F-51

D. For the six-month periods ended June 30, 2019 and 2020, the additions to right-of-use assets were $9,969,137 and $3,387,497, respectively.
E. For the six-month periods ended June 30, 2019 and 2020, the disposals to right-of-use assets were $61,434 and $20,757, respectively.
F. The information on income and expense accounts relating to lease contracts is as follows:

	Three-month period ended	Three-month period ended	Three-month period ended	Three-month period ended
		June 30,2019		June 30,2020
Items affecting profit or loss
Interest expense on lease liabilities	$	676,490	$	676,447
Expense on short-term lease contracts		1,726,058		975,459
Expense on leases of low-value assets		4,179		3,379
Expense on variable lease payments		1,462		1,063
Gains arising from lease modifications		2,306		464
	Six-month period ended		Six-month period ended
		June 30,2019		June 30,2020
Items affecting profit or loss
Interest expense on lease liabilities	$	1,351,641	$	1,445,085
Expense on short-term lease contracts		3,461,291		2,313,749
Expense on leases of low-value assets		8,176		7,513
Expense on variable lease payments		2,872		2,180
Gains arising from lease modifications		2,306		465

G. For six-month period ended June 30, 2019 and 2020, the Group’s total cash outflow for leases amounted to $10,274,041 and $9,462,009, respectively.
H. As of June 30, 2020, the Group had entered into lease agreements that contained non-lease service component. Based on the fair value of the lease and non-lease component, the future commitment payment allocated to service component amounted to $10,643,805.
I. The Group has applied the practical expedient to “Covid-19-related rent concessions”, and recognised the gain from changes in lease payments arising from the rent concessions amounting to $1,908 by decreasing rent expense in $1,540 and increasing other income in $368 for the sixmonth period ended June 30, 2020.
J. To hedge the impact of expected variable exchange rate risk arising from US dollar denominated lease liabilities payable, the Company designated US dollar denominated lease contracts as the hedging instruments for hedging the foreign exchange variation of future US dollar denominated marine freight income and adopted cash flow hedge accounting. Moreover, the effective portion with respect to the changes in cash flows of the hedging instruments is deferred to recognise in gains (loss) on hedging instruments, which is under other equity interest, and will be included in the profit or loss when the highly probable marine freight income is recognised. Details of relevant transactions are as follows:

~51~

F-52

Designated as Hedged items hedginginstruments Contractperiod Expected US dollar denominated marine freight income transaction US dollar denominated lease liabilities 2019.1.1~2027.6.12 Designated as Hedged items hedginginstruments Contractperiod Expected US dollar denominated marine freight income transaction US dollar denominated lease liabilities 2019.1.1~2034.8.15 Designated as Hedged items hedginginstruments Contractperiod Expected US dollar denominated marine freight income transaction US dollar denominated lease liabilities 2019.1.1~2034.8.15 June 30,2019 December 31,2019 June 30,2020		June 30,2019
			Book value
			16,012,394 $

		Contractperiod 2019.1.1~2034.8.15 June 30,2020	Book value
			20,188,942 $

		Contractperiod 2019.1.1~2034.8.15	Book value
			18,850,478 $

(a) Lease liabilities designated as hedges (recorded as financial liabilities for hedging)

Cash flow hedges� Exchange rate risk Lease liability contracts designated as hedges Current liabilities Non-current liabilities	June 30,2019 1,635,308 $ 14,377,086 16,012,394 $	December 31,2019 1,861,026 $ 18,327,916 20,188,942 $	June 30,2020
			1,904,770 $ 16,945,708
			18,850,478 $

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F-53

(b) Other equity - cash flow hedge reserve

2019
At April 1
64,904)
($ Less : (Loss) profit on hedge effectiveness-amount
recognised in other comprehensive income
99,031)
(
Add : Reclassified to freight revenue as the hedged
item has affected profit or loss
5,094

At June 30
158,841)
($ 2019
At January 1
-
$ Less : (Loss) profit on hedge effectiveness-amount
recognised in other comprehensive income
167,963)
(
Add : Reclassified to freight revenue as the hedged
item has affected profit or loss
9,122

At June 30
158,841)
($

2020
333,011
$ 470,291
10,899)
(
792,403
$ 2020
460,138
$ 351,704
19,439)
(
792,403
$

(c) For the three-month and six-month periods ended June 30, 2019 and 2020, there are no cash flow hedges transactions of ineffective portion should be recognized in profit or loss.
(d) Information relating to the fair values of abovementioned hedging financial liabilities is provided in Note 12(3).
K. The amounts of lease liabilities (net of the lease liabilities designated as hedges) of the Group on June 30, 2019, December 31, 2019 and June 30, 2020 are as follows:

Current lease liabilities Current lease liabilities - related parties Non-current lease liabilities Non-current lease liabilities - related parties	June 30,2019 December 31,2019 9,232,238 $ 8,479,576 $ 594,515 596,000 50,104,936 51,284,350 1,000,509 682,967 60,932,198 $ 61,042,893 $	June 30,2020
		8,288,247 $ 552,689 49,818,344 403,221
		59,062,501 $

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F-54

(10) Investment property, net

Investment property, net
				2019
		Land		Buildings		Total
At January 1
Cost	$	1,415,054	$	5,048,676	$	6,463,730
Accumulated depreciation		-	(	628,656)	(	628,656)
	$	1,415,054	$	4,420,020	$	5,835,074
Opening net book amount as at January 1	$	1,415,054	$	4,420,020	$	5,835,074
Reclassifications		-		168		168
Depreciation		-	(	83,643)	(	83,643)
Net exchange differences		10		74,104		74,114
Closing net book amount as at
June 30	$	1,415,064	$	4,410,649	$	5,825,713
At June 30
Cost	$	1,415,064	$	5,143,029	$	6,558,093
Accumulated depreciation		-	(	732,380)	(	732,380)
	$	1,415,064	$	4,410,649	$	5,825,713
				2020
		Land		Buildings		Total
At January 1
Cost	$	1,415,029	$	4,788,141	$	6,203,170
Accumulated depreciation		-	(	748,100)	(	748,100)
	$	1,415,029	$	4,040,041	$	5,455,070
Opening net book amount as at January 1	$	1,415,029	$	4,040,041	$	5,455,070
Reclassifications	(	18,209)		24,312		6,103
Depreciation		-	(	78,159)	(	78,159)
Net exchange differences	(	19)	(	91,529)	(	91,548)
Closing net book amount as at June 30	$	1,396,801	$	3,894,665	$	5,291,466
At June 30
Cost	$	1,396,801	$	4,703,614	$	6,100,415
Accumulated depreciation		-	(	808,949)	(	808,949)
	$	1,396,801	$	3,894,665	$	5,291,466

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A. Rental income from the investment property and direct operating expenses arising from the investment property are shown below:

investment property are shown below:
Rental revenue from the lease of the investment property Direct operating expenses arising from the investment property that generated rental income in the period Direct operating expenses arising from the investment property that did not generate rental income in the period Rental revenue from the lease of the investment property Direct operating expenses arising from the investment property that generated rental income in the period Direct operating expenses arising from the investment property that did not generate rental income in the period	Three-month period endedJune 30,2019 50,166 $ 42,262 $ 175 $ Six-month period endedJune 30,2019 100,330 $ 84,431 $ 396 $	Three-month period endedJune 30,2020
		50,300 $
		38,743 $
		433 $
		Six-month period endedJune 30,2020
		105,945 $
		78,168 $
		750 $

B. The fair value of the investment property held by the Group as at June 30, 2019, December 31, 2019 and June 30, 2020 was $7,921,672, $7,195,945 and $6,919,205, respectively. The fair value measurements were based on the market prices of recently sold properties in the immediate vicinity of a certain property, and were classified as Level 2.
C. Information about the investment property that were pledged to others as collaterals is provided in Note 8.

(11) Other non-current assets

in Note 8. )Other non-current assets
Prepayments for equipment Refundable deposits Others	June 30,2019 December 31,2019 7,335,600 $ 9,308,236 $ 229,710 229,095 98,731 101,051 7,664,041 $ 9,638,382 $	June 30,2020
		13,077,677 $ 231,793 72,709
		13,382,179 $

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Movement analysis of prepayments for equipment are as follows:

				2020
At January 1	$	4,619,738	$	9,308,236
Additions		5,914,049		10,609,573
Reclassification to property,
plant and equipment	(	3,244,964)	(	6,507,359)
Reclassification to intangible assets		-	(	1,867)
Net exchange differences		46,777	(	330,906)
At June 30	$	7,335,600	$	13,077,677

Amount of borrowing costs capitalised as part of prepayment for equipment and the range of the interest rates for such capitalisation are as follows:

(12) (13)	Other current liabilities Corporate bonds payable Amount capitalised Interest rate Amount capitalised Interest rate Receipt in advance Long-term liabilities - current portion Corporate bonds - current portion Shipowner's accounts Agency accounts Others Domestic secured corporate bonds Less: Current portion or exercise of put options	Three-month period Three-month period endedJune 30,2019 endedJune 30,2020 44,965 $ 62,567 $ 0.86%~4.70% 0.86%~4.10% Six-month period Six-month period ended June 30,2019 endedJune 30,2020 104,431 $ 132,097 $ 0.86%~4.70% 0.86%~4.10% June 30,2019 December 31,2019 June 30,2020 36,869 $ 56,522 $ 21,584 $ 21,771,914 22,841,596 25,244,379 - - 4,000,000 1,682,782 2,366,770 2,260,331 2,603,691 2,453,406 1,812,228 75,294 46,015 49,668 26,170,550 $ 27,764,309 $ 33,388,190 $ June 30,2019 December 31,2019 June 30,2020 10,000,000 $ 10,000,000 $ 10,000,000 $ - - 4,000,000) ( 10,000,000 $ 10,000,000 $ 6,000,000 $

A. On April 25, 2017, the Company issued its thirteenth domestic secured corporate bonds (referred herein as the “Thirteenth Bonds”), totaling $8,000,000. The Thirteenth Bonds are categorized into Bond A, B, C, D, E, F and G, depending on the guarantee institution. Bond A totals $2,000,000, and the rest total $6,000,000, with each par value of $1,000,000. The major terms

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of the issuance are set forth below:

(a) Period: 5 years (April 25, 2017 to April 25, 2022)
(b) Coupon rate: 1.05% fixed per annum
(c) Principal repayment and interest payment

Repayments for the Thirteenth Bonds are paid annually on coupon rate, starting a year from the issuing date. For each category of the bonds mentioned above, half the principal must be paid at the end of the fourth year, and another half at the maturity date.

(d) Collaterals

The Thirteenth Bonds are secured. Bond A is guaranteed by Hua Nan Bank, Bond B is guaranteed by First Bank, Bond C is guaranteed by Mega International Commercial Bank, Bond D is guaranteed by Land Bank of Taiwan, Bond E is guaranteed by Chang Hwa Bank, Bond F is guaranteed by Taiwan Cooperative Bank, and Bond G is guaranteed by Bank Sinopac.

B. On June 27, 2018, the Company issued its fourteenth domestic secured corporate bonds (referred herein as the “Fourteenth Bonds”), totaling $2,000,000 at face value. The major terms of the issuance are set forth below:
(a) Period: 5 years (June 27, 2018 to June 27, 2023)
(b) Coupon rate: 0.86% fixed per annum
(c) Principal repayment and interest payment

Repayments for the Fourteenth Bonds are paid annually at coupon rate, starting a year from the issuing date. The principal of the Fourteenth Bonds shall be repaid in lump sum at maturity.

(d) Collaterals

The Fourteenth Bonds are secured and are guaranteed by First Commercial Bank.

(14) Long-term loans

Secured bank loans Unsecured bank loans Add : Unrealised foreign exchange gains (losses) Less: Hosting fee credit Less: Current portion (recorded as other current liabilities) Borrowing period Interest rate	June 30,2019 December 31,2019 June 30,2020 59,063,409 $ 55,633,704 $ 57,411,696 $ 47,204,027 51,053,234 53,560,621 267,193 49,713 26,139) ( 35,895) ( 35,083) ( 38,042) ( 106,498,734 106,701,568 110,908,136 21,771,914) ( 22,841,596) ( 25,244,379) ( 84,726,820 $ 83,859,972 $ 85,663,757 $ 2019.08~2028.12 2020.01~2029.11 2020.08~2030.06 0.95%~5.15% 1.12%~5.15% 0.93%~5.15%

Please refer to Note 8 for details of the collaterals pledged for the above long-term loans.

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(15) Other non-current liabilities

Other non-current liabilities
Accrued pension liabilities Guarantee deposits received Unrealised gain on sale and leaseback	June 30,2019 December 31,2019 2,921,712 $ 3,028,061 $ 340,629 325,987 13,317 14,517 3,275,658 $ 3,368,565 $	June 30,2020
		2,971,137 $ 280,254 3,645
		3,255,036 $

(16) Pension

A. (a) The Company and its domestic subsidiary-TTSC have a defined benefit pension plan in accordance with the Labor Standards Act (“the Act”), 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 Act. 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 and its domestic subsidiary-TTSC contribute monthly an amount equal to 15% of the employees’ monthly salaries and wages to the retirement fund deposited with Bank of Taiwan, the trustee, under the name of the independent retirement fund committee. Also, the Company and its domestic subsidiary-TTSC would assess the balance in the aforementioned labor pension reserve account by December 31, every year. If the account balance is insufficient to pay the pension calculated by the aforementioned method to the employees expected to qualify for retirement in the following year, the Company and its domestic subsidiary-TTSC will make contributions for the deficit by next March.
(b) The employees with R.O.C. nationality of the Group’s subsidiaries, EGH, GMS and EMU, adopted the Act. 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.
(c) For the aforementioned pension plan, the Group recognised pension costs and expenses of $84,824, $52,629, $145,442 and $97,854 for the three-month and six-month periods ended June 30, 2019 and 2020, respectively.
(d) Expected contributions to the defined benefit pension plans of the Company and its subsidiary-TTSC for the six-month period ended June 30, 2020 amounts to $98,628.
B. (a) Effective July 1, 2005, the Company and its domestic subsidiary-TTSC have established a defined contribution pension plan (the “New Plan”) under the Labor Pension Act (the“Act”), covering all regular employees with R.O.C. nationality. Under the New Plan, the Company and its domestic subsidiary-TTSC contribute monthly an amount based on 6% of the employees’ monthly salaries and wages to the employees’ individual pension accounts at the

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Bureau of Labor Insurance. The benefits accrued are paid monthly or in lump sum upon termination of employment.

  - (b) The pension costs and expenses under defined contribution pension plans of the Group for the three-month and six-month periods ended June 30, 2019 and 2020 were $67,740, $72,651, $130,115 and $150,297, respectively.

(17) Capital stock
A. As of June 30, 2020, the Company’s authorized capital was $50,000,000, and the paid-in capital was $48,129,738, consisting of 4,812,974 thousand shares of common stocks with a par value of NT$10 (in dollars) per share. All proceeds from shares issued have been collected.
B. On June 24, 2020, the shareholders meeting of the Company resolved to increase authorized capital from $50,000,000 to $70,000,000. All proceeds from share issuance was completed on July 22, 2020.
C. On August 13, 2019, the Board of Directors of the Company resolved to increase capital by $3,000,000 by issuing 300,000 thousand shares at a par value of NT$10 (in dollars) per share, of which 30,000 thousand shares are reserved for employee preemption. The proposal of capital increase has been reported and became effective on December 3, 2019. The total amount of shares was $3,333,934. All proceeds from share issuance was completed on December 31, 2019.
(18) Capital surplus

Pursuant to the R.O.C. Company Act, 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 capitalised 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.

legal reserve is insufficient.
At January 1 Recognition of change in equity of associates in proportion to the Company's ownership At June 30			2019
	Share premium 8,833,283 $ - 8,833,283 $	Employe stock options exercised 93,890 $ - 93,890 $	Adjustments to share of changes in equity of associates and joint ventures 2,124,813 $ 8,924) ( 2,115,889 $	Donated assets 446 $ - 446 $	Others
					6,713 $ -
					6,713 $

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		2020
Share premium 9,167,217 $ - - 9,167,217 $	Employe stock options exercised 110,956 $ - - 110,956 $	Adjustments to share of changes in equity of associates and joint ventures 2,122,105 $ - 1,019 2,123,124 $	Donated assets 446 $ - - 446 $	Others
				6,713 $ 38 -
				6,751 $

(19) Retained earnings

A. According to the Company’s Articles of Incorporation, if there is any profit for a fiscal year, the Company shall first make provision for all taxes and cover prior years’ losses and then appropriate 10% of the residual amount as legal reserve. Dividends shall be proposed by the Board of Directors and resolved by the stockholders.
B. Dividend policy

In order to facilitate future expansion plans, dividends to stockholders are distributed mutually in the form of both cash and stocks with the basic principle that the ratio of cash dividends to total stock dividends shall not be lower than 10%.

C. Legal reserve

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 distribution of the reserve is limited to the portion in excess of 25% of the Company’s paid-in capital.

D. 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.
E. The appropriation of earnings of year 2018 as resolved by the shareholders meeting of the Company on June 21, 2019 is as follows:

Year ended December 31, 2018 Accrual of legal reserve $ 29,392

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F. For the year ended December 31, 2019, the Company’s net income after tax plus other items including current unappropriated retained earnings are negative, thus the Company will not provision legal reserve. Additionally, the shareholders meeting of the Company during its meeting on June 24, 2020 adopted a resolution to participate will retain attributable earnings for future operating plan, thus the Company will not appropriate shareholders’ bonus.
(20) Other equity items

2019

At January 1 Revaluation – gross Revaluation – tax Revaluation – associates Revaluation transferred to retained earnings – associates Cash flow hedges: – Fair value loss in the period – Group – Group – tax – Associates Currency translation differences: – Group – Group – tax – Associates At June 30	Unrealised gains (losses) on valuation	Hedging reserve	Currency translation	Total
	1,234,225 $ 240,821 7,125) ( 41,341 2 - - - - - - 1,509,264 $	58,649) ($ - - - - 158,841) ( 32,907 141,914) ( - - - 326,497) ($	17,580 $ - - - - - - - 417,845 5) ( 45,656 481,076 $	1,193,156 $ 240,821 7,125) ( 41,341 2 158,841) ( 32,907 141,914) ( 417,845 5) ( 45,656 1,663,843 $

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2020

At January 1 Revaluation – gross Revaluation – tax Revaluation – associates Cash flow hedges: – Fair value loss in the period – Group – Group – tax – Associates Currency translation differences: – Group – Group – tax – Associates At June 30	Unrealised gains (losses) on valuation	Hedging reserve	Currency translation	Total
	1,411,638 $ 254,166) ( 10,198 79,546) ( - - - - - - 1,088,124 $	579,757 $ - - - 332,265 68,476) ( 86,312 - - - 929,858 $	856,773) ($ - - - - - - 897,208) ( 13 94,805) ( 1,848,773) ($	1,134,622 $ 254,166) ( 10,198 79,546) ( 332,265 68,476) ( 86,312 897,208) ( 13 94,805) ( 169,209 $

(21) Operating revenue

Operating revenue
Revenue from contracts with customers Other - ship rental and slottage income Revenue from contracts with customers Other - ship rental and slottage income	Three-month period endedJune 30,2019 46,396,725 $ 715,016 47,111,741 $ Six-month period endedJune 30,2019 91,834,139 $ 974,654 92,808,793 $	Three-month period endedJune 30,2020
		43,316,204 $ 554,542
		43,870,746 $
		Six-month period endedJune 30,2020
		86,218,244 $ 1,127,757
		87,346,001 $

A. Disaggregation of revenue from contracts with customers

The Group derives revenue from the transfer of services over time and at a point in time (terminal and other services) in the following major businesses (Ship-owners, agent and terminal are classified as transportation department) :

Three-month period ended June 30,2019 Total segment revenue Inter-segment revenue Revenue from external customer contracts	Ship-owners 47,345,936 $ 4,032,804) ( 43,313,132 $	Agent 2,284,318 $ 1,446,135) ( 838,183 $	Terminal 3,761,186 $ 2,001,002) ( 1,760,184 $	Other 485,226 $ - 485,226 $	Total 53,876,666 $ 7,479,941) ( 46,396,725 $

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Three-month period ended June 30,2020 Total segment revenue Inter-segment revenue ( Revenue from external customer contracts Six-month period endedJune 30,2019 Total segment revenue Inter-segment revenue ( Revenue from external customer contracts Six-month period endedJune 30,2020 Total segment revenue Inter-segment revenue ( Revenue from external customer contracts	Ship-owners 44,038,669 $ 3,468,237) 40,570,432 $ Ship-owners 93,315,079 $ 7,568,772) 85,746,307 $ Ship-owners 87,817,570 $ 6,897,359) 80,920,211 $	Agent 1,960,651 $ 1,206,055) ( 754,596 $ Agent 4,524,967 $ 2,819,738) ( 1,705,229 $ Agent 4,047,265 $ 2,434,772) ( 1,612,493 $	Terminal 3,336,415 $ 1,632,806) ( 1,703,609 $ Terminal 7,330,236 $ 3,921,493) ( 3,408,743 $ Terminal 6,308,322 $ 3,121,582) ( 3,186,740 $	Other 287,567 $ - 287,567 $ Other 973,860 $ - 973,860 $ Other 498,800 $ - 498,800 $	Total 49,623,302 $ 6,307,098) ( 43,316,204 $ Total 106,144,142 $ 14,310,003) ( 91,834,139 $ Total 98,671,957 $ 12,453,713) ( 86,218,244 $

B. Contract assets and liabilities

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

Contract assets: Contract assets relating to marine freight income Contract liabilities: Contract liabilities – unearned marine freight income	January1,2019 2,244,065 $ 1,774,392) ($ (	June 30,2019 1,654,853 $ 2,166,031) $ (	December 31,2019 1,693,497 $ 2,213,538) $ (	June 30,2020
				1,186,338 $
				2,492,427 $

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

Marine freight income

Three-month period ended June 30,2019 - $ Six-month period ended June 30,2019 1,774,392 $	Three-month period ended June 30,2020
	- $
	Six-month period endedJune 30,2020
	2,213,538 $

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(22) Other income and expenses, net

Interest income Other income Net gains on disposal of property, plant and equipment Net gains on disposal of property, plant and equipment Interest income from bank deposits Interest income from financial assets measured at amortised cost Interest income from bank deposits Interest income from financial assets measured at amortised cost Rent income Dividend income Other income, others Rent income Dividend income Other income, others	Three-month period endedJune 30,2019 10,129 $ Six-month period endedJune 30,2019 357,520 $ Three-month period endedJune 30,2019 183,139 $ 9,062 192,201 $ Six-month period endedJune 30,2019 353,487 $ 32,087 385,574 $ Three-month period endedJune 30,2019 50,215 $ 57,526 52,561 160,302 $ Six-month period endedJune 30,2019 100,449 $ 89,638 75,121 265,208 $	Three-month period endedJune 30,2020 4,445 $ Six-month period endedJune 30,2020 1,932) ($ Three-month period endedJune 30,2020 82,831 $ 4,561 87,392 $ Six-month period endedJune 30,2020 202,424 $ 23,047 225,471 $ Three-month period endedJune 30,2020 52,278 $ 73,247 18,294 143,819 $ Six-month period endedJune 30,2020 109,908 $ 73,247 86,500 269,655 $

(23) Interest income

(24) Other income

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(25) Other gains and losses

Other gains and losses
		Three-month period			Three-month period
		ended June 30,2019			ended June 30,2020
Net losses on disposal of investments	($		206)	$		-
Gains arising from lease modifications			2,306			464
Net currency exchange gains			8,405			63,901
Net gains on disposal of right-of-use assets			10,600			18,676
Depreciation on investment property	(		41,924)	(		38,875)
Other non-operating expenses	(		35,307)	(		26,376)
	($		56,126)	$		17,790
			Six-month period			Six-month period
		endedJune 30,2019			endedJune 30,2020
Net gains on disposal of investments	$		22	$		161
Gains arising from lease modifications			2,306			465
Net currency exchange gains			113,840			209,769
Net gains on disposal of right-of-use assets			14,158			33,677
Depreciation on investment property	(		83,643)	(		78,159)
Other non-operating expenses	(		65,780)	(		61,024)
	($		19,097)	$		104,889

(26) Finance costs

Interest expense: Bank loans Corporate bonds Lease liabilities Less: Capitalized borrowing costs Interest expense: Bank loans Corporate bonds Lease liabilities Less: Capitalized borrowing costs	Three-month period endedJune 30,2019 783,442 $ 25,231 676,490 1,485,163 44,965) ( 1,440,198 $ Six-month period endedJune 30,2019 1,477,488 $ 50,184 1,351,641 2,879,313 104,431) ( 2,774,882 $	Three-month period endedJune 30,2020 587,445 $ 24,953 676,447 1,288,845 62,567) ( 1,226,278 $ Six-month period endedJune 30,2020 1,187,667 $ 50,184 1,445,085 2,682,936 132,097) ( 2,550,839 $

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(27) Expenses by nature

Employee benefit expense Depreciation charges on property, plant and equipment Depreciation charges on right-of-use assets Amortisation charges on intangible assets Other operating costs and expenses Employee benefit expense Depreciation charges on property, plant and equipment Depreciation charges on right-of-use assets Amortisation charges on intangible assets Other operating costs and expenses	Three-month period endedJune 30,2019 2,425,005 $ 2,037,091 2,941,574 79,098 38,536,801 46,019,569 $ Six-month period endedJune 30,2019 4,779,551 $ 4,042,280 5,836,598 156,742 75,957,600 90,772,771 $	Three-month period endedJune 30,2020 2,328,108 $ 2,222,081 2,971,947 76,648 31,084,469 38,683,253 $ Six-month period endedJune 30,2020 4,634,307 $ 4,383,782 6,035,269 153,654 66,454,244 81,661,256 $

(28) Employee benefit expense

Employee benefit expense
Wages and salaries Labor and health insurance fees Pension costs Other personnel expenses Wages and salaries Labor and health insurance fees Pension costs Other personnel expenses	Three-month period endedJune 30,2019 1,952,921 $ 133,622 152,564 185,898 2,425,005 $ Six-month period endedJune 30,2019 3,848,131 $ 351,115 275,557 304,748 4,779,551 $	Three-month period endedJune 30,2020
		1,941,786 $ 163,617 125,280 97,425
		2,328,108 $
		Six-month period endedJune 30,2020
		3,852,692 $ 332,839 248,151 200,625
		4,634,307 $

A. According to the Articles of Incorporation of the Company, when distributing earnings, the Company shall distribute bonus to the employees that account for no less than 0.5% and pay remuneration to the directors and supervisors that account for no more than 2% of the total distributed amount.

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B. (a) For the six-month period ended June 30, 2019, employees’ compensation was accrued at $830, while directors’ remunerations was accrued at $233. The aforementioned amount was recognised in salary expenses.
(b) In accordance with the Articles of Incorporation of the Company, based on the profit for the six-month period ended June 30, 2020, employees’ compensation and directors’ remunerations were accrued at $14,691 and $4,585, respectively. The aforementioned amount was recognised in salary expenses.

Information about the appropriation of employees’, directors’ and supervisors’ remuneration by the Company as proposed by the Board of Directors will be posted in the “Market Observation Post System” at the website of the Taiwan Stock Exchange.

(29) Income tax
A. Income tax expense
- (a) Components of income tax expense:

e tax ome tax expense Components of income tax expense:
Current tax: Current tax on profits for the period Prior year income tax (overestimation) underestimation Total current tax Deferred tax: Origination and reversal of temporary differences Total deferred tax Income tax expense Current tax: Current tax on profits for the period Prior year income tax (overestimation) underestimation Total current tax Deferred tax: Origination and reversal of temporary differences Total deferred tax Income tax expense	Three-month period endedJune 30,2019 336,938 $ 1,979) ( 334,959 51,996) ( 51,996) ( 282,963 $ Six-month period endedJune 30,2019 632,956 $ 11,089) ( 621,867 94,281) ( 94,281) ( 527,586 $	Three-month period endedJune 30,2020
		261,357 $ 48,658
		310,015
		135,510
		135,510
		445,525 $
		Six-month period endedJune 30,2020
		428,206 $ 51,199
		479,405
		81,629
		81,629
		561,034 $

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

follows:
		Three-month period			Three-month period
		endedJune 30,2019			endedJune 30,2020
Changes in fair value of financial	$		8,967	($		3,316)
assets at fair value through other
comprehensive income (loss)
Exchange differences on translating
the financial statements of foreign
operations			3			-
Remeasurement of defined benefit
obligations			-			-
Cash flow hedges	(		15,038)			97,031
	($		6,068)	$		93,715
			Six-month period			Six-month period
		endedJune 30,2019			endedJune 30,2020
Changes in fair value of financial	$		7,125	($		10,198)
assets at fair value through other
comprehensive income (loss)
Exchange differences on translating
the financial statements of foreign
operations			5	(		13)
Remeasurement of defined benefit
obligations			-			159
Cash flow hedges	(		32,907)			68,476
	($		25,777)		$	58,424
The income tax charged/(credited) to equity during the period is as follows:
		Three-month period			Three-month period
		endedJune 30,2019			endedJune 30,2020
Reduction in capital surplus caused
by recognition of foreign investees
based on the shareholding ratio	($		26)	($		22)
			Six-month period			Six-month period
		endedJune 30,2019			endedJune 30,2020
Reduction in capital surplus caused
by recognition of foreign investees
based on the shareholding ratio	($		52)	($		46)

B. The Company and its subsidiary-TTSC’s income tax returns through 2017 and 2018 have been assessed and approved by the Tax Authority, respectively.

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(30) Earnings (loss) per share

Earnings (loss) per share
Basic loss per share Net loss attributable to ordinary shareholders of the parent Diluted loss per share Net loss attributable to ordinary shareholders of the parent Basic earnings per share Net profit attributable to ordinary shareholders of the parent Diluted earnings per share Net profit attributable to ordinary shareholders of the parent Assumed conversion of all dilutive potential ordinary shares Employees’ compensation Net profit attributable to ordinary shareholders of the parent	Three-monthperiod endedJune 30,
	Weighted average number of ordinary shares outstanding Amount after tax (share in thousands) 354,766) ($ 4,512,974 354,766) ($ 4,512,974 Three-monthperiod endedJune 30,
	Amount after tax 3,192,356 $ 3,192,356 $ - 3,192,356 $

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Basic earnings per share
Net profit attributable to
ordinary shareholders of the
parent
Diluted earnings per share
Net profit attributable to
ordinary shareholders of the
parent
Assumed conversion of all
dilutive potential ordinary
shares
Employees’ compensation
Net profit attributable to
ordinary shareholders of the
parent plus assumed
conversion of all dilutive
potential ordinary shares
Basic earnings per share
Net profit attributable to
ordinary shareholders of the
parent
Diluted earnings per share
Net profit attributable to
ordinary shareholders of the
parent
Assumed conversion of all
dilutive potential ordinary
shares
Employees’ compensation
Net profit attributable to
ordinary shareholders of the
parent

Weighted average
number of ordinary
shares outstanding
Earnings per share
Amount after tax
(share in thousands)
(in dollars)
204,806
$ 4,512,974
0.05
$ 204,806
4,512,974
-
85
204,806
$ 4,513,059
0.05
$ Weighted average
number of ordinary
shares outstanding
Earnings per share
Amount after tax
(share in thousands)
(in dollars)
2,750,779
$ 4,812,974
0.57
$ 2,750,779
$ 4,812,974
-
1,793
2,750,779
$ 4,814,767
0.57
$ Six-monthperiod endedJune 30,2019
Six-monthperiod endedJune 30,2020

Amount after tax
2,750,779
$ 2,750,779
$ -
2,750,779
$

~70~

F-71

(31) Transactions with non-controlling interest
A. Acquisition of additional equity interest in a subsidiary
- Subsidiary, EGH, purchased 3% of outstanding shares of ECN for cash of $650 (approx. USD 21) on December 10, 2019. The carrying amount of non-controlling interest in ECN was $2,019 at the acquisition date. This transaction resulted in a decrease in the non-controlling interest by $2,019 and an increase in the equity attributable to owners of the parent by $1,369.
B. The Group did not participate in the capital increase raised by a subsidiary proportionally to its interest to the subsidiary
- Indirect subsidiary, ECO, of the Group increased its capital by issuing new shares on May 31, 2019. The subsidiary, EGH, did not acquire shares proportionally to its interest. As a result, the Group decreased its share interest by 25%. The transaction increased non-controlling interest by $6,387 and decreased the equity attributable to owners of parent by $3,006.
C. For the six-month period ended June 30, 2020, the amount of cash dividends paid to noncontrolling interests was $197,085.

(32) Supplemental cash flow information

A. Investing activities with partial cash payments
(a) Property, plant and equipment

trolling interests was $197,085. mental cash flow information esting activities with partial cash payments Property, plant and equipment
			Six-month period			Six-month period
		endedJune 30,2019			endedJune 30,2020
Purchase of property, plant and equipment	$		4,925,948	$		4,012,726
Add: Opening balance of payable
on equipment			34,258			455,427
Less: Ending balance of payable
on equipment	(		1,737,460)	(		809,492)
Cash paid during the period	$		3,222,746	$		3,658,661
Prepayments for equipment (recorded as other	non-current assets)
			Six-month period			Six-month period
		endedJune 30,2019			endedJune 30,2020
Purchase of prepayments for equipment	$		5,914,049	$		10,609,573
Add: Opening balance of payable on
prepayments for equipment			194			-
Less: Ending balance of payable on
prepayments for equipment	(		55,146)	(		99,153)
Capitalized borrowing costs	(		104,431)	(		132,097)
Cash paid during the period	$		5,754,666	$		10,378,323

(b) Prepayments for equipment (recorded as other non-current assets)

~71~

F-72

(33) Changes in liabilities from financing activities

)Changes in liabilities from financing a	ctivities
At January 1, 2019 Adjustments under new standards Changes in cash flow from financing activities Additions to lease liabilities Remeasurement of lease liabilities Impact of changes in foreign exchange rate At June 30, 2019 At January 1, 2020 Changes in cash flow from financing activities Additions to lease liabilities Remeasurement of lease liabilities Changes in other non-cash items Impact of changes in foreign exchange rate At June 30, 2020	Long-term borrowings (including current portion)	Guarantee deposits received	Lease liabilities (lease payable) and Financial liabilities for hedging	Liabilities from financing activities-gross
	99,360,501 $ - 6,565,785 - - 572,448 106,498,734 $ Long-term borrowings (including current portion)	347,115 $ - 9,719) ( - - 3,233 340,629 $ Guarantee deposits received	11,639,698 $ 60,563,079 5,450,061) ( 9,969,137 470,857) ( 693,596 76,944,592 $ Lease liabilities and Financial liabilities for hedging	111,347,314 $ 60,563,079 1,106,005 9,969,137 470,857) ( 1,269,277 183,783,955 $ Liabilities from financing activities-gross
	106,701,568 $ 5,464,977 - - - 1,258,409) ( 110,908,136 $	325,987 $ 39,553) ( - - - 6,180) ( 280,254 $	81,231,835 $ 5,693,482) ( 3,044,311 444,217 2,374) ( 1,111,528) ( 77,912,979 $	188,259,390 $ 268,058) ( 3,044,311 444,217 2,374) ( 2,376,117) ( 189,101,369 $

7. RELATED PARTY TRANSACTIONS

(1) Names of related parties and their relationship with the Group

LATED PARTY TRANSACTIONS
Names of related parties and their relationship with the Group
At June 30, 2020
110,908,136
$ 28
$

0,254
77,912,979
$ 189,1
$

Names of related parties

Relationship with the Group

Evergreen International Storage and Transport Corp. (EITC)
Eva Airways Corp. (EVA)
Evergreen Security Corp. (ESC)
Charng Yang Development Co., Ltd. (CYD)
Taipei Port Container Terminal Corp. (TPCT)
Ningbo Victory Container Co. Ltd. (NVC)
Qingdao Evergreen C&T Co., Ltd. (QECT)
Green Peninsula Agencies Sdn. Bhd. (GPP)
Luanta Investment (Netherlands) N.V. (Luanta)
Balsam Investment (Netherlands) N.V. (Balsam)
Italia Marittima S.p.A. (ITS)
Colon Container Terminal S.A. (CCT)
PT. Evergreen Shipping Agency Indonesia (EMI)
Evergreen Shipping Agency Co. (U.A.E) LLC (UAE)

Associate
Associate
Associate
Associate
Associate
Associate
Associate
Associate
Associate
Associate
Associate
Associate
Associate
Associate

~72~

F-73

Names of related parties

Relationship with the Group

Names of related parties	Relationship with the Grou
	Associate
Evergreen Shipping Agency Lanka (Private) Limited (ELK)	(An associate since
	March 1, 2019)
VIP Greenport Joint Stock Company (VGP)	Associate
Ics Depot Services Sdn. Bhd. (IDS)	Associate
	Associate
Evergreen Marine (Latin America) S.A. (ELA)	(An subsidiary since
	March 1, 2020)
Evergreen International Corp. (EIC)	Other related party
Evergreen Airline Service Corp. (EGAS)	Other related party
Chang Yung-Fa Charity Foundation (CYFC)	Other related party
Chang Yung-Fa Foundation (CYFF)	Other related party
Evergreen Steel Corp. (EGST)	Other related party
Eever Accord Construction Corporation (EAC)	Other related party
Evergreen Aviation Technologies Corporation (EGAT)	Other related party
Evergreen Sky Catering Corporation (EGSC)	Other related party
Evergreen Air Cargo Services Corporation (EGAC)	Other related party
	Other related party
Evergreen Aviation Precision Corporation (EGAP)	(Has been merged with EGAT
	on Febuary 28, 2019)
Central Reinsurance Corporation(CRC)	Other related party
Evergreen International S.A.(EIS)	Other related party
Evergreen Marine (Singapore) Pte. Ltd.(EMS)	Other related party
Gaining Enterprise S.A. (GESA)	Other related party
Evergreen Insurance Company Ltd. (EINS)	Other related party
Evergreen Shipping Agency (America) Corporation (EGA)	Other related party
Evergreen Shipping Agency (Japan) Corporation (EGJ)	Other related party
Evergreen Shipping Agency Philippines Corporation (EGP)	Other related party
Evergreen International Myanmar Co., Ltd. (EIM)	Other related party
Chestnut Estate B.V. (Chestnut)	Other related party
Advanced Business Process, Inc. (ABPI)	Other related party
Unigreen Marine S.A.(UMS)	Other related party
Directors, General manager and Vice General Manager	Key management

~73~

F-74

(2) Significant related party transactions and balances

A. Operating revenue:

nificant related party transactions and balances Operating revenue:
Sales of services: Associates Other related parties Sales of services: Associates Other related parties	Three-month period endedJune 30,2019 540,493 $ 3,418,571 3,959,064 $ Six-month period endedJune 30,2019 1,165,258 $ 6,571,421 7,736,679 $	Three-month period endedJune 30,2020
		419,233 $ 2,982,932
		3,402,165 $
		Six-month period endedJune 30,2020
		928,459 $ 5,849,768
		6,778,227 $

The business terms on which the Group transacts with related parties are of no difference from those with non-related parties.

B. Purchases:

those with non-related parties. Purchases:
Purchases of services: Associates Other related parties Purchases of services: Associates Other related parties	Three-month period endedJune 30,2019 888,002 $ 1,909,627 2,797,629 $ Six-month period endedJune 30,2019 1,511,826 $ 3,752,257 5,264,083 $	Three-month period endedJune 30,2020
		862,705 $ 1,591,156
		2,453,861 $
		Six-month period endedJune 30,2020
		1,720,663 $ 3,242,808
		4,963,471 $

Goods and services are purchased from associates and other related parties on normal commercial terms and conditions.

~74~

F-75

C. Receivables from related parties:

Receivables from related parties:
. Accounts receivable: Associates Other related parties Subtotal Other receivables: Associates -EVA -EITC -Other Other related parties -Other Subtotal Total	June 30,2019 December 31, 2019 79,451 $ 121,156 $ 744,522 659,406 823,973 $ 780,562 $ 377,266 $ - $ 63,784 - 150,797 1,818 25,907 18,796 617,754 $ 20,614 $ 1,441,727 $ 801,176 $	June 30,2020
		56,810 $ 526,681
		583,491 $
		194,407 $ 130,757 98,486 54,518
		478,168 $
		1,061,659 $

The receivables from related parties arise mainly from sale transactions. The receivables are unsecured in nature and bear no interest. The receivables include provisions against receivables from related parties.

D. Payables to related parties:

from related parties. Payables to related parties:
. Accounts payable: Associates Other related parties Subtotal Other payables: Associates Other related parties Subtotal Total	June 30,2019 December 31,2019 57,476 $ 143,074 $ 188,403 268,028 245,879 $ 411,102 $ 35,122 $ 31,825 $ 76,463 149,671 111,585 $ 181,496 $ 357,464 $ 592,598 $	June 30,2020
		115,875 $ 370,609
		486,484 $
		19,683 $ 157,396
		177,079 $
		663,563 $

The payables to related parties arise mainly from purchase transactions. The payables bear no interest.

~75~

F-76

E. Property transactions:

(a) Acquisition of property, plant and equipment:

Associates Other related parties Associates Other related parties	Three-month period endedJune 30,2019 1,903 $ - 1,903 $ Six-month period endedJune 30,2019 2,018 $ - 2,018 $	Three-month period endedJune 30,2020
		8,570 $ 763
		9,333 $
		Six-month period endedJune 30,2020
		8,570 $ 73,333
		81,903 $

(b) Disposal of property, plant and equipment:

Disposal Gain on proceeds disposal - $ - $ Disposal Gain on proceeds disposal 149 $ 14 $ endedJune 30,2019 Three-month period endedJune 30,2019 Six-month period	Three-month period endedJune 30,2020	Three-month period endedJune 30,2020
	Disposal Gain on proceeds disposal - $ - $ endedJune 30,2020 Six-month period	Gain on disposal
		- $
Disposal proceeds 149 $	Disposal proceeds - $	Gain on disposal
		- $

F. Leasing arrangements - lessee

(a) The Group leases buildings, ships as well as loading and unloading equipment from associates and other related parties. Rental contracts are typically made for periods of 2 to 10 years, rents are paid in accordance with the contract terms.

(b) Acquisition of right-of-use assets:

The Group leases buildings, ships as well as loading and unloading equipment from associates and other related parties under IFRS 16 ‘Leases’. Accordingly, on January 1, 2019, the Group increased ‘right-of-use asset’ by $3,196,381.

(c) Lease liabilities:

i. Outstanding balance:

creased ‘right-of-use asset’ by ease liabilities: Outstanding balance:	$3,196,381.
Associates Other related parties	June 30,2019 December 31,2019 1,021,103 $ 791,302 $ 573,921 487,665 1,595,024 $ 1,278,967 $	June 30,2020
		580,080 $ 375,831
		955,911 $

~76~

F-77

ii. Interest expense:

. Interest expense:
Associates Other related parties Associates Other related parties	Three-month period endedJune 30,2019 13,163 $ 2,707) ( 10,456 $ Six-month period endedJune 30,2019 22,314 $ 10,259 32,573 $	Three-month period endedJune 30,2020
		6,985 $ 3,693
		10,678 $
		Six-month period endedJune 30,2020
		15,144 $ 7,690
		22,834 $

(d) Lease liabilities designated as hedges:

		June 30,2019	December	31,2019		June 30,2020
Associates	$	120,669	$	94,049	$	69,992
Other related parties		972,619		610,456		423,947
	$	1,093,288	$	704,505	$	493,939
Agency accounts:
.		June 30,2019	December	31,2019		June 30,2020
Debit balance of agency accounts:
Associates	$	-	$	513	$	61
Other related
parties
-EIC		-		337,038		686,585
-EGA		150,880		-		1,113,290
-Other		16,182		98,580		14,537
	$	167,062	$	436,131	$	1,814,473
.		June 30,2019	December	31,2019		June 30,2020
Credit balance of agency accounts:
Associates	($	112,359)	($	135,281)	($	55,954)
Other related
parties
-EGJ	(	442,940)	(	523,778)	(	386,923)
-Other	(	5,238)	(	49,274)		-
	($	560,537)	($	708,333)	($	442,877)

G. Agency accounts:

~77~

F-78

H. Shipowner’s accounts:

June 30, 2019 December 31, 2019 June 30, 2020

Debit balance of shipowner’s accounts: Associates -ITS Other related parties -EIS -GESA . Credit balance of shipowner’s accounts: Associates -ITS Other related parties -EIS -EMS ( (	130,652 $ - $ 770,786 $ 1,194,260 - - 32,757 28,957 19,093 1,357,669 $ 28,957 $ 789,879 $ June 30,2019 December 31,2019 June 30,2020 - $ 277,877) ($ - $ - 1,027,141) ( 689,412) ( 1,682,782) 1,061,752) ( 1,570,919) ( 1,682,782) $ 2,366,770) ($ 2,260,331) ($

I. Loans to/from related parties:

oans to/from related parties:
(a) Loans to related parties: i. Outstanding balance: ii. Interest income: . Associates Associates Associates	June30,2019 December 31,2019 June30,2020 662,685 $ 722,926 $ 796,533 $ Three-month period Three-month period ended June 30,2019 ended June 30,2020 3,419 $ 2,894 $ Six-month period Six-month period ended June 30,2019 endedJune 30,2020 8,553 $ 7,708 $

		2,894 $
		Six-month period endedJune 30,2020
		7,708 $

The loans to associates carry interest at floating rates for the three-month and six-month periods ended June 30, 2019 and 2020.

(b) Loans from related parties:
i. Outstanding balance:

Loans from related parties: i. Outstanding balance:
. Other related parties	June30,2019 December 31,2019 607,072 $ 524,743 $	June30,2020
		9,553 $

~78~

F-79

ii. Interest expense:

ii. Interest expense:
Other related parties Other related parties	Three-month period ended June 30,2019 7,283 $ Six-month period ended June 30,2019 18,101 $	Three-month period ended June 30,2020
		2,946 $
		Six-month period endedJune 30,2020
		7,470 $

The loans from associates carry interest at floating rates for the three-month and six-month periods ended June 30, 2019 and 2020.

J. Endorsements and guarantees provided to related parties:

Endorsements and guarantees provided	to related parties:
. Associates	June30,2019 December 31,2019 3,173,361 $ 3,674,191 $	June30,2020
		2,246,148 $

K. On December 20, 2019, the Board of Directors of the subsidiary, EGH, approved to acquire 16.50% equity interests of ELA from the associate, ITS, and each other related party, EIS and EMS. The transaction date was set on March 1, 2020, and the transaction price amounted to $9,712 (approx. USD 323).
L. On November 13, 2019, the shareholders at the shareholders’ meeting of the subsidiary, Armand B.V., approved to sell 2.92% equity interests of the associate, Taipei Port Container Terminal Corporation, to other related party, EIS. The transaction date was set on February 1, 2020, and the transaction price amounted to $150,464 (approx. USD 4,997).
M. On November 10, 2019, the Board of Directors of the subsidiary, Peony, has resolved to participate in the capital increase of the investee, Balsam, accounted for using equity method, as the original shareholder. The amount of capital increase was USD 24,500. The effective date was set on November 14, 2019.
N. The Board of Directors of the Company during its meeting on December 21, 2018 adopted a resolution to participate in the capital increase raised by EVA Airways Corporation amounting to 39,150 thousand shares, with a subscription price of NT$13 (in dollars) per share and total price of $508,944. The effective date was set on January 24, 2019. Moreover, the Company purchased 70 thousand shares as specific person and the purchase amounted to $700.

~79~

F-80

(3) Key management compensation

Key management compensation
Salaries and other short-term employee benefits Post-employment benefits Salaries and other long-term employee benefits Salaries and other short-term employee benefits Post-employment benefits Salaries and other long-term employee benefits	Three-month period endedJune 30,2019 33,472 $ 591 - 34,063 $ Six-month period endedJune 30,2019 82,666 $ 1,349 - 84,015 $	Three-month period endedJune 30,2020
		44,132 $ 722 107
		44,961 $
		Six-month period endedJune 30,2020
		99,357 $ 1,275 214
		100,846 $

8. PLEDGED ASSETS

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

Pledged assets Financial assets at amortised cost - Pledged time deposits Refundable deposits - Pledged time deposits Property, plant and equipment -Land -Buildings -Loading and unloading equipment -Ships -Computer and communication equipment Investment property -Land -Buildings		Book value	June 30,2020 Purpose Performance 239,295 $ guarantee 2,000 � 514,312 Long-term loan 5,460,691 � 1,693,910 � 77,518,231 � 221,981 � 1,285,781 Long-term loan 3,837,805 � 90,774,006 $
	June 30,2019 293,748 $ 2,000 514,312 5,752,582 1,984,915 71,789,557 416,078 1,285,781 4,346,133 86,385,106 $	December 31,2019 290,740 $ 2,000 514,312 5,631,364 1,900,801 71,742,174 314,161 1,285,781 3,972,653 85,653,986 $

9. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNISED CONTRACT

COMMITMENTS

(1) Contingencies

None.

~80~

F-81

(2) Commitments

A. As of June 30, 2020, the Company had delegated DBS Bank to issue Standby Letter of Credit amounting to USD 5,000.
B. As of June 30, 2020, the long-term and medium-term loan facilities granted by the financial institutions with the resolution from the Board of Directors to finance the Group’s purchase of new ships and general working capital requirement amounted to $138,422,180 and the unutilized credit was $27,476,002.
C. As of June 30, 2020, the amount of guaranteed notes issued by the Company for loans borrowed was $88,896,197.
D. To meet its operational needs, the Company signed the shipbuilding contracts with Samsung Heavy Industries, Hyundai Mipo Dockyard Co., Ltd, Jiangnan Shipyard (Group) Co., Ltd. and China Shipbuilding Trading Company Ltd.. As of June 30, 2020, the total price of the contracts, wherein the vessels have not yet been delivered amounted to USD 2,298,832, USD 1,897,744 of which remain unpaid.
E. To meet its operational needs, the Company signed the transportation equipment purchase contracts. As of June 30, 2020, the total price of the contracts, wherein the equipment have not yet been delivered, amounted to USD 86,920, USD 22,632 of which remain unpaid.
F. In response to international regulations on sulfur content in shipping fuel, the Group entered into sulfur emission abatement equipment purchase contracts with Wartsila Finland Oy. The total contract prices are USD 32,716 and USD 18,920 remain unpaid. The Group signed installation contracts with Huarun Dadong Dockyard Co., Ltd., COSCO Shipping Heavy Industry (Zhoushan) Co., Ltd. and Global Oil And Gas Services. As of June 30, 2020, the total price of the contracts amounted to USD 58,874, USD 42,953 of which remain unpaid.
G. To meet its operational needs, the Company signed the loading and unloading equipment purchase contracts. As of June 30, 2020, the total price of the contracts amounted to $98,932, $89,039 of which remain unpaid.
H. For the Group’s lease contract which was entered into but not completed construction. As of June 30, 2020, the expected minimum lease payment in the future was $110,580,353.
I. As of June 30, 2020, the Group had entered into a service contract which was not belonging to lease component. The amount of future commitment payment is provided in Note 6(9).

10. SIGNIFICANT DISASTER LOSS

None.

11. SIGNIFICANT EVENTS AFTER THE BALANCE SHEET DATE

A. On June 30, 2020, the Board of Directors of the subsidiary, EGH, resolved to make an equity transaction. EGH acquired 40% and 60% equity interests of EGP from the other related party, EIS, and a non-related party, respectively, and obtained the control over EGP. The transaction date was July 1, 2020 and the transaction amount was PHP 239,500 (approx. $141,760).

~81~

F-82

(a) The following table based on an unconfirmed acquisition of EGP report summarises the consideration paid and the fair values of the assets acquired and liabilities assumed at the acquisition date:

acquisition date:
		July 1, 2020
Purchase Concideration
Cash paid	$	141,760
Fair value of the identifiable assets
Cash and cash equivalents		413,198
Notes receivable		3,742
Accounts receivable		200,995
Prepayments		40,386
Other current assets		203,821
Property, plant and equipment, net		117,256
Right-of-use assets		2,419
Intangible assets		7,022
Other non-current assets		5,383
Accounts payable	(	119,922)
Current income tax liabilities	(	2,462)
Other current liabilities	(	297,601)
Deferred income tax liabilities	(	41,430)
Lease liabilities	(	1,012)
Other non-current liabilities	(	384,422)
Total identifiable net assets		147,373
Gain from bargain purchase	($	5,613)

(b) The fair value of the acquired identifiable intangible assets – customer relationship of $6,640 is provisional pending receipt of the final valuations for those assets.
(c) Had EGP been acquired from January 1, 2020, the consolidated statement of comprehensive income for the six-month period ended June 30, 2020 would show operating revenue and profit before income tax of $16,325 and $21,556, respectively.
B. On July 9, 2020, the Board of Directors of the Company resolved to issue the maximum amount of USD 300,000, 0% first unsecured overseas convertible bonds due in 5 years.
C. To fully maximize markets in Malaysia, on August 13, 2020, the Board of Directors of the subsidiary, EGM, resolved to make a property transaction. EGM would purchase properties located in Shah Alam City, Johor Bahru City and Port of Tanjung Pelepas (PTP), Malaysia from the associate, GPP, for the appraised amount of MYR 46,000.

~82~

F-83

12. OTHERS

(1) Capital management

The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern in order to provide returns for shareholders and to maintain an optimal capital structure to reduce the cost of capital. In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders and issue new shares to maintain an optimal capital.

(2) Financial instruments

A. Financial instruments by category

w shares to maintain an optimal capital. nancial instruments Financial instruments by category
Financial assets Financial assets at fair value through other comprehensive income Designation of equity instrument Financial assets at amortised cost Cash and cash equivalents Financial assets at amortised cost Notes receivables Accounts receivable Other accounts receivable Guarantee deposits paid Financial liabilities Financial liabilities at amortised cost Accounts payable Other accounts payable Bonds payable Lease payable (including current portion) Long-term borrowings (including current portion) Guarantee deposits received Financial liabilities for hedging (including current portion)	June 30,2019 1,897,715 $ 37,163,150 $ 2,218,823 90,183 15,287,680 1,495,489 229,710 56,485,035 $ June 30,2019 17,293,161 $ 6,339,398 10,000,000 60,932,198 106,498,734 340,629 201,404,120 $ 16,012,394 $	December31,2019 1,719,423 $ 37,871,889 $ 2,188,536 129,545 14,759,813 1,027,279 229,095 56,206,157 $ December31,2019 16,580,812 $ 5,113,118 10,000,000 61,042,893 106,701,568 325,987 199,764,378 $ 20,188,942 $	June 30,2020
			1,458,417 $
			38,258,732 $ 762,480 95,124 14,645,781 1,422,304 231,793
			55,416,214 $
			June 30,2020
			15,523,040 $ 5,022,490 10,000,000 59,062,501 110,908,136 280,254
			200,796,421 $
			18,850,478 $

~83~

F-84

B. Financial risk management policies
(a) The Group’s activities expose it to a variety of financial risks: market risk (including foreign exchange risk, interest rate risk and price risk), credit risk and liquidity risk. The Group’s overall risk management programme focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on the Group’s financial position and financial performance.
(b) Risk management is carried out by the Group’s Finance Department under policies approved by the Board of Directors. The Group’s Finance Department identifies, evaluates and hedges financial risks in close co-operation with the Group’s Operating Department. The Board of Directors provides written principles for overall risk management, as well as written policies covering specific areas and matters, such as foreign exchange risk, interest rate risk, credit risk, use of derivative financial instruments and non-derivative financial instruments, and investment of excess liquidity.
C. Significant financial risks and degrees of financial risks
(a) Market risk

Foreign exchange risk

i. The Group operates internationally and is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to the USD and CNY. Foreign exchange risk arises from future commercial transactions, recognised assets and liabilities and net investment in foreign operations.
ii. The Group’s management has set up a policy to require group companies to manage their foreign exchange risk against their functional currency. The group companies are required to hedge their entire foreign exchange risk exposure with the Group’s Finance Department. To manage their foreign exchange risk arising from future commercial transactions and recognised assets and liabilities, entities in the Group use forward foreign exchange contracts, transacted with Group’s Finance Department. Foreign exchange risk arises when future commercial transactions or recognised assets or liabilities are denominated in a foreign currency that is not the entity’s functional currency.
iii. The Group’s businesses involve some non-functional currency operations (the Company’s and certain subsidiaries’ functional currency: NTD; other certain subsidiaries’ functional currency: USD, GBP, EUR, CNY and others). The information on assets and liabilities denominated in foreign currencies whose values would be materially affected by the exchange rate fluctuations is as follows:

~84~

F-85

	June 30,2019
Foreign currency amount Book value (In Thousands) Exchange rate (NTD) 893,643 $ 31.0505 27,748,062 $ 1,414,098 $ 31.0505 43,908,450 $ 104,379 0.1280 414,851 5,421 1.2677 213,385 216,392 0.1454 976,954 3,691 1.1369 130,297 December 31,2019		Book value (NTD)
Foreign currency amount (In Thousands) 582,814 $ 2,889 1,080,163 $ 97,479 3,807 4,190 225,390	Exchange rate 30.0130 1.3118 30.0130 0.1284 1.3118 1.1233 0.1431	Book value (NTD)
		17,491,997 $ 113,743 32,418,932 $ 375,652 149,886 141,260 968,019

~85~

F-86

June 30, 2020

		June 30,2020
Financial assets Monetary items USD:NTD EUR:NTD GBP:USD Financial liabilities Monetary items USD:NTD CNY:NTD HKD:USD GBP:USD EUR:USD CNY:USD (Foreign currency: functional currency)	Foreign currency amount (In Thousands) 691,095 $ 5,446 3,261 1,283,492 $ 59,500 118,524 7,059 5,030 241,481	Exchange rate 29.4600 1.1198 1.2302 29.4600 4.1604 0.1290 1.2302 1.1198 0.1412	Book value (NTD)
			20,359,659 $ 179,660 118,184 37,811,674 $ 247,544 450,431 255,830 165,936 1,004,501

iv. The total exchange (loss) gain, including realised and unrealised arising from significant foreign exchange variation on the monetary items held by the Group for the three-month and six-month periods ended June 30, 2019 and 2020 amounted to $8,405, $63,901, $113,840 and $209,769, respectively.
v. Analysis of foreign currency market risk arising from significant foreign exchange variation:

variation:
Financial assets Monetary items USD:NTD Financial liabilities Monetary items USD:NTD HKD:USD GBP:USD CNY:USD EUR:USD (Foreign currency: functional currency)	Six-monthperiod ended June 30,2019
	Sensitivityanalysis
	Degree of variation 1% 1% 1% 1% 1% 1%	Effect on profitor loss 277,481 $ 278,960 $ 4,149 2,134 9,770 1,303	Effect on other comprehensive income
			- $ 160,125 $ - - - -

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Six-month period ended June 30, 2020

	Six-monthperiod ended June30,2020	Six-monthperiod ended June30,2020	Six-monthperiod ended June30,2020
Financial assets Monetary items USD:NTD EUR:USD GBP:USD Financial liabilities Monetary items USD:NTD CNY:NTD HKD:USD GBP:USD EUR:USD RMB:USD (Foreign currency: functional currency)	Sensitivityanalysis
	Degree of variation 1% 1% 1% 1% 1% 1% 1% 1% 1%	Effect on profitor loss 203,597 $ 1,797 1,182 189,611 $ 2,475 4,504 2,558 1,659 10,045	Effect on other comprehensive income
			- $ - - 188,505 $ - - - - -

Price risk

i. The Group is exposed to equity securities price risk because of investments held by the Group and classified on the consolidated balance sheet at fair value through other comprehensive income. The Group is not exposed to commodity price risk. To manage its price risk arising from investments in equity securities, the Group diversifies its portfolio. Diversification of the portfolio is done in accordance with the limits set by the Group.
ii. The Group’s investments in equity securities comprise domestic listed and unlisted stocks. The prices of equity securities would change due to the change of the future value of investee companies. If the prices of these equity securities had increased/decreased by 1% with all other variables held constant, equity would have increased/decreased by $18,470 and $14,340 for the six-month periods ended June 30, 2019 and 2020, respectively, as a result of other comprehensive income classified as equity investment at fair value through other comprehensive income.

Cash flow and fair value interest rate risk

i. The Group’s interest rate risk arises from long-term borrowings. Borrowings issued at variable rates expose the Group to cash flow interest rate risk which is partially offset by cash and cash equivalents held at variable rates. Borrowings issued at fixed rates expose the Group to fair value interest rate risk. During the six-month periods ended June 30, 2019 and 2020, the Group’s borrowings at variable rate were denominated in the NTD, USD and GBP.

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ii. At June 30, 2019 and 2020, if interest rates on borrowings had been 1% higher/lower with all other variables held constant, post-tax profit for the six-month periods ended June 30, 2019 and 2020 would have been $935,857 and $986,434 lower/higher, respectively, mainly as a result of higher/lower interest expense on floating rate borrowings.
(b) Credit risk
i. Credit risk refers to the risk of financial loss to the Group arising from default by the clients or counterparties of financial instruments on the contract obligations. The main factor is that counterparties could not repay in full the accounts receivable based on the agreed terms.
ii. The Group manages their credit risk taking into consideration the entire group’s concern. According to the Group’s credit policy, each local entity in the Group is responsible for managing and analysing the credit risk for each of their clients before standard payment and delivery terms and conditions are offered. Internal risk control assesses the credit quality of the customers, taking into account their financial position, past experience and other factors.
iii. The Group adopts following assumptions under IFRS 9 to assess whether there has been a significant increase in credit risk on that instrument since initial recognition: If the contract payments were past due over 30 days based on the terms, there has been a significant increase in credit risk on that instrument since initial recognition.
iv. As the Group’s historical credit losses experience does not show significantly different loss patterns for different customer segments which are worldwide and in a wide range without connection, so there is no credit risk concentration for notes and accounts receivable as well as contract assets. Therefore, the provision for losses is not further distinguished according to different segments of the Group’s customer base.
v. The Group wrote-off the financial assets, which cannot be reasonably expected to be recovered, after initiating recourse procedures. However, the Group will continue executing the recourse procedures to secure their rights. As of June 30, 2019, December 31, 2019 and June 30, 2020, the Group has no written-off financial assets that are still under recourse procedures.
vi. The Group used the forecastability to adjust historical, timely information, economic conditions of the industry, GDP forecast and trade growth rate to assess the default possibility of accounts receivable (including related parties), contract assets and overdue receivable. As of June 30, 2019, December 31, 2019 and June 30, 2020, the loss rate methodology is as follows:

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At June 30, 2019 Not past due Up to 30 days 31 to 180 days Total At June 30, 2019 Not past due Total At June 30, 2019 Over 180 days Total December 31, 2019 Not past due Up to 30 days 31 to 180 days Total December 31, 2019 Not past due Total December 31, 2019 Over 180 days Total	Accounts receivable (including related parties) Totalbookvalue 10,625,541 $ 3,501,570 1,176,877 15,303,988 $ Contract assets Totalbookvalue 1,655,399 $ 1,655,399 $ Overdue receivable Totalbookvalue 278,585 $ 278,585 $ Accounts receivable (including related parties) Totalbookvalue 12,094,901 $ 2,450,297 226,960 14,772,158 $ Contract assets Totalbookvalue 1,694,072 $ 1,694,072 $ Overdue receivable Totalbookvalue 269,506 $ 269,506 $	Expectedlossrate 0.03%~0.10% 0.03%~0.10% 0.03%~0.10% Expectedlossrate 0.03% Expectedlossrate 100% Expectedlossrate 0.03%~0.08% 0.03%~0.08% 0.03%~0.08% Expectedlossrate 0.03% Expectedlossrate 100%	Lossallowance
			11,323 $ 3,731 1,254
			16,308 $
			Lossallowance
			546 $
			546 $
			Lossallowance
			278,585 $
			278,585 $
			Lossallowance
			10,107 $ 2,048 190
			12,345 $
			Lossallowance
			575 $
			575 $
			Lossallowance
			269,506 $
			269,506 $

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At June 30, 2020 Not past due Up to 30 days 31 to 180 days Over 180 days Total At June 30, 2020 Not past due Total At June 30, 2020 Over 180 days Total	Accounts receivable (including related parties) Totalbookvalue Expectedlossrate 12,411,939 $ 0.0049%~0.8508% 2,030,759 0.0149%~0.4689% 141,699 0.0085%~1.5533% 70,865 0.0349%~15.3460% 14,655,262 $ Contract assets Totalbookvalue Expectedlossrate 1,186,452 $ 0%~0.0067% 1,186,452 $ Overdue receivable Totalbookvalue Expectedlossrate 264,667 $ 100% 264,667 $	Lossallowance
		6,871 $ 1,326 171 1,113
		9,481 $
		Lossallowance
		114 $
		114 $
		Lossallowance
		264,667 $
		264,667 $

vii. Movements in relation to the group applying the modified approach to provide loss allowance for notes receivable, accounts receivable (including related parties), contract assets and overdue receivable are as follows:

						2019	2019
			Notes			Accounts		Contract			Overdue
		receivable			receivable			assets		receivable
At January 1	($		4)	($		96,468)	($	692)	($		202,654)
Provision for impairment			-	(		1,806)		25			-
Reversal of impairment loss			1			15,437		121			-
Reclassifications			-			66,913		-	(		66,913)
Write-offs			-			1		-			-
Effect of foreign exchange			1	(		385)		-	(		9,018)
At June 30	($		2)	($		16,308)	($	546)	($		278,585)
						2020
			Notes			Accounts		Contract			Overdue
		receivable			receivable			assets		receivable
At January 1	($		2)	($		12,345)	($	575)	($		269,506)
Provision for impairment	(		7)	(		2,233)		-			-
Reversal of impairment loss			-			4,614		460			-
Reclassifications			-			-		-			-
Write-offs			-			-		-			-
Effect of foreign exchange			-			483		1			4,839
At June 30	($		9)	($		9,481)	($	114)	($		264,667)

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(c) Liquidity risk

i. Cash flow forecasting is performed in the operating entities of the Group and aggregated by Group’s Finance Department. Group’s Finance Department monitors rolling forecasts of the Group’s liquidity requirements to ensure it has sufficient cash to meet operational needs.
ii. The table below analyses the Group’s non-derivative financial liabilities and net-settled or gross-settled derivative financial liabilities into relevant maturity groupings based on the remaining period at the balance sheet date to the contractual maturity date for nonderivative financial liabilities.

Non-derivative financial liabilities:

June 30, 2019 Accounts payable Accounts payable - related parties Other payables Other payables - related parties Bonds payable Long-term loans (including current portion) Lease payable and financial liabilities for hedging (including current portion)	Less than 3 months	Between 3 months and 1year	Between 1 and 2years	Between 2 and 5years	Over 5years	Total
	17,039,471 $ 126,837 5,396,809 77,347 - 4,616,154 3,598,369	7,811 $ 119,042 216,869 631,441 101,200 19,881,762 8,335,180	- $ - 4,508 - 4,101,200 27,926,838 10,006,334	- $ - 460 - 6,076,400 45,464,578 29,186,053	- $ - 2,095 9,869 - 17,204,960 19,217,613	17,047,282 $ 245,879 5,620,741 718,657 10,278,800 115,094,292 70,343,549

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Non-derivative financial liabilities:

December 31, 2019 Accounts payable Accounts payable - related parties Other payables Other payables - related parties Bonds payable Long-term loans (including current portion) Lease payable and financial liabilities for hedging (including current portion) Non-derivative financial	Less than 3 months	Between 3 months and 1year	Between 1 and 2years	Between 2 and 5years	Over 5years	Total
	16,165,426 $ 369,044 4,115,041 696,438 - 4,063,463 3,815,715 liabilities: Less than 3 months	4,284 $ 42,058 288,335 101,200 21,210,732 9,799,502 Between 3 months and 1year	- $ - 3,503 - 4,101,200 23,999,762 12,274,193 Between 1 and 2years	- $ - - - 6,076,400 47,550,813 34,201,995 Between 2 and 5years	- $ - - 9,801 - 17,454,788 34,848,315 Over 5years	16,169,710 $ 411,102 4,406,879 706,239 10,278,800 114,279,558 94,939,720 Total
June 30, 2020 Notes payable Accounts payable Accounts payable - related parties Other payables Other payables - related parties Bonds payable (including current portion) Long-term loans (including current portion) Lease payable and financial liabilities for hedging (including current portion)
	15,982 $ 14,861,786 $ 426,927 4,604,767 175,468 - 4,577,714 3,791,666	- $ 174,770 $ 59,557 231,091 1,610 4,101,200 22,207,124 9,456,546	- $ - - - 4,059,200 24,955,466 11,938,539	- $ - - - 2,017,200 46,662,531 32,780,643	- $ - - 9,554 - 17,216,154 31,839,047	15,982 $ 15,036,556 486,484 4,835,858 186,632 10,177,600 115,618,989 89,806,441

iii. The Group does not expect the timing of occurrence of the cash flows estimated through the maturity date analysis will be significantly earlier, nor expect the actual cash flow amount will be significantly different.

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(3) Fair value estimation

A.The different levels that the inputs to valuation techniques are used to measure fair value of financial and non-financial instruments have been defined as follows:
Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date. A market is regarded as active if it meets all the following conditions: the items traded in the market are homogeneous; willing buyers and sellers can normally be found at any time; and prices are available to the public. The fair value of the Group’s investment in listed stocks, beneficiary certificates and derivative instruments with quoted market prices is included in Level.
Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.
Level 3: Unobservable inputs for the asset or liability.
B. Fair value information of investment property at cost is provided in Note 6(10).
C. Financial instruments not measured at fair value
(a) Except for those listed in the table below, the carrying amounts of cash and cash equivalents, notes receivable, accounts receivable, other receivables, financial assets measured at amortised cost, accounts payable and other payables are approximate to their fair values.

Financial liabilities: Bonds payable Long-term loans (including current portion) Financial liabilities: Bonds payable Long-term loans (including current portion) Financial liabilities: Bonds payable (including current portion) Long-term loans (including current portion)	June 30,2019	June 30,2019
	Book value 10,000,000 $ 106,498,734 116,498,734 $ December	Fair value
		Level 3
		10,118,734 $ 114,913,675
		125,032,409 $
		31,2019
	Fair value Book value Level 3 10,000,000 $ 10,154,063 $ 106,701,568 114,134,001 116,701,568 $ 124,288,064 $ June 30,2020	Fair value
		Level 3
		10,154,063 $ 114,134,001
		124,288,064 $
	Book value 10,000,000 $ 110,908,136 120,908,136 $	Fair value
		Level 3
		10,120,291 $ 115,456,902
		125,577,193 $

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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 are as follows:

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

June 30, 2019 Assets: Recurring fair value measurements Financial assets at fair value through other comprehensive income Equity securities Liabilities: Recurring fair value measurements Derivative financial liabilities for hedging December 31, 2019 Assets: Recurring fair value measurements Financial assets at fair value through other comprehensive income Equity securities Liabilities: Derivative financial liabilities for hedging Recurring fair value measurements June 30, 2020 Assets: Recurring fair value measurements Financial assets at fair value through other comprehensive income Equity securities Liabilities: Recurring fair value measurements Derivative financial liabilities for hedging	Level 1 892,610 $ - $ Level 1 989,850 $ - $ Level 1 930,010 $ - $	Level 2 - $ - $ Level 2 - $ - $ Level 2 - $ - $	Level3 1,005,105 $ - $ Level3 729,573 $ - $ Level3 528,407 $ - $	Total
				1,897,715 $
				16,012,394 $
				Total
				1,719,423 $
				20,188,942 $
				Total
				1,458,417 $
				18,850,478 $

~94~

F-95

(b) The methods and assumptions the Group used to measure fair value are as follows:
i. The instruments the Group used market quoted prices as their fair values (that is, Level 1) are listed below by characteristics:

Listed shares

Market quoted price Closing price
ii. Except for financial instruments with active markets, the fair value of other financial instruments is measured by using valuation techniques or by reference to counterparty quotes. The fair value of financial instruments measured by using valuation techniques can be referred to current fair value of instruments with similar terms and characteristics in substance, discounted cash flow method or other valuation methods, including calculated by applying model using market information available at the consolidated balance sheet date (i.e. yield curves on the Taipei Exchange, average commercial paper interest rates quoted from Reuters).
iii. When assessing non-standard and low-complexity financial instruments, the Group adopts valuation technique that is widely used by market participants. The inputs used in the valuation method to measure these financial instruments are normally observable in the market.
iv. The valuation of derivative financial instruments is based on valuation model widely accepted by market participants, such as present value techniques and option pricing models. Forward exchange contracts are usually valued based on the current forward exchange rate. Structured interest derivative instruments are measured by using appropriate option pricing models (i.e. Black-Scholes model) or other valuation methods, such as Monte Carlo simulation.
v. The output of valuation model is an estimated value and the valuation technique may not be able to capture all relevant factors of the Group’s financial and non-financial instruments. Therefore, the estimated value derived using valuation model is adjusted accordingly with additional inputs, for example, model risk or liquidity risk and etc. In accordance with the Group’s management policies and relevant control procedures relating to the valuation models used for fair value measurement, management believes adjustment to valuation is necessary in order to reasonably represent the fair value of financial and non-financial instruments at the consolidated balance sheet. The inputs and pricing information used during valuation are carefully assessed and adjusted based on current market conditions.
vi. The Group takes into account adjustments for credit risks to measure the fair value of financial and non-financial instruments to reflect credit risk of the counterparty and the Group’s credit quality.

