FH — Annual Report 2023

Jun 21, 2024

Stock Code: 2015

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2023 ANNUAL REPORT

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

Printed on April 15, 2024

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: dycheng@fenghsin.com.tw

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

Name: Mr. Zhuang Wen-Che Job Title: Assistant Vice President, 1st Sales Office Tel. No.: (04) 25565101, Ext. 2160 Email: nike@fenghsin.com.tw

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 2F., No. 11, 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 & Tu, Chin Yuan, CPA Firm Name: EY Taiwan Address: 26F., No. 186, Shizheng N. 7th Rd., Taichung City 40756 Tel. No.: (04)22598999 Website: https://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	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 .......................................................3
III.	External competition, legal environment, and business environment .....................4
IV.	Future Development Strategies ................................................................................5
Two. Company Profile
I.	Date of Incorporation ...............................................................................................6
II.	History......................................................................................................................6
Three.	Corporate Governance Report
I.	Organizational Chart ................................................................................................8
II.	Business Operations of Major Units ........................................................................9
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 ............................................................................................................15
IV.	Corporate Governance Operations .........................................................................31
V.	Information About CPAs .....................................................................................148
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. ...............................................149
VII.	Changes in equity of directors, managers, and shareholders with more than 10%
	of the Company’s shares ....................................................................................149
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 .....................................................................................152
IX.	Comprehensive Shareholding Ratio ..............................................................153
Four. Capital Overview - Capital and Shares
I.	Source of Capital Stock ........................................................................................154
II.	Shareholder Structure ....................................................................................154
III.	Status of Share Dispersion ........................................................ 155
IV.	List of Major Shareholders ...................................................................................155
V.	Price, Net Worth, Earnings, Dividends, and Other Information per Share for the
	Most Recent Two Years ............................................................ 156
VI.	Dividend Policy and Execution Thereof ..............................................................156
VII.	Effect of Bonus Stock Distribution Proposed at the Shareholders’ Meeting on the
	Company’s Operation Performance and EPS. .....................................................157
VIII.	Remuneration to Employees and Directors ..........................................................158
IX.	Repurchase of the Company’s Shares ..................................................................158

Five. Corporate Bonds .................................................................................... 159	Five. Corporate Bonds .................................................................................... 159
Six.	Preferred Stocks ...................................................................................... 159
Seven. Overseas Depository Receipts ............................................................ 159
Eight. Employee Stock Warrants and Restricted Stock Awards (RSAs) ...... 159
Nine. New Shares Issued Upon Merger or Acquisition, or Acquisition of
Another Company's Shares ............................................................................ 159
Ten. Capital Application Plan Implementation Status ................................... 159
Eleven. Overview of Operations
I.	Business Contents ........................................................................................................160
II.	Marketing and Sales Status ..........................................................................................171
III.	Information About Employees for the Most Recent Two Years Until the Date of
	Publication of the Annual Report ................................................................................177
IV.	Information About Environmental Protection Expenditure .........................................179
V.	Labor-Management Relations ......................................................................................181
VI.	Cyber security management .........................................................................................190
VII.	Important Contracts .....................................................................................................191
Twelve. Overview of Finance
	I. Condensed Balance Sheet and Statement of Comprehensive Income for the
	Most Recent Five Years .................................................................................194
	II. Financial Analysis for the Most Recent Five Years ......................................198
	III. Audit Committee Review Report on the Financial Report for the Most Recent
	Year ................................................................................................................201
	IV. Consolidated Financial Report for the Most Recent Year .............................202
	V. Standalone Financial Report for the Most Recent Year ................................288
	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: ..........................................................................................373
Thirteen. Review and Analysis on Financial Position and Performance, and
	Risk Management Issues
	I. Financial Position ..........................................................................................374
	II. Financial Performance ...................................................................................375
	III. Cash Flow ......................................................................................................376
	IV. Impact posed by material capital expenditures in the most recent year to
	business and finance ......................................................................................377
	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 .......377
VI.	Risk Management Issues ...............................................................................378
VII.	Other Important Notes ...................................................................................380
Fourteen.	Special Notes
I.	Information About Affiliates .........................................................................382
II.	Any private placement of securities in the most recent year and until the date
	of publication of the annual report .................................................................382
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.................383
IV.	Other Supplementary Notes, Where Applicable............................................383
Fifteen. Other Matters Posing Significant Effects ......................................... 384

One. A Letter to Shareholders

Dear Ladies & Gentlemen:

In recent years, international steel prices have fluctuated significantly due to the impact of the pandemic and the Russo-Ukrainian war, which has yet to end but has stopped expanding in scale. As lockdown measures lifted across nations, inflationary pressures subsided after central banks worldwide hiked up interest rates. For these reasons, the global steel market had notably less volatile pricing in 2023. During the pandemic, the Company had high inventory levels of its round bar products in downstream industries. Even stable steel prices had not effectively boost round bar sales. Nevertheless, rebar products grew along with the booming domestic housing market and public construction. In 2023, the sales volume of finished products totalled 1.596 million metric tons, a 2% decrease from 2022 including 16% decrease in round bar and 3% increase in rebar. Annual operating revenue amounted to NT$34.9 billion, a 9.64% decrease from 2022. However, due to the decline in round bar shipments, which have higher margins, the operating profit was NT$2.7 billion, a decrease of 17.98% from 2022.

A. Operating results

1. Sales performance results of main products in 2023 are as follows:

Unit: Metric tons

	Main Products	Sales volume in 2023	Sales volume in 2022	Growth Rate%
Finished Product	Merchant Bar	301,845	309,761	-2.56%
	Round Bar	303,081	361,635	-16.19%
	Rebar	990,711	963,684	2.80%
	Total	1,595,637	1,635,080	-2.41%

1. The Company's profitability is compared as follows:

2. (1) Consolidated Financial Statements

Unit: NT$ thousands

Item	Year 2023	Year 2022	Growth Rate %
OperatingRevenue	34,882,023	38,604,929	-9.64%
OperatingCosts	31,326,299	34,424,330	-9.00%
Gross Profit	3,555,724	4,180,599	-14.95%
OperatingExpenses	845,369	876,186	-3.52%
Net Profit	2,710,355	3,304,413	-17.98%

• (2) Standalone Financial Statements

Unit: NT$ thousands

Item	Year 2023	Year 2022	Growth Rate %
OperatingRevenue	34,882,023	38,604,929	-9.64%

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OperatingCosts	31,326,299	34,424,330	-9.00%
Gross Profit	3,555,724	4,180,599	-14.95%
OperatingExpenses	845,341	876,165	-3.52%
Net Profit	2,710,383	3,304,434	-17.98%

1. Financial structure and profitability analysis (consolidated financial statements are consistent with standalone financial statements)

Year	Year
		Year 2023	Year 2022
Analysis Item
Financial structure	Debt-to-Asset Ratio	18.92	15.08
	Ratio of long-term capital to property,plant and equipment	228.73	238.43
Profitability	Return on Assets (%)	9.14	11.76
	Return on Equity (%)	10.87	14.01
	Income Before Tax to Paid-in Capital Ratio (%)	49.90	65.00
	Profit margin (%)	6.81	7.96
	Earnings per share (NT$)	4.08	5.28

4. Technology and R&D Overview

The Company focuses technological and R&D developments on optimizing semi-finished product (steel billet) processes, innovating new products, and enhancing existing product quality. New initiatives encompasses low-carbon steel for cold heading, mechanical structural use carbon steel and low-alloy steel, medium-carbon resulfured steel, non-quenched and tempered steel, automotive spring steel, lead screw, and slider steel. We continue to expand our portfolio by introducing new shapes and sizes across various product lines.

Our innovations include vacuum degreasing equipment for steel billet refining. Except steel billet is used magnetic powder equipment for inspection, different levels of grinding based on usage, and strict quality checks of finished rolling product to meet customer needs. The completed straight bar inspection line will fulfil requirements of automotive products and enhance product value. Concurrently, online automatic inspection systems have also been installed to monitor the surface quality of rolled products in real-time, thereby improving consistency in quality.

For technological development, the Company not only hired domestic and international consultants to train our existing research personnel, but also encouraged them to attend industry seminars and conferences at home and abroad to enhance their level of knowledge. Our contracts with professional steelmakers and rolled steel manufacturers introduced advanced steelmaking and rolled steel equipment, technology, and quality assurance systems into our factories to facilitate

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iterative quality improvements.

Regarding AI/AOI technology, our steel billet defect identification system can standardize criteria and directly locate steel billet surface defects to lower the leak rates. While our channel steel direct recognition system ensures direct product quality to reduce claims. We also established an automatic rebar measurement system to automate the inspection process and avoid human errors. Lastly, our advanced automated system for assessing high-end product cleanliness standardized criteria and reduce both training and operation time for new recruits.

Company technology R&D work completed in 2023 involves 1018A for automobile T-tube/weld nut/flange nut/casing/connector, 1022A for automobile casing/flange nut/weld nut/T-nut, SCM415H for gear/guide rod nut/mechanical parts, and SCM420H for gear/mechanical parts.

B. 2024 Business Plan

1. Business Policy

Our 2024 business policy will continue our 2023 goal to maximize benefits for the Company and our shareholders with iterative equipment and technology improvements to increase productivity and enhance product quality as well as energy-saving and carbon-reducing processes to contribute towards circular economy.

2. Estimated sales volume and basis

In October of 2023, World Steel Association forecasts a resumption of 1.8% growth in global steel demand. Rising prices in Europe and the United States are expected to stimulate the Asian steel market. In 2024, steel demand is projected to grow to 1.9%, representing an increase of 36.4 million metric tons compared to 2023.

The Company's new straight bar inspection facility was completed in Q4 of 2023 and has started the trial run, after which both surface and internal quality of products will be examined and guaranteed as required by customers . In the future, we aim to enter the automotive and high-end steel markets to expand our types of purchase orders and increase sales volume.

The hot-rolled straight-line rolling process at our new rebar factory substantially increased rebar output and reduced energy consumption and carbon emissions, ultimately lowering production cost. This maintains our competitive advantage in accordance with government projects on public infrastructure and construction, the national Forward-looking Infrastructure Development Program, as well as in private construction projects of major electronic manufacturers. With an estimated increase in the sales volume of steel products in 2024, we anticipate a rebound in overall steel demand to overcome unfavourable conditions in 2023.

3. Key production and sales policies

• (1) Production

• A. Continue to innovate, expand our portfolio, and tailor production plans to fulfil customer needs.

• B. Implement the Company's quality policy of “Full Participation, Top

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Quality, Prioritizing Customer Needs”.

• C. Rebar factories stabilize mass production, enhance quality, and reduce energy consumption and costs to sharpen our competitive edge.

(2) Sales

• A. Actively bid for the tenders of public and major factory construction projects, collaborate with processing plants, and develop new customers to increase market shares for rebar.

• B. Continue to expand the export market for finished products to maximize profits.

• C. Maintain long-term partnerships with suppliers to stabilize the volume and quality of raw materials.

• D. Improve the quality of service and establish long-term collaborations with distributors and customers to consolidate sales volume and market share.

• E. Iterative updates of steelmaking and rolling equipment and technology are aiming to increase productivity and improve quality. Adding round bar products to the straight bar finishing line will lead us to innovate high-end applications.

C. External competitive, regulatory, and overall business environments

The first half of 2023 initially held promise for a rebound in steel demand due to the easing of lockdowns in China. However, this outlook was dampened by continued debt defaults among major real estate firms. Furthermore, an imbalance in the control of crude steel production, coupled with low steel demand has increased the risk of overcapacity. Geopolitical risks due to the Israel-Palestinian conflict and Russo-Ukrainian war also posed additional challenges, encumbering market recovery. The latter half of 2023 witnessed a shift in the industry with a gradual decrease in unfavorable factors and a rebound in automobile production. CCP’s economic policy stabilized the Chinese housing market and stimulated the Taiwanese construction industry. As the government actively launched projects for public infrastructure and construction through the Forward-looking Infrastructure Development Program, a rebound in real estate purchases, the construction of high-tech plants, and a resurgence in demand for rebar and construction materials attributed to only a slightly decline in annual sales volume compared to the previous year.

The year 2024 brings optimism for a global economic upswing with an early glimpse of signs indicating sustained manufacturing growth, as reflected in the rising PMI figures for the U.S. and China. A positive economic recovery can also be observed as major central banks in Europe and the U.S. near the end of their interest rate hike cycles, along with decreasing inflationary pressures worldwide. Concurrently, the EU's implementation of the Carbon Border Adjustment Mechanism (CBAM) has prioritized zero-carbon emission mandates, which is expected to stimulate investment in factory equipment, consequently boosting the demand for steel. In addition, the global market performance in 2024 is projected to be better than the previous year due to the anticipated easing of geopolitical tensions.

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D. Future Development Strategies

To facilitate sustainable corporate development, the Company has formulated the following short- and long-term strategies for all employees:

1. Short-term strategies

2. (1) To foster a friendly work environment.

3. (2) To save energy, reduce pollutants, reuse water resources, and achieve zero wastewater discharge.

4. (3) To develop new steel grades and products.

5. (4) To reduce costs, improve product quality, and expand market share.

6. (5) To enhance corporate brand image as eco-friendly through afforestation of factory surroundings.

7. Long-term strategy

8. (1) To comply with national policies in the direction of carbon neutrality.

9. (2) To integrate smart production with processes.

10. (3) To diversify management, extend core advantages, and gradually penetrate international markets.

11. (4) To build a comprehensive knowledge system.

Thank you for your continued support. We wish you the best of health, happiness, and prosperity!

Chairman of Board Lin Ta-Chun

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Two. Company Profile

I. Date of Incorporation: January 1969

• II. History:

• 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:

• (1) The Company increased the capital in Taiwan Steel Union Co., Ltd. in cash by NT$ 15,520 thousand in 2023 and until April 15 2024. Upon the capital increase, the total trading value amounted to NT$ 470,164 thousand.

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

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

3. Other important events sufficient to affect shareholders’ equity, and the impact posed by them:

4. (2) On February 23, 2023, the Company's board of directors resolved to distribute cash at $4.0 per share, and the distribution of cash dividends from the earnings will be reported at the general shareholders' meeting 2023.

5. (3) On February 29, 2024, the Company's board of directors resolved to distribute cash at $3.5 per share, and the distribution of cash dividends from the earnings will be reported at the general shareholders' meeting 2024.

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Three. Corporate Governance Report I. Organizational Chart

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II. Business Operations of Major Units

Organizational Unit	Basic Operations
Audit Office	1. Planning and implementation of the audit system, and follow-up on corrections of audited defects by various departments. 2. Operation improvement, personnel training and implementation of target management ofthe affiliated business.
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. 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. Operation improvement, personnel training and implementation of target management of the affiliated business. 7. Otheradministrative 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. Operation improvement, personnel training and implementation of target management of the affiliated business. 5. Otherbusinessesrelated tofinance 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. Operation improvement, personnel training and implementation of target management of the affiliated business. 6. Writing andmaintenance ofcomputersoftware program.
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. Operation improvement, personnel training and implementation of target management of the affiliated business. 9. Productionplanand semi-finishedinventorymanagement.
2nd Sales Division	1. Procurement of raw materials domestically/overseas. 2. Procurement and sales of semi-finishedgoods domestically/overseas.

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Organizational Unit	Basic Operations
	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. Processing of complaints and claims from customers. 9. Operation improvement, personnel training and implementation of target management ofthe affiliated business.
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. 8. Operation improvement, personnel training and implementation of target management ofthe affiliated business.
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. Operation improvement, personnel training and implementation of target management of the affiliated business. 8. Other warehousing affairs.
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. Operation improvement, personnel training and implementation of target management of the affiliated business. 6. 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. New personnel and safety and health education and training, as well as legal certificateissuance training andreturntraining.

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Organizational Unit	Basic Operations
	3. Occupational disaster investigation and statistical analysis. 4. Planning and supervision of ISO 14001 environmental audit, promotion and supervision of ISO 45001 & TOSHMS occupational safety and health management system implement. 5. Businesses related to greenhouse gases and sustainable development, including the implementation of ISO 14064 and ISO 14067, and the promotion and tracking of carbon reduction results. 6. Identification and management of environmental protection and occupational safety and health related laws and regulations. 7. Supervision, inspection and reporting of environmental protection, occupational safety and health, fire protection and building public safety businesses (including relationships with the corresponding supervisory authorities) 8. Health examination, labor health services (including factory visits by occupational doctors), residents’ complaints and factory cleaning.Security guard management. 9. Access control management. 10. Operation improvement, personnel training and implementation of target management of the affiliated business. 11. Other mattersrelated to environmentalprotectionand safety &health.
Metallurgy R&D Division	1. Off-line inspection and testing of finished goods, semi-finished goods, raw 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. AI/AOI model construction and project development 7. Planning, audit, supervision and execution of ISO 9001, NCA 3800 and TAF quality systems, etc.. 8. Calibration and management of measurement tools and instruments. 9. Inspection of items related to environmental protection. 10. On-site QC supervision of production line at the rolling steel. 11. Registration and control of documents on the quality, environmental protection & EHS systems throughout the Company. 12. Environment, health and safety (EHS) management affairs (including environmental factors/identification of hazard, contingency policy and routine self-inspection, etc.). 13. Operation improvement, personnel training and implementation of target management of the affiliated business. 14. Other R&Daffairsrelated tometallurgy.
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,inspectionandmaintenance ofelectrical

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Organizational Unit	Basic Operations
	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. Handle business related to renewable energy equipment. 9. Operation improvement, personnel training and implementation of target management of the affiliated business. 10. Any otheraffairsrelated toElectrical EquipmentDivision.
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. Operation improvement, personnel training and implementation of target management of the affiliated business. 6. Any other affairs related to No. 1 Steelmaking Shop.
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. Operation improvement, personnel training and implementation of target management of the affiliated business. 7. Any otheraffairsrelated to No.1Steel 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. Coordinationand cooperationwithvarious units about the process quality

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Organizational Unit	Basic Operations
	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. Operation improvement, personnel training and implementation of target management of the affiliated business. 6. Any otheraffairsrelated to No.2Steelmaking Shop.
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. Operation improvement, personnel training and implementation of target management of the affiliated business. 6. Any otheraffairsrelated to No.2Steel RollingMill.
Steel Rolling 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 steel rolling mills 2. Execution of budget, policy and target for equipment at steel rolling mills. 3. Preparation and execution of dimension replacement in rolling steel production process. 4. Environment, health and safety (EHS) management affairs (including environmental factors/identification of hazard, contingency policy and routine self-inspection, etc.). 5. Operation improvement, personnel training and implementation of target management of the affiliated business. 6. Anyother affairs related to Steel RollingEquipment Maintenance
Steelmaking 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 . 2. Execution of budget, policy and target for equipment at steelmaking shops. 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 equipment. 6. Transportation of furnace slag and iron oxide. 7. Maintenance and protection of motor vehicles. 8. Operation improvement, personnel training and implementation of target management of the affiliated business.
Steelmaking	1. Productiontechnologyimprovement, upgrading ofquality and construction,

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Organizational Unit	Basic Operations
Technology Division	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. Steelmaking new process, new equipment evaluation and testing 6. Environment, health and safety (EHS) management affairs (including environmental factors/identification of hazard, contingency policy and routine self-inspection, etc.). 7. Operation improvement, personnel training and implementation of target management ofthe affiliated business.
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. 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. Operation improvement, personnel training and implementation of target management of the affiliated business. 6. Any otheraffairsrelated to No. 3 Steel RollingMill.
Rolling Technology Division	1. Production technology improvement, upgrading of quality and construction, maintenance and control of process quality at steel rolling mills shops. 2. Assist in the development of new rolling products and the formulation and maintenance of product specifications 3. Integration of rolls, machines and inducers in rolling mills, Roll Shop, and analysis of results of use. 4. Assist in improving the quality of rolled steel products and coordinate relevant units to solve quality problems. 5. Assist each rolling mill with new process, new equipment evaluation, installation and commissioning. 6. Steel rolling cadre training. 7. Operation improvement, personnel training and implementation of target management ofthe affiliated business.

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III. Information concerning the president, vice presidents, assistant vice presidents, and department and branch managers: 1. Information about directors (1)

1. Information about directors (1)	1. Information about directors (1)	1. Information about directors (1)	1. Information about directors (1)	1. Information about directors (1)	1. Information about directors (1)	1. Information about directors (1)
									Record Date: April 15,2024
Job Title	Nati onali ty or Plac e of Regi strati on	Name	Gender /Age	Date of election (appointment)	Term of office	Date when first elected Date	Shareholding when elected		Current shareholding		Shares currently held by a spouse or underage children		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			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 Ta-Chun	Male/4 1-50	July 22, 2021	3 years	June 17, 2015	7,168,881	1.23%	7,956,881	1.37%	13,160,840	2.26%	5,279,000	0.91%	Master, Boston University CEO of Feng Hsin Steel Co., Ltd.	Supervisor of Lih Dar Steel Co., Ltd. Supervisor of Fengyu Resource Co., Ltd.	Director	Lin Tsai-Hsian g	Brothers
Director	the R.O. C.	Lin Chiu-Hu ang	Male/8 1-90	July 22, 2021	3 years	May 25, 1992	5,526,000	0.95%	5,526,000	0.95%	10,294,000	1.77%	2,100,000	0.36%	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/7 1-80	July 22, 2021	3 years	May 30, 2003	5,388,871	0.93%	4,640,871	0.80%	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
Director	the R.O. C.	Lin Tsai-Hsi ang	Male/4 1-50	July 22, 2021	3 years	July 22, 2021	5,846,860	1.01%	6,216,860	1.07%	3,743,000	0.64%	10,000,000	1.72%	Graduated from Cal. State University Fullerton Assistant Manager of Dragon Steel Corporation Vice President of Taiwan Steel Union Co., Ltd	President of Taiwan Steel Union Co., Ltd Director of Fengyu Resource Co., Ltd. Corporate director representative of Gwo Huei Iron & Steel Co., Ltd. Corporate director representative of Gwo Uei Metals Industry Co., Ltd. Corporate director representative of Taiwan Steel Resources Co., Ltd.	Chairma n of Board	Lin Ta-Chun	Brother s
Director	the R.O. C.	Lin Chi-Jui	Male/3 1-40	July 22, 2021	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. Corporate director representative of Chien Shing Harbour Service Co., Ltd. Director of Shin Lin Ji Co., Ltd.	N/A
Director	the R.O. C.	Yang Tsung-Ju	Male/3 1-40	July 22, 2021	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. Chairman of Board of Feng Yuan Cafe CO., LTD.	N/A

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Job Title	Nati onali ty or Plac e of Regi strati on	Name	Gender /Age	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.	Chen Hsin-Hu ng	Male/4 1-50	July 22, 2021	3 years	July 22, 2021	3,119,997	0.54%	4,434,997	0.76%	364,000	0.06%	0	0%	Master,Syracuse University	Chairman of Board of Gei Tai International Co., Ltd. Chairman of Board of Yiyuan Wood Industry Co., Ltd. Chairman of Board of Yifeng Gypsum Chemical Co., Ltd. Director and President of Chang Ying International Limited	N/A
Director	the R.O. C.	Chung Shing-Li n	Male/7 1-80	July 22, 2021	3 years	May 25,1992	10,727,510	1.84%	10,727,510	1.84%	71,550	0.01%	0	0%	Graduated from Taichung Municipal Taichung First Senior High School Supervisor of Feng Hsin Steel Co., Ltd. Supervisor of Fengxin Development Enterprise Co., Ltd	N/A	N/A
Director	the R.O. C.	Lai San-Ping	Male/7 1-80	July 22, 2021	3 years	April 30, 1994	12,702,006	2.18%	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. Supervisor of Yung Li Shing Construction Co., Ltd.	N/A
Director	the R.O. C.	Lin Kun-Tan	Male/6 1-70	July 22, 2021	3 years	May 25, 1992	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 Chairman of Board of Yung Li ShingConstruction Co.,Ltd.	N/A

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Job Title	Nati onali ty or Plac e of Regi strati on	Name	Gender /Age	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
Independe nt Director	the R.O. C.	Yue Chao-Ta ng	Male/6 1-70	July 22, 2021	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	N/A
Independe nt Director	the R.O. C.	Liao Liao- Yu	Male/7 1-80	July 22, 2021	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	N/A	N/A

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Job Title	Nati onali ty or Plac e of Regi strati on	Name	Gender /Age	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
Independe nt Director	the R.O. C.	Wang Yea -Kang	Male/ 71-80	July 22, 2021	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

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1-1. Major Shareholders of Corporate Shareholders

Record Date: April 15, 2024 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 15, 2024 Name of Juristic Person Major Shareholder of the Juristic Person N/A N/A

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1. Information about directors (2)

2. 1.Disclosure of professional qualifications of directors and

independence of independent directors.

		Record Date: April 15, 2024	Record Date: April 15, 2024
Qualifications Name	Professional Qualifications and Experience(Note)	Independence	Concurrent independent director position in other publicly traded companies
Lin Ta-Chun	1. Mr. Lin Ta-Chun, a graduate of Boston University, U.S. He was promoted to the position of President of the Company from June 2018 to July 2021. Thereafter he has been designated as the Chairman of the Board of Directors since July 2021 and is responsible for the implementation of the overall strategy formulated by the Board of Directors. 2. Mr. Lin Ta-Chun is well versed in the development of the steel industry chain and has industry experience in business management, leadership, decision making, production, marketing, and professional capabilities in finance and accounting.	N/A	N/A
Lin Chiu-Huang	1. Mr. Lin Chiu-Huang is a graduate of the senior department of Feng Yuan Commercial High School and is currently the chairman of the board of directors of Sun Young Lumber Products Co., Ltd. 2. Mr. Lin Chiu-Huang is well versed in the development of the steel industry chain and has the industrial experience in business management
Lin Wen-Fu	1. Mr. Lin Wen-Fu has studied at Feng Chia University, and he is currently the chairman of the board of directors of Lih Dar Steel Co., Ltd. and a director of Ta Chia Iron & Steel Co., Ltd. 2. Mr. Lin Chiu-Huang is well versed in the development of the steel industry chain and has the industrial experience in business management

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Lin Tsai-Hsiang	1. Mr. Lin Tsai-Hsiang, a graduate of Cal. State University Fullerton, was an Assistant Manager of Dragon Steel Corporation and is currently the president of the investment company—Taiwan Steel Union Co., Ltd. 2. Mr. Lin Tsai-Hsiang is well versed in the development of the steel industry chain and has industry experience in business management, leadership, decision making, production, marketing, and financial relevant expertise.	N/A	N/A
Lin Chi-Jui	1. Mr. Lin Chi-Jui is a Graduate of the Department of Business Finance and Accounting, Bentley University and is currently the Vice President of the Company’s sales department. 2. Mr. Lin Chi-Jui is expert in the operation and strategic management of the steel industry. He acts as a manager on the board of directors, communicates and interacts with all directors on management strategies. In addition, he also provides relevant management advice and has expertise in leadership, decision-making, production, marketing, and accounting.
Yang Tsung-Ju	1. Mr. Yang Tsung-Ju has a doctoral degree in Physics from Tsing Hua University and is currently the Chairman of Feng Yuan Development Co., Ltd. 2. Mr. Yang Tsung-Ju has business management and industrial technology expertise.
Chen Hsin-Hung	1. Mr. Chen Hsin-Hung has a master's degree from Syracuse University and has worked in the sales department of the Company. Currently, he is also the chairman of the board of directors of the peer company, namely Gei Tai International Co., Ltd. 2. Mr. Chen Hsin-Hung is well versed in the development of the steel industry chain, and he has the industrial experience in business management and the Insight on international steel market.
Chung Shing-Lin	1. Mr. Chung Shing-Lin is a graduate of Taichung First Senior High School and has served as a director and supervisor of the Company in different periods of time. 2. Mr. Lin Chiu-Huang is well versed in the development of the steel industry chain and has the industrial experience in business management

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Lai San-Ping	1. Mr. Lai San-Ping is a graduate of Chung Yuan University and currently serves as the Vice President of the Company's procurement department. He is also a director of the peer companies, namely Gwo Huei Iron & Steel Co., Ltd. and Gwo Uei Metals Industry Co., Ltd. 2. Mr. Lai San-Ping is expert in the operation and strategic management of the steel industry. He acts as a manager on the board of directors, communicates and interacts with all directors on management strategies, and provides relevant management advice. In addition, he has the industrial experience in leadership and decision-making and has the insight of the international steel market.	N/A	N/A
Lin Kun-Tan	1. Mr. Lin Kun-Tan is a graduate of Chengchi University and is currently the chairman of the board of directors of the peer companies, namely Gwo Huei Iron & Steel Co., Ltd., Gwo Uei Metals Industry Co., Ltd. and Yung Li Shing Builders Co., Ltd. 2. Mr. Lin Chiu-Huang is well versed in the development of the steel industry chain and has the industrial experience in business management
Yue Chao-Tang	1. Mr. Yue Chao-Tang holds a master's degree in accounting from National Chengchi University and is a certified public accountant of R.O.C. He has served as the chairman and director of Ernst & Young, and has been an adjunct professor at National Chung Cheng University. Moreover, he is a professor-level specialist with expertise in accounting information and financial analysis, and possesses knowledge of business-related laws. 2. Mr. Yue Chao-Tang has practical experience, strategic management, leadership and academic ability and has the industrial experience in leadership and decision-making. In addition to serving as an independent director of the Company, he has also served as a director and independent director in upstream and downstream companies in the relevant traditional industry chains and peer group in order to contribute his expertise in corporate management.	Serve as an Independent Director and meet the independence requirements: 1.that the person or the spouse or any relative of the person within the second degree of kinship is not a director, supervisor, or employee of the Company or any of its affiliate; 2.the person or the spouse or any relative of the person within the second degree of kinship does not hold the Company’s issued shares; 3.the person is not a director, supervisor, or employee of the Company or any of its affiliates; 4.the person has not received any remuneration for providing business, legal, financial, or accounting services to the Company or any of its affiliates in the last two fiscal years;	0

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Liao Liao-Yu	1. Mr. Liao Liao-Yu is a graduate of Feng Chia University and currently is also an independent director of the peer company, namely China Metal Products Co., Ltd. 2. Mr. Liao Liao-Yu has long been involved in public affairs and has served as the county magistrates of Taichung, the Minister of the Interior of the Executive Yuan, and the Secretary-General to the President.		0
Wang Yea-Kang	1. Mr. Wang Yea-Kang has a Master's degree from the Graduate Institute of Urban Studies, Chung Hsing University. In addition to serving as an independent director of the Company, he has also served as a director and independent director in upstream and downstream companies in the relevant traditional industry chains and peer group in order to contribute his expertise in corporate management. Furthermore, he also possesses leadership, decision-making and industrial experience in technology. 2. Mr. Wang Yea-Kang has long been involved in public affairs and is familiar with the development of the industry. He has served as the Director General of the Industrial Development Bureau of the MOEA, the Director General of the Department of Commerce of the MOEA, and the Secretary General of Chinese National Federation of Industries.		3

Note: None of the 13 directors of the Company are involved in any of the circumstances described in Article 30 of the Company Act.

1. Diversity and Independence of Board of Directors.

2. (1) Diversity of Board of Directors: In accordance with the Company's "Corporate Governance Best Practice Principles", directors are expected to generally possess the knowledge, skills and caliber that are necessary to perform their duties. In order to achieve the desired goals of corporate governance, the overall diversity policies of the － －

3. Board preferably include but are not limited to the following two categories of criteria.

4. Basic qualifications and caliber: gender, age, nationality and culture, etc.

5. Professional knowledge and skills: professional background (e.g. law, accounting, industry, finance, sales or technology), professional skills and industrial experience, etc.

The Company's current Board of Directors consists of 13 directors, including 3 independent directors, who have extensive experience and expertise in the domains of finance, business and management, etc. The Company's goal is to have more than half

23

of its members possessing management and leadership expertise. Currently, 77% of the directors have management expertise, and 69% of them have leadership expertise.

The diversity policies and their implementation for the current members of the Company's Board of Directors are described as follows.

Names of directors / diversity core indicators			Composition	Composition					Industrial	Experience			Expertise	Expertise
	Nation ality	Gende r	Concurre ntly serving as an employee of the Company		Age		Service term of independ ent directors	Business managem ent	Leader ship and decisio n Makin g	Productio n and marketing	Internatio nal market	Fin anc e	La w	Techn ology	Acco untin g
				Und er 50	51 to 70	A b o v e 7 1	Under 9 years
Lin Ta-Chun	TW	Male		V				V	V	V	V	V			V
Lin Chiu-Huang	TW	Male				V		V
Lin Wen-Fu	TW	Male				V		V	V
Lin Tsai-Hsiang	TW	Male		V				V	V	V	V	V
Lin Chi-Jui	TW	Male	V	V				V	V	V	V				V
Yang Tsung-Ju	TW	Male		V				V						V
Chen Hsin-Hung	TW	Male			V			V		V	V
Chung Shing-Lin	TW	Male				V		V
Lai San-Ping	TW	Male				V		V	V		V
Lin Kun-Tan	TW	Male			V			V	V	V
Yue Chao-Tang	TW	Male			V		V		V			V	V		V
Liao Liao-Yu	TW	Male				V	V		V
Wang Yea-Kang	TW	Male				V	V		V					V

Reviewing the list of 13 directors of the Company, Lin Ta-Chun, Lin Chiu-Huang, Lin Wen-Fu, Lin Tsai-Hsiang, Chen Hsin-Hung, Chung Shing-Lin, Lai San-Ping, and Lin Kun-Tan 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 professor concurrently. Wang Yea-Kang once served as the Director-General, Industrial Development Bureau, Ministry of Economic Affairs. Liao Liao-Yi was the Minister, Ministry of the Interior. Yang Tsung-Ju has remarkable achievements in the physical field. Lin Chi-Jui is specialized in international market and management fields.

• (2) Independence of the Board of Directors: There are 3 independent directors of the Company, which account for 23% of the total 13 directors. None of the independent directors and directors are related to each other as spouses and relatives within the second degree of kinship, and only the Chairman, Mr. Lin Ta-Chun, and the Director, Mr. Lin Tsai-Hsiang, are related to each other in the second degree of kinship, therefore, the Company does not have any of the circumstances as stated in paragraph 3 of article 26-3 of the Securities and Exchange Act.

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

Record Date: April 15, 2024

Job Title (Note 1)	Nationality	Name	Gend er	Date of election (appointment)	Shareholding	Shareholding	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
President	the R.O.C.	Lin Yong-Yuan	Male	May 1, 2022	0	0%	0	0%	0	0%	Graduated from Department of Materials Science, National Taipei Institute of Technology	N/A	N/A
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.	Corporate director representative of Chien Shing Harbour Service Co., Ltd. Director of Shin Lin Ji Co., Ltd.	N/A
Vice President, Procurement Department	the R.O.C.	Lin Cheng-Chan g	Male	March 1, 2024	4,002,000	0.69%	0	0%	0	0%	Graduated from The American College in Los Angeles Manager of Warehousing Division, Feng Hsin Steel Co., Ltd.	N/A	N/A			Note 3
Vice President, Administration Department	the R.O.C.	Yang Tsung-Lin	Male	March 1, 2024	3,752,839	0.65%	31	0%	0	0%	Graduated from Feng Chia University Manager of Administration Division, Feng Hsin Steel Co., Ltd. Special Assistant of Foreign Division, Gwo Uei Mentals IndustryCo.,Ltd.	Director of Gwo Huei Iron & Steel Co., Ltd. Director of Gwo Uei Metals Industry Co., Ltd. Supervisor of Qian Sheng Steel Co., Ltd.	N/A			Note 4
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 Director of Pro-Ascentek Investment Corporation.	N/A
Executive Assistant	the R.O.C.	Chen Shi-Zhong	Male	May 1, 2022	4,658	0%	0	0%	0	0%	Graduated from Department of Material Engineering, National Cheng Kung University	N/A	N/A
Assistant Vice President, 1st Sales Office	the R.O.C.	Zhuang Wen-Che	Male	January 1, 2024	0	0%	0	0%	0	0%	Graduated from Department of Business Administration, Tunghai University Manager of 1st Sales Division, Feng Hsin Steel Co., Ltd.	N/A	N/A			Note 5

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: On February 29,2024,Lai San-Ping, retired from vice president, procurement department and on March 1, 2024 Lin Cheng-Chang elected as vice president, procurement department. Note 4: On March 1, 2024,Yang Tsung-Lin elected as vice president, administration department.. Note 5: On September 30,2023,Chen Lian-Hsin retired from Assistant Vice President, Sales Department. On January 1, 2024 Zhuang Wen-Che elected as assistant vice president, 1st sales office

25

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, B, C, and D as amount and a percentage of net income	Sum of A, B, C, and D as amount and a percentage of net income		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, B and G as a percenta inco	, C, D, E, F, mount and a ge of net me	Remunerati on from investees other than subsidiaries , or parent company
		Remune	ration (A)	Pensi retirem	on upon ent (B)	Compensation to directors (C)		Professio expen	nal practice ses (D)			Wages, b special a etc	onuses, and llowances, .(E)	Pensi retire	on 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	Stoc k	Cash	Sto ck
Chairman of Board	Lin Ta-Chun	11,926	11,926	0	0	47,500	47,500	3,075	3,075	62,501/ 2.63%	62,501/ 2.63%	3,584	3,584	0	0	9,785	0	9,785	0	75,870/ 3.19%	75,870/ 3.19%	10,760
Director	Lin Chiu-Hua ng
	Lin Wen-Fu
	Lin Tsai-Hsia ng
	Lin Chi-Jui
	Yang Tsung-Ju
	Chen Hsin-Hun g
	Chung Shing-Lin
	Lai San-Ping
	Lin Kun-Tan
Indepen dent Director	Yue Chao-Tan g	3,600	3,600	0	0	0	0	90	90	3,690/ 0.15%	3,690/ 0.15%	0	0	0	0	0	0	0	0	3,690/ 0.15%	3,690/ 0.15%	0
	Liao Liao-Yu
	Wang Yea-Kang

1. 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.

1. 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.

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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)
5,000,000 (inclusive)~10,000,000 (exclusive)	Chen Hsin-Hung, Lin Chiu-Huang, Lin Tsai-Hsiang , Lin Wen-Fu Lai San-Ping, Lin Kun-Tan, Chung Shing-Lin, Yang Tsung-Ju, Lin Chi-Jui	Chen Hsin-Hung, Lin Chiu-Huang, Lin Tsai-Hsiang , Lin Wen-Fu Lai San-Ping, Lin Kun-Tan, Chung Shing-Lin, Yang Tsung-Ju, Lin Chi-Jui	Chen Hsin-Hung, Lin Chiu-Huang, Lin Tsai-Hsiang, Lin Wen-Fu , Lin Kun-Tan,Chung Shing-Lin, Yang Tsung-Ju	Chen Hsin-Hung, Lin Chiu-Huang, Lin Tsai-Hsiang, Lin Wen-Fu , Lin Kun-Tan,Chung Shing-Lin, Yang Tsung-Ju
10,000,000(inclusive)~15,000,000(exclusive)	Lin Ta-Chun	Lin Ta-Chun	Lai San-Ping, Lin Chi-Jui	Lai San-Ping, Lin Chi-Jui
15,000,000(inclusive)~30,000,000(exclusive)			Lin Ta-Chun	Lin Ta-Chun
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	13persons

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4-2. Remuneration to President and Vice Presidents

Unit: NT$ thousand

Job Title	Name	Wages (A)	Wages (A)	Pension upon retirement (B)	Pension upon retirement (B)	Bonuses and special allowances, etc. (C)	Bonuses and special allowances, etc. (C)	Remuneration to employees (D)	Remuneration to employees (D)	Remuneration to employees (D)	Remuneration to employees (D)	Sum of A, B, C, and D as amount and a percentage of net income (%)	Sum of A, B, C, and D as amount and a percentage of net income (%)	Remuneration from investees other than subsidiaries, or parent company
		The Company	Companies included in the financial statement	The Company	Companies included in the financial statement	The Company	Companies ~~i~~ncluded in the financial statement	The Company		Companies included in the financial statement		The Company	Companies included in the financial statement
								Cash	Stock	Cash	Stock
President	Lin Yong-Yuan	5,393	5,393	0	0	347	347	17,043	0	17,043	0	22,783/ 0.96%	22,783/ 0.96%	252
Vice President, Sales Department	Lin Chi-Jui
Vice President, Procurement Department	Lai San-Ping(No te 1)

Note 1: On February 29,2024,Lai San-Ping, retired from vice president, procurement department.

Range of Remuneration

Range of Remuneration
Range of Remuneration to Each President and Vice President of the Company Less than 1,000,000	Names of	President and Vice President
	The Company	Companies included into the financial statementE
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, Lin Yong-Yuan	Lai San-Ping, Lin Chi-Jui, Lin Yong-Yuan
10,000,000 (inclusive)~15,000,000 (exclusive)
15,000,000 (inclusive)~30,000,000 (exclusive)
30,000,000 (inclusive)~50,000,000 (exclusive)
50,000,000 (inclusive)~100,000,000 (exclusive)
More than 100,000,000
Total	3 persons	3 persons

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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	President	Lin Yong-Yuan	0	18,966	18,966	0.80%
	Vice President, Sales Department	Lin Chi-Jui
	Vice President, Procurement Department	Lai San-Ping(Note 1)
	Assistant Vice President, Sales Department	Chen Lian-Hsin(Note 2)
	Assistant Vice President, Administration Department	Cheng Der-Yih
	Executive Assistant	Chen Shi-Zhong
	Manager of Finance Division	Huang Kuei-Yu
	Manager of Audit Office	Cho Hsiu-Ying

Note 1: On February 29,2024,Lai San-Ping, retired from vice president, procurement department. Note 2: On September 30,2023,Chen Lian-Hsin retired from Assistant Vice President, Sales Department.

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1. 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

Year	2023	2022
Total of remuneration to directors, CEO, presidents and vice presidents (A)	89,286	94,003
A/Net income (%)	3.76%	3.06%

(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

1. For the remuneration to the Company’s directors, according to Article 16 of the Company's Articles of Incorporation, the remuneration to the directors and independent directors is based on the value of how much they participate in and contribute to the Company's operations, and the Board of Directors is authorized to determine such remuneration with reference to typical pay levels adopted by peer companies. If the Company is profitable during the year, it shall contribute no more than 2% thereof as the remuneration to the directors pursuant to Article 27 of the Company’s Articles of Incorporation. The independent directors shall not participate in the distribution of remuneration to directors. The Company regularly evaluates the performance of directors in accordance with the "Regulations Governing Performance Evaluation on Board of Directors". Furthermore, the related performance evaluation, remuneration policies, systems, standards, and structures are reviewed by the Remuneration Committee and the Board of Directors.

2. For the remuneration to the Company’s managers, according to the Company’s remuneration regulation, the Company has promulgated the work allowance and bonus measures in order to appreciate and reward our employees for their efforts and contribution in work. The relevant bonuses are determined based on the Company's annual performance, financial condition, operational condition and individual performance. If the Company is profitable during the year, it shall contribute no less than 2% thereof as the remuneration to the employees pursuant to Article 27 of the Company’s Articles of Incorporation. The amount of the mangers’ bonus is based on the result of the performance review pursuant to the Company’s “Regulations Governing Year-end Performance Evaluation and Employee Remuneration.” For The manager's performance evaluation items, they can be classified into the financial indicators and the non-financial indicators; the remuneration will be calculated with reference to the achievement rate of the manager's target and the performance of all the departments(included ESG engagement level). Moreover, the remuneration system will be reviewed from time to time according to the practical operating conditions and relevant laws and regulations.

