FH - Annual Report 2020 | FinancialReports.eu

Stock Code: 2015

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2020 ANNUAL REPORT

The Company‘s annual report may be accessed from the following website: The Company‘s website: www.fenghsin.com.tw MOPS: http://mops.twse.com.tw/mops/web/index

Printed on April 13, 2021

The reader is advised that annual report has been prepared originally in Chinese. In the event of a conflict between this and the original Chinese version or difference in interpretation between the two versions, the Chinese language annual report shall prevail.

Name, Job Title, Contact Telephone, and Email Address of the Company‘s Spokesperson: Name: Mr. Cheng Der-Yih Job Title: Assistant Vice President, Administration Department Tel. No.: (04) 25565101, Ext. 2020 Email: [email protected]

Name, Job Title, Contact Telephone, and Email Address of the Company‘s Deputy Spokesperson:

Name: Mr. Zhuang Wen-Che Job Title: Manager, 1st Sales Office Tel. No.: (04) 25565101, Ext. 2160 Email: [email protected]

Addresses and Telephone Numbers of the Head Office, Administration Building, Branch Companies, and Factories:

Head Office No. 998, Sec. 1, Jiahou Rd., Houli Dist., Taichung City 42151 Tel. No.: (04) 25565101

Administration Building No. 259, Sec. 3, Houke Rd., Houli Dist., Taichung City 42152 Tel. No.: (04) 25565101

Taipei Office No. 22, Ln. 27, Sec. 2, Zhongshan N. Rd., Zhongshan Dist., Taipei City 10445 Tel. No.: (02) 25613611

Kaohsiung Office No. 549. Chenggong 1st Rd., Cianjin Dist., Kaohsiung City 80142 Tel. No.: (07) 2412368

Name, Address, Website, and Telephone of the Stock Transfer Agency:

Name: CTBC Bank Co., Ltd., Transfer Agency Department Address: 5F, No. 83, Sec, 1, Chongcing S. Rd. Jhongjheng Dist., Taipei City 10008 Tel. No: (02) 66365566 Website: https://ecorp.chinatrust.com.tw/cts/index.jsp

Name, Address, Website, and Telephone Number of the Certified Public Accountant who Attested the Latest Annual Financial Report:

Name: Chen Ming-Hung, CPA & Yen Wen-Pi, CPA Firm Name: EY Taiwan Address: 7F, No. 239, Mincyuan Rd., Taichung City 40341 Tel. No.: (04) 23055500 Website: http://www.ey.com/tw

Name of the trading place where the overseas securities are listed for trading and the method to inquire about the overseas securities information: No overseas securities are issued by the Company for the time being.

The Company‘s website: www.fenghsin.com.tw

Table of Contents	Table of Contents
One. A Letter to Shareholders
I.	Operating results for the previous year ....................................................................1
II.	Summary of business plan for the current year .......................................................2
III.	External competition, legal environment, and business environment .....................3
IV.	Future Development Strategies ................................................................................4
Two. Company Profile
I.	Date of Incorporation ...............................................................................................5
II.	History......................................................................................................................5
Three.	Corporate Governance Report
I.	Organizational Chart ................................................................................................7
II.	Business Operations of Major Units ........................................................................8
III.	Information About Directors, Presidents, Vice Presidents, Assistant Vice
	Presidents, Supervisors of All the Company‘s Divisions and Branch Units, and
	Remuneration Paid to Directors, Presidents and Vice Presidents During the Most
	Recent Year ............................................................................................................13
IV.	Corporate Governance Operations .........................................................................24
V.	Information About CPAs .......................................................................................79
VI.	Any of the Company‘s Chairman, President, or managers responsible for
	financial or accounting affairs being employed by the CPA firm or any of its
	affiliated companies during the most recent year. .................................................81
VII.	Changes in equity of directors, managers, and shareholders with more than 10%
	of the Company‘s shares ......................................................................................81
VIII.	Information about top 10 shareholders in proportion of shareholdings and who
	are related parties to one another, or spouses, relatives within the second degree
	of kinship of one another .......................................................................................82
IX.	Comprehensive Shareholding Ratio ................................................ 84
Four. Capital Overview - Capital and Shares
I.	Source of Capital Stock ..........................................................................................85
II.	Shareholder Structure ................................................................ 85
III.	Status of Share Dispersion ......................................................... 86
IV.	List of Major Shareholders .....................................................................................86
V.	Price, Net Worth, Earnings, Dividends, and Other Information per Share for the
	Most Recent Two Years ............................................................. 87
VI.	Dividend Policy and Execution Thereof ................................................................87
VII.	Effect of Bonus Stock Distribution Proposed at the Shareholders‘ Meeting on the
	Company‘s Operation Performance and EPS. .......................................................89
VIII.	Remuneration to Employees and Directors ............................................................90
IX.	Repurchase of the Company‘s Shares ....................................................................90

Five. Corporate Bonds ...................................................................................... 90	Five. Corporate Bonds ...................................................................................... 90
Six. Preferred Stocks ........................................................................................ 90
Seven. Overseas Depository Receipts .............................................................. 90
Eight. Employee Stock Warrants and Restricted Stock Awards (RSAs) ........ 90
Nine. New Shares Issued Upon Merger or Acquisition, or Acquisition of
Another	Company's Shares .............................................................................. 91
Ten. Capital Application Plan Implementation Status ..................................... 91
Eleven. Overview of Operations
I.	Business Contents ................................................................................................92
II.	Marketing and Sales Status ................................................................................101
III.	Information About Employees for the Most Recent Two Years Until the Date of
	Publication of the Annual Report ......................................................................106
IV.	Information About Environmental Protection Expenditure ...............................108
V.	Labor-Management Relations ............................................................................110
VI.	Important Contracts ...........................................................................................116
Twelve.	Overview of Finance
I.	Condensed Balance Sheet and Statement of Comprehensive Income for the
	Most Recent Five Years .................................................................................117
II.	Financial Analysis for the Most Recent Five Years ......................................121
III.	Audit Committee Review Report on the Financial Report for the Most Recent
	Year ................................................................................................................124
IV.	Consolidated Financial Report for the Most Recent Year .............................125
V.	Standalone Financial Report for the Most Recent Year ................................209
VI.	If the Company and its affiliates have encountered any financial turnover
	problems for the most recent fiscal year and until the date of publication of the
	Annual Report, please state the impact posed by the same to the Company‘s
	financial position: ..........................................................................................291
Thirteen. Review and Analysis on Financial Position and Performance, and
Risk Management Issues
I.	Financial Position ..........................................................................................292
II.	Financial Performance ...................................................................................293
III.	Cash Flow ......................................................................................................294
IV.	Impact posed by material capital expenditures in the most recent year to
	business and finance ......................................................................................295
V.	The investment policy in the most recent year, main causes for profit or loss
	thereof, improvement plans, and investment plans for the coming year .......295

VI.	Risk Management Issues ...............................................................................295
VII.	Other Important Notes ...................................................................................296
Fourteen.	Special Notes
I.	Information About Affiliates .........................................................................299
II.	Any private placement of securities in the most recent year and until the date
	of publication of the annual report .................................................................299
III.	Holding or disposition of the Company‘s stocks by subsidiaries in the most
	recent year and up to the date of publication of the annual report.................299
IV.	Other Supplementary Notes, Where Applicable............................................299

Fifteen. Other Matters Posing Significant Effects ......................................... 300

One. A Letter to Shareholders

Dear Ladies & Gentlemen:

In 2020, among the Company‘s primary products, the round bars got rid of the impact posed by the Sino-US Trade War and COVID-19 in the second half of 2020. The effect posed by rush orders boosted the mild growth of annual sales of round bars. The rebar market kept benefiting from the government‘s public work boosting policy and Taiwanese businessman‘s return to and plant construction projects in Taiwan. The increase in the entire domestic demand for rebar, plus the positive results achieved by the new rebar factories operated by the Company since 2018, drove the growth of the Company‘s sale volume for rebar by about 20% in 2020. The Company‘s sale volume for primary products in 2020 included the semi-finished goods, 1.636 million tons, an increase from that in 2019 by 9.23%. The operating revenue amounted to NT$27.3 billion, decreasing by 1.58% from that in 2019. The operating profit amounted to NT$3.1 billion, increasing by 47.96% from 2019.

I. Operating results

1. The implementing results for the Company‘s primary product sale volume 2020:

Unit: Tons

				Unit: Ton
	Primary Products	Sale volume 2020	Sale volume 2019	Growth rate %
Semi-finished goods	billet	-	25	-100%
Finished goods	merchant bar	339,599	366,233	-7.27%
	round bar	342,809	332,655	3.05%
	rebar	953,339	798,597	19.38%
	Subtotal	1,635,747	1,497,485	9.23%
	Total	1,635,747	1,497,510	9.23%

2. The Company‘s earnings are compared as follows:

(1) Consolidated financial statements

Unit: NT$ thousand

			Unit: NT$t
Item	2020	2019	Growth rate %
Operating revenue	27,298,051	27,735,611	-1.58%
Operatingcost	23,448,762	24,870,034	-5.71%
Grossprofit	3,849,289	2,865,577	34.33%
Operating expenses	758,427	776,575	-2.34%
Operating profit	3,090,862	2,089,002	47.96%

(2) Parent company only financial statements

Unit: NT$ thousand

			Unit: NT$t
Item	2020	2019	Growth rate %
Operating revenue	27,298,051	27,735,611	-1.58%
Operatingcost	23,448,762	24,870,034	-5.71%

Grossprofit	3,849,289	2,865,577	34.33%
Operating expenses	758,405	776,553	-2.34%
Operating profit	3,090,884	2,089,024	47.96%

Analysis of financial structure and profitability (the figures of the consolidated financial statements consist with those of the parent company only financial statements)

Analysis Item	Year	2020	2019
Financial structure (%)	Liabilityto asset ratio	15.41	14.81
	Ratio of long-term capital to property, plants and equipment	206.32	185.72
Profitability	Return on assets(ROA) (%)	11.80	8.91
	Return on equity (ROE) (%)	13.88	10.62
	Income before tax to paid-in capital ratio(%)	55.66	41.10
	Netprofit margin(%)	9.60	7.07
	EPS (NT$)	4.50	3.37

4. Technology and R&D

The Company‘s new product development primarily covered improvement on process of semi-finished goods, development of new products and upgrading of product quality. Among the other things, the new products under development primarily included the new steel types and products for new purposes, e.g. Low-carbon and medium-carbon cold forging materials, carbon steel and low-alloy steel for mechanical structure, medium-carbon vulcanized steel, and spring steel for vehicles, etc.. Meanwhile, the Company also engaged in the R&D of products in new shapes and sizes.

The Company‘s primary R&D results in 2020 are stated as follows: To develop blades of cultivator/car blade dampers and coil springs SUP9, medium-carbon vulcanized steel 1144 for cold drawn bright bars, hexagon socket bolts SCM435H, HEX flange bolts 10B33, bridge bolts 25CUNICRV, steering tie rods 30mnvs6, linear sliders SCM420H & deformed steel for sliders S55C and high-tensile steel SD690, upon customers‘ request.

Given the general economic distress, Feng Hsin Steel‘s technology and R&D focused on electric furnace steelmaking, few and diversified as its characteristics, in order to mitigate the impact posed by the environment to the Company‘s orders. The Company has passed the certification by IATF 16949:2016 Quality Management System of SGS Taiwan Limited in March 2020.

II. Business Plan 2021

1. External competition, legal environment, and business policy:

Given the critical challenge caused by the Sino-U.S. Trade War and increasing trade protectionism adopted in various countries with respect to the steel trading in the previous year (2019), in addition to the severe impact posed by the COVID-19 pandemic in 2020, various countries have successively adopted the lockdown policy in response to the situation. As a result, the demand for steel materials declined drastically in the world in the first half of the year. The normal economic activities recovered gradually only after the lockdown was lifted step by step as the epidemic slowed down gradually in the second of

the year. The Company‘s business policy 2021 will continue to adopt the goal in 2020, namely ―continue to remodel equipment and improve technology to upgrade the production efficiency and product quality, conserve energy in production, practice the circular economy of green environment, and fulfill the corporate social responsibility,‖ in order to create the maximum interest for the Company and shareholders at the same time.

2. Sales volume forecast and supporting basis

Despite the COVID-19 epidemic and Protectionism, competition in the global steel industry remains fierce in 2021. All people expect that the lockdown policy would be lifted step by step in various countries so that the world may be back to the normal situation and the demand could recover. According to the forecast announced by the World Steel Association in October 2020, the demand for steel materials would grow by 4.1% in the world in 2021 from 2020. Upon completion of the remodeling of steel bar & wire mills, the Company continued to develop toward the market for high-rank steel types and purposes. Further, upon the official mass production of steel rebars mills, due to the government‘s prospective infrastructure construction and public work boosting policies, Taiwanese businessman‘s return to and plant construction projects in Taiwan and leading electronics manufacturers‘ increasing demand for factory expansion, it is expected that the overall demand may grow stably in 2021. The sales of steel products will grow mildly in 2021 from 2020.

3. Key production and sales policies

(1) Production

A. Continue to develop new products per customers‘ needs, expand the product portfolio and apply flexible scheduling in response to the production plan in order to satisfy customers‘ needs.
B. Uphold the philosophy ―Full Engagement, Quality First, and Customers as the First Priority‖ as the Company‘s quality policy.
C. Start mass production of new steel mills, improve the quality of finished goods, conserve energy consumption by means of direct steel rolling, cut the production cost, and improve the Company‘s competitiveness.

(2) Sale

A. Actively participate in the tender solicitations for public works and important factory construction, and use the best effort to strive for orders to increase the market share in the steel rebars market by enhancing the cooperation with processors and developing new customers.
B. Continue to develop the export markets for finished goods to seek maximum profit.
C. Maintain a long-term supply relationship with raw materials suppliers to stabilize the source of goods and product quality.
D. Improve the service quality and establish a long-term fair partnership with distributors and customers to strive together and thrive together.
E. Keep remodeling, updating, and improving technologies of, steel-making and rolling equipment to improve production efficiency and improve various products‘ quality; also keep researching and developing round bar products to help launch into higher rank and wider ranges.

III. Business Environment

Since the previous peak of booming in the global steel industry, the steel manufacturers in various countries have started to expand their production capacity successively. As a result,

the overcapacity issue derived again. Besides, the Protectionism advocated by Trump caused the steel price to drop in the world since 2019 and even till 2020. Meanwhile, given the COVID-19 epidemic, the steel price didn‘t stop dropping until Q4 of 2020 and fluctuated sharply at the end of 2020 and the beginning of 2021. International research organizations started to adjust the global economic forecast upward successively and thereby might benefit the steel industry‘s contingency plan. Therefore, the future can be expected optimistically. Notwithstanding, the COVID-19 still remains a major variable for the global economy. The significant fluctuation in steel price would also test various steel manufacturers‘ adaptability to changes, thereby increasing challenges in their business management.

IV. Future Development Strategies

In order to pursue sustainable development, the Company sets forth the following short-term and long-term development strategies, which all employees shall follow: 1. Short-term development strategies

(1) Build a friendly working environment.

(2) Develop new steel types and products.

(3) Cut costs, improve product quality, and expand market share.

(4) Conserve energy and reduce carbon, reduce pollution emissions, improve recycling of water resources, and aim at zero waste discharge.

(5) Be a good neighbor and landscape the environment to improve the Company‘s identity.

2. Long-term development strategies

Implement the smart production into the production process step by step, and adopt the diversification strategy to expand the Company‘s core strengths and help the Company launch into the global market.

Thank you for your support and care over the years. We wish you good health and all the best!

Chairman of Board Lin Ming-Ju

Two. Company Profile

I. Date of Incorporation: January 1969

II. History:

April 1969 Plant constructed. October 1970 The ―NO.1 rolling mill‖ started production. (End-of-Life on December 27, 1996) (Primary product: angle steel)
October 1971 The ―NO.1 steelmaking shop A arc furnace‖ started production. (End-of-Life on December 28, 2006) (Primary product: steel ingot)
October 1979 The ―NO. 1 steelmaking shop B arc furnace‖ (End of Life on December 28, 2006) and ―angle bar rolling mill‖ started production.
(The angle bar rolling mill was re-constructed as a steel bar mill in February 1999 (End-of-Life on February 28, 2018).) (Primary Products: steel ingot, angle steel, and steel bar)
October 1981 The ―NO.1 steelmaking shop continuous casting billet machine‖ started production. (End-of-Life on December 28, 2006) (Primary product: steel billet)
June 1989 The ―bar & rod rolling mill‖ started production. (Primary Products: bars, rods, and steel bars)
May 1992 Stock officially listed on Taiwan Stock Exchange Corporation (TWSE). (May 25, 1992)
March 1996 The ―shapes rolling mill‖ started production (March 4, 1996). (Primary Products: angle steel, steel bar, flat-rolled steel, and channel steel)
November 1996 The ―NO. 2 steelmaking shop‖ started production (November 26, 1996) (primary products: steel billet).
March 2005 The ―new NO. 1 steelmaking shop continuous casting billet machine‖ started production (March 10, 2005) (primary product: steel billet).
April 2005 The ―new NO. 1 steelmaking shop ladle furnace‖ was completed and started operating (April 12, 2005).
December 2006 The ―new NO. 1 steelmaking shop arc furnace‖ was completed and started production. (December 12, 2006)
September 2007 The ―light profile plant‖ started production. (September 14, 2007) (primary product: small flat-rolled steel)
December 2015 The NO. 2 steelmaking shop vacuum degassing was completed and started operating. (December 15, 2015)
January 2018 The ―new rebar rolling mill‖ started hot commissioning. (January 17, 2018)

Mergers, acquisitions, investments in affiliated companies, and restructuring that took place in the most recent year and until the date of publication of the annual report:

The Company increased the capital in Taiwan Steel Union Co., Ltd. in cash by NT$52,122 thousand in 2020. Upon the capital increase, the total trading value amounted to NT$199,883 thousand.

Large-number transfer or replacement of directors or major shareholders holding over 10% of the Company's shares: N/A.

Changes in the right of management, and material changes in business models or contents: N/A.

Other important events sufficient to affect shareholders‘ equity, and the impact posed by them: The Company‘s Board of Directors resolved on February 25, 2020 to pay the cash at NT$3 per share. The resolution has been submitted to the general shareholders‘ meeting for final acknowledgment on June 10, 2020.

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Three. Corporate Governance Report
I. Organizational Chart
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Shareholders’
Meeting
Board of Directors
Remuneration Committee/Audit
Committee/Nomination Committee Audit Office
CEO
President
Vice President, Vice President, Vice President, Assistant Vice President,
Production Procurement Sales Department Administration Department
Department Department (Corporate Governance Officer)
Assistant Vice President,
Sales Department
(HR Section of Administration
Department is responsible for promoting
corporate social responsibility and ethical
management practices concurrently.)
Technology Division 3rd Steel Rolling Division 2nd Steel Rolling Division 1st Steel Rolling Division 2nd Steelmaking Division 1st Steelmaking Division Division Equipment Maintenance Division Electrical Equipment Metallurgy R&D Division Health Division Occupational Safety & Procurement Division Warehousing Division 2nd Sales Division 3rd Sales Division 1st Sales Division IT Division Finance Division Administration Division
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II. Business Operations of Major Units

Organizational Unit	Basic Operations
Audit Office	1. Promotion of improvement about proposals and projects, and educational training and target management systems. 2. Planning and implementation of the audit system, and follow-up on corrections of audited defects byvarious departments.
Administration Division	1. Appraisal and selection, appointment/employment, salary, performance evaluation, rewards and punishment, promotion, retirement, layoff, pension, complaint and insurance practices related to HR. 2. Security guard management, receipt and dispatch of documents, file management, meal, dormitory and welfare affairs, etc. 3. Collection, analysis and communication of information about the overview of the industry. 4. Undertaking the affairs related to the procurement of land, change of land purposes, and urban planning, etc. 5. Undertaking of the applications for building permits and occupation licenses. 6. Other administrative affairs.
Finance Division	1. Accounting system, documents, accounts, final accounts, budget system and tax accounting, etc. 2. Fund raising and operation, property management, property insurance and shareholders service. 3. Analysis/research of long-term and short-term investment, and post-investment follow-up management. 4. Other businesses related to finance and accounting.
IT Division	1. Construction and promotion of computerized system. 2. Analysis and construction of system network. 3. Planning and management of information security. 4. Maintenance and protection of computer hardware devices. 5. Writingand maintenance of computer softwareprogram.
1st Sales Division	1. Domestic sales of bar & wire. 2. Processing of quotation, execution of contracts, deliveries and collection of payment. 3. Collection and analysis of the information about market survey and quotation. 4. Customer credit investigation. 5. Processing of complaints and claims from customers. 6. Shipping, transportation and weight measurement. 7. Proposal and improvement of sales system projects. 8. Productionplan and semi-finished inventorymanagement.
2nd Sales Division	1. Procurement of raw materials domestically/overseas. 2. Procurement and sales of semi-finished goods domestically/overseas. 3. Sales of section steel, bar & wire and steel bar overseas. 4. Processing of purchase orders, deliveries and payment of goods. 5. Processing of quotation, execution of contracts, deliveries and collection of payment. 6. Collection and analysis of the information about the market quotation. 7. Customer credit investigation. 8. Processingof complaints and claims from customers.

Organizational Unit	Basic Operations
3rd Sales Division	1. Sales of section steel and steel bar domestically. 2. Processing of quotation, execution of contracts, deliveries and collection of payment. 3. Collection and analysis of the information about market survey and quotation. 4. Customer credit investigation. 5. Processing of complaints and claims from customers. 6. Review on qualification of section steel franchisees, execution of contracts, and promotion of the system. 7. Sales of iron oxide.
Warehousing Division	1. Inspection and acceptance of raw materials and supplies, and receipt and dispatch of materials, domestically/overseas. 2. Raw materials & supplies, waste and unsalable materials, factory supplies and consumables. 3. Section steel, bars, steel bars and bar in coil warehousing affairs. 4. Finished product weight measurement, stock-in/stock-out, and inventory affairs. 5. Loading, unloading and maintenance of waste iron block yard. 6. Environment, health and safety (EHS) management affairs (including environmental factors/identification of hazard, contingency policy and routine self-inspection, etc.). 7. Other warehousingaffairs.
Procurement Division	1. Procurement of factory supplies, consumables, production equipment and domestic/overseas supplies. 2. Renovation, expansion projects, price inquiry for materials, price comparison, tender solicitation, price negotiation and contracting. 3. Communications to vendors. 4. Disposal of furnace slag. 5. Any other business related to the procurement of materials and supplies.
Occupational Safety & Health Division	1. Preparation of the Company‘s annual safety and health self-inspection plan and supervision of various department‘s implementation thereof. 2. Preparation, implementation and reporting of the training plan for new employees and the general safety and health practices. 3. Gather statistics and analysis of the Company‘s annual occupational disasters. 4. Communication with environmental protection and labor inspection authorities. 5. Planning, supervision and execution of ISO 14001 environmental audit; promotion, supervision and execution of OHSAS 18001 & TOSHMS occupational safety and health management system. 6. Identification and management of environmental protection/occupational safety-related laws and regulations. 7. Reporting, supervision and inspection of affairs related to environmental protection and safety & health. 8. Health checkup, claims & complaints by residents, and sanitation inside the factory. 9. Other matters related to environmentalprotection and safety& health.
Metallurgy	1. Off-line inspection and testingof finishedgoods,semi-finishedgoods,raw

Organizational Unit	Basic Operations
R&D Division	materials and supplies, and any other products, and R&D of new products. 2. Maintenance of requirements about the Company‘s products and analysis of metallurgy of defective goods alleged in any claims. 3. Inquiry for metallurgy problems and processing customers‘ claims. 4. Process and review metallurgy information in purchase orders and reflect the trends and needs for quality of materials applied in the market. 5. Reproduce and manage the commissioned design and engineering data and design drawings of production equipment. 6. Planning, audit, supervision and execution of ISO 9001, NCA 3800 and TAF quality systems, etc.. 7. Calibration and management of measurement tools and instruments. 8. Inspection of items related to environmental protection. 9. On-site QC supervision of production line at the rolling steel. 10. Registration and control of documents on the quality, environmental protection & EHS systems throughout the Company. 11. Environment, health and safety (EHS) management affairs (including environmental factors/identification of hazard, contingency policy and routine self-inspection, etc.). 12. Other R&D affairs related to metallurgy.
Electrical Equipment Division	1. Planning, design, review, construction and specifications of electrical equipment, and maintenance, protection and operation of electrical equipment throughout the Company. 2. Selection, procurement, inspection & acceptance, use, maintenance and management of electrical equipment and tools throughout the Company. 3. Management and supervision, inspection and maintenance of electrical engineering affairs related to cranes, air compressors, and oxygen production plant throughout the Company. 4. Operation, inspection, maintenance and monitoring of electrical engineering systems in water treatment plant throughout the Company. 5. Undertaking of the energy consumption and external audit on related business, bid for required power consumption from TPC, and planned reduction of water consumption throughout the Company. 6. Management, troubleshooting and improvement of process-related equipment at various production plants. 7. Environment, health and safety (EHS) management affairs (including environmental factors/identification of hazard, contingency policy and routine self-inspection, etc.). 8. Anyother affairs related to Electrical Equipment Division.
No. 1 Steelmaking Shop	1. Preparation of standard operating procedures for steelmaking and continuous casting billet at No. 1 Steelmaking Shop, and execution and record of production operations. 2. Analysis, calculation, selection and control of raw materials and ingredients at No. 1 Steelmaking Shop. 3. Coordination and cooperation with various units about the quality and EHS management practices. 4. Environment, health and safety (EHS) management affairs (including environmental factors/identification of hazard, contingency policy and routine self-inspection, etc.). 5. Anyother affairs related to No. 1 SteelmakingShop.

Organizational Unit	Basic Operations
No. 1 Steel Rolling Mill	1. Production technology improvement, production planning, design operation and management affairs at No. 1 Steel Rolling Mill. 2. On-site QC supervision and audit of the production line at No. 1 Steel Rolling Mill. 3. Occupational safety and health, HR evaluation and construction materials estimation of No. 1 Steel Rolling Mill. 4. Coordination and cooperation with various units about the quality and EHS management practices. 5. Environment, health and safety (EHS) management affairs (including environmental factors/identification of hazard, contingency policy and routine self-inspection, etc.). 6. Anyother affairs related to No. 1 Steel RollingMill.
No. 2 Steelmaking Shop	1. Preparation, execution and record of ingredients program of No. 2 Steelmaking Shop. 2. Preparation of standard operating procedures for steelmaking and continuous casting billet at No. 2 Steelmaking Shop, and planning, execution and record of production operations. 3. Coordination and cooperation with various units about the process quality control and EHS management practices. 4. Environment, health and safety (EHS) management affairs (including environmental factors/identification of hazard, contingency policy and routine self-inspection, etc.). 5. Anyother affairs related to No. 2 SteelmakingShop.
No. 2 Steel Rolling Mill	1. Production technology improvement, preparation and execution of production planning and requirements, review on business and safety & health, HR evaluation, and construction materials estimation of No. 2 Steel Rolling Mill. 2. Preparation and execution of the standards for steel rolling process. 3. Coordination and cooperation with various units about the quality and EHS management practices. 4. Environment, health and safety (EHS) management affairs (including environmental factors/identification of hazard, contingency policy and routine self-inspection, etc.). 5. Anyother affairs related to No. 2 Steel RollingMill.
Equipment Maintenance Division	1. Planning, design, review, construction and specifications of machinery and equipment, and maintenance, protection and operation of the machinery and equipment at steelmaking shops and steel rolling mills 2. Execution of budget, policy and target for equipment at steelmaking shops and steel rolling mills. 3. Operation, maintenance & oxygen production and supply & transportation of oxygen production equipment, water treatment equipment and air compressors. 4. Environment, health and safety (EHS) management affairs (including environmental factors/identification of hazard, contingency policy and routine self-inspection, etc.). 5. Any other affairs related to maintenance of steelmaking and steel rolling equipment. 6. Transportation of furnace slag and iron oxide.

Organizational Unit	Basic Operations
	7. Maintenance and protection of motor vehicles.
Technology Division	1. Production technology improvement, upgrading of quality and construction, maintenance and control of process quality at steelmaking shops. 2. Design, selection and use analysis of fire-proof materials at steelmaking shops. 3. Supervision and support about enactment and maintenance of new product development and product specifications. 4. Improvement of product quality and coordination with related units to solve quality problems. 5. Supervision and support production technology improvement and upgrading of quality at steel rolling mills. 6. Evaluation of new process and equipment at steelmaking shops and steel rolling mills. 7. Environment, health and safety (EHS) management affairs (including environmental factors/identification of hazard, contingency policy and routine self-inspection,etc.).
No. 3 Steel Rolling Mill	1. Planning, design, record and control of production, technology and cost at No. 3 Steel Rolling Mill. 2. Planning, design, review and operation of production equipment at No. 3 Steel Rolling Mill. 3. On-site quality management, supervision and audit on the production line at No. 3 Steel Rolling Mill. 4. Coordination and cooperation with various units about the quality and EHS management practices. 5. Environment, health and safety (EHS) management affairs (including environmental factors/identification of hazard, contingency policy and routine self-inspection, etc.). 6. Anyother affairs related to No. 3 Steel RollingMill.

III. Information concerning the president, vice presidents, assistant vice presidents, and department and branch managers:

Information about directors (1)

Record Date: April 13, 2021

Job Title	Nati onali ty or Plac e of Regi strati on	Name	Gender	Date of election (appointment)	Term of office	Date when first elected Date	Shareholding when elected	Shareholding when elected	Current shareholding	Current shareholding	Shares currently held by a spouse or underage children	Shares currently held by a spouse or underage children	Shares held in the names of others	Shares held in the names of others	Major academic degree (work experience)	Concurrent positions in the Company and other companies	Spouse or relatives within the second degree of kinship or closer acting as other department heads,directors	Spouse or relatives within the second degree of kinship or closer acting as other department heads,directors	Spouse or relatives within the second degree of kinship or closer acting as other department heads,directors	Remark s
							Quantity of shares	Shareh olding	Quantity of shares	Sharehold ing	Quantity of shares	Shareholding	Quantity of shares	Sharehol ding			Job Title	Name	Relation ship
Chairman of Board	the R.O. C.	Lin Ming-Ju	Male	June 8, 2018	3 years	April 30, 1994	12,668,159	2.18%	12,825,159	2.21%	11,394,882	1.96%	0	0%	Graduated from Department of Business Administration, Tamsui Institute of Business Administration President of Feng Hsin Steel Co., Ltd. Chairman of Taiwan Steel & Iron Industries Association	CEO of Feng Hsin Steel Co., Ltd. Chairman of Board of Taiwan Steel Union Co., Ltd. Supervisor of Ta Chia Iron & Steel Co., Ltd. Chairman of Board of Fengyu Resource Co., Ltd. Vice Chairman of the Chinese National Federation of Industries	Director	Lin Ta-Chun	Father and son	Note
Director	the R.O. C.	Chen Mu-Tse	Male	June 8, 2018	3 years	May 19, 1997	2,723,543	0.47%	2,723,543	0.47%	2,182,107	0.38%	0	0%	Graduated from Department of Mining and Metallurgy, National Taipei Institute of Technology Graduated from National Open University President of Feng Hsin Steel Co., Ltd. Director of SINO-PROSPERITY IRON & STEEL CO., LTD.		N/A
Director	the R.O. C.	Lai San-Ping	Male	June 8, 2018	3 years	April 30, 1994	13,202,006	2.27%	12,702,006	2.18%	3,327,274	0.57%	0	0%	Graduated from Department of Chemical Engineering, Chung Yuan Christian University Procurement Manager of Feng Hsin Steel Co.,Ltd.	Vice President of Feng Hsin Steel Co., Ltd. Director of Gwo Huei Iron & Steel Co., Ltd. Director of Gwo Uei Metals Industry Co., Ltd.	N/A
Director	the R.O. C.	Lin Chiu-Hu ang	Male	June 8, 2018	3 years	May 19, 1991	7,526,000	1.29%	5,526,000	0.95%	10,294,000	1.77%	2,000,000	0.34%	Graduated from Taichung Municipal Feng Yuan Commercial High School	Chairman of Lumber Products Co., Ltd. Supervisor of Gwo Huei Iron & Steel Co., Ltd. Supervisor of Gwo Uei Metals IndustryCo.,Ltd.	N/A
Director	the R.O. C.	Lin Wen-Fu	Male	June 8, 2018	3 years	May 30, 2003	7,058,871	1.21%	5,388,871	0.93%	259,236	0.04%	0	0%	Undergraduate, Feng Chia University	Chairman of Board of Lih Dar Steel Co., Ltd. Director of Ta Chia Iron & Steel Co., Ltd.	N/A

Job Title	Nati onali ty or Plac e of Regi strati on	Name	Gender	Date of election (appointment)	Term of office	Date when first elected Date	Shareholding when elected	Shareholding when elected	Current shareholding	Current shareholding	Shares currently held by a spouse or underage children	Shares currently held by a spouse or underage children	Shares held in the names of others	Shares held in the names of others	Major academic degree (work experience)	Concurrent positions in the Company and other companies	Spouse or relatives within the second degree of kinship or closer acting as other department heads,directors	Spouse or relatives within the second degree of kinship or closer acting as other department heads,directors	Spouse or relatives within the second degree of kinship or closer acting as other department heads,directors	Remark s
							Quantity of shares	Shareh olding	Quantity of shares	Sharehold ing	Quantity of shares	Shareholding	Quantity of shares	Sharehol ding			Job Title	Name	Relation ship
Director	the R.O. C.	Lin Kun-Tan	Male	June 8, 2018	3 years	May 19, 1991	8,160,782	1.40%	8,160,782	1.40%	554,459	0.10%	0	0%	Graduated from Department of Money and Finance, National Chengchi University	Chairman of Board of Gwo Huei Iron & Steel Co., Ltd. Chairman of Board of Gwo Uei Metals Industry Co., Ltd.	N/A
Director	the R.O. C.	Chung Chao-Ch uan	Male	June 8, 2018	3 years	June 17, 2015	11,587,530	1.99%	11,587,530	1.99%	1,304,168	0.22%	0	0%	Graduated from Department of Accounting, Overseas Chinese University	Chairman of Board of Rong Cyuan Co., Ltd. Chairman of Board of Quan Tai Xing Steel Materials Co., Ltd. Director of Gwo Uei Metals Industry Co., Ltd. Director of Gwo Huei Iron & Steel Co.,Ltd.	N/A
Director	the R.O. C.	Lin Ta-Chun	Male	June 8, 2018	3 years	June 17, 2015	11,169,881	1.92%	7,168,881	1.23%	12,874,840	2.21%	5,000,000	0.86%	Master, Boston University Vice President of Feng Hsin Steel Co., Ltd.	President of Feng Hsin Steel Co., Ltd. Supervisor of Lih Dar Steel Co., Ltd. Supervisor of Fengyu Resource Co.,Ltd.	Chairma n of Board	Lin Ming-Ju	Father and son	Note
Director	the R.O. C.	Lin Chi-Jui	Male	June 8, 2018	3 years	June 8, 2018	3,768,292	0.65%	3,768,292	0.65%	0	0%	0	0%	Graduated from the Department of Business Finance and Accounting, Bently University Manager of 2nd Sales Division, Feng Hsin Steel Co.,Ltd.	Vice President of Feng Hsin Steel Co., Ltd.	N/A
Director	the R.O. C.	Yang Tsung-Ju	Male	June 8, 2018	3 years	June 8, 2018	5,597,708	0.96%	5,597,708	0.96%	0	0%	180,000	0.03%	PhD, Graduate Institute of Physics, National Tsing Hua University SINO-PROSPERITY IRON & STEEL CO., LTD.	Chairman of Board of Fengyuan Development Co., Ltd.	N/A
Independe nt Director	the R.O. C.	Liao Liao- Yu	Male	June 8, 2018	3 years	June 17, 2015	0	0%	0	0%	0	0%	0	0%	Graduated from Feng Chia University Taichung County Magistrate Minister, Ministry of the Interior Secretary-General to the President	Independent director of China Metal Products Co., Ltd.	N/A

Job Title	Nati onali ty or Plac e of Regi strati on	Name	Gender	Date of election (appointment)	Term of office	Date when first elected Date	Shareholding when elected	Shareholding when elected	Current shareholding	Current shareholding	Shares currently held by a spouse or underage children	Shares currently held by a spouse or underage children	Shares held in the names of others	Shares held in the names of others	Major academic degree (work experience)	Concurrent positions in the Company and other companies	Spouse or relatives within the second degree of kinship or closer acting as other department heads,directors	Spouse or relatives within the second degree of kinship or closer acting as other department heads,directors	Spouse or relatives within the second degree of kinship or closer acting as other department heads,directors
							Quantity of shares	Shareh olding	Quantity of shares	Sharehold ing	Quantity of shares	Shareholding	Quantity of shares	Sharehol ding			Job Title	Name	Relation ship
Independe nt Director	the R.O. C.	Yue Chao-Ta ng	Male	June 8, 2018	3 years	June 17, 2015	0	0%	0	0%	0	0%	0	0%	Master, Graduate Institute of Accounting, National Chengchi University CPA of the R.O.C. Chairman of Board/President of Ernst & Young, Taiwan Director of Tianye Consulting Co., Ltd. Adjunct Professor of National Chung Cheng University Independent director of O-Bank	Independent director of Uni-President Enterprises Corporation Independent director of Johnson Health Tech	N/A
Independe nt Director	the R.O. C.	Wang Yea -Kang	Male	June 8, 2018	3 years	June 8, 2018	0	0%	0	0%	0	0%	0	0%	Master, Graduate Institute of Urban Planning, National Chung Hsing University Chairman of Board of Taiwan Textile Research Institute Director-General, Industrial Development Bureau, Ministry of Economic Affairs Director-General, Small and Medium Enterprise Administration, Ministry of Economic Affairs Director-General, Department of Commerce, Ministry of Economic Affairs Secretary-General of Chinese National Federation of Industries	Advisor of Taiwan Textile Research Institute Independent director of Eclat Textile Co., Ltd. Independent director of Wah Lee Industrial Corp. Independent director of Wisher Industrial Co., Ltd.	N/A

Note: The Chairman and President are relatives within 1st degree of kinship with each other. Both of them adhere to the Company founder‘s core management philosophy for ―Ethical Management and Stable Creation‖ and always identify the corporate sustainability as the first priority. They take the long view and value the sustainable relations with various stakeholders. When training the candidates for president, the Company always demand that they should be able to manage business, act professionally and work in shift as a manager. The training is indifferent from that conducted for the general management.

1-1. Major Shareholders of Corporate Shareholders

Record Date: April 13, 2021 Name of Corporate Shareholder Major Shareholder of Corporate Shareholder N/A N/A

1-2. Major shareholders of the major shareholder who is a juristic person

Record Date: April 13, 2021 Name of Juristic Person Major Shareholder of the Juristic Person N/A N/A

2. Information about directors (2)

Record Date: April 13, 2021

				Record Date: April 13,2021	Record Date: April 13,2021	Record Date: April 13,2021	Record Date: April 13,2021	Record Date: April 13,2021	Record Date: April 13,2021	Record Date: April 13,2021	Record Date: April 13,2021	Record Date: April 13,2021	Record Date: April 13,2021	Record Date: April 13,2021	Record Date: April 13,2021
Qualifications Name (Note 1)	Has at least five years of relevant working experience and the following professional qualifications			Compliance of independence (Note 2)												Number of other public listed compani es in which he/she hold the position as an Indepen dent Director
	Lecturer (or above) of commerce, law, finance, accounting, or any subject relevant to the Company‘s operations in a public or private college/university	A judge, public prosecutor, attorney-at-law, certified public accountant, or other professional or technical specialists who have passed a national examination and been awarded a certificate in a profession necessary for the business of the Company	Commercial, legal, financial, accounting or other work experience required for the Company‘s operations	1	2	3	4	5	6	7	8	9	10	11	12
Lin Ming-Ju																0
Chen Mu-Tse																0
Lai San-Ping																0
Lin Chiu-Huang																0
Lin Wen-Fu																0
Lin Kun-Tan																0
Chung Chao-Chuan																0
Lin Ta-Chun																0
Lin Chi-Jui																0
Yang Tsung-Ju																0
Liao Liao-Yu																1
Yue Chao-Tang																2
Wang Yea-Kang																3

Note 1: The number of spaces shall be adjusted subject to the actual circumstances.

Note 2: A ―  ‖ is marked in the space beneath a condition number when a director has met that condition during the two (2) years prior to election and during his or her period of service. The conditions are as follows:
(1) Not an employee of the Company or any of its affiliates.
(2) Not a director or supervisor of the Company or its affiliates (unless the person is an independent director appointed by the Company and its parent company or subsidiaries, or subsidiaries subordinated to the same parent company pursuant to the Securities and Exchange Act (the ―Act‖) or the local laws and regulations).
(3) Not a natural-person shareholder who holds shares, together with those held by the person‘s spouse, minor children, or held by the person under others‘ names, in an aggregate amount of 1% or more of the total number of outstanding shares of the Company or ranking in the top 10 in holdings.
(4) Not a spouse, relative within the second degree of kinship, or lineal relative within the fifth degree of kinship, of the managers in subparagraph (1) or any of the persons in subparagraph s (2) & (3).
(5) Not a director, supervisor, or employee of a corporate shareholder that directly holds five percent or more of the total number of issued shares of the Company, or of a corporate shareholder that ranks among the top five in shareholdings, or of a corporate shareholder that designates its representative to act as the director or supervisor of the Company under Paragraph 1 or Paragraph 2 of Article 27 of the Company Act (unless the person is an independent director appointed by the Company and its parent company or subsidiaries, or subsidiaries subordinated to the same parent company pursuant to the Act or the local laws and regulations) .
(6) Not a director, supervisor or employee of a company of which the director seats or a majority of voting shares and those of the Company are controlled by the same person (unless the person is an independent director appointed by the Company and its parent company or subsidiaries, or subsidiaries subordinated to the same parent company pursuant to the Act or the local laws and regulations).

(7) Not a director, supervisor or employee of a company or institution that is the same person or spouse of the Company's Chairman, President or equivalents (unless the person is an independent director appointed by the Company and its parent company or subsidiaries, or subsidiaries subordinated to the same parent company pursuant to the Act or the local laws and regulations).
(8) Not a director, supervisor, manager or shareholder holding more than 5% of the outstanding shares of a specific company or institution in a business or financial relationship with the Company (unless the specific or institution holds more than 20% but less than 50% of the total number of issued shares of the Company, and the person is an independent director appointed by the Company and its parent company or subsidiaries, or subsidiaries subordinated to the same parent company pursuant to the Act or the local laws and regulations).
(9) Not a professional individual who, or an owner, partner, director, supervisor, managerial officer of a sole proprietorship, partnership, company, or institution that, provides audit services, or the commercial, legal, financial or accounting services, which have earned no more than NT$500,000 cumulatively for the most recent two years, to the Company or any affiliate of the Company, or the spouse thereof. Notwithstanding, this shall not apply to the members of the Remuneration Committee, Public Tender Offers Review Committee or Special Committee under Taiwan Business Mergers and Acquisitions Act, who perform duty pursuant to the Securities and Exchange Act or Business Mergers and Acquisitions Act.
(10) Not having a marital relationship, or a relative within the second degree of kinship to any other director of the Company.
(11) Not been a person satisfying any conditions defined in Article 30 of the Company Law.
(12) Has not been elected as a government unit, institution, or their representative as prescribed in Article 27 of the Company Act.

III. Information concerning the president, vice presidents, assistant vice presidents, and department and branch managers:

Record Date: April 13, 2021

Job Title (Note 1)	Nationality	Name	Gend er	Date of election (appointment)	Shareholding when elected	Shareholding when elected	Shares held by a spouse or underage children	Shares held by a spouse or underage children	Shares held in the names of others	Shares held in the names of others	Major academic degree (work experience) (Note 2)	Concurrent positions in other companies	Spouse or relatives within the second degree of kinship or closer acting as managers	Spouse or relatives within the second degree of kinship or closer acting as managers	Spouse or relatives within the second degree of kinship or closer acting as managers	Remark s
					Quantity of shares	Sharehold ing	Quantity of shares	Sharehold ing	Quantity of shares	Sharehold ing			Job Title	Name	Relations hip
CEO	the R.O.C.	Lin Ming-Ju	Male	January 1, 2009	12,825,159	2.21%	11,394,882	1.96%	0	0%	Graduated from Department of Business Administration, Tamsui Institute of Business Administration President of Feng Hsin Steel Co., Ltd. Chairman of Taiwan Steel & Iron Industries Association	CEO of Feng Hsin Steel Co., Ltd. Chairman of Board of Taiwan Steel Union Co., Ltd. Supervisor of Ta Chia Iron & Steel Co., Ltd. Chairman of Board of Fengyu Resource Co., Ltd. Vice Chairman of the Chinese National Federation of Industries	President	Lin Ta-Chun	Father and son	Note 3
President	the R.O.C.	Lin Ta-Chun	Male	June 1, 2018	7,168,881	1.23%	12,874,840	2.21%	5,000,000	0.86%	Master, Boston University Vice President of Feng Hsin Steel Co., Ltd.	President of Feng Hsin Steel Co., Ltd. Supervisor of Lih Dar Steel Co., Ltd. Supervisor of Fengyu Resource Co., Ltd.	CEO	Lin Ming-Ju	Father and son	Note 3
Vice President, Sales Department	the R.O.C.	Lin Chi-Jui	Male	June 1, 2018	3,768,292	0.65%	0	0%	0	0%	Graduated from the Department of Business Finance and Accounting, Bentley University Manager of 2nd Sales Division, Feng Hsin Steel Co.,Ltd.	Vice President of Feng Hsin Steel Co., Ltd.	N/A
Vice President, Procurement Department	the R.O.C.	Lai San-Ping	Male	June 1, 2000	12,702,006	2.18%	3,327,274	0.57%	0	0%	Graduated from Department of Chemical Engineering, Chung Yuan Christian University Manager of Procurement Division, Feng Hsin Steel Co.,Ltd.	Vice President of Feng Hsin Steel Co., Ltd. Director of Gwo Huei Iron & Steel Co., Ltd. Director of Gwo Uei Metals Industry Co., Ltd.	N/A
Assistant Vice President, Sales Department	the R.O.C.	Chen Lian-Hsin	Male	January 10, 2007	0	0%	0	0%	0	0%	Graduated from Department of Industrial Engineering and Enterprise Information, Tunghai University	N/A	N/A
Assistant Vice President of No. 1 Steel Rolling Mill	the R.O.C.	Tsai Chao-Kuang	Male	January 1, 2008	0	0%	0	0%	0	0%	Graduated from Department of Mechanical Engineering, National United University	N/A	N/A
Assistant Vice President, Administration Department	the R.O.C.	Cheng Der-Yih	Male	March 1, 2018	0	0%	0	0%	0	0%	Graduated from Department of International Business, National Chengchi University MBA, The City University of New York CPA of the USA CPA of the R.O.C.	Director of Wen Shan Resort Corporation	N/A

Note 1: It shall include the information concerning the president, vice presidents, assistant vice presidents, and department and branch managers. Meanwhile, the information for all persons holding a position equivalent to president, vice president, or assistant vice president must be disclosed, regardless of job title.

Note 2: The work experience of anyone above relating to their current roles, e.g. previous employment in the auditor‘s firm or employment in a related company, must be addressed with detailed job titles and responsibilities.

Note 3: The Chairman and President are relatives within 1st degree of kinship with each other. Both of them adhere to the Company founder‘s core management philosophy for ―Ethical Management and Stable Creation‖ and always identify corporate sustainability as the first priority. They take the long view and value sustainable relations with various stakeholders. When training the candidates for president, the Company always demand that they should be able to manage business, act professionally and work in shift as a manager. The training is indifferent from that conducted for the general management.

4. Remuneration to Directors, President, and Vice Presidents

4-1. Remuneration to General Directors and Independent Directors

Unit: NT$ thousand

Job Title	Name				Remuneratio	n to Directors	n to Directors			Sum of A D as a pe net i	, B, C, and rcentage of ncome		Rem	uneration fr	om concurrentlyservings as employees	om concurrentlyservings as employees	om concurrentlyservings as employees	om concurrentlyservings as employees	om concurrentlyservings as employees	Sum of A, F, and percent inc	B, C, D, E, G as a age of net ome	Remuneration from investees other than subsidiaries, or parent company
		Remune	ration (A)	Pensio retirem	n upon ent (B)	Compensation to directors (C)		Professio expen	nal practice ses (D)			Wages, b special a etc	onuses, and llowances, .(E)	Pensio retire	n upon ment (F)	Remuneration		to employees (G)
		The Company	Companies included in the financial statement	The Company	Companies included in the financial statement	The Company	Companies included in the financial statement	The Company	Companies included in the financial statement	The Company	Companies included in the financial statement	The Company	Companies included in the financial statement	The Company	Companies included in the financial statement	The Company		Companies included in the financial statement		The Company	Companies included in the financial statement
																Cash	Stock	Cash	Stock
Chairman of Board	Lin Ming-Ju	0	0	0	0	45,000	45,000	2,400	2,400	1.81%	1.81%	8,884	8,884	0	0	31,585	0	31,585	0	3.35%	3.35%	Yes 5,266
Director	Lin Chiu-Hua ng
	Chen Mu-Tse
	Lin Wen-Fu
	Lai San-Ping
	Lin Kun-Tan
	Chung Chao-Chu an
	Lin Ta-Chun
	Yang Tsung-Ju
	Lin Chi-Jui
Indepen dent Director	Yue Chao-Tan g	3,600	3,600	0	0	0	0	90	90	0.14%	0.14%	0	0	0	0	0	0	0	0	0.14%	0.14%	NA
	Liao Liao-Yu
	Wang Yea-Kang

Please state the remuneration policies, systems, standards and packages about independent directors, and the connection of the factors, such as responsibilities, risk and spent hours, with the

amount of remuneration: The Company determines the remuneration to independent directors based on the level of pay prevailing in the same trade.

Other than the remuneration disclosed in said table, the remuneration received by any of the Company‘s directors for providing services to any companies included in the financial statement,

e.g., as an advisor other than an employee in the most recent year: N/A.

Range of Remuneration

Range of Remuneration
Range of Remuneration to Each Director of the Company			Name of Director
	Sum of the first four items (A+B+C+D)		Sum of the first seven items (A+B+C+D+E+F+G)
	The Company	Companies included into the financial statement H	The Company	Companies included into the financial statement I
Less than 1,000,000
1,000,000 (inclusive)~2,000,000 (exclusive)	Yue Chao-Tang Liao Liao-Yu Wang Yea-Kang	Yue Chao-Tang Liao Liao-Yu Wang Yea-Kang	Yue Chao-Tang Liao Liao-Yu Wang Yea-Kang	Yue Chao-Tang Liao Liao-Yu Wang Yea-Kang
2,000,000(inclusive)~3,500,000(exclusive)
3,500,000 (inclusive)~5,000,000 (exclusive)	Lin Ming-Ju, Lin Chiu-Huang Chen Mu-Tse, Lin Wen-Fu Lai San-Ping, Lin Kun-Tan Chung Chao-Chuan, Lin Ta-Chun Yang Tsung-Ju, Lin Chi-Jui	Lin Ming-Ju, Lin Chiu-Huang Chen Mu-Tse, Lin Wen-Fu Lai San-Ping, Lin Kun-Tan Chung Chao-Chuan, Lin Ta-Chun Yang Tsung-Ju, Lin Chi-Jui	Lin Chiu-Huang, Chen Mu-Tse Lin Wen-Fu, Lin Kun-Tan Chung Chao-Chuan, Yang Tsung-Ju	Lin Chiu-Huang, Chen Mu-Tse Lin Wen-Fu, Lin Kun-Tan Chung Chao-Chuan, Yang Tsung-Ju
5,000,000(inclusive)~10,000,000(exclusive)
10,000,000(inclusive)~15,000,000(exclusive)			Lai San-Ping, Lin Chi-Jui	Lai San-Ping, Lin Chi-Jui
15,000,000(inclusive)~30,000,000(exclusive)			Lin Ta-Chun, Lin Ming-Ju	Lin Ta-Chun, Lin Ming-Ju
30,000,000(inclusive)~50,000,000(exclusive)
50,000,000(inclusive)~100,000,000(exclusive)
More than 100,000,000
Total	13 persons	13 persons	13 persons	13 persons

4-2. Remuneration to President and Vice Presidents

Unit: NT$ thousand

Job Title Name	Wages (A) The Company Companies included in the financial statement	Wages (A) The Company Companies included in the financial statement	Pension upon retirement (B) The Company Companies included in the financial statement	Pension upon retirement (B) The Company Companies included in the financial statement	Bonuses and special allowances, etc. (C) The Company Companies ~~i~~ncluded in the financial statement	Bonuses and special allowances, etc. (C) The Company Companies ~~i~~ncluded in the financial statement	Remuneration The Company Cash Stock	Remuneration The Company Cash Stock	to employees (D) Companies included in the financial statement Cash Stock	to employees (D) Companies included in the financial statement Cash Stock	Sum of A, B, C, and D as a percentage of net income (%) The Company Companies included in the financial statement	Remuneration from investees other than subsidiaries, or parent company
CEO Lin Ming-Ju
President Lin Ta-Chun
Vice President, Sales Department Lin Chi-Jui	6,037	6,037	0	0	2,847	2,847	31,585	0	31,585	0	1.54% 1.54%	Yes 3,232
Vice President, Procurement Department Lai San-Ping
Range of Remuneration

ice President, rocurement epartment Lai San-Ping Range of Remuneration
		Names of President and Vice President
Range of Remuneration to Each President and Vice President of the Company
	The Company		Companies included into the financial statementE
Less than 1,000,000
1,000,000 (inclusive)~2,000,000 (exclusive)
2,000,000 (inclusive)~3,500,000 (exclusive)
3,500,000 (inclusive)~5,000,000 (exclusive)
5,000,000 (inclusive)~10,000,000 (exclusive)	Lai San-Ping, Lin Chi-Jui		Lai San-Ping, Lin Chi-Jui
10,000,000 (inclusive)~15,000,000 (exclusive)	Lin Ta-Chun		Lin Ta-Chun
15,000,000 (inclusive)~30,000,000 (exclusive)	Lin Ming-Ju		Lin Ming-Ju
30,000,000 (inclusive)~50,000,000 (exclusive)
50,000,000 (inclusive)~100,000,000 (exclusive)
More than 100,000,000
Total	4 persons		4 persons

5. Name of the manager receiving remuneration to employee, and state of distribution

Unit: NT$ thousand

	Job Title	Name	Stock	Cash	Total	The sum as a percentage of net income (%)
Manager	CEO	Lin Ming-Ju	0	45,304	45,304	1.73%
	President	Lin Ta-Chun
	Vice President, SalesDepartment	Lin Chi-Jui
	Vice President, Procurement Department	Lai San-Ping
	Assistant Vice President of No. 1 Steel Rolling Mill	Tsai Chao-Kuang
	Assistant Vice President, Sales Department	Chen Lian-Hsin
	Assistant Vice President, Administration Department	Cheng Der-Yih
	Manager of FinanceDivision	Huang Kuei-Yu
	Manager of Audit Office	Cho Hsiu-Ying

Analyze the remuneration paid by the Company to the Company's directors, presidents and vice presidents in the most recent two years as a percentage of the net income, and state the remuneration policies, standards and packages, and the procedures for determining remuneration and its connection with business performance and future risk exposure:

(1) The remuneration paid by the Company to the Company's directors, CEO, presidents and vice presidents in the most recent two years as a percentage of the net income:

		Unit: NT$thousand 2019 82,606 4.21%
Year	2020	2019
Total of remuneration to directors, CEO, presidents and vice presidents (A)	91,906	82,606
A/Net income (%)	3.51%	4.21%

(2) The remuneration policies, standards and packages, and the procedures for determining remuneration and its connection with business performance and future risk exposure: A. The remuneration policies, standards and packages

The Company determines the remuneration to directors based on the typical pay levels adopted by peer companies and upon review and approval of the Remuneration Committee. The independent directors receive fixed remuneration on a monthly basis and recuse themselves from distribution of earnings. Meanwhile, Remuneration Committee will review the remuneration policies, systems, standards and packages for directors and managers periodically, and submitted all of its proposals to the Board of Directors for discussion.

B. The procedures for determining remuneration and its connection with business performance and future risk exposure

For the remuneration to directors, according to Article 27 of the Company‘s Articles of Incorporation, if the Company retains earnings at the end of any fiscal year, it shall contribute no more than 2% thereof as the remuneration to directors. The procedure for determining remuneration takes into account the typical pay levels adopted by peer companies, the Company‘s business performance and reasonableness of the correlation with future risk exposure. It is also in reference to the director‘s performance evaluation. The reasonableness of related wages will always be subject to the approval of the Remuneration Committee and Board of Directors. Meanwhile, the Remuneration Committee will keep reviewing the remuneration system in a timely manner, subject to the overview of business and related laws, in order to seek the balance between corporate sustainability and risk control.

The procedure for determining remuneration to the Company‘s managers takes into account the typical pay levels adopted by peer companies. The company has a special bonus, and the chairman and general manager refer to the results of each unit's goal and financial indicators. It is also in reference to the annual performance evaluation results.

IV. Corporate Governance Operations
Operation of the Board of Directors

The Board held 7 (A) meetings during the most recent year (2020). The attendance of directors is summarized as follows:

Job Title	Name (Note 1)	Actual attendance B	Actual attendance rate (%) (B/A) (Note 2)
Chairman of Board	Lin Ming-Ju	7	100%
Director	Chen Mu-Tse	7	100%
Director	Lai San-Ping	7	100%
Director	Lin Wen-Fu	5	71.4%

Director	Lin Chiu-Huang	7	0	100%
Director	Lin Kun-Tan	7	0	100%
Director	ChungChao-Chuan	7	0	100%
Director	Lin Ta-Chun	7	0	100%
Director	Lin Chi-Jui	7	0	100%
Director	Yang Tsung-Ju	7	0	100%
Independent Director	Liao Liao-Yu	7	0	100%
Independent Director	Yue Chao-Tang	5	1	71.4%
Independent Director	Wang Yea-Kang	6	0	85.7%

Attendance of directors at various Board of Directors meetings in 2020	Attendance of directors at various Board of Directors meetings in 2020	Attendance of directors at various Board of Directors meetings in 2020	Attendance of directors at various Board of Directors meetings in 2020
			: Inperson ◎: By proxy X: Absent
			2020 11th meeting of 21st term 12th meeting of 21st term 13th meeting of 21st term 14th meeting of 21st term 15th meeting of 21st term	16th meeting of 21st term 17th meeting of 21st term
		Liao Liao-Yu     			
		Yue Chao-Tang ◎   X 			
			Wang Yea-Kang    X 		
Other items to be stated:
I.	Where the operation of the Board of Directors meets any of the following
	circumstances, the minutes concerned shall clearly state the			meeting date,		term,
	contents of motions, opinions of all independent directors,			and the Company‘s
	resolution of said opinions:
	(1)		Resolutions passed in accordance with Article 14-3 of the Securities and Exchange
	Act.
	(2)		Aside from said circumstances, any other resolution(s) passed	but with independent
	directors voicing opposing or qualified opinions on the record or in writing:
			1. January15,2020(11th meetingof 21st term)Board of Directors
			Motion and follow-up The	Independent
			circumstances	directors
			referred to in	voicing
			Article 14-3 of	opposing or
			the Securities and	qualified
			Exchange Act	opinions
			1. A motion for the amendments to the Company‘s
			―Procedures for Ethical Management and Guidelines 
			forConduct‖ was submitted for discussion.
			2. Resolved by 4th meeting of 4th term Remuneration Committee. 
			Independent director‘s opinion: N/A.
			TheCompany‘s resolution of the independent director‘s opinion: N/A.
			Resolution: Motion 1 was passed by the directors unanimously. Motion	2 was passed by
			the directors unanimously, except the directors who recused themselves from the
			discussion to avoid conflict of interest.
			In instances where a director recused himself/herself due to a conflict of interest:
			(1) Name of directors: Lin Ming-Ju, Lai San-Ping, Lin Ta-Chun, Lin Chi-Jui
			(2) Contents of the motion: Resolved by 4th meeting of 4th term Remuneration Committee.
			(3) Cause of recusal, and actual voting counts: Said directors also served as the Company‘s
			managers concurrently and, therefore, were the interested parties for the remuneration
			policy and review on remuneration to managers. For this reason, they recused themselves
			from the voting.
			2. February25,2020(12th meetingof 21st term)Board of Directors
			Motion and follow-up The circumstances referred to in Article 14-3 of the Securities and Exchange Act	Independent directors voicing opposing or qualified opinions
			1. Appointment of EY Taiwan to audit and certify the financial statements 2020, and professional fees 

charged byit.
2. Submission of the ―2019 Declaration of Statement for InternalControls.‖	
3. A motion for the amendments to the ―Regulations Governing Ordinary Accounting Affairs‖ was submitted for discussion.	
4. A motion for the amendments to the ―Official Seal Management Regulations‖ was submitted for discussion.	
5. A motion for the amendments to the ―Operating Procedure for Acquisition or Disposal of Assets‖ was submitted for discussion.	
6. A motion for the amendments to FA-00 (General Provisions) in Title 10. Financial Management Handbook of the Company‘s regulations was submitted for discussion.	
7. A motion for the amendments to relevant requirements about the level of authority vested in Chairman/CEO & President referred to in the Company‘s regulations was submitted for discussion.	
Independent director‘s opinion: N/A.
TheCompany‘s resolution of the independent director‘s opinion: N/A.
Resolution: Said motions werepassed bythe directors unanimously.
Motion and follow-up	The circumstances referred to in Article 14-3 of the Securities and Exchange Act	Independent directors voicing opposing or qualified opinions
1. A motion for proposed execution of the ―Sale and Purchase Agreement for Difference in Air Pollutant Emission Reduction Credits‖ with Fengyu Resource Co.,Ltd. was submitted for discussion.	
2. Resolved by 5th meeting of 4th term Remuneration Committee.	
3. A motion for the amendments to the ―Parliamentary Rules for Shareholders‘ Meetings‖ was submitted for discussion.	
4. A motion for the amendments to the ―Regulations Governing Application of International Accounting Standards(IAS)‖ was submitted for discussion.	
5. A motion for the amendments to the ―Parliamentary Rules for Board Meetings‖ was submitted for discussion.	
6. A motion for the amendments to the ―Audit Committee‘s Organizational Regulations‖ was submitted for discussion.	
7. A motion for the amendments to the ―Remuneration Committee‘s Articles of Association‖ was submitted for discussion.	
Independent director‘s opinion: N/A.
TheCompany‘s resolution of the independent director‘s opinion: N/A.
Resolution: Motion 1 and Motion 2 were passed by the directors unanimously, except the directors who recused themselves from the discussion to avoid conflict of interest. Motions 3~7 werepassed bythe directors unanimously.
In instances where a director recused himself/herself due to a conflict of interest: Motion 1

(1) Name of directors: Lin Ming-Ju, Lin Chiu-Huang, Lin Kun-Tai, Lai San-Ping, Chung Chao-Chuan, Lin Ta-Chun (2) Contents of the motion: A motion for proposed execution of the ―Sale and Purchase Agreement for Difference in Air Pollutant Emission Reduction Credits‖ with Fengyu Resource Co., Ltd. was submitted for discussion. (3) Cause of recusal, and actual voting counts: Said directors were the concerned parties and, therefore, recused themselves from the voting. Motion 2 (1) Name of director: Lin Ming-Ju (2) Contents of the motion: Resolved by 5th meeting of 4th term Remuneration Committee. (3) Cause of recusal, and actual voting counts: Said director served as the representative of the corporate director, namely Taiwan Steel Union Co., Ltd., and was identified as the concerned party in the review on distribution of remuneration. Therefore, he recused himself from the discussion and voting.	(1) Name of directors: Lin Ming-Ju, Lin Chiu-Huang, Lin Kun-Tai, Lai San-Ping, Chung Chao-Chuan, Lin Ta-Chun (2) Contents of the motion: A motion for proposed execution of the ―Sale and Purchase Agreement for Difference in Air Pollutant Emission Reduction Credits‖ with Fengyu Resource Co., Ltd. was submitted for discussion. (3) Cause of recusal, and actual voting counts: Said directors were the concerned parties and, therefore, recused themselves from the voting. Motion 2 (1) Name of director: Lin Ming-Ju (2) Contents of the motion: Resolved by 5th meeting of 4th term Remuneration Committee. (3) Cause of recusal, and actual voting counts: Said director served as the representative of the corporate director, namely Taiwan Steel Union Co., Ltd., and was identified as the concerned party in the review on distribution of remuneration. Therefore, he recused himself from the discussion and voting.	(1) Name of directors: Lin Ming-Ju, Lin Chiu-Huang, Lin Kun-Tai, Lai San-Ping, Chung Chao-Chuan, Lin Ta-Chun (2) Contents of the motion: A motion for proposed execution of the ―Sale and Purchase Agreement for Difference in Air Pollutant Emission Reduction Credits‖ with Fengyu Resource Co., Ltd. was submitted for discussion. (3) Cause of recusal, and actual voting counts: Said directors were the concerned parties and, therefore, recused themselves from the voting. Motion 2 (1) Name of director: Lin Ming-Ju (2) Contents of the motion: Resolved by 5th meeting of 4th term Remuneration Committee. (3) Cause of recusal, and actual voting counts: Said director served as the representative of the corporate director, namely Taiwan Steel Union Co., Ltd., and was identified as the concerned party in the review on distribution of remuneration. Therefore, he recused himself from the discussion and voting.
4. July31,2020(15th meetingof 21st term)Board of Directors
Motion and follow-up	The circumstances referred to in Article 14-3 of the Securities and Exchange Act	Independent directors voicing opposing or qualified opinions
1. Resolved by 6th meeting of 4th term Remuneration Committee.	
2. A motion for the amendments to ―Professional Accounting Judgment Procedure, Accounting Policy and Regulations Governing Procedure for Changes in AccountingEstimates‖ was submitted for discussion.	
3. A motion for the amendments to the contents of the ―Regulations Governing Borrowing of Long-Term and Short-Term Loans‖ and change of the name into the ―Regulations Governing Borrowing of Loans‖ was submitted for discussion.	
4. A motion for the amendments to the ―Rules Governing Financial and Business Matters Between the Company and its Affiliated Enterprises‖ was submitted for discussion.	
5. A motion for the amendments to the ―Investment Management Regulations‖ was submitted for discussion.	
6. A motion for the amendments to the ―Regulations Governing Management of Budget Preparation‖ was submitted for discussion.	
7. A motion for the amendments to the ―Regulations Governing Supervision of Subsidiaries‖ was submitted for discussion.	
8. A motion for the amendments to the ―Parliamentary Rules for Board Meetings‖ was submitted for discussion.	
9. A motion for the amendments to the ―Regulations Governing Performance Evaluation on Board of Directors‖ was submitted for discussion.	
10. A motion for the amendments to the ―Regulations Governing the Scope of Power of Independent Directors‖ was submitted for discussion.	
11. A motion for the amendments to the ―Remuneration Committee‘s Articles of Association‖ was submitted for discussion.	