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E. For the six-month periods ended June 30, 2019 and 2020, there was no transfer between Level 1 and Level 2.
F. The following chart is the movement of Level 3 for the six-month periods ended June 30, 2019 and 2020:

At January 1 Gains and losses recognised in other comprehensive income (Note 1) At June 30	2019 800,149 $ 204,956 1,005,105 $	2020 729,573 $ 201,166) ( 528,407 $

Note 1: Recorded as unrealised gains or losses on valuation of investments in equity instruments measured at fair value through other comprehensive income and exchange differences on translating the financial statements of foreign operations.
G. For the six-month periods ended June 30, 2019 and 2020, there was no transfer into or out from Level 3.
H. The Group 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. 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.

~96~

F-97

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:

Non-derivative equity instrument: Unlisted shares Venture capital shares Private equity fund investment Non-derivative equity instrument: Unlisted shares Venture capital shares Private equity fund investment	Fair value at June 30, 2019	Valuation technique	Significant unobservable input	Range (weighted average)	Relationship of inputs to fair value
	998,333 $ 6,772 Fair value at December 31,2019	Market comparable companies Net asset value Valuation technique	Price to earnings ratio multiple Price to book ratio multiple Discount for lack of marketability Net asset value Significant unobservable input	11.28~43.40 0.52~2.44 20%~30% Range (weighted average)	The higher the multiple and control premium, the higher the fair value The higher the multiple and control premium, the higher the fair value The higher the weighted average cost of capital and discount for lack of control, the lower the fair value The higher the net asset value, the higher the fair value Relationship of inputs to fair value
	722,800 $ 6,773	Market comparable companies Net asset value	Price to earnings ratio multiple Price to book ratio multiple Discount for lack of marketability Net asset value	8.82~46.24 0.54~3.06 20%~30%	The higher the multiple and control premium, the higher the fair value The higher the multiple and control premium, the higher the fair value The higher the weighted average cost of capital and discount for lack of control, the lower the fair value The higher the net asset value, the higher the fair value

~97~

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Non-derivative equity instrument: Unlisted shares Venture capital shares Private equity fund investment	Fair value at June 30, 2020	Valuation technique	Significant unobservable input	Range (weighted average)	Relationship of inputs to fair value
	521,635 $ 6,772	Market comparable companies Net asset value	Price to earnings ratio multiple Price to book ratio multiple Discount for lack of marketability Net asset value	7.50~48.56 0.53~2.89 20%~30%	The higher the multiple and control premium, the higher the fair value The higher the multiple and control premium, the higher the fair value The higher the weighted average cost of capital and discount for lack of control, the lower the fair value The higher the net asset value, the higher the fair value

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

Input	Change	June 30,2019	June 30,2019	June 30,2019	June 30,2019	June 30,2019	June 30,2019	June 30,2019
		Recognised in profit or loss				Recognised in other comprehensive income
		Favourable change		Unfavourable change		Favourable change	Unfavourable change
Price to earnings ratio/ price to book ratio/ discount for lack of marketability Net asset value	±1% ±1%		- $ - - $		- $ - - $	9,983 $ 68 10,051 $		9,983 $ 68 10,051 $

~98~

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Input	Change	December 31,2019	December 31,2019	December 31,2019	December 31,2019	December 31,2019	December 31,2019	December 31,2019
		Recognised in profit or loss				Recognised in other comprehensive income
		Favourable change		Unfavourable change		Favourable change	Unfavourable change
Price to earnings ratio/ price to book ratio/ discount for lack of marketability Net asset value Input	±1% ±1% Change		- $ - - $		- $ 7,228 $ - 68 - $ 7,296 $ June 30,2020			7,228 $ 68 7,296 $
			Recognised in profit or loss			Recognised in other comprehensive income
		Favourable change		Unfavourable change		Favourable change	Unfavourable change
Price to earnings ratio/ price to book ratio/ discount for lack of marketability Net asset value	±1% ±1%		- $ - - $		- $ - - $	5,216 $ 68 5,284 $		5,216 $ 68 5,284 $

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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): Please refer to table 3.
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 $300 million or 20% of paid-in capital or more: None.
F. Disposal of real estate reaching $300 million or 20% of paid-in capital or more: None.
G. Purchases or sales of goods from or to related parties reaching $100 million or 20% of paid-in capital or more: Please refer to table 4.
H. Receivables from related parties reaching $100 million or 20% of paid-in capital or more: Please refer to table 5.
I. Trading in derivative instruments undertaken during the reporting periods: None.
J. Significant inter-company transactions during the reporting periods: Please refer to table 6.

(2) Information on investees (not including investees in Mainland China)

Names, locations and other information of investee companies (not including investees in Mainland China) � Please refer to table 7.

(3) Information on investments in Mainland China

A. Basic information: Please refer to table 8.
B.Significant transactions, either directly or indirectly through a third area, with investee companies in the Mainland Area: None.

(4) Information of major shareholder

Information of major shareholder: Please refer to table 9.

14. SEGMENT INFORMATION

(1) General information

Management has determined the operating segments based on the reports reviewed by the chief operating decision-maker that are used to make strategic decisions.

There is no material change in the basis for formation of entities and division of segments in the Group or in the measurement basis for segment information in this period.

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(2) Segment information

The segment information provided to the chief operating decision-maker for the reportable segments is as follows:

is as follows:
Transportation Other Adjustments and Department Departments written-off Total Revenue from external customers 91,834,933 $ 973,860 $ - $ 92,808,793 $ Revenue from internal customers 15,436,448 - 15,436,448) ( - Segment revenue 107,271,381 973,860 15,436,448) ( 92,808,793 Interest income 371,592 13,982 - 385,574 Interest expense 2,769,557) ( 5,325) ( - 2,774,882) ( Depreciation and amortisation 9,990,416) ( 128,847) ( - 10,119,263) ( Share of loss of associates and joint ventures accounted for using equity method 581,111 306,094) ( - 275,017 Other items 79,016,214) ( 1,015,060) ( - 80,031,274) ( Segment profit (loss) 16,447,897 $ 467,484) ($ 15,436,448) ($ 543,965 $ Recognizable assets 262,850,637 $ 9,753,629 $ - $ 272,604,266 $ Investments accounted for using equity method 22,246,054 6,019,335 - 28,265,389 Segment assets 285,096,691 $ 15,772,964 $ - $ 300,869,655 $ Segment liabilities 228,414,454 $ 1,066,200 $ - $ 229,480,654 $ Six-monthperiod ended June 30,2019	Six-monthperiod ended June 30,2019
		Total
		92,808,793 $ -
		543,965 $
		272,604,266 $ 28,265,389
		300,869,655 $
		229,480,654 $

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Transportation Other Adjustments and Department Departments written-off Total Revenue from external customers 86,847,201 $ 498,800 $ - $ 87,346,001 $ Revenue from internal customers 13,967,797 - 13,967,797) ( - Segment revenue 100,814,998 498,800 13,967,797) ( 87,346,001 Interest income 214,431 11,040 - 225,471 Interest expense 2,547,096) ( 3,743) ( - 2,550,839) ( Depreciation and amortisation 10,525,637) ( 125,227) ( - 10,650,864) ( Share of income (loss) of associates and joint ventures accounted for using equity method 25,548) ( 43,511) ( - 69,059) ( Other items 70,110,227) ( 519,766) ( - 70,629,993) ( Segment profit (loss) 17,820,921 $ 182,407) ($ 13,967,797) ($ 3,670,717 $ Recognizable assets 270,102,210 $ 8,763,457 $ - $ 278,865,667 $ Investments accounted for using equity method 22,844,616 5,564,052 - 28,408,668 Segment assets 292,946,826 $ 14,327,509 $ - $ 307,274,335 $ Segment liabilities 231,013,853 $ 953,391 $ - $ 231,967,244 $ Six-monthperiod ended June 30,2020		Six-monthperiod ended June 30,2020
			Total
			87,346,001 $ -
			3,670,717 $
			278,865,667 $ 28,408,668
			307,274,335 $
			231,967,244 $

(3) Reconciliation for segment income (loss)

A. Sales between segments are carried out at arm’s length. The revenue from external parties reported to the chief operating decision-maker is measured in a manner consistent with that in the statement of comprehensive income.
B. The amounts provided to the chief operating decision-maker with respect to total assets are measured in a manner consistent with that in the balance sheet.
C. The amounts provided to the chief operating decision-maker with respect to total liabilities are measured in a manner consistent with that in the balance sheet.
D. The amounts provided to the chief operating decision-maker with respect to segment profit (loss) are measured in a manner consistent with the income (loss) before tax from continuing operations.

~102~

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Footnote	Footnote
Ceiling on total loans granted (Note 7)		13,696,039 $	13,696,039	13,696,039	1,072,293	2,279,025	1,021,794
Limit on loans granted to a single party (Note 7)		5,478,416 $	10,956,831	5,478,416	536,146	1,139,513	408,718
Collateral	Value	- $	-	-	-	-	-
	Item	None	None	None	None	None	None
Allowance for	doubtful accounts	- $	-	-	-	-	-
Reason for short-term financing (Note 6)		Working capital requirement	Working capital requirement	Working capital requirement	Working capital requirement	Working capital requirement	Working capital requirement
Amount of transactions with borrower (Note 5)		- $	-	-	-	-	-
Nature of loan (Note 4)		2	2	2	2	2	2
Interest rate		1.27375~ 1.27950	1.17663~ 1.29013	1.27363~ 1.27663	1.27663~ 1.29800	1.27363~ 1.29000	2.555~ 2.555
Actual amount drawn down		58,920 $	574,470	241,572	353,520	133,896	265,140
Balance at June 30, 2020 (Note 8)		61,866 $	589,200	241,572	353,520	133,896	265,140
Maximum outstanding balance during the six-month period ended June 30, 2020 (Note 3)		63,674 $	782,282	241,572	539,714	133,896	265,140
Is a related party		Yes	Yes	Yes	Yes	Yes	Yes
General ledger account (Note 2)		Receivables from related parties	Receivables from related parties	Receivables from related parties	Receivables from related parties	Receivables from related parties	Receivables from related parties
Borrower		Luanta Investment (Netherlands) N.V.	Clove Holding Ltd.	Colon Container Terminal S.A.	Colon Container Terminal S.A.	Colon Container Terminal S.A.	Whitney Equipment LLC.
Creditor		Peony Investment S.A.	Peony Investment S.A.	Peony Investment S.A.	Clove Holding Ltd.	Evergreen Marine (Hong Kong) Ltd.	Everport Terminal Services
Number (Note 1)		1	1	1	2	3	4

F-104

Footnote	Footnote
Provision of endorsements/ guarantees to the party in Mainland China (Note 7)		N	N	N	N	N	N	N	N	Y	N	N
Provision of endorsements/ guarantees by subsidiary to parent company (Note 7)		N	N	N	N	N	N	N	N	N	N	N
Provision of endorsements/ guarantees by parent company to subsidiary (Note 7)		Y	Y	Y	Y	N	N	Y	Y	Y	N	N
Ceiling on total amount of endorsements/ guarantees provided (Note 3)		179,588,063 $	179,588,063	179,588,063	179,588,063	179,588,063	179,588,063	179,588,063	179,588,063	14,243,909	14,243,909	14,243,909
Ratio of accumulated endorsement/ guarantee amount to net asset value of the endorser/ guarantor company		69.68%	0.21%	46.95%	0.14%	1.57%	1.21%	3.57%	44.31%	-	4.45%	12.33%
Amount of endorsements/ guarantees secured with collateral		- $	-	-	-	-	-	-	-	-	-	-
Actual amount drawn down (Note 6)		29,835,036 $	-	29,074,125	50,132	757,711	721,770	964,831	17,720,511	-	170,485	551,856
Outstanding endorsement/ guarantee amount at June 30, 2020 (Note 5)		50,057,492 $	147,300	33,728,921	101,294	1,126,550	866,124	2,562,275	31,829,843	-	253,474	702,363
Maximum outstanding endorsement/ guarantee amount as of June 30, 2020 (Note 4)		52,023,307 $	151,605	34,362,054	104,254	2,323,801	891,437	2,657,778	33,589,686	36,357	522,855	2,329,180
	Limit on endorsements/ guarntees provided for a single party (Note 3)	143,670,451 $	143,670,451	143,670,451	143,670,451	35,917,613	35,917,613	143,670,451	143,670,451	11,395,127	2,848,782	11,395,127
Party being endorsed/guaranteed	Relationship with the endorser/ guarantor (Note 2)	2	2	2	2	6	6	2	2	2	6	2
	Company name	Greencompass Marine S.A.	Peony Investment S.A.	Evergreen Marine (UK) Limited	Whitney Equipment LLC.	Colon Container Terminal S.A.	Balsam Investment (Netherlands) N.V.	Everport Terminal Services Inc.	Evergreen Marine (Hong Kong) Ltd.	Ever Shine (Shanghai) Enterprise Management Consulting Co., Ltd.	Colon Container Terminal S.A.	Evergreen Marine (Hong Kong) Ltd.
	Endorser/Guarantor	Evergreen Marine Corporation	Evergreen Marine Corporation	Evergreen Marine Corporation	Evergreen Marine Corporation	Evergreen Marine Corporation	Evergreen Marine Corporation	Evergreen Marine Corporation	Evergreen Marine Corporation	Evergreen Marine (Hong Kong) Ltd.	Evergreen Marine (Hong Kong) Ltd.	Evergreen Marine (Hong Kong) Ltd.
	Number (Note 1)	0	0	0	0	0	0	0	0	1	1	1

F-105

Footnote	Footnote
Provision of endorsements/ guarantees to the party in Mainland China (Note 7)		N
Provision of endorsements/ guarantees by subsidiary to parent company (Note 7)		N
Provision of endorsements/ guarantees by parent company to subsidiary (Note 7)		N
Ceiling on total amount of endorsements/ guarantees provided (Note 3)		36,832,259 $
Ratio of accumulated endorsement/ guarantee amount to net asset value of the endorser/ guarantor company		1.00%
Amount of endorsements/ guarantees secured with collateral		- $
Actual amount drawn down (Note 6)		147,300 $
Outstanding endorsement/ guarantee amount at June 30, 2020 (Note 5)		147,300 $
Maximum outstanding endorsement/ guarantee amount as of June 30, 2020 (Note 4)		150,065 $
	Limit on endorsements/ guarntees provided for a single party (Note 3)	7,366,452 $
Party being endorsed/guaranteed	Relationship with the endorser/ guarantor (Note 2)	1
	Company name	Everport Terminal Services Inc.
	Endorser/Guarantor	Greencompass Marine S.A.
	Number (Note 1)	2

F-106

Footnote (Note 4)	Footnote (Note 4)
As of June 30, 2020	Fair value		6,772 $	3,935	27,876	129,720	930,010		50,000	50,000	USD 178	USD 12,035	EUR 10
	Ownership (%)		5.68%	1.44%	17.48%	17.50%	8.45%		-	-	5.27%	5.00%	2.86%
	Book value (Note 3)		6,772 $	3,935	27,876	129,720	930,010		50,000	50,000	USD 178	USD 12,035	EUR 10
	Number of shares		677	50	2,464	10,500	49,866		-	-	0.75	18,942	10
Genearl ledger account			Financial asset measured at fair value through other comprehensive income - non-current	�	�	�	�		Financial asset measured at atmortised cost - non-current	�	Financial asset measured at fair value through other comprehensive income - non-current	�	�
Relationship with the securities issuer (Note 2)						Other related party
Marketable securities (Note 1)		Stock:	Power World Fund Inc.	Linden Technologies, Inc.	TopLogis, Inc.	Ever Accord Construction Corp.	Central Reinsurance Corp.	Financial bonds:	Sunny Bank 2nd Subordinate Financial Debentures-B Issue in 2015	Sunny Bank 3rd Subordinate Financial Debentures-B Issue in 2017	Hutchison Inland Container Depots Ltd.	South Asia Gateway Terminals (Private) Ltd.	Zoll Pool Hafen Hamburg AG
Securities held by		Evergreen Marine Corporation									Peony Investment S.A.		Evergreen Shipping Agency (Europe) GmbH

F-107

Footnote (Note 2)
Notes/accounts receivable (payable)	Percentage of total notes/accounts receivable (payable)	3%	-	-	2%	-	-	-	-	1%	1%	-	1%	-	1%	-	-
	Balance	($ 95,922)	( 441)	6,214	( 63,763)	( 4,550)	233	( 15,893)	-	( 41,996)	( 44,853)	982	( 20,819)	555	( 18,158)	91	-
Differences in transaction terms compared to third party transactions (Note 1)	Credit term	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-
	Unit price	$ -	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-
Transaction	Credit term	30~60 days	30~60 days	30~60 days	30~60 days	30~60 days	30~60 days	30~60 days	30~60 days	30~60 days	30~60 days	30~60 days	30~60 days	30~60 days	30~60 days	30~60 days	30~60 days
	Percentage of total purchases/ sales	3%	3%	4%	1%	1%	1%	1%	1%	1%	1%	2%	1%	4%	2%	2%	1%
	Amount	$ 688,889	853,411	1,128,686	411,430	142,587	175,461	182,983	143,771	269,658	304,344	373,578	222,310	837,420	427,321	426,997	149,450
	Purchases/ sales	Purchases	Purchases	Sales	Purchases	Purchases	Sales	Purchases	Purchases	Purchases	Purchases	Sales	Purchases	Sales	Purchases	Sales	Purchases
Relationship with the counterparty		Subsidiary	Subsidiary		Subsidiary	Associates		Associates	Other related parties	Other related parties	Subsidiary		Other related parties		Subsidiary		Subsidiary
Counterparty		Everport Terminal Services Inc.	Greencompass Marine S.A.		Taiwan Terminal Services Co., Ltd.	Italia Marittima S.p.A.		Evergreen International Storage and Transport Corp.	Evergreen Shipping Agency (America) Corporation	Evergreen International Corp.	Evergreen Marine (UK) Limited		Evergreen Marine (Singapore) Pte. Ltd.		Evergreen Marine (Hong Kong) Ltd.		Evergreen Shipping Agency (Europe) GmbH (EEU)
Purchaser/Seller		Evergreen Marine Corporation

F-108

Footnote (Note 2)				(Note)	(Note)		(Note)	(Note)	(Note)	(Note)	(Note)	(Note)	(Note)							(Note)
Notes/accounts receivable (payable)	Percentage of total notes/accounts receivable (payable)	-	-	99%	11%	20%	4%	16%	8%	-	-	-	1%	-	1%	-	-	-	-	-
	Balance	$ -	-	63,763	3,256 USD	6,135 USD	1,329 USD	4,685 USD	2,412 USD	616 USD	3) (USD	20 USD	581) (USD	-	763) (USD	-	36) (USD	148 USD	-	20 USD
Differences in transaction terms compared to third party transactions (Note 1)	Credit term	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-
	Unit price	$ -	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-
Transaction	Credit term	30~60 days	30~60 days	30~60 days	30~60 days	30 days	30 days	30 days	30 days	30~60 days	30~60 days	30~60 days	30~60 days	30~60 days	30~60 days	30~60 days	30~60 days	30~60 days	30~60 days	30~60 days
	Percentage of total purchases/ sales	1%	1%	100%	12%	26%	7%	19%	9%	3%	3%	4%	3%	1%	4%	5%	1%	1%	2%	2%
	Amount	$ 139,088	299,795	411,430	USD 22,962	USD 48,655	USD 12,942	USD 36,381	USD 17,656	USD 14,244	USD 14,233	USD 19,169	USD 14,692	USD 4,331	USD 17,325	USD 23,374	USD 5,210	USD 3,405	USD 6,755	USD 10,332
	Purchases/ sales	Sales	Purchases	Sales	Sales	Sales	Sales	Sales	Sales	Sales	Purchases	Sales	Purchases	Sales	Purchases	Sales	Purchases	Sales	Purchases	Sales
Relationship with the counterparty		Other related parties	Other related parties	The parent	The parent	Investee of the Parent Company's major shareholder	Indirect subsidiary of the Parent Company	Indirect subsidiary of the Parent Company	Subsidiary of the Parent Company	The parent		Indirect subsidiary of the Parent Company		Investee of Balsam Investment (NetherLands) N.V.		Investee of the Parent Company's major shareholder		Investee of the Parent Company's major shareholder		Indirect subsidiary of the Parent Company
Counterparty		Evergreen International S.A.(EIS)	Gaining Enterprise S.A.	Evergreen Marine Corp.	Evergreen Marine Corp.	Evergreen Marine (Singapore) Pte. Ltd.	Greencompass Marine S.A.	Evergreen Marine (UK) Limited	Evergreen Marine (Hong Kong) Ltd.	Evergreen Marine Corp.		Greencompass Marine S.A.		Italia Marittima S.p.A.		Evergreen Marine (Singapore) Pte. Ltd.		Evergreen International Corp.		Evergreen Marine (UK) Limited
Purchaser/Seller		Evergreen Marine Corporation		Taiwan Terminal Services Co.,Ltd.	Everport Terminal Services Inc.					Evergreen Marine (Hong Kong) Ltd.

F-109

Footnote (Note 2)		(Note)	(Note)		(Note)	(Note)	(Note)	(Note)	(Note)	(Note)							(Note)	(Note)	(Note)	(Note)
Notes/accounts receivable (payable)	Percentage of total notes/accounts receivable (payable)	-	2%	-	2%	1%	-	-	-	1%	1%	1%	-	-	-	-	-	-	-	-
	Balance	436) (USD	2,412) (USD	1) (USD	2,308) (USD	1,033 USD	439) (USD	15 USD	211) (USD	1,329) (USD	1,701 USD	3,270) (USD	-	-	-	-	-	581 USD	20) (USD	439 USD
Differences in transaction terms compared to third party transactions (Note 1)	Credit term	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-
	Unit price	$ -	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-
Transaction	Credit term	30~60 days	30 days	30~60 days	30~60 days	30~60 days	30~60 days	30~60 days	30~60 days	30 days	30~60 days	30~60 days	30~60 days	30~60 days	30~60 days	30~60 days	30~60 days	30~60 days	30~60 days	30~60 days
	Percentage of total purchases/ sales	10%	4%	1%	3%	1%	1%	2%	3%	1%	3%	1%	1%	2%	1%	1%	-	1%	2%	2%
	Amount	USD 45,414	USD 17,656	USD 4,217	USD 14,047	USD 16,537	USD 11,870	USD 28,446	USD 37,622	USD 12,942	USD 39,448	USD 12,139	USD 9,820	USD 17,557	USD 8,424	USD 6,015	USD 4,588	USD 14,692	USD 19,169	USD 11,870
	Purchases/ sales	Purchases	Purchases	Purchases	Purchases	Sales	Purchases	Sales	Purchases	Purchases	Sales	Purchases	Sales	Purchases	Purchases	Purchases	Purchases	Sales	Purchases	Sales
Relationship with the counterparty		Indirect subsidiary of the Parent Company	Subsidiary of the Parent Company	Investee of the Parent Company's major shareholder	Indirect subsidiary of the Parent Company	Indirect subsidiary of the Parent Company		The parent		Subsidiary of the Parent Company	Investee of the Parent Company's major shareholder		Investee of Balsam Investment (NetherLands) N.V.		Investee of the Parent Company's major shareholder	Investee of the Parent Company's major shareholder	Indirect subsidiary of the Parent Company	Subsidiary of the Parent Company		Indirect subsidiary of the Parent Company
Counterparty		Evergreen Marine (UK) Limited	Everport Terminal Services Inc.	Evergreen Shipping Agency (America) Corporation	Master International Shipping Agency Co., Ltd.	Evergreen Marine (UK) Limited		Evergreen Marine Corp.		Everport Terminal Services Inc.	Evergreen Marine (Singapore) Pte. Ltd.		Italia Marittima S.p.A.		Evergreen Shipping Agency (America) Corporation	Evergreen International Corp.	Evergreen Shipping Agency (Europe) GmbH	Evergreen Marine (Hong Kong) Ltd.		Greencompass Marine S.A.
Purchaser/Seller		Evergreen Marine (Hong Kong) Ltd.				Greencompass Marine S.A.														Evergreen Marine (UK) Limited

F-110

Footnote (Note 2)		(Note)	(Note)	(Note)	(Note)					(Note)	(Note)		(Note)		(Note)	(Note)
Notes/accounts receivable (payable)	Percentage of total notes/accounts receivable (payable)	1%	1%	-	3%	-	-	1%	-	-	-	100%	-	2%	-	100%
	Balance	1,033) (USD	1,523 USD	33) (USD	4,685) (USD	185) (USD	342 USD	1,179) (USD	-	436 USD	20) (USD	25,523 MYR	-	937 EUR	-	16,343 CNY
Differences in transaction terms compared to third party transactions (Note 1)	Credit term	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-
	Unit price	$ -	-	-	-	-	-	-	-	-	-	-	-	-	-	-
Transaction	Credit term	30~60 days	30~60 days	30~60 days	30 days	30~60 days	30~60 days	30~60 days	30~60 days	30~60 days	30~60 days	45 days	30~60 days	30~60 days	30~60 days	30~60 days
	Percentage of total purchases/ sales	3%	2%	2%	7%	1%	3%	1%	2%	8%	2%	100%	21%	27%	23%	100%
	Amount	USD 16,537	USD 10,144	USD 12,452	USD 36,381	USD 3,505	USD 15,555	USD 3,858	USD 9,605	USD 45,414	USD 10,332	MYR 70,763	EUR 4,163	EUR 5,269	EUR 4,520	CNY 98,826
	Purchases/ sales	Purchases	Sales	Purchases	Purchases	Purchases	Sales	Purchases	Purchases	Sales	Purchases	Sales	Sales	Sales	Sales	Sales
Relationship with the counterparty		Indirect subsidiary of the Parent Company	The Parent		Subsidiary of the Parent Company	Investee of Balsam Investment (NetherLands) N.V.	Investee of the Parent Company's major shareholder		Investee of the Parent Company's major shareholder	Subsidiary of the Parent Company		Investee of EITC	Indirect subsidiary of the Parent Company	Investee of the Parent Company's major shareholder	The Parent	Subsidiary of the Parent Company
Counterparty		Greencompass Marine S.A.	Evergreen Marine Corp.		Everport Terminal Services Inc.	Italia Marittima S.p.A.	Evergreen Marine (Singapore) Pte. Ltd.		Evergreen Shipping Agency (America) Corporation	Evergreen Marine (Hong Kong) Ltd.		Gaining Enterprise S.A.	Greencompass Marine S.A.	Evergreen Marine (Singapore) Pte. Ltd.	Evergreen Marine Corp.	Evergreen Marine (Hong Kong) Ltd.
Purchaser/Seller		Evergreen Marine (UK) Limited										Evergreen Heavy Industrial Corp.(Malaysia) Berhad	Evergreen Shipping Agency (Europe) GmbH			Master International Shipping Agency Co. Ltd.

F-111

Footnote	Footnote			Note		Note
Allowance for doubtful accounts		- $	-	-	-	-	-	-
Amount collected	subsequent to the balance sheet date	- $	MYR 25,523	-	-	USD 4,083	USD 5,347	-
Overdue receivables	Action taken	-	-	-	-	-	-	-
	Amount	- $	-	-	-	-	-	-
	Turnover rate	-	-	-	-	-	-	-
Balance as at	June 30, 2020 (Note 1)	USD 12,235	MYR 25,523	USD 19,813	USD 8,207	USD 4,685	USD 6,135	USD 4,547
Relationship with the counterparty		Investee of Clove Holding Ltd. accounted for using equity method	Investee of EITC	Subsidiary	Investee of Clove Holding Ltd. accounted for using equity method	Indirectly subsidiary of the Parent Company	Other related party	Investee of Evergreen Marine (Hong Kong) Limited accounted for using equity method
Counterparty		Colon Container Terminal, S.A.	Gaining Enterprise S.A.	Clove Holding Ltd.	Colon Container Terminal, S.A.	Evergreen Marine (UK) Limited	Evergreen Marine (Singapore) Pte. Ltd.	Colon Container Terminal, S.A.
Creditor		Clove Holding Ltd.	Evergreen Heavy Industrial Corp. (Malaysia) Berhad	Peony Investment S.A.	Peony Investment S.A.	Everport Terminal Services Inc.	Everport Terminal Services Inc.	Evergreen Marine (Hong Kong) Ltd.

F-112

Expressed in thousands of TWD (Except as otherwise indicated) Evergreen Marine Corporation (Taiwan) Ltd. Significant inter-company transactions during the reporting periods For the six-month period ended June 30, 2020 Table 6	Transaction	Percentage of consolidated total operating revenues or total assets (Note 3)	0.47 0.03 1.29 0.98 0.07 0.43 0.35 0.12 0.49 0.49 0.17 0.79 0.03 0.41 0.16 0.66 0.44 0.10 0.57 1.56
		Transaction terms	Note 4 " " " " " " " " " " " " " " " " " " "
		Amount	411,430 $ 102,382 1,128,686 853,411 217,328 373,578 304,344 370,095 426,997 427,321 149,450 688,889 100,518 356,118 137,639 575,076 388,266 303,831 496,118 1,362,465
		General ledger account	Operating cost Shipowner's account - credit Operating revenue Operating cost Shipowner's account - debit Operating revenue Operating cost Shipowner's account - credit Operating revenue Operating cost Operating cost Operating cost Shipowner's account - debit Operating cost Operating cost Operating cost Operating cost Shipowner's account - debit Operating cost Operating revenue
		Relationship (Note 2)	1 1 1 1 1 1 1 1 1 1 1 1 1 3 3 3 3 3 3 3
		Counterparty	Taiwan Terminal Services Co.,Ltd. Greencompass Marine S.A. Greencompass Marine S.A. Greencompass Marine S.A. Evergreen Marine (UK) Limited Evergreen Marine (UK) Limited Evergreen Marine (UK) Limited Evergreen Marine (Hong Kong) Ltd. Evergreen Marine (Hong Kong) Ltd. Evergreen Marine (Hong Kong) Ltd. Evergreen Shipping Agency (Europe) GmbH Everport Terminal Services Inc. Evergreen Shipping Agency (Europe) GmbH Evergreen Marine (UK) Limited Evergreen Shipping Agency (Europe) GmbH Evergreen Marine (Hong Kong) Ltd. Everport Terminal Services Inc. Evergreen Marine (UK) Limited Greencompass Marine S.A. Evergreen Marine (Hong Kong) Ltd.
		Company name	Evergreen Marine Corporation Evergreen Marine Corporation Evergreen Marine Corporation Evergreen Marine Corporation Evergreen Marine Corporation Evergreen Marine Corporation Evergreen Marine Corporation Evergreen Marine Corporation Evergreen Marine Corporation Evergreen Marine Corporation Evergreen Marine Corporation Evergreen Marine Corporation Evergreen Marine Corporation Greencompass Marine S.A. Greencompass Marine S.A. Greencompass Marine S.A. Greencompass Marine S.A. Greencompass Marine S.A. Evergreen Marine (UK) Limited Evergreen Marine (UK) Limited
		Number (Note 1)	0 0 0 0 0 0 0 0 0 0 0 0 0 1 1 1 1 1 2 2

F-113

Transaction	Percentage of consolidated total operating revenues or total assets (Note 3)	0.35 0.04 1.25 0.04 0.50 0.61 0.48 0.05 0.19	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: Relationship between transaction company and counterparty is classified into the following three categories; Fill in the number of category each case belongs to (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.): (1) Parent company to subsidiary. (2) Subsidiary to parent company (3) Subsidiary to subsidiary 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 and based on accumulated transaction amount for the period to consolidated total operating revenues for income statement accounts. Note 4: Terms are approximately the same as for general transactions.
	Transaction terms	Note 4 " " " " " " " "
	Amount	309,967 $ 112,422 1,091,474 138,025 440,776 529,682 421,416 139,430 583,684
	General ledger account	Operating cost Shipowner's account - credit Operating cost Account payables Operating cost Operating cost Operating cost Shipowner's account - credit Other receivables
	Relationship (Note 2)	3 3 3 3 3 3 3 3 3
	Counterparty	Evergreen Marine (Hong Kong) Ltd. Evergreen Shipping Agency (Europe) GmbH Everport Terminal Services Inc. Everport Terminal Services Inc. Greencompass Marine S.A. Everport Terminal Services Inc. Evergreen Shipping Agency (China) Co., Ltd. Evergreen Marine (UK) Limited Clove Holding Ltd.
	Company name	Evergreen Marine (UK) Limited Evergreen Marine (UK) Limited Evergreen Marine (UK) Limited Evergreen Marine (UK) Limited Evergreen Marine (Hong Kong) Ltd. Evergreen Marine (Hong Kong) Ltd. Evergreen Marine (Hong Kong) Ltd. Evergreen Marine (Hong Kong) Ltd. Peony Investment S.A.
	Number (Note 1)	2 2 2 2 3 3 3 3 4

F-114

Footnote	Footnote	Subsidiary of the Company (Note)	�(Note)	�(Note)	�(Note)	�(Note)	Investee accounted for using equity method	�	�	�	�	�	�	Indirect subsidiary of the Company (Note)	�(Note)	�(Note)	�(Note)	�(Note)	�(Note)
Investment income (loss) recognised by the Company For the six-month period ended June 30, 2020 (Note 2(3))		1,624,788 $	1,301) (	111,467	737,986	9,865	33,514	147,568	6,538	293,487) (	46,583	39	20,734	2,091	15,748	12,446	1,177,361	18,517	1,360) (
	Net profit (loss) of the investee For the six-month period ended June 30, 2020 (Note 2(2))	1,607,717 $	2,366) (	118,044	987,171	16,721	83,785	365,635	20,923	1,834,366) (	173,982	443	95,375	2,091	15,748	12,446	1,177,361	18,518	1,431) (
Shares held as of June 30, 2020	Book value	27,307,366 $	53,224	1,778,968	7,775,366	30,680	522,864	8,891,012	107,571	10,959,263	1,481,822	-	280,132	2,680,731	302,314	45,585	14,732,903	166,093	41,646
	Ownership (%)	100.00	55.00	94.43	79.00	59.00	40.00	40.36	31.25	16.00	27.85	-	21.74	100.00	100.00	100.00	100.00	99.99	95.00
	Number of shares	4,765	5,500	1	6,320	1,062	58,542	430,692	6,336	776,541	144,799	-	13,750	10	-	121	3,535	100	150
Initial investment amount	Balance as of December 31, 2019	14,301,195 $	55,000	3,001	6,283,222	9,103	320,000	4,840,408	25,000	11,276,823	1,094,073	3,151	178,750	1,548,102	244,989	71,470	10,414,110	34,666	4,124
	Balance as of June 30, 2020	14,301,195 $	55,000	3,001	6,283,222	9,103	320,000	4,840,408	25,000	11,276,823	1,446,196	-	178,750	1,548,102	244,989	71,470	10,414,110	34,666	4,124
	Main business activities	Investment activities	Loading and discharging operations of container yards	Terminal services	Marine transportation	Shipping agency	Development, rental, sale of residential and commercial buildings	Container transportation and gas stations	General security guards services	International passengers and cargo transportation	Container distribution and cargo stevedoring	Management consultancy	Terminal services	Investment holding company	Shipping agency	Shipping agency	Marine transportation	Shipping agency	Leasing
	Location	Republic of Panama	Taiwan	U.S.A	Hong Kong	Israel	Taiwan	Taiwan	Taiwan	Taiwan	Taiwan	Republic of Panama	Vietnam	British Virgin Islands	Germany	South Korea	Republic of Panama	India	Argentina
	Investee (Note 1�Note 2)	Peony Investment S.A.	Taiwan Terminal Services Co., Ltd.	Everport Terminal Services Inc.	Evergreen Marine (Hong Kong) Ltd.	Evergreen Shipping Agency (Israel) Ltd.	Charng Yang Development Co.,Ltd.	Evergreen International Storage and Transport Corporation	Evergreen Security Corporation	EVA Airways Corporation	Taipei Port Container Terminal Corporation	Evergreen Marine (Latin America), S.A.	VIP Greenport Joint Stock Company	Clove Holding Ltd.	Evergreen Shipping Agency (Europe) GmbH	Evergreen Shipping Agency (Korea) Corporation	Greencompass Marine S.A.	Evergreen Shipping Agency (India) Pvt. Ltd.	Evergreen Argentina S.A.
	Investor	Evergreen Marine Corp.												Peony Investment S.A.

F-115

Footnote	Footnote	Indirect subsidiary of the Company (Note)	�(Note)	�(Note)	�(Note)	�(Note)	�(Note)	�(Note)	�(Note)	�(Note)	�(Note)	�(Note)	Investee company of Peony accounted for using equity method	�	�	�	�	Indirect subsidiary of the Company (Note)
Investment income (loss) recognised by the Company For the six-month period ended June 30, 2020 (Note 2(3))		39,768 $	741) (	4,201	57,432	208	81,304	28,015	23,229	21,424	8,480	89,032	15,379	764) (	146,744) (	44,972	779	118,505
	Net profit (loss) of the investee For the six-month period ended June 30, 2020 (Note 2(2))	41,847 $	4,263) (	4,975	57,432	378	159,419	28,015	45,548	25,204	15,418	89,032	31,386	1,528) (	299,478) (	91,780	2,597	118,505
Shares held as of June 30, 2020	Book value	612,644 $	13,473	901,382	198,570	70,870	864,258	34,900	23,411	63,221	64,364	428,155	99,334	1,849,171	407,923	83,174	32,128	921,823
	Ownership (%)	95.03	17.39	84.44	100.00	55.00	51.00	100.00	51.00	85.00	55.00	100.00	49.00	50.00	49.00	49.00	30.00	100.00
	Number of shares	17	2	42,120	6	1	765	1	-	680	5,500	-	0.441	460	0.451	-	1,500	500
Initial investment amount	Balance as of December 31, 2019	230,994 $	23,695	804,106	198,717	69,290	3,950,664	50,329	24,982	66,079	17,116	36,265	28,665	1,400,507	12,305,042	61,336	12,551	277,342
	Balance as of June 30, 2020	251,174 $	23,695	804,106	198,717	69,290	3,950,664	50,329	24,982	66,079	17,116	36,265	28,665	1,400,507	12,305,042	61,336	12,551	277,342
	Main business activities	Loading and discharging operations of container yards and inland transportation	Container repair, cleaning and inland transportation	Container manufacturing	Shipping agency	Shipping agency	Marine transportation	Shipping agency	Shipping agency	Shipping agency	Shipping agency	Shipping agency	Shipping agency	Investment holding company	Investment holding company	Shipping agency	Renting estate and storehouse company	Shipping agency
	Location	Indonesia	Indonesia	Malaysia	Spain	Italy	U.K	Australia	Russia	Thailand	South Africa	Vietnam	Indonesia	Curaçao	Curaçao	United Arab Emirates	Malaysia	Malaysia
	Investee (Note 1�Note 2)	PT. Multi Bina Pura International	PT. Multi Bina Transport	Evergreen Heavy Industrial Corp. (Malaysia) Berhad	Evergreen Shipping (Spain) S.L.	Evergreen Shipping Agency (Italy) S.p.A.	Evergreen Marine (UK) Limited	Evergreen Shipping Agency (Australia) Pty. Ltd.	Evergreen Shipping Agency (Russia) Ltd.	Evergreen Shipping Agency (Thailand) Co., Ltd.	Evergreen Agency (South Africa) (Pty) Ltd.	Evergreen Shipping Agency (Vietnam) Corp.	PT. Evergreen Shipping Agency Indonesia	Luanta Investment (Netherlands) N.V.	Balsam Investment (Netherlands) N.V.	Evergreen Shipping Agency Co. (U.A.E.) LLC	Greenpen Properties Sdn. Bhd.	Evergreen Marine Corp. (Malaysia) SDN.BHD.
	Investor	Peony Investment S.A.

F-116

Footnote	Footnote	Investee company of Peony accounted for using equity method	�(Note)	Investee company of Clove Holding Ltd. accounted for using equity method	Indirect subsidiary of the Company (Note)	�(Note)	�(Note)	Investee company of Evergreen Marine (Hong Kong) Limited accounted for using equity method	Indirect subsidiary of the Company (Note)	�(Note)	�(Note)	�(Note)	�(Note)	�(Note)	�(Note)	�(Note)
Investment income (loss) recognised by the Company For the six-month period ended June 30, 2020 (Note 2(3))		9,342 $	3,978	1,975) (	6,577	9,751	3,110) (	444) (	443	17,255	28,027	24,060	14,723	13,509	11,715	167
	Net profit (loss) of the investee For the six-month period ended June 30, 2020 (Note 2(2))	987,171 $	13,887	4,939) (	118,044	9,751	4,263) (	4,939) (	443	17,255	46,712	32,080	24,538	22,515	19,524	16,721
Shares held as of June 30, 2020	Book value	98,422 $	64,901	2,538,757	264,619	225,552	56,519	591,655	18,293	53,038	35,668	31,820	20,424	24,783	29,169	520
	Ownership (%)	1.00	28.65	40.00	5.57	100.00	72.95	9.00	100.00	100.00	60.00	75.00	60.00	60.00	60.00	1.00
	Number of shares	80	286	22,860	0.059	-	8	5,144	600	200	900	80	44	2	2	18
Initial investment amount	Balance as of December 31, 2019	78,069 $	32,818	673,456	191,606	5,892	97,260	459,576	2,917	5,892	8,178	10,341	6,753	9,392	7,963	150
	Balance as of June 30, 2020	78,069 $	32,818	673,456	191,606	5,892	97,260	459,576	17,676	5,892	8,178	10,341	6,753	9,392	7,963	150
	Main business activities	Marine transportation	Depot services	Inland container storage and loading	Terminal services	Equipment Leasing Company	Container repair cleaning and inland transportation	Inland container storage and loading	Management consultancy	Shipping agency	Shipping agency	Shipping agency	Shipping agency	Shipping agency	Shipping agency	Shipping agency
	Location	Hong Kong	Malaysia	Republic of Panama	U.S.A	U.S.A	Indonesia	Republic of Panama	Republic of Panama	Cambodia	Peru	Colombia	Mexico	Chile	Greece	Isrrael
	Investee (Note 1�Note 2)	Evergreen Marine (Hong Kong) Ltd.	Ics Depot Services Snd. Bhd.	Colon Container Terminal, S.A.	Everport Terminal Services Inc.	Whitney Equipment LLC.	PT. Multi Bina Transport	Colon Container Terminal S.A.	Evergreen Marine (Latin America), S.A.	Evergreen Shipping Service (Cambodia) Co., Ltd.	Evergreen Shipping Agency (Peru) S.A.C.	Evergreen Shipping Agency (Colombia) S.A.S	Evergreen Shipping Agency Mexico S.A. de C.V.	Evergreen Shipping Agency (Chile) SPA.	Evergreen Shipping Agency (Greece) Societe Anonyme.	Evergreen Shipping Agency (Isrrael) Ltd.
	Investor	Peony Investment S.A.		Clove Holding Ltd.		Everport Terminal Services Inc.	PT. Multi Bina Pura International	Evergreen Marine (Hong Kong) Limited

F-117

Footnote	Footnote	Indirect subsidiary of the Company (Note)	Investee company of Evergreen Marine (Hong Kong) Limited accounted for using equity method
Investment income (loss) recognised by the Company For the six-month period ended June 30, 2020 (Note 2(3))		- $	13,335
	Net profit (loss) of the investee For the six-month period ended June 30, 2020 (Note 2(2))	- $	33,338
Shares held as of June 30, 2020	Book value	6,542 $	10,296
	Ownership (%)	60.00	40.00
	Number of shares	120	2,160
Initial investment amount	Balance as of December 31, 2019	- $	3,571
	Balance as of June 30, 2020	7,288 $	3,571
	Main business activities	Shipping agency	Shipping agency
	Location	Brazil	Lanka
	Investee (Note 1�Note 2)	Evergreen Shipping Agency (Brazil) Ltd.	Evergreen Shipping Agency Lanka (Private) Ltd.
	Investor	Evergreen Marine (Hong Kong) Limited

F-118

Footnote	Footnote			(Note)	(Note)	(Note)	(Note)	(Note)
Accumulted amount of investment income remitted back to Taiwan as of June 30, 2020		- $	-	-	-	-	-	-
Book value of investments in Mainland China as of June 30, 2020		305,381 $	183,281	190,289	3,065,530	141,667	385,466	234,925
Investment income (loss) recognised by the Company. For the six-month period ended June 30, 2020 (Note 2(2)B)		7,873 $	30,328	10,325	23,267) (	174	2,335) (	77
Ownership held by the Company (direct of indirect) (%)		40.00	40.00	46.20	80.00	80.00	80.00	80.00
Net income (loss) of the investee for the six-month period ended June 30, 2020		19,682 $	75,820	22,348	16,941	182	2,065	1,767
Accumulated amount of remittance from Taiwan to Mainland China as of June 30, 2020		210,978 $	41,740	278,847	2,399,822	265,490	461,947	376,569
Amount remitted from Taiwan to Mainland China/Amount remitted back to Taiwan for the six-month period ended June 30, 2020	Remitted back to Taiwan	- $	-	-	-	-	-	-
	Remitted to Mainland China	- $	-	-	-	-	-	-
Accumulated amount of remittance from Taiwan to Mainland China as of January 1, 2020		210,978 $	41,740	278,847	2,399,822	265,490	461,947	376,569
Investment method (Note 1)		(2)	(2)	(2)	(2)	(2)	(2)	(2)
Paid-in capital		519,942 $	176,817	324,217	1,807,596	178,897	255,226	206,938
Main business activities		Inland container transportation, container storage, loading, discharging, repair and related activities	Inland container transportation, storage, loading, discharging, repair, cleaning and related activities	Inland container transportation, storage, loading, discharging, repair, cleaning and related activities	Management consultancy, self-owned property leasing	Management consultancy, self-owned property leasing	Management consultancy, self-owned property leasing	Management consultancy, self-owned property leasing
Investee in Mainland China		Ningbo Victory Container Co., Ltd.	Qingdao Evergreen Container Storage & Transportation Co., Ltd.	Kingtrans Intl. Logistics (Tianjin) Co., Ltd.	Ever Shine (Shanghai) Enterprise Management Consulting Co., Ltd.	Ever Shine (Ningbo) Enterprise Management Consulting Co., Ltd.	Ever Shine (Shenzhen) Enterprise Management Consulting Co., Ltd.	Ever Shine (Qingdao) Enterprise Management Consulting Co., Ltd.

F-119

Footnote	Footnote	(Note)
Accumulted amount of investment income remitted back to Taiwan as of June 30, 2020		- $
Book value of investments in Mainland China as of June 30, 2020		14,123 $
Investment income (loss) recognised by the Company. For the six-month period ended June 30, 2020 (Note 2(2)B)		9,679) ($
Ownership held by the Company (direct of indirect) (%)		41.60
Net income (loss) of the investee for the six-month period ended June 30, 2020		21,509 $
Accumulated amount of remittance from Taiwan to Mainland China as of June 30, 2020		81,952 $
Amount remitted from Taiwan to Mainland China/Amount remitted back to Taiwan for the six-month period ended June 30, 2020	Remitted back to Taiwan	- $
	Remitted to Mainland China	- $
Accumulated amount of remittance from Taiwan to Mainland China as of January 1, 2020		81,952 $
Investment method (Note 1)		(2)
Paid-in capital		20,802 $
Main business activities		Shipping agency
Investee in Mainland China		Evergreen Shipping Agency (China) Co., Ltd.

F-120

Evergreen Marine Corporation (Taiwan) Ltd. Major shareholders information For the six-month period ended June 30, 2020 Table 9	Shares	Ownership (%)	8.14%	6.64%	5.45%	Note 1: The major shareholders information was from the data that the Company issued common shares (including treasury shares) and preference shares in dematerialised form Note 1: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. Note 1:The share capital which was recorded in the financial statements may differ from the actual number of shares issued in dematerialised form because of a Note 1:differenent calculation basis. Note 2: If the aforementioned data contains shares which were kept in trust by the shareholders, the data disclosed was the settlor’s separate account for the fund set by the trustee. Note 2:As for the shareholder who reports share equity as an insider whose shareholding ratio is greater than 10% in accordance with Securities and Exchange Act, the shareholding Note 2:ratio includes the self-owned shares and trusted shares, at the same time, persons who have power to decide how to allocate the trust assets. Note 2:For the information of reported share equity of insider, please refer to Market Observation Post System.
		Name of shares held	391,786,816	319,646,157	262,411,866
	Name of major shareholders		Evergreen International S.A.(EIS)	Chang, Kuo-Hua	Evergreen International Corp.

F-121

Footnote	Footnote
Provision of endorsements/ guarantees to the party in Mainland China (Note 7)		N	N	N	N	N	N	N	N	Y	N	N
Provision of endorsements/ guarantees by subsidiary to parent company (Note 7)		N	N	N	N	N	N	N	N	N	N	N
Provision of endorsements/ guarantees by parent company to subsidiary (Note 7)		Y	Y	Y	Y	N	N	Y	Y	Y	N	N
Ceiling on total amount of endorsements/ guarantees provided (Note 3)		179,588,063 $	179,588,063	179,588,063	179,588,063	179,588,063	179,588,063	179,588,063	179,588,063	14,243,909	14,243,909	14,243,909
Ratio of accumulated endorsement/ guarantee amount to net asset value of the endorser/ guarantor company		69.68%	0.21%	46.95%	0.14%	1.57%	1.21%	3.57%	44.31%	-	4.45%	12.33%
Amount of endorsements/ guarantees secured with collateral		- $	-	-	-	-	-	-	-	-	-	-
Actual amount drawn down (Note 6)		29,835,036 $	-	29,074,125	50,132	757,711	721,770	964,831	17,720,511	-	170,485	551,856
Outstanding endorsement/ guarantee amount at June 30, 2020 (Note 5)		50,057,492 $	147,300	33,728,921	101,294	1,126,550	866,124	2,562,275	31,829,843	-	253,474	702,363
Maximum outstanding endorsement/ guarantee amount as of June 30, 2020 (Note 4)		52,023,307 $	151,605	34,362,054	104,254	2,323,801	891,437	2,657,778	33,589,686	36,357	522,855	2,329,180
	Limit on endorsements/ guarntees provided for a single party (Note 3)	143,670,451 $	143,670,451	143,670,451	143,670,451	35,917,613	35,917,613	143,670,451	143,670,451	11,395,127	2,848,782	11,395,127
Party being endorsed/guaranteed	Relationship with the endorser/ guarantor (Note 2)	2	2	2	2	6	6	2	2	2	6	2
	Company name	Greencompass Marine S.A.	Peony Investment S.A.	Evergreen Marine (UK) Limited	Whitney Equipment LLC.	Colon Container Terminal S.A.	Balsam Investment (Netherlands) N.V.	Everport Terminal Services Inc.	Evergreen Marine (Hong Kong) Ltd.	Ever Shine (Shanghai) Enterprise Management Consulting Co., Ltd.	Colon Container Terminal S.A.	Evergreen Marine (Hong Kong) Ltd.
	Endorser/Guarantor	Evergreen Marine Corporation	Evergreen Marine Corporation	Evergreen Marine Corporation	Evergreen Marine Corporation	Evergreen Marine Corporation	Evergreen Marine Corporation	Evergreen Marine Corporation	Evergreen Marine Corporation	Evergreen Marine (Hong Kong) Ltd.	Evergreen Marine (Hong Kong) Ltd.	Evergreen Marine (Hong Kong) Ltd.
	Number (Note 1)	0	0	0	0	0	0	0	0	1	1	1

F-122

Footnote	Footnote
Provision of endorsements/ guarantees to the party in Mainland China (Note 7)		N
Provision of endorsements/ guarantees by subsidiary to parent company (Note 7)		N
Provision of endorsements/ guarantees by parent company to subsidiary (Note 7)		N
Ceiling on total amount of endorsements/ guarantees provided (Note 3)		36,832,259 $
Ratio of accumulated endorsement/ guarantee amount to net asset value of the endorser/ guarantor company		1.00%
Amount of endorsements/ guarantees secured with collateral		- $
Actual amount drawn down (Note 6)		147,300 $
Outstanding endorsement/ guarantee amount at June 30, 2020 (Note 5)		147,300 $
Maximum outstanding endorsement/ guarantee amount as of June 30, 2020 (Note 4)		150,065 $
	Limit on endorsements/ guarntees provided for a single party (Note 3)	7,366,452 $
Party being endorsed/guaranteed	Relationship with the endorser/ guarantor (Note 2)	1
	Company name	Everport Terminal Services Inc.
	Endorser/Guarantor	Greencompass Marine S.A.
	Number (Note 1)	2

F-123

Footnote (Note 4)	Footnote (Note 4)
As of June 30, 2020	Fair value		6,772 $	3,935	27,876	129,720	930,010		50,000	50,000	USD 178	USD 12,035	EUR 10
	Ownership (%)		5.68%	1.44%	17.48%	17.50%	8.45%		-	-	5.27%	5.00%	2.86%
	Book value (Note 3)		6,772 $	3,935	27,876	129,720	930,010		50,000	50,000	USD 178	USD 12,035	EUR 10
	Number of shares		677	50	2,464	10,500	49,866		-	-	0.75	18,942	10
Genearl ledger account			Financial asset measured at fair value through other comprehensive income - non-current	�	�	�	�		Financial asset measured at atmortised cost - non-current	�	Financial asset measured at fair value through other comprehensive income - non-current	�	�
Relationship with the securities issuer (Note 2)						Other related party
Marketable securities (Note 1)		Stock:	Power World Fund Inc.	Linden Technologies, Inc.	TopLogis, Inc.	Ever Accord Construction Corp.	Central Reinsurance Corp.	Financial bonds:	Sunny Bank 2nd Subordinate Financial Debentures-B Issue in 2015	Sunny Bank 3rd Subordinate Financial Debentures-B Issue in 2017	Hutchison Inland Container Depots Ltd.	South Asia Gateway Terminals (Private) Ltd.	Zoll Pool Hafen Hamburg AG
Securities held by		Evergreen Marine Corporation									Peony Investment S.A.		Evergreen Shipping Agency (Europe) GmbH

F-124

Footnote (Note 2)
Notes/accounts receivable (payable)	Percentage of total notes/accounts receivable (payable)	3%	-	-	2%	-	-	-	-	1%	1%	-	1%	-	1%	-	-
	Balance	($ 95,922)	( 441)	6,214	( 63,763)	( 4,550)	233	( 15,893)	-	( 41,996)	( 44,853)	982	( 20,819)	555	( 18,158)	91	-
Differences in transaction terms compared to third party transactions (Note 1)	Credit term	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-
	Unit price	$ -	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-
Transaction	Credit term	30~60 days	30~60 days	30~60 days	30~60 days	30~60 days	30~60 days	30~60 days	30~60 days	30~60 days	30~60 days	30~60 days	30~60 days	30~60 days	30~60 days	30~60 days	30~60 days
	Percentage of total purchases/ sales	3%	3%	4%	1%	1%	1%	1%	1%	1%	1%	2%	1%	4%	2%	2%	1%
	Amount	$ 688,889	853,411	1,128,686	411,430	142,587	175,461	182,983	143,771	269,658	304,344	373,578	222,310	837,420	427,321	426,997	149,450
	Purchases/ sales	Purchases	Purchases	Sales	Purchases	Purchases	Sales	Purchases	Purchases	Purchases	Purchases	Sales	Purchases	Sales	Purchases	Sales	Purchases
Relationship with the counterparty		Subsidiary	Subsidiary		Subsidiary	Associates		Associates	Other related parties	Other related parties	Subsidiary		Other related parties		Subsidiary		Subsidiary
Counterparty		Everport Terminal Services Inc.	Greencompass Marine S.A.		Taiwan Terminal Services Co., Ltd.	Italia Marittima S.p.A.		Evergreen International Storage and Transport Corp.	Evergreen Shipping Agency (America) Corporation	Evergreen International Corp.	Evergreen Marine (UK) Limited		Evergreen Marine (Singapore) Pte. Ltd.		Evergreen Marine (Hong Kong) Ltd.		Evergreen Shipping Agency (Europe) GmbH (EEU)
Purchaser/Seller		Evergreen Marine Corporation

F-125

Footnote (Note 2)				(Note)	(Note)		(Note)	(Note)	(Note)	(Note)	(Note)	(Note)	(Note)							(Note)
Notes/accounts receivable (payable)	Percentage of total notes/accounts receivable (payable)	-	-	99%	11%	20%	4%	16%	8%	-	-	-	1%	-	1%	-	-	-	-	-
	Balance	$ -	-	63,763	3,256 USD	6,135 USD	1,329 USD	4,685 USD	2,412 USD	616 USD	3) (USD	20 USD	581) (USD	-	763) (USD	-	36) (USD	148 USD	-	20 USD
Differences in transaction terms compared to third party transactions (Note 1)	Credit term	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-
	Unit price	$ -	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-
Transaction	Credit term	30~60 days	30~60 days	30~60 days	30~60 days	30 days	30 days	30 days	30 days	30~60 days	30~60 days	30~60 days	30~60 days	30~60 days	30~60 days	30~60 days	30~60 days	30~60 days	30~60 days	30~60 days
	Percentage of total purchases/ sales	1%	1%	100%	12%	26%	7%	19%	9%	3%	3%	4%	3%	1%	4%	5%	1%	1%	2%	2%
	Amount	$ 139,088	299,795	411,430	USD 22,962	USD 48,655	USD 12,942	USD 36,381	USD 17,656	USD 14,244	USD 14,233	USD 19,169	USD 14,692	USD 4,331	USD 17,325	USD 23,374	USD 5,210	USD 3,405	USD 6,755	USD 10,332
	Purchases/ sales	Sales	Purchases	Sales	Sales	Sales	Sales	Sales	Sales	Sales	Purchases	Sales	Purchases	Sales	Purchases	Sales	Purchases	Sales	Purchases	Sales
Relationship with the counterparty		Other related parties	Other related parties	The parent	The parent	Investee of the Parent Company's major shareholder	Indirect subsidiary of the Parent Company	Indirect subsidiary of the Parent Company	Subsidiary of the Parent Company	The parent		Indirect subsidiary of the Parent Company		Investee of Balsam Investment (NetherLands) N.V.		Investee of the Parent Company's major shareholder		Investee of the Parent Company's major shareholder		Indirect subsidiary of the Parent Company
Counterparty		Evergreen International S.A.(EIS)	Gaining Enterprise S.A.	Evergreen Marine Corp.	Evergreen Marine Corp.	Evergreen Marine (Singapore) Pte. Ltd.	Greencompass Marine S.A.	Evergreen Marine (UK) Limited	Evergreen Marine (Hong Kong) Ltd.	Evergreen Marine Corp.		Greencompass Marine S.A.		Italia Marittima S.p.A.		Evergreen Marine (Singapore) Pte. Ltd.		Evergreen International Corp.		Evergreen Marine (UK) Limited
Purchaser/Seller		Evergreen Marine Corporation		Taiwan Terminal Services Co.,Ltd.	Everport Terminal Services Inc.					Evergreen Marine (Hong Kong) Ltd.

F-126

Footnote (Note 2)		(Note)	(Note)		(Note)	(Note)	(Note)	(Note)	(Note)	(Note)							(Note)	(Note)	(Note)	(Note)
Notes/accounts receivable (payable)	Percentage of total notes/accounts receivable (payable)	-	2%	-	2%	1%	-	-	-	1%	1%	1%	-	-	-	-	-	-	-	-
	Balance	436) (USD	2,412) (USD	1) (USD	2,308) (USD	1,033 USD	439) (USD	15 USD	211) (USD	1,329) (USD	1,701 USD	3,270) (USD	-	-	-	-	-	581 USD	20) (USD	439 USD
Differences in transaction terms compared to third party transactions (Note 1)	Credit term	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-
	Unit price	$ -	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-
Transaction	Credit term	30~60 days	30 days	30~60 days	30~60 days	30~60 days	30~60 days	30~60 days	30~60 days	30 days	30~60 days	30~60 days	30~60 days	30~60 days	30~60 days	30~60 days	30~60 days	30~60 days	30~60 days	30~60 days
	Percentage of total purchases/ sales	10%	4%	1%	3%	1%	1%	2%	3%	1%	3%	1%	1%	2%	1%	1%	-	1%	2%	2%
	Amount	USD 45,414	USD 17,656	USD 4,217	USD 14,047	USD 16,537	USD 11,870	USD 28,446	USD 37,622	USD 12,942	USD 39,448	USD 12,139	USD 9,820	USD 17,557	USD 8,424	USD 6,015	USD 4,588	USD 14,692	USD 19,169	USD 11,870
	Purchases/ sales	Purchases	Purchases	Purchases	Purchases	Sales	Purchases	Sales	Purchases	Purchases	Sales	Purchases	Sales	Purchases	Purchases	Purchases	Purchases	Sales	Purchases	Sales
Relationship with the counterparty		Indirect subsidiary of the Parent Company	Subsidiary of the Parent Company	Investee of the Parent Company's major shareholder	Indirect subsidiary of the Parent Company	Indirect subsidiary of the Parent Company		The parent		Subsidiary of the Parent Company	Investee of the Parent Company's major shareholder		Investee of Balsam Investment (NetherLands) N.V.		Investee of the Parent Company's major shareholder	Investee of the Parent Company's major shareholder	Indirect subsidiary of the Parent Company	Subsidiary of the Parent Company		Indirect subsidiary of the Parent Company
Counterparty		Evergreen Marine (UK) Limited	Everport Terminal Services Inc.	Evergreen Shipping Agency (America) Corporation	Master International Shipping Agency Co., Ltd.	Evergreen Marine (UK) Limited		Evergreen Marine Corp.		Everport Terminal Services Inc.	Evergreen Marine (Singapore) Pte. Ltd.		Italia Marittima S.p.A.		Evergreen Shipping Agency (America) Corporation	Evergreen International Corp.	Evergreen Shipping Agency (Europe) GmbH	Evergreen Marine (Hong Kong) Ltd.		Greencompass Marine S.A.
Purchaser/Seller		Evergreen Marine (Hong Kong) Ltd.				Greencompass Marine S.A.														Evergreen Marine (UK) Limited

F-127

Footnote (Note 2)		(Note)	(Note)	(Note)	(Note)					(Note)	(Note)		(Note)		(Note)	(Note)
Notes/accounts receivable (payable)	Percentage of total notes/accounts receivable (payable)	1%	1%	-	3%	-	-	1%	-	-	-	100%	-	2%	-	100%
	Balance	1,033) (USD	1,523 USD	33) (USD	4,685) (USD	185) (USD	342 USD	1,179) (USD	-	436 USD	20) (USD	25,523 MYR	-	937 EUR	-	16,343 CNY
Differences in transaction terms compared to third party transactions (Note 1)	Credit term	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-
	Unit price	$ -	-	-	-	-	-	-	-	-	-	-	-	-	-	-
Transaction	Credit term	30~60 days	30~60 days	30~60 days	30 days	30~60 days	30~60 days	30~60 days	30~60 days	30~60 days	30~60 days	45 days	30~60 days	30~60 days	30~60 days	30~60 days
	Percentage of total purchases/ sales	3%	2%	2%	7%	1%	3%	1%	2%	8%	2%	100%	21%	27%	23%	100%
	Amount	USD 16,537	USD 10,144	USD 12,452	USD 36,381	USD 3,505	USD 15,555	USD 3,858	USD 9,605	USD 45,414	USD 10,332	MYR 70,763	EUR 4,163	EUR 5,269	EUR 4,520	CNY 98,826
	Purchases/ sales	Purchases	Sales	Purchases	Purchases	Purchases	Sales	Purchases	Purchases	Sales	Purchases	Sales	Sales	Sales	Sales	Sales
Relationship with the counterparty		Indirect subsidiary of the Parent Company	The Parent		Subsidiary of the Parent Company	Investee of Balsam Investment (NetherLands) N.V.	Investee of the Parent Company's major shareholder		Investee of the Parent Company's major shareholder	Subsidiary of the Parent Company		Investee of EITC	Indirect subsidiary of the Parent Company	Investee of the Parent Company's major shareholder	The Parent	Subsidiary of the Parent Company
Counterparty		Greencompass Marine S.A.	Evergreen Marine Corp.		Everport Terminal Services Inc.	Italia Marittima S.p.A.	Evergreen Marine (Singapore) Pte. Ltd.		Evergreen Shipping Agency (America) Corporation	Evergreen Marine (Hong Kong) Ltd.		Gaining Enterprise S.A.	Greencompass Marine S.A.	Evergreen Marine (Singapore) Pte. Ltd.	Evergreen Marine Corp.	Evergreen Marine (Hong Kong) Ltd.
Purchaser/Seller		Evergreen Marine (UK) Limited										Evergreen Heavy Industrial Corp.(Malaysia) Berhad	Evergreen Shipping Agency (Europe) GmbH			Master International Shipping Agency Co. Ltd.

F-128

Footnote	Footnote			Note		Note
Allowance for doubtful accounts		- $	-	-	-	-	-	-
Amount collected	subsequent to the balance sheet date	- $	MYR 25,523	-	-	USD 4,083	USD 5,347	-
Overdue receivables	Action taken	-	-	-	-	-	-	-
	Amount	- $	-	-	-	-	-	-
	Turnover rate	-	-	-	-	-	-	-
Balance as at	June 30, 2020 (Note 1)	USD 12,235	MYR 25,523	USD 19,813	USD 8,207	USD 4,685	USD 6,135	USD 4,547
Relationship with the counterparty		Investee of Clove Holding Ltd. accounted for using equity method	Investee of EITC	Subsidiary	Investee of Clove Holding Ltd. accounted for using equity method	Indirectly subsidiary of the Parent Company	Other related party	Investee of Evergreen Marine (Hong Kong) Limited accounted for using equity method
Counterparty		Colon Container Terminal, S.A.	Gaining Enterprise S.A.	Clove Holding Ltd.	Colon Container Terminal, S.A.	Evergreen Marine (UK) Limited	Evergreen Marine (Singapore) Pte. Ltd.	Colon Container Terminal, S.A.
Creditor		Clove Holding Ltd.	Evergreen Heavy Industrial Corp. (Malaysia) Berhad	Peony Investment S.A.	Peony Investment S.A.	Everport Terminal Services Inc.	Everport Terminal Services Inc.	Evergreen Marine (Hong Kong) Ltd.

F-129

Expressed in thousands of TWD (Except as otherwise indicated) Evergreen Marine Corporation (Taiwan) Ltd. Significant inter-company transactions during the reporting periods For the six-month period ended June 30, 2020 Table 6	Transaction	Percentage of consolidated total operating revenues or total assets (Note 3)	0.47 0.03 1.29 0.98 0.07 0.43 0.35 0.12 0.49 0.49 0.17 0.79 0.03 0.41 0.16 0.66 0.44 0.10 0.57 1.56
		Transaction terms	Note 4 " " " " " " " " " " " " " " " " " " "
		Amount	411,430 $ 102,382 1,128,686 853,411 217,328 373,578 304,344 370,095 426,997 427,321 149,450 688,889 100,518 356,118 137,639 575,076 388,266 303,831 496,118 1,362,465
		General ledger account	Operating cost Shipowner's account - credit Operating revenue Operating cost Shipowner's account - debit Operating revenue Operating cost Shipowner's account - credit Operating revenue Operating cost Operating cost Operating cost Shipowner's account - debit Operating cost Operating cost Operating cost Operating cost Shipowner's account - debit Operating cost Operating revenue
		Relationship (Note 2)	1 1 1 1 1 1 1 1 1 1 1 1 1 3 3 3 3 3 3 3
		Counterparty	Taiwan Terminal Services Co.,Ltd. Greencompass Marine S.A. Greencompass Marine S.A. Greencompass Marine S.A. Evergreen Marine (UK) Limited Evergreen Marine (UK) Limited Evergreen Marine (UK) Limited Evergreen Marine (Hong Kong) Ltd. Evergreen Marine (Hong Kong) Ltd. Evergreen Marine (Hong Kong) Ltd. Evergreen Shipping Agency (Europe) GmbH Everport Terminal Services Inc. Evergreen Shipping Agency (Europe) GmbH Evergreen Marine (UK) Limited Evergreen Shipping Agency (Europe) GmbH Evergreen Marine (Hong Kong) Ltd. Everport Terminal Services Inc. Evergreen Marine (UK) Limited Greencompass Marine S.A. Evergreen Marine (Hong Kong) Ltd.
		Company name	Evergreen Marine Corporation Evergreen Marine Corporation Evergreen Marine Corporation Evergreen Marine Corporation Evergreen Marine Corporation Evergreen Marine Corporation Evergreen Marine Corporation Evergreen Marine Corporation Evergreen Marine Corporation Evergreen Marine Corporation Evergreen Marine Corporation Evergreen Marine Corporation Evergreen Marine Corporation Greencompass Marine S.A. Greencompass Marine S.A. Greencompass Marine S.A. Greencompass Marine S.A. Greencompass Marine S.A. Evergreen Marine (UK) Limited Evergreen Marine (UK) Limited
		Number (Note 1)	0 0 0 0 0 0 0 0 0 0 0 0 0 1 1 1 1 1 2 2

F-130

Transaction	Percentage of consolidated total operating revenues or total assets (Note 3)	0.35 0.04 1.25 0.04 0.50 0.61 0.48 0.05 0.19	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: Relationship between transaction company and counterparty is classified into the following three categories; Fill in the number of category each case belongs to (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.): (1) Parent company to subsidiary. (2) Subsidiary to parent company (3) Subsidiary to subsidiary 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 and based on accumulated transaction amount for the period to consolidated total operating revenues for income statement accounts. Note 4: Terms are approximately the same as for general transactions.
	Transaction terms	Note 4 " " " " " " " "
	Amount	309,967 $ 112,422 1,091,474 138,025 440,776 529,682 421,416 139,430 583,684
	General ledger account	Operating cost Shipowner's account - credit Operating cost Account payables Operating cost Operating cost Operating cost Shipowner's account - credit Other receivables
	Relationship (Note 2)	3 3 3 3 3 3 3 3 3
	Counterparty	Evergreen Marine (Hong Kong) Ltd. Evergreen Shipping Agency (Europe) GmbH Everport Terminal Services Inc. Everport Terminal Services Inc. Greencompass Marine S.A. Everport Terminal Services Inc. Evergreen Shipping Agency (China) Co., Ltd. Evergreen Marine (UK) Limited Clove Holding Ltd.
	Company name	Evergreen Marine (UK) Limited Evergreen Marine (UK) Limited Evergreen Marine (UK) Limited Evergreen Marine (UK) Limited Evergreen Marine (Hong Kong) Ltd. Evergreen Marine (Hong Kong) Ltd. Evergreen Marine (Hong Kong) Ltd. Evergreen Marine (Hong Kong) Ltd. Peony Investment S.A.
	Number (Note 1)	2 2 2 2 3 3 3 3 4

F-131

Footnote	Footnote	Subsidiary of the Company (Note)	�(Note)	�(Note)	�(Note)	�(Note)	Investee accounted for using equity method	�	�	�	�	�	�	Indirect subsidiary of the Company (Note)	�(Note)	�(Note)	�(Note)	�(Note)	�(Note)
Investment income (loss) recognised by the Company For the six-month period ended June 30, 2020 (Note 2(3))		1,624,788 $	1,301) (	111,467	737,986	9,865	33,514	147,568	6,538	293,487) (	46,583	39	20,734	2,091	15,748	12,446	1,177,361	18,517	1,360) (
	Net profit (loss) of the investee For the six-month period ended June 30, 2020 (Note 2(2))	1,607,717 $	2,366) (	118,044	987,171	16,721	83,785	365,635	20,923	1,834,366) (	173,982	443	95,375	2,091	15,748	12,446	1,177,361	18,518	1,431) (
Shares held as of June 30, 2020	Book value	27,307,366 $	53,224	1,778,968	7,775,366	30,680	522,864	8,891,012	107,571	10,959,263	1,481,822	-	280,132	2,680,731	302,314	45,585	14,732,903	166,093	41,646
	Ownership (%)	100.00	55.00	94.43	79.00	59.00	40.00	40.36	31.25	16.00	27.85	-	21.74	100.00	100.00	100.00	100.00	99.99	95.00
	Number of shares	4,765	5,500	1	6,320	1,062	58,542	430,692	6,336	776,541	144,799	-	13,750	10	-	121	3,535	100	150
Initial investment amount	Balance as of December 31, 2019	14,301,195 $	55,000	3,001	6,283,222	9,103	320,000	4,840,408	25,000	11,276,823	1,094,073	3,151	178,750	1,548,102	244,989	71,470	10,414,110	34,666	4,124
	Balance as of June 30, 2020	14,301,195 $	55,000	3,001	6,283,222	9,103	320,000	4,840,408	25,000	11,276,823	1,446,196	-	178,750	1,548,102	244,989	71,470	10,414,110	34,666	4,124
	Main business activities	Investment activities	Loading and discharging operations of container yards	Terminal services	Marine transportation	Shipping agency	Development, rental, sale of residential and commercial buildings	Container transportation and gas stations	General security guards services	International passengers and cargo transportation	Container distribution and cargo stevedoring	Management consultancy	Terminal services	Investment holding company	Shipping agency	Shipping agency	Marine transportation	Shipping agency	Leasing
	Location	Republic of Panama	Taiwan	U.S.A	Hong Kong	Israel	Taiwan	Taiwan	Taiwan	Taiwan	Taiwan	Republic of Panama	Vietnam	British Virgin Islands	Germany	South Korea	Republic of Panama	India	Argentina
	Investee (Note 1�Note 2)	Peony Investment S.A.	Taiwan Terminal Services Co., Ltd.	Everport Terminal Services Inc.	Evergreen Marine (Hong Kong) Ltd.	Evergreen Shipping Agency (Israel) Ltd.	Charng Yang Development Co.,Ltd.	Evergreen International Storage and Transport Corporation	Evergreen Security Corporation	EVA Airways Corporation	Taipei Port Container Terminal Corporation	Evergreen Marine (Latin America), S.A.	VIP Greenport Joint Stock Company	Clove Holding Ltd.	Evergreen Shipping Agency (Europe) GmbH	Evergreen Shipping Agency (Korea) Corporation	Greencompass Marine S.A.	Evergreen Shipping Agency (India) Pvt. Ltd.	Evergreen Argentina S.A.
	Investor	Evergreen Marine Corp.												Peony Investment S.A.