3. In accordance with the Articles of Association of the Remuneration Committee, the remuneration package of the Company includes cash remuneration, retirement benefits or severance pay, allowances and other tangible incentives. The scope is consistent with that of the Regulations Governing Information to be Published in Annual Reports of Public Companies in respect of directors' and managers' remuneration.

B. Procedures for setting remuneration

1. In order to evaluate the directors' and managers' remuneration periodically, the results of

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evaluations are based on the Company's "Regulations Governing Performance Evaluation on Board of Directors" and the "Regulations Governing Year-end Performance Review and Employee Remuneration" that applies to the managers and employees; In addition, the results are shown on the basis of the Company's annual business indicators related to operation, governance and finance.

1. The results of the self-assessment on the performance of the Board of Directors, the members of the Board of Directors and the members of each functional committee for the year 2023 all went beyond the scope of standards. Due to weak manufacturing demand in 2023. Notwithstanding, the Company still used the best effort to expand the market and control costs. The results of the Company's 2023 annual managerial performance evaluation showed that all managers met their performance requirements, and the results of the Company's annual operating metrics were evaluated to satisfy the highest standards.

2. The reasonableness of the performance evaluation and remuneration of the Company's directors and managers are regularly evaluated and reviewed by the Remuneration Committee and the Board of Directors on an annual basis. In addition to the individual's performance achievement and contribution to the company, we also consider the overall operational performance of the company, the future risk and development trend of the industry. After the comprehensive consideration of the trend of the current corporate governance, we will give reasonable remuneration in order to strike a balance between the sustainable operation and risk control of the company. The actual amounts of directors' and managers' remuneration for 2023 were reviewed by the remuneration committee and proposed to the board of directors for approval.

C. Correlation between business performance and future risk exposure

1. The payment standards and system related to the Company’s remuneration policy are reviewed based on the overall operation of the Company, and the payment standards are approved based on their performance achievement and contribution in order to enhance the overall organizational team effectiveness of the Board of Directors and the managerial units. In addition, we make reference to industry salary standards to ensure that our management's salaries are competitive in the industry so as to retain outstanding management personnel. 2. The performance goals of our managers are integrated with "risk control" to ensure that possible risks within the scope of their duties and responsibilities are managed and prevented. Furthermore, the results of their actual performance evaluation are linked to the relevant human resources and related remuneration policies. All the important decisions of the Company's management are made after weighing various risk factors. The relevant decisions reflect the performance of the Company's profitability, and further relate the management’s remuneration and the risk management performance.

2. IV. Corporate Governance Operations

3. Operation of the Board of Directors

The Board held 5 (A) meetings during the most recent year (2023). The attendance of directors is summarized as follows:

Job Title	Name (Note 1)	Actual attendance B	Attendance by proxy	Actual attendance rate (%) (B/A) (Note 2)	Remarks
Chairman of Board	Lin Ta-Chun	5	0	100%
Director	Lin Chiu-Huang	5	0	100%
Director	Lin Wen-Fu	5	0	100%
Director	Lin Tsai-Hsiang	5	0	100%
Director	Lin Chi-Jui	5	0	100%

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Director	YangTsung-Ju	5	0	100%
Director	Chen Hsin-Hung	4	0	80%
Director	Chung Shing-Lin	5	0	100%
Director	Lai San-Ping	5	0	100%
Director	Lin Kun-Tan	4	0	80%
Independent Director	Yue Chao-Tang	5	0	100%
Independent Director	Liao Liao-Yu	5	0	100%
Independent Director	Wang Yea-Kang	4	1	80%
Attendance of directors at various Board of Directors meetings in 2023 ✓: In-Person Attendance◎: ProxyAttendance X:Absence 2023 9th meeting of 22st term 10th meeting of 22st term 11th meeting of 22st term 12th meeting of 22st term 13th meeting of 22st term Liao Liao-Yu ✓ ✓ ✓ ✓ ✓ Yue Chao-Tang ✓ ✓ ✓ ✓ ✓ Wang Yea-Kang ✓ ✓ ✓ ✓ ◎ 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: (I) Resolutions passed in accordance with Article 14-3 of the Securities and Exchange Act. (II) Aside from said circumstances, any other resolution(s) passed but with independent directors voicing opposing or qualified opinions on the record or in writing: 1.2023.01.13(9th meetingof the 22nd Board of Directors) Motion and follow-up Listed in Securities and Exchange Act 14-3 Independent directors’ objections or qualified opinions 1. Review of existing director and manager remuneration policyand system ✓ 2. Review of 2022 remuneration of managers and directors ✓ 3. Review of 2022 remuneration of directors. ✓ 4. Ratification of the NT$ 606 million solar photovoltaic system installation contract with RC Renewable Energy TechnologyCo.,Ltd ✓ 5. Amendments to the Safety, Health and Environmental Management-General Principles ✓ 6. Amendments to the Steelmaking Production Management-General Principles ✓ 7. Amendments to Corporate Governance Best Practice Principles ✓ 8. Amendments to Regulations Governing the ✓

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		Performance Evaluation of Directors
		9. Establishment of Risk Management Policy			✓
		Independent director’s opinion: N/A.
		Resolution for the independent director’s opinion: N/A.
		Resolution: Except for motions 1 to 2 with recusals, all		motions were approved by all
		directors without objections.
		Recusals by directors due to conflict of interests:
		Motion 1
		(1) Names: Lin Ta-Chun, Lin Chi-Jui, Lai San-Ping and Lin Tsai-Hsiang.
		(2) Contents: Review of existing director and manager remuneration policy and system.
		(3) Reasons: Some directors concurrently serving as managers			or are relatives within the
		second degree of kinship to those involved recused themselves from				discussion and
		voting.
		Motion 2
		(1) Names: Lin Ta-Chun, Lin Chi-Jui, Lai San-Ping and Lin Tsai-Hsiang.
		(2) Contents: Review of 2022 remuneration of directors and managers.
		(3) Reasons: Some directors concurrently serving as managers			or are relatives within the
		second degree of kinship to those involved recused themselves from				discussion and
		voting.
2023.02.23		(10th meetingof the 22ndBoard of Directors)
		Motion and follow-up		Listed in Securities		Independent directors’
				and		objections or
				Exchange		qualified
				Act	14-3	opinions
		1.Change of CPAs in line with the internal job rotation			✓
		of Ernst &Young,Taiwan.
		2. Appointment of Ernst &Young, Taiwan for 2023			✓
		financial and tax report audit and certification; election
		for the convener of the Audit Committee for
		non-assurance services.
		3. Issuance of 2022 Statement of Internal Control			✓
		System
		Independent director’s opinion: N/A.
		Resolution of the independent director’s opinion: N/A.
		Resolution: Motions were approved byall directors without objections.
2023.04.27		(11th meetingof the 22nd Board of Directors)
		Motion and follow-up		Listed in Securities		Independent directors’
				and		objections or
				Exchange		qualified
				Act	14-3	opinions

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	1. Review of remuneration of the Vice President Lin Chi-Jui as representative of the institutional director, Chien ShingHarbour Service Co.,Ltd.	✓
	2. Amendments to the Financial Management Operation Manual – General Principles	✓
	3. Amendments to the Procedures for Professional Accounting Judgments, and Processes for Changes in AccountingPolicies and Estimates	✓
	4. Amendments to Corporate Governance Best Practice Principles	✓
	5. Amendments to Regulations Governing Financial Transactions amongAffiliates and its title	✓
	6. Amendments to Management of Stakeholder Transactions	✓
	7. Amendments to the Investment Management Regulations	✓
	8. Amendments to the Regulations Governing the Handlingof General AccountingAffairs	✓
	9. Amendments to the Regulations Governing the Handlingof Cost AccountingAffairs	✓
	10. Amendments to the Regulation of Fixed Assets Management	✓
	11. Amendments to the Internal Control System Regulations	✓
	12. Amendments to the Safety, Health and Environmental Management-General Principles	✓
	13. Amendments to the Internal Audit Implementation Rules	✓
	14. Amendments to the Regulations Governing Information SecurityPolicy	✓
	Independent director’s opinion: N/A.
	Resolution of the independent director’s opinion: N/A.
	Resolution: Except for motion 1 with recusals, all motions were approved by all directors without objections.
	Recusals by directors due to conflict of interest: Motion 1 (1) Name: Lin Chi-Jui (2) Contents: Review on the remuneration of the Vice President Lin Chi-Jui as institutional director of Chien Shing Harbour Service Co., Ltd. (3)Reasons: As the representative director of Chien ShingHarbour Service Co.,Ltd.,

34

		Lin recused himself from discussion and voting.
2023.07.27		(12th meetingof the 22ndBoard of Directors)
		Motion and follow-up	Listed in Securities			Independent directors’
			and			objections or
			Exchange			qualified
			Act	14-3		opinions
		1. Lease Kaohsiung liaison Office from the director’s		✓
		relative within the second degree of kinship
		2. Amendments to the Quality Management Operating Manual-General Principles		✓
		3. Amendments to the Management of Stakeholder Transactions		✓
		4. Amendments to the Procedures for Professional		✓
		Accounting Judgments, and Processes for Changes in
		AccountingPolicies and Estimates
		5. Amendments to the Regulation of Fixed Assets		✓
		Management
		Independent director’s opinion: N/A.
		Resolution of the independent director’s opinion: N/A.
		Resolution: Except for motion 1 with recusals, all motions		were	approved by all
		directors without objections.
		Recusals by directors due to conflict of interest:
		Motion 1
		(1) Names: Lin Ta-Chun, Lin Tsai-Hsiang
		(2) Contents: Lease of Kaohsiung liaison office from the	director’s relative within the
		second degree of kinship
		(3) Reasons: Directors involved or related within the second degree of kinship recused
		themselves from discussion and voting.
2023.10.26		(13th Meetingof the 22ndBoard of Directors)
		Motion and follow-up	Listed in Securities			Independent directors’
			and			objections or
			Exchange			qualified
			Act	14-3		opinions
		1. Amendments to the Internal Audit Establishment and Implementation Guidelines and its title		✓
		2. Amendments to the Business Management Working Handbook-General Principles		✓
		3. Amendments to the Financial Management Working		✓
		Handbook–General Principles
		4. Amendments to Corporate Governance Best Practice		✓
		Principles
		Independent director’s opinion: N/A.
		Resolution of the independent director’s opinion: N/A.

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Resolution: All motions were approved by all directors without objections.

II.	Evaluation cycle and period, scope of evaluation, method and contents of evaluation about the Board of Directors’ self(orpeer) performance evaluation of theyear: Evaluation cycle Evaluation period Scope of evaluation Method of evaluation Contents of evaluation Once a year. Evaluate the performance of the Board of Directors from January 1, 2023 to December 31, 2023. The performan ce evaluation on the Board of Directors, individual Board members, Functional Committee Internal self-evalua tion by the Board of Directors and self-evalua tion 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.. Once every three years Evaluate the performance of the Board of Directors from November 1, 2022 to October 31, 2023. The performan ce evaluation on the Board of Directors and each of its member The evaluation was conducted by the Taiwan Corporate Governanc e Associatio n through questionna ires and on-site visits. The planning, implementation, supervision and evaluation cycle of corporate management, and the division of labor between the board of directors and the management department, including the following 8 aspects: (1) Composition of the Board of Directors. (2) Guidance given by the Board of Directors. (3) Authorization of the Board of Directors. (4) Supervision of the Board of Directors. (5) Communication of the Board of Directors. (6) Internal control and risk management. (7) Self-discipline of the Board of Directors. (8) Other such as board meetings, support systems,etc.	Evaluation cycle and period, scope of evaluation, method and contents of evaluation about the Board of Directors’ self(orpeer) performance evaluation of theyear: Evaluation cycle Evaluation period Scope of evaluation Method of evaluation Contents of evaluation Once a year. Evaluate the performance of the Board of Directors from January 1, 2023 to December 31, 2023. The performan ce evaluation on the Board of Directors, individual Board members, Functional Committee Internal self-evalua tion by the Board of Directors and self-evalua tion 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.. Once every three years Evaluate the performance of the Board of Directors from November 1, 2022 to October 31, 2023. The performan ce evaluation on the Board of Directors and each of its member The evaluation was conducted by the Taiwan Corporate Governanc e Associatio n through questionna ires and on-site visits. The planning, implementation, supervision and evaluation cycle of corporate management, and the division of labor between the board of directors and the management department, including the following 8 aspects: (1) Composition of the Board of Directors. (2) Guidance given by the Board of Directors. (3) Authorization of the Board of Directors. (4) Supervision of the Board of Directors. (5) Communication of the Board of Directors. (6) Internal control and risk management. (7) Self-discipline of the Board of Directors. (8) Other such as board meetings, support systems,etc.	Evaluation cycle and period, scope of evaluation, method and contents of evaluation about the Board of Directors’ self(orpeer) performance evaluation of theyear: Evaluation cycle Evaluation period Scope of evaluation Method of evaluation Contents of evaluation Once a year. Evaluate the performance of the Board of Directors from January 1, 2023 to December 31, 2023. The performan ce evaluation on the Board of Directors, individual Board members, Functional Committee Internal self-evalua tion by the Board of Directors and self-evalua tion 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.. Once every three years Evaluate the performance of the Board of Directors from November 1, 2022 to October 31, 2023. The performan ce evaluation on the Board of Directors and each of its member The evaluation was conducted by the Taiwan Corporate Governanc e Associatio n through questionna ires and on-site visits. The planning, implementation, supervision and evaluation cycle of corporate management, and the division of labor between the board of directors and the management department, including the following 8 aspects: (1) Composition of the Board of Directors. (2) Guidance given by the Board of Directors. (3) Authorization of the Board of Directors. (4) Supervision of the Board of Directors. (5) Communication of the Board of Directors. (6) Internal control and risk management. (7) Self-discipline of the Board of Directors. (8) Other such as board meetings, support systems,etc.	Evaluation cycle and period, scope of evaluation, method and contents of evaluation about the Board of Directors’ self(orpeer) performance evaluation of theyear: Evaluation cycle Evaluation period Scope of evaluation Method of evaluation Contents of evaluation Once a year. Evaluate the performance of the Board of Directors from January 1, 2023 to December 31, 2023. The performan ce evaluation on the Board of Directors, individual Board members, Functional Committee Internal self-evalua tion by the Board of Directors and self-evalua tion 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.. Once every three years Evaluate the performance of the Board of Directors from November 1, 2022 to October 31, 2023. The performan ce evaluation on the Board of Directors and each of its member The evaluation was conducted by the Taiwan Corporate Governanc e Associatio n through questionna ires and on-site visits. The planning, implementation, supervision and evaluation cycle of corporate management, and the division of labor between the board of directors and the management department, including the following 8 aspects: (1) Composition of the Board of Directors. (2) Guidance given by the Board of Directors. (3) Authorization of the Board of Directors. (4) Supervision of the Board of Directors. (5) Communication of the Board of Directors. (6) Internal control and risk management. (7) Self-discipline of the Board of Directors. (8) Other such as board meetings, support systems,etc.	Evaluation cycle and period, scope of evaluation, method and contents of evaluation about the Board of Directors’ self(orpeer) performance evaluation of theyear: Evaluation cycle Evaluation period Scope of evaluation Method of evaluation Contents of evaluation Once a year. Evaluate the performance of the Board of Directors from January 1, 2023 to December 31, 2023. The performan ce evaluation on the Board of Directors, individual Board members, Functional Committee Internal self-evalua tion by the Board of Directors and self-evalua tion 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.. Once every three years Evaluate the performance of the Board of Directors from November 1, 2022 to October 31, 2023. The performan ce evaluation on the Board of Directors and each of its member The evaluation was conducted by the Taiwan Corporate Governanc e Associatio n through questionna ires and on-site visits. The planning, implementation, supervision and evaluation cycle of corporate management, and the division of labor between the board of directors and the management department, including the following 8 aspects: (1) Composition of the Board of Directors. (2) Guidance given by the Board of Directors. (3) Authorization of the Board of Directors. (4) Supervision of the Board of Directors. (5) Communication of the Board of Directors. (6) Internal control and risk management. (7) Self-discipline of the Board of Directors. (8) Other such as board meetings, support systems,etc.
	Evaluation cycle	Evaluation period	Scope of evaluation	Method of evaluation	Contents of evaluation
	Once a year.	Evaluate the performance of the Board of Directors from January 1, 2023 to December 31, 2023.	The performan ce evaluation on the Board of Directors, individual Board members, Functional Committee	Internal self-evalua tion by the Board of Directors and self-evalua tion 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..
	Once every three years	Evaluate the performance of the Board of Directors from November 1, 2022 to October 31, 2023.	The performan ce evaluation on the Board of Directors and each of its member	The evaluation was conducted by the Taiwan Corporate Governanc e Associatio n through questionna ires and on-site visits.	The planning, implementation, supervision and evaluation cycle of corporate management, and the division of labor between the board of directors and the management department, including the following 8 aspects: (1) Composition of the Board of Directors. (2) Guidance given by the Board of Directors. (3) Authorization of the Board of Directors. (4) Supervision of the Board of Directors. (5) Communication of the Board of Directors. (6) Internal control and risk management. (7) Self-discipline of the Board of Directors. (8) Other such as board meetings, support systems,etc.

• III. Measures undertaken during the current year and in the most recent year to strengthen the functions of the Board of Directors (establishment of an audit committee and improvement of information transparency) and evaluation on their implementation:

• To improve corporate governance and strengthen the functions of the Board of Directors, the Company has established a Remuneration Committee in 2011 to assist the Board of Directors in implementing the remuneration management mechanism. For the implementation status, please refer to Corporate Governance Implementation Status and Deviations from Corporate Governance Best Practice Principles for TSEC/GTSM Listed Companies and Reasons and Operation of the Remuneration Committee.

• To promote corporate governance, improve audit supervision functions and strengthen management functions, the Company has implemented the independent director system and established an audit committee in 2015. Please refer to the operation of the audit committee for its implementation.

• To promote corporate governance and improve the functions of the Board of Directors, and to

36

strengthen the selection mechanism of directors (independent directors) to build a diversified and	strengthen the selection mechanism of directors (independent directors) to build a diversified and
professional board member, the Company established a nomination committee on October 30, 2020 to
assist in determining the suitability of board members. Please refer to the operation of the nomination
committee for its implementation.
IV. Succession	planning for the Board members and important management: According to the Company’s
succession planning, all successors shall hold excellent expertise and management abilities, and also 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.
1. Succession planning for the Board members
(1)	The Company proceeds with the succession planning for directors in the following manners:
	I. The competent candidates recommended by the existing directors
	II. The director candidates recommended by shareholders
(2)	To improve the directors’ performance in exercising functions, the Company will keep pace
	with the times and take into account any changes in the Company’s internal and external
	environmental conditions from time to time, and arrange the annual continuing education
	programs to improve directors’ competence.
2. Succession planning for the important management
(1)	In recent years, the following three key management executives have been selected:
	➢ Mr. Zhuang Wen-Che served as 1st Sales Office Assistant Vice President with job
	rotations in the following departments: Rebar Sales Department, Sales Management
	Department, Round Bar Sales Department, 1st Sales Office.
	➢ Mr. Lin Cheng-Chang served as the Vice General Manager of the Procurement
	Department with job rotations in the following departments: the Materials Department,
	Raw Materials Procurement Department, Overseas Department, 2nd Sales Office, and
	Warehouse Department.
	➢ Mr. Yang Tsung-Lin served as the Vice General Manager of the Administration
	Department with job rotations in the: the Material Department, the Audit Office, the
	Personnel Department, the Management Division, Merchant Bar Sales Department,
	Rebar Sales Department.
(1)	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.
3. The Company keeps planning the training of the Chairman’s and president’s successors and
improvement of the abilities to manage a business as required from the same positions.

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 (2023). The

37

attendance of independent directors is summarized as follows:

Job Title	Name	Actual attendance (B)	Attendance by proxy	Actual attendance rate (%) (B/A) (Note1,Note2)	Remarks
Independent Director/Con vener	Yue Chao-Tang	5	0	100%	Please refer to "2. Information on director 2" on page 20 of the Annual Report for details of the professional qualifications and experience of the Audit Committee members.
Independent Director	Liao Liao-Yu	5	0	100%
Independent Director	Wang Yea-Kang	4	1	80%

Other items to be stated:

• I. 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, independent directors' adverse opinion, independent directors' qualified opinion or significant recommendations, Audit Committee’s resolutions, and the Company’s resolution of the Audit Committee’s opinions:

• (1) Matters listed in 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 2023, primarily in order to review the following matters:

1. Audit on parent company only financial statements

2. Internal control system and relevant policies and procedures

3. Attesting CPAs’ independence evaluation

4. Appointment of and remuneration to the attesting CPAs

5. Performance of Audit Committee’s duties

6. Audit Committee Self-evaluation Questionnaire

7. ➢ Review on consolidated financial Report

The Board of Directors has prepared the Company's business report, financial statements and the motion for allocation of earnings 2023. EY Taiwan has audited and issued an audit report on the financial statements. After inspecting business report, financial statements and motion for allocation of earnings, the Audit Committee believes that they are free of material misstatement.

• ➢ Evaluation of the effectiveness of the internal control system

The Audit Committee assessed the effectiveness of the Company's internal control system and procedures, and it also reviewed the Company's audit department, certified public accountants, and the periodic reports of the management, which included the risk management and the compliance － with the law. By referring to the Internal Control System (Internal Control Integrated Framework) issued by The Committee of Sponsoring Organizations of the Treadway Commission (COSO) in 2013, the Audit Committee believes that the Company's risk management and internal control system is effective and that the Company has adopted the necessary control systems to

38

	supervise and correct violations of regulation.
1.2023.01.13(7th meetingof the 3rd Audit Committee)
	Motion and follow-up	Listed in Securities and	Resolution(s) not passed by the
		Exchange Act	Audit Committee
		14-5	but with consent of
			two-thirds of
			directors:
	1. Ratification of the NT $606 million solar	✓
	photovoltaic system installation contract with
	RC Renewable EnergyTechnologyCo.,Ltd..
	2.Amendments to the Safety, Health and Environmental Management-General Principles	✓
	3. Amendments to the Steelmaking Production Management-General Principles	✓
	4. Amendments to Corporate Governance Best Practice Principles	✓
	5. Amendments to the Regulations Governing the Performance Evaluation of the Board of	✓
	Directors
	6. Establish Risk Management Policy	✓
	Resolution: Approval without objections.
	Resolution of opinions: All motions were approved byall directors without objections.
2.2023.02.23(8th meetingof the 3rd Audit Committee)
	Motion and follow-up	Items listed in Securities and	Resolution(s) not passed by the
		Exchange Act	Audit Committee
		14-5	but with consent of
			two-thirds of
			directors:
	1. Change of CPAs in line with the job rotation	✓
	of Ernst &Young,Taiwan
	2. Appointment of Ernst &Young, Taiwan to	✓
	handle the 2023 financial and tax report audit
	and certification; agent election for
	non-assurance services
	3. Issuance of the 2022 Statement of Internal	✓
	Control System
	4. 2022 individual and consolidated financial	✓
	statements.
	5. 2022 Business Report.	✓
	6. 2022 Earnings Distribution	✓
	7. Authorization of convener Yue to issue the	✓
	verification report
	Resolution: Approval without objections
	Resolution of opinions: All motions were approved byall directors without objections.

39

3.Apr. 27, 2023(9th meetingof the 3rd Audit Committee) Motion and follow-up Listed in Securities and Exchange Act 14-5 Resolution(s) not passed by the Audit Committee but with consent of two-thirds of directors: 1. 2023Q1 financial report. ✓ 2. Amendments to the Financial Management Operation Manual - General Principles ✓ 3. Amendments to the Procedures for Professional Accounting Judgments, and Processes for Changes in Accounting Policies and Estimates ✓ 4. Amendments to Corporate Governance Best Practice Principles ✓ 5. Amendments to the Operation Regulations Governing Financial Transactions among Affiliates ✓ 6. Amendments to the Management of Stakeholder Transactions ✓ 7. Amendments to the Investment Management Regulations ✓ 8. Amendments to the Regulations Governing the Handlingof General AccountingAffairs ✓ 9.Amendments to the Regulations Governing the Handlingof Cost AccountingAffairs ✓ 10.Amendments to the Regulation of Fixed Assets Management ✓ 11. Amendments to the Internal Control System Regulations ✓ 12.Amendments to the Safety, Health and Environmental Management-General Principles ✓ 13. Amendments to the Internal Audit Implementation Rules ✓ 14. Amendments to the Regulations Governing Information SecurityPolicy ✓ Resolution: Approval without objections. Resolution of opinions: All motions were approved byall directors without objections.	3.Apr. 27, 2023(9th meetingof the 3rd Audit Committee) Motion and follow-up Listed in Securities and Exchange Act 14-5 Resolution(s) not passed by the Audit Committee but with consent of two-thirds of directors: 1. 2023Q1 financial report. ✓ 2. Amendments to the Financial Management Operation Manual - General Principles ✓ 3. Amendments to the Procedures for Professional Accounting Judgments, and Processes for Changes in Accounting Policies and Estimates ✓ 4. Amendments to Corporate Governance Best Practice Principles ✓ 5. Amendments to the Operation Regulations Governing Financial Transactions among Affiliates ✓ 6. Amendments to the Management of Stakeholder Transactions ✓ 7. Amendments to the Investment Management Regulations ✓ 8. Amendments to the Regulations Governing the Handlingof General AccountingAffairs ✓ 9.Amendments to the Regulations Governing the Handlingof Cost AccountingAffairs ✓ 10.Amendments to the Regulation of Fixed Assets Management ✓ 11. Amendments to the Internal Control System Regulations ✓ 12.Amendments to the Safety, Health and Environmental Management-General Principles ✓ 13. Amendments to the Internal Audit Implementation Rules ✓ 14. Amendments to the Regulations Governing Information SecurityPolicy ✓ Resolution: Approval without objections. Resolution of opinions: All motions were approved byall directors without objections.	3.Apr. 27, 2023(9th meetingof the 3rd Audit Committee) Motion and follow-up Listed in Securities and Exchange Act 14-5 Resolution(s) not passed by the Audit Committee but with consent of two-thirds of directors: 1. 2023Q1 financial report. ✓ 2. Amendments to the Financial Management Operation Manual - General Principles ✓ 3. Amendments to the Procedures for Professional Accounting Judgments, and Processes for Changes in Accounting Policies and Estimates ✓ 4. Amendments to Corporate Governance Best Practice Principles ✓ 5. Amendments to the Operation Regulations Governing Financial Transactions among Affiliates ✓ 6. Amendments to the Management of Stakeholder Transactions ✓ 7. Amendments to the Investment Management Regulations ✓ 8. Amendments to the Regulations Governing the Handlingof General AccountingAffairs ✓ 9.Amendments to the Regulations Governing the Handlingof Cost AccountingAffairs ✓ 10.Amendments to the Regulation of Fixed Assets Management ✓ 11. Amendments to the Internal Control System Regulations ✓ 12.Amendments to the Safety, Health and Environmental Management-General Principles ✓ 13. Amendments to the Internal Audit Implementation Rules ✓ 14. Amendments to the Regulations Governing Information SecurityPolicy ✓ Resolution: Approval without objections. Resolution of opinions: All motions were approved byall directors without objections.	3.Apr. 27, 2023(9th meetingof the 3rd Audit Committee) Motion and follow-up Listed in Securities and Exchange Act 14-5 Resolution(s) not passed by the Audit Committee but with consent of two-thirds of directors: 1. 2023Q1 financial report. ✓ 2. Amendments to the Financial Management Operation Manual - General Principles ✓ 3. Amendments to the Procedures for Professional Accounting Judgments, and Processes for Changes in Accounting Policies and Estimates ✓ 4. Amendments to Corporate Governance Best Practice Principles ✓ 5. Amendments to the Operation Regulations Governing Financial Transactions among Affiliates ✓ 6. Amendments to the Management of Stakeholder Transactions ✓ 7. Amendments to the Investment Management Regulations ✓ 8. Amendments to the Regulations Governing the Handlingof General AccountingAffairs ✓ 9.Amendments to the Regulations Governing the Handlingof Cost AccountingAffairs ✓ 10.Amendments to the Regulation of Fixed Assets Management ✓ 11. Amendments to the Internal Control System Regulations ✓ 12.Amendments to the Safety, Health and Environmental Management-General Principles ✓ 13. Amendments to the Internal Audit Implementation Rules ✓ 14. Amendments to the Regulations Governing Information SecurityPolicy ✓ Resolution: Approval without objections. Resolution of opinions: All motions were approved byall directors without objections.
	Motion and follow-up	Listed in Securities and Exchange Act 14-5	Resolution(s) not passed by the Audit Committee but with consent of two-thirds of directors:
	1. 2023Q1 financial report.	✓
	2. Amendments to the Financial Management Operation Manual - General Principles	✓
	3. Amendments to the Procedures for Professional Accounting Judgments, and Processes for Changes in Accounting Policies and Estimates	✓
	4. Amendments to Corporate Governance Best Practice Principles	✓
	5. Amendments to the Operation Regulations Governing Financial Transactions among Affiliates	✓
	6. Amendments to the Management of Stakeholder Transactions	✓
	7. Amendments to the Investment Management Regulations	✓
	8. Amendments to the Regulations Governing the Handlingof General AccountingAffairs	✓
	9.Amendments to the Regulations Governing the Handlingof Cost AccountingAffairs	✓
	10.Amendments to the Regulation of Fixed Assets Management	✓
	11. Amendments to the Internal Control System Regulations	✓
	12.Amendments to the Safety, Health and Environmental Management-General Principles	✓
	13. Amendments to the Internal Audit Implementation Rules	✓
	14. Amendments to the Regulations Governing Information SecurityPolicy	✓
	Resolution: Approval without objections.
	Resolution of opinions: All motions were approved byall directors without objections.

4.July 27, 2023 (10th meeting of the 3rd Audit Committee)

40

	Motion and follow-up			Listed in Securities and	Resolution(s) not passed by the
				Exchange Act	Audit Committee
				14-5	but with consent of
					two-thirds of
					directors:
	1.2023Q2 financial report.			✓
	2. Lease Kaohsiung Liaison Office from		the	✓
	director’s relative within the second degree of
	kinship
	3. Amendments to the Quality Management			✓
	OperatingManual-General Principles
	4. Amendments to the Management		of	✓
	Stakeholder Transactions
	5. Amendments to the Procedures		for	✓
	Professional Accounting Judgments,		and
	Processes for Changes in Accounting Policies
	and Estimates
	6. Amendments to the Regulation of	Fixed		✓
	Assets Management
	Resolution: Approval without objections.
	Resolution of opinions: All motions were approved byall directors without objections.
5.October 26,2023(11th meetingof the 3rd Audit Committee)
	Motion and follow-up			Listed in Securities and	Resolution(s) not passed by the
				Exchange Act	Audit Committee
				14-5	but with consent of
					two-thirds of
					directors:
	1. 2023Q3 financial report			✓
	2. Amendments to the Internal	Audit		✓
	Establishment and Implementation Guidelines
	and its title
	3. 2024 auditplan			✓
	4. Amendments to the Business Management			✓
	WorkingHandbook-General Principles
	5. Amendments to the Financial Management			✓
	Operation Manual – General Principles
	6. Amendments to Corporate Governance		Best	✓
	Practice Principles
	Resolution: Approval without objections.
	Resolution of opinions: All motions were approved byall directors without objections.
II.	In instances where an independent director recused himself/herself due to a conflict of interest, the minutes
	shall clearlystate the independent director’s name,contents of the motion and resolution thereof,cause of

41

	recusal, and actual voting counts: N/A in 2023. III. Communication between independent directors and internal auditing officers as well as CPAs: 1. The Audit Committee of the Company was held on February 23, 2023, April 27, 2023, July 27, 2023 and October 26, 2023, during which the certified public accountants and independent directors communicated on the Company's corporate governance unit and management. In addition, a seminar was arranged on February 23, 2023 for the certified public accountants and independent directors to communicate individually. The relevant communication is as follows:	recusal, and actual voting counts: N/A in 2023. III. Communication between independent directors and internal auditing officers as well as CPAs: 1. The Audit Committee of the Company was held on February 23, 2023, April 27, 2023, July 27, 2023 and October 26, 2023, during which the certified public accountants and independent directors communicated on the Company's corporate governance unit and management. In addition, a seminar was arranged on February 23, 2023 for the certified public accountants and independent directors to communicate individually. The relevant communication is as follows:	recusal, and actual voting counts: N/A in 2023. III. Communication between independent directors and internal auditing officers as well as CPAs: 1. The Audit Committee of the Company was held on February 23, 2023, April 27, 2023, July 27, 2023 and October 26, 2023, during which the certified public accountants and independent directors communicated on the Company's corporate governance unit and management. In addition, a seminar was arranged on February 23, 2023 for the certified public accountants and independent directors to communicate individually. The relevant communication is as follows:	recusal, and actual voting counts: N/A in 2023. III. Communication between independent directors and internal auditing officers as well as CPAs: 1. The Audit Committee of the Company was held on February 23, 2023, April 27, 2023, July 27, 2023 and October 26, 2023, during which the certified public accountants and independent directors communicated on the Company's corporate governance unit and management. In addition, a seminar was arranged on February 23, 2023 for the certified public accountants and independent directors to communicate individually. The relevant communication is as follows:	recusal, and actual voting counts: N/A in 2023. III. Communication between independent directors and internal auditing officers as well as CPAs: 1. The Audit Committee of the Company was held on February 23, 2023, April 27, 2023, July 27, 2023 and October 26, 2023, during which the certified public accountants and independent directors communicated on the Company's corporate governance unit and management. In addition, a seminar was arranged on February 23, 2023 for the certified public accountants and independent directors to communicate individually. The relevant communication is as follows:	recusal, and actual voting counts: N/A in 2023. III. Communication between independent directors and internal auditing officers as well as CPAs: 1. The Audit Committee of the Company was held on February 23, 2023, April 27, 2023, July 27, 2023 and October 26, 2023, during which the certified public accountants and independent directors communicated on the Company's corporate governance unit and management. In addition, a seminar was arranged on February 23, 2023 for the certified public accountants and independent directors to communicate individually. The relevant communication is as follows:	recusal, and actual voting counts: N/A in 2023. III. Communication between independent directors and internal auditing officers as well as CPAs: 1. The Audit Committee of the Company was held on February 23, 2023, April 27, 2023, July 27, 2023 and October 26, 2023, during which the certified public accountants and independent directors communicated on the Company's corporate governance unit and management. In addition, a seminar was arranged on February 23, 2023 for the certified public accountants and independent directors to communicate individually. The relevant communication is as follows:	recusal, and actual voting counts: N/A in 2023. III. Communication between independent directors and internal auditing officers as well as CPAs: 1. The Audit Committee of the Company was held on February 23, 2023, April 27, 2023, July 27, 2023 and October 26, 2023, during which the certified public accountants and independent directors communicated on the Company's corporate governance unit and management. In addition, a seminar was arranged on February 23, 2023 for the certified public accountants and independent directors to communicate individually. The relevant communication is as follows:
	Date	Participants		Method of Communicatio n		Contents of Communication		Results of Communication
	2023.02.23	Independent directors: Yue Chao-Tang, Liao Liao-Yu, Wang Yea -Kang CPAs: Chen Ming-Hung, Tu Chin-Yuan		8th meeting of the 3rd Audit Committee		Communication report between accountants and corporate governance unit and management in 2023 Q1		No disagreement.
	2023.02.23	Independent directors: Yue Chao-Tang, Liao Liao-Yu, Wang Yea -Kang CPAs: Chen Ming-Hung, Tu Chin-Yuan		Exclusive consultation for the independent directors and the CPAs to communicate		1.2022 Report on Significant Audit Issues 2. Information on audit quality indicators (AQI) 3. Prior communication of non-assurance services		No disagreement.
	2023.04.27	Independent directors: Yue Chao-Tang, Liao Liao-Yu, Wang Yea -Kang CPA: Chen Ming-Hung		9th meeting of the 3rd Audit Committee		Communication report between accountants and corporate governance unit and management in 2023 Q2		No disagreement.
	2023.07.27	Independent directors: Yue Chao-Tang, Liao Liao-Yu, Wang Yea -Kang CPA: Chen Ming-Hung		10th meeting of the 3rd Audit Committee		Communication report between accountants and corporate governance unit and management in 2023 Q3		No disagreement.
	2023.10.26	Independent Directors: Yue Chao-Tang, Liao Liao-Yu CPA: Chen Ming-Hung		11th meeting of the 3rd Audit Committee		Communication report between accountants and corporate governance unit and management in 2023 Q4		No disagreement.
	2. The Company’s internal audit officers would communicate with the Audit Committee about the audit results periodically and produce the internal audit report at the Audit Committee meeting quarterly. Any special cases would also be reported to the Audit Committee members immediately. There were no special cases as stated above in 2023. The communication between the Company’s Audit Committee and internal audit officers is considered fair. Communication between independent directors and internal auditingofficers :
	Date	Participants	Method of Communicatio n		Contents of Communication		Results of Communication
	2023.01.13	Independent directors: Yue Chao-Tang, Liao Liao-Yu, Wang Yea -Kang Audit officer: Cho Hsiu-Ying	7th meeting of the 3rd Audit Committee		Internal audit business report		No comments at this meeting
	2023.02.23	Independent directors: Yue Chao-Tang, Liao	8th meeting of the 3rd Audit Committee		1. Internal audit business report 2. Issuance of the 2022		No comments at this meeting

42

		Liao-Yu, Wang Yea -Kang Audit officer: Cho Hsiu-Ying		Statement of Internal Control System
	2023.02.23	Independent directors: Yue Chao-Tang, Liao Liao-Yu, Wang Yea -Kang Audit officer: Cho Hsiu-Ying	Exclusive consultation for the independent directors and the CPAs to communicate	1. 2023 list of auditors and 2022 list of auditors Training hours, and details of professional licenses of auditors2. Effectiveness of the overall internal control system in 2022	No comments at this meeting
	2023.04.27	Independent directors: Yue Chao-Tang, Liao Liao-Yu, Wang Yea -Kang Audit officer: Cho Hsiu-Ying	9th meeting of the 3rd Audit Committee	1. Internal audit business report 2. Amendment to Internal Audit Implementation Rules	No comments at this meeting
	2023.07.27	Independent directors: Yue Chao-Tang, Liao Liao-Yu, Wang Yea -Kang Audit officer: Cho Hsiu-Ying	10th meeting of the 3rd Audit Committee	Internal audit business report	No comments at this meeting
	2023.10.26	Independent Directors: Yue Chao-Tang, Liao Liao-Yu Audit officer: Cho Hsiu-Ying	11th meeting of the 3rd Audit Committee	1. Internal audit business report 2. Amend the Internal Audit Establishment and Implementation Guidelines and its title. 3. Submission of the 2024 Audit Plan	No comments at this meeting

43

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

asons 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
(I) Has the Company established an internal operating procedure to address shareholders’ recommendations, doubts, and disputes, as well as litigation matters, and implemented the procedure?	✓		(I)	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. The Company provides Stakeholder information at website https://www.fenghsin.com.tw/investor.html Meanwhile, the Company also provides access to channels and procedures for seeking remedies or whistle-blowing any misconduct on the Company’s website at https://www.fenghsin.com.tw/appeal.html	Conformity
(II) Does the Companyhave a list of the major	✓		(II)	The Companydiscloses the important information,	Conformity

44

Scope of evaluation			Status	Deviations from corporate governance Best Practice Principles for TWSE/TPEX Listed Companies, and reasons thereof
	Yes	No	Summary
shareholders and ultimate controllers of major shareholders with actual control?			such as increase in major shareholders, or decrease or changes in the Company’s shares, periodically. the Company’s website at https://www.fenghsin.com.tw/e_investor.html
(III) Has the Company established and implemented a risk control and firewall mechanism between affiliates?	✓		(III) The Company has set forth「the Rules Governing Financial and Business Matters Between the Company and its Related Parties」to establish and implement the risk control and firewall mechanism between its affiliates.	Conformity
(IV) Does the Company have internal regulations that prohibit the Company insiders from buying or selling securities using unpublished market information?	✓		(IV) 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
(I) Has the Board of Directors formulated a member composition diversification policy and implemented it accordingly?	✓		(I) The Company has set forth the “Corporate Governance Best Practice Principles,” and provided the diversificationpolicyin Chapter 3.	Conformity

45

Scope of evaluation			Status	Deviations from corporate governance Best Practice Principles for TWSE/TPEX Listed Companies, and reasons thereof
	Yes	No	Summary
			“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. Reviewing the list of 13 directors of the Company, Lin Ta-Chun, Lin Chiu-Huang, Lin Wen-Fu, Lin Tsai-Hsiang, Chen Hsin-Hung, Chung Shing-Lin, Lai San-Ping, and Lin Kun-Tan 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 professor concurrently. Wang Yea-Kang once served as the Director-General,Industrial Development Bureau,

46

Scope of evaluation			Status	Deviations from corporate governance Best Practice Principles for TWSE/TPEX Listed Companies, and reasons thereof
	Yes	No	Summary
			Ministry of Economic Affairs. Liao Liao-Yi was the Minister, Ministry of the Interior. Yang Tsung-Ju has remarkable achievements in the physical field. Lin Chi-Jui is specialized in international market and management fields. The Company's directors shall also are the Company’s employees and account for 8%. The independent directors account for 23% of the whole directors. The independent directors have served the term of office under 9 years. 6 directors are more than 71 years old; 2 directors are between 61-70 years old, 1 directors are between 51~60 years old, 2 directors are between 41~50 years old, and 2 directors are 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 69% of the directors satisfy the competencyin leadershipand decision making.