==> picture [459 x 734] intentionally omitted <==

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

12. A motion for the amendments to the
―Parliamentary Rules for Shareholders‘ Meetings‖ 
was submitted for discussion.
13. A motion for the amendments to the ―Regulations
Governing Shareholders Service‖ was submitted for 
discussion.
Independent director‘s opinion: N/A.
The Company‘s resolution of the independent director‘s opinion: N/A.
Resolution: Said motions were passed by the directors unanimously.
5. August 31, 2020 (16th meeting of 21st term) Board of Directors
Motion and follow-up The Independent
circumstances directors
referred to in voicing
Article 14-3 of opposing or
the Securities and qualified
Exchange Act opinions
1. A motion for investment in Farglory U-TOWN 
property was submitted for discussion.
Independent director‘s opinion: N/A.
The Company‘s resolution of the independent director‘s opinion: N/A.
Resolution: Said motions were passed by the directors unanimously.
6. October 30, 2020 (17th meeting of 21st term) Board of Directors
Motion and follow-up The
Independent
circumstances
directors
referred to in
voicing
Article 14-3 of
opposing or
the Securities
qualified
and Exchange
opinions
Act
1. A motion for the amendments to the ―Articles of

Incorporation‖ was submitted for discussion.
2. A motion for the amendments to the ―Regulations
Governing Performance Evaluation on Board of 
Directors‖ was submitted for discussion.
3. A motion for the amendments to the Company‘s
―Procedures for Ethical Management and Guidelines 
for Conduct‖ was submitted for discussion.
4. A motion for the amendments to the ―Regulations
Governing Ordinary Accounting Affairs‖ was 
submitted for discussion.
5. A motion for the amendments to the ―Regulations
Governing Cost Accounting Affairs‖ was submitted 
for discussion.
6. A motion for the enactment of the ―Regulations
Governing Management of Non-Financial 
Information‖ was submitted for discussion.
7. A motion for the amendments to the ―Regulations
Governing Notes Receivable‖ was submitted for 
discussion.
8. A motion for the amendments to the ―Corporate
Social Responsibility Best-Practice Principles‖ was 
submitted for discussion.
9. A motion for the amendments to the ―Corporate
Governance Best-Practice Principles‖ was submitted 
for discussion.
10. A motion for the amendments to the level of 
----- End of picture text -----

II.	authority vested in Chairman/CEO & President was submitted for discussion. 11. A motion for the amendments to the ―Nomination Committee‘s Articles of Association‖ was submitted for discussion.  Independent director‘s opinion: N/A. TheCompany‘s resolution of the independent director‘s opinion: N/A. Resolution: Motion 11 were passed by the directors unanimously, except the directors who recused themselves from the discussion to avoid conflict of interest. Motions 1~10 were passed bythe directors unanimously. In instances where a director recused himself/herself due to a conflict of interest: (1) Name of director: Lin Ming-Ju, Yue Chao-Tang, Liao Liao-Yu, Wang Yea-Kang (2) Contents of the motion: A motion for the name list of ―Nomination Committee‖ was submitted for discussion. (3) Cause of recusal, and actual voting counts: Said directors were the concerned parties and,therefore,recused themselves from the voting. The evaluation cycle and period, scope of evaluation, method and contents of evaluation about the Board of Directors‘ self (or peer) performance evaluation, and specifythe status of evaluation: Evaluation cycle Evaluation period Scope of evaluation Method of evaluation Contents of evaluation Once per year The performance evaluation on the Board of Directors persisted from January 1, 2020 to December 31, 2020. Performance evaluation on the Board of Directors, individual Board members, Remuneration Committee and Audit Committee Internal self-evaluation by the Board of Directors and self-evaluation by the Board members Degree of participation in the Company's operation, quality of the Board of Directors‘ decision making, formation and structure of the Board of Directors, election and continuing education of directors, alignment with the Company's goals and mission, awareness toward directors‘ responsibilities and duties, management of internal relations and communication, awareness toward Audit Committee‘s responsibilities and duties, quality of the functional committees‘ decision making, and formation of	authority vested in Chairman/CEO & President was submitted for discussion. 11. A motion for the amendments to the ―Nomination Committee‘s Articles of Association‖ was submitted for discussion.  Independent director‘s opinion: N/A. TheCompany‘s resolution of the independent director‘s opinion: N/A. Resolution: Motion 11 were passed by the directors unanimously, except the directors who recused themselves from the discussion to avoid conflict of interest. Motions 1~10 were passed bythe directors unanimously. In instances where a director recused himself/herself due to a conflict of interest: (1) Name of director: Lin Ming-Ju, Yue Chao-Tang, Liao Liao-Yu, Wang Yea-Kang (2) Contents of the motion: A motion for the name list of ―Nomination Committee‖ was submitted for discussion. (3) Cause of recusal, and actual voting counts: Said directors were the concerned parties and,therefore,recused themselves from the voting. The evaluation cycle and period, scope of evaluation, method and contents of evaluation about the Board of Directors‘ self (or peer) performance evaluation, and specifythe status of evaluation: Evaluation cycle Evaluation period Scope of evaluation Method of evaluation Contents of evaluation Once per year The performance evaluation on the Board of Directors persisted from January 1, 2020 to December 31, 2020. Performance evaluation on the Board of Directors, individual Board members, Remuneration Committee and Audit Committee Internal self-evaluation by the Board of Directors and self-evaluation by the Board members Degree of participation in the Company's operation, quality of the Board of Directors‘ decision making, formation and structure of the Board of Directors, election and continuing education of directors, alignment with the Company's goals and mission, awareness toward directors‘ responsibilities and duties, management of internal relations and communication, awareness toward Audit Committee‘s responsibilities and duties, quality of the functional committees‘ decision making, and formation of	authority vested in Chairman/CEO & President was submitted for discussion. 11. A motion for the amendments to the ―Nomination Committee‘s Articles of Association‖ was submitted for discussion.  Independent director‘s opinion: N/A. TheCompany‘s resolution of the independent director‘s opinion: N/A. Resolution: Motion 11 were passed by the directors unanimously, except the directors who recused themselves from the discussion to avoid conflict of interest. Motions 1~10 were passed bythe directors unanimously. In instances where a director recused himself/herself due to a conflict of interest: (1) Name of director: Lin Ming-Ju, Yue Chao-Tang, Liao Liao-Yu, Wang Yea-Kang (2) Contents of the motion: A motion for the name list of ―Nomination Committee‖ was submitted for discussion. (3) Cause of recusal, and actual voting counts: Said directors were the concerned parties and,therefore,recused themselves from the voting. The evaluation cycle and period, scope of evaluation, method and contents of evaluation about the Board of Directors‘ self (or peer) performance evaluation, and specifythe status of evaluation: Evaluation cycle Evaluation period Scope of evaluation Method of evaluation Contents of evaluation Once per year The performance evaluation on the Board of Directors persisted from January 1, 2020 to December 31, 2020. Performance evaluation on the Board of Directors, individual Board members, Remuneration Committee and Audit Committee Internal self-evaluation by the Board of Directors and self-evaluation by the Board members Degree of participation in the Company's operation, quality of the Board of Directors‘ decision making, formation and structure of the Board of Directors, election and continuing education of directors, alignment with the Company's goals and mission, awareness toward directors‘ responsibilities and duties, management of internal relations and communication, awareness toward Audit Committee‘s responsibilities and duties, quality of the functional committees‘ decision making, and formation of	authority vested in Chairman/CEO & President was submitted for discussion. 11. A motion for the amendments to the ―Nomination Committee‘s Articles of Association‖ was submitted for discussion.  Independent director‘s opinion: N/A. TheCompany‘s resolution of the independent director‘s opinion: N/A. Resolution: Motion 11 were passed by the directors unanimously, except the directors who recused themselves from the discussion to avoid conflict of interest. Motions 1~10 were passed bythe directors unanimously. In instances where a director recused himself/herself due to a conflict of interest: (1) Name of director: Lin Ming-Ju, Yue Chao-Tang, Liao Liao-Yu, Wang Yea-Kang (2) Contents of the motion: A motion for the name list of ―Nomination Committee‖ was submitted for discussion. (3) Cause of recusal, and actual voting counts: Said directors were the concerned parties and,therefore,recused themselves from the voting. The evaluation cycle and period, scope of evaluation, method and contents of evaluation about the Board of Directors‘ self (or peer) performance evaluation, and specifythe status of evaluation: Evaluation cycle Evaluation period Scope of evaluation Method of evaluation Contents of evaluation Once per year The performance evaluation on the Board of Directors persisted from January 1, 2020 to December 31, 2020. Performance evaluation on the Board of Directors, individual Board members, Remuneration Committee and Audit Committee Internal self-evaluation by the Board of Directors and self-evaluation by the Board members Degree of participation in the Company's operation, quality of the Board of Directors‘ decision making, formation and structure of the Board of Directors, election and continuing education of directors, alignment with the Company's goals and mission, awareness toward directors‘ responsibilities and duties, management of internal relations and communication, awareness toward Audit Committee‘s responsibilities and duties, quality of the functional committees‘ decision making, and formation of	authority vested in Chairman/CEO & President was submitted for discussion. 11. A motion for the amendments to the ―Nomination Committee‘s Articles of Association‖ was submitted for discussion.  Independent director‘s opinion: N/A. TheCompany‘s resolution of the independent director‘s opinion: N/A. Resolution: Motion 11 were passed by the directors unanimously, except the directors who recused themselves from the discussion to avoid conflict of interest. Motions 1~10 were passed bythe directors unanimously. In instances where a director recused himself/herself due to a conflict of interest: (1) Name of director: Lin Ming-Ju, Yue Chao-Tang, Liao Liao-Yu, Wang Yea-Kang (2) Contents of the motion: A motion for the name list of ―Nomination Committee‖ was submitted for discussion. (3) Cause of recusal, and actual voting counts: Said directors were the concerned parties and,therefore,recused themselves from the voting. The evaluation cycle and period, scope of evaluation, method and contents of evaluation about the Board of Directors‘ self (or peer) performance evaluation, and specifythe status of evaluation: Evaluation cycle Evaluation period Scope of evaluation Method of evaluation Contents of evaluation Once per year The performance evaluation on the Board of Directors persisted from January 1, 2020 to December 31, 2020. Performance evaluation on the Board of Directors, individual Board members, Remuneration Committee and Audit Committee Internal self-evaluation by the Board of Directors and self-evaluation by the Board members Degree of participation in the Company's operation, quality of the Board of Directors‘ decision making, formation and structure of the Board of Directors, election and continuing education of directors, alignment with the Company's goals and mission, awareness toward directors‘ responsibilities and duties, management of internal relations and communication, awareness toward Audit Committee‘s responsibilities and duties, quality of the functional committees‘ decision making, and formation of
	Evaluation cycle	Evaluation period	Scope of evaluation	Method of evaluation	Contents of evaluation
	Once per year	The performance evaluation on the Board of Directors persisted from January 1, 2020 to December 31, 2020.	Performance evaluation on the Board of Directors, individual Board members, Remuneration Committee and Audit Committee	Internal self-evaluation by the Board of Directors and self-evaluation by the Board members	Degree of participation in the Company's operation, quality of the Board of Directors‘ decision making, formation and structure of the Board of Directors, election and continuing education of directors, alignment with the Company's goals and mission, awareness toward directors‘ responsibilities and duties, management of internal relations and communication, awareness toward Audit Committee‘s responsibilities and duties, quality of the functional committees‘ decision making, and formation of

functional committees and election of the committee members, etc..

III. Measures undertaken during the current year and in the most recent year in order to strengthen the functions of the Board of Directors (such as the establishment of an audit committee and improvement of information transparency, etc.) and evaluation on their implementation:
The Board meeting minutes would be disclosed on the Company‘s website accessible by all shareholders after the meetings.
In order to build robust corporate governance and strengthen the Board of Directors‘ functions, the Company has established the Remuneration Committee in 2011 to help the Board of Directors exercise the function to manage remuneration. For the Committee‘s operations, please refer to the ―Corporate Governance Operation Status and deviations from corporate governance Best Practice Principles for TWSE/TPEX Listed Companies, and reasons thereof‖ and operations of the Remuneration Committee for details.
In order to promote corporate governance, build a robust audit function and enhance the management functions, the Company has implemented the independent directorship and established the Audit Committee since 2015. For the Committee‘s operations, please refer to the operations of the Audit Committee for details.
Meanwhile, in order to promote corporate governance and build the Board of Directors‘ robust functions, and strengthen the director (independent director) election mechanism to serve purposes upheld by the diversity and professional policies for the Board members, the Company established the Nomination Committee in 2020 to help judge the Board members‘ competency. For the Committee‘s operations, please refer to the operations of the Nomination Committee for details. IV. Succession planning for the Board members and important management: 1. According to the Company‘s succession planning, all successors shall hold excellent abilities to work and believe in the values commensurate with the Company‘s, with the personality of honesty and integrity, and know-how to win the trust from customers. 2. Recently, Mr. Lin Ta-Chun and Mr. Lin Chi-Jui have been selected to train their ability to make decisions. (1) Mr. Lin Ta-Chun is asked to take the job rotation in the following departments: Finance Department, Steel Rolling Department, Steelmaking Department, Sales Department and Administrative Department. (2) Mr. Lin Chi-Jui is asked to take the job rotation in the following departments:

Sales Management Section, International Section, Production Planning Section and Sales Division.

The Company keeps planning the training of the Chairman‘s successor and improvement of the abilities to manage a business as required from the position as a Chairman.
The training model for the high-rank management successors also covers the abilities to manage a business, professional abilities and job rotation. The job rotation enables trainees to verify the Company‘s overview of operations and various departments‘ physical operations. The trainees may integrate and utilize the relevant information to train their abilities to judge and make decisions.
The Board member successors‘ training model covers the knowledge about the Company‘s overview of business and industry. In 2020, a total of 32 trainees attended the relevant courses persisting for 24 hours.
Note 1: The name and representative of the institutional shareholder of any director who is a juristic person, if any, shall be disclosed.
Note 2: (1) Where a specific director may be relieved from duties before the end of the fiscal year, specify the date of discharge in the ―Remark‖ section. The actual attendance (in-attendance) rate (%) was calculated based on the number of the Board meetings held during each director‘s term of office and the number of that director‘s attendance (in-attendance) at the meetings actually.

(2) Where reelection may be held for filling the vacancies of directors before the end of the fiscal year, list both the new and the discharged directors, and specify if they are the former directors, or newly elected, re-elected and the date of the reelection in the ―Remark‖ section. The actual attendance rate (%) was calculated on the basis of the number of Board meetings held during each director‘s term of office and the number of meetings actually attended by that director.

2. Operations of the Audit Committee:

(1) Operations of the Audit Committee

The Audit Committee has held 5 (A) meetings during the most recent year (2020). The attendance of independent directors is summarized as follows:

Job Title	Name	Actual attendance (B)	Actual attendance rate (%) (B/A) (Note)	Remarks
Independent Director/Con vener	Yue Chao-Tang	5	100%	Note
Independent Director	Liao Liao-Yu	5	100%
Independent Director	Wang Yea-Kang	5	100%

Other items to be stated:

Where the operation of the Audit Committee meets any of the following circumstances, the minutes concerned shall clearly state the meeting date, term, contents of motions, Audit Committee‘s resolutions, and the Company‘s resolution of the Audit Committee‘s opinions:
(1) Resolutions passed in accordance with Article 14-5 of the Securities and Exchange Act.
(2) Aside from said circumstances, resolution(s) not passed by the Audit Committee but receiving the consent of two-thirds of the whole directors:

The Company's Audit Committee members consist of 3 independent directors, aiming to help the Board of Directors achieve the quality and credibility of the Board‘s supervision of the Company‘s execution of accounting, auditing and financial reporting procedures and financial controls. The Audit Committee held 5 meetings in 2020, primarily in order to review the following matters:

Audit on financial statements
Internal control system & related policies and procedures
Independent auditor‘s independence evaluation
Appointment of and remuneration to the independent auditor
Appointment and dismissal of financial and accounting managers
Performance of Audit Committee‘s duties
Audit Committee Self-evaluation Questionnaire.
The Board of Directors has prepared the Company's business report, financial statements and the motion for allocation of earnings 2020, in which the financial statements have been audited by EY Taiwan, who also gave their audit report. After inspecting business report, financial statements and motion for allocation of earnings, the Audit Committee believes that they are free of material misstatement.
The audit committee evaluated the effectiveness of the company‘s internal control system policies and procedures, and reviewed the company‘s audit department CPA

	and management‘s regular reports, including risk management and compliance with laws and regulations. Refer to The Committee of 2013 Sponsoring Organizations of the Treadway Commission (COSO) issued the internal control system-internal (Internal Control-Integrated Framework), the audit committee believes that the company risk management and internal control systems are effective, and the company has adopted the necessary control mechanisms to monitor and correct violations. 1. February25,2020(12th meetingof 21st term)Board of Directors Motion and follow-up The circumstances referred to in Article 14-5 of the Securities and Exchange Act Resolution(s) not passed by the Audit Committee but receiving the consent of two-thirds of the whole directors: 1. Appointment of EY Taiwan to audit and certify the financial statements 2020, and professional fees charged byit.  2. Submission of the ―2019 Declaration of Statement for Internal Controls‖ issued by the Board of Directors.  3. A motion for financial statements 2019 was submitted for discussion.  4. A motion for Business Report 2019 was submitted for discussion.  5. A motion for Statement of Earnings Allocation 2019was submitted for discussion.  6. A motion for the amendments to the ―Regulations Governing Ordinary Accounting Affairs‖ was submitted for discussion.  7. A motion for the amendments to the ―Official Seal Management Regulations‖ was submitted for discussion.  8. A motion for the amendments to the ―Operating Procedure for Acquisition or Disposal of Assets‖ was submitted for discussion.  9. A motion for the amendments to FA-00 (General Provisions) in Title 10. Financial Management Handbook of the Company‘s regulations was submitted for discussion.  10. A motion for the amendments to relevant requirements about the level of authority vested in Chairman/CEO & President referred to in the Company‘s regulations was submitted for discussion.  Audit Committee‘s resolution on February 25, 2020 (7th meeting of 2nd term): Passed bythe Committee members unanimously. The Company‘s resolution of the Audit Committee‘s opinions: Passed by the directors present at the meetingunanimously. 2. April 29,2020(13th meetingof 21st term)Board of Directors Motion and follow-up The circumstances referred to in Article 14-5 of Resolution(s) not passed by the Audit Committee but receivingthe	and management‘s regular reports, including risk management and compliance with laws and regulations. Refer to The Committee of 2013 Sponsoring Organizations of the Treadway Commission (COSO) issued the internal control system-internal (Internal Control-Integrated Framework), the audit committee believes that the company risk management and internal control systems are effective, and the company has adopted the necessary control mechanisms to monitor and correct violations. 1. February25,2020(12th meetingof 21st term)Board of Directors Motion and follow-up The circumstances referred to in Article 14-5 of the Securities and Exchange Act Resolution(s) not passed by the Audit Committee but receiving the consent of two-thirds of the whole directors: 1. Appointment of EY Taiwan to audit and certify the financial statements 2020, and professional fees charged byit.  2. Submission of the ―2019 Declaration of Statement for Internal Controls‖ issued by the Board of Directors.  3. A motion for financial statements 2019 was submitted for discussion.  4. A motion for Business Report 2019 was submitted for discussion.  5. A motion for Statement of Earnings Allocation 2019was submitted for discussion.  6. A motion for the amendments to the ―Regulations Governing Ordinary Accounting Affairs‖ was submitted for discussion.  7. A motion for the amendments to the ―Official Seal Management Regulations‖ was submitted for discussion.  8. A motion for the amendments to the ―Operating Procedure for Acquisition or Disposal of Assets‖ was submitted for discussion.  9. A motion for the amendments to FA-00 (General Provisions) in Title 10. Financial Management Handbook of the Company‘s regulations was submitted for discussion.  10. A motion for the amendments to relevant requirements about the level of authority vested in Chairman/CEO & President referred to in the Company‘s regulations was submitted for discussion.  Audit Committee‘s resolution on February 25, 2020 (7th meeting of 2nd term): Passed bythe Committee members unanimously. The Company‘s resolution of the Audit Committee‘s opinions: Passed by the directors present at the meetingunanimously. 2. April 29,2020(13th meetingof 21st term)Board of Directors Motion and follow-up The circumstances referred to in Article 14-5 of Resolution(s) not passed by the Audit Committee but receivingthe	and management‘s regular reports, including risk management and compliance with laws and regulations. Refer to The Committee of 2013 Sponsoring Organizations of the Treadway Commission (COSO) issued the internal control system-internal (Internal Control-Integrated Framework), the audit committee believes that the company risk management and internal control systems are effective, and the company has adopted the necessary control mechanisms to monitor and correct violations. 1. February25,2020(12th meetingof 21st term)Board of Directors Motion and follow-up The circumstances referred to in Article 14-5 of the Securities and Exchange Act Resolution(s) not passed by the Audit Committee but receiving the consent of two-thirds of the whole directors: 1. Appointment of EY Taiwan to audit and certify the financial statements 2020, and professional fees charged byit.  2. Submission of the ―2019 Declaration of Statement for Internal Controls‖ issued by the Board of Directors.  3. A motion for financial statements 2019 was submitted for discussion.  4. A motion for Business Report 2019 was submitted for discussion.  5. A motion for Statement of Earnings Allocation 2019was submitted for discussion.  6. A motion for the amendments to the ―Regulations Governing Ordinary Accounting Affairs‖ was submitted for discussion.  7. A motion for the amendments to the ―Official Seal Management Regulations‖ was submitted for discussion.  8. A motion for the amendments to the ―Operating Procedure for Acquisition or Disposal of Assets‖ was submitted for discussion.  9. A motion for the amendments to FA-00 (General Provisions) in Title 10. Financial Management Handbook of the Company‘s regulations was submitted for discussion.  10. A motion for the amendments to relevant requirements about the level of authority vested in Chairman/CEO & President referred to in the Company‘s regulations was submitted for discussion.  Audit Committee‘s resolution on February 25, 2020 (7th meeting of 2nd term): Passed bythe Committee members unanimously. The Company‘s resolution of the Audit Committee‘s opinions: Passed by the directors present at the meetingunanimously. 2. April 29,2020(13th meetingof 21st term)Board of Directors Motion and follow-up The circumstances referred to in Article 14-5 of Resolution(s) not passed by the Audit Committee but receivingthe
	Motion and follow-up	The circumstances referred to in Article 14-5 of	Resolution(s) not passed by the Audit Committee but receivingthe

	the Securities and Exchange Act	consent of two-thirds of the whole directors:
1. A motion for the financial statements of Q1 2020 wasproposed for resolution.	
2. A motion for proposed execution of the ―Sale and Purchase Agreement for Difference in Air Pollutant Emission Reduction Credits‖ with Fengyu Resource Co., Ltd. was submitted for discussion.	
3. A motion for the amendments to the ―Parliamentary Rules for Shareholders‘ Meetings‖ was submitted for discussion.	
4. A motion for the amendments to the ―Regulations Governing Application of International Accounting Standards (IAS)‖ was submitted for discussion.	
5. A motion for the amendments to the ―Parliamentary Rules for Board Meetings‖ was submitted for discussion.	
6. A motion for the amendments to the ―Audit Committee‘s Organizational Regulations‖ was submitted for discussion.	
7. A motion for the amendments to the ―Remuneration Committee‘s Articles of Association‖ was submitted for discussion.	
Audit Committee‘s resolution on April 29, 2020 (8th meeting of 2nd term): Motion 1 was acknowledged by the Committee members unanimously. The other motions were passed bythe Committee members unanimously.
The Company‘s resolution of the Audit Committee‘s opinions: Motion 1 was acknowledged by the directors present at the meeting unanimously. The other motions werepassed bysaid directors unanimously.
Motion and follow-up	The circumstances referred to in Article 14-5 of the Securities and Exchange Act	Resolution(s) not passed by the Audit Committee but receiving the consent of two-thirds of the whole directors:
1. A motion for the financial statements of Q2 2020 wasproposed for resolution.	
2. A motion for the amendments to ―Professional Accounting Judgment Procedure, Accounting Policy and Regulations Governing Procedure for Changes in Accounting Estimates‖ was submitted for discussion.	
3. A motion for the amendments to the contents of the ―Regulations Governing Borrowing of Long-Term and Short-Term Loans‖ and change of the name into the ―Regulations Governing Borrowing of Loans‖ was submitted for discussion.	
4. A motion for the amendments to the ―Rules Governing Financial and Business Matters Between the Company and its Affiliated Enterprises‖ was submitted for discussion.	
5. A motion for the amendments to the ―Investment Management Regulations‖was	

submitted for discussion.
6. A motion for the amendments to the ―Regulations Governing Management of Budget Preparation‖ was submitted for discussion.	
7. A motion for the amendments to the ―Regulations Governing Supervision of Subsidiaries‖ was submitted for discussion.	
8. A motion for the amendments to the ―Parliamentary Rules for Board Meetings‖ was submitted for discussion.	
9. A motion for the amendments to the ―Regulations Governing Performance Evaluation on Board of Directors‖ was submitted for discussion.	
10. A motion for the amendments to the ―Regulations Governing the Scope of Power of Independent Directors‖ was submitted for discussion.	
11. A motion for the amendments to the ―Remuneration Committee‘s Articles of Association‖ was submitted for discussion.	
12. A motion for the amendments to the ―Parliamentary Rules for Shareholders‘ Meetings‖ was submitted for discussion.	
13. A motion for the amendments to the ―Regulations Governing Shareholders Service‖ was submitted for discussion.	
Audit Committee‘s resolution on July 31, 2020 (9th meeting of 2nd term): Motion 1 was acknowledged by the Committee members unanimously. The other motions were passed bythe Committee members unanimously.
The Company‘s resolution of the Audit Committee‘s opinions: Motion 1 was acknowledged by the directors present at the meeting unanimously. The other motions werepassed bysaid directors unanimously.
Motion and follow-up	The circumstances referred to in Article 14-5 of the Securities and Exchange Act	Resolution(s) not passed by the Audit Committee but receiving the consent of two-thirds of the whole directors:

	1. A motion for the financial statements of Q3 2020 wasproposed for resolution.  2. A motion for the Audit Plan 2021 was submitted for discussion.  3. A motion for the amendments to the ―Articles of Incorporation‖ was submitted for discussion.  4. A motion for the amendments to the ―Regulations Governing Performance Evaluation on Board of Directors‖ was submitted for discussion.  5. A motion for the amendments to the Company‘s ―Procedures for Ethical Management and Guidelines for Conduct‖ was submitted for discussion.  6. A motion for the amendments to the ―Regulations Governing Ordinary Accounting Affairs‖ was submitted for discussion.  7. A motion for the amendments to the ―Regulations Governing Cost Accounting Affairs‖ was submitted for discussion.  8. A motion for the amendments to the ―Regulations Governing Management of Non-Financial Information‖ was submitted for discussion.  9. A motion for the amendments to the ―Regulations Governing Notes Receivable‖ was submitted for discussion.  10. A motion for the amendments to the ―Corporate Social Responsibility Best-Practice Principles‖ was submitted for discussion.  11. A motion for the amendments to the ―Corporate Governance Best-Practice Principles‖ was submitted for discussion.  12. A motion for the amendments to the level of authority vested in Chairman/CEO & President was submitted for discussion.  Audit Committee‘s resolution on October 30, 2020 (11th meeting of 2nd term): Motion 1 was acknowledged by the Committee members unanimously. The other motions were passed bythe Committee members unanimously. The Company‘s resolution of the Audit Committee‘s opinions: Motion 1 was acknowledged by the directors present at the meeting unanimously. The other motions werepassed bysaid directors unanimously. II. In instances where an independent director recused himself/herself due to a conflict of interest, the minutes shall clearly state the independent director‘s name, contents of the motion and resolution thereof, cause of recusal, and actual voting counts: N/A in 2020. III. Communication between independent directors and internal auditing officers as well as CPAs: 1. The Company had the independent auditors and independent directors communicating with each other about the issues on the Company‘s corporate governance unit and management at the Audit Committee meetings on February 25, 2020, April 29, 2020, July 31, 2020 and October 30, 2020. The communication between the Audit Committee and independent auditors is summarized as follows: Date Participants Method of Communication Contents of Communication Results of Communication	1. A motion for the financial statements of Q3 2020 wasproposed for resolution.  2. A motion for the Audit Plan 2021 was submitted for discussion.  3. A motion for the amendments to the ―Articles of Incorporation‖ was submitted for discussion.  4. A motion for the amendments to the ―Regulations Governing Performance Evaluation on Board of Directors‖ was submitted for discussion.  5. A motion for the amendments to the Company‘s ―Procedures for Ethical Management and Guidelines for Conduct‖ was submitted for discussion.  6. A motion for the amendments to the ―Regulations Governing Ordinary Accounting Affairs‖ was submitted for discussion.  7. A motion for the amendments to the ―Regulations Governing Cost Accounting Affairs‖ was submitted for discussion.  8. A motion for the amendments to the ―Regulations Governing Management of Non-Financial Information‖ was submitted for discussion.  9. A motion for the amendments to the ―Regulations Governing Notes Receivable‖ was submitted for discussion.  10. A motion for the amendments to the ―Corporate Social Responsibility Best-Practice Principles‖ was submitted for discussion.  11. A motion for the amendments to the ―Corporate Governance Best-Practice Principles‖ was submitted for discussion.  12. A motion for the amendments to the level of authority vested in Chairman/CEO & President was submitted for discussion.  Audit Committee‘s resolution on October 30, 2020 (11th meeting of 2nd term): Motion 1 was acknowledged by the Committee members unanimously. The other motions were passed bythe Committee members unanimously. The Company‘s resolution of the Audit Committee‘s opinions: Motion 1 was acknowledged by the directors present at the meeting unanimously. The other motions werepassed bysaid directors unanimously. II. In instances where an independent director recused himself/herself due to a conflict of interest, the minutes shall clearly state the independent director‘s name, contents of the motion and resolution thereof, cause of recusal, and actual voting counts: N/A in 2020. III. Communication between independent directors and internal auditing officers as well as CPAs: 1. The Company had the independent auditors and independent directors communicating with each other about the issues on the Company‘s corporate governance unit and management at the Audit Committee meetings on February 25, 2020, April 29, 2020, July 31, 2020 and October 30, 2020. The communication between the Audit Committee and independent auditors is summarized as follows: Date Participants Method of Communication Contents of Communication Results of Communication	1. A motion for the financial statements of Q3 2020 wasproposed for resolution.  2. A motion for the Audit Plan 2021 was submitted for discussion.  3. A motion for the amendments to the ―Articles of Incorporation‖ was submitted for discussion.  4. A motion for the amendments to the ―Regulations Governing Performance Evaluation on Board of Directors‖ was submitted for discussion.  5. A motion for the amendments to the Company‘s ―Procedures for Ethical Management and Guidelines for Conduct‖ was submitted for discussion.  6. A motion for the amendments to the ―Regulations Governing Ordinary Accounting Affairs‖ was submitted for discussion.  7. A motion for the amendments to the ―Regulations Governing Cost Accounting Affairs‖ was submitted for discussion.  8. A motion for the amendments to the ―Regulations Governing Management of Non-Financial Information‖ was submitted for discussion.  9. A motion for the amendments to the ―Regulations Governing Notes Receivable‖ was submitted for discussion.  10. A motion for the amendments to the ―Corporate Social Responsibility Best-Practice Principles‖ was submitted for discussion.  11. A motion for the amendments to the ―Corporate Governance Best-Practice Principles‖ was submitted for discussion.  12. A motion for the amendments to the level of authority vested in Chairman/CEO & President was submitted for discussion.  Audit Committee‘s resolution on October 30, 2020 (11th meeting of 2nd term): Motion 1 was acknowledged by the Committee members unanimously. The other motions were passed bythe Committee members unanimously. The Company‘s resolution of the Audit Committee‘s opinions: Motion 1 was acknowledged by the directors present at the meeting unanimously. The other motions werepassed bysaid directors unanimously. II. In instances where an independent director recused himself/herself due to a conflict of interest, the minutes shall clearly state the independent director‘s name, contents of the motion and resolution thereof, cause of recusal, and actual voting counts: N/A in 2020. III. Communication between independent directors and internal auditing officers as well as CPAs: 1. The Company had the independent auditors and independent directors communicating with each other about the issues on the Company‘s corporate governance unit and management at the Audit Committee meetings on February 25, 2020, April 29, 2020, July 31, 2020 and October 30, 2020. The communication between the Audit Committee and independent auditors is summarized as follows: Date Participants Method of Communication Contents of Communication Results of Communication	1. A motion for the financial statements of Q3 2020 wasproposed for resolution.  2. A motion for the Audit Plan 2021 was submitted for discussion.  3. A motion for the amendments to the ―Articles of Incorporation‖ was submitted for discussion.  4. A motion for the amendments to the ―Regulations Governing Performance Evaluation on Board of Directors‖ was submitted for discussion.  5. A motion for the amendments to the Company‘s ―Procedures for Ethical Management and Guidelines for Conduct‖ was submitted for discussion.  6. A motion for the amendments to the ―Regulations Governing Ordinary Accounting Affairs‖ was submitted for discussion.  7. A motion for the amendments to the ―Regulations Governing Cost Accounting Affairs‖ was submitted for discussion.  8. A motion for the amendments to the ―Regulations Governing Management of Non-Financial Information‖ was submitted for discussion.  9. A motion for the amendments to the ―Regulations Governing Notes Receivable‖ was submitted for discussion.  10. A motion for the amendments to the ―Corporate Social Responsibility Best-Practice Principles‖ was submitted for discussion.  11. A motion for the amendments to the ―Corporate Governance Best-Practice Principles‖ was submitted for discussion.  12. A motion for the amendments to the level of authority vested in Chairman/CEO & President was submitted for discussion.  Audit Committee‘s resolution on October 30, 2020 (11th meeting of 2nd term): Motion 1 was acknowledged by the Committee members unanimously. The other motions were passed bythe Committee members unanimously. The Company‘s resolution of the Audit Committee‘s opinions: Motion 1 was acknowledged by the directors present at the meeting unanimously. The other motions werepassed bysaid directors unanimously. II. In instances where an independent director recused himself/herself due to a conflict of interest, the minutes shall clearly state the independent director‘s name, contents of the motion and resolution thereof, cause of recusal, and actual voting counts: N/A in 2020. III. Communication between independent directors and internal auditing officers as well as CPAs: 1. The Company had the independent auditors and independent directors communicating with each other about the issues on the Company‘s corporate governance unit and management at the Audit Committee meetings on February 25, 2020, April 29, 2020, July 31, 2020 and October 30, 2020. The communication between the Audit Committee and independent auditors is summarized as follows: Date Participants Method of Communication Contents of Communication Results of Communication	1. A motion for the financial statements of Q3 2020 wasproposed for resolution.  2. A motion for the Audit Plan 2021 was submitted for discussion.  3. A motion for the amendments to the ―Articles of Incorporation‖ was submitted for discussion.  4. A motion for the amendments to the ―Regulations Governing Performance Evaluation on Board of Directors‖ was submitted for discussion.  5. A motion for the amendments to the Company‘s ―Procedures for Ethical Management and Guidelines for Conduct‖ was submitted for discussion.  6. A motion for the amendments to the ―Regulations Governing Ordinary Accounting Affairs‖ was submitted for discussion.  7. A motion for the amendments to the ―Regulations Governing Cost Accounting Affairs‖ was submitted for discussion.  8. A motion for the amendments to the ―Regulations Governing Management of Non-Financial Information‖ was submitted for discussion.  9. A motion for the amendments to the ―Regulations Governing Notes Receivable‖ was submitted for discussion.  10. A motion for the amendments to the ―Corporate Social Responsibility Best-Practice Principles‖ was submitted for discussion.  11. A motion for the amendments to the ―Corporate Governance Best-Practice Principles‖ was submitted for discussion.  12. A motion for the amendments to the level of authority vested in Chairman/CEO & President was submitted for discussion.  Audit Committee‘s resolution on October 30, 2020 (11th meeting of 2nd term): Motion 1 was acknowledged by the Committee members unanimously. The other motions were passed bythe Committee members unanimously. The Company‘s resolution of the Audit Committee‘s opinions: Motion 1 was acknowledged by the directors present at the meeting unanimously. The other motions werepassed bysaid directors unanimously. II. In instances where an independent director recused himself/herself due to a conflict of interest, the minutes shall clearly state the independent director‘s name, contents of the motion and resolution thereof, cause of recusal, and actual voting counts: N/A in 2020. III. Communication between independent directors and internal auditing officers as well as CPAs: 1. The Company had the independent auditors and independent directors communicating with each other about the issues on the Company‘s corporate governance unit and management at the Audit Committee meetings on February 25, 2020, April 29, 2020, July 31, 2020 and October 30, 2020. The communication between the Audit Committee and independent auditors is summarized as follows: Date Participants Method of Communication Contents of Communication Results of Communication
	Date	Participants	Method of Communication	Contents of Communication	Results of Communication

February 25, 2020	Independent directors: Yue Chao-Tang, Liao Liao-Yu, Wang Yea-Kang CPA: Yen Wen-Pi Audit officer: Cho Hsiu-Ying	7th meeting of 2nd term Audit Committee	1.109Q1 Report on communication between the CPA, and corporate governance unit & management. 2.108/12-109/1 internal audit report	No disagreement.
April 29, 2020	Independent directors: Yue Chao-Tang, Liao Liao-Yu, Wang Yea-Kang CPA: Chen Ming-Hung Audit officer: Cho Hsiu-Ying	8th meeting of 2nd term Audit Committee	1.109Q2 Report on communication between the CPA, and corporate governance unit & management. 2.109/2-3 internal audit report	No disagreement.
July 31, 2020	Independent directors: Yue Chao-Tang, Liao Liao-Yu, Wang Yea-Kang CPA: Yen Wen-Pi Audit officer: Cho Hsiu-Ying	9th meeting of 2nd term Audit Committee	1.109Q3 Report on communication between the CPA, and corporate governance unit & management. 2.109/5-6 internal audit report	No disagreement.
October 30, 2020	Independent directors: Yue Chao-Tang, Liao Liao-Yu, Wang Yea-Kang CPA: Chen Ming-Hung Audit officer: Cho Hsiu-Ying	11th meeting of 2nd term Audit Committee	1.109Q4 Report on communication between the CPA, and corporate governance unit & management. 2.109/7-9 internal audit report	No disagreement.

Note:

Where a specific independent director may be relieved from duties before the end of the fiscal year, specify the date of discharge in the ―Remark‖ section. The actual attendance rate (%) was calculated based on the number of the Board meetings held during each director‘s term of office and the number of meetings attended by that director actually.
Where a reelection may be held for filling the vacancies of independent directors before the end of the fiscal year, list both the new and the discharged independent directors, and specify if they are the former independent directors, or newly elected, re-elected and the date of the reelection in the ―Remark‖ section. Actual attendance rate (%) was calculated on the basis of the number of Board meetings held during each director‘s term of office and the number of meetings actually attended by that director.

Corporate Governance Operation Status and deviations from corporate governance Best Practice Principles for TWSE/TPEX Listed Companies, and reasons thereof:

ompanies,and reasons thereof:
Scope of evaluation	Status			Deviations from corporate governance Best Practice Principles for TWSE/TPEX Listed Companies, and reasons thereof
	Yes	No	Summary
I. Has the Company formulated and disclosed its "Corporate Governance Best Practice Principles" pursuant to the "Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies.‖			The Company has set forth its Corporate Governance Best Practice Principles on February 4, 2015, and disclosed the same on the MOPS and the Company‘s website.	Conformity
II. Company Shareholding Structure and Shareholders' Equity (1) Has the Company established an internal operating procedure to address shareholders‘ recommendations, doubts, and disputes, as well as litigation matters, and implemented the procedure? (2) Does the Company have a list of the major shareholders and ultimate controllers of major shareholders with actual control? (3) Has the Company established and implemented a risk control and firewall mechanism between affiliates?	  		(1) The Company has appointed a spokesperson and deputy spokesperson, who will speak on behalf of the Company in the event of any recommendations, doubts or disputes from shareholders. Meanwhile, the Company also provides access to channels and procedures for seeking remedies or whistle-blowing any misconduct on the Company‘s website at http://www.fenghsin.com.tw/investor.htm/Stakehold ers/Complaint. (2) The Company discloses the important information, such as increase in major shareholders, or decrease or changes in the Company‘s shares, periodically. (3) The Company has set forth the Rules Governing Financial and Business Matters Between the Company and its Affiliated Enterprises to establish and implement the risk control and firewall	Conformity Conformity Conformity

(4) Does the Company have internal regulations that prohibit the Company insiders from buying or selling securities using unpublished market information?			mechanism between its affiliates. (4) The Company already sets forth the Operating Procedures for Handling Internal Material Information as the rules to be followed by insiders. Also, it releases the competent authority‘s promotional news about insiders‘ equity trading from time to time toprevent anyinsider trading.	Conformity
III. Composition and Duties of the Board of Directors (1) Has the Board of Directors formulated a member composition diversification policy and implemented it accordingly?			(1) The Company has set forth the ―Corporate Governance Best Practice Principles,‖ and provided the diversification policy in Chapter 3. ―Enhancement of the Board of Directors‘ Functions‖ therein. The Company‘s Board members are nominated and elected in accordance with the Articles of Incorporation. It adopts the candidate nomination system to evaluate each candidate‘s academic background and work experience, and strictly complies with the ―Parliamentary Rules for Directors‘ Meetings‘ and ―Corporate Governance Best Practice Principles‖ to ensure the Board members‘ diversification and independence. The Company‘s 13 Board members identified in the name list include one member represented by the Vice Chairman of the Chinese National Federation of Industries. Lin Ming-Ju, Chen Mu-Tse, Lai San-Ping, Lin Wen-Fu, Lin Chiu-Huang, Lin Kun-Tan and Chung Chao-Chuan are specialized in leadership, business judgment, business administration and crisis management and experienced in industries and international market observation. Yue Chao-Tang holds a CPA license and serves as a university	Conformity

professor concurrently. Wang Yea-Kang once served as the Director-General, Industrial Development Bureau, Ministry of Economic. Liao Liao-Yi was the Minister, Ministry of the Interior. Yang Tsung-Ju has remarkable achievements in the physical field. Lin Ta-Chun and Lin Chi-Jui are specialized in accounting and management fields. The Company's directors shall also are the Company‘s employees and account for 31%. The independent directors account for 23% of the whole directors. One independent director shall serve the term of office for no more than 3 years, and two independent directors shall serve the term of office ranging from 3 years to 9 years. 6 directors are more than 71 years old, 4 directors the age of 61~70 years old, 1 director the age of 41~50 years old, and 2 directors less than 40 years old. The Company aims to have a majority of the members become competent in business administration, leadership and decision making. For the time being, 77% of the directors satisfy the competency in business administration, and 62% of the directors satisfy the competency in leadership and decision making. The Company sets forth the related core indicators with respect to the Board member diversification policy according to corporate governance Best Practice Principles (Company Website/Stakeholders/Corporate Governance/Articles of Incorporation and Related Regulations), and disclose the evaluation results on the Company‘s website at http://www.fenghsin.com.tw/investor.htm/Stakeholde

(2) In addition to establishing the Remuneration Committee and Audit Committee pursuant to the law, has the Company voluntarily set up any other functional committees? (3) Has the Company established the regulations governing performance evaluation on the Board of Directors and the evaluation method, and conducted the performance evaluation periodically each year, and submitted the performance evaluation results to the Board of Directors, and taken it as the reference for remuneration to individual directors and nomination?	 		rs/Corporate Governance/Board Diversification. (2) The Company established the Audit Committee in 2015 and Remuneration Committee in 2011. In 2020, the Company established the Nomination Committee. (3) The Company‘s Board of Directors approved the Company‘s Regulations Governing Performance Evaluation on Board of Directors on May 5, 2016, and completed the related performance evaluation pursuant to the Regulations on January 15, 2021. The performance evaluation on the Board of Directors completed in the most recent year (2020) is summarized as follows: 1. the Board of Directors self-evaluation scores were 99.1 averagely (full scores: 100). 2. directors‘ self-evaluation scores were 99.2 on average (full scores: 100). Said performance evaluation results have been reported to the Board of Directors on January 28, 2021 and already applied as the reference for remuneration to individual directors and nomination. The same was also disclosed on the Company‘s website athttp://www.fenghsin.com.tw/investor.htm. In March 2021, it submitted an application for "Board Performance Evaluation" to the Chinese Corporate Governance Association, which is expected to be completed by the end of June. (4) The Company would evaluate the independence periodically (once per year). The evaluation results show no deviations from the independence requirements. For the evaluation results, please refer to the information about CPAsprovided in the	Conformity Conformity Conformity
(4) Has the Company regularly evaluated the independence of the independent auditors?	

			annual report.
IV. Whether the TWSE/TPEx listed company assigns the adequate number of competent corporate governance officers, and appoints the chief corporate governance officer responsible for corporate governance affairs (including but not limited to providing directors with the information needed to perform their duties, helping directors with compliance, organization of the Board of Directors meetings and shareholders‘ meetings, and preparation of board meeting and shareholders‘ meeting minutes, et al.)?			If necessary, the Company will delegate the ―Administrative Department Head‖ as the chief corporate governance officer, and the ―Administrative Department‖ as the Company‘s corporate governance and ethical management planning unit to protect shareholders‘ equity and strengthen the Board of Directors‘ functions, and help directors access the information needed by them to perform their duties and comply with laws. On April 29, 2019, the Board of Directors appointed the Administrative Department head, Assistant Vice President Cheng Der-Yih, to serve as the chief corporate governance officer. Cheng Der-Yih is qualified as a CPA and very experienced in managing finance and shareholders service in public companies. More than 3 years. During the years in which he has fulfilled his initial term of office (April 29, 2019~April 28, 2020), he completed the continuing education as a chief corporate governance officer for a total of 18 hours and also passed the basic competence test for corporate governance. The Company reports corporate governance practices at the Board meeting once per year. The practices in 2020 were reported to the Board meeting on January 28, 2021 (18th meeting of 21st term). The practices in 2020 are reported as follows: 1. Notify the laws and regulations about insider equity trading promulgated by TWSE to the Board members from time to time.	Conformity

2. Offer the continuing education courses for at least 6	2. Offer the continuing education courses for at least 6
credits to the Board members. The continuing education
courses proposed by the Company‘s corporate
governance unit in 2020 are summarized as follows:
Time Course Name Lecturer	Hour(s
	)
March 25, Corporate Governance Class - Global Taiwan	3
2020 political and economic conditions, and Academy of
risk thereof over business Banking and
administration (trainee: Director Wang Finance
Yea-Kang) (TABF)
March 31, 2020 Corporate Governance Class - Risk-oriented anti-money laundering trend, and effect posed therefor (trainee: Director Wang Yea-Kang) Taiwan Academy of Banking and Finance (TABF)	3
April 29, Corporate Sustainability Accelerator - Securities &	3
2020 CSR, ESG and SDGs Futures
(a total of 12 trainees) Institute
May 22, Risk and opportunity posed by climate Securities &	3
2020 transformation and energy policy trend Futures
to business administration Institute
(trainee: Director Liao Liao-Yu)
July 24, Group governance and performance Taiwan	3
2020 management Institute of
(trainee: Director Yue Chao-Tang) Directors
October 30, 2020 Key to success or failure of family business transfer (a total of 11 trainees) Taiwan Corporate Governance Association	3
3. The Company has its Audit Committee call the	CPAs,
independent directors, auditing managers, financial
managers and accounting managers to communicate with
each other in order to fulfill the internal audit/control
system. The communication meeting minutes is
disclosed on the Company‘s website at
(http://www.fenghsin.com.tw/investor.htm).
4. The proposed Board meeting agenda shall be notified
to directors within 7 days prior to the meeting, and also
provide the meetinginformation. Anydirector who

should recuse himself/herself from any motion for conflict of interest will be reminded in advance. The Board meeting minutes would be completed within 20 days after the meeting. 5. In order to practice corporate governance, the Company conducts the performance evaluation on the Board of Directors and individual directors in accordance with the ―Regulations Governing Performance Evaluation on Board of Directors‖ periodically. The related evaluation 2020 has been completed on January 15, 2021 and reported to the Board of Directors on January 28, 2021. 6. Attendance in the investment forums organized by SinoPac Securities, Capital Securities and Hua Nan Securities on April 17, 2020, July 17, 2020 and October 22, 2020,January 29 2021and April 21 2021(Expected), to establish diversified communication channels with investors. 7. Book the date of a shareholders‘ meeting pursuant to laws, and produce the meeting notice, meeting handbook and meeting minutes within the period prescribed by laws.

V. Does the Company establish a communication channel for the stakeholders (including but not limited to shareholders, employees, customers and suppliers), set the stakeholder section on the Company‘s website, and respond to the stakeholders regarding their concerns over corporate social responsibilities?			The Company makes the Tel. No. and email address available to stakeholders. Meanwhile, the Company has provided the stakeholders with access to channels for complaining and whistle-blowing any misconduct in the stakeholder section on the Company‘s website at (http://www.fenghsin.com.tw/investor.htm). The company has set up "Appeal Handling Measures" stating that employees may file a complaint in accordance with the administrative system when their lawful rights and interests in the company are infringed upon improper handling.	Conformity
VI. Does the Company appoint a professional shareholders service agent to handle shareholder service affairs?			The Company appoints CTBC Bank Co., Ltd., Transfer Agency Department as the Company‘s shareholders service agent.	Conformity
VII. Information Disclosure (1) Has the Company established a website to disclose financial business and corporate governance information? (2) Has the Company adopted other information disclosure methods (if an English website has been established, has a dedicated person been appointed to collect and disclose the	 		(1) The Company has set up the website and assigned dedicated personnel to maintain the website. The website atwww.fenghsin.com.tw/investor.htm also sets up the stakeholder section to disclose the Company‘s financial business, shareholders service information, Board meetings‘ resolution, shareholders‘ meeting information, internal audit and corporate social responsibility (CSR) section, linked to the MOPS, in order to achieve full disclosure of the information about the Company. Meanwhile, the Company will keep updating the information for shareholders‘ and stakeholders‘ reference. (2) The Company appoints dedicated personnel to disclose business and financial information on the MOPS periodically or from time to time.	Conformity Conformity

Company‘s information, execute the spokesperson system, or place the institutional investor conferences on the Company website)?
(3) Whether the Company announces and reports the annual financial report within two months at the end of each fiscal year, and the financial report for Q1, Q2 and Q3 and monthly operation overview before the prescribed time limit?			(3) 1. The quarterly financial statements 2020 were reported in the following manners: The financial statement for Q1 of 2020 was reported on April 30, 2020. The financial statement for Q2 of 2020 was reported on July 31, 2020. The financial statement for Q3 of 2020 was reported on October 30, 2020. The financial statement for Q4 of 2020 was reported on February 25, 2021. All were reported 10 days before the prescribed time limits. 2. The monthly operation overview was also reported before theprescribed time limit.	Conformity
VIII. VIII. Does the Company have other important information that can facilitate understanding towards the Company‘s corporate governance (including but not limited to employee rights, employee care, investor relations, supplier relations, stakeholders‘ rights, director and supervisor continuing education status, risk management policies and risk measurement implementation standards implementation status, customer policy implementation status, and director and supervisor insurance purchase status by the Company)?			1. Director continuing education status: The Company arranges directors to attend related training courses from time to time. For the training courses arranged by the Company for directors in the most recent year, please refer to the directors‘ training disclosed in the annual report. Further, the Company would provide directors with the competent authority‘s requirements or related laws and requirements related to directors or updated information, in writing or by electronic means. 2. Risk management policies and risk measurement standards implementation status: The Company never engages in any high-risk and high-leverage investment projects. It has not loaned funds to others or made endorsements/guarantees for others in the most recent	Conformity

years, either. The derivative trading is conducted primarily for the purpose of hedge and in accordance with the ―Operating Procedure for Acquisition or Disposal of Assets.‖ All of the related operations have taken the risk profile into consideration. According to the company‘s regulations, collect and analyze the possible impacts on the company on various internal or external issues, including politics, finance, society, regulations, production technology, and market changes, and finally report to the company‘s highest Management approval. 3. Consumer protection or customer policy implementation status: The quality issue is always the first priority target pursued by the Company. Therefore, the Company‘s product quality always outperforms the others in the same trade and also wins trust from customers widely. The Company purchases the radiation detection equipment to ensure that all raw materials & supplies and semi-finished goods are free from radiation sources. All of the Company‘s products are subject to strict quality controls. If any customer has a dispute over the product quality, the customer may file a complaint or claim against the Company to seek remedies via the customer service system. The Company also conducts the ―customer satisfaction survey‖ once per year to collect the feedback and needs from customers as the basis for its improvement and security of customers‘ rights. 4. Director insurance purchase status by the Company: The Company has taken out the liability insurance for directors since June 2019. The Company expects to submit the directors‘ liability insurance renewal report to the Board meeting in June 2021.

Certificate/license obtained by personnel involved in the transparency of financial information: 3 persons with a CPA license, and 2 persons with International Certified Internal Auditor license. IX.Please specify the status of the correction based on corporate governance assessment report released by corporate governance Center of TWSE in the most recent year, and the priority corrective actions and measures against the remaining deficiencies. 1. Assessment results: The Company ranked 21%~35% of the whole companies in 2019.
Corrective measures:

(1) The Company‘s annual report discloses the Board member diversification policy. The measures will be prepared based on relevant templates.

(2) The Company will upload the English version of the annual report within 7 days prior to a general shareholders‘ meeting as of 2021. (3) The Company will upload the English version of the meeting notice, meeting handbook and supplementary information within 30 days prior to a general shareholders‘ meeting as of 2021. (4) The Company established the functional committee, namely Nomination Committee, other than those required by laws voluntarily in 2020. Meanwhile, a majority of the Committee members are independent directors. The composition, functions and operations of the Committee are disclosed in the annual report. (5) The Company will upload the important news in Chinese and Englishs at the same time as of 2021. (6) The Company amended the Regulations Governing Performance Evaluation on Board of Directors to expressly define that it is necessary to conduct the external evaluation at least once per three (3) years and within the time limit prescribed in the Regulations, and disclose the implementation status and evaluation results on the Company‘s website or in the Company‘s annual report. (7) The Company has reported the consolidated financial statements and parent company only financial statements 2020 on February 25, 2021. (8) The Company expects to report the English version of quarterly financial statements as of Q1 in 2021. (9) The Company has provided the information about finance, business and corporate in English on the Company‘s website. (10) Upgrade the attendance rate at the communication meetings between the Company and Remuneration Committee. (11) The Company modifies the whistle-blowing system against misconduct (including corruption) and unethical conduct of the personnel inside and outside the Company, and discloses the same on the Company‘s website in detail.

4. The composition, functions and operations of the Remuneration Committee, if any, are disclosed as follows: (1) Information about Remuneration Committee members

Identity Status	Qualifications Name	Has at least five years of relevant working experience and the following professional qualifications	Has at least five years of relevant working experience and the following professional qualifications	Has at least five years of relevant working experience and the following professional qualifications				Compliance of independence (Note 3)	Compliance of independence (Note 3)	Compliance of independence (Note 3)	Compliance of independence (Note 3)	Compliance of independence (Note 3)			Number of other public listed companies in which he/she hold the position as a remuneration committee member
		Lecturer (or above) of commerce, law, finance, accounting, or any subject relevant to the Company‘s operations in a public or private college/university	A judge, public prosecutor, attorney-at-law, certified public accountant, or other professional or technical specialist who has passed a national examination and been awarded a certificate in a profession necessary for the business of the Company	Commercial, legal, financial, accounting or other work experience required for the Company‘s operations	1	2	3	4	5	6	7	8	9	10
Independent Director/Conv ener	Yue Chao-Tang														3
Independent Director	Liao Liao-Yu														1
Independent Director	Wang Yea-Kang														3

Note 1: Please specify director, independent director or others.
Note 2: A ―  ‖ is marked in the space beneath a condition number when a member has met that condition during the two (2) years prior to election and during his or her period of service. The conditions are as follows:
(1) Not an employee of the Company or any of its affiliates.
(2) Not a director or supervisor of the Company or its affiliates (unless the person is an independent director appointed by the Company and its parent company or subsidiaries, or subsidiaries subordinated to the same parent company pursuant to the Securities and Exchange Act (the ―Act‖) or the local laws and regulations).
(3) Not a natural-person shareholder who holds shares, together with those held by the person‘s spouse, minor children, or held by the person under others‘ names, in an aggregate amount of 1% or more of the total number of outstanding shares of the Company or ranking in the top 10 in holdings.
(4) Not a spouse, relative within the second degree of kinship, or lineal relative within the fifth degree of kinship, of the managers in subparagraph (1) or any of the persons in subparagraph s (2) & (3).
(5) Not a director, supervisor, or employee of a corporate shareholder that directly holds five percent or more of the total number of issued shares of the Company, or of a corporate shareholder that ranks among the top five in shareholdings, or of a corporate shareholder that designates its representative to act as the director or supervisor of the Company under Paragraph 1 or Paragraph 2 of Article 27 of the Company Act (unless the person is an independent director appointed by the Company and its parent company or subsidiaries, or subsidiaries subordinated to the same parent company pursuant to the Act or the local laws and regulations).

(6) Not a director, supervisor or employee of a company of which the director seats or a majority of voting shares and those of the Company are controlled by the same person (unless the person is an independent director appointed by the Company and its parent company or subsidiaries, or subsidiaries subordinated to the same parent company pursuant to the Act or the local laws and regulations).
(7) Not a director, supervisor or employee of a company or institution that is the same person or spouse of the Company's Chairman, President or equivalents (unless the person is an independent director appointed by the Company and its parent company or subsidiaries, or subsidiaries subordinated to the same parent company pursuant to the Act or the local laws and regulations).
(8) Not a director, supervisor, manager or shareholder holding more than 5% of the outstanding shares of a specific company or institution in a business or financial relationship with the Company (unless the specific or institution holds more than 20% but less than 50% of the total number of issued shares of the Company, and the person is an independent director appointed by the Company and its parent company or subsidiaries, or subsidiaries subordinated to the same parent company pursuant to the Act or the local laws and regulations).
(9) Not a professional individual who, or an owner, partner, director, supervisor, managerial officer of a sole proprietorship, partnership, company, or institution that provides audit services, or the commercial, legal, financial or accounting services, which have earned no more than NT$500,000 cumulatively for the most recent two years, to the Company or any affiliate of the Company, or the spouse thereof. Notwithstanding, this shall not apply to the members of the Remuneration Committee, Public Tender Offers Review Committee or Special Committee under Taiwan Business Mergers and Acquisitions Act, who perform duty pursuant to the Securities and Exchange Act or Business Mergers and Acquisitions Act.
(10) Not a person satisfying any conditions defined in Article 30 of the Company Law.

(2) Information about operations of Remuneration Committee

1. The Company‘s Remuneration Committee consists of 3 members.

Current term of office: June 8, 2018~June 7, 2021. In the most recent year (2020), the Company‘s Remuneration Committee has held a total of 3 meetings (A). The members‘ qualifications and attendance status are stated as follows:

Job Title	Name	Actual attendance (B)	Attendance by proxy	Actual attendance rate (%) (B/A) Note 2	Remarks
Convener	Yue Chao-Tang	2	1	67%	Note 3
Member	Liao Liao-Yu	3	0	100%
Member	Wang Yea-Kang	3	0	100%
Other items to be stated: 1. If the Board of Directors does not adopt, or amends, the recommendations of the Remuneration Committee, it shall state the meeting date, term, contents of the motion, Board of Directors‘ resolution, and the Company‘s resolution of the Remuneration Committee‘s opinion (if the salary adopted by the Board of Directors is better than the recommendations of the Remuneration Committee, please clarify the deviation and cause of the difference): N/A. 2. For resolution(s) made by the Remuneration Committee with the committee members voicing opposing or qualified opinions on the record or in writing, please state the meeting date, term, contents of motion, opinions of all members and the Company‘s resolution of said members‘ opinions: N/A. 3. Matters under discussion by the Remuneration Committee, the Remuneration Committee‘s resolution, and the Company‘s resolution of the members‘ opinion: 1. January15,2020(4th meetingof 4th term)Remuneration Committee Contents of Motion Resolution Committee members voicing opposing or qualified opinions 1. Review the motion for the Company‘s existing director and manager remunerationpolicyand system. The motion was passed by the whole members unanimously. N/A 2. Review the motion for the Company‘s remuneration to directors 2019. The motion was passed by the whole members unanimously. N/A 3. Review the motion for the payment of employee remuneration to theCompany‘s managers in 2019. The motion was passed by the whole members unanimously. N/A Said motion has been discussed andpassed bythe(11th meetingof 21st term)Board of Directors on January15. 2. April 29,2020(5th meetingof 4th term)Remuneration Committee

Contents of Motion	Resolution	Committee members voicing opposing or qualified opinions
1. Review the motion for payment of remuneration to the Company‘s Chairman, Lin Ming-Ju, for his service as the representative of the institutional director,Taiwan Steel Union Co.,Ltd..	The motion was passed by the whole members unanimously.	N/A
2. A motion for the amendments to the ―Remuneration Committee‘s Articles of Association‖ was submitted for discussion.	The motion was passed by the whole members unanimously.	N/A
Said motion has been discussed andpassed bythe(13th meetingof 21st term)Board of Directors on April 29.

Note 1: The Company has established the Remuneration Committee on October 25, 2011, and also convened the Remuneration Committee meetings on January 15, 2020, April 29, 2020 and July 31, 2020, respectively.

Note 2: Where a specific Remuneration Committee member may be relieved from duties before the end of the fiscal year, specify the date of discharge in the ―Remark‖ section. Actual attendance rate (%) was calculated on the basis of the number of Remuneration Committee meetings held during each director‘s term of office and the number of meetings actually attended by that director.

Note 3: Mr. Yue Chao-Tang was elected as the convener of meetings of the 4th term Remuneration Committee by the Remuneration Committee on June 8, 2018.

The composition, functions and operations of the Nomination Committee, if any, are disclosed as follows: I. The Company‘s Nomination Committee consists of 4 members.
II. Current term of office: October 30, 2020~June 7, 2021. In the most recent year (2020), the Company‘s Nomination Committee has held one meeting (A). The members‘ qualifications and attendance status are stated as follows:

Job Title	Name	Actual attendance (B)	Attendance by proxy	Actual attendance rate (%) (B/A) Note 2	Remarks
Convener	Yue Chao-Tang	1	0	100%	Note 3
Member	Lin Ming-Ju	1	0	100%
Member	Liao Liao-Yu	1	0	100%
Member	Wang Yea-Kang	1	0	100%
Other items to be stated: 1. To decline to adopt a recommendation of the Nomination Committee, the Board of Directors shall require the agreement of a majority of the directors present at a meeting attended by two-thirds or more of all of the directors. In such event, the Company shall specify the details and cause of the discrepancy in the Board meeting minutes, and within two days counting inclusively from the date of the Board meeting resolution, shall furthermore carry out a public announcement and reporting on the MOPS: N/A. 2. For resolution(s) made by the Nomination Committee with the committee members voicing opposing or qualified opinions on the record or in writing, please state the meeting date, term, contents of motion, opinions of all members and the Company‘s resolution of said members‘ opinions: N/A. Matters under discussion by the Nomination Committee, the Nomination Committee‘s resolution, and the Company‘s resolution of the members‘ opinion: 1. December 16,2020(1st meetingof 1st term)Nomination Committee Contents of Motion Resolution Committee members voicing opposing or qualified opinions 1. A motion for the nomination principles for the candidates of the Company‘s 22nd term directors was submitted for discussion. The motion was passed by the whole members unanimously. N/A

Note 1: The Company has established the Nomination Committee on October 30, 2020, and also convened the Nomination Committee meeting on December 16, 2020.
Note 2: Where a specific Nomination Committee member may be relieved from duties before the end of the fiscal year, specify the date of discharge in the ―Remark‖ section. Actual attendance rate (%) was calculated on the basis of the number of Nomination Committee meetings held during each director‘s term of office and the number of meetings actually attended by that director.

Note 3: Nominated and elected as the convener of meetings of 1st term Nomination Committee by the Company‘s Nomination Committee members on October 30, 2020.