F-132

Footnote	Footnote	Indirect subsidiary of the Company (Note)	�(Note)	�(Note)	�(Note)	�(Note)	�(Note)	�(Note)	�(Note)	�(Note)	�(Note)	�(Note)	Investee company of Peony accounted for using equity method	�	�	�	�	Indirect subsidiary of the Company (Note)
Investment income (loss) recognised by the Company For the six-month period ended June 30, 2020 (Note 2(3))		39,768 $	741) (	4,201	57,432	208	81,304	28,015	23,229	21,424	8,480	89,032	15,379	764) (	146,744) (	44,972	779	118,505
	Net profit (loss) of the investee For the six-month period ended June 30, 2020 (Note 2(2))	41,847 $	4,263) (	4,975	57,432	378	159,419	28,015	45,548	25,204	15,418	89,032	31,386	1,528) (	299,478) (	91,780	2,597	118,505
Shares held as of June 30, 2020	Book value	612,644 $	13,473	901,382	198,570	70,870	864,258	34,900	23,411	63,221	64,364	428,155	99,334	1,849,171	407,923	83,174	32,128	921,823
	Ownership (%)	95.03	17.39	84.44	100.00	55.00	51.00	100.00	51.00	85.00	55.00	100.00	49.00	50.00	49.00	49.00	30.00	100.00
	Number of shares	17	2	42,120	6	1	765	1	-	680	5,500	-	0.441	460	0.451	-	1,500	500
Initial investment amount	Balance as of December 31, 2019	230,994 $	23,695	804,106	198,717	69,290	3,950,664	50,329	24,982	66,079	17,116	36,265	28,665	1,400,507	12,305,042	61,336	12,551	277,342
	Balance as of June 30, 2020	251,174 $	23,695	804,106	198,717	69,290	3,950,664	50,329	24,982	66,079	17,116	36,265	28,665	1,400,507	12,305,042	61,336	12,551	277,342
	Main business activities	Loading and discharging operations of container yards and inland transportation	Container repair, cleaning and inland transportation	Container manufacturing	Shipping agency	Shipping agency	Marine transportation	Shipping agency	Shipping agency	Shipping agency	Shipping agency	Shipping agency	Shipping agency	Investment holding company	Investment holding company	Shipping agency	Renting estate and storehouse company	Shipping agency
	Location	Indonesia	Indonesia	Malaysia	Spain	Italy	U.K	Australia	Russia	Thailand	South Africa	Vietnam	Indonesia	Curaçao	Curaçao	United Arab Emirates	Malaysia	Malaysia
	Investee (Note 1�Note 2)	PT. Multi Bina Pura International	PT. Multi Bina Transport	Evergreen Heavy Industrial Corp. (Malaysia) Berhad	Evergreen Shipping (Spain) S.L.	Evergreen Shipping Agency (Italy) S.p.A.	Evergreen Marine (UK) Limited	Evergreen Shipping Agency (Australia) Pty. Ltd.	Evergreen Shipping Agency (Russia) Ltd.	Evergreen Shipping Agency (Thailand) Co., Ltd.	Evergreen Agency (South Africa) (Pty) Ltd.	Evergreen Shipping Agency (Vietnam) Corp.	PT. Evergreen Shipping Agency Indonesia	Luanta Investment (Netherlands) N.V.	Balsam Investment (Netherlands) N.V.	Evergreen Shipping Agency Co. (U.A.E.) LLC	Greenpen Properties Sdn. Bhd.	Evergreen Marine Corp. (Malaysia) SDN.BHD.
	Investor	Peony Investment S.A.

F-133

Footnote	Footnote	Investee company of Peony accounted for using equity method	�(Note)	Investee company of Clove Holding Ltd. accounted for using equity method	Indirect subsidiary of the Company (Note)	�(Note)	�(Note)	Investee company of Evergreen Marine (Hong Kong) Limited accounted for using equity method	Indirect subsidiary of the Company (Note)	�(Note)	�(Note)	�(Note)	�(Note)	�(Note)	�(Note)	�(Note)
Investment income (loss) recognised by the Company For the six-month period ended June 30, 2020 (Note 2(3))		9,342 $	3,978	1,975) (	6,577	9,751	3,110) (	444) (	443	17,255	28,027	24,060	14,723	13,509	11,715	167
	Net profit (loss) of the investee For the six-month period ended June 30, 2020 (Note 2(2))	987,171 $	13,887	4,939) (	118,044	9,751	4,263) (	4,939) (	443	17,255	46,712	32,080	24,538	22,515	19,524	16,721
Shares held as of June 30, 2020	Book value	98,422 $	64,901	2,538,757	264,619	225,552	56,519	591,655	18,293	53,038	35,668	31,820	20,424	24,783	29,169	520
	Ownership (%)	1.00	28.65	40.00	5.57	100.00	72.95	9.00	100.00	100.00	60.00	75.00	60.00	60.00	60.00	1.00
	Number of shares	80	286	22,860	0.059	-	8	5,144	600	200	900	80	44	2	2	18
Initial investment amount	Balance as of December 31, 2019	78,069 $	32,818	673,456	191,606	5,892	97,260	459,576	2,917	5,892	8,178	10,341	6,753	9,392	7,963	150
	Balance as of June 30, 2020	78,069 $	32,818	673,456	191,606	5,892	97,260	459,576	17,676	5,892	8,178	10,341	6,753	9,392	7,963	150
	Main business activities	Marine transportation	Depot services	Inland container storage and loading	Terminal services	Equipment Leasing Company	Container repair cleaning and inland transportation	Inland container storage and loading	Management consultancy	Shipping agency	Shipping agency	Shipping agency	Shipping agency	Shipping agency	Shipping agency	Shipping agency
	Location	Hong Kong	Malaysia	Republic of Panama	U.S.A	U.S.A	Indonesia	Republic of Panama	Republic of Panama	Cambodia	Peru	Colombia	Mexico	Chile	Greece	Isrrael
	Investee (Note 1�Note 2)	Evergreen Marine (Hong Kong) Ltd.	Ics Depot Services Snd. Bhd.	Colon Container Terminal, S.A.	Everport Terminal Services Inc.	Whitney Equipment LLC.	PT. Multi Bina Transport	Colon Container Terminal S.A.	Evergreen Marine (Latin America), S.A.	Evergreen Shipping Service (Cambodia) Co., Ltd.	Evergreen Shipping Agency (Peru) S.A.C.	Evergreen Shipping Agency (Colombia) S.A.S	Evergreen Shipping Agency Mexico S.A. de C.V.	Evergreen Shipping Agency (Chile) SPA.	Evergreen Shipping Agency (Greece) Societe Anonyme.	Evergreen Shipping Agency (Isrrael) Ltd.
	Investor	Peony Investment S.A.		Clove Holding Ltd.		Everport Terminal Services Inc.	PT. Multi Bina Pura International	Evergreen Marine (Hong Kong) Limited

F-134

Footnote	Footnote	Indirect subsidiary of the Company (Note)	Investee company of Evergreen Marine (Hong Kong) Limited accounted for using equity method
Investment income (loss) recognised by the Company For the six-month period ended June 30, 2020 (Note 2(3))		- $	13,335
	Net profit (loss) of the investee For the six-month period ended June 30, 2020 (Note 2(2))	- $	33,338
Shares held as of June 30, 2020	Book value	6,542 $	10,296
	Ownership (%)	60.00	40.00
	Number of shares	120	2,160
Initial investment amount	Balance as of December 31, 2019	- $	3,571
	Balance as of June 30, 2020	7,288 $	3,571
	Main business activities	Shipping agency	Shipping agency
	Location	Brazil	Lanka
	Investee (Note 1�Note 2)	Evergreen Shipping Agency (Brazil) Ltd.	Evergreen Shipping Agency Lanka (Private) Ltd.
	Investor	Evergreen Marine (Hong Kong) Limited

F-135

Footnote	Footnote			(Note)	(Note)	(Note)	(Note)	(Note)
Accumulted amount of investment income remitted back to Taiwan as of June 30, 2020		- $	-	-	-	-	-	-
Book value of investments in Mainland China as of June 30, 2020		305,381 $	183,281	190,289	3,065,530	141,667	385,466	234,925
Investment income (loss) recognised by the Company. For the six-month period ended June 30, 2020 (Note 2(2)B)		7,873 $	30,328	10,325	23,267) (	174	2,335) (	77
Ownership held by the Company (direct of indirect) (%)		40.00	40.00	46.20	80.00	80.00	80.00	80.00
Net income (loss) of the investee for the six-month period ended June 30, 2020		19,682 $	75,820	22,348	16,941	182	2,065	1,767
Accumulated amount of remittance from Taiwan to Mainland China as of June 30, 2020		210,978 $	41,740	278,847	2,399,822	265,490	461,947	376,569
Amount remitted from Taiwan to Mainland China/Amount remitted back to Taiwan for the six-month period ended June 30, 2020	Remitted back to Taiwan	- $	-	-	-	-	-	-
	Remitted to Mainland China	- $	-	-	-	-	-	-
Accumulated amount of remittance from Taiwan to Mainland China as of January 1, 2020		210,978 $	41,740	278,847	2,399,822	265,490	461,947	376,569
Investment method (Note 1)		(2)	(2)	(2)	(2)	(2)	(2)	(2)
Paid-in capital		519,942 $	176,817	324,217	1,807,596	178,897	255,226	206,938
Main business activities		Inland container transportation, container storage, loading, discharging, repair and related activities	Inland container transportation, storage, loading, discharging, repair, cleaning and related activities	Inland container transportation, storage, loading, discharging, repair, cleaning and related activities	Management consultancy, self-owned property leasing	Management consultancy, self-owned property leasing	Management consultancy, self-owned property leasing	Management consultancy, self-owned property leasing
Investee in Mainland China		Ningbo Victory Container Co., Ltd.	Qingdao Evergreen Container Storage & Transportation Co., Ltd.	Kingtrans Intl. Logistics (Tianjin) Co., Ltd.	Ever Shine (Shanghai) Enterprise Management Consulting Co., Ltd.	Ever Shine (Ningbo) Enterprise Management Consulting Co., Ltd.	Ever Shine (Shenzhen) Enterprise Management Consulting Co., Ltd.	Ever Shine (Qingdao) Enterprise Management Consulting Co., Ltd.

F-136

Footnote	Footnote	(Note)
Accumulted amount of investment income remitted back to Taiwan as of June 30, 2020		- $
Book value of investments in Mainland China as of June 30, 2020		14,123 $
Investment income (loss) recognised by the Company. For the six-month period ended June 30, 2020 (Note 2(2)B)		9,679) ($
Ownership held by the Company (direct of indirect) (%)		41.60
Net income (loss) of the investee for the six-month period ended June 30, 2020		21,509 $
Accumulated amount of remittance from Taiwan to Mainland China as of June 30, 2020		81,952 $
Amount remitted from Taiwan to Mainland China/Amount remitted back to Taiwan for the six-month period ended June 30, 2020	Remitted back to Taiwan	- $
	Remitted to Mainland China	- $
Accumulated amount of remittance from Taiwan to Mainland China as of January 1, 2020		81,952 $
Investment method (Note 1)		(2)
Paid-in capital		20,802 $
Main business activities		Shipping agency
Investee in Mainland China		Evergreen Shipping Agency (China) Co., Ltd.

F-137

Evergreen Marine Corporation (Taiwan) Ltd. Major shareholders information For the six-month period ended June 30, 2020 Table 9	Shares	Ownership (%)	8.14%	6.64%	5.45%	Note 1: The major shareholders information was from the data that the Company issued common shares (including treasury shares) and preference shares in dematerialised form Note 1: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. Note 1:The share capital which was recorded in the financial statements may differ from the actual number of shares issued in dematerialised form because of a Note 1:differenent calculation basis. Note 2: If the aforementioned data contains shares which were kept in trust by the shareholders, the data disclosed was the settlor’s separate account for the fund set by the trustee. Note 2:As for the shareholder who reports share equity as an insider whose shareholding ratio is greater than 10% in accordance with Securities and Exchange Act, the shareholding Note 2:ratio includes the self-owned shares and trusted shares, at the same time, persons who have power to decide how to allocate the trust assets. Note 2:For the information of reported share equity of insider, please refer to Market Observation Post System.
		Name of shares held	391,786,816	319,646,157	262,411,866
	Name of major shareholders		Evergreen International S.A.(EIS)	Chang, Kuo-Hua	Evergreen International Corp.

F-138

EVERGREEN MARINE CORPORATION (TAIWAN) LTD. AND SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS AND REPORT OF INDEPENDENT ACCOUNTANTS DECEMBER 31, 2018 AND 2019

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F-139

REPORT OF INDEPENDENT ACCOUNTANTS TRANSLATED FROM CHINESE

To the Board of Directors and Shareholders of Evergreen Marine Corporation (Taiwan) Ltd.

Introduction

We have audited the accompanying consolidated balance sheets of Evergreen Marine Corporation (Taiwan) Ltd. (the“ Company”) and its subsidiaries (collectively referred herein as the “Group”) as at December 31, 2018 and 2019, and the related consolidated statements of comprehensive income, of changes in equity and of cash flows for the years then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies.

In our opinion, based on our audits and the reports of other independent accountants (please refer to Other Matter section of our report), the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as of December 31, 2018 and 2019, and the consolidated financial performance and its consolidated cash flows for the years then ended in accordance with the “Regulations Governing the Preparation of Financial Reports by Securities Issuers” and the International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations, and SIC Interpretations as endorsed by the Financial Supervisory Commission.

Basis for opinion

We conducted our audits in accordance with the “Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants” and generally accepted auditing standards in the Republic of China (ROC GAAS). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Group in accordance with the Code of Professional Ethics for Certified Public Accountants in the Republic of China (the “Code”), and we have fulfilled our other ethical responsibilities in accordance with the Code. We believe that the audit evidence we have obtained and the reports of other independent accountants are sufficient and appropriate to provide a basis for our opinion.

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F-140

Key audit matters

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the consolidated financial statements of the current period. These matters were addressed in the context of our audit of the consolidated financial statements as a whole and, in forming our opinion thereon, we do not provide a separate opinion on these matters.

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

Accuracy and cut-off of freight revenue

Description

Please refer to Note 4(32) for accounting policies on revenue recognition, Note 5(2) for uncertainty of accounting estimates and assumptions applied on revenue recognition, and Note 6(22) for details of sales revenue.

Despite the Group conducting business worldwide, its transactions are all in small amounts, whereas the freight rate is subject to fluctuation caused by cargo loading rate as well as market competition. Worldwide shipping agencies use a system to record the transactions by entering data including shipping departure, destination, counterparty, transit time, shipping amounts, and freight price for the Group. Therefore, management could recognize freight revenue in accordance with the data on bill of lading reports generated from the system, accompanied by estimation made from past experience and current cargo loading conditions that the revenue would flow in, and calculate the revenue under the percentageof-completion method. As the process of recording transactions, communicating with agencies, and maintaining the system are done manually, and the estimation of freight revenue are subject to management’s judgement, therefore freight revenue involves high uncertainty and is material to the financial statements. Given the conditions mentioned above, we consider the accuracy of freight revenue and the appropriate use of cut-off by the Group and its investee companies as a key audit matter.

~3~

F-141

How our audit addressed the matter

Our key audit procedures performed in respect of the above key audit matter included the following:

Obtained an understanding of the operation and industry of the Group to assess the reasonableness of policies and procedures on revenue recognition, and confirmed whether it is appropriate to the financial statements.
Obtained an understanding of the procedures of revenue recognition from booking, picking, billing to receiving. Assessed and tested relevant internal controls, including checking freight items and amounts of delivery information against the approved contracts and booking list. In addition, recalculated the accuracy of freight revenue, and ensured its consistency with the bill of lading report.
Obtained the estimated freight income report for vessels underway as of balance sheets date, and inquired with management for the reasonableness of judgement. In addition, checked historical freight revenue for total voyage under each individual vessel, along with comparing with current cargo loading condition as well as actual revenue received after period end to ensure the reasonableness of revenue assumptions.
Confirmed the completeness of vessels underway for the reporting period, including tracking the movements of shipments on the internet to ensure the vessels that depart before period end have been taken into consideration in the freight revenue calculation.
Verified accuracy of data used in calculating percentage of completion under each voyage, including selecting samples and check whether total shipping days shown on the Company’s website are in agreement with cruise timetable as well as recalculating shipping days (days between departure and balance sheet date), in order to examine the soundness of percentage applied.

~4~

F-142

Impairment of property, plant and equipment and right-of-use assets

Description

Please refer to Notes 4(16) and 4(17) for accounting policies on property, plant and equipment and rightof-use assets, Note 5(2) for uncertainty of accounting estimates and assumptions applied on impairment of property, plant and equipment and right-of-use assets, and Notes 6(8) and 6(9) for details of property, plant and equipment and right-of-use assets.

As of December 31, 2019, property, plant and equipment amounted to NTD 108,393,511 thousand, constituting 35.35% of total assets, and ship equipment, transport equipment and cargo handling equipment amounted to NTD 100,150,433 thousand, accounting for approximately 92.40% of total property, plant and equipment; right-of-use assets amounted to NTD 82,624,186 thousand, constituting 26.95% of total assets, and ship equipment, transport equipment and cargo handling equipment amounted to NTD 69,466,851 thousand, accounting for approximately 84.08% of total right-of-use assets.

As new ships have been built and put into operation by many carriers around the world, market supply has exceeded demand. Therefore, the market imbalance led to price competition, resulting in unstable profitability for the industry and raising the risk of impairment arising from main operating ship equipment, transport equipment and cargo handling equipment. The valuation of impairment and recoverable amounts are evaluated by the Group using the present value of the future cash flows expected to be derived from an asset or cash-generating unit compared to the book value. The main assumptions of discount rates used in recoverable amounts, and expected operating revenue growth rates, gross profit, operating profit rates, capital expenditures and discount rates used in future cash flow estimates are subject to management’s judgement and involve high uncertainty, and the estimated results are material to the consolidated financial statements. Given the conditions mentioned above, we consider the impairment assessment of ship equipment, transport equipment and cargo handling equipment in the property, plant and equipment and right-of-use assets under the Group and its investee companies as a key audit matter.

~5~

F-143

How our audit addressed the matter

Our key audit procedures performed in respect of the above key audit matter included the following:

Obtained an understanding and assessed the relevant policies, internal controls and process applied to valuation of asset impairments.
Interviewed with management regarding the impairment test report, and assessed the reasonableness of discount rates and the reasonableness of operating revenue, gross profit, operating profit rate, growth rates and capital expenditure that management used in estimating future cash flows by checking actual performance under past operating plans and comparing the performance with industry forecast to evaluate the intention and capability of management.
Checked the parameters of the valuation model and recalculated the valuation model for accuracy.

Other matter – Report of other independent accountants

We did not audit the financial statements of all the consolidated subsidiaries. Those statements and the information disclosed in Note 13 were performed by other independent accountants whose reports thereon have been furnished to us, and our audit expressed herein is based solely on the reports of the other independent accountants. The statements reflect that total assets in these subsidiaries amounted to NTD 52,567,030 thousand and NTD 64,007,665 thousand, constituting 22.95% and 20.88% of the total consolidated assets as of December 31, 2018, and 2019, respectively. Net operating revenues in the subsidiaries amounted to NTD 50,179,774 thousand and NTD 41,978,500 thousand, constituting 29.65% and 22.03% of the total consolidated net operating revenues of 2018 and 2019 for the years then ended. In addition, we did not audit the financial statements of all the investments accounted for using equity method. Those statements and the information disclosed in Note 13 were audited by other independent accountants whose reports thereon have been furnished to us, and our audit expressed herein, insofar as it relates to the amounts included for those investee companies accounted for using equity method and information disclosed in Note 13 related to these long-term equity investments, is based solely on the reports of other independent accountants. Long-term equity investments in these investee companies amounted to NTD 17,158,367 thousand and NTD 18,297,311 thousand, constituting 7.49% and 5.97% of the total consolidated assets as of December 31, 2018 and 2019, respectively, and comprehensive income (including share of profit or loss and share of other comprehensive income of associates and joint ventures accounted for using equity method) was NTD 109,172 thousand and NTD 331,944 thousand constituting 16.69% and (51.01%) of the consolidated total comprehensive income and loss for the years then ended, respectively.

~6~

F-144

Other matter – Parent company only financial reports

We have audited the parent company only financial statement of Evergreen Marine Corporation (Taiwan) Ltd. as at and for the years ended December 31, 2018 and 2019 on which we have issued an unqualified opinion with explanatory paragraph thereon.

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

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

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

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

Auditor’s responsibilities for the audit of the consolidated financial statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s 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 ROC GAAS will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.

As part of an audit in accordance with ROC GAAS, we exercise professional judgement and maintain professional skepticism throughout the audit. We also:

~7~

F-145

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

~8~

F-146

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

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

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s 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.

Lee, Hsiu-Ling Chih, Ping-Chiun For and on behalf of PricewaterhouseCoopers, Taiwan March 24, 2020

------------------------------------------------------------------------------------------------------------------------------------------------The accompanying consolidated financial statements are not intended to present the financial position and results of operations and cash flows in accordance with accounting principles generally accepted in countries and jurisdictions other than the Republic of China. The standards, procedures and practices in the Republic of China governing the audit of such financial statements may differ from those generally accepted in countries and jurisdictions other than the Republic of China. Accordingly, the accompanying consolidated financial statements and report of independent accountants 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.

~9~

F-147

EVERGREEN MARINE CORPORATION (TAIWAN) LTD. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2018 AND 2019

(Expressed in thousands of New Taiwan dollars and United Stated dollars)

Notes	December	31, 2019
	NT$ $ 37,871,889 2,018,536 1,693,497 129,545 13,979,251 780,562 283,739 743,540 381,933 4,547,919 1,500,038 2,368,627 66,299,076 1,719,423 100,000 29,400,925 108,393,511 82,624,186 5,455,070 1,929,667 1,035,398 9,638,382 240,296,562 $ 306,595,638	US$
6(1) 6(3) 6(22) 6(4) 6(4) 6(4) and 7 7 6(5) 6(6) and 8 6(2) 6(3) 6(7) 6(8), 8 and 9 6(9) 6(10) and 8 6(29) 6(4)(11) (16) and 8		(Unaudited) (Note 4) $ 1,286,409 68,564 57,525 4,400 474,839 26,514 9,638 25,256 12,973 154,481 50,952 80,456
		2,252,007
		58,404 3,397 998,673 3,681,845 2,806,528 185,293 65,546 35,170 327,391
		8,162,247
		$ 10,414,254

(Continued)

~10~

F-148

EVERGREEN MARINE CORPORATION (TAIWAN) LTD. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2018 AND 2019

(Expressed in thousands of New Taiwan dollars and United Stated dollars)

Notes	December	31, 2019
	NT$ $ 1,861,026 2,213,538 16,169,710 411,102 4,406,879 706,239 841,265 9,075,576 27,764,309 63,449,644 18,327,916 10,000,000 83,859,972 2,027,378 51,967,317 3,368,565 169,551,148 233,000,792 48,129,738 11,407,437 5,714,940 3,659,042 1,134,622 70,045,779 3,549,067 73,594,846 $ 306,595,638	US$
6(9) and 7 6(22) 7 7 6(9) and 7 6(12)(16) 6(9) and 7 6(13) 6(14) 6(29) 6(9) and 7 6(15)(16)(17) 6(18) 6(19) 6(20) 6(21) 9 11		(Unaudited) (Note 4) $ 63,214 75,188 549,243 13,964 149,690 23,989 28,576 308,274 943,081
		2,155,219
		622,552 339,674 2,848,504 68,865 1,765,194 114,421
		5,759,210
		7,914,429
		1,634,842 387,481 194,121 124,288 38,540
		2,379,272 120,553
		2,499,825
		$ 10,414,254

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

~11~

F-149

EVERGREEN MARINE CORPORATION (TAIWAN) LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2019

(Expressed in thousands of New Taiwan dollars and United Stated dollars, except earnings per share)

				For the years ended December 31,	For the years ended December 31,
				2018	2019
	Items	Notes		NT$	NT$	US$
						(Unaudited)
						(Note 4)
4000	Operating revenue	6(22) and 7	$	169,236,653 $	190,589,281 $	6,473,821
5000	Operating costs	6(27)(28)
		and 7	(	161,771,163)(	176,071,661)(	5,980,695)
5900	Gross profit			7,465,490	14,517,620	493,126
5910	Unrealized (profit) loss from sales		(	8,131 )	25,181	855
5920	Realized profit on from sales			13,509	12,220	415
5950	Gross profit			7,470,868	14,555,021	494,396
	Operating expenses	6(27)(28)
		and 7
6100	Selling expenses		(	1,533,425 ) (	1,585,738 ) (	53,864)
6200	General and administrative expenses		(	6,520,083 ) (	8,703,296 ) (	295,628)
6450	(Impairment loss) impairment gain and
	reversal of impairment loss determined in
	accordance with IFRS 9		(	1,473)	16,336	555
6000	Operating expenses		(	8,054,981 ) (	10,272,698 ) (	348,937)
6500	Other gains - net	6(23) and 7		1,510,330	375,947	12,770
6900	Operating profit			926,217	4,658,270	158,229
	Other non-operating income and expenses
7010	Other income	6(24)		1,473,164	1,204,076	40,899
7020	Other gains and losses	6(25)	(	77,900 ) (	74,671) (	2,536)
7050	Finance costs	6(26) and 7	(	1,880,424 ) (	5,675,837 ) (	192,793)
7060	Share of profit of associates and joint
	ventures accounted for using equity
	method			754,347	667,062	22,658
7000	Total non-operating income and
	expenses			269,187 (	3,879,370)(	131,772)
7900	Profit before income tax			1,195,404	778,900	26,457
7950	Income tax expense	6(29)	(	1,116,903)(	1,001,913)(	34,032 )
8200	Profit (loss) for the year		$	78,501 ($	223,013 )( $	7,575 )

(Continued)

~12~

F-150

EVERGREEN MARINE CORPORATION (TAIWAN) LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2019

(Expressed in thousands of New Taiwan dollars and United Stated dollars, except earnings per share)

	(Expressed in thousands of New	Taiwan d	o	llars	and United Stated d	ollars, except earnings per sha	ollars, except earnings per sha	ollars, except earnings per sha	re)
					For	the years ended December 31,
					2018			2019
	Items	Notes			NT$			NT$	US$
									(Unaudited)
									(Note 4)
	Other comprehensive income (loss)
	Components of other comprehensive
	income that will not be reclassified to
	profit or loss
8311	Losses on remeasurements of defined	6(17)
	benefit plans		($		32,228 )	(	$	133,101 ) ( $	4,521�
8316	Unrealised (losses) gains on valuation of	6(2)
	investments in equity instruments
	measured at fair value through other
	comprehensive income		(		316,044)			82,688	2,809
8320	Share of other comprehensive income of
	associates and joint ventures accounted for
	using equity method, components of other
	comprehensive income that will not be
	reclassified to profit or loss		(		44,100 )	(		11,977 ) (	407�
8349	Income tax related to components of other	6(29)
	comprehensive income that will not be
	reclassified to profit or loss				23,136			32,918	1,118
8310	Components of other comprehensive
	income that will not be reclassified to
	profit or loss		(		369,236)	(		29,472)(	1,001�
	Components of other comprehensive
	income that will be reclassified to profit or
	loss
8361	Exchange differences on translating the
	financial statements of foreign operations				839,342	(		918,876 ) (	31,212�
8368	Gains on hedging instrument	6(9)			-			460,138	15,630
8370	Share of other comprehensive income of
	associates and joint ventures accounted for
	using equity method				104,751			148,372	5,040
8399	Income tax relating to the components of	6(29)
	other comprehensive income (loss)				746	(		87,954)(	2,988�
8360	Components of other comprehensive
	income that will be reclassified to
	profit or loss				944,839	(		398,320)(	13,530�
8300	Other comprehensive income (loss) for the
	year, net of income tax			$	575,603	(	$	427,792)($	14,531�
8500	Total comprehensive income (loss) for the
	year			$	654,104	(	$	650,805)($	22,106�
	Profit (loss), attributable to:
8610	Owners of the parent			$	293,919		$	112,519 $	3,822
8620	Non-controlling interest		($		215,418)	(	$	335,532)($	11,397 �
	Comprehensive (loss) income attributable
	to:
8710	Owners of the parent			$	1,031,164	(	$	143,740)($	4,882�
8720	Non-controlling interest		($		377,060)	(	$	507,065)($	17,224�
	Basic earnings per share (in dollars)	6(30)
9750	Basic earnings per share			$	0.07		$	0.02$	0.0007
9850	Diluted earnings per share			$	0.07		$	0.02$	0.0007

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

~13~

F-151

											Non-controlling	interest Total equity		$ 3,290,236 $ 66,688,790	1,231 )( 4,227 )	3,289,005 66,684,563	215,418 ) 78,501	161,642 ) 575,603	377,060 ) 654,104		- -	- -	- ( 802,471 )	- 3,226,890		- 17,610		- 19,321		- -	55,857 55,857	1,155,804 1,111,962	$ 4,123,606 $ 70,967,836		$ 4,123,606 $ 70,967,836	335,532 ) ( 223,013 )	171,533 )( 427,792 )	507,065 )( 650,805 )		- -	- 3,333,934		- 17,066		- ( 4,074 )		67,474 ) ( 69,111 )	$ 3,549,067 $ 73,594,846
												Total		63,398,554	2,996) (	63,395,558	293,919 (	737,245 (	1,031,164 (		-	-	802,471)	3,226,890		17,610		19,321		-	-	43,842)	66,844,230		66,844,230	112,519 (	256,259) (	143,740) (		-	3,333,934		17,066		4,074)		1,637) (	70,045,779
														$																			$		$													$
									Gains (losses) on	effective portion Gains (losses) on	of cash flow hedging	hedges instruments		( $ 15,912 ) $ -	15,912( 15,912) (	-( 15,912)	- -	-( 42,737)	-( 42,737)		- -	- -	- - (	- -		- -		- -		- -	- -	- - (	$ -( $ 58,649)		$ -( $ 58,649)	- -	- 638,406 (	- 638,406 (		- -	- -		- -		- - (		- - (	$ - $ 579,757
EVERGREEN MARINE CORPORATION (TAIWAN) LTD. AND SUBSIDIARIES	CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY	FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2019	(Expressed in thousands of New Taiwan dollars and United Stated dollars)	Equity attributable to owners of the parent	Retained earnings Other equity interest	Unrealised gains	Financial (losses) from	statements financial assets	translation measured at fair Unrealised gain or	differences of value through other loss on available-	Unappropriated foreign comprehensive for-sale financial	Legal reserve retained earnings operations income assets		$ 4,985,031 $ 6,769,575 ( $ 1,135,114) $ - $ 1,833,339	- 276,681 - 1,553,662( 1,833,339)	4,985,031 7,046,256( 1,135,114) 1,553,662 -	- 293,919 - - -	- ( 71,341 ) 1,152,694 ( 301,371 ) -	- 222,578 1,152,694 ( 301,371 ) -		700,517 ( 700,517 ) - - -	- ( 2,006,178 ) - - -	- ( 802,471 ) - - -	- - - - -		- - - - -		- 3,537 - ( 4,628 ) -		- 13,438 - ( 13,438 ) -	- - - - -	- - - - -	$ 5,685,548 $ 3,776,643 $ 17,580 $ 1,234,225 $ -		$ 5,685,548 $ 3,776,643 $ 17,580 $ 1,234,225 $ -	- 112,519 - - -	- ( 197,673 )( 874,353) 177,361 -	- ( 85,154 )( 874,353) 177,361 -		29,392 ( 29,392 ) - - -	- - - - -		- - - - -		- ( 49 ) - 52 -		- ( 3,006 ) - - -	$ 5,714,940 $ 3,659,042( $ 856,773) $ 1,411,638 $ -	(Continued)	~14~
										Capital surplus,	additional paid-in	capital		$ 10,838,075	-	10,838,075	-	-	-		-	-	-	226,890		17,610		20,412		-	-	( 43,842)	$ 11,059,145		$ 11,059,145	-	-	-		-	333,934		17,066		( 4,077)		1,369	$ 11,407,437
												Common stock		$ 40,123,560	-	40,123,560	-	-	-		-	2,006,178	-	3,000,000		-		-		-	-	-	$ 45,129,738		$ 45,129,738	-	-	-		-	3,000,000		-		-		-	$ 48,129,738
												Notes		6(21)	6(21)	6(21)		6(21)		6(20)				6(18)(19)	6(19)		6(19)(20)	(21)	6(20)			6(19)(31)			6(21)		6(21)		6(20)		6(18)(19)	6(19)		6(19)(20)	(21)	6(19)(20)	(31)
													Year 2018— NT dollars	Balance at January 1, 2018	Retrospective application	Balance at 1 January after adjustments	Profit (loss) for the year	Other comprehensive income (loss) for the year	Total comprehensive income (loss)	Distribution of 2017 earnings:	Legal capital reserve	Stock dividends	Cash dividends	Issuance of common stock for cash	Cash capital increase reserved for employee	preemption	Adjustments to share of changes in equity of	associates and joint ventures	Disposal of investments in equity instruments	designated at fair value	Effect of business combination	Net change in non-controlling interests	Balance at December 31, 2018	Year 2019— NT dollars	Balance at January 1, 2019	Profit (loss) for the year	Other comprehensive income (loss) for the year	Total comprehensive income (loss)	Distribution of 2018 earnings:	Legal capital reserve	Issuance of common stock for cash	Cash capital increase reserved for employee	preemption	Adjustments to share of changes in equity of	associates and joint ventures	Net change in non-controlling interests		Balance at December 31, 2019

F-152

												Total equity		$ 2,410,592	7,575 )	14,531 )	22,106 )		-	113,245		580		138 )		2,348 )	$ 2,499,825
											Non-controlling	interest		$ 140,068	11,397 ) (	5,827 )(	17,224 )(		-	-		-		- (		2,291 )(	$ 120,553
												Total		$ 2,270,524	3,822 (	8,704) (	4,882) (		-	113,245		580		138)		57) (	$ 2,379,272
																(	(							(		(
									Gains (losses) on	effective portion Gains (losses) on	of cash flow hedging	hedges instruments		$ -( $ 1,992)	- -	- 21,685	- 21,685		- -	- -		- -		- -		- -	$ - $ 19,693
EVERGREEN MARINE CORPORATION (TAIWAN) LTD. AND SUBSIDIARIES	CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY	FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2019	(Expressed in thousands of New Taiwan dollars and United Stated dollars)	Equity attributable to owners of the parent	Retained earnings Other equity interest	Unrealised gains	Financial (losses) from	statements financial assets	translation measured at fair Unrealised gain or	differences of value through other loss on available-	Unappropriated foreign comprehensive for-sale financial	Legal reserve retained earnings operations income assets		$ 193,123 $ 128,283 $ 597 $ 41,923 $ -	- 3,822 - - -	- ( 6,714 )( 29,699) 6,024 -	- ( 2,892 )( 29,699) 6,024 -		998 ( 998 ) - - -	- - - - -		- - - - -		- ( 2 ) - 2 -		- ( 103 ) - - -	$ 194,121 $ 124,288( $ 29,102) $ 47,949 $ -	The accompanying notes are an integral part of these consolidated financial statements.	~15~
										Capital surplus,	additional paid-in	capital		$ 375,650	-	-	-		-	11,343		580		( 138)		46	$ 387,481
												Common stock		$ 1,532,940	-	-	-		-	101,902		-		-		-	$ 1,634,842
												Notes		6(21)		6(21)		6(20)		6(18)(19)	6(19)		6(19)(20)	(21)	6(19)(20)	(31)
													Year 2019— US dollars��(Note 4)	Balance at January 1, 2019	Profit (loss) for the year	Other comprehensive income (loss) for the year	Total comprehensive income (loss)	Distribution of 2018 earnings:	Legal capital reserve	Issuance of common stock for cash	Cash capital increase reserved for employee	preemption	Adjustments to share of changes in equity of	associates and joint ventures	Net change in non-controlling interests		Balance at December 31, 2019

F-153

EVERGREEN MARINE CORPORATION (TAIWAN) LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2019

(Expressed in thousands of New Taiwan dollars and United Stated dollars)

For the	years ended December 31, 2019 NT$ US$ (Unaudited) (Note 4) $ 778,900 $ 26,457 20,450,038 694,634 313,635 10,653 16,336 ) ( 555 ) 749,147 ) ( 25,447 ) 5,675,837 192,793 112,966 ) ( 3,837 ) - - 667,062 ) ( 22,658 ) - - 8,937 ) ( 304 ) 375,947 ) ( 12,770 ) 47,716 ) ( 1,621 ) 49,117 1,668 12,220 ) ( 415 ) 25,181 ) ( 855 ) 17,066 580 189 6 513,065 17,427 21,037 715 684,785 23,260 283,302 ) ( 9,623 ) 578,926 19,665 154,690 ) ( 5,254 ) 452,022 15,354 105,010 3,567 355,601 12,079 8,685 ) ( 295 ) 471,486 16,015 3,285,621 ) ( 111,604 ) 163,421 5,551 353,008 11,991 36,917 1,254 837,394 28,444 6,017 ) ( 204 ) 26,103,627 886,671 749,147 25,447 5,776,049 ) ( 196,197 ) 1,283,463 ) ( 43,596 ) 19,793,262 672,325	years ended December 31, 2019 NT$ US$ (Unaudited) (Note 4) $ 778,900 $ 26,457 20,450,038 694,634 313,635 10,653 16,336 ) ( 555 ) 749,147 ) ( 25,447 ) 5,675,837 192,793 112,966 ) ( 3,837 ) - - 667,062 ) ( 22,658 ) - - 8,937 ) ( 304 ) 375,947 ) ( 12,770 ) 47,716 ) ( 1,621 ) 49,117 1,668 12,220 ) ( 415 ) 25,181 ) ( 855 ) 17,066 580 189 6 513,065 17,427 21,037 715 684,785 23,260 283,302 ) ( 9,623 ) 578,926 19,665 154,690 ) ( 5,254 ) 452,022 15,354 105,010 3,567 355,601 12,079 8,685 ) ( 295 ) 471,486 16,015 3,285,621 ) ( 111,604 ) 163,421 5,551 353,008 11,991 36,917 1,254 837,394 28,444 6,017 ) ( 204 ) 26,103,627 886,671 749,147 25,447 5,776,049 ) ( 196,197 ) 1,283,463 ) ( 43,596 ) 19,793,262 672,325
2018 NT$ 1,195,404 8,803,540 69,348 1,473 ( 563,604 ) ( 1,880,424 109,996 ) ( 122,834 754,347 ) ( 138,571 ) - ( 1,510,330 ) ( - ( - 13,509 ) ( 8,131 ( 17,610 - 358,513 ) 85,537 ) 2,505,861 ) 299,056 ( 428,644 ) 98,659 ) ( 1,274,022 ) 189,060 ) 210,846 ) 47,085 ( 748,709 ) 3,779,538 ( 50,260 199,638 788,583 ) 1,178,807 ) 239,764 ) ( 5,276,979 563,604 2,019,771 ) ( 830,758 ) ( 2,990,054
	$ 778,900 20,450,038 313,635 16,336 ) 749,147 ) 5,675,837 112,966 ) - 667,062 ) - 8,937 ) 375,947 ) 47,716 ) 49,117 12,220 ) 25,181 ) 17,066 189 513,065 21,037 684,785 283,302 ) 578,926 154,690 ) 452,022 105,010 355,601 8,685 ) 471,486 3,285,621 ) 163,421 353,008 36,917 837,394 6,017 ) 26,103,627 749,147 5,776,049 ) 1,283,463 ) 19,793,262	(Unaudited) (Note 4) $ 26,457 694,634 10,653 ( 555 ) ( 25,447 ) 192,793 ( 3,837 ) - ( 22,658 ) - ( 304 ) ( 12,770 ) ( 1,621 ) 1,668 ( 415 ) ( 855 ) 580 6 17,427 715 23,260 ( 9,623 ) 19,665 ( 5,254 ) 15,354 3,567 12,079 ( 295 ) 16,015 ( 111,604 ) 5,551 11,991 1,254 28,444 ( 204 ) 886,671 25,447 ( 196,197 ) ( 43,596 ) 672,325

(Continued)

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EVERGREEN MARINE CORPORATION (TAIWAN) LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2019

(Expressed in thousands of New Taiwan dollars and United Stated dollars)

	For the	years ended December 31, 2019 NT$ US$ (Unaudited) (Note 4) $ 641,814 $ 21,801 - - - - 1,248,694 ) ( 42,415 ) 66 2 6,731,119 ) ( 228,638 ) 1,172,365 39,822 174,944 5,942 23,758 ) ( 807 ) 7,283 ) ( 247 ) 12,371,737 ) ( 420,236 ) - - - - 923,614 31,373 17,469,788 ) 593,403 200,000 6,793 200,000 ) ( 6,793 ) 477,872 ) ( 16,232 ) 32,954,862 1,119,391 24,186,530 ) ( 821,553 ) 11,628,066 ) ( 394,975 ) - - 69,111 ) ( 2,348 ) - - 13,068 ) ( 444 ) 3,333,934 113,245 - - 85,851 ) ( 2,916 ) 202,369 ) ( 6,874 ) 2,035,254 69,132 35,836,635 1,217,277 $ 37,871,889$ 1,286,409
	2018 NT$ 2,134,711 342,661 924 980,574 ) ( 43,904 10,065,416 ) ( 2,161,292 - 29,380 ) ( 7,295 ) ( 14,455,798 ) ( 5 2,635,830 ) 717,798 22,772,998 ) ( - - ( 939,354 ( 43,572,441 27,312,244 ) ( - ( 2,000,000 1,215,982 ( 1,050,945 ) 122,898 ( 3,226,890 802,471 ) 21,911,905 ( 72,892 ( 2,201,853 33,634,782 35,836,635
$		(Unaudited) (Note 4) $ 21,801 - - ( 42,415 ) 2 ( 228,638 ) 39,822 5,942 ( 807 ) ( 247 ) ( 420,236 ) - - 31,373 593,403 6,793 ( 6,793 ) ( 16,232 ) 1,119,391 ( 821,553 ) ( 394,975 ) - ( 2,348 ) - ( 444 ) 113,245 - ( 2,916 ) ( 6,874 ) 69,132 1,217,277 $ 1,286,409





$

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

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EVERGREEN MARINE CORPORATION (TAIWAN) LTD. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

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

1. HISTORY AND ORGANISATION

THE DATE OF AUTHORISATION FOR ISSUANCE OF THE CONSOLIDATED FINANCIAL

STATEMENTS AND PROCEDURES FOR AUTHORISATION

These consolidated financial statements were authorised for issuance by the Board of Directors on March 24, 2020.

3. APPLICATION OF NEW STANDARDS, AMENDMENTS AND INTERPRETATIONS

(1) Effect of the adoption of new issuances of or amendments to International Financial Reporting Standards (“IFRS”) as endorsed by the Financial Supervisory Commission (“FSC”) New standards, interpretations and amendments endorsed by the FSC effective from 2019 are as follows:

New standards, interpretations and amendments endorsed by the FSC follows:	effective from 2019 are a
NewStandards,Interpretations and Amendments	Effective date by International Accounting Standards Board
Amendments to IFRS 9, ‘Prepayment features with negative compensation’ IFRS 16, ‘Leases’ Amendments to IAS 19, ‘Plan amendment, curtailment or settlement’ Amendments to IAS 28, ‘Long-term interests in associates and joint ventures’ IFRIC 23, ‘Uncertainty over income tax treatments’ Annual improvements to IFRSs 2015-2017 cycle	January 1, 2019 January 1, 2019 January 1, 2019 January 1, 2019 January 1, 2019 January 1, 2019

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

A. IFRS 16, ‘Leases’

(a) IFRS 16, ‘Leases’, replaces IAS 17, ‘Leases’ and related interpretations and SICs. The standard requires lessees to recognise a 'right-of-use asset' and a lease liability (except for those leases with terms of 12 months or less and leases of low-value assets). The accounting stays the same for lessors, which is to classify their leases as either finance leases or operating leases and

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account for those two types of leases differently. IFRS 16 only requires enhanced disclosures to be provided by lessors.

(b) The Group has elected to apply IFRS 16 by not restating the comparative information (referred herein as the ‘modified retrospective approach’) when applying “IFRSs” effective in 2019 as endorsed by the FSC. Accordingly, the Group increased ‘right-of-use asset’ by $74,284,901 and ‘lease liability’ by $72,202,777, and decreased prepayments by $182,711, lease assets by $13,539,111 and lease payable (including current portion) by $11,639,698 with respect to the lease contracts of lessees on January 1, 2019.
(c) The Group has used the following practical expedients permitted by the standard at the date of initial application of IFRS 16:
i. Reassessment as to whether a contract is, or contains, a lease is not required, instead, the application of IFRS 16 depends on whether or not the contracts were previously identified as leases applying IAS 17 and IFRIC 4.
ii. The use of a single discount rate to a portfolio of leases with reasonably similar characteristics.
iii. The accounting for operating leases whose period will end before December 31, 2019 as short-term leases and accordingly, rent expense of $6,227,119 was recognised in 2019.
iv. The use of hindsight in determining the lease term where the contract contains options to extend or terminate the lease.
(d) The Group calculated the present value of lease liabilities by using the weighted average incremental borrowing interest rate range from 1% to 10%.
(e) The Group recognised lease liabilities which had previously been classified as ‘operating leases’ under the principles of IAS 17, ‘Leases’. The reconciliation between operating lease commitments under IAS 17 measured at the present value of the remaining lease payments, discounted using the lessee’s incremental borrowing rate and lease liabilities recognised as of January 1, 2019 is as follows:

January 1, 2019 is as follows:
Operating lease commitments disclosed by applying IAS 17 as at
December 31, 2018	$	130,964,797
Add: Lease payable recognised under finance lease by applying
IAS 17 as at December 31, 2018		11,639,698
Less: Short-term leases	(	3,550,755)
Less: Low-value assets	(	49,970)
Less: Contracts reassessed as service agreements	(	22,715,097)
Less: Lease contracts contracted but the construction not yet finished	(	33,049,430)
Add: Adjustments as a result of a different treatment of
extension and termination options		24,432
Total lease contracts amount recognised as lease liabilities by applying
IFRS 16 on January 1, 2019		83,263,675
Incremental borrowing interest rate at the date of initial application		1%~10%
Lease liabilities recognised as at January 1, 2019 by applying IFRS 16	$	72,202,777

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B. Amendments to IAS 19, ‘Plan amendment, curtailment or settlement’

When a change to a plan take place, the amendments require a company to use the updated assumptions from this remeasurement to determine current service cost and net interest for the remainder of the reporting period after the change to the plan.

C. Annual improvements to IFRSs 2015-2017 cycle
(a) Amendments to IFRS 3, ‘Business combinations’

The amendments clarified that obtaining control of a business that is a joint operation is a business combination achieved in stages. The acquirer should remeasure its previously held interest in the joint operation at fair value at of the acquisition date.

(b) Amendments to IAS 12, ‘Income taxes’

The amendment clarified that the income tax consequences of dividends on financial instruments classified as equity should be recognised according to where the past transactions or events that generated distributable profits were recognised. These requirements apply to all income tax consequences of dividends.

The amendments clarified that if a specific borrowing remains outstanding after the related qualifying asset is ready for its intended use or sale, it becomes part of general borrowings.

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

New standards, interpretations and amendments endorsed by the FSC effective from 2020 are as follows:

the Group New standards, interpretations and amendments endorsed by the FSC follows:	effective from 2020 are a
NewStandards,Interpretations and Amendments	Effective date by International Accounting Standards Board
Amendment to IAS 1 and IAS 8, ‘Disclosure Initiative-Definition of Material’ Amendments to IFRS 3, ‘Definition of a business’ Amendments to IFRS 9, IAS 39 and IFRS7 ,‘Interest rate benchmark reform’	January 1, 2020 January 1, 2020 January 1, 2020

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

A. Amendment to IAS 1 and IAS 8, ‘Disclosure Initiative-Definition of Material’

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B. Amendments to IFRS 9, IAS 39 and IFRS 7, ‘Interest rate benchmark reform’

(3) Effect of 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:
NewStandards,Interpretations and Amendments	Effective date by International Accounting Standards Board
Amendments to IFRS 10 and IAS 28, ‘Sale or contribution of assets between an investor and its associate or joint venture’ IFRS 17, ‘Insurance contracts’ Amendments to IAS 1, ‘Classification of liabilities as current or non- current’	To be determined by International Accounting Standards Board January 1, 2021 January 1, 2022

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

A. Amendments to IFRS 10 and IAS 28, ‘Sale or contribution of assets between an investor and its associate or joint venture’

(a) If sales or contributions of assets constitute a ‘business’, the full gain or loss is recognized;
(b) If sales or contributions of assets do not constitute a ‘business’, the partial gain or loss is recognised only to the extent of unrelated investors’ interests in the associate or joint venture.
B. Amendments to IAS 1, ‘Classification of liabilities as current or non-current’

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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(1) Compliance statement

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

(2) Basis of preparation
A. Except for the following items, the consolidated financial statements have been prepared under the historical cost convention:
- (a) Financial assets and financial liabilities (including derivative instruments) at fair value through profit or loss.
- (b) Financial assets at fair value through other comprehensive income.
- (c) Defined benefit liabilities recognised based on the net amount of pension fund assets less present value of defined benefit obligation.
B. The preparation of financial statements in conformity with IFRSs requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in Note 5.

(3) Basis of consolidation

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

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(e) When the Group loses control of a subsidiary, the Group remeasures any investment retained in the former subsidiary at its fair value. That fair value is regarded as the fair value on initial recognition of a financial asset or the cost on initial recognition of the associate or joint venture. Any difference between fair value and carrying amount is recognised in profit or loss. All amounts previously recognised in other comprehensive income in relation to the subsidiary are reclassified to profit or loss on the same basis as would be required if the related assets or liabilities were disposed of. That is, when the Group loses control of a subsidiary, all gains or losses previously recognised in other comprehensive income in relation to the subsidiary should be reclassified from equity to profit or loss, if such gains or losses would be reclassified to profit or loss when the related assets or liabilities are disposed of.
B. Subsidiaries included in the consolidated financial statements:

Name of Investor The Company The Company The Company The Company The Company Peony Peony Peony Peony Peony	Name of Subsidiary TTSC Peony ETS EGH EIL GMS Clove EMU EHIC(M) Armand N.V.	Main business activities Cargo loading and discharging Investments in transport-related business Terminal Services Container shipping and agency services dealing with port formalities Agency services dealing with port formalities Container shipping Investments in container yards and port terminals Container shipping Manufacturing of dry steel containers and container parts Investments in container yards and port terminals	December 31, December 31, 2018 2019 55.00 55.00 100.00 100.00 94.43 94.43 79.00 79.00 - 59.00 100.00 100.00 100.00 100.00 51.00 51.00 84.44 84.44 70.00 70.00 Ownership (%)	Description
			December 31, 2018 55.00 100.00 94.43 79.00 - 100.00 100.00 51.00 84.44 70.00
				(k) (j)

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Name of Investor Peony Peony Peony Peony Peony Peony Peony Peony Peony Peony Peony Peony Peony Peony Peony	Name of Subsidiary KTIL MBPI MBT EGS EGK EGT EGI EMA EIT EES ERU EEU EGD-WWX ESA EGB	Main business activities Loading, discharging, storage, repairs and cleaning of containers Containers storage and inspections of containers at the customs house Inland transportation, repairs and cleaning of containers Agency services dealing with port formalities Agency services dealing with port formalities Agency services dealing with port formalities Agency services dealing with port formalities Agency services dealing with port formalities Agency services dealing with port formalities Agency services dealing with port formalities Agency services dealing with port formalities Agency services dealing with port formalities Agency services dealing with port formalities Agency services dealing with port formalities Real estate leasing	December 31, December 31, 2018 2019 Ownership (%) 20.00 20.00 95.03 95.03 17.39 17.39 - - 100.00 100.00 85.00 85.00 99.99 99.99 100.00 100.00 55.00 55.00 100.00 100.00 51.00 51.00 100.00 100.00 - - 55.00 55.00 95.00 95.00	Description
			December 31, 2018 20.00 95.03 17.39 - 100.00 85.00 99.99 100.00 55.00 100.00 51.00 100.00 - 55.00 95.00
				(i) (a) (b) (b)

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Name of Investor Peony Peony Peony EGH EGH EGH EGH EGH EGH EGH EGH EGH EGH EGH	Name of Subsidiary EGM EGH EGV Ever shine (Shanghai) Ever shine (Ningbo) EKH EPE ECO ECL EMX EGRC HMH Ever shine (Shenzhen) Ever shine (Qingdao)	Main business activities Agency services dealing with port formalities Container shipping and agency services dealing with port formalities Agency services dealing with port formalities Management consultancy and self-owned property leasing Management consultancy and self-owned property leasing Agency services dealing with port formalities Agency services dealing with port formalities Agency services dealing with port formalities Agency services dealing with port formalities Agency services dealing with port formalities Agency services dealing with port formalities Agency services dealing with port formalities Management consultancy and self-owned property leasing Management consultancy and self-owned property leasing	December 31, December 31, 2018 2019 Ownership (%) 100.00 100.00 1.00 1.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 60.00 60.00 100.00 75.00 60.00 60.00 60.00 60.00 - 60.00 - - 100.00 100.00 100.00 100.00	Description
			December 31, 2018 100.00 1.00 100.00 100.00 100.00 100.00 60.00 100.00 60.00 60.00 - - 100.00 100.00
				(l) (d) (e) (f) (g) (c) (h) (h) (h)

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Name of Investor EGH EGH EGH ETS EMU Clove Armand N.V. MBPI	Name of Subsidiary MAC KTIL EIL Whitney KTIL ETS Armand B.V. MBT	Main business activities Agency services dealing with port formalities Loading, discharging, storage, repairs and cleaning of containers Agency services dealing with port formalities Investments and leases of operating machinery and equipment of port terminals Loading, discharging, storage, repairs and cleaning of containers Terminal Services Investments in container yards and port terminals Inland transportation, repairs and cleaning of containers	December 31, December 31, 2018 2019 Ownership (%) 49.00 52.00 20.00 20.00 - 1.00 100.00 100.00 20.00 20.00 5.57 5.57 100.00 100.00 72.95 72.95	Description
			December 31, 2018 49.00 20.00 - 100.00 20.00 5.57 100.00 72.95
				(h)�(m) (h) (j) (k) (k)

(a) On December 21, 2018, the Board of Directors resolved to have the subsidiary, Peony Investment, acquire 32.5% of the shares of EMA from non-controlling interest. The effective date of ownership transfer was December 28, 2018.
(b) The proposal of reorganisation of the subsidiary, Peony, has been approved by the Board of Directors on May 12, 2017 to transfer EGDW’s business to the sub-subsidiary, EEU, beginning on August 1, 2017. The liquidation process of EGDW was completed by June 12, 2018.
(c) On December 21, 2018, the Board of Directors of the subsidiary, EGH, resolved to establish a subsidiary, EGRC, in Greece. The capital for establishment is EUR 400 (approx. USD 450), and the subsidiary is primarily engaged in container shipping and agency services dealing with port formalities.
(d) On July 31, 2018, the Board of Directors of the subsidiary, EGH, resolved to establish a subsidiary, EPE, in Peru. The capital for establishment is PEN 1,500 (approx. USD 462), and the subsidiary is primarily engaged in container shipping and agency services dealing with port formalities.

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(e) On August 14, 2018, the Board of Directors of the subsidiary, EGH, resolved to establish a subsidiary, ECO, in Columbia. The capital for establishment is COP 80,000 (approx. USD 27), and the subsidiary is primarily engaged in container shipping and agency services dealing with port formalities. However, EGH did not participate in the capital increase and EGH’s share interest was decreased to 75%.
(f) On October 1, 2018, the Board of Directors of the subsidiary, EGH, resolved to establish a subsidiary, ECL, in Chile. The capital for establishment is CLP 350,000 (approx. USD 531), and the subsidiary is primarily engaged in container shipping and agency services dealing with port formalities.
(g) On October 15, 2018, the Board of Directors of the subsidiary, EGH, resolved to establish a subsidiary, EMX, in Mexico. The capital for establishment is MXN 7,400 (approx. USD 382), and the subsidiary is primarily engaged in container shipping and agency services dealing with port formalities.
(h) On August 13, 2018, shareholders of the subsidiary, EGH, during their meeting resolved to make an equity transaction. EGH acquired a 100% equity interest of HMH and its indirect investees, wholly-owned Ever Shine (Shenzhen), wholly-owned Ever Shine (Qingdao), 49% owned MAC and 20% owned KTIL from other related party, Chestnut Estate B.V.. The transaction amount was US $105,808. The applicable transactions were approved by the Investment Commission of the Ministry of Economic Affairs. The acquisition date was December 14, 2018. On December 21, 2018, shareholders of EGH during their meeting resolved to merge its subsidiary, HMH. EGH will be the surviving companies and HMH will be dissolved after the merger. The liquidation process of HMH was completed by January 10, 2020.
(i) The liquidation process of the sub-subsidiary, EGS was completed by December 19, 2018.
(j) On March 22, 2019, the Board of Directors of the Company and the subsidiary, EGH, resolved to establish a subsidiary, EIL, in Israel. The capital for establishment is ILS 1,800 (approx. USD 500), and the subsidiary is primarily engaged in container shipping and agency services dealing with port formalities.
(k) On December 20, 2017, shareholders of the subsidiary, ETS, during their meeting resolved to make an equity transaction. ETS acquired a 100% equity interest of Island from the joint ventures, Clove and EMU, of which the transaction made with Clove is through issuing new shares totaling 59 shares with par value of US$100 per share in exchange for a 36% equity interest of Island with Clove. On January 1, 2018, shareholders of ETS during their meeting resolved to merge its subsidiary, Island, and its second-tier subsidiaries, Hemlock and Whitney, when the equity transaction made with Clove and EMU was completed. Under the merger, ETS and Whitney are the surviving companies, and Island and Hemlock will be dissolved.

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(l) On December 20, 2017, the Board of Directors resolved to have the subsidiary, Peony Investment, acquire 51% of the shares of EGV from the original shareholders. The effective date of ownership transfer was January 1, 2018.
(m) On October 28, 2019, shareholders of the subsidiary, EGH, during their meeting resolved to make an equity transaction. EGH acquired the 3% ownership of MAC from Ningbo Jiang Dong Ever Elite Investment Consulting Ltd.. The transaction amount was CNY $150. The applicable transactions were approved by the Investment Commission of the Ministry of Economic Affairs. The acquisition date was December 10, 2019.
C. Subsidiary not included in the consolidated financial statements: None.
D. Adjustments for subsidiaries with different balance sheet dates: None.
E. Significant restrictions: None.
F. Subsidiaries that have non-controlling interests that are material to the Group:
As of December 31, 2018 and 2019, the non-controlling interest amounted to $4,123,606 and, $3,549,067 respectively. The information of non-controlling interest and respective subsidiaries is as follows:

as follows:
Name of subsidiary	Principal place of business U.K. Hong Kong	Ownership Ownership Amount (%) Amount (%) 1,469,422 $ 49% 768,414 $ 49% 1,903,321 20% 2,021,999 20% Non-controllinginterest December 31,2019 December 31,2018		Description
		Ownership Amount (%) 1,469,422 $ 49% 1,903,321 20% December 31,2018
		Amount 1,469,422 $ 1,903,321	Amount 768,414 $ 2,021,999
EMU EGH

Summarised financial information of the subsidiaries:

Balance sheets

Balance sheets
			EMU
		December 31,2018		December 31,2019
Current assets	$		9,362,266	$	6,866,440
Non-current assets			37,184,025		46,043,283
Current liabilities	(		17,239,612)	(	16,584,869)
Non-current liabilities	(		26,307,858)	(	34,756,663)
Total net assets	$		2,998,821	$	1,568,191
			EGH
		December 31,2018		December 31,2019
Current assets	$		9,396,355	$	12,300,364
Non-current assets			21,515,148		29,181,330
Current liabilities	(		8,315,106)	(	12,496,762)
Non-current liabilities	(		13,383,103)	(	19,659,040)
Total net assets	$		9,213,294	$	9,325,892

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Statements of comprehensive income

Statements of comprehensive income
			EMU
			Year ended			Year ended
		December 31,2018			December 31,2019
Revenue	$		50,304,493	$		42,008,989
Loss before income tax	($		1,297,028)	($		1,366,023)
Income tax expense	(		23,795)	(		26,245)
Loss for the period from
continuing operations	(		1,320,823)	(		1,392,268)
Other comprehensive (loss) income,
net of tax			7,518	(		6,763)
Total comprehensive loss for the period	($		1,313,305)	($		1,399,031)
Comprehensive loss attributable
to non-controlling interest	($		643,519)	($		685,525)
			EGH
			Year ended			Year ended
		December 31,2018			December 31,2019
Revenue	$		11,014,069	$		27,131,993
Profit before income tax	$		1,194,785	$		720,884
Income tax expense	(		215,462)	(		454,748)
Profit for the period
from continuing operations			979,323			266,136
Other comprehensive loss, net of tax	(		2,263)			-
Total comprehensive income
for the period	$		977,060	$		266,136
Comprehensive income attributable
to non-controlling interest	$		195,412	$		53,227
Statements of cash flows
			EMU
			Year ended			Year ended
		December 31,2018			December 31,2019
Net cash provided by (used in)
operating activities	($		953,448)	$		3,346,892
Net cash (used in) provided by
investing activities			1,098,202	(		949,263)
Net cash used in financing activities	(		256,283)	(		2,541,998)
Effect of exchange rates on cash
and cash equivalents			58,194	(		32,005)
Decrease in cash and cash equivalents	(		53,335)	(		176,374)
Cash and cash equivalents,
beginning of period			1,840,693			1,787,358
Cash and cash equivalents, end of period	$		1,787,358	$		1,610,984

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EGH

			Year ended		Year ended
		December 31,2018		December 31, 2019
Net cash provided by operating activities	$		2,565,400	$	4,638,610
Net cash used in investing activities	(		12,950,639)	(	7,349,565)
Net cash provided by financing activities			12,471,803		4,207,514
Effect of exchange rates on cash
and cash equivalents			75,867	(	119,673)
Increase in cash and cash equivalents			2,162,431		1,376,886
Cash and cash equivalents,
beginning of period			1,003,634		3,166,065
Cash and cash equivalents, end of period	$		3,166,065	$	4,542,951

(4) Foreign currency translation

A. Foreign currency transactions and balances
(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, except when deferred in other comprehensive income as qualifying cash flow hedges and qualifying net investment hedges.
(b) Monetary assets and liabilities denominated in foreign currencies at the period end are retranslated at the exchange rates prevailing at the balance sheet date. Exchange differences arising upon re-translation 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 re-translated at the exchange rates prevailing at the balance sheet date; their translation differences are recognised in other comprehensive income. However, nonmonetary assets and liabilities denominated in foreign currencies that are not measured at fair value are translated using the historical exchange rates at the dates of the initial transactions.
(d) All other foreign exchange gains and losses based on the nature of those transactions are presented in the statement of comprehensive income within ‘other gains and losses’.
B. Translation of foreign operations
(a) The operating results and financial position of all the group entities and associates that have a functional currency different from the presentation currency are translated into the presentation currency as follows:

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     - i. Assets and liabilities for each balance sheet presented are translated at the closing exchange rate at the date of that balance sheet;

     - ii. Income and expenses for each statement of comprehensive income are translated at average exchange rates of that period; and

     - iii. All resulting exchange differences are recognised in other comprehensive income.

  - (b) When the foreign operation partially disposed of or sold is an associate, exchange differences that were recorded in other comprehensive income are proportionately reclassified to profit or loss as part of the gain or loss on sale. In addition, even when the Group retains partial interest in the former foreign associate after losing significant influence over the former foreign associate, such transactions should be accounted for as disposal of all interest in these foreign operations.

  - (c) When the foreign operation partially disposed of or sold is a subsidiary, cumulative exchange differences that were recorded in other comprehensive income are proportionately transferred to the non-controlling interest in this foreign operation. In addition, even when the Group retains partial interest in the former foreign subsidiary after losing control of the former foreign subsidiary, such transactions should be accounted for as disposal of all interest in the foreign operation.

  - (d) Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing exchange rates at the balance sheet date.

(5) Classification of current and non-current items
A. Assets that meet one of the following criteria are classified as current assets; otherwise they are classified as non-current assets:
- (a) Assets arising from operating activities that are expected to be realised, or are intended to be sold or consumed within the normal operating cycle;
- (b) Assets held mainly for trading purposes;
- (c) Assets that are expected to be realised within twelve months from the balance sheet date;
- (d) Cash and cash equivalents, excluding restricted cash and cash equivalents and those that are to be exchanged or used to settle liabilities more than twelve months after the balance sheet date.
B. Liabilities that meet one of the following criteria are classified as current liabilities; otherwise they are classified as non-current liabilities:
- (a) Liabilities that are expected to be settled within the normal operating cycle;
- (b) Liabilities arising mainly from trading activities;
- (c) Liabilities that are to be settled within twelve months from the balance sheet date;
- (d) Liabilities for which the repayment date cannot be extended unconditionally to more than twelve months after the balance sheet date. Terms of a liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not affect its classification.

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(6) Cash equivalents

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

A. Financial assets at fair value through profit or loss are financial assets that are not measured at amortised cost or fair value through other comprehensive income.
B. On a regular way purchase or sale basis, financial assets at fair value through profit or loss are recognised and derecognised using trade date accounting.
C. At initial recognition, the Group measures the financial assets at fair value and recognises the transaction costs in profit or loss. The Group subsequently measures the financial assets at fair value, and recognises the gain or loss in profit or loss.
D. The Group recognises the dividend income when the right to receive payment is established, future economic benefits associated with the dividend will flow to the Group and the amount of the dividend can be measured reliably.

(8) Financial assets at fair value through other comprehensive income

A. Financial assets at fair value through other comprehensive income comprise equity securities which are not held for trading, and for which the Group has made an irrevocable election at initial recognition to recognise changes in fair value in other comprehensive income and debt instruments which meet all of the following criteria:
(a) The objective of the Group’s business model is achieved both by collecting contractual cash flows and selling financial assets; and
(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 fair value through other comprehensive income are recognised and derecognised using trade date accounting.
C. At initial recognition, the Group measures the financial assets at fair value plus transaction costs. The Group subsequently measures the financial assets at fair value:
(a) The changes in fair value of equity investments that were recognised in other comprehensive income are reclassified to retained earnings and are not reclassified to profit or loss following the derecognition of the investment. Dividends are recognised as other income when the right to receive payment is established, future economic benefits associated with the dividend will flow to the Group and the amount of the dividend can be measured reliably.
(b) Except for the recognition of impairment loss, interest income and gain or loss on foreign exchange which are recognised in profit or loss, the changes in fair value of debt instruments are taken through other comprehensive income. When the financial asset is derecognised, the cumulative gain or loss previously recognised in other comprehensive income is reclassified from equity to profit or loss.

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(9) 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.
D. The Group’s time deposits which do not fall under cash equivalents are those with a short maturity period and are measured at initial investment amount as the effect of discounting is immaterial.
(10) Notes, accounts and other receivables
A. Notes and account receivable entitle the Group a legal right to receive consideration in exchange for transferred goods or rendered services. Receivables arising from transactions other than the sale of goods or service are classified as other receivables.
B. The short-term notes receivable, accounts receivable and other receivable without bearing interest are subsequently measured at initial invoice amount as the effect of discounting is immaterial.

(11) Impairment of financial assets

(12) Derecognition of financial assets

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

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

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- (13) Operating leases (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.