47

Scope of evaluation				Status	Deviations from corporate governance Best Practice Principles for TWSE/TPEX Listed Companies, and reasons thereof
	Yes	No		Summary
				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 https://www.fenghsin.com.tw/Stocks/investor/Direc tors_diversity_2023.pdf
(II) In addition to establishing the Remuneration Committee and Audit Committee pursuant to the law, has the Company voluntarily set up anyother functional committees?	✓			(II) The Company established the Audit Committee in 2015 and Remuneration Committee in 2011. In 2020, the Company established the Nomination Committee.	Conformity
(III) 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	✓			(III) The Company’s Board of Directors has passed 「the Regulations Governing Performance Evaluation on Board of Directors」on May 5, 2016. The performance evaluation on the Board of Directors completed in the most recent year (2023) is summarized as follows: 1. the Board of Directors self-evaluation scores	Conformity

48

Scope of evaluation	Status	Status	Status	Deviations from corporate governance Best Practice Principles for TWSE/TPEX Listed Companies, and reasons thereof
	Yes	No	Summary
reference for remuneration to individual directors and nomination?			were 98.7 averagely (full scores: 100). 2. directors’ self-evaluation scores were 98.2 on average (full scores: 100). Said performance evaluation results have been reported to the Board of Directors on February 29, 2024 and already applied as the reference for remuneration to individual directors and nomination. The same was also disclosed on the Company’s website at https://www.fenghsin.com.tw/Stocks/investor/selfev al_112.pdf
(IV) Has the Company regularly evaluated the independence of the independent auditors?	✓		(IV) The Company assesses the independence of the attesting CPAs annually. Since 2022, the Company also assesses the qualification of the attesting CPAs annually, and no violation of independence or qualification has been found. For the evaluation results, please refer to the information about CPAs provided in the annual report.	Conformity
IV. Whether the TWSE/TPEx listed company	✓		If necessary,the Companywill delegate the	Conformity

49

Scope of evaluation	Status	Status	Status	Deviations from corporate governance Best Practice Principles for TWSE/TPEX Listed Companies, and reasons thereof
	Yes	No	Summary
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.)?			“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 has at least three years of experience in managing finance and shareholders service in public companies. During 2023, he completed the continuing education as a chief corporate governance officer for a total of 12 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 2023 were reported to the Board meetingon January26,2024

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Scope of evaluation			Status	Status	Status	Status	Deviations from corporate governance Best Practice Principles for TWSE/TPEX Listed Companies, and reasons thereof
	Yes	No	Summary
			(14th meeting of 22nd term),and disclosed on the Company’s website at https://www.fenghsin.com.tw/Stocks/investor/governanc e_advance_112.pdf. The practices in 2023 are reported as follows: 1. Notify the laws and regulations about insider equity trading promulgated by TWSE to the Company’s insiders from time to time. Dissemination of Information on Prevention of Insider Tradingin 2023 Date Method Target Promotion/Course Content 2023/1/13 Promotion during board meeting Director Directors are prohibited from trading stocks during the thirty-day closed period prior to the announcement of the annual financial report. (Promotion: 13 individuals)
			Date	Method	Target	Promotion/Course Content
			2023/1/13	Promotion during board meeting	Director	Directors are prohibited from trading stocks during the thirty-day closed period prior to the announcement of the annual financial report. (Promotion: 13 individuals)

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Scope of evaluation				Status	Status			Deviations from corporate governance Best Practice Principles for TWSE/TPEX Listed Companies, and reasons thereof
	Yes	No		Summary
			2023/1/19	Letter Promotion	Internal personnel of the company	Letter Tai-Zheng-Jian-Zi No. 1120400126-Common violation of equity transfer by internal personnel (Promotion: 19 individuals)
			2023/2/23	Promotion during board meeting	Director	Directors are prohibited from trading stocks during the fifteen-day closed period prior to the announcement of quarterly financial reports. (Promotion: 12 individuals)
			2023/4/19	Letter Promotion	Internal personnel of the company	Letter Tai-Zheng-Jian-Zi No. 1120401016- Common violation of equity transfer by internal personnel (Promotion: 19 individuals)
			2023/4/27	Promotion during board meeting	Director	Directors are prohibited from trading stocks during the fifteen-day closed period prior to the announcement of quarterly financial reports. (Promotion: 13 individuals)
			2023/7/19	Letter Promotion	Internal personnel of the company	Letter Tai-Zheng-Jian-Zi No. 1120402041- Common violation of equity transfer by

52

Scope of evaluation				Status	Status		Deviations from corporate governance Best Practice Principles for TWSE/TPEX Listed Companies, and reasons thereof
	Yes	No		Summary
						internal personnel (Promotion: 19 individuals)
			2023/7/27	Promotion during board meeting	Director	Directors must not trade shares during the closed period of 15 days before the announcement of quarterly financial reports. (13 trainees)
			2023/10/23	Letter Promotion	Internal personnel of the company	Letter Tai-Zheng-Jian-Zi No. 1120402971- Internal personnel are prohibited from engaging in securities lending and borrowing transactions. (Promotion: 18 individuals)
			2023/11/9	Letter Promotion	Internal personnel of the company	Letter Tai-Zheng-Jian-Zi No. 1120403071- Common violation of equity transfer by internal personnel (Promotion: 18 individuals)
			2023/12/15	Textbook Promotion	Director	Promotion of significant news and prevention of insider trading (Promotion: 13 individuals)
			2023/12/15	System announcement	Employees	Promotion of significant news and prevention of insider trading (Promotion: 260 clicks)

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Scope of evaluation			Status	Status	Status	Status	Deviations from corporate governance Best Practice Principles for TWSE/TPEX Listed Companies, and reasons thereof
	Yes	No	Summary
			credits to the Board members and at least 6 credits to the re-elected directors. The continuing education courses proposed by the Company’s corporate governance unit in 2023 are summarized as follows: Time Course Name Organizer Course hours (hours) 2023.02.15 Sustainable Development and Sustainable Governance Trend (Trainee: Director Wang, Yea-Kang) Taipei Foundation of Finance 3 2023.03.13 Adaptation path planning for climate change resilience (Trainee: Director Wang, Yea-Kang) Taipei Foundation of Finance 2 2023.04.27 Global net-zero challenge: How enterprise leaders lead low-carbon ESG transformation plan (13 trainees) Securities and Futures Institute 3 2023.05.04 Global and Taiwan tax reform and corporate tax governance from the ESG trend and epidemic environment (trainees: DirectorWang,Yea-Kang) Accounting Research and Developme nt Funds 3 2023.05.08 Local Creation and Circular Economy (Trainee: Director Wang, Taipei Foundation of Finance 3
			Time	Course Name	Organizer	Course hours (hours)
			2023.02.15	Sustainable Development and Sustainable Governance Trend (Trainee: Director Wang, Yea-Kang)	Taipei Foundation of Finance	3
			2023.03.13	Adaptation path planning for climate change resilience (Trainee: Director Wang, Yea-Kang)	Taipei Foundation of Finance	2
			2023.04.27	Global net-zero challenge: How enterprise leaders lead low-carbon ESG transformation plan (13 trainees)	Securities and Futures Institute	3
			2023.05.04	Global and Taiwan tax reform and corporate tax governance from the ESG trend and epidemic environment (trainees: DirectorWang,Yea-Kang)	Accounting Research and Developme nt Funds	3
			2023.05.08	Local Creation and Circular Economy (Trainee: Director Wang,	Taipei Foundation of Finance	3

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Scope of evaluation				Status			Deviations from corporate governance Best Practice Principles for TWSE/TPEX Listed Companies, and reasons thereof
	Yes	No		Summary
				Yea-Kang)
			2023.07.25	Information security governance strategy of listed companies from the perspective of ESG corporate sustainable development (trainees: Director Lin Tsai-Hsiang)	Taiwan Corporate Governanc e Association	3
			2023.07.27	How to Fulfill the Responsibilities of the Functional Committees of the Board of Directors (11 trainees)	Securities and Futures Institute	3

55

Scope of evaluation	Status	Status	Status	Deviations from corporate governance Best Practice Principles for TWSE/TPEX Listed Companies, and reasons thereof
	Yes	No	Summary
			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 2023 has been completed and reported to the Board of Directors on February 29, 2024. 6. On Februry 24, 2023, April 25, 2023, July 28, 2023, and October 27, 2023, the Company took part in the investment forums held by IBF Securities Co.,Ltd. and held at least one institutional investors' conference every quarter so as to establish a diversified communication channel with investors. 7. The date of a shareholders’ meeting is registered in advanced pursuant to laws, and the meeting notice, meetinghandbook and meetingminutes are issued

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Scope of evaluation	Status	Status	Status	Deviations from corporate governance Best Practice Principles for TWSE/TPEX Listed Companies, and reasons thereof
	Yes	No	Summary
			within theperiodprescribed bythe 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 (https://www.fenghsin.com.tw/appeal.html) The company has set up "Complaint Handling Measures" stating that employees may file a complaint in accordance with the administrative system when their legal 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
(I) Has the Company established a website to disclose financial business and corporate governance information?	✓		(I) The Company has set up the website and assigned dedicated personnel to maintain the website. The website at https://www.fenghsin.com.tw has the stakeholder section, which disclose the Company’s financial business,shareholders service information,	Conformity

57

Scope of evaluation	Status	Status	Status	Deviations from corporate governance Best Practice Principles for TWSE/TPEX Listed Companies, and reasons thereof
	Yes	No	Summary
			shareholders’ meeting information, internal audit, governance information section which disclose the Company’s board of director information,functional committee information,governance report ,risk management and other internal regulations and Sustainable Development section, linked to the MOPS in order to achieve full disclosure of the information about the Company. Meanwhile, the Company will continue updating the information for shareholders’ and stakeholders’ reference.
(II) 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 Company’s information, execute the spokesperson system, or place the institutional investor conferences on the Company website)?	✓		(II) The Company appoints dedicated personnel to disclose business and financial information on the MOPS periodically or from time to time. In addition, monthly financial information is updated on our Chinese and English website. The Company has released the important news in Chinese and English at the same time since 2021. Since 2021, the Company has been holding (participating in) institutional investors’ conferences quarterly, and the slides of the institutional investors' conferences are disclosed simultaneouslyon the Company's	Conformity

58

Scope of evaluation	Status	Status	Status	Deviations from corporate governance Best Practice Principles for TWSE/TPEX Listed Companies, and reasons thereof
	Yes	No	Summary
			website.
(III) 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?	✓		(III) 1. The quarterly financial statements 2023 were reported in the following manners: The financial report for Q1 of 2023 was reported on April 27, 2023. The financial report for Q2 of 2023 was reported on July 27, 2023. The financial report for Q3 of 2023 was reported on October 27, 2023. The financial report for Q4 of 2023 was reported on March 8, 2024. All were reported before the prescribed time limits. 2. The monthly operation overview was also reported before theprescribed time limit.	Conformity
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 continuingeducation status,	✓		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	Conformity

59

Scope of evaluation	Status	Status	Status	Deviations from corporate governance Best Practice Principles for TWSE/TPEX Listed Companies, and reasons thereof
	Yes	No	Summary
risk management policies and risk measurement implementation standards implementation status, customer policy implementation status, and director insurance purchase status by the Company)?			laws and requirements related to directors or updated information, in writing or by electronic means. 2. Implementation status of risk management policies and risk measurement standards: The "Risk Management Policy" is approved by the board of directors on January 13, 2023, and the risk assessment results are reported to the board of directors at least once a year. The risk assessment report of 2023 will be reported to the board of directors on April 26, 2024. The Company does not engage in high-risk, highly leveraged investments now and has not provided any loans or endorsements to others in recent years. The derivative products are used mainly for hedging purposes and are handled in accordance with the "Regulations Governing the Acquisition and Disposal of Assets". Taking into account the risk profile, the relevant processes are carried out prudently. In accordance with the Company's regulations, the Company collects and analyzes internal and external issues including politics, finance, society, regulations, production technology and market fluctuations and plan control measure. Lastly,theywill be submitted to the

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Scope of evaluation	Status	Status	Status	Deviations from corporate governance Best Practice Principles for TWSE/TPEX Listed Companies, and reasons thereof
	Yes	No	Summary
			Company’s supreme management for 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 Companysubmit the

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==> picture [710 x 340] intentionally omitted <==

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

Status Deviations from corporate
governance Best Practice
Principles for
Scope of evaluation
Yes No Summary TWSE/TPEX Listed
Companies, and reasons
thereof
directors’ liability insurance renewal report to the Board
meeting in the next meeting.
5. Certificate/license obtained by personnel involved in
the transparency of financial information: 3 persons with
a CPA license, 2 persons with International Certified
Internal Auditor license and 1 person with International
Computer 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 6%~20% of the entire companies in 2022.
2. Improvement Measures:
(1). ESG report submit to the board of directors for approval.
(2). Declare ESG report in English version.
(3). The re-election of directors is expected to add a female independent director.
(4). Declare two complete audio-visual files of institutional investors' conference
----- End of picture text -----

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4. The composition, functions and operations of the Remuneration Committee, if any, are disclosed as follows:

(1) Information about Remuneration Committee members

==> picture [577 x 190] intentionally omitted <==

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

April 15, 2024
Identity Qualifications Professional Independence Number of other
Qualifications public listed
and experience companies in which
he/she hold the
position as a
remuneration
Name committee member
Independent Director/Convener Yue Chao-Tang Please refer to “2. Information on 1
Independent Director Liao Liao-Yu directors(2)” on page 20 0
Independent Director Wang 3
Yea-Kang
----- End of picture text -----

(2) Information about operations of Remuneration Committee

1. The Company’s Remuneration Committee consists of 3 members.( Note 1)

2. Current term of office: June 22, 2021-July 21, 2024. In the most recent year (2023), the Company’s Remuneration Committee has held a total of 4 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	4	0	100%
Member	Liao Liao-Yu	4	0	100%
Member	WangYea-Kang	3	1	75%

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	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. Matters under discussion by the Remuneration Committee, the Remuneration Committee’s resolution, and the Company’s resolution of the members’ opinion: 1.2023.01.13 (6th meeting of the 5thRemuneration Committee) Contents of Motion Resolution Objections or qualified opinions 1. Review of the existing director and manager remunerationpolicyand system. Approved by all members as proposed. No 2. Review the 2022 managerial officers’ remuneration for employees and directors. Approved by all members as proposed. No 3. Review the 2022 remuneration of directors. Approved by all members as proposed. No The above proposals were also submitted to and approved by the Board of Directors on January 13 (9th meeting of the 22nd Board of Directors) 2.2023.04.27 (7th meeting of the 5thRemuneration Committee) Contents of Motion Resolution Objections or qualified opinions 1. Review on the remuneration of the Vice President Lin Approved byall members as No	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. Matters under discussion by the Remuneration Committee, the Remuneration Committee’s resolution, and the Company’s resolution of the members’ opinion: 1.2023.01.13 (6th meeting of the 5thRemuneration Committee) Contents of Motion Resolution Objections or qualified opinions 1. Review of the existing director and manager remunerationpolicyand system. Approved by all members as proposed. No 2. Review the 2022 managerial officers’ remuneration for employees and directors. Approved by all members as proposed. No 3. Review the 2022 remuneration of directors. Approved by all members as proposed. No The above proposals were also submitted to and approved by the Board of Directors on January 13 (9th meeting of the 22nd Board of Directors) 2.2023.04.27 (7th meeting of the 5thRemuneration Committee) Contents of Motion Resolution Objections or qualified opinions 1. Review on the remuneration of the Vice President Lin Approved byall members as No	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. Matters under discussion by the Remuneration Committee, the Remuneration Committee’s resolution, and the Company’s resolution of the members’ opinion: 1.2023.01.13 (6th meeting of the 5thRemuneration Committee) Contents of Motion Resolution Objections or qualified opinions 1. Review of the existing director and manager remunerationpolicyand system. Approved by all members as proposed. No 2. Review the 2022 managerial officers’ remuneration for employees and directors. Approved by all members as proposed. No 3. Review the 2022 remuneration of directors. Approved by all members as proposed. No The above proposals were also submitted to and approved by the Board of Directors on January 13 (9th meeting of the 22nd Board of Directors) 2.2023.04.27 (7th meeting of the 5thRemuneration Committee) Contents of Motion Resolution Objections or qualified opinions 1. Review on the remuneration of the Vice President Lin Approved byall members as No
	Contents of Motion	Resolution	Objections or qualified opinions
	1. Review of the existing director and manager remunerationpolicyand system.	Approved by all members as proposed.	No
	2. Review the 2022 managerial officers’ remuneration for employees and directors.	Approved by all members as proposed.	No
	3. Review the 2022 remuneration of directors.	Approved by all members as proposed.	No
	The above proposals were also submitted to and approved by the Board of Directors on January 13 (9th meeting of the 22nd Board of Directors)
	2.2023.04.27 (7th meeting of the 5thRemuneration Committee)
	Contents of Motion	Resolution	Objections or qualified opinions
	1. Review on the remuneration of the Vice President Lin	Approved byall members as	No

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	Chi-Ju as the institutional director, Chien Hsin International,Co.,Ltd.	proposed.
	The above proposals were also submitted to and approved by the Board of Directors on April 27 (11th meeting of the 22nd Board of Directors).
	Contents of Motion	Resolution	Objections or qualified opinions
	1. Review the remuneration of the new managerial officers.	Approved by all members as proposed.	No
	The above proposals were also submitted to and approved by the Board of Directors on October 26 (13th meeting of the 22nd Board of Directors).

Note 1: The Company has established the Remuneration Committee on October 25, 2011, and also convened the Remuneration Committee meetings on January 13, 2023, April 27, 2023,July 27,2023 and October 26, 2023, 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.

5. Information on the Nomination Committee members and their performance:

I. On this term, all the members of the Nomination Committee are the directors and the entire independent directors of the Company. They all have

65

more than five years of working experience and relevant qualifications, which are sufficient to maintain the independence, expertise and fairness of the Nomination Committee. The duties of the Nomination Committee are as follows:

• (I) Nominating director candidates of the Company and reviewing the qualifications of such director candidates

• (II) Nominating director candidates of the Company and reviewing the qualifications of such director candidates

• (III) Establishing and periodically reviewing the directors' continuing education program and the succession plans for directors.

• (IV) Establishing and revising the Company's Corporate Governance Best Practice Principles

• II. Professional qualifications and experience of the nomination committee members and their performance.

• (I) The Company’s Nomination Committee consists of 5 members.

• (II) Current term of office: July 22, 2021~July 21, 2024. In the most recent year (2023), the Company’s Nomination Committee has held

one meetings (A). The members’ qualifications and attendance status are stated as follows:

Job Title	Name	Professional Qualifications and Experience	Actual attendance (B)	Attendance by proxy	Actual attendance rate (%) (B/A)Note 2	Remarks
Convener	Lin Ta-Chun	Current position: Chairman of Board of Feng Hsin Steel Co., Ltd. Educational background: Master’s, Boston University Expertise: business administration	1	0	100%
Member	Lin Chiu-Huang	Current position: Director of Feng Hsin Steel Co., Ltd. Educational background: Graduated from Taichung Municipal Feng Yuan Commercial High School	1	0	100%

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		Expertise: business administration
Convener	Yue Chao-Tang	Current Position: Independent director of Uni-President Enterprises Corporation Educational background: Master’s, Graduate Institute of Accounting, National Chengchi University Expertise: financial accounting	1	0	100%
Member	Liao Liao-Yu	Current Position: Independent director of China Metal Products Co., Ltd. Educational background: a graduate of Feng Chia University Expertise: Leadership and decision-making	1	0	100%
Member	Wang Yea-Kang	Current Position: Chairman of Board of Taiwan Textile Research Institute Educational background: Master’s, Graduate	0	1	100%

67

Institute of Urban Planning, National Chung Hsing University Expertise: Leadership and decision-making

Other items to be stated:

The meeting date, term, content of the motion, the content of the proposal or objection of the Committee members, the resolution of the Nomination Committee and the Company's reaction to the Nomination Committee’s proposal are described.

1.2023.10.26 (3rd meeting of the 2ndNomination Committee)	1.2023.10.26 (3rd meeting of the 2ndNomination Committee)	1.2023.10.26 (3rd meeting of the 2ndNomination Committee)
Contents of Motion	Resolution of nominees’ opinion	Objections or qualified opinions
1. A motion for discussion on the estimated continuing education courses for directors in 2024 was submitted.	Approved by all members as proposed.	No
2. A motion for the amendments to “Corporate Governance Best Practice Principles”was submitted for discussion.	Approved by all members as proposed.	No
3. The Company’s 23rd director candidate nomination principle.	All members agreed that the Company will re-elect 13 directors at the 2024 shareholders' meeting.	No
The above proposals were also submitted to and approved by the Board of Directors on October 26 (13th meeting of the 22nd Board of Directors).

Note 1: The Company has established the Nomination Committee on October 30, 2020, and also convened the Nomination Committee meetings on October 26, 2023 respectively.

Note 2: Where a specific Nomination Committee member may be relieved from duties before the end of the fiscal year, specify the date of

68

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.

6. Promotion of sustainable development practices and deviations from Sustainable Development Best Practice Principles for TWSE/TPEX Listed Companies, and reasons thereof:

Promotional Items	Implementation status	Implementation status	Implementation status	Deviations from Sustainable Development Best Practice Principles for TWSE/TPEX Listed Companies,and reasons thereof
	Yes	No	Summary
I. Has the company established a governance structure to promote sustainable development and set up a dedicated (concurrent) department to promote sustainable development which is authorized by the board of directors and handled by senior management? How is it being supervised by the board of directors?(The TWSE/TPEx listed company shall report the implementation status. This is not a complyor-explain provision.)	✓		1. The Company’s Sustainable Development Best Practice Principles Article 5 of the principles: (1) The Board of Directors of the Company shall exercise its due care as a good administrator to urge the Company to practice sustainable development. In addition, the Board shall review the effectiveness of its implementation and make continuous improvements from time to time so as to ensure the realization of the sustainable development policy. (2) In order to optimize the management of the Company’s sustainable development, the labor safety sub-department of administrative department participates in promoting sustainable development. It is responsible for the formulation and implementation of sustainable development policies or systems. On October 4, 2021, the companyestablished the net zero carbon	Conformity

69

Promotional Items	Implementation status	Implementation status	Implementation status	Deviations from Sustainable Development Best Practice Principles for TWSE/TPEX Listed Companies,and reasons thereof
	Yes	No	Summary
			emission promotion group and on January 2022, the name was changed to the Climate Change Response Group, with the chairman as the coordinator, the president as the deputy coordinator and the group members include the head of the steel making, the head of the electrical equipment sub-department, the head of metallurgy R&D division, the vice president of the sales department, the head of the labor safety sub-department and the head of financial department. Quarterly meetings were held to review the situation and countermeasures . The administration department’s managers reported to the Board of Directors on the implementation of corporate social responsibility and corporate governance once a year. The labor and safety department reports to the board of directors quarterly the implementation results of sustainable development and future work plans, and discloses the net zero strategy and path and other related management and implementation status in the environmental safety and health section of the companywebsite.

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Promotional Items	Implementation status	Implementation status	Implementation status	Deviations from Sustainable Development Best Practice Principles for TWSE/TPEX Listed Companies,and reasons thereof
	Yes	No	Summary
			2. On January 26, 2024, the administration department’s managers reported to the Board of Directors on the implementation of corporate social responsibility and corporate governance. And disclosed on the company website https://www.fenghsin.com.tw/Stocks/csr/execr eport_112.pdf .The implementation of corporate governance is detailed in Page 51 and the implementation of corporate social responsibility is as follows, . The Company’s ESG status 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

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Promotional Items			Implementation status	Implementation status	Implementation status	Implementation status	Implementation status	Implementation status	Deviations from Sustainable Development Best Practice Principles for TWSE/TPEX Listed Companies,and reasons thereof
	Yes	No	Summary
			statistics about funded cases and value from 2019 to 2023 are stated as follows: Unit: NT$ Year 2019 2020 2021 2022 2023 Number of cases 43 47 38 64 44 Amount 430,000 450,000 285,000 392,000 237,000 (2) Neighborhood caring activity The Company extends care for the community development and helps participation 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 2019 to 2023 are stated as follows: Unit: NT$
			Year	2019	2020	2021	2022	2023
			Amo	2,520,637	1,046,956	807,675	1,137,319	1,646,654

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Promotional Items				Implementation status	Implementation status	Implementation status	Implementation status	Implementation status				Deviations from Sustainable Development Best Practice Principles for TWSE/TPEX Listed Companies,and reasons thereof
	Yes	No			Summary
			unt
			(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 2019 to 2023 are stated as follows: Number of students receiving scholarships Number of students receiving fellowships Total number of students Total contributed amount 2023 403 persons 303 persons 706 persons NT$1.99 million 2022 392 persons 300 persons 692 persons NT$1.99 million
				Number of students receiving scholarships		Number of students receiving fellowships		Total number of students		Total contributed amount
			2023	403 persons		303 persons		706 persons		NT$1.99 million
			2022	392 persons		300 persons		692 persons		NT$1.99 million

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Promotional Items				Implementation status	Implementation status	Implementation status	Implementation status		Deviations from Sustainable Development Best Practice Principles for TWSE/TPEX Listed Companies,and reasons thereof
	Yes	No			Summary
			2021	388 persons	287 persons	675 persons		NT$1.99 million
			2020	408 persons	282 persons	690 persons		NT$1.99 million
			2019	409 persons	284 persons	693 persons		NT$2 million
			(4)
				Major natural disasters			Donated fund(NT$)
			2022	Donations for COVID-19 Preparedness and Response			1,410,857
			2021	Donations for COVID-19 Preparedness and Response			13,160,000
			(5)

74

Promotional Items				Implementation status	Implementation status	Implementation status	Implementation status	Implementation status	Implementation status	Implementation status	Implementation status	Implementation status	Deviations from Sustainable Development Best Practice Principles for TWSE/TPEX Listed Companies,and reasons thereof
	Yes	No		Summary
				T		aichung Ci	ty		Miaol	i County	Other cities/counti es	Total
			District	Houli District	Waipu District	Fenyuan District	Dajia District	Others in Taichung	Sanyi Village	Others in Miaoli
			Number of person	363	138	85	56	138	11	25	83	899
			Percentage	40.38%	15.35 %	9.45%	6.23%	15.35%	1.22%	2.78%	9.23%	100%

75

Promotional Items	Implementation status	Implementation status	Implementation status	Deviations from Sustainable Development Best Practice Principles for TWSE/TPEX Listed Companies,and reasons thereof
	Yes	No	Summary
			l_execreport_112.pdf.
II. Does the company conduct risk assessments of environmental, social and corporate governance (ESG) issues related to the company's operations in accordance with the materiality principle, and formulate relevant risk management policies or strategies? (Note 2)(The TWSE/TPEx listed company shall report the implementation status. This is not a complyor-explain provision.)	✓		1. The Disclosure covers the Company's sustainable development performance in the key locations from January 2023 to December 2023. The Company's subsidiary is in BVI with no physical operation; therefore, the Company's risk assessment is limited to the Company's established presence in Taiwan. 2. The company has formulated the "Risk Management Policy" to standardize the scope of risk management, organizational structure, responsibilities, assessment implementation, reporting and disclosure requirements. The company's board of directors is the highest decision-making body for risk management, and the Climate Change Response Group conducts risk assessment and implementation. Report the risk assessment results to the board of directors at least once a year, and the risk assessment report of 2023 will be reported to the board of directors on April 26, 2024. And disclose relevant content on the company website https://www.fenghsin.com.tw/governance.html	Conformity

76

Promotional Items	Implementation status	Implementation status	Implementation status	Deviations from Sustainable Development Best Practice Principles for TWSE/TPEX Listed Companies,and reasons thereof
	Yes	No	Summary
			3. The Climate Change Response Group integrates assessment data from various departments to assess material ESG issues, formulate risk management policies for effective identification, measurement, assessment, monitoring, and control, and take specific action plans to reduce the impact of related risks. 4. Based on the assessed risks, the relevant risk management policies or strategies are established, which are described as follows. (1) Environment: A. Risk assessment items: energy saving and carbon reduction Risk management policies or strategies: a.the external systems currently introduced include ISO 14001, ISO 14064-1, etc. And regularly participate in government meetings to review compliance with regulations. b.hold climate change response group meetings quarterly to formulate feasible carbon reduction methods, and implement and verify the actual performance of carbon reduction. c.The mechanical and electrical unit conducts

77

Promotional Items	Implementation status	Implementation status	Implementation status	Deviations from Sustainable Development Best Practice Principles for TWSE/TPEX Listed Companies,and reasons thereof
	Yes	No	Summary
			inspections and measurements on annual energy use, the production unit continuously tracks and measures the energy consumption of various products in the production process, and the purchasing department conducts price tracking on various energy sources (such as diesel, natural gas, etc.). d.the independent goals of each department in the annual sustainable management meeting, and continue to promote various energy-saving related work. e.In addition to the energy-saving review system and implementation, personnel will be dispatched to participate in various off-site energy-saving seminars and observation meetings as necessary. B. Risk assessment items: environmental protection a.Risk management policies or strategies: The company conducts effluent water quality inspections several times a year, and all inspections over the years have met the effluent discharge standards, so there is no environmentalpollutionproblem.

78

Promotional Items	Implementation status	Implementation status	Implementation status	Deviations from Sustainable Development Best Practice Principles for TWSE/TPEX Listed Companies,and reasons thereof
	Yes	No	Summary
			b.Establish operational standards for scrap steel procurement, inspection and electric furnace operation. The output rate of the steelmaking process is the recycling rate of raw materials; for effective management, management has been carried out in accordance with international management systems such as ISO 9001. c.Each factory has set up a dedicated unit in accordance with regulations to be responsible for system management and regular reporting business (2) Society: A. Risk assessment items: employee-employer relationships Risk management policies or strategies a. Welfare Management System of Feng Hsin Steel b. Employee-employer meetings are held regularly. c. Performance appraisals of employees are conducted on an annual basis. B. Risk assessment items: occupational safety

79

Promotional Items	Implementation status	Implementation status	Implementation status	Deviations from Sustainable Development Best Practice Principles for TWSE/TPEX Listed Companies,and reasons thereof
	Yes	No	Summary
			and health Risk management policies or strategies: Occupational Safety and Health Law, Labor Standards Act, and ISO / CNS 45001 shall be followed. C. Risk assessment items: local communities Risk management policies or strategies: Continue to promote the ISO 14001 environmental management system, maintain effective pollution prevention and control management, and conduct environmental protection-related inspections on a regular basis. (3) Corporate governance A. Risk assessment items: governance and Transparency Risk management policies or strategies a. The Company shall introduce ISO 9001, 14001 and ISO 45001 certifications, and have external auditors regularly review the system every year in order to follow up and review the system, thus proposing improvement plans. b. The Companyshallprepare annual budgets

80

Promotional Items	Implementation status	Implementation status	Implementation status	Deviations from Sustainable Development Best Practice Principles for TWSE/TPEX Listed Companies,and reasons thereof
	Yes	No	Summary
			every year, hold qulterly budget meetings to track and review the fulfillment of the goals, and take related management measures. c. The procurement department and the production department shall hold coordination meetings for procurement and inventory monthly to follow up the material consumption situation in accordance with the production plan. d. The sales and production departments shall hold meetings monthly on the consumption of raw materials so as to review the current month's raw material consumption status and forecast next month's raw material consumption for planning. e. The production department shall production joint meetings monthly periodically. f. Other departments shall hold relevant management meetings based on the actual operating conditions. g.The board of directors is the center of the company's major business decisions. Its responsibilities include appointing and supervisingthe company's management,being

81

Promotional Items	Implementation status	Implementation status	Implementation status	Deviations from Sustainable Development Best Practice Principles for TWSE/TPEX Listed Companies,and reasons thereof
	Yes	No	Summary
			responsible for the company's overall operating status, disclosing the attendance rate of board directors through the annual report, and strengthening the directors' requirements for their own responsibilities and obligations. Perform the functions of supervising and managing the company. h.Internal performance evaluations of the Board of Directors and each of the functional committees yearly. i.The performance evaluation of the board of directors is conducted once every three years by an external professional independent organization or a team of external experts and scholars. https://www.fenghsin.com.tw/Stocks/investor/o utereval_113.pdf B. Risk assessment items: value Chain Sustainability Risk management policies or strategies: a. Follow IATF16949, ISO9001 and other management systems for regular tracking and review and conduct PDCA effectiveness

82

Promotional Items	Implementation status	Implementation status	Implementation status	Deviations from Sustainable Development Best Practice Principles for TWSE/TPEX Listed Companies,and reasons thereof
	Yes	No	Summary
			evaluation on customer health and safety management every year. b. The company's internal supplier management regulations. c. The Quality Assurance Committee is responsible for promoting and investing in relevant hardware facilities. For more information, please refer to the Company's Sustainability Report, which is available on the Company's website (https://www.fenghsin.com.tw/reportdwn.html)
III. Environmental issues
(I) Has the Company established an appropriate environmental management system according to the specific nature of the industry?	✓		In all of the Company's facilities, the environmental management system has been established pursuant to ISO 9001, 14001, and ISO 45001 and has been continuously verified by third parties. In addition, according to ISO 14064-1, annual greenhouse gas inventory are conducted, and the effectiveness of emission reduction is followed up and disclosed in the sustainability report and our website. (https://www.fenghsin.com.tw/reportdwn.html andhttps://www.fenghsin.com.tw/central.html)	Conformity
(II) Has the Companyendeavored to maximize	✓		1. Belongingto the electric arc furnace	Conformity

83

Promotional Items	Implementation status	Implementation status	Implementation status	Deviations from Sustainable Development Best Practice Principles for TWSE/TPEX Listed Companies,and reasons thereof
	Yes	No	Summary
the use of the energy and utilize renewable materials that pose the least impact on the environment?			steelmaking industry, the Company plans the optimal capacity design for steelmaking and rolling process to meet its orders’ requirements. Purchased electricity is the largest source of energy used by the Company and natural gas is the second largest. Over the years, the Company has been striving to improve the efficiency of electricity and heavy oil usage. In 2018, the fuel for the heater in three rolling mill lines was changed from heavy oil to natural gas to reduce greenhouse gas emissions. 2. The energy reduction strategies are listed as follows (1) The amount of gas and electricity consumption is reduced. (2) Electric furnace and heating furnace combustion efficiency are enhanced. (3) The Company maintains the temperature of the electric furnace and heating furnace, and the heat loss shall reduced. (4) The Company uses clean energy, e.g., change heavy oil to natural gas, to reduce greenhousegas emissions.

84

Promotional Items	Implementation status	Implementation status	Implementation status	Deviations from Sustainable Development Best Practice Principles for TWSE/TPEX Listed Companies,and reasons thereof
	Yes	No	Summary
			(5) The process is modified, and the company replaced the old process with new one to improve the energy efficiency. 3. Performance results: The estimated total energy savings in 2023 is 445.5 kWh (about 1,603.7 GJ). If it is converted to greenhouse gas emissions, a total of 220.50 metric tons of carbon dioxide equivalent is reduced.
(III) Whether the Company assesses the potential risk and opportunity posed by climate transformation to the enterprise, now and in the future, and takes responsive measures related to climate issues?	✓		Refer to Climate-Related Information section.	Conformity
(IV) 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 waste goods?	✓		1. Greenhouse gas management refer to Climate-Related Information section. 2. Water resource management (1) The Company’s facilities are all situated in Houli District, Taichung City. According to the "Water Risk Assessment Tools" of the World Resources Institute, the water pressure in the district where the Company is situated is "Low-Medium risk (1-2)". The water source for the Company’s mainprocess is	Conformity

85

Promotional Items	Implementation status	Implementation status	Implementation status	Deviations from Sustainable Development Best Practice Principles for TWSE/TPEX Listed Companies,and reasons thereof
	Yes	No	Summary
			underground water, for which the Company has obtained the water title deed and installed flow meters at each well to consume groundwater sources. Meanwhile, the Company will conduct the water quality inspection on a quarterly basis. According to the historical inspection, the Company is held satisfying all of the emission standards. In other words, the Company’s water consumption is in compliance with the amount approved in the water title deed issued by the government. According to Article 26 of the Regulations on Environmental Impact Assessment Of Industrial Zone Development, the total water recycling rate of an industrial zone (including the recycling of water in the premises, the recycling in the reclaimed water system and the recycling of wastewater from the sewage treatment plant) shall be at least 70%, and the Company's water recycling rate is much higher than the regulatory standard. Regarding the Company's process water, the water is cooled bythe coolingwater tower

86

Promotional Items	Implementation status	Implementation status	Implementation status	Deviations from Sustainable Development Best Practice Principles for TWSE/TPEX Listed Companies,and reasons thereof
	Yes	No	Summary
			and then recycled to the direct and indirect cooling pools for reuse. In the process water, it is used as discharge water for adjusting water quality and backwash wastewater for sand filter barrels, and part of it is used for road sprinkling and slag cooling sprinkling. The above-mentioned excess discharge water is discharged to the final wastewater treatment plant. Part of the treated discharge water is recycled as road sprinkler for dust suppression, and the other part is discharged from the discharge port to improve the reuse rate of water resources. (2) Water consumption: Unit: million liters 2022 2023 Intake Water 1,797.17 1,756.99 Discharge water 186.61 152.87 Consumption water 1,610.56 1,604.12 Recycled water consumption in the mills 28,178.33 28,327.24 Water reuse rate% 1,568 1,612 Reuse rate of recycled water 94.00 94.16 Intensity of water intake 1.09 1.08 Note:

87

Promotional Items	Implementation status	Implementation status	Implementation status	Deviations from Sustainable Development Best Practice Principles for TWSE/TPEX Listed Companies,and reasons thereof
	Yes	No	Summary
			1. Consumption water = intake water - discharge water 2. Reuse rate of water (%) = recycled water consumption in the mills / intake water 3. Reuse rate of recycled water (%) = recycled water consumption in the mills /(intake water + recycled water consumption in the mills) 4. Intensity of water intake: water intake/total finished steel rolling production. 5. The water recycling figures in the mills are the actual values of the flow meters. (3) Reduction promotion target: We shall strive to reduce the intensity of water intake, in order to make the water reuse rate (times) greater than 10, and the reuse rate of recycled water greater than 90%. (4) Promotion target: short-term target: water reuse rate (times) is greater than 10, water recycling rate is greater than 90%, medium-term target: water recycling rate is 98% by 2030, wastewater treatment is in compliance with national policies and regulations, and meets the commitment value of the water plan. Long-term goal: To achieve the national net zero emissionpolicyby2050.

88

Promotional Items	Implementation status	Implementation status	Implementation status	Deviations from Sustainable Development Best Practice Principles for TWSE/TPEX Listed Companies,and reasons thereof
	Yes	No	Summary
			(5) Promotion measures: The external systems currently introduced by the Company include ISO 14001, ISO 14064-1, ISO 45001, etc. In accordance with requirements of each external system and environmental laws, the legal compliance is reviewed quarterly. Concurrently, we cooperate with the government to participate in meetings and opine to the authorities for reference in decision-making. (6) Achievement status: Achieved short-term goal in 2023: water reuse rate (times) is greater than 10, water recycling rate is greater than 90%3. Waste management 3. Waste management (1) The Company has set up storage sites for each type of waste pursuant to the law. According to the promulgated categories of recycled, reused, and business waste, we have entrusted legal and professional recycling and disposal companies to carry out recycling and cleaning works; there is no violation of the Basel Convention, and there is no problem regardingcross-countrytransportation and

89

Promotional Items	Implementation status	Implementation status	Implementation status	Deviations from Sustainable Development Best Practice Principles for TWSE/TPEX Listed Companies,and reasons thereof
	Yes	No	Summary
			disposal of hazardous waste. Furthermore, each type of waste removal and disposal is inspected from time to time by the responsible department to ensure the legality and safety of final disposal. Furnace slags EAF Dust is the Company’s main waste, and the amount of which depends on the quality of scrap steel raw materials. At present, the reuse of EAF Dust is carried out by professional and qualified reuse companies. Crude zinc oxide powder is extracted from the dust and sold to customers for refining into zinc ingots, which are used as industrial raw materials. On the other hand, the reuse of furnace slag is carried out by professional recycling organizations. After stabilizing the furnace slag, it is made into ready-mixed concrete / asphalt granules for use in non-structural construction. (2) Volume of waste disposed: Unit: Tons Main Business 2022 2023 Disposal methods Hazardous waste EAF Dust 32,434 31,062 Off-site

90

Promotional Items				Implementation status	Implementation status	Implementation status		Deviations from Sustainable Development Best Practice Principles for TWSE/TPEX Listed Companies,and reasons thereof
	Yes	No			Summary
			disposal and recycling Non-hazardous waste Wasted wood 90 131 Off-site disposal and incineration (including energy recycling) Household waste 218 246 Iron oxides 222,630 226,428 Off-site disposal and recycling Reducing slag 101,530 48,891 Iron oxides 35,273 19,017 Waste brick 8,921 8,487 Waste insulation material 10 11 Inorganic sludge 53 41 waste lubricatingoil 2 5 Metal Smelting Slag 10 0 Note: Based on the actual production sources, data on the amount of the Company's significant industrial wastes (produced, transported and stored) will be reported monthly on the Internet in accordance with the regulations. Data source: Industrial Waste Report and Management System, Environmental Protection Administration, Executive Yuan (4)Management approach				disposal and recycling
				Non-hazardous w	aste
				Wasted wood	90	131	Off-site disposal and incineration (including energy recycling)
				Household waste	218	246
				Iron oxides	222,630	226,428	Off-site disposal and recycling
				Reducing slag	101,530	48,891
				Iron oxides	35,273	19,017
				Waste brick	8,921	8,487
				Waste insulation material	10	11
				Inorganic sludge	53	41
				waste lubricatingoil	2	5
				Metal Smelting Slag	10	0

91

Promotional Items	Implementation status	Implementation status	Implementation status	Deviations from Sustainable Development Best Practice Principles for TWSE/TPEX Listed Companies,and reasons thereof
	Yes	No	Summary
			A. Each factory has set up a dedicated person in accordance with the regulations to be responsible for ISO 14001 system management and regular reporting business. B. The output, storage, removal, reuse and declaration of industrial waste shall be carried out in accordance with the provisions of the "Standards for the Storage and Removal of Industrial Waste and Facilities" and the "Declaration Format, Items, Content and Frequency of Reporting the Output, Storage, Removal, Treatment, Reuse, Export and Import of Waste by Network Transmission". For more information, please refer to the Company's Sustainability Report, which is available on the Company's website (https://www.fenghsin.com.tw/reportdwn.html)
IV. Social Issues
(I) Whether the Company establishes the related management policies and procedures in accordance with the relevant laws and international human rights conventions?	✓		1. In accordance with the labor laws and related letters, we formulated the Company’s articles of incorporation and regulations to protect the rights and interests of its employees. we also make	Conformity

92

Promotional Items			Implementation status	Implementation status	Deviations from Sustainable Development Best Practice Principles for TWSE/TPEX Listed Companies,and reasons thereof
	Yes	No	Summary
			reference to the internationally recognized human rights standards of the International Bill of Human Rights, which protects equal work opportunities, prohibits forced labor and child labor, and guarantees the right to physical and mental health, thereby treating all employees with dignity and respect. 2. The Company's human rights management policies and concrete plans are summarized as follows. Human rights managementpolicies Concrete plans (1) Providing a safe and healthy environment Refer to (VI) Working environment and employees’ personal safety protection measures: (2) Eliminating Illegal discrimination to ensure equal work opportunities The Company has a Labor-management meetings and a remuneration group, which conducts reviews on unreasonable salaries from time to time in order to eliminate discrimination. In addition, the personnel regulations provide for the protection of the rights and interests of both men and women, such as baby-sitting. (3) Prohibition of child labor The Company's appointment and dismissal regulations stipulate that no one under the age of 16 shall be employed by the Company. Therefore, the number of employees under the age of 16 is zero in allpreviousyears. (4) Prohibition of forced labor The Company shall comply with the labor laws of the local government and international regulations, and shall not force or threaten any person who does not agree toperform labor.
			Human rights managementpolicies	Concrete plans
			(1) Providing a safe and healthy environment	Refer to (VI) Working environment and employees’ personal safety protection measures:
			(2) Eliminating Illegal discrimination to ensure equal work opportunities	The Company has a Labor-management meetings and a remuneration group, which conducts reviews on unreasonable salaries from time to time in order to eliminate discrimination. In addition, the personnel regulations provide for the protection of the rights and interests of both men and women, such as baby-sitting.
			(3) Prohibition of child labor	The Company's appointment and dismissal regulations stipulate that no one under the age of 16 shall be employed by the Company. Therefore, the number of employees under the age of 16 is zero in allpreviousyears.
			(4) Prohibition of forced labor	The Company shall comply with the labor laws of the local government and international regulations, and shall not force or threaten any person who does not agree toperform labor.