Fulfillment of corporate social responsibility, and deviations from the Corporate Social Responsibility Best Practice Principles for TWSE/TPEX Listed Companies, and reasons thereof:

Scope of evaluation			Status	Status	Status	Status	Status	Status	Deviations from the Corporate Social Responsibility Best Practice Principles for TWSE/TPEX Listed Companies,and reasons thereof
	Yes	No	Summary
1. Whether the Company conducts the risk assessment on the environment, society and corporate governance issues concerning the Company's operations in accordance with the materiality principle, and adopt related risk managementpolicies or strategies?			Please refer to Paragraphs 1.2 and 2.3 of the Company‘s CSR report. The CSR report is disclosed on the Company‘s website at (http://www.fenghsin.com.tw/csr.htm)/CSR Report Download.						Conformity
2. Whether the Company establishes a unit dedicated to (concurrently engaged in) promoting corporate social responsibility under supervision by the high-rank management authorized by the Board of Directors who shall be responsible for reporting the status thereof to the Board of Directors?			The Company‘s HR Section serves as the unit concurrently engaged in promoting corporate social responsibility and responsible for proposing and executing corporate social responsibility policy or system. The Administrative Department head shall submit a report to the Board of Directors once per year. The status thereof in 2020 has been reported to the Board of Directors on January 28, 2021. The related report is also disclosed on the Company‘s website at http://www.fenghsin.com.tw/csr.htm/CSR Report. The Company‘s CSR status in 2020 is stated as follows: 1. Emergency relief The Company has boosted the ―Implementation Regulations Governing Emergency Relief to Houli Village Residents‖ since 2006. Any person registering his/her address and residing in Houli who needs support from outsiders to solve the difficulty in life badly, in the event of any major accident suffered by his/her family or him/her personally, may be awarded the relief adequately. The statistics about funded cases and value from 2016 to 2020 are stated as follows: Unit: NT$						Conformity
			Year	2016	2017	2018	2019	2020
			Number of cases	51	46	55	43	47
			Amount	560,000	465,000	510,000	430,000	450,000
			2. Neighborhood caring activity The Company extends care for the community development and helpsparticipation in local activities. It sponsors the

expenditure for equipment and activities required by various community associations, disadvantaged groups, schools and entities in the district of Houli and participates in local public welfare activities, such as marathon, biking and charity carnivals, via the Company‘s internal societies. The statistics about sponsorship to expenditure for the local neighborhood caring activities from 2016 to 2020 are stated as follows:

Unit: NT$ Year 2016 2017 2018 2019 2020 Amount 962,180 1,625,530 3,156,410 2,520,637 1,046,956 3. Scholarship/fellowship The Company has boosted the ―Implementation Regulations Governing Scholarship/Fellowship to Schools in Houli District‖ since 2011. In order to encourage the students from schools in Houli District to be upright in character and diligent in the pursuit of knowledge and to study hard, the Company contributes the scholarship/fellowship to the schools in March of each year. The scholarship is awarded to students with good conduct and outstanding performance, and the fellowship is awarded to those from low-income households.

The statistics about students receiving the scholarship/fellowship from 2016 to 2020 are stated as follows:

follows:
	Number of students receiving scholarships	Number of students receiving fellowships	Total number of students	Total contributed amount
2020	408 persons	282 persons	690 persons	NT$1.99 million
2019	409 persons	284 persons	693 persons	NT$2 million
2018	389 persons	266 persons	655 persons	NT$1.65 million
2017	400 persons	276 persons	676 persons	NT$1.65 million
2016	406 persons	272 persons	678 persons	NT$1.62 million

Donation for major natural disasters The Company will donate funds as relief for major natural disasters at home and abroad, if any, in order to help victims

recover from the pains and rebuild their home as early as	recover from the pains and rebuild their home as early as	recover from the pains and rebuild their home as early as
possible.
Major natural disasters	Donated fund(NT$)
September 1999 921 Earthquake	(including	employees‘
	one-day salary
	donation)3,357,730
July2004 Typhoon MINDULLE		5,000,000
September 2009 Typhoon Morakot		10,000,000
March 2011 311 Japan Earthquake		1,000,000
Tsunami
July 2014 Kaohsiung Gas		3,000,000
Explosion
February2016 0206 Tainan Earthquake		5,000,000,
5. Provide the local employment opportunities
In principle, the Company will hire local residents		in Houli or
neighborhood areas who meet certain	requirements as its
workers as the first priority. The Company has hired a total of
884 workers until December 31, 2020, including 54 foreign
laborers and 830 local workers. The relevant statistics are
summarized bythe registered address as follows:
TaichungCity District Houli District Waipu District Fenyuan District Dajia District Others in Taichun	Miaoli County Sanyi Village Others in Miaoli	Other cities/c
g		ounties Total
Numbe 375 135 78 53 121	7 24	55 830
r of
person
Percent 43.01% 16.27% 9.40% 6.39% 14.58%	0.84% 2.89%	6.63% 100%
age

III. Environmental issues

(1) Has the Company established an appropriate environmental  management system according to the specific nature of the industry?

(1) Has the Company established an appropriate environmental  (1) The Company establishes the related international Conformity management system according to the specific nature of the certification systems, including ISO9001, ISO14001, industry? OHSAS18001 and ISO14001. (2) Has the Company endeavored to maximize the use of the  (2) As the Company is engaged in the Electric Arc Furnace Conformity various resources and utilize renewable materials that pose (EAF) steelmaking business, it recycles waste iron to make the least impact on the environment? various steel materials required for people's livelihood and uses the best effort to improve its efficiency recycling and utilizing waste iron. Certain materials used by the Company in the production process may also be recycled, or reused to produce eco-friendly products that pose the least impact to the environment. (3) Whether the Company assesses the potential risk and  (3) Please refer to Paragraph 2.3.2 of the Company‘s CSR Conformity

opportunity posed by climate transformation to the enterprise, now and in the future, and takes responsive measures related to climate issues? (4) Whether the Company gathers the statistics about the annual greenhouse gas emission, water consumption and gross weight of waste for the past two years, and adopts policies for energy conservation and carbon reduction, greenhouse gas reduction, reduction of water consumption or management of other wastegoods?			report. The CSR report is disclosed on the Company‘s website at (http://www.fenghsin.com.tw/csr.htm)/CSR Report Download. (4) Please refer to Paragraphs 3.3.1, 3.2, 3.3.3 and 3.4 of the Company‘s CSR report. The CSR report is disclosed on the Company‘s website at (http://www.fenghsin.com.tw/csr.htm)/CSR Report Download.	Conformity
IV. Social Issues (1) Whether the Company establishes the related management policies and procedures in accordance with the relevant laws and international human rights conventions? (2) Whether the Company adopts and implements reasonable employee benefits policy (including remuneration, vacation and other benefits, etc.), and reflects the operating performance or results to the remuneration to employees adequately? (3) Whether the Company provides the existence of a safe and healthy work environment and regular safety and health training to employees? (4) Whether the Company establishes some effective career development training plan for employees? (5) Whether the Company complies with the related laws and international practices with respect to customers‘ health and safety, customers‘ privacy, marketing and labeling for its products and services, and adopts related consumer protection policy and grievance procedures?	    		(1) The Company enacts the charters and regulations pursuant to labor laws and related decrees to protect employees‘ rights. (2) Please refer to Paragraph 4.4 of the Company‘s CSR Report. (3) The Company engages in the ―safe partnership‖ with the Ministry of Labor, in order to improve the safety of workplaces where the employees are working through persisting self-management. Health: Invite hospitals and health promotion associations to Organize health seminars for employees once per six months. Safety: The company organizes seminars from time to time to improve employees' awareness of working environment safety. (4) The Company trains excellent workers per various units‘ planning, and recruits management trainees externally if necessary. (5) Please refer to Paragraph 2.5 of the Company‘s CSR Report. The CSR report is disclosed on the Company‘s website at (http://www.fenghsin.com.tw/csr.htm)/CSR Report Download. (6) Please refer to Paragraph 2.6 of the Company‘s CSR report. The CSR report is disclosed on the Company‘s website at(http://www.fenghsin.com.tw/csr.htm)/CSR Report	Conformity Conformity Conformity Conformity Conformity Conformity
(6) Whether the Company adopts any specific suppliers‘ management policy demanding that the suppliers should comply with the related regulations governing	

environmental protection, occupational safety and health or labors‘ human rights,and how is thepolicyimplemented?		Download.
V. Whether the Company prepares the report disclosing the Company's non-financial information, such as CSR report, based on the guidelines or directions for preparing reports applicable internationally? Whether said report has been assured orguaranteed bya third-partycertification unit?		Please refer to the paragraph about the principles of preparation in the Company‘s CSR report.	Conformity
VI. If the Company has drafted its own corporate social responsibility best practice principles in accordance with the ―Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies,‖ please state the deviations of its current practices and Principles drafted by it from said Best Practice Principles: The Corporate Social Responsibility Policy and Corporate Social Responsibility Best Practice Principles drafted by the Company were passed by the Board meetings on October 29, 2014 and March 8, 2018, respectively. The same was also disclosed on the Company‘s website to be followed by all employees. Meanwhile, the Corporate Social Responsibility Best Practice Principles are also disclosed on the MOPS as the reference for stakeholders. Its current practices and principles have no deviations from said Best Practice Principles.
VII. Other important information to facilitate a better understanding of the Company‘s corporate social responsibility practices: 1. The Company has passed the certification by EHS management systems, including ISO 14001, ISO 14064, ISO 45001 and CNS 45001, reflecting that the Company owns a robust management system and also values industrial safety and employees‘ benefits. Therefore, the labor-management relationship is considered harmonious. Externally, the Company helps communities build a green environment and sponsors environmental protection volunteer groups. The Company also provides emergency relief to poor families in the community and, therefore, wins a good reputation. 2. In order to insist on the Company‘s environmental protection philosophy about ―good neighbor,‖ the Company has invested huge expenditure in procurement of pollution prevention equipment to be integrated into the production process, equipped with perfect dust-collection equipment, waste water recycling equipment, soundproof walls, sweeper trucks and furnace slag trucks, etc.. Meanwhile, the Company has engaged in the landscaping project throughout its plants permanently, in order to fulfill its corporate social responsibility. 3. Please visit the Company‘s website at (http://www.fenghsin.com.tw/csr.htm)/Corporate Social Responsibility/Execution Report to access the information related to the Company‘s current corporate social responsibility practices. 4. The Company was honored the ―Excellence Award of the Year for Industry GHS Reduction‖ by Industrial Development Bureau, Ministry of Economic Affairs in 2018, and the ―Excellent Supplier of VoluntaryGHG Reduction‖ in 2019.
VIII. If the Company‘s CSR report has met the assurance standards of relevant certification institutions,theyshould be stated below: N/A.

7. Fulfillment of ethical management, and deviations from the Ethical Corporate Management Best Practice Principles for TWSE/TPEX Listed Companies, and reasons thereof:

Scope of evaluation	Status	Status	Status	Deviations from the Ethical Corporate Management Best Practice Principles for TWSE/TPEX Listed Companies,and reasons thereof
	Yes	No	Summary
I. Establish Ethical Management Policies and Programs (1) Whether the Company adopts the ethical management policy approved by the Board of Directors, and expressly state the ethical corporate management policy and rules, and its fulfillment by the Board of Directors and senior management in its Articles of Incorporation and public documents? (2) Whether the Company establishes the assessment mechanism about unethical conduct to analyze and assess the operating activities with a higher risk of unethical conduct in the scope of business periodically, and adopts the unethical conduct prevention program based on the mechanism, which shall at least cover the prevention measures referred to in subparagraph s of Paragraph 2, Article 7 of the ―Ethical Corporate Management Best Practice Principles for TWSE/TPEx-Listed Companies‖?	 		(1) The Company‘s Board of Directors has resolved on October 29, 2014 to adopt the ethical corporate management best practice principles, in order to fulfill the commitments of the Board of Directors and management toward ethical management. The principles are also disclosed on the Company‘s website and MOPS to expressly state the Company‘s ethical management policy. (2) The Company‘s Board of Directors has resolved on February 4, 2015 to pass the Company‘s Procedures for Ethical Management and Guidelines for Conduct. Feng Hsin Steel also stipulates in its ―Personnel Management Rules‖ that employees shall note their characters, act and speak cautiously, and refrain from taking advantage of their job duties to seek personal interest. Meanwhile, it also states in the ―Regulations Governing Reward and Punishment to Workers‖ that any worker is proven to seek personal interest and engage in corruption, theft or misappropriation of public funds, accept bribe or commission, or damage the Company‘s property intentionally will be removed from duty or terminated from employment, subject to the circumstances, in order to stop any corruption. All of the Company‘s departments/plants and subsidiaries shall self-check their operating indicators via the internal audit/control system, including compliance with laws, timely adjustment of the design and execution of internal control system, and practice the self-supervision mechanism. The Company expressly states in its Procedures for Ethical Management and Guidelines for Conduct that any business activities involving higher risk over unethical conduct are strictly forbidden. No corruption or bribe	Conformity Conformity

Scope of evaluation			Status	Status	Status	Deviations from the Ethical Corporate Management Best Practice Principles for TWSE/TPEX Listed Companies,and reasons thereof
	Yes	No	Summary
(3) Whether the Company expressly states the SOP, guidelines for conduct and reward & punishment and grievance systems in the unethical and the conduct prevention program, implements the sameprecisely,and reviews amendments to saidprogram?			was found in 2020. (3) The Company expressly states in its Procedures for Ethical Management and Guidelines for Conduct that any business activities involving higher risk over unethical conduct are strictlyforbidden.			Conformity
II. Implementation of ethical management (1) Whether the Company assesses a trading counterpart‘s ethical management record, and expressly states the ethical management clause in the contract to be signed with the trading counterpart? (2) Whether the Company establishes a unit dedicated to promoting ethical corporate management under the supervision of the Board of Directors which shall be responsible for reporting the status of implementation of the ethical management policy and unethical conduct prevention program to the Board of Directors periodically (at least once per year)?
			(1) The Company will conduct on-site survey and credit investigation against new customers, and expressly state the performance bond in the contract. (2) The Company‘s HR Section is responsible for preparing and executing the ethical management policy, under the supervision of the Audit Office. The Administrative Department head shall also report the status of implementation thereof to the Board of Directors once per year. The status thereof in 2020 has been reported to the Board of Directors on January 28, 2021. The related report is also disclosed on the Company‘s website at http://www.fenghsin.com.tw/csr.htm/Ethical Management Practices. The relevantpractices thereof are stated as follows:			Conformity
						Conformity
			Provisions (Ethical Corporate Manageme nt Best Practice Principles)	Item	Major Deficiency/Status
			Article 2.	Prohibition of Unethical Conduct	N/A
			Article 9.	Ethical Management of Business Activities	N/A
			Article 10.	Prohibition of Offering and Acceptance of Bribe	N/A
			Article 11.	Prohibition of Illegal Political Contribution	N/A

			Status	Status	Status	Status	Status	Status	Status	Status	Status	Status	Status	Status
Yes	No		Summary
		Article 12.	Prohibition of Unjustified Charity Donation or Sponsorship					N/A
		Article 13.	Prohibition of Unreasonable Gifts and Treats, or Other Unjustified Benefit					N/A
		Article 8.	Commitment and Execution					1. The Principles are disclosed on the Company‘s website and the MOPS. Meanwhile, the Company also provides access to the grievance channels in the stakeholder section on the Company‘s website at http://www.fenghsin.com.tw/investo r.htm). As a result, no related grievance cases were found in 2020. 2. Further, new employees will be required to attend the courses about Ethical Corporate Management Best Practice Principles and Procedures for Ethical Management and Guidelines for Conduct for 0.5 hours. The number of employee trainees was 58 persons, who attended the training courses for 29 hours in total,in 2020.
		No misconduct or major deficiency with respect to the Ethical Corporate Management Best Practice Principles was found in 2020. The annual ethical corporate management plan implementation status in 2020: Annual ethical corporate managementplan Q1 Q2 Q3 Q4 Month 1 2 3 4 5 6 7 8 9 10 11 12 Promotiona l Plan Case briefing and On June 19, 2020, Section Case briefing and Case briefing and
			Annual ethical corporate managementplan
			Q1			Q2			Q3			Q4
		Month	1	2	3	4	5	6	7	8	9	10	11	12
		Promotiona l Plan	Case briefing and			On June 19, 2020, Section			Case briefing and			Case briefing and

Scope of evaluation				Status	Status	Status		Deviations from the Ethical Corporate Management Best Practice Principles for TWSE/TPEX Listed Companies,and reasons thereof
	Yes	No			Summary
(3) Has the Company established a policy to prevent conflicts of interest, provided a proper reporting channel, and implemented it accordingly? (4) Whether the Company fulfills the ethical management by establishing an effective accounting system and internal control system, and has an internal audit unit research and adopt related audit plans based on the unethical conduct risk assessment result and conduct audits on the compliance by the unethical conduct prevention program or appoints a CPA to conduct the audits?	 			promotion, gathering of statistics about readback rate.	Chief Shen from Investigation Bureau was invited to promote the ethical management laws and regulations.	promotion, gathering of statistics about readback rate.	promotion, gathering of statistics about readback rate.	Conformity Conformity
			Readback rate (quarterly hit counts/total number of ERP) and statistics about trainees	40.48%	22 factory managers attended the courses.	32.24%	33.45%

Scope of evaluation	Status	Status	Status	Deviations from the Ethical Corporate Management Best Practice Principles for TWSE/TPEX Listed Companies,and reasons thereof
	Yes	No	Summary
(5) Whether the Company organizes internal/external education training program for ethical management periodically?			report on the internal audit affairs. (5) The Company requires that new employees should attend the training courses about Ethical Corporate Management Best Practice Principles and Procedures for Ethical Management and Guidelines for Conduct for 0.5 hours. The number of employee trainees was 58 persons, who attended the training courses for 29 hours in total, in 2020. Further, the Company also discloses related regulations on the Company‘s website, as the rules to be followed byall employees.	Conformity
III. Status of the Company‘s whistle-blowing system (1) Whether the Company has defined a specific whistle-blowing and reward system, and established some convenient whistle-blowing channel, and assigned competent dedicated personnel to deal with the situation? (2) Whether the Company defines the standard operating procedure, follow-up measures to be taken upon completion of the investigation, and nondisclosure mechanism toward the investigation of complaints as accepted? (3) Whether the Company has adopted any measures to prevent the whistle-blowers from being abused after the whistle-blowing?	  		(1) The Company also provides stakeholders with the access to channels for seeking remedies or whistle-blowing any misconduct on the Company‘s website at http://www.fenghsin.com.tw/investor.htm/Stakeholder/Grievanc e & Communication). The Administrative Department head is responsible for dealing with the situation directly. (2) The related operating procedures are defined in the ―Procedures for Ethical Management and Guidelines for Conduct‖ adopted by the Company. (3) The Company keeps the whistle-blower‘s personal information in confidence strictly and adopts adequate protective measures to protect the personal data and privacy pursuant to laws.	Conformity Conformity Conformity
IV. Strengthening Information Disclosure Whether the Company has disclosed the Ethical Corporate Management Best Practice Principles adopted by it, and the effect of implementation thereof on its website and the MOPS?			The Company discloses corporate governance-related laws and regulations in the stakeholder section on its website at (http://www.fenghsin.com.tw/investor.htm/Stakeholder/Corpora te Governance).	Conformity
V. If the Company has drafted its own ethical corporate management best practice principles in accordance with the "Ethical Corporate Management Best Practice Principles for TWSE/TPEx Listed Companies,‖please describe the deviation of itspractices and ownprinciples from said Best Practice Principles: N/A.

Scope of evaluation	Status	Status	Status	Deviations from the Ethical Corporate Management Best Practice Principles for TWSE/TPEX Listed Companies,and reasons thereof
	Yes	No	Summary
VI. Other important information to facilitate a better understanding of the Company‘s ethical management practices (e.g. discussion of an amendment to the ethical corporate management best practice principles adopted by the Company): For related information, please visit the Company‘s website at http://www.fenghsin.com.tw/investor.htm/Stakeholder/Corporate Governance/Ethical Management Status.

If the Company has established its own corporate governance best practice principles and related regulations, please disclose how to access the same:
(1) Please refer to the MOPS/Corporate Governance/Adoption of Corporate Governance-Related Regulations and Rules/2015 Feng Hsin Steel Co., Ltd. - Corporate Governance Best Practice Principles, Parliamentary Rules for Shareholders‘ Meetings, Parliamentary Rules for Directors‘ Meetings, Procedure for Election of Directors and Supervisors, Regulations Governing the Scope of Power of Independent Directors, Rules Governing Financial and Business Matters Between the Company and its Affiliated Enterprises, Audit Committee‘s Articles of Association, Ethical Corporate Management Best Practice Principles, Remuneration Committee‘s Articles of Association, Corporate Social Responsibility Best Practice Principles, Regulations Governing Performance Evaluation on Board of Directors, Procedures for Ethical Management and Guidelines for Conduct,and Nomination Committee Organization Rules at https://mops.twse.com.tw/mops/web/t100sb04_1.
(2) Please access the related regulations on the Company‘s website\Stakeholder\Corporate Governance at
- http://www.fenghsin.com.tw/investor.htm/Stakeholder/Corporate Governance/Articles of Incorporation and Related Regulations; the Company‘s website/Corporate Social Responsibility/Corporate Social Responsibility Best Practice Principles at http://www.fenghsin.com.tw/csr.htm/CSR/CSR Best Practice Principles.
Other important information that is sufficient to enhance the understanding of corporate governance operations may be disclosed altogether: N/A.

10. Internal Control System Implementation Status

10-1. Declaration of Statement for Internal Controls

Feng Hsin Steel Co., Ltd.

Declaration of Statement for Internal Control System

Date: February 25, 2021

The following statement is made based on the results of the self-evaluation on the Company’s internal control system in 2020:

1. The Company acknowledges and understands that the establishment, implementation and maintenance of the internal control system are the responsibility of the Board and management and that such a system has been implemented within the Company. The purpose of this system is to provide reasonable assurance in terms of business performance, efficiency (including profitability, performance, asset security etc), reliable, timely and transparent financial reporting, and regulatory compliance.

2. The internal control system is designed with inherent limitations. No matter how perfect the internal control system is, it can only provide reasonable assurance to the fulfillment of the three objectives referred to above. Moreover, the effectiveness of the internal control system could be affected by the changes in the environment and circumstances. However, a self-monitor mechanism is installed in the internal control system of the Company. The Company will make corrections once the deficiencies are identified.

3. The Company has assessed the effectiveness of the internal control system design and implementation in accordance with the criteria provided in the “Regulations Governing the Establishment of Internal Control Systems by Public Companies” (hereinafter referred to as “the Regulations”). The criteria introduced by the Regulations consist of five major elements, each representing a different stage of internal control: 1. Control environment; 2. Risk assessment; 3. Control operation; 4. Information and communication; and 5. Supervision. Each element further encompasses several sub-elements. Please refer to “the Regulations” for details.

4. The Company has adopted said criteria to validate the effectiveness of its internal control system design and implementation.

5. Based on the assessment result referred to in the preceding paragraph. The Company believes that the design and implementation of the internal control system (including monitoring and management on subsidiaries) as of December 31, 2020, including the achievement rate o f effectiveness and efficiency of operations and reliability, timeliness, transparency, and regulatory compliance of reporting, as well as the compliance with applicable laws, regulations, and bylaws, are effective and may reasonably ensure the achievement of said goals.

6. The Statement will be the major contents of the annual report and prospectus of the Company to be publicly disclosed. Any illegalities such as misrepresentations or concealments in the published contents mentioned above will be considered a breach of Articles 20, 32, 171, and 174 of the Securities and Exchange Act and incur legal liability.

7. The Statement was passed unanimously without objection by all 13 Directors present at the Board meeting dated February 25, 2021.

Feng Hsin Steel Co., Ltd.

Chairman of Board: Lin Ming-Ju

President: Lin Ta-Chun

10-2. The independent auditor's report issued by the CPA commissioned to conduct an internal control audit if any: The Company never appoints a CPA to review its internal control system exclusively.

Punishments received by the Company and its internal personnel pursuant to laws and punitive actions issued by the Company against its internal employees in violation of the internal control system provisions for the latest year until the date of publication of the Annual Report, major deficiency and correction status: N/A.
Important resolution of the Board of Directors and shareholders‘ meetings as of the date of publication of the annual report:

12-1. Resolutions by shareholders‘ meetings and execution thereof: (General Shareholders‘ Meeting 2020)

Date & Time: 9:00AM, June 1, 2020 (Wednesday)

Present directors: Lin Ming-Ju, Chen Mu-Tse, Lin Chiu-Huang, Lin Wen-Fu, Lai San-Ping, Lin Kun-Tan, Chung Chao-Chuan, Lin Ta-Chun, Lin Chi-Jui, Yang Tsung-Ju and Liao Liao-Yu (totaling 11 persons).

Proposed Resolutions:

Summary: Proposed Resolution for Business Report and Financial Statements 2020 (Proposed by the Board of Directors)

Note: The Audit Committee has inspected the Company's business report and financial statements (including consolidated and parent company only financial statements) 2020. Among the other things, said financial statements were also audited by Chen Ming-Hung, CPA and Yen Wen-Pi, CPA of EY Taiwan. The business report and financial statements are proposed for resolution.

Resolution: The voting result (including e-balloting) shows the votes in favor of the motion, 491,307,086 votes, i.e. 98.73% of the total votes represented by present directors; the votes opposing the motion, 26,881 votes, i.e. 0% of the total votes represented by present directors; the votes valid, 6,283,822 votes, i.e. 1.26% of the total votes represented by present directors. Apparently, the votes in favor exceed the statutory votes and the motion was passed unanimously.

Execution of resolutions and review thereof: The financial statements have been announced

and reported per the competent authority‘s requirements. Further, the business report will serve as the basis for follow-up on the Company‘s operations and compliance.

Summary: To propose the resolution for allocation of earnings 2019 (Proposed by the Board of Directors)

Explanation: The allocation of earnings 2019 is planned as follows:

Feng Hsin Steel Co., Ltd.

Statement of Earnings Allocation 2019

Unit: NT$

	Unit: NT$
Item	Amount
Unallocated earnings - beginning	5,722,104,027
Add(less):
Other comprehensive income (Defined benefit plan re-measurement amount - 2019)	2,088,391
Current net income 2019	1,962,354,968
Allocable earnings	7,686,547,386
Less:

Provisions
Appropriation of legal reserve(10%)	(196,444,336)
Reversal of special reserve set asidepursuant to laws	38,261,452
Allocations
Shareholder bonus - cash (NT$3.00 distributed per share)	(1,744,798,272)
Unallocated earnings - ending	5,783,566,230

Note 1: The cash dividends will be calculated and truncated to the nearest NTD. Fractions shall be summed and recognized by the Company as other income.
Note 2: The earnings 2019 shall be allocated as the first priority this year. Note 3: Once resolved at the Annual General Meeting, the Board of Directors will be authorized to set the ex-dividend date and date of allocation with respect to the cash dividends referred to herein.
Resolution: The voting result (including e-balloting) shows the votes in favor of the motion, 491,308,086 votes, i.e. 98.73% of the total votes represented by present directors; the votes opposing the motion, 26,881 votes, i.e. 0% of the total votes represented by present directors; the votes valid, 6,282,822 votes, i.e. 1.26% of the total votes represented by present directors. Apparently, the votes in favor exceed the statutory votes and the motion was passed unanimously.

Execution of resolutions and review thereof: The Company‘s allocation of earnings 2019

was passed by the Board of Directors on June 10, 2020. The ex-dividend record date was set on July 5, 2020. The distribution of cash dividends was completed on July 23, 2020.

Discussed Motions:

Summary: The motion for amendments to the ―Operating Procedure for Acquisition or Disposal of Assets.‖ (Proposed by the Board of Directors)

Explanation: Cross Reference Table for the ―Operating Procedure for Acquisition or Disposal of Assets‖(omitted)

Basis: Amend the related provisions in accordance with FSC‘s letter under

Jin-Guan-Zheng-Fa-Zi No. 1070341072 dated November 27, 2018 and in response to the Company‘s needs.
Resolution: The voting result (including e-balloting) shows the votes in favor of the motion, 491,098,083 votes, i.e. 98.68% of the total votes represented by present directors; the votes opposing the motion, 26,881 votes, i.e. 0% of the total votes represented by present directors; the votes valid, 6,492,822 votes, i.e. 1.30% of the total votes represented by present directors. Apparently, the votes in favor exceed the statutory votes and the motion was passed unanimously.

Execution of resolutions and review thereof: Complete the amendments per resolution by

the shareholders‘ meeting, and execute related operations in accordance with the amended regulations.

Summary: The motion for amendments to the ―Parliamentary Rules for Shareholders‘ Meetings.‖ (Proposed by the Board of Directors)

Explanation: Cross Reference Table for the amendments to the Company‘s ―Parliamentary

Rules for Shareholders‘ Meetings.‖(omitted)

Basis: Amend the Rules in accordance with the ―Sample Template for XXX Co., Ltd. Rules of Procedure for Shareholders Meetings‖ promulgated by TWSE on January 2, 2020 and in response to the Company‘s needs.
Resolution: The voting result (including e-balloting) shows the votes in favor of the motion, 491,094,083 votes, i.e. 98.68% of the total votes represented by present directors; the votes opposing the motion, 26,884 votes, i.e. 0% of the total votes represented by present directors; the votes valid, 6,496,822 votes, i.e. 1.30% of the total votes represented by present directors. Apparently, the votes in favor exceed the statutory votes and the motion was passed unanimously.

Execution of resolutions and review thereof: Complete the amendments per resolution by

the shareholders‘ meeting, and execute related operations in accordance with the amended regulations.

12-2. Important resolutions by the Board of Directors: Date & Time: 10:30AM, April 29, 2020 (Wednesday)

(13th meeting of 21st term)

Proposed Resolutions:

Summary: The motion for the financial statements of Q1 2020.

Preparation of the consolidated financial statements (consolidated balance sheets, consolidated statements of comprehensive income, consolidated statements of changes in shareholders‘ equity, consolidated statements of cash flow and notes) of Q1 2020 was completed.
The consolidated financial statements, together with the independent auditor‘s report issued by Tu Ching-Yuan, CPA and Yen Wen-Pi, CPA of EY Taiwan (omitted).
The motion has been acknowledged by Audit Committee on April 29.

Resolution: The motion was acknowledged by all present directors unanimously upon inquiry by the chairperson.

Discussed Motions:

Summary: The motion for amendments to the ―Parliamentary Rules for Shareholders‘ Meetings.‖

Explanation: 1. Amend the Rules in accordance with the ―Sample Template for XXX Co., Ltd. Rules of Procedure for Shareholders Meetings‖ promulgated by TWSE on January 2, 2020.
For the cross-reference table for the amendments, please refer to the attachment hereto (omitted).
The motion was submitted to the meeting of the Audit Committee on April 29, which is going to be proposed at the general shareholders‘ meeting 2020.

Resolution: The motion was approved by all present directors unanimously upon inquiry by the chairperson.

Summary: A motion for amendments to the agenda of the general shareholders‘ meeting 2020 was submitted for discussion.

Explanation: (1) In response to the epidemic prevention policy, the Company planned to change the meeting place and find another more flexible place, and also amend the Company‘s ―Parliamentary Rules for Shareholders‘ Meetings.‖

Therefore, the agenda of the general shareholders‘ meeting 2020 was amended.

(2) New meeting place: No. 259, Sec. 3, Houke Rd., Houli Dist., Taichung City
(3) Contents of the general shareholders‘ meeting after the amendments:
I. Reports
Report on Business Overview 2019
Report on Financial Statements 2019 Reviewed by Audit Committee
Report on Allocation of Remuneration to Employees and Directors 2019

II. Proposed Resolutions

Summary: Proposed Resolution for Business Report and Financial Statements 2019
Summary: Proposed resolution for allocation of earnings 2019
III. Discussed Motions
Summary: The motion for amendments to the Company‘s ―Operating Procedure for Acquisition or Disposal of Assets.‖
Summary: The motion for amendments to the Company‘s ―Parliamentary Rules for Shareholders‘ Meetings.‖ (Add the agenda)
IV. Extemporary Motions:

Resolution: The motion was approved by all present directors unanimously upon inquiry by the chairperson.

Date & Time: 10:00AM, June 10, 2020 (Wednesday)

(14th meeting of 21st term)

Discussed Motions:

Summary: The ex-dividend record date and date of distribution of the Company‘s dividends 2019.

Explanation: 1. Contents of distribution: The Company‘s motion for allocation of earnings 2019 has been passed by the general shareholders‘ meeting. As a result, the cash dividends to be distributed totaled NT$1,744,798,272, at NT$3.00 per share. Please refer to the attachment for the agenda (omitted).
Ex-dividend trading date: June 29, 2020
Ex-dividend record date: July 5, 2020
Date of distribution: July 23, 2020.
Date of suspension of transfer registration: July 1~July 5, 2020
Due date for transfer registration; June 30, 2020.
Name, Address, and Tel. No. of the Stock Transfer Agency: Name: CTBC Bank Co., Ltd., Transfer Agency Department Address: 5F, No. 83, Sec, 1, Chongcing S. Rd. Jhongjheng Dist., Taipei City 10008

Tel. No: (02) 66365566

Resolution: The motion was approved by all present directors unanimously upon inquiry by the chairperson.

Date & Time: 10:00AM, July 31, 2020 (Friday)

(15th meeting of 21st term)

Proposed Resolutions:

Summary: The motion for the financial statements of Q2 2020.

Preparation of the consolidated financial statements (consolidated balance sheets, consolidated statements of comprehensive income, consolidated statements of changes in shareholders‘ equity, consolidated statements of cash flow and notes)

of Q2 2020 was completed.

The consolidated financial statements, together with the independent auditor‘s report issued by Chen Ming-Hung, CPA and Yen Wen-Pi, CPA of EY Taiwan (omitted).
The motion has been acknowledged by Audit Committee on July 31.
Resolution: The motion was acknowledged by all present directors unanimously upon inquiry by the chairperson.

Discussed Motions:

Summary: The motion for amendments to the ―Parliamentary Rules for Shareholders‘ Meetings.‖

Explanation: 1. Amend the relevant provisions in accordance with the ―Sample Template for XXX Co., Ltd. Rules of Procedure for Shareholders Meetings‖ promulgated by TWSE on June 3, 2020.
Amend Article 2 according to said Sample Template
For the cross reference table for the amendments, please refer to the attachment hereto (omitted).
The motion was submitted to the Audit Committee meeting for discussion on July 31, which is going to be proposed at the general shareholders‘ meeting 2021 for discussion.

Resolution: The motion was approved by all present directors unanimously upon inquiry by the chairperson.

Date & Time: 10:15AM, October 30, 2020 (Friday)

(17th meeting of 21st term)

Proposed Resolutions:

Summary: The motion for the financial statements of Q3 2020.

Explanation: 1. Preparation of the consolidated financial statements (consolidated balance sheets, consolidated statements of comprehensive income, consolidated statements of changes in shareholders‘ equity, consolidated statements of cash flow and notes) of Q3 2020 was completed.
The consolidated financial statements, together with the independent auditor‘s report issued by Chen Ming-Hung, CPA and Yen Wen-Pi, CPA of EY Taiwan (omitted).
The motion has been acknowledged by Audit Committee on October 30.

Resolution: The motion was acknowledged by all present directors unanimously upon inquiry by the chairperson.

Discussed Motions:

Summary: A motion for the amendments to the ―Articles of Incorporation‖ was submitted for discussion.

Explanation: 1. The related provisions were amended according to the ―Taiwan Stock Exchange Corporation Operation Directions for Compliance with the Establishment of Board of Directors by TWSE Listed Companies and the Board's Exercise of Powers‖ and relevant practices.
Amend Article 16, as a result of the literal corrections. Amend Article 25, as a result of the addition of literal descriptions about the remuneration to managers. Amend Article 27-1, as a result of the addition of the contents providing that the Board of Directors is authorized to resolve the cash dividend distribution to shareholders. Amend Article 31, as a result of the addition of date of amendments.

For the cross reference table for the amendments, please refer to the attachment hereto (omitted).
The motion was submitted to the Audit Committee meeting for discussion on October 30, which will be proposed at the general shareholders‘ meeting 2021 for discussion.

Resolution: The motion was approved by all present directors unanimously upon inquiry by the chairperson.

Date & Time: 11:00AM, February 25, 2021 (Thursday)

(19th meeting of 21st term)

Discussed Motions:

Summary: Appointment of EY Taiwan to audit and certify the financial statements 2021, and professional fees charged by it.

Explanation: (1) A TWSE/TPEx-listed company shall select professional, responsible and independent external auditors, and also assess the external auditors‘ independence periodically (at least once per year). The independence principles for a CPA:
1. Free from any material financial interest relations with the client.
2. Avoid engaging in any inadequate relationship with the client.
3. Procure his/her assistants to strictly comply with the principles of honesty, fairness and independence.
4. Prohibited from auditing and certifying the financial statements of any institution for which he/she is serving within two years prior to his/her practicing as a CPA.
5. Prohibited from lending his/her name to any others.
6. Prohibited from holding any shares of the client.
7. Prohibited from engaging in loaning of funds with the client, unless it refers to an arm‘s length transaction in the financial industry.
8. Prohibited from engaging in a joint venture or sharing profit with the client.
9. Prohibited from holding a routine position with fixed consideration for the client.
10. Prohibited from holding any management function involving decision making for the client.
11. Prohibited from engaging in other businesses which might cause him/her to forfeit the independence concurrently.
12. Rescued if he/she or his/her management is the spouse, lineal relative by blood, lineal relative by marriage, or collateral relative by blood within 4th degree of kinship with the client.
13. Prohibited from collecting any commission related to the business.
(2) As EY Taiwan is free from any of the circumstances referred to in Paragraph (1), the Company decides to retain it to audit and certify the Company‘s finance and taxation 2021.
(3) The CPA‘s statement on independence and checklist issued by EY Taiwan are attached (omitted).
(4) The professional fees for the audit and certification total NT$2.715 million in 2021.
(5) The Chairman will be authorized to deal with the execution of contract related to the audit and certification.
(6) CPAs responsible for certifying the Company‘s financial statements: Chen Min-Hung, CPA and Yen Wen-Pi, CPA.

(7) The motion has been discussed by Audit Committee on February 25.
Resolution: The motion was approved by all present directors unanimously upon inquiry by the chairperson.
Summary: A motion for date and place of convention of the general shareholders‘ meeting 2021 was submitted for discussion.

Explanation: (1) The Company plans to convene the general shareholders‘ meeting in the Briefing Room on 2F of the Administration Building (Address: No. 259, Sec. 3, Houke Rd., Houli Dist., Taichung City) at 9:00AM on June 11, 2021 (Friday). For the general shareholders‘ meeting agenda, please refer to the attachment (omitted).

    - (2) According to Article 165 of the Company Act, the share transfer registration should be suspended from April 13, 2021 to June 11, 2021.

    - (3) According to Article 172-1 and Article 192-1 of the Company Act, the Company plans to accept written proposals from shareholders and nomination of candidates for director (including independent director) at the Company‘s information desk (address: 1F, No. 259, Sec. 3, Houke Rd., Houli Dist., Taichung City) from March 2, 2021 to March 12, 2021.

    - (4) Contents of the general shareholders‘ meeting:

I. Reports
1. Report on Business Overview 2020
2. Report on Financial Statements 2020 Reviewed by Audit Committee
Report on Allocation of Remuneration to Employees and Directors 2020

II. Proposed Resolutions

 1. Summary: Proposed Resolution for Business Report and Financial Statements 2020

 2. Summary: Proposed resolution for allocation of earnings 2020

III. Discussed Motions
1. Summary: Motion for the amendments to the Company‘s ―Articles of Incorporation.‖
2. Summary: The motion for amendments to the ―Parliamentary Rules for Shareholders‘ Meetings.‖
VII. Elections
- Summary: Election of 13 Directors (Including 3 Independent Directors) of 22nd Term of the Company
V. Other Motions
Release of the Company‘s New Directors from Non-Competition Restrictions

VI. Extemporary Motions:

- (5) Shareholders were allowed to exercise their voting rights by way of electronic transmission in the manner prescribed in Article 177-1 of the Company Act at the shareholders‘ meeting. The same was specified in the shareholders‘ meeting notice and handled in accordance with related laws and regulations.

Resolution: The motion was approved by all present directors unanimously upon inquiry by the chairperson.

Summary: A motion for the financial statements 2020 was submitted for discussion. Explanation: 1. Preparation of the parent company only financial statements and consolidated financial statements 2020 was completed.

The parent company only financial statements and consolidated financial

statements referred to in the preceding paragraph, together with the independent auditor‘s report issued by Chen Ming-Hung, CPA and Yen Wen-Pi, CPA of EY Taiwan, were submitted for review.

The financial statements 2020 have been discussed by Audit Committee on February 25.
The motion will be proposed to the general shareholders‘ meeting 2021 for acknowledgement.
Please refer to the attachment for the audit report and financial statements (omitted).
The discrepancy between the parent company only financial statements 2020 and the self-audited ones is stated in the attachment (omitted).

Resolution: The motion was approved by all present directors unanimously upon inquiry by the chairperson.

Summary: A motion for Business Report 2020 was submitted for discussion.

Explanation: 1. The Company‘s business report 2020 has been prepared, and was submitted for review accordingly.

The motion has been discussed by Audit Committee on February 25.
The motion will be proposed to the general shareholders‘ meeting 2021 for acknowledgement.
The business report is shown in the attachment (omitted).
Resolution: The motion was approved by all present directors unanimously upon inquiry by the chairperson.

Summary: A motion for allocation of earnings 2020.

Explanation: 1. The Company planned to distribute the cash dividend at NT$3.50 per share in 2020. The cash dividends were calculated and truncated to the nearest NTD. Fractions were summed and recognized by the Company as other income. Upon approval of the general shareholders‘ meeting, the Board of Directors was authorized to set the ex-dividend record date and date of distribution.
Please refer to the attachment for the Statement of Earnings Allocation 2020 proposed by the Company (omitted).
Please refer to the attachment for the summarization of the Company‘s statements of earnings allocation for the most recent years (omitted).
Please refer to the attachment for the Company‘s estimated statement of cash flow (omitted).
The motion has been discussed by Audit Committee on February 25.
The motion will be proposed to the general shareholders‘ meeting 2021 for acknowledgement.

Resolution: The motion was approved by all present directors unanimously upon inquiry by the chairperson.

Summary: A motion for the amendments to the ―Parliamentary Rules for Shareholders‘ Meetings‖ was submitted for discussion.

Basis: 1. The Company‘s parliamentary rules for shareholders‘ meetings were amended, in response to the letter under Tai-Cheng-Ji-Li-Zi No. 1100001446 which required the amendments to the ―Sample Template for XXX Co., Ltd. Rules of Procedure for Shareholders Meetings‖ in order to improve corporate governance and maintain shareholders‘ interests and rights.
Article 2 was amended in response to the adjustment on regulations; Article 8

and Article 13 were amended in order to improve corporate governance and maintain shareholders‘ interests and rights.

For the cross reference table for the amendments, please refer to the attachment hereto (omitted).
The motion was submitted to the Audit Committee meeting for discussion on February 25, which is going to be proposed at the general shareholders‘ meeting 2021 for discussion.
Resolution: The motion was approved by all present directors unanimously upon inquiry by the chairperson.

The main contents of important resolutions passed by the Board of Directors for which directors have voiced different opinions on the record or in writing, during the most recent year and up to the date of publication of the annual report: N/A.
Summary of resignation by/dismissal of the Company Chairman, president, accounting manager, financial manager, internal audit officer, chief corporate governance officer, and R&D officer in the most recent year and as of the publication of the annual report: N/A.

15. Continuing education and training courses attended by directors:

Job Title	Name	Course Name	Date	Hour(s )	Training Institution	Certificate of Completion No.
Independent Director	Wang Yea-Kang	Corporate Governance Class - Global political and economic conditions, and risk thereof over business administration	March 25, 2020	3	Taiwan Academy of Banking and Finance (TABF)	2020-TABF-Securities-Governance No. 056008
Independent Director	Wang Yea-Kang	Corporate Governance Class - Risk-oriented anti-money laundering trend, and effect posed therefor	March 31, 2020	3	Taiwan Academy of Banking and Finance (TABF)	2020-TABF-Securities-Governance No. 057005
Director Director Director Director Director Director Director Director Director Director Independent Director Independent Director	Lin Ming-Ju Lin Ta-Chun Lin Chiu-Huang Chen Mu-Tse Lai San-Ping Lin Wen-Fu Lin Kun-Tan Chung Chao-Chuan Lin Chi-Jui Yang Tsung-Ju Liao Liao-Yu Wang Yea-Kang	Corporate Sustainability Accelerator - CSR, ESG and SDGs	April 29, 2020	3	Securities & Futures Institute	2020-SFI-Director-Supervisor-Renewal No. 00371 2020-SFI-Director-Supervisor-Renewal No. 00379 2020-SFI-Director-Supervisor-Renewal No. 00373 2020-SFI-Director-Supervisor-Renewal No. 00372 2020-SFI-Director-Supervisor-Renewal No. 00377 2020-SFI-Director-Supervisor-Renewal No. 00374 2020-SFI-Director-Supervisor-Renewal No. 00375 2020-SFI-Director-Supervisor-Renewal No. 00378 2020-SFI-Director-Supervisor-Renewal No.

Job Title	Name	Course Name	Date	Hour(s )	Training Institution	Certificate of Completion No.
						00376 2020-SFI-Director-Supervisor-Renewal No. 00380 2020-SFI-Director-Supervisor-Renewal No. 00381 2020-SFI-Director-Supervisor-Renewal No. 00383
Independent Director	Liao Liao-Yu	Risk and opportunity posed by climate transformation and energy policy trend to business administration	May 22, 2020	3	Securities & Futures Institute	2020-SFI-Director-Supervisor-Renewal No. 00552
Independent Director	Yue Chao-Tang	Group governance and performance management	July 24, 2020	3	Taiwan Institute of Directors	2020-TID-Supervisor No. 20200724033
Director Director Director Director Director Director Director Director Director Director Independent Director	Lin Ming-Ju Lin Ta-Chun Lin Chiu-Huang Chen Mu-Tse Lai San-Ping Lin Wen-Fu Lin Kun-Tan Chung Chao-Chuan Lin Chi-Jui Yang Tsung-Ju Yue Chao-Tang	Key to success or failure of family business transfer	October 30, 2020	3	Taiwan Corporate Governance Association	TCGA10908219 TCGA10908227 TCGA10908221 TCGA10908220 TCGA10908225 TCGA10908222 TCGA10908223 TCGA10908226 TCGA10908224 TCGA10908228 TCGA10908229

V. Information About CPAs

Information about professional fees paid to independent auditors, independent auditors‘ firm and affiliates thereof:

Table 1:

able 1:	able 1:
Firm Name		Name of CPA			Audit Period			Remarks
EY Taiwan		Chen Min-Hung	Yen Wen-Pi		January 1, 2020~December 31, 2020
						Unit: NT$thousand
Amount Range		Fee items		Audit Fee		Non-Audit Fee	Total
1	Less than NT$2,000 thousand						
2	NT$2,000 thousand (inclusive)~NT$4,000 thousand						
3	NT$4,000 thousand (inclusive)~NT$6,000 thousand
4	NT$6,000(inclusive)~NT$8,000 thousand
5	NT$8,000(inclusive)~NT$10,000 thousand
6	More than NT$10,000(inclusive)

Table 2: Independent Auditor Fee Information

Unit: NT$ thousand

Firm Name	Name of CPA	Audit Fee		Non-Audit Fee	Non-Audit Fee	Non-Audit Fee		CPA Audit Period	Remarks
			System Design	Business Registrati on	Human Resources	Others	Subtotal
EY Taiwan	Min-Hun g Yen Wen-Pi	2,715	-	-	-	25	25	January 1, 2020~Dec ember 31, 2020

Explanation:

The Company has assessed the independent auditor‘s independence at the meetings of the Board of Directors on February 25, 2020 and February 25, 2021 according to the following independence principles:
(1) Free from any material financial interest relations with the client.
(2) Avoid engaging in any inadequate relationship with the client.
(3) Procure his/her assistants to strictly comply with the principles of honesty, fairness and independence.
(4) Prohibited from auditing and certifying the financial statements of any institution for which he/she is serving within two years prior to his/her practicing as a CPA.
(5) Prohibited from lending his/her name to any others.
(6) Prohibited from holding any shares of the client.
(7) Prohibited from engaging in loaning funds with the client, unless it refers to an arm‘s length transaction in the financial industry.
(8) Prohibited from engaging in a joint venture or sharing profit with the client.

(9) Prohibited from holding a routine position with fixed consideration for the client.
(10) Prohibited from holding any management function involving decision making for the client.
(11) Prohibited from engaging in other businesses which might cause him/her to forfeit the independence concurrently.
(12) Rescued if he/she or his/her management is the spouse, lineal relative by blood, lineal relative by marriage, or collateral relative by blood within 4th degree of kinship with the client.
(13) Prohibited from collecting any commission related to the business. Upon assessment, EY Taiwan retained by the Company to audit and certify the Company‘s financial statements were found free from any of the circumstances referred to in Paragraphs (1)~(13).
1.1 In the case of any change of CPA firm and the audit fees for the year of the change less than that of the previous year, please disclose the amount of audit fees before and after the change, and reasons of the change: N/A.
1.2 In the case of any reduction in audit fees by more than 10% compared to the previous year, please disclose the amount, the percentage, and reasons of such variation: N/A.
Information about replacement of CPAs: N/A.

VI. Any of the Company‘s Chairman, President, or managers responsible for financial or accounting affairs being employed by the CPA firm or any of its affiliated companies during the most recent year: N/A.
VII. Equity transfer and equity pledge modification scenario of directors, managers and shareholders holding more than 10% of the shares for the most recent year until the date of publication of the annual report:
Changes in equit y of directors, managers and major shareholders

Job Title	Name	2020	2020	Ending until April 13, 2021	Ending until April 13, 2021
		Increase (Decrease) in the Number of Shares Held	Increase (Decrease) in the Number of Shares Pledged	Increase (Decrease) in the Number of Shares Held	Increase (Decrease) in the Number of Shares Pledged
Chairman of Board	Lin Ming-Ju	93,000 -	-	-	-
Director	Chen Mu-Tse	-	-	-	-
Director & President	Lin Ta-Chun	329,000 (5,000,000)	-	207,000 -	-
Director & Vice President	Lai San-Ping	-	-	-	-
Director	Lin Chiu-Huang	- (2,000,000)	-	-	-
Director	Lin Wen-Fu	150,000 -	-	-	-
Director	Lin Kun-Tan	-	-	-	-
Director & Vice President	Lin Chi-Jui	-	-	-	-
Director	Yang Tsung-Ju	-	-	-	-
Director	Chung Chao-Chuan	-	-	-	-
Independent Director	Liao Liao-Yu	-	-	-	-
Independent Director	Yue Chao-Tang	-	-	-	-
Independent Director	WangYea-Kang	-	-	-	-
Assistant Vice President	Chen Lian-Hsin	-	-	-	-
Assistant Vice President	Tsai Chao-Kuang	-	-	-	-
Assistant Vice President	Cheng Der-Yih	-	-	-	-
Internal Audit Officer	Cho Hsiu-Ying	-	-	-	-
AccountingManager	HuangKuei-Yu	-	-	-	-

2. Equity transfer information

Name (Note 1)	Cause of Equity Transfer	Trading Date	Trading Counterpart	Relationship between the trading counterpart and the Company, directors, managers, and shareholders holding more than 10% of the Company‘s shares	Quantity of shares	Trading price
Lin Ta-Chun Lin Chiu-Huang	Offset against incorporation (Note 2) Offset against incorporation (Note 3)	August 2020 November 2020	Bao Liang Investment Co., Ltd. Jin Fu Li Investment Co., Ltd.	Shares held by the director in the name of others Shares held by the director in the name of others	5,000,000 2,000,000	51.50 56.00

Note 1: Please specify the names of the Company‘s directors, managers, and shareholders holding more than 10% of the Company‘s shares.

Note 2: To offset the payment for shares of the new company, Bao Liang Investment Co., Ltd.

Note 3: To offset the payment for shares of the new company, Jin Fu Li Investment Co., Ltd.

3. Information about pledge of equity: N/A.

VIII. Information about top 10 shareholders in proportion of shareholdings and who are related parties to one another, or spouses, relatives within the second degree of kinship of one another

Information about relationship among top 10 shareholders in proportion of shareholdings

			shareholdings	shareholdings	shareholdings	shareholdings	shareholdings	shareholdings	shareholdings
			Record Date: April 13, 2021
Name (Note 1)	Shareholding when elected		Shares held by a spouse or underage children		Total shares held in the names of others		Disclosure of information on related parties or spousal relationship or relations within the second degree of kinship, among top ten shareholders, including their names or designations, and relationships(Note 3).		Rem arks
	Quantity of shares	Sharehold ing	Quantity of shares	Sharehold ing	Quantity of shares	Sharehold ing	Name	Relationship
Cheng Chuang Investment Co., Ltd. Representative: Lin Yu-Li	24,642,000	4.24%	-	-%	-	-%	Lin Ming-Ju Lin Chang Su-Wen	Father and daughter Mother and daughter	-
Fung-So Investment Co. Ltd Representative: Lin Cheng-Fon	21,710,026	3.73%	-	-%	-	-%	Representative ofJin Fu Li Investment Co., Ltd: Lin Cheng-Chang	Brothers	-
Lin Meng-Be	16,311,323	2.80%	152,185	0.03%	6,238,000	1.07%	Lin Ming-Ju	Brothers	-
Yang Chien-Cheng	13,236,506	2.28%	5,919,373	1.02%	-	-%	N/A	N/A	-
Lin Ming-Ju	12,825,159	2.21%	11,394,882	1.96%	-	-%	Lin Meng-Be Representative of Cheng Chuang Investment Co., Ltd.: Lin Yu-Li Lin Chang Su-Wen	Brothers Father and daughter Spouse	-
Lai San-Ping	12,702,006	2.18%	3,327,274	0.57%	-	-%	N/A	N/A	-

Representative ofJin Fu Li Investment Co., Ltd: Lin Cheng-Chang	12,000,000	2.06%	-	-%	-	-%	Representative of Feng Shuo Investment Co., Ltd: Lin Cheng-Feng	Brothers
Chung Chao-Chuan	11,587,530	1.99%	1,304,168	0.22%	0	0%	Chung Ching-Lin	Brothers	-
Lin Chang Su-Wen	11,394,882	1.96%	12,825,159	2.21%	-	-%	Lin Ming-Ju Representative of Cheng Chuang Investment Co., Ltd.: Lin Yu-Li	Spouse Mother and daughter	-
Chung Ching-Lin	10,727,510	1.84%	-	-%	-	-%	Chung Chao-Chuan	Brothers

Note 1: All top ten shareholders should be enumerated in whole. Names of all corporate shareholders, if any, and names of their representatives, should be enumerated respectively.

Note 2: The shareholdings are calculated based on the shares held by oneself, spouses or underage children, or in the name of another person respectively.

Note 3: The relationship among said shareholders, including juristic persons and natural persons, should be disclosed based on the regulations governing the preparation of financial reports by issuers.

IX. Number of Shares Held by the Company or the Company's Directors and Managers, as Well as the Number of Shares Held by the Company for the Reinvestment Businesses That it Directly or Indirectly Controls, and Combined to Calculate the Comprehensive Shareholding Ratio:

Comprehensive Shareholding Ratio

Unit: Share; %

					Unit: Share;%	Unit: Share;%
Investee (Note)	Invested by the Company		Investment by directors and managers or by directly or indirectlycontrolled enterprises		Comprehensive Investment
	Quantity of shares	Shareholdi ng	Quantity of shares	Shareholding	Quantity of shares	Shareholding
GREAT FORTUNE HOLDING LIMITED Taiwan Steel Union Co., Ltd. Fengyu Resource Co., Ltd. Wen Shan Resort Corporation	31,406,834 23,943,587 51,625,000 18,000,000	100.00% 21.52% 29.71% 18.00%	- 120,000 4,712,500 3,888,000	- 0.11% 2.71% 3.89%	31,406,834 24,063,587 56,337,500 21,888,000	100.00% 21.63% 32.42% 21.89%

Note1: The Company‘s investment under equity method Note2:Record Date: March 31, 2021

Four. Capital Overview - Capital and Shares

I. Source of Capital Stock
Type of shares: common shares; no capital increase or decrease completed from 2020 until April 13, 2021.

2. Authorized capital:

thorized capital:	Record Date: April 13,2021	Record Date: April 13,2021	Record Date: April 13,2021	Record Date: April 13,2021
Type of shares	Authorized capital			Remarks
	Outstanding Capital Stock	Un-issued Shares	Total
Common Shares	581,599,424	118,400,576	700,000,000	The Company‘s shares are listed ones.

3. Information about the aggregate reporting policy: N/A.

II. Shareholder Structure

areholder Structure	areholder Structure	areholder Structure	areholder Structure	areholder Structure	areholder Structure	areholder Structure
Record Date: April 13,2021
Shareholder Structure Quantity	Government Agency	Financial Institution	Other Juristic Person	Foreign Company and Foreigner	Individual	Total
Number of person	1	16	89	209	13,410	13,725
Number of Shares Held	12	37,405,030	117,673,290	57,870,213	368,650,879	581,599,424
Shareholding %	0.00%	6.43%	20.23%	9.95%	63.39%	100.00%

III. Status of Share Dispersion

III. Status of Share Dispersion	III. Status of Share Dispersion	III. Status of Share Dispersion	III. Status of Share Dispersion
1. Common shares,at thepar value NT$10per share. Record Date: April 13,2021
Shareholding Level	Number of Shareholders	Number of Shares Held	Shareholding %
1-999	5,662	810,897	0.14%
1,000-5,000	6,136	12,430,356	2.14%
5,001-10,000	809	6,312,914	1.09%
10,001-15,000	270	3,407,823	0.59%
15,001-20,000	144	2,664,212	0.46%
20,001-30,000	159	4,049,137	0.70%
30,001-40,000	71	2,527,715	0.43%
40,001-50,000	47	2,224,908	0.38%
50,001-100,000	118	8,375,442	1.44%
100,001-200,000	75	11,214,941	1.93%
200,001-400,000	61	16,610,797	2.86%
400,001-600,000	40	19,611,583	3.37%
600,001-800,000	20	14,001,592	2.41%
800,001-1,000,000	19	17,418,022	2.99%
More than 1,001,001 shares	94	459,939,085	79.07%
Total	13,725	581,599,424	100.00%

Preferred shares: No preferred shares issued by the Company.
IV. List of Major Shareholders (Shareholders With a Shareholding Ratio of Over 5% or Ranking Top 10 Shareholders)

	Record Date: April 13,2021 Number of Shares Held Shareholding % 24,642,000 4.24% 21,710,026 3.73% 16,311,323 2.80% 13,236,506 2.28% 12,825,159 2.21% 12,702,006 2.18% 12,000,000 2.06% 11,587,530 1.99% 11,394,882 1.96% 10,727,510 1.84%	Record Date: April 13,2021 Number of Shares Held Shareholding % 24,642,000 4.24% 21,710,026 3.73% 16,311,323 2.80% 13,236,506 2.28% 12,825,159 2.21% 12,702,006 2.18% 12,000,000 2.06% 11,587,530 1.99% 11,394,882 1.96% 10,727,510 1.84%
Shares Name of Major Shareholder	Number of Shares Held	Shareholding %
Cheng Chuang Investment Co., Ltd.	24,642,000	4.24%
Fung-So Investment Limited	21,710,026	3.73%
Lin Meng-Be	16,311,323	2.80%
Yang Chien-Cheng	13,236,506	2.28%
Lin Ming-Ju	12,825,159	2.21%
Lai San-Ping	12,702,006	2.18%
Jin Fu Li Investment Co., Ltd.	12,000,000	2.06%
Chung Chao-Chuan	11,587,530	1.99%
Lin Chang Su-Wen	11,394,882	1.96%
Chung Ching-Lin	10,727,510	1.84%

V. Price, Net Worth, Earnings, Dividends, and Other Information per Share for the Most Recent Two Years

					Unit: NT$
Item	Year		2019	2020	Ending until April 13,2021(Note 5)
Market Price per Share (Note 1)	Highest		65.00	76.70	75.50
	Lowest		50.80	42.80	62.70
	Average		57.40	54.89	69.32
Net Worth Per Share	Before Distribution		31.44	33.47	33.47
	After Distribution		28.44	Undistributed	Undistributed
EPS	Weighted Average Number of Shares		581,599,424	581,599,424	581,599,424
	Before Adjustment		3.37	4.50	1.16
	After Adjustment		3.37	Undistributed	Undistributed
Cash Dividend	Cash dividend		3.00	Undistributed	Undistributed
	Bonus Shares	Out of Earnings	0	Undistributed	Undistributed
		Out of Capital Surplus	0	Undistributed	Undistributed
	Accumulated and Unpaid Dividends		0	0	0
Investment Returns Analysis	P/E Ratio (Note 2)		17.03	12.20	14.94
	P/D Ratio (Note 3)		19.13	Undistributed	Undistributed
	Cash Dividend Yield (Note 4)		5.23%	Undistributed	Undistributed

Note 1: List the highest and lowest market prices of common shares for each year, and then calculate the average market price for each year based on the annual transaction value and volume.

Note 2: P/E Ratio = average closing price per share/earnings per share for the year.

Note 3: P/D Ratio = average closing price per share/cash dividend per share for the year.

Note 4: Cash Dividend Yield=cash dividend per share/average closing price per share for the year.

Note 5: The information about net worth per share and earnings per share shall refer to the information available during the most recent quarter until the date of publication of the annual report, which has been audited (reviewed) by the CPA, while the other sections shall specify the information available in the current year until the date of publication of the annual report.

VI. Dividend Policy and Execution Thereof

1. Dividend Policy:

(1) If the Company has retained earnings according to its annual financial account, it may, after paying all taxes, and making up all past losses, set aside a 10% legal reserve and provide or reverse special reserve. The remainder, if any, plus accumulated unappropriated earnings shall be allocated as shareholder bonus subject to the motion proposed by the Board of Directors and resolved by a shareholders‘ meeting.
(2) No further legal reserve shall be provided, where the legal reserve referred to in the preceding paragraph has amounted to the Company‘s total paid-in capital.
(3) The industry developed by the Company has become matured and sought stable profit under the robust financial structure. Therefore, the motion for allocation of shareholder bonus proposed by the Board of Directors supports allocation of cash dividend primarily. Notwithstanding, if the Company has to spend any major capital expenditure, no more than 70% of the dividends to be allocated in then year may be distributed in the form of stocks.
(4) The Board of Directors proposes the motion for distribution of shareholder bonus pursuant to Paragraph 1. The shareholder bonus refers

to more than 50% (inclusive) of the balance after the current net income less the legal reserve and special reserve to be provided in the current period, as well as the non-recurring non-operating gains. Notwithstanding, when the allocable earnings are less than 10% of the paid-in capital or the current net income is less than 2% of the paid-in capital, a motion for suspended allocation of the shareholder bonus may be proposed.

2. The dividends proposed to be distributed at the shareholders‘ meeting:

Item	Amount
Unallocated earnings -beginning	5,783,566,230
Add(less):
Other comprehensive income(Defined benefitplan re-measurement amount - 2020)	(6,100,242)
Current net income 2020	2,619,426,254
Disposal of equity instrument at fair value through other comprehensive income	146,444,744
Allocable earnings	8,543,336,986
Less:
Provisions
Appropriation of legal reserve(10%)	(275,977,076)
Reversal of special reserve set asidepursuant to laws	194,249,615
Allocations
Shareholder bonus -cash (NT$3.50 distributed per share)	(2,035,597,984)
Unallocated earnings -ending	6,426,011,541

Note 1: The cash dividends will be calculated and truncated to the nearest NTD. Fractions shall be summed and recognized by the Company as other income.
Note 2: The earnings 2020 shall be allocated as the first priority this year. Note 3: Once resolved at the Annual General Meeting, the Board of Directors will be authorized to set the ex-dividend date and date of allocation with respect to the cash dividends referred to herein.

VII. Effect of Bonus Stock Distribution Proposed at the Shareholders‘ Meeting on the Company‘s Operation Performance and EPS:

Effect of Bonus Stock Distribution on the Company‘s Operation Performance, EPS and ROE.

and ROE.
Item	Year		2021 (Projected)
Paid-in capital	- beginning		5,815,994,240
Allocation of stocks and dividends this year	Cash dividend per share		3.50
	Stock dividends per share (from capitalization of earnings) (shares)		--
	Stock dividends per share (from capitalization of capital surplus) (shares)		--
Changes in Operation Performance	Operating income		Note 1
	Year-on-year percentage variation of operating income		Note 1
	Net income		Note 1
	Year-on-year percentage variation of net income		Note 1
	EPS		Note 1
	Year-on-year percentage variation of EPS		Note 1
	Yearly average return on investment (a reciprocal of yearly average P/E ratio)		Note 1
Pro forma EPS and P/E ratio	If allocation of cash dividends in whole adopted instead of that from capitalization of earnings.	Pro forma EPS	Note 1
		Pro forma annual average ROE	Note 1
	If no capitalization of capital surplus is effected	Pro forma EPS	Note 1
		Pro forma annual average ROE	Note 1
	If allocation of cash dividends adopted instead of that from capitalization of capital surplus and earnings	Pro forma EPS	Note 1
		Pro forma annual average ROE	Note 1

Notes: 1. Not required to disclose such information, as the Company has not yet prepared or published the financial forecast 2021.

The Company shall explain the basic assumptions based on the projected or pro forma information.
Pro forma EPS, if allocation of cash dividends in whole adopted instead of that from capitalization of earnings.

= [Net income-Imputed interest expenses to be borne by cash dividends[] × (1-Tax rate)]/[Total quantity of shares issued at the end of then year-Quantity of shares distributed from earnings[] ] Imputed interest expenses to be borne by cash dividends[] = Amount of capitalization of earnings×Lending interest rate for one-year loan

Quantity of shares distributed from earnings[**] : Quantity of shares increased upon distribution of shares from earnings.