(14) Inventories

(15) Investments accounted for using equity method / associates
A. Associates are all entities over which the Group has significant influence but not control. In general, it is presumed that the investor has significant influence, if an investor holds, directly or indirectly 20 percent or more of the voting power of the investee. Investments in associates are accounted for using the equity method and are initially recognised at cost.
B. The Group’s share of its associates’ post-acquisition profits or losses is recognised in profit or loss, and its share of post-acquisition movements in other comprehensive income is recognised in other comprehensive income. When the Group’s share of losses in an associate equals or exceeds its interest in the associate, including any other unsecured receivables, the Group does not recognise further losses, unless it has incurred legal or constructive obligations or made payments on behalf of the associate.
C. When changes in an associate’s equity that are not recognised in profit or loss or other comprehensive income of the associate and such changes not affecting the Group’s ownership percentage of the associate, the Group recognises the Group’s share of change in equity of the associate in ‘capital surplus’ in proportion to its ownership.
D. Unrealised gains and loss on transactions between the Group and its associates are eliminated to the extent of the Group’s interest in the associates. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of associates have been adjusted where necessary to ensure consistency with the policies adopted by the Group.

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E. In the case that an associate issues new shares and the Group does not subscribe or acquire new shares proportionately, which results in a change in the Group’s ownership percentage of the associate but maintains significant influence on the associate, then ‘capital surplus’ and ‘investments accounted for using equity method’ shall be adjusted for the increase or decrease of its share of equity interest. If the above condition causes a decrease in the Group’s ownership percentage of the associate, in addition to the above adjustment, the amounts previously recognised in other comprehensive income in relation to the associate are reclassified to profit or loss proportionately on the same basis as would be required if the relevant assets or liabilities were disposed of.
F. Upon loss of significant influence over an associate, the Group remeasures any investment retained in the former associate at its fair value. Any difference between fair value and carrying amount is recognised in profit or loss.
G. When the Group disposes its investment in an associate and 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 retains significant influence over this associate, 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.
H. When the Group disposes its investment in an associate and loses significant influence over this associate, the amounts previously recognised as capital surplus in relation to the associate are transferred to profit or loss. If it still retains significant influence over this associate, then the amounts previously recognised as capital surplus in relation to the associate are transferred to profit or loss proportionately.
(16) Property, plant and equipment
A. Property, plant and equipment are initially recorded at cost. Borrowing costs incurred during the construction period are capitalised.
B. Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are charged to profit or loss during the financial period in which they are incurred.
C. Land is not depreciated. Other property, plant and equipment apply cost model and are depreciated using the straight-line method to allocate their cost over their estimated useful lives. Each part of an item of property, plant, and equipment with a cost that is significant in relation to the total cost of the item must be depreciated separately.

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D. The assets’ residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each financial year-end. 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:

Buildings 20 ~ 135 years Loading and unloading equipment 5 ~ 20 years Ships (Except for docking repair and scrubber) 10 ~ 25 years Ship (Docking repair) 2.5 ~ 25 years Ship (Scrubber) 6 ~ 10 years Transportation equipment 6 ~ 10 years Lease assets 2 ~ 90 years Other equipment 1.5 ~ 20 years

The ships (Docking repair and Scrubber) mentioned above are significant components of ships.

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

Effective 2019

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

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

(18) Leased assets/ operating leases (lessee)

Prior to 2019

A. Based on the terms of a lease contract, a lease is classified as a finance lease if the Group assumes substantially all the risks and rewards incidental to ownership of the leased asset.
(a) A finance lease is recognised as an asset and a liability at the lease’s commencement at the lower of the fair value of the leased asset or the present value of the minimum lease payments.
(b) The minimum lease payments are apportioned between the finance charges and the reduction of the outstanding liability. The finance charges are allocated to each period over the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability.
(c) Property, plant and equipment held under finance leases are depreciated over their estimated useful lives. If there is no reasonable certainty that the Group will obtain ownership at the end of the lease, the asset shall be depreciated over the shorter of the lease term and its useful life.
B. Payments made under an operating lease (net of any incentives received from the lessor) are recognised in profit or loss on a straight-line basis over the lease term.
C. The accounting treatment of sale and leaseback transactions depends on the substance of the transaction. If sale and finance leaseback is in substance a financing transaction, the difference between the sales proceeds and the carrying value of the asset is deferred and amortised to the income statement over the lease term. If the sale price is below the fair value, the difference between sale price and carrying amount should be recognised immediately except that, if a loss arising is compensated by future rent at below market price, it should be deferred and amortised in proportion to the rent payments over the period for which the asset is expected to be used. If the sale price is above the fair value, the excess of proceeds over fair value should be deferred and amortised over the period for which the asset is expected to be used.

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(19) Investment property

(20) Intangible assets

A. Computer software

Computer software is stated at cost and amortised on a straight-line basis over its estimated useful life of 3 years.

B. Goodwill

Goodwill arises in a business combination accounted for by applying the acquisition method.

C. Customer relationship

(21) Impairment of non-financial assets

(22) Borrowings

A. Borrowings comprise long-term and short-term bank borrowings and other long-term and shortterm loans. 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.
B. Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw-down occurs. To the extent there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalised as a pre-payment for liquidity services and amortised over the period of the facility to which it relates.

(23) Accounts payable

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

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(24) Financial liabilities at fair value through profit or loss

A. Financial liabilities are classified in this category of held for trading if acquired principally for the purpose of repurchasing in the short-term. Derivatives are also categorised as financial liabilities held for trading unless they are designated as hedges or financial liabilities at fair value through profit or loss. Financial liabilities that meet one of the following criteria are designated as at fair value through profit or loss at initial recognition:
- (a) Hybrid (combined) contracts; or
- (b) They eliminate or significantly reduce a measurement or recognition inconsistency; or
- (c) They are managed and their performance is evaluated on a fair value basis, in accordance with a documented risk management policy.
B. At initial recognition, the Group measures the financial liabilities at fair value. All related transaction costs are recognised in profit or loss. The Group subsequently measures these financial liabilities at fair value with any gain or loss recognised in profit or loss.
(25) Bonds payable
Ordinary corporate bonds issued by the Group are initially recognised at fair value less transaction costs. Any difference between the proceeds (net of transaction costs) and the redemption value is presented as an addition to or deduction from bonds payable, which is amortised to profit or loss over the period of bond circulation using the effective interest method as an adjustment to ‘finance costs’.
(26) Derecognition of financial liabilities

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

(27) Offsetting financial instruments

(28) Hedge accounting

A. At the inception of the hedging relationship, there is formal designation and documentation of the hedging relationship and the Group’s risk management objective and strategy for undertaking the hedge. That documentation shall include identification of the hedging instrument, the hedged item, the nature of the risk being hedged and how the Group will assess whether the hedging relationship meets the hedge effectiveness requirements.
B. The Group designates the hedging relationship as follows: Cash flow hedge:

A hedge of the exposure to variability in cash flows that is attributable to a particular risk associated with a recognised asset or liability or a highly probable forecast transaction.

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C. Cash flow hedges

(a) The cash flow hedge reserve associated with the hedged item is adjusted to the lower of the following (in absolute amounts):
i. the cumulative gain or loss on the hedging instrument from inception of the hedge; and
ii. the cumulative change in fair value of the hedged item from inception of the hedge.
(b) The effective portion of the gain or loss on the hedging instrument is recognised in other comprehensive income. The gain or loss on the hedging instrument relating to the ineffective portion is recognised in profit or loss.
(c) The amount that has been accumulated in the cash flow hedge reserve in accordance with (a) is accounted for as follows:
i. If a hedged forecast transaction subsequently results in the recognition of a non-financial asset or non-financial liability, or a hedged forecast transaction for a non-financial asset or non-financial liability becomes a firm commitment for which fair value hedge accounting is applied, the Group shall remove that amount from the cash flow hedge reserve and include it directly in the initial cost or other carrying amount of the asset or liability.
ii. For cash flow hedges other than those covered by item i. above, that amount shall be reclassified from the cash flow hedge reserve to profit or loss as a reclassification adjustment in the same period or periods during which the hedged expected future cash flows affect profit or loss.
iii. If that amount is a loss and the Group expects that all or a portion of that loss will not be recovered in one or more future periods, it shall immediately reclassify the amount that is not expected to be recovered into profit or loss as a reclassification adjustment.
(d) When the hedging instrument expires, or is sold, terminated, exercised or when the hedging relationship ceases to meet the qualifying criteria, if the forecast transaction is still expected to occur, the amount that has been accumulated in the cash flow hedge reserve shall remain in the cash flow hedge reserve until the forecast transaction occurs; if the forecast transaction is no longer expected to occur, the amount shall be immediately reclassified from the cash flow hedge reserve to profit or loss as a reclassification adjustment.

(29) Employee benefits

A. Short-term employee benefits

B. Pensions

(a) Defined contribution plans

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(b) Defined benefit plans
- i. Net obligation under a defined benefit plan is defined as the present value of an amount of pension benefits that employees will receive on retirement for their services with the Group in current period or prior periods. The liability recognised in the balance sheet in respect of defined benefit pension plans is the present value of the defined benefit obligation at the balance sheet date less the fair value of plan assets. The net defined benefit 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 high-quality corporate bonds that are denominated in the currency in which the benefits will be paid, and that have terms to maturity approximating to the terms of the related pension liability; when there is no deep market in high-quality corporate bonds, the Group uses interest rates of government bonds (at the balance sheet date) instead.
- ii. Remeasurements 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

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

(30) 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.

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B. The current income tax expense is calculated on the basis of the tax laws enacted or substantively enacted at the balance sheet date in the countries where the Company and its subsidiaries operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in accordance with applicable tax regulations. It establishes provisions where appropriate based on the amounts expected to be paid to the tax authorities. An additional tax is levied on the unappropriated retained earnings and is recorded as income tax expense in the year the stockholders resolve to retain the earnings.
C. Deferred income tax is recognised, using the balance sheet liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated balance sheet. Deferred income tax is provided on temporary differences arising on investments in subsidiaries and associates, except where the timing of the reversal of the temporary difference is controlled by the Group and it is probable that the temporary difference will not reverse in the foreseeable future. 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 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 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.
(31) 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.

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(32) Revenue recognition

A. Sales of goods
Revenue is measured at the fair value of the consideration received or receivable taking into account of business tax, returns, rebates and discounts for the sale of goods to external customers in the ordinary course of the Group’s activities. Revenue arising from the sales of goods is recognised when the Group has delivered the goods to the customer, the amount of sales revenue can be measured reliably and it is probable that the future economic benefits associated with the transaction will flow to the entity. The delivery of goods is completed when the significant risks and rewards of ownership have been transferred to the customer, the Group retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold, and the customer has accepted the goods based on the sales contract or there is objective evidence showing that all acceptance provisions have been satisfied.
B. Sales of services

Revenue from delivering services is recognised under the percentage-of-completion method when the outcome of services provided can be estimated reliably. The stage of completion of a service contract is measured by the percentage of the actual services performed as of the financial reporting date to the total services to be performed. If the outcome of a service contract cannot be estimated reliably, contract revenue should be recognised only to the extent that contract costs incurred are likely to be recoverable. 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.

C. Rental revenue

The Group leases ships and shipping spaces under IAS 17, ‘Leases’ and IFRS 16, ‘Leases’. Lease assets are classified as finance leases or operating leases based on the transferred proportion of the risks and rewards incidental to ownership of the leased asset, and recognised in revenue over the lease term.

(33) Business combinations

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

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measured at the acquisition-date fair value.

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

(34) Operating segments

(35) Convenience conversion into U.S dollars

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

UNCERTAINTY

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

None.

(2) Critical accounting estimates and assumptions

A. Revenue recognition

Revenue from delivering services and related costs are recognised under the percentage-ofcompletion method when the outcome of services provided can be estimated reliably. The stage of completion of a service contract is measured by the percentage of the actual services performed as of the financial reporting date to the total services to be performed.

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B. Impairment assessment of tangible assets

As of December 31, 2019, the Group recognised property, plant, equipment and right-of-use asset amounting to $100,150,433 and $69,466,851, respectively.

6. DETAILS OF SIGNIFICANT ACCOUNTS

(1) Cash and cash equivalents

TAILS OF SIGNIFICANT ACCOUNTS Cash and cash equivalents
Cash on hand and petty cash Checking accounts and demand deposits Time deposits	December 31,2018 22,713 $ 7,192,906 28,621,016 35,836,635 $	December 31,2019
		28,964 $ 6,903,864 30,939,061
		37,871,889 $

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

(2) Financial assets at fair value through other comprehensive income

Items Non-current items: Equity instruments Listed (TSE) stocks Unlisted stocks Valuation adjustment	December 31, 2018 490,801 $ 211,476 702,277 948,095 1,650,372 $	December 31,2019
		490,801 $ 208,570
		699,371 1,020,052
		1,719,423 $

A. The Group has elected to classify these investments that are considered to be strategic investments as financial assets at fair value through other comprehensive income. The fair value of such investments amounted to $1,650,372 and $1,719,423 as at December 31, 2018 and 2019, respectively.
B. For the year ended December 31, 2018, for the consideration of operations, the Group sold shares of listed stocks with a fair value of $342,661, of which a cumulative disposal gain of $13,332 was recognised.

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C. For the year ended December 31, 2018, for the consideration of operations, the Group acquired 11.1074% of the unlisted shares of Ics Depot Services Snd. Bhd. from other related parties. As a result, the Group directly and indirectly hold its 28.65% shares. Because of having significant influence on it, the Group transferred this target to investments accounted for using equity method according to fair value and reclassified the recognised unrealised gains or losses on valuation of investments in equity instruments measured at fair value through other comprehensive income to retained earnings amounting to $111.
D. Amounts recognised in profit or loss and other comprehensive income in relation to the financial assets at fair value through other comprehensive income are listed below:

Equity instruments at fair value through other comprehensive income Fair value change recognised in other comprehensive income Income tax recognised in other comprehensive income Cumulative gains reclassified to retained earnings due to derecognition Dividend income recognised in profit or loss held at end of period	Year ended December 31,2018 316,044) ($ 6,210 $ 13,438 $ 99,467 $	Year ended December 31,2019
		82,688 $

		7,716 $
		- $
		112,966 $

E. Information relating to fair value of financial assets at fair value through other comprehensive income is provided in Note 12(3).
(3) Financial assets at amortised cost

income is provided in Note 12(3). Financial assets at amortised cost
Items Current items: Time deposits exceeding 3 months Pledged time deposits Non-current items: Financial bonds	December 31,2018 2,393,887 $ 271,721 2,665,608 $ 100,000 $	December 31,2019
		1,727,796 $ 290,740
		2,018,536 $
		100,000 $

A. Amounts recognised in profit or loss in relation to financial assets at amortised cost are listed below:

below:
Interest income	Year ended December 31,2018 36,077 $	Year ended December 31,2019
		43,028 $

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B. As at December 31, 2018 and 2019, without taking into account any collateral held or other credit enhancements, the maximum exposure to credit risk in respect of the amount that best represents the financial assets at amortised cost held by the Group was $2,765,608 and $2,118,536, respectively.
C. Details of the Group’s financial assets at amortised cost pledged to others as collateral are provided in Note 8.
D. Information relating to credit risk of financial assets at amortised cost is provided in Note 12(2).
(4) Notes and accounts receivable

Notes and accounts receivable
Notes receivable Less: Allowance for bad debts ( Accounts receivable (including related parties) Less: Allowance for bad debts ( Overdue receivables (recorded as other non-current assets) Less: Allowance for bad debts (	December 31,2018 154,299 $ 4) ( 154,295 $ 15,613,317 $ 96,468) ( 15,516,849 $ 202,654 $ 202,654) ( - $	December 31,2019
		129,547 $ 2)
		129,545 $
		14,772,158 $ 12,345)
		14,759,813 $
		269,506 $ 269,506)
		- $

A. The ageing analysis of accounts receivable and notes receivable are as follows:

Not past due Up to 30 days 31 to 180 days Over 180 days Not past due Up to 30 days 31 to 180 days	December 31,2018 Accounts receivable 12,448,692 $ 2,694,557 470,068 202,654 15,815,971 $ December 31,2018 Notes receivable 154,299 $ - - 154,299 $	December 31,2019 Accounts receivable 12,094,901 $ 2,450,297 226,960 269,506 15,041,664 $ December 31,2019 Notes receivable 129,547 $ - - 129,547 $

The above ageing analysis was based on past due date.

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B. As of January 1, 2018, December 31, 2018 and, December 31, 2019 the balances of receivables (including notes receivable) from contracts with customers amounted to $14,855,913, $14,202,068 and, $13,084,484 respectively.
C. The Group has no notes and accounts receivable held by the Group pledged to others.
D. As at December 31, 2018 and 2019, 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 Group’s notes receivable were $154,295 and $129,545 respectively; and the amount that best represents the Group’s accounts receivable were $15,516,849 and, $14,759,813 respectively.
E. Information relating to credit risk of notes receivable and accou nts receivable is provided in Note 12(2).

(5) Inventories

in Note 12(2). Inventories
Ship fuel Steel and others Ship fuel Steel and others		December 31,2018
	Cost 4,715,175 $ 385,722 5,100,897 $	Allowance for valuation loss - $ - - $ December 31,2019	Book value
			4,715,175 $ 385,722
			5,100,897 $

	Cost 4,273,258 $ 274,661 4,547,919 $	Allowance for valuation loss - $ - - $	Book value
			4,273,258 $ 274,661
			4,547,919 $

(6) Other current assets

Other current assets
Shipowner's accounts Agency accounts Temporary debits	December 31,2018 624,748 $ 894,341 1,333,964 2,853,053 $	December 31,2019
		28,957 $ 1,502,487 837,183
		2,368,627 $

A. Shipowner’s accounts:

Temporary accounts, between the Group and other related parties – Evergreen International S.A., Gaining Enterprise S.A., Italia Marittima S.p.A., Evergreen Marine (Hong Kong) Ltd. and Evergreen Marine (Singapore) Pte. Ltd. incurred due to foreign port formalities and pier rental expenses.

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B. Agency accounts:

C. Temporary debits are mainly subject to the account of settlements between other carriers and the OCEAN Alliance, which the Group formed in response to market competition and enhancement of global transportation network to provide better logistics services to customers with Cosco Container Lines Co., Ltd., CMA CGM, Ltd., and the Orient Overseas Container Line, Ltd. on March 31, 2017 for trading of shipping space.

(7) Investments accounted for using equity method

A. Details of long-term equity investments accounted for using equity method are set forth below:

Evergreen International Storage and Transport Corporation EVA Airways Corporation Taipei Port Container Terminal Corporation Charng Yang Development Co., Ltd. Luanta Investment (Netherlands) N.V. Balsam Investment (Netherlands) N.V. Colon Container Terminal S.A. Others	December 31,2018 8,884,659 $ 10,334,116 1,500,384 544,057 1,933,828 658,599 3,261,433 1,148,092 28,265,168 $	December 31,2019
		9,039,677 $ 11,399,909 1,583,427 553,210 1,884,647 525,226 3,193,300 1,221,529
		29,400,925 $

B. Associates

(a) The basic information of the associates that are material to the Group is as follows:

Companyname	Principal place of business	Ownership(%)	Ownership(%)	Nature of relationship	Methods of measurement
Evergreen International Storage and Transport Corporation EVA Airways Corporation	TW TW	December 31, 2018	December 31, 2019	With a right over 20% to vote Have a right to vote in the Board of Directors	Equity method Equity method
		40.36% 16.31%	40.36% 16.00%

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(b) The summarised financial information of the associates that are material to the Group is as follows:

Balance sheet

follows: Balance sheet
		Evergreen InternationalStorage and TransportCorporation
		December 31,2018		December 31,2019
Current assets	$	6,066,455	$	6,121,815
Non-current assets		27,152,629		28,889,987
Current liabilities	(	2,418,658)	(	2,703,450)
Non-current liabilities	(	8,269,749)	(	9,485,576)
Total net assets	$	22,530,677	$	22,822,776
Share in associate's net assets	$	8,982,546	$	9,098,692
Unrealized income with
affiliated companies	(	97,887)	(	59,015)
Carrying amount of the associate	$	8,884,659	$	9,039,677
		EVA Airways Corporation
		December 31,2018		December 31,2019
Current assets	$	75,996,433	$	77,199,776
Non-current assets		165,197,470		279,051,918
Current liabilities	(	60,922,876)	(	82,441,715)
Non-current liabilities	(	110,151,292)	(	195,667,963)
Total net assets	$	70,119,735	$	78,142,016
Share in associate's net assets	$	10,334,116	$	11,399,909

Statement of comprehensive income

Evergreen International Storage and Transport Corporation

Revenue Profit for the period Other comprehensive (loss) income, net of tax Total comprehensive income Dividends received from associates	Year ended December 31,2018 7,742,438 $ 870,248 $ 351,587 1,221,835 $ 148,422 $	Year ended December 31,2019 7,730,682 $ 845,274 $ 180,711) ( 664,563 $ 150,742 $

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Revenue Profit for the period Other comprehensive income (loss), net of tax ( Total comprehensive income Dividends received from associates	EVA Airways Corporation	EVA Airways Corporation
	Year ended December 31,2018 179,907,332 $ 7,214,513 $ 543,495) 6,671,018 $ 136,157 $	Year ended December 31,2019
		181,275,258 $
		4,851,875 $ 1,800,103
		6,651,978 $
		374,935 $

(c) The carrying amount of the Group’s interests in all individually immaterial associates and the Group’s share of the operating results are summarised below:

As of December 31, 2018 and 2019, the carrying amount of the Group’s individually immaterial associates amounted to $9,046,393 and, $8,961,339 respectively.

		Year ended		Year ended
		December 31,2018		December 31,2019
Loss for the period	($	992,621)	($	342,769)
Other comprehensive loss, net of tax	(	3,309)	(	6,245)
Total comprehensive loss	($	995,930)	($	349,014)

C. Above stated certain investments accounted for using equity method are based on the financial statements of associates which were audited by independent accountants.
D. The fair value of the Group’s associates which have quoted market price was as follows:

Evergreen International Storage and Transport Corporation EVA Airways Corporation	December 31,2018 5,814,345 $ 11,294,242 17,108,587 $	December 31, 2019
		6,180,433 $ 10,677,440
		16,857,873 $

E. On December 21, 2017, the Board of Directors of the subsidiary, Evergreen Marine (Hong Kong) Ltd., during their meeting resolved to acquire a 9% equity interest of Colon Container Terminal S.A. from its original shareholder, Marubeni Corporation, in the amount of USD 15,600, and gain from bargain purchase amounted to USD 4,300 thousand (NTD 129,724) was recognised. The shareholding ratio will be increased to 49% when the transaction is completed.
F. On August 29, 2018, the Company resolved to acquire 6,629 thousand shares of Evergreen International Storage and Transport Corporation’s shares from the stock exchange market. The transaction price was $86,894, and the ownership percentage was increased to 40.36% after the purchase.

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G. The Board of Directors of the Company during its meeting on December 21, 2018 adopted a resolution to participate in the capital increase raised by EVA Airways Corporation amounting to 39,150 thousand shares, subscription price of NT$13 (in dollars) per share, whose total price of $508,944. In addition, the effective date was set on January 24, 2019 and after the acquisition, the Company’s share interest was decreased to 16.10%. Moreover, the Company purchased 70 thousand shares as specific person, the purchasing proceeds amounted to $700, and the share interest further decreased to 16% as of December 31, 2019 after many conversions from corporate bonds to stocks took place in EVA Airways Corporation for the year ended December 31, 2019.
H. On November 10, 2019, the Board of Directors of the subsidiary, Peony, has resolved to participate in the capital increase of the investee, Balsam Investment (Netherlands) N.V., as the original shareholder. The amount of capital increase was USD 24,500. After the capital increase, Peony’s shareholding ratio is still 49%.

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		Total		163,934,470 $		66,247,016) (	97,687,454 $			97,687,454 $	10,041,327	652,088) (	16,168,347	8,670,560) (		211,222		2,433,483			117,219,185 $		191,961,393 $		74,742,208) (	117,219,185 $
		Others		85,891 $		3,353) (	82,538 $			82,538 $	68,046	-	14,672) (	3,658) (		26,620		575			159,449 $		166,460 $		7,011) (	159,449 $
	Leasehold	improvements		574,438 $		358,270) (	216,168 $			216,168 $	20,370	-	-	122,078) (		10,539		125			125,124 $		605,782 $		480,658) (	125,124 $
	Lease	assets		19,524,906 $		6,168,818) (	13,356,088 $			13,356,088 $	1,035,091	4,594) (	121,803) (	1,185,711) (		158		459,947			13,539,176 $		20,242,368 $		6,703,192) (	13,539,176 $
	Office	equipment		533,874 $		423,613) (	110,261 $			110,261 $	34,023	157) (	6,924) (	40,922) (		24,383		355) (			120,309 $		543,931 $		423,622) (	120,309 $
	Transportation	equipment Ships		16,325,955 $ 107,532,947 $		7,596,520) ( 43,793,777) (	8,729,435 $ 63,739,170 $			8,729,435 $ 63,739,170 $	8,367,446 297,302	549,776) ( -	1,989 16,116,276	1,644,186) ( 4,788,870) (		113 -		291,603 1,460,396			15,196,624 $ 76,824,274 $		22,567,926 $ 126,866,151 $		7,371,302) ( 50,041,877) (	15,196,624 $ 76,824,274 $
Computer and	communication	equipment		1,120,713 $		416,793) (	703,920 $			703,920 $	90,695	1,009) (	13,706	209,499) (		9,378		20,915			628,106 $		1,245,653 $		617,547) (	628,106 $
Loading and	unloading	equipment		9,600,294 $		5,878,445) (	3,721,849 $			3,721,849 $	65,091	462) (	172,500	519,453) (		-		57,028			3,496,553 $		10,823,844 $		7,327,291) (	3,496,553 $
	Machinery	equipment		611,447 $		495,678) (	115,769 $			115,769 $	23,114	-	-	10,827) (		-		1,084			129,140 $		640,766 $		511,626) (	129,140 $
		Buildings		7,194,260 $		1,111,749) (	6,082,511 $			6,082,511 $	40,149	96,090) (	7,275	145,356) (		140,031		149,834			6,178,354 $		7,436,436 $		1,258,082) (	6,178,354 $
		Land		829,745 $		-	829,745 $			829,745 $	-	-	-	-		-		7,669) (			822,076 $		822,076 $		-	822,076 $
			At January 1	Cost	Accumulated	depreciation		Opening net book	amount as at	January 1	Additions	Disposals	Reclassifications	Depreciation	business	combinations	Net exchange	differences	Closing net book	amount as at	December 31	At December 31	Cost	Accumulated	depreciation

F-191

Loading and Computer and	Machinery unloading communication Transportation Office Lease Leasehold	Land Buildings equipment equipment equipment equipment Ships equipment assets improvements Others Total	At January 1	Cost 822,076 $ 7,436,436 $ 640,766 $ 10,823,844 $ 1,245,653 $ 22,567,926 $ 126,866,151 $ 543,931 $ 20,242,368 $ 605,782 $ 166,460 $ 191,961,393 $	Accumulated	depreciation - 1,258,082) ( 511,626) ( 7,327,291) ( 617,547) ( 7,371,302) ( 50,041,877) ( 423,622) ( 6,703,192) ( 480,658) ( 7,011) ( 74,742,208) (	822,076 $ 6,178,354 $ 129,140 $ 3,496,553 $ 628,106 $ 15,196,624 $ 76,824,274 $ 120,309 $ 13,539,176 $ 125,124 $ 159,449 $ 117,219,185 $	Opening net book	amount as at	January 1 822,076 $ 6,178,354 $ 129,140 $ 3,496,553 $ 628,106 $ 15,196,624 $ 76,824,274 $ 120,309 $ 13,539,176 $ 125,124 $ 159,449 $ 117,219,185 $	Additions - 30,341 14,653 139,693 39,841 6,356,102 377,434 47,376 - 11,552 135,296 7,152,288	Disposals - - 195) ( 1,000) ( 777) ( 20,837) ( 774,222) ( 516) ( - - - 797,547) (	Reclassifications - 263,361 5,786 361,870 86,951 425,182 7,032,421 12,806 13,539,176) ( 232,359 74,174) ( 5,192,614) (	Depreciation - 162,211) ( 13,767) ( 558,934) ( 234,355) ( 2,182,031) ( 5,057,609) ( 51,346) ( - 100,284) ( 4,347) ( 8,364,884) (	Net exchange	differences 1,301 141,107) ( 1,207) ( 32,423) ( 9,041) ( 376,922) ( 1,055,742) ( 1,679) ( - 91) ( 6,006) ( 1,622,917) (	Closing net book	amount as at	December 31 823,377 $ 6,168,738 $ 134,410 $ 3,405,759 $ 510,725 $ 19,398,118 $ 77,346,556 $ 126,950 $ - $ 268,660 $ 210,218 $ 108,393,511 $	At December 31	Cost 823,377 $ 7,589,613 $ 653,005 $ 11,587,972 $ 1,317,804 $ 28,726,237 $ 122,361,439 $ 581,306 $ - $ 852,610 $ 221,576 $ 174,714,939 $	Accumulated	depreciation - 1,420,875) ( 518,595) ( 8,182,213) ( 807,079) ( 9,328,119) ( 45,014,883) ( 454,356) ( - 583,950) ( 11,358) ( 66,321,428) (	823,377 $ 6,168,738 $ 134,410 $ 3,405,759 $ 510,725 $ 19,398,118 $ 77,346,556 $ 126,950 $ - $ 268,660 $ 210,218 $ 108,393,511 $	A. The Group has issued a negative pledge to granting banks for drawing borrowings within the credit line to purchase the above transportation equipment.	B. Information about the property, plant and equipment that were pledged to others as collaterals is provided in Note 8.

F-192

� (9) Leasing arrangements lessee/ Financial liabilities for hedging

Effective 2019

A. The Group leases various assets including land, buildings, loading and unloading equipment, transportation equipment, ships, and business vehicles. Rental contracts are typically made for periods of 1.3 to 90 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.
B. Short-term leases with a lease term of 12 months or less comprise buildings and ships. Low-value assets comprise office equipment and other equipment.
C. The carrying amount of right-of-use assets and the depreciation charge are as follows:

Land Buildings Loading and unloading equipment Transportation equipment Ships Office equipment Other equipment	December 31,2019 Carryingamount 12,228,498 $ 865,940 101,493 2,230,717 67,134,641 39,930 22,967 82,624,186 $	Year ended December 31,2019
		Depreciation charge
		1,940,936 $ 275,930 129,289 996,046 8,536,432 17,290 23,560
		11,919,483 $

D. For the year ended December 31, 2019, the additions to right-of-use assets was $23,270,343.
E. For the year ended December 31, 2019, the disposals to right-of-use assets was $127,228.
F. The information on income and expense accounts relating 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 Expense on variable lease payments	Year ended December 31,2019
	2,844,157 $ 6,227,119 18,299 2,808

G. For the year ended December 31, 2019, the Group’s total cash outflow for leases amounted to $20,720,449.
H. To hedge the impact of expected variable exchange rate risk arising from US dollar denominated lease liabilities payable, the Company designated US dollar denominated lease contracts as the hedging instruments for hedging the foreign exchange variation of future US dollar denominated marine freight income and adopted cash flow hedge accounting. Moreover, the effective portion with respect to the changes in cash flows of the hedging instruments is deferred to recognise in gains (loss) on hedging instruments, which is under other equity interest, and will be directly

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included in the marine freight income when the hedged items are subsequently recognised in the income. Details of relevant transactions are as follows:

income. Details of relevant transactions are as follows:	t transactions are as follows:	t transactions are as follows:
Designated as Hedged items hedginginstruments Contractperiod Expected US dollar denominated marine freight income transaction US dollar denominated lease liabilities 2019.1.1~2034.8.15 December 31,2019	December 31,2019
		Contractperiod 2019.1.1~2034.8.15	Book value
			20,188,942 $

(a) Lease liabilities designated as hedges (recorded as financial liabilities for hedging)

Lease liabilities designated as hedges (recorded as financial liabilities ight income nsaction lease liabilities 2019.1.1~2034.8.1	for hedging) ,,
Cash flow hedges� Exchange rate risk Lease liability contracts designated as hedges Current liabilities Non-current liabilities	December 31,2019
	1,861,026 $ 18,327,916
	20,188,942 $

(b) Other equity - cash flow hedge reserve

Other equity - cash flow hedge reserve
At January 1 Add : Gains on hedge effectiveness-amount recognised in other comprehensive income Add : Reclassified to freight revenue as the hedged item has affected profit or loss At December 31	2019
	- $ 447,499 12,639
	460,138 $

(c) For the year ended December 31, 2019, there are no cash flow hedges transactions of ineffective portion should be recognised in profit or loss.
(d) Information relating to the fair values of abovementioned hedging financial liabilities is provided in Note 12(3).
I. The amounts of lease liabilities (net of the lease liabilities designated as hedges) of the Group on December 31, 2019 are as follows:

December 31, 2019 are as follows:
Current lease liabilities Current lease liabilities - related parties Non-current lease liabilities Non-current lease liabilities - related parties	December 31,2019
	8,479,576 $ 596,000 51,284,350 682,967
	61,042,893 $

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(10) Investment property, net

At January 1 Cost Accumulated depreciation Opening net book amount as at January 1 Reclassifications Depreciation Acquired from business combinations Net exchange differences Closing net book amount as at December 31 At December 31 Cost Accumulated depreciation At January 1 Cost Accumulated depreciation Opening net book amount as at January 1 Reclassifications Depreciation Net exchange differences ( Closing net book amount as at December 31 At December 31 Cost Accumulated depreciation		2018

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A. Rental income from the investment property and direct operating expenses arising from the investment property are shown below:

investment property are shown below:
Rental revenue from the lease of the investment property Direct operating expenses arising from the investment property that generated rental income in the period Direct operating expenses arising from the investment property that did not generate rental income in the period	Year ended December 31,2018 273,868 $ 134,783 $ 734 $	Year ended December 31,2019
		154,330 $
		158,378 $
		769 $

B. The fair value of the investment property held by the Group as at December 31, 2018 and 2019 was $7,801,498 and $7,195,945, respectively. The fair value measurements were based on the market prices of recently sold properties in the immediate vicinity of a certain property.
C. Information about the investment property that were pledged to others as collaterals is provided in Note 8.

(11) Other non-current assets

in Note 8. Other non-current assets
Prepayments for equipment Refundable deposits Others	December 31,2018 4,619,738 $ 226,760 94,645 4,941,143 $	December 31,2019
		9,308,236 $ 229,095 101,051
		9,638,382 $

Movement analysis of prepayments for equipment are as follows:

			Year ended			Year ended
		December 31,2018			December 31,2019
At January 1	$		6,080,908	$		4,619,738
Additions			14,606,580			12,565,222
Reclassification to property,
plant and equipment	(		16,168,617)	(		7,521,096)
Net exchange differences			100,867	(		355,628)
At December 31	$		4,619,738	$		9,308,236

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Amount of borrowing costs capitalised as part of prepayment for equipment and the range of the interest rates for such capitalisation are as follows:

	interest rates for such capitalisation are as follows:
(12) (13)	Other current liabilities Corporate bonds payable Amount capitalised Interest rate Receipt in advance Long-term liabilities - current portion Shipowner's accounts Agency accounts Long-term leases payable - current Others Domestic secured corporate bonds Less: Current portion or exercise of put options	Year ended December 31,2018 155,226 $ 0.86%~4.12% December 31,2018 15,127 $ 16,350,126 1,804,031 2,385,780 1,941,251 119,663 22,615,978 $ December 31,2018 10,000,000 $ - 10,000,000 $	Year ended December 31,2019
			193,678 $
			0.86%~4.70% December 31,2019
			56,522 $ 22,841,596 2,366,770 2,453,406 - 46,015
			27,764,309 $
			December 31,2019
			10,000,000 $ -
			10,000,000 $

(a) Period: 5 years (April 25, 2017 to April 25, 2022)
(b) Coupon rate: 1.05% fixed per annum

(c) Principal repayment and interest payment

(d) Collaterals

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B. On June 27, 2018, the Company issued its fourteenth domestic secured corporate bonds (referred
herein as the “Fourteenth Bonds”), totaling $2,000,000 at face value. The major terms of the issuance are set forth below:
(a) Period: 5 years (June 27, 2018 to June 27, 2023)
(b) Coupon rate: 0.86% fixed per annum
(c) Principal repayment and interest payment

Repayments for the Fourteenth Bonds are paid annually at coupon rate, starting a year from the issuing date. The principal of the Fourteenth Bonds shall be repaid in lump sum at maturity.

(d) Collaterals

The Fourteenth Bonds are secured and are guaranteed by First Commercial Bank.

(14) Long-term loans

Long-term loans
Secured bank loans Unsecured bank loans Add : Unrealised foreign exchange losses Less: Hosting fee credit Less: Current portion (recorded as other current liabilities) Borrowing period Interest rate	December 31,2018 63,430,488 $ 35,729,010 223,179 22,176) ( 99,360,501 16,350,126) ( 83,010,375 $ 2019.01~2028.12 1.12%~5.15%	December 31,2019
		55,633,704 $ 51,053,234 49,713 35,083) (
		106,701,568 22,841,596) (
		83,859,972 $
		2020.01~2029.11 1.12%~5.15%

Please refer to Note 8 for details of the collaterals pledged for the above long-term loans.

(15) Other non-current liabilities

Other non-current liabilities
Long-term leases payable - non-current Accrued pension liabilities Guarantee deposits received Unrealised gain on sale and leaseback	December 31,2018 9,698,447 $ 2,935,589 347,115 20,041 13,001,192 $	December 31,2019
		- $ 3,028,061 325,987 14,517
		3,368,565 $

(16) Finance lease liabilities

Prior to 2019

The Group leases in loading and unloading equipment, ships and transportation equipment under finance lease, based on the terms of the lease contracts. Future minimum lease payments and their present values as at December 31, 2018 are as follows:

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	December 31,2018	December 31,2018
Total finance lease liabilities 2,325,368 $ 10,489,983 12,815,351 $	Future finance charges 384,117) ($ 791,536) ( 1,175,653) ($	Present value of finance lease liabilities
		1,941,251 $
		9,698,447
		11,639,698 $

(17) Pension

A. (a) The Company and its domestic subsidiary-TTSC have a defined benefit pension plan in accordance with the Labor Standards Act (“the Act”), 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 Act. 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 and its domestic subsidiary-TTSC contribute monthly an amount equal to 15% of the employees’ monthly salaries and wages to the retirement fund deposited with Bank of Taiwan, the trustee, under the name of the independent retirement fund committee. Also, the Company and its domestic subsidiary-TTSC would assess the balance in the aforementioned labor pension reserve account by December 31, every year. If the account balance is insufficient to pay the pension calculated by the aforementioned method to the employees expected to qualify for retirement in the following year, the Company and its domestic subsidiary-TTSC will make contributions for the deficit by next March.
(b) The employees with R.O.C. nationality of the Group’s subsidiaries, EGH, GMS and EMU, adopted the Act. 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.
(c) The amounts recognised in the balance sheet are as follows:

	December	31,2018	December	31,2019
Present value of defined benefit obligations	($	4,240,280)	($	4,406,518)
Fair value of plan assets		1,304,691		1,378,457
Net defined benefit liability	($	2,935,589)	($	3,028,061)

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

Year ended December 31, 2018 Balance at January 1 Current service cost Interest (expense) income Past service cost Curtailment (Settlement) Remeasurements: Return on plan assets (excluding amounts included in interest income or expense) Change in demographic assumptions Change in financial assumptions Experience adjustments Pension fund contribution Paid pension Exchange difference Balance at December 31	Present value of defined benefit obligations		Fair value of plan assets	Net defined benefit liability
	4,236,061) ($ 157,857) ( 56,362) ( 121 344 4,449,815) ( - 9,184) ( 41,007) ( 6,090) ( 56,281) ( 10,349 247,051 8,416 4,240,280) ($	1,182,719 $ - 19,780 - 8,470) ( 1,194,029 24,053 - - - 24,053 246,597 152,800) ( 7,188) ( 1,304,691 $		3,053,342) ($ 157,857) ( 36,582) ( 121 8,126) ( 3,255,786) ( 24,053 9,184) ( 41,007) ( 6,090) ( 32,228) ( 256,946 94,251 1,228 2,935,589) ($

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Year ended December 31, 2019 Balance at January 1 Current service cost Interest (expense) income Past service cost Curtailment (Settlement) Remeasurements: Return on plan assets (excluding amounts included in interest income or expense) Change in demographic assumptions Change in financial assumptions Experience adjustments Pension fund contribution Paid settlement Paid pension Exchange difference Balance at December 31	Present value of defined benefit obligations		Fair value of plan assets	Net defined benefit liability
	4,240,280) ($ 187,564) ( 54,636) ( 665 335 4,481,480) ( - 1,494) ( 100,010) ( 42,337) ( 143,841) ( 55 6,056 179,969 32,723 4,406,518) ($	1,304,691 $ - 19,024 - 8,537) ( 1,315,178 10,740 - - - 10,740 173,986 - 93,848) ( 27,599) ( 1,378,457 $		2,935,589) ($ 187,564) ( 35,612) ( 665 8,202) ( 3,166,302) ( 10,740 1,494) ( 100,010) ( 42,337) ( 133,101) ( 174,041 6,056 86,121 5,124 3,028,061) ($

(e) The Bank of Taiwan was commissioned to manage the Fund of the Company’s and its domestic subsidiaries-TTSC’s 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 utilization 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 twoyear time deposits with the interest rates offered by local banks. If the earning is less than aforementioned rates, government shall make payment for the deficit after being authorized by the Regulator. The Group has no right to participate in managing and operating that fund and hence the Group 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, 2018 and 2019 is given in the Annual Labor Retirement Fund Utilisation Report announced by the government.

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(f) The principal actuarial assumptions used were as follows:

Discount rate Future salary increases	Year ended December 31,2018 0%~8% 0%~10%	Year ended December 31,2019
		1%~8%
		1%~10%

Assumptions regarding future mortality experience are set based on actuarial advice in accordance with published statistics and experience in each territory.

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

obligation is affected. The analysis was as follows:
Increase Decrease 0.015%~1.00% 0.015%~1.00% December 31, 2018 Effect on present value of defined benefit obligation 147,753) ( 157,779 Increase Decrease 0.25%~1.00% 0.25%~1.00% December 31, 2019 Effect on present value of defined benefit obligation 166,156) ( 172,062 Discount rate Discount rate	Increase Decrease 0.25%~1.00% 0.25%~1.00% 104,371 94,424) ( Increase Decrease 0.25%~1.00% 0.25%~1.00% 117,149 110,937) ( Future salaryincreases Future salaryincreases
	Increase 0.25%~1.00% 117,149 (

The sensitivity analysis above is based on one assumption which changed while the other conditions remain unchanged. 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.

(g) Expected contributions to the defined benefit pension plans of the Company and its subsidiary-TTSC for the year ending December 31, 2019 amounts to $122,042.
(h) As of December 31, 2019, the weighted average duration of the retirement plan is10~28 years.
B. (a) Effective July 1, 2005, the Company and its domestic subsidiary-TTSC have established a defined contribution pension plan (the “New Plan”) under the Labor Pension Act (the“Act”), covering all regular employees with R.O.C. nationality. Under the New Plan, the Company and its domestic subsidiary-TTSC contribute monthly an amount based on 6% of the employees’ monthly salaries and wages to the employees’ individual pension accounts at the Bureau of Labor Insurance. The benefits accrued are paid monthly or in lump sum upon termination of employment.
(b) The pension costs under defined contribution pension plans of the Group for the years ended December 31, 2018 and 2019 were $241,026 and $300,962, respectively.

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(18) Capital stock

A. As of December 31, 2019, the Company’s authorized capital was $50,000,000, and the paid-in capital was $48,129,738, consisting of 4,812,974 thousand shares of common stocks with a par value of $10 (in dollars) per share. All proceeds from shares issued have been collected.
B. On August 13, 2019, the Board of Directors of the Company resolved to increase capital by $3,000,000 by issuing 300,000 thousand shares at a par value of NT$10 (in dollars). Of which 30,000 thousand shares are reserved for employee preemption. The proposal of capital increase has been reported and become effective on December 3, 2019. The total amount of shares was $3,333,934. All proceeds from share issuance was completed on December 31, 2019.
C. On August 13, 2018, the Board of Directors of the Company resolved to increase capital by $3,000,000 by issuing 300,000 thousand shares at a par value of NT$10 (in dollars). Of which 30,000 thousand shares are reserved for employee preemption. The proposal of capital increase has been reported and become effective on November 28, 2018. The total amount of shares was $3,226,890. All proceeds from share issuance was completed on December 21, 2018.
D. The stockholders at their annual stockholders meeting on June 21, 2018, resolved to issue 200,618 thousand shares through capitalization of unappropriated retained earnings of $2,006,178. The proposal of the capitalisation of earnings was filed online with the Securities and Futures Bureau of the Financial Supervisory Commission and went into effect on July 31, 2018. The Company had filed registration of the capital increase through capitalisation of earnings with the Ministry of Economic Affairs on September 18, 2018.
(19) Capital surplus

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(20)	Retained earnings Share premium At January 1 8,606,393 $ Issuance of common stock for cash 226,890 Recognition of change in equity of associates in proportion to the Company's ownership - At December 31 8,833,283 $ Share premium At January 1 8,833,283 $ Issuance of common stock for cash 333,934 Recognition of change in equity of associates in proportion to the Company's ownership - At December 31 9,167,217 $ At January 1 Retrospective application Balance at 1 January after adjustments Profit for the year Distribution of earnings Remeasurement on post employment benefit obligations, net of tax Adjustments to share of changes in equity of associates and joint ventures Disposal of investments in equity instruments designated at fair value through other comprehensive income Net change in non-controlling interests At December 31			2018
		Share premium 8,606,393 $ 226,890 - 8,833,283 $	Adjustments to Employe share of changes stock in equity of options associates and Donated exercised joint ventures assets 76,280 $ 2,148,243 $ 446 $ 17,610 - - - 23,430) ( - 93,890 $ 2,124,813 $ 446 $ 2019

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A. According to the Company’s Articles of Incorporation, if there is any profit for a fiscal year, the Company shall first make provision for all taxes and cover prior years’ losses and then appropriate 10% of the residual amount as legal reserve. The Company shall set aside or reserve a certain amount as special reserve according to relevant regulations. After the distribution of earnings, the remaining earnings and prior year’s unappropriated retained earnings shall be proposed by the Board of Directors and resolved by the stockholders.
B. Dividend policy

C. Legal reserve
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 distribution of the reserve is limited to the portion in excess of 25% of the Company’s paid-in capital.
D. 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.
E. (a) The appropriation of earnings of year 2017 as resolved by the Board of Directors on June 21, 2018 is as follows:

2018 is as follows:
Accrual of legal reserve Appropriation of cash dividends to shareholders Appropriation of stock dividends to shareholders	Year ended December 31,2017
	Amount 700,517 $ 802,471 $ 2,006,178 $	Dividend per share (in dollars)
		0.2 $
		0.5 $

(b) The appropriation of earnings of year 2018 as resolved by the Board of Directors on June 21, 2019 is as follows:

2019 is as follows:
Accrual of legal reserve		Year ended December 31,2018
		Amount 29,392 $

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F. For the year ended December 31, 2019, the Company’s net income after tax plus other items including current unappropriated retained earnings are negative, thus the Company will not provision legal reserve. Additionally, the Company will retain attributable earnings for future operating plan, thus the Company will not appropriate shareholders’ bonus.
- As of the reporting date, the distribution of earnings for the year of 2019 has not been resolved by the shareholders.
G. For information relating to employees’ and directors’ remuneration, please refer to Note 6(28).
(21) Other equity items

Other equity items
At January 1 Effects of retrospective application Balance at January 1 after retrospective adjustments Revaluation – gross Revaluation – tax Revaluation – associates Revaluation transferred to retained earnings – gross Revaluation transferred to retained earnings – associates Cash flow hedges: – Fair value losses in the period – Associates Currency translation differences: – Group – Group – tax – Associates At December 31			2018			Total
		Unrealised gains (losses) on valuation	Hedging reserve	Currency translation
	1,833,339 $ 279,677) ( 1,553,662 $ 316,044) ( 6,210 8,463 13,438) ( 4,628) ( - - - - 1,234,225 $		15,912) ($ - 15,912) ($ - - - - - 42,737) ( - - - 58,649) ($	1,135,114) ($ - 1,135,114) ($ - - - - - - 1,004,409 746 147,539 17,580 $	682,313 $ 279,677) ( 402,636 $ 316,044) ( 6,210 8,463 13,438) ( 4,628) ( 42,737) ( 1,004,409 746 147,539 1,193,156 $

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2019

At January 1 Revaluation – gross Revaluation – tax Revaluation – associates Revaluation transferred to retained earnings – associates Cash flow hedges: – Fair value gains in the period – Group – Group – tax – Associates Currency translation differences: – Group – Group – tax – Associates At December 31		Unrealised gains (losses) on valuation	Hedging reserve	Currency translation	Total
		1,234,225 $ 82,688 7,716 86,957 52 - - - - - - 1,411,638 $	58,649) ($ - - - - 460,138 87,972) ( 266,240 - - - 579,757 $	17,580 $ - - - - - - - 755,051) ( 18 119,320) ( 856,773) ($	1,193,156 $ 82,688 7,716 86,957 52 460,138 87,972) ( 266,240 755,051) ( 18 119,320) ( 1,134,622 $

(22) Operating revenue

Operating revenue At December 31 1,411,638 $	579,757 $ 85 ($	6,773) 1,134,622 $
Revenue from contracts with customers Other - ship rental and slottage income	Year ended December 31,2018 167,647,073 $ 1,589,580 169,236,653 $	Year ended December 31,2019
		188,151,293 $ 2,437,988
		190,589,281 $

A. Disaggregation of revenue from contracts with customers

The Group derives revenue from the transfer of services over time and at a point in time in the following major businesses:

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Year ended December 31,2018 Total segment revenue Inter-segment revenue Revenue from external customer contracts Year ended December 31,2019 Total segment revenue Inter-segment revenue Revenue from external customer contracts	Ship-owners 181,390,664 $ 24,295,878) ( 157,094,786 $ Ship-owners 202,781,182 $ 27,206,789) ( 175,574,393 $	Agent 2,894,849 $ - 2,894,849 $ Agent 3,749,965 $ - 3,749,965 $	Terminal 7,150,737 $ - 7,150,737 $ Terminal 6,924,474 $ - 6,924,474 $	Other 506,701 $ - 506,701 $ Other 1,902,461 $ - 1,902,461 $	Total 191,942,951 $ 24,295,878) ( 167,647,073 $ Total 215,358,082 $ 27,206,789) ( 188,151,293 $

B. Contract assets and liabilities

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

Contract assets: Contract assets relating to marine freight income Contract liabilities: Contract liabilities – unearned marine freight income	January1,2018 1,881,693 $ 2,523,101) ($ (	December 31,2018 2,244,065 $ 1,774,392) $ (	December 31,2019
			1,693,497 $
			2,213,538) $

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

	period:
(23)	Other income and expenses, net Marine freight income Net gains on disposal of property, plant and equipment	Year ended December 31,2018 2,523,101 $ Year ended December 31,2018 1,510,330 $	Year ended December 31,2019
			1,774,392 $
			Year ended December 31,2019 375,947 $

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(24) Other income

Other income
Interest income� Interest income from bank deposits Interest income from financial assets measured at amortised cost Rent income Dividend income Gain recognised in bargain purchase transaction Other income, others	Year ended December 31,2018 527,527 $ 36,077 284,183 109,996 138,571 376,810 1,473,164 $	Year ended December 31,2019
		706,119 $ 43,028 200,561 112,966 - 141,402
		1,204,076 $

(25) Other gains and losses

Other gains and losses
			Year ended			Year ended
		December 31,2018			December 31,2019
Net losses on disposal of investments	($		122,834)	($		49,117)
Gains arising from lease modifications			-			8,937
Net currency exchange gains			308,013			217,597
Net gains on disposal of right-of-use assets			-			47,716
Depreciation on investment property	(		132,980)	(		165,671)
Other non-operating expenses	(		130,099)	(		134,133)
	($		77,900)	($		74,671)
Finance costs
			Year ended			Year ended
		December 31,2018			December 31,2019
Interest expense:
Bank loans	$		1,942,785	$		2,924,158
Corporate bonds			92,859			101,200
Lease liabilities			-			2,844,157
Other			6			-
			2,035,650			5,869,515
Less: Capitalized borrowing costs	(		155,226)	(		193,678)
	$		1,880,424	$		5,675,837

(26) Finance costs

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(27) Expenses by nature

Expenses by nature
Employee benefit expense Depreciation charges on property, plant and equipment Depreciation charges on right-of-use assets Amortisation charges on intangible assets Other operating costs and expenses	Year ended December 31,2018 7,823,668 $ 8,670,560 - 69,348 153,262,568 169,826,144 $	Year ended December 31,2019
		9,469,734 $ 8,364,884 11,919,483 313,635 156,276,623
		186,344,359 $

(28) Employee benefit expense

Employee benefit expense
Wages and salaries Labor and health insurance fees Pension costs Directors' remuneration Other personnel expenses	Year ended December 31,2018 6,442,981 $ 534,619 443,470 9,303 393,295 7,823,668 $	Year ended December 31,2019
		7,707,224 $ 728,494 531,675 9,074 493,267
		9,469,734 $

A. According to the Articles of Incorporation of the Company, when distributing earnings, the Company shall distribute bonus to the employees that account for no less than 0.5% and pay remuneration to the directors and supervisors that account for no more than 2% of the total distributed amount. Aforementioned earnings was current income before tax without reducing employees’ compensation and directors’ remuneration.
B. (a) For the year ended December 31, 2019, the Company generated loss and thus did not accrue employees’ and supervisors’ remuneration.
(b) For the year ended December 31 2018, employees’ compensation was accrued at 2,560, while directors’ remunerations was accrued at $0. The aforementioned amount was recognised in salary expenses.

Employees’ compensation and directors’ and supervisors’ remuneration of 2018 as resolved by the Board of Directors were in agreement with those amounts recognised in the 2018 financial statements.

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(29) Income tax

A. Income tax expense

(a) Components of income tax expense:

e tax ome tax expense Components of income tax expense:
			Year ended			Year ended
		December 31,2018			December 31,2019
Current tax:
Current tax on profits for the period	$		907,890	$		1,182,535
Tax on undistributed surplus earnings			283,973			-
Prior year income tax overestimation	(		8,780)	(		7,319)
Total current tax			1,183,083			1,175,216
Deferred tax:
Origination and reversal of
temporary differences	(		108,897)	(		173,303)
Impact of change in tax rate			42,717			-
Total deferred tax	(		66,180)	(		173,303)
Income tax expense	$		1,116,903	$		1,001,913

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

follows:
		Year ended		Year ended
	December 31,2018		December 31,2019
Changes in fair value of financial
assets at fair value through other	$	12,465	$	7,716
comprehensive (loss) income
Exchange differences on translating
the financial statements of foreign
operations	(	33)		18
Remeasurement of defined benefit
obligations		5,063		25,202
Cash flow hedges		-	(	87,972)
Impact of change in tax rate		6,387		-
	$	23,882	($	55,036)

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(c) The income tax charged/(credited) to equity during the period is as follows:

		Year ended		Year ended
	December 31,2018		December 31,2019
Reduction in capital surplus caused
by recognition of foreign investees
based on the shareholding ratio	($	115)	($	86)
Reduction in retained earnings caused
by recognition of foreign investees
based on the shareholding ratio		146		2
Effects of retrospective application		182		-
Impact of change in tax rate		95		-
	$	308	($	84)

B. Reconciliation between income tax expense and accounting profit:

			Year ended			Year ended
		December 31,2018			December 31,2019
Tax calculated based on profit before	$		1,051,440	$		1,184,504
tax and statutory tax rate
Expenses disallowed by tax regulation			29,891			32,554
Tax exempt income by tax regulation	(		324,906)	(		183,747)
Effect from investment tax credits			41,966			-
Change in assessment of realisation
of deferred tax assets	(		246)			-
Prior year income tax overestimation	(		8,780)	(		7,319)
Effect from changes in tax regulation			42,717			-
Tax on undistributed earnings			283,973			-
Effect from income tax deduction from prior years			21,272			2,152
Other	(		20,424)	(		26,231)
Income tax expense	$		1,116,903	$		1,001,913

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C. Amounts of deferred tax assets or liabilities as a result of temporary differences, tax losses and investment tax credits are as follows:

			2018
January1	Recognised in profit or loss	Recognised in other comprehensive income	Recognised in equity	Translation differences	Business combination	December 31
16,047 $ 1,979 13,918 30,185 40,741 369,659 275 193,394 42,068 708,266 $ - $ 584) ( 5,019) ( 617) ( 768,141) ( 974,659) ( 1,749,020) ($ 1,040,754) ($	2,470 $ - 671 5,976 11,862) ( 7,258 621 152,432 42,068) ( 115,498 $ - $ 462 161) ( - 45,996) ( 3,623) ( 49,318) ($ 66,180 $	- $ 1,979) ( - - - 16,126 - - - 14,147 $ 4,371) ($ - - - 14,106 - 9,735 $ 23,882 $	182 $ - - - - - - - - 182 $ - $ - - - 126 - 126 $ 308 $	182) ($ - - 269) ( 89 1,726) ( 183 209) ( - 2,114) ($ - $ 4 164 126 354 32,458) ( 31,810) ($ 33,924) ($	- $ - - - - - - - - - $ - $ - - - - 150,280) ( 150,280) ($ 150,280) ($	18,517 $ - 14,589 35,892 28,968 391,317 1,079 345,617 -
						835,979 $
						4,371) ($ 118) ( 5,016) ( 491) ( 799,551) ( 1,161,020) ( 1,970,567) ($ 1,134,588) ($

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2019

			2019
Temporary differences: �Deferred tax assets: Bad debts expense Loss on valuation of financial assets Deferred profit Unrealized expense Unrealized exchange loss Pension expense and actuarial losses/(gains) Others Tax losses Subtotal �Deferred tax liabilities: Temporary differences: Gain on valuation of financial assets Unrealized exchange gain Unrealized gain Pension expense and actuarial losses/(gains) Foreign investment income Gains (losses) on hedging instruments Others Subtotal Total	January1	Recognised in profit or loss	Recognised in other comprehensive income	Recognised in equity	Translation differences	December 31
	18,517 $ - 14,589 35,892 28,968 391,317 1,079 345,617 835,979 $ 4,371) ($ 118) ( 5,016) ( 491) ( 799,551) ( - 1,161,020) ( 1,970,567) ($ 1,134,588) ($	997) ($ - 1,788) ( 59,537 3,118) ( 12,088) ( 54,091 84,905 180,542 $ - $ 114 104) ( - 72,701 - 79,950) ( 7,239) ($ 173,303 $	- $ 743 - - - 23,226 - - 23,969 $ 4,371 $ - - 47) ( 8,698 92,027) ( - 79,005) ($ 55,036) ($	- $ - - - - - - - - $ - $ - - - 84) ( - - 84) ($ 84) ($	22) ($ - - 2,318) ( 79 2,480) ( 140) ( 211) ( 5,092) ($ - $ 4 206 22 215) ( - 29,500 29,517 $ 24,425 $	17,498 $ 743 12,801 93,111 25,929 399,975 55,030 430,311 1,035,398 $ - $ - 4,914) ( 516) ( 718,451) ( 92,027) ( 1,211,470) ( 2,027,378) ($ 991,980) ($

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

December 31, 2018

Year incurred		Amount filed/ assessed		Unused amount	Unrecognised deferred tax assets	Unrecognised deferred tax assets	Expiry year
2018 2017 2016 2015		671,047 $ 40,204 747,045 269,787 1,728,083 $		671,047 $ 40,204 747,045 269,787 1,728,083 $		- $ - - - - $	2028 2027 2026 2025

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December 31, 2019

Year incurred		Amount filed/ assessed		Unused amount	Unrecognised deferred tax assets	Unrecognised deferred tax assets	Expiry year
2019 2018 2017 2016 2015		392,576 $ 671,047 12,894 747,045 269,787 2,093,349 $		392,576 $ 671,047 12,894 747,045 269,787 2,093,349 $		- $ - - - - - $	2029 2028 2027 2026 2025

E. The Company has not recognised taxable temporary differences associated with investment in subsidiaries as deferred tax liabilities. As of December 31, 2018 and 2019, the amounts of temporary difference unrecognised as deferred tax liabilities were $13,656,982 and $12,524,548, respectively.
F. The Company’s income tax returns through 2017 have been assessed and approved by the Tax Authority.
G. Under the amendments to the Income Tax Act which was promulgated by the President of the Republic of China in February, 2018, the Company’s applicable income tax rate was raised from 17% to 20% effective from January 1, 2018. The Group has assessed the impact of the change in income tax rate.

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(30) Earnings per share

Earnings per share
Basic earnings per share Profit attributable to ordinary shareholders of the parent Diluted loss per share Profit attributable to ordinary shareholders of the parent Assumed conversion of all dilutive potential ordinary shares Employees’ compensation Profit attributable to ordinary shareholders of the parent plus assumed conversion of all dilutive potential ordinary shares Basic earnings per share Profit attributable to ordinary shareholders of the parent Diluted earnings per share Profit attributable to ordinary shareholders of the parent	Year	ended December 31,2018
	Amount after tax 293,919 $ 293,919 $ - 293,919 $ Year	Weighted average number of ordinary shares outstanding Earnings per share (share in thousands) (in dollars) 4,240,919 0.07 $ 4,240,919 0.07 $ 215 4,241,134 0.07 $ ended December 31,2019
	Amount after tax 112,519 $ 112,519 $	Weighted average number of ordinary shares outstanding Earnings per share (share in thousands) (in dollars) 4,536,809 0.02 $ 4,536,809 0.02 $
			0.02 $
			0.02 $

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(31) Transactions with non-controlling interest

A. Acquisition of additional equity interest in a subsidiary
(a) Subsidiary, Peony, purchased 32.5% of outstanding shares of EMA for cash of $44,940 (approx. USD 1,461) on December 28, 2018. The carrying amount of non-controlling interest in EMA was $41,019 at the acquisition date. This transaction resulted in a decrease in the non-controlling interest by $41,019 and a decrease in the equity attributable to owners of the parent by $3,921.
(b) Subsidiary, Everport Terminal Service Inc., purchased 49% of outstanding shares of Island for cash of $262,927 (approx. USD 8,853) on January 1, 2018. The carrying amount of noncontrolling interest in Island was $223,006 at the acquisition date. This transaction resulted in a decrease in the non-controlling interest by $223,006 and a decrease in the equity attributable to owners of the parent by $39,921.
(c) Subsidiary, EGH, purchased 3% of outstanding shares of MAC for cash of $650 (approx. USD 21) on December 10, 2019. The carrying amount of non-controlling interest in MAC was $2,019 at the acquisition date. This transaction resulted in a decrease in the noncontrolling interest by $2,019 and an increase in the equity attributable to owners of the parent by $1,369.
B. The effect of changes in interests in MAC, EMA and Island on the equity attributable to owners of the parent for the years ended December 31, 2018 and 2019 are shown below:

Carrying amount of non-controlling interest acquired Consideration paid to non-controlling interest ( Capital surplus - difference between proceeds on actual acquisition of or disposal of equity interest in a subsidiary and its carrying amount (	Year ended December 31,2018 264,025 $ 307,867) ( 43,842) $	Year ended December 31,2019
		2,019 $ 650)
		1,369 $

C. The Group did not participate in the capital increase raised by a subsidiary proportionally to its interest to the subsidiary

Indirect subsidiary ECO of the Group increased its capital by issuing new shares on May 31, 2019. The subsidiary EGH did not acquire shares proportionally to its interest. As a result, the Group decreased its share interest by 25%. The transaction increased non-controlling interest by $6,387 and decreased the equity attributable to owners of parent by $3,006. The effect of changes in interests in ECO on the equity attributable to owners of the parent for the year ended December 31, 2019 is shown below:

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Cash Increase in the carrying amount of non-controlling interest Retained earnings - recognition of changes in ownership interest in subsidiaries	Year ended December 31,2019 3,381 $ 6,387 3,006) ($

(32) Business combinations

A. On December 14, 2018, subsidiary, EGH, acquired 100% of the shares of HMH for cash of $3,265,341 (approx. USD 105,808) and obtained control of the company. The company primarily provides shipping agency services. As a result of the acquisition, the Group is expected to strengthen its foothold in the Greater China market and expand our shipping agency and other related businesses in the region.
B. On January 1, 2018, subsidiary, Peony Investment, acquired 51% of the shares of EGV for cash of $10,603 (approx. USD 357). Peony Investment has a 49% equity interest before acquiring these 51% equity interests, therefore, Peony owns 100% of the shares of EGV after the acquisition and has control of EGV. The company primarily provides cargo and shipping agency services in Malaysia. As a result of the acquisition, the Group is expected to increase its presence in these markets. It also expects to reduce costs through economies of scale.
C. The following table summarises the consideration paid and the fair values of the assets acquired and liabilities assumed at the acquisition date, as well as the non-controlling interest’s proportionate share of the recognised amounts of acquiree’s identifiable net assets at the acquisition date:

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		HMH
Purchase consideration
Cash paid	$	3,265,341	$	10,603
Fair value of equity interest in EGV
held before the business combination		-		10,187
		3,265,341		20,790
Fair value of the identifiable assets
acquired and liabilities assumed
Cash and cash equivalents		489,234		150,880
Accounts receivable		922,433		103,402
Prepayments		15,057		3,549
Other receivables		55,777		3,471
Other current assets		17,210		89,482
Investments accounted for using
equity method		87,092		-
Property, plant and equipment, net		178,126		33,096
Investment property, net		962,109		-
Intangible assets		2,144,086		-
Other non-current assets		10,936		4,841
Accounts payable	(	226,261)	(	41,965)
Other payables	(	12,199)	(	223,234)
Current income tax liabilities	(	20,195)	(	7,267)
Other current liabilities	(	842,902)	(	102,077)
Long-term loans	(	131,261)		-
Deferred income tax liabilities	(	150,280)		-
Other non-current liabilities	(	224,773)		-
Total identifiable net assets		3,274,189		14,178
Goodwill / Gain from bargain purchase	($	8,848)	$	6,612

D. As at December 14, 2018, the fair value of the acquired identifiable intangible assets – customer relationship was estimated to be $2,144,086.
E. The Group originally held 49% of share ownership in EGV before the business combination. Loss on remeasurement of fair value amounted to $119,908.
F. The subsidiary, EGH, consolidated HMH as of December 14, 2018, and HMH contributed operating income and pre-tax loss of $6,807 and $115,535, respectively. Had EGH been consolidated from January 1, 2018, the consolidated statement of comprehensive income for the year ended December 31, 2018 would show operating revenue and profit before income tax of $1,183,972 and $712,310, respectively.

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(33) Supplemental cash flow information

A. Investing activities with partial cash payments
(a) Property, plant and equipment

Purchase of property, plant and equipment Add: Opening balance of payable on equipment Less: Ending balance of payable on equipment Cash paid during the period	Year ended December 31,2018 10,041,327 $ 58,347 34,258) ( 10,065,416 $	Year ended December 31,2019 7,152,288 $ 34,258 455,427) ( 6,731,119 $

(b) Prepayments for equipment (recorded as other non-current assets)

Investments accounted for using equity method
Year ended
December 31,2018
Purchase of prepayments for equipment
14,606,580
$ Add: Opening balance of payable on
prepayments for equipment
4,638
Less: Ending balance of payable on
prepayments for equipment
194)
(
Capitalized borrowing costs
155,226)
(

Cash paid during the period
14,455,798
$ Year ended
December 31,2018
Purchase of investments
accounted for using equity method
1,003,740
$ Add: Opening balance of payable
on capital stock
23,166)
(
Less: Ending balance of payable
on capital stock
-
Cash paid during the period
980,574
$

Year ended
December 31,2019
12,565,222
$ 194
-
193,678)
(
12,371,738
$ Year ended
December 31,2019
1,248,694
$ -
-
1,248,694
$

(c) Investments accounted for using equity method

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(d) The balances of the assets and liabilities of consolidated subsidiaries for the current period are as follows:

(e) Change in non-controlling interest
Cash and cash equivalents
Accounts receivable
Prepayments
Other receivables
Other current assets
Investments accounted for using
equity method
Property, plant and equipment, net
Investment property, net
Intangible assets
Other non-current assets
Accounts payable
Other payables
Current income tax liabilities
Other current liabilities
Long-term loans
Deferred income tax liabilities
Other non-current liabilities
Cash paid for the acquisition
Cash and cash equivalents
Net cash paid for the acquisition
Goodwill/Gain from bargain purchase
Change in transactions with
non-controlling interest
Add: Opening balance of payable
on investments
Less: Ending balance of payable
on investments
Add: Acquired from business
combinations
Cash paid during the period

January1,2018
640,114
$ 1,025,835
18,606
59,248
106,692
87,092
211,222
962,109
2,144,086
15,777
268,226)
(
235,433)
(
27,462)
(
944,979)
(
131,261)
(
150,280)
(
224,773)
(
2,236)
(
3,286,131
$ 3,275,944
$ 640,114)
(
2,635,830
$ Year ended
Year ended
December 31,2018
December 31,2019
1,167,819
$ 69,111)
($ -
-
-
-
48,163
-
1,215,982
$ 69,111)
($

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(34) Changes in liabilities from financing activities

Changes in liabilities from financing activities	Changes in liabilities from financing activities	ctivities	ctivities
Long-term borrowings (including current portion) Guarantee deposits received Lease liabilities (lease payable) and Financial liabilities for hedging At January 1, 2018 81,487,631 $ 37,608 $ 10,381,197 $ Changes in cash flow from financing activities 16,260,197 122,898 1,050,945) ( Changes in acquisition of subsidiaries 131,261 185,703 141 Impact of changes in foreign exchange rate 1,481,412 906 368,054 At December 31, 2018 99,360,501 $ 347,115 $ 9,698,447 $ Long-term borrowings (including current portion) Guarantee deposits received Lease liabilities (lease payable) and Financial liabilities for hedging At January 1, 2019 99,360,501 $ 347,115 $ 11,639,698 $ Adjustments under new standards - - 60,563,079 Changes in cash flow from financing activ 8,768,332 13,068) ( 11,628,066) ( ( Changes in other non-cash items - - 21,996,710 Impact of changes in foreign exchange rat 1,427,265) ( 8,060) ( 1,339,586) ( ( At December 31, 2019 106,701,568 $ 325,987 $ 81,231,835 $		Long-term borrowings (including current portion)		Guarantee deposits received		Lease liabilities (lease payable) and Financial liabilities for hedging	Liabilities from financing activities-gross
							91,906,436 $ 15,332,150 317,105 1,850,372 109,406,063 $ Liabilities from financing activities-gross
	99,360,501 $ - 8,768,332 - 1,427,265) ( 106,701,568 $		347,115 $ - 13,068) ( - 8,060) ( 325,987 $		11,639,698 $ 60,563,079 11,628,066) ( ( 21,996,710 1,339,586) ( ( 81,231,835 $		111,347,314 $ 60,563,079 2,872,802) 21,996,710 2,774,911) 188,259,390 $

7. RELATED PARTY TRANSACTIONS

(1) Names of related parties and their relationship with the Group

LATED PARTY TRANSACTIONS
Names of related parties and their relationship with the Group
At December 31, 2019
106,701,568
$ 32
$

5,987
81,231,835
$ 188,2
$

Names of related parties

Relationship withthe Group

Evergreen International Storage and Transport Corp. (EITC)
Eva Airways Corp. (EVA)
Evergreen Security Corp. (ESC)
Charng Yang Development Co., Ltd. (CYD)
Taipei Port Container Terminal Corp. (TPCT)
Ningbo Victory Container Co. Ltd. (NVC)
Qingdao Evergreen C&T Co., Ltd. (QECT)
Evergreen Marine (Latin America) S.A. (ELA)
Green Properties Sdn. Bhd. (GPP)
Luanta Investment (Netherlands) N.V. (Luanta)
Balsam Investment (Netherlands) N.V. (Balsam)
Italia Marittima S.p.A. (ITS)
Colon Container Terminal S.A. (CCT)
PT. Evergreen Shipping Agency Indonesia (EMI)
Evergreen Shipping Agency Co. (U.A.E) LLC (UAE)
Evergreen Shipping Agency Lanka (Private) Limited (ELK)
VIP Greenport Joint Stock Company (VGP)
Ics Depot Services Sdn. Bhd. (IDS)

Associate
Associate
Associate
Associate
Associate
Associate
Associate
Associate
Associate
Associate
Associate
Associate
Associate
Associate
Associate
Associate
(An associate since
March 1,2019)
Associate
Associate

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Names of related parties

Relationship withthe Group

Evergreen International Corp. (EIC)
Evergreen Airline Service Corp. (EGAS)
Chang Yung-Fa Charity Foundation (CYFC)
Chang Yung-Fa Foundation (CYFF)
Eever Accord Construction Corporation (EAC)
Evergreen Aviation Technologies Corporation (EGAT)
Evergreen Sky Catering Corporation (EGSC)
Evergreen Air Cargo Services Corporation (EGAC)
Evergreen Aviation Precision Corporation (EGAP)
Evergreen International S.A. (EIS)
Evergreen Marine (Singapore) Pte. Ltd. (EMS)
Gaining Enterprise S.A. (GESA)
Eevergreen Insurance Company Limited (EINS)
Evergreen Shipping Agency (America) Corporation (EGA)
Evergreen Shipping Agency (Japan) Corporation (EGJ)
Evergreen Shipping Agency Philippines Corporation (EGP)
Evergreen International Myanmar Co., Ltd. (EIM)
Chestnut Estate B.V. (Chestnut)
Advanced Business Process, Inc. (ABPI)
Directors, General manager and Vice General Manager

Other related party
Other related party
Other related party
Other related party
Other related party
Other related party
Other related party
Other related party
Other related party
(Has been merged with EGAT
on Febuary 28,2019)
Other related party
Other related party
Other related party
Other related party
Other related party
Other related party
Other related party
Other related party
Other related party
Other related party
Key management

(2) Significant related party transactions and balances

A. Operating revenue:

nificant related party transactions and balances Operating revenue:
Sales of services: Associates Other related parties	Year ended December 31,2018 2,830,008 $ 10,452,502 13,282,510 $	Year ended December 31,2019
		1,859,166 $ 13,772,984
		15,632,150 $

The business terms on which the Group transacts with related parties are of no difference from those with non-related parties.