93

Promotional Items			Implementation status	Implementation status	Implementation status	Deviations from Sustainable Development Best Practice Principles for TWSE/TPEX Listed Companies,and reasons thereof
	Yes	No		Summary
			(5) Helping employees maintain physical and mental health and work balance	A. The Company shall provide diversified activities, such as sports clubs, dance clubs, and other arts and culture clubs, in order to expand interpersonal interaction among employees and to enrich work-life balance. B. The Company shall take the needs of employees as the guidance and encourage them to have a healthy lifestyle. Moreover, In the office building, there is a table tennis room, a fitness room, and a dance studio for employees to use.
(II) 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?	✓		1. Employee remuneration: According to the Company’s remuneration regulation, the Company has promulgated the work allowance and bonus measures in order to appreciate and reward our employees for their efforts and contribution in work. The relevant bonuses are determined based on the Company's annual performance, financial condition, operational condition and individual performance. If the Company is profitable during the year, it shall contribute no less than 2% thereof as the remuneration to the employees pursuant to Article 27 of the Company’s Articles of Incorporation. The Company evaluates the performance based on the the "Regulations Governing Year-end Performance Review and Employee Remuneration" and reviews the remuneration system on a timelybasis accordingto the actual			Conformity

94

Promotional Items			Implementation status	Implementation status	Implementation status	Deviations from Sustainable Development Best Practice Principles for TWSE/TPEX Listed Companies,and reasons thereof
	Yes	No	Summary
			operating conditions and relevant laws and regulations. Article 9 of the "Measures for Year-end Assessment and Employee Remuneration Approval" stipulates that: the principle of year-end bonus distribution... The year-end bonus is issued according to the company's operating performance (after-tax earnings per share+0.2), and there are upper and lower limits.
			YEAR	2022	2023
			bonus months	5.8	4.6
			release time	112.01.17	113.02.02
(III) Whether the Company provides the existence of a safe and healthy work environment and regular safety and health training to employees?	✓		Please refer to V. on page 181.	Labor-Management Relations		Conformity
(IV) Whether the Company establishes some effective career development training plan for employees?	✓		Please refer to V. on page 181.	Labor-Management Relations		Conformity
(V) Does the Company comply with the related laws and international practices with respect to issues of customers’ health and safety, customers’ privacy, marketing, labeling, etc. for itsproducts and services,and adopt	✓		1. In order to maintain the safety of the Company’s products, during the production process (from importing raw materials to warehousing finished products), we set the production batch number and take 100%			Conformity

95

Promotional Items	Implementation status	Implementation status	Implementation status	Deviations from Sustainable Development Best Practice Principles for TWSE/TPEX Listed Companies,and reasons thereof
	Yes	No	Summary
related consumer or customer protection policy and grievance procedures?			batch-by-batch inspection, and hold regular meetings regarding the quality of imported materials every year. When raw materials and new products are being manufactured and transferred, quality control personnel will control the quality to ensure that all products entering the production process are up to standard; in the quality control system, quality control personnel spot-check the inspected products to ensure that they are radiation-free and meet the national standards, thus achieving perfect quality. After years of hard work, all of our employees are aware of the concept of quality first. In addition, each of us is responsible for the quality of our products. Over the years, we have received recognition and awards from all walks of life, which drive the Company to keep pursuing even more excellent quality assurance. 2.The company has internal regulations such as "Administrative Measures for Automatic Radiation Detection Operation", "Specifications for Concrete Reinforced Products", "Specifications for Profile Steel Products",

96

Promotional Items	Implementation status	Implementation status	Implementation status	Deviations from Sustainable Development Best Practice Principles for TWSE/TPEX Listed Companies,and reasons thereof
	Yes	No	Summary
			"Specifications for Reinforcement Marking and Packaging for Concrete", etc., and strictly control the relevant specifications of profiled steel products, and Obtained IATF 16949, ISO 9001, ISO 14001, ISO 45001, TAF laboratory certification, JIS MARK certification, SIRIM certification, EN certification, ACRS certification and other external verifications. In 2023, there will be no serious penalties or major fines for violating health and safety regulations (CNS regulations, radiation steel bar regulations, product information and labeling regulations, etc.), banned or controversial product sales and violations of marketing communication regulations Nothing happened. The company actively responds to the global boycott of conflict minerals, and promises not to use conflict minerals, comply with relevant laws and regulations, and avoid social and environmental impacts. The company's rebar products are regulated in accordance with CNS 560, which can meet the strength requirements and non-radiation steel bars, which can take into account the health and safetyof customers.

97

Promotional Items	Implementation status	Implementation status	Implementation status	Deviations from Sustainable Development Best Practice Principles for TWSE/TPEX Listed Companies,and reasons thereof
	Yes	No	Summary
			3.No sold products and product packaging materials were recycled in 2023. The Company's products are controlled in accordance with relevant standards. The ingredients, the mechanical characteristics and the radiation tests all meet the national standards, and there is no any violation of laws and the voluntary regulations. 4. The Company values the confidentiality and privacy of customer and personal information. In order to ensure the customer's information is protected, it is required to obtain authorization for the use of the Company's computer systems. Users of each department must apply for user codes and applications, and obtain approval from their department heads and the Information sub-department heads to obtain official access to the computer systems. Hence non-relevant personnel is unable to access to customer-related information. In 2023, there were no complaints from customers or damages to their rights due to breach of customer privacy or loss of customer information. 5. The companyconducts customer satisfaction

98

Promotional Items	Implementation status	Implementation status	Implementation status	Deviations from Sustainable Development Best Practice Principles for TWSE/TPEX Listed Companies,and reasons thereof
	Yes	No	Summary
			survey for its products every year. In addition, the salespersons visit the customers to conduct the survey, including service, bonus discount plan, delivery quality, etc. For dissatisfied items or those with satisfaction level less than 70% of the standard value, the sales and related departments are required to explain to improve and continuously progress, thus, providing the most satisfactory service quality to the customers and creating a win-win relationship. 6. The Company conducts customer satisfaction surveys every year (full score of 5, 100%), which includes the Company's sales method, salespersons’ service, product quality, discounts and bonuses, and handling of complaints and claims, etc. Consequently, the Company has maintained good performance in customer satisfaction over the years. A total of 164 satisfaction surveys were conducted in 2023, with satisfaction scores exceeding 88%, and " salespersons' service" was the most satisfied item amongcustomers.
(VI) Whether the Company adopts any specific suppliers’ managementpolicydemandingthat	✓		1. In the "Safety and Hygiene Agreement for Construction and Construction",the company	Conformity

99

Promotional Items	Implementation status	Implementation status	Implementation status	Deviations from Sustainable Development Best Practice Principles for TWSE/TPEX Listed Companies,and reasons thereof
	Yes	No	Summary
the suppliers should comply with the related regulations governing environmental protection, occupational safety and health or labors’ human rights, and how is the policy implemented?			requires that it is committed to protecting employees' human rights, personal privacy and prohibiting improper discrimination, and to abide by the principles of fairness, impartiality and integrity in the recruitment of talents. The recruitment, selection and employment of employees are in compliance with government laws and regulations, and are not based on race, class, language, ideology, religion, party, place of origin, place of birth, gender, sexual orientation, age, marriage, appearance, facial features, physical and mental disability, constellation, blood type, discrimination and differential pay, and explicitly prohibit the use of child labor, to ensure that no child labor under the legal minimum employment age is employed, and to ensure the physical and mental health of underage employees For safety reasons, it is forbidden to arrange dangerous work. In addition, the company has also stated in the "Fenghsin Regulations", "Administrative Measures for Safety and Health in Contracting Operations", and "External Announcement of Procurement E-commerce" thatpersons under the age of 20 are

100

Promotional Items	Implementation status	Implementation status	Implementation status	Deviations from Sustainable Development Best Practice Principles for TWSE/TPEX Listed Companies,and reasons thereof
	Yes	No	Summary
			not allowed to enter the site to engage in labor services, and the contracted projects are also related to manufacturers. Sign the "Safety and Hygiene Agreement" and strictly control it. 2. Supplier evaluation: (1) Materials: Every year, through the system, print the "Material Supplier Annual Evaluation Form". For specific projects, the "quality" and "contract performance" of the whole year are averaged, and evaluation scores are given. Purchasing contractors will also prepare the "List of C-level Suppliers in the OO Annual Material Suppliers' Annual Evaluation Form" for the manufacturers rated as C, and submit them to the top for verification. It records the unqualified items, reasons, suggestions, etc., and attaches the "Material Inspection Report". (2) Materials: Regularly evaluate the third-party contractors in the engineering category. The evaluation items include construction quality, construction environment rectification, degree of cooperation, industrial safety requirements and the construction performance of other factories. Theperformance of suppliers inperformingeach

101

Promotional Items	Implementation status	Implementation status	Implementation status	Deviations from Sustainable Development Best Practice Principles for TWSE/TPEX Listed Companies,and reasons thereof
	Yes	No	Summary
			project is indeed evaluated, and according to the evaluation results, they are divided into A-level, B-level, and C-level suppliers. In major requisitions, the price of the third-level suppliers rated as A is higher than that of B-level third-party suppliers. If the price is less than 10%, it can be considered as a priority to negotiate the price; for the third-party supplier rated as C, the procurement department will sign the contract to the motor department, the maintenance department factory, and the director/manager to decide whether to continue the contract procurement. In 2023, there will be 87 engineering third-party manufacturers, including 42 A-level manufacturers, 42 B-level manufacturers, and 3 C-level manufacturers. (3)Raw materials: Fill in the domestic and foreign supplier evaluation record form and annual evaluation summary form every year for the delivery quality, as a reference for future purchases. If there are suppliers that are lower than the scoring standard, the suppliers will be required to improve. In 2023, a total of 10 domestic suppliers will be tested and evaluated,

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Promotional Items	Implementation status	Implementation status	Implementation status	Deviations from Sustainable Development Best Practice Principles for TWSE/TPEX Listed Companies,and reasons thereof
	Yes	No	Summary
			and 10 qualified suppliers; 11 foreign suppliers, 11qualified suppliers.
V. Did the Company prepare the report disclosing the Company's non-financial information, such as sustainability report, based on the guidelines or directions for preparing reports applicable internationally? Whether said report has been assured or guaranteed by a third-party certification unit?	✓		1. The company's sustainability report is disclosed in accordance with the GRI Standards (2021 edition) published by the internationally recognized Global Sustainability Reporting Institute (GRI) and the Taiwan Stock Exchange's "Operational Measures for the Preparation and Submission of Sustainability Reports by Listed Companies", and refers to Climate-related financial information disclosure recommendations (Task Force on Climate-Related Financial Disclosures, TCFD) and sustainable accounting standards board (Sustainability Accounting Standards Board, SASB) disclosure report. 2. Although the Company's sustainability report has not been verified by external parties this year, the Company has ensured the accuracy of all economic, environmental and social information in the report through rigorous internal controls and inspection mechanisms.	Conformity
VI. If the Company has established its own Sustainable Development Best Practice Principles in accordance with the “Sustainable Development Best

VI. If the Company has established its own Sustainable Development Best Practice Principles in accordance with the “Sustainable Development Best

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Implementation status Deviations from Sustainable Development Promotional Items Best Practice Principles for TWSE/TPEX Yes No Summary Listed Companies, and reasons thereof Practice Principles for TWSE/TPEx Listed Companies,” please state the deviations of its current practices and such established principles: The sustainable development policies and the Sustainable Development Best Practice Principles are promulgated on the Company’s website. Meanwhile, the Sustainable Development 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 sustainable development 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.

1. Please visit the Company’s website at (https://www.fenghsin.com.tw/report.html) to access the information related to the Company’s current sustainable development practices.

2. For more information, please refer to the Company's Sustainability Report, which is available on the Company's website (https://www.fenghsin.com.tw/reportdwn.html)

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Climate-Related Information of TWSE/TPEx Listed Company

1. Implementation of Climate-Related Information

• Item Implementation status 1. Describe the board of directors' and 1.~4.

• Describe the board of directors' and management's oversight and governance of climate-related risks and opportunities. 2. Describe how the identified climate risks and opportunities affect the business, strategy, and finances of the business (short, medium, and long term). 3. Describe the financial impact of extreme weather events and transformative actions. 4. Describe how climate risk identification, assessment, and management processes are integrated into the overall risk management system.

(1) Governance: The company's climate change risk-related discussion and management, the heads of various departments assist in identifying relevant risks and opportunities, and then send them to the climate change response team for discussion and evaluation. Regarding the suggestions discussed by TCFD, formulate response strategies and promote energy conservation and carbon reduction Relevant measures, setting short-term, medium-term and long-term goals and tracking related implementation results are regularly reported to Audit Committee and the board of directors, and the board of directors will report on April 26, 2024.

(2) Risk management and strategy: The company refers to the framework suggested by TCFD to assess transformation risks, physical risks, and opportunities. The assessment method is scored by the heads of each department based on the "possibility" and "impact" of each climate issue, and Judging the possible occurrence time of this climate issue is divided into short-term (2024-2026), medium-term (2027-2031) and long-term (after 2032). After summarizing the risk and opportunity scoring results, the corresponding score matrix is sorted into high, medium and low risks and opportunities (relevant assessment results are detailed in the attached table below). The company further responds according to the level of risk and opportunity. The change response team formulates response strategies, and reports the identification results and strategies, together with other risks regularly assessed by the company, to the board of directors, so that the board of directors can understand and supervise the risk issues faced by the company. Refer to the list below.

(3) Indicators and goals: In order to reduce the impact of climate change on operations, the company - first conducts an inventory of energy consuming equipment in the plant and replaces them with

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1. If scenario analysis is used to assess resilience to climate change risks, the scenarios, parameters, assumptions, analysis factors and major financial impacts used should be described.

high-efficiency equipment year by year to achieve the annual energy-saving goal. In the medium and long term, it will continue to focus on high-carbon emission projects. Reduction strategy, build process energy-saving equipment, use alternative fuels and use renewable energy, evaluate the feasibility of carbon capture, and set the long-term goal of net zero emissions in 2050. For relevant indicators and targets, please refer to the company's sustainability report, which is disclosed on the company's website (https://www.fenghsin.com.tw/reportdwn.html) 5.~8NA

1. If there is a transition plan for managing climate-related risks, describe the content of the plan, and the indicators and targets used to identify and manage physical risks and transition risks.

2. If internal carbon pricing is used as a planning tool, the basis for setting the price should be stated.

3. If climate-related targets have been set, the activities covered, the scope of greenhouse gas emissions, the planning horizon, and the progress achieved each year should be specified. If carbon credits or renewable energy certificates (RECs) are used to achieve relevant targets, the source and quantity of carbon credits or RECs to be offset should be specified.

4. Greenhouse gas inventory and assurance status (separately fill out in point 1-1 below).

5. Details in the attached table below

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Possibility	Climate Change Risk Prioritization Map	Climate Change Risk Prioritization Map	Climate Change Risk Prioritization Map	Climate Change Risk Prioritization Map
	High		4. Costs of transition to low-carbon technologies 5. Mandatory filing 6. International Covenant or Agreement	1. Fuel/Energy Tax/Carbon Fee Imposed by the Government 2. Total volume control/emission trading 3. Renewable energy regulations
	Medium	8. Average temperatures rise	7. Changes in customer behavior 9. Increased severity of extreme weather events such as typhoons and floods 10. Increasing concern and negative feedback from stakeholders
	Low
		Low	Medium	High

Impact

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Opportunity Priorities Map for Climate Change

Possibility	High		1. Participate in renewable energy projects and adopt energy-saving measures
	Mediu m	5. Make good use of public sector incentives 9. Enter the new market of renewable energy	2. Use more efficient production and distribution processes 3. Development and innovation of new products and services 4. Adopt a rewarding policy 6. Recycle 7. Use new technology 8. Participate in the carbon trading market
	Low	10. Financial Institutions Awards 11. Transition to non-centralized energy
		Low	Medium	High

Impact

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	Results of Climate Change Risk Impact Analysis	Results of Climate Change Risk Impact Analysis	Results of Climate Change Risk Impact Analysis
Risk/Opp ortunity	Risk categories and opportunities	Short-term (1-3 year),	Medium-term (3-7 year)	Long-term (after 7 year).
Risk	Transition risks Risks related to changes in policies, laws and regulations, technology, markets, social and economic conditions that may occur in the process of low-carbon transformation.	■ Fuel/Energy Tax/Carbon Fee Imposed by the Government ■ Total volume control/emission trading ■ Renewable energy regulations ▲ Mandatory filing ▲ International Covenant or Agreement	▲The cost of low-carbon technology transformation ▲Change in customer behavior ▲Stakeholders’ attention and negative feedback are increasing day by day
	Physical Risks The physical risks brought by climate change can be immediate or long-term. Physical risks may have financial impacts on the organization, such as direct damage to Assets or indirect impact due to supply chain disruption.			▲The average temperature rises ▲The severity of extreme weather events such as typhoons and floods has increased
Opportun ities	Opportunities The efforts made to mitigate and adapt to climate change will create opportunities for the organization.		■ participate in the Item with energy saving measures ▲Adopt incentive policies ▲ Make good use of public sector incentives ▲Participate in the carbon trading market	▲ Use more efficient production and distribution processes ▲ Development and innovation of new products and services ▲ Recycling and reuse ▲ Use new technology ▲ enters the new market of renewable energy ▲ Financial Institution Awards ▲ Shift to decentralized energy

■High risk/opportunity project ▲Medium risk/opportunity project

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Risk and Opportunity Identification Results	Risk and Opportunity Identification Results		Impact on the Company		Strategy
Transition risks- Policies and regulations	Fuel/Energy Tax/Carbon Fee Imposed by the Government		Increased operating costs In 2023, the government announced the Climate Change Adaptation Act, and the Ministry of Environment will hold a review meeting on carbon fee rates in the following year. If the carbon fee rates are announced, they will be levied, and the future carbon fee rates will increase year by year, which will affect the company's finances.		Increased capex, reduced operating costs 1. Convene quarterly climate change response team meetings to formulate carbon reduction strategies and goals, develop low-carbon technologies, and improve the energy efficiency of equipment to reduce carbon emissions in the process. 2. Set up solar renewable energy for self-use, increase the proportion of renewable energy use, and reduce Scope 2 greenhouse gas emissions.
Transition risks- Policies and regulations	Total volume control/emission trading		Increased operating costs The implementation of the total volume control and emission trading system is to verify the greenhouse gas emission quota of enterprises that control the emission sources, and their emissions shall not exceed the approved emission quota. If the emission quota is exceeded, they must be purchased through the carbon trading platform. By gradually reducing the emission limit, with the increase in emission demand, the price of the emission quota will also rise.		Increased capex, reduced operating costs The Company continues to conduct greenhouse gas inventory and carbon footprint, looking for carbon emission hot spots, so as to seek opportunities for product carbon reduction and process improvement. In the future, it will continue to improve the energy efficiency of electric furnaces, increase the proportion of renewable energy use, and adopt emerging carbon reduction technologies to mitigate the impact of the government's future implementation of total volume control and emission trading systems.
Transition risks- Policies and regulations	Renewable energy regulations		Increased operating costs 1. According to the Ministry of Economic Affairs announcement "Regulations for the Management of Setting up Renewable Energy Power Generation Equipment of Power Users above a Certain Contract Capacity " on December 31, 2020, large electricity consumers need to purchase renewable energy power and certificates, set up renewable energy power generation equipment and energy storage equipment, and other obligations. 2. If no action is put forward, annual payment is required, the estimated amount of the annual payment will be $182 million.		Increased capex, reduced operating costs 1. In response to the early bird program, evaluate the available areas in the plant area and lease the roof of the plant, and set up solar photovoltaic power generation equipment. 2. Set up 13.6MW of obligation capacity of photovoltaic equipment and start self-generation for self-use before the deadline for fulfillment of obligations (end of 2023). 3. The estimated annual output of green power is 17,000,000 kWh, which can reduce the Company's demand for Taiwan Power and current electricity expenses.

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Risk and Opportunity Identification Results	Risk and Opportunity Identification Results		Impact on the Company		Strategy
Opportunity-Resilience	Participate in renewable energy projects and adopt energy-saving measures		Increase in capital expenditure 1. In addition toto fulfilling the capacity obligation, the Company also invested in 5.1MW solar photovoltaic power generation equipment. 2. Continuously evaluating potential renewable energy generation sites		Decrease in Operating cost and increase in Operating revenue 1. Performance of obligations (13.6MW) Photovoltaic power generation belongs to green power, and green power certificates can be obtained for the Company's own use. 2. The additional investment of 5.1MW photovoltaic power generation is estimated to inject 6,375,000 kWh of electricity supply to Taipower.

• 1-1 The Company's greenhouse gas inventory and assurance situation in the last two years 1-1-1 Greenhouse gas inventory information

• According to the Sustainable Development Roadmap for TWSE/TPEx Listed Companies, the Company shall disclose the parent company's individual inventory information from 2023, and disclose the inventory of the consolidated company from 2025. However, the consolidated subsidiary of the Company is an investment company with no substantial operations, so there is no greenhouse gas emission, so there is no inventory and verification. The following disclosures are all parent company only information.

• The Company has established a greenhouse gas inventory mechanism in accordance with the ISO14064-1 greenhouse gas inventory standard issued by International Organization for Standardization (ISO) (ISO). Since 2001, the Company has been regularly checking its greenhouse gas emissions every year, fully grasping the greenhouse gas use and emission status, and verifying the effectiveness of the reduction actions, which are described as follows:

Describe the greenhouse gas emissions (tons CO2e), intensity (tons CO2e/million) and data coverage for the last two years.	Describe the greenhouse gas emissions (tons CO2e), intensity (tons CO2e/million) and data coverage for the last two years.	Describe the greenhouse gas emissions (tons CO2e), intensity (tons CO2e/million) and data coverage for the last two years.	Describe the greenhouse gas emissions (tons CO2e), intensity (tons CO2e/million) and data coverage for the last two years.	Describe the greenhouse gas emissions (tons CO2e), intensity (tons CO2e/million) and data coverage for the last two years.
Year	2022		2023
	Emissions (Tons CO2e)	Intensity (Tons of CO2e/new turnover NT $Million)	Emissions (Tons CO2e)	Intensity (Tons of CO2e/new turnover NT $Million)
Scope 1 Direct greenhouse gas	226,105.485		197,345.956

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emissions
Scope 2 Indirect greenhouse gas emissions	510,068.083		499,394.268
Total	736,173.568	19.07	696,740.224	19.97

Note 1: Direct emissions (Scope 1: Direct emissions from sources that are owned or controlled by the Company), energy indirect emissions (Scope 2: Indirect greenhouse gas emissions from imported electricity, heat or steam) and Other indirect emissions (Scope 3: Indirect emissions from company activities, not from energy indirect emissions, but from sources that are owned or controlled by Other).

Note 2: The data coverage of direct and indirect energy emissions shall be processed according to the schedule specified in Paragraph 2 of Article 10 of this Code, and the information of indirect other emissions may be disclosed on a voluntary basis.

Note 3: Greenhouse gas inventory standard: ISO 14064-1 published by Greenhouse Gas (GHG) Protocol or International Organization for Standardization (ISO).

Note 4: The intensity of greenhouse gas emissions can be calculated by each unit of product/service or turnover, but at least the data calculated by turnover (NT $million) should be stated.

Note 5: The greenhouse gas emissions in 2023 are the results of the company's internal inventory, and the complete and reliable information will be disclosed in the sustainability report without external verification

1-1-2 Greenhouse gas assurance information

1. According to the Sustainable Development Roadmap for TWSE/TPEx Listed Companies, the Company shall disclose the parent company's individual assurance situation from 2024.

individual assurance situation from 2024.	individual assurance situation from 2024.	individual assurance situation from 2024.
Describe the assurance situation for the most recent two years as of the publication date of the annual report, including the assurance scope, assurance agency, assurance standards and assurance opinions.
Scope of execution assurance	Emissions in 2022 (Tons CO2e)	Emissions in 2023 (Tons CO2e)
Scope 1 Direct greenhouse gas emissions	226,105.485	Complete assurance information will be disclosed in sustainability report
Scope 2 Indirect greenhouse gas emissions	524,494.251
Total	750,599.736
Percentage of the inventory disclosed in 1-1-1	100%
Assurance body	SGS

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	Description of the assurance situation	ISO 14064-1: 2018 Reasonable assurance

Note 1: It shall be handled in accordance with the schedule stipulated in Paragraph 2 of Article 10 of this Code. If the Company fails to obtain a complete greenhouse gas assurance opinion on the date of publication of the annual report, the "complete assurance information will be disclosed in the sustainability report" shall be indicated. If the Company fails to prepare the sustainability report, the "complete assurance information will be disclosed in the public information observatory" shall be indicated, and the complete assurance information shall be disclosed in the annual report of the following year.

Note 2: The assurance agency should meet the relevant regulations of the Taiwan Stock Exchange Corporation and Taipei Exchange stipulated sustainability report assurance agency.

Note 3: Scope 2 includes externally purchased electricity, and the electricity emissions in 2022 have not been announced at the time of external verification, so the electricity emissions in 2021 will be 0.509 kg of carbon dioxide equivalent in 2022.

1-2 Greenhouse gas reduction targets, strategies and concrete action plans

1-2 Greenhouse gas reduction targets, strategies and concrete action plans	1-2 Greenhouse gas reduction targets, strategies and concrete action plans
Describe the base year of greenhouse gas reduction and its data, reduction targets, strategies and specific action plans, and the achievement of reduction targets.
Base year of reduction	Year 2018
Greenhouse gas emissions (tons of CO2e) for Scope 1 and Scope 2 for the base year of emissions reduction.	Scope 1 233,532.093 Scope 2537,742.134 Total 771,274.227
Reduction target	Reduce 25% in 2030 compared to the base year of 2018, and 75% in 2050, to achieve the net zero carbon goal in 2050.
Strategy and action plan	1. Raw materials replacement: reduce the unit steel billet coke input. 2. Process improvement: Upgrade the oxygen plant, old motors, and pumps to IE3 high-efficiency equipment. 3. Using green electricity: installing solar panels of 19 MW for self-use 4. Fuel/Supplies substitution: Hydrogen replaces natural gas and biomass carbon replaces coke. 5. Transformation of electric furnace: reduce the energy consumption per unit steel billet. 6. Renewable energy: purchase green power certificates or build other renewable energy. 7. CCUS: Carbon capture in the flue, bottom sealing, or other emerging technologies. 8. Reducing Scope 2 emissions in line with the decrease in national electricity emission coefficient.

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Achievement of reduction targets	The greenhouse gas emissions of 696,740.224 t-CO2e in 2023 have been reduced by 9.66% compared to the base year of 2018 and 38% achieved to the reduction target of 2030.

Note 1: It shall be handled according to the schedule stipulated in Paragraph 2 of Article 10 of this Code. Note 2: The base year should be the year when the inventory is completed by the boundary of the consolidated financial report. For instance, in accordance with the provisions of Article 10, Paragraph 2 of this Standard, companies with a capital amount of over NT $10 billion should complete the inventory of the 2024 consolidated financial report in 2025, so the base year is 2024. If the company has completed the inventory of the consolidated financial report in advance, the earlier year can be the base year, and the data of the base year can be calculated by the average of a single year or a few years.

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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	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
(I) Does the Company adopt 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?	✓		(I)	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 https://www.fenghsin.com.tw/Stocks/investor/ho	Conformity
				nesty.pdfand MOPS to expressly state the Company’s ethical managementpolicy.
(II) 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	✓		(II)	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」that any business activities involving higher risk over unethical conduct are strictlyforbidden. No corruption or	Conformity

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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
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”?			bribe was found in 2023. 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,andpractice the

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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
			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 was found in 2023.
(III) 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 same precisely, and reviews amendments to saidprogram?	✓		(III) 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.	Conformity
II. Implementation of ethical management
(I) 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 tradingcounterpart?	✓		(I) The performance bond in the contract.	Conformity
(II) 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 reportingthe status of implementation	✓		(II) The Company’s HR Section is responsible for revision, implementation, interpretation, consulting services and notification content registration and filingof the operating	Conformity

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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
of the ethical management policy and unethical conduct prevention program to the Board of Directors periodically (at least once per year)?			procedures and conduct guidelines for the dedicated unit, 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 2023 has been reported to the Board of Directors on January 26, 2024. The related report is also disclosed on the Company’s website at https://www.fenghsin.com.tw/Stocks/investor/im plememt_112.pdf). The relevantpractices thereof are stated as follows:
			Provisions (Ethical Corporate Management Best Practice Principles)	Main Business	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
			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

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Scope of evaluation				Status	Status	Deviations from the Ethical Corporate Management Best Practice Principles for TWSE/TPEX Listed Companies, and reasons thereof
	Yes	No		Summary
					access to the grievance channels in the stakeholder section on the Company’s website at http://www.fenghsin.com.tw/investor.htm). As a result, no related grievance cases were found in 2023. 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 64 persons, who attended the training courses for 32 hours in total, in 2023. 3. The reread rate of the ethical corporate management statement is 42.12%.
			No misconduct or major deficiency with respect to the Ethical Corporate Management Best Practice Principles was found in 2023.
(III) Has the Company established a policy to prevent conflicts of interest, provided a proper reporting channel, and implemented it accordingly?	✓		(III) The Company established the Procedures for Ethical Management and Guidelines for Conduct to be followed by all employees. Meanwhile, the Company will strengthen the promotion thereof from time to time to prevent conflicts of interest.			Conformity
(IV) 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	✓		(IV) The Company has established the corporate system to fulfill ethical management in the Company’s regulations and “Internal Audit Handbook,” and had an internal audit unit implement the auditplan. The Audit Office			Conformity

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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
audits on the compliance by the unethical conduct prevention program or appoints a CPA to conduct the audits?			conducted the audit strictly according to the audit plan 2023 authorized by the Board of Directors. Upon submission of the audit report and follow-up report, it submitted the summary report to each Audit Committee member as required by the end of the month following completion of the audit deliverables. The internal audit officer also attended meetings of the Board of Directors to report on the internal audit affairs.
(V) Whether the Company organizes internal/external education training program for ethical management periodically?	✓		(V) 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 64 persons, who attended the training courses for 32 hours in total, in 2023. Further, the Company also discloses related regulations on the Company’s website,as the rules to be followed byall	Conformity

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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
			employees. The reread rate of the ethical corporate management statement is 42.12%.
III. Status of the Company’s whistle-blowingsystem
(I) 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?	✓		(I) The Company also provides stakeholders with the access to channels for seeking remedies or whistle-blowing any misconduct on the Company’s website at https://www.fenghsin.com.tw/appeal.html). The Administrative Department head is responsible for dealingwith the situation directly.	Conformity
(II) 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?	✓		(II) The related operating procedures are defined in the “Procedures for Ethical Management and Guidelines for Conduct” adopted by the Company.	Conformity
(III) Whether the Company has adopted any measures to prevent the whistle-blowers from being abused after the whistle-blowing?	✓		(III) The Company keeps the whistle-blower’s personal information in confidence strictly and adopts adequate protective measures to protect thepersonal data andprivacy pursuant to laws.	Conformity
IV. StrengtheningInformation Disclosure

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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
Does the Company have 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 , regulations and relevant practices in the stakeholder section on its website at (https://www.fenghsin.com.tw/governance.html).	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 its practices and own principles from said Best Practice Principles: N/A.
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 https://www.fenghsin.com.tw/governance.html

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 its practices and own principles from said Best Practice Principles: N/A.

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 https://www.fenghsin.com.tw/governance.html

1. The Company has established its own corporate governance best practice principles and related regulations, disclose how to access the same:

2. (I) Please refer to the MOPS\Corporate Governance\ Corporate Governance Structure\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, Directions for the Implementation of Continuing Education for Directors and Supervisors, Audit Committee’s Articles of Association, Ethical Corporate Management Best Practice Principles, Remuneration Committee’s Articles of Association, Sustainable Development Best Practice Principles, Regulations Governing Performance Evaluation on Board of Directors of the Company,

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Procedures for Ethical Management and Guidelines for Conduct, and Nomination Committee’s Articles of Association on https://mops.twse.com.tw/mops/web/t100sb04_1.

• (II) For the regulations related to stakeholders and corporate governance, please refer to the Company’s website at

https://www.fenghsin.com.tw/governance.html/ (Stakeholder/Corporate Governance/Important internal regulations); and for the Company’s sustainable development and the Sustainable Development Best Practice Principles, please refer to the Company’s website at https://www.fenghsin.com.tw/csr.html/CSR/CSR Best Practice Principles(sustainable development/Sustainable Development Best Practice Principles).

1. Other important information that is sufficient to enhance the understanding of corporate governance operations may be disclosed altogether: N/A.

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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 29, 2024

The following statement is made based on the results of the self-evaluation on the Company’s internal control system in 2023:

• (2) 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.

• (3) 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.

• (4) 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.

• (5) The Company has adopted said criteria to validate the effectiveness of its internal control system design and implementation.

• (6) 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, 2023, including the achievement rate of 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.

• (7) 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.

• (8) The Statement was passed unanimously without objection by all 11 Directors present at the Board meeting dated February 29, 2024

Feng Hsin Steel Co., Ltd. Chairman of Board: (Seal/Signature) 133

President: (Seal/Signature)

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.

1. 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.

2. 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: (annual general meeting 2023)

Meeting time: Thursday, May 31, 2023 at 9:00 a.m.

Present directors: Mark Lin, Lin Tsai-Hsiang, Lin Wen-Fu, Lai San-Ping, Lin Kun-Tan, Chung Ching-Lin,Chen Hsin-Hung, Lin Chi-Jui, Yang Tsung-Ju, Yu Chao-Tang, Liao Liao-I and Wang Yea-Kang (totaling 12 persons) Proposed Resolutions: Summary: Proposed Resolution for Business Report and Financial Statements 2022 (Proposed by the Board of Directors)

• Explanation: The Audit Committee has inspected the Company's business report and financial statements (including consolidated and parent company only financial statements) 2022. 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, 490,436,729 votes, i.e. 97.96% of the total votes represented by present persons; the votes opposing the motion, 18,159 votes, i.e. 0% of the total votes represented by present persons; the abstentions, 10,181,439votes, i.e. 2.03% of the total votes represented by present persons. Apparently, the votes in favor exceed the statutory votes and the motion was passed unanimously.

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Summary: Proposed resolution for allocation of earnings 2022 (Proposed by the Board of Directors)

Explanation: The allocation of earnings 2022 is planned as follows:

Feng Hsin Steel Co., Ltd. Statement of Earnings Allocation 2022

Unit: NT$

	Unit:
Main Business	Amount
Unallocated earnings - beginning	7,539,445,715
Plus (Minus):
Other comprehensive income (Defined benefit plan re-measurement amount-2022)	51,329,103
Current net income 2022	3,073,394,894
Disposal of equity instrument at fair value through other comprehensive income	16,963,398
Changes in associates and joint ventures under the equity method	(34,209,300)
Allocable earnings	10,646,923,810
Minus:
Provisions
Appropriation of legal reserve (10%)	(310,747,810)
Appropriation of special resreve	(198,786,627)
Allocations
Dividend to shareholders—cash ($4 per share)	(2,326,397,696)
Unallocated earnings - ending	7,810,991,677

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 of 2022 shall be allocated as the first priority this year.

Resolution: The voting result (including e-balloting) shows the votes in favor of the motion, 491,162,974 votes, i.e. 98.10% of the total votes represented by present persons; the votes opposing the motion, 18,109votes, i.e. 0% of the total votes represented by present persons; the abstentions, 9,455,244 votes, i.e. 1.88% of the total votes represented by present persons. Apparently, the votes in favor exceed the statutory votes and the motion was passed unanimously.

12-2. Important resolutions by the Board of Directors: Meeting date: 4: 00 p.m. on Friday, January 13, 2023. (9th meeting of 22nd term) Discussed Motions:

Summary: Motion for ratification of the NT$606 million solar power system construction contract with RC Renewable Energy Technology Co., Ltd.

Description: 1. The Company has signed a solar photovoltaic system construction contract with RC Renewable Energy Technology Co., Ltd. on May 19, 2022 and November 8, 2022, respectively, with a capacity of 13.6MW and a total contract amount of NT $606 million. Since the Company acquired over NT $500 million

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of equipment for business use from a single counterparty within one year, the Company has reported to Public Information Observatory on November 8, 2022 in accordance with the regulations, and has reached the threshold of NT $500 million for equipment investment for business use as stipulated in Article 9 of the Procedures for the Acquisition or Disposal of Assets, which is required to be reported to the Board of Directors, it is listed as a ratification item in the current Board of Directors.

1. According to the Renewable Energy Development Act, large electricity consumers are required to build a 10% green power capacity within 5 years. According to this regulation and the early bird discounts, the Company must complete 13.6MW of solar power capacity by December 31, 2023.

2. In response to large electricity consumer clauses and future needs, the amount and installed capacity under the contract are shown in the summarization table (omitted).

3. Of the 13.6MW, the installation will be completed before December 31, 2023, and the electricity will be used to comply with the law. The remaining electricity will be sold to Taiwan Power first, and will be changed according to the regulatory requirements in the future.

4. the motion failed to attain the threshold, it was included into the cases to be reported to the Board of Director on a quarterly basis. Then, the Company will still report the follow-up status to the Board of Directors on a quarterly basis.

5. The motion has been approved per resolution by Audit Committee on January 13.

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

Meeting date: Thursday, February 23, 2023 at 10: 30 a.m.

(10th meeting of 22nd term)

Discussed Motions:

Subject: Motion for the change of CPAs in line with the internal job rotation of Ernst &Young, Taiwan.

Explanation: 1. In line with the internal job rotation of Ernst &Young, Taiwan, the

• following adjustments have been made to the CPA responsible for the Company's financial report service starting 2023 Q1:

• Former external auditors: Chen Ming-Hung, CPA & Yen Wen-Pi, CPA New external auditors: Chen Ming-Hung, CPA & Tu Chin-Yuan, CPA

• The motion has been approved per resolution by Audit Committee on February 23.

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

Subject: Motion for the appointment of Ernst &Young, Taiwan to handle the 2023 fiscal and tax report audit and certification fee and the election of the convener of the audit committee as the agent for non-assurance services.

• 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 declaration of CPAs, the independence and competence evaluation form issued by EY Taiwan and the Company's own evaluation information on the independence and competence of the CPAs are shown in the Attachment (omitted). The AQI information is shown in the attachment (omitted).

• Ernst &Young, Taiwan, the company’s appointed financial statement audit certification, does not violate the above description 1. Independence and

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suitability, therefore, the appointment is planned for conducting the financial and tax audit certification for the fiscal year 2023.

1. Ernst &Young, Taiwan shall comply with the amendments to the International Code of Ethics for Certified Public Accountants. Prior to providing non-assurance services, it shall obtain the consent of the Audit Committee. The non-assurance services provided in 2023 are tax compliance. Relevant information such as the relevant contract of audit and certification in the appendix (omitted), it is proposed to authorize the Chairman to handle it at his/her absolute discretion.

2. The above-mentioned 2023 financial report audit and certification fee is NT $2.555 million and the tax report audit and certification fee is NT $170,000, totaling NT $2.725 million.

3. The Chairman is authorized to deal with the execution of contracts related to the audit and certification services.

4. CPAs responsible for attesting the Company’s financial statements: Chen Ming-Hung, CPA and Tu Chin-Yuan, CPA.

5. The Audit Committee elects its convener to act as the agent. Any contract with EY Taiwan for execution of new non-assurance services shall be subject to prior approval of the agent.

6. The motion has been approved per resolution by Audit Committee on February 23 (with the resolution attached thereto).

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

Subject: Discussion on the date, place and related matters of the 2023 regular shareholders' meeting.

• Explanation: 1. The Company plans to convene the AGM at Administration Building (Address: No. 259, Sec. 3, Houke Rd., Houli Dist., Taichung City) at 9: 00 a.m. on Wednesday, May 31, 2023. Please refer to the attachment for the agenda of the AGM.

• According to Article 165 of Company Act, the share transfer registration will be suspended from April 2, 2023 to May 31, 2023.

• According to Article 172-1 of Company Act, the period from March 20, 2023 to March 30, 2023 is the period for accepting written proposals from shareholders. The proposal premise is intended to be set up at the Company's service station (address: No. 259, Sec. 3, Houke Rd., Houli Dist., Taichung City/1F).

4. Contents of the annual general meeting:

1. Reports

2. (1) 2022 Business Report.

3. (2) Audit Committee’s Report on the Review of the 2022 Financial Statements. (3) Report on the distribution of remuneration to employees and directors in 2022. (4) Report on the earning distribution in 2022.

4. Ratification

5. (1) Subject: Proposal for ratification of 2022 Business Report and financial statements.

(2) Subject: Proposal for ratification of 2022 earnings distribution. III. Extemporary Motions:

1. 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 this shareholders’ meeting. The same was specified in the shareholders’ meeting notice and handled in accordance with related laws and regulations.

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

Subject: Discussion on the 2022 parent company only and consolidated financial statements.

Explanation: 1. The preparation of parent company only and consolidated financial reports for 2022 has been completed.

1. 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.

2. The 2022 financial report was approved by Audit Committee Resolution on February 23.

3. This motion will also be submitted to the 2023 annual general meeting for ratification.

4. Please refer to the attachment for the audit report and financial statements (omitted).

5. The difference between the 2022 parent company only financial report and the self-settlement is described in the attachment (omitted).

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

Subject: Discussion of 2022 Business Report.

Description: 1. The 2022 Business Report has been prepared and submitted for review.

1. The motion has been approved per resolution by Audit Committee on February 23.

2. This motion will also be submitted to the 2023 annual general meeting for ratification.

3. The business report is shown in the attachment (omitted).

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

Subject: Distribution of earnings for 2022.

• Explanation: 1. The cash dividend of NT $4.00 per share will be proposed in 2022, and the relevant amount will be calculated up to NT dollar(round off below NT dollar). The total of odd amounts will be included in the Company’s other revenue. The relevant ex-dividend date and distribution date will be discussed in the eighth proposal of the Board of Directors. The 2022 earnings distribution of cash dividends status will be reported at the 2023 annual general meeting.

• The proposed 2022 earnings distribution statement is shown in the attachment (omitted).

• A summary of the earnings distribution in recent years is shown in the attachment (omitted).

• Please refer to the attachment for the estimated statement of cash flow (omitted).

• The motion has been approved per resolution by Audit Committee on February 23.

• This motion will also be submitted to the 2023 annual general meeting for ratification. Resolution: The motion was approved by all directors unanimously upon inquiry by the chairperson.

• Subject: 2022 Dividend Record Date and Distribution Date Discussion Description: 1. Content of distribution: The 2022 earnings distribution proposal has been approved by the 7th proposal of the Board of Directors to distribute cash dividends of NT $2,326,397,696, that is, a cash dividend of NT $4.00 per share.

• Ex-dividend date: March 30, 2023.

• Dividend record date: April 6, 2023.

• Distribution date: April 27, 2023.

• Book closure date: April 2, 2023 to April 6, 2023.

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1. Last date before book closure: April 1, 2023.

2. Name, Address, and Tel. No. of the Stock Transfer Agency: Name: CTBC Bank Co., Ltd., Transfer Agency Department Address: 5F., No. 83, Sec. 1, Chongqing S. Rd., Zhongzheng Dist., Taipei City Tel. No: (02) 66365566

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

Meeting date: April 27, 2023 (Thursday) at 10: 30 a.m.

(11th meeting of the 22nd term)

Discussed Motions:

Subject: Discussion on the financial statements for 2023 Q1.

Explanation: 1. Preparation of consolidated financial statements (Consolidated Balance

Sheets, Consolidated Statements of Comprehensive Income, Consolidated Statements of Changes in Shareholders' Equity, Consolidated Statements of Cash Flows, and notes) for 2023 Q1 has been completed.

1. Review the report and financial statements (omitted).

2. The motion was approved by Audit Committee Resolution on April 27.

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

Meeting date: July 27, 2023 (Thursday) at 10: 30 a.m.

(12th meeting of the 22nd term)

Discussed Motions:

Subject: Discussion on the financial statements for 2023 Q2.

Explanation: 1. Preparation of consolidated financial statements (Consolidated Balance

Sheets, Consolidated Statements of Comprehensive Income, Consolidated Statements of Changes in Shareholders' Equity, Consolidated Statements of Cash Flows, and notes) for 2023 Q2 has been completed.