Annual average P/E ratio = Annual average market price per share/EPS in annual financial statements

VIII. Remuneration to Employees and Directors

The percentages or ranges with respect to remuneration to employees and directors, as set forth in the Company‘s Articles of Incorporation: According to Article 27 of the Articles of Incorporation, where the Company has annual profits at the end of a financial year, the Company may distribute no less than 2% of the profits for such year as the remuneration to employees and no more than 2% thereof as the remuneration to directors. Notwithstanding, the Company's accumulated losses, if any, shall have been covered first.
The basis for estimating the amount of remuneration to employees and directors, for calculating the number of shares to be distributed as the remuneration to employees, and the accounting treatment of the discrepancy, if any, between the actual distributed amount and the estimated figures, for the current period: The basis for estimating the amount of remuneration to employees and directors refers to the net income plus the remuneration to employees and directors until 2020 at the percentages resolved by the Board of Directors (8.52% and 1.25%), in consideration of the legal reserve, and recognized as expenses for 2020. Notwithstanding, the discrepancy, if any, between the actual distributed amount and the estimated figure is stated as the income for the year when the shareholders‘ meeting is convened. The quantity of shares for stock dividends to be distributed is calculated based on the closing price on the last trading date in the previous fiscal year and by taking the ex-dividend and ex-right effects into consideration.
Board of Directors Resolution Status on Remuneration Distribution:
(1) Remuneration to employees and directors distributed in cash or the form of stock If the annual estimated amount is different than the recognized amount, the discrepancy, cause, and how it is treated must be disclosed: The Company‘s Board of Directors passed the motion for allocation of the remuneration to employees, NT$305,112 thousand, and remuneration to directors, NT$45,000 thousand, on January 28, 2021. As a result, the actual remuneration distributed to employees was NT$305,699 thousand, and to directors was NT$45,000 thousand. The discrepancy has been reported to the Board of Directors on February 25, 2021 and included into the report to the shareholders‘ meeting 2021.
(2) Proposed distribution of remuneration to employees in the form of stock bonus as a percentage to net income plus the total remuneration to employees in the parent company only or individual financial statement for the current period: N/A.
The actual distribution of remuneration to employees and directors for the previous fiscal year and, if there is any discrepancy between the actual distribution and the estimated remuneration to employees and directors, the discrepancy, cause, and how it is treated must be disclosed: N/A.

IX. Repurchase of the Company‘s Shares: N/A.

Five. Corporate Bonds: No corporate bonds have been issued by the Company.
Six. Preferred Stocks: No preferred stocks have been issued by the Company
Seven. Overseas Depository Receipts: No overseas depository receipts have been issued by the Company
Eight. Employee Stock Warrants and Restricted Stock Awards (RSAs): No employee stock warrants and RSAs have been undertaken by the Company.

Nine. New Shares Issued Upon Merger or Acquisition, or Acquisition of Another Company's Shares: No issuance of new shares upon merger or acquisition, or acquisition of another company‘s shares has done by the Company.

Ten. Capital Application Plan Implementation Status

I. Contents of the plan: Plan for offering or private placement of securities: The Company didn‘t engage in offering or private placement of securities in the most recent three years.
II. Implementation status: N/A, as the Company didn‘t engage in offering or private placement of securities in the most recent three years.

Eleven. Overview of Operations

I. Business Contents

(1) Scope of business

A. Main business lines:
Steelmaking and rolled steel manufacturing, repair, processing and trading.
Cast steel, milling and iron foundry casting, manufacturing, processing and trading.
Angle steel, flat-rolled steel, channel steel, steel plate and joist beam manufacturing, processing and trading.
Ordinary and special steels, including reinforcing steels and round steels (bars and rods), manufacturing, processing and trading.
Old (scrap) ship demolition and incidental services.
Steel & iron products and processed goods and byproduct thereof manufacturing, processing and trading.
Trading of raw materials, supplies, facilities and equipment for related products referred to in the previous paragraphs.
Import of the goods referred to in the previous paragraphs.
Engineering, management and consulting services for the related business referred to in the previous paragraphs.
ZZ99999 All business items that are not prohibited or restricted by law, except those that are subject to special approval.
B. Main products and business proportion:

Item	Business proportion in 2020
Section steel	21.88%
Steel bar	53.03%
Bar & wire (steel bar and	25.05%
~~b~~ ~~i~~ ~~il)~~ Other steel products	0.04%

C. New products planned to be developed: Please refer to the contents of (4) R&D plans on page 111 of the annual report.

(2) Overview of industry

Industry status and development Upon the outbreak of COVID-19 in the world in 2020, export orders from customers were interrupted therefor. Notwithstanding, in consideration of the adequate epidemic controls in Taiwan, and return of large-scale technology manufacturers and Taiwan businessmen back to Taiwan for plant construction and investment, the demand for steel kept growing stably. Looking forward to 2021, the COVID-19 vaccination is expected to become popularized. As the global epidemic is becoming mitigated, the steel market‘s thriving may continue accordingly.

The growth range of section steel, although as the basic industrial materials, was limited as the usage of materials was changed in the market for convenience in processing and cost reduction. Notwithstanding, the Company will keep using the best effort to work on the policy supporting research and development of innovative products, size and types of steel, and improvement of the product quality, verify the strength, weakness and pricing strategy about alternates, improve the service quality, analyze the strength of the Company‘s products and

strengthen promotion of the product, and enhance customers‘ loyalty, in order to increase the Company‘s market share.

The Company provides diversified steel products and complete types and sizes as one of its remarkable characteristics. Its products cover steel bars, bars in coil and plain steel bars of the sizes ranging from 9mm to 72mm, as well as deformed steel bars from D10 to D57 and all-steel types (subject to CNS and ASTM specifications), supplied to satisfy customers‘ needs. The Company‘s product achievements extend to many domestic important construction projects (including the fourth nuclear power plant, national highways, MRTs, bridges, tunnels, residential and commercial complex, and factory premises structure, etc.). The Company also wins very positive comments from customers in the areas of public works and construction project due to its product quality, as the key to the Company‘s performance and stable market share in the steel bar industry. In 2020, the Company kept using the best effort to work with domestic excellent construction contractors and development companies to participate in the tender submission for various major projects, and also work with wholesalers to further develop the infrastructure and construction projects, in order to stabilize and expand its sales in the steel bar market.

In Q1 of 2018, the Company‘s brand new steel bar production line completed the test run and started the mass production. The new equipment adopted advanced low-temperature direct rolling process with the strength in energy conservation and carbon reduction, thus upgrading the Company‘s steel bar product quality and improving its competitiveness in market. Meanwhile, the Company would work with the wholesalers more actively to provide forming processing services and further develop the infrastructure market to stabilize and expand its sales in the steel bar market.

The epidemic upon outbreak of COVID-19 in 2020 posed severe impacts to the domestic screw fastener industry, mechanical parts industry, auto parts industry, and hand tools manufacturing industry. The procurement momentum throughout the entire market has declined significantly in Q2~Q3 and, therefore, the processing industry and end users all tended to deplete the inventories as the first priority. As of Q4, the economies, such as Europe and the USA, were have been recovering step by step, and the market inventories hit the lowest record; therefore, transactions and investment became booming again. Looking forward to 2021, the booming replenishment of inventories is expected to continue in Q1 of 2021 from Q4 of 2020. Notwithstanding, as the COVID-19 remains rampant in various countries and is even becoming serious again, whether the demand in Q2 may keep growing remains uncertain. Notwithstanding, the preliminary results achieved by the Company in 2020 through its efforts in promotion in the high-end market are expected to help stabilize the sales and also the entire visibility for build-to-order in 2021. Besides, the Company acquires IATF16949, which may help the Company continue developing business in the auto parts supply chain market in 2021. Meanwhile, the Company will work harder to develop new customers, steel types, products and sizes, and also applications in the high-end industry, in order to mitigate the negative impact posed by external environmental factors and help the Company‘s stable growth.

Correlation between the upstream, midstream, and downstream dealers in the industry:

Considering that the steel industry kept booming in the past few years, investors‘ willingness in investing the steel industry has been driven significantly. Notwithstanding, insufficient steelmaking (upstream) and excessive steel rolling

(downstream) are existing in Taiwan. As far as the electric furnace industry is concerned, self-produced waste iron can only satisfy about 60% of the demand. Therefore, the import of massive waste iron and steel billets will keep persisting. New investors shall pay special attention to such correlation and structural characteristics. The Company is identified as a steel manufacturer specialized in making and rolling steels. The correlation between the upstream and downstream dealers in the industry in which the Company is engaged in is stated as follows:

==> picture [455 x 420] intentionally omitted <==

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

Consumable materials
Consumable materials
(Electrodes, fire-proof materials & cast die,
(fireproof materials & rolls, etc.)
etc.)
Major raw materials Steelmaki Self-produced
(cast iron & waste iron) ng steel billet
Steel rolling
Indirect materials
(quicklime, alloy iron & coke carbon, etc.)
Feng Hsin products
Angle steel, channel steel, flat-rolled steel, round
bar, and steel bar, etc.
Traders Domestic
wholesalers
Foreign Private Public Screw fastener Machinery Other metal
customers construction works manufacturing manufacturing product
contractor manufacturing
3. Product development trends and competition
Recently, the price for the import of steel billets has fluctuated significantly.
Domestically, it is hard for the steel rolling mills to control their costs and delivery
periods, while the Company‘s stable volume price policy can signify a steelmaking
shop‘s strengths more thoroughly.
Upstream and production
Downstream and processing
----- End of picture text -----

(3) Technology and R&D

The Company‘s technology and R&D primarily covered improvement on the process of semi-finished goods, development of new products and upgrading of product quality. Among the other things, the new products under development primarily included the new steel types and products for new purposes, e.g. low-carbon and medium-carbon cold forging materials, carbon steel and low-alloy steel for mechanical structure, medium-carbon vulcanized steel, and spring steel for vehicles, etc.. Meanwhile, the Company also engaged in the R&D of products in new shapes and sizes.

The Company‘s new product development primarily covered the application of vacuum degassing equipment to make steel billets. Then, the magnetic particle test equipment is applied to inspect the steel billets made therefor, and the billets are

ground at various levels subject to the product usage. Finally, the finished goods would be subject to strict quality controls in order to satisfy customers‘ demand. For the R&D of technology, the Company retains domestic and foreign professional advisors to train the Company‘s existing research personnel, and have the personnel attend related conferences domestically and overseas to improve their expertise and knowledge. Meanwhile, the Company will continue to work with professional steelmaking and steel rolling mills by contract, and implement advanced steelmaking and steel rolling equipment, technology and QA systems, so as to keep improving various products‘ quality. The Company passed the certification by IATF 16949:2016 Quality Management System of SGS Taiwan Limited in March 2020.

The technology and R&D projects completed by the Company in 2020 include the following: Blades of cultivator/car blade dampers and coil springs SUP9, medium-carbon vulcanized steel 1144 for cold drawn bright bars, hexagon socket bolts SCM435H, HEX flange bolts 10B33, bridge bolts 25CUNICRV, steering tie rods 30MnVS6, linear sliders SCM420H & deformed steel for sliders S55C and high-tensile steel SD690.

1. Research expenditure and Item No./Value/Year R&D expenses (NT$ thousand) To the turnover(%) Researchpersonnel To the total number of personnel throughout the Company	personnel
Item No./Value/Year	2018	2019	2020	January~March 2021
R&D expenses (NT$ thousand)	46,061	44,890	43,833	11,509
To the turnover(%)	0.15%	0.16%	0.16%	0.15%
Researchpersonnel	25	25	25	24
To the total number of personnel throughout the Company	2.89%	2.89%	2.82%	2.67%

2. Research results

2. Research results
	Products or steel types
Already put to the mass production	Steel for the general structure (angle steel, channel steel, flat-rolled steel, square steel and round bar steel) Steel for SM and SN structure Deformed and plain steel bars (SR300, SD280/280W, SD420/420W, SD490W, SD550W and SD690) Steel coils (SD280/280W, SD420/420W, Gr.40 and Gr.60:D13~D32) Carbon steel, low-alloy steel and sulfur-based free-cutting steel for mechanical structure Hard coating steel (SCM415H, SCM420H, SCM435H and SCM440H) Carbon steel and low carbon boron steel for cold forging Cold forging steel for high-strength bolts and nuts (1045AK, 1040ACRM, …) Medium-carbon vulcanized steel for hot forging (1141) 1010 A bar in coil and large-size bar steel for sever deformation products Cold forging shear nail steel (1018AK) Cold forging boron steel 10B21: Applicable to 8-level and 10-level high-strength high deformation bolt steel Cold forging boron steel 10B33: Applicable to 8.8-level high-strength bolt steel Cold forging boron steel (10B33M): Applicable to high-strength TC bolts Hot forging boron steel 15B32: Applicable to farming machine track. Torquer output flange 1541H Medium-carbon vulcanized steel for cold drawn bright bars 1144 Medium-carbon steel for hydraulic rod S45C Linear sliders S55C; sliders S55C/SCM420H Flat-rolled steel for blades of cultivator SUP9 Steel types under European standard for construction product safety (EN10025-2) Imperial unit and free size Large round steel and large flat-rolled steel under European standards S355J2 Round steel at the imperial unit: 3/4,‖ 7/8,‖ 1,‖ 1- 1/4,‖ 1- 1/2,‖ 2‖ free size round steel: 22.5, 23.5, 28.5 Equilateral angle steel A40 & A70 series size High-strength parallel channel steel 145x46x12 100 and 150 PFC (parallel steel at the height ranging from 100 to 150mm) Single-slot flat-rolled steel 25x22x12 Double-slot flat-rolled steel 84x68x20/100x84x20 Equilateral flat-rolled steel with unequal thickness: 93x15.5x12.5,93x19.7x17.7,103x15.5x12.5,103x20.2x17.2, 103x22.5x20,113x22x20,123x23x20,123x26.5x23 50mm large-size bar in coil
Results in 2020	Gearbox flange SCM415HRCH, blades of cultivator and car blade /coil springs SUP9, cold forging axle bowl for vehicle S20C, HEX flange bolts 10B33, auto nylon nut 1045AK, medium-carbon vulcanized steel 1144 for cold drawn bright bars, deformed steel for slide trail S55C, deformed steel for linear sliders SCM420H/S55C and high-tensile steel SD690(D10~D16).

(4) R&D plans

1. Pending R&D plans

Plan	Items & progress	Additional R&D expenses required	Expected mass productio n time	Factors critical to success in R&D
Development of spring steel SUP9 (blades of cultivator, car blade/coil spring)	1. Design of steel billet compositions 2. Surface and internal quality assurance for finished goods 3. Assurance for mechanical property of the product 4. The customer has tried some of the products and felt good about the products. Therefore, the customer is increasing the purchasequantitystepbystep.	Required to make the steel billet on a trial basis more than three times to satisfy the demand for the free trial (about 100 tons per furnace)	December 2021	1. Product surface quality 2. Hot forging and hot treatment 3. Customers‘ feedback 4. Prolonged process and slow feedback
Development of HEX flange bolts 10B33	1. Surface and internal quality assurance 2. Information about customers‘ feedback 3. The customer has tried some of the products and felt good about the products. Therefore, the customer is increasing the purchasequantitystepbystep.	Required to make the steel billet on a trial basis more than three times to satisfy the demand for the free trial (about 100 tons per furnace)	December 2020	1. Product surface quality control 2. Cold forging and hot treatment 3. Mechanical properties of bolts
Steering tie rods 30MnVS6,	1. Design of steel billet compositions 2. Surface and internal quality assurance for finished goods 3. Assurance for mechanical property of the product 4. The customer has tried some of the products and felt good about the products. Therefore, the customer is increasing the purchasequantitystepbystep.	Required to make the steel billet on a trial basis more than three times to test the mechanical properties (about 100 tons per furnace)	September 2021	1. Product surface quality 2. Mechanical properties of the product 3. Customers‘ feedback 4. Prolonged process and slow feedback
Development of bridge bolts 25CUNICRV/30CUNI CRM	1. Design of steel billet compositions 2. Surface and internal quality assurance 3. Customers‘ feedback after free trial 4. The customer has tried some of the products and felt good about the products. Therefore, the customer is increasing the purchasequantitystepbystep.	Required to make the steel billet on a trial basis more than three times to satisfy the demand for the free trial (about 100 tons per furnace)	September 2021	1. Product surface quality 2. Product heat treatment properties 3. Mechanical properties of bolts 4. Prolonged process and slow feedback
Development of medium-carbon vulcanized steel for cold drawn bright bars 1144	1. Design of steel billet compositions 2. Temperature-controlled steel rolling 3. Customers‘ feedback after free trial	Required to make the steel billet on a trial basis more than three times to satisfy the demand for the free trial (about 100 tonsper furnace)	January 2021	1. Product surface quality 2. Mechanical properties of the product 3. Customers‘ feedback
Development of gearbox flange SCM415HRCH	1. Focus of the plan: design of steel billet compositions, product surface quality and internal homogeneity 2. Mechanical properties and processing assurance after hot treatment of cold forgingfinished	Required to make the steel billet on a trial basis more than three times to satisfy the demand for the free trial (about 100 tons per furnace)	June 2021	1. Product surface quality 2. Cold forging and hot treatment 3. Customers‘ feedback on forming and processing

	goods 3. The customers have placed the order for a free trial.			4. Prolonged process and slow feedback
Development of hex bolt SCM435H	1. Design of steel billet compositions 2. Surface and internal quality assurance for finished goods 3. Product mechanical and hot treatment properties assurance 4. The customers have placed the order for certainquantity.	Required to make the steel billet on a trial basis more than three times to satisfy the demand for the free trial (about 100 tons per furnace)	June 2021	1. Product surface quality 2. Hot forging and hot treatment 3. Customers‘ feedback
Development of SD690 steel bars	1. Design of steel billet compositions 2. Assurance for mechanical properties of the finished goods 3. D16 customer havs placed the order for certain quantity.	Required to make the steel billet on a trial basis more than three times to satisfy the demand for the free trial (about 100 tons per furnace)	December 2020	1. Design of steel billet compositions 2. Mechanical properties of the product 3. Customers‘ feedback on forming and processing

2. Future R&D plans

2. Future R&Dplans
Future R&Dplans	Focus of theplan and expected investment in R&D expenses
Development of SD690 thread steel bars	1. Development of large-size (D32~D36) thread steel bar products 2. Focus of the plan including: design of steel billet compositions, roll design, product size and mechanical properties compliance assurance, etc. 3. The R&D expenses are spent in the design and making of steel billet compositions, design of the special drive shaft for thread steel bars and steel bar mechanical properties assurance. It is necessary to develop the product of each size for trial rollingand free trial. It is expected to invest NT$6 million in R&D expenses.
Development of hexagonal polishing steel bar 1215MS	1. Test the suitability of hexagonal polishing steel bar. 1. Focus of the plan: design of steel billet compositions and process, product surface quality and internal homogeneity 3. Stability of forming and mechanical properties of drawn finished goods. 4. As required to make the steel billet on a trial basis more than three times to satisfy the demand for the free trial (about 100 tons per furnace), it is expected to invest NT$1.20 million in R&D expenses.
Development of 5120H (Auto drive gear)	1. Researched and developed brand new steel type: 5120H 2. Test the suitability of auto drive gear. 3. Focus of the plan: design of steel billet compositions, product surface quality and internal homogeneity 4. Conformity and stability of mechanical properties of hot forging finished goods after hot treatment 5. As required to make the steel billet on a trial basis more than ten times per steel type to satisfy the demand for the free trial (about 100 tons per furnace), it is expected to invest NT$4 million in R&D expenses.
Development of S20C (Auto cold forging shaft bowl)	1. Test the suitability of auto cold forging shaft bowl 2. Focus of the plan: design of steel billet compositions, product surface quality and internal homogeneity 3. Conformity and stability of mechanical properties of cold forging finished goods 4. As required to make the steel billet on a trial basis more than three times per steel type to satisfy the demand for the free trial (about 100 tons per furnace), it is expected to invest NT$1.2 million in R&D expenses.
Development of 8620H (Hot forging gear)	1. Researched and developed brand new steel type: 8620H 2. Test the suitability of hot forging gear 3. Focus of the plan: design of steel billet compositions, product surface quality and internal homogeneity 4. Conformity and stability of mechanical properties of finished rolling materials and hot forging finished goods after hot treatment 5. As required to make the steel billet on a trial basis more than ten times per steel type to satisfy the demand for the free trial (about 100 tons per furnace), it is expected to invest NT$4 million in R&D expenses.

Development of deformed steel
for linear sliders
(Steel type SCM420H)

1. Development of different deformed steel sizes as the sliders (linear slider trails).
2. Focus of the plan including: roll design, size conformity and product surface quality.
3. Conformity and stability of slider products drawn by the customer
4. As required to develop each size for trial rolling and free trial, it is expected to invest
NT$2 million in R&D expenses.

Development of deformed steel
for slide trail
(Steel type S55C)

1. Development of different deformed steel sizes as the slide trails (linear slider trails).
2. Focus of the plan including: roll design, size conformity, product surface quality and
decarburization control.
3. Conformity and stability of finished slide trail products drawn by the customer
4. As required to develop each size for trial rolling and free trial, it is expected to invest
NT$2 million in R&D expenses.

The expected investment in R&D expenses accounts for about 1% of the operating revenue in 2021.

(5) Long and short term business development plans, and mid-term and long-term strategic targets
Long-term/short-term business development plan
Short-term:

In consideration of the domestic important public works, such as Metro Taipei-Xinyi Line Extension, Wanda Line, Western Coastal Road, Danhai Bridge, National Highway No. 4 Extensive East-West Line Project, underground railway project, plant expansion projects of certain electronic manufacturers, such as TSMC, Largan and Micron, and multiple new plant construction projects of Taiwanese businessmen returning back to Taiwan, and the recovering real property market that drives the launch of various public residential projects, the demand for steel bars may benefit therefrom.

Long-term:

(1) In the domestic competitive environment full of steel bar manufacturers and overcapacity, the Company will strengthen the cooperation with excellent domestic construction contractors, participate in domestic important construction projects, and further develop the interaction with wholesalers, in order to stabilize the sales of steel bars.
(2) Expand the section steel franchising system in depth and width, strengthen customers‘ loyalty and increase the market share.
(3) The Company has acquired international certificate such as IATF16949. Therefore, the Company will work with technology and quality assurance units to keep developing the benchmark customers in high-end markets. Start to promote the potential users in developed high-end markets by upgrading and improving the quality stability with equipment parallelly, in order to increase the market share.
(4) Increase the export volume: Although the steel materials made in China are penetrating into the markets in various countries, as various countries have accused China of dumping, it might bring a chance to the Company‘s export business. For the time being, the Company‘s growing markets cover the USA, Canada and Australia. Meanwhile, the Company will also communicate with customers to discuss the development of new products periodically, in order to develop more extensive markets.

2. Mid-term and long-term strategic targets

(1) Continue to aim at increasing the market share in the steel bar market, by adopting the strategy to improve the quality requirements and adjust the product portfolio flexibly to satisfy the customers‘ and market‘s demand; also, work with wholesalers to provide customers with diversified steel bar processing demands, participate in tender submission for important construction projects, and develop the potential customers whom the sales have not yet extended to and further develop cooperation with wholesalers in the districts, such as Changhua, Nantou, Hsinchu and Miaoli.
(2) Establish the long-term supply contract with raw material providers.
(3) Improve the service quality, and establish a long-term fair partnership with distributors to strive together and thrive together, in order to solidify the market

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sales and shares.

II. Marketing and Sales Status

(I) Market analysis:
(1) Angle steel:

Angle steel refers to the main force of the Company‘s section steel products, and also the material adopted by various infrastructure projects and the machinery manufacturing industry. In consideration of the fine quality, complete sizes and sufficient supply of products, and the marketing network extending throughout the nation that may deliver goods rapidly based on the strong transportation array, the Company is recommended by franchisees widely.

(2) Channel steel:

The Company introduces precision production equipment, and keeps improving the steel rolling process. The channel steel produced by the Company is well received by lots of customers, in terms of straightness, right angle, flatness and surface quality. Meanwhile, the Company combines it into a diversified product portfolio for shipping to provide more convenience and make it become more competitive in the section steel market.

(3) Flat-rolled steel:

The available flat-rolled steel is 12mm~200mm in width. Considering that the quality of materials is stable, the appearance requirements are rigid. The sale targets extend to iron materials stores, machinery manufacturing industry, steel structure industry and grating manufacturing industry, etc., the demand for small-size flat-rolled steel, I-shape (groove shape) and non-slip flat-rolled steel applied to the plant‘s platform and cover of the drainage system has been increasing in the recent years. The Company‘s production capacity can afford to supply the market demand.

(4) Steel bar:

The Company sold 953,339 tons steel bars in 2020, growing by 19% from 798,597 tons in 2019. First of all, since the new steel bar plant started mass production in Q1 of 2018, the effect of mass production has become more significant in 2020. Besides, the government started to release new public work projects, and the private investment projects, such as Taiwanese businessman‘s return and new construction projects, was also increasing. The Company‘s stable quality, which receives high recognition from the market, helps enhance the Company‘s competitiveness. For the time being, the Company is primarily engaged in New Taipei City Danhai Bridge, Metro Taipei-Xinyi Line Extension, MRT Wanda Line, Desilting Tunnel Project of Shimen Reservoir, underground railway project, Western Coastal Road, National Highway No. 4 Extensive East-West Line Project, plant expansion projects of certain benchmarking electronic manufacturers, such as TSMC, Largan and Micron, and multiple large-size construction and public residential projects.

(5) Bar & wire (steel bar and bar in coil)

The Company‘s domestic sales were 3,210,000 tons in 2020, growing by 6% from 2019. Upon the outbreak of the epidemic in 2020, the market demand has declined

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significantly. Notwithstanding, as the Company keeps developing the high-end markets and adopts the flexible sale strategies, and in consideration of the recovering market momentum in Q4, the Company‘s sales are expected to grow from last year. Looking forward to 2021, the effect posed by COVID-19 never ceases to exist and, therefore, the market demand recovery still remains uncertain. From a long-term prospective, the price competition is still existing between the importers of steel materials and the same trade, thus affecting the stability of production and marketing status in the domestic market. The Company needs to continue improving its product quality and exclusivity, improving its market competitiveness, and providing customers with more flexible sales service.

(6) Export of section steel:
The territories primarily cover Australia, Canada, Hong Kong, Singapore, Malaysia, and other countries in South East Asia. The products are primarily angle steel, channel steel, flat-rolled steel and round bar. The output volume declined by 10% in 2020 from 2019, primarily due to the effect posed by COVID-19 on the global steel market. The orders have been decreased significantly as of Q2 in 2020, but were recovering step by step in Q3. Notwithstanding, the raw material price raised in Q4, and the export demand exceeded the supply. Subject to the distribution of production capacity, the Company could only accept limited orders. The orders from Australia, which provided higher unit price, were raised in 2020, growing by 10% from 2019.
(7) Export of special steel:
The special steel was primarily exported to South East Asia, to supply the wholesalers‘ and direct processing manufacturers‘ demand. The output volume declined by 20% in 2020 from 2019, primarily due to the effect imposed by the COVID-19. In Q2, as South East Asia countries implemented the lockdown policy, a lot of them could not place the order. Despite the adequate epidemic prevention in Vietnam and Thailand, Malaysia and Indonesia have announced the lockdown for several times throughout 2020, thus causing the export orders for special steel to decline.
(8) The Company‘s export sales in 2020 and 2019 are stated as follows:

(Unit: NT$ thousand)

		(Unit: NT$thousand)
District	2020	2019
Asia	1,252,554	1,667,622
Other territories	1,092,003	1,400,283
Total	2,344,557	3,067,905

(9) The Company‘s products are supplied for domestic marketing primarily. In 2020, the Company‘s products accounted for the following market share in Taiwan: 62.5% for angle steel, 58.6% for channel steel, 52.3% for flat-rolled steel, and 14.8% for steel bar (source of data: ―Statistics about Production, Marketing and Inventory of Main Steel Materials‖ of Taiwan Steel & Iron Industries Association).
(II) Positive and negative factors for future development:
Positive factors:

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(1) The Company applies the integrated process consisting of making and rolling, and also provides the steel bar of stable quality and complete sizes. The Company‘s product achievements extend to many important domestic construction projects and plant and residential & commercial complex projects. Meanwhile, the Company supplies all-steel types (subject to CNS and ASTM specifications) to satisfy customers‘ needs and thereby makes it become more competitive.
(2) After the ―921 Earthquake,‖ the Government announced that the steel bars used for construction should adopt the steel model CNS560 with better shock resistance. As such mode requires stricter composition quality, the low-price steel billets imported from foreign countries cannot afford to satisfy the requirement. As a result, the steel rolling mills used to rely on low-price imported steel billets suffer adverse impact therefor, while the steel making shops have the chance to develop instead. Particularly, it helps improve the Company‘s competitiveness.
(3) Since the Company started to promote the section steel franchising system in 2001, it has successfully established fair interactive relationship with customers. Besides, the Company‘s product diversity and complete product sizes can satisfy customers‘ requirements about convenient order placement. The Company‘s uninterrupted marketing network is also well received by all franchisees. As a result, the Company‘s market share of section steel keeps growing.
(4) The improvement of steelmaking and steel rolling equipment appears to strengthen the product quality and stability significantly, solidify customers‘ confidence about usage, and pass the IATF16949 certification. Then, the Company will optimize its competitiveness and continue to develop the high-end market.

2. Negative factors:

(1) China has executed the RCEP with 15 countries, including ASEAN, Japan, Korea, New Zealand Australia in November 2020. After the RCEP takes effect, it will become the multilateral trading agreement covering the most population and largest scale of economy in the world. For the time being, the Company primarily exports its products to the four territories including Australia & New Zealand, Singapore & Malaysia, Hong Kong and North America. In the most recent three years, the Company‘s export sales have accounted for 90% and, therefore, enjoyed the tax rate, 0%, in Taiwan. According to the RCEP, only the tax imposed on angle steels and square steels exported by China, Japan and Korea to Vietnam is adjusted from 15% to 0% within 10 years, upon agreement by various countries. Notwithstanding, Vietnam is not the main export market for the Company. The Company‘s special steels are primarily exported to Vietnam, Thailand, Malaysia and India. China suppliers are the Company‘s major competitors. Notwithstanding, the relevant tax rate remains the same. In conclusion, the RCEP only adjusts the tax rate on steel bars related to the Company, while the Company‘s overall export sales would remain the same substantially.
(2) The domestic steel bar overcapacity, intense competition, and disorder and declining demand in the market make the competition in the steel bar market fiercer than ever.
(3) The production capacity in China‘s steel market has attained more than 50% in the world. The imbalance in production and marketing, if any, and its demand for mass raw materials and supplies are critical to the stability of markets in the

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countries neighboring it (including Taiwan). Said circumstance is also a major variable affecting the domestic and foreign market quotation.

(4) The section steel market is in a critical state and the demand in the market is declining. In order to save human resource and facilitate processing, certain construction materials have been replaced by steel products. Further, due to the COVID-19, the export orders for steel products applied to mechanical components were also cut accordingly. Besides, the section steel manufacturers in the same trade have successively expanded their equipment to participate in the competition in the market. Therefore, the competition in sales of section steels becomes more intense.
(III) Important Purpose and Production Process of the Main Products
Important purposes
(1) Section steel: For construction, factory premises, shipbuilding, power distribution towers, machinery manufacturing, lifting equipment for automobile maintenance, transportation, metal products, and steel construction.
(2) Steel bar: For the engineering purposes, such as construction, civil engineering, structure and infrastructure (residence, factory premises, RC and SRC residential and commercial complex, roads, bridges and tunnels, etc.).
(3) Bar & wire (steel bar and bar in coil): For screws and bolts, cold drawn bright bars, hand tools, and auto/motorcycle spare parts, etc..
Production process

==> picture [452 x 219] intentionally omitted <==

(4) Supply of main raw materials:
Waste iron:

The major raw materials for steelmaking refer to waste iron, out of the sources described as follows:

(1) Domestic areas:
A. In consideration of the rapidly spreading COVID-19 epidemic at the beginning of 2020 that was not controlled effectively and thereby causing the world, especially European countries and the U.S.A., to implement the lockdown policy, all of the cross-border economic activities almost

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stopped. As a result, the orders to processing plants were interrupted, and certain export orders already accepted were deferred, cut or even canceled per customers‘ instruction in the first half of the year. Generally, the output volume of scraps decreased by 30~40%. Meanwhile, the demand in the foundry industry has become sluggish since Q3 of 2018 until now. In consideration of the demand declining by about 70%, the demand for consumption of raw materials turned to consumption by electric furnace and, therefore, mitigate the impact posed to the electric furnace industry by the reduction in sources of scraps from the general processing plants.

B. Unlike the sources of scraps, the general recycled waste iron sources were not decreased significantly. Notwithstanding, as the epidemic is unstable and the economy is still likely to become sluggish again, many plant dismantling projects were also deferred in response to the situation. Besides, given the declining supply of goods, large-scale iron waste suppliers tended to r, due to the decline in the overall supply of goods, large scrap iron suppliers also began to hoard their supply of goods for arbitrage. As a result, the market circulation became more tightened and caused the domestic market quotation to keep fluctuating slightly by Q3.
C. Looking forward to 2021, as it is impossible to control the epidemic effectively in a short term, the uncertainty in whether imported supply may be delivered as scheduled is raised accordingly. Meanwhile, the peer steel companies in the same industry need to deal with the pressure from more tense price competition under the circumstance that the sources of waste iron are insufficient domestically. Therefore, in order to stabilize the ordered quantity as planned, it is necessary to control more details about domestic/foreign market quotation and adjust the price in a timely manner.
(2) Foreign areas:

The waste steels were primarily imported from the U.S.A and Japan. The price of raw materials has been raised sharply in Q4 of 2020. Notwithstanding, the Company maintained the normal procurement quantity per the market quotation and demand. The U.S.A. container waste steels were subject to the quality grading system established based on customers. Their achievements in supplies serve as the reference for procurement. The supplies in bulk from Japan, with better quality and shorter delivery period, will be procured depending on the market quotation.

2. Source of steel billets: 99% self-made.

(5) Trade creditors‘/trade debtors‘ names as well as their sales (purchase) amounts and ratios that accounted for over 10% of the total amount of goods purchased (sold) in the past two years:

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Trade debtors: No trade debtors whose purchase ratios accounted for over 10% of the total amount of goods sold by the Company in the most recent two years.
Trade creditors: No trade creditors whose sales ratios accounted for over 10% of the total amount of goods purchased by the Company in the most recent two years.

(6) Production volume/value during the most recent two years

Unit: Ton/NT$ thousand

	Production Volume/ Value Main Products		2019			2020
		Production capacity	Production volume	Production value	Production capacity	Production volume	Production value
Semi-finish ed goods	Steel billet	1,800,000	1,524,105	22,426,968	1,800,000	1,624,299	20,848,518 22,426,968
Finished goods	Section steel	1,753,200	372,603	6,151,197	1,753,200	352,867	5,170,787
	Bar & wire (steel bar and bar in coil)		329,213	6,059,328		345,427	5,548,753
	Steel bar		800,879	12,520,355		939,465	12,835,822
	Total		1,502,695	24,730,880		1,637,759	23,555,362

Note 1: The production capacity refers to the quantity which may be produced under normal operation with the existing production equipment, after the Company takes into account all factors, such as shutdown and holidays.

(7) Sales volume/value during the most recent two years

Unit: Ton/NT$ thousand

	Sales Volume/ Value Main Products	2019	2019	2019	2019	2020	2020	2020	2020
		Domestic marketing		Export		Domestic marketing		Export
		Volume	Value	Volume	Value	Volume	Value	Volume	Value
Semi-finish ed goods	Steel billet	-	-	25	262	-	-	-	-
Finished goods	Section steel	230,282	4,563,432	135,951	2,457,516	217,926	4,036,865	121,673	1,935,318
	Bar & wire (steel bar and bar in coil)	302,749	6,652,951	29,906	609,458	320,755	6,441,854	22,054	395,660
	Steel bar	798,595	13,442,465	2	29	953,339	14,478,087	-	-
	Others	880	9,498	-	-	760	10,267	-	-
	Total	1,332,506	24,668,346	165,859	3,067,003	1,492,780	24,967,073	143,727	2,330,978
III.Information About Employees for the Most Recent Two Years Until the Date of Publication of the Annual Report 1. Information About Employees for the Most Recent Two Years Until the Date of Publication of the Annual Report: Year 2019 2020 Ending until April 13, 2021 Number of employees Production Department 634 638 649 Administrative/Sales Department 231 246 245 Total 865 884 894

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Average age	Average age	42	43	43
Average service seniority		15	15	15
Academic background distribution ratio	PhD degree	0.2%	0.2%	0.2%
	Master degree	8.6%	9.0%	9.2%
	College	55.0%	55.8%	55.5%
	Senior high school	28.4%	27.6%	27.3%
	Under senior high school	7.8%	7.4%	7.8%

Comparison of empdloyees production value (capacity) between the most recent two years:
The employees‘ contribution to the business administration may be measured based on the following financial indicators:
(1) Sales per employee (operating revenue, net/number of employees)
(2) Net profit per employee (net income/number of employees, also known as the production capacity indicator)

Comparison of the Company‘s employees production value (capacity) between the most recent two years:

Unit: NT$ thousand

years: : NT$thousand
Item	2019	2020	Increase/decrease (%)
Operating profit	27,735,611	27,298,051	-1.58%
Net income	2,390,730	3,236,942	35.40%
Number of employees	865	884	2.20%
Sales per employee	32,064	30,880	-3.69%
Net profit per employee	2,764	3,662	32.49%

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IV. Information About Environmental Protection Expenditure

(1) Losses (including damages) and fines incurred due to pollution of the environment

during the most recent year and up to the date of publication of the annual report:

	2020	Ending until April 13, 2021
Level of pollution (type/level)	The environmental competent authority's inspection result showed that the annual consumption of paint/steel balls in the rebar yards, section steel yards, and steel bar/steel wire yards exceeded 10% of the limit authorized by the permit.	The inspection conducted by the environmental protection authority on reducing slag storage areas at the factory premises showed that the areas were not covered with dust-proof net; therefore, the waste flew and spread at the premises, and the measures taken to prevent leakage of rain and sewage were defective.
Indemnitee or DisciplinaryUnit	Environment Protection Bureau, Taichung CityGovernment	Environment Protection Bureau, Taichung City Government
Date of Decision, Decision No., Contents of Decision	March 15, 2021, under Taichung City-Environment-Inspection No. 1100021478, fined NT$100000 for each violation,NT$300,000 in total.	January 28, 2021, under Taichung City-Environment-Inspection No. 1100007931, fined NT$18,000 in total.
Violated Provisions and Violated Laws & Regulations	Violates Paragraph 1 and Paragraph 4 of Article 24 of the Air Pollution Control Act, as the annual consumption of raw materials and supplies exceeded the quantity authorized in the permit.	1. Violate Paragraph 1 of Article 36 of the Waste Disposal Act as the reducing slag storage areas were not covered with dust-proof net and no equipment or measure was adopted to prevent rain and underground water frompenetratingonto the areas.
Damages	300,000	18,000
Other losses	N/A	N/A

(2) Continuing environmental protection expenditure for next three years:

Unit: NT$ thousand

			Unit: NT$thousand
	2021	2022	2023
Pollution prevention equipment to be procured, or details about the expenditure	1. Update of the filter materials in dust collection filter bags 2. Repair of reagent equipment at water treatment plant 3. Processing fees for recycling collected dust 4. Processing fees for recycling furnace slags 5. Report on government fees for air, dirt and water treatment 6. Maintenance of robot vacuum/street sprinkler	1. Update of the filter materials in dust collection filter bags 2. Repair of reagent equipment at water treatment plant 3. Processing fees for recycling collected dust 4. Processing fees for recycling furnace slags 5. Report on government fees for air, dirt and water treatment 6. Maintenance of robot vacuum/street sprinkler	1. Update of the filter materials in dust collection filter bags 2. Repair of reagent equipment at water treatment plant 3. Processing fees for recycling collected dust 4. Processing fees for recycling furnace slags 5. Report on government fees for air, dirt and water treatment 6. Maintenance of robot vacuum/street sprinkler

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Expected corrective actions	1. Replace the equipment and filter materials with new ones to enhance the air and water filter effect 2. Recycling of furnace slags and collected dust 3. Effective control over the dust spreading on roads 4. Effective reduction of pollutant emissions 5. Report the pollution prevention expenses periodically pursuant to laws.	1. Replace the equipment and filter materials with new ones to enhance the air and water filter effect 2. Recycling of furnace slags and collected dust 3. Effective control over the dust spreading on roads 4. Effective reduction of pollutant emissions 5. Report the pollution prevention expenses periodically pursuant to laws.	1. Replace the equipment and filter materials with new ones to enhance the air and water filter effect 2. Recycling of furnace slags and collected dust 3. Effective control over the dust spreading on roads 4. Effective reduction of pollutant emissions 5. Report the pollution prevention expenses periodically pursuant to laws.
Amount	`＄`450,000	`＄`450,000	`＄`450,000

(3) An estimate of losses incurred to date or likely to be incurred in the future, and responsive measures: About NT$100,000

Adopt RC/AC surface in the storage areas and cover the areas with the dust-proof net (cloth).

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V. Labor-Management Relations:
(I) Employee welfare measures and retirement system and their implementation status, and labor agreements as well as the various employee rights protection measures:
1. Employee welfare measures:
  - (1) Food:
    - a. The Company owns the most advanced kitchenware able to supply various Chinese and western food at the same time. The Company supplies free lunch each day.
    - b. The Company provides RO water to improve the drinking water quality.
  - (2) Clothing:
    - a. Provide uniform for two seasons without charge on a yearly basis.
    - b. Provide the cloth, pants, helmet and safe shoes, etc., as needed by the workplace.
  - (3) Housing:
    - a. Provide the single dormitory to workers who are away from home for a long distance at a preferential price
  - (4) Transportation:
    - a. Erect wide parking lots available to workers for parking cars and motorcycles.
    - b. Send large-size sweeper trucks and street sprinklers to clean, maintain and landscape the roads at the factory premises.
  - (5) Education:
    - a. According to the ―Regulations Governing Implementation of Training Programs,‖ the Company implements various training programs and send professional personnel to attend training courses overseas or retain professional engineer dispatched from overseas to guide the technology personnel on site at the factory premises to help the personnel improve their profession.
    - b. The Company encourages workers to attend training programs, seminars and professional training courses outside the factory premises. Also, it helps new employees to attend various certificate/license examinations for specific qualifications at the Company‘s expenses.
    - c. The Company regularly retains professionals and scholars to deliver speech or teach lesson at the factory premises. Workers are free to attend the speech and lesson without restriction.
  - (6) Entertainment:
    - a. The Worker Welfare Committee has set up several clubs. Each club is funded by the Company, and regularly organizes various recreational activities or art & cultural activities to provide physical and mental relaxation, and facilitate emotional exchanges among co-workers.
    - b. Workers will receive the gift money for their birthday. The Company holds the year-end party each year.
  - (7) Medical treatment and healthcare:
    - a. Execute special contracts with large-scale hospitals and clinics nearby the Company. Workers or their dependents may seek medical service or inpatient service at preferential price, and also may ask for special services.
    - b. Workers are required to attend the health checkup once per year. The scope of checkup may be adjusted if necessary. Workers at special workplaces are required to attend special health checkup separately each year.

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c. The physician by contract resides at the factory premises to provide services, including health guidance or health consultation, to workers twice per month.
d. Workers who are hospitalized or seek outpatient service for injury or sickness may apply for the group medical insurance benefits.
e. The weight loss and smoking quitting events are organized in order to upgrade the employees‘ value toward health, and serve the purpose for effective prevention of diseases via health promotion activities.
(8) Subsidy for marriage, funeral and celebration:

Workers who satisfy the requirements for marriage, funeral and celebration subsidies may receive gift money or consolation money ranging from NT$3,000 to NT$100,000.

(9) Scholarship:

Employees‘ children who are senior high school students, two-year junior college students or university students with a GPA satisfying the specific standards may apply for the scholarship ranging from NT$1,000 to NT$3,000.

Retirement system
(1) The Company already set forth the regulations governing workers‘ retirement, and also established the Labor Pension Supervisory Committee. The regulations are summarized as follows:
- a. A worker may apply for voluntary retirement under any of the following conditions:
  - (a) Where the worker attains the age of fifty-five and has worked for fifteen years.
  - (b) Where the worker has worked more than twenty-five years.
  - (c) Where the worker attains the age of sixty and has worked for ten years.
- b. An employer shall not force a worker to retire unless any of the following situations has occurred:
  - (a) Where the worker attains the age of sixty-five.
  - (b) Where the worker is unable to perform his/ her duties due to physical or mental disability.
- c. The old criteria for payment of worker pensions shall be as follows:
  - (a) Two bases are given for each full year of service rendered. For the rest of the years over 15 years, one base is given for each full year of service rendered, provided that the total number of bases shall be no more than 45. The length of service is calculated as half year when it is less than six months and as one year when it is more than six months.
  - (b) As set forth in subparagraph 2, Paragraph 1 of Article 54 of the Labor Standards Act, an additional 20% on top of the amount calculated according to the preceding subparagraph shall be given to workers forced to retire due to physical or mental disability incurred from performance of their duties.

The retirement pension base as specified in subparagraph 1 of the preceding paragraph shall be one month‘s average wage of the worker at the time when his or her retirement is approved.

(2) The Company has retained actuaries to calculate the pension for the Company since 1995. The payment of pension is calculated in the manner referred to in the Labor Standards Act.

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(3) Under the old system, the Company shall contribute 2% of the individual employee‘s monthly salary into the employee‘s pension account on a monthly basis.
(4) In response to the implementation of the new labor pension system, since July 1, 2005, the Company has contributed 6% of the individual employee‘s monthly salary to the employee‘s personal pension account Furthermore, following the promulgation of the Labor Pension Act on July 1, 2005, the Company has made monthly payments, equivalent to 6% of the individual employee‘s monthly salary, into the employee‘s personal labor pension account on a monthly basis for new employees, and employees who choose to apply the new system and also continued to retain the seniority accrued under the old system as of July 1, 2005.
In order to encourage employees to respect their own profession and do their job, the labor and management, out of the intent to work with each other to facilitate the business development, set forth various ethical codes and reward & punishment standards for employees.

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(II) Continuing education and training of employees:
1. The Company values the training about each employee‘s competence. From the orientation training to competence training, the Company provides employees with diversified training channels, including on-the-job training, internal training (internal/external trainers), external training, professional training, and self-study, etc., in order to improve the active workers‘ quality, enhance their own profession and expertise, upgrade their work efficiency, and retain more talents for the Company.
2. For the experience transfer and convenient learning, all teaching materials are computerized and all employees are allowed to attend the online courses.
3. Send professional personnel to attend training courses overseas or retain professional engineers dispatched from overseas to guide the technology personnel on site at the factory premises.
4. Encourage workers to attend training programs, seminars and professional training courses outside the factory premises, and also help workers to attend various certificate/license examinations for specific qualifications at the Company‘s own expenses.

(3) Agreement between the labor and management and employee rights protection measures, and their implementation status:

 - The Company is used to valuing various employee welfare measures and complying with the Labor Standards Act to offer a reasonable salary to employees.

 - The Company has set forth various robust systems.  The Company will also organize the communication meeting for employees and welfare committee meetings periodically.  The two-way communication between the Company and employees is considered fair.

(4) Any loss sustained as a result of labor disputes during the most recent year and up to the date of publication of the annual report, and an estimate of losses incurred to date or likely to be incurred in the future, and responsive measures: The Company has harmonious labor and management relationship. Therefore, no loss was sustained as a result of labor disputes during the most recent year and up to the date of publication of the annual report. The Company was also selected by the Council of Labor, Executive Yuan as the business unit with excellent labor-management relationships throughout the nation in 1995. In 1995, the Council of Labor organized the observation tour for business units with excellent labor and management relationship at the Company, signifying its recognition of the Company‘s efforts and results in maintaining the labor and management relationship in the past years.

(5) Compliance with the employees‘ behavior and ethical codes:

 - The Company upholds the management philosophy for ―Ethical Management and Stable Creation‖ and strictly requires that employees must follow the principles of ethics, honesty and integrity.  The Company identifies employees as the Company‘s important assets, and values the whole employees‘ behavior

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and ethics. For this, it sets for the Company‘s regulations, and the management handbook respectively by the department to govern the employees. Among the other things, the important regulations are outlined as follows:

  1. Communications between various supervisors and workers shall adhere to the integrity guidelines.

  2. Workers shall follow the disciplines strictly.  Employees must comply with the Company‘s regulations, observe each executive officer‘s supervision and management and avoid defying or ignoring the officer‘s order.  Each executive officer shall also direct workers kindly.

  3. The various products or services provided by the Company are intended to satisfy customers‘ needs as the first priority.  The Company also maintains fair interaction with customers in an ethical and honest manner, in order to satisfy all customers‘ needs.

  4. No work or activity unrelated to job duty will be allowed during the working hours.

  5. In order to foresee any hazardous activities, workers discuss with each other to propose any suggestions about unsafe movement and working environment to related units for preparation of countermeasures to correct the defect.  Meanwhile, the discussion may help improve participants‘ safety awareness, and strengthen the self-inspection on work safety, so as to reduce occupational injuries.

(6) Working environment and employees‘ personal safety protection measures:
Working environment: The Company applies the integrated process consisting of making and rolling, and engages in the production process in which raw materials including waste iron, carbon coke, and alloy, etc. are made, cost and rolled into steel bars, bars in coil and various steel products. The noise, dust and high temperature caused by the process form the special working environment at a steel plant.
Employees‘ personal safety protection: The workers‘ personal safety may be protected based on perfect safety and sanitation management and pollution prevention equipment, as well as necessary safety protection policy, in such a working environment full of noise, high temperature and dust.
- a. Set forth the safety work rules to be followed by employees.
- b. Set forth the safe operating standards applicable to various operations.
- c. Apply safety and sanitation training to employees periodically.
- d. Installation of pollution prevention equipment.
- e. Perform periodic health checkup for employees each year.
- f. Provide various protective gears, including earplugs, mouth masks, fire-resistant clothing and drinking water, etc..
- g. Conduct self-inspection on machinery and equipment, practice preventive
  - maintenance work, and provide a safe working environment.
The Company keeps improving occupational safety and health management, and uses the best effort to reduce and prevent accidents, in order to build a friendly and safe working environment for employees. The Company passed the ISO 45001 certification by SGS occupational safety and health

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management system, and also acquired the CNS45001 certificate. Meanwhile, the Company establishes the Occupational Safety and Health Committee in accordance with the ―Occupational Safety and Health Management Regulations.‖ The Company‘s president serves as the Committee Chairman. The Committee members consist of occupational safety and health personnel, department heads, engineering personnel, healthcare professionals, and labors‘ representatives.

4. The scope of the Company‘s health promotion in 2020 is stated as follows:

	Scope of the Company‘s healthpromotion in 2020
1. Health checkup	The Company organizes the health checkup (including special health checkup) for employees every year. Regardless of age, all employees are required to take the health checkup. The checkup includes the general indicators, in addition to male prostate cancer screening and female ovarian cancer screening, in order to help employees find the cause and control t as early as possible. The employee health checkupexpenses spent bythe Companyin 2020 totaled NT$460,700.
2. Presentation of health checkup results	In 2020, the general health checkup results showed the abnormality in the total cholesterol, triglycerides, low-density cholesterol and urine protein indicators. In order to help the workers better understand their physical conditions, the Company organized the presentation conference and invited the physicians to interpret the significance of each indicator as disclosed. The healthcare professionals will arrange for any employee whose abnormal indicators appear to be higher to seek consultation with the physician in the Company‘s clinic, for early detection and treatment.
3. On-site working environment monitoring	In accordance with the "Regulations Governing Implementation of Working Environment Monitoring,‖ the Company contracted a qualified company to perform the monitoring periodically to analyze the operating environment and protect workers‘ health. The monitoring indicators include dust, manganese, comprehensive temperature heat indices, noise, n-hexane, xylene, acetone and hydrogen chloride. In the special health checkup conducted in 2020, only the indicator, noise, was monitored by the management personnel at three levels. The Company has retained the specialist in occupational medicine to follow up the health checkup results, re-grade the assessment results, and report the grading results and measures adopted by him/her to the Occupational Safety and Health Administration of the Ministry of Labor in the manner announced by the central competent authority. Meanwhile, a noise hazard mark has been posted on the site and earplugs and earmuffs are also made available to thepersonnel.
4. Resident physician‘s service	The Company has retained the resident physician since 2013. The physician performs the job duties to protect labors‘ health and prevent occupational injury/sickness. The Company also renovates the exclusive clinic to provide medical service and health consulting service to the personnel at the factory premises. The resident physician‘s service hours will be posted on the bulletin of the Company‘s ERP system. Workers may seek advice on health from the clinic voluntarily. The workers in any special working environment who are held abnormal according to the special health checkup results, or the workers whose health checkup results refer to level-2 results or above, the Company will provide the workers with advice on personal health. The healthcare professionals will arrange for the one-by-one consultation with the physician to gather the comprehensive evaluation on the nature of work, living habit and family history of them, and provide them and Company with the suggestion about improvement, in order to care the workers‘ health more thoroughly. The resident physician has provided the service for a total of 24 times in 2020.

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VI. Important Contracts

Nature of Contract	Involved Parties	Date of Execution	Main Contents	Restrictive Clauses
Sales Contract	Far Eastern Construction Company	November 16, 2020 November 23, 2020 February 6, 2020 May 25, 2020	Master order for central procurement Master order for central procurement Master order for central procurement Master order for central procurement	N/A
Sales Contract	DACIN Construction Co ., Ltd	March 12, 2020 July 24, 2020 September 15, 2020	Master order for central procurement Master order for central procurement Master order for central procurement	N/A
Sales Contract	Continental Engineering Corporation	December 22, 2020 March 24, 2020 September 30, 2020 August 4, 2020	Master order for central procurement Master order for central procurement Continental Engineering - Trueful Land Zhubei Residential and Commercial Complex Continental Engineering - Trueful Land Bade Residential Building	N/A
Sales Contract	Hwang Chang General Contractor Co., Ltd	May 18, 2020	Master order for central procurement	N/A
Sales Contract	Li Jin Engineering Co., Ltd.	April 14, 2020 July 21, 2020	Master order for central procurement Master order for central procurement	N/A
Sales Contract	RUENTEX Engineering & Construction Co., Ltd.	January 15, 2020 February 20, 2020 June 22, 2020 July 6, 2020	Master order for central procurement Master order for central procurement Master order for central procurement RUENTEX Innovative Yangbei Project	N/A
Sales Contract	TAISEI Corporation	February 10, 2020	Master order for central procurement	N/A
Sales Contract	Bao-Sin Construction Co., Ltd.	February 14, 2020 July 17, 2020	Master order for central procurement Master order for central procurement	N/A
Sales Contract	Kedge Construction Co., Ltd.	February 21, 2020 May 22, 2020	Kedge - Nanmen Market Building Master order for central procurement	N/A
Sales Contract	Taiwan Kumagai Co., Ltd.	April 1, 2020	Master order for central procurement	N/A
Sales Contract	Sun Pao Tsun Construction Co., Ltd.	September 18, 2020	Master order for central procurement	N/A
Sales Contract	Te Chang Construction Co., Ltd.	November 20, 2020 February 27, 2020 February 25, 2020	Largan - LP4 New Construction Project Largan - LP3 New Construction Project Master order for central procurement	N/A
Sales Contract	Shine Fa Construction Co., Ltd.	May 6, 2020	Master order for central procurement	N/A
Sales Contract	Tsang Uei Machine Co., Ltd.	May 15, 2020	Tsang Uei Machine - SunnyRich Multifunction Solar Power Co., Ltd.	N/A
Procurement Contract	Wei Chih Steel Industrial Co., Ltd.	October 5, 2020	Procurement of steel billet	N/A
Procurement Contract	Dragon Steel Corporation	October 5, 2020 August 31, 2020	Procurement of steel billet Procurement of steel billet	N/A
Procurement Contract	Tung Ho Steel Enterprise Corp.	August 31, 2020	Procurement of steel billet	N/A

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Twelve. Overview of Finance

I. Condensed Balance Sheet and Statement of Comprehensive Income for the Most Recent Five Years
(1.1) Condensed Balance Sheet (Consolidated)

Unit: NT$ thousand

Unit: NT$ thousand	Unit: NT$ thousand
Year Item		Financial Information for the Most Recent Five Years					Financial information ending until March 31, 2021
		2016	2017	2018	2019	2020
Current assets		9,630,784	7,743,516	9,679,017	8,365,192	9,748,933	Same as the 2020 financial information identified in the left columns, as it is the most recent financial information audited or certified by the CPA, until the date of publication of the annual report, namely April 13, 2021.
Property, plant and equipment		7,407,102	8,845,656	9,953,300	9,846,122	9,436,032
Non-current assets		2,107,790	3,001,162	3,068,850	3,153,821	3,485,755
Other non-current assets		491,508	1,080,025	101,589	101,641	343,142
Total assets		19,637,184	20,670,359	22,802,756	21,466,776	23,013,862
Current liabilities	Before Distribution	2,866,499	2,879,029	3,982,719	2,816,109	3,215,161
	After Distribution	4,611,298	4,914,627	6,309,117	4,560,907	Undistributed
Non-current liabilities		187,062	185,034	181,870	363,653	330,491
Total liabilities	Before Distribution	3,053,561	3,064,063	4,164,589	3,179,762	3,545,652
	After Distribution	4,798,360	5,099,661	6,490,987	4,924,560	Undistributed
Equity attributed to the ow company	ner of parent	16,583,623	17,606,296	18,638,167	18,287,014	19,468,210
Capital stock		5,815,994	5,815,994	5,815,994	5,815,994	5,815,994
Capital surplus		447,280	448,351	615,583	588,123	560,097
Retained earnings	Before Distribution	10,419,060	11,388,839	12,523,093	12,161,138	13,176,110
	After Distribution	8,674,261	9,353,241	10,196,695	10,416,340	Undistributed
Other equity		-98,711	-46,888	-316,503	-278,241	-83,991
Treasurystock		-	-	-	-	-
Non-controllingequity		-	-	-	-	-
Total equity	Before Distribution	16,583,623	17,606,296	18,638,167	18,287,014	19,468,210
	After Distribution	14,838,824	15,570,698	16,311,769	16,542,216	Undistributed

Note 1: Said financial information has been audited or certified by the CPA.

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(1.2) Condensed Balance Sheet (Parent Company Only) Unit: NT$ thousand

Unit: NT$thousand	Unit: NT$thousand
Year Item		Financial Information for the Most Recent Five Years					Financial information ending until March 31, 2021
		2016	2017	2018	2019	2020
Current assets		9,629,488	7,742,337	9,677,836	8,364,051	9,747,887	Same as the 2020 financial information identified in the left columns, as it is the most recent financial information audited or certified by the CPA, until the date of publication of the annual report, namely April 13, 2021.
Property, plant and equipment		7,407,102	8,845,656	9,953,300	9,846,122	9,436,032
Non-current assets		2,109,086	3,002,341	3,070,031	3,154,962	3,486,801
Other non-current assets		491,508	1,080,025	101,589	101,641	343,142
Total assets		19,637,184	20,670,359	22,802,756	21,466,776	23,013,862
Current liabilities	Before Distribution	2,866,499	2,879,029	3,982,719	2,816,109	3,215,161
	After Distribution	4,611,298	4,914,627	6,309,117	4,560,907	Undistributed
Non-current liabilities		187,062	185,034	181,870	363,653	330,491
Total liabilities	Before Distribution	3,053,561	3,064,063	4,164,589	3,179,762	3,545,652
	After Distribution	4,798,360	5,099,661	6,490,987	4,924,560	Undistributed
Equity attributed to the company	owner of parent	16,583,623	17,606,296	18,638,167	18,287,014	19,468,210
Capital stock		5,815,994	5,815,994	5,815,994	5,815,994	5,815,994
Capital surplus		447,280	448,351	615,583	588,123	560,097
Retained earnings	Before Distribution	10,419,060	11,388,839	12,523,093	12,161,138	13,176,110
	After Distribution	8,674,261	9,353,241	10,196,695	10,416,340	Undistributed
Other equity		-98,711	-46,888	-316,503	-278,241	-83,991
Treasurystock		-	-	-	-	-
Non-controllingequity		-	-	-	-	-
Total equity	Before Distribution	16,583,623	17,606,296	18,638,167	18,287,014	19,468,210
	After Distribution	14,838,824	15,570,698	16,311,769	16,542,216	Undistributed

Note 1: Said financial information has been audited or certified by the CPA.

118

(2.1) Condensed Statement of Comprehensive Income (Consolidated) Unit: NT$ thousand

Unit: NT$thousand
Year Item	Financial Information for the Most Recent Five Years					Financial information ending until March 31, 2021
	2016	2017	2018	2019	2020
Operatingrevenue	20,932,650	24,741,937	30,865,647	27,735,611	27,298,051	Same as the 2020 financial information identified in the left columns, as it is the most recent financial information audited or certified by the CPA, until the date of publication of the annual report, namely April 13, 2021.
Grossprofit	3,162,911	3,815,324	4,171,060	2,865,577	3,849,289
Operatingincome(loss)	2,342,327	3,033,481	3,335,672	2,089,002	3,090,862
Non-operating revenue and expenditure	-145,347	208,665	301,704	301,728	146,080
Net income	2,196,980	3,242,146	3,637,376	2,390,730	3,236,942
Current net income from continuingoperations	1,815,794	2,724,957	2,942,415	1,962,355	2,619,426
Loss from discontinued operations	-	-	-	-	-
Current net income(loss)	1,815,794	2,724,957	2,942,415	1,962,355	2,619,426
Other comprehensive income for currentperiod(net after tax)	-69,503	41,444	5,141	40,350	334,594
Total current comprehensive income	1,746,291	2,766,401	2,947,556	2,002,705	2,954,020
Net income attributed to the owner ofparent company	1,815,794	2,724,957	2,942,415	1,962,355	2,619,426
Net income attributed to non-controllingequity	-	-	-	-	-
Total comprehensive income attributed to the owner of parent company	1,746,291	2,766,401	2,947,556	2,002,705	2,954,020
Total comprehensive income attributed to the non-controlling equity	-	-	-	-	-
EPS	3.12	4.69	5.06	3.37	4.50

Note 1: Said financial information has been audited or certified by the CPA.

119

(2.2) Condensed Statement of Comprehensive Income (Parent Company Only) Unit: NT$ thousand

Unit: NT$thousand
Year Item	Financial Information for the Most Recent Five Years					Financial information ending until March 31, 2021
	2016	2017	2018	2019	2020
Operatingrevenue	20,932,650	24,741,937	30,865,647	27,735,611	27,298,051	Same as the 2020 financial information identified in the left columns, as it is the most recent financial information audited or certified by the CPA, until the date of publication of the annual report, namely April 13, 2021.
Grossprofit	3,162,911	3,815,324	4,171,060	2,865,577	3,849,289
Operatingincome(loss)	2,342,348	3,033,503	3,335,709	2,089,024	3,090,884
Non-operating revenue and expenditure	-145,368	208,643	301,667	301,706	146,058
Net income	2,196,980	3,242,146	3,637,376	2,390,730	3,236,942
Current net income from continuingoperations	1,815,794	2,724,957	2,942,415	1,962,355	2,619,426
Loss from discontinued operations	-	-	-	-	-
Current net income(loss)	1,815,794	2,724,957	2,942,415	1,962,355	2,619,426
Other comprehensive income for currentperiod(net after tax)	-69,503	41,444	5,141	40,350	334,594
Total current comprehensive income	1,746,291	2,766,401	2,947,556	2,002,705	2,954,020
Net income attributed to the owner ofparent company	-	-	-	-	-
Net income attributed to non-controllingequity	-	-	-	-	-
Total comprehensive income attributed to the owner of parent company	-	-	-	-	-
Total comprehensive income attributed to the non-controlling equity	-	-	-	-	-
EPS	3.12	4.69	5.06	3.37	4.50

Note 1: Said financial information has been audited or certified by the CPA.

(IV) Name of Independent Auditor and his/her Audit Opinion for the Most Recent Five

Years

Year	Firm Name	Name of Independent Auditor	Audit Opinion
2016	EY Taiwan	Tu Ching-Yuan/Yen Wen-Pi	Unqualified opinions
2017	EY Taiwan	Tu Ching-Yuan/Yen Wen-Pi	Unqualified opinions
2018	EY Taiwan	Chen Ming-Hung/Yen Wen-Pi	Unqualified opinions
2019	EY Taiwan	Chen Ming-Hung/Yen Wen-Pi	Unqualified opinions
2020	EY Taiwan	Chen Ming-Hung/Yen Wen-Pi	Unqualified opinions

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II. Financial Analysis for the Most Recent Five Years

(1) Financial analysis (consolidated)

Analysis Item	Year	Financial Analysis for the Most Recent Five Years	Financial Analysis for the Most Recent Five Years	Financial Analysis for the Most Recent Five Years	Financial Analysis for the Most Recent Five Years	Financial Analysis for the Most Recent Five Years	Ending until March 31, 2021	Increase (decrease) by % in 2020 from 2019
		2016	2017	2018	2019	2020
Financial structure (%)	Liability to asset ratio	15.55	14.82	18.26	14.81	15.41	Same as the 2020 financial information identified in the left columns, as it is the most recent financial information audited or certified by the CPA, until the date of publication of the annual report, namely April 13, 2021.	4.05%
	Ratio of long-term capital to property, plants and equipment	223.89	199.04	187.26	185.73	206.32		11.09%
Solvency (%)	Current ratio	335.98	268.96	243.03	297.05	303.22		2.08%
	Quick ratio	218.53	128.86	60.01	120.26	179.73		49.45%
	Interest coverage ratio	1,372.40	1,281.96	443.66	177.66	548.06		208.49%
Operational ability	Receivables turnover (counts)	19.27	18.96	20.22	18.35	17.88		-2.56%
	Average cash collection days	19.00	19.00	18.00	19.89	20.41		2.61%
	Inventory turnover (counts)	6.50	6.31	5.17	4.51	6.16		36.59%
	Payables turnover (counts)	15.01	14.74	17.99	18.18	18.91		4.02%
	Average inventory turnover days	56.18	57.83	70.63	80.93	59.25		-26.79%
	Property, plant and equipment turnover (counts)	2.83	2.80	3.10	2.82	2.89		2.48%
	Total asset turnover (counts)	1.07	1.20	1.35	1.29	1.19		-7.75%
Profitability	Return on assets (ROA) (%)	9.40	13.53	13.57	8.91	11.80		32.44%
	Return on equity (ROE) (%)	11.05	15.94	16.24	10.63	13.88		30.57%
	Income before tax to paid-in capital ratio (%)	37.77	55.75	62.54	41.11	55.66		35.39%
	Net profit margin (%)	8.67	11.01	9.53	7.08	9.60		35.59%
	EPS (NT$)	3.12	4.69	5.06	3.37	4.50		33.53%
Cash Flow	Cash flow ratio (%)	95.86	90.66	14.96	159.62	156.97		-1.66%
	Net cash flow adequacy ratio (%)	136.81	96.29	64.06	72.70	74.24		2.12%
	Cash reinvestment ratio (%)	4.53	2.86	-4.69	7.04	10.05		42.76%
Leverage	Operating leverage	1.89	1.70	1.63	2.15	1.78		-17.21%
	Financial leverage	1.00	1.00	1.00	1.01	1.00		-0.99%
The reasons for changes in each financial ratio by more than 20% during the most recent two years (2020 and 2019), if any:
1. Quick ratio: The increase in quick ratio in 2020 from 2019 was primarily the result of a decrease in important capital expenditure.
2. Interest coverage ratio: The increase in interest coverage ratio in 2020 from 2019 was primarily the result of the increase in net profit in
2020.
3. Inventory turnover and average inventory turnover days: The decrease in the inventory turnover and average inventory turnover days was
primarily the result of the lower inventory level at the end of 2020.
4. ROA, ROE, income before tax to paid-in capital, net profit margin and EPS: The increase therein in 2020 from 2019 was primarily the
result of the increase in net profit in 2020 from 2019.
5. Increase in cash reinvestment ratio: With the reason same as that for the quick ratio.