B. Purchases:

those with non-related parties. Purchases:
Purchases of services: Associates Other related parties	Year ended December 31,2018 3,293,741 $ 7,481,533 10,775,274 $	Year ended December 31,2019
		3,476,170 $ 7,720,670
		11,196,840 $

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Goods and services are purchased from associates and other related parties on normal commercial terms and conditions.

C. Receivables from related parties:

terms and conditions. Receivables from related parties:
. Accounts receivable: Associates Other related parties Subtotal Other receivables: Associates -Other Other related parties -EIC -Other Subtotal Total	December 31,2018 115,875 $ 387,763 503,638 $ 1,626 $ 179,661 8,402 189,689 $ 693,327 $	December 31,2019
		121,156 $ 659,406
		780,562 $
		1,818 $ - 18,796
		20,614 $
		801,176 $

D. Payables to related parties:

from related parties. Payables to related parties:
. Accounts payable: Associates Other related parties Subtotal Other payables: Associates Other related parties Subtotal Total	December 31,2018 61,940 $ 191,232 253,172 $ 25,548 $ 156,320 181,868 $ 435,040 $	December 31,2019
		143,074 $ 268,028
		411,102 $
		31,825 $ 149,671
		181,496 $
		592,598 $

The payables to related parties arise mainly from purchase transactions. The payables bear no interest.

E. Property transactions:
(a) Acquisition of property, plant and equipment:

Associates Other related parties	Year ended December 31,2018 - $ 4,805 4,805 $	Year ended December 31,2019 4,446 $ 172 4,618 $

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(b) Disposal of property, plant and equipment:

Other related parties		Disposal proceeds Gain (loss) on disposal December 31,2018 Year ended	Disposal proceeds Gain (loss) on disposal December 31,2018 Year ended	Disposal proceeds Gain (loss) on disposal December 31,2018 Year ended		Disposal proceeds Gain (loss) on disposal December 31,2019 Year ended	Disposal proceeds Gain (loss) on disposal December 31,2019 Year ended	Disposal proceeds Gain (loss) on disposal December 31,2019 Year ended
		Disposal proceeds				Disposal proceeds
		- $		- $		149 $		14 $

F. Leasing arrangements - lessee

(a) The Group leases buildings, ships as well as loading and unloading equipment from associates and other related parties. Rental contracts are typically made for periods of 2 to 9 years, rents are paid in accordance with the contract terms.

(b) Acquisition of right-of-use assets:

(c) Lease liabilities:
i. Outstanding balance:

increased ‘right-of-use asset’ by $3,196,381. Lease liabilities: i. Outstanding balance:
ii. Interest expense: Associates Other related parties Associates Other related parties	December 31,2019
	791,302 $ 487,665
	1,278,967 $
	Year ended December 31,2019
	42,655 $ 19,682
	62,337 $

(d) Lease liabilities designated as hedges:

Lease liabilities designated as hedges: Associates Other related parties	December 31,2019 42,655 $ 19,682 62,337 $
Associates Other related parties	December 31,2019
	94,049 $ 610,456
	704,505 $

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G. Agency accounts:

December 31, 2018 December 31, 2019

Debit balance of agency accounts:

. Debit balance of agency accounts:	Dece	mber 31,2018	Decem	ber 31,2019
Associates	$	-	$	513
Other related parties
-EIC		-		337,038
-Other		-		98,580
	$	-	$	436,131
Credit balance of agency accounts:
Associates	($	170,132)	($	135,281)
Other related parties
-EIC	(	382,642)		-
-EGA	(	648,750)		-
-EGJ	(	441,941)	(	523,778)
-Other	(	57,287)	(	49,274)
	($	1,700,752)	($	708,333)

H. Shipowner’s accounts:

. Debit balance of shipowner’s accounts: Associates -ITS Other related parties -EIS -GESA . Credit balance of shipowner’s accounts: Associates -ITS Other related parties -EIS -EMS	December 31,2018 December 31,2019 133,072 $ - $ 471,267 - 20,409 28,957 624,748 $ 28,957 $ December 31,2018 December 31,2019 - $ 277,877) ($ - 1,027,141) ( 1,804,031) ( 1,061,752) ( 1,804,031) ($ 2,366,770) ($

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I. Loans to/from related parties:
(a) Loans to related parties:
- i. Outstanding balance:

ns to/from related parties: Loans to related parties: i. Outstanding balance:
ii. Interest income . Associates Associates	December 31,2018 409,242 $ Year ended December 31,2018 10,314 $	December 31,2019
		722,926 $
		Year ended December 31,2019
		19,784 $

The loans to associates carry interest at floating rates for the years ended December 31, 2018 and 2019.

(b) Loans from related parties:
i. Outstanding balance:

and 2019. Loans from related parties: i. Outstanding balance:
ii. Interest expense: . Other related parties Other related parties	December 31,2018 1,002,616 $ Year ended December 31,2018 40,026 $	December 31,2019
		524,743 $
		Year ended December 31,2019
		30,485 $

Other related parties

The loans from associates carry interest at floating rates for the years ended December 31, 2018 and 2019.

J. Endorsements and guarantees provided to related parties:

. Associates	December 31,2018 3,646,750 $	December 31,2019
		3,674,191 $

K. On December 20, 2017, the Board of Directors resolved to have the subsidiary ETS acquire 15% of the shares of Island for $80,488 (approx. USD 2,710) from the associate, ITS. The acquisition date was January 1, 2018.
L. On June 7, 2018, the Board of Directors resolved to have the subsidiary, Peony Investment, acquire 11.1074% of the shares of ICS Depot Services Snd. Bhd. for $21,568 (approx. USD 706) from the associate, GESA. The acquisition date was June 30, 2018.
M. On August 13, 2018, the Board of Directors of the subsidiary, EGH, during their meeting resolved to acquire 100% of the shares of HMH from other the related party, Chestnut. The acquisition date was December 14, 2018, and the transaction amount was $3,265,341 (approx. USD 105,808).
N. The Board of Directors of the Company during its meeting on December 21, 2018 adopted a resolution to participate in the capital increase raised by EVA Airways Corporation amounting to 39,150 thousand shares, subscription price of NT$13 (in dollars) per share, whose total price of $508,944. The effective date was set on January 24, 2019. Moreover, the Company purchased 70 thousand shares as specific person, the purchasing proceeds amounted to $700.

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O. On November 11, 2019, the Board of Directors of the subsidiary, Peony, has resolved to participate

in the capital increase of the investee, Balsam, the investment accounted for using equity method, as the original shareholder. The amount of capital increase was USD 24,500. The effective date was set on November 14, 2019.

(3) Key management compensation

was set on November 14, 2019. Key management compensation
Salaries and other short-term employee benefits Post-employment benefits	Year ended December 31,2018 150,727 $ 3,704 154,431 $	Year ended December 31,2019
		179,520 $ 2,530
		182,050 $

8. PLEDGED ASSETS

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

Pledged assets Financial assets at amortised cost - Pledged time deposits Refundable deposits - Pledged time deposits Property, plant and equipment -Land -Buildings -Loading and unloading equipment -Ships -Computer and communication equipment Investment property -Land -Buildings	December 31,2018 December 31,2019 Purpose Performance 271,721 $ 290,740 $ guarantee 2,000 2,000 � 514,312 514,312 Long-term loan 5,760,284 5,631,364 � 1,971,185 1,900,801 � 71,813,444 71,742,174 � 502,283 314,161 � 1,285,781 1,285,781 Long-term loan 4,393,746 3,972,653 � 86,514,756 $ 85,653,986 $ Book value
	December 31,2018 271,721 $ 2,000 514,312 5,760,284 1,971,185 71,813,444 502,283 1,285,781 4,393,746 86,514,756 $

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9. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNISED CONTRACT COMMITMENTS

(1) Contingencies
None.
(2) Commitments
A. As of December 31, 2019, the Company had delegated DBS Bank to issue Standby Letter of Credit amounting to USD 5,000.
B. As of December 31, 2019, the long-term and medium-term loan facilities granted by the financial institutions with the resolution from the Board of Directors to finance the Group’s purchase of new ships and general working capital requirement amounted to $126,988,260 and the unutilized credit was $ 20,251,608.
C. As of December 31, 2019, the amount of guaranteed notes issued by the Company for loans borrowed was $72,607,919.
D. To meet its operational needs, the Company signed the shipbuilding contracts with Samsung Heavy Industries, Hyundai Mipo Dockyard Co., td, Jiangnan Shipyard (Group) Co., Ltd. and China Shipbuilding Trading Company Ltd.. As of December 31, 2019, the total price of the contracts, wherein the vessels have not yet been delivered, amounted to USD 2,487,592, USD 2,209,589 of which remain unpaid.
E. To meet its operational needs, the Company signed the transportation equipment purchase contracts. As of December 31, 2019, the total price of the contracts, wherein the equipment have not yet been delivered, amounted to USD 111,591, USD 55,455 of which remain unpaid.
F. In response to international regulations on sulfur content in shipping fuel, the Group entered into sulfur emission abatement equipment purchase contracts with Wartsila Finland Oy, China Shipbuilding & Offshore International Co., Ltd.and Alfa Laval Nijmegen B.V.. The total contract prices are USD 54,950 and EUR 1,383, respectively, and USD 37,360 and EUR 277 remain unpaid. The Group signed installation contracts with Huarun Dadong Dockyard Co., Ltd., COSCO Shipping Heavy Industry (Zhoushan) Co., Ltd., Liftech Consultants Inc., China Shipbuilding & Offshore International Co., Ltd., Yiu Lian Dockyards (Shekou) Ltd. and Global Oil And Gas Services. As of December 31, 2019, the total price of the contracts amounted to USD 63,652, USD 56,523 of which remain unpaid.
G. To cooperate with the construction in Kaohsiung Port 7th container center, the Company entered into the technique plan service contract for bridge crane with Liftech Consultants Inc., the total contract amount was USD235 and the unpaid amount was USD196.
H. For the Group’s lease contract which was entered into but not completed construction, the expected minimum lease payment in the future was $116,050,362.
SIGNIFICANT DISASTER LOSS
None.

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11. SIGNIFICANT EVENTS AFTER THE BALANCE SHEET DATE

(1) For details of appropriation of earnings as proposed by the Board of Directors on March 24, 2020, please refer to Note 6(20).
(2) To simplify investment structure, on November 11, 2019, the Board of Directors of the Company resolved to acquire 35,421,358 shares of the investee, Taipei Port, the investment accounted for using equity method, held by the sub-subsidiary, Armand B.V. The transaction amount per share is approximately $9.941 (in dollars) and the expected transaction amount is $352,123. The shareholding ratio of Taipei Port held by the Company will be increased from 21.03% to 27.85% after the transaction. As of the reporting date, the registration for the transfer has been completed.
(3) Due to the impact of the spread of COVID-19 virus, the Group’s operation in some locations and shipping lines were affected. The degree of impact to the Group’s operating income would depend on the subsequent control of the spread of COVID-19 virus.
(4) On March 24, 2020, to meet the operation needs, the Board of Directors of the Company resolved to order 3,800 set freezers with 40-feet from China International Marine Containers Ltd., Dongfang International Container Co., Ltd., Guangdong Fuwa Engineering Group Co., Ltd. and Maersk Container Industry, the total transaction amount was USD26,460. As of the reporting date, the related transaction payments have not been settled.
(5) On December 20, 2019, the Board of Directors of the subsidiary, EGH, resolved to acquire 501,000 shares of the investee, ELA, which is accounted for using equity method, from the Company, the sub-subsidiary, EMU, the associate ITS and the other related parties, EIS and EMS. The transaction price was USD1.0859 (in dollars) per share, and the total transaction amount was USD544. After the transaction, EGH’s shareholding ratio was increased from 16.50% to 100%. As of the reporting date, the related transaction payments were settled, and the transfer was completed.

12. OTHERS

(1) Capital management

(2) Financial instruments
A. Financial instruments by category

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December 31, 2018

December 31, 2019

	December31,2018	December31,2019
Financial assets Financial assets at fair value through other comprehensive income Designation of equity instrument Financial assets at amortised cost Cash and cash equivalents Financial assets at amortised cost Notes receivables Accounts receivable Other accounts receivable Guarantee deposits paid Financial liabilities Financial liabilities at amortised cost Accounts payable Other accounts payable Bonds payable Lease payable (including current portion) Long-term borrowings (including current portion) Guarantee deposits received Financial liabilities for hedging (including current portion)	1,650,372 $ 35,836,635 2,765,608 154,295 15,516,849 1,481,452 226,760 55,981,599 $ December31,2018 20,066,362 $ 4,807,376 10,000,000 - 99,360,501 347,115 134,581,354 $ - $	1,719,423 $
		37,871,889 2,118,536 129,545 14,759,813 1,027,279 229,095
		56,136,157 $
		December31,2019
		16,580,812 $ 5,113,118 10,000,000 61,042,893 106,701,568 325,987
		199,764,378 $
		20,188,942 $

B. Financial risk management policies
(a) The Group’s activities expose it to a variety of financial risks: market risk (including foreign exchange risk, interest rate risk and price risk), credit risk and liquidity risk. The Group’s overall risk management programme focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on the Group’s financial position and financial performance.
(b) Risk management is carried out by the Group’s Finance Department under policies approved by the Board of Directors. The Group’s Finance Department identifies, evaluates and hedges financial risks in close co-operation with the Group’s Operating Department. The Board of Directors provides written principles for overall risk management, as well as written policies covering specific areas and matters, such as foreign exchange risk, interest rate risk, credit risk, use of derivative financial instruments and non-derivative financial instruments, and investment of excess liquidity.

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C. Significant financial risks and degrees of financial risks
(a) Market risk

Foreign exchange risk

i. The Group operates internationally and is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to the USD and CNY. Foreign exchange risk arises from future commercial transactions, recognised assets and liabilities and net investment in foreign operations.
ii. The Group’s management has set up a policy to require group companies to manage their foreign exchange risk against their functional currency. The group companies are required to hedge their entire foreign exchange risk exposure with the Group’s Finance Department. To manage their foreign exchange risk arising from future commercial transactions and recognised assets and liabilities, entities in the Group use forward foreign exchange contracts, transacted with Group’s Finance Department. Foreign exchange risk arises when future commercial transactions or recognised assets or liabilities are denominated in a foreign currency that is not the entity’s functional currency.
iii. The Group’s businesses involve some non-functional currency operations (the Company’s and certain subsidiaries’ functional currency: NTD; other certain subsidiaries’ functional currency: USD, GBP, EUR, CNY and others). The information on assets and liabilities denominated in foreign currencies whose values would be materially affected by the exchange rate fluctuations is as follows:

exchange rate fluctuations is as follows:	:	:	:
Foreign currency amount Book value (In Thousands) Exchange rate (NTD) Financial assets Monetary items USD:NTD 975,655 $ 30.7535 30,004,806 $ Financial liabilities Monetary items USD:NTD 955,998 $ 30.7535 29,400,284 $ HKD:USD 102,461 0.1276 402,072 GBP:USD 5,892 1.2650 229,218 CNY:USD 209,819 0.1456 939,509 EUR:USD 4,406 1.1450 155,147 December 31,2018 (Foreign currency: functional currency)	December 31,2018
		Exchange rate 30.7535 30.7535 0.1276 1.2650 0.1456 1.1450	Book value (NTD)
			30,004,806 $ 29,400,284 $ 402,072 229,218 939,509 155,147

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Foreign currency amount Book value (In Thousands) Exchange rate (NTD) Financial assets Monetary items USD:NTD 582,814 $ 30.0130 17,491,997 $ GBP:USD 2,889 1.3118 113,743 Financial liabilities Monetary items USD:NTD 407,490 30.0130 12,229,997 HKD:USD 97,479 0.1284 375,652 GBP:USD 3,807 1.3118 149,886 EUR:USD 4,190 1.1233 141,260 CNY:USD 225,390 0.1431 968,019 December 31,2019 (Foreign currency: functional currency)	December 31,2019	December 31,2019	December 31,2019
		Exchange rate 30.0130 1.3118 30.0130 0.1284 1.3118 1.1233 0.1431	Book value (NTD)
			17,491,997 $ 113,743 12,229,997 375,652 149,886 141,260 968,019

iv. The total exchange (loss) gain, including realised and unrealised arising from significant foreign exchange variation on the monetary items held by the Group for the years ended December 31, 2018 and 2019 amounted to $308,013 and $217,597, respectively.

v. Analysis of foreign currency market risk arising from significant foreign exchange variation:

variation:
Degree of Effect on Effect on other comprehensive variation profit or loss income Financial assets Monetary items USD:NTD 1% 300,048 $ - $ Financial liabilities Monetary items USD:NTD 1% 294,003 $ - $ HKD:USD 1% 4,021 - GBP:USD 1% 2,292 - CNY:USD 1% 9,395 - EUR:USD 1% 1,551 - Year ended December 31,2018 Sensitivityanalysis (Foreign currency: functional currency)	Year ended December 31,2018
	Sensitivityanalysis
		Effect on profit or loss 300,048 $ 294,003 $ 4,021 2,292 9,395 1,551	Effect on other comprehensive income
			- $ - $ - - - -

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Year ended December 31, 2019

Year ended December 31,2019	Year ended December 31,2019	Year ended December 31,2019	Year ended December 31,2019
Degree of Effect on Effect on other comprehensive variation profit or loss income Financial assets Monetary items USD:NTD 1% 174,920 $ - $ GBP:USD 1% 1,137 - Financial liabilities Monetary items USD:NTD 1% 122,300 $ - $ HKD:USD 1% 3,757 - GBP:USD 1% 1,499 - EUR:USD 1% 1,413 - CNY:USD 1% 9,680 - Sensitivityanalysis (Foreign currency: functional currency)	Sensitivityanalysis
		Effect on profit or loss 174,920 $ 1,137 122,300 $ 3,757 1,499 1,413 9,680	Effect on other comprehensive income
			- $ - - $ - - - -

Price risk

i. The Group is exposed to equity securities price risk because of investments held by the Group and classified on the consolidated balance sheet at fair value through other comprehensive income. The Group is not exposed to commodity price risk. To manage its price risk arising from investments in equity securities, the Group diversifies its portfolio. Diversification of the portfolio is done in accordance with the limits set by the Group.
ii. The Group’s investments in equity securities comprise domestic listed and unlisted stocks. The prices of equity securities would change due to the change of the future value of investee companies. If the prices of these equity securities had increased/decreased by 1% with all other variables held constant, equity would have increased/decreased by $16,071 and $16,845 for the years ended December 31, 2018 and 2019, respectively, as a result of other comprehensive income classified as equity investment at fair value through other comprehensive income.

Cash flow and fair value interest rate risk

i. The Group’s interest rate risk arises from long-term borrowings. Borrowings issued at variable rates expose the Group to cash flow interest rate risk which is partially offset by cash and cash equivalents held at variable rates. Borrowings issued at fixed rates expose the Group to fair value interest rate risk. During the years ended December 31, 2018 and 2019, the Group’s borrowings at variable rate were denominated in the NTD, USD and GBP.

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ii. At December 31, 2018 and 2019, if interest rates on borrowings had been 1% higher/lower with all other variables held constant, post-tax profit for the years ended December 31, 2018 and 2019 would have been $866,151 and $946,578 lower/higher, respectively, mainly as a result of higher/lower interest expense on floating rate borrowings.
(b) Credit risk
i. Credit risk refers to the risk of financial loss to the Group arising from default by the clients or counterparties of financial instruments on the contract obligations. The main factor is that counterparties could not repay in full the accounts receivable based on the agreed terms.
ii. The Group manages their credit risk taking into consideration the entire group’s concern. According to the Group’s credit policy, each local entity in the Group is responsible for managing and analysing the credit risk for each of their clients before standard payment and delivery terms and conditions are offered. Internal risk control assesses the credit quality of the customers, taking into account their financial position, past experience and other factors.
iii. The Group adopts following assumptions under IFRS 9 to assess whether there has been a significant increase in credit risk on that instrument since initial recognition: If the contract payments were past due over 30 days based on the terms, there has been a significant increase in credit risk on that instrument since initial recognition.
iv. If the default rate of an investment target exceeds 0.03%, there has been a significant increase in credit risk on that instrument since initial recognition.
v. The Group classifies customers’ contract assets, notes receivable, accounts receivable (including related parties) and overdue receivable in accordance with the nature of segments. The Group applies the modified approach using probability of default to estimate expected credit loss under the provision matrix basis.
vi. The Group wrote-off the financial assets, which cannot be reasonably expected to be recovered, after initiating recourse procedures. However, the Group will continue executing the recourse procedures to secure their rights. As of December 31, 2018 and 2019, the Group has no written-off financial assets that are still under recourse procedures.
vii. The Group used the forecastability to adjust historical and timely information to assess the default possibility of notes receivable, accounts receivable (including related parties), contract assets and overdue receivable. As of December 31, 2018 and 2019, the loss rate methodology is as follows:

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At December 31, 2018 Expected loss rate Total book value Loss allowance At December 31, 2019 Expected loss rate Total book value Loss allowance	Individual 100% 269,567 $ 269,567 $ Individual 100% 269,506 $ 269,506 $	Group 0.17% 17,945,460 $ 30,251 $ Group 0.08% 16,595,777 $ 12,922 $	Total
			18,215,027 $
			299,818 $
			Total
			16,865,283 $
			282,428 $

viii. Movements in relation to the group applying the modified approach to provide loss

allowance for notes receivable, accounts receivable (including related parties), contract assets and overdue receivable are as follows:

allowance for notes receivable, accounts receivable (including related parties), contrac assets and overdue receivable are as follows:	eivable (including related par	ties), contrac
Notes Accounts Contract Overdue receivable receivable assets receivable At January 1_IAS 39 - $ 96,283) ($ - $ 195,715) ($ Adjustments under new standards 5) ( 909) ( 4,467) ( - At January 1_IFRS 9 5) ( 97,192) ( 4,467) ( 195,715) ( Provision for impairment - 15,524) ( - - Reversal of impairment loss 1 10,192 3,858 - Write-offs - 1,114 - - Effect of foreign exchange - 4,942 83) ( 6,939) ( At December 31 4) ($ 96,468) ($ 692) ($ 202,654) ($ Notes Accounts Contract Overdue receivable receivable assets receivable At January 1 4) ($ 96,468) ($ 692) ($ 202,654) ($ Provision for impairment - 1,312) ( 126) ( - Reversal of impairment loss 2 17,534 238 - Reclassifications - 66,913 - 66,913) ( Write-offs - 665 - - Effect of foreign exchange - 323 5 61 At December 31 2) ($ 12,345) ($ 575) ($ 269,506) ($ 2019 2018	2018
		Overdue receivable
		269,506) ($

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(c) Liquidity risk

i. Cash flow forecasting is performed in the operating entities of the Group and aggregated by Group’s Finance Department. Group’s Finance Department monitors rolling forecasts of the Group’s liquidity requirements to ensure it has sufficient cash to meet operational needs.
ii. The table below analyses the Group’s non-derivative financial liabilities and net-settled or gross-settled derivative financial liabilities into relevant maturity groupings based on the remaining period at the balance sheet date to the contractual maturity date for nonderivative financial liabilities.

Non-derivative financial liabilities:

derivative financial liabilities. Non-derivative financial liabilities:	iabilities. liabilities:
December 31, 2018 Less than 3 months Accounts payable 19,747,208 $ Accounts payable - related parties 145,511 Other payables 3,345,893 Other payables - related parties 80,048 Bonds payable - Long-term loans (including current portion) 6,739,554 Long-term leases (including current portion) 593,514 Non-derivative financial liabilities: December 31, 2019 Less than 3 months Accounts payable 16,165,426 $ Accounts payable - related parties 369,044 Other payables 4,115,041 Other payables - related parties 696,438 Bonds payable - Long-term loans (including current portion) 4,063,463 Lease payable and financial liabilities for hedging (including current portion) 3,815,715	Less than 3 months	Between 3 months and 1year	Between 1 and 2years	Between 2 and 5years	Over 5years	Total
		65,975 $ 107,661 275,033 1,104,436 101,200 12,365,049 1,347,737 Between 3 months and 1year	7 $ - - - 101,200 25,567,731 1,245,685 Between 1 and 2years	- $ - - - 10,177,600 47,214,097 8,452,762 Between 2 and 5years	- $ - 1,966 - - 16,668,096 - Over 5years	19,813,190 $ 253,172 3,622,892 1,184,484 10,380,000 108,554,527 11,639,698 Total
December 31, 2019 Accounts payable Accounts payable - related parties Other payables Other payables - related parties Bonds payable Long-term loans (including current portion) Lease payable and financial liabilities for hedging (including current portion)
	16,165,426 $ 369,044 4,115,041 696,438 - 4,063,463 3,815,715	4,284 $ 42,058 288,335 - 101,200 21,210,732 9,799,502	- $ - 3,503 - 4,101,200 23,999,762 12,274,193	- $ - - - 6,076,400 47,550,813 34,201,995	- $ - - 9,801 - 17,454,788 34,848,315	16,169,710 $ 411,102 4,406,879 706,239 10,278,800 114,279,558 94,939,720

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     - iii. The Group does not expect the timing of occurrence of the cash flows estimated through the maturity date analysis will be significantly earlier, nor expect the actual cash flow amount will be significantly different.

(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 if it meets all the following conditions: the items traded in the market are homogeneous; willing buyers and sellers can normally be found at any time; and prices are available to the public. The fair value of the Group’s investment in listed stocks, beneficiary certificates and derivative instruments with quoted market prices is included in Level 1.
- Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.
- Level 3: Unobservable inputs for the asset or liability.
B. Fair value information of investment property at cost is provided in Note 6(10).
C. Financial instruments not measured at fair value
- (a) Except for those listed in the table below, the carrying amounts of cash and cash equivalents, notes receivable, accounts receivable, other receivables, financial assets measured at amortised cost, accounts payable and other payables are approximate to their fair values.

Financial liabilities: Bonds payable Long-term loans (including current portion) Financial liabilities: Bonds payable Long-term loans (including current portion)	December	31,2018
	Book value 10,000,000 $ 99,360,501 109,360,501 $ December	Fair value
		Level 3
		10,156,197 $ 108,243,508
		118,399,705 $
		31,2019
	Book value 10,000,000 $ 106,701,568 116,701,568 $	Fair value
		Level 3
		10,154,063 $ 114,134,001
		124,288,064 $

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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 are as follows:

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

December 31, 2018 Assets: Recurring fair value measurements Financial assets at fair value through other comprehensive income Equity securities December 31, 2019 Assets: Recurring fair value measurements Financial assets at fair value through other comprehensive income Equity securities Liabilities: Derivative financial liabilities for hedging Recurring fair value measurements	Level 1 850,223 $ Level 1 989,850 $ - $	Level 2 - $ Level 2 - $ - $	Level 3 800,149 $ Level 3 729,573 $ - $	Total
				1,650,372 $
				Total
				1,719,423 $
				20,188,942 $

(b) The methods and assumptions the Group used to measure fair value are as follows:
i. The instruments the Group used market quoted prices as their fair values (that is, Level 1) are listed below by characteristics:

Listed shares Market quoted price Closing price

ii. Except for financial instruments with active markets, the fair value of other financial instruments is measured by using valuation techniques or by reference to counterparty quotes. The fair value of financial instruments measured by using valuation techniques can be referred to current fair value of instruments with similar terms and characteristics in substance, discounted cash flow method or other valuation methods, including calculated by applying model using market information available at the consolidated balance sheet date (i.e. yield curves on the Taipei Exchange, average commercial paper interest rates quoted from Reuters).

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iii. When assessing non-standard and low-complexity financial instruments, the Group adopts valuation technique that is widely used by market participants. The inputs used in the valuation method to measure these financial instruments are normally observable in the market.
iv. The valuation of derivative financial instruments is based on valuation model widely accepted by market participants, such as present value techniques and option pricing models. Forward exchange contracts are usually valued based on the current forward exchange rate. Structured interest derivative instruments are measured by using appropriate option pricing models (i.e. Black-Scholes model) or other valuation methods, such as Monte Carlo simulation.
v. The output of valuation model is an estimated value and the valuation technique may not be able to capture all relevant factors of the Group’s financial and non-financial instruments. Therefore, the estimated value derived using valuation model is adjusted accordingly with additional inputs, for example, model risk or liquidity risk and etc. In accordance with the Group’s management policies and relevant control procedures relating to the valuation models used for fair value measurement, management believes adjustment to valuation is necessary in order to reasonably represent the fair value of financial and non-financial instruments at the consolidated balance sheet. The inputs and pricing information used during valuation are carefully assessed and adjusted based on current market conditions.
vi. The Group takes into account adjustments for credit risks to measure the fair value of financial and non-financial instruments to reflect credit risk of the counterparty and the Group’s credit quality.
E. For the years ended December 31, 2018 and 2019, 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, 2018 and 2019:

At January 1 Issued in the period Sold in the period Gains and losses recognised in other comprehensive income (Note 1) ( At December 31	2018 1,137,645 $ - (924) 336,572) ( 800,149 $	2019 800,149 $ - - 70,576) 729,573 $

Note 1: Recorded as unrealised gains or losses on valuation of investments in equity instruments measured at fair value through other comprehensive income and exchange differences on translating the financial statements of foreign operations.
G. For the years ended December 31, 2018 and 2019, there was no transfer into or out from Level

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H. The Group 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. Such assessment is to ensure the valuation results are reasonable by applying independent information to make results close to current market conditions, confirming the resource of information is independent, reliable and in line with other resources and represented as the exercisable price, and frequently calibrating valuation model, performing back-testing, updating inputs used to the valuation model and making any other necessary adjustments to the fair value.
I. The following is the qualitative information of significant unobservable inputs and sensitivity analysis of changes in significant unobservable inputs to valuation model used in Level 3 fair value measurement:

Non-derivative equity instrument: Unlisted shares Venture capital shares Private equity fund investment	Fair value at December 31,2018	Valuation technique	Significant unobservable input	Range (weighted average)	Relationship of inputs to fair value
	793,376 $ 6,773	Market comparable companies Net asset value	Price to earnings ratio multiple Price to book ratio multiple Discount for lack of marketability Net asset value	7.61~70.77 0.46~2.36 20%~30%	The higher the multiple and control premium, the higher the fair value The higher the multiple and control premium, the higher the fair value The higher the weighted average cost of capital and discount for lack of control, the lower the fair value The higher the net asset value, the higher the fair value

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Non-derivative equity instrument: Unlisted shares Venture capital shares Private equity fund investment	Fair value at December 31,2019	Valuation technique	Significant unobservable input	Range (weighted average)	Relationship of inputs to fair value
	722,800 $ 6,773	Market comparable companies Net asset value	Price to earnings ratio multiple Price to book ratio multiple Discount for lack of marketability Net asset value	8.82~46.24 0.54~3.06 20%~30%	The higher the multiple and control premium, the higher the fair value The higher the multiple and control premium, the higher the fair value The higher the weighted average cost of capital and discount for lack of control, the lower the fair value The higher the net asset value, the higher the fair value

Input	Change	December 31,2018	December 31,2018	December 31,2018	December 31,2018	December 31,2018	December 31,2018
		Recognised in profit or loss			Recognised in other comprehensive income
		Favourable change	Unfavourable change		Favourable change	Unfavourable change
Price to earnings ratio/ price to book ratio/ discount for lack of marketability Net asset value	±1% ±1%	$ - - - $		$ - - - $	$ 7,934 68 8,002 $		$ 7,934 68 8,002 $

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Input	Change	December 31,2019	December 31,2019	December 31,2019	December 31,2019	December 31,2019	December 31,2019	December 31,2019
		Recognised inprofit or				Recognised in other
		Favourable change		Unfavourable change		Favourable change	Unfavourable change
Price to earnings ratio/ price to book ratio/ discount for lack of marketability Net asset value	±1% ±1%		$ - - - $		$ - - - $	$ 7,228 68 7,296 $		$ 7,228 68 7,296 $

(4) The Group initially classified time deposits exceeding 3 months as “cash and cash equivalents” and initially classified pledged time deposits as “other current-assets”. However, considering the categories of financial instruments, the Group recorded those time deposits exceeding 3 months and pledged time deposits as “current financial assets at amortised cost” for this period and reclassified accounts of prior period at the same time for comparison. This reclassification had no effect on either earnings (losses) per share for the year ended December 31, 2018 or total assets and total liabilities as of December 31, 2018.

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): Please refer to table 3.
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 $300 million or 20% of paid-in capital or more: None.
F. Disposal of real estate reaching $300 million or 20% of paid-in capital or more: None.
G. Purchases or sales of goods from or to related parties reaching $100 million or 20% of paid-in capital or more: Please refer to table 4.
H. Receivables from related parties reaching $100 million or 20% of paid-in capital or more: Please refer to table 5.
I. Trading in derivative instruments undertaken during the reporting periods: None.
J. Significant inter-company transactions during the reporting periods: Please refer to table 6.

(2) Information on investees (not including investees in Mainland China)

Names, locations and other information of investee companies (not including investees in Mainland China) � Please refer to table 7.

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(3) Information on investments in Mainland China

A. Basic information: Please refer to table 8.
B.Significant transactions, either directly or indirectly through a third area, with investee companies in the Mainland Area: None.

14. SEGMENT INFORMATION

(1) General information

Management has determined the operating segments based on the reports reviewed by the chief operating decision-maker that are used to make strategic decisions.

There is no material change in the basis for formation of entities and division of segments in the Group or in the measurement basis for segment information in this period.

(2) Segment information

The segment information provided to the chief operating decision-maker for the reportable segments is as follows:

is as follows:
Revenue from external customers Revenue from internal customers Segment revenue Interest income Interest expense Depreciation and amortisation Share of income (loss) of associates and joint ventures accounted for using equity method Other items Segment profit (loss) Recognizable assets Investments accounted for using equity method Segment assets Segment liabilities		Year ended December 31,2018
	Transportation Other Adjustments and Department Departments written-off Total 168,729,952 $ 506,701 $ - $ 169,236,653 $ 25,809,049 - 25,809,049) ( - 194,539,001 506,701 25,809,049) ( 169,236,653 538,144 25,460 - 563,604 1,873,692) ( 6,732) ( - 1,880,424) ( 8,659,957) ( 212,931) ( - 8,872,888) ( 1,602,737 848,390) ( - 754,347 158,122,183) ( 483,705) ( - 158,605,888) ( 28,024,050 $ 1,019,597) ($ 25,809,049) ($ 1,195,404 $ 192,189,335 $ 8,557,452 $ - $ 200,746,787 $ 21,780,248 6,484,920 - 28,265,168 213,969,583 $ 15,042,372 $ - $ 229,011,955 $ 156,893,418 $ 1,150,701 $ - $ 158,044,119 $

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Revenue from external customers Revenue from internal customers Segment revenue Interest income Interest expense Depreciation and amortisation Share of income (loss) of associates and joint ventures accounted for using equity method Other items Segment profit (loss) Recognizable assets Investments accounted for using equity method Segment assets Segment liabilities		Year ended December 31,2019
	Transportation Other Adjustments and Department Departments written-off Total 188,686,820 $ 1,902,461 $ - $ 190,589,281 $ 30,651,874 - 30,651,874) ( - 219,338,694 1,902,461 30,651,874) ( 190,589,281 712,617 36,530 - 749,147 5,660,355) ( 15,482) ( - 5,675,837) ( 20,507,958) ( 255,715) ( - 20,763,673) ( 1,177,998 510,936) ( - 667,062 162,787,475) ( 1,999,605) ( - 164,787,080) ( 32,273,521 $ 842,747) ($ 30,651,874) ($ 778,900 $ 268,786,834 $ 8,407,879 $ - $ 277,194,713 $ 23,096,965 6,303,960 - 29,400,925 291,883,799 $ 14,711,839 $ - $ 306,595,638 $ 232,051,920 $ 948,872 $ - $ 233,000,792 $

(3) Reconciliation for segment income (loss)

A. Sales between segments are carried out at arm’s length. The revenue from external parties reported to the chief operating decision-maker is measured in a manner consistent with that in the statement of comprehensive income.
B. The amounts provided to the chief operating decision-maker with respect to total assets are measured in a manner consistent with that in the balance sheet.
C. The amounts provided to the chief operating decision-maker with respect to total liabilities are measured in a manner consistent with that in the balance sheet.
D. The amounts provided to the chief operating decision-maker with respect to segment profit (loss) are measured in a manner consistent with the income (loss) before tax from continuing operations.

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(4) Trading information

Service routes		Year ended December 31,2018	Year ended December 31,2018	Year ended December 31,2018		Year ended December 31,2019	Year ended December 31,2019	Year ended December 31,2019
		Amount		% of Account Balance		Amount		% of Account Balance
North America Europe Asia Others		65,814,288 $ 32,141,861 33,672,426 21,427,908 153,056,483 $		43 21 22 14 100		69,118,979 $ 37,088,233 38,774,061 23,601,603 168,582,876 $		41 22 23 14 100

(5) Geographical information

Service routes		Year ended December 31,2018	Year ended December 31,2018	Year ended December 31,2018		Year ended December 31,2019	Year ended December 31,2019	Year ended December 31,2019
		Revenue		Non-current assets		Revenue		Non-current assets
Taiwan America Europe Asia Others		31,626,116 $ 77,426,330 49,069,897 10,516,436 597,874 169,236,653 $		37,861,813 $ 32,747,591 37,558,867 22,086,161 7,496 130,261,928 $		40,933,013 $ 84,672,217 38,952,059 25,531,053 500,939 190,589,281 $		62,437,652 $ 69,085,976 46,765,549 29,719,173 32,466 208,040,816 $

(6) Major customer information

The Group provides services to customers all over the world. No single customer of the Group accounts for more than 10% of the Group’s operating revenues.

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F-264

EVERGREEN MARINE CORPORATION (TAIWAN) LTD. AND SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS AND REPORT OF INDEPENDENT ACCOUNTANTS DECEMBER 31, 2017 AND 2018

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REPORT OF INDEPENDENT ACCOUNTANTS (TRANSLATED FROM CHINESE)

To the Board of Directors and Shareholders of Evergreen Marine Corporation (Taiwan) Ltd.

Introduction

We have audited the accompanying consolidated balance sheets of Evergreen Marine Corporation (Taiwan) Ltd. (the“ Company”) and its subsidiaries (collectively referred herein as the “Group”) as at December 31, 2017 and 2018, and the related consolidated statements of comprehensive income, of changes in equity and of cash flows for the years then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies.

In our opinion, based on our audits and the reports of other independent accountants (please refer to Other Matter section of the report), the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as of December 31, 2017 and 2018, and the consolidated financial performance and its consolidated cash flows for the years then ended in accordance with the “Regulations Governing the Preparation of Financial Reports by Securities Issuers” and the International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations, and SIC Interpretations as endorsed by the Financial Supervisory Commission.

Basis for opinion

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Key audit matters

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

Accuracy and cut-off of freight revenue

Description

Please refer to Note 4(31) for accounting policies on revenue recognition, Note 5(2) for uncertainty of accounting estimates and assumptions applied on revenue recognition, and Note 6(21) for details of sales revenue.

Evergreen Marine Corporation (Taiwan) Ltd. primarily engages in global container shipping service covering ocean-going and near-sea shipping line, shipping agency business as well as container freight station business. In 2018, freight revenue from contracts with customers was NTD 153,056,483 thousand, representing 90.44% of operating revenue. Since ocean-going shipping often lasts for several days, voyages are sometimes completed after the date of balance sheet. Also, demands for freight are consistently sent by forwarders during voyage. Due to the factors mentioned above, freight revenue is recognized under the percentage-of-completion method for each vessel during the reporting period. Despite the Group conducting business worldwide, its transactions are all in small amounts, whereas the freight rate is subject to fluctuation caused by cargo loading rate as well as market competition. Worldwide shipping agencies use a system to record the transactions by entering data including shipping departure, destination, counterparty, transit time, shipping amounts, and freight price for the Group. Therefore, management could recognize freight revenue in accordance with the data on bill of lading reports generated from the system, accompanied by estimation made from past experience and current cargo loading conditions that the revenue would flow in, and calculate the revenue under the percentageof-completion method. As the process of recording transactions, communicating with agencies, and maintaining the system are done manually, and the estimation of freight revenue are subject to management’s judgement, therefore freight revenue involves high uncertainty and is material to the financial statements. Given the conditions mentioned above, we consider the accuracy of freight revenue and the appropriate use of cut-off by the Group and its investee companies as a key audit matter.

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How our audit addressed the matter

Our key audit procedures performed in respect of the above key audit matter included the following:

Obtained an understanding of the operation and industry of the Group to assess the reasonableness of policies and procedures on revenue recognition, and confirmed whether it is appropriate to the financial statements.
Obtained an understanding of the procedures of revenue recognition from booking, picking, billing to receiving. Assessed and tested relevant internal controls, including checking freight items and amounts of delivery information against the approved contracts and booking list. In addition, recalculated the accuracy of freight revenue, and ensured its consistency with the bill of lading report.
Obtained the estimated freight income report for vessels underway as of balance sheets date, and inquired with management for the reasonableness of judgement. In addition, checked historical freight revenue for total voyage under each individual vessel, along with comparing with current cargo loading condition as well as actual revenue received after period end to ensure the reasonableness of revenue assumptions.
Confirmed the completeness of vessels underway for the reporting period, including tracking the movements of shipments on the internet to ensure the vessels that depart before period end have been taken into consideration in the freight revenue calculation.
Verified accuracy of data used in calculating percentage of completion under each voyage, including selecting samples and check whether total shipping days shown on the Company’s website are in agreement with cruise timetable as well as recalculating shipping days (days between departure and balance sheet date), in order to examine the soundness of percentage applied.

Impairment of property, plant and equipment

Description

Please refer to Note 4(16) for accounting policies on property, plant and equipment, Note 5(2) for uncertainty of accounting estimates and assumptions applied on impairment of property, plant and equipment, and Note 6(8) for details of property, plant and equipment.

As of December 31, 2018, property, plant and equipment amounted to NTD 117,219,185 thousand, constituting 51.18% of total assets, and ship equipment, transport equipment and cargo handling equipment amounted to NTD 95,517,451 thousand, accounting for approximately 81.49% of total property, plant and equipment. As new ships have been built and put into operation by many carriers around the world, market supply has exceeded demand. Therefore, the market imbalance led to price

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competition, resulting in unstable profitability for the industry and raising the risk of impairment arising from main operating ship equipment, transport equipment and cargo handling equipment. The valuation of impairment and recoverable amounts are evaluated by the Group using the present value of the future cash flows expected to be derived from an asset or cash-generating unit compared to the book value. The main assumptions of discount rates used in recoverable amounts, and expected operating revenue growth rates, gross profit, operating profit rates, capital expenditures and discount rates used in future cash flow estimates are subject to management’s judgement and involve high uncertainty, and the estimated results are material to the consolidated financial statements. Given the conditions mentioned above, we consider the impairment assessment of ship equipment, transport equipment and cargo handling equipment in the property, plant and equipment under the Group and its investee companies as a key audit matter.

How our audit addressed the matter

Our key audit procedures performed in respect of the above key audit matter included the following:

Obtained an understanding and assessed the relevant policies, internal controls and process applied to valuation of asset impairments.
Interviewed with management regarding the impairment test report, and assessed the reasonableness of discount rates and the reasonableness of operating revenue, gross profit, operating profit rate, growth rates and capital expenditure that management used in estimating future cash flows by checking actual performance under past operating plans and comparing the performance with industry forecast to evaluate the intention and capability of management.
Checked the parameters of the valuation model and recalculated the valuation model for accuracy.

Significant transaction

Description

Please refer to Note 4(32) for accounting policies on business combination and Note 6(31) for details of business combination.

The subsidiary, Evergreen Marine (Hong Kong) Ltd., acquired 100% equity interest of Hatsu Marine (Hong Kong) Limited for a cash consideration of $3,265,341 thousand in December 2018. The fair value of identifiable net assets, inclusive of intangible asset - customer relationship, amounted to $ 3,274,188 thousand and gain from bargain purchase amounted to $ 8,847 thousand. The merger was classified as a significant transaction during the reporting period. The valuation and measurement of the fair value of

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identifiable net assets based on management’s estimation and the Purchase Price Allocation report issued by the independent expert appraisers involved critical judgements and estimates so as to be material to the financial statements. Given the conditions mentioned above, we consider the allocation of purchase price as a key audit matter.

How our audit addressed the matter

Our key audit procedures performed in respect of the above key audit matter included the following:

Understood and assessed the purpose of the acquisition, relevant internal controls and process applied to the accounting treatments.
Understood and assessed the valuation models that management used in measuring the fair value of the acquisition and the reasonableness of major assumption, inclusive of discount rate and operating revenue, gross profit and operating profit rate that management used in estimating future cash flows.
Obtained an understanding of the acquisition price allocation and procedures including acquiring the measurement and disclosure of relevant policy and evaluation procedures relating to acquiree’s identifiable net assets and reviewed the contract and the Purchase Price Allocation report of the acquisition. In addition, examined the date, the consideration and the fair value of acquiree’s identifiable net assets of the acquisition determined by management to ensure the accuracy of the accounting treatment.

Other matter – Report of other independent accountants

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it relates to the amounts included for those investments accounted for using equity method and information disclosed in Note 13 related to these long-term equity investments, is based solely on the reports of other independent accountants. Long-term equity investments in these investee companies amounted to NTD 16,239,361 thousand and NTD 17,158,367 thousand, constituting 8.12% and 7.49% of the total consolidated assets as of December 31, 2017 and 2018, respectively, and comprehensive income (including share of profit or loss and share of other comprehensive income of associates and joint ventures accounted for using equity method) was NTD 1,892,245 thousand and NTD109,172 thousand constituting 51.28% and 16.69% of the consolidated total comprehensive income and loss for the years then ended, respectively.

Other matter – Parent company only financial reports

We have audited the parent company only financial statement of Evergreen Marine Corporation (Taiwan) Ltd. as at and for the years ended December 31, 2017 and 2018 on which we have issued an unqualified opinion with explanatory paragraph thereon.

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

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

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Auditor’s responsibilities for the audit of the consolidated financial statements

As part of an audit in accordance with ROC GAAS, we exercise professional judgement and maintain professional skepticism throughout the audit. We also:

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

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

Lee, Hsiu-Ling

Chih, Ping-Chiun

For and on behalf of PricewaterhouseCoopers, Taiwan

March 22, 2019

------------------------------------------------------------------------------------------------------------------------------------------------The accompanying consolidated financial statements are not intended to present the financial position and results of operations and cash flows in accordance with accounting principles generally accepted in countries and jurisdictions other than the Republic of China. The standards, procedures and practices in the Republic of China governing the audit of such financial statements may differ from those generally accepted in countries and jurisdictions other than the Republic of China. Accordingly, the accompanying consolidated financial statements and report of independent accountants 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.

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F-273

EVERGREEN MARINE CORPORATION (TAIWAN) LTD. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2017 AND 2018

(Expressed in thousands of New Taiwan dollars)

Assets	Notes	December 31, 2017 AMOUNT % $ 38,108,263 19 - - 66,410 - 12,976,049 7 793,621 - 396,179 - 486,727 - 159,893 - 3,719,429 2 1,579,564 1 2,665,093 1 60,951,228 30 - - 2,282,619 1 100,000 - - - 26,783,026 14 97,687,454 49 4,969,272 3 159,667 - 708,266 - 6,438,365 3 139,128,669 70 $ 200,079,897 100	December 31, 2018	December 31, 2018
		AMOUNT $ 38,108,263 - 66,410 12,976,049 793,621 396,179 486,727 159,893 3,719,429 1,579,564 2,665,093 60,951,228 - 2,282,619 100,000 - 26,783,026 97,687,454 4,969,272 159,667 708,266 6,438,365 139,128,669 $ 200,079,897	AMOUNT $ 38,230,522 2,244,065 154,295 15,013,211 503,638 882,521 598,931 221,601 5,100,897 1,824,053 3,124,774 67,898,508 1,650,372 - - 100,000 28,265,168 117,219,185 5,835,074 2,266,526 835,979 4,941,143 161,113,447 $ 229,011,955	%
Current assets 1100 Cash and cash equivalents 1140 Current contract assets 1150 Notes receivable, net 1170 Accounts receivable, net 1180 Accounts receivable, net - related parties 1200 Other receivables 1210 Other receivables - related parties 1220 Current income tax assets 130X Inventories 1410 Prepayments 1470 Other current assets 11XX Current assets Non-current assets 1517 Non-current financial assets at fair value through other comprehensive income 1523 Available-for-sale financial assets - non-current 1527 Held-to-maturity financial assets - non-current 1535 Non-current financial assets at amortised cost, net 1550 Investments accounted for using equity method 1600 Property, plant and equipment, net 1760 Investment property, net 1780 Intangible assets 1840 Deferred income tax assets 1900 Other non-current assets 15XX Non-current assets 1XXXTotal assets	6(1) 6(21) 6(4) 6(4) 7 7 6(5) 6(6) and 8 6(2) 12(4) 12(4) 6(3) 6(7) 6(8), 8 and 9 6(9) and 8 6(28) 6(10)(15) and 8			17 1 - 7 - 1 - - 2 1 1
				30
				1 - - - 12 51 3 1 - 2
				70
				100

(Continued)

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F-274

EVERGREEN MARINE CORPORATION (TAIWAN) LTD. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2017 AND 2018

(Expressed in thousands of New Taiwan dollars)

Liabilities and Equity	Notes	December 31, 2017 AMOUNT % $ - - 15,358,651 8 203,868 - 3,111,155 2 1,002,731 1 368,327 - 24,715,669 12 44,760,401 23 8,000,000 4 65,369,665 32 1,749,020 1 13,512,021 7 88,630,706 44 133,391,107 67 40,123,560 20 10,838,075 5 4,985,031 3 6,769,575 3 682,313 1 63,398,554 32 3,290,236 1 66,688,790 33 $ 200,079,897 100	December 31, 2018
			AMOUNT % $ 1,774,392 1 19,813,190 9 253,172 - 3,622,892 2 1,184,484 - 797,877 - 22,615,978 10 50,061,985 22 10,000,000 4 83,010,375 36 1,970,567 1 13,001,192 6 107,982,134 47 158,044,119 69 45,129,738 20 11,059,145 5 5,685,548 2 3,776,643 2 1,193,156 - 66,844,230 29 4,123,606 2 70,967,836 31 $ 229,011,955 100
Current liabilities 2130 Current contract liabilities 2170 Accounts payable 2180 Accounts payable - related parties 2200 Other payables 2220 Other payables - related parties 2230 Current income tax liabilities 2300 Other current liabilities 21XX Current liabilities Non-current liabilities 2530 Corporate bonds payable 2540 Long-term loans 2570 Deferred income tax liabilities 2600 Other non-current liabilities 25XX Non-current liabilities 2XXXTotal liabilities Equity attributable to owners of the parent Capital 3110 Common stock Capital surplus 3200 Capital surplus Retained earnings 3310 Legal reserve 3350 Unappropriated retained earnings Other equity interest 3400 Other equity interest 31XX Equity attributable to owners of the parent 36XXNon-controlling interest 3XXXTotal equity Significant Contingent Liabilities And Unrecognized Contract Commitments Significant Events After The Balance 3X2XTotal liabilities and equity	6(21) 7 7 6(11) 6(12) 6(13) 6(28) 6(14)(15) 6(17) 6(18) 6(19) 6(20) 9 11

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

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F-275

EVERGREEN MARINE CORPORATION (TAIWAN) LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2017 AND 2018

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

Items	Notes	For the years ended December 31,	For the years ended December 31,
		2017	2018
4000 Operating revenue 5000 Operating costs 5900 Gross profit 5910 Unrealized profit from sales 5920 Realized profit on from sales 5950 Gross profit Operating expenses 6100 Selling expenses 6200 General and administrative expenses 6450 Impairment loss determined in accordance with IFRS 9 6000 Operating expenses 6500 Other gains - net 6900 Operating profit 7010 Other income 7020 Other gains and losses 7050 Finance costs 7060 Share of profit of associates and joint ventures accounted for using equity method 7000 Total non-operating income and expenses 7900 Profit before income tax 7950 Income tax expense 8200 Profit for the year

(Continued)

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F-276

EVERGREEN MARINE CORPORATION (TAIWAN) LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2017 AND 2018

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

Items	Notes	Year ended December 31	Year ended December 31
		2017	2018
Other comprehensive income (loss) Components of other comprehensive income that will not be reclassified to profit or loss 8311 Losses on remeasurements of defined benefit plans 8316 Unrealised losses on valuation of investments in equity instruments measured at fair value through other comprehensive income 8320 Share of other comprehensive income of associates and joint ventures accounted for using equity method, components of other comprehensive income that will not be reclassified to profit or loss 8349 Income tax related to components of other comprehensive income that will not be reclassified to profit or loss 8310 Components of other comprehensive income that will not be reclassified to profit or loss Components of other comprehensive income that will be reclassified to profit or loss 8361 Exchange differences on translating the financial statements of foreign operations 8362 Unrealized gain on valuation of available- for-sale financial assets 8370 Share of other comprehensive (loss) income of associates and joint ventures accounted for using equity method 8399 Income tax relating to the components of other comprehensive (loss) income 8360 Components of other comprehensive income that will be reclassified to profit or loss 8300 Other comprehensive (loss) income for the year, net of income tax 8500 Total comprehensive income for the year Profit (loss), attributable to: 8610 Owners of the parent 8620 Non-controlling interest Comprehensive income (loss) attributable to: 8710 Owners of the parent 8720 Non-controlling interest Basic earnings per share (in dollars) 9750 Basic earnings per share 9850 Diluted earnings per share	6(2) 6(28) 6(28) 6(29)
		$	$

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

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												Total equity		$ 53,638,501	6,661,621	( 2,971,907 )	3,689,714		-	7,711,222	76,280		67,866	1,613,445	( 108,238 )	$ 66,688,790		$ 66,688,790		( 4,227 )	66,684,563	78,501	575,603	654,104		-	-	( 802,471 )	3,226,890	17,610		19,321	-	55,857	1,111,962	$ 70,967,836
											Non-controlling	interest		$ 2,651,008	( 343,550 )	( 528,736 )	( 872,286 )		-	-	-		-	1,613,445	( 101,931 )	$ 3,290,236		$ 3,290,236		( 1,231 )	3,289,005	( 215,418 )	( 161,642 )	( 377,060 )		-	-	-	-	-		-	-	55,857	1,155,804	$ 4,123,606
												Total		50,987,493	7,005,171	2,443,171 )	4,562,000		-	7,711,222	76,280		67,866	-	6,307 )	63,398,554		63,398,554		2,996 )	63,395,558	293,919	737,245	1,031,164		-	-	802,471 )	3,226,890	17,610		19,321	-	-	43,842 )	66,844,230
														$		(									(	$		$		(								(							(	$
									Gain (losses) on Gains	effective portion (losses) on	of cash flow hedging	hedges instruments		($ 67,895 ) $ -	- -	51,983 -	51,983 -		- -	- -	- -		- -	- -	- -	($ 15,912 ) $ -		($ 15,912 ) $ -		15,912 ( 15,912 )	- ( 15,912 )	- -	- ( 42,737 )	- ( 42,737 )		- -	- -	- -	- -	- -		- -	- -	- -	- -	$ - ($ 58,649 )
EVERGREEN MARINE CORPORATION (TAIWAN) LTD. AND SUBSIDIARIES	CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY	FOR THE YEARS ENDED DECEMBER 31, 2017 AND 2018	(Expressed in thousands of New Taiwan dollars)	Equity attributable to owners of the parent	Retained earnings Other equity interest	Unrealised gains	(losses) from	(Accumulated Financial financial assets	deficit) statements measured at fair Unrealised gain or	Capital surplus, unappropriated translation value through other loss on available-	additional paid-in retained differences of comprehensive for-sale financial	capital Legal reserve earnings foreign operations income assets		$ 7,989,014 $ 9,233,242 ($ 4,248,211 ) $ 1,254,622 $ - $ 1,703,161	- - 7,005,171 - - -	- - ( 235,596 ) ( 2,389,736 ) - 130,178	- - 6,769,575 ( 2,389,736 ) - 130,178		- ( 4,248,211 ) 4,248,211 - - -	2,711,222 - - - - -	76,280 - - - - -		67,866 - - - - -	- - - - - -	( 6,307 ) - - - - -	$ 10,838,075 $ 4,985,031 $ 6,769,575 ($ 1,135,114 ) $ - $ 1,833,339		$ 10,838,075 $ 4,985,031 $ 6,769,575 ( $ 1,135,114 ) $ - $ 1,833,339		- - 276,681 - 1,553,662 ( 1,833,339 )	10,838,075 4,985,031 7,046,256 ( 1,135,114 ) 1,553,662 -	- - 293,919 - - -	- - ( 71,341 ) 1,152,694( 301,371 ) -	- - 222,578 1,152,694( 301,371 ) -		- 700,517 ( 700,517 ) - - -	- - ( 2,006,178 ) - - -	- - ( 802,471 ) - - -	226,890 - - - - -	17,610 - - - - -		20,412 - 3,537 - ( 4,628 ) -	- - 13,438 - ( 13,438 ) -	- - - - - -	( 43,842 ) - - - - -	$ 11,059,145 $ 5,685,548 $ 3,776,643 $ 17,580 $ 1,234,225 $ -	(Continued)
												Common stock		$ 35,123,560	-	-	-		-	5,000,000	-		-	-	-	$ 40,123,560		$ 40,123,560		-	40,123,560	-	-	-		-	2,006,178	-	3,000,000	-		-	-	-	-	$ 45,129,738
												Notes				6(19)(20)		6(19)		6(17)(18)	6(18)	6(18)			6(30)				3(1), 6(19)	and 12(4)			6(20)		6(17)(19)				6(17)(18)		6(18)		6(2)		6(18)(30)
													Year 2017	Balance at January 1, 2017	Profit (loss) for the year	Other comprehensive income (loss) for the year	Total comprehensive income (loss)	Distribution of 2016 earnings:	Legal reserve used to cover accumulated deficit	Issuance of common stock for cash	Cash capital increase reserved for employee preemption	Adjustments to share of changes in equity of associates and joint	ventures	Effect of business combination	Decrease in non-controlling interests	Balance at December 31, 2017	Year 2018	Balance at January 1, 2018	Retrospective application		Balance at 1 January after adjustments	Profit (loss) for the year	Other comprehensive income (loss) for the year	Total comprehensive income (loss)	Distribution of 2017 earnings:	Legal capital reserve	Stock dividends	Cash dividends	Issuance of common stock for cash	Cash capital increase reserved for employee preemption	Adjustments to share of changes in equity of associates and joint	ventures	Disposal of investments in equity instruments designated at fair value	Effect of business combination	Net change in non-controlling interests	Balance at December 31, 2018

F-278

EVERGREEN MARINE CORPORATION (TAIWAN) LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 2017 AND 2018

(Expressed in thousands of New Taiwan dollars)

CASH FLOWS FROM OPERATING ACTIVITIES
Profit before tax
Adjustments
Income and expenses having no effect on cash flows
Depreciation

Amortization

Expected credit loss

Interest income

Interest expense

Dividend income

Gain on disposal of available-for-sale financial assets
Gain on disposal of investments accounted for using
equity method

Share of profit of associates and joint ventures
accounted for using equity method
Gain from bargain purchase

Net gain on disposal of property, plant and equipment
Loss on disposal of other investments
Realized income with affliated companies
Unrealized income with affliated companies
Cash capital increase reserved for employee
preemption

Changes in assets/liabilities relating to operating
activities
Changes in operating assets
Current contract assets
Notes receivable, net
Accounts receivable
Accounts receivable, net - related parties
Other receivables
Other receivables - related parties
Inventories
Prepayments
Other current assets
Other non-current assets
Net changes in liabilities relating to operating
activities
Current contract liabilities
Accounts payable
Accounts payable - related parties
Other payables
Other payables - related parties
Other current liabilities
Other non-current liabilities
Cash inflow generated from operations
Interest received
Interest paid
Income tax paid
Net cash flows from operating activities

Notes

(Continued)

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F-279

EVERGREEN MARINE CORPORATION (TAIWAN) LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 2017 AND 2018

(Expressed in thousands of New Taiwan dollars)

					For the years endedDecember 31,	For the years endedDecember 31,
		Notes			2017	2018
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from disposal of available-for-sale financial
assets				$	1,053,435 $	-
Proceeds from disposal of financial assets at fair value	6(2)
through other comprehensive income					-	342,661
Proceeds from capital reduction of financial assets at fair
value through other comprehensive income					-	924
Proceeds from disposal of held-to-maturity financial
assets					170,000	-
Acquisition of held-to-maturity financial assets			(		50,000 )	-
Acquisition of investments accounted for using equity	6(32)
method			(		16,683 ) (	980,574 )
Proceeds from disposal of investments accounted for
using equity method					42,803	-
Proceeds from capital reduction of investments accounted
for using equity method					-	43,904
Acquisition of property, plant and equipment	6(32)		(		1,559,769 ) (	10,065,416 )
Proceeds from disposal of property, plant and equipment					551,502	2,161,292
Acquisition of intangible assets	6(32)		(		55,744 ) (	29,380 )
Increase in guarantee deposits paid			(		43,328 ) (	7,295 )
Increase in other non-current assets	6(32)		(		5,628,835 ) (	14,455,798 )
Proceeds from disposal of subsidiaries					-	5
Net cash flow from acquisition of subsidiaries	6(32)		(		5,106,379 ) (	2,635,830 )
Cash dividend received					796,989	717,798
Non-current prepayments for investments			(		23,166 )	-
Net cash flows used in investing activities			(		9,869,175 ) (	24,907,709 )
CASH FLOWS FROM FINANCING ACTIVITIES
Increase in short-term loans					600,000	-
Decrease in short-term loans			(		600,000 )	-
Increase other payables - related parties	7				814,101	939,354
Increase in long-term loans	6(33)				8,447,360	43,572,441
Decrease in long-term loans	6(33)		(		16,660,954 ) (	27,312,244 )
Net change in non-controlling interest	6(32)		(		85,393 )	1,215,982
Increase in corporate bonds payable					8,000,000	2,000,000
Decrease in corporate bonds payable			(		3,000,000 )	-
Decrease other non-current liabilities			(		1,350,278 ) (	1,050,945 )
(Decrease) increase in guarantee deposits received			(		1,262 )	122,898
Issuance of common stock for cash	6(17)				7,711,222	3,226,890
Cash dividends paid	6(19)				- (	802,471 )
Net cash flows from financing activities					3,874,796	21,911,905
Effect of exchange rate changes			(		1,501,647 )	72,892
Net increase in cash and cash equivalents					3,694,814	122,259
Cash and cash equivalents at beginning of year					34,413,449	38,108,263
Cash and cash equivalents at end of year				$	38,108,263$	38,230,522

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

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EVERGREEN MARINE CORPORATION (TAIWAN) LTD. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

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

1. HISTORY AND ORGANISATION

2. THE DATE OF AUTHORISATION FOR ISSUANCE OF THE CONSOLIDATED FINANCIAL

STATEMENTS AND PROCEDURES FOR AUTHORISATION

These consolidated financial statements were authorised by the Board of Directors on March 22, 2019.

3. APPLICATION OF NEW STANDARDS, AMENDMENTS AND INTERPRETATIONS

follows:

New Standards,InterpretationsandAmendments

Effective date by
International Accounting
StandardsBoard

Amendments to IFRS 2, ‘Classification and measurement of share-
based payment transactions’
Amendments to IFRS 4, ‘Applying IFRS 9 Financial instruments with
IFRS 4 Insurance contracts’
IFRS 9, ‘Financial instruments’
IFRS 15, ‘Revenue from contracts with customers’
Amendments to IFRS 15, ‘Clarifications to IFRS 15 Revenue from
contracts with customers’
Amendments to IAS 7, ‘Disclosure initiative’
Amendments to IAS 12, ‘Recognition of deferred tax assets for
unrealised losses’
Amendments to IAS 40, ‘Transfers of investment property’
IFRIC 22, ‘Foreign currency transactions and advance consideration’

January 1, 2018
January 1, 2018
January 1, 2018
January 1, 2018
January 1, 2018
January 1, 2017
January 1, 2017
January 1, 2018
January 1, 2018

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New Standards,Interpretations andAmendments	Effective date by International Accounting StandardsBoard
Annual improvements to IFRSs 2014-2016 cycle- Amendments to IFRS 1, ‘First-time adoption of International Financial Reporting Standards’ Annual improvements to IFRSs 2014-2016 cycle- Amendments to IFRS 12, ‘Disclosure of interests in other entities’ Annual improvements to IFRSs 2014-2016 cycle- Amendments to IAS 28, ‘Investments in associates and joint ventures’	January 1, 2018 January 1, 2017 January 1, 2018

Except for the following, the above standards and interpretations have no significant impact to the Group’s financial condition and financial performance based on the Group’s assessment. A. IFRS 9, ‘Financial instruments’

(a) Classification of debt instruments is driven by the entity’s business model and the contractual cash flow characteristics of the financial assets, which would be classified as financial asset at fair value through profit or loss, financial asset measured at fair value through other comprehensive income or financial asset measured at amortised cost. Equity instruments would be classified as financial asset at fair value through profit or loss, unless an entity makes an irrevocable election at inception to present subsequent changes in the fair value of an investment in an equity instrument that is not held for trading in other comprehensive income.
(b) The impairment losses of debt instruments are assessed using an ‘expected credit loss’ approach. An entity assesses at each balance sheet date whether there has been a significant increase in credit risk on that instrument since initial recognition to recognise 12-month expected credit losses or lifetime expected credit losses (interest revenue would be calculated on the gross carrying amount of the asset before impairment losses occurred); or if the instrument that has objective evidence of impairment, interest revenue after the impairment would be calculated on the book value of net carrying amount (i.e. net of credit allowance). The Group shall always measure the loss allowance at an amount equal to lifetime expected credit losses for trade receivables that do not contain a significant financing component.
(c) The amended general hedge accounting requirements align hedge accounting more closely with an entity’s risk management strategy. Risk components of non-financial items and a group of items can be designated as hedged items. The standard relaxes the requirements for hedge effectiveness, removing the 80-125% bright line, and introduces the concept of ‘rebalancing’; while its risk management objective remains unchanged, an entity shall rebalance the hedged item or the hedging instrument for the purpose of maintaining the hedge ratio.

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(d) The Group has elected not to restate prior period financial statements using the modified retrospective approach under IFRS 9. The significant effects of adopting the modified transition as of January 1, 2018 are summarised below:
- i. In accordance with IFRS 9, the Group expects to reclassify available-for-sale financial assets in the amount of $2,282,619 by increasing financial assets at fair value through other comprehensive income in the amount of $2,282,619. Additionally, the Group increased retained earnings by $281,074, decreased investments accounted for using equity method by $1,397 and decreased other equity interest by $279,677.
- ii. In accordance with IFRS 9, the Group expects to reclassify held-to-maturity financial assets of $100,000 by increasing financial assets at amortised cost in the amount of $100,000.
- iii. In line with the regulations under IFRS 9 on provision for impairment, the Group increased deferred income tax assets by $289, and decreased notes receivable, net by $5, accounts receivable, net by $857, contract assets, net by $4,467, accounts receivable, net - related parties by $52, other current assets by $502, investments accounted for using equity method by $30, retained earnings by $4,393 and non-controlling interest by $1,231.
- iv. Please refer to Note 12(4) for disclosure in relation to the first time application of IFRS 9.
B. IFRS 15, ‘Revenue from contracts with customers’ and amendments
(a) IFRS 15, ‘Revenue from contracts with customers’ replaces IAS 11, ‘Construction contracts’, IAS 18, ‘Revenue’ and relevant interpretations. According to IFRS 15, revenue is recognised when a customer obtains control of promised goods or services. A customer obtains control of goods or services when a customer has the ability to direct the use of, and obtain substantially all of the remaining benefits from, the asset.

The core principle of IFRS 15 is that an entity recognises revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. An entity recognises revenue in accordance with that core principle by applying the following steps: Step 1: Identify contracts with customer. Step 2: Identify separate performance obligations in the contract(s). Step 3: Determine the transaction price.

Step 4: Allocate the transaction price to the performance obligations in the contract(s).

Step 5: Recognise revenue when the performance obligation is satisfied. Further, IFRS 15 includes a set of comprehensive disclosure requirements that requires an entity to disclose sufficient information to enable users of financial statements to understand the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers.

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(b) The Group has elected not to restate prior period financial statements and recognised the cumulative effect of initial application as retained earnings at January 1, 2018, using the modified retrospective approach under IFRS 15. The Group applied retrospectively IFRS 15 only to incomplete contracts as of January 1, 2018, by adopting an optional transition expedient. The significant effects of adopting the modified transition as of January 1, 2018 are summarised below:

Presentation of assets and liabilities in relation to contracts with customers

In line with IFRS 15 requirements, the Group changed the presentation of certain accounts in the balance sheet as follows:
i. Under IFRS 15, contracts whereby services have been rendered but not yet billed are recognised as contract assets, but were previously presented as part of accounts receivable in the balance sheet. As of January 1, 2018, the balance amounted to $1,881,693 (including contract assets and allowance for bad debts amounting to $1,886,160 and $4,467, respectively).
ii. Under IFRS 15, liabilities in relation to contracts are recognised as contract liabilities, but were previously presented as advance sales receipts in the balance sheet. As of January 1, 2018, the balance amounted to $2,523,101.
iii. Please refer to Note 12(5) for other disclosures in relation to the first time application of IFRS 15.