1. Review the report and financial statements (omitted).

2. The motion was approved by Audit Committee Resolution on July 27.

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

Meeting date: October 26, 2023 (Thursday) at 3: 30 p.m. 13th meeting of the 22[nd] term)

Discussed Motions:

Subject: Discussion on the financial statements for 2023 Q3.

Explanation: 1. Preparation of consolidated financial statements (Consolidated Balance

Sheets, Consolidated Statements of Comprehensive Income, Consolidated Statements of Changes in Shareholders' Equity, Consolidated Statements of Cash Flows, and notes) for 2023 Q3 has been completed.

1. Review the report and financial statements (omitted).

2. The motion was approved by Audit Committee Resolution on October 26. Resolution: The motion was approved by all directors unanimously upon inquiry by the chairperson.

Subject: Review the appointment of the new managerial officers.

Explanation: 1. According to Article 29 of the Company Act, “appointment and discharge and the remuneration of the managerial personnel shall be decided by a resolution to be adopted by a majority vote of the directors at a board meeting attended by at least most

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of the directors.”

• 2.Manager of 1st Sales Office, Zhuang Wen-Che, is mainly responsible for taking charge of the round bar sales department, transportation department, production planning department and sales management department to maintain the smooth operation of the Company and serve as the Company's business spokesperson. In consideration of the tremendous contribution of manager Zhuang Wen-Che to the Company, it is proposed that his position will be promoted from manager to assistant vice president with effect from January 1, 2024.

• The remuneration of the above-mentioned personnel after promotion shall be submitted to the Remuneration Committee of the Company for review first, and the relevant resolution of the Remuneration Committee will be discussed in the fifth motion.

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

Meeting date: January 26, 2024(Friday) at 2: 30 p.m. 14th meeting of the 22nd term)

Discussed Motions:

Subject: Review the appointment of the new managerial officers.

• Explanation: 1. According to Article 29 of the Company Act, “appointment and discharge and the remuneration of the managerial personnel shall be decided by a resolution to be adopted by a majority vote of the directors at a board meeting attended by at least a most of the directors.”

• The vice general manager of the procurement department of the Company, Lai San-Ping, will retire on February 29, 2024. It is proposed that the manager of the warehouse department, Lin Cheng-Chang take over the position. In addition, in line with the Company's organizational adjustment, it is proposed to promote 3rd Sales Office chief manager, Yang Tsung-Lin to vice general manager of the administration department. The above-mentioned newly appointed managerial officers took effect on March 1, 2024. Please refer to the attachment for relevant employment experience (omitted).

• The remuneration of the above-mentioned personnel after promotion shall be submitted to the Remuneration Committee of the Company for review first, and the relevant resolution of the Remuneration Committee will be discussed in the fifth motion.

• Lin Chiu-Huang, a director present in this motion, is a relative within the second degree of kinship of the party concerned and should therefore be recused.

Resolution: Approved as proposed without objection after the chairperson consulted all directors present (excluding directors who recused themselves from voting).

Meeting date: February 29, 2023(Thursday) at 3: 30 p.m. (15th meeting of 22nd term)

Discussed Motions:

Subject: Discussion on the 2023 parent company only and consolidated financial statements.

Explanation: 1. The preparation of the 2023 parent company only and consolidated financial statements have been completed.

1. The above-mentioned parent company only and consolidated financial statements, together with the draft independent auditor’s report to be issued by the accountants of Ernst &Young, Taiwan Chen Ming-Hung and Tu Chin-Yuan, are submitted for deliberation.

2. The 2023 financial statement was approved by Audit Committee Resolution on February 29.

3. This motion will also be submitted to the 2024 annual general meeting for

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ratification.

1. Please refer to the attachment for the audit report and financial statements (omitted).

2. The difference between the parent company only financial statement and the self-settlement in 2023 is described in the attachment (omitted).

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

Subject: Fees of appointment of Ernst &Young, Taiwan to audit and certify the 2024 financial statements.

• 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). Ernst &Young, Taiwan has issued an accountant independence statement, an independence and suitability checklist, and the company's self-assessment of accountant's independence and suitability data are shown in Attachment 7; the audit quality index information (AQI) is shown in Attachment 8.

• Ernst &Young, Taiwan, the company's financial statement audit certification, has not violated the above explanation 1. Independence and suitability, and it is proposed to appoint it to handle the financial and tax audit certification for 2024.

• Ernst &Young, Taiwan shall comply with the amendments to the International Code of Ethics for Certified Public Accountants. Prior to providing non-assurance services, it shall obtain the consent of the Audit Committee. The non-assurance services expected to be provided in 2024 are tax compliance certification and company registration certificate for change of information. for the re-election of directors.

• The above-mentioned 2024 financial report audit and certification fee of NT $2.625 million and tax report audit and certification fee of NT $170,000, totaling NT $2.795 million. The fee for company registration certificate for change of information is separately negotiated by Ernst &Young, Taiwan.

• The Chairman is authorized to deal with the execution of contracts related to the audit and certification services.

• CPAs responsible for attesting the Company’s financial statements: Chen Ming-Hung, CPA and Tu Chin-Yuan , CPA.

• The motion has been approved per resolution by Audit Committee on February 29.

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

Subject: Discussion on the date, place and related matters of the 2024 annual general meeting.

• Description: 1. The Company plans to convene the annual general meeting at the Administration Building at 10: 00 a.m. on Thursday, June 13, 2024 (Address: No. 259, Sec. 3, Houke Rd., Houli Dist., Taichung City). Please refer to Attachment 10 for the agenda of the annual general meeting.

• According to Article 165 of Company Act, the share transfer registration will be suspended from April 15, 2024 to June 13, 2024.

• In accordance with Article 172-1 and Article 192-1 of Company Act, it is planned to accept written proposals from shareholders and nomination of candidates for directors (including independent directors) from March 27, 2024 to April 8, 2024. The proposal (name) venue is intended to be set at the Company's service station (address: No. 259,

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Sec. 3, Houke Rd., Houli Dist., Taichung City 1F).

1. Contents of the annual general meeting:

2. 1.. Reports

3. (1) 2023 Business Report.

4. (2) Audit Committee’s report on the review of the 2023 Financial Statements.

5. (3) Report on the distribution of remuneration to employees and directors in

7. (4) Report on the distribution of cash dividends from earnings in 2023.

8. Ratifications

9. (1) Subject: Propose to ratify the 2023 business report and financial statements.

10. (2) Subject: Propose to ratify the 2023 earnings distribution motion.

11. Discussion

12. (1) Amendment of “Rules of Procedure for Shareholders Meetings”.

13. Elections

14. Election of 13 directors (including 3 independent directors) of the 23rd Board of Directors.

15. Other Motion

To release the newly elected directors from non-compete restrictions.

1. Extemporary Motion:

2. 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 this 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 directors unanimously upon inquiry by the chairperson.

Note: The company’s board of directors passed a resolution on April 26, 2024 to modify the meeting time of the 2024 shareholders’ meeting to 9:00 a.m. on June 13, 2024 (Thursday).

Subject: Discussion of 2023 business report.

Description: 1. 2023 business report has been prepared and submitted for review.

1. The motion has been approved per resolution by Audit Committee on February 29.

2. This motion will also be submitted to the 2024 annual general meeting for ratification.

3. The business report is shown in the attachment (omitted).

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

Subject: Distribution of earnings for 2023.

• Explanation: 1. The cash dividend of NT $3.50 per share will be proposed in 2023, and the relevant amount will be calculated up to NT dollar (round off below NT dollar). The total of odd amounts will be included in the Company’other revenue. The relevant ex-dividend date and distribution date will be discussed in the eighth proposal of the Board of Directors. The 2023 earnings distribution of cash dividends status will be reported at the 2024 annual general meeting. 2. The proposed 2023 earnings distribution statement is shown in the attachment (omitted).

• A summary of the earnings distribution in recent years is shown in the attachment (omitted).

• Please refer to the attachment for the estimated statement of cash flow (omitted).

• The motion has been approved per resolution by Audit Committee on February 29.

• This motion will also be submitted to the 2024 annual general meeting for ratification. Resolution: The motion was approved by all directors unanimously upon inquiry by the chairperson.

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Subject: 2023 Dividend Record Date and Distribution Date Discussion. Description: 1. Content of distribution: The 2023 earnings distribution proposal has been approved by the 6[th] proposal of the Board of Directors to distribute cash dividends of NT $2,035,597,984, that is, a cash dividend of NT $3.50 per share.

1. Ex-dividend date: April 11, 2024.

2. Dividend record date: April 19, 2024.

3. Distribution date: May 10, 2024.

4. Book closure date: April 15, 2024 to April 19, 2024.

5. Last date before book closure: April 14, 2024.

6. Name, Address, and Tel. No. of the Stock Transfer Agency: Name: CTBC Bank Co., Ltd., Transfer Agency Department Address: 5F., No. 83, Sec. 1, Chongqing S. Rd., Zhongzheng Dist., Taipei City Tel. No: (02) 66365566

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

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1. 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.

2. 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.

3. Continuing education and training courses attended by directors:

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Job Title	Name	Course Name	Date	Hour(s)	Training institution	Certificate No.	Remarks
Independent Director	Wang Yea-Kang	Sustainable Development and Sustainable GovernanceTrend	2023.02.15	3	Taipei Foundation of Finance	Tai-Jin-Zheng-Zi No. CGESG001005
Independent Director	Wang Yea-Kang	Adaptation path planning for climate change resilience	2023.03.13	2	Taipei Foundation of Finance	Tai-Jin-Zheng-Zi No. CGESG006001
Director Director Director Director Director Director Director Director Director Director Independent Director Independent Director Independent Director	Lin Ta-Chun Chen Hsin-Hung Lin Chiu-Huang Lin Wen-Fu Lin Chi-Jui Lai San-Ping Chung Shing-Lin Lin Kun-Tan Lin Tsai-Hsiang Yang Tsung-Ju Liao Liao-Yu Yue Chao-Tang Wang Yea-Kang	Global net-zero challenge: How enterprise leaders lead low-carbon ESG transformation plan	2023.04.27	3	Securities & Futures Institute	112 Zheng Ji Dong Jian Xu Ren Zi No. 00370 112 Zheng Ji Dong Jian Xu Ren Zi No. 00371 112 Zheng Ji Dong Jian Xu Ren Zi No. 00372 112 Zheng Ji Dong Jian Xu Ren Zi No. 00373 112 Zheng Ji Dong Jian Xu Ren ZiNo. 00374 112 Zheng Ji Dong Jian Xu Ren Zi No. 00375 112 Zheng Ji Dong Jian Xu Ren Zi No. 00376 112 Zheng Ji Dong Jian Xu Ren Zi No. 00377 112 Zheng Ji Dong Jian Xu Ren Zi No. 00378 112 Zheng Ji Dong Jian Xu Ren Zi No.

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Job Title	Name	Course Name	Date	Hour(s)	Training institution	Certificate No.	Remarks
						00379 112 Zheng Ji Dong Jian Xu Ren Zi No. 00380 112 Zheng Ji Dong Jian Xu Ren Zi No. 00381 112 Zheng Ji Dong Jian Xu Ren Zi No. 00382
Independent Director	Wang Yea-Kang	Global and Taiwan tax reform and corporate tax governance from the ESG trend and epidemic environment	2023.05.04	3	Accounting Research and Development Foundation	112 Hui Chiao (Dong) Zi No. 6009011
Independent Director	Wang Yea-Kang	Local Creation and Circular Economy	2023.05.08	3	Taipei Foundation of Finance	Tai-Jin-Zheng-Zi No. CGESG013009
Director	Lin Tsai-Hsiang	Information security governance strategy of listed companies from the perspective of ESG corporate sustainable development	2023.07.25	3	Taiwan Corporate Governance Association	TCGA11204340

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Job Title	Name	Course Name	Date	Hour(s)	Training institution	Certificate No.	Remarks
Director Director Director Director Director Director Director Director Director Independent Director Independent Director	Lin Ta-Chun Chen Hsin-Hung Lin Chiu-Huang Lin Wen-Fu Lin Chi-Jui Lai San-Ping Chung Shing-Lin Lin Kun-Tan Yang Tsung-Ju Liao Liao-Yu Yue Chao-Tang	How to Fulfill the Responsibilities of the Functional Committees of the Board of Directors	2023.07.27	3	Securities & Futures Institute	112 Zheng Ji Dong Jian Ren Zi No. 01276 112 Zheng Ji Dong Jian Ren Zi No. 01277 112 Zheng Ji Dong Jian Ren Zi No. 01278 112 Zheng Ji Dong Jian Ren Zi No. 01279 112 Zheng Ji Dong Jian Ren Zi No. 01280 112 Zheng Ji Dong Jian Ren Zi No. 01281 112 Zheng Ji Dong Jian Ren Zi No. 01282 112 Zheng Ji Dong Jian Ren Zi No. 01283 112 Zheng Ji Dong Jian Ren Zi No. 01284 112 Zheng Ji Dong Jian Ren Zi No. 01285 112 Zheng Ji Dong Jian Ren Zi No. 01286

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V. Information on attesting CPAs

Unit: NT$ thousand

Firm Name	Name of	CPA	Audit Period	Audit Fee	Non-Audit Fee	Total	Note
EY Taiwan	Chen Ming-Hung	Tu, Chin Yuan	January 1, 2023–December 31,2023	2,555	260	2,815

Please specify the content of service for non-audit fee:NT$260 thousand is for taxation assurance. [Explanation]

1.1 The Company has assessed the attesting CPAs’ independence at the meetings of the Board of Directors on February 23, 2023 and February 29, 2024 according to the following independence principles. And on February 23, 2023, the audit committee and the board of directors conducted an assessment of independence and suitability with reference to the audit quality indicators (AQIs), and confirmed that the mobility of the case team and the professional support of the firm were better than the average level of the industry. In addition, the continuous introduction of digital audit tools and regular Perform internal quality review of the firm to improve audit quality: Independence:

• (1) No material financial interest relations with the client

• (2) Avoidance of engaging in any inadequate relationship with the client

• (3) CPAs shall Procure their assistants to strictly comply with the principles of honesty, fairness and independence.

• (4) Prohibition against 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) Prohibition against lending person’s name to any others

• (6) Prohibition against holding any shares of the client

• (7) Prohibition against engaging in loaning funds with the client, unless it refers to an arm’s length transaction in the financial industry.

• (8) Prohibition against engaging in a joint venture or sharing profit with the client.

• (9) Prohibition against holding a routine position with fixed consideration for the client

• (10) Prohibition against holding any management function involving decision making for the client.

• (11) Prohibition against engaging in other businesses which might cause him/her to forfeit the independence concurrently.

• (12) CPAs shall not provide assurance services if he/she or his/her management is the spouse, lineal relative by blood, lineal relative by marriage, or collateral relative by blood within the 2nd degree of kinship with the client.

• (13) Prohibition against collecting any commission related to the business

1.2Adaptability :

• (1) Whether the accountant has been involved in any civil or criminal proceedings in the last two years?

• (2) Whether the accounting firm has a record of being disciplined by the Accountants Disciplinary Committee in the last two years?

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• (3) Have the accountants or audit team members conducted audits of companies of similar industry size and risk profile?

• (4) Whether the accountant understands the industry in which the company operates and the related risks?

• (5) Does the accounting firm have clear quality control procedures? Does it include key points of audit procedures, methods of handling audit issues and judgments, independent quality control and risk management?

• (6) Does the accounting firm have sufficient scale and resources to provide audit services for the company?

• (7) Can the accountant clearly explain the scope and method of auditing the company's subsidiaries and affiliates?

• (8) Have the accountants completed the review of the company's quarterly report and annual report in a timely manner, and completed the first draft of comments?

• (9) Do accountants have appropriate interactions and records with the audit committee when reporting on audit planning and before issuing audit opinions?

• (10) Can the accountant timely and appropriately assist the company in responding to the questions asked by the competent authority, and assist the company in communicating and coordinating with the competent authority?

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 above paragraphs.

2.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.

3.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.

1. Information about replacement of CPAs: N/A.

(3) The reply letter from the former CPA regarding the Company’s disclosures regarding the matters under Article 10.6.A and 10.6.B(c) of the Regulations.:NA

• 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 equity of directors, managers and major shareholders Job Title Name 2023 Ending until April 15, 2024

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		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 Ta-Chun	271,000	-	-	-
Director	Lin Chiu-Huang	-	-	-	-
Director	Lin Wen-Fu	(748,000)	-	-	-
Director	Lin Tsai-Hsiang	75,000	-	-	-
Director & Vice President	Lin Chi-Jui	-	-	-	-
Director	Yang Tsung-Ju	-	-	-	-
Director	Chen Hsin-Hung	496,000	-	97,000	-
Director	Chung Shing-Lin	-	-	-	-
Director	Lai San-Ping(Note1)	-	-	-	-
Director	Lin Kun-Tan	-	-	-	-
Independent Director	Yue Chao-Tang	-	-	-	-
Independent Director	Liao Liao-Yu	-	-	-	-
Independent Director	Wang Yea-Kang	-	-	-	-
President	Lin Yong-Yuan	-	-	-	-
Assistant Vice President	Lin Cheng-Chang(N ote2)	-	-	-	-
Assistant Vice President	Yang Tsung-Lin(Note 3)	-	-	-	-
Assistant Vice President	Chen Lian-Hsin(Note4 )	-	-	-	-
Assistant Vice President	Cheng Der-Yih	-	-	-	-
Assistant Vice President	Zhuang Wen-Che(Note5 )	-	-	-	-
Executive Assistant	Chen Shi-Zhong	-	-	-	-
Internal Audit Officer	Cho Hsiu-Ying	-	-	-	-
Accounting Manager	Huang Kuei-Yu	-	-	-	-

Note1: retired from vice president on February 29,2024 . Note2: elected as assistant vice president on March 1,2024. Note3: elected as assistant vice president on March 1,2024. Note4: retired from assistant vice president on September 30,2023. Note5: elected as assistant vice president on January 1,2024.

2. Equity transfer information:

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Name	Reason for transfer	Date of transaction	Counterparty	Relationship between the counterparty and the Company,directors,supervisors, managerial officers,and major shareholders	No. of shares	Transaction price
Lin Wen-Fu	Gift	March 20,2024.	Lin Da-Qiao	Father& Son	100,000	70
Lin Wen-Fu	Gift	March 20,2024.	Lin Ling-Tian	Father and daughter	239,000	70
Lin Wen-Fu	Gift	March 20,2024.	Lin Shan-Yi	Father and daughter	277,000	70
Lin Wen-Fu	Gift	March 20,2024.	Lin Zhen-Ru	Father and daughter	132,000	70

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

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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 15, 2024
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, andrelationships (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	31,593,000	5.43%	-	-%	-	-%	Lin Ming-Ju Lin Chang Su-Wen	Father and daughter Mother and daughter	-
Fung-So Investment Co. Ltd Representative: Lin Cheng-Fon	22,307,026	3.84%	-	-%	-	-%	Representative ofJin Fu Li Investment Co., Ltd: Lin Cheng-Chang Lin Hsu Yu-Mei	Brothers Motherand son	-
Lin Meng-Be	14,427,323	2.48%	95,185	0.02%	-	-%	Lin Ming-Ju	Brothers	-
Lin Chang Su-Wen	13,698,882	2.36%	11,822,159	2.03%	-	-%	Lin Ming-Ju Representative of Cheng Chuang Investment Co., Ltd.: Lin Yu-Li	Spouse Mother and daughter	-
Lai San-Ping	12,702,006	2.18%	3,327,274	0.57%	-	-%	N/A	N/A	-
Jin Fu Li Investment Co., Ltd Representative: Lin Cheng-Chang	12,100,000	2.08%	-	-%	-	-%	Representative of Feng Shuo Investment Co., Ltd: Lin Cheng-Feng Lin Hsu Yu-Mei	Brothers Mother and son
Lin Ming-Ju	11,822,159	2.03%	13,698,882	2.36%	-	-%	Lin Meng-Be Representative of Cheng Chuang Investment Co., Ltd.: Lin Yu-Li Lin Chang Su-Wen	Brothers Father and daughter Spouse	-
Chung Chao-Chuan	11,313,530	1.95%	1,308,168	0.22%	-	-%	Chung Shing-Lin	Brothers	-
Chung Shing-Lin	10,727,510	1.84%	71,550	0.01%	-	-%	Chung Chao-Chuan	Brothers
Lin Hsu Yu-Mei	10,294,000	1.77%	5,526,000	0.95%	-	-%	Fung-So Investment Co. Ltd Representative: Lin Cheng-Fon Jin Fu Li Investment Co., Ltd Representative: Lin Cheng-Chang	Mother and son Mother and son

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.

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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;%	Unit: Share;%	Unit: Share;%	Unit: Share;%
Investee (Note1)	Invested by the Company		Investment by directors and managers or by directly or indirectly controlled enterprises		Comprehensive Investment
	Quantity of shares(Note 2)	Shareholdi ng	Quantity of shares	Shareholding	Quantity of shares	Shareholding
GREAT FORTUNE HOLDING LIMITED Taiwan Steel Union Co., Ltd. Fengyu Resource Co.,Ltd.	31,406,834 26,666,587 58,161,000	100.00% 23.97% 29.08%	- 511,000(Note3) 3,194,500(Note2)	- 0.46% 1.60%	31,406,834 27,177,587 61,355,500	100.00% 24.42% 30.68%

Note1: The Company’s investment under equity method Note2:Record Date: March 31, 2024 Note3:Record Date: March 28, 2024

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Four. Capital Overview - Capital and Shares

• I. Source of Capital Stock

• Type of shares: common shares; no capital increase or decrease completed from 2023 until April 15, 2024.

2. Authorized capital: Type of shares Common Shares	2. Authorized capital: Type of shares Common Shares	Record Date: April 15, 2024	Record Date: April 15, 2024	Record Date: April 15, 2024	Record Date: April 15, 2024
	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.

1. 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 15,2024
Shareholder Structure Quantity	Government Agency	Financial Institution	Other Juristic Person	Individual	Foreign Company and Foreigner	Total
Number of person	1	14	96	13,923	188	14,222
Number of Shares Held	12	16,030,461	135,623,066	365,536,058	64,409,827	581,599,424
Shareholding %	0.00%	2.76%	23.32%	62.85%	11.07%	100.00%

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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 15,2024
Shareholding Level	Number of Shareholders	Number of Shares Held	Shareholding %
1-999	5,923	853,526	0.15%
1,000-5,000	6,490	12,892,671	2.22%
5,001-10,000	785	6,204,469	1.07%
10,001-15,000	261	3,323,777	0.57%
15,001-20,000	148	2,745,310	0.47%
20,001-30,000	119	3,013,032	0.52%
30,001-40,000	77	2,752,876	0.47%
40,001-50,000	42	1,935,638	0.33%
50,001-100,000	88	6,255,272	1.08%
100,001-200,000	62	9,249,443	1.59%
200,001-400,000	64	18,154,551	3.12%
400,001-600,000	37	18,601,065	3.20%
600,001-800,000	16	11,176,485	1.92%
800,001-1,000,000	12	10,988,928	1.89%
More than 1,001,001 shares	98	473,452,381	81.40%
Total	14,222	581,599,424	100.00%

1. Preferred shares: No preferred shares issued by the Company.

2. IV. List of Major Shareholders (Shareholders With a Shareholding Ratio of Over 5% or Ranking Top 10 Shareholders)

	Record Date: April 15, 2024 Number of Shares Held Shareholding % 31,593,000 5.43% 22,307,026 3.84% 14,427,323 2.48% 13,698,882 2.36% 12,702,006 2.18% 12,100,000 2.08% 11,822,159 2.03% 11,313,530 1.95% 10,727,510 1.84% 10,294,000 1.77%	Record Date: April 15, 2024 Number of Shares Held Shareholding % 31,593,000 5.43% 22,307,026 3.84% 14,427,323 2.48% 13,698,882 2.36% 12,702,006 2.18% 12,100,000 2.08% 11,822,159 2.03% 11,313,530 1.95% 10,727,510 1.84% 10,294,000 1.77%
Shares Name of Major Shareholder	Number of Shares Held	Shareholding %
Cheng Chuang Investment Co., Ltd.	31,593,000	5.43%
Fung-So Investment Limited	22,307,026	3.84%
Lin Meng-Be	14,427,323	2.48%
Lin Chang Su-Wen	13,698,882	2.36%
Lai San-Ping	12,702,006	2.18%
Jin Fu Li Investment Co., Ltd.	12,100,000	2.08%
Lin Ming-Ju	11,822,159	2.03%
Chung Chao-Chuan	11,313,530	1.95%
Chung Shing-Lin	10,727,510	1.84%
Lin Hsu Yu-Mei	10,294,000	1.77%

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

Unit: NT$

						Unit: NT$
	Item	Year		2022	2023	Ending until April 15, 2024 (Note 5)
	Market Price per Share (Note 1)	Highest		99.00	76.20	75.10
		Lowest		56.00	61.80	65.60
		Average		72.97	68.23	70.23
	Net Worth Per Share	Before Distribution		37.46	37.71	35.17
		After Distribution		33.46	34.21	31.67
	EPS	Weighted Average Number of Shares		581,599,424	581,599,424	581,599,424
		EPS		5.28	4.08	1.03
	Cash Dividend	Cash dividend		4.00	3.50	3.50
		Bonus Shares	Out of Earnings	0	0	0
			Out of Capital Surplus	0	0	0
		Accumulated and Unpaid Dividends		0	0	0
	Investment Returns Analysis	P/E Ratio (Note 2)		13.82	16.72	17.05
		P/D Ratio (Note 3)		18.24	19.49	20.07
		Cash Dividend Yield (Note 4)		5.48%	5.13%	4.98%

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:

2. (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.

3. (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.

4. (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.

5. (4) The Board of Directors proposes the motion for distribution of shareholder bonus pursuant to Paragraph 1. The shareholder bonus refers

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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.

1. The dividends proposed to be distributed at the shareholders’ meeting:

For distribution of the shareholder bonus referred to in the preceding paragraph, based on the resolution of a majority of directors at a meeting attended by two-thirds of the whole directors, the Company shall distribute the dividend and bonus, in whole or in part, in cash and report to the shareholders’ meeting.

On February 29, 2024, the Board of Directors of the Company proposed the distribution of shareholders' dividend of $2,035,597,984, which was entirely in cash, and the record date and date of distribution of 2023 were approved by the Board of Directors at this board meeting. Dividends have been distributed on May 10, 2024. The distribution of cash dividends from the earnings of 2023 will be reported at the general shareholders' meeting 2024, and the motion of distribution of earning of 2023 will be proposed at the general shareholders’ meeting for acknowledgement.

1. If a material change in dividend policy is expected, an explanation shall be provided :N/A

2. VII. Effect of Bonus Stock Distribution Proposed at the Shareholders’ Meeting on the Company’s Operation Performance and EPS:N/A

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VIII. Remuneration to Employees and Directors

1. 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.

2. 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 2022 at the percentages resolved by the Board of Directors (7.06% and 1.21%), in consideration of the legal reserve, and recognized as expenses for 2022. 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. Article 9 of the "Measures for Year-end Assessment and Employee Remuneration Approval" stipulates that: the principle of year-end bonus distribution... The year-end bonus is issued according to the company's operating performance (after-tax earnings per share+0.2), and there are upper and lower limits.

limits.
YEAR	2022	2023
bonus months	5.8	4.6
release time	2023.1.17	2024.2.2

1. Board of Directors Resolution Status on Remuneration Distribution:

2. (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$221,567 thousand, and remuneration to directors, NT$47,500 thousand, on January 16, 2024. As a result, the actual remuneration distributed to employees was NT$221,567 thousand, and remuneration to directors, NT$47,500housand. The discrepancy has been reported to the Board of Directors on February 29, 2024 and included into the report to the shareholders’ meeting 2024.

3. (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.

4. 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.

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

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• 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.

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Eleven. Overview of Operations

• I. Business Contents

• (I) 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:

Main Business	Business proportion in 2023
Section steel	20.94%
Steel bar	57.38%
Bar & wire	21.41%
Other steel products	0.27%

C. New products planned to be developed: Please refer to the contents of (4) R&D plans on page 165 of the annual report.

(II) Overview of industry

1. Industry status and development

In 2023, the continuation of the Ukrainian-Russian war, the addition of the new geopolitical conflicts in the Kazakhstan corridor, and the continued downturn of the real estate market in China, have triggered the outbreak of debt defaults by many real estate companies. Many factors affect the global demand for steel, which in turn has led to a continuous delay in the recovery time of the steel market. Looking forward to 2024, the Central Bank estimates that Taiwan's economic growth rate this year is expected to be better than last year, and Taiwan's export orders turned positive in November last year, ending the dilemma of negative growth for 14 consecutive months. In addition, the continued slowdown in the core inflation in the United States will help the Federal Reserve initiate an interest rate reduction cycle., which will be conducive to the global economic recovery and drive steel market demand.

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In 2023, the bar steel market is severely affected by the inflation problem in the United States and Europe, coupled with the slowdown in procurement and consumption due to high interest rates, and foreign customers are generally in high inventory, resulting in a rapid cooling of the market, manufacturing-related industries will take the first blow, and demand will decline sharply. The main downstream related industries of round bar, such as screw nuts, hand tools, and machine tools, have declined by about 15% to 23% in 2023 compared to 2022.

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 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 2024, the Company kept using its best effort to work with excellent domestic construction contractors and development companies to participate in the tender submission for various major projects, and also work with wholesalers to provide molding process and further exploit the mass market and the construction domain, in order to stabilize and expand its sales in the steel bar market.

Due to the recession in the overall manufacturing market, the economic performance of China has been lower than expected, particularly in the real estate and manufacturing-related industries. Consequently, major round bar have reduced prices and accepted orders, leading to an increase of over 35% in the export volume of steel products. This has resulted in a sluggish import market, impacting the overall round bar market and dampening customer willingness to make purchases.

Currently, major international investment banks predict a recovery in the overall economy from 2024 Q2. This recovery is expected to be driven by the continued cooling of inflation and the gradual lifting of monetary tightening policies. Additionally, China has implemented a stimulus plan involving a reduction in the reserve requirement ratio. This is anticipated to stimulate the economy and lead to a revival in steel demand, subsequently boosting the round bar market and gradually increasing sales volume.

In the future, our company will remain committed to the development and promotion of high-end products and markets. We aim to gradually gain customer recognition and affirmation of our product quality, which will help mitigate the impact of future market fluctuations. After obtaining IATF16949 certification, we plan to invest in a new straight bar inspection factory in 2022 Q3, with official ordering expected in 2024 Q1.

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This investment will enable us to further expand into high-end product supply chains such as automotive parts. We will actively invest in the development of new customers, steel types, products, and sizes, targeting various downstream high-end industrial applications. By doing so, we aim to reduce the negative impact of the external environment and ensure steady growth.

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

2. 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 [467 x 395] intentionally omitted <==

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

Consumable materials
(Electrodes, fire-proof materials Consumable materials
& cast die, etc.) (fireproof materials & rolls, etc.)
Major raw materials Steelma Self-produce
(cast iron & scrap king d steel billet
Steel
steel)
rolling
Purchased
Steel billet
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 manufacturingaa
Upstream and production
Downstream and processing
----- End of picture text -----

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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.

(III) Technology and R&D

Our company's focus in the area of technology and R&D includes process improvement for semi-finished products (steel billets), new product development, and quality enhancement. In terms of new product development, we are primarily working on the development of new steel grades and applications such as low-carbon cold-drawn materials, carbon steels, and low-alloy steels for mechanical structures, medium-carbon sulfur-added steels, quenched and tempered steels, automotive spring steels, screws, and slide rail steels. We are also continuously conducting research and development on new shapes and sizes for various products.

Regarding new product development, our processes involve refining steel billets using vacuum degassing equipment. The steel billets undergo magnetic particle inspection to detect any defects and are subjected to different levels of grinding based on their intended applications. Strict quality inspections are carried out on the final rolled products to meet customer requirements. The installation of online automatic inspection equipment enables real-time monitoring of surface quality to improve and stabilize product quality. Additionally, a straight bar inspection line has been established to meet the demands of automotive products and enhance product value.

In our research and development efforts, we have engaged professional consultants from both domestic and international sources to provide intensive training to our existing research personnel. We also actively participate in domestic and international seminars and conferences to enhance our knowledge base. Furthermore, we maintain cooperative agreements with professional steel refining and rolling manufacturers to introduce advanced steelmaking and rolling equipment, technologies, and quality assurance systems, thereby continuously improving product quality.

We are also involved in the development of AI/AOI-related technologies. This includes the development of a steel billet defect identification system to standardize defect criteria and improve detection rates. We have implemented a visual system to indicate defect locations, reducing inspection errors. A straightness recognition system has been developed to ensure product straightness and minimize compensation claims. An automated rebar measurement system has been established to achieve inspection process automation and eliminate measurement errors. Additionally, an advanced product cleanliness automatic judgment system has been developed to standardize judgment criteria and expedite the training of new personnel and related operational tasks.

In current year (2023), our technology and research and development efforts have achieved the following:

vehicle T-pipes, weld nuts, flange nuts, sleeves, and connection use 1018A.,vehicle sleeves, flange nuts, weld nuts, and T-caps use 1022A.,gears, guide rod nuts, and mechanical components use SCM415H.,gears and mechanical components use SCM420H.

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1. Research expenditure and personnel

Item No./Value/Year	2021	2022	2023	Jan-Mar 2024
R&D expenses(NT$thousand)	46,555	46,517	43,170	12,283
To the turnover(%)	0.12%	0.12%	0.12%	0.14%
Researchpersonnel	26	27	28	27
To the total number of personnel throughout the Company	2.88%	2.85%	2.91%	2.81%

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2. Research results

2. Research results
	Products or steel types
Results in 2023	vehicle T-pipes, weld nuts, flange nuts, sleeves, and connection use 1018A. vehicle sleeves, flange nuts, weld nuts, and T-caps use 1022A. gears, guide rod nuts, and mechanical components use SCM415H. gears andmechanicalcomponents use SCM420H.

(IV) R&D plans

1. Pending R&D plans

Plan	Items & progress	Additional R&D expenses required	Expected mass producti on time	Factors critical to success in R&D
SCM435H for inter/outer hex bolt	1. Design of steel billet compositions 2. Surface and internal quality assurance for finished goods 3. Product mechanical and hot treatment properties assurance 4. Minor trials have been completed	Required to make the steel billet on a trial basis over 2 times to satisfy the demand for the free trial (about 100 tons per furnace.)	2024.06	1. Product surface quality 2. Cold forging and heat treatment 3. Customers’ feedback

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Development of SD690 thread rebars and couplers	1. Design of steel billet compositions 2. Assurance for mechanical properties of the finished goods 3. Threading Rebar high (screw) confirmation 4. Development of Connectors	1. Outsourcing the development of splice connectors is required, the cost is approximately NTD500,000. 2. Mechanical property testing of thread rebars combined with splice connectors and T-type anchoring head assembly costs approximately NTD150,000.	2024.06	1. Threadings Rebar (screw) and splitters 2. Mechanical properties of couplers after heat treatment 3. Mechanical properties after combination of thread rebars, couplers, nuts, T-shaped anchoring head with mortar or fast hardening resins
30CUNICRM (For bridge bolt)	1. Design of steel billet compositions 2. Surface and internal quality assurance 3. Customers’ feedback after free trial	Required to make the steel billet on a trial basis over 2 times to satisfy the demand for the free trial (about 100 tons per furnace.)	2024.06	1. Product surface quality 2. Product heat treatment properties 3. Mechanical properties of bolts
Gearbox flange SCM415HRCH	1. Design of steel billet compositions 2.Product surface quality and internal homogeneity 3. Mechanical properties and processing assurance after hot treatment of finished goods	Required to make the steel billet on a trial basis over 7 times to satisfy the demand for the free trial (about 100 tons per furnace.)	2024.09	1. Product surface quality 2. Cold forging and hot treatment 3. Customers’ feedback on forming and processing 4. Prolonged process and slow feedback
Spring steel SUP9 (Coil Spring)	1. Design of steel billet compositions 2. Surface and internal quality assurance for finished goods 3. Recognition of product fatigue nature 4. The customer has started trial production and received a good initial response, gradually increasing orders.	Required to make the steel billet on a trial basis over 3 times to satisfy the demand for the free trial (about 100 tons per furnace)	2024.12	1. Product surface quality 2. Wire drawing and curvature 3. Customers’ feedback 4. Prolonged process and slow feedback

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Plan	Items & progress	Additional R&D expenses required	Expected mass produ ction time	Factors critical to success in R&D
For screw 4150HW	1. Design of steel billet compositions 2. Surface and internal quality assurance 3. Customers’ feedback after free trial	Required to make the steel billet on a trial basis over 5 times to satisfy the demand for the free trial (about 100 tons per furnace)	2024.12	1. Product surface quality 2. Conformity and stability of finished screw rods 3. Prolonged process and slow feedback
38 MnVS6 for control armrest	1. Design of steel billet compositions 2. Surface and internal quality assurance 3. Customers’ feedback after free trial	Required to make the steel billet on a trial basis over 5 times to satisfy the demand for the free trial (about 100 tons per furnace)	2025.03	1. Product surface and internal quality assurance 2. Product properties after heat treatment 3. Conformity of large-size products
For conversion to screw S55C	1. Design of steel billet compositions 2. Surface and internal quality assurance 3. Customers’ feedback after free trial	Required to make the steel billet on a trial basis over 8 times to satisfy the demand for the free trial (about 100 tons per furnace)	2025.03	1. Product surface quality 2. Conformity and stability of finished screw rods 3. Prolonged process and slow feedback
For slide rails S55C Fang Gang	1. Roll design 2. Sizing conformity 3. Control on surface of decarbonized zone	More than 5 rounds of test on rolling are required (approx. 60 tons per round)	2025.06	1. Product surface quality 2. Depth of decarbonized zone 3. Conformity and stability of finished drawing slide trail products 4. Prolonged process and slow feedback
For slide rails S55C flat steel.	1. Roll design 2. Sizing conformity 3. Control on surface of decarbonized zone	More than 5 rounds of test on rolling are required (approx. 60 tons per round)	2025.06	1. Product surface quality 2. Depth of decarbonized zone 3. Conformity and stability of finished drawing slide trail products 4. Prolonged process and slow feedback

1. Future R&D plans

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Future R&D plans	Project focus and estimated R&D expenses
Auto cold forging shaft bowl S20C	1. Test the suitability of cold forging shaft bowl for automobile 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 products 4. As required to make the steel billet on a trial basis over 3 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.
Deformed steel for linear sliders SCM420H for the use of sliding block	1. Develop different sizes of flat steel for use as sliding block (linear guide) 2. Focus of the plan including: roll design, size conformity and product surface quality. 3. Conformity and stability of finished drawing sliding block products of the customers. 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.
Hexagonal polishing steel bar 1215MS	1. Test the suitability of hexagonal polishing steel bar 2. Focus of the plan: design of steel billet compositions and process, product surface quality and internal homogeneity 3. Sampling Finished goods forming properties and mechanical properties stability 4. The R&D expenditure is at least 6 furnaces (about 100 tons per furnace) or more steel billets for trial use, and the estimated R&D expenditure is about NT $2.4 million.
Future R&D plans	Project focus and estimated R&D expenses
Auto drive gear 5120H	1. Test the suitability of the vehicle drive gear 2. Focus of the plan: design of steel billet compositions, product surface quality and internal homogeneity 3. Conformity and stability of mechanical properties of hot forging finished products after hot treatment 4. As required to make the steel billet on a trial basis over 10 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.
Hot forging gear 8620H	1. Development of new steel: 8620H 2. Test for the suitability of hot forging gear. 3. Focus of the plan: design of steel billet compositions, inclusions contents control, product surface quality and internal homogeneity. 4. Conformity and stability of mechanical properties of finished rolling materials and hot forging finished products after hot treatment 5. As required to make the steel billet on a trial basis over 10 times per steel type to satisfy the demand for the free trial (about 100 tons per furnace), it is expected toinvest NT$4 million in R&Dexpenses.

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Blade spring SUP9N

1. Development of new steel: SUP9N 2. Testing the suitability of automotive leaf springs 3. The key points of the plan include: steel billet composition design, inclusions content control, reduction of the number of large inclusions, product surface quality and internal homogeneity. 4. Conformity and stability of mechanical and fatigue properties of hot forging finished products 5. R&D expenditure At least six steel billets per furnace (about 100 tons per furnace) must be made available for trial use, and the estimated R&D expenditure is about NT $2.4 million.

The expected investment in R&D expenses accounts for about 1% of the operating revenue in 2024.

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• (V) Long and short term business development plans, and mid-term and long-term strategic targets

• Long-term/short-term business development plan Short-term:

Major domestic public construction projects such as Taipei MRT, Wanda Line, Taoyuan MRT Green Line, 3rd LNG Receiving Terminal Project, Railway Elevation and Station Project, Aerotropolis Development Project, and National Highway Bridge Reinforcement Project, along with electronic plant expansion projects including TSMC, Largan, Delta, and others, continue to contribute to the stable demand for rebars. Furthermore, ongoing construction projects in the housing market in the past two years, coupled with the launch of various social housing initiatives, further ensure the sustained stability in rebar demand.

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) The Company will research, develop, and produce SD490W, SD550W, and SD690 ultra-high strength steel bars, and moreover it will put tread bars into production.

• (3) Expand the section steel franchising system in depth and width, strengthen customers’ loyalty and increase the market share.

• (4) The investment in a new "Straight Bar Inspection Facility" for the third quarter of 2022 is expected to officially accept orders in the first quarter of 2024. At that time, a comprehensive inspection of the straight bar surface and internal quality conditions will be carried out according to customer requirements to provide more quality assurance, which will be more conducive to the future acquisition of automotive and high-end application markets. With the improvement of production equipment and product quality, along with obtaining the IATF16949 international certification, we will continue to strive for the benchmark customer market for high-end products. Strengthen quality stability through technical and metallurgical enhancement, deepen relationships with developed high-end market users, increase product share, and promote potential users to improve quality image.

• (5) In response to the carbon neutrality policy, China has started to reduce production and export volume since 2021. The Company has the opportunity to increase export volume hence. Due to the passage of the new U.S. government’s Infrastructure Investment and Jobs Act, there are still opportunities for growth in the North American steel market in the future. For special steel, the focus of sales in Asia is Vietnam and Thailand. Furthermore, the company regularly communicates with customers to discuss the development of new products in order to reach a wider market.

• (6) We continue to evaluate and improve our equipment to enhance the quality of our merchant bar products. Currently, our company's merchant steel product quality is stable and highly trusted by domestic manufacturers. However, some customers in the iron tower and machinery sectors still specify the use of products

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manufactured in Japan. In order to reduce the opportunity for domestic manufacturers to use imported products, we will continuously refine the quality of our merchant steel products, increase customer loyalty, and consequently increase the shipment volume and market share of our merchant steel products.

1. Mid-term and long-term strategic targets

2. (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.

3. (2) Establish the long-term supply contract with raw material providers.

4. (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 sales and shares.

5. II. Marketing and Sales Status

6. (I) Market analysis:

7. (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’s sales volume of rebar in 2023 increased by approximately 2.8% compared with that in 2022. The main reason is that the Company increased the

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production capacity of rebars from the previous year based on the portfolio. The government continues to release new public work projects, and the private investment projects, such as Taiwanese businessmen’s return and new construction projects, are also launched stably. Besides, 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 Metro Taipei Wanda Line, Green Line of Taoyuan Metro, elevated railway and station project, 3rd natural gas terminal project, and plant expansion projects of certain benchmarking electronic manufacturers, such as TSMC, Largan and Delta, as well as multiple large-size construction and social housing projects.