Note 1: Said financial information was included in the consolidated financial statements audited or certified by the CPA.

121

(2) Financial analysis (parent company only)

Analysis Item	Year	Financial Analysis for the Most Recent Five Years	Financial Analysis for the Most Recent Five Years	Financial Analysis for the Most Recent Five Years	Financial Analysis for the Most Recent Five Years	Financial Analysis for the Most Recent Five Years	Ending until March 31, 2021 (Note 2)	Increase (decrease) by % in 2020 from 2019
		2016	2017	2018	2019	2020
Financial structure (%)	Liabilityto asset ratio	15.55	14.82	18.26	14.81	15.41	N/A	4.05%
	Ratio of long-term capital to property, plants and equipment	223.89	199.04	187.26	185.73	206.32	N/A	11.09%
Solvency (%)	Current ratio	335.93	268.96	243.00	297.01	303.19	N/A	2.08%
	Quick ratio	218.49	128.86	59.98	120.22	179.70	N/A	49.48%
	Interest coverage ratio	1,372.40	1281.96	443.66	177.66	548.06	N/A	208.49%
Operational ability	Receivables turnover (counts)	19.27	18.96	20.22	18.35	17.88	N/A	-2.56%
	Average cash collection days	19.00	19.00	18.00	19.89	20.41	N/A	2.61%
	Inventory turnover (counts)	6.50	6.31	5.17	4.51	6.16	N/A	36.59%
	Payables turnover (counts)	15.01	14.74	17.99	18.18	18.91	N/A	4.02%
	Average inventory turnover days	56.18	57.83	70.63	80.93	59.25	N/A	-26.79%
	Property, plant and equipment turnover (counts)	2.83	2.80	3.10	2.82	2.89	N/A	2.48%
	Total asset turnover (counts)	1.07	1.20	1.35	1.29	1.19	N/A	-7.75%
Profitability	Return on assets (ROA) (%)	9.40	13.53	13.57	8.91	11.80	N/A	32.44%
	Return on equity (ROE) (%)	11.05	15.94	16.24	10.63	13.88	N/A	30.57%
	Income before tax to paid-in capital ratio (%)	37.77	55.75	62.54	41.11	55.66	N/A	35.39%
	Net profit margin (%)	8.67	11.01	9.53	7.08	9.60	N/A	35.59%
	EPS (NT$)	3.12	4.69	5.06	3.37	4.50	N/A	33.53%
Cash Flow	Cash flow ratio (%)	95.86	90.66	14.96	159.62	156.97	N/A	-1.66%
	Net cash flow adequacy ratio (%)	136.81	96.29	64.06	72.70	74.24	N/A	2.12%
	Cash reinvestment ratio (%)	4.53	2.86	-4.69	7.04	10.05	N/A	42.76%
Leverage	Operating leverage	1.89	1.70	1.63	2.15	1.78	N/A	-17.21%
	Financial leverage	1.00	1.00	1.00	1.01	1.00	N/A	-0.99%

Note 1: Said financial information was included into the parent company only financial statements audited or certified by the CPA.

Note 2: The Company didn‘t prepare any parent company financial statements for Q1 of 2021.

122

The formula about the analysis items are stated as follows:

Financial structure
(1) Ratio of liabilities to assets = Total liabilities/Total Assets.
(2) Ratio of long-term capital to property, plant and equipment = (Total equity+Non-current liabilities)/Property, plant and equipment, net.
Solvency
(1) Current ratio = Current assets/Current liabilities.
(2) Quick ratio = (Current assets-Inventory-Prepaid expenses)/Current liabilities.
(3) Interest coverage ratio=Income tax and income before interest expenses/Current interest expenses.
Operational ability
(1) Receivables (including accounts receivable and notes receivable resulting from operation) turnover = net sales / balance of average accounts receivable (including accounts receivable and notes receivable resulting from operation).
(2) Average cash collection days = 365/Receivables turnover.
(3) Inventory turnover = Cost of goods sold/Average inventory.
(4) Payables (including accounts payable and notes payable resulting from operation) turnover = cost of goods sold / balance of average accounts payable (including accounts payable and notes payable resulting from operation).
(5) Average inventory turnover days = 365/Inventory turnover.
(6) Property, plant and equipment turnover=net sales/average property, plant and equipment, net.
(7) Total assets turnover = Net sales/Average total assets.
Profitability
(1) ROA = [Profit or loss after tax+interest expenses × (1- tax rate)]/average total assets.
(2) ROE = Profit or loss after tax/Average total equity.
(3) Net profit margin = Profit or loss after tax/Net sales.
(4) EPS = (income attributed to the owner of parent company-Preferred stock dividend)/Weighted average number of outstanding shares.
Cash Flow
(1) Cash flow ratio = Net cash flow from operating activities/Current liabilities.
(2) Net cash flow adequacy ratio = Net cash flow from operating activities during the most recent five years/(Capital expenditure+Increase in inventory+Cash dividends) during the most recent five years.
(3) Cash reinvestment ratio = (Net cash flow from operating activities-Cash dividends)/(Gross property, plant and equipment+Long-term investments+Other non-current assets+working capital).
Leverage:
(1) Operating leverage = (Net operating revenues-Variable operating costs and expenses)/Operating profit
(2) Financial leverage = Operating profit/(Operating profit-Interest expenses).

123

III. Audit Committee Review Report on the Financial Report for the Most Recent Year

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Audit Committee’s Inspection Report

The Board of Directors has prepared the Company's business report, financial statements (including consolidated and standalone financial statements) and the motion for allocation of earnings 2020, in which the financial statements have been audited by Chen Ming-Hung, CPA and Yen Wen-Pi, CPA of EY Taiwan, who also gave their audit report. After inspecting business report, financial statements and motion for allocation of earnings, the Audit Committee believes that they are free of material misstatement and thus produces this report according to Article 14-4 of the Securities and Exchange Act and Article 219 of the Company Act. Please review and approve it accordingly.

Feng Hsin Steel Co., Ltd.

Convener of Audit Committee: Yue Chao-Tang

February 25, 2021

124

IV. Consolidated Financial Report for the Most Recent Year

Feng Hsin Steel Co., Ltd.

Declaration of Statement

The companies to be included by the Company in the consolidated financial statements of affiliated enterprises in 2020 (Jan. 1, 2020~Dec. 31, 2020) pursuant to the Criteria Governing Preparation of Affiliation Reports, Consolidated Business Reports and Consolidated Financial Statements of Affiliated Enterprises are the same as those to be included into the consolidated financial statements of the parent company and subsidiaries pursuant to the Statements of International Financial Reporting Standards (IFRS) No. 10. Further, the related information to be disclosed in the consolidated financial statements of affiliated enterprises has been disclosed in consolidated financial statements of the parent company and subsidiaries. Accordingly, it is not necessary for the Company to prepare the consolidated financial statements of affiliated enterprises separately.

We hereby declare as above.

Feng Hsin Steel Co., Ltd.

Responsible Person: Lin Ming-Ju February 25, 2021

125

Independent Auditors’ Report

To FENG HSIN STEEL Co., Ltd.

Opinion

We have audited the accompanying consolidated balance sheets of FENG HSIN STEEL Co., Ltd. and its subsidiaries (the ―Group‖) as of 31 December 2020 and 2019, and the related consolidated statements of comprehensive income, changes in equity and cash flows for the years ended 31 December 2020 and 2019, and notes to the consolidated financial statements, including the summary of significant accounting policies (together ―the consolidated financial statements‖).

In our opinion, based on our audits and the reports of other auditors (please refer to the Other Matter – Making Reference to the Audits of Component Auditors section of our report), the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of the Group as of 31 December 2020 and 2019, and their consolidated financial performance and cash flows for the years ended 31 December 2020 and 2019, in conformity with the requirements of the Regulations Governing the Preparation of Financial Reports by Securities Issuers and International Financial Reporting Standards, International Accounting Standards, Interpretations developed by the International Financial Reporting Interpretations Committee or the former Standing Interpretations Committee as endorsed by Financial Supervisory Commission of the Republic of China.

Basis for Opinion

We conducted our audits in accordance with the Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants and auditing standards generally accepted in the Republic of China. Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Group in accordance with the Norm of Professional Ethics for Certified Public Accountant of the Republic of China (the ―Norm‖), and we have fulfilled our other ethical responsibilities in accordance with the Norm. Based on our audits and the reports of other auditor(s), we believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of 2020 consolidated financial statements. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Valuation for inventories

As of 31 December 2020, the Group‘s net inventories amounted to NT$3,301,468 thousand which represented 14% of the total consolidated assets. The amount of inventories was significant to the Group‘s financial statements. The Group manufacture and sell various types of steel products. The main ingredient is iron scrap. The material and finished goods are affected by the fluctuation of international prices that may cause significant changes in inventory prices. As a result, the calculation of net realizable value was complicated, we therefore determined this a key audit mater. Our audit procedures included, but not limited to, understanding and testing the effectiveness of internal control; evaluating the adequacy of accounting policies around obsolete inventories; evaluating stocktaking plan and selecting important storage locations to observe inventory counts to ensure inventory quantities and status; obtaining inventory aging schedule to test whether inbound and outbound records are accurate; re-calculating the unit cost of inventories; evaluating and testing net realizable value adopted by management; testing selling prices; and implementing analytical procedures with respect to the gross profit ratios by products. We also assessed the adequacy of disclosures of inventories. Please refer to Note 6 to the Group‘s consolidated financial statements.

Other Matter – Making Reference to the Audits of Component Auditors

Those financial statements were audited by other auditors, whose reports thereon have been furnished to us, and our opinions expressed herein are based solely on the audit reports of the other auditors. We did not audit the financial statements of certain associates and joint ventures accounted for under the equity method whose statements are based solely on the reports of other auditors. Investment in these associates and joint ventures under equity method amounted to NT$744,203 thousand and NT$696,101 thousand, both representing 3% of the consolidated total assets as of 31 December 2020 and 2019, respectively. The related shares of profits from the associates and joint ventures under the equity method amounted to NT$83,504 thousand and NT$79,764 thousand, both representing 3% of the consolidated net income before tax for the years ended 31 December 2020 and 2019, respectively; and the related shares of other comprehensive income from the associates and joint ventures under the equity method amounted to NT$159 thousand and NT$173 thousand, both representing 0% of the consolidated other comprehensive income for the years ended 31 December 2020 and 2019, respectively.

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

127

Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with the requirements of the Regulations Governing the Preparation of Financial Reports by Securities Issuers and International Financial Reporting Standards, International Accounting Standards, Interpretations developed by the International Financial Reporting Interpretations Committee or the former Standing Interpretations Committee as endorsed by Financial Supervisory Commission of the Republic of China 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 ability to continue as a going concern of the Group 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 financial reporting process of the Group.

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

128

As part of an audit in accordance with auditing standards generally accepted in the Republic of China, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
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 internal control of the Group.
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 ability to continue as a going concern of the Group. 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 consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our 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 accompanying notes, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

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

129

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 2020 consolidated financial statements 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.

Other

We have audited and expressed an unqualified opinion on the parent company only financial statements of FENG HSIN STEEL CO., Ltd. as of and for the years ended 31 December 2020 and 2019.

/s/Chen, Ming Hung

/s/Yen, Wen Pi

Ernst & Young, Taiwan

25 February 2021

Notice to Readers

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

130

English Translation of Consolidated Financial Statements Originally Issued in Chinese

FENG HSIN STEEL CO., LTD. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS

31 December 2020 and 2019

(Expressed in Thousands of New Taiwan Dollars)

Assets	Notes	2020.12.31 $2,175,269 $1,566,952 397,242 239,141 11,006 25,287 1,478,967 1,532,271 8,579 20,516 3,301,468 4,307,181 668,739 671,224 7,352 2,620 9,748,933 8,365,192 1,426,954 1,367,312 9,436,032 9,846,122 178,936 212,184 698,381 380,417 109,222 111,510 343,142 101,641 13,264,929 13,101,584 2019.12.31 1,072,262 1,082,398 - 1,700,311
Current Assets Cash and cash equivalents Financial assets at fair value through other comprehensive income-current Contract assets, current Notes receivable, net Accounts receivable, net Other receivables Inventories, net Prepayments Other current assets Total current assets Non-current assets Financial assets at fair value through other comprehensive income-noncurrent Investments accounted for under the equity method Property, plant and equipment Right-of-use asset Investment property,net Deferred tax assets Other non-current assets Total non-current assets	4, 6.(1) 4, 6.(14),(15) 4, 6.(15) 4, 6.(3),(15) 4, 6.(4) 6.(5) 4, 6.(6) 4, 6.(7) 4, 6.(16) 4, 6.(8) 4, 6.(20) 6.(9) 4, 6.(2) 4, 6.(2)

Total assets

$23,013,862 $21,466,776

(Continued)

English Translation of Consolidated Financial Statements Originally Issued in Chinese FENG HSIN STEEL CO., LTD. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Continued)

31 December 2020 and 2019

(Expressed in Thousands of New Taiwan Dollars)

	Notes 4, 6.(10) 4, 6.(14) 7 6.(11) 4 4, 6.(16) 4, 6.(16) 4, 6.(12) 6.(13) 6.(13) 6.(13) 4	2020.12.31 2019.12.31 $329,941 $381,151 134,198 131,372 - 241 1,302,794 1,176,403 1,026,124 998,743 414,836 120,585 5,109 6,238 2,159 1,376 3,215,161 2,816,109 174,803 204,165 155,688 159,488 330,491 363,653 3,545,652 3,179,762 5,815,994 5,815,994 560,097 588,123 4,354,532 4,158,088 278,241 316,503 8,543,337 7,686,547 13,176,110 12,161,138 (83,991) (278,241) (83,991) (278,241) 19,468,210 18,287,014 $23,013,862 $21,466,776
Current liabilities Short-term loans Contract liabilities, current Notes payable Accounts payable Other payables Current tax liabilities Lease liabilities, current Other current liabilities Total current liabilities Non-current liabilities Lease liabilities, noncurrent Net defined benefit obligation, noncurrent Total non-current liabilities Total liabilities Equity attributable to the parent company Capital Common stock Additional paid-in capital Retained earnings Legal reserve Special reserve Unappropriated earnings Total Retained earnings Other components of equity Unrealized gains (losses) measured at fair value through other comprehensive income financial asset Total Other components of equity Total equity Total liabilities and equity

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

English Translation of Consolidated Financial Statements Originally Issued in Chinese FENG HSIN STEEL CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

For the years ended 31 December 2020 and 2019

(Expressed in Thousands of New Taiwan Dollars, Except for Earnings per Share)

Operating revenues Operating costs Gross Profit-net Operating expenses Sales and marketing expenses General and administrative expenses Research and development expenses Subtotal Operating Income Non-operating income and expenses Interest income Other income Other gains and losses Finance costs Share of profit or loss of associates and joint ventures Subtotal Income from continuing operations before income tax Income tax expense Net income Other comprehensive income Items that will not to be reclassified subsequently to profit or loss Remeasurements of defined benefit pension plans Unrealized gains (losses) from equity instruments investments measured at fair value through other comprehensive income Share of other comprehensive of associates and joint ventures Income tax related to items that will not to be reclassified subsequently to profit or loss Total other comprehensive loss, net of tax Total comprehensive income Net income attributable to: Stockholders of the parent Non-controlling interests Comprehensive income attributable to: Stockholder of the parent Non-controlling interests Earnings per share (NTD) Earnings per share-basic Earnings per share-diluted	Notes	2020 2019
	4,6.(14) 6.(17),7 6.(17) 4,6.(18) 6.(18) 6.(18) 6.(6) 4,6.(20) 6.(19) 4,6.(21)	$27,298,051 $27,735,611 (23,448,762) (24,870,034) 3,849,289 2,865,577 (410,547) (441,118) (304,047) (290,567) (43,833) (44,890) (758,427) (776,575) 3,090,862 2,089,002 3,480 2,535 65,015 56,321 (11,542) 47,185 (5,917) (13,533) 95,044 209,220 146,080 301,728 3,236,942 2,390,730 (617,516) (428,375) 2,619,426 1,962,355 (7,784) 2,437 159 173 334,594 40,350 $2,954,020 $2,002,705 $2,619,426 $1,962,355 - - $2,619,426 $1,962,355 $2,954,020 $2,002,705 - - $2,954,020 $2,002,705 $4.50 $3.37 $4.50 $3.37 1,525 (522) 340,694 38,262

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

	Total Equity	Total Equity	$18,638,167 - - (2,326,398) (28,385) 925 1,962,355 40,350	2,002,705	$18,287,014	$18,287,014 - (1,744,798) - (28,867) 841 2,619,426 334,594	2,954,020	-	$19,468,210
Equity Attributable to the parent company	Other components of equity	Unrealized Gains (losses) measured at fair value through other comprehensive income	$(316,503) 38,262	38,262	$(278,241)	$(278,241) 340,694	340,694	(146,444)	$(83,991)
	Retained earnings	Unappropriated Earnings	$8,612,358 (294,241) (269,615) (2,326,398) 1,962,355 2,088	1,964,443	$7,686,547	$7,686,547 (196,444) (1,744,798) 38,262 2,619,426 (6,100)	2,613,326	146,444	$8,543,337
		Special reserve	$46,888 269,615	-	$316,503	$316,503 (38,262)	-		$278,241
		Legal Reserve	$3,863,847 294,241	-	$4,158,088	$4,158,088 196,444	-		$4,354,532
		Additional Paid-in Capital	$615,583 (28,385) 925	-	$588,123	$588,123 (28,867) 841	-		$560,097
		Common Stock	$5,815,994	-	$5,815,994	$5,815,994	-		$5,815,994
			Balance as of 1 January 2019 Appropriation and distribution of 2018 retained earnings Legal reserve Special reserve Cash dividends Change in other paid-in capital Change in other paid-in capital of associates and joint ventures accounted for using the equity method Change in other paid-in capital Net income for the year ended 31 December 2019 Other comprehensive income (loss), net of tax for the year ended 31 December 2019 Total comprehensive income (loss) Balance as of 31 December 2019 Balance as of 1 January 2020 Appropriation and distribution of 2019 retained earnings Legal reserve Cash dividends Reversal of special reserve Change in other paid-in capital Change in other paid-in capital of associates and joint ventures accounted for using the equity method Change in other paid-in capital Net income for the year ended 31 December 2020 Other comprehensive income (loss), net of tax for the year ended 31 December 2020 Total comprehensive income (loss) Disposal of financial assets at fair value through other comprehensive income Balance as of 31 December 2020

English Translation of Consolidated Financial Statements Originally Issued in Chinese

FENG HSIN STEEL CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the years ended 31 December 2020 and 2019

(Expressed in Thousands of New Taiwan Dollars)

Cash flows from operating activities:
Net income before tax
Adjustments to reconcile net income before tax to net cash provided by operating activities:
Income and expense adjustments:
Depreciation
Amortization
Net gain of financial assets and liabilities at fair value through profit or loss
Interest expense
Interest income
Dividend income
Share of profit of associates and joint ventures
Gain on disposal of property, plant and equipment
Loss on disposal of other assets
Other items
Changes in operating assets and liabilities:
(Increase) Decrease in current contract assets
Decrease (Increase) in notes receivable
Decrease (Increase) in accounts receivable
Decrease in other receivables
Decrease in inventories, net
Increase in prepayments
Increase in other current assets
Increase (Decrease) in current contract liabilities
Decrease in notes payable
Increase (Decrease) in accounts payable
Increase in other payables
Increase in other current liabilities
Decrease in net defined benefit obligation
Cash generated from operations
Interest received
Dividends received
Interest paid
Income tax paid
Net cash provided by operating activities

For theyears ended 31 December

2020
2019
$3,236,942
$2,390,730
1,184,374
1,114,364
3,000
3,000
(520)
-
5,917
13,533
(3,480)
(2,535)
(48,056)
(30,583)
(95,044)
(209,220)
(497)
(34,329)
98
-
(544)
-
(158,101)
11,783
15,122
(21,566)
53,304
(76,572)
8,700
11,656
1,007,086
2,435,929
(40,114)
(174,274)
(1,892)
(504)
2,826
(39,528)
(241)
(2,231)
129,036
(379,728)
39,594
86,131
783
156
(23,612)
(13,698)
5,314,681
5,082,514
3,480
2,478
51,293
26,783
(3,186)
(10,917)
(319,452)
(605,721)
5,046,816
4,495,137

(Continued)

English Translation of Consolidated Financial Statements Originally Issued in Chinese

FENG HSIN STEEL CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the years ended 31 December 2020 and 2019

(Expressed in Thousands of New Taiwan Dollars)

Cash flows from investing activities:
Acquisition of financial assets at fair value through other comprehensive income
Disposal of financial assets at fair value through other comprehensive income
Return of paid-in capital for capital reduction in financial assets at fair value through other
comprehensive income
Acquisition of financial assets at fair value through profit or loss
Disposal of financial assets at fair value through profit or loss
Acquisition of investments accounted for under the equity method
Decrease in investments accounted for under the equity method
Acquisition of property, plant and equipment
Disposal of property, plant and equipment
Acquisition of investment properties
Increase in non-current-assets
Dividends received
Net cash used in investing activities
Cash flows from financing activities:
Decrease in short-term loans
Cash payments for the principal of lease liability
Cash dividends
Net cash used in financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period

For theyears ended 31 December

2020
2019
(2,666,305)
-
1,303,417
-
13,407
3,528
(10,000)
-
10,520
-
(52,122)
(188,129)
-
4,268
(726,663)
(874,744)
150
14,553
(321,843)
-
(244,501)
(59,851)
58,816
496,393
(2,635,124)
(603,982)
(51,210)
(637,382)
(7,367)
(10,756)
(1,744,798)
(2,326,398)
(1,803,375)
(2,974,536)
608,317
916,619
1,566,952
650,333
$2,175,269
$1,566,952

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

FENG HSIN STEEL CO., LTD. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended 31 December 2020 and 2019

(Expressed in Thousands of New Taiwan Dollars Unless Otherwise Specified)

1. History and organization

FENG HSIN STEEL Co., Ltd. (the Company) was incorporated in 1969. The Company operates in the blast furnaces and steel mills sector. Its products include angle irons, steel channel, flat structural frames and shafts. In June 1989, the second steel-rolling plants began operations, thus, the Company is capable of producing of other types of steel products such as: carbon steel and particular steel. Also, the second steel plant completed trail run in 1997. The second steel plant works primarily to produce particular types of steelnet, which supplies the first steel-rolling plant work and second steel-rolling plant work to ensure the control over quality and reduce manufacturing costs. The Company was approved for listing on the Taiwan Stock Exchange (―TWSE‖) in 1991. The Company‘s common shares were publicly traded on the TWSE on 25 May 1992. The Company‘s registered office and the main business location is at No.998, Sec.1, Jiahou Rd., Houli Dist., Taichung, Taiwan (R.O.C.).

2. Date and procedures of authorization of financial statements for issue

The consolidated financial statements of the Company and its subsidiaries (―the Group‖) for the years ended 31 December 2020 and 2019 were authorized for issue by the Company‘s board of directors (the Board) on 25 February 2021.

3. Newly issued or revised standards and interpretations

(1) Changes in accounting policies resulting from applying for the first time certain standards and amendments

The Group applied for the first time International Financial Reporting Standards, International Accounting Standards, and Interpretations issued, revised or amended which are recognized by Financial Supervisory Commission (―FSC‖) and become effective for annual periods beginning on or after 1 January 2020. Apart from the nature and impact of the new standard and amendment is described below, the remaining new standards and amendments had no material impact on the Group.

Covid-19-Related Rent Concessions (Amendment to IFRS 16)

The Group elected to early apply Covid-19-Related Rent Concessions (Amendment to IFRS 16) which is recognized by FSC for annual periods beginning on or after 1 January 2020, and in accordance with the requirements of the transition. For the rent concession arising as a direct consequence of the covid-19 pandemic, the Group elected not to assess whether it is a lease

modification but accounted it as a variable lease payment. Please refer to Note 6 for disclosure related to the lessee which required by the amendment.

(2) Standards or interpretations issued, revised or amended, by International Accounting Standards Board (―IASB‖) which are endorsed by FSC, but not yet adopted by the Group as at the end of the reporting period are listed below.

Items	New, Revised or Amended Standards and Interpretations	Effective Date issued by IASB
a	Interest Rate Benchmark Reform - Phase 2 (Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16)	1 January 2021

(a) Interest Rate Benchmark Reform - Phase 2 (Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16)

The final phase amendments mainly relate to the effects of the interest rate benchmark reform on the companies‘ financial statements:

A. A company will not have to derecognize or adjust the carrying amount of financial instruments for changes to contractual cash flows as required by the reform, but will instead update the effective interest rate to reflect the change to the alternative benchmark rate;
B. A company will not have to discontinue its hedge accounting solely because it makes changes required by the reform, if the hedge meets other hedge accounting criteria; and
C. A company will be required to disclose information about new risks arising from the reform and how it manages the transition to alternative benchmark rates.

The abovementioned amendments that are applicable for annual periods beginning on or after 1 January 2021 have no material impact on the Group.

(3) Standards or interpretations issued, revised or amended, by IASB which are not endorsed by FSC, and not yet adopted by the Group as at the end of the reporting period are listed below.

Items	New, Revised or Amended Standards and Interpretations	Effective Date issued byIASB
a	IFRS 10 ―Consolidated Financial Statements‖ and IAS 28 ―Investments in Associates and Joint Ventures‖ — Sale or Contribution of Assets between an Investor and its Associate or Joint Ventures	To be determined by IASB

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b	IFRS 17 ―Insurance Contracts‖	1 January2023
c	Classification of Liabilities as Current or Non-current – Amendments to IAS 1	1 January 2023
d	Narrow-scope amendments of IFRS, including Amendments to IFRS 3, Amendments to IAS 16, Amendments to IAS 37 and the Annual Improvements	1 January 2022

(a) IFRS 10―Consolidated Financial Statements‖ and IAS 28―Investments in Associates and Joint Ventures‖ — Sale or Contribution of Assets between an Investor and its Associate or Joint Ventures

The amendments address the inconsistency between the requirements in IFRS 10 Consolidated Financial Statements and IAS 28 Investments in Associates and Joint Ventures , in dealing with the loss of control of a subsidiary that is contributed to an associate or a joint venture. IAS 28 restricts gains and losses arising from contributions of non-monetary assets to an associate or a joint venture to the extent of the interest attributable to the other equity holders in the associate or joint ventures. IFRS 10 requires full profit or loss recognition on the loss of control of the subsidiary. IAS 28 was amended so that the gain or loss resulting from the sale or contribution of assets that constitute a business as defined in IFRS 3 between an investor and its associate or joint venture is recognized in full.

IFRS 10 was also amended so that the gains or loss resulting from the sale or contribution of a subsidiary that does not constitute a business as defined in IFRS 3 between an investor and its associate or joint venture is recognized only to the extent of the unrelated investors‘ interests in the associate or joint venture.

(b) IFRS 17 ―Insurance Contracts‖

IFRS 17 provides a comprehensive model for insurance contracts, covering all relevant accounting aspects (including recognition, measurement, presentation and disclosure requirements). The core of IFRS 17 is the General (building block) Model, under this model, on initial recognition, an entity shall measure a group of insurance contracts at the total of the fulfilment cash flows and the contractual service margin. The fulfilment cash flows comprise of the following:

(1) estimates of future cash flows;

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(2) Discount rate: an adjustment to reflect the time value of money and the financial risks related to the future cash flows, to the extent that the financial risks are not included in the estimates of the future cash flows; and
(3) a risk adjustment for non-financial risk.

The carrying amount of a group of insurance contracts at the end of each reporting period shall be the sum of the liability for remaining coverage and the liability for incurred claims. Other than the General Model, the standard also provides a specific adaptation for contracts with direct participation features (the Variable Fee Approach) and a simplified approach (Premium Allocation Approach) mainly for short-duration contracts.

IFRS 17 was issued in May 2017 and it was amended in June 2020. The amendments include deferral of the date of initial application of IFRS 17 by two years to annual beginning on or after 1 January 2023 (from the original effective date of 1 January 2021); provide additional transition reliefs; simplify some requirements to reduce the costs of applying IFRS 17 and revise some requirements to make the results easier to explain. IFRS 17 replaces an interim Standard – IFRS 4 Insurance Contracts – from annual reporting periods beginning on or after 1 January 2023.

These are the amendments to paragraphs 69-76 of IAS 1 Presentation of Financial statements and the amended paragraphs related to the classification of liabilities as current or non-current.

(d) Narrow-scope amendments of IFRS, including Amendments to IFRS 3, Amendments to IAS 16, Amendments to IAS 37 and the Annual Improvements
A. Updating a Reference to the Conceptual Framework (Amendments to IFRS 3)

The amendments updated IFRS 3 by replacing a reference to an old version of the Conceptual Framework for Financial Reporting with a reference to the latest version, which was issued in March 2018. The amendments also added an exception to the recognition principle of IFRS 3 to avoid the issue of potential ―day 2‖ gains or losses arising for liabilities and contingent

140

liabilities. Besides, the amendments clarify existing guidance in IFRS 3 for contingent assets that would not be affected by replacing the reference to the Conceptual Framework.

B. Property, Plant and Equipment: Proceeds before Intended Use (Amendments to IAS 16)

The amendments prohibit a company from deducting from the cost of property, plant and equipment amounts received from selling items produced while the company is preparing the asset for its intended use. Instead, a company will recognise such sales proceeds and related cost in profit or loss.

C. Onerous Contracts - Cost of Fulfilling a Contract (Amendments to IAS 37) The amendments clarify what costs a company should include as the cost of fulfilling a contract when assessing whether a contract is onerous.

D. Annual Improvements to IFRS Standards 2018 - 2020

Amendment to IFRS 1

The amendment simplifies the application of IFRS 1 by a subsidiary that becomes a first-time adopter after its parent in relation to the measurement of cumulative translation differences.

Amendment to IFRS 9 Financial Instruments

The amendment clarifies the fees a company includes when assessing whether the terms of a new or modified financial liability are substantially different from the terms of the original financial liability.

Amendment to Illustrative Examples Accompanying IFRS 16 Leases

The amendment to Illustrative Example 13 accompanying IFRS 16 modifies the treatment of lease incentives relating to lessee‘s leasehold improvements.

Amendment to IAS 41

The amendment removes a requirement to exclude cash flows from taxation when measuring fair value thereby aligning the fair value measurement requirements in IAS 41 with those in other IFRS Standards.

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The abovementioned standards and interpretations issued by IASB have not yet endorsed by FSC at the date when the Group‘s financial statements were authorized for issue. The new or amended standards and interpretations have no material impact on the Group.

4. Summary of significant accounting policies

(1) Statement of compliance

The consolidated financial statements of the Group for the years ended 31 December 2020 and 2019 have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers (―the Regulations‖), IFRSs, IASs, IFRIC and SIC, which are endorsed by the FSC (collectively referred to as ―TIFRSs‖).

(2) Basis of preparation

The consolidated financial statements have been prepared on a historical cost basis, except for financial instruments that have been measured at fair value. The consolidated financial statements are expressed in thousands of New Taiwan Dollars (―NT$‖) unless otherwise stated.

(3) Basis of consolidation

Preparation principle of consolidated financial statement

Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Specifically, the Group controls an investee if and only if the Group has:

(a) power over the investee (i.e. existing rights that give it the current ability to direct the relevant activities of the investee)
(b) exposure, or rights, to variable returns from its involvement with the investee, and
(c) the ability to use its power over the investee to affect its returns

When the Group has less than a majority of the voting or similar rights of an investee, the Group considers all relevant facts and circumstances in assessing whether it has power over an investee, including:

(a) the contractual arrangement with the other vote holders of the investee
(b) rights arising from other contractual arrangements
(c) the Group‘s voting rights and potential voting rights

The Group re-assesses whether or not it controls an investee if facts and

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circumstances indicate that there are changes to one or more of the three elements of control.

Subsidiaries are fully consolidated from the acquisition date, being the date on which the Company obtains control, and continue to be consolidated until the date that such control ceases. The financial statements of the subsidiaries are prepared for the same reporting period as the parent company, using uniform accounting policies. All intra-group balances, income and expenses, unrealized gains and losses and dividends resulting from intra-group transactions are eliminated in full.

A change in the ownership interest of a subsidiary, without a change of control, is accounted for as an equity transaction.

Total comprehensive income of the subsidiaries is attributed to the owners of the parent and to the non-controlling interests even if this results in the non-controlling interests having a deficit balance.

If the Company loses control of a subsidiary, it:

(a) derecognizes the assets (including goodwill) and liabilities of the subsidiary;
(b) derecognizes the carrying amount of any non-controlling interest;
(c) recognizes the fair value of the consideration received;
(d) recognizes the fair value of any investment retained;
(e) recognizes any surplus or deficit in profit or loss; and
(f) reclassifies the parent‘s share of components previously recognized in other comprehensive income to profit or loss.

The consolidated entities are as follows:

Investor The Company	Subsidiary GREAT FORTUNE HOLDING LIMITED	Main businesses Trading and holding Group	Percentage of ownership (%)	Percentage of ownership (%)
			31 December 2020 100 %	31 December 2019
				100%

(4) Foreign currency transactions

The Group‘s consolidated financial statements are presented in NT$, which is also the Company‘s functional currency. Each entity in the Group determines its own functional currency and items included in the financial statements of each entity are measured using that functional currency.

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Transactions in foreign currencies are initially recorded by the Group‘s entities at their respective functional currency rates prevailing at the transaction date. Monetary assets and liabilities denominated in foreign currencies are translated at the functional currency closing rate of exchange ruling at the reporting date. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value is determined. Non-monetary items that are measured at historical cost in a foreign currency are translated using the exchange rates as at the dates of the initial transactions.

All exchange differences arising on the settlement of monetary items or on translating monetary items are taken to profit or loss in the period in which they arise except for the following:

(a) Exchange differences arising from foreign currency borrowings for an acquisition of a qualifying asset to the extent that they are regarded as an adjustment to interest costs are included in the borrowing costs that are eligible for capitalization.
(b) Foreign currency items within the scope of IFRS 9 Financial Instruments are accounted for based on the accounting policy for financial instruments.
(c) Exchange differences arising on a monetary item that forms part of a reporting entity‘s net investment in a foreign operation is recognized initially in other comprehensive income and reclassified from equity to profit or loss on disposal of the net investment.

When a gain or loss on a non-monetary item is recognized in other comprehensive income, any exchange component of that gain or loss is recognized in other comprehensive income. When a gain or loss on a non-monetary item is recognized in profit or loss, any exchange component of that gain or loss is recognized in profit or loss.

(5) Current and non-current distinction

An asset is classified as current when:

(a) The Group expects to realize the asset, or intends to sell or consume it, in its normal operating cycle
(b) The Group holds the asset primarily for the purpose of trading
(c) The Group expects to realize the asset within twelve months after the reporting period
(d) The asset is cash or cash equivalent unless the asset is restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.

All other assets are classified as non-current.

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A liability is classified as current when:

(a) The Group expects to settle the liability in its normal operating cycle.
(b) The Group holds the liability primarily for the purpose of trading.
(c) The liability is due to be settled within twelve months after the reporting period.
(d) The Group does not have an unconditional right to defer settlement of the liability for at least twelve months after the reporting period. 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.

All other liabilities are classified as non-current.

(6) Cash and cash equivalents

Cash and cash equivalents comprise cash on hand, demand deposits and short-term, highly liquid time deposits (including ones that have maturity within 3 months) or investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

(7) Financial instruments

Financial assets and financial liabilities are recognized when the Group becomes a party to the contractual provisions of the instrument.

Financial assets and financial liabilities within the scope of IFRS 9 Financial Instruments are recognized initially at fair value plus or minus, in the case of investments not at fair value through profit or loss, directly attributable transaction costs.

(1) Financial instruments: Recognition and Measurement

The Group accounts for regular way purchase or sales of financial assets on the trade date.

The Group classified financial assets as subsequently measured at amortized cost, fair value through other comprehensive income or fair value through profit or loss considering both factors below:

A. the Group‘s business model for managing the financial assets and

B. the contractual cash flow characteristics of the financial asset.

Financial assets measured at amortized cost

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A financial asset is measured at amortized cost if both of the following conditions are met and presented as note receivables, trade receivables, financial assets measured at amortized cost and other receivables etc., on balance sheet as at the reporting date:

(a) the financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows and
(b) the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

Such financial assets are subsequently measured at amortized cost (the amount at which the financial asset is measured at initial recognition minus the principal repayments, plus or minus the cumulative amortization using the effective interest method of any difference between the initial amount and the maturity amount and adjusted for any loss allowance). A gain or loss is recognized in profit or loss when the financial asset is derecognized, through the amortization process or in order to recognize the impairment gains or losses.

Interest revenue is calculated by using the effective interest method. This is calculated by applying the effective interest rate to the gross carrying amount of a financial asset except for:

(a) purchased or originated credit-impaired financial assets. For those financial assets, the Group applies the credit-adjusted effective interest rate to the amortized cost of the financial asset from initial recognition.
(b) financial assets that are not purchased or originated credit-impaired financial assets but subsequently have become credit-impaired financial assets. For those financial assets, the Group applies the effective interest rate to the amortized cost of the financial asset in subsequent reporting periods.

Financial asset measured at fair value through other comprehensive income

A financial asset is measured at fair value through other comprehensive income if both of the following conditions are met:

(a) the financial asset is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets and

146

(b) the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

Recognition of gain or loss on a financial asset measured at fair value through other comprehensive income are described as below:

(a) A gain or loss on a financial asset measured at fair value through other comprehensive income recognized in other comprehensive income, except for impairment gains or losses and foreign exchange gains and losses, until the financial asset is derecognized or reclassified.
(b) When the financial asset is derecognized the cumulative gain or loss previously recognized in other comprehensive income is reclassified from equity to profit or loss as a reclassification adjustment.
(c) Interest revenue is calculated by using the effective interest method. This is calculated by applying the effective interest rate to the gross carrying amount of a financial asset except for:
(i) Purchased or originated credit-impaired financial assets. For those financial assets, the Group applies the credit-adjusted effective interest rate to the amortized cost of the financial asset from initial recognition.
(ii) Financial assets that are not purchased or originated credit-impaired financial assets but subsequently have become credit-impaired financial assets. For those financial assets, the Group applies the effective interest rate to the amortized cost of the financial asset in subsequent reporting periods.

Besides, for certain equity investments within the scope of IFRS 9 that is neither held for trading nor contingent consideration recognized by an acquirer in a business combination to which IFRS 3 applies, the Group made an irrevocable election to present the changes of the fair value in other comprehensive income at initial recognition. Amounts presented in other comprehensive income shall not be subsequently transferred to profit or loss (when disposal of such equity instrument, its cumulated amount included in other components of equity is transferred directly to the retained earnings) and these investments should be presented as financial assets measured at fair value through other comprehensive income on the balance sheet. Dividends on such investment are recognized in profit or loss unless the dividends clearly represents a recovery of part of the cost of investment.

Financial asset measured at fair value through profit or loss

Financial assets were classified as measured at amortized cost or measured at

147

fair value through other comprehensive income based on aforementioned criteria. All other financial assets were measured at fair value through profit or loss and presented on the balance sheet as financial assets measured at fair value through profit or loss.

Such financial assets are measured at fair value, the gains or losses resulting from remeasurement is recognized in profit or loss which includes any dividend or interest received on such financial assets.

(2) Impairment of financial assets

The Group recognizes a loss allowance for expected credit losses on debt instrument investments measured at fair value through other comprehensive income and financial asset measured at amortized cost.

The Group measures expected credit losses of a financial instrument in a way that reflects:

A. an unbiased and probability-weighted amount that is determined by evaluating a range of possible outcomes ；
B. the time value of money ； and
C. reasonable and supportable information that is available without undue cost or effort at the reporting date about past events, current conditions and forecasts of future economic conditions.

The loss allowance is measures as follows:

A. At an amount equal to 12-month expected credit losses: the credit risk on a financial asset has not increased significantly since initial recognition or the financial asset is determined to have low credit risk at the reporting date. In addition, the Group measures the loss allowance at an amount equal to lifetime expected credit losses in the previous reporting period, but determines at the current reporting date that the credit risk on a financial asset has increased significantly since initial recognition is no longer met.
B. At an amount equal to the lifetime expected credit losses: the credit risk on a financial asset has increased significantly since initial recognition or financial asset that is purchased or originated credit-impaired financial asset.
C. For trade receivables or contract assets arising from transactions within the scope of IFRS 15, the Group measures the loss allowance at an amount equal to lifetime expected credit losses.

148

At each reporting date, the Group needs to assess whether the credit risk on a financial asset has increased significantly since initial recognition by comparing the risk of a default occurring at the reporting date and the risk of default occurring at initial recognition. Please refer to Note 12 for further details on credit risk.

(3) Derecognition of financial assets

A financial asset is derecognized when:

A. The rights to receive cash flows from the asset have expired
B. The Group has transferred the asset and substantially all the risks and rewards of the asset have been transferred
C. The Group has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.

On derecognition of a financial asset in its entirety, the difference between the carrying amount and the consideration received or receivable including any cumulative gain or loss that had been recognized in other comprehensive income, is recognized in profit or loss.

(4) Financial liabilities and equity

Classification between liabilities or equity

The Group classifies the instrument issued as a financial liability or an equity instrument in accordance with the substance of the contractual arrangement and the definitions of a financial liability, and an equity instrument.

Equity instruments

An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. The transaction costs of an equity transaction are accounted for as a deduction from equity (net of any related income tax benefit) to the extent they are incremental costs directly attributable to the equity transaction that otherwise would have been avoided.

Financial liabilities

Financial liabilities within the scope of IFRS 9 Financial Instruments are

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classified as financial liabilities at fair value through profit or loss or financial liabilities measured at amortized cost upon initial recognition.

Financial liabilities at amortized cost

Financial liabilities measured at amortized cost include interest bearing loans and borrowings that are subsequently measured using the effective interest rate method after initial recognition. Gains and losses are recognized in profit or loss when the liabilities are derecognized as well as through the effective interest rate method amortization process.

Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or transaction costs.

Derecognition of financial liabilities

A financial liability is derecognized when the obligation under the liability is discharged or cancelled or expires.

When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified (whether or not attributable to the financial difficulty of the debtor), such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognized in profit or loss.

(5) Offsetting of financial instruments

Financial assets and financial liabilities are offset and the net amount reported in the balance sheet if, and only if, there is a currently enforceable legal right to offset the recognized amounts and there is an intention to settle on a net basis, or to realize the assets and settle the liabilities simultaneously.

(8) Fair value measurement

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:

(a) In the principal market for the asset or liability, or
(b) In the absence of a principal market, in the most advantageous market for the asset or liability.

The principal or the most advantageous market must be accessible to by the Group.

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The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants in their economic best interest.

A fair value measurement of a non-financial asset takes into account a market participant‘s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.

The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs.

(9) Inventories

Inventories are valued at lower of cost and net realizable value item by item.

Costs incurred in bringing each inventory to its present location and condition are accounted for as follows:

Materials ─ Weighted average of actual procurements Finished goods and ─ Cost of direct materials and labor and a proportion of work in process manufacturing overheads based on normal operating capacity. Finished goods and work in process are accounted under the weighted average method.

Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale.

Rendering of services is accounted in accordance with IFRS 15 and not within the scope of inventories.

(10) Investments accounted for using the equity method

The Group‘s investment in its associate is accounted for using the equity method other than those that meet the criteria to be classified as held for sale. An associate is an entity over which the Group has significant influence. A joint venture is a type of joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the joint venture.

Under the equity method, the investment in the associate or an investment in a joint venture is carried in the balance sheet at cost and adjusted thereafter for the post-acquisition change in the Group‘s share of net assets of the associate or joint venture. After the interest in the associate or joint venture is reduced to zero, additional losses are provided for, and a liability is recognized, only to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of the associate or joint venture. Unrealized gains and losses resulting from

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transactions between the Group and the associate or joint venture are eliminated to the extent of the Group‘s related interest in the associate or joint venture.

When changes in the net assets of an associate or a joint venture occur and not those that are recognized in profit or loss or other comprehensive income and do not affects the Group‘s percentage of ownership interests in the associate or joint venture, the Group recognizes such changes in equity based on its percentage of ownership interests. The resulting capital surplus recognized will be reclassified to profit or loss at the time of disposing the associate or joint venture on a pro-rata basis.

When the associate or joint venture issues new stock, and the Group‘s interest in an associate or a joint venture is reduced or increased as the Group fails to acquire shares newly issued in the associate or joint venture proportionately to its original ownership interest, the increase or decrease in the interest in the associate or joint venture is recognized in Additional Paid in Capital and Investment accounted for using the equity method. When the interest in the associate or joint venture is reduced, the cumulative amounts previously recognized in other comprehensive income are reclassified to profit or loss or other appropriate items. The aforementioned capital surplus recognized is reclassified to profit or loss on a pro rata basis when the Group disposes the associate or joint venture.

The financial statements of the associate or joint venture are prepared for the same reporting period as the Group. Where necessary, adjustments are made to bring the accounting policies in line with those of the Group.

The Group determines at each reporting date whether there is any objective evidence that the investment in the associate or an investment in a joint venture is impaired in accordance with IAS 28 Investments in Associates and Joint Ventures . If this is the case the Group calculates the amount of impairment as the difference between the recoverable amount of the associate or joint venture and its carrying value and recognizes the amount in the ‗share of profit or loss of an associate‘ in the statement of comprehensive income in accordance with IAS 36 Impairment of Assets . In determining the value in use of the investment, the Group estimates:

(1) Its share of the present value of the estimated future cash flows expected to be generated by the associate or joint venture, including the cash flows from the operations of the associate and the proceeds on the ultimate disposal of the investment; or
(2) The present value of the estimated future cash flows expected to arise from dividends to be received from the investment and from its ultimate disposal.

Because goodwill that forms part of the carrying amount of an investment in an associate or an investment in a joint venture is not separately recognized, it is not tested for impairment separately by applying the requirements for impairment testing goodwill in IAS 36 Impairment of Assets .

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Upon loss of significant influence over the associate or joint venture, the Group measures and recognizes any retaining investment at its fair value. Any difference between the carrying amount of the associate or joint venture upon loss of significant influence and the fair value of the retaining investment and proceeds from disposal is recognized in profit or loss. Furthermore, if an investment in an associate becomes an investment in a joint venture or an investment in a joint venture becomes an investment in an associate, the entity continues to apply the equity method and does not remeasure the retained interest

(11) Property, plant and equipment

Property, plant and equipment is stated at cost, net of accumulated depreciation and accumulated impairment losses, if any. Such cost includes the cost of dismantling and removing the item and restoring the site on which it is located and borrowing costs for construction in progress if the recognition criteria are met. 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 is depreciated separately. When significant parts of property, plant and equipment are required to be replaced in intervals, the Group recognized such parts as individual assets with specific useful lives and depreciation, respectively. The carrying amount of those parts that are replaced is derecognized in accordance with the derecognition provisions of IAS 16 Property, plant and equipment . When a major inspection is performed, its cost is recognized in the carrying amount of the plant and equipment as a replacement if the recognition criteria are satisfied. All other repair and maintenance costs are recognized in profit or loss as incurred.

Depreciation is calculated on a straight-line basis over the estimated economic lives of the following assets:

Items Buildings Machinery and equipment Transportation equipment Furniture, fixtures and equipment Leasehold improvements	Useful Lives
	6`～`56 years 3`～`41 years 4`～`16 years 3`～`17 years 2`～`25 years

An item of property, plant and equipment and any significant part initially recognized is derecognized upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset is recognized in profit or loss.

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The assets‘ residual values, useful lives and methods of depreciation are reviewed at each financial year end and adjusted prospectively, if appropriate, and are treated as changes in accounting estimates.

(12) Investment property

The Group‘s owned investment properties are measured initially at cost, including transaction costs. The carrying amount includes the cost of replacing part of an existing investment property at the time that cost is incurred if the recognition criteria are met and excludes the costs of day-to-day servicing of an investment property. Subsequent to initial recognition, other than those that meet the criteria to be classified as held for sale (or are included in a disposal group that is classified as held for sale) in accordance with IFRS 5 Non-current Assets Held for Sale and Discontinued Operations , investment properties are measured using the cost model in accordance with the requirements of IAS 16 Property, plant and equipment for that model. If investment properties are held by a lessee as right-of-use assets and is not held for sale in accordance with IFRS 5, investment properties are measured in accordance with the requirements of IFRS 16.

Depreciation is calculated on a straight-line basis over the estimated economic lives of the following assets:

Items	Useful Lives
Buildings	30`～`50 years

Investment properties are derecognized when either they have been disposed of or when the investment property is permanently withdrawn from use and no future economic benefit is expected from its disposal. The difference between the net disposal proceeds and the carrying amount of the asset is recognized in profit or loss in the period of derecognition.

The Group transfers properties to or from investment properties according to the actual use of the properties.

The Group transfers to or from investment properties when there is a change in use for these assets. Properties are transferred to or from investment properties when the properties meet, or cease to meet, the definition of investment property and there is evidence of the change in use.

(13) Leases

The Group assesses whether the contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an

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identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset for a period of time, the Group assesses whether, throughout the period of use, has both of the following:

(a)the right to obtain substantially all of the economic benefits from use of the identified asset; and
(b)the right to direct the use of the identified asset.

For a contract that is, or contains, a lease, the Group accounts for each lease component within the contract as a lease separately from non-lease components of the contract. For a contract that contains a lease component and one or more additional lease or non-lease components, the Group allocates the consideration in the contract to each lease component on the basis of the relative stand-alone price of the lease component and the aggregate stand-alone price of the non-lease components. The relative stand-alone price of lease and non-lease components shall be determined on the basis of the price the lessor, or a similar supplier, would charge the Group for that component, or a similar component, separately. If an observable stand-alone price is not readily available, the Group estimates the stand-alone price, maximising the use of observable information.

Group as a lessee

Except for leases that meet and elect short-term leases or leases of low-value assets, the Group recognizes right-of-use asset and lease liability for all leases which the Group is the lessee of those lease contracts.

At the commencement date, the Group measures the lease liability at the present value of the lease payments that are not paid at that date. The lease payments are discounted using the interest rate implicit in the lease, if that rate can be readily determined. If that rate cannot be readily determined, the Group uses its incremental borrowing rate. At the commencement date, the lease payments included in the measurement of the lease liability comprise the following payments for the right to use the underlying asset during the lease term that are not paid at the commencement date:

(a)fixed payments (including in-substance fixed payments), less any lease incentives receivable;
(b)variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the commencement date;
(c)amounts expected to be payable by the lessee under residual value guarantees;
(d)the exercise price of a purchase option if the Group is reasonably certain to exercise that option; and

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(e)payments of penalties for terminating the lease, if the lease term reflects the lessee exercising an option to terminate the lease.

After the commencement date, the Group measures the lease liability on an amortised cost basis, which increases the carrying amount to reflect interest on the lease liability by using an effective interest method; and reduces the carrying amount to reflect the lease payments made.

At the commencement date, the Group measures the right-of-use asset at cost. The cost of the right-of-use asset comprises:

(a)the amount of the initial measurement of the lease liability;
(b)any lease payments made at or before the commencement date, less any lease incentives received;
(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.

For subsequent measurement of the right-of-use asset, the Group measures the right-of-use asset at cost less any accumulated depreciation and any accumulated impairment losses. That is, the Group measures the right-of-use applying a cost model.

If the lease transfers ownership of the underlying asset to the Group by the end of the lease term or if the cost of the right-of-use asset reflects that the Group will exercise a purchase option, the Group depreciates the right-of-use asset from the commencement date to the end of the useful life of the underlying asset. Otherwise, the Group depreciates the right-of-use asset from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term.

The Group applies IAS 36 ―Impairment of Assets‖ to determine whether the right-of-use asset is impaired and to account for any impairment loss identified.

Except for those leases that the Group accounted for as short-term leases or leases of low-value assets, the Group presents right-of-use assets and lease liabilities in the balance sheet and separately presents lease-related interest expense and depreciation charge in the statements comprehensive income.

For short-term leases or leases of low-value assets, the Group elects to recognize the lease payments associated with those leases as an expense on either a straight-line basis over the lease term or another systematic basis.

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For the rent concession arising as a direct consequence of the Covid-19 pandemic, the Group elected not to assess whether it is a lease modification but accounted it as a variable lease payment. The Group have applied the practical expedient to all rent concessions that meet the conditions for it.

Group as a lessor

At inception of a contract, the Group classifies each of its leases as either an operating lease or a finance lease. A lease is classified as a finance lease if it transfers substantially all the risks and rewards incidental to ownership of an underlying asset. A lease is classified as an operating lease if it does not transfer substantially all the risks and rewards incidental to ownership of an underlying asset. At the commencement date, the Group recognizes assets held under a finance lease in its balance sheet and present them as a receivable at an amount equal to the net investment in the lease.

For a contract that contains lease components and non-lease components, the Group allocates the consideration in the contract applying IFRS 15.

The Group recognizes lease payments from operating leases as rental income on either a straight-line basis or another systematic basis. Variable lease payments for operating leases that do not depend on an index or a rate are recognized as rental income when incurred.

(14) Impairment of non-financial assets

The Group assesses at the end of each reporting period whether there is any indication that an asset in the scope of IAS 36 Impairment of Assets may be impaired. If any such indication exists, or when annual impairment testing for an asset is required, the Group estimates the asset‘s recoverable amount. An asset‘s recoverable amount is the higher of an asset‘s or cash-generating unit‘s (―CGU‖) fair value less costs to sell and its value in use and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. Where the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount.

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recognized impairment loss is reversed only if there has been an increase in the estimated service potential of an asset which in turn increases the recoverable amount. However, the reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognized for the asset in prior years.

A cash generating unit, or groups of cash-generating units, to which goodwill has been allocated is tested for impairment annually at the same time, irrespective of whether there is any indication of impairment. If an impairment loss is to be recognized, it is first allocated to reduce the carrying amount of any goodwill allocated to the cash generating unit (group of units), then to the other assets of the unit (group of units) pro rata on the basis of the carrying amount of each asset in the unit (group of units). Impairment losses relating to goodwill cannot be reversed in future periods for any reason.

An impairment loss of continuing operations or a reversal of such impairment loss is recognized in profit or loss.

(15) Revenue recognition

The Group‘s revenue arising from contracts with customers are primarily related to sale of goods and rendering of services. The accounting policies are explained as follows:

Sale of goods

The Group manufactures and sells goods. Sales are recognized when control of the goods is transferred to the customer and the goods are delivered to the customers. The main product of the Group is iron and steel, and revenue is recognized based on the consideration stated in the contract. For certain sales of goods transactions, they are usually accompanied by volume discounts (based on the accumulated total sales amount for a specified period). Therefore, revenue from these sales is recognized based on the price specified in the contract, net of the estimated volume discounts. The Group estimates the discounts using the expected value method based on historical experiences. Revenue is only recognized to the extent that it is highly probable that a significant reversal in the amount of cumulative revenue recognized will not occur and when the uncertainty associated with the variable consideration is subsequently resolved. During the period specified in the contract, refund liability is recognized for the expected volume discounts.

The credit period of the Group‘s sale of goods is within 10 to 75 days. For most of the contracts, when the Group transfers the goods to customers and has a right to an amount of consideration that is unconditional, these contracts are recognized as trade receivables. The Group usually collects the payments shortly after transfer of goods to customers; therefore, there is no significant financing component to the contract. For some of the contracts, the Group has transferred the goods to

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customers but does not has a right to an amount of consideration that is unconditional, these contacts should be presented as contract assets. Besides, in accordance with IFRS 9, the Group measures the loss allowance for a contract asset at an amount equal to the lifetime expected credit losses.

Rendering of services

The Group provides maintenance services for the sale of iron and steel. Such services are separately priced or negotiated, and provided based on contract periods. As the Group provides the maintenance services over the contract period, the customers simultaneously receive and consume the benefits provided by the Group. Accordingly, the performance obligations are satisfied over time, and the related revenue is recognized by straight -line method over the contract period.

Most of the contractual considerations of the Group are collected evenly throughout the contract periods. When the Group has performed the services to customers but does not have a right to an amount of consideration that is unconditional, these contacts should be presented as contract assets. However, for some rendering of services contracts, part of the consideration was received from customers upon signing the contract, and the Group has the obligation to provide the services subsequently; accordingly, these amounts are recognized as contract liabilities.

The period between the transfers of contract liabilities to revenue is usually within one year, thus, no significant financial component aroise.

(16) Borrowing cost

Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalized as part of the cost of the respective assets. All other borrowing costs are expensed in the period they occur. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds.

(17) Post-employment benefits

All regular employees of the Company are entitled to a pension plan that is managed by an independently administered pension fund committee. Fund assets are deposited under the committee‘s name in the specific bank account and hence, not associated with the Company and its domestic subsidiaries. Therefore fund assets are not included in the Group‘s consolidated financial statements.

For the defined contribution plan, the Company and its domestic subsidiaries will make a monthly contribution of no less than 6% of the monthly wages of the employees subject to the plan. The Company recognizes expenses for the defined contribution plan in the period in which the contribution becomes due.

Post-employment benefit plan that is classified as a defined benefit plan uses the

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Projected Unit Credit Method to measure its obligations and costs based on actuarial assumptions. Re-measurements, comprising of the effect of the actuarial gains and losses, the effect of the asset ceiling (excluding net interest) and the return on plan assets, excluding net interest, are recognized as other comprehensive income with a corresponding debit or credit to retained earnings in the period in which they occur. Past service costs are recognized in profit or loss on the earlier of:

(a) the date of the plan amendment or curtailment, and

(b) the date that the Group recognizes restructuring-related costs

Net interest is calculated by applying the discount rate to the net defined benefit liability or asset, both as determined at the start of the annual reporting period, taking account of any changes in the net defined benefit liability (asset) during the period as a result of contribution and benefit payment.

(18) Income taxes

Income tax expense (income) is the aggregate amount included in the determination of profit or loss for the period in respect of current tax and deferred tax.

Current income tax

Current income tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities, using the tax rates and tax laws that have been enacted or substantively enacted by the end of the reporting period. Current income tax relating to items recognized in other comprehensive income or directly in equity is recognized in other comprehensive income or equity and not in profit or loss.

The income tax for undistributed earnings is recognized as income tax expense in the subsequent year when the distribution proposal is approved by the Shareholders‘ meeting.

Deferred tax

Deferred tax is provided on temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.

Deferred tax liabilities are recognized for all taxable temporary differences, except:

i. Where the deferred tax liability arises from the initial recognition of goodwill or

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of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss

ii. In respect of taxable temporary differences associated with investments in subsidiaries, associates and interests in joint arrangements, where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.

Deferred tax assets are recognized for all deductible temporary differences, carry forward of unused tax credits and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilized, except:

i. Where the deferred tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss
ii. In respect of deductible temporary differences associated with investments in subsidiaries, associates and interests in joint arrangements, deferred tax assets are recognized only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilized.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realized or the liability is settled, based on tax rates and tax laws that have been enacted or substantively enacted at the reporting date. The measurement of deferred tax assets and deferred tax liabilities reflects the tax consequences that would follow from the manner in which the Group expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.

Deferred tax relating to items recognized outside profit or loss is recognized outside profit or loss. Deferred tax items are recognized in correlation to the underlying transaction either in other comprehensive income or directly in equity. Deferred tax assets are reassessed at each reporting date and are recognized accordingly.

Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current income tax assets against current income tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.

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5. Significant accounting judgements, estimates and assumptions

The preparation of the Group‘s consolidated financial statements require management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the disclosure of contingent liabilities, at the end of the reporting period. However, uncertainty about these assumption and estimate could result in outcomes that require a material adjustment to the carrying amount of the asset or liability affected in future periods.

(1) Judgement

In the process of applying the Group‘s accounting policies, management has made the following judgements, which have the most significant effect on the amounts recognized in the consolidated financial statements:

(a) Investment Properties

Certain properties of the Group comprise a portion that is held to earn rentals or for capital appreciation and another portion that is owner-occupied. If these portions could be sold separately, the Group accounts for the portions separately as investment properties and property, plant and equipment. If the portions could not be sold separately, the property is classified as investment property in its entirety only if the portion that is owner-occupied is insignificant.

`－` (b) Operating lease commitment Group as the lessor

The Group has entered into commercial property leases on its investment property portfolio. The Group has determined, based on an evaluation of the terms and conditions of the arrangements, that it retains all the significant risks and rewards of ownership of these properties and accounts for the contracts as operating leases.

(2) Estimates and assumptions

The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.

(a) Pension benefits

The cost of post-employment benefit and the present value of the pension obligation under defined benefit pension plans are determined using actuarial valuations. An actuarial valuation involves making various assumptions. These include the determination of the discount rate and future salary increases,

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mortality rates and future pension increases. Please refer to Note 6 for more details.

(b) Revenue recognition – sales returns and allowance

The Group estimates sales returns and allowance based on historical experience and other known factors at the time of sale, which reduces the operating revenue. In assessing the aforementioned sales returns and allowance, revenue is recognized to the extent it is highly probable that a significant reversal in the amount of cumulative revenue recognized will not occur. Please refer to Note 6 for more details.

(c) Income tax

Uncertainties exist with respect to the interpretation of complex tax regulations and the amount and timing of future taxable income. Given the wide range of international business relationships and the long-term nature and complexity of existing contractual agreements, differences arising between the actual results and the assumptions made, or future changes to such assumptions, could necessitate future adjustments to tax income and expense already recorded. The Group establishes provisions, based on reasonable estimates, for possible consequences of audits by the tax authorities of the respective counties in which it operates. The amount of such provisions is based on various factors, such as experience of previous tax audits and differing interpretations of tax regulations by the taxable entity and the responsible tax authority. Such differences of interpretation may arise on a wide variety of issues depending on the conditions prevailing in the respective Group company's domicile.

Deferred tax assets are recognized for all carryforward of unused tax losses and unused tax credits and deductible temporary differences to the extent that it is probable that taxable profit will be available or there are sufficient taxable temporary differences against which the unused tax losses, unused tax credits or deductible temporary differences can be utilized. The amount of deferred tax assets determined to be recognized is based upon the likely timing and the level of future taxable profits and taxable temporary differences together with future tax planning strategies.

(d) Accounts receivables–estimation of impairment loss

The Group estimates the impairment loss of accounts receivables at an amount equal to lifetime expected credit losses. The credit loss is the present value of the difference between the contractual cash flows that are due under the contract (carrying amount) and the cash flows that expects to receive (evaluate forward looking information). However, as the impact from the discounting of short-term receivables is not material, the credit loss is measured by the undiscounted cash flows. Where the actual future cash flows are lower than expected, a material impairment loss may arise. Please refer to Note 6 for more

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details.

(e) Inventories

Estimates of net realizable value of inventories take into consideration that inventories may be damaged, become wholly or partially obsolete, or their selling prices have declined. The estimates are based on the most reliable evidence available at the time the estimates are made. Please refer to Note 6 for more details.

6. Contents of significant accounts

(1) Cash and cash equivalents

Cash and cash equivalents
Cash on hand Demand deposits Cash equivalents Total	As of 31 December
	2020 $948 1,074,729 1,099,592 $2,175,269	2019
		$963 1,166,029 399,960
		$1,566,952

(2) Financial assets at fair value through other comprehensive income

Equity instrument investments measured at fair value through other comprehensive income – Current: Listed companies stocks Equity instrument investments measured at fair value through other comprehensive income – Non-current: Listed companies stocks Unlisted companies stocks Total	As of 31 December	As of 31 December
	2020 $1,700,311 $245,294 826,968 $1,072,262	2019
		$ - $302,826 779,572
		$1,082,398

Financial assets at fair value through other comprehensive income were not pledged.

The Group disposed of equity instrument measured at fair value through other comprehensive income for the year ended 2020. Upon derecognition, the fair value of the investments was NT$1,303,417 thousand, and the cumulative disposal gain in the amount of NT$146,444 thousand was transferred from other equity to retained earnings.

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The return of paid-in capital for capital reduction from Ascentek Venture Capital Corporation amounted to NT$13,407 thousand and NT$3,528 thousand as of 23 November 2020 and 1 August 2019.