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

the Group

New standards, interpretations and amendments endorsed by the FSC effective from 2019 are as follows:

follows:
	Effective date by
	International Accounting
New Standards,InterpretationsandAmendments	StandardsBoard
Amendments to IFRS 9, ‘Prepayment features with negative	January 1, 2019
compensation’
IFRS 16, ‘Leases’	January 1, 2019
Amendments to IAS 19, ‘Plan amendment, curtailment or settlement’	January 1, 2019
Amendments to IAS 28, ‘Long-term interests in associates and joint	January 1, 2019
ventures’
IFRIC 23, ‘Uncertainty over income tax treatments’	January 1, 2019
Annual improvements to IFRSs 2015-2017 cycle	January 1, 2019
Except for the following, the above standards and interpretations have	no significant impact to the
Group’s financial condition and financial performance based on the Group’s assessment.

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A. IFRS 16, ‘Leases’
IFRS 16, ‘Leases’, replaces IAS 17, ‘Leases’ and related interpretations and SICs. The standard requires lessees to recognise a 'right-of-use asset' and a lease liability (except for those leases with terms of 12 months or less and leases of low-value assets). The accounting stays the same for lessors, which is to classify their leases as either finance leases or operating leases and account for those two types of leases differently. IFRS 16 only requires enhanced disclosures to be provided by lessors.

The Group expects to recognise the lease contract of lessees in line with IFRS 16. However, the Group does not intend to restate the financial statements of prior period (collectively referred herein as the � modified retrospective approach � ). On January 1, 2019, it is expected that rightof-use asset and lease liability will be increased by $60,887,660 and $60,710,151, respectively.

B. Amendments to IAS 19, ‘Plan amendment, curtailment or settlement’
When a change to a plan take place, the amendments require a company to use the updated assumptions from this remeasurement to determine current service cost and net interest for the remainder of the reporting period after the change to the plan.
C. Annual improvements to IFRSs 2015-2017 cycle
(a) Amendments to IFRS 3, ‘Business combinations’

(b) Amendments to IAS 12, ‘Income taxes’

(c) Amendments to IAS 23, ‘Borrowing costs’
The amendments clarified that if a specific borrowing remains outstanding after the related qualifying asset is ready for its intended use or sale, it becomes part of general borrowings.

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(3) Effect of 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
Amendment to IAS 1 and IAS 8, ‘Disclosure Initiative-Definition of Material’ Amendments to IFRS 3, ‘Definition of a business’ Amendments to IFRS 10 and IAS 28, ‘Sale or contribution of assets between an investor and its associate or joint venture’ IFRS 17, ‘Insurance contracts’	January 1, 2020 January 1, 2020 To be determined by International Accounting Standards Board January 1, 2021

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

A. Amendment to IAS 1 and IAS 8, ‘Disclosure Initiative-Definition of Material’

B. Amendments to IFRS 10 and IAS 28, ‘Sale or contribution of assets between an investor and its associate or joint venture’

(a) If sales or contributions of assets constitute a ‘business’ , the full gain or loss is recognized;
(b) If sales or contributions of assets do not constitute a ‘business’ , the partial gain or loss is recognised only to the extent of unrelated investors’ interests in the associate or joint venture.

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(1) Compliance statement

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(2) Basis of preparation

A. Except for the following items, the consolidated financial statements have been prepared under the historical cost convention:
- (a) Financial assets and financial liabilities (including derivative instruments) at fair value through profit or loss.
- (b) Financial assets at fair value through other comprehensive income /Available-for-sale financial assets measured at fair value.
- (c) Defined benefit liabilities recognised based on the net amount of pension fund assets less present value of defined benefit obligation.
B. The preparation of financial statements in conformity with IFRSs requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in Note 5.
C. In adopting IFRS 9 and IFRS 15 effective January 1, 2018, the Group has elected to apply modified retrospective approach whereby the cumulative impact of the adoption was recognised as retained earnings or other equity as of January 1, 2018 and the financial statements for the year ended December 31, 2017 were not restated. The financial statements for the year ended December 31, 2017 were prepared in compliance with International Accounting Standard 39 (‘IAS 39’), International Accounting Standard 11 (‘IAS 11’), International Accounting Standard 18 (‘IAS 18’) and related financial reporting interpretations. Please refer to Notes 12(4) and (5) for details of significant accounting policies and details of significant accounts.
(3) Basis of consolidation
A. Basis for preparation of consolidated financial statements:
- (a) All subsidiaries are included in the Group’s consolidated financial statements. Subsidiaries are all entities (including structured entities) controlled by the Group. The Group controls an entity when the Group is exposed, or has rights, to variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Consolidation of subsidiaries begins from the date the Group obtains control of the subsidiaries and ceases when the Group loses control of the subsidiaries.
- (b) Inter-company transactions, balances and unrealised gains or losses on transactions between companies within the Group are eliminated. Accounting policies of subsidiaries have been adjusted where necessary to ensure consistency with the policies adopted by the Group.
- (c) Profit or loss and each component of other comprehensive income are attributed to the owners of the parent and to the non-controlling interests. Total comprehensive income is attributed to the owners of the parent and to the non-controlling interests even if this results in the noncontrolling interests having a deficit balance.

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(d) Changes in a parent’s ownership interest in a subsidiary that do not result in the parent losing control of the subsidiary (transactions with non-controlling interests) are accounted for as equity transactions, i.e. transactions with owners in their capacity as owners. Any difference between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid or received is recognised directly in equity.
(e) When the Group loses control of a subsidiary, the Group remeasures any investment retained in the former subsidiary at its fair value. That fair value is regarded as the fair value on initial recognition of a financial asset or the cost on initial recognition of the associate or joint venture. Any difference between fair value and carrying amount is recognised in profit or loss. All amounts previously recognised in other comprehensive income in relation to the subsidiary are reclassified to profit or loss on the same basis as would be required if the related assets or liabilities were disposed of. That is, when the Group loses control of a subsidiary, all gains or losses previously recognised in other comprehensive income in relation to the subsidiary should be reclassified from equity to profit or loss, if such gains or losses would be reclassified to profit or loss when the related assets or liabilities are disposed of.
B. Subsidiaries included in the consolidated financial statements:

Name of Investor The Company The Company The Company The Company Peony Peony Peony	Name of Subsidiary TTSC Peony ETS EGH GMS Clove EMU	Main business activities Cargo loading and discharging Investments in transport-related business Terminal Services Container shipping and agency services dealing with port formalities Container shipping Investments in container yards and port terminals Container shipping	December 31, December 31, 2017 2018 55.00 55.00 100.00 100.00 100.00 94.43 79.00 79.00 100.00 100.00 100.00 100.00 51.00 51.00 Ownership (%)	Description
			December 31, 2017 55.00 100.00 100.00 79.00 100.00 100.00 51.00
				(e)

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Name of Investor Peony Peony Peony Peony Peony Peony Peony Peony Peony Peony Peony Peony Peony Peony	Name of Subsidiary EHIC(M) Armand N.V. KTIL MBPI MBT EGS EGK EGT EGI EMA EIT EES ERU EEU	Main business activities Manufacturing of dry steel containers and container parts Investments in container yards and port terminals Loading, discharging, storage, repairs and cleaning of containers Containers storage and inspections of containers at the customs house Inland transportation, repairs and cleaning of containers Agency services dealing with port formalities Agency services dealing with port formalities Agency services dealing with port formalities Agency services dealing with port formalities Agency services dealing with port formalities Agency services dealing with port formalities Agency services dealing with port formalities Agency services dealing with port formalities Agency services dealing with port formalities	December 31, December 31, 2017 2018 Ownership (%) 84.44 84.44 70.00 70.00 20.00 20.00 95.03 95.03 17.39 17.39 51.00 - 100.00 100.00 85.00 85.00 99.99 99.99 67.50 100.00 55.00 55.00 100.00 100.00 51.00 51.00 100.00 100.00	Description
			December 31, 2017 84.44 70.00 20.00 95.03 17.39 51.00 100.00 85.00 99.99 67.50 55.00 100.00 51.00 100.00
				(m) (a) (c)(d)

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Name of Investor Peony Peony Peony Peony Peony Peony EGH EGH EGH EGH EGH EGH EGH EGH EGH	Name of Subsidiary EGD-WWX ESA EGB EGM EGH EGV Ever shine (Shanghai) Ever shine (Ningbo) EKH EPE ECO ECL EMX HMH Ever shine (Shenzhen)	Main business activities Agency services dealing with port formalities Agency services dealing with port formalities Real estate leasing Agency services dealing with port formalities Container shipping and agency services dealing with port formalities Agency services dealing with port formalities Management consultancy and self-owned property leasing Management consultancy and self-owned property leasing Agency services dealing with port formalities Agency services dealing with port formalities Agency services dealing with port formalities Agency services dealing with port formalities Agency services dealing with port formalities Agency services dealing with port formalities Management consultancy and self-owned property leasing	December 31, December 31, 2017 2018 Ownership (%) 100.00 - 55.00 55.00 95.00 95.00 100.00 100.00 1.00 1.00 49.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 - 60.00 - 100.00 - 60.00 - 60.00 - - - 100.00	Description
			December 31, 2017 100.00 55.00 95.00 100.00 1.00 49.00 100.00 100.00 100.00 - - - - - -
				(c) (f) (g) (h) (i) (j) (k) (l) (l)

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Name of Investor EGH EGH EGH ETS EMU EMU EMU EMU EEU Clove Clove Armand N.V.	Name of Subsidiary Ever shine (Qingdao) MAC KTIL Whitney Island KTIL EGU EGUD EGDL Island ETS Armand B.V.	Main business activities Management consultancy and self-owned property leasing Agency services dealing with port formalities Loading, discharging, storage, repairs and cleaning of containers Investments and leases of operating machinery and equipment of port terminals Investments in operating machinery and equipment of port terminals Loading, discharging, storage, repairs and cleaning of containers Agency services dealing with port formalities Agency services dealing with port formalities Agency services dealing with port formalities Investments in operating machinery and equipment of port terminals Terminal Services Investments in container yards and port terminals	December 31, December 31, 2017 2018 Ownership (%) - 100.00 - 49.00 - 20.00 - 100.00 15.00 - 20.00 20.00 100.00 - 100.00 - 100.00 - 36.00 - - 5.57 100.00 100.00	Description
			December 31, 2017 - - - - 15.00 20.00 100.00 100.00 100.00 36.00 - 100.00
				(l) (l) (e) (e) (e) (b) (b) (d) (e) (e)

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Name of Investor Island Island MBPI	Name of Subsidiary Whitney Hemlock MBT	Main business activities Investments and leases of operating machinery and equipment of port terminals Investments and leases of operating machinery and equipment of port terminals Inland transportation, repairs and cleaning of containers	December 31, December 31, 2017 2018 Ownership (%) 100.00 - 100.00 - 72.95 72.95	Description
			December 31, 2017 100.00 100.00 72.95
				(e) (e)

(a) On December 21, 2018, the Board of Directors resolved to have the subsidiary Peony Investment acquire 32.5% of the shares of EMA from non-controlling interest. The effective date of ownership transfer was December 28, 2018.
(b) On August 1, 2016, the Board of Directors has resolved that the subsidiary – Peony to sell 100% share ownership of EGUD to the indirect subsidiary – EMU. Since EMU obtained the wholly-owned ownership, the Board of Directors resolved a reorganization plan to transfer businesses from EGU and EGUD to EMU on August 1, 2016. The liquidation process of EGU and EGUD were completed by June 28, 2018 and May 27, 2018, respectively.
(c) The proposal of reorganisation of the subsidiary, Peony, has been approved by the Board of Directors on May 12, 2017 to transfer EGDW’s business to the sub-subsidiary, EEU, beginning on August 1, 2017. The liquidation process of EGDW was completed by June 12, 2018.
(d) The proposal of reorganisation of the sub-subsidiary, EEU, has been resolved at the shareholders’ meeting on May 18, 2017, to transfer its business to its subsidiary, EGDL, effective on August 1, 2017. The liquidation process of EGDL was completed by May 14, 2018.
(e) On December 20, 2017, shareholders of the subsidiary, ETS, during their meeting resolved to make an equity transaction. ETS acquired a 100% equity interest of Island from Clove and EMU, of which the transaction made with Clove is through issuing new shares totaling 59 shares with par value of US$100 per share in exchange for a 36% equity interest of Island with Clove. On January 1, 2018, shareholders of ETS during their meeting resolved to merge its subsidiary, Island, and its second-tier subsidiaries, Hemlock and Whitney, when the equity

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transaction made with Clove and EMU was completed. Under the merger, ETS and Whitney are the surviving companies, and Island and Hemlock will be dissolved.

(f) On December 20, 2017, the Board of Directors resolved to have the subsidiary, Peony Investment, acquire 51% of the shares of EGV from the original shareholders. The effective date of ownership transfer was January 1, 2018.
(g) On September 13, 2017, the Board of Directors of the subsidiary, EGH, resolved to establish a subsidiary, EKH, in Cambodia. The capital of establishment is KHR 1,200,000 (approx. USD 300), and the subsidiary is primarily engaged in container shipping and agency services dealing with port formalities.
(h) On July 31, 2018, the Board of Directors of the subsidiary, EGH, resolved to establish a subsidiary, EPE, in Peru. The capital of establishment is PEN 1,500 (approx. USD462), and the subsidiary is primarily engaged in container shipping and agency services dealing with port formalities.
(i) On August 14, 2018, the Board of Directors of the subsidiary, EGH, resolved to establish a subsidiary, ECO, in Columbia. The capital of establishment is COP 80,000 (approx. USD27), and the subsidiary is primarily engaged in container shipping and agency services dealing with port formalities.
(j) On October 1, 2018, the Board of Directors of the subsidiary, EGH, resolved to establish a subsidiary, ECL, in Chile. The capital of establishment is CLP 350,000 (approx. USD531), and the subsidiary is primarily engaged in container shipping and agency services dealing with port formalities.
(k) On October 15, 2018, the Board of Directors of the subsidiary, EGH, resolved to establish a subsidiary, EMX, in Mexico. The capital of establishment is MXN 7,400 (approx. USD382), and the subsidiary is primarily engaged in container shipping and agency services dealing with port formalities.
(l) On August 13, 2018, shareholders of the subsidiary, EGH, during their meeting resolved to make an equity transaction. EGH acquired a 100% equity interest of HMH and its indirect investees, wholly-owned Ever shine (Shenzhen), wholly-owned Ever shine (Qingdao), 49% owned MAC and 20% owned KTIL from other related party, Chestnut Estate B.V.. The transaction amount was US $105,808. The applicable transactions were approved by the Investment Commission of the Ministry of Economic Affairs. The acquisition date was December 14, 2018. On December 21, 2018, shareholders of EGH during their meeting resolved to merge its subsidiary, HMH. EGH will be the surviving companies and HMH will be dissolved after the merger. As of the date of issuance of the financial report, the merger procedure was still in process.
(m) The liquidation process of the sub-subsidiary, EGS was completed by December 19, 2018.

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C. Subsidiary not included in the consolidated financial statements: None.
D. Adjustments for subsidiaries with different balance sheet dates: None.
E. Significant restrictions: None.
F. Subsidiaries that have non-controlling interests that are material to the Group:

As of December 31, 2017 and 2018, the non-controlling interest amounted to $3,290,236 and $4,123,606, respectively. The information of non-controlling interest and respective subsidiaries is as follows:

as follows:
Name of subsidiary	Principal place ofbusiness		Non-controlling	interest
		December	31,2017	December31,2018
		Amount $ 598,392 1,591,869	Ownership (%) 49% 20%	Amount $ 1,469,422 1,903,321	Ownership (%) 49% 20%
EMU EGH	U.K. Hong Kong

Summarised financial information of the subsidiaries:

Balance sheets

Balance sheets
			EMU
		December31,2017		December31,2018
Current assets		$	9,113,834	$	9,362,266
Non-current assets			38,436,657		37,184,025
Current liabilities	(		20,121,083)	(	17,239,612)
Non-current liabilities	(		26,208,199)	(	26,307,858)
Total net assets		$	1,221,209	$	2,998,821
			EGH
		December31,2017		December31,2018
Current assets		$	3,119,694	$	9,396,355
Non-current assets			8,673,850		21,515,148
Current liabilities	(		2,054,676)	(	8,315,106)
Non-current liabilities	(		1,779,522)	(	13,383,103)
Total net assets		$	7,959,346	$	9,213,294

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Statements of comprehensive income

			EMU	EMU	EMU
			Year ended			Year ended
			December31,2017			December31,2018
Revenue		$	54,151,814		$	50,304,493
Loss before income tax	($		1,313,841)	($		1,297,028)
Income tax expense	(		15,818)	(		23,795)
Loss for the period from
continuing operations	(		1,329,659)	(		1,320,823)
Other comprehensive income
(loss), net of tax	(		13,202)			7,518
Total comprehensive loss
for the period	($		1,342,861)	($		1,313,305)
Comprehensive loss attributable
to non-controlling interest	($		658,002)	($		643,519)
			EGH
			Year ended			Year ended
			December31,2017			December 31, 2018
Revenue		$	3,883,278		$	11,014,069
Profit before income tax		$	977,953		$	1,194,785
Income tax expense	(		114,967)	(		215,462)
Profit for the period
from continuing operations			862,986			979,323
Other comprehensive loss,
net of tax	(		3,310)	(		2,263)
Total comprehensive income for
the period		$	859,676		$	977,060
Comprehensive income attributable
to non-controlling interest		$	12,402		$	195,412

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Statements of cash flows

Statements of cash flows
		EMU
		Year ended			Year ended
		December31,2017			December31,2018
Net cash (used in) provided by
operating activities	$	4,996,091	($		953,448)
Net cash provided by (used in)
investing activities	(	246,896)			1,098,202
Net cash used in financing
activities	(	4,648,565)	(		256,283)
Effect of exchange rates on cash
and cash equivalents	(	150,575)			58,194
Decrease in cash and cash
equivalents	(	49,945)	(		53,335)
Cash and cash equivalents,
beginning of period		1,890,638			1,840,693
Cash and cash equivalents,
end of period	$	1,840,693		$	1,787,358
		EGH
		Year ended			Year ended
		December31,2017			December31,2018
Net cash provided by operating
activities	$	1,944,965		$	2,565,400
Net cash (used in) provided by
investing activities		80,984	(		12,950,639)
Net cash provided by (used in)
financing activities	(	1,252,423)			12,471,803
Effect of exchange rates on cash
and cash equivalents	(	39,186)			75,867
Increase in cash and cash
equivalents		734,340			2,162,431
Cash and cash equivalents,
beginning of period		269,294			1,003,634
Cash and cash equivalents,
end of period	$	1,003,634		$	3,166,065

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(4) Foreign currency translation

Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic environment in which the entity operates (the “functional currency”). The consolidated financial statements are presented in New Taiwan Dollars, which is the Company’s functional and the Group’s presentation currency.
A. Foreign currency transactions and balances
(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, except when deferred in other comprehensive income as qualifying cash flow hedges and qualifying net investment hedges.
(b) Monetary assets and liabilities denominated in foreign currencies at the period end are retranslated at the exchange rates prevailing at the balance sheet date. Exchange differences arising upon re-translation 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 re-translated at the exchange rates prevailing at the balance sheet date; their translation differences are recognised in other comprehensive income. However, nonmonetary assets and liabilities denominated in foreign currencies that are not measured at fair value are translated using the historical exchange rates at the dates of the initial transactions.
(d) All other foreign exchange gains and losses based on the nature of those transactions are presented in the statement of comprehensive income within ‘other gains and losses’.
B. Translation of foreign operations
(a) The operating results and financial position of all the group entities and associates that have a functional currency different from the presentation currency are translated into the presentation currency as follows:
- i. Assets and liabilities for each balance sheet presented are translated at the closing exchange rate at the date of that balance sheet;
- ii. Income and expenses for each statement of comprehensive income are translated at average exchange rates of that period; and
- iii. All resulting exchange differences are recognised in other comprehensive income.

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  - (b) When the foreign operation partially disposed of or sold is an associate, exchange differences that were recorded in other comprehensive income are proportionately reclassified to profit or loss as part of the gain or loss on sale. In addition, even when the Group retains partial interest in the former foreign associate after losing significant influence over the former foreign associate, such transactions should be accounted for as disposal of all interest in these foreign operations.

  - (c) When the foreign operation partially disposed of or sold is a subsidiary, cumulative exchange differences that were recorded in other comprehensive income are proportionately transferred to the non-controlling interest in this foreign operation. In addition, even when the Group retains partial interest in the former foreign subsidiary after losing control of the former foreign subsidiary, such transactions should be accounted for as disposal of all interest in the foreign operation.

  - (d) Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing exchange rates at the balance sheet date.

(5) Classification of current and non-current items
A. Assets that meet one of the following criteria are classified as current assets; otherwise they are classified as non-current assets:
- (a) Assets arising from operating activities that are expected to be realised, or are intended to be sold or consumed within the normal operating cycle;
- (b) Assets held mainly for trading purposes;
- (c) Assets that are expected to be realised within twelve months from the balance sheet date;
- (d) Cash and cash equivalents, excluding restricted cash and cash equivalents and those that are to be exchanged or used to settle liabilities more than twelve months after the balance sheet date.
B. Liabilities that meet one of the following criteria are classified as current liabilities; otherwise they are classified as non-current liabilities:
- (a) Liabilities that are expected to be settled within the normal operating cycle;
- (b) Liabilities arising mainly from trading activities;
- (c) Liabilities that are to be settled within twelve months from the balance sheet date;
- (d) Liabilities for which the repayment date cannot be extended unconditionally to more than twelve months after the balance sheet date. Terms of a liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not affect its classification.
(6) Cash equivalents

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(7) Financial assets at fair value through profit or loss
A. Financial assets at fair value through profit or loss are financial assets that are not measured at amortised cost or fair value through other comprehensive income.
B. On a regular way purchase or sale basis, financial assets at fair value through profit or loss are recognised and derecognised using trade date accounting.
C. At initial recognition, the Group measures the financial assets at fair value and recognises the transaction costs in profit or loss. The Group subsequently measures the financial assets at fair value, and recognises the gain or loss in profit or loss.
D. The Group recognises the dividend income when the right to receive payment is established, future economic benefits associated with the dividend will flow to the Group and the amount of the dividend can be measured reliably.
(8) Financial assets at fair value through other comprehensive income
A. Financial assets at fair value through other comprehensive income comprise equity securities which are not held for trading, and for which the Group has made an irrevocable election at initial recognition to recognise changes in fair value in other comprehensive income and debt instruments which meet all of the following criteria:
- (a) The objective of the Group’s business model is achieved both by collecting contractual cash flows and selling financial assets; and
- (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 fair value through other comprehensive income are recognised and derecognised using trade date accounting.
C. At initial recognition, the Group measures the financial assets at fair value plus transaction costs. The Group subsequently measures the financial assets at fair value:
- (a) The changes in fair value of equity investments that were recognised in other comprehensive income are reclassified to retained earnings and are not reclassified to profit or loss following the derecognition of the investment. Dividends are recognised as other income when the right to receive payment is established, future economic benefits associated with the dividend will flow to the Group and the amount of the dividend can be measured reliably.
- (b) Except for the recognition of impairment loss, interest income and gain or loss on foreign exchange which are recognised in profit or loss, the changes in fair value of debt instruments are taken through other comprehensive income. When the financial asset is derecognised, the cumulative gain or loss previously recognised in other comprehensive income is reclassified from equity to profit or loss.

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(9) 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.
(10) Notes, accounts and other receivables
A. Notes and account receivable entitle the Group a legal right to receive consideration in exchange for transferred goods or rendered services. Receivables arising from transactions other than the sale of goods or service are classified as other receivables.
B. The short-term notes receivable, accounts receivable and other receivable without bearing interest are subsequently measured at initial invoice amount as the effect of discounting is immaterial.
(11) Impairment of financial assets

(12) Derecognition of financial assets

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

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

(13) Operating leases (lessor)

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.

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(14) Inventories

(15) Investments accounted for using equity method / associates
A. Associates are all entities over which the Group has significant influence but not control. In general, it is presumed that the investor has significant influence, if an investor holds, directly or indirectly 20 percent or more of the voting power of the investee. Investments in associates are accounted for using the equity method and are initially recognised at cost.
B. The Group’s share of its associates’ post-acquisition profits or losses is recognised in profit or loss, and its share of post-acquisition movements in other comprehensive income is recognised in other comprehensive income. When the Group’s share of losses in an associate equals or exceeds its interest in the associate, including any other unsecured receivables, the Group does not recognise further losses, unless it has incurred legal or constructive obligations or made payments on behalf of the associate.
C. When changes in an associate’s equity that are not recognised in profit or loss or other comprehensive income of the associate and such changes not affecting the Group’s ownership percentage of the associate, the Group recognises the Group’s share of change in equity of the associate in ‘capital surplus’ in proportion to its ownership.
D. Unrealised gains and loss on transactions between the Group and its associates are eliminated to the extent of the Group’s interest in the associates. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of associates have been adjusted where necessary to ensure consistency with the policies adopted by the Group.
E. In the case that an associate issues new shares and the Group does not subscribe or acquire new shares proportionately, which results in a change in the Group’s ownership percentage of the associate but maintains significant influence on the associate, then ‘capital surplus’ and ‘investments accounted for using equity method’ shall be adjusted for the increase or decrease of its share of equity interest. If the above condition causes a decrease in the Group’s ownership percentage of the associate, in addition to the above adjustment, the amounts previously

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recognised in other comprehensive income in relation to the associate are reclassified to profit or loss proportionately on the same basis as would be required if the relevant assets or liabilities were disposed of.

F. Upon loss of significant influence over an associate, the Group remeasures any investment retained in the former associate at its fair value. Any difference between fair value and carrying amount is recognised in profit or loss.
G. When the Group disposes its investment in an associate and 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 retains significant influence over this associate, 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.
H. When the Group disposes its investment in an associate and loses significant influence over this associate, the amounts previously recognised as capital surplus in relation to the associate are transferred to profit or loss. If it still retains significant influence over this associate, then the amounts previously recognised as capital surplus in relation to the associate are transferred to profit or loss proportionately.
(16) Property, plant and equipment
A. Property, plant and equipment are initially recorded at cost. Borrowing costs incurred during the construction period are capitalised.
B. Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are charged to profit or loss during the financial period in which they are incurred.
C. Land is not depreciated. Other property, plant and equipment apply cost model and are depreciated using the straight-line method to allocate their cost over their estimated useful lives. Each part of an item of property, plant, and equipment with a cost that is significant in relation to the total cost of the item must be depreciated separately.
D. The assets’ residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each financial year-end. 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:

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Buildings 20 ~ 135 years Loading and unloading equipment 5 ~ 20 years

Ships 18 ~ 25 years Transportation equipment 5 ~ 10 years Lease assets 2 ~ 90 years Other equipment 2 ~ 15 years

(17) Leased assets/ operating leases (lessee)

A. Based on the terms of a lease contract, a lease is classified as a finance lease if the Group assumes substantially all the risks and rewards incidental to ownership of the leased asset.
(a) A finance lease is recognised as an asset and a liability at the lease’s commencement at the lower of the fair value of the leased asset or the present value of the minimum lease payments.
(b) The minimum lease payments are apportioned between the finance charges and the reduction of the outstanding liability. The finance charges are allocated to each period over the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability.
(c) Property, plant and equipment held under finance leases are depreciated over their estimated useful lives. If there is no reasonable certainty that the Group will obtain ownership at the end of the lease, the asset shall be depreciated over the shorter of the lease term and its useful life.
B. Payments made under an operating lease (net of any incentives received from the lessor) are recognised in profit or loss on a straight-line basis over the lease term.
C. The accounting treatment of sale and leaseback transactions depends on the substance of the transaction. If sale and finance leaseback is in substance a financing transaction, the difference between the sales proceeds and the carrying value of the asset is deferred and amortised to the income statement over the lease term. If the sale price is below the fair value, the difference between sale price and carrying amount should be recognised immediately except that, if a loss arising is compensated by future rent at below market price, it should be deferred and amortised in proportion to the rent payments over the period for which the asset is expected to be used. If the sale price is above the fair value, the excess of proceeds over fair value should be deferred and amortised over the period for which the asset is expected to be used.

(18) Investment property

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(19) Intangible assets

A. Computer software

Computer software is stated at cost and amortised on a straight-line basis over its estimated useful life of 3 years.

B. Goodwill

Goodwill arises in a business combination accounted for by applying the acquisition method.

C. Customer relationship

(20) Impairment of non-financial assets

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

(21) Borrowings
A. Borrowings comprise long-term and short-term bank borrowings and other long-term and shortterm loans. 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.
B. Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw-down occurs. To the extent there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalised as a pre-payment for liquidity services and amortised over the period of the facility to which it relates.
(22) Accounts payable
A. Accounts payable are liabilities for purchases of raw materials, goods or services.
B. The short-term notes and accounts payable without bearing interest are subsequently measured at initial invoice amount as the effect of discounting is immaterial.

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(23) Financial liabilities at fair value through profit or loss

A. Financial liabilities are classified in this category of held for trading if acquired principally for the purpose of repurchasing in the short-term. Derivatives are also categorised as financial liabilities held for trading unless they are designated as hedges or financial liabilities at fair value through profit or loss. Financial liabilities that meet one of the following criteria are designated as at fair value through profit or loss at initial recognition:
(a) Hybrid (combined) contracts; or
(b) They eliminate or significantly reduce a measurement or recognition inconsistency; or
(c) They are managed and their performance is evaluated on a fair value basis, in accordance with a documented risk management policy.
B. At initial recognition, the Group measures the financial liabilities at fair value. All related transaction costs are recognised in profit or loss. The Group subsequently measures these financial liabilities at fair value with any gain or loss recognised in profit or loss.

(24) Bonds payable

(25) Derecognition of financial liabilities

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

(26) Offsetting financial instruments

(27) Hedge accounting

A. At the inception of the hedging relationship, there is formal designation and documentation of the hedging relationship and the Group’s risk management objective and strategy for undertaking the hedge. That documentation shall include identification of the hedging instrument, the hedged item, the nature of the risk being hedged and how the Group will assess whether the hedging relationship meets the hedge effectiveness requirements.
B. The Group designates the hedging relationship as follows: Cash flow hedge:

A hedge of the exposure to variability in cash flows that is attributable to a particular risk associated with a recognised asset or liability or a highly probable forecast transaction.

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C. Cash flow hedges
(a)The cash flow hedge reserve associated with the hedged item is adjusted to the lower of the following (in absolute amounts):
- i. the cumulative gain or loss on the hedging instrument from inception of the hedge; and
- ii. the cumulative change in fair value of the hedged item from inception of the hedge.
(b)The effective portion of the gain or loss on the hedging instrument is recognised in other comprehensive income. The gain or loss on the hedging instrument relating to the ineffective portion is recognised in profit or loss.
(c)The amount that has been accumulated in the cash flow hedge reserve in accordance with (a) is accounted for as follows:
- i. If a hedged forecast transaction subsequently results in the recognition of a non-financial asset or non-financial liability, or a hedged forecast transaction for a non-financial asset or non-financial liability becomes a firm commitment for which fair value hedge accounting is applied, the Group shall remove that amount from the cash flow hedge reserve and include it directly in the initial cost or other carrying amount of the asset or liability.
- ii. For cash flow hedges other than those covered by item i. above, that amount shall be reclassified from the cash flow hedge reserve to profit or loss as a reclassification adjustment in the same period or periods during which the hedged expected future cash flows affect profit or loss.
- iii. If that amount is a loss and the Group expects that all or a portion of that loss will not be recovered in one or more future periods, it shall immediately reclassify the amount that is not expected to be recovered into profit or loss as a reclassification adjustment.
(d) When the hedging instrument expires, or is sold, terminated, exercised or when the hedging relationship ceases to meet the qualifying criteria, if the forecast transaction is still expected to occur, the amount that has been accumulated in the cash flow hedge reserve shall remain in the cash flow hedge reserve until the forecast transaction occurs; if the forecast transaction is no longer expected to occur, the amount shall be immediately reclassified from the cash flow hedge reserve to profit or loss as a reclassification adjustment.

(28) Employee benefits

A. Short-term employee benefits

B. Pensions

(a) Defined contribution plans

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(b) Defined benefit plans
i. Net obligation under a defined benefit plan is defined as the present value of an amount of pension benefits that employees will receive on retirement for their services with the Group in current period or prior periods. The liability recognised in the balance sheet in respect of defined benefit pension plans is the present value of the defined benefit obligation at the balance sheet date less the fair value of plan assets. The net defined benefit 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 high-quality corporate bonds that are denominated in the currency in which the benefits will be paid, and that have terms to maturity approximating to the terms of the related pension liability; when there is no deep market in high-quality corporate bonds, the Group uses interest rates of government bonds (at the balance sheet date) instead.
ii. Remeasurements 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

D. Employees’ compensation and directors’ remuneration

(29) Income tax

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

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B. The current income tax expense is calculated on the basis of the tax laws enacted or substantively enacted at the balance sheet date in the countries where the Company and its subsidiaries operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in accordance with applicable tax regulations. It establishes provisions where appropriate based on the amounts expected to be paid to the tax authorities. An additional tax is levied on the unappropriated retained earnings and is recorded as income tax expense in the year the stockholders resolve to retain the earnings.
C. Deferred income tax is recognised, using the balance sheet liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated balance sheet. Deferred income tax is provided on temporary differences arising on investments in subsidiaries and associates, except where the timing of the reversal of the temporary difference is controlled by the Group and it is probable that the temporary difference will not reverse in the foreseeable future. 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 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 and equity investments to the extent that it is possible that future taxable profit will be available against which the unused tax credits can be utilised.
(30) Dividends

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(31) Revenue recognition

A. Sales of goods

Revenue is measured at the fair value of the consideration received or receivable taking into account of business tax, returns, rebates and discounts for the sale of goods to external customers in the ordinary course of the Group’s activities. Revenue arising from the sales of goods is recognised when the Group has delivered the goods to the customer, the amount of sales revenue can be measured reliably and it is probable that the future economic benefits associated with the transaction will flow to the entity. The delivery of goods is completed when the significant risks and rewards of ownership have been transferred to the customer, the Group retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold, and the customer has accepted the goods based on the sales contract or there is objective evidence showing that all acceptance provisions have been satisfied.
B. Sales of services
Revenue from delivering services is recognised under the percentage-of-completion method when the outcome of services provided can be estimated reliably. The stage of completion of a service contract is measured by the percentage of the actual services performed as of the financial reporting date to the total services to be performed. If the outcome of a service contract cannot be estimated reliably, contract revenue should be recognised only to the extent that contract costs incurred are likely to be recoverable.
C. Rental revenue

The Group leases ships and shipping spaces under IAS 17, ‘Leases’. Lease assets are classified as finance leases or operating leases based on the transferred proportion of the risks and rewards incidental to ownership of the leased asset, and recognised in revenue over the lease term.

(32) Business combinations

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

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B. The excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and the fair value of any previous equity interest in the acquiree over the fair value of the identifiable assets acquired and the liabilities assumed is recorded as goodwill at the acquisition date. If the total of consideration transferred, non-controlling interest in the acquiree recognised and the fair value of previously held equity interest in the acquiree is less than the fair value of the identifiable assets acquired and the liabilities assumed, the difference is recognised directly in profit or loss on the acquisition date.
(33) Operating segments
Operating segments are reported in a manner consistent with the internal reporting provided to the Chief Operating Decision-Maker. The Chief Operating Decision-Maker is responsible for allocating resources and assessing performance of the operating segments.

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

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

None.

(2)Critical accounting estimates and assumptions

A. Revenue recognition
Revenue from delivering services and related costs are recognised under the percentage-ofcompletion method when the outcome of services provided can be estimated reliably. The stage of completion of a service contract is measured by the percentage of the actual services performed as of the financial reporting date to the total services to be performed.
B. Impairment assessment of tangible and intangible assets (excluding goodwill)

As of December 31, 2018, the Group recognised property, plant, equipment amounting to $117,219,185.

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6. DETAILS OF SIGNIFICANT ACCOUNTS

(1) Cash and cash equivalents

Cash on hand and petty cash Checking accounts and demand deposits Time deposits	December31,2017 20,739 $ 6,300,219 31,787,305 38,108,263 $	December31,2018 22,713 $ 7,192,906 31,014,903 38,230,522 $

A. The Group transacts with a variety of financial institutions all with high credit quality to disperse credit risk, so it expects that the probability of counterparty default is remote. The Group’s maximum exposure to credit risk at balance sheet date is the carrying amount of all cash and cash equivalents.
B. The Group has no cash and cash equivalents pledged to others.
(2) Financial assets at fair value through other comprehensive income

equivalents. B. The Group has no cash and cash equivalents pledged to others. Financial assets at fair value through other comprehensive income
Items Non-current items: Listed (TSE) stocks Unlisted stocks Valuation adjustment	December31,2018
	490,801 $ 211,476
	702,277 948,095
	1,650,372 $

A. The Group has elected to classify these investments that are considered to be strategic investments as financial assets at fair value through other comprehensive income. The fair value of such investments amounted to $1,650,372 at December 31, 2018.
B. For the year ended December 31, 2018, for the consideration of operations, the Group sold shares of unlisted stocks and listed stocks with a fair value of $34,055 and $342,661, respectively, of which a cumulative disposal gain of $111 and $13,332, respectively, was recognised.

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C. Amounts recognised in profit or loss and other comprehensive income in relation to the financial assets at fair value through other comprehensive income are listed below:

Equity instruments at fair value through other comprehensive income Fair value change recognised in other comprehensive income ( Income tax recognised in other comprehensive income Cumulative gains reclassified to retained earnings due to derecognition Dividend income recognised in profit or loss Held at end of period	Year ended December31,2018 316,044) $ 6,210 $ 13,438 $ 99,467 $

D. Information relating to credit risk of financial assets at fair value through other comprehensive income is provided in Note 12(3).
E. Information on available-for-sale financial assets and financial assets at cost as of December 31, 2017 are provided in Note 12(4).

(3) Financial assets at amortised cost

Items Non-current items: Financial bonds	December31,2018 100,000 $

A. Amounts recognised in profit or loss in relation to financial assets at amortised cost are listed below:

Interest income

		Three-month
		Year ended
		December31,2018
	$	2,200

B. As at December 31, 2018, without taking into account any collateral held or other credit enhancements, the maximum exposure to credit risk in respect of the amount that best represents the financial assets at amortised cost held by the Group was $100,000.
C. The Group has no financial assets at amortised cost held by the Group pledged to others.
D. Information on held-to-maturity financial assets and investments in debt instruments without active market as of December 31, 2017 are provided in Note 12(4).

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(4) Notes and accounts receivable

Notes and accounts receivable
Notes receivable Less: Allowance for bad debts Accounts receivable (including related parties) Less: Allowance for bad debts ( Overdue receivables (recorded as other non-current assets) Less: Allowance for bad debts (	December31,2017 66,410 $ - ( 66,410 $ 13,865,953 $ 96,283) ( 13,769,670 $ 195,715 $ 195,715) ( - $	December31,2018
		154,299 $ 4)
		154,295 $
		15,613,317 $ 96,468)
		15,516,849 $
		202,654 $ 202,654)
		- $

A. The ageing analysis of accounts receivable and notes receivable are as follows:

Not past due Up to 30 days 31 to 180 days Not past due Up to 30 days 31 to 180 days	December31,2017 Accountsreceivable 11,747,121 $ 1,749,509 273,040 13,769,670 $ December31,2017 Notesreceivable 66,410 $ - - 66,410 $	December31,2018
		Accountsreceivable
		12,352,224 $ 2,694,557 470,068
		15,516,849 $
		December31,2018
		Notesreceivable
		154,295 $ - -
		154,295 $

The above ageing analysis was based on past due date.

B. The Group has no notes and accounts receivable held by the Group pledged to others.
C. As at December 31, 2017 and 2018, 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 Group’s notes receivable were $66,410 and, $154,295 respectively; and the amount that best represents the Group’s accounts receivable were $13,769,670 and, $15,516,849 respectively.
D. Information relating to credit risk of accounts receivable and notes receivable is provided in Note 12(2).

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(5) Inventories

Inventories
Ship fuel Steel and others Ship fuel Steel and others		December31,2017
	Cost 3,306,081 $ 413,348 3,719,429 $	Allowance for valuation loss - $ - - $ December 31, 2018	Bookvalue
			3,306,081 $ 413,348
			3,719,429 $

	Cost 4,715,175 $ 385,722 5,100,897 $	Allowance for valuation loss - $ - - $	Bookvalue
			4,715,175 $ 385,722
			5,100,897 $

(6) Other current assets

Other current assets
Shipowner's accounts Agency accounts Temporary debits Other financial assets	December31,2017 1,207,851 $ 824,422 308,312 324,508 2,665,093 $	December31,2018
		624,748 $ 894,341 1,333,964 271,721
		3,124,774 $

A. Shipowner’s accounts:
(a) Temporary accounts, between the Group and other related parties – Evergreen International S.A., Gaining Enterprise S.A., Italia Marittima S.p.A., Evergreen Marine (Hong Kong) Ltd. and Evergreen Marine (Singapore) Pte. Ltd. incurred due to foreign port formalities and pier rental expenses.
(b) In response to market competition and enhancement of global transportation network to provide better logistics services to customers, the Group has joined Cosco Container Lines Co., Ltd., Kawasaki Kisen Kaisha, Ltd., Yang Ming (UK), Ltd. and Hanjin Shipping Co., Ltd. to form the CKYHE Alliance Transactions for trading of shipping spaces from March 1, 2014 to March 31, 2017.
(c) In response to market competition and enhancement of global transportation network to provide better logistics services to customers, the Group has joined Cosco Container Lines Co., Ltd., CMA CGM, Ltd., and the Orient Overseas Container Line, Ltd. to form the OCEAN Alliance on March 31, 2017 for trading of shipping space.

~50~

F-314

B. Agency accounts:

(7) Investments accounted for using equity method

A. Details of long-term equity investments accounted for using equity method are set forth below:

Evergreen International Storage and Transport Corporation EVA Airways Corporation Taipei Port Container Terminal Corporation Charng Yang Development Co., Ltd. Luanta Investment (Netherlands) N.V. Balsam Investment (Netherlands) N.V. Colon Container Terminal S.A. Others	December31,2017 8,452,437 $ 9,462,402 1,428,295 537,532 1,865,804 1,282,862 2,532,187 1,221,507 26,783,026 $	December31,2018
		8,884,659 $ 10,334,116 1,500,384 544,057 1,933,828 658,599 3,261,433 1,148,092
		28,265,168 $

B. Associates

(a) The basic information of the associates that are material to the Group is as follows:

Companyname	Principal place of business	Ownership(%)	Ownership(%)	Nature of relationship	Methods of measurement
Evergreen International Storage and Transport Corporation EVA Airways Corporation	TW TW	December 31, 2017	December 31, 2018	With a right over 20% to vote Have a right to vote in the Board of Directors	Equity method Equity method
		39.74% 16.31%	40.36% 16.31%

~51~

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(b) The summarised financial information of the associates that are material to the Group is as follows:

Balance sheet

follows: Balance sheet
	Evergreen InternationalStorageandTransportCorporation
		December31,2017		December31,2018
Current assets	$	5,429,946	$	6,066,455
Non-current assets		27,662,565		27,152,629
Current liabilities	(	2,369,781)	(	2,418,658)
Non-current liabilities	(	9,031,865)	(	8,269,749)
Total net assets	$	21,690,865	$	22,530,677
Share in associate's net assets	$	8,558,554	$	8,982,546
Unrealized income with
affiliated companies	(	106,117)	(	97,887)
Carrying amount of the associate	$	8,452,437	$	8,884,659
		EVA Airways Corporation
		December31,2017		December31,2018
Current assets	$	69,002,340	$	75,996,433
Non-current assets		159,204,888		165,197,470
Current liabilities	(	60,428,208)	(	60,922,876)
Non-current liabilities	(	103,569,512)	(	110,151,292)
Total net assets	$	64,209,508	$	70,119,735
Share in associate's net assets	$	9,462,402	$	10,334,116

Statement of comprehensive income

Statement of comprehensive income
Revenue Profit for the period Other comprehensive income (loss), net of tax Total comprehensive income Dividends received from associates	Evergreen InternationalStorageandTransportCorporation
	Year ended December 31,2017 7,554,009 $ 884,258 $ 647,260) ( 236,998 $ 148,422 $	Year ended December 31,2018
		7,742,438 $
		870,248 $ 351,587
		1,221,835 $
		148,422 $

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Revenue Profit for the period Other comprehensive loss, net of tax ( Total comprehensive income Dividends received from associates	EVA Airways	Corporation
	Year ended December 31,2017 163,561,731 $ 6,310,934 $ 769,683) ( 5,541,251 $ 132,191 $	Year ended December 31,2018
		179,907,332 $
		7,214,513 $ 543,495)
		6,671,018 $
		136,157 $

(c) The carrying amount of the Group’s interests in all individually immaterial associates and the Group’s share of the operating results are summarised below:
As of December 31, 2017 and 2018, the carrying amount of the Group’s individually immaterial associates amounted to $8,868,187 and, $9,046,393 respectively.

(Loss) gain for the period Other comprehensive loss, net of tax ( Total comprehensive (loss) income	Year ended December Year ended December 31,2017 31,2018 2,410,843 $ 992,621) ($ 4,318) 3,309) ( 2,406,525 $ 995,930) ($	Year ended December 31,2018

C. Above stated certain investments accounted for using equity method are based on the financial statements of associates which were audited by the independent accountants.
D. Above stated certain investments accounted for using equity method are based on the financial statements of associates which were reviewed by the associates’ independent accountants.
E. The fair value of the Group’s associates which have quoted market price was as follows:

Evergreen International Storage and Transport Corporation EVA Airways Corporation	December31,2017 6,000,494 $ 10,790,460 16,790,954 $	December31,2018
		5,814,345 $ 11,294,242
		17,108,587 $

F. On December 21, 2017, the Board of Directors of the subsidiary, Evergreen Marine (Hong Kong) Ltd., during their meeting resolved to acquire a 9% equity interest of Colon Container Terminal S.A. from its original shareholder, Marubeni Corporation, in the amount of USD 15,600, and gain from bargain purchase amounted to USD43,000 thousand was recognised. The shareholding ratio will be increased to 49% when the transaction is completed.
G. On October 8, 2018, the Board of Directors during their meeting resolved to acquire 6,629 thousand shares of Evergreen International Storage and Transport Corporation’s shares from the stock exchange market. The transaction price was $86,894, and the ownership percentage was increased to 40.36% after the purchase.

~53~

F-317

		Total		163,429,518 $		63,959,088) (	99,470,430 $			99,470,430 $	1,602,423	50,883) (	4,263,055	7,663,183) (		5,764,793		5,699,181) (		97,687,454 $		163,934,470 $		66,247,016) (	97,687,454 $
		Others		138,493 $		531) (	137,962 $			137,962 $	35,235	-	81,922) (	2,822) (		-		5,915) (		82,538 $		85,891 $		3,353) (	82,538 $
	Leasehold	improvements		366,787 $		242,660) (	124,127 $			124,127 $	15,488	6,155) (	204,088	120,753) (		-		627) (		216,168 $		574,438 $		358,270) (	216,168 $
	Lease	assets		21,192,069 $		5,565,381) (	15,626,688 $			15,626,688 $	70,957	6,337) (	81,527) (	1,063,223) (		-		1,190,470) (		13,356,088 $		19,524,906 $		6,168,818) (	13,356,088 $
	Office	equipment		511,701 $		411,375) (	100,326 $			100,326 $	21,224	3,721) (	4,012) (	33,435) (		27,237		2,642		110,261 $		533,874 $		423,613) (	110,261 $
		Ships		110,782,722 $		42,981,997) (	67,800,725 $			67,800,725 $	207,088	3,451) (	3,660,780	4,406,998) (		116,948		3,635,922) (		63,739,170 $		107,532,947 $		43,793,777) (	63,739,170 $
	Transportation	equipment		17,025,213 $		7,412,028) (	9,613,185 $			9,613,185 $	985,566	25,375) (	-	1,328,043) (		2,970		518,868) (		8,729,435 $		16,325,955 $		7,596,520) (	8,729,435 $
Computer and	communication	equipment		1,064,943 $		248,689) (	816,254 $			816,254 $	58,911	617) (	76,298	192,670) (		2,265		56,521) (		703,920 $		1,120,713 $		416,793) (	703,920 $
Loading and	unloading	equipment		9,269,204 $		5,612,263) (	3,656,941 $			3,656,941 $	202,894	3,875) (	482,220	464,240) (		-		152,091) (		3,721,849 $		9,600,294 $		5,878,445) (	3,721,849 $
	Machinery	equipment		600,442 $		479,520) (	120,922 $			120,922 $	3,169	285) (	-	10,041) (		173		1,831		115,769 $		611,447 $		495,678) (	115,769 $
		Buildings		1,632,334 $		1,004,644) (	627,690 $			627,690 $	1,891	1,067) (	7,130	40,958) (		5,615,200		127,375) (		6,082,511 $		7,194,260 $		1,111,749) (	6,082,511 $
		Land		845,610 $		-	845,610 $			845,610 $	-	-	-	-		-		15,865) (		829,745 $		829,745 $		-	829,745 $
			At January 1, 2017	Cost	Accumulated	depreciation		2017	Opening net book	amount	Additions	Disposals	Reclassifications	Depreciation	Acquired from	business combinations	Net exchange	differences	Closing net book	amount	At December 31, 2017	Cost	Accumulated	depreciation

F-318

Loading and Computer and	Machinery unloading communication Transportation Office Lease Leasehold	Land Buildings equipment equipment equipment equipment Ships equipment assets improvements Others Total	At January 1, 2018	Cost 829,745 $ 7,194,260 $ 611,447 $ 9,600,294 $ 1,120,713 $ 16,325,955 $ 107,532,947 $ 533,874 $ 19,524,906 $ 574,438 $ 85,891 $ 163,934,470 $	Accumulated	depreciation - 1,111,749) ( 495,678) ( 5,878,445) ( 416,793) ( 7,596,520) ( 43,793,777) ( 423,613) ( 6,168,818) ( 358,270) ( 3,353) ( 66,247,016) (	829,745 $ 6,082,511 $ 115,769 $ 3,721,849 $ 703,920 $ 8,729,435 $ 63,739,170 $ 110,261 $ 13,356,088 $ 216,168 $ 82,538 $ 97,687,454 $	2018	Opening net book	amount 829,745 $ 6,082,511 $ 115,769 $ 3,721,849 $ 703,920 $ 8,729,435 $ 63,739,170 $ 110,261 $ 13,356,088 $ 216,168 $ 82,538 $ 97,687,454 $	Additions - 40,149 23,114 65,091 90,695 8,367,446 297,302 34,023 1,035,091 20,370 68,046 10,041,327	Disposals - 96,090) ( - 462) ( 1,009) ( 549,776) ( - 157) ( 4,594) ( - - 652,088) (	Reclassifications - 7,275 - 172,500 13,706 1,989 16,116,276 6,924) ( 121,803) ( - 14,672) ( 16,168,347	Depreciation - 145,356) ( 10,827) ( 519,453) ( 209,499) ( 1,644,186) ( 4,788,870) ( 40,922) ( 1,185,711) ( 122,078) ( 3,658) ( 8,670,560) (	Acquired from	business combinations - 140,031 - - 9,378 113 - 24,383 158 10,539 26,620 211,222	Net exchange	differences 7,669) ( 149,834 1,084 57,028 20,915 291,603 1,460,396 355) ( 459,947 125 575 2,433,483	Closing net book	amount 822,076 $ 6,178,354 $ 129,140 $ 3,496,553 $ 628,106 $ 15,196,624 $ 76,824,274 $ 120,309 $ 13,539,176 $ 125,124 $ 159,449 $ 117,219,185 $	At December 31, 2018	Cost 822,076 $ 7,436,436 $ 640,766 $ 10,823,844 $ 1,245,653 $ 22,567,926 $ 126,866,151 $ 543,931 $ 20,242,368 $ 605,782 $ 166,460 $ 191,961,393 $	Accumulated	depreciation - 1,258,082) ( 511,626) ( 7,327,291) ( 617,547) ( 7,371,302) ( 50,041,877) ( 423,622) ( 6,703,192) ( 480,658) ( 7,011) ( 74,742,208) (	822,076 $ 6,178,354 $ 129,140 $ 3,496,553 $ 628,106 $ 15,196,624 $ 76,824,274 $ 120,309 $ 13,539,176 $ 125,124 $ 159,449 $ 117,219,185 $	A. The Group has issued a negative pledge to granting banks for drawing borrowings within the credit line to purchase the above transportation	equipment.	B. Information about the property, plant and equipment that were pledged to others as collaterals is provided in Note 8.

F-319

(9) Investment property, net

At January 1, 2017
Cost

Accumulated depreciation
2017
Opening net book amount

Reclassifications
Depreciation
Acquired from business combinations
Net exchange differences

Closing net book amount
At December 31, 2017
Cost

Accumulated depreciation
At January 1, 2018
Cost

Accumulated depreciation
2018
Opening net book amount

Reclassifications

Depreciation
Acquired from business combinations
Net exchange differences
Closing net book amount
At December 31, 2018
Cost

Accumulated depreciation

Land
Buildings
Total
$ 1,414,631
1,000,649
$ 2,415,280
$ -
476,506)
(
476,506)
(
1,414,631
$ 524,143
$ 1,938,774
$ $ 1,414,631 $ 524,143
1,938,774
$ 174
-
174
-
28,516)
(
28,516)
(
-
3,119,127
3,119,127
48)
(
60,239)
(
60,287)
(
1,414,757
$ 3,554,515
$ 4,969,272
$ $ 1,414,757
4,066,438
$ 5,481,195
$ -
511,923)
(
511,923)
(
1,414,757
$ 3,554,515
$ 4,969,272
$ Land
Buildings
Total
$ 1,414,757
4,066,438
$ 5,481,195
$ -
511,923)
(
511,923)
(
1,414,757
$ 3,554,515
$ 4,969,272
$ $ 1,414,757 $ 3,554,515
4,969,272
$ 270 -
270
-
132,980)
(
132,980)
(
-
962,109
962,109
27
36,376
36,403
1,415,054
$ 4,420,020
$ 5,835,074
$ $ 1,415,054 $ 5,048,676
6,463,730
$ -
628,656)
(
628,656)
(
1,415,054
$ 4,420,020
$ 5,835,074
$

~56~

F-320

A. Rental income from the investment property and direct operating expenses arising from the investment property are shown below:

investment property are shown below:
Rental revenue from the lease of the investment property Direct operating expenses arising from the investment property that generated rental income in the period Direct operating expenses arising from the investment property that did not generate rental income in the period	Year ended December 31,2017 125,880 $ 25,294 $ 1,017 $	Year ended December 31,2018
		273,868 $
		134,783 $
		734 $

B. The fair value of the investment property held by the Group as at December 31, 2017 and 2018 was $6,743,253and, $7,801,498 respectively. The fair value measurements were based on the market prices of recently sold properties in the immediate vicinity of a certain property.
C. Information about the investment property that were pledged to others as collaterals is provided in Note 8.

(10) Other non-current assets

Note 8. Other non-current assets
Prepayments for equipment Refundable deposits Others	December31,2017 6,080,908 $ 197,413 160,044 6,438,365 $	December31,2018
		4,619,738 $ 226,760 94,646
		4,941,144 $

Movement analysis of prepayments for equipment are as follows:

			Year ended December			Year ended December
			31,2017			31,2018
At January 1		$	4,898,843		$	6,080,908
Additions			5,615,770			14,606,580
Reclassification to property,
plant and equipment	(		4,263,229)	(		16,168,617)
Net exchange differences	(		170,476)			100,867
At December 31		$	6,080,908		$	4,619,738

~57~

F-321

Amount of borrowing costs capitalised as part of prepayment for equipment and the range of the interest rates for such capitalisation are as follows:

Other current liabilities Amount capitalised Interest rate Receipt in advance Long-term liabilities - current portion Shipowner's accounts Agency accounts Long-term leases payable - current Others	Year ended December Year ended December 31,2017 31,2018 107,084 $ 155,226 $ 1.31%~3.06% 0.86%~4.12% December 31, 2017 December31,2018 12,367 $ 15,127 $ 16,117,966 16,350,126 2,322,289 1,804,031 4,838,099 2,385,780 1,349,699 1,941,251 75,249 119,663 24,715,669 $ 22,615,978 $	Year ended December Year ended December 31,2017 31,2018 107,084 $ 155,226 $ 1.31%~3.06% 0.86%~4.12% December 31, 2017 December31,2018 12,367 $ 15,127 $ 16,117,966 16,350,126 2,322,289 1,804,031 4,838,099 2,385,780 1,349,699 1,941,251 75,249 119,663 24,715,669 $ 22,615,978 $
	$

		15,127 $ 16,350,126 1,804,031 2,385,780 1,941,251 119,663
		22,615,978 $

(11) Other current liabilities

(12) Corporate bonds payable

Corporate bonds payable
Domestic secured corporate bonds Less: Current portion or exercise of put options	December31,2017 8,000,000 $ - 8,000,000 $	December31,2018
		10,000,000 $ -
		10,000,000 $

A.. On April 25, 2017, the Company issued its thirteenth domestic secured corporate bonds (referred herein as the “Thirteenth Bonds”), totaling $8,000,000. The Thirteenth Bonds are categorized into Bond A, B, C, D, E, F and G, depending on the guarantee institution. Bond A totals $2,000,000, and the rest total $6,000,000, with each par value of $1,000,000. The major terms of the issuance are set forth below:
(a) Period: 5 years (April 25, 2017 to April 25, 2022)
(b) Coupon rate: 1.05% fixed per annum
(c) Principal repayment and interest payment

(d) Collaterals

~58~

F-322

B. On June 27, 2018, the Company issued its fourteenth domestic secured corporate bonds (referred herein as the “Fourteenth Bonds”), totaling $2,000,000 at face value. The major terms of the issuance are set forth below:
(a) Period: 5 years (June 27, 2018 to June 27, 2023)
(b) Coupon rate: 0.86% fixed per annum
(c) Principal repayment and interest payment

Repayments for the Fourteenth Bonds are paid annually at coupon rate, starting a year from the issuing date. The principal of the Fourteenth Bonds shall be repaid in lump sum at maturity.

(d) Collaterals

The Fourteenth Bonds are secured and are guaranteed by First Commercial Bank.

(13) Long-term loans

Long-term loans
Secured bank loans Unsecured bank loans Add : Unrealised foreign exchange (gains) losses Less: Hosting fee credit Less: Current portion (recorded as other current liabilities) Borrowing period Interest rate	December31,2017 55,586,429 $ 25,915,897 10,339 25,034) ( 81,487,631 16,117,966) ( 65,369,665 $ 2018.02~2027.06 1.18%~5.15%	December31,2018
		63,430,488 $ 35,729,010 223,179 22,176) (
		99,360,501 16,350,126) (
		83,010,375 $
		2019.01~2028.12 1.12%~5.15%

Please refer to Note 8 for details of the collaterals pledged for the above long-term loans.

(14) Other non-current liabilities

Other non-current liabilities
Long-term leases payable - non-current Accrued pension liabilities Guarantee deposits received Unrealised gain on sale and leaseback	December31,2017 10,381,197 $ 3,053,342 37,608 39,874 13,512,021 $	December31,2018
		9,698,447 $ 2,935,589 347,115 20,041
		13,001,192 $

(15) Finance lease liabilities

~59~

F-323

December 31, 2017

Total finance lease liabilities	Future finance charges	Present value of financeleaseliabilities
1,761,272 $ 11,124,634 356,716 11,481,350 13,242,622 $
Total finance lease liabilities	Future finance charges
2,325,368 $ 10,489,983 12,815,351 $	384,117) ($ 791,536) ( 1,175,653) ($	1,941,251 $ 9,698,447 11,639,698 $

(16) Pension

A.(a) The Company and its domestic subsidiary-TTSC have a defined benefit pension plan in accordance with the Labor Standards Act (“the Act”), 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 Act. 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 and its subsidiaryTTSC contribute monthly an amount equal to 15% of the employees’ monthly salaries and wages to the retirement fund deposited with the Trust Department of Bank of Taiwan under the name of the Labor Pension Fund Supervisory Committee. Also, the Company would assess the balance in the aforementioned labor pension reserve account by the end of December 31, every year. If the account balance is insufficient to pay the pension calculated by the aforementioned method, to the employees expected to be qualified for retirement next year, the Company will make contributions to cover the deficit by next March.

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(b) The employees with R.O.C. nationality of the Group’s subsidiaries, Evergreen Marine (Hong Kong) Ltd., Greencompass Marine S. A. and Evergreen Marine (UK) Limited, adopted the Act. 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.
(c) The amounts recognised in the balance sheet are as follows:

	December	31,2017	December	31,2018
Present value of defined benefit obligations	($	4,236,061)	($	4,240,280)
Fair value of plan assets		1,182,719		1,304,691
Net defined benefit liability	($	3,053,342)	($	2,935,589)

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

Year ended December 31, 2017 Balance at January 1 Current service cost Interest (expense) income Past service cost Settlement profit or loss Remeasurements: Return on plan assets (excluding amounts included in interest income or expense) Change in demographic assumptions Change in financial assumptions Experience adjustments Pension fund contribution Paid pension Exchange difference Effect of business combination Balance at December 31	Present value of defined benefit obligations		Fair value of plan assets	Net defined benefit liability
	4,165,132) ($ 159,331) ( 59,773) ( 1,415 668 4,382,153) ( - 6,478) ( 34,108) ( 68,326) ( 108,912) ( 22,718 302,970 33,781) ( 36,903) ( 4,236,061) ($	1,197,086 $ - 11,664 - - 1,208,750 40,092) ( - - - 40,092) ( 188,078 201,422) ( 27,405 - 1,182,719 $		2,968,046) ($ 159,331) ( 48,109) ( 1,415 668 3,173,403) ( 40,092) ( 6,478) ( 34,108) ( 68,326) ( 149,004) ( 210,796 101,548 6,376) ( 36,903) ( 3,053,342) ($

~61~

F-325

Year ended December 31, 2018 Balance at January 1 Current service cost Interest (expense) income Past service cost Curtailment (Settlement) Remeasurements: Return on plan assets (excluding amounts included in interest income or expense) Change in demographic assumptions Change in financial assumptions Experience adjustments Pension fund contribution Paid pension Exchange difference Balance at December 31	Present value of defined benefit obligations		Fair value of plan assets	Net defined benefit liability
	4,236,061) ($ 157,857) ( 56,362) ( 121 344 4,449,815) ( - 9,184) ( 41,007) ( 6,090) ( 56,281) ( 10,349 247,051 8,416 4,240,280) ($	1,182,719 $ - 19,780 - 8,470) ( 1,194,029 24,053 - - - 24,053 246,597 152,800) ( 7,188) ( 1,304,691 $		3,053,342) ($ 157,857) ( 36,582) ( 121 8,126) ( 3,255,786) ( 24,053 9,184) ( 41,007) ( 6,090) ( 32,228) ( 256,946 94,251 1,228 2,935,589) ($

(e) The Bank of Taiwan was commissioned to manage the Fund of the Company’s and its domestic subsidiaries-TTSC’s 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 utilization 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 twoyear time deposits with the interest rates offered by local banks. If the earning is less than aforementioned rates, government shall make payment for the deficit after being authorized by the Regulator. The Group has no right to participate in managing and operating that fund and hence the Group 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, 2017 and 2018 is given in the Annual Labor Retirement Fund Utilisation Report announced by the government.

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F-326

(f) The principal actuarial assumptions used were as follows:

Discount rate Future salary increases	Year ended December 31,2017 0%~7.3% 0.5%~11%	Year ended December 31,2018
		0%~8%
		0%~10%

Assumptions regarding future mortality experience are set based on actuarial advice in accordance with published statistics and experience in each territory.

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 salaryincreases	Future salaryincreases
		Increase	Decrease	Increase	Decrease
	0.025%~1.00%		0.025%~1.00%	0.25%~1.00%	0.25%~1.00%
December 31, 2017
Effect on present value of
defined benefit obligation	(	150,553)	161,436	108,296	98,285) (
		Discount rate		Future salaryincreases
		Increase	Decrease	Increase	Decrease
	0.015%~1.00%		0.015%~1.00%	0.25%~1.00%	0.25%~1.00%
December 31, 2018
Effect on present value of
defined benefit obligation	(	147,753)	157,779	104,371	94,424) (
The sensitivity analysis above is based on			one assumption which changed while the other
conditions remain unchanged.		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.

(g) Expected contributions to the defined benefit pension plans of the Company and its subsidiary-TTSC for the year ending December 31, 2018 amounts to $121,399.
(h) As of December 31, 2018, the weighted average duration of the retirement plan is 10 ~25 years.
B. (a) Effective July 1, 2005, the Company and its domestic subsidiary-TTSC have established a defined contribution pension plan (the “New Plan”) under the Labor Pension Act (the“Act”), covering all regular employees with R.O.C. nationality. Under the New Plan, the Company and its domestic subsidiary-TTSC contribute monthly an amount based on 6% of the employees’ monthly salaries and wages to the employees’ individual pension accounts at the Bureau of Labor Insurance. The benefits accrued are paid monthly or in lump sum upon termination of employment.
(b) The pension costs under defined contribution pension plans of the Group for the years ended December 31, 2017 and 2018 were $186,442 and $241,026, respectively.

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(17) Capital stock

A. As of December 31, 2018, the Company’s authorized capital was $50,000,000, and the paid-in capital was $ 45,129,738, consisting of 4,512,974 thousand shares of common stocks with a par value of NT$10 (in dollars) per share. All proceeds from shares issued have been collected.
B. On August 11, 2017, the Board of Directors of the Company resolved to increase capital by $5,000,000 by issuing 500,000 thousand shares at a par value of NT$10 (in dollars). Of which 50,000 thousand shares are reserved for employee preemption. The proposal of capital increase has been reported and become effective on December 5, 2017. The total amount of shares was $7,711,222. All proceeds from share issuance was completed on December 27, 2017.
C. The stockholders at their annual stockholders meeting on June 21, 2018, resolved to issue 200,618 thousand shares through capitalization of unappropriated retained earnings of $2,006,178. The proposal of the capitalisation of earnings was filed online with the Securities and Futures Bureau of the Financial Supervisory Commission and went into effect on July 31, 2018. The Company had filed registration of the capital increase through capitalisation of earnings with the Ministry of Economic Affairs on September 18, 2018.
D. On August 13, 2018, the Board of Directors of the Company resolved to increase capital by $3,000,000 by issuing 300,000 thousand shares at a par value of NT$10 (in dollars). Of which 30,000 thousand shares are reserved for employee preemption. The proposal of capital increase has been reported and become effective on November 28, 2017. The total amount of shares was $3,226,890. All proceeds from share issuance was completed on December 21, 2018.

(18) Capital surplus

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At January 1, 2017 Issuance of common stock for cash Recognition of change in equity of associates in proportion to the Company's ownership At December 31, 2017 At January 1, 2018 Issuance of common stock for cash Recognition of change in equity of associates in proportion to the Company's ownership At December 31, 2018				2017	Others 6,713 $ - - 6,713 $
		Share premium 5,895,171 $ 2,711,222 - 8,606,393 $	Employe stock options exercised - $ 76,280 - 76,280 $	Adjustments to share of changes in equity of associates and Donated jointventures assets 2,086,684 $ 446 $ - - 61,559 - 2,148,243 $ 446 $ 2018
		Share premium 8,606,393 $ 226,890 - 8,833,283 $	Employe stock options exercised 76,280 $ 17,610 - 93,890 $	Adjustments to share of changes in equity of associates and Donated jointventures assets 2,148,243 $ 446 $ - - 23,430) ( - 2,124,813 $ 446 $	Others 6,713 $ - - 6,713 $

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(19) Retained earnings

Retained earnings
			2017				2018
At January 1	($			4,248,211)		$		6,769,575
Retrospective application				-				276,681
Balance at 1 January after adjustments	(			4,248,211)				7,046,256
Profit for the year				7,005,171				293,919
Legal reserve used to cover
accumulated deficits				4,248,211				-
Distribution of 2017 earnings				-	(			3,509,166)
Remeasurement on post employment
benefit obligations, net of tax	(			235,596)	(			71,341)
Adjustments to share of changes in
equity of associates and joint ventures				-				3,537
Disposal of investments in equity
instruments designated at fair value
through other comprehensive income				-				13,438
At December 31		$		6,769,575		$		3,776,643

A. According to the Company’s Articles of Incorporation, if there is any profit for a fiscal year, the Company shall first make provision for all taxes and cover prior years’ losses and then appropriate 10% of the residual amount as legal reserve. Dividends shall be proposed by the Board of Directors and resolved by the stockholders.
B. Dividend policy

C. Legal reserve

D. 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.

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E. (a) For the year ended December 31, 2016, the Company incurred accumulated deficit. On June 22, 2017, the Board of Directors proposed to cover the accumulated deficit totaling $4,248,211 with the legal reserve.
. (b) The appropriation of earnings of year 2017 as resolved by the Board of Directors on June 21, 2018 is as follows:

018 is as follows:
Accrual of legal reserve Appropriation of cash dividends to shareholders Appropriation of stock dividends to shareholders	Dividend per share Amount (indollars) 700,517 $ 802,471 $ 0.2 $ 2,006,178 $ 0.5 $ YearendedDecember31,2017
	Amount 700,517 $ 802,471 $ 2,006,178 $
		0.2 $ 0.5 $

F. The appropriation of earnings of year 2018 as resolved by the Board of Directors on March 22, 2019 is as follows:

The appropriation of earnings of year 2018 2019 is as follows:	as resolved by the Board of Directors on March 2	as resolved by the Board of Directors on March 2
Accrual of legal reserve Appropriation of cash dividends to shareholders Appropriation of stock dividends to shareholders	Dividend per share Amount (indollars) 29,392 $ - $ - $ - $ - $ YearendedDecember31,2018
	Amount 29,392 $ - $ - $
		- $ - $

As of March 22, 2019, the above-mentioned 2018 earnings appropriation had not been resolved by the stockholders.