(5) Bar & wire:

The company's sales volume in 2023 was 280,000.0 tons, which represents a decrease of 16.4% compared to 2022. In 2023, the market experienced a rapid cooling due to the severe inflation issues in the United States and Europe, as well as the slowdown in procurement and consumption caused by high interest rates. This led to foreign customers maintaining high inventory levels, further contributing to the challenging market conditions. Due to intense price competition from international steel mills, the market conditions rapidly deteriorated in Q2 and Q3, resulting in a noticeable decrease in sales volume compared to the previous year. Looking forward to 2024, it is expected that the economic conditions in Europe and the United States will gradually recover in Q2, and after the gradual elimination of inflation and interest rate cuts and other favorable factors are gradually fermented, the related manufacturing industries will also start to improve, driving the overall demand for the round bar market to rebound. From a long-term perspective, 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. Shipments in 2023 increased slightly compared to 2022. The main reason is that the market has gradually recovered after the anti-dumping case of merchant bar sold to the Australian market was closed. The Southeast Asian market was affected by the low-cost material rush orders from China. In 2023, freight returned to a relatively stable status in both container and bulk shipping, which is beneficial to our company’s external sales orders. Turkey is affected by high energy prices, which has reduced the price competitiveness of merchant bar, which helps our sales to Malaysia.

(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 shipment volume in 2023 declined compared to 2022. This can be attributed to various factors including the ongoing Ukraine-Russia conflict, currency devaluation in different countries, severe inflation, sluggish steel market, and China's aggressive low-price competition. Among these, the market decline was most pronounced in Vietnam. In

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2023, Thailand replaced Vietnam as the largest market for the export of special steel.

• (8) The Company’s export sales in 2023 and 2022 are stated as follows:

		(Unit: NT$ thousand
District	2023	2022
Asia	1,643,122	1,913,509
Other territories	1,641,483	1,748,442
Total	3,284,605	3,661,951

• (9) The Company’s products are supplied for domestic marketing primarily. In 2023, the Company’s products accounted for the following market share in Taiwan: 60.3% for angle steel, 51.1% for channel steel, 48.7% for flat-rolled steel, and 14.0% 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:

1. Positive factors:

2. (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.

3. (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. Besides, the Company's new rebar rolling mill adopts the hot rolling direct delivery, thus helpful to reduce rolling costs and improve the Company’s competitiveness.

4. (3) The merchant bar franchise system has been promoted for over 20 years, and it has been continuously revised and refined during this period. It has successfully established a good interactive relationship with customers. Our company offers a diverse range of products and comprehensive sizes, ensuring both convenience for customer orders and receiving high praise from franchise manufacturers. This is further enhanced by our well-established marketing network.

5. (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.

6. Negative factors:

7. (1) China executed the RCEP with 15 countries, including ASEAN, Japan, Korea, New Zealand Australia in November 2020. After the RCEP took effect, it became the multilateral trading agreement covering the most population and largest scale

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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) In consideration of the overcapacity of steel bars in Taiwan, the market is in chaos and also out of order. In recent years, as the government adopted measures to suppress real estate speculation and the factors, such as lift rates, affected the launch of housing projects, various steel mills competed with each other fiercely in the price war to strive for large-size customers.

• (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 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, given the declining market demand, the peers in the section steel manufacturing industry has kept expanding the price difference to solicit for orders from customers. Therefore, the competition in sales of section steels becomes more intense.

(III) Important Purpose and Production Process of the Main Products

1. Important purposes

2. (1) Section steel: For construction, factory premises, shipbuilding, power distribution towers, machinery manufacturing, lifting equipment for automobile maintenance, transportation, metal products, and steel construction.

3. (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.).

4. (3) Bar & wire: for screws and bolts, cold drawn bright bars, hand tools, and auto/motorcycle spare parts, etc..

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2. Production process

==> picture [491 x 250] intentionally omitted <==

(IV)Supply of main raw materials:

1. Scrap steel

The major raw material for steelmaking is crap steel, and its main the sources are described as follows:

• (1) Domestic areas:

• A. In 2023, the domestic scrap steel market continued the trend of decreasing volume that started in the second half of the previous year. Particularly, scrap materials such as punch waste, K-materials, and iron scraps experienced a decline of 30% or even more than 40-50% due to a decrease in order volume for processing plants. This resulted in a reduction in the number of materials collected by distributors. On the other hand, the dismantling and bidding projects continued to contribute to a relatively stable collection volume of industrial iron scrap. However, despite the overall decrease in the supply of materials, distributors struggled to establish inventory within their premises. Apart from a few distributors who held back from selling due to inventory losses, most distributors opted to sell their stock as they were concerned about the sluggish steel sales outlook and the absence of a recovery opportunity.

• B. It is anticipated that the low volume of domestic scrap steel will persist in 2024, as the global economic recovery is expected to be slow and the prospects for processing plants to receive orders remain uncertain, which has seriously affected the confidence of wire traders, and the short supply of goods. Competitive bidding has become a consensus among companies in the market. Therefore, it is crucial for the company to closely monitor and analyze both domestic and foreign market conditions, and flexibly adjust the price of scrap iron to maintain the incentive of delivery to maintain the willingness of wire traders to stabilize supply

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(2) Foreign areas:

  - The United States and Japan are the main sources of imported scrap steel, with each accounting for approximately half of the procurement volume. The purchasing quantity from each region is subject to corresponding increases or decreases based on market changes affecting scrap steel prices. Containerized scrap steel is subject to a quality grading system established by customers, and its supply performance serves as a reference for procurement. In 2023, due to the recession of the global steel market since 2023 Q2, the price has remained low and has not changed much so far, and there is no room for rise and decline. In 2024, the low steel market in 2023 will continue for some time.

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

2. (V) 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:

3. 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.

4. 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.

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

Unit: Ton/NT$ thousand

	Production Volume/ Value Main Products		2022			2023
		Production capacity	Production volume	Production value	Production capacity	Production volume	Production value
Semi-finish ed goods	Steel billet	1,800,000	1,669,010	32,658,102	1,800,000	1,643,538	29,510,972
Finished goods	Section steel	1,753,200	317,028	6,822,706	1,753,200	322,851	6,464,788
	Bar & wire (steel bar and bar in coil)		363,521	8,405,366		304,898	6,575,514
	Steel bar		963,378	19,589,608		994,842	18,807,740
	Total		1,643,927	34,817,680		1,622,591	31,848,042

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.

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

Unit: Ton/NT$ thousand

	Sales Volume/ Value Main Products	2022	2022	2022	2022	2023	2023	2023	2023
		Domestic marketing		Export		Domestic marketing		Export
		Volume	Value	Volume	Value	Volume	Value	Volume	Value
Semi-finish ed goods	Steel billet	-	-	-	-	301	6,501	-	-
Finished goods	Section steel	194,547	5,071,919	115,214	2,945,705	181,017	4,552,979	120,828	2,751,956
	Bar & wire (steel bar and bar in coil)	335,040	9,538,446	26,595	716,246	279,996	6,936,847	23,085	532,649
	Steel bar	963,684	20,295,366	-	-	990,711	20,016,223	-	-
	Total	1,493,271	34,905,731	141,809	3,661,951	1,451,724	31,506,049	143,913	3,284,605
	Others	-	37,247	-	-	-	84,868	-	-

• III. Information About Employees for the Most Recent Two Years Until the Date of Publication of the Annual Report

• Information About Employees for the Most Recent Two Years Until the Date of Publication of the Annual Report:

Year		2022	2023	Ending until April 15, 2024
Number of employees	Production Department	687	696	697
	Administrative/Sales Department	261	263	265
	Total	948	959	962
Average age		43	43	43
Average service seniority		15	15	15
Academic background distribution ratio	PhD degree	0.4%	0.4%	0.4%
	Master degree	10.2%	10.2%	10.2%
	College	56.7%	56.9%	56.8%
	Senior high school	25.8%	25.9%	26.1%
	Under senior high school	6.9%	6.5%	6.5%

1. 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

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production capacity indicator)

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

years:
	Unit: NT$thousand 2022 2023 Increase/decrease (%) 38,604,929 34,882,023 -9.64% 3,780,618 2,901,921 -23.24% 948 959 1.16% 40,722 36,373 -10.68% 3,988 3,026 -24.12%
Item	2022	2023	Increase/decrease (%)
Operating profit	38,604,929	34,882,023	-9.64%
Net income	3,780,618	2,901,921	-23.24%
Number of employees	948	959	1.16%
Sales per employee	40,722	36,373	-10.68%
Net profit per employee	3,988	3,026	-24.12%

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IV. Information About Environmental Protection Expenditure

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

IV. Information About Environmental Protection Expenditure (I) Losses (including damages) and fines incurred due to pollution of the environment	IV. Information About Environmental Protection Expenditure (I) Losses (including damages) and fines incurred due to pollution of the environment	IV. Information About Environmental Protection Expenditure (I) 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:
	2023	Ending until April 15, 2024
Level of pollution (type/level)	The Environmental Protection Bureau inspected the quality of discharged water, and the sampling inspection results showed that the detection value of oil and fat: 14.4mg/L (limit value: 10mg/L) failed to meet the effluent standards.	The Environmental Protection Bureau inspected the metal rolling process (M04) and found that the pressure drop of the air reverse-bagged dust collector did not meet the approved content of the permit.
Indemnitee or Disciplinary Unit	Environmental Protection Bureau, Taichung City Government	Environmental Protection Bureau, Taichung City Government
Date of Decision, Decision No., Contents of Decision	March 16, 2023, Zhong-Shi-Huan-Shui-Zi No. 1120027419, a fine of NT $147,000. (The Environmental Protection Bureau inspected the Company from October 4, 2022)	January 18, 2024, Zhong-Shi-Huan-Kong-Zi No. 1130004929, a fine of NT $100,000. (Environmental Protection Bureau November 28, 2023 to Company audit)
Violated Provisions and Violated Laws & Regulations	Violated Paragraph 1, Article 7 of the Water Pollution Control Act: Those enterprises, sewage systems, or building sewage treatment facilities that discharge wastewater or sewage into surface water bodies shall comply with effluent standards.	Violated Paragraph 2, Article 24 of the Air Pollution Control Act: After the installation or change of the stationary pollution source in the preceding paragraph, the company shall submit documentary evidence of legal compliance to competent authorities of the municipality or county (city) and apply for and obtain an operating license. The company shall operate according to the content of the license issued.
Damages	NT$147,000	NT$100,000
Other losses	None	None

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

Unit: NT$ thousand

2024 2025 2026

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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 EAF 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 EAF 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 EAF 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
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	$530,000	$530,000	$530,000

• (3) Estimated amount and response measures that may occur at present and in the future:

• Establish a continuous water quality monitoring system that is capable of issuing alerts in case of water quality abnormalities, enabling prompt emergency response measures and convening meetings to communicate the necessary operating and maintenance procedures. Avoid directly disposing of oil products into the process wastewater collection channels to prevent overloading the terminal water treatment facilities. It is also proposed to add a

• continuous automatic detection system for water quality, which can play an early warning function. Estimated cost of $500,000.

• After the re-replacement of the pressure differential calculation of U-shaped pipes, it has returned to the normal operating range value.

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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:

  2. (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.

  3. (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.

  4. (3) Housing:

     • a. Provide the single dormitory to workers who are away from home for a long distance at a preferential price.(Rent subsidy will be given when the dormitory is full)

  5. (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.

  6. (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.

  7. (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.

  8. (7) Medical treatment and healthcare:

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• 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.

• 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 elementary school students, junior high school students, 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.

• (10) Childcare subsidy

Monthly childcare subsidies of $3,000 per child are provided for each employee's child who is under the age of 6.

1. Retirement system

2. (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. An 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.

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     - (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.

• (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:

• 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.

• For the experience transfer and convenient learning, all teaching materials are computerized and all employees are allowed to attend the online courses.

• 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.

• 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.

• (III) 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.

• (IV) 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 1996, 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.

(V) 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

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ethics, honesty and integrity. The Company identifies employees as the Company’s important assets, and values the whole employees’ behavior 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 orders. 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. (VI) Working environment and employees’ personal safety protection measures:

7. 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 steel, carbon coke, and alloy, etc. are melted, forged 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.

8. Employees’ personal safety protection: The workers’ personal safety may be protected based on perfect safety and health management and pollution prevention equipment, as well as necessary safety protection policy, in such a working environment full of noise, high temperature and dust.

   • (1) safety work rules are established for employees to follow.

   • (2) Safe operating standards applicable are established for various operations.

   • c. Safety and health training are applied for employees periodically.

   • (4) Installation of pollution prevention equipment.

   • (5) Perform periodic health checkup for employees each year.

   • (6) Various protective gears, including earplugs, mouth masks, fire-resistant clothing and drinking water, etc. are provided.

   • (7) Self-inspections on machinery and equipment are conducted; Preventive

   • maintenance works are practiced, and a safe working environment is provided.

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1. 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 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 chairman of board serves as the Committee Chairman. The Committee members consist of occupational safety and health personnel, department heads, engineering personnel, healthcare professionals, and labors’ representatives.

2. The Company's 2023 Occupational Safety Report: The Company's occupational accident statistics are mainly based on the frequency and severity of disabling injuries in accordance with the Disclosure Items of Major Occupational Accident Statistics released by the Occupational Safety and Health Administration. The total number of occupational accidents in 2023 is 11(11 people) and 1.1% of all employee and the types consist of burn, pinch, and fall. The serious occupational injury rate is 0, and the recordable occupational injury rate is 0 and releant safety seacurity refer to 5. 2023 Occupational Safety Report .

5.There was no fire incidents in 2023.

6. 2023 Occupational Safety Report

(1) Worker management

• A. To realize the concept of safety and health and to develop good occupational safety practices:

• ➢ Nine articles of safety and health management manuals have been compiled and revised.

• ➢ Safety and health committees: 8 monthly meetings were chaired by the head of Labor Safety sub-department, and 4 quarterly meetings were chaired by the chairman of board.

• ➢ Incentive system for proposals: including the reporting of false alarm events, safety-related proposals for improvement and zero accident incentive campaign, employees are encouraged to propose improvements through incentive money ranging from 200 to 800, and zero accident incentive campaign a total of $757,000 has been paid in 2023.

• ➢ Implementation for employee benefits and reinstatement support: Employees involved in occupational accidents (including commuting traffic accidents) are given preferential benefits in accordance with the laws. In addition, through the Labor Health Service personnel and occupational medicine physicians, monthly clinical services and

186

regular follow-up and evaluation on injury conditions are provided. For those who can return to work according to physician's assessment, the human resources department and their department supervisors will provide consultation and advice regarding vocational skill evaluation, job redesign or adjustment for them, thereby enabling them to gradually return to the working conditions and return to their original duties afterwards.

B. Safety and health education and training to strengthen the intelligence of crisis identification.

• ➢ Implementation for occupational safety and health education and training: new employees' safety and health education and training (55 attendees/12 times); in-service safety and health education and training: (480attendees/13 times); in-house overhead cranes, forklifts and the hoist licenses package retraining and initial training (261attendees/11 times); external license initial training and retraining (41 attendees)

• ➢ Re-education on major occupational accidents: For significant occupational accident information published in the mill or on the website of the Occupational Safety and Health Administration of the Ministry of Labor. Case studies are disseminated on the ERP electronic bulletin board, which could be used by each department to conduct monthly hazard prevention meetings.

• C. To protect employees from injury by using personal protective equipment.

• ➢ Dissemination in the monthly safety and health committee: In addition to minor injuries or major occupational accidents happened in the mill in the previous month or the major occupational accidents broadcasted on the news, If the main cause of accidents is that the personal protective equipment is not properly worn or the fall prevention and protection facilities are not properly set up, such cases will be disseminated and announced on the ERP electronic bulletin board.

• ➢ Regular monthly tracking with ERP program: Through daily routine inspections, if personal protective equipment is not worn correctly or safety and health facilities are not in compliance with the conditions, the ERP system will be used to report environmental safety deficiencies; each unit will report monthly When requisitioning and distributing personal safety and health protection equipment, the unit will use the warehouse requisition documents and produce paper records such as the issued quantity and the signature of the requisition, and upload them to the ERP system regularly every month. The system will then sign off with the Department of Labor and Safety to confirm the issuance of protective equipment. Check whether the quantity of tools meets the requirements. If the quantity

187

does not meet the requirements, please return the ticket and ask the unit to improve and re-send the ticket to ensure that all colleagues on site receive sufficient quantities to eliminate the possibility of occupational disasters.

• (2) Elimination of insecurity

• A. Proactive reporting on foreseeable danger by on-site departments:

• ➢ Monthly Foreseeable Danger Meeting: The courses are held for each shift or group. The supervisor, who is a shift leader or above, will act as the moderator to understand the possible dangers of on-site operations through the voices of the rank and file operators so as to study and propose preventive measures, and the chairman will decide on the handling plans, and during the meeting, it was reviewed whether there were any false alarms in the unit. Afterwards, the ERP program will be used to organize relevant units for improvement. A total of 349 meetings were held in 2023.

• ➢ Formulation of safe operating standards: All departments set SOP for their operations and implement them after approval by the supervisors. From 2022,The SOP has been converted into video and video and uploaded to the E-learning system. To be carried out gradually in 2024.

• B. Company self-management improvement, supervisor inspections, and joint inspections.

• ➢ Dividing operational responsibility areas: We have made every place and equipment in the factory have a safekeeping unit and personnel responsible for management. In addition, diary logs are set up for shift operators to register the handover of safety matters.

• ➢ Automatic inspection system: The hazardous machinery and equipment are all inspected and passed in 2023; regarding the public safety of the buildings, professional organizations or professional inspectors recognized by the central competent authority are appointed to carry out inspections and certify the results between July and September each year, and the inspection results shall be reported to the local building authority online; for the fire protection inspection and reporting, the fire safety engineers or fire safety technicians are regularly appointed to carry out the inspection and reporting to the local fire safety authority between September and November each year. The application has been completed in 2023 and has been accepted and reviewed.

• ➢ Supervisor inspection system: A total of 120 inspections were completed in 2023.

• ➢ Defect follow-up management: In 2023, 948 defects were detected, and all improvements were completed with an improvement rate of 100%.

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• C. External resources to help inspect amelioration of defects

• ➢ Included in the Ministry of Labor's Occupational Safety and Health Administration's "Strengthening High Occupational Accidents and High Risk Factory Inspection and Guidance Implementation Plan (EEP)" level 2 management object.

• ➢ Government agencies: Participated in the "Taichung City Iron and Steel Foundry Safety and Health Family" led by the Taichung City Labor Inspection Office to improve their own satellite factories or contractors to implement a friendly workplace environment, and the number of beneficiary workers reached 6,800.

• ➢ Iron and Steel Industry Association: Participated in the "Occupational Safety and Health Management Promotion Seminar" on December 26, 2023, providing member factories with the direction and application of occupational safety and health management, so that safety and health management can be implemented on site.

• ➢ Consulting firm: In 2023, Wen Yuan Management Company and the retired chief of the Central District Center were invited to conduct safety and health counseling visits. and held senior executive education and training.

• (3) Contractor Management

• A. Elimination of unsafe behavior

• ➢ Gate control: until December 31 2023, 3,810 employees are recorded (all of them have labor insurance, accident insurance, identity qualifications, or licenses to operate machinery).

• ➢ Violations and bans: Random alcohol tests were conducted on the entrance personnel 4 times a week, and a total of more than 200 alcohol tests were carried out. A total of 4 cases exceeding the legal limit were found, and a total of 3 cases of illegally carrying alcoholic beverages were found. Tickets were immediately issued and those who exceeded the legal limit were banned from entering. to avoid harm. Consider adding blood pressure monitors to test workers on roofs and elevated buildings, and set standards. Those who exceed the standard will only be allowed to enter if they have prepared blood pressure medication and taken it (or taken the medication on time according to the medicine package).

• ➢ Implementation for safety and health education and training for contractors: Safety and health education and training for contractors were held 4 times in 2023; year-end maintenance contractor safety and health coordinating organization meetings were held 10 times in 2023.

• ➢ Application for safe work permit: When the project involves roof or confined space operations, the on-site unit and contractor shall submit a "safe work permit application", which must be approved by

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the factory director and counter-signed by the Labor Safety Department before construction can begin.

• ➢ Defect tracking management: Check for defects in unsafe behaviors of contractors. In 2023, a total of 81 defects were found. Orders were fined, counseling and requirements for immediate improvement were imposed, and 2 cases were suspended and required to receive occupational safety re-education training.

• B. Elimination of insecurity

• ➢ Gate control: Central Taiwan Safety and Health Consultant Co., Ltd was entrusted to inspect the contractors' deficiencies at the entry and exit, and inspect the hand tools and appliances that violate regulations, such as wire insulation layer failure, grinder tongue missing, stair anti-slip mat failure...etc., He was also detained in the West Side Road Guardhouse. Systematically implement contractor face recognition system and factory entry management. The organizer should apply for dispatching workers to enter the venue, and apply for admission according to the estimated construction period of the contract.

• ➢ Supervisory inspection system: The handling department inspects the site; the labor safety sub-department is in charge of the inspection; and a project unit is set up for major projects.

• C. Deficiency follow up

• ➢ Check the contractors for unsafe conditions and deficiencies. In 2023, a total of 20 deficiencies were found, orders were fined, and guidance and requirements for immediate improvement were imposed.

• Award: National Occupational Safety and Health Award in 2023.

(Special Award for Traditional Industry Investment)

• VI. Cyber security management:

• (I) Information security risk management structure: The company takes the general manager as the responsible person for information security, and the information department as the unit responsible for information security, and arranges an information security officer to regularly report the implementation of information security to the board of directors every year.

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==> picture [144 x 178] intentionally omitted <==

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

Chairman of
board
President
IT Division(overall
responsibility for
information security)
----- End of picture text -----

• (II) Infocom security policy risk and specific management plan for countermeasures

==> picture [381 x 215] intentionally omitted <==

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

•Unauthorized
•SPAM Spam and Phishing installation of
Letter Blocking software is prohibited
•Regular data backup •Internal and External
Audits Information
System
Mail file Security and
specificatio Information
protection n Environment
•Set up an enterprise Network Personnel
•New and in-service
firewall security train
education and training
•Install antivirus software
•Provide relevant
on your computer
information security
•Endpoint Protection information from time to
Software
time
----- End of picture text -----

• (III) Invest in information security management resources and major information security incidents:

In 2023, about 11 million software and hardware equipment related to information were purchased and updated. In addition to anti-virus, anti-hack, and anti-attack, it can provide stable services for the outflow of documents and information, as well as information-related equipment and services. In the future, we will continue to strengthen information security protection and deepen defense measures. As of the publication date of the annual report, there was no loss caused by any major information security accident.

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VII. Important Contracts

Nature of Contract	Involved Parties	Date of Execution	Main Contents	Restrictive covenants
Sales Contract	BES Engineering Inc.	112/03/22	Rebar sales order	NA
Sales Contract	Futsu Construction Co., Ltd.	112/06/08	Rebar sales order	NA
Sales Contract	LI JIN ENGINEERING CO., LTD.	112/02/22 112/05/05 112/08/09 112/10/31	Rebar sales order	NA
Sales Contract	Continental Engineering Corporation	112/04/14 112/05/30 112/11/20	Rebar sales order	NA
Sales Contract	Innotech Logistics Co., Ltd.	112/04/11	Rebar sales order	NA
Sales Contract	Kedge Construction Co., Ltd.	112/08/03 112/12/22	Rebar sales order	NA
Sales Contract	RUENTEX Engineering & Construction Co., Ltd.	112/01/13 112/03/10 112/12/06	Rebar sales order	NA
Sales Contract	DACIN Construction Co., Ltd	112/06/08 112/07/07 112/10/13	Rebar sales order	NA
Sales Contract	KIMZOA Corporation	112/01/06	Rebar sales order	NA
Sales Contract	CHIEN KUO CONSTRUCTION CO., LTD.	112/08/17	Rebar sales order	NA
Sales Contract	TE CHANG CONSTRUCTION CO., LTD.	112/03/16 112/05/05 112/09/20 112/11/08 112/12/11	Rebar sales order	NA
Sales Contract	PAN ASIA (ENGINEERS & CONSTRUCTORS)CORPORATION)	112/03/08	Rebar sales order	NA
Sales Contract	Reiju Construction	112/09/20	Rebar sales order	NA
Sales Contract	CHUWANG DEVELOPMENT CO., LTD.	112/07/03 112/07/12	Rebar sales order	NA
Sales Contract	FORTUNE CONSTRUCTION CO., LTD.	112/09/01	Rebar sales order	NA
Sales Contract	EARTH POWER Construction CO., LTD.	112/02/22 112/08/18	Rebar sales order	NA
Sales Contract	SHUIN HAN CONSTRUCTION CO., LTD.	112/10/06 112/12/08	Rebar sales order	NA

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Sales Contract	Lee Ming Construction	112/05/12	Rebar sales order	NA
Sales Contract	SHENG JIE CONSTRUCTION CO., LTD.	112/06/16	Rebar sales order	NA

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Twelve. Overview of Finance

• I. Condensed Balance Sheet and Statement of Comprehensive Income for the Most Recent Five Years

• (I) .1Condensed Balance Sheet (Consolidated)

Unit: NT$ thousand

Year Item	Year Item	Financial Information for the Most Recent Five Years	Financial Information for the Most Recent Five Years	Financial Information for the Most Recent Five Years	Financial Information for the Most Recent Five Years	Financial Information for the Most Recent Five Years	Financial information ending until March 31, 2024
		2019	2020	2021	2022	2023
Current assets		8,365,192	9,748,933	13,679,079	12,220,296	12,992,157	Same as the 2023 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 15, 2024.
Property, plant and equipment		9,846,122	9,436,032	8,946,284	9,136,866	9,587,374
Non-current assets		3,153,821	3,485,755	4,008,629	4,034,085	4,175,326
Other non-current assets		101,641	343,142	238,224	262,927	292,487
Total assets		21,466,776	23,013,862	26,872,216	25,654,174	27,047,344
Current liabilities	Before Distribution	2,816,109	3,215,161	4,533,004	3,534,867	4,709,765
	After Distribution	4,560,907	5,250,759	7,441,001	5,861,265	6,745,363
Non-current liabilities		363,653	330,491	239,412	333,865	408,362
Total liabilities	Before Distribution	3,179,762	3,545,652	4,772,416	3,868,732	5,118,127
	After Distribution	4,924,560	5,581,250	7,680,413	6,195,130	7,153,725
Equity attributed to the ow company	ner of parent	18,287,014	19,468,210	22,099,800	21,785,442	21,929,217
Capital stock		5,815,994	5,815,994	5,815,994	5,815,994	5,815,994
Capital surplus		588,123	560,097	452,514	453,308	454,032
Retained earnings	Before Distribution	12,161,138	13,176,110	15,515,445	15,714,926	15,715,142
	After Distribution	10,416,340	11,140,512	12,607,448	13,388,528	13,679,544
Other equity		-278,241	-83,991	315,847	-198,786	-55,951
Treasurystock		-	-	-	-	-
Non-controllingequity		-	-	-	-	-
Total equity	Before Distribution	18,287,014	19,468,210	22,099,800	21,785,442	21,929,217
	After Distribution	16,542,216	17,432,612	19,191,803	19,459,044	19,893,619

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

194

(I) .2 Condensed Balance Sheet (Parent Company Only)

Unit: NT$ thousand

Year Item	Year Item	Financial Information for the Most Recent Five Years	Financial Information for the Most Recent Five Years	Financial Information for the Most Recent Five Years	Financial Information for the Most Recent Five Years	Financial Information for the Most Recent Five Years	Financial information ending until March 31, 2024
		2019	2020	2021	2022	2023
Current assets		8,364,051	9,747,887	13,678,068	12,219,191	12,991,066	Same as the 2023 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 15, 2024.
Property, plant and equipment		9,846,122	9,436,032	8,946,284	9,136,866	9,587,374
Non-current assets		3,154,962	3,486,801	4,009,640	4,035,190	4,176,417
Other non-current assets		101,641	343,142	238,224	262,927	292,487
Total assets		21,466,776	23,013,862	26,872,216	25,654,174	27,047,344
Current liabilities	Before Distribution	2,816,109	3,215,161	4,533,004	3,534,867	4,709,765
	After Distribution	4,560,907	5,250,759	7,441,001	5,861,265	6,745,363
Non-current liabilities		363,653	330,491	239,412	333,865	408,362
Total liabilities	Before Distribution	3,179,762	3,545,652	4,772,416	3,868,732	5,118,127
	After Distribution	4,924,560	5,581,250	7,680,413	6,195,130	7,153,725
Equity attributed to the company	owner of parent	18,287,014	19,468,210	22,099,800	21,785,442	21,929,217
Capital stock		5,815,994	5,815,994	5,815,994	5,815,994	5,815,994
Capital surplus		588,123	560,097	452,514	453,308	454,032
Retained earnings	Before Distribution	12,161,138	13,176,110	15,515,445	15,714,926	15,715,142
	After Distribution	10,416,340	11,140,512	12,607,448	13,388,528	13,679,544
Other equity		-278,241	-83,991	315,847	-198,786	-55,951
Treasurystock		-	-	-	-	-
Non-controllingequity		-	-	-	-	-
Total equity	Before Distribution	18,287,014	19,468,210	22,099,800	21,785,442	21,929,217
	After Distribution	16,542,216	17,432,612	19,191,803	19,459,044	19,893,619

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

195

(II) .1 Condensed Statement of Comprehensive Income (Consolidated)

Unit: NT$ thousand

	Unit: NT$thousand	Unit: NT$thousand	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, 2024
	2019	2020	2021	2022	2023
Operatingrevenue	27,735,611	27,298,051	38,360,406	38,604,929	34,882,023	Same as the 2023 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 15, 2024.
Grossprofit	2,865,577	3,849,289	5,648,923	4,180,599	3,555,724
Operatingincome(loss)	2,089,002	3,090,862	4,721,008	3,304,413	2,710,355
Non-operating revenue and expenditure	301,728	146,080	307,514	476,205	191,566
Net income	2,390,730	3,236,942	5,028,522	3,780,618	2,901,921
Current net income from continuing operations	1,962,355	2,619,426	4,034,565	3,073,395	2,375,491
Loss from discontinued operations	-	-	-	-	-
Current net income(loss)	1,962,355	2,619,426	4,034,565	3,073,395	2,375,491
Other comprehensive income for current period (net aftertax)	40,350	334,594	742,035	-446,341	103,330
Total current comprehensive income	2,002,705	2,954,020	4,776,600	2,627,054	2,478,821
Net income attributed to the owner ofparent company	1,962,355	2,619,426	4,034,565	3,073,395	2,375,491
Net income attributed to non-controllingequity	-	-	-	-	-
Total comprehensive income attributed to the owner of parent company	2,002,705	2,954,020	4,776,600	2,627,054	2,478,821
Total comprehensive income attributed to the non-controlling equity	-	-	-	-	-
EPS	3.37	4.50	6.94	5.28	4.08

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

196

(II) .2 Condensed Statement of Comprehensive Income (Parent Company Only) Unit: NT$ thousand

	Unit: NT$thousand	Unit: NT$thousand	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, 2024
	2019	2020	2021	2022	2023
Operatingrevenue	27,735,611	27,298,051	38,360,406	38,604,929	34,882,023	Same as the 2023 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 15, 2024.
Grossprofit	2,865,577	3,849,289	5,648,923	4,180,599	3,555,724
Operatingincome(loss)	2,089,024	3,090,884	4,721,030	3,304,434	2,710,383
Non-operating revenue and expenditure	301,706	146,058	307,492	476,184	191,538
Net income	2,390,730	3,236,942	5,028,522	3,780,618	2,901,921
Current net income from continuing operations	1,962,355	2,619,426	4,034,565	3,073,395	2,375,491
Loss from discontinued operations	-	-	-	-	-
Current net income(loss)	1,962,355	2,619,426	4,034,565	3,073,395	2,375,491
Other comprehensive income for current period (net aftertax)	40,350	334,594	742,035	-446,341	103,330
Total current comprehensive income	2,002,705	2,954,020	4,776,600	2,627,054	2,478,821
Net income attributed to the ownerofparent company	-	-	-	-	-
Net income attributed to non-controlling equity	-	-	-	-	-
Total comprehensive income attributed to the owner of parent company	-	-	-	-	-
Total comprehensive income attributed to the non-controlling equity	-	-	-	-	-
EPS	3.37	4.50	6.94	5.28	4.08

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

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

	Five Years
Year	Firm Name	Name of Independent Auditor	Audit Opinion
2019	EY Taiwan	Chen Ming-Hung/Yen Wen-Pi	Unqualified opinions
2020	EY Taiwan	Chen Ming-Hung/Yen Wen-Pi	Unqualified opinions
2021	EY Taiwan	Chen Ming-Hung/Yen Wen-Pi	Unqualified opinions
2022	EY Taiwan	Chen Ming-Hung/Yen Wen-Pi	Unqualified opinions
2023	EY Taiwan	Chen Ming-Hung/Tu, Chin Yuan	Unqualified opinions

197

II. Financial Analysis for the Most Recent Five Years

(I) Financial analysis (consolidated)

AnalysisItem	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, 2024	Increase (decrease) by % in 2023 from 2022
		2019	2020	2021	2022	2023
Financial structure (%)	Liabilityto asset ratio	14.81	15.41	17.76	15.08	18.92	Same as the 2023 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 15, 2024.	25.46%
	Ratio of long-term capital to property, plants and equipment	185.73	206.32	247.03	238.43	228.73		-4.07%
Solvency (%)	Current ratio	297.05	303.22	301.77	345.71	275.86		-20.20%
	Quick ratio	120.26	179.73	123.00	155.45	99.17		-36.20%
	Interest coverage ratio	177.66	548.06	636.15	186.99	72.12		-61.43%
Operational ability	Receivables turnover (counts)	18.35	17.88	22.49	19.56	17.48		-10.63%
	Average cash collection days	19.89	20.41	16.22	18.66	20.88		11.90%
	Inventory turnover (counts)	4.51	6.16	6.12	5.06	4.47		-11.66%
	Payables turnover (counts)	18.18	18.91	22.56	23.80	21.86		-8.15%
	Average inventory turnover days	80.93	59.25	59.64	72.13	81.66		13.20%
	Property, plant and equipment turnover (counts)	2.82	2.89	4.29	4.23	3.64		-13.95%
	Total asset turnover (counts)	1.29	1.19	1.43	1.50	1.29		-14.00%
Profitability	Return on assets (ROA) (%)	8.91	11.80	16.20	11.76	9.14		-22.28%
	Return on equity (ROE) (%)	10.63	13.88	19.41	14.01	10.87		-22.41%
	Income before tax to paid-in capital ratio (%)	41.11	55.66	86.46	65.00	49.90		-23.23%
	Net profit margin (%)	7.08	9.60	10.52	7.96	6.81		-14.45%
	EPS (NT$)	3.37	4.50	6.94	5.28	4.08		-22.73%
Cash Flow	Cash flow ratio (%)	159.62	156.97	24.59	118.82	41.6		-64.99%
	Cash flow adequacy ratio (%)	72.70	74.24	55.57	63.52	74.76		17.70%
	Cash reinvestment ratio (%)	7.04	10.05	-2.55	3.55	-1.01		-128.45%
Leverage	Operating leverage	2.15	1.69	1.02	1.77	1.85		4.52%
	Financial leverage	1.01	1.00	1.00	1.01	1.02		0.99%
The reasons for changes in each financial ratio by more than 20% during the most recent two years (2023 and 2022), if any:
1. Liability to asset ratio: The increase in Iiability to asset ratio in 2023 from 2022 were primarily the result of a increase in loans.
2. Current ratio, Quick ratio and Interest coverage ratio : The decrease in 2023 from 2022 was primarily the result of a increase in loans and
interest expense.
3. ROA,ROE, Income before tax to paid-in capital ratio,EPS ,Cash flow ratio and Cash reinvestment ratio: The decrease in ROA,ROE,
Income before tax to paid-in capital ratio,EPS ,Cash flow ratio and Cash reinvestment ratio was primarily the result of the decrease in net
profit

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

198

(II) Financial analysis (parent company only)

AnalysisItem	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, 2024 (Note 2)	Increase (decrease) by % in 2023 from 2022
		2019	2020	2021	2022	2023
Financial structure (%)	Liabilityto asset ratio	14.81	15.41	17.76	15.08	18.92	N/A	25.46%
	Ratio of long-term capital to property, plants and equipment	185.73	206.32	247.03	238.43	228.73	N/A	-4.07%
Solvency (%)	Current ratio	297.01	303.19	301.74	345.68	275.86	N/A	-20.21%
	Quick ratio	120.22	179.70	122.98	155.42	99.15	N/A	-36.21%
	Interest coverage ratio	177.66	548.06	636.15	186.99	72.12	N/A	-61.43%
Operational ability	Receivables turnover (counts)	18.35	17.88	22.49	19.56	17.48	N/A	-10.63%
	Average cash collection days	19.89	20.41	16.22	18.66	20.88	N/A	11.90%
	Inventory turnover (counts)	4.51	6.16	6.12	5.06	4.47	N/A	-11.66%
	Payables turnover (counts)	18.18	18.91	22.56	23.80	21.86	N/A	-8.15%
	Average inventory turnover days	80.93	59.25	59.64	72.13	81.66	N/A	13.20%
	Property, plant and equipment turnover (counts)	2.82	2.89	4.29	4.23	3.64	N/A	-13.95%
	Total asset turnover (counts)	1.29	1.19	1.43	1.50	1.29	N/A	-14.00%
Profitability	Return on assets (ROA) (%)	8.91	11.80	16.20	11.76	9.14	N/A	-22.28%
	Return on equity (ROE) (%)	10.63	13.88	19.41	14.01	10.87	N/A	-22.41%
	Income before tax to paid-in capital ratio (%)	41.11	55.66	86.46	65.00	49.90	N/A	-23.23%
	Net profit margin (%)	7.08	9.60	10.52	7.96	6.81	N/A	-14.45%
	EPS (NT$)	3.37	4.50	6.94	5.28	4.08	N/A	-22.73%
Cash Flow	Cash flow ratio (%)	159.62	156.97	24.59	118.81	41.6	N/A	-64.99%
	Cash flow adequacy ratio (%)	72.70	74.24	55.57	63.52	74.76	N/A	17.70%
	Cash reinvestment ratio (%)	7.04	10.05	-2.55	3.55	-1.01	N/A	-128.45%
Leverage	Operating leverage	2.15	1.69	1.02	1.77	1.85	N/A	4.52%
	Financial leverage	1.01	1.00	1.00	1.01	1.02	N/A	0.99%
The reason for change in each financial ratio more than 20% during the mostly recent two years (2023 and 2022), if any: please refer financial analysis(consolidated).

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 2024.

199

The formula about the analysis items are stated as follows:

1. Financial structure

2. (1) Ratio of liabilities to assets = Total liabilities/Total Assets.

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

4. Solvency

5. (1) Current ratio = Current assets/Current liabilities.

6. (2) Quick ratio = (Current assets-Inventory-Prepaid expenses)/Current liabilities.

7. (3) Interest coverage ratio=Income tax and income before interest expenses/Current interest expenses.

8. Operational ability

9. (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).

10. (2) Average cash collection days = 365/Receivables turnover.

11. (3) Inventory turnover = Cost of goods sold/Average inventory.

12. (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).

13. (5) Average inventory turnover days = 365/Inventory turnover.

14. (6) Property, plant and equipment turnover=net sales/average property, plant and equipment, net.

15. (7) Total assets turnover = Net sales/Average total assets.

16. Profitability

17. (1) ROA = [Profit or loss after tax+interest expenses × (1- tax rate)]/average total assets.

18. (2) ROE = Profit or loss after tax/Average total equity.

19. (3) Net profit margin = Profit or loss after tax/Net sales.

20. (4) EPS = (income attributed to the owner of parent company-Preferred stock dividend)/Weighted average number of outstanding shares.

21. Cash Flow

22. (1) Cash flow ratio = Net cash flow from operating activities/Current liabilities.

23. (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.

24. (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).

25. Leverage:

26. (1) Operating leverage = (Net operating revenues-Variable operating costs and expenses)/Operating profit

27. (2) Financial leverage = Operating profit/(Operating profit-Interest expenses).

200

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

==> picture [262 x 33] intentionally omitted <==

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 2023 in which the financial statements have been audited by Chen Ming-Hung, CPA and Tu, Chin Yuan, 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 29, 2024

201

• 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 2023 (Jan. 1, 2023~Dec. 31, 2023) 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 Ta-Chun

February 29, 2024

202

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 2023 and 2022, and the related consolidated statements of comprehensive income, changes in equity and cash flows for the years ended 31 December 2023 and 2022, 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 2023 and 2022, and their consolidated financial performance and cash flows for the years ended 31 December 2023 and 2022, 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 the Standard on Auditing of 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 2023 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.

203

Valuation for inventories

As of 31 December 2023, the Group’s net inventories amounted to NT$7,786,837 thousand which represented 29% 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 –Referring 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$985,686 thousand and NT$1,031,402 thousand, representing 4% of the consolidated total assets as of 31 December 2023 and 2022, respectively. The related shares of profits from the associates and joint ventures under the equity method amounted to NT$120,915 thousand and NT$231,867 thousand, representing 4% and 6% of the consolidated net income before tax for the years ended 31 December 2023 and 2022, respectively; and the related shares of other comprehensive income from the associates and joint ventures under the equity method amounted to NT$141 thousand and NT$413 thousand, both representing 0% of the consolidated other comprehensive income for the years ended 31 December 2023 and 2022, respectively.

204

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

Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with the 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 the Standard on Auditing of 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.

205

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

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

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

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

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

5. 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.

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

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

206

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 2023 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 2023 and 2022.

/s/Chen, Ming Hung

/s/Tu, Chin Yuan

Ernst & Young, Taiwan

29 February 2024

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.