(3) Accounts receivables

Accounts receivables
Accounts receivables Less: loss allowance Total Accounts receivables were not pledged.	As of 31 December
	2020 $1,481,085 (2,118)	2019
		$1,534,389 (2,118)
	$1,478,967	$1,532,271

Accounts receivables are generally on 10-75 day terms. The total carrying amount are NT$1,481,085 thousand and NT$1,534,389 thousand as of 31 December 2020 and 2019, respectively. Please refer to Note 6 (15) for more details on loss allowance of accounts receivables for the year periods ended 31 December 2020 and 2019. Please refer to Note 12 for more details on credit risk management.

(4) Inventories

Inventories
Raw materials Supplies & parts Work in progress Finished goods Total	As of 31 December
	2020 $1,405,703 267,145 796,631 831,989 $3,301,468	2019
		$1,230,794 744,366 1,236,781 1,095,240 $4,307,181

The cost of inventories recognized in expenses amounted to NT$23,448,762 thousand and NT$24,870,034 thousand, respectively, for the years ended 31 December 2020 and 2019.

No inventories were pledged.

(5) Prepayments

Prepayments
Factory supplies Prepayments of purchases Other prepayments Total	As of 31 December 2020 2019 $578,186 $598,305 86,989 69,359 3,564 3,560 $668,739 $671,224
	2020 $578,186 86,989 3,564 $668,739
		$671,224

Prepayments were not pledged.

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(6) Investments accounted for using the equity method

The following table lists the investments accounted for using the equity method of the Group:

As of 31 December 2020 2019 Carrying amount Percentage of ownership(%) Carrying amount Percentage of ownership(%) $744,203 20.92 $696,101 20.24 510,929 29.71 514,794 29.71 171,822 18.00 156,417 18.00 $1,426,954 $1,367,312	As of 31 December 2020 2019 Carrying amount Percentage of ownership(%) Carrying amount Percentage of ownership(%) $744,203 20.92 $696,101 20.24 510,929 29.71 514,794 29.71 171,822 18.00 156,417 18.00 $1,426,954 $1,367,312	As of 31 December 2020 2019 Carrying amount Percentage of ownership(%) Carrying amount Percentage of ownership(%) $744,203 20.92 $696,101 20.24 510,929 29.71 514,794 29.71 171,822 18.00 156,417 18.00 $1,426,954 $1,367,312
2020 Carrying amount Percentage of ownership(%) $744,203 20.92 510,929 29.71 171,822 18.00 $1,426,954
Carrying amount $744,203 510,929 171,822 $1,426,954	Carrying amount $696,101 514,794 156,417 $1,367,312	Percentage of ownership(%)
		20.24 29.71 18.00

For the years ended 31 December 2020, the Group increased its investment in Taiwan Steel Union Co., Ltd. in the amount of NT$52,122 thousand, which increased its shareholding ratio from 20.24% to 20.92%. Thus, the Group recognized a decrease in capital surplus in the amount of NT$28,867 thousand.

For the years ended 31 December 2019, the Group increased its investment in Taiwan Steel Union Co., Ltd. in the amount of NT$43,579 thousand, which increased its shareholding ratio from 19.81% to 20.24%. Thus, the Group recognized a decrease in capital surplus in the amount of NT$28,347 thousand.

The return of paid-in capital for capital reduction from Feng Ying Development Enterprise Co., Ltd. amounted to NT$4,268 thousand as of 21 November 2019. Feng Ying Development Enterprise Co., Ltd. was closed down on 22 November 2019.

In the third quarter of 2019, the Group participated in issuance of common stock for cash of Fong Yu Resources Co., Ltd., increasing its investment in Fong Yu Resources Co., Ltd in the amount of NT$144,550 thousand. Thus, the Group recognized a decrease in capital surplus in the amount of NT$38 thousand.

Although the holding of Wen-Shan Enterprise Co., Ltd. is less than 20%, the Group presumed to have significant influence on these invested companies. Hence, it evaluates the investment by using the equity method.

Fair value of the investment in the associate when there is a quoted market price for the investment: Taiwan Steel United Co., Ltd. is a listed entity on the Taiwan Stock Exchange (TWSE). The fair value of the investment in Taiwan Steel United Co., Ltd. was NT$1,766,921 thousand and NT$1,874,212 thousand as of 31 December 2020 and 2019, respectively.

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The Group‘s investments in Taiwan Steel Union Co., Ltd., Fong Yu Resources Co., Ltd. and Wen-Shan Enterprise Co., Ltd are not individually material. The summarized financial information based on the Group‘s investment in associates is as follows:

Profit from continuing operations Other comprehensive income (post-tax) Total comprehensive income	For theyears ended 31 December	For theyears ended 31 December
	2020 $95,044 127 $95,171	2019
		$209,220 139
		$209,359

The above mentioned associates had no contingent liabilities or capital commitments as of 31 December 2020 and 2019. No investment in the associates was pledged.

Our audit, in so far as it related to the investments accounted for under the equity method amounting to NT$744,203 thousand and NT$696,101 thousand as of 31 December 2020 and 2019; the related shares of investment income from the associates and joint ventures amounted to NT$83,504 thousand and NT$79,764 thousand for the years ended 31 December 2020 and 2019, respectively; and the related shares of other comprehensive income from the associates and joint ventures amounted to NT$159 thousand and NT$173 thousand for the years ended 31 December 2020 and 2019, respectively; are based solely on the reports of other independent accountants.

(7) Property, plant and equipment

Land	Buildings	Machinery and equipment	Office equipment	Transportation equipment	Leasehold improvements	Construction in progress and equipment pending inspection	Total
$1,193,967 91,842 - -	$3,439,406 1,063 - 34,660	$16,667,078 321,949 (288,904) 167,723	$46,438 2,518 - -	$394,566 18,069 (2,850) -	$330,148 - - -	$125,475 291,222 - (162,429)	$22,197,078 726,663 (291,754) 39,954
$1,285,809	$3,475,129	$16,867,846	$48,956	$409,785	$330,148	$254,268	$22,671,941
	$1,279,505 103,724 - -	$10,716,926 1,032,167 (287,878) -	$15,159 2,641 - -	$286,391 23,791 (2,850) -	$52,975 13,358 - -	$ - - - -	$12,350,956 1,175,681 (290,728) -
$ -	$1,383,229	$11,461,215	$17,800	$307,332	$66,333	$ -	$13,235,909

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Land	Buildings	Machinery and equipment	Office equipment	Transportation equipment	Leasehold improvements	Construction in progress and equipment pending inspection	Total
$1,196,407 - (2,440) -	$2,983,623 15,517 (68,689) 508,955	$16,550,018 302,608 (527,673) 342,125	$26,902 1,814 (8,587) 26,309	$376,908 25,466 (7,808) -	$261,931 - (10,814) 79,031	$417,671 529,339 - (821,535)	$21,813,460 874,744 (626,011) 134,885
$1,193,967	$3,439,406	$16,667,078	$46,438	$394,566	$330,148	$125,475	$22,197,078
	$1,255,985 92,002 (68,482) -	$10,271,273 973,193 (527,540) -	$22,373 1,373 (8,587) -	$268,659 24,460 (6,728) -	$41,870 12,932 (10,814) 8,987	$ - - - -	$11,860,160 1,103,960 (622,151) 8,987
$ -	$1,279,505	$10,716,926	$15,159	$286,391	$52,975	$ -	$12,350,956
$1,285,209	$2,091,900	$5,406,631	$31,156	$102,453	$263,815	$254,268	$9,436,032
$1,193,967	$2,159,901	$5,950,152	$31,279	$108,175	$277,173	$125,475	$9,846,122

There is no capitalization of interest due to purchase of property, plant and equipment.

As of 31 December 2020 and 2019 deeds of certain agriculture land amounted to NT$147,267 thousand and NT$55,425 thousand,respectively. The ownership of the land was not transferred to the Group. The Group had entered into a trust deed with the entrusted registrant for such agriculture land.

Property, plant and equipment were not pledged.

(8) Investment property

The Group has entered into commercial property leases on its owned investment properties with terms of between 1and 10 years. These leases include a clause to enable upward revision of the rental charge on an annual basis according to prevailing market conditions.

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	Land	Buildings	Total
Cost:
As of 1 January 2020	$376,867	$6,086	$382,953
Additions	129,610	192,233	321,843
Disposals	-	(6,086)	(6,086)
As of 31 December 2020	$506,477	$192,233	$698,710
Depreciation`：`
As of 1 January 2020	$ -	$2,536	$2,536
Depreciation	-	1,039	1,039
Disposals	-	(3,246)	(3,246)
As of 31 December 2020	$ -	$329	$329
Cost:
As of 1 January 2019	$376,867	$6,086	$382,953
Additions	-	-	-
As of 31 December 2019	$376,867	$6,086	$382,953
Depreciation`：`
As of 1 January 2019	$ -	$1,318	$1,318
Depreciation	-	1,218	1,218
As of 31 December 2019	$ -	$2,536	$2,536
Net carrying amount`：`
As of 31 December 2020	$506,477	$191,904	$698,381
As of 31 December 2019	$376,867	$3,550	$380,417
		For theyears ended 31 December
		2020	2019
Rental income from investment property		$2,296	$2,657
Less:
Direct operating expenses from investment		-	-
property generating rental income
Direct operating expenses from investment		-	-
property not generating rental income
Total		$2,296	$2,657

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No investment property was pledged.

Investment properties held by the Group are not measured at fair value but for which the fair value is disclosed. The fair value measurements of the investment properties are categorized at Level 3. The fair value of certain investment properties was NT$627,522 thousand as at February 2017. The fair value has been determined based on valuations performed by an independent appraiser. The valuation method used is comparison approach and land development analysis approach, and the discount rate used is 5.58%.

The Group consulted the real estate transaction inquiry service website of the Ministry of the Interior on 31 December 2020 and 2019 to check recent transaction prices in similar locations and found that the fair value of said investment real estate was equivalent to the fair value evaluated by the independent external appraisal expert engaged in February 2017.

The fair value of the investment properties newly added by the Group in August 2020 was valued at NT$441,347 thousand by the independent external appraisal expert engaged by the Group, and the evaluation methods adopted were the comparative method and the income method. The main income capitalization rate was assumed at 2.31%. The Group assessed that the fair value of these investment properties as of 31 December 2020 did not have significant fluctuations.

(9) Other non-current assets

Other non-current assets
Advance payments in equipment Refundable deposits Other non-current assets - other Total	As of 31 December
	2020 $316,530 7,081 19,531 $343,142	2019
		$74,343 5,112. 22,186
		$101,641

(10) Short-term borrowings

hort-term borrowings
Unsecured bank loans	Interest Rates(%) 0.52%-1.25%	As of 31 December
		2020 $329,941	2019
			$381,151

The Group‘s unused short-term lines of credits amounted to NT$6,084,526 thousand and NT$9,045,230 thousand as of 31 December 2020 and 2019, respectively.

(11) Other payables

) Other payables
Accrued Salary and bonus Accrued Utilities Pollution control payable	As of 31 December
	2020 $344,290 194,542 176,499	2019
		$280,280 177,502 214,010

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Accrued Discount Others Total	162,391 148,402 $1,026,124	174,272 152,679
		$998,743

(12) Post-employment benefits

Defined contribution plan

The Group adopt a defined contribution plan in accordance with the Labor Pension Act of the R.O.C. Under the Labor Pension Act, the Company will make monthly contributions of no less than 6% of the employees‘ monthly wages to the employees‘ individual pension accounts. The Group has made monthly contributions of 6% of each individual employee‘s salaries or wages to employees‘ pension accounts.

Pension expenses under the defined contribution plan for the years ended 31 December 2020 and 2019 were NT$20,796 thousand and NT$19,691 thousand, respectively.

Defined benefits plan

The Company adopts a defined benefit plan in accordance with the Labor Standards Act of the R.O.C. The pension benefits are disbursed based on the units of service years and the average salaries in the last month of the service year. Two units per year are awarded for the first 15 years of services while one unit per year is awarded after the completion of the 15th year. The total units shall not exceed 45 units. Under the Labor Standards Act, the Company and its domestic subsidiaries contribute an amount equivalent to 2% of the employees‘ total salaries and wages on a monthly basis to the pension fund deposited at the Bank of Taiwan in the name of the administered pension fund committee. Before the end of each year, the Company and its domestic subsidiaries assess the balance in the designated labor pension fund. If the amount is inadequate to pay pensions calculated for workers retiring in the same year, the Company and its domestic subsidiaries will make up the difference in one appropriation before the end of March the following year.

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with the interest rates offered by local banks. Treasury Funds can be used to cover the deficits after the approval of the competent authority. As the Company does not participate in the operation and management of the pension fund, no disclosure on the fair value of the plan assets categorized in different classes could be made in accordance with paragraph 142 of IAS 19. The Group expects to contribute NT$13,065 thousand to its defined benefit plan during the 12 months beginning after 31 December 2020.

The weighted average duration of the defined benefits obligation was 8 years of 31 December 2020.

Pension costs recognized in profit or loss are as follows:

Current period service costs Past service cost Gains and losses arising from settlements Net interest on the net defined benefit liabilities(assets) Total	For the years ended 31 December	For the years ended 31 December
	2020	2019
	$8,895 163 348 1,336	$10,656 - - 1,868
	$10,742	$12,524

Reconciliations of the defined benefit obligation and fair value of plan assets are as follows:

	As of
31 December 2020	31 December 2019	1 January 2019
$708,911 (544,366)	$696,770 (516,396)	$709,018 (512,509)
164,545 (8,857)	180,374 (20,886)	196,509 (14,798)
$155,688	$159,488	$181,711

Reconciliation of liabilities (assets) of the defined benefit plan are as follows:

Defined benefit obligation	Fair value of plan assets	Benefit liability (asset)
$709,018 10,656 6,956	$(512,509) - (5,088)	$196,509 10,656 1,868
17,612	(5,088)	12,524

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Defined benefit obligation	Fair value of plan assets	Benefit liability (asset)
1 15,391 997 -	- - - (18,826)	1 15,391 997 (18,826)
16,389	(18,826)	(2,437)
(46,249) -	40,249 (20,222)	(6,000) (20,222)
696,770 8,895 5,136 511	(516,396) - (3,800) -	180,374 8,895 1,336 511
14,542	(3,800)	10,742
129 26,862 (1,581) -	- - - (17,626)	129 26,862 (1,581) (17,626)
25,410	(17,626)	7,784
(12,961) - (14,850)	8,289 (26,143) 11,310	(4,672) (26,143) (3,540)
$708,911	$(544,366)	$164,545

The principal assumptions used in determining the Company‘s defined benefit plan are shown below:

Discount rate Expected rate of salary increases	As of 31 December	As of 31 December
	2020	2019
	0.30% 0.50%	0.75% 0.50%

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Sensitivity analysis for significant assumption are shown below:

For theyears ended 31 December	For theyears ended 31 December	For theyears ended 31 December	For theyears ended 31 December
2020		2019
Defined benefit obligation increase	Defined benefit obligation decrease	Defined benefit obligation increase	Defined benefit obligation decrease
$ - 15,300 15,230 -	$14,823 - - 14,830	$ - 15,906 15,906 -	$15,391 - - 15,466

The sensitivity analysis above are based on a change in a significant assumption (for example: change in discount rate or future salary), keeping all other assumptions constant. The sensitivity analysis may not be representative of an actual change in the defined benefit obligation as it is unlikely that changes in assumptions would occur in isolation of one another.

There was no change in the methods and assumptions used in preparing the sensitivity analysis compared to the previous period.

(13) Equities

(a) Common stock

The Company‘s authorized capital was both NT$7,000,000 thousand as at 31 December 2020 and 2019, each at a par value of NT$10. The Company has issued 581,599,424 common shares both as at 31 December 2020 and 2019. The paid-up capital was NT$5,815,994 thousand. Each share has one voting right and a right to receive dividends.

(b) Capital surplus

Capital surplus
Additional paid-in capital Treasury share transactions Share of changes in net assets of associates and joint ventures accounted for using the equity method Gain on sale of assets Donated assets	As of 31 December
	2020 $271,134 175,263 108,392 665 218	2019
		$271,134 175,263 137,259 665 218

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Other Total	4,425 $560,097	3,584
		$588,123

According to the Company Act, the capital reserve shall not be used except for making good the deficit of the company. When a company incurs no loss, it may distribute the capital reserves related to the income derived from the issuance of new shares at a premium or income from endowments received by the company. The distribution could be made in cash or in the form of dividend shares to its shareholders in proportion to the number of shares being held by each of them.

(c) Legal reserve

The Company Act provides that companies must retain at least 10% of their annual earnings, as defined in the Act, until such retention equals the amount of paid-in capital. This retention is accounted for as a legal reserve account. When the Company incurs no loss, it may distribute the portion of legal serve which exceeds 25% of the paid-in capital by issuing new shares or by cash in proportion to the number of shares being held by each of the shareholders.

(d) Special reserve

When the Company distributed the earnings, it shall set aside supplemental special reserve based on the difference between the amount already set aside and other net deductions from shareholders‘ equity. For any subsequent reversal of other net deductions from shareholders‘ equity, the amount reversed may be distributed.

(e) Retained earnings and dividend policies

According to the Company‘s Articles of Incorporation, current year‘s earnings, if any, shall be distributed in the following order:

a. Payment of all taxes and dues
b. Offset prior years‘ operation losses
c. Set aside 10% of the remaining amount after deducting items (a) and (b) as legal reserve
d. Set aside or reverse special reserve in accordance with law and regulations
e. The distribution of the remaining portion, if any, will be recommended by the Board of Directors and resolved in the shareholders‘ meeting

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As the Company‘s industry is mature and the Company makes stable profits, most of the dividends will be distributed to shareholders as cash dividends. However, when there is significant capital expenditure, no more than 70% of total dividends can be distributed as stock dividends to shareholders.

According to the Company Act, the Company needs to set aside amount to legal reserve unless where such legal reserve amounts to the total paid-in capital. The legal reserve can be used to make good the deficit of the Company. When the Company incurs no loss, it may distribute the portion of legal reserve which exceeds 25% of the paid-in capital by issuing new shares or by cash in proportion to the number of shares being held by each of the shareholders.

Details of the 2020 and 2019 earnings distribution and dividends per share as approved and resolved by the board of directors‘ meeting and shareholders‘ meeting on 25 February 2021 and 10 June 2020 respectively, are as follows:

Appropriation of earnings	Appropriation of earnings	Dividendper share(NT$)	Dividendper share(NT$)
2020	2019	2020	2019
$275,977 (194,250) 2,035,598	$196,444 (38,262) 1,744,798	$3.5	$3
$2,117,325	$1,902,980

Please refer to Note 6(17) for further details on employees‘ compensation and remuneration to directors and supervisors.

(14) Operating revenue

Operating revenue
Revenue from contracts with customers Sale revenue Revenue arising from rendering of services Total	For theyears ended 31 December
	2020	2019
	$27,186,421 111,630	$27,622,481 113,130
	$27,298,051	$27,735,611

Analysis of revenue from contracts with customers during the year periods ended 31 December 2020 and 2019 are as follows:

(1) Disaggregation of revenue

A. The Group is a single operating department and should report the income information disclosed by the department. Please refer to the preceding

176

paragraph for details.

B. The income types of contracts with customers from 1 January to 31 December 2020 and 2019 are all recognized at a certain point in time.

(2) Contract balances

A. Contract assets - current Sales of goods	31 Dec. 2020	31 Dec. 2019	1 Jan. 2019
	$397,242	$239,141	$250,924

The significant changes in the Group‘s balances of contract assets during the twelve-month periods ended 31 December 2020 and 2019 are as follows ：

The beginning balance transferred to accounts receivable Increase in receivable (excluding the account incurred and transferred to accounts receivable) Contract liabilities - current 31 Dec. 2020 Sales of goods $134,198	12 month period ended 31 December	12 month period ended 31 December
	2020	2019
		$(250,924) 239,141 1 Jan. 2019 $170,900
$134,198	$131,372

B. Contract liabilities - current

The changes in the Group‘s balances of contract liabilities during the twelve-month periods ended 31 December 2020 and 2019 were mainly affected by the orders for steel products, the delivery schedule required by the clients and progress schedule.

(3) Transaction price allocated to unsatisfied performance obligations

As of 31 December 2020 and 2019, the Group expected that all of the transaction price allocated to unsatisfied performance obligations will be recognized as revenue within one year, therefore, it is not required to provide information about the unsatisfied performance obligations.

(4) Assets recognized from costs to fulfil a contract

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None.

(15) Expected credit losses

The Group expected credit losses for the year ended 31 December 2020 and 2019: None.

Please refer to Note 12 for more details on credit risk.

The Group measures the loss allowance of its contract assets and trade receivables (including note receivables and trade receivables) at an amount equal to lifetime expected credit losses. The assessment of the Group‘s loss allowance as of 31 December 2020 and 2019 are as follows:

(1)the loss allowance of contract assets is measured at an amount equal to lifetime expected credit losses, details are as follow:

expected credit losses, details are as follow:
Total carrying amount Expected credit loss rates Loss allowance Total	As of 31 December
	2020	2019 $239,141 0% -
	$397,242 0% -
	$397,242	$239,141

(2)the Group considers the grouping of trade receivables by counterparties‘ credit rating, by geographical region and by industry sector and its loss allowance is measured by using a provision matrix, details are as follows:

31 December 2020

Not yet due (Note)			Overdue			Total
	<=30 days	31-60 days	61-90 days	91-120 days	>=121 days
$1,488,248 0-1%	$5,030 -%	$ - -%	$ - -%	$ - -%	$ - -%	$1,493,278 3,305 $1,489,973
3,305	-	-	-	-	-
$1,484,943	$5,030	$-	$-	$-	$-

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31 December 2019

Not yet due (Note)			Overdue			Total
	<=30 days	31-60 days	61-90 days	91-120 days	>=121 days
$1,535,913 0-1%	$24,950 -%	$ - -%	$ - -%	$ - -%	$ - -%	$1,560,863 3,305
3,305	-	-	-	-	-
$1,532,608	$24,950	$-	$-	$-	$-	$1,557,558

Note: The Group‘s trade receivables are not overdue, and the credit loss of its duration period is all recorded in the previous year.

The movement in the provision for impairment of contract assets, note receivables and trade receivables for the year ended 31 December 2020 and 2019 are as follows:

As of 1 January 2020 Addition/(reversal) for the current period Write off As of 31 December 2020 As of 1 January 2019 Addition/(reversal) for the current period Write off As of 31 December 2019	Contract assets Note receivables Trade receivables
	$ - $1,187 $2,118 - - - - - -
	$ - $1,187 $2,118
	$ - $1,187 $2,118 - - - - - -
	$ - $1,187 $2,118

(16) Leases

(1) Group as a lessee

The Group leases various properties, including real estate such as land, machinery and equipment. The lease terms range from 1 to 50 years.

The Group‘s leases effect on the financial position, financial performance and cash flows are as follow:

A. Amounts recognized in the balance sheet

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a. Right-of-use assets

The carrying amount of right-of-use assets

Land Machinery and equipment Total	As of 31 December 2020 2019 $176,281 $207,654 2,655 4,530 $178,936 $212,184
	2020
	$176,281 2,655
	$178,936

During the year period ended 31 December 2020 and 2019, the Group did not add new right-of-use assets.

b. Lease liabilities

Lease liabilities Current Non-current Total	As of 31 December	As of 31 December
	2020	2019
	$5,109 174,803	$6,238 204,165
	$179,912	$210,403

Please refer to Note 6 (18)(c) for the interest on lease liabilities recognized during the year period ended 31 December 2020 and 2019 and refer to Note 12 (5) Liquidity Risk Management for the maturity analysis for lease liabilities as at 31 December 2020 and 2019.

B. Amounts recognized in the statement of profit or loss

Depreciation charge for right-of-use assets

Land Machinery and equipment Total C. Income and costs relating to leasing activities	For the years ended 31 December	For the years ended 31 December
	2020	2019
	$5,779 1,875	$7,311 1,875
	$7,654	$9,186

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$4,154

The expenses relating to short-term leases

$4,750

For the rent concession arising as a direct consequence of the Covid-19 pandemic from 1 January to 31 December 2020, the rent concession in the amount of NT$544 thousand was recognized as a rental expense deduction. The Group have applied the practical expedient to reflect the changes in rental payments.

D. Cash outflow relating to leasing activities

During the year period ended 31 December 2020 and 2019, the Group‘s total cash outflows for leases amounting to NT$12,181 and NT$14,776 thousand.

E. Other information relating to leasing activities

(i) Variable lease payments

Some of the Group‘s property rental agreement contain variable payment terms that are linked to certain percentages of sales generated from the leased stores, which is very common in the industry of the Group. As such variable lease payments do not meet the definition of lease payments, those payments are not included in the measurement of the assets and liabilities.

(ii) Extension and termination options

Some of the Group‘s property rental agreement contain extension and termination options. In determining the lease terms, the non-cancellable period for which the Group has the right to use an underlying asset, together with both periods covered by an option to extend the lease if the Group is reasonably certain to exercise that option and periods covered by an option to terminate the lease if the Group is reasonably certain not to exercise that option. These options are used to maximize operational flexibility in terms of managing contracts. The majority of extension and termination options held are exercisable only by the Group. After the commencement date, the Group reassesses the lease term upon the occurrence of a significant event or a significant change in circumstances that is within the control of the lessee and affects whether the Group is reasonably certain to exercise an option not previously included in its determination of the lease term, or not to exercise an option previously included in its determination of the lease term.

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(iii) Residual value guarantees None.

(2) Group as a lessor

Please refer to Note 6 (8) for details on the Group‘s owned investment properties and investment properties held by the Group as right-of-use assets. Leases of owned investment properties are classified as operating leases as they do not transfer substantially all the risks and rewards incidental to ownership of underlying assets.

Lease income for operating leases

Income relating to fixed lease payments and variable

lease payments that depend on an index or a rate

For the years ended 31 December	For the years ended 31 December
2020	2019
$2,296	$3,562

Please refer to Note 6 (8) for relevant disclosure of property, plant and equipment for operating leases under IFRS 16. For operating leases entered by the Group, the undiscounted lease payments to be received and a total of the amounts for the remaining years as at 31 December 2020 and 2019 are as follow:

amounts for the remaining years as at 31 December follow:	2020 and 2019 are as	2020 and 2019 are as
Not later than one year Later than one year but not later than two years Later than two years but not later than three years Later than three years but not later than four years Later than four years but not later than five years Later than five years Total	As of 31 December
	2020	2019
	$1,849 1,552 1,323 785 785 8,635	$1,849 1,849 1,552 1,323 785 10,990
	$14,929	$18,348

(17) Summary statement of employee benefits, depreciation and amortization expenses by function for the year ended 31 December 2020 and 2019:

Function e r	2020	2020	2020	2019	2019	2019
	atingcosts	perating expenses a	Total mount	atingcosts	perating expenses	al amount
oyee benefits expense
Salaries	$717,397	$250,817	$968,214	$657,977	$178,236	$836,213
Labor and health insurance	51,916	15,882	67,798	51,198	17,366	68,564
Pension	26,120	5,418	31,538	26,571	5,594	32,165

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Other employee benefits expense	33,016	8,067	41,083	32,791	7,902	40,693
ciation	1,135,350	49,024	1,184,374	1,079,808	34,556	1,114,364
tization	3,000	-	3,000	3,000	-	3,000

The number of employees of the Group as of 31 December 2020 and 2019 were 890 and 870, respectively.

According to the Articles of Incorporation, no less than 2% of profit of the current year is distributable as employees‘ compensation and no higher than 2% of profit of the current year is distributable as remuneration to directors and supervisors. However, the company's accumulated losses shall have been covered. The Company may, by a resolution adopted by a majority vote at a meeting of board of directors attended by two-thirds of the total number of directors, have the profit distributable as employees‘ compensation in the form of cash; and in addition thereto a report of such distribution is submitted to the shareholders‘ meeting. Information on the board meeting resolution regarding the employees‘ compensation and remuneration to directors and supervisors can be obtained from the ―Market Observation Post System‖ on the website of the TWSE.

Based on profit of 31 December 2020, the Company estimated the amounts of the employees‘ compensation and remuneration to directors and supervisors for the period ended of 31 December 2020 to be 8.52% and 1.25% of profit, respectively. The employees‘ compensation and remuneration to directors and supervisors for the period ended of 31 December 2020 amounted to NT$305,699 thousand and NT$45,000 thousand respectively, recognized as employee benefits expense.

A resolution was passed at a board meeting to distribute NT$305,699 thousand and NT$45,000 thousand in cash as employees‘ compensation and remuneration to directors and supervisors of 2020, respectively. Differences between the estimated amount and the actual distribution of the employee compensation and remuneration to directors and supervisors for the year ended 31 December 2020 were recognized in profit or loss of the subsequent year.

The employees‘ compensation and remuneration to directors and supervisors for the period ended of 31 December 2019 amount to NT$250,623 thousand and NT$37,000 thousand respectively. No material differences exist between the estimated amount and the actual distribution of the employee bonuses and remuneration to directors and supervisors for the year ended 31 December 2019.

(18) Non-operating income and expenses

(a) Other income

For the years ended 31 December

183

	2020	2019
Dividend income	$48,056	$30,583
Rental income	2,296	3,562
Others	14,663	22,176
Total	$65,015	$56,321
(b) Other gains and losses

	2020 $48,056 2,296 14,663 $65,015	2019
		$30,583 3,562 22,176
		$56,321

Gains on disposal of property, plant and equipment, net Foreign exchange (losses) gains, net Gains on financial assets at fair value through profit or loss Others Total (c) Finance costs Interest on loans from bank Interest on lease liabilities Total (19) Components of other comprehensive income	For theyears ended 31 December
	2020	2019
	$497 7,206 520 (19,765)	$34,329 13,083 - (227)
	$(11,542)	$47,185
	2020	2019
	$3,001 2,916	$10,433 3,100
	$5,917	$13,533

For the year ended 31 December 2020:

Not to be reclassified to profit or loss in subsequent periods: Remeasurements of defined benefit plans Unrealized gains (losses) from equity instruments investments measured at fair value through other comprehensive income Share of other comprehensive income of associates and joint ventures accounted for	Arising during theperiod	Reclassificatio n adjustments during the period	Other comprehensive income, before tax	Income tax effect	Other comprehensive income, net of tax
	$(7,784) 340,694 159	$ - - -	$(7,784) 340,694 159	$1,557 - (32)	$(6,227) 340,694 127

184

using the equity method

using the equity method
Total of other comprehensive income $333,069 $ - For the year ended 31 December 2019: Arising during theperiod Reclassificatio n adjustments during the period Not to be reclassified to profit or loss in subsequent periods: Remeasurements of defined benefit plans $2,437 $ - Unrealized gains (losses) from equity instruments investments measured at fair value through other comprehensive income 38,262 - Share of other comprehensive income of associates and joint ventures accounted for using the equity method 173 - Total of other comprehensive income $40,872 $ -	$333,069	$ -	$333,069	$1,525	$334,594
			Other comprehensive income, before tax	Income tax effect	Other comprehensive income, net of tax
	$2,437 38,262 173	$ - - -	$2,437 38,262 173	$(487) - (35)	$1,950 38,262 138
	$40,872	$ -	$40,872	$(522)	$40,350

(20) Income tax

The major components of income tax expense (income) for the year ended 31 December 2020 and 2019 are as follows:

(A)Income tax expense (income) recognized in profit or loss

Current income tax expense: Current income tax charge Adjustment in respect of current income tax of prior periods Deferred tax income: Deferred tax income relating to origination and reversal of temporary differences	For theyears ended 31 December	For theyears ended 31 December
	2020	2019
	$615,075 (1,372) 3,813	$399,851 - 28,524

185

$617,516 $428,375

Total income tax expense

(B)Income tax relating to components of other comprehensive income

Deferred tax expense (income): Remeasurements of defined benefit plans Share of other comprehensive income of associates and joint ventures accounted for using the equity method Income tax relating to components of other comprehensive income	For theyears ended 31 December	For theyears ended 31 December
	2020	2019 $487 35 $522
	$(1,557) 32
	$(1,525)

(C)A reconciliation between tax expense and the product of accounting profit multiplied by applicable tax rate is as follows:

(C)A reconciliation between tax expense and the product of accounting profit multiplied by applicable tax rate is as follows:	roduct of accounting profit	roduct of accounting profit
For the years ended 31 December 2020 2019 Accounting profit before tax from continuing operations $3,236,942 $2,390,730 Tax at the domestic rates applicable to profits in the country concerned $647,388 $478,146 Adjustment of in respect of current income tax of prior periods (1,372) - Tax effect of revenues exempt from taxation (28,770) (50,039) Tax effect of expenses not deductible for tax purposes 270 268 Total income tax expenses recognized in profit or loss $617,516 $428,375 (D)Deferred tax assets (liabilities) relate to the following:	For the years ended 31 December
	2020	2019
	$3,236,942	$2,390,730
	$647,388 (1,372) (28,770) 270	$478,146 - (50,039) 268
	$617,516	$428,375

For the year ended 31 December 2020:

Items	Balance as of 1 January	Recognized in profit or loss	Recognized in other comprehensive income	Balance as of 31 December
Temporary difference Bonus payable Impairment losses on available-for-sale financial assets Loss from price recovery (reduction) of inventories Unrealized foreign exchange gains or losses	$4,701 4,328 1,308 111	$635 - - 255	$ - - - -	$5,336 4,328 1,308 366

186

Balance as of 1 January	Recognized in profit or loss	Recognized in other comprehensive income	Balance as of 31 December
55,443 46 20,199 15,445 9,929 $111,510	19 - (4,722) - -	- (32) - 1,557 -	55,462 14 15,477 17,002 9,929
	$(3,813)	$1,525	$109,222

$111,510			$109,222
$ -			$ -

Items	Balance as of 1 January	Recognized in profit or loss	Recognized in other comprehensive income	Balance as of 31 December
Temporary difference Bonus payable Impairment losses on available-for-sale financial assets Loss from price recovery (reduction) of inventories Unrealized foreign exchange gains or losses Investments accounted for using the equity method Share of other comprehensive of associates and joint ventures Non-current liability – Defined benefit Liability Remeasurements of defined benefit plans Difference between book depreciation expense and tax depreciation expense Deferred tax income	$4,913 4,328 1,308 (159) 55,435 81 22,939 15,932 35,779	$(212) - - 270 8 - (2,740) - (25,850)	$ - - - - - (35) - (487) -	$4,701 4,328 1,308 111 55,443 46 20,199 15,445 9,929
		$(28,524)	$(522)

187

Items	Balance as of 1 January	Balance as of 31 December
Net deferred tax assets Reflected in balance sheet as follows: Deferred tax assets Deferred tax liabilities	$140,556	$111,510
	$140,715	$111,510
	$(159)	$ -

The assessment of income tax returns

As of 31 December 2020, the Company‘s income tax returns through 2018 have been assessed and approved by the tax authority.

(21) Earnings per share

Basic earnings per share amounts are calculated by dividing net profit for the year attributable to ordinary equity holders of the parent entity by the weighted average number of ordinary shares outstanding during the year.

Diluted earnings per share amounts are calculated by dividing the net profit attributable to ordinary equity holders of the parent entity by the weighted average number of ordinary shares outstanding during the year plus the weighted average number of ordinary shares that would be issued on conversion of all the dilutive potential ordinary shares into ordinary shares.

Basic earnings per share Profit attributable to ordinary equity holders of the Company Weighted-average number of ordinary shares for basic earnings per share (in thousands) Basic earnings per share (NT$)	For the years ended 31 December	For the years ended 31 December
	2020	2019
	$2,619,426	$1,962,355
	581,599	581,599
	$4.50	$3.37

The Company‘s diluted earnings per share amounts equal to its basic earnings per share amounts.

There have been no other transactions involving ordinary shares or potential ordinary shares between the reporting date and the date the financial statements were authorized for issue.

Related party transactions

188

Information of the related parties that had transactions with the Group during the financial reporting period is as follows:

Name and nature of relationship of the related parties

Name of the relatedparties Taiwan Steel Union Co., Ltd. Wen-Shan Enterprise Co., Ltd. Fong Yu Resources Co., Ltd. Taiwan Steel Resources Co., Ltd.	Nature of relationshipof the relatedparties
	Associate Associate Associate Subsidiary of associate

Significant transactions with the related parties

(a)Account Payable

a) Account Payable
Associate Subsidiary of associate Total	As of 31 December
	2020	2019
	$6,894 12,513	$3,669 2,774
	$19,407	$6,443

(b)Other

Taiwan Steel Union Co., Ltd was commissioned to process the electric arc furnace dust. Other expenditures paid to Taiwan Steel Union Co., Ltd for the years ended 31 December 2020 and 2019 were NT$79,606 thousand and NT$31,716 thousand, respectively, and were recorded as manufacturing expenses. The unpaid amounts as of 31 December 2020 and 2019 were NT$ 6,894 thousand and NT$3,669 thousand.

Taiwan Steel Resources Co., Ltd. was commissioned to process the reduction slag. Other expenditures paid to Taiwan Steel Resources Co., Ltd. for the years ended 31 December 2020 and 2019 were NT$65,507 thousand and NT$2,774 thousand and were recorded as manufacturing expenses. The unpaid amounts as of 31 December 2020 and 2019 were NT$12,513 thousand and NT$ 2,774 thousand.

(c)Key management personnel compensation

For the years ended 31 December

2020 2019

189

Short-term employee benefits Post-Employment Benefits Total	$91,559 347	$82,241 365
	$91,906	$82,606

8. Assets pledged as security

None.

9. Commitments and contingencies

(1) As of 31 December 2020 and 2019, the Group issued guaranty notes as security for borrowings in the amount of NT$10,062,450 thousand and NT$12,755,250 thousand, respectively.
(2) As of 31 December 2020 and 2019, the Group was issued letters of guarantee by banks in the amount of NT$30,000 thousand and NT$50,000 thousand for importing goods, respectively.
(3) Amounts available under unused letters of credit are as follows:

Currency USD JPY EUR	Carrying	amount
	2020.12.31 $58,487 213,413 440	2019.12.31
		$33,097 258,785 421

The amounts that are available under unused letters of credit above are unguaranteed.

(4) The following table lists major purchase contracts of the Group:

Contract counterparty Company A Company B Company C Company D	Contract content Crane update project Crane update project Oxygen field update project Roof dust collection renovation project	Contract amount JPY 263,100 $75,700 JPY 550,000 JPY 198,000	Contract amountpaid JPY 210,480 $68,130 JPY 495,000 JPY 178,200	Unpaid amount as of 31 December 2020
				JPY 52,620 $7,570 JPY 55,000 JPY 19,800

10. Losses due to major disasters

None.

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11. Significant subsequent events

None.

12. Others

(1) Categories of financial instruments

Categories of financial instruments
Financial assets Financial assets at fair value through other comprehensive income Financial assets measured at amortized cost: Cash and cash equivalents (exclude cash on hand) Contract assets Notes and accounts receivable Other receivables Other financial assets -Non Current Subtotal Total Financial liabilities Financial liabilities at amortized cost: Short-term borrowings Notes and accounts payable Other payables Lease liabilities Total	As of 31 December
	2020	2019
	$2,772,573 2,174,321 397,242 1,489,973 8,579 13,686	$1,082,398 1,565,989 239,141 1,557,558 20,516 13,686
	4,083,801	3,396,890
	$6,856,374	$4,479,288
	$329,941 1,302,794 1,026,124 179,912	$381,151 1,176,644 998,743 210,403 $2,766,941
	$2,838,771

(2) Financial risk management objectives and policies

The Group‘s principal financial risk management objective is to manage the market risk, credit risk and liquidity risk related to its operating activities. The Group identifies measures and manages the aforementioned risks based on the Group‘s policy and risk appetite.

The Group has established appropriate policies, procedures and internal controls for financial risk management. Before entering into significant financial activities, due approval process by the board of directors and audit committee must be carried out based on related protocols and internal control procedures. The Group complies with its financial risk management policies at all times.

191

(3) Market risk

Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of the changes in market prices. Market prices comprise currency risk, interest rate risk and other price risk.

In practice, it is rarely the case that a single risk variable will change independently from other risk variables, there is usually interdependencies between risk variables. However the sensitivity analysis disclosed below does not take into account the interdependencies between risk variables.

Foreign currency risk

The Group‘s exposure to the risk of changes in foreign exchange rates relates primarily to the Group‘s operating activities (when revenue or expense is denominated in a different currency from the Group‘s functional currency).

The Group has certain foreign currency receivables to be denominated in the same foreign currency with certain foreign currency payables, therefore natural hedge is received.

The foreign currency sensitivity analysis of the possible change in foreign exchange rates on the Group‘s profit is performed on significant monetary items denominated in foreign currencies as of the end of the reporting period. The Group‘s foreign currency risk is mainly related to the volatility in the exchange rates for USD, JPY and EUR.

Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Group‘s exposure to the risk of changes in market interest rates relates primarily to the Group‘s debt instrument investments at variable interest rates, bank borrowings with fixed interest rates and variable interest rates.

The interest rate sensitivity analysis is performed on the borrowings and investments with variable interest rates as of the end of the reporting period, under the assumption that, a change of 10 basis points of interest rates in a reporting period.

Pre-tax sensitivity analysis of changes in related risk factors for the years ended 31 December 2020 and 2019 are as follows:

192

For the year ended 31 December 2020

Main Risk Foreign currency risk Interest rate risk	Fluctuation NTD/USD rate +/− 1% NTD/JPY.rate +/− 1% NTD/EUR rate +/− 1% Market rate +/− 10 basis points	Sensitivity of profit/loss +/-$(1,375) +/-$(266) +/-$(3) +/-$330	Sensitivity of equity
			$ - $ - $ - $ -

For the year ended 31 December 2019

Main Risk Foreign currency risk Interest rate risk	Fluctuation NTD/USD rate +/− 1% NTD/EUR rate +/− 1% Market rate +/− 10 basis points	Sensitivity of profit/loss +/-$(1,844) +/-$(434) +/-$381	Sensitivity of equity
			$ - $ - $ -

Equity price risk

The fair value of the Group‘s listed and unlisted equity securities and conversion rights of the Euro-convertible bonds issued are susceptible to market price risk arising from uncertainties about future values of the investment securities. The Group‘s listed and unlisted equity securities are classified under held for trading financial assets measured at fair value through profit or loss and financial assets measured at fair value through other comprehensive income, while conversion rights of the Euro-convertible bonds issued are classified as financial liabilities at fair value through profit or loss as it does not satisfy the definition of an equity component. The Group manages the equity price risk through diversification and placing limits on individual and total equity instruments. Reports on the equity portfolio are submitted to the Group‘s senior management on a regular basis. The Group‘s board of directors reviews and approves all equity investment decisions.

At the reporting date, a change of 1% in the price of the listed equity securities measured at fair value through other comprehensive income could could have an impact of NT$19,456 thousand and NT$3,028 thousand on the equity attributable to the Group for the year periods ended 31 December 2020 and 2019, respectively.

(4) Credit risk management

Credit risk is the risk that counterparty will not meet its obligations under a contract, leading to a financial loss. The Group is exposed to credit risk from

193

operating activities (primarily for contract assets, accounts and notes receivables and lease receivables) and from its financing activities, including bank deposits and other financial instruments.

Credit risk is managed by each business unit subject to the Group‘s established policy, procedures and control relating to credit risk management. Credit limits are established for all counter parties based on their financial position, ratings from credit rating agencies, historical experiences, prevailing economic condition and the Group‘s internal rating criteria, etc. Certain counter parties‘ credit risk will also be managed by taking credit enhancing procedures, such as requesting for prepayment.

As of 31 December 2020 and 2019, account receivables from top ten customers represented 24.53% and 23.22% of the total trade receivables of the Group, respectively. The credit concentration risk of other accounts receivables is insignificant.

Credit risk from balances with banks, fixed income securities and other financial instruments is managed by the Group‘s treasury in accordance with the Group‘s policy. The Group only transacts with counterparties approved by the internal control procedures, which are banks and financial institutions, companies and government entities with good credit rating and with no significant default risk. Consequently, there is no significant credit risk for these counter parties.

(5) Liquidity risk management

The Group‘s objective is to maintain a balance between continuity of funding and flexibility through the use of cash and cash equivalents, highly liquid equity investments and bank loans. The table below summarizes the maturity profile of the Company‘s financial liabilities based on the contractual undiscounted payments and contractual maturity. The payment amount includes the contractual interest. The undiscounted payment relating to borrowings with variable interest rates is extrapolated based on the estimated interest rate yield curve as of the end of the reporting period.

194

Non-derivative financial liabilities

Non-derivative financial liabilities
As of 31 December 2020 Short-term borrowings Notes and accounts payable Other payable Lease liabilities(note) As of 31 December 2019 Short-term borrowings Notes and accounts payable Other payable Lease liabilities(note)	Less than 1 year	2 to 3 years	4 to 5 years	> 5years
	$332,860 1,302,794 1,026,124 7,679 $391,145 1,176,644 998,743 9,240	$ - - - 11,842 $ - - - 15,863	$ - - - 10,883 $ - - - 12,358	$ - - - 212,226 $ - - - 247,155

Note: Information about the maturities of lease liabilities is provided in the table below ：

2020.12.31 2019.12.31			Maturities	Maturities
	Less than 1 year	2 to 5 years	6 to 10 years	11 to 15 years	> 15years	Total
	$7,679 9,240	$22,725 28,221	$27,208 30,894	$27,209 30,894	$157,809 185,367	$242,630 284,616

Derivative financial liabilities

None.

(6) Reconciliation of liabilities arising from financing activities

Reconciliation of liabilities for the year ended 31 December 2020:

As of 1 Jan. 2020 Cash flows Non-cash changes Acquisition As of 31 Dec. 2020	Short-term borrowings	Leases liabilities	Total liabilities from financingactivities
	$381,151 (51,210) -	$210,403 (7,367) (23,124)	$591,554.. (58,577) (23,124)
	$329,941	$179,912	$509,853

195

Reconciliation of liabilities for the year ended 31 December 2019:

As of 1 Jan. 2019 Cash flows Non-cash changes Acquisition As of 31 Dec. 2019	Short-term borrowings	Leases liabilities	Total liabilities from financing activities
	$1,018,533 (637,382) -	$218,059 (10,756) 3,100	$1,236,592 (648,138) 3,100
	$381,151	$210,403	$591,554

(7) Fair value of financial instruments
(1) The methods and assumptions applied in determining the fair value of financial instruments:

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The following methods and assumptions were used by the Group to measure or disclose the fair values of financial assets and financial liabilities:

A. The carrying amount of cash and cash equivalents, accounts receivables, accounts payable and other current liabilities approximate their fair value due to their short maturities.
B. For financial assets and liabilities traded in an active market with standard terms and conditions, their fair value is determined based on market quotation price (including listed equity securities and bonds) at the reporting date.
C. Fair value of equity instruments without market quotations (including private placement of listed equity securities, unquoted public company and private company equity securities) are estimated using the market method valuation techniques based on parameters such as prices based on market transactions of equity instruments of identical or comparable entities and other relevant information (for example, inputs such as discount for lack of marketability, P/E ratio of similar entities and Price-Book ratio of similar entities).
D. Fair value of debt instruments without market quotations, bank loans and other non-current liabilities are determined based on the counterparty prices or valuation method. The valuation method uses DCF method as a basis, and the assumptions such as the interest rate and discount rate are

196

primarily based on relevant information of similar instrument (such as yield curves published by the GreTai Securities Market, average prices for Fixed Rate Commercial Paper published by Reuters and credit risk, etc.)

(2) Fair value of financial instruments measured at amortized cost

The book value of the Group‘s financial assets and financial liabilities measured at amortized cost is very close to the fair value.

(3) Fair value measurement hierarchy for financial instruments

Please refer to Note 12. (9) for fair value measurement hierarchy for financial instruments of the Group.

(8) Derivative financial instruments

None.

(9) Fair value measurement hierarchy
(1) Fair value measurement hierarchy

All asset and liabilities for which fair value is measured or disclosed in the financial statements are categorized within the fair value hierarchy, based on the lowest level input that is significant to the fair value measurement as a whole. Level 1, 2 and 3 inputs are described as follows:

Level 1 – Quoted (unadjusted) market prices in active markets for identical assets or liabilities that the entity can access at the measurement date

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

For assets and liabilities that are recognized in the financial statements on a recurring basis, the Group determines whether transfers have occurred between Levels in the hierarchy by re-assessing categorization at the end of each reporting period.

(2) Fair value measurement hierarchy of the Group‘s assets and liabilities

The Group does not have assets that are measured at fair value on a non-recurring basis. Fair value measurement hierarchy of the Group‘s assets

197

and liabilities measured at fair value on a recurring basis is as follows:

As of 31 December 2020 Financial assets: Financial assets measured at fair value through other comprehensive income Equity instrument measured at fair value through other comprehensive income As of 31 December 2019 Financial assets: Financial assets measured at fair value through other comprehensive income Equity instrument measured at fair value through other comprehensive income	Level 1	Level 2	Level 3	Total
	$1,945,605 Level 1	$ - Level 2	$826,968 Level 3	$2,772,573 Total
	$302,826	$ -	$779,572	$1,082,398

Transfers between Level 1 and Level 2 during the period During the year period ended 31 December 2020 and 2019, there were no transfers between Level 1 and Level 2 fair value measurements. Reconciliation for fair value measurements in Level 3 of the fair value hierarchy for movements during the period is as follows:

Beginning balances as at 1 January 2020 Total gains and losses recognized for the year ended 31 December 2020: Amount recognized in OCI (presented in ―Unrealized gains (losses) from equity instruments investments measured at fair value through other comprehensive income) Return of paid-in capital for capital reduction Ending balances as at 31 December 2020	Assets
	At fair value through other comprehensive income
	Stocks
	$779,572 60,803 (13,407)
	$826,968

198

Beginning balances as at 1 January 2019 Total gains and losses recognized for the year ended 31 December 2019: Amount recognized in OCI (presented in ―Unrealized gains (losses) from equity instruments investments measured at fair value through other comprehensive income) Return of paid-in capital for capital reduction Ending balances as at 31 December 2019	Assets
	At fair value through other comprehensive income
	Stocks
	$799,553 (16,453) (3,528)
	$779,572

Information on significant unobservable inputs to valuation

Description of significant unobservable inputs to valuation of recurring fair value measurements categorized within Level 3 of the fair value hierarchy is as follows:

As at 31 December 2020

Relationship Valuation Significant Quantitative between inputs Sensitivity of the input techniques unobservable inputs information and fair value to fair value Financial assets at fair value through other comprehensive income Stocks and others Market approach discount for lack of 10%~30% The higher the 10% increase (decrease) marketability discount for lack in the discount for lack of marketability, of marketability would the lower the fair result in increase value of the (decrease) in the Group‘s stocks equity by NT$82,697 thousand

As at 31 December 2019

Valuation Significant Quantitative Relationship Sensitivity of the input

199

techniques unobservable inputs information between inputs and fair value

to fair value

Financial assets at fair value through other comprehensive income Stocks and others Market approach discount for lack of 10%~30% The higher the 10% increase (decrease) marketability discount for lack in the discount for lack of marketability, of marketability would the lower the fair result in increase value of the (decrease) in the Group‘s stocks equity by NT$77,957 thousand

Valuation process used for fair value measurements categorized within Level 3 of the fair value hierarchy

The Group‘s financial Department is responsible for validating the fair value measurements and ensuring that the results of the valuation are in line with market conditions, based on independent and reliable inputs which are consistent with other information, and represent exercisable prices. The department analyses the movements in the values of assets and liabilities which are required to be re-measured or re-assessed as per the Group‘s accounting policies at each reporting date.

(3) Fair value measurement hierarchy of the Group‘s assets and liabilities not measured at fair value but for which the fair value is disclosed

As of 31 December 2020 Financial assets not measured at fair value but for which the fair value is disclosed: Investment properties (Notes 6, 8) Investments accounted for using the equity method (please refer to Notes 6, 6) As of 31 December 2019 Financial assets not measured at fair	Level 1 $ - 1,766,921 Level 1	Level 2 $ - - Level 2	Level 3 $1,068,869 - Level 3	Total
				$1,068,869 1,766,921 Total

200

value but for which the fair value is
disclosed:
Investment properties (Notes 6, 8)	$ -	$ -	$627,522	$627,522
Investments accounted for using the	1,874,212	-	-	1,874,212
equity method (please refer to Notes 6, 6)

(10) Significant assets and liabilities denominated in foreign currencies

Information regarding the significant assets and liabilities denominated in foreign currencies is listed below:

Unit: Thousands

			Unit: Thousands	Unit: Thousands	Unit: Thousands
Financial assets Monetary items: USD EUR JPY Financial liabilities Monetary item: USD EUR JPY	As of 31 December 2020 Foreign currencies Foreign exchange rate NTD $7,886 28.0500 $221,203 - 34.3650 - 2 0.2706 - $12,744 28.1500 $358,720 7 34.7250 252 97,060 0.2744 26,633		As of 31 December 2019
	Foreign currencies $7,886 - 2 $12,744 7 97,060	Foreign exchange rate 28.0500 34.3650 0.2706 28.1500 34.7250 0.2744	Foreign currencies $6,509 - 2 $12,604 1,279 -	Foreign exchange rate 30.0500 33.5470 0.2752 30.1500 33.9070 0.2790	NTD
					$195,597 - - $379,966 43,377 -

The Company has a number of different functional currencies; therefore, we are unable to disclose the exchange loss and gain of monetary financial assets and financial liabilities under each foreign currency that has significant impact. The Company had NT$7,206 thousand and NT$13,083 thousand foreign exchange gains for the years ended 31 December 2020 and 2019, respectively.

The above information is disclosed based on the carrying amount of foreign currency (after conversion to functional currency).

(11) Capital management

The primary objective of the Group‘s capital management is to ensure that it

201

maintains a strong credit rating and healthy capital ratios in order to support its business and maximize the shareholder value. The Group manages its capital structure and makes adjustments to it, in light of changes in economic conditions. To maintain or adjust the capital structure, the Group may adjust dividend payment to shareholders, return capital to shareholders or issue new shares.

13. Other disclosure

(1) Information at significant transactions
a. Financing provided to others for the year ended 31 December 2020: None.
b. Endorsement/Guarantee provided to others for the year ended December 31, 2020:

None.

c. Securities held as of 31 December 2020:

Name of company	Type of securities	Name of securities	Relationship	Financial statement account		December 31, 2020	December 31, 2020
					Shares	Book value	Percentage of ownership (%)	Market value/Net assets value	Note
FENG..HSIN STEEL CO.,LTD.	Stock	Yuanta/P-shares Taiwan Dividend Plus ETF Taiwan Cement Corporation Charoen Pokphand Enterprise (Taiwan) Co., Ltd. Formosa Plastics Corporation Formosa Taffeta Co., Ltd. Taiwan Semiconductor Manufacturing Company Limited Synnex Technology International Corporation Asustek Computer Incorporation	- - - - - - - -	Financial assets at fair value through other comprehensive income,current Financial assets at fair value through other comprehensive income,current Financial assets at fair value through other comprehensive income,current Financial assets at fair value through other comprehensive income,current Financial assets at fair value through other comprehensive income,current Financial assets at fair value through other comprehensive income,current Financial assets at fair value through other comprehensive income,current Financial assets at fair value through other comprehensive income,current	3,376,000 2,426,000 717,000 1,247,000 3,162,000 225,000 2,426,000 401,000	$101,111 104,803 51,911 120,211 98,180 119,250 114,022 100,450	0.15% 0.04% 0.27% 0.02% 0.19% - 0.15% 0.05%	$101,111 104,803 51,911 120,211 98,180 119,250 114,022 100,450

202

Name of company	Type of securities	Name of securities	Relationship	Financial statement account		December 31, 2020	December 31, 2020
					Shares	Book value	Percentage of ownership (%)	Market value/Net assets value	Note
FENG..HSIN STEEL CO.,LTD. FENG..HSIN STEEL CO.,LTD.	Stock Stock	DA-CIN Construction Co., Ltd. Huaku Development Co., Ltd. Mega Financial Holding Company Limited Sinopac Financial Holdings Company Limited WPG Holdings Limited YungShin Global Holding Corporation Far Eastone Telecommunications Co.,Ltd. Pegatron Corporation Zhen Ding Technology Holding Limited Taiwan Printed Circuit Board Techvest Co., Ltd. Taiwan Hon Chuan Enterprise Co., Ltd. Chien Shing Harbour Service Co., Ltd. Fengshuo Investment Co., Ltd. Gwo Uei Metals Industry Co., Ltd. Gwo Huei Iron & Steel Co., Ltd.	- - - - - - - - - - - - - - -	Financial assets at fair value through other comprehensive income,current Financial assets at fair value through other comprehensive income,current Financial assets at fair value through other comprehensive income,current Financial assets at fair value through other comprehensive income,current Financial assets at fair value through other comprehensive income,current Financial assets at fair value through other comprehensive income,current Financial assets at fair value through other comprehensive income,current Financial assets at fair value through other comprehensive income,current Financial assets at fair value through other comprehensive income,current Financial assets at fair value through other comprehensive income,current Financial assets at fair value through other comprehensive income,current Total Financial assets at fair value through other comprehensive income, noncurrent Financial assets at fair value through other comprehensive income, noncurrent Financial assets at fair value through other comprehensive income, noncurrent Financial assets at fair value through other comprehensive income, noncurrent	1,847,000 575,000 3,589,000 9,263,000 2,562,000 1,347,000 1,634,000 1,583,000 830,000 1,214,000 861,000 8,203,800 3,640,000 3,800,000 3,800,000	49,777 50,485 106,952 106,061 109,910 60,211 100,001 106,536 94,620 53,902 51,918	0.56% 0.21% 0.03% 0.08% 0.15% 2.02% 0.05% 0.06% 0.09% 0.45% 0.30% 10.11% 18.20% 19.00% 19.00%	49,777 50,485 106,952 106,061 109,910 60,211 100,001 106,536 94,620 53,902 51,918
						$1,700,311
						$245,294 220,796 50,605 34,505		$245,294 220,796 50,605 34,505

203

Name of company	Type of securities	Name of securities	Relationship	Financial statement account		December 31, 2020	December 31, 2020
					Shares	Book value	Percentage of ownership (%)	Market value/Net assets value	Note
FENG..HSIN STEEL CO.,LTD. GREAT FORTUNE HOLDING LIMITED	Stock Stock	Ascentek Venture Capital Corporation Taichung International Entertainment Corporation China Trade And Development Corporation Shihlien China Holding Co.,Ltd.	- - - -	Financial assets at fair value through other comprehensive income, noncurrent Financial assets at fair value through other comprehensive income, noncurrent Financial assets at fair value through other comprehensive income, noncurrent Financial assets at fair value through other comprehensive income, noncurrent Total	70,560 1 1,925 23,033,543	4,656 970 25 515,411 $1,072,262	5.35% 0.03% - 5.63%	4,656 970 25 515,411

d. Individual securities acquired or disposed of with accumulated amount exceeding the lower of NT$300 million or 20% of the paid-in capital for the year ended 31 December 2020: None.
e. Acquisition of individual real estate with amount exceeding the lower of NT$300 million or 20% of the paid-in capital for the year ended 31 December 2020:

Company Name	Name of Property	Transaction Date	Transaction Amount	Payment Status	Counterparty	Relationship	When counterparty is related party, details of prior transactions	When counterparty is related party, details of prior transactions	When counterparty is related party, details of prior transactions	When counterparty is related party, details of prior transactions	Price Reference	Purpose of Acquisition and Status of Utilization	Other Commitments
							Owner	Relationships	Transfer Date	Amount
FENG HSIN STEEL CO.,LTD.	Land and Building	Contract date`：` 10 September 2020 Transferring date`：` 17 December 2020	$327,015	$327,015	Farglory Investment Co., Ltd. Farglory Land Development Co., Ltd.	Non-related party	N/A	N/A	N/A	N/A i	Appraisal report ssued by Weiming Real Estate Appraiser Firm	To acquire investment property for leasing to increase company revenue	N/A

f. Disposal of individual real estate with amount exceeding the lower of

204

NT$300 million or 20% of the capital stock for the year ended 31 December 2020: None.

g. Related party transactions for purchases and sales amounts exceeding the lower of NT$100 million or 20 percent of the capital stock for the year ended 31 December 2020:

None.

h. Receivables from related parties with amounts exceeding the lower of NT$100 million or 20% of capital stock as of year ended 31 December 2020: None.
i. Financial instruments and derivative transactions: None.
j. Others: The business relationship, significant transactions and amounts between parent company and subsidiaries: None.
(2) Information on investees

Names, locations, main businesses and products, original investment amount, investment as of 31 December 2020, net income (loss) of investee company and investment income (loss) recognized as of 31 December 2020 (excluding investees in mainland China):

Investment company	Investee company	Address	Main businesses and products	Initial Investment	Initial Investment	Investment as of December 31,2020	Investment as of December 31,2020	Investment as of December 31,2020	Net income (loss) of investee company (Note)	Investment income (loss) recognized	Note
				Ending balance	Beginning balance	Number of Shares (thousand)	Percentage of ownership (%)	Book value
FENG HSIN STEEL CO.,LTD.	GREAT FORTUNE HOLDING LIMITED	Offshore Chamber, P.O. Box217, Apia, Samoa	General investment business	$971,367	$971,367	31,406,834	100.00%	$516,457	$(95)	$(95)	Subsidiary company of the Company
FENG HSIN STEEL CO.,LTD.	TAIWAN STEEL UNION CO., LTD.	No. 36, Xiangong N. 1st Rd., Shengang Township, Changhua County 509, Taiwan	General business and hazardous industrial waste treatment, the manufacture and sale of zinc oxide and	$199,883	$147,761	23,279,587	20.92%	$744,203	$407,534	$83,504	Associated company of the Company

205

Investment company	Investee company	Address	Main businesses and products	Initial Investment	Initial Investment	Investment as of December 31,2020	Investment as of December 31,2020	Investment as of December 31,2020	Net income (loss) of investee company (Note)	Investment income (loss) recognized	Note
				Ending balance	Beginning balance	Number of Shares (thousand)	Percentage of ownership (%)	Book value
		(R.O.C.)	non-metallic mineralproducts.
FENG HSIN STEEL CO.,LTD.	FONG YU RESOURCES CO., LTD.	No.998, Jiahou Rd., Sec. 1, Houli Dist., Taichung City 421, Taiwan (R.O.C.)	General business and hazardous industrial waste treatment	$516,250	$516,250	51,625,000	29.71%	$510,929	$(13,012)	$(3,865)	Associated company of the Company
FENG HSIN STEEL CO.,LTD.	Wen-Shan Enterprise Co., Ltd.	No.16, Wuncyuan Ln., Sec. 1, Dongguan Rd., Heping Dist., Taichung City 42444, Taiwan (R.O.C.)	General business	$209,777	$209,777	18,000,000	18.00%	$171,822	$85,588	$15,405	Associated company of the Company
			and the operation
			of hotel industry

Note: The Company has recognized investment income from subsidiaries, and the investment income was eliminated in the consolidated report.

(3) Information on investments in mainland China

a. Information on investments in mainland China from the subsidiaries through GREAT FORTUNE HOLDING LIMITED as of 31 December 2020:

Investee company	Main Businesses and Products	Total Amount of Paid-in Capital	Method of Investment	Accumulated Outflow of Investment from Taiwan as of 1 January 2020	Investmen	t Flows	Accumulated Outflow of Investment from Taiwan as of 31 December 2020	Net income (loss) of investee company	Percentage of Ownership	Investment income (loss) recognized	Carrying Value as of 31 December 2020 (Note 1)	Accumulated Inward Remittance of Earnings as of 31 December 2020
					Outflow	Inflow
Shihlien Chemical Industrial Jiangsu Co.	Sodium carbonate, which is the ingredient of glass production	USD 800,000,000	Investment in Mainland China companies through a company invested and	$767,246 (USD27,352,800)	-	-	$767,246 (USD27,352,800)	Note 1	3.15%	$ -	$488,816	$ -

206

Investee company	Main Businesses and Products	Total Amount of Paid-in Capital	Method of Investment	Accumulated Outflow of Investment from Taiwan as of 1 January 2020	Investmen	t Flows	Accumulated Outflow of Investment from Taiwan as of 31 December 2020	Net income (loss) of investee company	Percentage of Ownership	Investment income (loss) recognized	Carrying Value as of 31 December 2020 (Note 1)	Accumulated Inward Remittance of Earnings as of 31 December 2020
					Outflow	Inflow
			established in a third region
Shihlien Brine Huaian Co.	Brine, which is the ingredient ofsodium carbonate	USD 32,000,000	Investment in Mainland China companies through a company invested and established in a third region	$41,705 (USD1,486,800)	-	-	$41,705 (USD1,486,800)	Note 1	3.94%	$ -	$26,595	$ -

Accumulated Investment in Mainland China as of 31 December 2020 (Note 3)	Investment Amounts Authorized by Investment Commission, MOEA (Note 3)	Upper Limit on Investment
		The lender‘s net accounts value×60%
$808,951 (USD 28,839,600)	$808,951 (USD 28,839,600)	$11,680,926 (Note 2)

Note 1: The Company's subsidiary's investment in Mainland China was made indirectly through financial assets at fair value through other comprehensive income investee established in the third region.

Note 2: Pursuant to the Investment Commission, Ministry of Economic Affairs, R.O.C., the Company's investment in Mainland

China is limited to 60% of net worth or consolidated net worth.

Note 3: Initial investment amounts denominated in foreign currencies are translated into New Taiwan Dollars using the spot rates

at the financial statement reporting date.

b. Directly or indirectly significant transactions through third regions with the investees in Mainland China, including price, payment terms, unrealized gain or loss, and other events with significant effects on the operating results and financial condition: None.

(4) Information on major shareholders

The Company had no shareholders holding more than 5% of its shares on 31 December 2020.

14. Segment information

207

(a) The Company is considered as a single operating segment as judged by the managements that, the organization‘s primary income comes from manufacturing and processing various angle irons, round irons, and flat irons.