G. For information relating to employees’ and directors’ remuneration, please refer to Note 6(27).

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(20) Other equity items

Other equity items
At January 1, 2017 Revaluation – gross Revaluation – tax Revaluation – associates Cash flow hedges: – Fair value gain in the period – Associates Currency translation differences: – Group – Group – tax – Associates At December 31, 2017 At January 1, 2018 Effects of retrospective application Balance at January 1 after retrospective adjustments Revaluation – gross Revaluation – tax Revaluation – associates Revaluation transferred to retained earnings – gross Revaluation transferred to retained earnings – associates Cash flow hedges: – Fair value loss in the period – Associates Currency translation differences: – Group – Group – tax – Associates At December 31, 2018	Unrealised gains (losses) onvaluation	Hedging reserve	Currency translation Total 1,254,622 $ 2,889,888 $ - 103,585 - 8,110) ( - 34,703 - 51,983 2,046,070) ( 2,046,070) ( 2,296 2,296 345,962) ( 345,962) ( 1,135,114) ($ 682,313 $ Currency translation Total 1,135,114) ($ 682,313 $ - 279,677) ( 1,135,114) ($ 402,636 $ - 316,044) ( - 6,210 - 8,463 - 13,438) ( - 4,628) ( - 42,737) ( 1,004,409 1,004,409 746 746 147,539 147,539 17,580 $ 1,193,156 $
	1,703,161 $ 103,585 8,110) ( 34,703 - - - - 1,833,339 $ Unrealised gains (losses) onvaluation	67,895) ($ - - - 51,983 - - - 15,912) ($ Hedging reserve
	1,833,339 $ 279,677) ( 1,553,662 $ 316,044) ( 6,210 8,463 13,438) ( 4,628) ( - - - - 1,234,225 $	15,912) ($ - 15,912) ($ - - - - - 42,737) ( - - - 58,649) ($

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(21) Operating revenue

Operating revenue
Revenue from contracts with customers Other - ship rental and slottage income	Year ended December 31,2018
	167,647,073 $ 1,589,580
	169,236,653 $

A. Disaggregation of revenue from contracts with customers

The Group derives revenue from the transfer of services over time and at a point in time in the following major businesses:

Year ended December31,2018 Total segment revenue Inter-segment revenue Revenue from external customer contracts	Ship-owners 182,903,835 $ 25,809,049) ( 157,094,786 $	Agent 2,894,849 $ - 2,894,849 $	Terminal 7,150,737 $ - 7,150,737 $	Other 506,701 $ - 506,701 $	Total
					193,456,122 $ 25,809,049) (
					167,647,073 $

B. Contract assets and liabilities

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

Contract assets and liabilities The Group has recognised the following revenue-related contract assets and liabilities: Revenue from external customer contracts 157,094,786 $ 2,894,849 $ 7,150,737 $ 506,701 $ 167,647,073 $	Contract assets and liabilities The Group has recognised the following revenue-related contract assets and liabilities: Revenue from external customer contracts 157,094,786 $ 2,894,849 $ 7,150,737 $ 506,701 $ 167,647,073 $	Contract assets and liabilities The Group has recognised the following revenue-related contract assets and liabilities: Revenue from external customer contracts 157,094,786 $ 2,894,849 $ 7,150,737 $ 506,701 $ 167,647,073 $
December31,2018
Contract assets:
Contract assets relating to marine freight income	$	2,244,065
Contract liabilities:
Contract liabilities – unearned marine freight income	($	1,774,392)
Revenue recognised that was included in the contract liability balance at the beginning of the
period

period
Marine freight income	Year ended December 31,2018
	2,523,101 $

C. Related disclosures for 2017 operating revenue are provided in Note 12(5) B.

(22) Other income and expenses, net

Other income and expenses, net
Gains on disposal of property, plant and equipment	Year ended December 31,2017 501,784 $	Year ended December 31,2018
		1,510,330 $

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(23) Other income

(23)	Other income
(24)	Other gains and losses Interest income� Interest income from bank deposits Interest income from financial assets measured at amortised cost Interest income from financial assets other than financial assets at fair value through profit or loss Rent income Dividend income Gain recognised in bargain purchase transaction Other income, others	Year ended December 31,2017 434,615 $ - 2,339 127,807 117,436 5,983 266,126 954,306 $	Year ended December 31,2018
			561,404 $ 2,200 - 284,183 109,996 138,571 376,810
			1,473,164 $

Other gains and losses
			Year ended December			Year ended December
			31,2017			31,2018
(Losses) gains on disposal of		$	612,704	($		122,834)
investments
Net currency exchange gains			51,516			308,013
Depreciation on investment property	(		28,516)	(		132,980)
Other non-operating expenses	(		62,810)	(		130,099)
		$	572,894	($		77,900)
Finance costs
			Year ended December			Year ended December
			31,2017			31,2018
Interest expense:
Bank loans		$	1,417,937		$	1,942,785
Corporate bonds			69,863			92,859
Other			-			6
			1,487,800			2,035,650
Less: Capitalized borrowing costs	(		107,084)	(		155,226)
Finance costs		$	1,380,716		$	1,880,424

(25) Finance costs

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(26) Expenses by nature

Expenses by nature
Employee benefit expense Depreciation charges on property, plant and equipment Amortisation charges on intangible assets Other operating costs and expenses	Year ended December 31,2017 6,932,955 $ 7,663,183 38,375 131,617,656 146,252,169 $	Year ended December 31,2018
		7,823,668 $ 8,670,560 69,348 153,262,568
		169,826,144 $

(27) Employee benefit expense

Employee benefit expense Amortisation charges on intangible assets Other operating costs and expenses	38,375 131,617,656 146,252,169 $	69,348 153,262,568 169,826,144 $
Wages and salaries Labor and health insurance fees Pension costs Other personnel expenses	Year ended December 31,2017 5,770,241 $ 440,465 391,799 330,450 6,932,955 $	Year ended December 31,2018
		6,452,284 $ 534,619 443,470 393,295
		7,823,668 $

A. According to the Articles of Incorporation of the Company, when distributing earnings, the Company shall distribute bonus to the employees that account for no less than 0.5% and pay remuneration to the directors and supervisors that account for no more than 2% of the total distributed amount.
B. (a) For the year ended December 31, 2018, employees’ compensation was accrued at $2,560, while directors’ remunerations were accrued at $0. The aforementioned amount was recognised in salary expenses.
(b) The employees’ compensation and directors’ remuneration were estimated and accrued based on 0.5% and 0% of distributable profit of current year for the year ended December 31, 2018.
(c) For the year ended December 31, 2017, employees’ compensation was accrued at $36,322, while directors’ and supervisors’ remunerations were accrued at $10,207. The aforementioned amounts were recognised in salary expenses.
- Employees’ compensation and directors’ and supervisors’ remuneration of 2017 as resolved by the Board of Directors were in agreement with those amounts recognised in the 2017 financial statements.

Information about the appropriation of employees’, directors’ and supervisors’ remuneration by the Company as proposed by the Board of Directors and resolved by the stockholders will be posted in the “Market Observation Post System” at the website of the Taiwan Stock Exchange.

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(28) Income tax

A. Income tax expense

(a)Components of income tax expense:

e tax ome tax expense Components of income tax expense:
	Year ended December		Year	ended December
		31,2017		31,2018
Current tax:
Current tax on profits for the period	$	629,009	$	907,890
Tax on undistributed surplus earnings		-		283,973
Alternative MinimumTax		31,399		-
Prior year income tax overestimation	(	32,894)	(	8,780)
Total current tax		627,514		1,183,083
Deferred tax:
Origination and reversal of
temporary differences		155,464	(	108,897)
Impact of change in tax rate		2,950		42,717
Total deferred tax		158,414	(	66,180)
Income tax expense	$	785,928	$	1,116,903
)The income tax (charge)/credit relating	to components of other comprehensive income is a
follows:
	Year ended December		Year	ended December
		31,2017		31,2018
Changes in fair value of financial
assets at fair value through other	$	-	$	12,465
comprehensive income
Fair value gains/losses on available-
for-sale financial assets	(	8,125)		-
Exchange differences on translating
the financial statements of foreign
operations		2,296	(	33)
Remeasurement of defined benefit
obligations		16,942		5,063
Impact of change in tax rate		-		6,387
	$	11,113	$	23,882

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

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(c)The income tax charged/(credited) to equity during the period is as follows:

		Year ended December	Year ended December	Year	ended December
			31,2017		31, 2018
Reduction in capital surplus caused
by recognition of foreign investees
based on the shareholding ratio	($		95)	($	115)
Reduction in retained earnings caused
by recognition of foreign investees
based on the shareholding ratio			-		146
Effects of retrospective application			-		182
Impact of change in tax rate			-		95
	($		95)	$	308
Reconciliation between income tax expense		and accounting profit:
		Year ended December		Year	ended December
			31,2017		31,2018
Tax calculated based on profit before
tax and statutory tax rate		$	1,823,489	$	1,051,440
Expenses disallowed by tax regulation			19,362		29,891
Tax exempt income by tax regulation	(		1,028,143)	(	324,906)
Effect from investment tax credits	(		42,068)		41,966
Change in assessment of realisation
of deferred tax assets			-	(	246)
Prior year income tax overestimation	(		32,894)	(	8,780)
Effect from Alternative Minimum Tax			31,399		-
Effect from changes in tax regulation			2,950		42,717
Tax on undistributed earnings			-		283,973
Effect from income tax deduction
from prior years			7,984		21,272
Effect of defferd tax from prior year
income tax underestimation			3,849		-
Other			-	(	20,424)
Income tax expense		$	785,928	$	1,116,903

B. Reconciliation between income tax expense and accounting profit:

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C. Amounts of deferred tax assets or liabilities as a result of temporary differences, tax losses and investment tax credits are as follows:

Temporary differences: �Deferred tax assets: Bad debts expense Loss on valuation of financial assets Deferred profit from disposal of loading and unloading equipment Unrealized expense Unrealized exchange loss Pension expense and actuarial losses/(gains) Others Net operating loss carryforward Investment tax credits Subtotal �Deferred tax liabilities: Temporary differences: Gain on valuation of financial assets Unrealized exchange gain Unrealized gain Pension expense and actuarial losses/(gains) Foreign investment income Others Subtotal Total				2017
	January1	Recognised in profit or loss	Recognised in other comprehensive income	Recognised inequity	Translation differences	Business combination	December 31
	14,493 $ 1,766 16,708 32,248 50,198 365,725 4,165 176,711 - 662,014 $ - $ 20,999) ( 5,833) ( 233) ( 558,247) ( 47,870) ( 633,182) ($ 28,832 $	1,501 $ - 2,790) ( 1,301) ( 9,482) ( 13,376) ( 3,706) ( 16,474 42,068 29,388 $ - $ 20,112 454 - 207,171) ( 1,197) ( 187,802) ($ 158,414) ($	- $ 209 - - - 15,284 - - - 15,493 $ - $ - - 133) ( 4,247) ( - 4,380) ($ 11,113 $	- $ - - - - - - - - - $ - $ - - - 95) ( - 95) ($ 95) ($	53 $ 4 - 762) ( 25 2,026 184) ( 209 - 1,371 $ - $ 303 360 251) ( 1,619 22,026 24,057 $ 25,428 $	- $ - - - - - - - - - $ - $ - - - - 947,618) ( 947,618) ($ 947,618) ($	16,047 $ 1,979 13,918 30,185 40,741 369,659 275 193,394 42,068 708,266 $ - $ 584) ( 5,019) ( 617) ( 768,141) ( 974,659) ( 1,749,020) ($ 1,040,754) ($

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2018

				2018
Temporary differences: �Deferred tax assets: Bad debts expense Loss on valuation of financial assets Deferred profit from disposal of loading and unloading equipment Unrealized expense Unrealized exchange loss Pension expense and actuarial losses/(gains) Others Net operating loss carryforward Investment tax credits Subtotal �Deferred tax liabilities: Temporary differences: Gain on valuation of financial assets Unrealized exchange gain Unrealized gain Pension expense and actuarial losses/(gains) Foreign investment income Others Subtotal Total	January1	Recognised in profit or loss	Recognised in other comprehensive income	Recognised inequity	Translation differences	Business combination	December 31
	16,047 $ 1,979 13,918 30,185 40,741 369,659 275 193,394 42,068 708,266 $ - $ 584) ( 5,019) ( 617) ( 768,141) ( 974,659) ( 1,749,020) ($ 1,040,754) ($	2,470 $ - 671 5,976 11,862) ( 7,258 621 152,432 42,068) ( 115,498 $ - $ 462 161) ( - 45,996) ( 3,623) ( 49,318) ($ 66,180 $	- $ 1,979) ( - - - 16,126 - - - 14,147 $ 4,371) ($ - - - 14,106 - 9,735 $ 23,882 $	182 $ - - - - - - - - 182 $ - $ - - - 126 - 126 $ 308 $	182) ($ - - 269) ( 89 1,726) ( 183 209) ( - 2,114) ($ - $ 4 164 126 354 32,458) ( 31,810) ($ 33,924) ($	- $ - - - - - - - - - $ - $ - - - - 150,280) ( 150,280) ($ 150,280) ($	18,517 $ - 14,589 35,892 28,968 391,317 1,079 345,617 - 835,979 $ 4,371) ($ 118) ( 5,016) ( 491) ( 799,551) ( 1,161,020) ( 1,970,567) ($ 1,134,588) ($

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D. Details of the amount the Company is entitled as investment tax credit and unrecognised deferred tax assets are as follows:

As of December 31, 2018 � None.

tax assets are as follows: As of December 31, 2018�None.
Qualifyingitems		December 31,2017
	Unused tax credits	Unrecognised deferredtax assets	Expiry year
Investments in emerging important strategic industries	42,068 $	- $	2020

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

December 31, 2017

Year incurred		Amount filed		Unused amount		Unrecognised deferred tax assets	Expiry year
2017 2016 2015		116,177 $ 747,045 269,787 1,133,009 $		116,177 $ 747,045 269,787 1,133,009 $		- $ - - - $	2027 2026 2025

			December 31,2018	December 31,2018	December 31,2018
Year incurred		Amount filed/ assessed		Unusedamount		Unrecognised deferred tax assets	Expiry year
2018 2017 2016 2015		671,047 $ 40,204 747,045 269,787 1,728,083 $		671,047 $ 40,204 747,045 269,787 1,728,083 $		- $ - - - - $	2028 2027 2026 2025

F. The Company has not recognised taxable temporary differences associated with investment in subsidiaries as deferred tax liabilities. As of December 31, 2017 and 2018, the amounts of temporary difference unrecognised as deferred tax liabilities were $13,018,477and, $13,656,982 respectively.
G. The Company’s income tax returns through 2016 have been assessed and approved by the Tax Authority.

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H. Under the amendments to the Income Tax Act which was promulgated by the President of the Republic of China in February, 2018, the Company’s applicable income tax rate was raised from 17% to 20% effective from January 1, 2018. The Group has assessed the impact of the change in income tax rate.
I. The impact of the change in tax rate was primarily from the tax bill signed into law by the President of the United States on December 22, 2017 (Taiwan time), which lowered the corporate income tax rate from 35% to 21%. The Group has assessed the impact of the change in income tax rate.

(29) Earnings (loss) per share

Earnings (loss) per share
Basic earnings per share Net income attributable to ordinary shareholders of the parent Diluted earnings per share Net income attributable to ordinary shareholders of the parent Assumed conversion of all dilutive potential ordinary shares Employees’ compensation Net income attributable to ordinary shareholders of the parent plus assumed conversion of all dilutive potential ordinary shares		Year ended December 31, 2017
		Amount after tax 7,005,171 $ 7,005,171 - 7,005,171 $	Weighted average number of ordinary shares outstanding Earnings per share (sharein thousands) (indollars) 3,726,809 1.88 $ 3,726,809 3,375 3,730,184 1.88 $

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Basic loss per share Net loss attributable to ordinary shareholders of the parent Diluted loss per share Net loss attributable to ordinary shareholders of the parent Assumed conversion of all dilutive potential ordinary shares Employees’ compensation Net income attributable to ordinary shareholders of the parent plus assumed conversion of all dilutive potential ordinary shares		Year ended December 31, 2018	Year ended December 31, 2018	Year ended December 31, 2018
		Amount after tax 293,919 $ 293,919 - 293,919 $	Weighted average number of ordinary shares outstanding (sharein thousands) 4,240,919 4,240,919 215 4,241,134	Loss per share (indollars) 0.07 $ 0.07 $

(30) Transactions with non-controlling interest

A. Acquisition of additional equity interest in a subsidiary
(a) Subsidiary, Peony, purchased 32.5% of outstanding shares of EMA for cash of $44,940 (approx. USD 1,461) on December 28, 2018. The carrying amount of non-controlling interest in Island was $41,019 at the acquisition date. This transaction resulted in a decrease in the non-controlling interest by $41,019 and a decrease in the equity attributable to owners of the parent by $3,921.

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(b) Subsidiary, Everport Terminal Service Inc., purchased 49% of outstanding shares of Island for cash of $262,927 (approx. USD 8,853) on January 1, 2018. The carrying amount of noncontrolling interest in Island was $223,006 at the acquisition date. This transaction resulted in a decrease in the non-controlling interest by $223,006 and a decrease in the equity attributable to owners of the parent by $39,921.
(c) Subsidiary, Peony Investment, purchased 34% of outstanding shares of subsidiary, EGT, for cash of $22,845 (approx. USD 769) on December 31, 2017. The carrying amount of noncontrolling interest in EGT was $15,311 at the acquisition date. This transaction resulted in a decrease in the non-controlling interest by $15,311 and a decrease in the equity attributable to owners of the parent by $7,534.
(d) Subsidiary, Peony Investment, purchased 45% of outstanding shares of subsidiary, EES, for cash of $85,393 (approx. USD 2,875) on December 31, 2017. The carrying amount of noncontrolling interest in EES was $86,620 at the acquisition date. This transaction resulted in a decrease in the non-controlling interest by $86,620 and an increase in the equity attributable to owners of the parent by $1,227.
B. The effect of changes in interests in EMA,ETS, EGT and EES on the equity attributable to owners of the parent for the years ended December 31, 2017 and 2018 are shown below:

Carrying amount of non-controlling interest acquired Consideration paid to non-controlling interest Capital surplus - difference between proceeds on actual acquisition of or disposal of equity interest in a subsidiary and its carrying amount	Year ended December Year ended December 31,2017 31,2018 101,931 $ 264,025 $ 108,238) ( 307,867) ( 6,307) ($ 43,842) ($

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(31) Business combinations

A. On December 14, 2018, subsidiary, EGH, acquired 100% of the shares of HMH for cash of $3,265,341 (approx. USD 105,808) and obtained control of the company. The company primarily provides shipping agency services. As a result of the acquisition, the Group is expected to strengthen our foothold in the Greater China market and expand our shipping agency and other related businesses in the region.
B. On January 1, 2018, subsidiary, Peony Investment, acquired 51% of the shares of EGV for cash of $10,603 (approx. USD 357). Peony Investment has a 49% equity interest before acquiring these 51% equity interests, therefore, Peony owns 100% of the shares of EGV after the acquisition and has control of EGV. The company primarily provides cargo and shipping agency services in Malaysia. As a result of the acquisition, the Group is expected to increase its presence in these markets. It also expects to reduce costs through economies of scale.
C. On December 18, 2017, the Company and Peony Investment acquired 80% of the shares of EGH for cash of $6,452,225 and obtained control of the company. The company primarily provides cargo services domestically and internationally and shipping agency services. As a result of the acquisition, the Group is expected to strengthen our foothold in the Greater China market and expand our shipping agency, liner transport, and other related businesses in the region.
D. On December 27, 2017, Peony Investment acquired 70% of the shares of EGM for cash of $280,668. Previously, on November 30, 2017, Peony Investment received 30% of the shares of EGM from its associate, Green Peninsula Agencies SDN. BHD., as a dividend payment. Therefore, Peony owns 100% of the shares of EGM after the acquisition and has control of EGM. The company primarily provides cargo and shipping agency services in Malaysia. As a result of the acquisition, the Group is expected to increase its presence in these markets. It also expects to reduce costs through economies of scale.

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E. The following table summarises the consideration paid and the fair values of the assets acquired and liabilities assumed at the acquisition date, as well as the non-controlling interest’s proportionate share of the recognised amounts of acquiree’s identifiable net assets at the acquisition date:

acquisition date:
Purchase consideration Cash paid Fair value of equity interest in EGM held before the business combination Non-controlling interest’s proportionate share of the recognised amounts of acquiree’s identifiable net assets Fair value of the identifiable assets acquired and liabilities assumed Cash and cash equivalents Notes receivable Accounts receivable Prepayments Other receivables Inventories Other current assets Investments accounted for using equity method Property, plant and equipment, net Investment property, net Intangible assets Other non-current assets Accounts payable Other payables Current income tax liabilities Other current liabilities Long-term loans Deferred income tax liabilities Other non-current liabilities Total identifiable net assets Goodwill / Gain from bargain purchase		Year ended December 31,2017		Year ended December 31,2018
	6,732,893 $ 120,287 1,613,445 8,466,625 1,626,514 21,411 1,654,816 357,931 38,375 50,253 1,415,204 4,195 5,764,793 3,119,127 75,928 148,991 2,006,696) ( 241,970) ( 215,017) ( 1,805,049) ( 534,492) ( 947,618) ( 54,088) ( 8,472,608 5,983) ($		3,275,944 $ 10,187 - 3,286,131 640,114 - 1,025,835 18,606 59,248 - 106,692 87,092 211,222 962,109 2,144,086 15,777 268,226) ( 235,433) ( 27,462) ( 944,979) ( 131,261) ( 150,280) ( 224,773) ( 3,288,367 2,236) ($

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The following table summarises the amounts of goodwill and gain from bargain purchase by company:

ompany:
HMH EGV EGH EGM	Year ended December 31,2017	Year ended December 31,2018
	- $ - 1,553) ( 4,430) ( 5,983) ($	8,848) ($ 6,612 - - 2,236) ($

F. As at December 31, 2017 and 2018, the fair value of the acquired identifiable intangible assets – customer relationship were estimated to be $75,928 and, $2,143,384 respectively.
G. The Group originally held 49% of share ownership in EGV before the business combination. Loss on remeasurement of fair value amounted to $119,908.
H. The Group originally held 30% of share ownership in EGM before the business combination. Gain on remeasurement of fair value amounted to $30,253.
I. The subsidiary, EGH, consolidated HMH as of December 14, 2018, and HMH contributed operating income and pre-tax loss of $6,807 and $115,535, respectively. Had EGH been consolidated from January 1, 2018, the consolidated statement of comprehensive income for the year ended December 31, 2018 would show operating revenue and profit before income tax of $1,183,972 and $712,310, respectively.
J. The Company and subsidiary, Peony Investment, consolidated EGH as of December 18, 2017, and EGH contributed operating income and pre-tax loss of $317,144 and $28,251, respectively. Had EGH been consolidated from January 1, 2017, the consolidated statement of comprehensive income for the year ended December 31, 2017 would show operating revenue and gain before income tax of $2,340,377 and $988,743, respectively.
K. Peony Investment consolidated EGM as of December 27, 2017, and EGM contributed operating income and pre-tax loss of $3,531 and $331, respectively. Had EGM been consolidated from January 1, 2017, the consolidated statement of comprehensive income for the year ended December 31, 2017 would show operating revenue and profit before income tax of $341,516 and $327,926, respectively.

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(32) Supplemental cash flow information

Investing activities with partial cash payments

A. Property, plant and equipment

Purchase of property, plant and equipment Add: Opening balance of payable on equipment Less: Ending balance of payable on equipment Cash paid during the period	Year ended December 31,2017 1,602,423 $ 15,693 58,347) ( 1,559,769 $	Year ended December 31,2018 10,041,327 $ 58,347 34,258) ( 10,065,416 $

B. Prepayments for equipment (recorded as other non-current assets)

			Year ended December			Year ended December
			31,2017			31, 2018
Purchase of prepayments for
equipment		$	5,615,770		$	14,606,580
Add: Opening balance of payable
on prepayments for
equipment			124,787			4,638
Less: Ending balance of payable
on prepayments for
equipment	(		4,638)	(		194)
Capitalized borrowing costs	(		107,084)	(		155,226)
Cash paid during the period		$	5,628,835		$	14,455,798
C. Intangible assets
			Year ended December			Year ended December
			31,2017			31,2018
Purchase of intangible assets		$	7,397		$	29,380
Add: Opening balance of payable
on intangible assets			48,347			-
Less: Ending balance of payable
on intangible assets			-			-
Cash paid during the period		$	55,744		$	29,380

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D. Investments accounted for using equity method

Purchase of investments accounted for using equity method Add: Opening balance of payable on capital stock Less: Ending balance of payable on capital stock Cash paid during the period	Year ended December Year ended December 31, 2017 31,2018 - $ 1,003,740 $ - 23,166) ( - - - $ 980,574 $

E. The balances of the assets and liabilities of consolidated subsidiaries for the current period are as follows:

follows:
			Year ended December
			31,2017			January1,2018
Cash and cash equivalents		$	1,626,514		$	640,114
Notes receivable			21,411			-
Accounts receivable			1,654,816			1,025,835
Prepayments			357,931			18,606
Other receivables			38,375			59,248
Inventories			50,253			-
Other current assets			1,415,204			106,692
Investments accounted for using equity method			4,195			87,092
Property, plant and equipment, net			5,764,793			211,222
Investment property, net			3,119,127			962,109
Intangible assets			75,928			2,144,086
Deferred income tax assets			142,849			-
Other non-current assets			6,142			15,777
Accounts payable	(		2,006,696)	(		268,226)
Other payables	(		241,970)	(		235,433)
Current income tax liabilities	(		215,017)	(		27,462)
Other current liabilities	(		1,805,049)	(		944,979)
Long-term loans	(		534,492)	(		131,261)
Deferred income tax liabilities	(		947,618)	(		150,280)
Other non-current liabilities	(		54,088)	(		224,773)
Goodwill/Gain from bargain purchase	(		5,983)	(		2,236)
		$	8,466,625		$	3,286,131
Cash paid for the acquisition		$	6,732,893		$	3,275,944
Cash and cash equivalents	(		1,626,514)	(		640,114)
Net cash paid for the acquisition		$	5,106,379		$	2,635,830

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F. Change in non-controlling interest

Change in non-controlling interest
Year ended December 31,2017 Change in transactions with non-controlling interest 108,238 $ Add: Opening balance of payable on investments - Less: Ending balance of payable on investments 22,845) ( Add: Acquired from business combinations - Cash paid during the period 85,393 $	Year ended December 31,2018
	1,167,819 $ - - 48,163
	1,215,982 $

(33) Changes in liabilities from financing activities

At January 1, 2018 Changes in cash flow from financing activities Changes in acquisition of subsidiaries Impact of changes in foreign exchange rate At December 31, 2018		Long-term borrowings (including currentportion)		Guarantee deposits received Leads payable 37,608 $ 10,381,197 $ 122,898 1,050,945) ( 185,703 141 906 368,054 347,115 $ 9,698,447 $		Liabilities from financing activities-gross
		81,487,631 $ 16,260,197 131,261 1,481,412 99,360,501 $				91,906,436 $ 15,332,150 317,105 1,850,372 109,406,063 $

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7. RELATED PARTY TRANSACTIONS

(1) Names of related parties and their relationship with the Group

LATED PARTY TRANSACTIONS
Names of related parties and their relationship with the Group

Names of related parties

Relationship with the Group

Evergreen International Storage and Transport Corp.
Eva Airways Corp.
Evergreen Security Corp.
Charng Yang Development Co., Ltd.
Taipei Port Container Terminal Corp.
Ningbo Victory Container Co. Ltd.
Qingdao Evergreen Container Storage & Transportation Co. Ltd.
Evergreen Marine (Latin America) S.A.
Green Peninsula Agencies SDN.BHD
Luanta Investment (Netherlands) N.V.
Balsam Investment (Netherlands) N.V.
Italia Marittima S.p.A.
Colon Container Terminal S.A.
PT. Evergreen Shipping Agency Indonesia
Evergreen Shipping Agency (Vietnam) Corp.
Evergreen Shipping Agency Co. (U.A.E) LLC
Evergreen International Corp.
Evergreen Airline Service Corp.
Chang Yung-Fa Charity Foundation
Chang Yung-Fa Foundation
Eever Accord Construction Corporation
Evergreen Aviation Technologies Corporation
Evergreen Sky Catering Corporation
Evergreen Air Cargo Services Corporation
Evergreen Aviation Precision Corporation
Evergreen International S.A.
Evergreen Marine (Singapore) Pte. Ltd.
Gaining Enterprise S.A.
Eevergreen Insurance Company Limited
Evergreen Shipping Agency (America) Corporation
Evergreen Shipping Agency (Japan) Corporation
Evergreen Shipping Agency (Philippines) Corporation
Evergreen International Myanmar Co., Ltd.
Evergreen Marine (Hong Kong) Ltd.

Associate
Associate
Associate
Associate
Associate
Associate
Associate
Associate
Associate
Associate
Associate
Associate
Associate
Associate
Other related party
(A subsidiary since
January 1, 2018)
Associate
Other related party
Other related party
Other related party
Other related party
Other related party
Other related party
Other related party
Other related party
Other related party
Other related party
Other related party
Other related party
Other related party
Other related party
Other related party
Other related party
Other related party
Other related party
(A subsidiary since
December 18, 2017)

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(2) Significant related party transactions and balances

A. Operating revenue:

Operating revenue:
Sales of services: Associates Other related parties	Year ended December 31,2017 3,191,386 $ 10,692,025 13,883,411 $	Year ended December 31,2018
		2,830,008 $ 10,452,502
		13,282,510 $

The business terms on which the Group transacts with related parties are of no difference from those with non-related parties.

B. Purchases:

those with non-related parties. Purchases:
Year ended December 31,2017 Purchases of services: Associates 3,717,601 $ Other related parties 7,698,504 11,416,105 $	Year ended December 31,2018
	3,293,741 $ 7,481,533
	10,775,274 $

Goods and services are purchased from associates and other related parties on normal commercial terms and conditions.

C. Receivables from related parties :

terms and conditions. Receivables from related parties :
. Accounts receivable: Associates Other related parties Subtotal Other receivables: Associates -Other Other related parties -EIC -Other Subtotal Total	December31,2017 162,609 $ 631,012 793,621 $ 3,038 $ 162,433 48,789 214,260 $ 1,007,881 $	December31,2018
		115,875 $ 387,763
		503,638 $
		1,626 $ 179,661 8,402
		189,689 $
		693,327 $

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D. Payables to related parties:

Payables to related parties:
. Accounts payable: Associates Other related parties Subtotal Other payables: Associates Other related parties Subtotal Total	December31,2017 57,279 $ 146,589 203,868 $ 11,752 $ 113,616 125,368 $ 329,236 $	December31,2018
		61,940 $ 191,232
		253,172 $
		25,548 $ 156,320
		181,868 $
		435,040 $

The payables to related parties arise mainly from purchase transactions. The payables bear no interest.

E. Property transactions:
(a) Acquisition of property, plant and equipment:

rest. perty transactions: Acquisition of property, plant and equipment:	rest. perty transactions: Acquisition of property, plant and equipment:	rest. perty transactions: Acquisition of property, plant and equipment:	rest. perty transactions: Acquisition of property, plant and equipment:
Disposal of property, plant and equipment: Year ended December Year ended December 31,2017 31,2018 Associates 4,350 $ - $ Other related parties 4,199 4,805 8,549 $ 4,805 $ Disposal proceeds Gain (loss) on disposal Disposal proceeds Gain (loss) on disposal Other related parties 4,890 $ 746 $ - $ - $ 31,2017 31,2018 Year ended December Year ended December				Year ended December 31,2018
				- $ 4,805
				4,805 $

	Disposal proceeds		Disposal proceeds
	4,890 $	746 $	- $		- $

(b) Disposal of property, plant and equipment:

F. Agency accounts:

Agency accounts: Other related parties 4 $	,89	0 746 $ $		- - $
.		December31,2017		December31,2018
Credit balance of agency accounts:
Associates	($	196,045)	($	170,132)
Other related parties
-EIC	(	515,617)	(	382,642)
-EGA	(	865,521)	(	648,750)
-EGJ	(	364,482)	(	441,941)
-Other	(	28,815)	(	57,287)
	($	1,970,480)	($	1,700,752)

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G. Shipowner’s accounts:

Shipowner’s accounts:
. Debit balance of shipowner’s accounts: Associates -ITS Other related parties -EIS -GESA .	December31,2017 - $ 696,616 25,028 721,644 $ December31,2017	December31,2018
		133,072 $ 471,267 20,409
		624,748 $
		December31,2018

Credit balance of shipowner’s accounts:

Associates
-ITS	($	889,198)		$	-
Other related parties
-EMS	(	525,647)	(		1,804,031)
	($	1,414,845)	($		1,804,031)

H. Loans to/from related parties:
(a) Loans to related parties:
- i. Outstanding balance:

ans to/from related parties: Loans to related parties: i. Outstanding balance:
.		December31,	2017	December31,	2018
Associates	$		272,467	$	409,242
ii. Interest income
		Year ended December		Year ended December
		31,2017		31,2018
Associates	$		2,876	$	10,314
The loans to associates carry interest at floating rates			for the years ended December 31, 2017
and 2018.

(b) Loans from related parties:
i. Outstanding balance:

and 2018. Loans from related parties: i. Outstanding balance:
. Other related parties	December31,2017 877,363 $	December31,2018
		1,002,616 $

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ii. Interest expense:

ii. Interest expense:
Associates Other related parties	Year ended December 31,2017 765 $ 15,401 16,166 $	Year ended December 31,2018
		- $ 40,026
		40,026 $

The loans from associates carry interest at floating rates for the years ended December 31, 2017 and 2018.

I. Endorsements and guarantees provided to related parties:

. Associates	December31,2017 3,035,391 $	December31,2018
		3,646,750 $

J. On August 11, 2017, the Board of Directors resolved to have the Company and Peony Investment acquire 79% and 1%, respectively, of the shares of EGH from other related party Evergreen International S.A. The acquisition date was December 18, 2017, and the transaction amount was $6,452,225 (approx. USD $212,000).
K. On November 30, 2017, the Board of Directors resolved to have Peony Investment acquire 19% of the shares (95,000 shares) of EGM for $76,181 (approx. USD 2,545) from other related party GESA. The acquisition date was December 27, 2017.
L. On December 20, 2017, the Board of Directors resolved to have subsidiary ETS acquire 15% of the shares of Island for $80,488 (approx. USD 2,710) from associate ITS. The acquisition date was January 1, 2018.
M. On June 7, 2018, the Board of Directors resolved to have the subsidiary Peony Investment acquire 11.1074% of the shares of ICS Depot Services Sdn Bhd for $21,568 (approx. USD 706) from associate GESA. The acquisition date was June 30, 2018.
N. On August 13, 2018, the Board of Directors of the subsidiary, EGH, during their meeting resolved to acquire 100% of the shares of HMH from other related party Chestnut. The acquisition date was December 14, 2018, and the transaction amount was $3,265,341 (approx. USD $105,808).

(3) Key management compensation

Key management compensation
Salaries and other short-term employee benefits Post-employment benefits	Year ended December 31,2017 207,058 $ 3,909 210,967 $	Year ended December 31,2018
		150,727 $ 3,704
		154,431 $

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8. PLEDGED ASSETS

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

Pledgedassets Other financial assets - Pledged time deposits Refundable deposits - Pledged time deposits Property, plant and equipment -Land -Buildings -Loading and unloading equipment -Ships -Computer and communication equipment Investment property -Land -Buildings	December31,2017 December31,2018 324,508 $ 271,721 $ 2,000 2,000 514,312 514,312 2,081,017 5,760,284 1,968,231 1,971,185 56,643,395 71,813,444 659,279 502,283 1,285,781 1,285,781 3,523,332 4,393,746 67,001,855 $ 86,514,756 $ Bookvalue	Purpose
	December31,2017 324,508 $ 2,000 514,312 2,081,017 1,968,231 56,643,395 659,279 1,285,781 3,523,332 67,001,855 $
		Performance guarantee � Long-term loan � � � � Long-term loan �

9. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNISED CONTRACT

COMMITMENTS

(1) Contingencies

None.

(2) Commitments

A. As of December 31, 2018, the Company had delegated Crédit Agricole Corporate and Investment Bank to issue Standby Letter of Credit amounting to USD 5,000.
B. A former stockholder of the Company sold some of its shares through issuance of global depository receipts (GDRs). The issuance of GDRs was approved by the SEC on June 19, 1996 as per Letter (85) Tai-Cai-Zheng (1) No. 35410. On August 2, 1996, the GDRs were approved by the UK governing authority to be listed on the London Stock Exchange and were issued in Asia, Europe and the US. The total amount of the issuance of GDRs was USD 115,000. The initial number of units issued was 5,449,592, representing 54,495,920 shares of the Company’s common stock at $50.50 (in dollars) per share, and the number of supplementary units issued was 817,438. In total, the number of units issued was 6,267,030, representing 62,670,300 shares of the Company’s common stock at $50.50 (in dollars) per share, and the GDRs issued amounted to USD 115,000. Another 2,116,352 units, representing 21,163,604 shares of the Company’s common stock, were issued during the period from 1997 to December 31, 2018. As of December 31, 2018, 8,301,902 units were redeemed and 81,480 units were outstanding, representing 814,889 shares of the Company’s common stock.

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C. As of December 31, 2018, the long-term and medium-term loan facilities granted by the financial institutions with the resolution from the Board of Directors to finance the Group’s purchase of new ships and general working capital requirement amounted to $112,504,119 and the unutilized credit was $20,541,327.
D. Operating lease

The estimated amount of rent expense in the following years under long-term contracts is set forth as follows:

forth as follows:
Within 1 year 1~5 years Over 5 years	December31,2018
	18,144,025 $ 67,013,201 45,807,288
	130,964,514 $

E. As of December 31, 2018, the amount of guaranteed notes issued by the Company for loans borrowed was $75,190,874.
F. To meet its operational needs, the Company signed the shipbuilding contracts with Imabari Shipbuilding Co., Ltd. and Samsung Heavy Industries. As of December 31, 2018, the total price of the contracts, wherein the vessels have not yet been delivered, amounted to USD 912,760, USD 791,560 of which remain unpaid.
G. In response to international regulations on sulfur content in shipping fuel, the Group entered into sulfur emission abatement equipment purchase contracts with Wartsila Finland Oy and Alfa Laval Nijmegen B.V.. The total contract prices are USD 72,440 and EUR 23,246, respectively, and USD 60,897 and EUR 18,544 remain unpaid. The Group signed installation contracts with Huarun Dadong Dockyard Co., Ltd.. As of December 31, 2018, the total price of the contracts amounted to USD 88,380, USD 86,612 of which remain unpaid.

10. SIGNIFICANT DISASTER LOSS

None.

11. SIGNIFICANT EVENTS AFTER THE BALANCE SHEET DATE

For details of appropriation of earnings as proposed by the Board of Directors on March 22, 2019, please refer to Note 6(18).

12. OTHERS

(1) Capital management

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(2) Financial instruments

A. Financial instruments by category

nancial instruments Financial instruments by category
Financial assets Financial assets at fair value through other comprehensive income Designation of equity instrument Available-for-sale financial assets Held-to-maturity financial assets Financial assets at amortised cost Cash and cash equivalents Notes receivables Accounts receivable Other accounts receivable Financial assets at amortised cost Guarantee deposits paid Other financial assets Financial liabilities Financial liabilities at amortised cost Accounts payable Other accounts payable Bonds payable (including current portion) Long-term borrowings (including current portion) Guarantee deposits received	December31,2017 - $ 2,282,619 100,000 38,108,263 66,410 13,769,670 882,906 - 197,413 324,508 55,731,789 $ 15,562,519 $ 4,113,886 8,000,000 81,487,631 37,608 109,201,644 $	December31,2018
		1,650,372 $ - - 38,230,522 154,295 15,516,849 1,481,452 100,000 226,760 271,721
		57,631,971 $
		20,066,362 $ 4,807,376 10,000,000 99,360,501 347,115
		134,581,354 $

B. Financial risk management policies
(a) The Group’s activities expose it to a variety of financial risks: market risk (including foreign exchange risk, interest rate risk and price risk), credit risk and liquidity risk. The Group’s overall risk management programme focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on the Group’s financial position and financial performance.
(b) Risk management is carried out by the Group’s Finance Department under policies approved by the Board of Directors. The Group’s Finance Department identifies, evaluates and hedges financial risks in close co-operation with the Group’s Operating Department. The Board of Directors provides written principles for overall risk management, as well as written policies covering specific areas and matters, such as foreign exchange risk, interest rate risk, credit risk, use of derivative financial instruments and non-derivative financial instruments, and investment of excess liquidity.

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C. Significant financial risks and degrees of financial risks
(a) Market risk

Foreign exchange risk

i. The Group operates internationally and is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to the USD and GBP. Foreign exchange risk arises from future commercial transactions, recognised assets and liabilities and net investment in foreign operations.
ii. The Group’s management has set up a policy to require group companies to manage their foreign exchange risk against their functional currency. The group companies are required to hedge their entire foreign exchange risk exposure with the Group’s Finance Department. To manage their foreign exchange risk arising from future commercial transactions and recognised assets and liabilities, entities in the Group use forward foreign exchange contracts, transacted with Group’s Finance Department. Foreign exchange risk arises when future commercial transactions or recognised assets or liabilities are denominated in a foreign currency that is not the entity’s functional currency.
iii. The Group’s businesses involve some non-functional currency operations (the Company’s and certain subsidiaries’ functional currency: NTD; other certain subsidiaries’ functional currency: USD, GBP, EUR, CNY and others). The information on assets and liabilities denominated in foreign currencies whose values would be materially affected by the exchange rate fluctuations is as follows:

exchange rate fluctuations is as follows:	exchange rate fluctuations is as follows:
Foreign currency amount (In Thousands) Exchangerate Book value (NTD) Financial assets Monetary items USD:NTD 946,352 $ 29.7005 28,107,128 $ EUR:USD 9,375 1.1993 333,936 Financial liabilities Monetary items USD:NTD 830,955 $ 29.7005 24,679,779 $ HKD:USD 93,861 0.1279 356,549 CNY:USD 143,195 0.1532 651,554 December31,2017 (Foreign currency: functional currency)
	28,107,128 $ 333,936 24,679,779 $ 356,549 651,554

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Foreign currency amount (In Thousands) Exchangerate Book value (NTD) Financial assets Monetary items USD:NTD 975,655 $ 30.7535 30,004,806 $ Financial liabilities Monetary items USD:NTD 955,998 $ 30.7535 29,400,284 $ HKD:USD 102,461 0.1276 402,072 GBP:USD 5,892 1.2650 229,218 CNY:USD 209,819 0.1456 939,509 EUR:USD 4,406 1.1450 155,147 December31,2018 (Foreign currency: functional currency)	Foreign currency amount (In Thousands) Exchangerate Book value (NTD) Financial assets Monetary items USD:NTD 975,655 $ 30.7535 30,004,806 $ Financial liabilities Monetary items USD:NTD 955,998 $ 30.7535 29,400,284 $ HKD:USD 102,461 0.1276 402,072 GBP:USD 5,892 1.2650 229,218 CNY:USD 209,819 0.1456 939,509 EUR:USD 4,406 1.1450 155,147 December31,2018 (Foreign currency: functional currency)
	30,004,806 $ 29,400,284 $ 402,072 229,218 939,509 155,147

iv. The total exchange (loss) gain, including realised and unrealised arising from significant foreign exchange variation on the monetary items held by the Group for the years ended December 31, 2017 and 2018 amounted to $51,516 and $308,031, respectively.
v. Analysis of foreign currency market risk arising from significant foreign exchange variation:

ariation:
Financial assets Monetary items USD:NTD EUR:USD Financial liabilities Monetary items USD:NTD HKD:USD CNY:USD (Foreign currency: functional currency)	Degree of variation Effect on profitor loss Effect on other comprehensive income 1% 281,071 $ - $ 1% 3,339 - 1% 246,798 $ - $ 1% 3,565 - 1% 6,516 - YearendedDecember31,2017 Sensitivity analysis
	Degree of variation	Effect on profitor loss
	1% 1% 1% 1% 1%	281,071 $ 3,339 246,798 $ 3,565 6,516	- $ - - $ - -

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Year ended December 31, 2018

	YearendedDecember31,2018	YearendedDecember31,2018	YearendedDecember31,2018
Financial assets Monetary items USD:NTD Financial liabilities Monetary items USD:NTD HKD:USD GBP:USD CNY:USD EUR:USD (Foreign currency: functional currency)	Degree of variation Effect on profitor loss Effect on other comprehensive income 1% 300,048 $ - $ 1% 294,003 $ - $ 1% 4,021 - 1% 2,292 - 1% 9,395 - 1% 1,551 - Sensitivityanalysis
	Degree of variation	Effect on profitor loss
	1% 1% 1% 1% 1% 1%	300,048 $ 294,003 $ 4,021 2,292 9,395 1,551	- $ - $ - - - -

Price risk

i. The Group is exposed to equity securities price risk because of investments held by the Group and classified on the consolidated balance sheet either as available-for-sale or at fair value through profit or loss. The Group is not exposed to commodity price risk. To manage its price risk arising from investments in equity securities, the Group diversifies its portfolio. Diversification of the portfolio is done in accordance with the limits set by the Group.
ii. The Group’s investments in equity securities comprise domestic listed and unlisted stocks. The prices of equity securities would change due to the change of the future value of investee companies. If the prices of these equity securities had increased/decreased by 1% with all other variables held constant, equity would have increased/decreased by $22,364 and $16,071 for the years ended December 31, 2017 and 2018, respectively, as a result of gains/losses on equity securities classified as available-for-sale.

Cash flow and fair value interest rate risk

i. The Group’s interest rate risk arises from long-term borrowings. Borrowings issued at variable rates expose the Group to cash flow interest rate risk which is partially offset by cash and cash equivalents held at variable rates. Borrowings issued at fixed rates expose the Group to fair value interest rate risk. During the years ended December 31, 2017 and 2018, the Group’s borrowings at variable rate were denominated in the NTD, USD and GBP.

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ii. At December 31, 2017 and 2018, if interest rates on borrowings had been 1% higher/lower with all other variables held constant, post-tax profit for the years ended December 31, 2017 and 2018 would have been $702,141 and $866,151 lower/higher, respectively, mainly as a result of higher/lower interest expense on floating rate borrowings.
(b) Credit risk
i. Credit risk refers to the risk of financial loss to the Group arising from default by the clients or counterparties of financial instruments on the contract obligations. The main factor is that counterparties could not repay in full the accounts receivable based on the agreed terms.
ii. The Group manages their credit risk taking into consideration the entire group’s concern. According to the Group’s credit policy, each local entity in the Group is responsible for managing and analysing the credit risk for each of their clients before standard payment and delivery terms and conditions are offered. Internal risk control assesses the credit quality of the customers, taking into account their financial position, past experience and other factors.
iii. The Group adopts following assumptions under IFRS 9 to assess whether there has been a significant increase in credit risk on that instrument since initial recognition:
If the contract payments were past due over 30 days based on the terms, there has been a significant increase in credit risk on that instrument since initial recognition.
iv. If the default rate of an investment target exceeds 0.03%, there has been a significant increase in credit risk on that instrument since initial recognition.
v. The Group classifies customers’ accounts receivable in accordance with the nature of segments. The Group applies the modified approach using probability of default to estimate expected credit loss under the provision matrix basis.
vi. The Group wrote-off the financial assets, which cannot be reasonably expected to be recovered, after initiating recourse procedures. However, the Group will continue executing the recourse procedures to secure their rights. On December 31, 2018, the Group has no written-off financial assets that are still under recourse procedures.
vii. The Group used the forecastability to adjust historical and timely information to assess the default possibility of notes receivable, accounts receivable (including related parties) and contract assets. On December 31, 2018, the loss rate methodology is as follows:

At December 31, 2018 Expected loss rate Total book value Loss allowance	Individual 100% 269,567 $ 269,567 $	Group 0.17% 17,945,460 $ 30,251 $	Total
			18,215,027 $
			299,818 $

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viii. Movements in relation to the group applying the simplified approach to provide loss allowance for accounts receivable, contract assets and lease payments receivable are as follows:

follows:
At January 1_IAS 39 Adjustments under new standards At January 1_IFRS 9 Provision for impairment Reversal of impairment loss Write-offs Effect of foreign exchange At December 31			2018			Overdue receivables
		Notes receivable	Accounts receivable		Contract assets
	- $ 5) ( 5) ( - 1 - - 4) ($		96,283) ($ 909) ( 97,192) ( 15,524) ( 10,192 1,114 4,942 96,468) ($	- $ 4,467) ( 4,467) ( - 3,858 - 83) ( 692) ($		195,715) ($ - 195,715) ( - - - 6,939) ( 202,654) ($

ix. Credit risk information of 2017 is provided in Note 12(4).

(c) Liquidity risk

i. Cash flow forecasting is performed in the operating entities of the Group and aggregated by Group’s Finance Department. Group’s Finance Department monitors rolling forecasts of the Group’s liquidity requirements to ensure it has sufficient cash to meet operational needs.
ii. The table below analyses the Group’s non-derivative financial liabilities and net-settled or gross-settled derivative financial liabilities into relevant maturity groupings based on the remaining period at the balance sheet date to the contractual maturity date for non-derivative financial liabilities.

Non-derivative financial liabilities:

December 31, 2017 Accounts payable Accounts payable - related parties Other payables Other payables - related parties Bonds payable Long-term loans (including current portion) Long-term leases (including current portion)	Less than 3 months	Between 3 months and 1year	Between 1 and2years	Between 2 and 5 years	Over 5 years	Total
	15,358,566 $ 188,582 2,683,132 138,764 - 3,611,101 505,416	71 $ 15,286 426,465 863,967 84,000 14,125,522 844,283	14 $ - - - 84,000 19,548,867 1,672,398	- $ - - - 8,210,000 32,884,400 8,359,595	- $ - 1,558 - - 16,685,608 349,204	15,358,651 $ 203,868 3,111,155 1,002,731 8,378,000 86,855,498 11,730,896

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Non-derivative financial liabilities:

December 31, 2018 Accounts payable Accounts payable - related parties Other payables Other payables - related parties Bonds payable Long-term loans (including current portion) Long-term leases (including current portion)	Less than 3 months	Between 3 months and 1year	Between 1 and2years	Between 2 and 5 years	Over 5 years	Total
	19,747,208 $ 145,511 3,345,893 80,048 - 6,739,554 593,514	65,975 $ 107,661 275,033 1,104,436 101,200 12,365,049 1,347,737	7 $ - - - 101,200 25,567,731 1,245,685	- $ - - - 10,177,600 47,214,097 8,452,762	- $ - 1,966 - - 16,668,096 -	19,813,190 $ 253,172 3,622,892 1,184,484 10,380,000 108,554,527 11,639,698

iii. The Group does not expect the timing of occurrence of the cash flows estimated through the maturity date analysis will be significantly earlier, nor expect the actual cash flow amount will be significantly different.

(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 if it meets all the following conditions: the items traded in the market are homogeneous; willing buyers and sellers can normally be found at any time; and prices are available to the public. The fair value of the Group’s investment in listed stocks, beneficiary certificates and derivative instruments with quoted market prices is included in Level.
Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.
Level 3: Unobservable inputs for the asset or liability.
B. Fair value information of investment property at cost is provided in Note 6(9).
C. Financial instruments not measured at fair value
(a) Except for those listed in the table below, the carrying amounts of cash and cash equivalents, notes receivable, accounts receivable, other receivables, other financial assets, accounts payable and other payables are approximate to their fair values.

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Financial liabilities: Bonds payable Long-term loans (including current portion) Financial liabilities: Bonds payable Long-term loans (including current portion)	December	31,2017
	Bookvalue 8,000,000 $ 81,487,631 89,487,631 $ December	Fairvalue
		Level3
		8,177,927 $ 85,935,082
		94,113,009 $
		31,2018
	Bookvalue 10,000,000 $ 99,360,501 109,360,501 $	Fairvalue
		Level3
		10,156,197 $ 108,243,508
		118,399,705 $

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

December 31, 2017 Assets: Recurring fair value measurements Available-for-sale financial assets Equity securities December 31, 2018 Assets: Recurring fair value measurements Financial assets at fair value through other comprehensive income Equity securities	Level 1 1,144,974 $ Level 1 850,223 $	Level 2 - $ Level 2 - $	Level3 Total 1,137,645 $ 2,282,619 $ Level3 Total 800,149 $ 1,650,372 $

(b) The methods and assumptions the Group used to measure fair value are as follows:
i. The instruments the Group used market quoted prices as their fair values (that is, Level 1) are listed below by characteristics:

Listed shares Market quoted price Closing price

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ii. Except for financial instruments with active markets, the fair value of other financial instruments is measured by using valuation techniques or by reference to counterparty quotes. The fair value of financial instruments measured by using valuation techniques can be referred to current fair value of instruments with similar terms and characteristics in substance, discounted cash flow method or other valuation methods, including calculated by applying model using market information available at the consolidated balance sheet date (i.e. yield curves on the Taipei Exchange, average commercial paper interest rates quoted from Reuters).
iii. When assessing non-standard and low-complexity financial instruments, the Group adopts valuation technique that is widely used by market participants. The inputs used in the valuation method to measure these financial instruments are normally observable in the market.
iv. The valuation of derivative financial instruments is based on valuation model widely accepted by market participants, such as present value techniques and option pricing models. Forward exchange contracts are usually valued based on the current forward exchange rate. Structured interest derivative instruments are measured by using appropriate option pricing models (i.e. Black-Scholes model) or other valuation methods, such as Monte Carlo simulation.
v. The output of valuation model is an estimated value and the valuation technique may not be able to capture all relevant factors of the Group’s financial and non-financial instruments. Therefore, the estimated value derived using valuation model is adjusted accordingly with additional inputs, for example, model risk or liquidity risk and etc. In accordance with the Group’s management policies and relevant control procedures relating to the valuation models used for fair value measurement, management believes adjustment to valuation is necessary in order to reasonably represent the fair value of financial and non-financial instruments at the consolidated balance sheet. The inputs and pricing information used during valuation are carefully assessed and adjusted based on current market conditions.
vi. The Group takes into account adjustments for credit risks to measure the fair value of financial and non-financial instruments to reflect credit risk of the counterparty and the Group’s credit quality.
E. For the years ended December 31, 2017 and 2018, there was no transfer between Level 1 and Level 2.

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F. The following chart is the movement of Level 3 for the years ended December 31, 2017 and 2018:

At January 1 Issued in the period Sold in the period Gains and losses recognised in other comprehensive income (Note 1) At December 31	2017 2018 1,056,802 $ 1,137,645 $ - - - 924) ( 80,843 336,572) ( 1,137,645 $ 800,149 $

Note 1: Recorded as unrealised gain or losses on valuation of available-for-sale financial assets, unrealised gains or losses on valuation of investments in equity instruments measured at fair value through other comprehensive income and exchange differences on translating the financial statements of foreign operations.
G. For the years ended December 31, 2017 and 2018, there was no transfer into or out from Level 3.
H. The Group 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. 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:

Non-derivative equity instrument: Unlisted shares Venture capital shares Private equity fund investment	Fair value at December 31,2017	Valuation technique	Significant unobservable input	Range (weighted average)	Relationship of inputs tofairvalue
	1,129,949 $ 7,696	Market comparable companies Net asset value	Price to earnings ratio multiple Price to book ratio multiple Discount for lack of marketability Net asset value	15.33~31.89 0.48~1.71 20%	The higher the multiple and control premium, the higher the fair value The higher the multiple and control premium, the higher the fair value The higher the weighted average cost of capital and discount for lack of control, the lower the fair value The higher the net asset value, the higher the fair value

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Non-derivative equity instrument: Unlisted shares Venture capital shares Private equity fund investment	Fair value at December 31,2018	Valuation technique	Significant unobservable input Price to earnings ratio multiple Price to book ratio multiple Discount for lack of marketability Net asset value	Range (weighted average)	Relationship of inputs tofairvalue
	793,376 $ 6,773	Market comparable companies Net asset value		7.61~70.77 0.46~2.36 20%~30%	The higher the multiple and control premium, the higher the fair value The higher the multiple and control premium, the higher the fair value The higher the weighted average cost of capital and discount for lack of control, the lower the fair value The higher the net asset value, the higher the fair value

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

Input	Change	December 31,2017	December 31,2017	December 31,2017	December 31,2017	December 31,2017	December 31,2017	December 31,2017
		Recognised in profit or loss				Recognised in other comprehensive income
		Favourable change		Unfavourable change		Favourable change	Unfavourable change
Price to earnings ratio/ price to book ratio/ discount for lack of marketability Net asset value	±1% ±1%		$ - - - $		$ - - - $	$ 11,299 77 11,376 $		$ 11,299 77 11,376 $

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Input	Change	December 31, 2018	December 31, 2018	December 31, 2018	December 31, 2018	December 31, 2018	December 31, 2018	December 31, 2018
		Recognised in profit or loss				Recognised in other comprehensive income
		Favourable change		Unfavourable change		Favourable change	Unfavourable change
Price to earnings ratio/ price to book ratio/ discount for lack of marketability Net asset value	±1% ±1%		$ - - - $		$ - - - $	$ 7,934 68 8,002 $		$ 7,934 68 8,002 $

(4) Effects on initial application of IFRS 9 and information on application of IAS 39 in 2017

A. Summaries of adopting significant accounting policies in 2017:
(a) Financial assets at fair value through profit or loss
- i. They are financial assets held for trading or financial assets designated as at fair value through profit or loss on initial recognition. Financial assets are classified in this category of held for trading if acquired principally for the purpose of selling in the short-term. Derivatives are also categorized as financial assets held for trading unless they are designated as hedges. Financial assets that meet one of the following criteria are designated as at fair value through profit or loss on initial recognition:
  - (i) Hybrid (combined) contracts; or
  - (ii) They eliminate or significantly reduce a measurement or recognition inconsistency; or
  - (iii)They are managed and their performance is evaluated on a fair value basis, in accordance with a documented risk management or investment strategy.
- ii. 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.
- iii. Financial liabilities at fair value through profit or loss are initially recognised at fair value. Related transaction costs are expensed in profit or loss. These financial liabilities are subsequently remeasured and stated at fair value, and any changes in the fair value of these financial liabilities are recognised in profit or loss.
(b) Available-for-sale financial assets
- i. They are non-derivatives that are either designated in this category or not classified in any of the other categories.
- ii. On a regular way purchase or sale basis, available-for-sale financial assets are recognised and derecognised using trade date accounting.

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iii. They are initially recognised at fair value plus transaction costs. These financial assets are subsequently remeasured and stated at fair value, and any changes in the fair value of these financial assets are recognised in other comprehensive income.
(c) Held-to-maturity financial assets
i. They are non-derivative financial assets with fixed or determinable payments and fixed maturity date that the Group has the positive intention and ability to hold to maturity other than those that meet the definition of loans and receivables and those that are designated as at fair value through profit or loss or as available-for-sale on initial recognition.
ii. On a regular way purchase or sale basis, held-to-maturity financial assets are recognised and derecognised using trade date accounting.
iii. They are initially recognised at fair value on the trade date plus transaction costs and subsequently measured at amortised cost using the effective interest method, less provision for impairment. Amortisation of a premium or a discount on such assets is recognised in profit or loss.
(d) Notes, accounts and other receivables
Notes and accounts receivable are claims resulting from the sale of goods or services. Receivables arising from transactions other than the sale of goods or services are classified as other receivables. Notes, accounts and other receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment. However, short-term accounts receivable without bearing interest are subsequently measured at initial invoice amount as effect of discounting is immaterial.
(e) Impairment of financial assets
i. The Group assesses at each balance sheet date whether there is objective evidence that a financial asset or a group of financial assets is impaired as a result of one or more events that occurred after the initial recognition of the asset (a ‘loss event’) and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated.
ii. The criteria that the Group uses to determine whether there is objective evidence of an impairment loss is as follows:
- (i) Significant financial difficulty of the issuer or debtor;
- (ii) A breach of contract, such as a default or delinquency in interest or principal payments;
- (iii) The Group, for economic or legal reasons relating to the borrower’s financial difficulty, granted the borrower a concession that a lender would not otherwise consider;
- (iv) It becomes probable that the borrower will enter bankruptcy or other financial reorganisation;

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(v) The disappearance of an active market for that financial asset because of financial difficulties;
(vi) Observable data indicating that there is a measurable decrease in the estimated future cash flows from a group of financial assets since the initial recognition of those assets, although the decrease cannot yet be identified with the individual financial asset in the group, including adverse changes in the payment status of borrowers in the group or national or local economic conditions that correlate with defaults on the assets in the group;
(vii) Information about significant changes with an adverse effect that have taken place in the technology, market, economic or legal environment in which the issuer operates, and indicates that the cost of the investment in the equity instrument may not be recovered; or
(viii) A significant or prolonged decline in the fair value of an investment in an equity instrument below its cost.
iii. When the Group assesses that there has been objective evidence of impairment and an impairment loss has occurred, accounting for impairment is made as follows according to the category of financial assets:
(i) Financial assets measured at cost

The amount of the impairment loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the financial asset’s original effective interest rate, and is recognised in profit or loss. Impairment loss is recognized and reversed by adjusting the carrying amount of the asset through the use of an impairment allowance account.

(ii) Available-for-sale financial assets

The amount of the impairment loss is measured as the difference between the asset’s acquisition cost (less any principal repayment and amortisation) and current fair value, less any impairment loss on that financial asset previously recognised in profit or loss, and is reclassified from ‘other comprehensive income’ to ‘profit or loss’. If, in a subsequent period, the fair value of an investment in a debt instrument increases, and the increase can be related objectively to an event occurring after the impairment loss was recognised, such impairment loss is reversed through profit or loss. Impairment loss of an investment in an equity instrument recognised in profit or loss shall not be reversed through profit or loss. Impairment loss is recognised and reversed by adjusting the carrying amount of the asset through the use of an impairment allowance account.

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(f) Derivative financial instruments and hedging activities
i. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently remeasured at their fair value. Any changes in the fair value are recognised in profit or loss.
ii. The Group designates certain derivatives as hedges of a particular risk associated with a recognised asset or liability or a highly probable forecast transaction (cash flow hedge).
iii. The Group documents at the inception of the transaction the relationship between hedging instruments and hedged items, as well as its risk management objectives and strategy for undertaking various hedging transactions. The Group also documents its assessment, both at hedge inception and on an ongoing basis, of whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in fair values or cash flows of hedged items.
iv. The full fair value of a hedging derivative is classified as a non-current asset or liability when the remaining maturity of the hedged item is more than 12 months, and as a current asset or liability when the remaining maturity of the hedged item is less than 12 months. Trading derivatives are classified as current assets or liabilities.
v. Cash flow hedge
(i) The effective portion of changes in the fair value of derivatives that are designated and qualified as cash flow hedges is recognised in other comprehensive income. The gain or loss relating to the ineffective portion is recognised immediately in the statement of comprehensive income within ‘other gains and losses’.
(ii) Amounts accumulated in other comprehensive income are reclassified into profit or loss in the periods when the hedged item affects profit or loss. The gain or loss relating to the effective portion of interest rate swaps hedging variable rate borrowings is recognised in the statement of comprehensive income within ‘finance costs’. However, when the forecast transaction that is hedged results in the recognition of a non-financial asset or financial liability, the gains and losses previously deferred in other comprehensive income are reclassified into profit or loss in the periods when the asset acquired or the liability assumed affects profit or loss. The deferred amounts are ultimately recognised in operating costs.
(iii) When a hedging instrument expires, or is sold, cancelled or executed, or when a hedge no longer meets the criteria for hedge accounting, any cumulative gain or loss existing in other comprehensive income at that time remains in other comprehensive income. When a forecast transaction occurs or is no longer expected to occur, the cumulative gain or loss that was reported in other comprehensive income is transferred to profit or loss in the periods when the hedged forecast cash flow affects profit or loss.

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B. The reconciliations of carrying amount of financial assets transfered from December 31, 2017, IAS 39, to January 1, 2018, IFRS 9, were as follows:

Effects

IAS 39 Transferred into and measured at fair value through other comprehensive income-equity Transferred into and measured at amortised cost Impairment loss adjustment IFRS 9		Measured at fair value through other comprehensive income-equity	Available-for- sale financial assets	Held-to- maturity financial assets		Financial assets at amortised cost		Total		Retained earnings		Others equity
		- $ 2,282,619 - - 2,282,619 $	2,282,619 $ 2,282,619) ( - - - $	100,000 $ - 100,000) ( - - $		- $ - 100,000 - 100,000 $		2,382,619 $ - 2,382,619 - 4,765,238 $		- $ - - 192,156 192,156 $	- $ - - 192,156) ( 192,156) ($

(a) Under IAS 39, because the equity instruments, which were classified as: available-for-sale financial assets, amounting to $2,282,619, were not held for the purpose of trading, they were reclassified as "financial assets at fair value through other comprehensive income (equity instruments)" amounting to $2,282,619, increased retained earnings and decreased other equity interest in the amounts of $192,156 and $192,156 on initial application of IFRS 9.
(b) Under IAS 39, because the equity instruments, which were classified as: held-to-maturity financial assets, amounting to $100,000, met the condition that it is intended to settle the principal and interest on the outstanding principal balance, and the Group holds these assets for the purpose of cash inflow and sale, they were reclassified as "financial assets at amortised cost" amounting to $100,000 on initial application of IFRS 9.
C. The significant accounts as of December 31, 2017 and for the year ended December 31, 2017, are as follows:
(a)Available-for-sale financial assets

e as follows: Available-for-sale financial assets
Items Non-current items: Listed (TSE and OTC) stocks Unlisted stocks Subtoal Valuation adjustment	December31,2017
	631,039 $ 205,227
	836,266 1,446,353
	2,282,619 $

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i. The Group recognised $41,394 in other comprehensive income (including unrealised gain or losses on valuation of available-for-sale financial assets and exchange differences on translating the financial statements of foreign operations.) for fair value change for the year ended December 31, 2017.
ii. The Company originally owned the emerging stock of Taiwan High Speed Rail Corporation which was first publicly traded on October 27, 2016. However, for the year ended December 31, 2015, the Company assessed that there had been objective evidence of impairment given that the market price of the shares declined continuously fell. As of December 31, 2017, the Company has recognized $189,091 as impairment loss.
iii. The Company recognised impairment loss of $3,065 on unlisted stocks. iv. The Group has no available-for-sale assets pledged to others.
(b)Held-to-maturity financial assets

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Items December 31, 2017
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iv. The Group has no available-for-sale assets pledged to others. )Held-to-maturity financial assets Items	December31,2017
Current items: Financial bonds Non-current items: Financial bonds	- $
	100,000 $

  - i. The Group recognised interest income of $2,339 for amortised cost in profit or loss for the year ended December 31, 2017.

  - ii. The counterparties of the Group’s investments have good credit quality.

  - iii. The Group has no held-to-maturity financial assets held by the Group pledged to others.

D. Credit risk information for the year ended December 31, 2017 are as follows :
(a) Credit risk refers to the risk of financial loss to the Group arising from default by the clients or counterparties of financial instruments on the contract obligations. According to the Group’s credit policy, each local entity in the Group is responsible for managing and analysing the credit risk for each of their new clients before standard payment and delivery terms and conditions are offered. Internal risk control assesses the credit quality of the customers, taking into account their financial position, past experience and other factors. Individual risk limits are set based on internal or external ratings in accordance with limits set by the Board of Directors. The utilisation of credit limits is regularly monitored. Credit risk arises from cash and cash equivalents, derivative financial instruments and deposits with banks and financial institutions, as well as credit exposures to wholesale and retail customers, including outstanding receivables. For banks and financial institutions, only independently rated parties with a minimum rating of 'A' are accepted.
(b) For the year ended December 31, 2017, no credit limits were exceeded during the reporting periods, and management does not expect any significant losses from non-performance by these counterparties.

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(c) The credit quality of accounts receivable that were neither past due nor impaired was in the following categories based on the Group’s credit quality control policy.

Group 1 Group 2	December31,2017
	1,438,533 $ 9,514,967
	10,953,500 $

Note:

Group 1: Low risk: The Group’s ten largest customers, with sound performance and high transparency of financial information, are approved based on the Group’s credit quality control policy.

Group 2: General risk.

(d) The ageing analysis of accounts receivable that were past due but not impaired is as follows:

Up to 30 days 31 to 180 days	December31,2017
	1,749,509 $ 273,040
	2,022,549 $

The above ageing analysis was based on past due date.

(e) Movement analysis of financial assets that were impaired is as follows:

Individualprovision At January 1 99,075) ($ Provision for impairment 21,646) ( Reversal of impairment 18,569 Write-offs during the period 3,490 Net exchange differences 2,379 At December 31 96,283) ($		2017

(5) Effects of initial application of IFRS 15 and information on application of IAS 18 in 2017

A. The significant accounting policies applied on revenue recognition for the year ended December 31, 2017 are set out below.
(a) Sales of goods

Revenue is measured at the fair value of the consideration received or receivable taking into account of business tax, returns, rebates and discounts for the sale of goods to external customers in the ordinary course of the Group’s activities. Revenue arising from the sales of goods is recognised when the Group has delivered the goods to the customer, the amount of sales revenue can be measured reliably and it is probable that the future economic benefits associated with the transaction will flow to the entity. The delivery of goods is completed when the significant risks and rewards of ownership have been transferred to the customer, the Group retains neither continuing managerial involvement to the degree usually associated

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with ownership nor effective control over the goods sold, and the customer has accepted the goods based on the sales contract or there is objective evidence showing that all acceptance provisions have been satisfied.

(b) Sales of services

B. The revenue of the Group recognised by using above accounting policies for the year ended December 31, 2017 are as follows:

December 31, 2017 are as follows:
Marine freight income Ship rental and slottage income Container manufacturing income Commission income and agency service income Container income and others	Year ended December 31,2017
	135,358,310 $ 1,545,894 1,659,315 1,366,761 10,652,412
	150,582,692 $

C. Under IFRS 15, liabilities are recognised as contract liabilities, but were previously presented as other current liabilities-others in the balance sheet, the effects and description of current balance sheet items if the Group continues adopting above accounting policies for the year ended December 31, 2018 are as follows:

Balance sheet items Contract assets - current Accounts receivable, net Contract liabilities- current Other current liabilities		December 31,2018
	Balance by using IFRS15	Balance by using previous accounting policies	Effects from chages in accounting policy
	2,244,065 $ 15,013,211 1,774,392) ( 22,615,978) (	- $ 17,257,276 - 24,390,370) (	2,244,065 $ 2,244,065) ( 1,774,392) ( 1,774,392

There is no impact to the current comprehensive income.

(a) Contracts with customers where services were rendered but not yet billed, were previously presented as accounts receivable on the balance sheet, and are recognised as contract assets in accordance with IFRS 15 ‘Revenue from contracts with customers’.
(b) Contracts with customers in relation to advance service receipt in the previous period are reclassified as contract liabilities in accordance with IFRS 15.

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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): Please refer to table 3.
D. Acquisition or sale of the same security with the accumulated cost exceeding $300 million or 20% of the Company’s paid-in capital: Please refer to table 4.
E. Acquisition of real estate reaching $300 million or 20% of paid-in capital or more: None.
F. Disposal of real estate reaching $300 million or 20% of paid-in capital or more: None.
G. Purchases or sales of goods from or to related parties reaching $100 million or 20% of paid-in capital or more: Please refer to table 5.
H. Receivables from related parties reaching $100 million or 20% of paid-in capital or more: Please refer to table 6.
I. Trading in derivative instruments undertaken during the reporting periods: None.
J. Significant inter-company transactions during the reporting periods: Please refer to table 7.

(2) Information on investees (not including investees in Mainland China)

Names, locations and other information of investee companies (not including investees in Mainland China) � Please refer to table 8.

(3) Information on investments in Mainland China

A. Basic information: Please refer to table 8.
B.Significant transactions, either directly or indirectly through a third area, with investee companies in the Mainland Area: None.

14. SEGMENT INFORMATION

(1) General information

Management has determined the operating segments based on the reports reviewed by the chief operating decision-maker that are used to make strategic decisions.

There is no material change in the basis for formation of entities and division of segments in the

Group or in the measurement basis for segment information in this period.

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(2) Segment information

The segment information provided to the chief operating decision-maker for the reportable segments is as follows:

is as follows:
Revenue from external customers Revenue from internal customers Segment revenue Interest income Interest expense Depreciation and amortisation Share of income (loss) of associates and joint ventures accounted for using equity method Other items Segment profit (loss) Recognizable assets Investments accounted for using equity method Segment assets Segment liabilities				YearendedDecember31,2017
		Transportation Department		Other Departments
	148,746,685 $ 17,503,128 166,249,813 417,798 1,336,931) ( 7,410,359) ( 1,401,092 135,361,899) ( 23,959,514 $ 168,476,948 $ 19,745,077 188,222,025 $ 131,942,538 $		1,836,007 $ - 1,836,007 19,156 43,785) ( 319,715) ( 1,082,503 1,583,003) ( 991,163 $ 4,819,923 $ 7,037,949 11,857,872 $ 1,448,569 $

~114~

F-378

Revenue from external customers Revenue from internal customers Segment revenue Interest income Interest expense Depreciation and amortisation Share of income (loss) of associates and joint ventures accounted for using equity method Other items Segment profit (loss) Recognizable assets Investments accounted for using equity method Segment assets Segment liabilities				YearendedDecember 31,2018	YearendedDecember 31,2018
		Transportation Department		Other Departments
	168,729,952 $ 25,809,049 194,539,001 538,144 1,873,692) ( 8,659,957) ( 1,602,737 158,122,183) ( 28,024,050 $ 192,189,335 $ 21,780,248 213,969,583 $ 156,893,418 $		506,701 $ - 506,701 25,460 6,732) ( 212,931) ( 848,390) ( 483,705) ( 1,019,597) ($ 8,557,452 $ 6,484,920 15,042,372 $ 1,150,701 $

(3) Reconciliation for segment income (loss)

A. Sales between segments are carried out at arm’s length. The revenue from external parties reported to the chief operating decision-maker is measured in a manner consistent with that in the statement of comprehensive income.
B. The amounts provided to the chief operating decision-maker with respect to total assets are measured in a manner consistent with that in the balance sheet.
C. The amounts provided to the chief operating decision-maker with respect to total liabilities are measured in a manner consistent with that in the balance sheet.
D. The amounts provided to the chief operating decision-maker with respect to segment profit (loss) are measured in a manner consistent with the income (loss) before tax from continuing operations.