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Feng Hsin Steel Co., Ltd. and subsidiaries Consolidated Statements of Comprehensive Income January 1 to December 31, 2023 and 2022

					Unit: NT $thousand	Unit: NT $thousand
Code	Item	Notes	FY23		FY22
			Amount	%	Amount	%
4100 5000 5900 6000 6100 6200 6300 6450 6900 7000 7100 7010 7020 7050 7060 7900 7950 8200 8300 8310 8311 8316 8320 8349 8300 8500 8600 8610 8620 8700 8710 8720 9750 9850	Operating revenue Operating cost Gross profit Operating expenses Selling expenses Administrative expenses R&D expenses Expected credit losses/(gains) Total operating expenses Operating income Non-operating revenue and expenditure Interest revenue Other revenue Other gains and losses Financial cost Shares of associates and joint ventures accounted for using equity method Decrease(increase) in accounts receivable Net income Income tax expenses Current net profit Other comprehensive income Items not re-classified into income Remeasurement of defined benefit plans Equity instrument at fair value through other comprehensive income Increase(decrease) in other current liabilities Associates and joint ventures accounted for using Equity method Other comprehensive income Items not re-classified into income Amendments to Item in relation to income tax that will not be reclassified to profit or loss Other comprehensive income for current period (net after tax) Total current comprehensive income Profit, attributable to: Owner of parent company Non-controlling equity Comprehensive income attributable to: Owner of parent company Non-controlling equity EPS (NT$) Basic EPS Diluted EPS	IV and VI.14 IV,17 and VII VI.17 VI.15 IV and VI.18 VI.18 VI.18 VI.6 IV and VI.20 VI.19 IV and VI.21	$34,882,023 (31,326,299) 3,555,724 (414,505) (387,694) (43,170) - (845,369) 2,710,355 5,934 134,667 (13,134) (40,805) 104,904 191,566 2,901,921 (526,430) 2,375,491 (108,746) 189,998 411 21,667 103,330 $2,478,821 $2,375,491 - $2,375,491 $2,478,821 - $2,478,821 $4.08 $4.06	100 (90) 10 (1) (1) - - (2) 8 - - - - - - 8 (2) 6 - 1 - - 1 7	$38,604,929 (34,424,330)	100 (89)
					4,180,599	11
					(442,334) (388,522) (46,517) 1,187	(1) (1) - -
					(876,186)	(2)
					3,304,413	9
					2,092 237,170 23,876 (20,327) 233,394	- 1 - - -
					476,205	1
					3,780,618 (707,223)	10 (2)
					3,073,395	8
					63,749 (500,360) 3,775 (13,505)	- (1) - -
					(446,341)	(1)
					$2,627,054	7
					$3,073,395 -
					$3,073,395
					$2,627,054 -
					$2,627,054
					$5.28
					$5.24

(Please refer to Note to Consolidated Financial Statements)

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Feng Hsin Steel Co., Ltd. and subsidiaries Consolidated Statements of Changes in Shareholders' Equity January 1 to December 31, 2023 and 2022

Unit: NT $thousand

									Unit: NT $thousand
	Item			Equityattrib	uted to the owner ofpar	ent company			Total equity
		Capital stock	Capital surplus		Retained earnings		Other equityItem.
				Legal reserve	Special reserve	Unallocated earnings	~~Unrealized gains~~ (losses) from financial Fair value transactions through Other comprehensive income	Gains and losses on hedging instruments
Code		3100	3200	3310	3320	3350	3420	3450	3XXX
A1. B1. B5. B17 C7 C17 D1 D3 D5 Q1 Z1 A1. B1. B3. B5. C7 C17 D1 D3 D5 Q1 Z1	Balance at January 1, 2022 2021 surplus Appropriation and distribution Provision of legal reserve Common share cash dividend Reversal of special reserve Changes in other capital surplus Changes in associates and joint ventures under the equity method Other changes in capital surplus Decrease(increase) in accounts receivable 2022 Other comprehensive income Total current comprehensive income Disposal of equity instrument at fair value through other comprehensive income Balance as of December 31, 2022 Balance at January 1, 2023 Increase(decrease) in other current liabilities Provision of legal reserve Provision of special reserve Common share cash dividend Changes in other capital surplus Changes in associates and joint ventures under the equity method Other changes in capital surplus Net profit for 2023 2023 Other comprehensive income Total current comprehensive income Disposal of equity instrument at fair value through other comprehensive income Balance at December 31, 2023	$5,815,994	$452,514 794	$4,630,509 437,493 - $5,068,002 $5,068,002 310,749 - $5,378,751	$83,991 (83,991) - $- $ - 198,786 - $198,786	$10,800,945 (437,493) (2,907,997) 83,991 (34,209) 3,073,395 51,329	$318,742 (500,360)	$(2,895) 2,690	$22,099,800 - (2,907,997) - (34,209) 794 3,073,395 (446,341)
		-	-			3,124,724	(500,360)	2,690	2,627,054
						16,963	(16,963)		-
		$5,815,994	$453,308			$10,646,924	$(198,581)	$(205)	$21,785,442
		$5,815,994	$453,308 55 669			$10,646,924 (310,749) (198,786) (2,326,398) (9,372) 2,375,491 (86,884)	$(198,581) 189,998	$(205) 216	$21,785,442 - - (2,326,398) (9,317) 669 2,375,491 103,330
		-	-			2,288,607	189,998	216	2,478,821
						47,379	(47,379)		-
		$5,815,994	$454,032			$10,137,605	$(55,962)	$11	$21,929,217

(Please refer to Note to Consolidated Financial Statements)

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Feng Hsin Steel Co., Ltd. and subsidiaries

Consolidated Statements of Cash Flows

January 1 to December 31, 2023 and 2022

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Unit: NT $thousand
Code Item FY23 FY22
AAAA Cash flow from operating activities::
A10000 Current income before tax $2,901,921 $3,780,618
A20000 Adjustment::
A20010 Adjustments to reconcile profit (loss)::
A20100 Depreciation expenses 1,156,509 1,269,953
A20200 Amortization 2,426 2,500
A20300 Expected credit gain - (1,187)
A20900 Interest expenses 40,805 20,327
A21200 Interest revenue (5,934) (2,092)
A21300 Dividend revenue (110,393) (206,214)
A22300 Share of profit of associates and joint ventures accounted for using equity method (104,904) (233,394)
A22500 Losses on disposals of property, plant and equipment 18,085 4,812
A30000 Changes in operating activities related to Current assets/Liabilities:
A31125 Decrease (increase) in contract assets-current 103,114 (179,204)
A31130 Increase in notes receivable (4,666) (1,752)
A31150 Decrease(increase) in accounts receivable 76,342 (110,540)
A31180 Decrease in other receivable 3,162 33,961
A31200 Decrease (increase) in inventories (1,556,237) 1,165,761
A31230 (Increase) decrease in Prepayment (87,011) 167,626
A31240 Increase in other current assets (10,029) (15,964)
A32125 Decrease in contract liabilities-current (5,923) (87,504)
A32130 Increase in notes payable 119 333
A32150 Increase (decrease) in accounts payable 276,135 (302,870)
A32180 Decrease in other payables (154,138) (161,353)
A32230 Increase(decrease) in other current liabilities 797 (1,058)
A32240 Decrease in net defined benefit liabilities (103,016) (98,934)
A33000 Cash inflow from operations 2,437,164 5,043,825
A33100 Interest collected 5,933 2,118
A33200 Dividends collected 116,693 199,914
A33300 Interest paid (36,384) (17,053)
A33500 Income tax paid (564,304) (1,028,822)
AAAA Cash flow from operating activities 1,959,102 4,199,982
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(Please refer to Note to Consolidated Financial Statements)

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Feng Hsin Steel Co., Ltd. and subsidiaries

Consolidated Statements of Cash Flows (continued)

January 1 to December 31, 2023 and 2022

		Unit: NT $thousand	Unit: NT $thousand
Code	Item	FY23	FY22
BBBB B00010 B00020 B00030 B01800 B02700 B02800 B06800 B07600 BBBB CCCC C00100 C03000 C04020 C04500 CCCC EEEE E00100 E00200	Cash flow 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 Refund of capital decrease from financial assets at fair value through other comprehensive income Acquisition of investment under the equity method Acquisition of property, plant and equipment Disposal of property, plant and equipment Increase in other non-current assets Dividends collected Net cash outflow from investing activities Cash flow from financing activities:: Increase(decrease) in short-term loan Increase in guarantee deposits received Payment of lease liabilities Cash dividends Net cash outflow from financing activities (Decrease) increase in Cash and cash equivalents Balance of cash and cash equivalents, beginning Balance of cash and cash equivalents, ending	- 424,972 - (15,520) (1,528,907) 30 (31,986) 172,975 (978,436) 1,088,027 637 (50,014) (2,326,398) (1,287,748) (307,082) 1,299,681 $992,599	(113,885) 289,909 21,600 (56,882) (1,387,665) 7,091 (27,203) 117,281 (1,149,754) (28,735) - (35,311) (2,907,997) (2,972,043) 78,185 1,221,496 $1,299,681

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(Please refer to Note to Consolidated Financial Statements)
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Feng Hsin Steel Co., Ltd. and its Subsidiaries

Note to Consolidated Financial Statements

For the years ended December 31, 2023 and 2022 (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

1. Company History

Feng Hsin Steel Co., Ltd. (hereinafter referred to as "the Company") was established in 1969, originally engaged in the manufacturing, processing and trading of various triangle iron, angle iron, round iron, flat iron, iron plate, etc., along with the operation and investment of various incidental businesses. June 1989 The No. 2 Steel Rolling Mill was completed and put into operation, and officially entered the field of special steel to produce carbon steel and special steel. The Company No. 2 Steel Mill completed a hot test in 1997 and officially produced the special steel billet required for No. 2 Steel Rolling Mill and No. 1 Steel Rolling Mill, in order to control quality and reduce costs. The Company shares were approved for listing by the competent authority in 1991 and were officially listed on the Taiwan Stock Exchange on May 25, 1992. The registered office and the main business location are No. 998, Sec. 1, Jiahou Rd., Houli Dist., Taichung City.

2. Date and Procedures of Approval of the Financial Reports

The consolidated financial statements of the Company and its subsidiaries (“the Group“) for the years ended December 31, 2023 and 2022 were authorized for issue by the Board of Directors on February 29, 2024.

3. Application of New, Amended and Revised Standards and Interpretations

1. Changes in accounting policies resulting from the initial application of International Financial Reporting Standards.

The Group applied the International Accounting Standards (IAS), IFRIC Interpretations (IFRIC), and Statement on Internal Control (SIC) endorsed and issued by the Financial Supervisory Commission beginning on or after January 1, 2023. The adoption of these new standards and amendments had no material impact on the Group.

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

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Items	New, Revised or Amended Standards and Interpretations	Effective Date issued by IASB
1	Classification of Liabilities as Current or Non-current – Amendments to IAS 1	January 1, 2024
2	Lease Liability in a Sale and Leaseback – Amendments to IFRS 16	January 1, 2024
3	Non-current Liabilities with Covenants – Amendments to IAS 1	January 1, 2024
4	Supplier Finance Arrangements – Amendments to IAS 7 and IFRS 7	January 1, 2024

• (1) Classification of Liabilities as Current or Non-current – Amendments to IAS 1

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.

• (2) Lease Liability in a Sale and Leaseback – Amendments to IFRS 16

The amendments add seller-lessees’ additional requirements for the sale and leaseback transactions in IFRS 16, thereby supporting the consistent application of the standard.

• (3) Non-current Liabilities with Covenants – Amendments to IAS 1

The amendments improved the information companies provide about long-term debt with covenants. The amendments specify that covenants to be complied with within twelve months after the reporting period do not affect the classification of debt as current or non-current at the end of the reporting period.

• (4) Supplier Finance Arrangements – Amendments to IAS 7 and IFRS 7

The amendments introduced additional information on supplier finance arrangements and added disclosure requirements for such arrangements.

The abovementioned standards and interpretations were issued by the International Accounting Standards Board (IASB) and endorsed by the Financial Supervisory Commission (FSC) and became applicable for annual periods

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beginning on or after January 1, 2024. The remaining standards and interpretations have no material impact on the Group.

1. Standards or interpretations issued, revised or amended, by the International Accounting Standards Board (IASB) which are not endorsed by the Financial Supervisory Commission (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
1	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 orJoint Ventures	To be determined by IASB
2	IFRS17“Insurance Contracts”	January1,2023
3	Lackof Exchangeability– Amendments toIAS21	January1,2025

• (1) 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.

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(2) 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 fulfillment cash flows and the contractual service margin. 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 2020 and 2021. The amendments include deferral of the date of initial application of IFRS 17 by two years to annual beginning on or after January 1, 2023 (from the original effective date of January 1, 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. This standard will replace the transitional standard (i.e. International Financial Reporting Standards 4 “Insurance Contract”) upon going into effect.

(3) Lack of Exchangeability – Amendments to IAS 21

These amendments specify whether a currency is exchangeable into another currency and, when it is not, to determine the exchange rate to use and the disclosures to provide. The amendments are applicable for annual periods beginning on or after January 1, 2025.

The abovementioned standards and interpretations issued by IASB have not yet been endorsed by FSC at the date when the Group 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

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1. Statement of compliance

The consolidated financial statements of the Group for the years ended December 31, 2023, and 2022 have been prepared in accordance with Regulations Governing the Preparation of Financial Reports by Securities Issuers. and International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations, and Statement on Internal Control (SIC) as endorsed by the Financial Supervisory Commission.

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:

• (1) Power over the investee (i.e. existing rights that give it the current ability to direct the relevant activities of the investee), and

• (2) Exposure, or rights, to variable returns from its involvement with the investee, and

• (3) 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:

• (1) The contractual arrangement with the other vote holders of the investee

• (2) Rights arising from other contractual arrangements

• (3) The Group voting rights and potential voting rights

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

The total comprehensive income of the subsidiaries is attributed to the owners of the parent and 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:

• (1) Derecognizes the assets (including goodwill) and liabilities of the subsidiary

• (2) Derecognizes the carrying amount of any non-controlling interest

• (3) Recognizes the fair value of the consideration received

• (4) Recognizes the fair value of any investment retained

• (5) Reclassifies the parent company’s share of other items from comprehensive income previously recognized in profit or loss or transfers directly to retained earnings in accordance with other International Financial Reporting Standards

• (6) The resulting difference is recognized in profit or loss

The consolidated entities are as follows:

Name of investor The Company	Name of Subsidiary Great Fortune Holding Limited	Main Business	Percentage of EquityHeld	Percentage of EquityHeld
			2023.12.31	2022.12.31 100%
		General investment	100%

4. Foreign currency transactions

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The Group 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.

Transactions in foreign currencies are initially recorded by the Group 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:

• (1) Exchange differences, arising from foreign currency borrowings for the acquisition of assets that meet the requirements, are treated as an adjustment to interest costs and capitalized as part of the cost of the borrowing for assets.

• (2) Foreign currency items falling under the scope of International Financial Reporting Standards (IFRS) 9 are accounted for in accordance with the “Financial Instruments” accounting policies.

• (3) When a reporting entity holds a portion of its net investment in foreign operations denominated in a foreign currency, any resulting exchange differences are initially recognized in other comprehensive income. Subsequently, upon disposal of the net investment, these exchange differences are reclassified from equity to the income statement.

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. Classification of current and non-current assets and liabilities

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All assets that meet one of the following criteria are classified as current assets; otherwise, they are classified as non-current assets:

• (1) The group expects to realize the assets in its normal operating cycle or intends to sell or consume them.

• (2) Holding the assets primarily for trading.

• (3) The group expects to realize the assets within twelve months after the reporting period.

• (4) Cash or cash equivalents, except that the assets are restricted from being exchanged or used to settle liabilities at least 12 months after the reporting period.

All other assets are classified as non-current. A liability is classified as current when:

• (1) The group expects to settle liabilities in its normal operating cycle.

• (2) Holding the liabilities primarily for trading.

• (3) The liabilities are due to be settled within twelve months after the reporting period.

• (4) Liabilities do 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

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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 purchases 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 business model for managing the financial assets, and

• B. The contractual cash flow characteristics of assets

Financial assets measured at amortized cost

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 the 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 derecognizing, amortizing process or recognizing 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:

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• A. For purchased or originated credit-impaired financial assets, multiply the credit-adjusted effective interest rate by the amortized cost of the financial assets.

• B. For financial assets that are not purchased or originated credit-impaired financial assets but subsequently become credit-impaired financial assets, the company applies the effective interest rate to the amortized cost of the financial asset in accordance with assets.

Financial assets 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 business model for managing assets: collecting contractual cash flows and selling financial assets.

• 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 related to this type of financial asset is described as follows:

• A. Before derecognition or reclassification, gains or losses are recognized in other comprehensive income, except for impairment gains or losses and foreign currency translation gains or losses, which are recognized in profit or loss.

• B. Upon derecognition, 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 (effective interest rate multiplied by the total carrying amount of the financial assets), except:

• (a) When a financial asset is purchased or originated credit-impaired, multiply the credit-adjusted effective interest rate by the amortized cost of the financial assets.

• (b) When the financial asset is not purchased, but subsequently becomes credit-impaired, the effective interest rate is multiplied by the

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amortized cost of the financial asset in subsequent reporting periods.

Besides, for certain equity investments within the scope of IFRS 9 that are 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 represent a recovery of part of the cost of investment.

(2) Impairment of 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 assets 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. Time value of money

• 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 measured 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

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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 the initial recognition or a 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.

• D. For lease receivables arising from transactions within the scope of IFRS 16, the Group measures the loss allowance at an amount equal to lifetime expected credit losses.

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 Assets

A financial assets 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) Liabilities and Equity

Classification of liabilities or equity

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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 refers to any contract that recognizes the remaining equity after deducting all liabilities from assets. the equity instrument issued by the group is recognized at the amount obtained after deducting the direct issuance costs.



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

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 canceled 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

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paid, including any non-cash assets transferred or liabilities assumed, is recognized in profit or loss.

(5) Offsetting of Assets and Liabilities

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:

• (1) In the principal market for the asset or liability

• (2) 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 the Group.

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 are 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 cost and net realizable value item by item.

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

Materials ─ Weighted average of actual procurements

Finished goods and work in process ─ Cost of direct materials and labor and a proportion of 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 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 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 transactions between the Group and the associate or joint venture are eliminated to the extent of the Group 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 affect the Group 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

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to profit or loss at the time of disposing of the associate or joint venture on a pro-rata basis.

When the associate or joint venture issues new stock, and the Group 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 Capital Surplus or Retained Earnings 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 of 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 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

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tested for impairment separately by applying the requirements for impairment testing goodwill in IAS 36 Impairment of Assets.

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 are 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 Office 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

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are expected from its use or disposal. Any gain or loss arising from the derecognition of the asset is recognized in profit or loss.

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 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 are 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 Buildings	Useful Lives
	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.

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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 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 evaluates whether there are the following two factors throughout the period of use:

• (1) The right to obtain substantially all of the economic benefits from the use of the identified assets, and

• (2) 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, maximizing 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 for 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

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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:

• (1) Fixed payments (including in-substance fixed payments), less any lease incentives receivable

• (2) Variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the commencement date

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

• (4) The exercise price of a purchase option if the Group is reasonably certain to exercise that option

• (5) 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 amortized 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:

• (1) The amount of the initial measurement of the lease liability

• (2) Any lease payments made at or before the commencement date, less any lease incentives received

• (3) Any initial direct costs incurred by the lessee

• (4) 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 by 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

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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 of 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.

Group as a lessor

At the 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 presents them as 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

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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 a particular asset is required, the Group estimates the asset recoverable amount. If the result of the impairment test indicates that the carrying amount of the cash-generating unit to which assets or assets belong exceeds its recoverable amount, it is recognized as an impairment loss. An asset recoverable amount is the higher of an asset’s net fair value or its value in use.

At the end of each reporting period, the Group assesses whether there is any indication that the previously recognized goodwill Assets may no longer exist or may have decreased. If such indication exists, the Group 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 groups of cash-generating units, to which goodwill belongs are tested for impairment annually at the same time, irrespective of whether there is any indication of impairment. If an impairment loss is required to be recognized, the impairment loss is first allocated to reduce the carrying amount of goodwill and then to the other assets other than goodwill pro rata on the basis of the carrying amount of each asset in the unit. Impairment losses under goodwill cannot be reversed in future periods for any reason.

Impairment loss and its reversal from continuing operations are recognized in profit or loss.

15. Revenue recognition

The Group revenue arising from contracts with customers is primarily related to the 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

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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, probably, 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 for the Group 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 the 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 customers but does not have 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 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

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contract liabilities.

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

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. Retirement benefit plans

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 post-employment benefit plan which is a defined contribution plan, the Company’s monthly employee pension contribution rate shall not be less than six percent of the employee’s monthly salary, and the amount allocated is recognized as the current expense.For post-employment benefit plans that are defined benefit plans, are presented as actuarial reports at the end of the annual reporting period in accordance with the projected unit credit method. Remeasurement of the net defined benefit liabilities (assets) includes any changes in the plan assets compensation and the impact of the assets cap, less the amount of net interest included in the net defined benefit liabilities (assets) and actuarial gains and losses. The remeasurements of the net defined benefit liabilities (assets) are recognized in other comprehensive income and immediately recognized in retained earnings. Past service costs are recognized in profit or loss on the earlier date of the plan amendment or curtailment, and:

• (1) When the plan amendment or curtailment occurs, and

• (2) When date that the Group recognizes restructuring-related costs

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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 tax

Tax expense (profit) refers to the aggregate amount related to current income tax and deferred income tax included in the determination of current profit and loss.

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:

• (1) The initial recognition of goodwill, or the initial recognition of assets or liabilities resulting from a business combination transaction that does not affect either the accounting profit or taxable profit or loss at the time of the transaction and does not give rise to an equivalent taxable and deductible temporary difference at that time.

• (2) 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, probably, the temporary differences will not reverse in the foreseeable future.

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

• (1) 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.

• (2) 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 how 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.

In accordance with the temporary exceptions of the "International Tax Reform-Pillar 2 Rule Template" (International Accounting Standards Amendment No. 12), the deferred tax assets and liabilities of pillar 2 income tax are not recognized, and their related information are not disclosed.

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5. Critical Accounting Judgments and Key Sources of Estimation and Uncertainty

The preparation of the Group consolidated financial statements requires 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 assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of the asset or liability affected in future periods.

1. Judgment

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

(1) Investment property

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 cannot be sold separately, the property is classified as investment property in its entirety only if the owner-occupied portion is insignificant.

(2) Operating lease commitments-group as lessor

The Group has entered 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.

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(1) Revenue recognition-sales returns and discounts

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, probably, a significant reversal in the amount of cumulative revenue recognized will not occur. Please refer to Note 6 for more details.

(2) 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 taxable profit will probably 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.

(3) 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 decline. The estimates are based on the most reliable evidence available at the time the estimates are made. Please refer to Note 6 for more

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details.

6. Details of Significant Accounts

1. Cash and cash equivalents

Cash on hand Demand deposits Total	2023.12.31 $926 991,673 $992,599	2022.12.31
		$930 1,298,751
		$1,299,681

2. Financial assets at fair value through other comprehensive income -current

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	2023.12.31 $1,130,016 $402,808 1,041,363 $1,444,171	2022.12.31
		$1,485,055
		$331,596 1,004,000
		$1,335,596

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

Information on the Group holding of investments under other comprehensive income using fair value’s equity instruments for the years ended December 31, 2023 and 2022 is as follows:

Related to investments still held on the date of assets liabilities Related to investments derecognized in the current period Dividend revenue recognized in the current period	January 1, 2023~ December31,2023 $108,520 1,873 $110,393	January 1, 2022~ December31,2022
		$201,500 4,714 $206,214

On August 12, 2022, Wen Shan Resort Corporation, a subsidiary of the Group,

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resolved to reduce its capital by NT$120,000 thousand, and a capital return of NT$21,600 thousand based on its 18% ownership interest.

Information on the Group disposal of investments under other comprehensive income using fair value’s equity instruments for the years ended December 31, 2023 and 2022 is as follows:

Fair value at the date of derecognition Cumulative gain on disposal of other equity interest ransferred to retained earnings	January 1, 2023~ December31,2023 $436,462 47,379	January 1, 2022~ December31,2022
		$289,909 16,963

3. Accounts receivable - net

Accounts receivables Less: loss allowance Total	2023.12.31 $1,949,690 (2,118) $1,947,572	2022.12.31
		$2,026,032 (2,118)
		$2,023,914

Accounts receivables were not pledged.

Accounts receivables are generally on 10-75 day terms. The total carrying amount as of December 31, 2023 and 2022 were NT$1,949,690 thousand and NT$2,026,032 thousand, respectively. Please refer to Note 6.15 for more details on loss allowance for the years ended December 31, 2023 and 2022. Please refer to Note 12 for more details on credit risk management.

4. Inventories

Raw materials Supplies Work in progress Finished goods Total	2023.12.31 $3,717,464 279,738 2,271,299 1,518,336 $7,786,837	2022.12.31
		$2,546,422 395,676 1,902,413 1,383,968
		$6,228,479

The costs of Inventories recognized as expenses in 2023 and 2022 are NT $31,326,299 thousand and NT $34,424,330 thousand, respectively.

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Inventories was not pledged.

5. Prepayment

Factory supplies Prepayments of purchases Other prepayments Total	2023.12.31 2022.12.31
	$488,722 $436,230 25,540 55,211 20,346 5,480
	$534,608 $496,921

Prepayments were not pledged.

6. Investments under equity method

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

Investment company Investments in associates: Listed companies: Taiwan Steel Union Co., Ltd. Unlisted companies: Fong Yu Resources Co., Ltd. Total	2023.12.31 Amount Shareholding $985,686 23.97 540,593 29.08 $1,526,279	2022.12.31
	Amount $985,686 540,593 $1,526,279	Amount Shareholding $1,031,402 23.82 556,334 29.08 $1,587,736

The Group received dividends of NT$172,975 thousand and NT$104,051 thousand from Taiwan Steel Union Co., Ltd. in 2023 and 2022, respectively.

Wen Shan Resort Corporation was re-elected their director and supervisor in August 2022, and the Group lost its significant influence on the company, so it was reclassified as a financial asset under fair value through other comprehensive income.

The fair value of the investment in the associate when there is a quoted market price for the investment: Taiwan Steel Union Co., Ltd. is listed on the Taiwan Stock Exchange. The fair value of the investment in investments accounted for using the equity method on December 31, 2023 and December 31, 2022 was NT$2,442,659 thousand and NT$2,438,606 thousand, respectively.

The Group investments in Taiwan Steel Union Co., Ltd., Fong Yu Resources Co., Ltd. and Wen-Shan Enterprise Co., Ltd are not individually material. The following

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table summarizes the financial information of the Group investment in the associate attributable to the Group interest in total:

attributable to the Group interest in total:
Profit from continuing operations Other comprehensive income (post-tax) Total comprehensive income	January 1, 2023~ December31,2023 $104,904 329 $105,233	January 1, 2022~ December31,2022
		$233,394 3,020
		$236,414

As of December 31, 2023 and December 31, 2022, the aforementioned associates did not have any liabilities or capital commitment, nor any guarantee provided.

For the years ended December 31, 2023 and 2022, the investments in Taiwan Steel Union Co. Ltd. using the equity method were $985,686 thousand and $1,031,402 thousand, respectively. For the years ended December 31, 2023 and 2022, the share of profit of associates and joint ventures under equity method were $120,915 thousand and $231,867 thousand, respectively. Additionally, the share of other comprehensive income of associates and joint ventures accounted under the equity method for the years ended December 31, 2023 and 2022 were $141 thousand and $413 thousand, respectively. These amounts were recognized based on others’ audited financial statements.

7. Property, plant and equipment

Cost: 2023.01.01 Additions Disposals Other changes 2023.12.31 Depreciation: 2023.01.01 Depreciation Disposals Other changes	Land $1,288,353	Buildings $3,565,992 217,312 (13,536) 759,305	Machinery and equipment $17,595,994 485,640 (618,362) (360,146)	Office $48,773 7,000 - 2,870 $58,643 $22,870 2,980 - -	Transportation equipment $453,825 5,570 (2,616) - $456,779 $343,915 22,960 (2,616) -	Leasehold improvements $338,043 4,633 - 40,741 $383,417 $93,643 16,655 - -	Unfinished construction and Equipment to be inspected $502,798 808,752 - (995,751) $315,799 $ - - - -	Total $23,793,778 1,528,907 (634,514) (552,981) $24,135,190 $14,656,912 1,107,487 (614,278) (602,305)
	$1,288,353	$4,529,073	$17,103,126
	$ - - - -	$1,592,500 134,798 (3,459) -	$12,603,984 930,094 (608,203) (602.305)

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2023.12.31 Cost: 2022.01.01 Additions Disposals Other changes 2022.12.31 Depreciation: 2022.01.01 Depreciation Disposals Other changes 2022.12.31 Net carrying amount: 2023.12.31 2022.12.31	$ -	$1,723,839 $3,480,061 14,466 (420) 71,885 $3,565,992 $1,486,819 106,101 (420) - $1,592,500 $2,805,234 $1,973,492	$12,323,570 $17,131,810 637,248 (511,720) 338,656 $17,595,994 $12,019,654 1,080,525 (496,195) - $12,603,984 $4,779,556 $4,992,010	$25,850	$364,259 $427,263 34,403 (7,841) - $453,825 $324,976 26,780 (7,841) - $343,915 $92,520 $109,910	$110,298 $336,299 1,744 - - $338,043 $79,876 13,767 - - $93,643 $273,119 $244,400	$ - $165,284 699,804 - (362,290) $502,798 $ - - - - $ - $315,799 $502,798	$14,547,816
	$1,288,353 - - - $1,288,353 $ - - - - $ - $1,288,353 $1,288,353			$48,956 - (183) - $48,773 $20,417 2,599 (146) - $22,870 $32,793 $25,903				$22,878,026 1,387,665 (520,164) 48,251 $23,793,778 $13,931,742 1,229,772 (504,602) -
								$14,656,912
								$9,587,374 $9,136,866

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

As of December 31, 2023 and 2022, the carrying amounts of certain parcels of land were $149,811 thousand, which were registered in the name of certain individuals. The Group has obtained an unconditional transfer commitment for these parcels of land.

Property, plant and equipment were not pledged.

8. Investment property-net

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

Land

Buildings

Total

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Cost: 2023.01.01 $506,477 Additions-from acquisitions - 2023.12.31 $506,477 Depreciation: 2023.01.01 $ - Depreciations of the year - 2023.12.31 $- Cost: 2022.01.01 $506,477 Additions-from acquisitions - 2022.12.31 $506,477 Depreciation:： 2022.01.01 $ - Depreciations of the year - 2022.12.31 $- Net carrying amount: 2023.12.31 $506,477 2022.12.31 $506,477 Rental revenue from investment property Less: Direct operating expenses incurred for the investment property of rent income during the period Direct operating expenses incurred for the investment property that did not generate rent income during the period Total		$192,233 - $192,233 $8,222 3,947 $12,169 $192,233 - $192,233 $4,276 3,946 $8,222 $180,064 $184,011 January 1, 2023~ December 31,2023 $2,988 - (3,245)		$698,710 - $698,710 $8,222 3,947 $12,169 $698,710 - $698,710 $4,276 3,946 $8,222 $686,541 $690,488 January 1, 2022~ December 31,2022
				$2,760 - (2,914)
		$(257)		$(154)

No investment property was pledged.

Investment properties held by the Group are not measured under fair value but for which the fair value is disclosed. The fair value measurements of the investment

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properties are categorized within Level 3. The investment properties held by the Company were valued by independent external appraisal experts. The fair value as of December 31, 2023 and 2022 were as follows:

Item A B C	Valuation Method Comparison method and land development analysis method Comparison method and cost method Comparison method and the income method	Valuation Amount $895,315 69,333 331,010 $1,295,658	Valuation Time December 2021 December 2021 August 2020

Item A, B, and C refer to the real estate transaction price inquiry service network of the Ministry of the Interior on December 31, 2023 and December 31, 2022, and inquire about the recent transaction prices in similar locations and the fair value of the latest external appraisal expert.

9. Other non-current assets

ther non-current assets
	2023.12.31	2022.12.31
Prepayments for business facilities	$265,167	$139,954
Refundable deposits	13,634	12,786
Net defined benefit assets	-	96,501
Other	13,686	13,686
Total	$292,487	$262,927

10. Short-term loan

Unsecured bank loans	Interest Rates(%) 0.58%-6.56%	2023.12.31 $1,950,094	2022.12.31 $862,067

As of December 31, 2023 and 2022, the Group unused credit lines of short-term borrowings amounted to approximately $7,486,225 thousand and $9,829,242 thousand, respectively.

11. Other payables

Accrued salary and bonus Accrued utilities Accrued discount Accrued remuneration to directors Pollution control payable	2023.12.31 2022.12.31 $320,970 $356,838 235,259 235,191 121,306 127,855 48,185 50,685 4,870 45,724

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51,394 119,070 $781,984 $935,363

Other Total

12. Retirement benefit plans

Defined contribution plan

The Group adopts a defined contribution plan in accordance with the Labor Pension Act Labor Pension Act. In accordance with the provisions of the Act, the Company's monthly labor pension contribution rate shall not be less than six percent of the employee's monthly salary. The Company has established employee retirement regulations in accordance with the regulations, and contributes six percent of the employee's salary to the individual retirement account of the Labor Insurance Bureau every month.

Expenses under the defined contribution plan for the years ended December 31, 2023 and 2022 were $29,265 thousand and $26,161 thousand, respectively.

Defined benefits plan

The Company adopts a defined benefit plan in accordance with the Labor Standards Act. The pension benefits are based on the number of service years and the average monthly salaries at the time when the retirement is approved. Two bases are given for each full year of service within 15 years (inclusive), and one base is given for each full year of service over 15 years, provided that the cumulative base is limited to a maximum of 45 bases. A retirement pension base is defined as the average monthly salary at the time of retirement. In accordance with the Labor Standards Act, the Group contributes 2% of the employees’ monthly salaries and wages to the pension fund every month, which is deposited in the Bank of Taiwan in the name of the administered pension fund committee. Before the end of each year, the Group assesses 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 Group will make up the difference in one appropriation before the end of March of the following year.

The Ministry of Labor is in accordance with the Regulations for Revenues, Expenditures, Safeguard and Utilization of the Labor Retirement Funds to allocate Assets. The investment of Funds is in the form of self-management and entrusted management, and adopts a medium and long-term investment strategy of active and passive management. The Ministry of Labor establishes funds risk limits and control plans by considering market risk, credit risk and liquidity risk, in order to maintain adequate flexibility to achieve targeted return without over-exposure of risk. With regard to the utilization of funds, its minimum earnings in the annual distributions on the final financial statements shall be no less than the earnings

249

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 Group does not participate in the operation and management of Funds, it is not able to disclose the classification of the fair value of the plan Assets in accordance with paragraph 142 of International Accounting Standards. The Group expects to contribute NT $4,362 thousand to its defined benefit plan during the 12 months beginning after December 31, 2023.

As of December 31, 2023, the Group defined benefit plans are expected to expire after 7 years.

Pension costs recognized in profit or loss were as follows:

Current service costs Net interest of net defined benefit (assets) liabilities Total	January 1, 2023~ December 31,2023 $5,876 (1,232) $4,644	January 1, 2022~ December 31,2022
		$6,978 1,124
		$8,102

Reconciliations of liabilities (assets) of the defined benefit obligation and plan at fair value of assets are as follows:

Present value of defined benefit obligations Fair value of plan assets Liabilities (assets) Less: Due within one year Liabilities (assets)-Non-current	2023.12.31 $753,855 (748,125) 5,730 - $5,730	2022.12.31	2022.01.01
		$666,869 (763,370)	$712,452 (549,769)
		(96,501) -	162,683 (94,228)
		$(96,501)	$68,455

Reconciliations of net defined benefit liabilities (assets):

2022.01.01 Current service costs	Present value of defined benefit obligation	Assets fair value	Liabilities (assets)
	$712,452 6,978	$(549,769) -	$162,683 6,978

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Interest expense (Revenue) Subtotal Remeasurement of defined benefit Liabilities/Assets: Actuarial gains and losses arising from changes in demographic assumptions Actuarial gains and losses arising from changes in financial assumptions Experience adjustments Remeasurement of defined benefit assets Subtotal Payments from the plan Contributions by employer 2022.12.31 Current service costs Interest expense (Revenue) Subtotal Remeasurement of defined benefit Liabilities/Assets: Actuarial gains and losses arising from changes in demographic assumptions Actuarial gains and losses arising from changes in financial assumptions Experience adjustments Remeasurement of defined benefit Assets Subtotal Payments from the plan Contributions by employer 2023.12.31	Present value of defined benefit obligation	Assets fair value	Liabilities (assets)
	4,878	(3,754)	1,124
	11,856	(3,754)	8,102
	14 (47,832) 28,009 -	- - - (43,940)	14 (47,832) 28,009 (43,940)
	(19,809)	(43,940)	(63,749)
	(37,630) -	22,130 (188,037)	(15,500) (188,037)
	666,869 5,876 8,100	(763,370) - (9,332)	(96,501) 5,876 (1,232)
	13,976	(9,332)	4,644
	20 42,275 72,973 -	- - - (6,522)	20 42,275 72,973 (6,522)
	115,268	(6,522)	108,746
	(42,258) -	36,258 (5,159)	(6,000) (5,159)
	$753,855	$(748,125)	$5,730

The following significant actuarial assumptions are used to determine the present value of the defined benefit obligation:

Discount rate Expected rate of salary increases	2023.12.31 2022.12.31 1.20% 1.25% 1.50% 0.74%

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Sensitivity analysis of each significant actuarial assumption:

Discount rate increase by 0.25% Discount rate decrease by 0.25% Future salary increase by 0.25% Future salary decrease by 0.25%	January1,2023~December31,2023	January1,2023~December31,2023	January1,2022~December31,2022	January1,2022~December31,2022
	Increase in defined benefit obligation	Decrease in defined benefit obligation	Increase in defined benefit obligation	Decrease in defined benefit obligation
	$ - 13,769 13,694 -	$13,392 - - 13,385	$ - 12,666 12,699 -	$12,309 - - 12,401

The sensitivity analyzes above are based on a change in a significant assumption (e.g., changes in the discount rate or expected payroll), keeping all assumptions under other constant. The analysis is limited by the fact that some of the actuarial assumptions are correlated and, in practice, changes in only a single actuarial assumption rarely occur.

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

13. Equity

(1) Common stock

As of December 31, 2023 and 2022, the Company’s authorized share capital was $7,000,000 thousand, with a par value of $10 per share. The total issued shares amount to 581,599,424 shares, resulting in paid-in capital of $5,815,994 thousand. Each share has one voting right and a right to receive dividends.

(2) Capital surplus

Capital surplus
Additional paid-in capital Treasury share transactions Gain on sale of assets Donated assets Share of changes in net assets of associates and joint ventures accounted for using the equity method Other Total	2023.12.31 $271,134 175,263 665 218 55 6,697 $454,032	2022.12.31
		$271,134 175,263 665 218 - 6,028
		$453,308

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According to the Company Act, capital surplus may not be used except to offset a deficit of the Company. When a company incurs no loss, it may distribute the capital 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.

(3) Legal reserve

In accordance with the Company Act, after the current period's earnings are taxed out, the Company should first offset the deficit and then set aside 10% of the remaining balance as legal reserve in the next period. Legal reserve may be used to offset a deficit. If the Company has no deficit, the excess of the legal reserve over 25% of the Company's paid-in capital may be distributed in new shares or cash in proportion to the shareholders' original shares.

(4) Special reserve

Pursuant to existing regulations, the Company is required to set aside an additional special capital reserve equivalent to the net debit balance of the other components of stockholders’ equity that occurred during the financial year. For the subsequent decrease in the deduction amount to stockholders’ equity, any special reserve appropriated may be reversed to the extent that the net debit balance reverses.

(5) Earnings distribution and dividend policy

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

• A. Payment of taxes in accordance with the law.

• B. Offsetting losses of previous years.

• C. Legal reserve.

• D. Other provides for or reverses Special reserve in accordance with the law or the order of the competent authority.

• E. The distribution of the remaining portion, if any, will be recommended by the Board of Directors and resolved in the shareholders’ meeting.

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.

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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, Legal reserve should contribute until its total amount reaches the total amount of its capital. The legal reserve can be used to offset a deficit. If the Company has no deficit, the excess of the legal reserve over 25% of the Company's paid-in capital may be distributed in new shares or cash in proportion to the shareholders' original shares.

Details of the 2023 and 2022 earnings distribution and dividends per share of Resolution proposed by the Company’s board of directors on February 29, 2024 and in the annual shareholders’ meeting on May 31, 2023, are as follows:

Legal reserve Special reserve Common stock- cash dividend	Appropriation of earnings 2023 2022	Appropriation of earnings 2023 2022	Dividendsper share(in $NT)
	2023		2023 2022 $3.5 $4.0
	$232,661 (142,835) 2,035,598	$310,749
		198,786
		2,326,398

Please refer to Note 6.17 for further details on employees’ compensation and remuneration to directors and supervisors.

14. Operating revenue

Revenue from contracts with customers Sale of goods Revenue from rendering of services Total	January 1, 2023~ December 31,2023 $34,726,695 155,328 $34,882,023	January 1, 2022~ December 31,2022
		$38,465,911 139,018
		$38,604,929

Analysis of revenue from contracts with customers during the years ended December 31, 2023 and 2022 is as follows:

(1) Disaggregation of revenue

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• A. The Group is a single operating segment. Please refer to the preceding paragraph for the revenue information to be disclosed by the reportable segment.

• B. For the years ended December 31, 2023 and 2022, the types of revenue from contracts with customers are all recognized at a point in time.

(2) Contract balances

A. Contract assets ─ Current

Contract assets ─ Current
Sale of goods	2023.12.31	2022.12.31	2022.01.01
	$537,601	$640,715	$461,511

The significant changes in the Group balances of contracts with assets from January 1 to December 31, 2023 and 2022 are as follows:

The significant changes in the Group balances of contracts with assets from January 1 to December 31, 2023 and 2022 are as follows:	The significant changes in the Group balances of contracts with assets from January 1 to December 31, 2023 and 2022 are as follows:	ces of contracts with are as follows:	ces of contracts with are as follows:	assets from	assets from
January 1, 2023~ Decamber31,2023 January 1, 2022~ December31,2023 Equity at beginning of period transferred to accounts receivable $(640,715) $(461,511) Increase in receivables (excluding those incurred and transferred to accounts receivable) 537,601 640,715 Contract liabilities ─ Current 2023.12.31 2022.12.31 2022.01.01 Sale of goods $77,630 $83,553 $171,057		January 1, 2023~ Decamber31,2023		January 1, 2022~ December31,2023
					$(461,511) 640,715 2022.01.01
	$77,630		$83,553		$171,057

B. Contract liabilities ─ Current

The changes in the Group balances of contracts with liabilities from January 1 to December 31, 2023 and 2022 were mainly due to the impact of rebar product orders, customer delivery schedule requirements and project progress.

(3) Transaction price allocated to unsatisfied performance obligations

As of December 31, 2023 and 2022, since the original expected duration of the Group contracts with customers for the sale of goods is within one year, there is no need to provide relevant information on outstanding performance obligations.

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(4) Assets “revenue from contracts with customers”

None.

15. Expected credit loss (gains)

xpected credit loss (gains)
Operating expenses-expected credit losses Receivables	January 1, 2023~ December 31,2023	Janary 1, 2022~ December 31,2023
	$ -	$(1,187)

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

The Group contract assets and receivables (including notes receivable and accounts receivable) all use the amount of lifetime expected credit losses to measure the allowance loss. The relevant explanations on the assessment of the allowance loss amount as of December 31, 2023 and 2022 are as follows:

• (1) The historical credit loss experience of assets shows that there is no significant difference in loss patterns among different customer groups. Therefore, the loss allowance is measured at an amount equal to lifetime expected credit losses. The relevant information is as follows:

ses. The relevant information is as follows:
Gross carrying Expected credit loss rate Loss allowance Total	2023.12.31	2022.12.31 $640,715 0% - $640,715
	$537,601 0% -
	$537,601

• (2) The Company considers the grouping of trade receivables by counterparties’ credit rating, geographical region, industry sector, etc. Its loss allowance is measured by using a provision matrix, details are as follows:

2023.12.31

Gross carrying Loss ratio Lifetime expected	Overdue not yet due (note)			Overdue			Total
		<=30 days	31-60 days	61-90 days	91to120 days	Over 121days
	$1,931,894 0-1%	$27,810 -%	$ - -%	$ - -%	$ - -%	$ - -%	$1,959,704 (2,118)
	(2,118)	-	-	-	-	-

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credit losses

Carrying amount of trade receivables 2022.12.31 Gross carrying Loss ratio Lifetime expected credit losses Carrying amount of trade receivables	$1,929,776	$27,810	$ -	$ -	$ -	$ -	$1,957,586
	Overdue Not yet due (note)			Overdue			Total
		<=30 days	31-60 days	61-90 days	91to120 days	Over 121days
	$1,975,841 0-1%	$53,480 -%	$1,390 -%	$ - -%	$ - -%	$ - -%	$2,030,711 (2,118)
	(2,118)	-	-	-	-	-
	$1,973,723	$53,480	$1,390	$ -	$ -	$ -	$2,028,593

Note: The Group notes receivable is not overdue, and the expected credit losses of the duration of the receivables are all credit losses provided in previous years.