(b) Geographical information

i. Revenue from external customers:

For the years ended 31 December

Taiwan Export - Asia Export - Other Total	2020	2019
	$24,953,494 1,252,554 1,092,003	$24,667,706 1,667,622 1,400,283
	$27,298,051	$27,735,611

The revenue information above is based on the location of the customers.

ii. Non-current assets:

Taiwan	As of 31 December	As of 31 December
	2020	2019
	10,656,491	$10,540,364

No single customer‘s sales revenue accounted for over 10% of revenue on the Group income statement for the years ended 31 December 2020 and 2019.

208

V.Standalone Financial Report for the Most Recent Year

Independent Auditors’ Report

To FENG HSIN STEEL Co., Ltd.

Opinion

We have audited the accompanying standalone balance sheets of FENG HSIN STEEL Co., Ltd. (the ―Company‖) as of 31 December 2020 and 2019, and the related standalone statements of comprehensive income, changes in equity and cash flows for the years ended 31 December 2020 and 2019, and notes to the standalone financial statements, including the summary of significant accounting policies (together ―the standalone financial statements‖).

Basis for Opinion

We conducted our audits in accordance with the Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants and auditing standards generally accepted in the Republic of China. Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Standalone Financial Statements section of our report. We are independent of the Company in accordance with the Norm of Professional Ethics for Certified Public Accountant of the Republic of China (the ―Norm‖), and we have fulfilled our other ethical responsibilities in accordance with the Norm. Based on our audits and the reports of other auditor(s), we believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of 2020 standalone financial statements. These matters were addressed in the context of our audit of the standalone financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Valuation for inventories

As of 31 December 2020, the Company‘s net inventories amounted to NT$3,301,468 thousand which represented 14% of the total standalone assets. The amount of inventories was significant to the Company‘s financial statements. The Company manufacture and sell various types of steel products. The main ingredient is iron scrap. The material and finished goods are affected by the fluctuation of international prices that may cause significant changes in inventory prices. As a result, the calculation of net realizable value was complicated, we therefore determined this a key audit mater. Our audit procedures included, but not limited to, understanding and testing the effectiveness of internal control; evaluating the adequacy of accounting policies around obsolete inventories; evaluating stocktaking plan and selecting important storage locations to observe inventory counts to ensure inventory quantities and status; obtaining inventory aging schedule to test whether inbound and outbound records are accurate; re-calculating the unit cost of inventories; evaluating and testing net realizable value adopted by management; testing selling prices; and implementing analytical procedures with respect to the gross profit ratios by products. We also assessed the adequacy of disclosures of inventories. Please refer to Note 6 to the Company‘s standalone financial statements.

Other Matter – Making Reference to the Audits of Component Auditors

Those financial statements were audited by other auditors, whose reports thereon have been furnished to us, and our opinions expressed herein are based solely on the audit reports of the other auditors. We did not audit the financial statements of certain associates and joint ventures accounted for under the equity method whose statements are based solely on the reports of other auditors. Investment in these associates and joint ventures under equity method amounted to NT$744,203 thousand and NT$696,101 thousand, both representing 3% of the standalone total assets as of 31 December 2020 and 2019, respectively. The related shares of profits from the associates and joint ventures under the equity method amounted to NT$83,504 thousand and NT$79,764 thousand, both representing 3% of the standalone net income before tax for the years ended 31 December 2020 and 2019, respectively; and the related shares of other comprehensive income from the associates and joint ventures under the equity method amounted to NT$159 thousand and NT$173 thousand, both representing 0% of the standalone other comprehensive income for the years ended 31 December 2020 and 2019, respectively.

210

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

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

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

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

Auditor’s Responsibilities for the Audit of the Standalone Financial Statements

Our objectives are to obtain reasonable assurance about whether the standalone 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 auditing standards generally accepted in the Republic of China will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these standalone financial statements.

211

Identify and assess the risks of material misstatement of the standalone 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 internal control of the Company.
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 ability to continue as a going concern of the Company. 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 standalone 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 Company to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the standalone financial statements, including the accompanying notes, and whether the standalone financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Company to express an opinion on the standalone financial statements. We are responsible for the direction, supervision and performance of the company audit. We remain solely responsible for our audit opinion.

212

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of 2020 standalone financial statements 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.

/s/Chen, Ming Hung

/s/Yen, Wen Pi

Ernst & Young, Taiwan

25 February 2021

Notice to Readers

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

213

English Translation of Standalone Financial Statements Originally Issued in Chinese FENG HSIN STEEL CO., LTD. Standalone BALANCE SHEETS 31 December 2020 and 2019

(Expressed in Thousands of New Taiwan Dollars)

Assets	Notes	2020.12.31 $2,174,223 $1,565,811 397,242 239,141 11,006 25,287 1,478,967 1,532,271 8,579 20,516 3,301,468 4,307,181 668,739 671,224 7,352 2,620 9,747,887 8,364,051 1,943,411 1,883,864 9,436,032 9,846,122 178,936 212,184 698,381 380,417 109,222 111,510 343,142 101,641 13,265,975 13,102,725 556,851 566,987 - 1,700,311 2019.12.31
Current Assets Cash and cash equivalents Financial assets at fair value through other comprehensive income-current Contract assets, current Notes receivable, net Accounts receivable, net Other receivables Inventories, net Prepayments Other current assets Total current assets Non-current assets Financial assets at fair value through other comprehensive income-noncurrent Investments accounted for under the equity method Property, plant and equipment Right-of-use asset Investment property,net Deferred tax assets Other non-current assets Total non-current assets	4, 6.(1) 4, 6.(14),(15) 4, 6.(15) 4, 6.(3),(15) 4, 6.(4) 6.(5) 4, 6.(6) 4, 6.(7) 4, 6.(16) 4, 6.(8) 4, 6.(20) 6.(9) 4, 6.(2) 4, 6.(2)

Total assets

$23,013,862 $21,466,776

(Continued)

English Translation of Standalone Financial Statements Originally Issued in Chinese FENG HSIN STEEL CO., LTD.

Standalone BALANCE SHEETS (Continued) 31 December 2020 and 2019

(Expressed in Thousands of New Taiwan Dollars)

	Notes 4, 6.(10) 4, 6.(14) 7 6.(11) 4 4, 6.(16) 4, 6.(16) 4, 6.(12) 6.(13) 6.(13) 6.(13) 4	2020.12.31 2019.12.31 $329,941 $381,151 134,198 131,372 - 241 1,302,794 1,176,403 1,026,124 998,743 414,836 120,585 5,109 6,238 2,159 1,376 3,215,161 2,816,109 174,803 204,165 155,688 159,488 330,491 363,653 3,545,652 3,179,762 5,815,994 5,815,994 560,097 588,123 4,354,532 4,158,088 278,241 316,503 8,543,337 7,686,547 13,176,110 12,161,138 (83,991) (278,241) (83,991) (278,241) 19,468,210 18,287,014 $23,013,862 $21,466,776
Current liabilities Short-term loans Contract liabilities, current Notes payable Accounts payable Other payables Current tax liabilities Lease liabilities, current Other current liabilities Total current liabilities Non-current liabilities Lease liabilities, noncurrent Net defined benefit obligation, noncurrent Total non-current liabilities Total liabilities Equity attributable to the parent company Capital Common stock Additional paid-in capital Retained earnings Legal reserve Special reserve Unappropriated earnings Total Retained earnings Other components of equity Unrealized gains (losses) measured at fair value through other comprehensive income financial asset Total Other components of equity Total equity Total liabilities and equity

(The accompanying notes are an integral part of the Standalone financial statements)

English Translation of Standalone Financial Statements Originally Issued in Chinese FENG HSIN STEEL CO., LTD.

Standalone STATEMENTS OF COMPREHENSIVE INCOME

For the years ended 31 December 2020 and 2019

(Expressed in Thousands of New Taiwan Dollars, Except for Earnings per Share)

Operating revenues Operating costs Gross Profit-net Operating expenses Sales and marketing expenses General and administrative expenses Research and development expenses Subtotal Operating Income Non-operating income and expenses Interest income Other income Other gains and losses Finance costs Share of profit or loss of associates and joint ventures Subtotal Income from continuing operations before income tax Income tax expense Net income Other comprehensive income Items that will not to be reclassified subsequently to profit or loss Remeasurements of defined benefit pension plans Unrealized gains (losses) from equity instruments investments measured at fair value through other comprehensive income Share of other comprehensive of associates and joint ventures Income tax related to items that will not to be reclassified subsequently to profit or loss Total other comprehensive loss, net of tax Total comprehensive income Earnings per share (NTD) Earnings per share-basic Earnings per share-diluted	Notes	2020 2019
	4,6.(14) 6.(17),7 6.(17) 4,6.(18) 6.(18) 6.(18) 6.(6) 4,6.(20) 6.(19) 4,6.(21)	$27,298,051 $27,735,611 (23,448,762) (24,870,034) 3,849,289 2,865,577 (410,547) (441,118) (304,025) (290,545) (43,833) (44,890) (758,405) (776,553) 3,090,884 2,089,024 3,479 2,529 65,015 56,321 (11,468) 47,209 (5,917) (13,533) 94,949 209,180 146,058 301,706 3,236,942 2,390,730 (617,516) (428,375) 2,619,426 1,962,355 (7,784) 2,437 159 173 334,594 40,350 $2,954,020 $2,002,705 $4.50 $3.37 $4.50 $3.37 340,694 38,262 1,525 (522)

(The accompanying notes are an integral part of the Standalone financial statements)

	Total Equity	Total Equity	$18,638,167 - - (2,326,398) (28,385) 925 1,962,355 40,350	2,002,705	$18,287,014	$18,287,014 - (1,744,798) - (28,867) 841 2,619,426 334,594	2,954,020	-	$19,468,210
Equity Attributable to the parent company	Other components of equity	Unrealized Gains (losses) measured at fair value through other comprehensive income	$(316,503) 38,262	38,262	$(278,241)	$(278,241) 340,694	340,694	(146,444)	$(83,991)
	Retained earnings	Unappropriated Earnings	$8,612,358 (294,241) (269,615) (2,326,398) 1,962,355 2,088	1,964,443	$7,686,547	$7,686,547 (196,444) (1,744,798) 38,262 2,619,426 (6,100)	2,613,326	146,444	$8,543,337
		Special reserve	$46,888 269,615	-	$316,503	$316,503 (38,262)	-		$278,241
		Legal Reserve	$3,863,847 294,241	-	$4,158,088	$4,158,088 196,444	-		$4,354,532
		Additional Paid-in Capital	$615,583 (28,385) 925	-	$588,123	$588,123 (28,867) 841	-		$560,097
		Common Stock	$5,815,994	-	$5,815,994	$5,815,994	-		$5,815,994
			Balance as of 1 January 2019 Appropriation and distribution of 2018 retained earnings Legal reserve Special reserve Cash dividends Change in other paid-in capital Change in other paid-in capital of associates and joint ventures accounted for using the equity method Change in other paid-in capital Net income for the year ended 31 December 2019 Other comprehensive income (loss), net of tax for the year ended 31 December 2019 Total comprehensive income (loss) Balance as of 31 December 2019 Balance as of 1 January 2020 Appropriation and distribution of 2019 retained earnings Legal reserve Cash dividends Reversal of special reserve Change in other paid-in capital Change in other paid-in capital of associates and joint ventures accounted for using the equity method Change in other paid-in capital Net income for the year ended 31 December 2020 Other comprehensive income (loss), net of tax for the year ended 31 December 2020 Total comprehensive income (loss) Disposal of financial assets at fair value through other comprehensive income Balance as of 31 December 2020

English Translation of Standalone Financial Statements Originally Issued in Chinese FENG HSIN STEEL CO., LTD.

Standalone STATEMENTS OF CASH FLOWS

For the years ended 31 December 2020 and 2019

(Expressed in Thousands of New Taiwan Dollars)

For theyears ended 31 December

2020
2019
$3,236,942
$2,390,730
1,184,374
1,114,364
3,000
3,000
(520)
-
5,917
13,533
(3,479)
(2,529)
(48,056)
(30,583)
(94,949)
(209,180)
(497)
(34,329)
98
-
(544)
-
(158,101)
11,783
15,122
(21,566)
53,304
(76,572)
8,700
11,656
1,007,086
2,435,929
(40,114)
(174,274)
(1,892)
(504)
2,826
(39,528)
(241)
(2,231)
129,036
(379,728)
39,594
86,131
783
156
(23,612)
(13,698)
5,314,777
5,082,560
3,479
2,472
51,293
26,783
(3,186)
(10,917)
(319,452)
(605,721)
5,046,911
4,495,177

(Continued)

English Translation of Standalone Financial Statements Originally Issued in Chinese

FENG HSIN STEEL CO., LTD.

Standalone STATEMENTS OF CASH FLOWS

For the years ended 31 December 2020 and 2019

(Expressed in Thousands of New Taiwan Dollars)

For theyears ended 31 December

2020
2019
(2,666,305)
-
1,303,417
-
13,407
3,528
(10,000)
-
10,520
-
(52,122)
(188,129)
-
4,268
(726,663)
(874,744)
150
14,553
(321,843)
-
(244,501)
(59,851)
58,816
496,393
(2,635,124)
(603,982)
(51,210)
(637,382)
(7,367)
(10,756)
(1,744,798)
(2,326,398)
(1,803,375)
(2,974,536)
608,412
916,659
1,565,811
649,152
$2,174,223
$1,565,811

(The accompanying notes are an integral part of the Standalone financial statements)

FENG HSIN STEEL CO., LTD. NOTES TO STANDALONE FINANCIAL STATEMENTS

For the Years Ended 31 December 2020 and 2019

(Expressed in Thousands of New Taiwan Dollars Unless Otherwise Specified)

1. History and organization

2. Date and procedures of authorization of financial statements for issue

The standalone financial statements of the Company for the years ended 31 December 2020 and 2019 were authorized for issue by the Company‘s board of directors (the Board) on 25 February 2021.

3. Newly issued or revised standards and interpretations

(2) Changes in accounting policies resulting from applying for the first time certain standards and amendments

The Company applied for the first time International Financial Reporting Standards, International Accounting Standards, and Interpretations issued, revised or amended which are recognized by Financial Supervisory Commission (―FSC‖) and become effective for annual periods beginning on or after 1 January 2020. Apart from the nature and impact of the new standard and amendment is described below, the remaining new standards and amendments had no material impact on the Company.

Covid-19-Related Rent Concessions (Amendment to IFRS 16)

The Company elected to early apply Covid-19-Related Rent Concessions (Amendment to IFRS 16) which is recognized by FSC for annual periods beginning on or after 1 January 2020, and in accordance with the requirements of the transition. For the rent concession arising as a direct consequence of the

covid-19 pandemic, the Company elected not to assess whether it is a lease modification but accounted it as a variable lease payment. Please refer to Note 6 for disclosure related to the lessee which required by the amendment.

(2) Standards or interpretations issued, revised or amended, by International Accounting Standards Board (―IASB‖) which are endorsed by FSC, but not yet adopted by the Company as at the end of the reporting period are listed below.

Items	New, Revised or Amended Standards and Interpretations	Effective Date issued by IASB
a	Interest Rate Benchmark Reform - Phase 2 (Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16)	1 January 2021

(b) Interest Rate Benchmark Reform - Phase 2 (Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16)

The final phase amendments mainly relate to the effects of the interest rate benchmark reform on the companies‘ financial statements:

D. A company will not have to derecognize or adjust the carrying amount of financial instruments for changes to contractual cash flows as required by the reform, but will instead update the effective interest rate to reflect the change to the alternative benchmark rate;
E. A company will not have to discontinue its hedge accounting solely because it makes changes required by the reform, if the hedge meets other hedge accounting criteria; and
F. A company will be required to disclose information about new risks arising from the reform and how it manages the transition to alternative benchmark rates.

The abovementioned amendments that are applicable for annual periods beginning on or after 1 January 2021 have no material impact on the Company.

(3) Standards or interpretations issued, revised or amended, by IASB which are not endorsed by FSC, and not yet adopted by the Company as at the end of the reporting period are listed below.

Items	New, Revised or Amended Standards and Interpretations	Effective Date issued by IASB
a	IFRS 10 ―Standalone Financial Statements‖ and IAS 28 ―Investments in Associates and Joint Ventures‖ — Sale or Contribution of Assets between an Investor and its Associate or Joint Ventures	To be determined by IASB

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b	IFRS 17 ―Insurance Contracts‖	1 January2023
c	Classification of Liabilities as Current or Non-current – Amendments to IAS 1	1 January 2023
d	Narrow-scope amendments of IFRS, including Amendments to IFRS 3, Amendments to IAS 16, Amendments to IAS 37 and the Annual Improvements	1 January 2022

(a) IFRS 10―Standalone Financial Statements‖ and IAS 28―Investments in Associates and Joint Ventures‖ — Sale or Contribution of Assets between an Investor and its Associate or Joint Ventures

The amendments address the inconsistency between the requirements in IFRS 10 Standalone Financial Statements and IAS 28 Investments in Associates and Joint Ventures , in dealing with the loss of control of a subsidiary that is contributed to an associate or a joint venture. IAS 28 restricts gains and losses arising from contributions of non-monetary assets to an associate or a joint venture to the extent of the interest attributable to the other equity holders in the associate or joint ventures. IFRS 10 requires full profit or loss recognition on the loss of control of the subsidiary. IAS 28 was amended so that the gain or loss resulting from the sale or contribution of assets that constitute a business as defined in IFRS 3 between an investor and its associate or joint venture is recognized in full.

(b) IFRS 17 ―Insurance Contracts‖

IFRS 17 provides a comprehensive model for insurance contracts, covering all relevant accounting aspects (including recognition, measurement, presentation and disclosure requirements). The core of IFRS 17 is the General (building block) Model, under this model, on initial recognition, an entity shall measure a Company of insurance contracts at the total of the fulfilment cash flows and the contractual service margin. The fulfilment cash flows comprise of the following:

(4) estimates of future cash flows;

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(5) Discount rate: an adjustment to reflect the time value of money and the financial risks related to the future cash flows, to the extent that the financial risks are not included in the estimates of the future cash flows; and
(6) a risk adjustment for non-financial risk.

The carrying amount of a Company of insurance contracts at the end of each reporting period shall be the sum of the liability for remaining coverage and the liability for incurred claims. Other than the General Model, the standard also provides a specific adaptation for contracts with direct participation features (the Variable Fee Approach) and a simplified approach (Premium Allocation Approach) mainly for short-duration contracts.

These are the amendments to paragraphs 69-76 of IAS 1 Presentation of Financial statements and the amended paragraphs related to the classification of liabilities as current or non-current.

(d) Narrow-scope amendments of IFRS, including Amendments to IFRS 3, Amendments to IAS 16, Amendments to IAS 37 and the Annual Improvements
A. Updating a Reference to the Conceptual Framework (Amendments to IFRS 3)

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liabilities. Besides, the amendments clarify existing guidance in IFRS 3 for contingent assets that would not be affected by replacing the reference to the Conceptual Framework.

B. Property, Plant and Equipment: Proceeds before Intended Use (Amendments to IAS

.16)

C. Onerous Contracts - Cost of Fulfilling a Contract (Amendments to IAS 37) The amendments clarify what costs a company should include as the cost of fulfilling a contract when assessing whether a contract is onerous.
D. Annual Improvements to IFRS Standards 2018 - 2020

Amendment to IFRS 1

The amendment simplifies the application of IFRS 1 by a subsidiary that becomes a first-time adopter after its parent in relation to the measurement of cumulative translation differences.

Amendment to IFRS 9 Financial Instruments

Amendment to Illustrative Examples Accompanying IFRS 16 Leases

The amendment to Illustrative Example 13 accompanying IFRS 16 modifies the treatment of lease incentives relating to lessee‘s leasehold improvements.

Amendment to IAS 41

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The abovementioned standards and interpretations issued by IASB have not yet endorsed by FSC at the date when the Company‘s financial statements were authorized for issue. The new or amended standards and interpretations have no material impact on the Company.

4. Summary of significant accounting policies

(1) Statement of compliance

The standalone financial statements of the Company for the years ended 31 December 2020 and 2019 have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers (―the Regulations‖), IFRSs, IASs, IFRIC and SIC, which are endorsed by the FSC (collectively referred to as ―TIFRSs‖).

(2) Basis of preparation

The standalone financial statements have been prepared in accordance with the Regulations

Governing the Preparation of Financial Reports by Securities Issuers (―the Regulations‖).According to the Regulations Article 21 ―The profit or loss during the period

and other comprehensive income presented in parent company only financial reports shall be the same as the allocations of profit or loss during the period and of other comprehensive income attributable to owners of the parent presented in the financial reports prepared on a consolidated basis, and the owners' equity presented in the parent company only financial reports shall be the same as the equity attributable to owners of the parent presented in the financial reports prepared on a consolidated basis.‖ Therefore the subsidiaries is incorporated in the standalone financial statements under the equity method.

The standalone financial statements have been prepared on a historical cost basis, except for financial instruments that have been measured at fair value. The standalone financial

statements are expressed in thousands of New Taiwan Dollars (―NT$‖) unless otherwise stated.

(3) Foreign currency transactions

The Company‘s standalone financial statements are presented in NT$, which is also the Company‘s functional currency.

Transactions in foreign currencies are initially recorded by the Company‘s entities at their respective functional currency rates prevailing at the transaction date. Monetary assets and liabilities denominated in foreign currencies are translated at the functional currency closing rate of exchange ruling at the reporting date.

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Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value is determined. Non-monetary items that are measured at historical cost in a foreign currency are translated using the exchange rates as at the dates of the initial transactions.

All exchange differences arising on the settlement of monetary items or on translating monetary items are taken to profit or loss in the period in which they arise except for the following:

(d) Exchange differences arising from foreign currency borrowings for an acquisition of a qualifying asset to the extent that they are regarded as an adjustment to interest costs are included in the borrowing costs that are eligible for capitalization.
(e) Foreign currency items within the scope of IFRS 9 Financial Instruments are accounted for based on the accounting policy for financial instruments.
(f) Exchange differences arising on a monetary item that forms part of a reporting entity‘s net investment in a foreign operation is recognized initially in other comprehensive income and reclassified from equity to profit or loss on disposal of the net investment.

(4)Translation of Foreign Currency Financial Statements

The assets and liabilities of foreign operations are translated into NTD at the closing rate of exchange prevailing at the reporting date and their income and expenses are translated at an average exchange rate for the period. The exchange differences arising on the translation are recognized in other comprehensive income. On disposal of a foreign operation, the cumulative amount of the exchange differences relating to that foreign operation, recognized in other comprehensive income and accumulated in the separate component of equity, is reclassified from equity to profit or loss when the gain or loss on disposal is recognized.

On partial disposal of a subsidiary that includes a foreign operation that does not result in a loss of control, the proportionate share of the cumulative amount of the exchange differences recognized in other comprehensive income is re-attributed to the non-controlling interests in that foreign operation. On partial disposal of an associate or a joint venture that includes a foreign operation that does not result in a loss of significant influence or joint control, only the proportionate share of the

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cumulative amount of the exchange differences recognized in other comprehensive income is reclassified to profit or loss.

Any goodwill and any fair value adjustments to the carrying amounts of assets and liabilities arising from the acquisition of a foreign operation are treated as assets and liabilities of the foreign operation and expressed in its functional currency.

(5) Current and non-current distinction

An asset is classified as current when:

(a) The Company expects to realize the asset, or intends to sell or consume it, in its normal operating cycle
(b) The Company holds the asset primarily for the purpose of trading
(c) The Company expects to realize the asset within twelve months after the reporting period
(d) The asset is cash or cash equivalent unless the asset is restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.

All other assets are classified as non-current.

A liability is classified as current when:

(a) The Company expects to settle the liability in its normal operating cycle.
(b) The Company holds the liability primarily for the purpose of trading.
(c) The liability is due to be settled within twelve months after the reporting period.
(d) The Company does not have an unconditional right to defer settlement of the liability for at least twelve months after the reporting period. 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.

All other liabilities are classified as non-current.

(6) Cash and cash equivalents

(7) Financial instruments

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Financial assets and financial liabilities are recognized when the Company becomes a party to the contractual provisions of the instrument.

(1) Financial instruments: Recognition and Measurement

The Company accounts for regular way purchase or sales of financial assets on the trade date.

The Company classified financial assets as subsequently measured at amortized cost, fair value through other comprehensive income or fair value through profit or loss considering both factors below:

A. the Company‘s business model for managing the financial assets and
B. the contractual cash flow characteristics of the financial asset.

Financial assets measured at amortized cost

(c) the financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows and
(d) the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

Interest revenue is calculated by using the effective interest method. This is calculated by applying the effective interest rate to the gross carrying amount

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of a financial asset except for:

(c) purchased or originated credit-impaired financial assets. For those financial assets, the Company applies the credit-adjusted effective interest rate to the amortized cost of the financial asset from initial recognition.
(d) financial assets that are not purchased or originated credit-impaired financial assets but subsequently have become credit-impaired financial assets. For those financial assets, the Company applies the effective interest rate to the amortized cost of the financial asset in subsequent reporting periods.

Financial asset measured at fair value through other comprehensive income

A financial asset is measured at fair value through other comprehensive income if both of the following conditions are met:

(c) the financial asset is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets and
(d) the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

Recognition of gain or loss on a financial asset measured at fair value through other comprehensive income are described as below:

(d) A gain or loss on a financial asset measured at fair value through other comprehensive income recognized in other comprehensive income, except for impairment gains or losses and foreign exchange gains and losses, until the financial asset is derecognized or reclassified.
(e) When the financial asset is derecognized the cumulative gain or loss previously recognized in other comprehensive income is reclassified from equity to profit or loss as a reclassification adjustment.
(f) Interest revenue is calculated by using the effective interest method. This is calculated by applying the effective interest rate to the gross carrying amount of a financial asset except for:
(iii) Purchased or originated credit-impaired financial assets. For those financial assets, the Company applies the credit-adjusted effective interest rate to the amortized cost of the financial asset from initial recognition.
(iv) Financial assets that are not purchased or originated credit-impaired

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financial assets but subsequently have become credit-impaired financial assets. For those financial assets, the Company applies the effective interest rate to the amortized cost of the financial asset in subsequent reporting periods.

Besides, for certain equity investments within the scope of IFRS 9 that is neither held for trading nor contingent consideration recognized by an acquirer in a business combination to which IFRS 3 applies, the Company made an irrevocable election to present the changes of the fair value in other comprehensive income at initial recognition. Amounts presented in other comprehensive income shall not be subsequently transferred to profit or loss (when disposal of such equity instrument, its cumulated amount included in other components of equity is transferred directly to the retained earnings) and these investments should be presented as financial assets measured at fair value through other comprehensive income on the balance sheet. Dividends on such investment are recognized in profit or loss unless the dividends clearly represents a recovery of part of the cost of investment.

Financial asset measured at fair value through profit or loss

Financial assets were classified as measured at amortized cost or measured at fair value through other comprehensive income based on aforementioned criteria. All other financial assets were measured at fair value through profit or loss and presented on the balance sheet as financial assets measured at fair value through profit or loss.

(2) Impairment of financial assets

The Company recognizes a loss allowance for expected credit losses on debt instrument investments measured at fair value through other comprehensive income and financial asset measured at amortized cost.

The Company measures expected credit losses of a financial instrument in a way that reflects:

D. an unbiased and probability-weighted amount that is determined by evaluating a range of possible outcomes ；
E. the time value of money ； and
F. reasonable and supportable information that is available without undue cost or effort at the reporting date about past events, current conditions and forecasts of future economic conditions.

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The loss allowance is measures as follows:

D. At an amount equal to 12-month expected credit losses: the credit risk on a financial asset has not increased significantly since initial recognition or the financial asset is determined to have low credit risk at the reporting date. In addition, the Company measures the loss allowance at an amount equal to lifetime expected credit losses in the previous reporting period, but determines at the current reporting date that the credit risk on a financial asset has increased significantly since initial recognition is no longer met.
E. At an amount equal to the lifetime expected credit losses: the credit risk on a financial asset has increased significantly since initial recognition or financial asset that is purchased or originated credit-impaired financial asset.
F. For trade receivables or contract assets arising from transactions within the scope of IFRS 15, the Company measures the loss allowance at an amount equal to lifetime expected credit losses.

At each reporting date, the Company needs to assess whether the credit risk on a financial asset has increased significantly since initial recognition by comparing the risk of a default occurring at the reporting date and the risk of default occurring at initial recognition. Please refer to Note 12 for further details on credit risk.

(3) Derecognition of financial assets

A financial asset is derecognized when:

A. The rights to receive cash flows from the asset have expired
B. The Company has transferred the asset and substantially all the risks and rewards of the asset have been transferred
C. The Company has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.

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(4) Financial liabilities and equity

Classification between liabilities or equity

The Company classifies the instrument issued as a financial liability or an equity instrument in accordance with the substance of the contractual arrangement and the definitions of a financial liability, and an equity instrument.

Equity instruments

Financial liabilities

Financial liabilities within the scope of IFRS 9 Financial Instruments are classified as financial liabilities at fair value through profit or loss or financial liabilities measured at amortized cost upon initial recognition.

Financial liabilities at amortized cost

Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or transaction costs.

Derecognition of financial liabilities

A financial liability is derecognized when the obligation under the liability is discharged or cancelled or expires.

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non-cash assets transferred or liabilities assumed, is recognized in profit or loss.

(5) Offsetting of financial instruments

(8) Fair value measurement

(c) In the principal market for the asset or liability, or
(d) In the absence of a principal market, in the most advantageous market for the asset or liability.

The principal or the most advantageous market must be accessible to by the Company.

The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs.

(9) Inventories

Inventories are valued at lower of cost and net realizable value item by item.

Costs incurred in bringing each inventory to its present location and condition are accounted for as follows:

Materials ─ Weighted average of actual procurements

Finished goods and ─ Cost of direct materials and labor and a proportion of work in process manufacturing overheads based on normal operating capacity.

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Finished goods and work in process are accounted under the weighted average method.

Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale.

Rendering of services is accounted in accordance with IFRS 15 and not within the scope of inventories.

(10) Investments accounted for using the equity method

The subsidiary is incorporated in the standalone financial statements under the equity method. The standalone financial statements have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers (―the Regulations‖).According to the Regulations Article 21 ―The profit or loss during the period and other comprehensive income presented in parent company only financial reports shall be the same as the allocations of profit or loss during the period and of other comprehensive income attributable to owners of the parent presented in the financial reports prepared on a consolidated basis, and the owners' equity presented in the parent company only financial reports shall be the same as the equity attributable to owners of the parent presented in the financial reports prepared on a consolidated basis.‖

The Company‘s investment in its associate is accounted for using the equity method other than those that meet the criteria to be classified as held for sale. An associate is an entity over which the Company has significant influence.

Under the equity method, the investment in the associate or an investment in a joint venture is carried in the balance sheet at cost and adjusted thereafter for the post-acquisition change in the Company‘s share of net assets of the associate or joint venture. After the interest in the associate or joint venture is reduced to zero, additional losses are provided for, and a liability is recognized, only to the extent that the Company has incurred legal or constructive obligations or made payments on behalf of the associate or joint venture. Unrealized gains and losses resulting from transactions between the Company and the associate or joint venture are eliminated to the extent of the Company‘s related interest in the associate or joint venture.

When changes in the net assets of an associate or a joint venture occur and not those that are recognized in profit or loss or other comprehensive income and do not affects the Company‘s percentage of ownership interests in the associate or joint venture, the Company recognizes such changes in equity based on its percentage of ownership interests. The resulting capital surplus recognized will be reclassified to profit or loss at the time of disposing the associate or joint venture on a pro-rata basis.

When the associate or joint venture issues new stock, and the Company‘s interest in an associate or a joint venture is reduced or increased as the Company fails to acquire shares newly issued in the associate or joint venture proportionately to its original ownership interest, the increase or decrease in the interest in the associate or joint venture is recognized in Additional Paid in Capital and Investment

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accounted for using the equity method. When the interest in the associate or joint venture is reduced, the cumulative amounts previously recognized in other comprehensive income are reclassified to profit or loss or other appropriate items. The aforementioned capital surplus recognized is reclassified to profit or loss on a pro rata basis when the Company disposes the associate or joint venture.

The financial statements of the associate or joint venture are prepared for the same reporting period as the Company. Where necessary, adjustments are made to bring the accounting policies in line with those of the Company.

The Company determines at each reporting date whether there is any objective evidence that the investment in the associate or an investment in a joint venture is impaired in accordance with IAS 28 Investments in Associates and Joint Ventures (before 1 January 2018: IAS 39 Financial Instruments: Recognition and Measurement ). If this is the case the Company calculates the amount of impairment as the difference between the recoverable amount of the associate or joint venture and its carrying value and recognizes the amount in the ‗share of profit or loss of an associate‘ in the statement of comprehensive income in accordance with IAS 36 Impairment of Assets. In determining the value in use of the investment, the Company estimates:

(3) Its share of the present value of the estimated future cash flows expected to be generated by the associate or joint venture, including the cash flows from the operations of the associate and the proceeds on the ultimate disposal of the investment; or
(4) The present value of the estimated future cash flows expected to arise from dividends to be received from the investment and from its ultimate disposal.

Upon loss of significant influence over the associate or joint venture, the Company measures and recognizes any retaining investment at its fair value. Any difference between the carrying amount of the associate or joint venture upon loss of significant influence and the fair value of the retaining investment and proceeds from disposal is recognized in profit or loss. Furthermore, if an investment in an associate becomes an investment in a joint venture or an investment in a joint venture becomes an investment in an associate, the entity continues to apply the equity method and does not remeasure the retained interest.

(11) Property, plant and equipment

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Property, plant and equipment is stated at cost, net of accumulated depreciation and accumulated impairment losses, if any. Such cost includes the cost of dismantling and removing the item and restoring the site on which it is located and borrowing costs for construction in progress if the recognition criteria are met. 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 is depreciated separately. When significant parts of property, plant and equipment are required to be replaced in intervals, the Company recognized such parts as individual assets with specific useful lives and depreciation, respectively. The carrying amount of those parts that are replaced is derecognized in accordance with the derecognition provisions of IAS 16 Property, plant and equipment . When a major inspection is performed, its cost is recognized in the carrying amount of the plant and equipment as a replacement if the recognition criteria are satisfied. All other repair and maintenance costs are recognized in profit or loss as incurred.

Depreciation is calculated on a straight-line basis over the estimated economic lives of the following assets:

Items Buildings Machinery and equipment Transportation equipment Furniture, fixtures and equipment Leasehold improvements	Useful Lives
	6`～`56 years 3`～`41 years 4`～`16 years 3`～`17 years 2`～`25 years

(12) Investment property

The Company‘s owned investment properties are measured initially at cost, including transaction costs. The carrying amount includes the cost of replacing part of an existing investment property at the time that cost is incurred if the recognition criteria are met and excludes the costs of day-to-day servicing of an investment property. Subsequent to initial recognition, other than those that meet

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the criteria to be classified as held for sale (or are included in a disposal Company that is classified as held for sale) in accordance with IFRS 5 Non-current Assets Held for Sale and Discontinued Operations , investment properties are measured using the cost model in accordance with the requirements of IAS 16 Property, plant and equipment for that model. If investment properties are held by a lessee as right-of-use assets and is not held for sale in accordance with IFRS 5, investment properties are measured in accordance with the requirements of IFRS 16.

Depreciation is calculated on a straight-line basis over the estimated economic lives of the following assets:

Items	Useful Lives
Buildings	30`～`50 years

The Company transfers properties to or from investment properties according to the actual use of the properties.

The Company transfers to or from investment properties when there is a change in use for these assets. Properties are transferred to or from investment properties when the properties meet, or cease to meet, the definition of investment property and there is evidence of the change in use.

(13) Leases

The Company assesses whether the contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset for a period of time, the Company assesses whether, throughout the period of use, has both of the following:

(c)the right to obtain substantially all of the economic benefits from use of the identified asset; and
(d)the right to direct the use of the identified asset.

For a contract that is, or contains, a lease, the Company accounts for each lease component within the contract as a lease separately from non-lease components of the contract. For a contract that contains a lease component and one or more additional lease or non-lease components, the Company allocates the consideration

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in the contract to each lease component on the basis of the relative stand-alone price of the lease component and the aggregate stand-alone price of the non-lease components. The relative stand-alone price of lease and non-lease components shall be determined on the basis of the price the lessor, or a similar supplier, would charge the Company for that component, or a similar component, separately. If an observable stand-alone price is not readily available, the Company estimates the stand-alone price, maximising the use of observable information.

Company as a lessee

Except for leases that meet and elect short-term leases or leases of low-value assets, the Company recognizes right-of-use asset and lease liability for all leases which the Company is the lessee of those lease contracts.

At the commencement date, the Company measures the lease liability at the present value of the lease payments that are not paid at that date. The lease payments are discounted using the interest rate implicit in the lease, if that rate can be readily determined. If that rate cannot be readily determined, the Company uses its incremental borrowing rate. At the commencement date, the lease payments included in the measurement of the lease liability comprise the following payments for the right to use the underlying asset during the lease term that are not paid at the commencement date:

(f) fixed payments (including in-substance fixed payments), less any lease incentives receivable;
(g)variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the commencement date;
(h)amounts expected to be payable by the lessee under residual value guarantees;
(i) the exercise price of a purchase option if the Company is reasonably certain to exercise that option; and
(j) payments of penalties for terminating the lease, if the lease term reflects the lessee exercising an option to terminate the lease.

After the commencement date, the Company measures the lease liability on an amortised cost basis, which increases the carrying amount to reflect interest on the lease liability by using an effective interest method; and reduces the carrying amount to reflect the lease payments made.

At the commencement date, the Company measures the right-of-use asset at cost. The cost of the right-of-use asset comprises:

(e)the amount of the initial measurement of the lease liability;
(f) any lease payments made at or before the commencement date, less any lease incentives received;

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(g)any initial direct costs incurred by the lessee; and
(h)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.

For subsequent measurement of the right-of-use asset, the Company measures the right-of-use asset at cost less any accumulated depreciation and any accumulated impairment losses. That is, the Company measures the right-of-use applying a cost model.

If the lease transfers ownership of the underlying asset to the Company by the end of the lease term or if the cost of the right-of-use asset reflects that the Company will exercise a purchase option, the Company depreciates the right-of-use asset from the commencement date to the end of the useful life of the underlying asset. Otherwise, the Company depreciates the right-of-use asset from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term.

The Company applies IAS 36 ―Impairment of Assets‖ to determine whether the right-of-use asset is impaired and to account for any impairment loss identified.

Except for those leases that the Company accounted for as short-term leases or leases of low-value assets, the Company presents right-of-use assets and lease liabilities in the balance sheet and separately presents lease-related interest expense and depreciation charge in the statements comprehensive income.

For short-term leases or leases of low-value assets, the Company elects to recognize the lease payments associated with those leases as an expense on either a straight-line basis over the lease term or another systematic basis.

For the rent concession arising as a direct consequence of the Covid-19 pandemic, the Company elected not to assess whether it is a lease modification but accounted it as a variable lease payment. The Company have applied the practical expedient to all rent concessions that meet the conditions for it.

Company as a lessor

At inception of a contract, the Company classifies each of its leases as either an operating lease or a finance lease. A lease is classified as a finance lease if it transfers substantially all the risks and rewards incidental to ownership of an underlying asset. A lease is classified as an operating lease if it does not transfer substantially all the risks and rewards incidental to ownership of an underlying asset. At the commencement date, the Company recognizes assets held under a

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finance lease in its balance sheet and present them as a receivable at an amount equal to the net investment in the lease.

For a contract that contains lease components and non-lease components, the Company allocates the consideration in the contract applying IFRS 15.

The Company recognizes lease payments from operating leases as rental income on either a straight-line basis or another systematic basis. Variable lease payments for operating leases that do not depend on an index or a rate are recognized as rental income when incurred.

(14) Impairment of non-financial assets

The Company assesses at the end of each reporting period whether there is any indication that an asset in the scope of IAS 36 Impairment of Assets may be impaired. If any such indication exists, or when annual impairment testing for an asset is required, the Company estimates the asset‘s recoverable amount. An asset‘s recoverable amount is the higher of an asset‘s or cash-generating unit‘s (―CGU‖) fair value less costs to sell and its value in use and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or Companys of assets. Where the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount.

For assets excluding goodwill, an assessment is made at each reporting date as to whether there is any indication that previously recognized impairment losses may no longer exist or may have decreased. If such indication exists, the Company estimates the asset‘s or cash-generating unit‘s recoverable amount. A previously recognized impairment loss is reversed only if there has been an increase in the estimated service potential of an asset which in turn increases the recoverable amount. However, the reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognized for the asset in prior years.

A cash generating unit, or Companys of cash-generating units, to which goodwill has been allocated is tested for impairment annually at the same time, irrespective of whether there is any indication of impairment. If an impairment loss is to be recognized, it is first allocated to reduce the carrying amount of any goodwill allocated to the cash generating unit (Company of units), then to the other assets of the unit (Company of units) pro rata on the basis of the carrying amount of each

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asset in the unit (Company of units). Impairment losses relating to goodwill cannot be reversed in future periods for any reason.

An impairment loss of continuing operations or a reversal of such impairment loss is recognized in profit or loss.

(15) Revenue recognition

The Company‘s revenue arising from contracts with customers are primarily related to sale of goods and rendering of services. The accounting policies are explained as follows:

Sale of goods

The Company manufactures and sells goods. Sales are recognized when control of the goods is transferred to the customer and the goods are delivered to the customers. The main product of the Company is iron and steel, and revenue is recognized based on the consideration stated in the contract. For certain sales of goods transactions, they are usually accompanied by volume discounts (based on the accumulated total sales amount for a specified period). Therefore, revenue from these sales is recognized based on the price specified in the contract, net of the estimated volume discounts. The Company estimates the discounts using the expected value method based on historical experiences. Revenue is only recognized to the extent that it is highly probable that a significant reversal in the amount of cumulative revenue recognized will not occur and when the uncertainty associated with the variable consideration is subsequently resolved. During the period specified in the contract, refund liability is recognized for the expected volume discounts.

The credit period of the Company‘s sale of goods is within 10 to 75 days. For most of the contracts, when the Company transfers the goods to customers and has a right to an amount of consideration that is unconditional, these contracts are recognized as trade receivables. The Company usually collects the payments shortly after transfer of goods to customers; therefore, there is no significant financing component to the contract. For some of the contracts, the Company has transferred the goods to customers but does not has a right to an amount of consideration that is unconditional, these contacts should be presented as contract assets. Besides, in accordance with IFRS 9, the Company measures the loss allowance for a contract asset at an amount equal to the lifetime expected credit losses.

Rendering of services

The Company provides maintenance services for the sale of iron and steel. Such services are separately priced or negotiated, and provided based on contract periods. As the Company provides the maintenance services over the contract period, the customers simultaneously receive and consume the benefits provided by the Company. Accordingly, the performance obligations are satisfied over time, and the related revenue is recognized by straight -line method over the contract period.

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Most of the contractual considerations of the Company are collected evenly throughout the contract periods. When the Company has performed the services to customers but does not have a right to an amount of consideration that is unconditional, these contacts should be presented as contract assets. However, for some rendering of services contracts, part of the consideration was received from customers upon signing the contract, and the Company has the obligation to provide the services subsequently; accordingly, these amounts are recognized as contract liabilities.

The period between the transfers of contract liabilities to revenue is usually within one year, thus, no significant financial component aroise.

(16) Borrowing cost

(17) Post-employment benefits

Post-employment benefit plan that is classified as a defined benefit plan uses the Projected Unit Credit Method to measure its obligations and costs based on actuarial assumptions. Re-measurements, comprising of the effect of the actuarial gains and losses, the effect of the asset ceiling (excluding net interest) and the return on plan assets, excluding net interest, are recognized as other comprehensive income with a corresponding debit or credit to retained earnings in the period in which they occur. Past service costs are recognized in profit or loss on the earlier of:

(a) the date of the plan amendment or curtailment, and

(b) the date that the Company recognizes restructuring-related costs

Net interest is calculated by applying the discount rate to the net defined benefit liability or asset, both as determined at the start of the annual reporting period,

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taking account of any changes in the net defined benefit liability (asset) during the period as a result of contribution and benefit payment.

(18) Income taxes

Income tax expense (income) is the aggregate amount included in the determination of profit or loss for the period in respect of current tax and deferred tax.

Current income tax

The income tax for undistributed earnings is recognized as income tax expense in the subsequent year when the distribution proposal is approved by the Shareholders‘ meeting.

Deferred tax

Deferred tax is provided on temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.

Deferred tax liabilities are recognized for all taxable temporary differences, except:

i. Where the deferred tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss
ii. In respect of taxable temporary differences associated with investments in subsidiaries, associates and interests in joint arrangements, where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.
Deferred tax assets are recognized for all deductible temporary differences, carry forward of unused tax credits and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilized, except:
i. Where the deferred tax asset relating to the deductible temporary difference

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arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss

ii. In respect of deductible temporary differences associated with investments in subsidiaries, associates and interests in joint arrangements, deferred tax assets are recognized only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilized.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realized or the liability is settled, based on tax rates and tax laws that have been enacted or substantively enacted at the reporting date. The measurement of deferred tax assets and deferred tax liabilities reflects the tax consequences that would follow from the manner in which the Company expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.

5. Significant accounting judgements, estimates and assumptions

The preparation of the Company‘s standalone financial statements require management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the disclosure of contingent liabilities, at the end of the reporting period. However, uncertainty about these assumption and estimate could result in outcomes that require a material adjustment to the carrying amount of the asset or liability affected in future periods.

(1) Judgement

In the process of applying the Company‘s accounting policies, management has made the following judgements, which have the most significant effect on the amounts recognized in the standalone financial statements:

(c) Investment Properties

Certain properties of the Company comprise a portion that is held to earn rentals or for capital appreciation and another portion that is owner-occupied. If

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these portions could be sold separately, the Company accounts for the portions separately as investment properties and property, plant and equipment. If the portions could not be sold separately, the property is classified as investment property in its entirety only if the portion that is owner-occupied is insignificant.

`－` (d) Operating lease commitment Company as the lessor

The Company has entered into commercial property leases on its investment property portfolio. The Company has determined, based on an evaluation of the terms and conditions of the arrangements, that it retains all the significant risks and rewards of ownership of these properties and accounts for the contracts as operating leases.

(2) Estimates and assumptions

(f) Pension benefits

(g) Revenue recognition – sales returns and allowance

The Company estimates sales returns and allowance based on historical experience and other known factors at the time of sale, which reduces the operating revenue. In assessing the aforementioned sales returns and allowance, revenue is recognized to the extent it is highly probable that a significant reversal in the amount of cumulative revenue recognized will not occur. Please refer to Note 6 for more details.

(h) Income tax

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The Company establishes provisions, based on reasonable estimates, for possible consequences of audits by the tax authorities of the respective counties in which it operates. The amount of such provisions is based on various factors, such as experience of previous tax audits and differing interpretations of tax regulations by the taxable entity and the responsible tax authority. Such differences of interpretation may arise on a wide variety of issues depending on the conditions prevailing in the respective Company company's domicile.

(i) Accounts receivables–estimation of impairment loss

The Company estimates the impairment loss of accounts receivables at an amount equal to lifetime expected credit losses. The credit loss is the present value of the difference between the contractual cash flows that are due under the contract (carrying amount) and the cash flows that expects to receive (evaluate forward looking information). However, as the impact from the discounting of short-term receivables is not material, the credit loss is measured by the undiscounted cash flows. Where the actual future cash flows are lower than expected, a material impairment loss may arise. Please refer to Note 6 for more details.

(j) Inventories

6. Contents of significant accounts

(9) Cash and cash equivalents

Cash and cash equivalents
Cash on hand Demand deposits Cash equivalents	As of 31 December
	2020 $948 1,074,729 1,099,592	2019 $963 1,166,029 399,960

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$2,175,269

$1,566,952

Total

(10) Financial assets at fair value through other comprehensive income

Equity instrument investments measured at fair value through other comprehensive income – Current: Listed companies stocks Equity instrument investments measured at fair value through other comprehensive income – Non-current: Listed companies stocks Unlisted companies stocks Total	As of 31 December	As of 31 December
	2020 $1,700,311 $245,294 311,557 $556,851	2019
		$ - $302,826 264,161
		$566,987

Financial assets at fair value through other comprehensive income were not pledged.

The Company disposed of equity instrument measured at fair value through other comprehensive income for the year ended 2020. Upon derecognition, the fair value of the investments was NT$1,303,417 thousand, and the cumulative disposal gain in the amount of NT$146,444 thousand was transferred from other equity to retained earnings.

The return of paid-in capital for capital reduction from Ascentek Venture Capital Corporation amounted to NT$13,407 thousand and NT$3,528 thousand as of 23 November 2020 and 1 August 2019.

(11) Accounts receivables

) Accounts receivables
Accounts receivables Less: loss allowance Total	As of 31 December
	2020 $1,481,085 (2,118)	2019
		$1,534,389 (2,118)
	$1,478,967	$1,532,271

Accounts receivables were not pledged.

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allowance of accounts receivables for the year periods ended 31 December 2020 and 2019. Please refer to Note 12 for more details on credit risk management.

(12) Inventories

) Inventories
Raw materials Supplies & parts Work in progress Finished goods Total	As of 31 December
	2020 $1,405,703 267,145 796,631 831,989 $3,301,468	2019
		$1,230,794 744,366 1,236,781 1,095,240
		$4,307,181

The cost of inventories recognized in expenses amounted to NT$23,448,762 thousand and NT$24,870,034 thousand, respectively, for the years ended 31 December 2020 and 2019.

No inventories were pledged.

(13) Prepayments

) Prepayments
Factory supplies Prepayments of purchases Other prepayments Total	As of 31 December 2020 2019 $578,186 $598,305 86,989 69,359 3,564 3,560 $668,739 $671,224
	2020 $578,186 86,989 3,564 $668,739
		$671,224

Prepayments were not pledged.

(14) Investments accounted for using the equity method

The following table lists the investments accounted for using the equity method of the Company:

As of 31 December 2020 2019 Carrying amount Percentage of ownership(%) Carrying amount Percentage of ownership(%) $516,457 100.00 $516,552 100.00	As of 31 December 2020 2019 Carrying amount Percentage of ownership(%) Carrying amount Percentage of ownership(%) $516,457 100.00 $516,552 100.00	As of 31 December 2020 2019 Carrying amount Percentage of ownership(%) Carrying amount Percentage of ownership(%) $516,457 100.00 $516,552 100.00
2020 Carrying amount Percentage of ownership(%) $516,457 100.00
Carrying amount $516,457	Carrying amount $516,552	Percentage of ownership(%)
		100.00

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Taiwan Steel Union Co., Ltd. Unlisted companies: Fong Yu Resources Co., Ltd. Wen-Shan Enterprise Co., Ltd. Total	744,203 20.92 510,929 29.71 171,822 18.00 $1,943,411	696,101 20.24 514,794 29.71 156,417 18.00 $1,883,864

A. The share of profit or loss of associates and joint ventures for the years ended 31 December 2020 and 2019:

December 2020 and 2019:
Investment in subsidiaries: GREAT FORTUNE HOLDING LIMITED Investment in associates: Taiwan Steel Union Co., Ltd. Fong Yu Resources Co., Ltd Feng Ying Development Enterprise Co., Ltd. Wen-Shan Enterprise Co., Ltd. Total	For theyears ended 31 December
	2019 $(95) 83,504 (3,865) - 15,405 $94,949	2018
		$(40) 79,764 (746) 149,054 (18,852)
		$209,180

B. Investment in subsidiaries:

Investment in subsidiaries is represent as ―Investments accounted for under the equity method‖ in standalone statements and.

C. Investment in associates:

For the years ended 31 December 2020, the Company increased its investment in Taiwan Steel Union Co., Ltd. in the amount of NT$52,122 thousand, which increased its shareholding ratio from 20.24% to 20.92%. Thus, the Company recognized a decrease in capital surplus in the amount of NT$28,867 thousand.

For the years ended 31 December 2019, the Company increased its investment in Taiwan Steel Union Co., Ltd. in the amount of NT$43,579 thousand, which increased its shareholding ratio from 19.81% to 20.24%. Thus, the Company recognized a decrease in capital surplus in the amount of NT$28,347 thousand.

In the third quarter of 2019, the Company participated in issuance of common stock for cash of Fong Yu Resources Co., Ltd., increasing its investment in Fong Yu Resources Co., Ltd in the amount of NT$144,550 thousand. Thus, the Company

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recognized a decrease in capital surplus in the amount of NT$38 thousand.

Although the holding of Wen-Shan Enterprise Co., Ltd. is less than 20%, the Company presumed to have significant influence on these invested companies. Hence, it evaluates the investment by using the equity method.

The Company‘s investments in Taiwan Steel Union Co., Ltd., Fong Yu Resources Co., Ltd. and Wen-Shan Enterprise Co., Ltd are not individually material. The summarized financial information based on the Company‘s investment in associates is as follows:

Profit from continuing operations Other comprehensive income (post-tax) Total comprehensive income	For theyears ended 31 December	For theyears ended 31 December
	2020 $95,044 127 $95,171	2019
		$209,220 139
		$209,359

The above mentioned associates had no contingent liabilities or capital commitments as of 31 December 2020 and 2019. No investment in the associates was pledged.

(15) Property, plant and equipment

Cost: As of 1 January 2020 Additions	Land	Buildings	Machinery and equipment	Office equipment	Transportation equipment	Leasehold improvements	Construction in progress and equipment pending inspection	Total
	$1,193,967 91,842	$3,439,406 1,063	$16,667,078 321,949	$46,438 2,518	$394,566 18,069	$330,148 -	$125,475 291,222	$22,197,078 726,663

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Land	Buildings	Machinery and equipment	Office equipment	Transportation equipment	Leasehold improvements	Construction in progress and equipment pending inspection	Total
- -	- 34,660	(288,904) 167,723	- -	(2,850) -	- -	- (162,429)	(291,754) 39,954
$1,285,809	$3,475,129	$16,867,846	$48,956	$409,785	$330,148	$254,268	$22,671,941
	$1,279,505 103,724 - -	$10,716,926 1,032,167 (287,878) -	$15,159 2,641 - -	$286,391 23,791 (2,850) -	$52,975 13,358 - -	$ - - - -	$12,350,956 1,175,681 (290,728) -
$ -	$1,383,229	$11,461,215	$17,800	$307,332	$66,333	$ -	$13,235,909

Land	Buildings	Machinery and equipment	Office equipment	Transportation equipment	Leasehold improvements	Construction in progress and equipment pending inspection	Total
$1,196,407 - (2,440) -	$2,983,623 15,517 (68,689) 508,955	$16,550,018 302,608 (527,673) 342,125	$26,902 1,814 (8,587) 26,309	$376,908 25,466 (7,808) -	$261,931 - (10,814) 79,031	$417,671 529,339 - (821,535)	$21,813,460 874,744 (626,011) 134,885
$1,193,967	$3,439,406	$16,667,078	$46,438	$394,566	$330,148	$125,475	$22,197,078
	$1,255,985 92,002 (68,482) -	$10,271,273 973,193 (527,540) -	$22,373 1,373 (8,587) -	$268,659 24,460 (6,728) -	$41,870 12,932 (10,814) 8,987	$ - - - -	$11,860,160 1,103,960 (622,151) 8,987
$ -	$1,279,505	$10,716,926	$15,159	$286,391	$52,975	$ -	$12,350,956
$1,285,209	$2,091,900	$5,406,631	$31,156	$102,453	$263,815	$254,268	$9,436,032
$1,193,967	$2,159,901	$5,950,152	$31,279	$108,175	$277,173	$125,475	$9,846,122

There is no capitalization of interest due to purchase of property, plant and equipment.

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As of 31 December 2020 and 2019 deeds of certain agriculture land amounted to NT$147,267 thousand and NT$55,425 thousand,respectively. The ownership of the land was not transferred to the Company. The Company had entered into a trust deed with the entrusted registrant for such agriculture land.

Property, plant and equipment were not pledged.

(16) Investment property

The Company has entered into commercial property leases on its owned investment properties with terms of between 1and 10 years. These leases include a clause to enable upward revision of the rental charge on an annual basis according to prevailing market conditions.

Cost: As of 1 January 2020 Additions Disposals As of 31 December 2020 Depreciation`：` As of 1 January 2020 Depreciation Disposals As of 31 December 2020 Cost: As of 1 January 2019 Additions As of 31 December 2019 Depreciation`：` As of 1 January 2019 Depreciation As of 31 December 2019 Net carrying amount`：` As of 31 December 2020	Land $376,867 129,610 - $506,477 $ - - - $ - $376,867 - $376,867 $ - - $ - $506,477	Buildings $6,086 192,233 (6,086) $192,233 $2,536 1,039 (3,246) $329 $6,086 - $6,086 $1,318 1,218 $2,536 $191,904	Total
			$382,953 321,843 (6,086)
			$698,710
			$2,536 1,039 (3,246)
			$329
			$382,953 -
			$382,953
			$1,318 1,218
			$2,536
			$698,381

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	Land	Buildings	Total
As of 31 December 2019	$376,867	$3,550	$380,417
		For theyears ended 31 December
		2020	2019
Rental income from investment property		$2,296	$2,657
Less:
Direct operating expenses from investment		-	-
property generating rental income
Direct operating expenses from investment		-	-
property not generating rental income
Total		$2,296	$2,657

No investment property was pledged.

Investment properties held by the Company are not measured at fair value but for which the fair value is disclosed. The fair value measurements of the investment properties are categorized at Level 3. The fair value of certain investment properties was NT$627,522 thousand as at February 2017. The fair value has been determined based on valuations performed by an independent appraiser. The valuation method used is comparison approach and land development analysis approach, and the discount rate used is 5.58%.

The Company consulted the real estate transaction inquiry service website of the Ministry of the Interior on 31 December 2020 and 2019 to check recent transaction prices in similar locations and found that the fair value of said investment real estate was equivalent to the fair value evaluated by the independent external appraisal expert engaged in February 2017.

The fair value of the investment properties newly added by the Company in August 2020 was valued at NT$441,347 thousand by the independent external appraisal expert engaged by the Company, and the evaluation methods adopted were the comparative method and the income method. The main income capitalization rate was assumed at 2.31%. The Company assessed that the fair value of these investment properties as of 31 December 2020 did not have significant fluctuations.

(9) Other non-current assets

Other non-current assets
Advance payments in equipment Refundable deposits Other non-current assets - other Total	As of 31 December
	2020 $316,530 7,081 19,531 $343,142	2019
		$74,343 5,112. 22,186
		$101,641

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(10) Short-term borrowings

hort-term borrowings
Unsecured bank loans	Interest Rates(%) 0.52%-1.25%	As of 31 December
		2020 $329,941	2019
			$381,151

The Company‘s unused short-term lines of credits amounted to NT$6,084,526 thousand and NT$9,045,230 thousand as of 31 December 2020 and 2019, respectively.

(11) Other payables

) Other payables
Accrued Salary and bonus Accrued Utilities Pollution control payable Accrued Discount Others Total	As of 31 December
	2020 $344,290 194,542 176,499 162,391 148,402 $1,026,124	2019
		$280,280 177,502 214,010 174,272 152,679
		$998,743

(12) Post-employment benefits

Defined contribution plan

The Company adopt a defined contribution plan in accordance with the Labor Pension Act of the R.O.C. Under the Labor Pension Act, the Company will make monthly contributions of no less than 6% of the employees‘ monthly wages to the employees‘ individual pension accounts. The Company has made monthly contributions of 6% of each individual employee‘s salaries or wages to employees‘ pension accounts.

Pension expenses under the defined contribution plan for the years ended 31 December 2020 and 2019 were NT$20,796 thousand and NT$19,691 thousand, respectively.

Defined benefits plan

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name of the administered pension fund committee. Before the end of each year, the Company and its domestic subsidiaries assess the balance in the designated labor pension fund. If the amount is inadequate to pay pensions calculated for workers retiring in the same year, the Company and its domestic subsidiaries will make up the difference in one appropriation before the end of March the following year.

The Ministry of Labor is in charge of establishing and implementing the fund utilization plan in accordance with the Regulations for Revenues, Expenditures, Safeguard and Utilization of the Labor Retirement Fund. The pension fund is managed by the in-house managers or under discretionary accounts, based on a passive-aggressive investment strategy for long-term profitability. The Ministry of Labor establishes checks and risk management mechanism based on the assessment of risk factors including market risk, credit risk and liquidity risk, in order to maintain adequate manager flexibility to achieve targeted return without over-exposure of risk. With regard to utilization of the pension fund, the minimum earnings in the annual distributions on the final financial statement shall not be less than the earnings attainable from the amounts accrued from two-year time deposits with the interest rates offered by local banks. Treasury Funds can be used to cover the deficits after the approval of the competent authority. As the Company does not participate in the operation and management of the pension fund, no disclosure on the fair value of the plan assets categorized in different classes could be made in accordance with paragraph 142 of IAS 19. The Company expects to contribute NT$13,065 thousand to its defined benefit plan during the 12 months beginning after 31 December 2020.

The weighted average duration of the defined benefits obligation was 8 years of 31 December 2020.

Pension costs recognized in profit or loss are as follows:

Current period service costs Past service cost Gains and losses arising from settlements Net interest on the net defined benefit liabilities(assets) Total	For the years ended 31 December	For the years ended 31 December
	2020	2019
	$8,895 163 348 1,336	$10,656 - - 1,868
	$10,742	$12,524

Reconciliations of the defined benefit obligation and fair value of plan assets are as follows:

As of
31 December 2020 31 December 2019	1 January 2019

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Defined benefit obligation Plan assets at fair value Net defined benefit obligation Less: current portion Net defined benefit obligation-noncurrent	$708,911 (544,366)	$696,770 (516,396)	$709,018 (512,509)
	164,545 (8,857)	180,374 (20,886)	196,509 (14,798)
	$155,688	$159,488	$181,711

Reconciliation of liabilities (assets) of the defined benefit plan are as follows:

Defined benefit obligation	Fair value of plan assets	Benefit liability (asset)
$709,018 10,656 6,956	$(512,509) - (5,088)	$196,509 10,656 1,868
17,612	(5,088)	12,524
1 15,391 997 -	- - - (18,826)	1 15,391 997 (18,826)
16,389	(18,826)	(2,437)
(46,249) -	40,249 (20,222)	(6,000) (20,222)
696,770 8,895 5,136 511	(516,396) - (3,800) -	180,374 8,895 1,336 511
14,542	(3,800)	10,742
129 26,862 (1,581) -	- - - (17,626)	129 26,862 (1,581) (17,626)

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Defined benefit obligation	Fair value of plan assets	Benefit liability (asset)
25,410	(17,626)	7,784
(12,961) - (14,850)	8,289 (26,143) 11,310	(4,672) (26,143) (3,540)
$708,911	$(544,366)	$164,545

The principal assumptions used in determining the Company‘s defined benefit plan are shown below:

Discount rate Expected rate of salary increases	As of 31 December	As of 31 December
	2020	2019
	0.30% 0.50%	0.75% 0.50%

Sensitivity analysis for significant assumption are shown below:

For theyears ended 31 December	For theyears ended 31 December	For theyears ended 31 December	For theyears ended 31 December
2020		2019
Defined benefit obligation increase	Defined benefit obligation decrease	Defined benefit obligation increase	Defined benefit obligation decrease
$ - 15,300 15,230 -	$14,823 - - 14,830	$ - 15,906 15,906 -	$15,391 - - 15,466

There was no change in the methods and assumptions used in preparing the sensitivity analysis compared to the previous period.

(13) Equities
(f) Common stock

The Company‘s authorized capital was both NT$7,000,000 thousand as at 31

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December 2020 and 2019, each at a par value of NT$10. The Company has issued 581,599,424 common shares both as at 31 December 2020 and 2019. The paid-up capital was NT$5,815,994 thousand. Each share has one voting right and a right to receive dividends.

(g) Capital surplus

Capital surplus
Additional paid-in capital Treasury share transactions Share of changes in net assets of associates and joint ventures accounted for using the equity method Gain on sale of assets Donated assets Other Total	As of 31 December
	2020 $271,134 175,263 108,392 665 218 4,425 $560,097	2019
		$271,134 175,263 137,259 665 218 3,584
		$588,123

(h) Legal reserve

(i) Special reserve

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reversal of other net deductions from shareholders‘ equity, the amount reversed may be distributed.

(j) Retained earnings and dividend policies

According to the Company‘s Articles of Incorporation, current year‘s earnings, if any, shall be distributed in the following order:

a. Payment of all taxes and dues
b. Offset prior years‘ operation losses
c. Set aside 10% of the remaining amount after deducting items (a) and (b) as legal reserve
d. Set aside or reverse special reserve in accordance with law and regulations
e. The distribution of the remaining portion, if any, will be recommended by the Board of Directors and resolved in the shareholders‘ meeting

Appropriation of earnings	Appropriation of earnings	Dividendper share(NT$)	Dividendper share(NT$)
2020	2019	2020	2019
$275,977 (194,250) 2,035,598	$196,444 (38,262) 1,744,798	$3.5	$3
$2,117,325	$1,902,980

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Please refer to Note 6(17) for further details on employees‘ compensation and remuneration to directors and supervisors.

(14) Operating revenue

Operating revenue
Revenue from contracts with customers Sale revenue Revenue arising from rendering of services Total	For theyears ended 31 December
	2020	2019
	$27,186,421 111,630	$27,622,481 113,130
	$27,298,051	$27,735,611

Analysis of revenue from contracts with customers during the year periods ended 31 December 2020 and 2019 are as follows:

(2) Disaggregation of revenue

C. The Company is a single operating department and should report the income information disclosed by the department. Please refer to the preceding paragraph for details.
D. The income types of contracts with customers from 1 January to 31 December 2020 and 2019 are all recognized at a certain point in time.