~115~

F-379

(4) Trading information

Service routes		Year ended December 31,2017	Year ended December 31,2017	Year ended December 31,2017		Year ended December 31, 2018	Year ended December 31, 2018	Year ended December 31, 2018
		Amount		% of Account Balance		Amount		% of Account Balance
North America Europe Asia Others		52,789,741 $ 37,900,327 29,778,828 14,889,414 135,358,310 $		39 28 22 11 100		65,814,288 $ 32,141,861 33,672,426 21,427,908 153,056,483 $		43 21 22 14 100

(5) Geographical information

Service routes		Year ended December 31,2017	Year ended December 31,2017	Year ended December 31,2017		Year ended December 31,2018	Year ended December 31,2018	Year ended December 31,2018
		Revenue		Non-current assets		Revenue		Non-current assets
Taiwan America Europe Asia Others		26,534,097 $ 66,722,280 53,904,721 2,890,167 531,427 150,582,692 $		32,260,172 $ 28,478,053 38,404,276 10,104,135 8,122 109,254,758 $		31,626,116 $ 77,426,330 49,069,897 10,516,436 597,874 169,236,653 $		37,861,813 $ 32,747,591 37,558,867 22,086,161 7,496 130,261,928 $

(6) Major customer information

The Group provides services to customers all over the world. No single customer of the Group accounts for more than 10% of the Group’s operating revenues.

~116~

F-380

Footnote	Footnote		(Note 9)	(Note 9)
Ceiling on total loans granted (Note 7)		14,446,463 $	14,446,463	1,376,484	1,376,484	1,859,117
Limit on loans granted to a single party (Note 7)		5,778,585 $	11,557,170	1,101,187	550,594	929,558
Collateral	Value	- $	-	-	-	-
	Item	None	None	None	None	None
Allowance for	doubtful accounts	- $	-	-	-	-
Reason for short-term financing (Note 6)		Working capital requirement	Working capital requirement	Working capital requirement	Working capital requirement	Working capital requirement
Amount of transactions with borrower (Note 5)		- $	-	-	-	-
Nature of loan (Note 4)		2	2	2	2	2
Interest rate		3.4149~ 3.6056	3.3149~ 3.6038	3.3981	3.4149~ 3.6063	3.1694~ 3.5794
Actual amount drawn down		43,055 $	618,145	92,261	295,234	66,428
Balance at December 31, 2018 (Note 8)		43,055 $	707,331	92,261	369,042	83,034
Maximum outstanding balance during the year ended December 31, 2018 (Note 3)		76,426 $	712,103	92,883	371,532	83,595
Is a related party		Yes	Yes	Yes	Yes	Yes
General ledger account (Note 2)		Receivables from related parties	Receivables from related parties	Receivables from related parties	Receivables from related parties	Receivables from related parties
Borrower		Luanta Investment (Netherlands) N.V.	Clove Holding Ltd.	Whitney Equipment LLC.	Colon Container Terminal S.A.	Colon Container Terminal S.A.
Creditor		Peony Investment S.A.	Peony Investment S.A.	Clove Holding Ltd.	Clove Holding Ltd.	Evergreen Marine (Hong Kong) Ltd.
Number (Note 1)		1	1	2	2	3

F-381

Footnote	Footnote
Provision of endorsements/ guarantees to the party in Mainland China (Note 7)		N	N	N	N	N	N	N	N
Provision of endorsements/ guarantees by subsidiary to parent company (Note 7)		N	N	N	N	N	N	N	N
Provision of endorsements/ guarantees by parent company to subsidiary (Note 7)		Y	Y	Y	Y	N	N	Y	Y
Ceiling on total amount of endorsements/ guarantees provided (Note 3)		167,110,575 $	167,110,575	167,110,575	167,110,575	167,110,575	167,110,575	167,110,575	167,110,575
Ratio of accumulated endorsement/ guarantee amount to net asset value of the endorser/ guarantor company		65.22%	0.23%	51.15%	0.23%	3.35%	1.35%	2.44%	30.96%
Amount of endorsements/ guarantees secured with collateral		- $	-	-	-	-	-	-	-
Actual amount drawn down (Note 6)		25,800,522 $	-	29,061,383	149,651	2,238,855	881,549	1,395,973	11,295,851
Outstanding endorsement/ guarantee amount at December 31, 2018 (Note 5)		43,599,149 $	153,768	34,190,847	154,042	2,238,855	904,153	1,627,942	20,691,893
Maximum outstanding endorsement/ guarantee amount as of December 31, 2018 (Note 4)		47,652,627 $	154,805	38,039,795	237,641	2,253,961	910,253	1,745,064	20,878,199
	Limit on endorsements/ guarntees provided for a single party (Note 3)	133,688,460 $	133,688,460	133,688,460	133,688,460	33,422,115	33,422,115	133,688,460	133,688,460
Party being endorsed/guaranteed	Relationship with the endorser/ guarantor (Note 2)	2	2	2	2	6	6	2	2
	Company name	Greencompass Marine S.A.	Peony Investment S.A.	Evergreen Marine (UK) Limited	Whitney Equipment LLC.	Colon Container Terminal S.A.	Balsam Investment (Netherlands) N.V.	Everport Terminal Services Inc.	Evergreen Marine (Hong Kong) Ltd.
	Endorser/Guarantor	Evergreen Marine Corporation	Evergreen Marine Corporation	Evergreen Marine Corporation	Evergreen Marine Corporation	Evergreen Marine Corporation	Evergreen Marine Corporation	Evergreen Marine Corporation	Evergreen Marine Corporation
	Number (Note 1)	0	0	0	0	0	0	0	0

F-382

Footnote	Footnote
Provision of endorsements/ guarantees to the party in Mainland China (Note 7)		Y	N	Y
Provision of endorsements/ guarantees by subsidiary to parent company (Note 7)		N	N	N
Provision of endorsements/ guarantees by parent company to subsidiary (Note 7)		N	N	N
Ceiling on total amount of endorsements/ guarantees provided (Note 3)		11,619,479 $	11,619,479	204,228
Ratio of accumulated endorsement/ guarantee amount to net asset value of the endorser/ guarantor company		1.54%	10.84%	94.24%
Amount of endorsements/ guarantees secured with collateral		- $	-	-
Actual amount drawn down (Note 6)		35,633 $	503,742	76,987
Outstanding endorsement/ guarantee amount at December 31, 2018 (Note 5)		71,662 $	503,742	76,987
Maximum outstanding endorsement/ guarantee amount as of December 31, 2018 (Note 4)		134,910 $	507,141	76,987
	Limit on endorsements/ guarntees provided for a single party (Note 3)	9,295,583 $	2,323,896	81,691
Party being endorsed/guaranteed	Relationship with the endorser/ guarantor (Note 2)	2	6	1
	Company name	Ever Shine (Shanghai) Enterprise Management Consulting Co., Ltd.	Colon Container Terminal S.A.	Ever Shine (Shenzhen) Enterprise Management Consulting Co., Ltd.
	Endorser/Guarantor	Evergreen Marine (Hong Kong) Ltd.	Evergreen Marine (Hong Kong) Ltd.	Master International Shipping Agency Co., Ltd.
	Number (Note 1)	�	�	�

F-383

Footnote (Note 4)	Footnote (Note 4)
As of December 31, 2018	Fair value		6,772 $	40,423	18,906	105,258	850,223		50,000	50,000	USD 209	USD 20,226	EUR 10
	Ownership (%)		5.68%	1.44%	17.48%	17.50%	8.45%		-	-	7.50	5.00	2.86
	Book value (Note 3)		6,772 $	40,423	18,906	105,258	850,223		50,000	50,000	USD 209	USD 20,226	EUR 10
	Number of shares		677	50	2,464	9,317	49,866		-	-	0.75	18,942	10
Genearl ledger account			Financial asset measured at fair value through other comprehensive income - non-current	�	�	�	�		Financial asset measured at atmortised cost - non-current	�	Financial asset measured at fair value through other comprehensive income - non-current	�	�
Relationship with the securities issuer (Note 2)						Other related party
Marketable securities (Note 1)		Stock:	Power World Fund Inc.	Linden Technologies, Inc.	TopLogis, Inc.	Ever Accord Construction Corp.	Central Reinsurance Corp.	Financial bonds:	Sunny Bank 2nd Subordinate Financial Debentures-B Issue in 2015	Sunny Bank 3rd Subordinate Financial Debentures-B Issue in 2017	Hutchison Inland Container Depots Ltd.	South Asia Gateway Terminals (Private) Ltd.	Zoll Pool Hafen Hamburg AG
Securities held by		Evergreen Marine Corporation									Peony Investment S.A.		Evergreen Shipping Agency (Europe) GmbH

F-384

Balance as at December 31, 2018	Amount		- $
	Number of shares		-
Disposal (Note 3)	Gain (loss) on disposal		13,332 $
	Book value		329,329 $
	Selling price		342,661 $
	Number of shares		13,356
Addition (Note 3)	Amount		- $
	Number of shares		-
Balance as at January 1, 2018	Amount		329,329 $
	Number of shares		13,356
Relationship with the	investor (Note 2)
Counterparty	(Note 2)
General ledger account			Financial asset measured at fair value through other comprehensive income - non- current
Marketable securities �Note 1�		Stock:	Taiwan HSR Consortium
Investor		Evergreen Marine Corporation

F-385

Footnote (Note 2)		(Note)	(Note)	(Note)	(Note)							(Note)	(Note)			(Note)	(Note)
Notes/accounts receivable (payable)	Percentage of total notes/accounts receivable (payable)	1%	-	-	2%	-	-	-	-	-	1%	-	-	-	-	-	-
	Balance	($ 68,256)	( 20,659)	7,782	( 79,666)	-	8,445	( 20,660)	-	( 2,390)	33,363	( 110)	9,549	-	11,453	1,751	-
Differences in transaction terms compared to third party transactions (Note 1)	Credit term	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-
	Unit price	$ -	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-
Transaction	Credit term	30~60 days	30~60 days	30~60 days	30~60 days	30~60 days	30~60 days	30~60 days	30~60 days	30~60 days	30~60 days	30~60 days	30~60 days	30~60 days	30~60 days	30~60 days	30~60 days
	Percentage of total purchases/ sales	4%	5%	4%	3%	1%	1%	1%	1%	1%	5%	1%	2%	1%	3%	-	2%
	Amount	$ 1,455,870	1,580,488	1,497,882	893,918	370,150	408,890	410,325	363,380	449,731	1,739,984	250,536	729,254	181,192	1,085,215	112,920	577,182
	Purchases/ sales	Purchases	Purchases	Sales	Purchases	Purchases	Sales	Purchases	Purchases	Purchases	Sales	Purchases	Sales	Purchases	Sales	Sales	Purchases
Relationship with the counterparty		Subsidiary	Indirect subsidiary of the Company		Subsidiary	Associates		Associates	Other related parties	Other related parties		Indirect subsidiary of the Company		Other related parties		Subsidiary
Counterparty		Everport Terminal Services Inc.	Greencompass Marine S.A.		Taiwan Terminal Services Co., Ltd.	Italia Marittima S.p.A.		Evergreen International Storage and Transport Corp.	Evergreen Shipping Agency (America) Corporation	Evergreen International Corp.		Evergreen Marine (UK) Limited		Evergreen Marine (Singapore) Pte. Ltd.		Evergreen Marine (Hong Kong) Ltd.
Purchaser/Seller		Evergreen Marine Corporation

F-386

Footnote (Note 2)				(Note)	(Note)		(Note)	(Note)		(Note)		(Note)	(Note)	(Note)	(Note)
Notes/accounts receivable (payable)	Percentage of total notes/accounts receivable (payable)	-	-	99%	6%	13%	6%	16%	2%	1%	-	-	-	-	-	-	-	-	-
	Balance	$ -	-	79,666	2,219 USD	4,825 USD	2,226 USD	5,916 USD	858 USD	440 USD	-	-	57) (USD	-	-	-	-	-	(USD 14)
Differences in transaction terms compared to third party transactions (Note 1)	Credit term	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-
	Unit price	$ -	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-
Transaction	Credit term	30~60 days	30~60 days	30~60 days	30~60 days	30 days	30 days	30 days	30 days	30 days	30 days	30~60 days	30~60 days	30~60 days	30~60 days	30~60 days	30~60 days	30~60 days	30~60 days
	Percentage of total purchases/ sales	4%	-	100%	11%	17%	10%	27%	3%	2%	2%	5%	1%	9%	2%	2%	2%	2%	3%
	Amount	$ 1,365,732	107,467	893,918	USD 48,254	USD 76,497	USD 43,105	USD 121,382	USD 12,707	USD 8,937	USD 8,745	USD 19,130	USD 3,743	USD 32,710	USD 7,686	USD 6,667	USD 5,813	USD 7,325	USD 9,928
	Purchases/ sales	Purchases	Purchases	Sales	Sales	Sales	Sales	Sales	Sales	Sales	Purchases	Sales	Purchases	Sales	Purchases	Sales	Purchases	Sales	Purchases
Relationship with the counterparty		Other related parties	Associates	The parent	The parent	Investee of the Parent Company's major shareholder	Indirect subsidiary of the Parent Company	Indirect subsidiary of the Parent Company	Investee of Balsam Investment (NetherLands) N V	Subsidiary of the Parent Company	Investee of the Parent Company's major shareholder	The parent		Indirect subsidiary of the Parent Company		Investee of Balsam Investment (NetherLands) N.V.		Investee of the Parent Company's major shareholder
Counterparty		Gaining Enterprise S.A.	Taipei Port Container Terminal Corp.	Evergreen Marine Corp.	Evergreen Marine Corp.	Evergreen Marine (Singapore) Pte. Ltd.	Greencompass Marine S.A.	Evergreen Marine (UK) Limited	Italia Marittima S.p.A.	Evergreen Marine (Hong Kong) Ltd.	Evergreen Shipping Agency (America) Corporation	Evergreen Marine Corp.		Greencompass Marine S.A.		Italia Marittima S.p.A.		Evergreen Marine (Singapore) Pte. Ltd.
Purchaser/Seller		Evergreen Marine Corporation		Taiwan Terminal Services Co.,Ltd.	Everport Terminal Services Inc.							Evergreen Marine (Hong Kong) Ltd.

F-387

Footnote (Note 2)				(Note)	(Note)	(Note)	(Note)	(Note)	(Note)	(Note)	(Note)	(Note)								(Note)
Notes/accounts receivable (payable)	Percentage of total notes/accounts receivable (payable)	1%	-	-	-	1%	5%	-	-	-	-	1%	1%	-	-	-	-	-	-	-
	Balance	903 USD	-	130 USD	102) (USD	440) (USD	3,538) (USD	1,183 USD	382) (USD	672 USD	253) (USD	2,226) (USD	2,214 USD	443) (USD	-	-	-	1,055) (USD	-	-
Differences in transaction terms compared to third party transactions (Note 1)	Credit term	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-
	Unit price	$ -	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-
Transaction	Credit term	30~60 days	30~60 days	30~60 days	30~60 days	30 days	30~60 days	30~60 days	30~60 days	30~60 days	30~60 days	30 days	30~60 days	30~60 days	30~60 days	30~60 days	30~60 days	30~60 days	30~60 days	30~60 days
	Percentage of total purchases/ sales	3%	4%	2%	9%	3%	1%	2%	1%	2%	2%	2%	3%	1%	1%	2%	1%	-	-	1%
	Amount	USD 10,535	USD 11,723	USD 8,761	USD 29,271	USD 8,937	USD 3,538	USD 53,300	USD 32,095	USD 52,384	USD 49,646	USD 43,105	USD 85,897	USD 23,702	USD 31,255	USD 46,437	USD 19,432	USD 12,860	USD 6,581	USD 14,589
	Purchases/ sales	Sales	Purchases	Sales	Purchases	Purchases	Purchases	Sales	Purchases	Sales	Purchases	Purchases	Sales	Purchases	Sales	Purchases	Purchases	Purchases	Purchases	Purchases
Relationship with the counterparty		Investee of the Parent Company's major shareholder		Indirect subsidiary of the Parent Company		Subsidiary of the Parent Company	Indirect subsidiary of the Parent Company	Indirect subsidiary of the Parent Company		The parent		Subsidiary of the Parent Company	Investee of the Parent Company's major shareholder		Investee of Balsam Investment (NetherLands) N.V.		Investee of the Parent Company's major shareholder	Investee of the Parent Company's major shareholder	Investee of the Parent Company's major shareholder	Indirect subsidiary of the Parent Company
Counterparty		Evergreen International Corp.		Evergreen Marine (UK) Limited		Everport Terminal Services Inc.	Master International Shipping Agency Co., Ltd.	Evergreen Marine (UK) Limited		Evergreen Marine Corp.		Everport Terminal Services Inc.	Evergreen Marine (Singapore) Pte. Ltd.		Italia Marittima S.p.A.		Evergreen Shipping Agency (America) Corporation	Evergreen International Corp.	Evergreen Shipping Agency (Japan)	Evergreen Shipping Agency (Europe) GmbH
Purchaser/Seller		Evergreen Marine (Hong Kong) Ltd.						Greencompass Marine S.A.

F-388

Footnote (Note 2)			(Note)	(Note)	(Note)		(Note)	(Note)	(Note)	(Note)	(Note)						(Note)	(Note)
Notes/accounts receivable (payable)	Percentage of total notes/accounts receivable (payable)	-	-	-	-	-	-	1%	-	-	3%	-	-	-	-	-	-	-	-	-
	Balance	938) (USD	-	-	-	-	382 USD	1,183) (USD	4 USD	310) (USD	5,916) (USD	367 USD	364) (USD	673 USD	526) (USD	-	102 USD	130) (USD	226) (USD	-
Differences in transaction terms compared to third party transactions (Note 1)	Credit term	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-
	Unit price	$ -	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-
Transaction	Credit term	30~60 days	30~60 days	30~60 days	30~60 days	30~60 days	30~60 days	30~60 days	30~60 days	30~60 days	30 days	30~60 days	30~60 days	30~60 days	30~60 days	30~60 days	30~60 days	30~60 days	30~60 days	30~60 days
	Percentage of total purchases/ sales	-	-	-	1%	0%	2%	3%	-	1%	7%	1%	1%	2%	1%	2%	2%	1%	-	-
	Amount	USD 5,094	USD 5,446	USD 7,686	USD 32,710	USD 3,607	USD 32,095	USD 53,300	USD 8,304	USD 24,171	USD 121,382	USD 12,041	USD 17,127	USD 26,722	USD 9,030	USD 28,699	USD 29,271	USD 8,761	USD 8,310	USD 4,167
	Purchases/ sales	Purchases	Purchases	Sales	Purchases	Purchases	Sales	Purchases	Sales	Purchases	Purchases	Sales	Purchases	Sales	Purchases	Purchases	Sales	Purchases	Purchases	Purchases
Relationship with the counterparty		Investee of the Parent Company's major shareholder	Indirect subsidiary of the Parent Company	Subsidiary of the Parent Company		Investee of Peony Investment S.A.	Indirect subsidiary of the Parent Company		The Parent		Subsidiary of the Parent Company	Investee of Balsam Investment (NetherLands) N.V.		Investee of the Parent Company's major shareholder		Investee of the Parent Company's major shareholder	Subsidiary of the Parent Company		Investee of the Parent Company's major shareholder	Investee of the Parent Company's major shareholder
Counterparty		Evergreen Insurance Company Limited	Evergreen Marine Co. (Malaysia) SDN.BHD.	Evergreen Marine (Hong Kong) Ltd.		PT. Evergreen Shipping Agency Indonesia	Greencompass Marine S.A.		Evergreen Marine Corp.		Everport Terminal Services Inc.	Italia Marittima S.p.A.		Evergreen Marine (Singapore) Pte. Ltd.		Evergreen Shipping Agency (America) Corporation	Evergreen Marine (Hong Kong) Ltd.		Evergreen International Corp.	Evergreen Insurance Company Limited
Purchaser/Seller		Greencompass Marine S.A.					Evergreen Marine (UK) Limited

F-389

Footnote (Note 2)		(Note)		(Note)	(Note)		(Note)		(Note)
Notes/accounts receivable (payable)	Percentage of total notes/accounts receivable (payable)	-	-	100%	-	1%	-	2%	100%
	Balance	$ -	-	MYR 49,931	-	EUR 434	-	EUR 892	CNY 24,295
Differences in transaction terms compared to third party transactions (Note 1)	Credit term	-	-	-	-	-	-	-
	Unit price	$ -	-	-	-	-	-	-
Transaction	Credit term	30~60 days	45 days	45 days	30~60 days	30~60 days	30~60 days	30~60 days	30~60 days
	Percentage of total purchases/ sales	-	21%	79%	34%	13%	15%	27%	96%
	Amount	USD 6,671	MYR 64,925	MYR 249,169	EUR 12,354	EUR 4,813	EUR 5,649	EUR 9,921	CNY 23,434
	Purchases/ sales	Purchases	Sales	Sales	Sales	Sales	Sales	Sales	Sales
Relationship with the counterparty		Indirect subsidiary of the Parent Company	Investee of EITC	Subsidiary of the Parent Company	Indirect subsidiary of the Parent Company	Investee of Balsam Investment (NetherLands) N V	Indirect subsidiary of the Parent Company	Investee of the Parent Company's major shareholder	Subsidiary of the Parent Company
Counterparty		Evergreen Shipping Agency (Europe) GmbH	Gaining Enterprise S.A.	Evergreen Marine (Hong Kong) Ltd.	Greencompass Marine S.A.	Italia Marittima S.p.A.	Evergreen Marine (UK) Limited	Evergreen Marine (Singapore) Pte. Ltd.	Evergreen Marine (Hong Kong) Ltd.
Purchaser/Seller		Evergreen Marine (UK) Limited	Evergreen Heavy Industrial Corp.(Malaysia) Berhad		Evergreen Shipping Agency (Europe) GmbH				Master International Shipping Agency Co. Ltd.

F-390

Footnote	Footnote		Note	Note
Allowance for doubtful accounts		- $	-	-	-
Amount collected	subsequent to the balance sheet date	211,519 $	-	MYR 49,931	-
Overdue receivables	Action taken	-	-	-	-
	Amount	- $	-	-	-
	Turnover rate	-	-	-	-
Balance as at	December 31, 2018 (Note 1)	212,956 $	USD 20,194	MYR 49,931	USD 9,689
Relationship with the counterparty		Investee of the Company's major shareholder	Subsidiary	Investee of the Parent Company's major shareholder	Investee of Clove Holding Ltd. accounted for using equity method
Counterparty		Evergreen International Corporation	Clove Holding Ltd. (Note)	Evergreen Marine (Hong Kong) Ltd.	Colon Container Terminal, S.A.
Creditor		Evergreen Marine Corp.	Peony Investment S.A.	Evergreen Heavy Industrial Corp. (Malaysia) Berhad	Clove Holding Ltd.

F-391

Expressed in thousands of NTD (Except as otherwise indicated) Evergreen Marine Corporation (Taiwan) Ltd. Significant inter-company transactions during the reporting periods For the year ended December 31, 2018 Table 7	Transaction	Percentage of consolidated total operating revenues or total assets (Note 3)	0.53 0.05 0.89 0.93 0.30 0.43 0.15 0.27 0.07 0.34 0.86 0.15 0.58 0.77 0.10 0.57 0.95 0.52 0.16 2.16 0.08 1.10 0.16
		Transaction terms	Note 4 " " " " " " " " " " " " " " " " " " " " " "
		Amount	893,918 $ 114,568 1,497,882 1,580,488 675,749 729,254 250,536 613,053 112,920 577,182 1,455,870 354,342 986,885 1,300,513 164,311 968,342 1,608,121 883,133 264,318 3,662,221 181,951 1,861,135 369,255
		General ledger account	Operating cost Shipowner's account - debit Operating revenue Operating cost Shipowner's account - debit Operating revenue Operating cost Shipowner's account - credit Operating revenue Operating cost Operating cost Shipowner's account - debit Operating cost Operating cost Operating cost Operating revenue Operating cost Operating revenue Operating cost Operating cost Account payable Operating revenue Account receivables
		Relationship (Note 2)	1 1 1 1 1 1 1 1 1 1 1 3 3 3 3 3 3 3 3 3 3 3 3
		Counterparty	Taiwan Terminal Services Co.,Ltd. Greencompass Marine S.A. Greencompass Marine S.A. Greencompass Marine S.A. Evergreen Marine (UK) Limited Evergreen Marine (UK) Limited Evergreen Marine (UK) Limited Evergreen Marine (Hong Kong) Ltd. Evergreen Marine (Hong Kong) Ltd. Evergreen Marine (Hong Kong) Ltd. Everport Terminal Services Inc. Evergreen Marine (UK) Limited Evergreen Marine (Hong Kong) Ltd. Everport Terminal Services Inc. Evergreen Marine Corp. (Malaysia) SDN BHD Greencompass Marine S.A. Greencompass Marine S.A. Evergreen Marine (Hong Kong) Ltd. Evergreen Marine (Hong Kong) Ltd. Everport Terminal Services Inc. Everport Terminal Services Inc. Evergreen Marine (Hong Kong) Ltd. Evergreen Marine (Hong Kong) Ltd.
		Company name	Evergreen Marine Corporation Evergreen Marine Corporation Evergreen Marine Corporation Evergreen Marine Corporation Evergreen Marine Corporation Evergreen Marine Corporation Evergreen Marine Corporation Evergreen Marine Corporation Evergreen Marine Corporation Evergreen Marine Corporation Evergreen Marine Corporation Greencompass Marine S.A. Greencompass Marine S.A. Greencompass Marine S.A. Greencompass Marine S.A. Evergreen Marine (UK) Limited Evergreen Marine (UK) Limited Evergreen Marine (UK) Limited Evergreen Marine (UK) Limited Evergreen Marine (UK) Limited Evergreen Marine (UK) Limited Evergreen Heavy Industrial Co., (Malaysia) Berhad Evergreen Heavy Industrial Co., (Malaysia) Berhad
		Number (Note 1)	0 0 0 0 0 0 0 0 0 0 0 1 1 1 1 2 2 2 2 2 2 3 3

F-392

Transaction	Percentage of consolidated total operating revenues or total assets (Note 3)	0.14 0.14 0.10 0.16 0.05 0.06 0.27 0.25 0.17 0.12 0.08	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: Relationship between transaction company and counterparty is classified into the following three categories; Fill in the number of category each case belongs to (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.): (1) Parent company to subsidiary. (2) Subsidiary to parent company (3) Subsidiary to subsidiary 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 and based on accumulated transaction amount for the period to consolidated total operating revenues for income statement accounts. Note 4: Terms are approximately the same as for general transactions. Note 5: The Company may decide whether or not to disclose transaction details in this table based on the Materiality Principle.
	Transaction terms	Note 4 " " " " " " " " " "
	Amount	231,885 $ 325,710 234,668 269,625 108,813 106,357 621,046 415,318 385,266 199,075 188,978
	General ledger account	Operating cost Shipowner's account - credit Shipowner's account - credit Operating cost Account payable Operating revenue Other receivables Operating revenue Shipowner's account - credit Operating revenue Shipowner's account - credit
	Relationship (Note 2)	3 3 3 3 3 3 3 3 3 3 3
	Counterparty	Greencompass Marine S.A. Greencompass Marine S.A. Evergreen Marine (UK) Limited Everport Terminal Services Inc. Master International Shipping Agency Co., Ltd. Evergreen Marine (Hong Kong) Ltd. Clove Holding Ltd. Greencompass Marine S.A. Greencompass Marine S.A. Evergreen Marine (UK) Limited Evergreen Marine (Hong Kong) Ltd.
	Company name	Evergreen Marine (Hong Kong) Ltd. Evergreen Marine (Hong Kong) Ltd. Evergreen Marine (Hong Kong) Ltd. Evergreen Marine (Hong Kong) Ltd. Evergreen Marine (Hong Kong) Ltd. Master International Shipping Agency Co., Ltd. Peony Investment S.A. Evergreen Shipping Agency (Europe) GmbH Evergreen Shipping Agency (Europe) GmbH Evergreen Shipping Agency (Europe) GmbH Evergreen Shipping Agency (Europe) GmbH
	Number (Note 1)	4 4 4 4 4 5 6 7 7 7 7

F-393

Footnote	Footnote	Subsidiary of the Company (Note)	�	�	�	Investee accounted for using equity method	�	�	�	�	�	�	Indirect subsidiary of the Company (Note)	�(Note)	�(Note)	�(Note)	�(Note)	�(Note)	�(Note)
Investment income (loss) recognised by the Company For the year ended December 31, 2018 (Note 1(3))		1,896,945) ($	15,112	523,115	773,665	68,645	348,173	15,560	1,068,918	49,312	240	47,771	42,847	17,957	12,772	-	1,334,891) (	45,818	7,037) (
	Net profit (loss) of the investee For the year ended December 31, 2018 (Note 1(2))	1,888,994) ($	27,476	553,979	979,323	171,613	863,837	49,790	6,552,827	234,439	1,371	219,747	42,847	17,957	12,772	-	1,334,891) (	45,819	7,407) (
Shares held as of December 31, 2018	Book value	28,732,006 $	53,286	1,047,007	7,218,598	544,057	8,884,659	111,665	10,334,116	1,026,338	3,474	253,667	2,752,969	299,158	48,857	-	15,801,771	142,568	970
	Ownership (%)	100.00	55.00	94.43	79.00	40.00	40.36	31.25	16.31	21.03	17.50	21.74	100.00	100.00	100.00	100.00	100.00	99.99	95.00
	Number of shares	4,765	5,500	1	6,320	58,542	430,692	6,336	714,825	109,378	105	13,750	10	-	121	2	3,535	100	150
Initial investment amount	Balance as of December 31, 2017	14,654,043 $	55,000	3,075	6,438,245	320,000	4,753,514	25,000	10,767,879	1,094,073	3,229	178,750	1,616,074	255,746	74,608	20,359	10,871,362	36,188	4,305
	Balance as of December 31, 2018	14,654,043 $	55,000	3,075	6,438,245	320,000	4,840,408	25,000	10,767,879	1,094,073	3,229	178,750	1,616,074	255,746	74,608	-	10,871,362	36,188	4,305
	Main business activities	Investment activities	Loading and discharging operations of container yards	Terminal services	Marine transportation	Development, rental, sale of residential and commercial buildings	Container transportation and gas stations	General security guards services	International passengers and cargo transportation	Container distribution and cargo stevedoring	Management consultancy	Terminal services	Investment holding company	Shipping agency	Shipping agency	Shipping agency	Marine transportation	Shipping agency	Leasing
	Location	Republic of Panama	Taiwan	U.S.A	Hong Kong	Taiwan	Taiwan	Taiwan	Taiwan	Taiwan	Republic of Panama	Vietnam	British Virgin Islands	Germany	South Korea	Poland	Republic of Panama	India	Argentina
	Investee (Note 1)	Peony Investment S.A.	Taiwan Terminal Services Co., Ltd.	Everport Terminal Services Inc.	Evergreen Marine (Hong Kong) Ltd.	Charng Yang Development Co.,Ltd.	Evergreen International Storage and Transport Corporation	Evergreen Security Corporation	EVA Airways Corporation	Taipei Port Container Terminal Corporation	Evergreen Marine (Latin America), S.A.	VIP Greenport Joint Stock Company	Clove Holding Ltd.	Evergreen Shipping Agency (Europe) GmbH	Evergreen Shipping Agency (Korea) Corporation	Evergreen Shipping Agency (Poland) SP. ZO. O	Greencompass Marine S.A.	Evergreen Shipping Agency (India) Pvt. Ltd.	Evergreen Argentina S.A.
	Investor	Evergreen Marine Corp.											Peony Investment S.A.

F-394

Footnote	Footnote	Indirect subsidiary of the Company (Note)	�(Note)	�(Note)	�(Note)	�(Note)	�(Note)	�(Note)	�(Note)	�(Note)	�(Note)	�(Note)	�(Note)	�(Note)	Investee company of Peony accounted for using equity method	�	�	�	�	�	Indirect subsidiary of the Company (Note)	Investee company of Peony accounted for using equity method (Note)
Investment income (loss) recognised by the Company For the year ended December 31, 2018 (Note 1(3))		108,473 $	1,028	45,304	14,139	151,681	38,704	679,951) (	84,501	37,324	-	67,005	70,370	138,967	48,577	6,060) (	1,081,762) (	114) (	39,298	4,243	250,142	9,793
	Net profit (loss) of the investee For the year ended December 31, 2018 (Note 1(2))	114,147 $	5,914	53,652	20,198	151,681	70,370	1,333,238) (	125,187	73,185	-	78,830	127,945	138,967	99,136	12,120) (	2,207,677) (	380) (	80,200	14,145	250,142	979,323
Shares held as of December 31, 2018	Book value	502,803 $	14,248	1,002,482	323,664	236,380	91,804	1,529,399	124,808	19,007	-	105,232	100,350	167,404	123,188	1,933,827	658,599	65	78,903	41,527	592,961	91,375
	Ownership (%)	95.03	17.39	84.44	70.00	100.00	55.00	51.00	100.00	51.00	51.00	85.00	55.00	100.00	49.00	50.00	49.00	30.00	49.00	30.00	100.00	1.00
	Number of shares	17	2	42,120	4	6	0.55	765	1	-	765	680	5,500	-	0.441	460	0.451	24	-	1,500	500	80
Initial investment amount	Balance as of December 31, 2017	241,137 $	24,735	839,412	354,050	207,442	72,332	2,555,697	7,599	26,079	66,335	61,199	17,868	13,962	29,923	1,453,949	11,639,782	223,117	64,029	13,102	3,788	81,497
	Balance as of December 31, 2018	241,137 $	24,735	839,412	354,050	207,442	72,332	4,124,126	52,539	26,079	-	68,980	17,868	37,858	29,923	1,461,999	12,091,859	223,117	64,029	13,102	289,519	81,497
	Main business activities	Loading and discharging operations of container yards and inland transportation	Container repair, cleaning and inland transportation	Container manufacturing	Investment holding company	Shipping agency	Shipping agency	Marine transportation	Shipping agency	Shipping agency	Shipping agency	Shipping agency	Shipping agency	Shipping agency	Shipping agency	Investment holding company	Investment holding company	Investment holding company	Shipping agency	Renting estate and storehouse company	Shipping agency	Marine transportation
	Location	Indonesia	Indonesia	Malaysia	Curacao	Spain	Italy	U.K	Australia	Russia	Singapore	Thailand	South Africa	Vietnam	Indonesia	Curaçao	Curaçao	Malaysia	United Arab Emirates	Malaysia	Malaysia	Hong Kong
	Investee (Note 1)	PT. Multi Bina Pura International	PT. Multi Bina Transport	Evergreen Heavy Industrial Corp. (Malaysia) Berhad	Armand Investment (Netherlands) N.V.	Evergreen Shipping (Spain) S.L.	Evergreen Shipping Agency (Italy) S.p.A.	Evergreen Marine (UK) Limited	Evergreen Shipping Agency (Australia) Pty. Ltd.	Evergreen Shipping Agency (Russia) Ltd.	Evergreen Shipping Agency (Singapore) Pte. Ltd.	Evergreen Shipping Agency (Thailand) Co., Ltd.	Evergreen Agency (South Africa) (Pty) Ltd.	Evergreen Shipping Agency (Vietnam) Corp.	PT. Evergreen Shipping Agency Indonesia	Luanta Investment (Netherlands) N.V.	Balsam Investment (Netherlands) N.V.	Green Peninsula Agencies SDN. BHD.	Evergreen Shipping Agency Co. (U.A.E.) LLC	Greenpen Properties Sdn. Bhd.	Evergreen Marine Corp. (Malaysia) SDN.BHD.	Evergreen Marine (Hong Kong) Ltd.
	Investor	Peony Investment S.A.

F-395

Footnote	Footnote	Investee company of Peony accounted for using equity method (Note)	Indirect subsidiary of the Company (Note)	Investee company of Armand Estate B.V. accounted for using equity method	Investee company of Clove Holding Ltd. accounted for using equity method	Investee company of Clove Holding Ltd. accounted for using equity method (Note)	Investee company of Evergreen Marine (UK) Limited accounted for using equity method	Investee company of Everport Terminal Services Inc. accounted for using equity method (Note)	Indirect subsidiary of the Company (Note)	Investee company of Evergreen Marine (Hong Kong) Limited accounted for using equity method	�	Indirect subsidiary of the Company (Note)
Investment income (loss) recognised by the Company For the year ended December 31, 2018 (Note 1(3))		6,591 $	20,915	22,811	20,141	30,863	226	23,716	4,314	3,666	226	6,107
	Net profit (loss) of the investee For the year ended December 31, 2018 (Note 1(2))	49,639 $	20,915	234,439	50,352	553,978	1,371	23,716	5,914	50,352	1,371	6,107
Shares held as of December 31, 2018	Book value	60,962 $	466,259	474,046	2,645,712	221,434	3,275	192,943	59,771	615,720	3,275	12,376
	Ownership (%)	28.65	100.00	9.73	40.00	5.57	16.50	100.00	72.95	9.00	16.50	100.00
	Number of shares	286	-	50,602	22,860	0.059	99	-	8	5,143.5	99	200
Initial investment amount	Balance as of December 31, 2017	- $	520,839	50,602	703,025	-	3,045	-	101,530	-	3,045	3,998
	Balance as of December 31, 2018	34,259 $	520,839	50,602	703,025	200,019	3,045	6,151	101,530	479,755	3,045	6,151
	Main business activities	Depot services	Investment holding company	Container distribution and cargo stevedoring	Inland container storage and loading	Terminal services	Management consultancy	Equipment Leasing Company	Container repair cleaning and inland transportation	Inland container storage and loading	Management consultancy	Shipping agency
	Location	Malaysia	Netherlands	Taiwan	Republic of Panama	U.S.A	Republic of Panama	U.S.A	Indonesia	Republic of Panama	Republic of Panama	Cambodia
	Investee (Note 1)	Ics Depot Services Snd. Bhd.	Armand Estate B.V.	Taipei Port Container Terminal Corporation	Colon Container Terminal, S.A.	Everport Terminal Services Inc.	Evergreen Marine (Latin America), S.A.	Whitney Equipment LLC.	PT. Multi Bina Transport	Colon Container Terminal S.A.	Evergreen Marine (Latin America), S.A.	Evergreen Shipping Service (Cambodia) Co., Ltd.
	Investor	Peony Investment S.A.	Armand Investment (Netherlands ) N.V.	Armand Estate B.V.	Clove Holding Ltd.		Evergreen Marine (UK) Limited	Everport Terminal Services Inc.	PT. Multi Bina Pura International	Evergreen Marine (Hong Kong) Limited

F-396

Footnote	Footnote	Indirect subsidiary of the Company (Note)	�(Note)	�(Note)	�(Note)
Investment income (loss) recognised by the Company For the year ended December 31, 2018 (Note 1(3))		15,175 $	10,981) (	3,491	7,881
	Net profit (loss) of the investee For the year ended December 31, 2018 (Note 1(2))	25,292 $	10,981) (	5,819	13,135
Shares held as of December 31, 2018	Book value	23,570 $	574) (	10,580	17,097
	Ownership (%)	60.00	100.00	60.00	60.00
	Number of shares	900	80	44.40	1.5
Initial investment amount	Balance as of December 31, 2017	- $	0	-	0
	Balance as of December 31, 2018	8,537 $	10,796	7,049	9,805
	Main business activities	Shipping agency	Shipping agency	Shipping agency	Shipping agency
	Location	Peru	Colombia	Mexico	Chile
	Investee (Note 1)	Evergreen Shipping Agency (PERU) S.A.C.	Evergreen Shipping Agency (Colombia) S.A.S	Evergreeb Shipping Agency (Mexico) S.A. DE C.V.	Evergreeb Shipping Agency (CHILE)SPA.
	Investor	Evergreen Marine (Hong Kong) Limited

F-397

Footnote	Footnote			(Note)	(Note)	(Note)	(Note)	(Note)
Accumulted amount of investment income remitted back to Taiwan as of December 31, 2018		- $	-	-	-	-	-	-
Book value of investments in Mainland China as of December 31, 2018		277,074 $	191,016	246,811	3,332,384	152,305	417,532	250,770
Investment income (loss) recognised by the Company. For the year ended December 31, 2018 (Note 2(2)B)		10,137 $	87,747	11,631	56,013) (	934) (	570) (	145) (
Ownership held by the Company (direct of indirect) (%)		40.00	40.00	56.00	80.00	80.00	80.00	80.00
Net income (loss) of the investee for the year ended December 31, 2018		25,341 $	219,369	28,027	22,555	1,239) (	2,813	1,778
Accumulated amount of remittance from Taiwan to Mainland China as of December 31, 2018		220,241 $	43,575	291,090	2,505,191	277,147	482,230	393,103
Amount remitted from Taiwan to Mainland China/Amount remitted back to Taiwan for the year ended December 31, 2018	Remitted back to Taiwan	- $	-	-	-	-	-	-
	Remitted to Mainland China	- $	-	168,076	-	-	482,230	393,103
Accumulated amount of remittance from Taiwan to Mainland China as of January 1, 2018		220,241 $	43,575	123,014	2,505,191	277,147	-	-
Investment method (Note 1)		(2)	(2)	(2)	(2)	(2)	(2)	(2)
Paid-in capital		559,746 $	190,353	349,038	1,945,977	192,593	274,765	222,781
Main business activities		Inland container transportation, container storage, loading, discharging, repair and related activities	Inland container transportation, storage, loading, discharging, repair, cleaning and related activities	Inland container transportation, storage, loading, discharging, repair, cleaning and related activities	Management consultancy, self-owned property leasing	Management consultancy, self-owned property leasing	Management consultancy, self-owned property leasing	Management consultancy, self-owned property leasing
Investee in Mainland China		Ningbo Victory Container Co., Ltd.	Qingdao Evergreen Container Storage & Transportation Co., Ltd.	Kingtrans Intl. Logistics (Tianjin) Co., Ltd.	Ever Shine (Shanghai) Enterprise Management Consulting Co., Ltd.	Ever Shine (Ningbo) Enterprise Management Consulting Co., Ltd.	Ever Shine (Shenzhen) Enterprise Management Consulting Co., Ltd.	Ever Shine (Qingdao) Enterprise Management Consulting Co., Ltd.

F-398

Footnote	Footnote	(Note)
Accumulted amount of investment income remitted back to Taiwan as of December 31, 2018		- $
Book value of investments in Mainland China as of December 31, 2018		32,023 $
Investment income (loss) recognised by the Company. For the year ended December 31, 2018 (Note 2(2)B)		1,879 $
Ownership held by the Company (direct of indirect) (%)		39.20
Net income (loss) of the investee for the year ended December 31, 2018		48,085 $
Accumulated amount of remittance from Taiwan to Mainland China as of December 31, 2018		84,904 $
Amount remitted from Taiwan to Mainland China/Amount remitted back to Taiwan for the year ended December 31, 2018	Remitted back to Taiwan	- $
	Remitted to Mainland China	84,904 $
Accumulated amount of remittance from Taiwan to Mainland China as of January 1, 2018		- $
Investment method (Note 1)		(2)
Paid-in capital		22,395 $
Main business activities		Inland container transportation, storage, loading, discharging, passenger transportation and related activities
Investee in Mainland China		Master International Shipping Agency Co., Ltd.

F-399

– Appendix A The Securities Market of the ROC

The information presented in this section has been extracted from publicly available documents which have not been prepared or independently verified by us, the Initial Purchasers or any of our respective affiliates or advisors in connection with this Offering.

In September 1960, the ROC government established the ROC Securities and Exchange Commission to supervise and control all aspects of the existing domestic securities market and the TWSE began to take shape soon thereafter. In the 1970s and the early 1980s, the ROC government implemented a number of steps designed to upgrade the quality and importance of the ROC securities markets, such as encouraging listing on the TWSE and establishing an over-the-counter securities exchange. In the mid-1980s, the ROC government began to revise its laws and regulations in a manner designed to facilitate the gradual internationalization of the ROC securities markets. In 1997, the ROC Securities and Exchange Commission was renamed the ROC Securities and Futures Commission. Effective July 1, 2004, the ROC Securities and Futures Commission has been renamed the ROC Securities and Futures Bureau of the FSC, and its supervisory authority has been transferred from the Ministry of Finance to the FSC.

The Taiwan Stock Exchange

In 1961, the ROC SFB established the TWSE to provide a marketplace for securities trading. The TWSE is a corporation owned by government-controlled and privately owned banks and enterprises. The TWSE is independent of the entities transacting business through it, each of which pays to the TWSE a user’s fee. Subject to limited exceptions, all transactions in listed securities by brokers, traders and integrated securities firms must be made through the TWSE.

The TWSE commenced operations in 1962. During the early 1980s, the ROC SFB actively encouraged new listings on the TWSE and the number of listed companies has grown from 119 in 1983 to 946 as of August 31, 2020. As of August 31, 2020, the market capitalization of companies listed on the TWSE was approximately NT$38.3 trillion.

Historically, ROC companies have listed only shares and bonds on the TWSE. However, the ROC SFB has encouraged companies to list other types of securities. In 1988, the Ministry of Finance permitted the issuance of ROC’s first exchangeable bonds. Since 1989, there have been offerings of domestic convertible bonds and convertible preferred shares. In addition, beneficiary units evidencing beneficiary interests in closed-end investment funds and bonds issued by super-national financial institutions are also listed on the TWSE. The ROC SFB also has promulgated regulations which permit foreign issuers to list certain securities on the TWSE.

The TWSE considers the following factors when evaluating a company for listing:

the number and distribution of stockholders, including the diversification of such stockholders;
length of time in business;
amount of paid-in capital; and
profitability.

However, special listing criteria apply to technology companies and key businesses that are engaged in the national economic development.

A-1

The following table shows for the periods indicated information relating to the TWSE.

Period 1996 ....................................... 1997 ....................................... 1998 ....................................... 1999 ....................................... 2000 ....................................... 2001 ....................................... 2002 ....................................... 2003 ....................................... 2004 ....................................... 2005 ....................................... 2006 ....................................... 2007 ....................................... 2008 ....................................... 2009 ....................................... 2010 ....................................... 2011 ....................................... 2012 ....................................... 2013 ....................................... 2014 ....................................... 2015 ....................................... 2016 ....................................... 2017 ....................................... 2018 ....................................... 2019 ....................................... 2020 (through August, 2020) ..	No. of Listed Companies at Period End 382 404 437 462 531 584 638 669 697 691 688 698 718 741 758 790 809 838 854 874 892 907 928 942 946	Stock Trading Values (in NT$ billions) 12,907.6 37,241.1 29,619.0 29,291.5 30,526.6 18,354.9 21,874.0 20,333.2 23,875.4 18,818.9 23,900.4 33,043.8 26,115.4 29,680.5 28,218.7 26,197.4 20,238.2 18,940.9 21,898.5 20,191.5 16,771.1 23,972.2 29,608.9 26,464.6 27,930.7	Index High 6,982.81 10,116.84 9,277.09 8,608.91 10,202.20 6,104.24 6,462.30 6,142.32 7,034.10 6,575.53 7,823.72 9,809.88 9,295.20 8,188.11 8,972.50 9,145.35 8,144.04 8,623.43 9,569.17 9,973.12 9,392.68 10,854.57 11,253.11 12,122.45 12,981.58	Index Low 4,690.22 6,820.35 6,251.38 5,474.79 4,614.63 3,446.26 3,850.04 4,139.50 5,316.87 5,632.97 6,257.80 7,344.56 4,089.93 4,242.61 7,071.67 6,633.33 6,894.66 7,616.64 8,264.48 7,410.34 7,664.01 9,272.88 9,478.99 9,382.51 12,144.76	Index at Period End
					6,933.94 8,187.27 6,418.43 8,448.84 4,739.09 5,551.24 4,452.45 5,890.69 6,139.69 6,548.34 7,823.72 8,506.28 4,591.22 8,188.11 8,972.50 7,072.08 7,699.50 8,611.51 9,307.26 8,338.06 9,253.50 10,642.86 9,727.41 11,997.14 12,591.45

Source: TWSE

Price Limits, Commissions, Transaction Tax and Other Matters

The TWSE has placed limits on block trading and on the range of daily price movements. According to the TWSE’s block trading guidelines, transactions in one class of securities that involve 500 or more trading lots or trading amounts exceeding NT$15 million, and transactions involving five or more different classes of securities and trading amounts exceeding NT$15 million must be registered and executed in accordance with the guidelines. Fluctuations in the price of stock traded on the TWSE are currently subject to a restriction of 10% above and below the previous day closing price (or reference price set by the TWSE if the previous day closing price is not available because of lack of trading activity). However, these restrictions have been modified from time to time by the ROC SFB based on market conditions. The ROC SFB has announced that limitations on price fluctuations may be relaxed with a view to eventually abolish all share price fluctuation controls. Brokerage commission can be set at any rate of the transaction price, provided that any rate exceeding 0.1425% shall be reported to the TWSE and notified to the client in advance. A securities transaction tax, currently levied at 0.3% of the transaction price, is payable by the seller of equity securities. Such securities transaction taxes are withheld at the time of the transaction giving rise to such tax. Sales of shares of companies listed on the TWSE are currently sold in round lots of 1,000 shares. Investors who desire to sell less than 1,000 shares of a listed company occasionally experience delays in effecting such sales.

A-2

Regulation and Supervision

The ROC SFB has extensive regulatory authority over public companies. Public companies are generally required to obtain the deemed approval from the ROC SFB for all securities offerings. The ROC SFB has promulgated regulations requiring, unless otherwise exempted, periodic reporting of financial and operating information by all public companies. In addition, the ROC SFB establishes standards for financial reporting and carries out licensing and supervision of participants in the ROC securities market.

The ROC SFB has responsibility for implementing ROC Securities and Exchange Law and for overall administration of governmental policies in the ROC securities market. It has extensive regulatory authority over the offering, issuance and trading of securities. In addition, ROC Securities and Exchange Law specifically empowers the ROC SFB to promulgate necessary rules. ROC Securities and Exchange Law prohibits market manipulation. For example, it permits a ROC public company to recover short-swing trading profits made through purchases and sales within six months by directors, managerial personnel, supervisors, as well as the spouses, minor children and nominees of these parties, and stockholders (together with their spouses, minor children and nominees) who hold more than 10% of the shares of the company. ROC Securities and Exchange Law prohibits trading by “insiders” based on non-public information that materially affects share price movement prior to publication of such information and within 18 hours after publication of such information. “Insiders” include:

directors, supervisors, managers, as well as the spouses, minor children and nominees of these parties, and stockholders (together with their spouses, minor children and nominees) who hold more than 10% of a ROC public company’s shares and any individual designated by a governmental or corporate director or supervisor to act on its behalf;
any person who has learned material, non-public information due to an occupational or controlling relationship with a ROC public company;
any person who has discharged from the status or position in the first and second bullet points for not more than six months; and
any person who has learned material, non-public information from any of the above.

Sanctions include imprisonment. In addition, damages may be awarded to persons injured by the transaction. ROC Securities and Exchange Law also imposes criminal liability on certified public accountants and lawyers who make false certifications in their examination and audit of a company’s contracts, reports and other documents related to securities transactions. The ROC SFB regulations require that financial reports of listed companies be audited by accounting firms consisting of at least three certified public accountants and be signed by at least two certified public accountants.

The ROC SFB does not have criminal or civil enforcement powers under ROC Securities and Exchange Law. Criminal actions may be pursued only by government prosecutors. Civil actions may only be brought by plaintiffs who assert that they have suffered damages. The ROC SFB is empowered to curb abuses and violations of laws and regulations only through administrative measures including:

issuance of warnings;
temporary suspension of operation;
imposition of administrative fines; and
revocation of licenses.

In addition to providing a market for securities trading, the TWSE reviews applications by ROC issuers to list securities on the TWSE. If issuers of listed securities violate laws and regulations or encounter significant difficulties, the TWSE may, with the approval of the ROC SFB, delist the securities of these issuers.

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– Appendix B Foreign Investment and Exchange Controls in the ROC

Foreign Investment

Foreign investments in ROC securities markets were once restricted. Since 1983, the ROC government has adopted, enacted and amended laws and regulations to enable investment in ROC securities markets by oversea Chinese, foreign nationals, and PRC nationals. Currently, the Regulations Governing Investment in Securities by Overseas Chinese and Foreign Nationals, or the Securities Investment Regulations for Foreign Investors, announced on May 26, 1983 and last amended on February 11, 2014, and the Regulations Governing Securities Investment and Futures Trading in Taiwan by Mainland Area Investors, or the Securities Investment Regulations for PRC Nationals, announced on April 30, 2009 and last amended on October 6, 2010, are the two major regulations governing foreign investment in ROC securities. Foreign investors who are not PRC nationals shall follow the Securities Investment Regulations for Foreign Investors for their respective investment in ROC securities.

Under the Securities Investment Regulations for Foreign Investors, investors are classified into “Offshore General Foreign Investors,” “Onshore General Foreign Investors,” “Offshore Foreign Institutional Investors” and “Onshore Foreign Institutional Investors,” based upon whether they are institutional investors or natural persons, and whether they reside in the ROC (“Offshore General Foreign Investors” and “Offshore Foreign Institutional Investors,” hereafter “Offshore Investor”; Onshore General Foreign Investors” and “Onshore Foreign Institutional Investors,” hereafter “Onshore Investor”). Foreign investors are required to register with the TWSE to trade securities listed on TWSE, and the TWSE may withdraw or rescind the registration if the application documents submitted by foreign investors are untrue or incomplete, or if any material violation of the relevant regulations exists. Offshore investors are required to appoint their local agent or nominee to act on their behalf in Taiwan.

An Offshore Investor may only invest in ROC securities as permitted by the FSC such as shares, certificates of bond conversion entitlement, and Taiwan Depositary Receipts publicly or privately offered by TWSE-listed, TPEx-listed or emerging market-listed companies, beneficiary certificates issued by securities investment trusts, government bonds, bank debentures, corporate bonds, convertible bonds, bonds with warrant, beneficiary securities or asset-backed securities issued by the special purpose trust or special purpose vehicle and warrants. The FSC may set a cap for the total investment amount of offshore investors, after consulting with the CBC; provided that the FSC lifted such cap in 2008.

In the past, PRC persons were prohibited from investing, whether directly or indirectly, in ROC securities. The Securities Investment Regulations for PRC Nationals promulgated in 2009 (as amended in 2010) allow PRC nationals and institutional investors to make investment in ROC securities, if they are qualified for any of the following categories: (i) qualified domestic institutional investors approved by the PRC government, also known as “QDIIs”; (ii) PRC residents who are employees of a TWSE-listed or TPEx listed company and thereupon granted securities; (iii) companies incorporated under the laws of PRC or PRC residents who are the stockholders of a foreign company whose shares or depositary receipts are listed and traded on the TWSE or TPEx; or (iv) other categories as permitted by the competent authority. Subject to the requirements and restrictions set forth below, a PRC investor may invest in TWSE-listed or TPEx-listed securities, beneficiary certificates issued by securities investment trusts, government bonds, bank debentures, corporate bonds issued by public companies, beneficiary securities or asset-backed securities issued by the special purpose trust or special purpose vehicle, warrants and other securities as permitted by the FSC.

PRC investors are required to appoint their agent or nominee in Taiwan for opening a securities trading account.

B-1

PRC investors are required to appoint a custodian permitted by the competent authority to handle the custody of funds and certificates related to securities.
In exercising the voting rights of the shares of a TWSE-listed or TPEx-listed company, unless otherwise permitted by laws and regulations, PRC investors may not substantially control or effect the operation and management of the company.
The amount of investment remittance for each QDII is capped at US$100 million, and the total amount remitted into Taiwan by all QDIIs shall not exceed US$500 million.
The PRC investor may not exceed the PRC ownership limit imposed by the Taiwan competent authority.

Depositary Receipts

In April 1992, the ROC Securities and Futures Commission (later reformed and known as the Securities and Futures Bureau of the FSC) enacted regulations permitting ROC companies with securities listed on the TWSE, with the prior approval of the FSC, to sponsor the issue and sale to foreign investors of depositary receipts. Depositary receipts represent deposited shares of ROC companies. In December 1994, the ROC Ministry of Finance allowed companies whose shares are traded on the TPEx or listed on the TWSE, upon approval of the FSC, to sponsor the issue and sale of depositary receipts.

After depositary receipts are issued initially by a foreign depositary, a holder of depositary receipts may request the foreign depositary to cause the underlying shares (1) to be sold in the ROC, with the proceeds from that sale distributed to the depositary receipt holder after deducting tax payments and relevant costs and expenses, or (2) to be withdrawn from the depositary receipt facility and transferred to the depositary receipt holder.

Under existing laws and regulations relating to foreign exchange control, a depositary may, without obtaining further approvals from the CBC or any other governmental authority or agency of the ROC, convert NT Dollars into other currencies, including US Dollars, in respect of the following: proceeds of the sale of shares represented by depositary receipts, proceeds of the sale of shares received as stock dividends which have been deposited into the depositary receipt facility and any cash dividends or cash distributions received. In addition, a depositary, also without any of these approvals, may convert inward remittances of payments into NT Dollars for purchases of underlying shares for deposit into the depositary receipt facility against the creation of additional depositary receipts. However, a depositary may be required to obtain foreign exchange approval from the CBC on a payment-bypayment basis for conversion from NT Dollars into other currencies relating to the sale of subscription rights for new shares. Proceeds from the sale of any underlying shares by holders of depositary receipts withdrawn from the depositary receipt facility may be converted into other currencies without obtaining CBC approval.

Proceeds from sale of the underlying shares withdrawn from the depositary receipt facility may be used for reinvestment in the TWSE, the TPEx, or stock of emerging market companies, subject to limitations and restrictions set forth in “Foreign Investment” above (as applicable).

Overseas Corporate Bonds

Since 1989, the ROC Securities and Futures Commission has approved a series of overseas bonds issued by ROC companies listed on the TWSE in offerings outside the ROC. Under current ROC law and subject to the FSC approval, overseas corporate bonds can be (i) exchanged or converted by bondholders, other than persons of the PRC except for QDIIs, into shares of ROC companies; or (ii) converted into or exchanged for depositary receipts issued by the same ROC company or by the issuing company of the exchange shares, in the case of exchangeable bonds. The relevant regulations also permit ROC companies attaining public company status to issue corporate bonds in offerings outside the ROC. Proceeds from the sale of the shares converted from overseas convertible bonds may be used for reinvestment in securities listed on the TWSE or traded on the TPEx, subject to limitations and restrictions set for in “Foreign Investment” section above (as applicable).

B-2

According to the Securities Investment Regulations for Foreign Investors, a non-resident foreign converting bondholder, when exercising the conversion right to convert bonds into shares of a ROC company, will be required to register with the TWSE, and to appoint a local agent (with such qualifications provided by the FSC) to open a securities trading account with a local brokerage firm, pay ROC taxes, remit funds, exercise stockholders’ rights and perform such other matters as may be designated by such converting bondholder on behalf of and as agent for such converting bondholder. The converting holder is also required to appoint a custodian bank to hold the securities and any cash proceeds in safekeeping, to make confirmation to settle trades, and to report all relevant information. Additionally, such converting holder is required to appoint a tax guarantor for filing tax returns and making tax payments.

According to the Securities Investment Regulations for PRC Nationals, a PRC holder of overseas convertible bonds issued by a ROC company may not convert or exchange such convertible into shares unless (i) it is a qualified QDII, (ii) the businesses of the issuer are in the Positive List promulgated by the MOEA, (iii) the shares converted from overseas convertible bonds, in general, would not, jointly with the other PRC stockholders of the issuer, account for 10% or more of the issuer’s shares.

Unless otherwise limited by the CBC, a ROC company may, without obtaining further approval from the CBC or any other government authority of the ROC, convert NT Dollars to other non-ROC currencies, including US Dollars, for making payments in respect of proceeds of the redemption of the bonds or repayment of principal of and interest on the bonds. A non-ROC converting bondholder may, through its local agent and without obtaining prior approval from the CBC, convert into foreign currencies net proceeds realized from the sale of certificates of bond conversion entitlement, shares or any stock dividends relating to such shares, or any cash dividend or other cash distribution in respect of such shares, as well as inward remittance of subscription payments in respect of rights offerings. However, a converting bondholder must obtain prior approval from the CBC on a paymentby-payment basis for conversion from NT Dollars into other currencies in respect of the proceeds from the sale of subscription rights for newly issued Shares.

Other Foreign Investment

In addition to investments permitted under the Regulations, foreign investors (other than foreign investors who have registered with the TWSE for making investments in the ROC securities market) who wish to make direct investments in the shares of ROC companies are required to submit a Foreign Investment Approval application to the Investment Commission of the ROC Ministry of Economic Affairs or other government authority. The Investment Commission or such other government authority reviews each Foreign Investment Approval application and approves or disapproves each application after consultation with other governmental agencies (such as the CBC and the FSC).

Under current law, any non-ROC person possessing a Foreign Investment Approval may remit capital for the approved investment and is entitled to repatriate annual net profits, interest and cash dividends attributable to such investment. Dividends attributable to such investment, investment capital and capital gains attributable to such investment may be repatriated after approvals of the Investment Commission or other authorities have been obtained.

In addition to the general restriction against investment by non-ROC persons in ROC securities markets, non-ROC persons (except in certain limited cases) are currently prohibited from investing in certain industries in the ROC pursuant to a Negative List, as amended by the Executive Yuan. The prohibition on foreign investment in the prohibited industries specified in the Negative List is absolute in the absence of specific exemption from the application of the Negative List. Pursuant to the Negative List, certain other industries are restricted so that non-ROC persons (except in certain limited cases) may invest in such industries only up to a specified level and with the specific approval of the relevant competent authority which is responsible for enforcing the relevant legislation which the Negative List is intended to implement.

B-3

Exchange Controls

The Foreign Exchange Control Statute and regulations provide that all foreign exchange transactions must be executed by banks designated to handle such business by the FSC and by the CBC. Current regulations favor trade-related foreign exchange transactions and Foreign Investment Approval investments.

Consequently, foreign currency earned from exports of merchandise and services may now be retained and used freely by exporters, and all foreign currency needed for the importation of merchandise and services may be purchased freely from the designed foreign exchange banks.

Trade aside, ROC companies and resident individuals may, without foreign exchange approval, remit outside the ROC foreign currency of up to US$50,000,000 (or its equivalent) and US$5,000,000 (or its equivalent) respectively in each calendar year. In addition, ROC companies and resident individuals may, without foreign exchange approval, remit into the ROC foreign currency of up to US$50,000,000 (or its equivalent) and US$5,000,000 (or its equivalent) respectively in each calendar year. Furthermore, any remittance of foreign currency into the ROC by an ROC company or resident individual in a year will be offset by the amount remitted out of the ROC by the company or individual (as applicable) within its annual quota and will not use up its annual inward remittance quota to the extent of such offset. The above limits apply to remittances involving a conversion of NT Dollars to a foreign currency and vice versa. A requirement is also imposed on all enterprises to register mediumand long-term foreign debt with the CBC.

In addition, foreign persons may, subject to certain requirements, but without foreign exchange approval of the CBC, remit outside and into the ROC foreign currencies of up to US$100,000 (or its equivalent) for each remittance. The above limit applies to remittances involving a conversion of NT Dollars to a foreign currency and vice versa.

B-4

ISSUER

Evergreen Marine Corporation (Taiwan) Ltd.

No. 166, Sec. 2

Minsheng East Road Jhongshan Dist., Taipei City, Taiwan

TRUSTEE

REGISTRAR

PRINCIPAL AGENT

Citicorp International Limited

20th Floor, Citi Tower One Bay East 83 Hoi Bun Road Kwun Tong, Kowloon Hong Kong

Citibank N.A., London Branch Citibank, N.A., London Branch c/o Citibank, N.A., Dublin Branch One North Wall Quay Dublin 1, Ireland

Citibank, N.A., London Branch

c/o Citibank, N.A., Dublin Branch One North Wall Quay Dublin 1, Ireland

INDEPENDENT ACCOUNTANTS

PricewaterhouseCoopers, Taiwan

27th Floor

No. 333, Sec. 1, Keelung Road Xinyi Dist., Taipei City 110 Taiwan

LEGAL ADVISORS

ROC Legal Advisors to the Company

The Republic of Panama Legal Advisors to the Company

Baker and McKenzie

15th Floor

No. 168 Dunhua North Road Taipei City, 105 Taiwan

Arias B. & Associates Attorneys-at-law

BICSA Financial Center, 60th Floor Balboa Avenue Panama City, Republic of Panama

U.S. Legal Advisors to the Initial Purchasers

U.S. Legal Advisors to the Trustee

Simpson Thacher & Bartlett

35th Floor ICBC Tower

3 Garden Road, Central Hong Kong

K&L Gates LLP

44th Floor, Edinburgh Tower The Landmark, 15 Queen’s Road Central Central, Hong Kong

SINGAPORE LISTING AGENT

WongPartnership LLP

12 Marina Boulevard Level 28 Marina Bay Financial Centre Tower 3 Singapore 018982

AI assistant

EMC — Capital/Financing Update 2017

52158_rns_2017-11-16_1fe0dc8e-5b49-4c1f-b056-708ea547edcd.pdf

Important notice

NOT FOR DISTRIBUTION TO ANY PERSON OR ADDRESS IN THE UNITED STATES

Evergreen Marine Corporation (Taiwan) Ltd.

US$300,000,000 Currency-Linked Zero Coupon Convertible Bonds Due 2025

Issue Price: 100%

INVESTING IN THE BONDS INVOLVES RISKS THAT ARE DESCRIBED IN “RISK FACTORS” BEGINNING ON PAGE 14 OF THIS OFFERING CIRCULAR.

Sole Global Coordinator

Joint Bookrunners

Table of Contents

Presentation of information

Special note regarding forward-looking statements

Enforceability of foreign judgments

Glossary of technical terms

Summary

Overview

Competitive strengths

Strategy

Corporate and other information

The Offering

Recent Developments

Effects of COVID-19

Liquidity

Estimates of Preliminary Unaudited Consolidated Operating Revenue

Summary Financial and Other Data

Risk Factors

Risks Relating to Our Business

The outbreaks of COVID-19 and the governmental responses thereto may adversely affect our business.

Our business is highly dependent on regional and global economic trends.

Our international activities increase the compliance risks associated with economic and trade sanctions imposed by the United States, the European Union and other jurisdictions.

Supply and demand imbalances in the container shipping industry have depressed and may continue to cause fluctuation in freight rates and led to a prolonged period of challenging market conditions for global shipping carriers.

In the highly competitive international shipping industry, we may not be able to compete with established companies with greater resources or new entrants, and as a result, we may be unable to employ our vessels profitably.

Container ship capacities have increased in recent years, leading to overload and/or overcapacity and congestion in certain ports and access to ports could be limited or unavailable for other reasons.

Our container shipping business is subject to seasonal fluctuations.

Fluctuations in fuel prices and costs, if not adequately anticipated and accounted for in our freight services, could adversely affect our profitability.

Increases in bunker fuel prices, including as a result of the impact of IMO 2020, may significantly increase our costs of operations.

The container logistics industry is becoming digitalized and our future results may suffer if we do not keep pace with or exceed the digital offerings of competitors.

Security breaches or computer virus attacks could have a material adverse effect on our business prospects and operating results.

The market values of our vessels may fluctuate significantly and we may incur losses when we sell vessels and may not comply with certain financial covenants, which may adversely affect our earnings.

Risks inherent in the operation of oceangoing vessels could affect our business and reputation.

We may incur impairment charges for the vessels we owned if the carrying value exceeds the market value.

Significant indebtedness could affect our ability to finance our operations, pursue desirable business opportunities and successfully run our business in the future, and; therefore, make it more difficult for us to fulfill our obligations under our indebtedness.

We rely on revenues generated from a limited number of subsidiaries in certain regions, which could have a material adverse impact on our results of operations, financial condition and cash flows.

We may decide to expand our business in the geographical areas and markets where we current operate and into new geographical areas and markets, which may subject us to new uncertainties and risks.

Loss of our senior management or other key personnel could have an adverse effect on our business, financial condition and results of operations.

We are subject to complex international and domestic laws and regulations, including environmental regulations and the failure to comply with these regulations may subject us to increased liability and may result in a denial of access to, or detention in, certain ports.

Compliance with safety and other vessel requirements imposed by classification societies may be very costly and may adversely affect our business.

Our business has inherent operational risks, which may not be adequately covered by insurance.

Our shipping business is exposed to risks associated with the failure to declare or misdeclaration of illegal or dangerous cargo by our customers.

Delays or cost overruns in building new vessels, including the failure to deliver new vessels, would adversely affect our business and results of operations.

Declines in freight rates and other market deterioration could cause us to incur impairment charges.

The aging of our fleet may result in increased operating costs in the future, which could adversely affect our earnings.

We face periodic maintenance, repairing and dry-docking costs for our vessels, which can be substantial.

Maritime claimants could arrest one or more of our vessels, which could interrupt our cash flow.

We are subject to certain litigations or investigations and may be subject to litigation or investigation that, if not resolved in our favor and not sufficiently insured against, could have an adverse effect on us.

Our business could be adversely affected by terrorist attacks, piracy and international hostilities that affect the transportation industry.

Our vessels may call on ports which are identified by the United States, the European Union, or other authorities as state sponsors of terrorism and are subject to export controls and economic sanctions, which could be viewed negatively by investors.

Governments could requisition our vessels during a period of war or emergency, resulting in a loss of earnings.

We are subject to risks associated with operating internationally.

We are susceptible to severe weather and natural disasters.

We may have difficulty properly managing our planned growth through acquisitions of additional vessels.

As we expand our business, we may need to improve our operating and financial systems and will need to recruit suitable employees and crew for our vessels.

We, or any of our subsidiaries, may become subject to tax in jurisdictions in which we are organized or operate, which would reduce our earnings and potentially cause certain shareholders to be subject to tax in such jurisdictions.

Failure to comply with competition laws to which we are subject could lead to the imposition of fines and constraints on our business practices.

Foreign exchange and interest rate fluctuations could have a material adverse effect on our results of operations, and our attempts to hedge against such fluctuations may be ineffective and further deteriorate our financial condition.

Risks Relating to the ROC

Disruptions in the ROC’s political environment could seriously harm our business.

The value of the Common Shares and the Bonds may be adversely affected by the volatility of the Taiwan securities market.

Foreign exchange approvals may be required.

The imposition of foreign exchange restrictions may have an adverse effect on foreign investors’ abilities to acquire ROC securities, including the Common Shares, or to repatriate the interest, dividends or sale proceeds from those securities.

Financial reporting requirements and accounting standards in the ROC differ from those of other countries.

We publish monthly operating revenue information as part of our ongoing reporting obligations and such information is subject to change due to normal quarter-end closing procedures and excludes certain expenses and other information necessary to be indicative of actual financial results.

You may not be able to enforce a judgment of a foreign court in the ROC.

Risks Relating to the Common Shares and the Bonds

Non-ROC holders of the Bonds will be required to register with the Taiwan Stock Exchange and appoint several local agents in Taiwan if they convert the Bonds and become our shareholders, which may make ownership burdensome.

There are legal restrictions on a PRC investor’s conversion of the Bonds into the Common Shares.

The returns of the Bondholders on the Bonds may depend on the value of the Common Shares.

Investors may face difficulties in protecting their interests because we are incorporated under the Panama law and the Panama Islands law may provide different remedies to minority shareholders when compared with the laws of other jurisdictions.

EMC Capital/Financing Update 2017