(5) Contract balances

C. Contract assets - current

Contract assets - current
Sales of goods	31 Dec. 2020	31 Dec. 2019	1 Jan. 2019
	$397,242	$239,141	$250,924

The significant changes in the Company‘s balances of contract assets during the twelve-month periods ended 31 December 2020 and 2019 are as follows ：

The beginning balance transferred to accounts receivable Increase in receivable (excluding the account incurred and transferred to accounts receivable)	12 month period ended 31 December	12 month period ended 31 December
	2020	2019
	$(239,141) 397,242	$(250,924) 239,141

D. Contract liabilities - current

31 Dec. 2020 31 Dec. 2019 1 Jan. 2019

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$134,198 $131,372 $170,900

Sales of goods

The changes in the Company‘s balances of contract liabilities during the twelve-month periods ended 31 December 2020 and 2019 were mainly affected by the orders for steel products, the delivery schedule required by the clients and progress schedule.

(6) Transaction price allocated to unsatisfied performance obligations

As of 31 December 2020 and 2019, the Company expected that all of the transaction price allocated to unsatisfied performance obligations will be recognized as revenue within one year, therefore, it is not required to provide information about the unsatisfied performance obligations.

(7) Assets recognized from costs to fulfil a contract

None.

(15) Expected credit losses

The Company expected credit losses for the year ended 31 December 2020 and 2019: None.

Please refer to Note 12 for more details on credit risk.

The Company measures the loss allowance of its contract assets and trade receivables (including note receivables and trade receivables) at an amount equal to lifetime expected credit losses. The assessment of the Company‘s loss allowance as of 31 December 2020 and 2019 are as follows:

(3)the loss allowance of contract assets is measured at an amount equal to lifetime expected credit losses, details are as follow:

expected credit losses, details are as follow:
Total carrying amount Expected credit loss rates Loss allowance Total	As of 31 December
	2020	2019 $239,141 0% -
	$397,242 0% -
	$397,242	$239,141

(4)the Company considers the Companying of trade receivables by counterparties‘ credit rating, by geographical region and by industry sector and its loss

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allowance is measured by using a provision matrix, details are as follows:

31 December 2020

Not yet due (Note)			Overdue			Total
	<=30 days	31-60 days	61-90 days	91-120 days	>=121 days
$1,488,248 0-1%	$5,030 -%	$ - -%	$ - -%	$ - -%	$ - -%	$1,493,278 3,305
3,305	-	-	-	-	-
$1,484,943	$5,030	$-	$-	$-	$-	$1,489,973

31 December 2019

Not yet due (Note)			Overdue			Total
	<=30 days	31-60 days	61-90 days	91-120 days	>=121 days
$1,535,913 0-1%	$24,950 -%	$ - -%	$ - -%	$ - -%	$ - -%	$1,560,863 3,305
3,305	-	-	-	-	-
$1,532,608	$24,950	$-	$-	$-	$-	$1,557,558

Note: The Company‘s trade receivables are not overdue, and the credit loss of its duration period is all recorded in the previous year.

The movement in the provision for impairment of contract assets, note receivables and trade receivables for the year ended 31 December 2020 and 2019 are as follows:

As of 1 January 2020 Addition/(reversal) for the current period Write off As of 31 December 2020	Contract assets Note receivables Trade receivables
	$ - $1,187 $2,118 - - - - - -
	$ - $1,187 $2,118

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As of 1 January 2019 Addition/(reversal) for the current period Write off As of 31 December 2019	$ - $1,187 $2,118 - - - - - -
	$ - $1,187 $2,118

(16) Leases

(3) Company as a lessee

The Company leases various properties, including real estate such as land, machinery and equipment. The lease terms range from 1 to 50 years.

The Company‘s leases effect on the financial position, financial performance and cash flows are as follow:

F. Amounts recognized in the balance sheet

a. Right-of-use assets

The carrying amount of right-of-use assets

Land Machinery and equipment Total	As of 31 December	As of 31 December
	2020	2019 $207,654 4,530 $212,184
	$176,281 2,655
	$178,936

During the year period ended 31 December 2020 and 2019, the Company did not add new right-of-use assets.

b. Lease liabilities

Lease liabilities Current Non-current Total	As of 31 December	As of 31 December
	2020	2019
	$5,109 174,803	$6,238 204,165
	$179,912	$210,403

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G. Amounts recognized in the statement of profit or loss

Depreciation charge for right-of-use assets

Land Machinery and equipment Total Income and costs relating to leasing activities The expenses relating to short-term leases	For the years ended 31 December 2020 2019 $5,779 $7,311 1,875 1,875 $7,654 $9,186 For the years ended 31 December 2020 2019 $4,154 $4,750	For the years ended 31 December 2020 2019 $5,779 $7,311 1,875 1,875 $7,654 $9,186 For the years ended 31 December 2020 2019 $4,154 $4,750
		2019 $4,750

H. Income and costs relating to leasing activities

For the rent concession arising as a direct consequence of the Covid-19 pandemic from 1 January to 31 December 2020, the rent concession in the amount of NT$544 thousand was recognized as a rental expense deduction. The Company have applied the practical expedient to reflect the changes in rental payments.

I. Cash outflow relating to leasing activities

During the year period ended 31 December 2020 and 2019, the Company‘s total cash outflows for leases amounting to NT$12,181 and NT$14,776 thousand.

J. Other information relating to leasing activities

(i) Variable lease payments

Some of the Company‘s property rental agreement contain variable payment terms that are linked to certain percentages of sales generated from the leased stores, which is very common in the industry of the Company. As such variable lease payments do not meet the definition of lease payments, those payments are not included in the measurement of the assets and liabilities.

(ii) Extension and termination options

Some of the Company‘s property rental agreement contain

264

extension and termination options. In determining the lease terms, the non-cancellable period for which the Company has the right to use an underlying asset, together with both periods covered by an option to extend the lease if the Company is reasonably certain to exercise that option and periods covered by an option to terminate the lease if the Company is reasonably certain not to exercise that option. These options are used to maximize operational flexibility in terms of managing contracts. The majority of extension and termination options held are exercisable only by the Company. After the commencement date, the Company reassesses the lease term upon the occurrence of a significant event or a significant change in circumstances that is within the control of the lessee and affects whether the Company is reasonably certain to exercise an option not previously included in its determination of the lease term, or not to exercise an option previously included in its determination of the lease term.

(iii) Residual value guarantees None.

(4) Company as a lessor

Please refer to Note 6 (8) for details on the Company‘s owned investment properties and investment properties held by the Company as right-of-use assets. Leases of owned investment properties are classified as operating leases as they do not transfer substantially all the risks and rewards incidental to ownership of underlying assets.

Lease income for operating leases Income relating to fixed lease payments and variable lease payments that depend on an index or a rate	For the years ended 31 December	For the years ended 31 December
	2020	2019
	$2,296	$3,562

Please refer to Note 6 (8) for relevant disclosure of property, plant and equipment for operating leases under IFRS 16. For operating leases entered by the Company, the undiscounted lease payments to be received and a total of the amounts for the remaining years as at 31 December 2020 and 2019 are as follow:

follow:
Not later than one year	As of 31 December
	2020	2019
	$1,849	$1,849

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Later than one year but not later than two years Later than two years but not later than three years Later than three years but not later than four years Later than four years but not later than five years Later than five years Total	1,552 1,323 785 785 8,635	1,849 1,552 1,323 785 10,990
	$14,929	$18,348

(17) Summary statement of employee benefits, depreciation and amortization expenses by function for the year ended 31 December 2020 and 2019:

Function e r	2020	2020	2020	2019	2019	2019
	atingcosts p	erating expenses a	Total mount	atingcosts	perating expenses	al amount
oyee benefits expense
Salaries	$717,397	$250,817	$968,214	$657,977	$178,236	$836,213
Labor and health insurance	51,916	15,882	67,798	51,198	17,366	68,564
Pension	26,120	5,418	31,538	26,571	5,594	32,165
Remuneration to directors	-	51,090	51,090	-	43,095	43,095
Other employee benefits expense	33,016	8,067	41,083	32,791	7,902	40,693
ciation	1,135,350	49,024	1,184,374	1,079,808	34,556	1,114,364
tization	3,000	-	3,000	3,000	-	3,000

The number of employees of the Company for the years ended 31 December 2020 and 2019 were 890 and 870, including 6 non-employee directors, respectively.

Average labor cost for the year ended December 31, 2020 and 2019 were NT$1,196 thousand and 1,132 thousand, respectively.

Average salary and bonus for the year ended December 31, 2020 and 2019 were NT$1,037 thousand and 968 thousand, respectively.

The average salary and bonus decreased by 7% year over year

The company has set up an audit committee to replace the supervisor in accordance with the regulations, so the supervisor's remuneration has not been recognized.

The company's salary and remuneration policy is as follows:

266

According to Article 27 of the company's articles of association, directors should allocate no more than 2% as directors‘ remuneration if they make a profit each year. The procedures for determining the remuneration in addition to considering the usual level of payment in the industry, personal performance and contribution, the company‘s operating performance and the reasonableness of the relationship between future risks, and the results of the director‘s performance evaluation are also considered, and the reasonableness of the relevant salary is reported. The remuneration committee and the board of directors approve the application, and review the remuneration system in a timely manner based on the actual operating conditions and relevant laws and regulations, in order to strike a balance between the company's sustainable operation and risk control.

Managers and employees are in accordance with Article 27 of the company's articles of association. If there is any profit in the year, no less than 2% shall be allocated as employee remuneration. In addition to considering the relative reasonableness of the industry's usual level of payment, personal performance and contribution, and the company's operating performance, the results of the annual performance evaluation are also considered to be rewarded.

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were recognized in profit or loss of the subsequent year.

(18) Non-operating income and expenses

(a) Other income

Other income
Dividend income Rental income Others Total	For theyears ended 31 December
	2020 $48,056 2,296 14,663 $65,015	2019
		$30,583 3,562 22,176
		$56,321

(b) Other gains and losses

Other gains and losses
Gains on disposal of property, plant and equipment, net Foreign exchange (losses) gains, net Gains on financial assets at fair value through profit or loss Others Total	For theyears ended 31 December
	2020	2019
	$497 7,206 520 (19,765)	$34,329 13,083 - (227)
	$(11,542)	$47,185

Finance costs
Interest on loans from bank Interest on lease liabilities Total	For theyears ended 31 December
	2020	2019
	$3,001 2,916	$10,433 3,100
	$5,917	$13,533

(19) Components of other comprehensive income

For the year ended 31 December 2020:

	Reclassificatio	Other		Other
	n adjustments	comprehensive		comprehensive
Arising during	during the	income,	Income tax	income,
theperiod	period	before tax	effect	net of tax

Not to be reclassified to profit or

268

$(7,784) 340,694 159	$ - - -	$(7,784) 340,694 159	$1,557 - (32)	$(6,227) 340,694 127
$333,069	$ -	$333,069	$1,525	$334,594
		Other comprehensive income, before tax	Income tax effect	Other comprehensive income, net of tax
$2,437 38,262 173	$ - - -	$2,437 38,262 173	$(487) - (35)	$1,950 38,262 138
$40,872	$ -	$40,872	$(522)	$40,350

(20) Income tax

The major components of income tax expense (income) for the year ended 31 December 2020 and 2019 are as follows:

(A)Income tax expense (income) recognized in profit or loss

269

Current income tax expense: Current income tax charge Adjustment in respect of current income tax of prior periods Deferred tax income: Deferred tax income relating to origination and reversal of temporary differences Total income tax expense	For theyears ended 31 December	For theyears ended 31 December
	2020 $615,075 (1,372) 3,813 $617,516	2019
		$399,851 - 28,524
		$428,375

(B)Income tax relating to components of other comprehensive income

Deferred tax expense (income): Remeasurements of defined benefit plans Share of other comprehensive income of associates and joint ventures accounted for using the equity method Income tax relating to components of other comprehensive income	For theyears ended 31 December	For theyears ended 31 December
	2020	2019 $487 35 $522
	$(1,557) 32
	$(1,525)

(C)A reconciliation between tax expense and the product of accounting profit multiplied by applicable tax rate is as follows:

(C)A reconciliation between tax expense and the product of accounting profit multiplied by applicable tax rate is as follows:	roduct of accounting profit	roduct of accounting profit
For the years ended 31 December 2020 2019 Accounting profit before tax from continuing operations $3,236,942 $2,390,730 Tax at the domestic rates applicable to profits in the country concerned $647,388 $478,146 Adjustment of in respect of current income tax of prior periods (1,372) - Tax effect of revenues exempt from taxation (28,770) (50,039) Tax effect of expenses not deductible for tax purposes 270 268 Total income tax expenses recognized in profit or loss $617,516 $428,375 (D)Deferred tax assets (liabilities) relate to the following:	For the years ended 31 December
	2020	2019
	$3,236,942	$2,390,730
	$647,388 (1,372) (28,770) 270	$478,146 - (50,039) 268
	$617,516	$428,375

For the year ended 31 December 2020:

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Items	Balance as of 1 January	Recognized in profit or loss	Recognized in other comprehensive income	Balance as of 31 December
Temporary difference Bonus payable Impairment losses on available-for-sale financial assets Loss from price recovery (reduction) of inventories Unrealized foreign exchange gains or losses Investments accounted for using the equity method Share of other comprehensive of associates and joint ventures Non-current liability – Defined benefit Liability Remeasurements of defined benefit plans Difference between book depreciation expense and tax depreciation expense Deferred tax income Net deferred tax assets Reflected in balance sheet as follows: Deferred tax assets Deferred tax liabilities	$4,701 4,328 1,308 111 55,443 46 20,199 15,445 9,929 $111,510	$635 - - 255 19 - (4,722) - -	$ - - - - - (32) - 1,557 -	$5,336 4,328 1,308 366 55,462 14 15,477 17,002 9,929
		$(3,813)	$1,525	$109,222

	$111,510			$109,222
	$ -			$ -

For the year ended 31 December 2019:

Items	Balance as of 1 January	Recognized in profit or loss	Recognized in other comprehensive income	Balance as of 31 December
Temporary difference Bonus payable Impairment losses on available-for-sale financial assets Loss from price recovery (reduction) of inventories Unrealized foreign exchange gains or losses Investments accounted for using the equity method Share of other comprehensive of associates and joint ventures	$4,913 4,328 1,308 (159) 55,435 81	$(212) - - 270 8 -	$ - - - - - (35)	$4,701 4,328 1,308 111 55,443 46

271

Items	Balance as of 1 January	Recognized in profit or loss	Recognized in other comprehensive income	Balance as of 31 December
Non-current liability – Defined benefit Liability Remeasurements of defined benefit plans Difference between book depreciation expense and tax depreciation expense Deferred tax income Net deferred tax assets Reflected in balance sheet as follows: Deferred tax assets Deferred tax liabilities	22,939 15,932 35,779	(2,740) - (25,850)	- (487) -	20,199 15,445 9,929
	$140,556	$(28,524)	$(522)	$111,510

	$140,715			$111,510
	$(159)			$ -

The assessment of income tax returns

As of 31 December 2020, the Company‘s income tax returns through 2018 have been assessed and approved by the tax authority.

(21) Earnings per share

Basic earnings per share Profit attributable to ordinary equity holders of the Company Weighted-average number of ordinary shares for basic earnings per share (in thousands) Basic earnings per share (NT$)	For the years ended 31 December	For the years ended 31 December
	2020	2019
	$2,619,426	$1,962,355
	581,599	581,599
	$4.50	$3.37

The Company‘s diluted earnings per share amounts equal to its basic earnings per share amounts.

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There have been no other transactions involving ordinary shares or potential ordinary shares between the reporting date and the date the financial statements were authorized for issue.

7. Related party transactions

Information of the related parties that had transactions with the Company during the financial reporting period is as follows:

Name and nature of relationship of the related parties

Name of the relatedparties Taiwan Steel Union Co., Ltd. Wen-Shan Enterprise Co., Ltd. Fong Yu Resources Co., Ltd. Taiwan Steel Resources Co., Ltd.	Nature of relationshipof the relatedparties
	Associate Associate Associate Subsidiary of associate

Significant transactions with the related parties

(d)Account Payable

d) Account Payable
	As of 31 December
	2020	2019
Associate	$6,894	$3,669
Subsidiary of associate	12,513	2,774
Total	$19,407	$6,443

(e)Other

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(f) Key management personnel compensation

Short-term employee benefits Post-Employment Benefits Total	For theyears ended 31 December	For theyears ended 31 December
	2020	2019
	$91,559 347	$82,241 365
	$91,906	$82,606

8. Assets pledged as security

None.

9. Commitments and contingencies

(5) As of 31 December 2020 and 2019, the Company issued guaranty notes as security for borrowings in the amount of NT$10,062,450 thousand and NT$12,755,250 thousand, respectively.
(6) As of 31 December 2020 and 2019, the Company was issued letters of guarantee by banks in the amount of NT$30,000 thousand and NT$50,000 thousand for importing goods, respectively.
(7) Amounts available under unused letters of credit are as follows:

Currency USD JPY EUR	Carrying	amount
	2020.12.31 $58,487 213,413 440	2019.12.31
		$33,097 258,785 421

The amounts that are available under unused letters of credit above are unguaranteed.

(8) The following table lists major purchase contracts of the Company:

Contract counterparty Company A Company B Company C Company D	Contract content Crane update project Crane update project Oxygen field update project Roof dust collection renovation project	Contract amount JPY 263,100 $75,700 JPY 550,000 JPY 198,000	Contract amountpaid JPY 210,480 $68,130 JPY 495,000 JPY 178,200	Unpaid amount as of 31 December 2020
				JPY 52,620 $7,570 JPY 55,000 JPY 19,800

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10. Losses due to major disasters

None.

11. Significant subsequent events

None.

12. Others

(12) Categories of financial instruments

Categories of financial instruments
Financial assets Financial assets at fair value through other comprehensive income Financial assets measured at amortized cost: Cash and cash equivalents (exclude cash on hand) Contract assets Notes and accounts receivable Other receivables Other financial assets -Non Current Subtotal Total Financial liabilities Financial liabilities at amortized cost: Short-term borrowings Notes and accounts payable Other payables Lease liabilities Total	As of 31 December
	2020	2019
	$2,257,162 2,174,321 397,242 1,489,973 8,579 13,686	$566,987 1,565,989 239,141 1,557,558 20,516 13,686
	4,083,801	3,396,890
	$6,339,917	$3,962,736
	$329,941 1,302,794 1,026,124 179,912	$381,151 1,176,644 998,743 210,403 $2,766,941
	$2,838,771

(13) Financial risk management objectives and policies

The Company‘s principal financial risk management objective is to manage the market risk, credit risk and liquidity risk related to its operating activities. The Company identifies measures and manages the aforementioned risks based on the Company‘s policy and risk appetite.

The Company has established appropriate policies, procedures and internal controls for financial risk management. Before entering into significant financial

275

activities, due approval process by the board of directors and audit committee must be carried out based on related protocols and internal control procedures. The Company complies with its financial risk management policies at all times.

(14) Market risk

Foreign currency risk

The Company‘s exposure to the risk of changes in foreign exchange rates relates primarily to the Company‘s operating activities (when revenue or expense is denominated in a different currency from the Company‘s functional currency).

The Company has certain foreign currency receivables to be denominated in the same foreign currency with certain foreign currency payables, therefore natural hedge is received.

The foreign currency sensitivity analysis of the possible change in foreign exchange rates on the Company‘s profit is performed on significant monetary items denominated in foreign currencies as of the end of the reporting period. The Company‘s foreign currency risk is mainly related to the volatility in the exchange rates for USD, JPY and EUR.

Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company‘s exposure to the risk of changes in market interest rates relates primarily to the Company‘s debt instrument investments at variable interest rates, bank borrowings with fixed interest rates and variable interest rates.

276

Pre-tax sensitivity analysis of changes in related risk factors for the years ended 31 December 2020 and 2019 are as follows:

For the year ended 31 December 2020

Main Risk Foreign currency risk Interest rate risk	Fluctuation NTD/USD rate +/− 1% NTD/JPY.rate +/− 1% NTD/EUR rate +/− 1% Market rate +/− 10 basis points	Sensitivity of profit/loss +/-$(1,375) +/-$(266) +/-$(3) +/-$330	Sensitivity of equity
			$ - $ - $ - $ -

For the year ended 31 December 2019

Main Risk Foreign currency risk Interest rate risk	Fluctuation NTD/USD rate +/− 1% NTD/EUR rate +/− 1% Market rate +/− 10 basis points	Sensitivity of profit/loss +/-$(1,844) +/-$(434) +/-$381	Sensitivity of equity
			$ - $ - $ -

Equity price risk

The fair value of the Company‘s listed and unlisted equity securities and conversion rights of the Euro-convertible bonds issued are susceptible to market price risk arising from uncertainties about future values of the investment securities. The Company‘s listed and unlisted equity securities are classified under held for trading financial assets measured at fair value through profit or loss and financial assets measured at fair value through other comprehensive income, while conversion rights of the Euro-convertible bonds issued are classified as financial liabilities at fair value through profit or loss as it does not satisfy the definition of an equity component. The Company manages the equity price risk through diversification and placing limits on individual and total equity instruments. Reports on the equity portfolio are submitted to the Company‘s senior management on a regular basis. The Company‘s board of directors reviews and approves all equity investment decisions.

At the reporting date, a change of 1% in the price of the listed equity securities measured at fair value through other comprehensive income could could have an impact of NT$19,456 thousand and NT$3,028 thousand on the equity attributable to the Company for the year periods ended 31 December 2020 and 2019,

277

respectively.

(15) Credit risk management

Credit risk is the risk that counterparty will not meet its obligations under a contract, leading to a financial loss. The Company is exposed to credit risk from operating activities (primarily for contract assets, accounts and notes receivables and lease receivables) and from its financing activities, including bank deposits and other financial instruments.

Credit risk is managed by each business unit subject to the Company‘s established policy, procedures and control relating to credit risk management. Credit limits are established for all counter parties based on their financial position, ratings from credit rating agencies, historical experiences, prevailing economic condition and the Company‘s internal rating criteria, etc. Certain counter parties‘ credit risk will also be managed by taking credit enhancing procedures, such as requesting for prepayment.

As of 31 December 2020 and 2019, account receivables from top ten customers represented 24.53% and 23.22% of the total trade receivables of the Company, respectively. The credit concentration risk of other accounts receivables is insignificant.

Credit risk from balances with banks, fixed income securities and other financial instruments is managed by the Company‘s treasury in accordance with the Company‘s policy. The Company only transacts with counterparties approved by the internal control procedures, which are banks and financial institutions, companies and government entities with good credit rating and with no significant default risk. Consequently, there is no significant credit risk for these counter parties.

(16) Liquidity risk management

The Company‘s objective is to maintain a balance between continuity of funding and flexibility through the use of cash and cash equivalents, highly liquid equity investments and bank loans. The table below summarizes the maturity profile of the Company‘s financial liabilities based on the contractual undiscounted payments and contractual maturity. The payment amount includes the contractual

278

interest. The undiscounted payment relating to borrowings with variable interest rates is extrapolated based on the estimated interest rate yield curve as of the end of the reporting period.

Non-derivative financial liabilities

Non-derivative financial liabilities
As of 31 December 2020 Short-term borrowings Notes and accounts payable Other payable Lease liabilities(note) As of 31 December 2019 Short-term borrowings Notes and accounts payable Other payable Lease liabilities(note)	Less than 1 year	2 to 3 years	4 to 5 years	> 5years	Total
	$332,860 1,302,794 1,026,124 7,679 $391,145 1,176,644 998,743 9,240	$ - - - 11,842 $ - - - 15,863	$ - - - 10,883 $ - - - 12,358	$ - - - 212,226 $ - - - 247,155	$332,860 1,302,794 1,021,903 242,630 $391,145 1,176,644 998,743 284,616

Note: Information about the maturities of lease liabilities is provided in the table below ：

2020.12.31 2019.12.31			Maturities	Maturities
	Less than 1 year	2 to 5 years	6 to 10 years	11 to 15 years	> 15years	Total
	$7,679 9,240	$22,725 28,221	$27,208 30,894	$27,209 30,894	$157,809 185,367	$242,630 284,616

Derivative financial liabilities

None.

(17) Reconciliation of liabilities arising from financing activities

Reconciliation of liabilities for the year ended 31 December 2020:

As of 1 Jan. 2020 Cash flows	Short-term borrowings	Leases liabilities	Total liabilities from financingactivities
	$381,151 (51,210)	$210,403 (7,367)	$591,554.. (58,577)

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Non-cash changes Acquisition As of 31 Dec. 2020	-	(23,124)	(23,124)
	$329,941	$179,912	$509,853

Reconciliation of liabilities for the year ended 31 December 2019:

As of 1 Jan. 2019 Cash flows Non-cash changes Acquisition As of 31 Dec. 2019	Short-term borrowings	Leases liabilities	Total liabilities from financing activities
	$1,018,533 (637,382) -	$218,059 (10,756) 3,100	$1,236,592 (648,138) 3,100
	$381,151	$210,403	$591,554

(18) Fair value of financial instruments

(4) The methods and assumptions applied in determining the fair value of financial instruments:

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The following methods and assumptions were used by the Company to measure or disclose the fair values of financial assets and financial liabilities:

E. The carrying amount of cash and cash equivalents, accounts receivables, accounts payable and other current liabilities approximate their fair value due to their short maturities.
F. For financial assets and liabilities traded in an active market with standard terms and conditions, their fair value is determined based on market quotation price (including listed equity securities and bonds) at the reporting date.
G. Fair value of equity instruments without market quotations (including private placement of listed equity securities, unquoted public company and private company equity securities) are estimated using the market method valuation techniques based on parameters such as prices based on market transactions of equity instruments of identical or comparable entities and other relevant information (for example, inputs such as discount for lack of marketability, P/E ratio of similar entities and Price-Book ratio of similar entities).

280

H. Fair value of debt instruments without market quotations, bank loans and other non-current liabilities are determined based on the counterparty prices or valuation method. The valuation method uses DCF method as a basis, and the assumptions such as the interest rate and discount rate are primarily based on relevant information of similar instrument (such as yield curves published by the GreTai Securities Market, average prices for Fixed Rate Commercial Paper published by Reuters and credit risk, etc.)
(5) Fair value of financial instruments measured at amortized cost

The book value of the Company‘s financial assets and financial liabilities measured at amortized cost is very close to the fair value.

(6) Fair value measurement hierarchy for financial instruments

Please refer to Note 12. (9) for fair value measurement hierarchy for financial instruments of the Company.

(19) Derivative financial instruments

None.

(20) Fair value measurement hierarchy
(4) Fair value measurement hierarchy

Level 1 – Quoted (unadjusted) market prices in active markets for identical assets or liabilities that the entity can access at the measurement date

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

For assets and liabilities that are recognized in the financial statements on a recurring basis, the Company determines whether transfers have occurred between Levels in the hierarchy by re-assessing categorization at the end of each reporting period.

(5) Fair value measurement hierarchy of the Company‘s assets and liabilities

The Company does not have assets that are measured at fair value on a

281

non-recurring basis. Fair value measurement hierarchy of the Company‘s assets and liabilities measured at fair value on a recurring basis is as follows:

As of 31 December 2020
Level 1	Level 2		Level		3		Total
Financial assets:
Financial assets measured at fair value through
other comprehensive income
Equity instrument measured at fair value through other comprehensive income $1,945,605		$ -	$311,557			$2, 257,162
As of 31 December 2019
Level 1	Level 2		Level		3		Total
Financial assets:
Financial assets measured at fair value through
other comprehensive income
Equity instrument measured at fair value $302,826		$ -	$264,161			$566,987
through other comprehensive income
Transfers between Level 1 and Level 2 during the period
During the year period ended 31 December 2020	and	2019,	there	were no
transfers between Level 1 and Level 2 fair value measurements.
Reconciliation for fair value measurements in Level		3 of	the fair value
hierarchy for movements during the period is as follows:
			Assets
	At fair value through other
	comprehensive				income
			Stocks
Beginning balances as at 1 January 2020				$264,161
Total gains and losses recognized for the year ended
31 December 2020:
Amount recognized in OCI (presented in					60,803
―Unrealized gains (losses) from equity
instruments investments measured at fair value
through other comprehensive income)
Return of paid-in capital for capital reduction					(13,407)
Ending balances as at 31 December 2020				$311,557
			Assets
	At fair value through other
	comprehensive				income

282

Beginning balances as at 1 January 2019 Total gains and losses recognized for the year ended 31 December 2019: Amount recognized in OCI (presented in ―Unrealized gains (losses) from equity instruments investments measured at fair value through other comprehensive income) Return of paid-in capital for capital reduction Ending balances as at 31 December 2019	Stocks
	$284,142 (16,453) (3,528)
	$264,161

Information on significant unobservable inputs to valuation

Description of significant unobservable inputs to valuation of recurring fair value measurements categorized within Level 3 of the fair value hierarchy is as follows:

As at 31 December 2020

As at 31 December 2019

			Relationship
Valuation	Significant	Quantitative	between inputs	Sensitivity of the input
techniques	unobservable inputs	information	and fair value	to fair value

Financial assets at

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fair value through

other comprehensive income Stocks and others Market approach discount for lack of 10%~30% The higher the 10% increase (decrease) marketability discount for lack in the discount for lack of marketability, of marketability would the lower the fair result in increase value of the (decrease) in the stocks Company‘s equity NT$26,416 thousand

Valuation process used for fair value measurements categorized within Level 3 of the fair value hierarchy

The Company‘s financial Department is responsible for validating the fair value measurements and ensuring that the results of the valuation are in line with market conditions, based on independent and reliable inputs which are consistent with other information, and represent exercisable prices. The department analyses the movements in the values of assets and liabilities which are required to be re-measured or re-assessed as per the Company‘s accounting policies at each reporting date.

(6) Fair value measurement hierarchy of the Company‘s assets and liabilities not measured at fair value but for which the fair value is disclosed

As of 31 December 2020

Financial assets not measured at fair value but for which the fair value is disclosed: Investment properties (Notes 6, 8) Investments accounted for using the equity method (please refer to Notes 6, 6) As of 31 December 2019 Financial assets not measured at fair value but for which the fair value is disclosed: Investment properties (Notes 6, 8) Investments accounted for using the	Level 1 $ - 1,766,921 Level 1 $ - 1,874,212	Level 2 $ - - Level 2 $ - -	Level 3 $1,068,869 - Level 3 $627,522 -	Total
				$1,068,869 1,766,921 Total
				$627,522 1,874,212

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equity method (please refer to Notes 6, 6)

(21) Significant assets and liabilities denominated in foreign currencies

Information regarding the significant assets and liabilities denominated in foreign currencies is listed below:

Financial assets Monetary items: USD EUR JPY Financial liabilities Monetary item: USD EUR JPY	As of 31 December 2020 Foreign currencies Foreign exchange rate NTD $7,886 28.0500 $221,203 - 34.3650 - 2 0.2706 - $12,744 28.1500 $358,720 7 34.7250 252 97,060 0.2744 26,633	As of 31 December 2020 Foreign currencies Foreign exchange rate NTD $7,886 28.0500 $221,203 - 34.3650 - 2 0.2706 - $12,744 28.1500 $358,720 7 34.7250 252 97,060 0.2744 26,633	Unit: Thousands As of 31 December 2019	Unit: Thousands As of 31 December 2019	Unit: Thousands As of 31 December 2019
	Foreign currencies $7,886 - 2 $12,744 7 97,060	Foreign exchange rate 28.0500 34.3650 0.2706 28.1500 34.7250 0.2744	Foreign currencies $6,509 - 2 $12,604 1,279 -	Foreign exchange rate 30.0500 33.5470 0.2752 30.1500 33.9070 0.2790	NTD
					$195,597 - - $379,966 43,377 -

The Company has a number of different functional currencies; therefore, we are unable to disclose the exchange loss and gain of monetary financial assets and financial liabilities under each foreign currency that has significant impact. The Company had NT$7,280 thousand and NT$13,107 thousand foreign exchange gains for the years ended 31 December 2020 and 2019, respectively.

The above information is disclosed based on the carrying amount of foreign currency (after conversion to functional currency).

(22) Capital management

The primary objective of the Company‘s capital management is to ensure that it maintains a strong credit rating and healthy capital ratios in order to support its business and maximize the shareholder value. The Company manages its capital structure and makes adjustments to it, in light of changes in economic conditions. To maintain or adjust the capital structure, the Company may adjust dividend payment to shareholders, return capital to shareholders or issue new

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shares.

13. Other disclosure

(1) Information at significant transactions
k. Financing provided to others for the year ended 31 December 2020: None.
l. Endorsement/Guarantee provided to others for the year ended December 31, 2020:

None.

m. Securities held as of 31 December 2020:

Name of company	Type of securities	Name of securities	Relationship	Financial statement account	December 31, 2020	December 31, 2020	December 31, 2020	December 31, 2020	December 31, 2020
					Shares	Book value	Percentage of ownership (%)	Market value/Net assets value	Note
FENG..HSIN STEEL CO.,LTD.	Stock	Yuanta/P-shares Taiwan Dividend Plus ETF Taiwan Cement Corporation Charoen Pokphand Enterprise (Taiwan) Co., Ltd. Formosa Plastics Corporation Formosa Taffeta Co., Ltd. Taiwan Semiconductor Manufacturing Company Limited Synnex Technology International Corporation Asustek Computer Incorporation	- - - - - - - -	Financial assets at fair value through other comprehensive income,current Financial assets at fair value through other comprehensive income,current Financial assets at fair value through other comprehensive income,current Financial assets at fair value through other comprehensive income,current Financial assets at fair value through other comprehensive income,current Financial assets at fair value through other comprehensive income,current Financial assets at fair value through other comprehensive income,current Financial assets at fair value through other comprehensive income,current	3,376,000 2,426,000 717,000 1,247,000 3,162,000 225,000 2,426,000 401,000	$101,111 104,803 51,911 120,211 98,180 119,250 114,022 100,450	0.15% 0.04% 0.27% 0.02% 0.19% - 0.15% 0.05%	$101,111 104,803 51,911 120,211 98,180 119,250 114,022 100,450
		DA-CIN Construction Co., Ltd. Huaku Development Co., Ltd. Mega Financial Holding Company Limited Sinopac Financial	- - - -	Financial assets at fair value through other comprehensive income,current Financial assets at fair value through other comprehensive income,current Financial assets at fair value through other comprehensive income,current Financial assets at fair value through	1,847,000 575,000 3,589,000 9,263,000	49,777 50,485 106,952 106,061	0.56% 0.21% 0.03% 0.08%	49,777 50,485 106,952 106,061

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Name of company	Type of securities	Name of securities	Relationship	Financial statement account		December 31, 2020	December 31, 2020	December 31, 2020	December 31, 2020
					Shares	Book value	Percentage of ownership (%)	Market value/Net assets value	Note
FENG..HSIN STEEL CO.,LTD.	Stock	Holdings Company Limited WPG Holdings Limited YungShin Global Holding Corporation Far Eastone Telecommunications Co.,Ltd. Pegatron Corporation Zhen Ding Technology Holding Limited Taiwan Printed Circuit Board Techvest Co., Ltd. Taiwan Hon Chuan Enterprise Co., Ltd. Chien Shing Harbour Service Co., Ltd. Fengshuo Investment Co., Ltd. Gwo Uei Metals Industry Co., Ltd. Gwo Huei Iron & Steel Co., Ltd.	- - - - - - - - - - -	other comprehensive income,current Financial assets at fair value through other comprehensive income,current Financial assets at fair value through other comprehensive income,current Financial assets at fair value through other comprehensive income,current Financial assets at fair value through other comprehensive income,current Financial assets at fair value through other comprehensive income,current Financial assets at fair value through other comprehensive income,current Financial assets at fair value through other comprehensive income,current Total Financial assets at fair value through other comprehensive income, noncurrent Financial assets at fair value through other comprehensive income, noncurrent Financial assets at fair value through other comprehensive income, noncurrent Financial assets at fair value through other comprehensive income, noncurrent	2,562,000 1,347,000 1,634,000 1,583,000 830,000 1,214,000 861,000 8,203,800 3,640,000 3,800,000 3,800,000	109,910 60,211 100,001 106,536 94,620 53,902 51,918	0.15% 2.02% 0.05% 0.06% 0.09% 0.45% 0.30% 10.11% 18.20% 19.00% 19.00%	109,910 60,211 100,001 106,536 94,620 53,902 51,918
						$1,700,311
						$245,294 220,796 50,605 34,505		$245,294 220,796 50,605 34,505
		Ascentek Venture Capital Corporation Taichung International Entertainment Corporation China Trade And	- - -	Financial assets at fair value through other comprehensive income, noncurrent Financial assets at fair value through other comprehensive income, noncurrent Financial assets at fair value through	70,560 1 1,925	4,656 970 25	5.35% 0.03% -	4,656 970 25

287

Name of company	Type of securities	Name of securities	Relationship	Financial statement account		December 31, 2020	December 31, 2020
					Shares	Book value	Percentage of ownership (%)	Market value/Net assets value	Note
		Development Corporation		other comprehensive income, noncurrent Total		$556,851

n. Individual securities acquired or disposed of with accumulated amount exceeding the lower of NT$300 million or 20% of the paid-in capital for the year ended 31 December 2020: None.
o. Acquisition of individual real estate with amount exceeding the lower of NT$300 million or 20% of the paid-in capital for the year ended 31 December 2020:

Company Name	Name of Property	Transaction Date	Transaction Amount	Payment Status	Counterparty	Relationship	When counterparty is related party, details of prior transactions	When counterparty is related party, details of prior transactions	When counterparty is related party, details of prior transactions	When counterparty is related party, details of prior transactions	Price Reference	Purpose of Acquisition and Status of Utilization	Other Commitments
							Owner	Relationships	Transfer Date	Amount
FENG HSIN STEEL CO.,LTD.	Land and Building	Contract date`：` 10 September 2020 Transferring date`：` 17 December 2020	$327,015	$327,015	Farglory Investment Co., Ltd. Farglory Land Development Co., Ltd.	Non-related party	N/A	N/A	N/A	N/A i	Appraisal report ssued by Weiming Real Estate Appraiser Firm	To acquire investment property for leasing to increase company revenue	N/A

p. Disposal of individual real estate with amount exceeding the lower of NT$300 million or 20% of the capital stock for the year ended 31 December 2020: None.
q. Related party transactions for purchases and sales amounts exceeding the lower of NT$100 million or 20 percent of the capital stock for the year ended 31 December 2020:

None.

r. Receivables from related parties with amounts exceeding the lower of

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NT$100 million or 20% of capital stock as of year ended 31 December 2020: None.

s. Financial instruments and derivative transactions: None.
t. Others: The business relationship, significant transactions and amounts between parent company and subsidiaries: None.
(5) Information on investees

Investment company	Investee company	Address	Main businesses and products	Initial Investment	Initial Investment	Investment as of December 31,2020	Investment as of December 31,2020	Investment as of December 31,2020	Net income (loss) of investee company (Note)	Investment income (loss) recognized	Note
				Ending balance	Beginning balance	Number of Shares (thousand)	Percentage of ownership (%)	Book value
FENG HSIN STEEL CO.,LTD.	GREAT FORTUNE HOLDING LIMITED	Offshore Chamber, P.O. Box217, Apia, Samoa	General investment business	$971,367	$971,367	31,406,834	100.00%	$516,457	$(95)	$(95)	Subsidiary company of the Company
FENG HSIN STEEL CO.,LTD.	TAIWAN STEEL UNION CO., LTD.	No. 36, Xiangong N. 1st Rd., Shengang Township, Changhua County 509, Taiwan (R.O.C.)	General business and hazardous industrial waste treatment, the manufacture and sale of zinc oxide and non-metallic mineralproducts.	$199,883	$147,761	23,279,587	20.92%	$744,203	$407,534	$83,504	Associated company of the Company
FENG HSIN STEEL CO.,LTD.	FONG YU RESOURCES CO., LTD.	No.998, Jiahou Rd., Sec. 1, Houli Dist., Taichung City 421, Taiwan (R.O.C.)	General business and hazardous industrial waste treatment	$516,250	$516,250	51,625,000	29.71%	$510,929	$(13,012)	$(3,865)	Associated company of the Company
FENG HSIN	Wen-Shan	No.16,	General business	$209,777	$209,777	18,000,000	18.00%	$171,822	$85,588	$15,405	Associated

289

Investment company	Investee company	Address	Main businesses and products	Initial Investment	Initial Investment	Investment	as of December 31,2020	as of December 31,2020	Note
				Ending balance	Beginning balance	Number of Shares (thousand)	Percentage of ownership (%)	Book value
STEEL CO.,LTD.	Enterprise Co., Ltd.	Wuncyuan Ln., Sec. 1, Dongguan Rd., Heping Dist., Taichung City 42444, Taiwan (R.O.C.)	and the operation						company of the Company
			of hotel industry

Note: The Company has recognized investment income from subsidiaries, and the investment income was eliminated in the standalone report.

(6) Information on investments in mainland China

c. Information on investments in mainland China from the subsidiaries through GREAT FORTUNE HOLDING LIMITED as of 31 December 2020:

Investee company	Main Businesses and Products	Total Amount of Paid-in Capital	Method of Investment	Accumulated Outflow of Investment from Taiwan as of 1 January 2020	Investmen	t Flows	Accumulated Outflow of Investment from Taiwan as of 31 December 2020	Net income (loss) of investee company	Percentage of Ownership	Investment income (loss) recognized	Carrying Value as of 31 December 2020 (Note 1)	Accumulated Inward Remittance of Earnings as of 31 December 2020
					Outflow	Inflow
Shihlien Chemical Industrial Jiangsu Co.	Sodium carbonate, which is the ingredient of glass production	USD 800,000,000	Investment in Mainland China companies through a company invested and established in a third region	$767,246 (USD27,352,800)	-	-	$767,246 (USD27,352,800)	Note 1	3.15%	$ -	$488,816	$ -
Shihlien Brine Huaian Co.	Brine, which is the ingredient ofsodium carbonate	USD 32,000,000	Investment in Mainland China companies through a company invested and	$41,705 (USD1,486,800)	-	-	$41,705 (USD1,486,800)	Note 1	3.94%	$ -	$26,595	$ -

290

Investee company	Main Businesses and Products	Total Amount of Paid-in Capital	Method of Investment	Accumulated Outflow of Investment from Taiwan as of 1 January 2020	Investmen	t Flows	Accumulated Outflow of Investment from Taiwan as of 31 December 2020	Net income (loss) of investee company	Percentage of Ownership	Investment income (loss) recognized	Carrying Value as of 31 December 2020 (Note 1)	Accumulated Inward Remittance of Earnings as of 31 December 2020
					Outflow	Inflow
			established in a third region

Accumulated Investment in Mainland China as of 31 December 2020 (Note 3)	Investment Amounts Authorized by Investment Commission, MOEA (Note 3)	Upper Limit on Investment
		The lender‘s net accounts value×60%
$808,951 (USD 28,839,600)	$808,951 (USD 28,839,600)	$11,680,926 (Note 2)

Note 1: The Company's subsidiary's investment in Mainland China was made indirectly through financial assets at fair value through other comprehensive income investee established in the third region.

Note 2: Pursuant to the Investment Commission, Ministry of Economic Affairs, R.O.C., the Company's investment in Mainland China is limited to 60% of net worth or standalone net worth.

Note 3: Initial investment amounts denominated in foreign currencies are translated into New Taiwan Dollars using the spot rates at the financial statement reporting date.

d. Directly or indirectly significant transactions through third regions with the investees in Mainland China, including price, payment terms, unrealized gain or loss, and other events with significant effects on the operating results and financial condition: None.
(7) Information on major shareholders

The Company had no shareholders holding more than 5% of its shares on 31 December 2020.

14. Segment information

Please refer to the consolidated financial statements of FENG HSIN STEEL CO., LTD. and subsidiaries for operating segment informatio

VI. If the Company and its affiliates have encountered any financial turnover problems for the most recent fiscal year and until the date of publication of the Annual Report, please state the impact posed by the same to the Company‘s financial position:N/A

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Thirteen. Review and Analysis on Financial Position and Operating Results, and Risk Management Issues

I. Financial Position

Comparison and Analysis of Financial Position

Unit: NT$ thousand

			Unit: NT$thousand	Unit: NT$thousand
Year Item	2020	2019	Variance
			Amount	%
Current assets	9,748,933	8,365,192	1,383,741	16.54%
Non-current assets	3,485,755	3,153,821	331,934	10.52%
Property, plant and equipment	9,436,032	9,846,122	-410,090	-4.16%
Other non-current assets	343,142	101,641	241,501	237.60%
Total assets	23,013,862	21,466,776	1,547,086	7.21%
Current liabilities	3,215,161	2,816,109	399,052	14.17%
Non-current liabilities	330,491	363,653	-33,162	-9.12%
Total liabilities	3,545,652	3,179,762	365,890	11.51%
Capital stock	5,815,994	5,815,994	0	0.00%
Capital surplus	560,097	588,123	-28,026	-4.77%
Retained earnings	13,176,110	12,161,138	1,014,972	8.35%
Other equity	-83,991	-278,241	194,250	69.81%
Total shareholders’ equity	19,468,210	18,287,014	1,181,196	6.46%
The reasons for changes by more than 20% if any:The analysis is provided as follows: I. The increase in other non-current assets was primarily the result of increased repayment for equipment at the end of the current year. II. The increase in other equity was primarily the result of valuation gain on financial assets. III. Measures to be taken in response: No material impact has been posed by the changes in the Company‘s assets, liabilities and shareholders‘ equity in the Company in the most recent two years. Therefore, no measures will be taken in response preliminarily.

II. Financial Analysis

(I) Comparison and Analysis of Financial Performance

Unit: NT$ thousand

Year Item	2020	2019	Increase (decrease)	Changes (%)
	Amount	Amount
Operating revenue Operating cost Gross profit Operating expenses Operating income Non-operating revenue and expenditure Net income Income tax expenses Current net profit	$27,298,051 23,448,762	$27,735,611 24,870,034	-437,560 -1,421,272 983,712 -18,148 1,001,860 -155,648 846,212 189,141 657,071	-1.58% -5.71% 34.33% -2.34% 47.96% -51.59% 35.40% 44.15% 33.48%
	3,849,289 758,427	2,865,577 776,575
	3,090,862 146,080	2,089,002 301,728
	3,236,942 617,516	2,390,730 428,375
	$2,619,426	$1,962,355

Analysis on the changes (%):
(1) For the changes in operating revenue and cost, please refer to the analysis of changes in gross profit.
(2) The operating income, net income, income tax expenses and current net profit were generated as a result of the increase in gross profit.
(3) The non-operating revenue and expenditure was primarily the result of the decrease in investment share recognized under equity method.
Causes for changes in the Company‘s main business contents (e.g. the changes are caused by adjustment on selling price or cost, increase/decrease in product portfolio and quantity, or replacement of new and old products); material changes in business policy, market condition, economic environment or other internal/external factors already incurred or expected to be incurred, if any, and the potential effect upon the Company's business and finance posed therefor, and the measures to be taken in response: N/A.
Sales volume forecast for next year and the basis thereof, and main factors critical to the continued growth or declination of sales volume expected by the Company: Despite the persisting COVID-19 epidemic and Protectionism, competition in the global steel industry remains fierce in 2021. All people expect that the lockdown policy would be lifted step by step in various countries so that the world may be back to the normal situation and the demand could recover. According to the forecast announced by the World Steel Association in October 2020, the demand for steel materials would grow by 4.1% in the world in 2021 from 2020. Upon completing the remodeling of steel bar & wire mills, the Company continued developing toward the market for high-rank steel types and purposes. Further, upon the official mass production of steel bar mills, due to the government‘s prospective infrastructure construction and public work boosting policies, Taiwanese businessman‘s return to and plant construction projects in Taiwan and leading electronics manufacturers‘ increasing demand for factory expansion, it is

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expected that the overall demand may grow stably in 2021. The sales of steel products will grow mildly in 2021 from 2020.

(II) Analysis of Changes in Gross Profit

(II) Analysis of Changes in Gross Profit	(II) Analysis of Changes in Gross Profit	(II) Analysis of Changes in Gross Profit	(II) Analysis of Changes in Gross Profit	(II) Analysis of Changes in Gross Profit	(II) Analysis of Changes in Gross Profit
Unit: NT$thousand
Item Year	Operating revenue	Sales return and allowance	Operating cost	Gross profit	Gross margin(%)
2020	28,025,357	727,306	23,448,762	3,849,289	14.10
2019	28,563,128	827,517	24,870,034	2,865,577	10.33
Increase/decre ase from the previous period(%)	-1.88%	-12.11%	-5.71%	34.33%	36.50%
Explanation	The increase in gross profit and gross margin in 2020 from 2019 was primarily the result of the declination in operatingcost more than operatingrevenue.

III. Cash Flow

Analysis of cash flow for the most recent year, improvements for lack of liquidity, and liquidity analysis for the next year:

Unit: NT$ thousand

Balance of cash, beginning	Net cash flow from operating activities for the year	Net cash from investing activities and financing activities for the year	Effect of changes in the foreign exchange rate	Cash balance (deficit)	Corrective me insufficient	asures against cash position
					Investing plan	Wealth management plan
1,566,952	5,046,816	4,438,499	0	2,175,269	-	-

Analysis on changes of cash flow in this year:

(1) Operating activities: The increase in cash inflow from operating activities from the previous period by NT$551,679 thousand was primarily the result of the increase in current net profit.

(2) Investing activities: The increase in cash outflow from investing activities from the previous period by NT$2,031,142 thousand was primarily the result of the acquisition of financial assets and investment property.

(3) Financing activities: The decrease in short-term loans by NT$51,210 thousand distribution of cash dividends, NT$1,744,798 thousand resulted in the net cash outflow, NT$1,803,375 thousand
Projected corrective measures against insufficient cash position, and analysis on liquidity: N/A.
Analysis on liquidity for the coming year:

Unit: NT$ thousand

				Unit: NT$thousand	Unit: NT$thousand
Balance of cash, beginning	Projected net cash flow from operating activities for the year	Projected net cash from investing activities and financing activities for the year	Projected cash balance (deficit)	Projected corrective measures against insufficient cash position
				Investing plan	Wealth management plan
2,175,269	2,693,124	2,583,636	2,284,757	-	-

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IV. Impact posed by material capital expenditures in the most recent year to business and finance:

Unit: NT$ thousand

finance:				Unit: NT$thousand	Unit: NT$thousand
Project	Actual or expected source of capital	Actual or expected date of completion	Total required capita	Actual or scheduled capital utilization
				2020	2021
New oxygen plant production project	Own capital or bank loan facility	September 2021	250,000	137,168	112,832

Explanation: In consideration of the Company‘s stable profit, sufficient working capital and fair transactions with financial institutions in recent years, the Company‘s finance and business remained unaffected by said important capital expenditure.

V. The investment policy in the most recent year, main causes for profit or loss thereof,
improvement plans, and investment plans for the coming year:
(I) Investment plans: The Company‘s investment plans have relied on the profitability of industries related to its core profession, namely the steel industry, and took the Company‘s diversification strategy into account when evaluating the investment in other industries carefully, in the most recent years.
1. The Company established the subsidiary in Samoa, namely GREAT FORTUNE HOLDING LIMITED, in 2010 to re-invest Shihlien China Holding Co. (a company registered in Hong Kong) and then Shihlien Chemical Industrial Jiangsu Co. and Huaian Shihyuan Brine Co., Ltd. Until Q1 of 2021, the trading value has amounted to US$28,839 thousand.
2. The Company increased the capital in Taiwan Steel Union Co., Ltd. in cash by NT$52,122 thousand in 2020. Upon the capital increase, the total trading value amounted to NT$199,883 thousand.
(II) Analysis on profit sought by investment: The Company‘s Share of Profit or Loss of Associates & Joint Ventures Accounted for Using Equity Method amounted to NT$95,044 thousand in 2020, primarily as a result of recognition of the investment income from Taiwan Steel Union Co., Ltd. and Wen Shan Resort Corporation in Taiwan.
(III) Investment plans in the next year: N/A.
VI. Risk Issues (for the Most Recent Year Until the Date of Publication of the Annual Report)
(I) Impacts of interest rate/foreign exchange rate fluctuation and inflation to the Company's income for the most recent year and until the date of publication of the annual report, and future responsive measures:
1. Impact on the Company‘s income:
  - (1) Interest rate: The Company‘s interest expenditure from bank loans was NT$3,001 thousand in 2020, decreasing by NT$7,432 thousand from NT$10,433 thousand in 2019.
  - (2) Foreign exchange rate: The Company‘s foreign currency exchange gain was NT$7,206 thousand in 2020, decreasing by NT$5,877 thousand from the exchange gain, NT$13,083 thousand, in 2019.
  - (3) Inflation: No material impact posed.

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  2. Future responsive measures:

     - (1) Interest rate: Evaluate the most advantageous instruments and cut the capital cost.

     - (2) Foreign exchange rate: Utilize the export foreign exchange to repay the loan for foreign procurement (foreign payment repayable) to mitigate the effect posed by foreign exchange rate fluctuation on the profitability.

     - (3) Inflation: N/A.

(II) Policies on high-risk and highly leveraged investments, loans to third parties, endorsements/guarantees, and derivatives trading, main causes of profit or loss incurred and future responsive measures for the most recent year and until the date of publication of the annual report: The Company never engaged in high-risk and highly leveraged investments. It has not loaned fund to others or made endorsements/guarantees for others, or engaged in any derivative trading, in the most recent year. The Company executed all related operations carefully after taking into account all risk profiles.
(III) Future R&D plans and expected R&D expenditure: All R&D plans have been executed per the agreed schedule. For details, please refer to Page 111. The expected R&D expenditure covers the production cost and production expense in response to the R&D plan scheduling, in addition to the Company‘s R&D personnel salary, amount of materials and supplies to be consumed by the R&D plans, and training expenses spent for improving the R&D personnel‘s competence and profession. The expenditure is about NT$40 million each year.
(IV) Impact on the Company‘s business and finance due to changes in domestic or foreign policies and laws, and responsive measures: N/A.
(V) Impact on the Company‘s business and finance due to technological or industrial changes, and responsive measures: N/A.
(VI) Impact on crisis management in the event of a change in corporate identity, and responsive measures: N/A.
(VII) Expected benefits and possible risks of merger and acquisition, and responsive measures: N/A.
(VIII) Expected benefits and possible risks of facilities expansion, and responsive measures: For the expected benefits of facilities expansion, please refer to the investment plans in the next year on the previous page for details.
(IX) Risks and responsive measures associated with concentrated sales or purchases: N/A, as the Company had no supplier or customer ―whose sales or purchase ratios that accounted for over 10% of the total amount of goods purchased or sold by the Company‖ in 2020.
(X) Impact and risk on the Company due to major transfer or conversion of equity by directors, or shareholders with more than 10% ownership interest, and responsive measures: N/A.
(XI) Impact and risks on the Company due to a change of the right of management: N/A.
(XII) Impact on the Company due to litigations and non-contentious cases: N/A. (XIII) Other material risks and responsive measures: N/A.
VII. Other Important Notes
Risk management
- The Company‘s risk management identifies and assesses various potential risks, and then takes appropriate responsive measures to control the changes in

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external/internal environment and compliance with the system. The Company‘s units responsible for executing the risk management with respect to the following risks are stated as below:

(1) Strategic risk and business risk: Each facility unit sets forth the control system subject to its functions, and analyzes and assesses the system based on laws, policies and changes in market conditions periodically. For example:
A.The sales unit, namely Sales Management Section, convenes the business weekly and monthly meetings on a weekly/monthly basis.
B.The production unit and QC unit convene the joint production meeting and QA Committee meeting periodically on a monthly basis.
C.Occupational Safety & Health Division convenes the environmental protection and safety & health promotion committee meeting per two weeks.
- The meeting controls and resolves the various operating results and potential crises and risks.
(2) Financial risk: Finance Division sets forth various control systems, and analyzes and assesses the same based on the changes in the financial market periodically, reports the financial information on the business weekly and monthly meetings, and controls and settles any potential crisis and risk.
(3) Information risk: In response to the rapid technology development, digital transformation has become the main trend in various business areas. Given this, the Company will need to rely on the information system more than ever. The available data backup and remote backup mechanism are established subject to the risk grade to ensure the completeness of data. In order to prevent the information system from suffering damage, the Company establishes the anti-virus, anti-hacking, disaster prevention and anti-theft mechanism inside the Company. It executes the hardware maintenance agreement with IBM via the host, in order to ensure the successful operation of the equipment. Meanwhile, the Company also executes a service agreement with the third-party service providers for software to mitigate the possibility for disaster.
In order to strengthen the ability to respond to information security incidents and digital forensics, the Company has information personnel attend training courses from time to time, and provide the Company‘s employees with information about awareness toward safety of network and information, in order to avoid or mitigate the damage caused by persons to the safety. Each year, Audit Office will conduct an internal audit on information security risk management via the ―information & communication safety check on the information system management,‖ in order to serve the information security target.

Meanwhile, the Audit Office will keep auditing the controls over said risks via the risk assessment.

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Merit and basis for assessment on provisions under the asset and liability valuation titles

(1)

Item No.	Asset and liability valuation titles	Merit of assessment	Basis of assessment
1	Allowance for bad debt	Recognize as expected credit loss, and measure the allowance for losses.	The assessment of impairment on receivables refers to the comparison of the changes in default risk over financial instruments on the balance sheet date and date of initial recognition, in order to evaluate whether the credit risk over financial instruments increases significantly after the initial recognition of the financial instruments.
2	Allowance for inventory obsolescence losses	Aging analysis method based on inventory obsolescence	A. Obsolescence for 6~12 months Provided 30% B. Obsolescence for 12~24 months Provided 50% C. Obsolescence more than 24 months Provided 100% D. Obsolescence warehouse Provided 100%

(2) Valuation of financial assets: The listed stocks invested by the Company are valuated based on the lower cost and market price. The cost must be calculated under weighted average method. Since 2018, the Company has classified the financial assets as the financial assets at fair value through other comprehensive income pursuant to IFRS 9 ―Financial Instruments‖ and the Regulations Governing the Preparation of Financial Reports by Securities Issuers. The financial assets are measured at fair value at the time of initial recognition. The trading costs directly attributed to acquisition or issuance of financial assets and financial liabilities are added into or deducted from the fair value of the financial assets and financial liabilities.

Financial assets at fair value through other comprehensive income

The financial assets falling this category are measured at the fair value through other comprehensive income, and the financial assets at fair value through other comprehensive income should be reported on the balance sheet. The income from such financial assets is recognized in the following manners:

A. Except the impairment gain or loss and foreign currency exchange gain or loss, which is recognized into the income, the gain or loss thereof should be recognized into other comprehensive income before derecognition or re-classification.
B. At the time of derecognition, the accumulated gains or losses initially recognized into other comprehensive income should be re-classified from equity into income as the reclassification adjustment.

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Fourteen. Special Notes

I. Information About Affiliates:

Overview of affiliates - organizational charts of affiliates

The R.O.C. Samoa Feng Hsin Steel Co., Ltd. GREAT FORTUNE HOLDING (the Company) LIMITED Shareholding by the Company: 100% ( b idi )

2. Basic information on affiliates

			Unit: NT$thousand	Unit: NT$thousand
Name of Affiliate	Date of Incorporation	Address	Paid-in capital	Scope of Main Business
GREAT FORTUNE HOLDING LIMITED	May 31, 2010	OFFSHORE CHAMBERS,P.O. BOX 217,APIA,SAMOA	971,367	General investment

Information about the Same Shareholder Presumed to Have Control and Affiliation: N/A.
Information About Directors and Supervisors of the Various Affiliates

Name of Affiliate	Job Title	Name or Representative	Shareholdingwhen elected	Shareholdingwhen elected
			Quantity of shares	Shareholding (%)
GREAT FORTUNE HOLDING LIMITED	Chairman of Board Director Director Director	Lin Ming-Ju (Representative of Feng Hsin Steel Co., Ltd.) Lin Ta-Chun (Representative of Feng Hsin Steel Co., Ltd.) Lin Chiu-Huang (Representative of Feng Hsin Steel Co., Ltd.) Cheng Der-Yih (Representative of Feng Hsin Steel Co.,Ltd.)	31,406,834	100%

5. Overview of operations of affiliates

						Unit: NT$thousand	Unit: NT$thousand
Name of Affiliate	Capital	Total assets	Total liabilities	Net value	Operating revenue	Operatin g income (loss)	Current income (loss) after tax	EPS after tax (NT$)
GREAT FORTUNE HOLDING LIMITED	971,367	516,457	-	516,457	-	(22)	(94)	-

II. Any private placement of securities in the most recent year and until the date of publication of the annual report: N/A.

III.Holding or disposition of the Company‘s stocks by subsidiaries in the most recent year and up to the date of publication of the annual report: N/A.

IV.Other Supplementary Notes, Where Applicable:

The Company owns critical ratios subject to industrial distinctiveness:
In 2020, the Company‘s products accounted for the following market share: 62.5% for angle steel, 58.6% for channel steel, 52.3% for flat-rolled steel, and 14.8% for steel bar (source of data: ―Statistics about Production, Marketing and Inventory of Main Steel Materials‖ of Taiwan Steel & Iron Industries Association).

Comparison about important financial ratios between the Company and peer companies in the same trade until December 31, 2020:


Name of Company		Financial Analysis inn 2020

		Feng Hsin	ChinaSteel	Tung Ho Steel	Wei Chih Steel	Hai Kwang
Analysis Item

Financial			49.20	37.62	54.21	57.36
	Liability to asset ratio	15.41
structure(%)

Solvency	Current ratio	303.22	104.44	153.39	137.46	109.68
(%)	Quick ratio	179.73	32.59	43.37	29.63	28.40
	Inventory turnover (counts)	6.16	2.67	2.77	4.92	3.29
	Average inventory turnover days	59.25	136.70	131.76	74.18	110.94
Operational
ability	Property, plant and equipment turnover	289	0.74	2.25	2.43	2.15
	(counts)	.
	Total asset turnover (counts)	1.19	0.44	0.96	1.37	0.93
	Return on assets (ROA) (%)	11.80	0.64	8.05	10.49	2.37
	Return on equity (ROE) (%)	13.88	0.68	13.68	22.16	4.28
	Income before tax to paid-in capital ratio	55.66	1.75	42.40	18.50	10.44
Profitability
	(%)

	Net profit margin (%)	9.60	0.77	8.30	6.93	1.96
	EPS (NT$)	4.50	0.05	3.52	1.85	0.87

Conclusion: According to said comparison results, in terms of the data about the financial structure and operating ability, the Company appears to equally match the other peer companies in the same trade.

Fifteen. Other Matters Posing Significant Effects

If any of the situations referred to in subparagraph 2 of Paragraph 3, Article 36 of the Securities and Exchange Act that may materially affect shareholders‘ equity or the price of the Company‘s securities have occurred during the most recent year until the date of publication of the annual report, please describe each situation: N/A.

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Chairman of Board Lin Ming-Ju

April 13, 2021

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AI assistant

FH — Annual Report 2020

51946_rns_2021-08-02_afa315f4-0eaf-481e-a36d-5c8ad6806f31.pdf

Stock Code: 2015

2020 ANNUAL REPORT

Printed on April 13, 2021

Table of Contents

One. A Letter to Shareholders

Dear Ladies & Gentlemen:

I. Operating results

1. The implementing results for the Company‘s primary product sale volume 2020:

2. The Company‘s earnings are compared as follows:

4. Technology and R&D

II. Business Plan 2021

1. External competition, legal environment, and business policy:

2. Sales volume forecast and supporting basis

3. Key production and sales policies

(1) Production

(2) Sale

III. Business Environment

2. Long-term development strategies

Two. Company Profile

I. Date of Incorporation: January 1969

II. Business Operations of Major Units

1-1. Major Shareholders of Corporate Shareholders

1-2. Major shareholders of the major shareholder who is a juristic person

2. Information about directors (2)

Record Date: April 13, 2021

4. Remuneration to Directors, President, and Vice Presidents

4-1. Remuneration to General Directors and Independent Directors

Range of Remuneration

4-2. Remuneration to President and Vice Presidents

5. Name of the manager receiving remuneration to employee, and state of distribution

2. Operations of the Audit Committee:

(1) Operations of the Audit Committee

Other items to be stated:

Note:

4. The composition, functions and operations of the Remuneration Committee, if any, are disclosed as follows: (1) Information about Remuneration Committee members

(2) Information about operations of Remuneration Committee

1. The Company‘s Remuneration Committee consists of 3 members.

III. Environmental issues

7. Fulfillment of ethical management, and deviations from the Ethical Corporate Management Best Practice Principles for TWSE/TPEX Listed Companies, and reasons thereof:

10. Internal Control System Implementation Status

10-1. Declaration of Statement for Internal Controls

Feng Hsin Steel Co., Ltd.

Discussed Motions:

Proposed Resolutions:

Discussed Motions:

Date & Time: 10:00AM, June 10, 2020 (Wednesday)

Discussed Motions:

Discussed Motions:

Date & Time: 10:15AM, October 30, 2020 (Friday)

Proposed Resolutions:

Discussed Motions:

Discussed Motions:

15. Continuing education and training courses attended by directors:

V. Information About CPAs

2. Equity transfer information

3. Information about pledge of equity: N/A.

Information about relationship among top 10 shareholders in proportion of shareholdings

Comprehensive Shareholding Ratio

Four. Capital Overview - Capital and Shares

2. Authorized capital:

3. Information about the aggregate reporting policy: N/A.

II. Shareholder Structure

V. Price, Net Worth, Earnings, Dividends, and Other Information per Share for the Most Recent Two Years

VI. Dividend Policy and Execution Thereof

1. Dividend Policy:

2. The dividends proposed to be distributed at the shareholders‘ meeting:

VII. Effect of Bonus Stock Distribution Proposed at the Shareholders‘ Meeting on the Company‘s Operation Performance and EPS:

IX. Repurchase of the Company‘s Shares: N/A.

Eleven. Overview of Operations

I. Business Contents

(1) Scope of business

(2) Overview of industry

(3) Technology and R&D

2. Research results

(4) R&D plans

1. Pending R&D plans

2. Future R&D plans

FH Annual Report 2020