The movements of the loss allowance of assets, notes receivable and accounts receivable for the years ended December 31, 2023 and 2022 were as follows:

257

2023.01.01 Increase (reversal) in the current period Write-off unrecoverable 2023.12.31 2022.01.01 Increase (reversal) in the current period Write-off unrecoverable 2022.12.31	Assets	Receivables
	$ - - -	$2,118 - -
	$ -	$2,118
	$ - - -	$3,305 (1,187) -
	$ -	$2,118

16. Leases

(1) The Group as 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 lease’s effect on the financial position, financial performance and cash flows are as follow:

A. Amount recognized in Assets Liabilities

(a) Right to use assets

The carrying amount of right-of-use assets

The carrying amount of right-of-use assets
Land Buildings Machinery and equipment Total	2023.12.31	2022.12.31
	$298,119 115,633 2,355	$336,662 1,155 3,044
	$416,107	$340,861

For the years ended December 31, 2023 and 2022, the Group additions to Assets amounted to $120,321 thousand and $207,541 thousand, respectively.

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(b) Lease Liabilities

Lease liabilities Current Non-current Total	2023.12.31	2022.12.31
	$48,199 372,420	$41,116 305,534
	$420,619	$346,650

Please refer to Note 6.18 (3) Liabilities’ Interest expense for the Group

leases from January 1 to December 31, 2023 and 2022. Please refer to Note 12.5 Liquidity risk management for the maturity analysis of the lease liabilities on December 31, 2023 and 2022.

B. Amount recognized in the income statement of total

Assets-Depreciations

Land Buildings Machinery and equipment total	January 1, 2023~ December 31,2023	January 1, 2022~ December 31,2022
	$40,705 3,681 689	$34,722
		330
		1,183
		$36,235
	$45,075

C. Income and expenses relating to leasing activities

Expenses relating to short-term leases Not included in the measurement of leases under liabilities expenses for variable lease payments	January 1, 2023~ December 31,2023	January 1, 2022~ December 31,2022
	$5,676 2,052	$6,557
		-

D. Cash outflow relating to leasing activities

For the years ended December 31, 2023 and 2022, the Group total cash outflow for leases were $56,894 thousand and $39,882 thousand, respectively.

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E. Other Information about leasing activities

(a) Variable lease payments

Some of the Group real estate lease contracts contain variable lease payment terms that are linked to the sales amount generated by the lease, and the amount is linked to a certain range of sales amount generated by the leased subject. These variable lease payments are linked to sales and it is not uncommon for leases with such variable lease payments to be entered into in the Group's industry. 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. For every NT $100 thousand increase in sales, the Group expects to increase rent expenses by NT $9-15 thousand.

(b) Extension and termination options

Some of the Group property rental agreements 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.

(c) Residual value guarantees

None.

(2) The Group as lessor

Please refer to Note 6 (8) for details on the Group owned investment properties and investment properties held by the Group as right-of-use assets.

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Leases of owned investment properties which did not transfer substantially all the risks and rewards incidental to ownership of assets were classified as operating leases.

Lease income from operating leases Income relating to fixed lease payments and variable lease payments that depend on an index or a rate	January 1, 2023~ December 31,2023 January 1, 2022~ December 31,2022 $2,988 $2,760

Please refer to Note 6 (8) for relevant disclosure of the application of property, plant and equipment on operating lease under International Accounting Standards 16. The Group has entered into operating lease contracts. The undiscounted lease payments to be received as of December 31, 2023 and 2022 and the total amount for the remaining years are as follows:

follows:
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 and not later than four years Later than four years but not later than five years Later than five years Total	2023.12.31 $4,708 5,189 4,997 4,782 4,476 14,795 $38,947	2022.12.31
		$2,485 1,573 1,539 1,334 1,105 8,635
		$16,671

1. Summary of employee benefits, depreciations and amortization expense functions as follows:

Function Nature	2023.01.01~2023.12.31	2023.01.01~2023.12.31	2023.01.01~2023.12.31	2022.01.01~2022.12.31	2022.01.01~2022.12.31	2022.01.01~2022.12.31
	Operating costs	Operating expenses	Total	Operating costs	Operating expenses	Total
Employee benefits expense
Salaries	$794,631	$271,765	$1,066,396	$813,264	$284,464	$1,097,728
Labor and health insurance	69,167	20,361	89,528	63,323	21,540	84,863
Pension	28,371	5,538	33,909	28,534	5,729	34,263
Other employee benefits expense	45,373	10,399	55,772	48,220	10,977	59,197
Depreciation	1,065,721	90,788	1,156,509	1,186,703	83,250	1,269,953
Amortization	2,426	-	2,426	2,500	-	2,500

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As of December 31, 2023 and 2022, the Group had 970 and 959 employees, respectively.

According to the Articles of Incorporation, no less than 2% of the 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 the 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 of Directors’ 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.

For the year ended December 31, 2023, the Group used 6.99% and 1.50% to estimate the employees' and directors' compensation, respectively, based on the Group's profit for the year. The Group recognized employees' compensation and directors' compensation amounting to $221,567 thousand and $47,500 thousand, respectively, which were based on the Group's profit for the year, and the aforementioned amounts were recorded as salaries and wages.

The Board of Directors of the Group resolved to distribute $221,567 thousand and $47,500 thousand in cash to employees and directors for the year ended December 31, 2023, respectively. Any difference between the estimated amount and the actual amount of cash distribution resolved by the Board of Directors will be recognized as the profit and loss in the following year.

The actual amounts of employees’ compensation and remuneration of directors and supervisors for the year ended December 31, 2022 were $260,603 thousand and $50,000 thousand, respectively. There was no material difference between the amounts and the amounts recognized in the financial statements for the year ended December 31, 2022.

18. Non-operating revenue and expenditure

• (1) Other income

January 1, 2023~

January 1, 2022~

262

Dividend revenue Rental revenue Other revenue - others Total (2) Other gains and losses Net Proceeds from disposal of property, plant and equipment (loss) gain Net foreign exchange gains Miscellaneous expenditure Total (3) Finance costs Interest of bank loan Interest on lease of liabilities Finance costs total	December 31,2023 $110,393 2,988 21,286	December 31,2022 $206,214 2,760 28,196
	$134,667	$237,170
	January 1, 2023~ December 31,2023 $(18,085) 18,507 (13,556)	January 1, 2022~ December 31,2022 $(4,812) 32,781 (4,093)
	$(13,134)	$23,876
	January 1, 2023~ December 31,2023 $37,143 3,662	January 1, 2022~ December 31,2022 $17,443 2,884
	$40,805	$20,327

19. Other comprehensive income

The components of other comprehensive income for the year 2023 are as follows:

Item that will not be reclassified to profit or loss: Remeasurement of defined benefit plans Unrealized valuation gain or loss from investments in equity instruments measured at fair value through other comprehensive income Share of other comprehensive income of associates and joint ventures accounted for using equity method Total	Arising during the period	Current Reclassification adjustments	Other total	income tax Interest (expense)	Amount after tax
	$(108,746) 189,998 411	$ - - -	$(108,746) 189,998 411	$21,749 - (82)	$(86,997) 189,998 329
	$81,663	$-	$81,663	$21,667	$103,330

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The components of other comprehensive income for the year ended December 31, 2022 are as follows:

Item that will not be reclassified to profit or loss: Remeasurement of defined benefit plans Unrealized valuation gain or loss from investments in equity instruments measured at fair value through other comprehensive income Share of other comprehensive income of associates and joint ventures accounted for using equity method Total	Arising during the period	Current Reclassification adjustments	Other total	income tax Interest (expense)	Amount after tax
	$63,749 (500,360) 3,775	$ - - -	$63,749 (500,360) 3,775	$(12,750) - (755)	$50,999 (500,360) 3,020
	$(432,836)	$-	$(432,836)	$(13,505)	$(446,341)

20. Income tax expenses

The main composition of tax expense (profit) in 2023 and 2022 is as follows:

(A) Income tax recognized in profit or loss

Current tax expense: Current income tax payable Adjustments in respect of current income tax of prior periods Deferred income tax expenses: Deferred income tax expense related to the original generation and reversal of temporary differences Income tax expenses (B) Other comprehensive income tax Deferred tax expense (interest): Remeasurement of defined benefit plans	January 1, 2023~ December 31,2023 $553,022 (26,679) 87 $526,430 January 1, 2023~ December 31,2023 $(21,749)	January 1, 2022~ December 31,2022
		$685,091 (16,872) 39,004
		$707,223
		January 1, 2022~ December 31,2022
		$12,750

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Share of other comprehensive income of associates and joint ventures accounted for using equity method Other comprehensive income component related to income tax	82 $(21,667)	755
		$13,505

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

Accounting profit before tax from continuing operations Tax at the domestic rates applicable to profits in the country concerned Adjustments in respect of current income tax of prior periods Income tax effect of revenues exempt from taxation Unappropriated retained earnings Income tax effect of expenses not deductible for tax purposes Total tax expense recognized in profit or loss	January 1, 2023~ December 31,2023 $2,901,921 $580,383 (26,679) (43,059) 15,288 497 $526,430	January 1, 2022~ December 31,2022
		$3,780,618
		$756,124 (16,872) (88,179) 55,672 478
		$707,223

(D) Deferred income tax assets (liabilities) balances related to the following items:

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January 1, 2023 ~ December 31, 2023

Temporary differences Employee benefits payable Unrealized foreign exchange gains Investments accounted for using the equity method Share of equity associates and joint ventures accounted for using other comprehensive income-cash flow hedges Share of equity associates and joint ventures accounted for using other comprehensive income-remeasurement of defined benefit plans Net defined benefit liabilities-non-current Remeasurement of defined benefit plans Depreciations book-tax difference Deferred tax expense (gain) Net deferred tax assets The information expressed in the table of Assets liabilities is as follows: Deferred tax assets Deferred tax liabilities	Equity at beginning of period $5,820 (90) 55,450 51 (103) (28,107) 8,376 9,707 $51,104 $79,404 $28,300	Recognized in profit or loss $614 599 3 - - (1,303) - $(87)	Recognized in other comprehensive income $ - - - (54) (28) - 21,749 - $21,667	Equity at end ofperiod
				$6,434 509 55,453 (3) (131) (29,410) 30,125 9,707
				$72,684
				$102,228
				$29,544

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January 1, 2022 ~ December 31, 2022

Temporary differences Employee benefits payable Unrealized foreign exchange gains Investments accounted for using the equity method Share of equity associates and joint ventures accounted for using other comprehensive income-cash flow hedges Share of equity associates and joint ventures accounted for using other comprehensive income-remeasurement of defined benefit plans Net defined benefit Liabilities-non-current Remeasurement of defined benefit plans Depreciations book-tax difference Deferred tax expense (Gain) Net deferred tax assets The information expressed in the table of Assets Liabilities is as follows: Deferred tax assets Deferred tax liabilities	Equity at beginning of period $5,553 76 55,468 723 (20) 10,980 21,126 9,707 $103,613 $103,633 $20	Recognized in profit or loss $267 (166) (18) - - (39,087) - - $(39,004)	Recognized in other comprehensive income $ - - - (672) (83) - (12,750) - $(13,505)	Equity at end ofperiod
				$5,820 (90) 55,450 51 (103) (28,107) 8,376 9,707
				$51,104
				$79,404
				$28,300

income tax declaration and verification

As of December 31, 2023, the income tax of the Company in Taiwan has been approved until 2021.

21. EPS

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.

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Diluted 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 plus the weighted average of the number of ordinary shares that would be issued on conversion of all the dilutive potential ordinary shares into ordinary shares.

(1) Basic earnings per share Profit attributable to ordinary equity holders of the Company Weighted average number of common shares of basic earnings per share (thousand shares) Basic earnings per share (NT $) (2) Diluted earnings per share Profit attributable to ordinary equity holders of the Company Weighted average number of common shares of basic earnings per share (thousand shares) Effect of dilution: Employee bonus-stock (in thousands) Weighted average number of ordinary shares outstanding after dilution (thousand shares) Diluted earnings per share (NT $)	January 1, 2023~ December 31,2023	January 1, 2022~ December 31,2022
	$2,375,491	$3,073,395
	581,599	581,599
	$4.08	$5.28
	$2,375,491	$3,073,395
	581,599 3,272	581,599 4,597
	584,871	586,196
	$4.06	$5.24

There have been no significant changes to the other transactions that affect common shares or potential common 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 significant transactions with the Group during the financial reporting period is as follows:

Name and nature of relationship of the related parties

Name of related parties Taiwan Steel Union Co., Ltd. Taiwan Steel Resources Co., Ltd.	Relationship withthe Group
	Associates of the Group Subsidiary of associate

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Significant transactions with related parties

(1) Accounts payable

An associate of the Company A subsidiary of an associate of the Company Total	2023.12.31 $2,708 3,806 $6,514	2022.12.31
		$3,509 7,723
		$11,232

(2) Other transaction

The Group commissioned Taiwan Steel Union Co., Ltd. to handle dust collection and transportation, and recognized manufacturing expenses of NT $36,759 thousand and NT $16,717 thousand in 2023 and 2022, respectively. As of December 31, 2023 and December 31, 2022, there were still NT $2,708 thousand and NT $3,509 thousand unpaid, respectively, which were recognized under the account of accounts payable.

The Group engaged Taiwan Steel Resources Co., Ltd. to dispose of the restored slag. For the years ended December 31, 2023 and 2022, the Group recognized manufacturing expenses of NT $46,924 thousand and NT $83,582 thousand, respectively. As of December 31, 2023 and December 31, 2022, the unpaid manufacturing expenses were NT $3,806 thousand and NT $7,723 thousand, respectively, which were recognized under accounts payable.

(3) Compensation of key management personnel

Short-term employee benefits Retirement benefits Total	January 1, 2023~ December 31,2023 $88,973 313 $89,286	January 1, 2022~ December 31,2022
		$93,627 376
		$94,003

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8. Pledged assets

The Group has furnished the following assets as collaterals:

Item	Carrying amount oftradereceivables	Carrying amount oftradereceivables	CollateralContents
	2023.12.31 $13,686	2022.12.31 $13,686
Other non-current assets			Performance bond

9. Significant contingent liabilities and unrecognized commitments liabilities

1. Unredeemed canceled guarantee notes due to loan issuance As of December 31, 2023 and 2022, the guaranteed notes amounted to $12,886,200 thousand and $12,730,000 thousand, respectively.

2. Due to the application for the “Measures for the Implementation of the Post-release Duty for Imported Goods” when importing goods, the letter of guarantee issued by the bank is both NT $30,000 thousand as of December 31, 2023 and 2022.

3. Amounts of unused letters of credit are as follows: (in thousands of foreign currencies)

Currency USD JPY EUR CNY	2023.12.31 2022.12.31 $17,036 $21,493 10,120 134,229 945 - 23,072 -

The amounts that are available under unused letters of credit above are unguaranteed.

1. The Group has signed the following major purchase contracts (in thousands of foreign currencies)

Contract party Company A Company B	Contract content Solar power generation system and installation Shear press machinery	Total contract price $618,213 EUR 3,670	Amountpaid As of 2023.12.31 amount unpaid $527,767 $90,446 EUR 1,101 EUR 2,569

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10. Significant disaster loss

None.

11. Significant events after the reporting period

None.

12. Other

1. Categories of financial instruments

Assets Financial asset measured at fair value through other comprehensive income Assets: Cash and cash equivalents (excluding cash on hand) Contract assets Notes and accounts receivable Other receivables Other financial assets -Non Current Sub-total Total Financial liabilities Liabilities: Short-term borrowings Notes and accounts payable Other payables Lease liabilities Total	2023.12.31	2022.12.31
	$2,574,187 991,673 537,601 1,957,586 19,306 13,686	$2,820,651 1,298,751 640,715 2,028,593 17,277 13,686
	3,519,852	3,999,022
	$6,094,039	$6,819,673
	2023.12.31	2022.12.31
	$1,950,094 1,571,441 781,984 420,619	$862,067 1,295,187 935,363 346,650
	$4,724,138	$3,439,267

2. Financial risk management objectives and policies

The Group 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 policy and risk appetite.

The Group has established appropriate policies, procedures and internal controls

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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.

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 exposure to the risk of changes in foreign exchange rates relates primarily to the Group operating activities (when revenue or expense is denominated in a different currency from the Group 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 profit is performed on significant monetary items denominated in foreign currencies as of the end of the reporting period. The Group foreign currency risk is mainly related to the volatility in the exchange rates for USD.

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 exposure to the risk of changes in market interest rates relates primarily to the Group bank borrowings with fixed interest rates and variable interest rates.

The interest rate sensitivity analysis is performed on item exposure to interest rate risk as at the end of the reporting period, including borrowings with

272

variable interest rates and interest rate swaps. At the reporting date, a change of 10 basis points of interest rate in a reporting period could cause the profit.

The sensitivity analysis of the change in the relevant risks from January 1 to December 31, 2023 and 2022 before tax is as follows:

January 1 to December 31, 2023

Main Risk Foreign currency risk Interest rate risk	Extent of variation NTD/USD exchange rate +/-1% Market rate +/− 10 basis points	Profit or loss sensitivity Equity sensitivity +/-$(1,049 $ - -/+ $1,950 $ -

January 1 to December 31, 2022

Main Risk Foreign currency risk Interest rate risk	Extent of variation NTD/USD exchange rate +/-1% Market rate +/− 10 basis points	Profit or loss sensitivity Equity sensitivity +/-$(2,525 $ - -/+ $862 $ -

Equity price risk

The fair value of the Group listed and unlisted equity securities is susceptible to market price risk arising from uncertainties about the future values of the investment securities. The Group 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. 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 board of directors reviews and approves all equity investment decisions.

Shares of listed companies are included in investments in other comprehensive income under fair value equity. When the price of the securities of equity increased/decreased by 1%, the impact on the Group investment in equity on December 31, 2023 and 2022 was $-15,328 thousand and $18,167 thousand, respectively.

4. Credit risk management

Credit risk is the risk that the counterparty will not meet its obligations under a contract, leading to a financial loss. The Group is exposed to credit risk from operating activities (primarily for contract assets, accounts and notes receivables

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and lease receivables) and from its financing activities, including bank deposits and other financial instruments.

Customer credit risk is managed by each business unit subject to the Group’s established policy, procedures and control relating to customer credit risk management. Credit limits are established for all customers based on their financial position, rating from credit rating agencies, historical transaction experience, prevailing economic condition and the Group’s internal rating criteria etc. Certain customers’ credit risks will also be managed by taking credit-enhancing procedures, such as advance sales receipts.

As of December 31, 2023 and December 31, 2022, the percentages of contract assets and receivables of the Group's top ten customers to the Group's contract assets and receivable balances were 31.80% and 24.99%, respectively. The credit concentration risk of the remaining contract assets and accounts receivable is relatively insignificant.

Credit risk from balances with banks, fixed-income securities and other financial instruments is managed by the Group treasury in accordance with the Group 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 ratings and with no significant default risk. Consequently, there is no significant credit risk for these counterparties.

5. Liquidity risk management

The Group 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.

274

Non-derivative financial instruments

2023.12.31 Short-term borrowings Notes and accounts payable Other payables Lease liabilities (note) 2022.12.31 Short-term borrowings Notes and accounts payable Other payables Lease liabilities (note)	< 1year $1,988,350 1,571,441 781,984 52,392 $883,936 1,295,187 935,363 43,961	2 to 3years $ - - - 102,528 $ - - - 89,510	4 to 5years $ - - - 47,606 $ - - - 73,159	> 5years Total $ - $1,988,350 - 1,571,441 - 781,984 288,528 491,054 $ - $883, 936 - 1,295,187 - 935, 363 197,717 404,347

Note: The following table provides further information on the maturity analysis of liabilities:

2023.12.31 2022.12.31		LeaseExpirationperiod of Liabilities	LeaseExpirationperiod of Liabilities	LeaseExpirationperiod of Liabilities	LeaseExpirationperiod of Liabilities
	< 1year	2-5 years	6-10 years	11-15 years	> 15 years	Total
	$52,392 43,961	$150,134 162,669	$60,524 26,719	$60,524 26,718	$167,480 144,280	$491,054 404,347

Derivative financial instruments

None.

6. Reconciliation of liabilities arising from financing activities

Adjustment information of liabilities on December 31, 2023:

2023.01.01 Cash flows Non-cash changes 2023.12.31	Short-termborrowings	Leaseliabilities	Total
	$862,067 1,088,027 - $1,950,094	$346,650 (50,014) 123,983	$1,208,717 1,038,013 123,983
		$420,619	$2,370,713

Adjustment information of Liabilities on December 31, 2022:

Short-termborrowings	Leaseliabilities	Total
$890,802	$174,804	$1,065,606

2022.01.01

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Cash flows Non-cash changes 2022.12.31	(28,735) -	(35,311) 207,157	(64,046) 207,157
	$862,067	$346,650	$1,208,717

7. Fair value of financial instruments

• (1) Valuation techniques and assumptions applied for fair value

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 receivable, accounts payable and other current liabilities approximate their fair value due to their short maturities.

• B. The fair value of assets and liabilities, which are traded in an active market with standard terms and conditions, is determined by reference to quoted market prices (e.g., listed equity securities and bonds).

• C. The fair value of equity instruments without market quotations (including unquoted public company and private company equity securities) is estimated using the market method valuation techniques based on parameters such as prices based on market transactions of identical or comparable entities, equity instruments and relevant information of other (e.g., inputs such as discount for lack of marketability, P/E ratio of similar entities and price-book ratio of similar entities).

• D. The 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 instruments (such as yield curves published by the TPEx, average prices for commercial paper and credit risk, etc.)

276

• (2) Fair value of financial instruments measured at amortized cost

The carrying amount of the Group financial assets measured at amortized cost approximates their fair value.

• (3) Fair value measurement hierarchy for financial instruments

Please refer to Note 12 (9) for the fair value measurement hierarchy for the financial instruments of the Group.

8. Derivatives

As of December 31, 2023 and December 31, 2022, the Group did not hold any derivative instruments for trading.

9. Fair value hierarchy

(1) Definition of fair value hierarchy

All fair value disclosures required by assets and liabilities are based on the lowest level input that is significant to the overall fair value. Level 1, 2 and 3 inputs are described as follows:

• Level 1 – Quoted prices (unadjusted) in active markets for identical assets or liabilities available 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) Hierarchy information of fair value

The Group does not have non-repetitive fair value assets, and the fair value

277

hierarchy information of repetitive assets and liabilities is listed as follows:

Fair value Assets: Through Other comprehensive income, equity instruments measured at fair value through other comprehensive income Fair value Assets: Through Other comprehensive income, equity instruments measured at fair value through other comprehensive income			2023.12.31
		Level 1 $1,532,824	Level 2 Level 3 Total $ - $1,041,363 $2,574,187 2022.12.31 Level 2 Level 3 Total $ - $1,004,000 $2,820,651
		Level 1 $1,816,651	Level 2 $ -

Transfers between Level 1 and Level 2 during the period

During the years ended December 31, 2023 and 2022, there was no transfer between Level 1 and Level 2 fair value measurements of fair value assets and liabilities.

Reconciliation for fair value measurements in Level 3 of the fair value

hierarchy

Reconciliation for fair value measurements in Level 3 of the fair value hierarchy for the Group fair value assets and liabilities from the beginning of the period to equity at end of period is as follows:

278

2023.01.01 Total gains and losses recognized in 2023: Recognition under other comprehensive income (reported as “unrealized gain (loss) on valuation of investments in equity through fair value”) Reclassified 2023.12.31 2022.01.01 Total gains and losses recognized for the year ended December 31, 2022: Recognition under other comprehensive income (reported as “unrealized gain (loss) on valuation of investments in equity through fair value”) Reclassified Proceeds from capital reduction Acquisition 2022.12.31	Assets
	Through other comprehensive income according tofairvalue
	Stock
	$1,004,000 41,009 (3,646)
	$1,041,363
	Assets
	Through other comprehensive income according tofairvalue
	Stock
	$963,033 (130,260) 187,619 (21,600) 5,208
	$1,004,000

Information on significant unobservable inputs to valuation

Description of significant unobservable inputs to the valuation of fair value used by the Group repetitive assets at fair value level 3 is as follows:

December 31, 2023:

279

Assets: Financial asset measured at fair value through other comprehensive income other comprehensive income stocks and others December 31, Assets: Financial asset measured at fair value through other comprehensive income other comprehensive income stocks and others	Valuation techniques Market approach 2022: Valuation techniques	Valuation techniques	Valuation techniques	Significant Significant unobservable inputs	Significant Significant unobservable inputs	Quantitative information	Quantitative information	Inputs and Inputs Relationship between inputs and fair value	Inputs and Inputs Relationship between inputs and fair value	Sensitivity analysis of the relationship between inputs and fair value relationship
				Discount for lack of marketability 10%-30% Significant Significant unobservable inputs Quantitative information				The higher the discount for lack of marketability, the lower the fair value of the stocks 10% increase (decrease) in the discount for lack of marketability would result in increase (decrease) in the Group equity by $104,136 thousand. Inputs and Inputs Relationship between inputs and fair value Sensitivity analysis of the relationship between inputs and fair value relationship
	Market approach		Discount for lack of marketability		10%-30%		The higher the discount for lack of marketability, the lower the fair value of the stocks		10% increase (decrease) in the discount for lack of marketability would result in increase (decrease) in the Group equity by $100,400 thousand.

The valuation process used for fair value measurements is categorized within Level 3 of the fair value hierarchy

The Group 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 analyzes the movements in the values of assets and liabilities which are required to be re-measured or re-assessed as per the Group

280

accounting policies at each reporting date.

• (3)Hierarchical information of the Group assets and liabilities not measured at fair value but is subject to fair value disclosure

Assets with fair value disclosed only: Investment properties (Notes 6.8) Investments accounted for using equity method (Note 6 (6)) Assets with fair value disclosed only: Investment properties (Notes 6.8) Investments accounted for using equity method (Note 6 (6))		2023.12.31	2023.12.31
	Level 1 $ - 2,442,659	Level 2 Level 3 Total $ - $1,295,658 $1,295,658 - - 2,442,659 2022.12.31
	Level 1 $ - 2,438,606	Level 2 $ - -	Level 3 Total $1,295,658 $1,295,658 - 2,438,606

10. Significant assets and liabilities denominated in foreign currencies assets and liabilities

Information regarding the significant assets and liabilities denominated in foreign currencies is listed below:

Assets Monetary item: USD Financial liabilities Monetary item: USD		2023.12.31	2023.12.31	Unit: NT $thousands 2022.12.31	Unit: NT $thousands 2022.12.31
	Foreign currencies $6,459 $9,832	Exchange Rate 30.6450 30.8050	NTD $197,942 $302,847	Foreign currencies $5,693 $13,879	Exchange Rate NTD 30.6700 $174,592 30.7700 $427,052

Due to the wide variety of functional currencies of the Group standard-alone, it is not possible to disclose the exchange gains and losses information of

281

monetary financial assets and financial liabilities by each foreign currency with significant impact. The Group foreign exchange gains for the years 2023 and 2022 are NT $18,507 thousand and NT $32,781 thousand, 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 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 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. Note disclosures

1. Information at significant transactions

2. (1) Financing provided to others: None.

3. (2) Endorsements/guarantees provided: None.

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(3) Marketable securities held:

Holding Company	Type of Securities	Securities Company Name	Relationship with the Securities Issuer	Account		EndingBalance	EndingBalance	EndingBalance	EndingBalance
					Shares	Carrying Amount of Trade Receivables	Share-hold ing Ratio	Fair Value	Remark
Feng Hsin Steel Co., Ltd. Feng Hsin Steel Co., Ltd.	Stock Stock	Formosa Taffeta Co., Ltd. China steel Corporation Tung Ho steel Enterprise Corporation Cathay Real Estate Development Co., Ltd. Yung Shin Global Holding Corporation Chien Shing Harbor Service Fengshuo Investment Co., Ltd. Gwo Uei Metals Industry Co., Ltd. Kuo Hui Iron & Steel Co., Ltd. China Trade and Development Corporation Pro-Ascentek Investment Corporation Wen-Shan Enterprise	- - - - - - - - - - - -	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- non-current Financial assets at fair value through other comprehensive income- non-current Financial assets at fair value through other comprehensive income- non-current Financial assets at fair value through other comprehensive income- non-current Financial assets at fair value through other comprehensive income- non-current Financial assets at fair value through other comprehensive income- non-current Financial assets at fair value through	3,162,000 21,090,000 4,546,070 3,861,000 1,923,000 8,737,696 3,640,000 3,800,000 3,800,000 1,925 10,000,000 15,840,000	$79,682 569,430 321,407 70,077 89,420	0.19% 0.13% 0.62% 0.33% 0.72% 9.96% 18.20% 19.00% 19.00% - 8.33% 18.00%	$79,682 569,430 321,407 70,077 89,420 $402,808 215,653 52,457 33,355 25 101,065 123,397
						$1,130,016
						$402,808 215,653 52,457 33,355 25 101,065 123,397

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==> picture [554 x 253] intentionally omitted <==

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

Ending Balance
Relationship
Carrying
Holding Type of Securities with the
Account Amount of Share-hold
Company Securities Company Name Securities Shares Fair Value
Trade ing Ratio
Issuer
Receivables
Co., other comprehensive income-
non-current
Great Stock Shihlien china holding Financial assets at fair value through 27,033,543 515,411 4.87% 515,411
fortune co.,ltd. other comprehensive income-
holding non-current
limited
Total $1,444,171
Remark
----- End of picture text -----

• (4) Marketable securities acquired or disposed of at costs or prices of at least NT $300,000,000 or 20 percent of the paid-in capital: None.

• (5) Acquisition of individual real estate at costs of at least NT $300,000,000 or 20 percent of the paid-in capital: None.

• (6) Disposal of individual real estate at prices of at least NT $300,000,000 or 20 percent of the paid-in capital: None.

• (7) Total purchases from or sales to related parties amounting to at least NT $100,000,000 or 20 percent of the paid-in capital: None.

• (8) Receivables from related parties amounting to at least NT $100,000,000 or 20 percent of the paid-in capital: None.

• (9) Trading in derivative instruments: None.

• (10) Other: Business relationships and significant transactions between the parent company and subsidiaries and between subsidiaries (amounting to NT $100,000,000 or more than 20 percent of the paid-in capital): None.

2. Information on investees

Information on investees over which the Company has significant influence or control, directly or indirectly, is as follows (excluding investees in Mainland China):

Name of Investor	Name of Investee	Location	Main Business Item	Original Investment Amount	Ending Balance	Investee Company	Investment Income (Loss)	Remark

284

				Ending Balance	End of Last Year	Shares	Ratio	Carrying Amount of Trade Receivables	Current Profit (Loss)	Recognized in the Current Period
Feng Hsin Steel Co., Ltd.	Great fortune holding limited	Offshore Chamber, P.O. Box217, Apia, Samoa	General investment	$971,367	$971,367	31,406,834	100.00 %	$516,502	$(14)	$(14)	Subsidiaries
Feng Hsin Steel Co., Ltd.	Taiwan Steel Union Co., Ltd.	No. 36, Gongbei 1st Road, Changhua Coastal Industrial Park, Changhua County	General business and hazardous business waste disposal, non-ferrous metals (zinc oxide), non-metallic mineral products manufacturing and trading business	$470,164	$454,644	26,666,587	23.97%	$985,686	$504,622	$120,915	Associates
Feng Hsin Steel Co., Ltd.	Fong Yu Resource s Co., Ltd.	No. 18, Xibin 5th Road, Shengang Township, Changhua County	General business and hazardous business waste disposal	$584,878	$584,878	58,161,000	29.08%	$540,593	$(55,059)	$(16,011)	Associates

Note: The recognition of the investment profit or loss of each company has been included in the investment

profit or loss of the subsidiary respectively. It was eliminated in the consolidated financial statements.

3. Information on investments in mainland China

• (1) The Group invests in mainland China indirectly through Great fortune holding limited.

The relevant information is as follows:

Investee in Mainland China Company name	Main Busines s Item	Paid-in capital Capital	Method of Investment	Accumulated Investment Amount of Remittance from Taiwan-Beginning of the Current Period	Remittance or Investment Amount Recovered	Remittance or Investment Amount Recovered	From Taiwan, End of Period Accumulated Investment Remitted Amount	Invested Company Company Current Profit And Loss	% Ownership of Direct or Indirect Investment	Investment Income (Loss) Recognized	Ending Balance of Investment Book Value (Note 1)	Repatriated Income by the End of the Period
					Remitted	Release
Shihlien Chemical	Sodium carbona	USD 800,000,000	Investment in Mainland	$838,227 (USD 27,352,800)	-	-	$838,227 (USD 27,352,800)	Note 1	2.83%	$ -	$488,816	$ -

285

Investee in Mainland China Company name	Main Busines s Item	Paid-in capital Capital	Method of Investment	Accumulated Investment Amount of Remittance from Taiwan-Beginning of the Current Period	Remittance or Investment Amount Recovered	Remittance or Investment Amount Recovered	From Taiwan, End of Period Accumulated Investment Remitted Amount	Invested Company Company Current Profit And Loss	% Ownership of Direct or Indirect Investment	Investment Income (Loss) Recognized	Ending Balance of Investment Book Value (Note 1)	Repatriated Income by the End of the Period
					Remitted	Release
Industrial Jiangsu Co.	te, which is the ingredie nt of glass producti on		China companies through a company invested and established in a third region
Huaian Shihyuan Brine Co., Ltd.	Brine, which is the ingredie nt of sodium carbona te	USD 32,000,000	Investment in Mainland China companies through a company invested and established in a thirdregion	$45,563 (USD 1,486,800)	-	-	$45,563 (USD 1,486,800)	Note 1	3.94%	$ -	$26,595	$ -

Accumulated outflow of investment from Taiwan to Mainland China at the end of the period (Note 3)	Ministry of economic affairs investment commission, MOEA investment amount (Note 3)	Upper limit on investment in mainland china according to ministry of economic affairs investment commission,MOEA
		Thelender’snet accounts value×60%
$883,790 (USD 28,839,600)	$883,790 (USD 28,839,600)	$13,157,530 (Note2)

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: According to Ministry of Economic Affairs Investment Commission, MOEA, the Group investment in mainland China is limited to 60 percent of the net value.

• Note 3: Initial investment amounts denominated in foreign currencies are translated into New Taiwanese Dollars using the spot rates at the financial statement reporting date.

286

• (2) 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

Shares Name of major shareholders	Shares Held	Shareholding
Cheng ChuangInvestment Co.,Ltd.	31,593,000	5.43%

14. Segment information

1. The Group revenue is mainly derived from manufacturing, processing and trading of various angle iron, round iron, flat iron and other products. The management has determined that the Group is a single operating segment.

2. Geographical information

3. (1) Revenue from external customers:

Taiwan Export sales-Asia Export sales-Other total	January 1, 2023~ December31,2023	January 1, 2022~ December31,2022
	$31,597,182 1,643,122 1,641,719	$34,942,560 1,913,509 1,748,860
	$34,882,023	$38,604,929

The revenue information above is based on the location of the customers.

• (2) Non-current assets:

Taiwan	2023.12.31 $10,982,509	2022.12.31 $10,431,142

3. Information about major customers

The Group did not have any single customer, sales revenue, that accounted for more than 10% of the net income in the income statement in 2023 and 2022.

287

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 2023 and 2022, and the related standalone statements of comprehensive income, changes in equity and cash flows for the years ended 31 December 2023 and 2022, and notes to the standalone financial statements, including the summary of significant accounting policies (together “the standalone 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 standalone financial statements referred to above present fairly, in all material respects, the standalone financial position of the Company as of 31 December 2023 and 2022, and their standalone financial performance and cash flows for the years ended 31 December 2023 and 2022, in conformity with the requirements of the Regulations Governing the Preparation of Financial Reports by Securities Issuers .

Basis for Opinion

We conducted our audits in accordance with the Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants and the Standard on Auditing of 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 2023 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.

288

Valuation for inventories

As of 31 December 2023, the Company’s net inventories amounted to NT$7,786,837 thousand which represented 29% 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 –Referring 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$985,686 thousand and NT$1,031,402 thousand, representing 4% of the standalone total assets as of 31 December 2023 and 2022, respectively. The related shares of profits from the associates and joint ventures under the equity method amounted to NT$120,915 thousand and NT$231,867 thousand, representing 4% and 6% of the standalone net income before tax for the years ended 31 December 2023 and 2022, respectively; and the related shares of other comprehensive income from the associates and joint ventures under the equity method amounted to NT$141 thousand and NT$413 thousand, both representing 0% of the standalone other comprehensive income for the years ended 31 December 2023 and 2022, respectively.

289

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 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 the Standard on Auditing of 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.

290

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

1. 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.

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

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

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

5. 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.

6. 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.

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.

291

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 2023 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.

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/s/Chen, Ming Hung

/s/Tu, Chin Yuan

Ernst & Young, Taiwan

29 February 2024

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.

292

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293

Feng Hsin Steel Co., Ltd.

Standalone Balance Sheets (continued) December 31, 2023 and December 31, 2022

Unit: NT $thousand

					Unit: NT $thousand	Unit: NT $thousand
Liabilities and Equity			December 31,	2023	December 31, 2022
Code	Item	Notes	Amount	%	Amount	%
2100 2130 2150 2170 2200 2230 2280 2300 21xx 2570 2580 2640 2645 25xx 2xxx 31xx 3100 3110 3200 3300 3310 3320 3350 33xx 3400 3420 3453 3400 3xxx	Current liabilities Short-term loan Contract liabilities-current Notes payable Accounts payable Other payables Current income tax liabilities Lease liabilities-current Other current liabilities Subtotal of current liabilities Non-current liabilities Deferred income tax liabilities Lease liabilities-non-current Net defined benefit Liabilities-non-current Deposits received Subtotal of non-current liabilities Total liabilities Equity attributed to the owner of parent company Capital stock Capital stock-common shares Capital surplus Retained earnings Legal reserve Special reserve Unallocated earnings Subtotal of retained earnings Other equity Unrealized gain or loss on financial assets at fair value through other comprehensive income Gains (losses) on hedging instruments, associates and joint ventures accounted for using the equity method Subtotal of other equity Total equity Total liabilities and equity	IV, VI.11 IV IV and VI.16 IV and VI.20 IV and VI.16 IV and VI.12 VI.13 VI.13 VI.13 IV IV and VI.10 VII IV and VI.14	$1,950,094 77,630 452 1,570,989 781,984 278,418 48,199 1,999	7 - - 6 3 1 - -	$862,067 83,553 333 1,294,854 935,363 316,379 41,116 1,202	4 - - 5 4 1 - -
			4,709,765	17	3,534,867	14
						- 1 - -
			29,544	-	28,300
			372,420 5,730 668	2 - -	305,534 - 31
			408,362	2	333,865	1
			5,118,127	19	3,868,732	15
			5,815,994 454,032 5,378,751 198,786 10,137,605	21 2 20 1 37	5,815,994 453,308 5,068,002 - 10,646,924	23 2 20 - 41
			15,715,142	58	15,714,926	61
			(55,962) 11	- -	(198,581) (205)	(1) -
			(55,951)	-	(198,786)	(1)
			21,929,217	81	21,785,442	85
			$27,047,344	100	$25,654,174	100

(Please refer to Note to Standalone Financial Statements)

294

Feng Hsin Steel Co., Ltd. Standalone Statements of Comprehensive Income January 1 to December 31, 2023 and 2022

					Unit: NT $thousand	Unit: NT $thousand
Code	Item	Notes	FY23		FY22
			Amount	%	Amount	%
4100 5000 5900 6000 6100 6200 6300 6450 6900 7000 7100 7010 7020 7050 7060 7900 7950 8200 8300 8310 8311 8316 8320 8349 8300 8500 9750 9850	Operating revenue Operating cost Gross profit Operating expenses Selling expenses Administrative expenses R&D expenses Expected credit losses/(gains) Total operating expenses Operating income Non-operating revenue and expenditure Interest revenue Other revenue Other gains and losses Financial cost Shares of associates and joint ventures accounted for using equity method Total non-operating revenue and expenditure Net income Income tax expenses Current net profit Other comprehensive income Items not re-classified into income Remeasurement of defined benefit plans Equity instrument at fair value through other comprehensive income Unrealized valuation gain or loss on investments Associates and joint ventures accounted for using Equity method Other comprehensive income Items not re-classified into income Amendments to Item in relation to income tax that will not be reclassified to profit or loss Other comprehensive income for current period (net after tax) Total current comprehensive income EPS (NT$) Basic EPS Diluted EPS	IV and VI.14 IV,17 and VII VI.17 VI.15 IV and VI.18 VI.18 VI.18 VI.6 IV and VI.20 VI.19 IV and VI.21	$34,882,023 (31,326,299) 3,555,724 (414,505) (387,666) (43,170) - (845,341) 2,710,383 5,919 134,667 (13,133) (40,805) 104,890 191,538 2,901,921 (526,430) 2,375,491 (108,746) 189,998 411 21,667 103,330 $2,478,821 $4.08 $4.06	100 (90) 10 (1) (1) - - (2) 8 - - - - - - 8 (2) 6 - 1 - - 1 7	$38,604,929 (34,424,330)	100 (89)
					4,180,599	11
					(442,334) (388,501) (46,517) 1,187	(1) (1) - -
					(876,165)	(2)
					3,304,434	9
					2,088 237,170 23,765 (20,327) 233,488	- 1 - - -
					476,184	1
					3,780,618 (707,223)	10 (2)
					3,073,395	8
					63,749 (500,360) 3,775 (13,505)	- (1) - -
					(446,341)	(1)
					$2,627,054	7
					$5.28
					$5.24

(Please refer to Note to Standalone Financial Statements)

295

Feng Hsin Steel Co., Ltd.

Standalone Statements of Changes in Shareholders' Equity January 1 to December 31, 2023 and 2022

							Unit: NT $thousand	Unit: NT $thousand	Unit: NT $thousand
	Item	Capital stock	Capital surplus		Retained earnings		Other equityItem.		Total equity
				Legal reserve	Special reserve	Unallocated earnings	~~Unrealized gains~~ (losses) from financial Fair value transactions through Other comprehensive income	Gains and losses on hedging instruments
Code		3100	3200	3310	3320	3350	3420	3450	3XXX
A1. B1. B5. B17 C7 C17 D1 D3 D5 Q1 Z1 A1. B1. B3. B5. C7 C17 D1 D3 D5 Q1 Z1	Balance at January 1, 2022 2021 surplus Appropriation and distribution Provision of legal reserve Common share cash dividend Reversal of special reserve Changes in other capital surplus Changes in associates and joint ventures under the equity method Other changes in capital surplus 2022 net profit 2022 Other comprehensive income Total current comprehensive income Disposal of equity instrument at fair value through other comprehensive income Balance as of December 31, 2022 Balance at January 1, 2023 2022 surplus Appropriation and distribution Provision of legal reserve Provision of special reserve Common share cash dividend Changes in other capital surplus Changes in associates and joint ventures under the equity method Other changes in capital surplus Net profit for 2023 2023 Other comprehensive income Total current comprehensive income Disposal of equity instrument at fair value through other comprehensive income Balance at December 31, 2023	$5,815,994	$452,514 794	$4,630,509 437,493 - $5,068,002	$83,991 (83,991) - $-	$10,800,945 (437,493) (2,907,997) 83,991 (34,209) 3,073,395 51,329	$318,742 (500,360)	$(2,895) 2,690	$22,099,800 - (2,907,997) - (34,209) 794 3,073,395 (446,341)
		-	-			3,124,724	(500,360)	2,690	2,627,054
						16,963	(16,963)		-
		$5,815,994	$453,308			$10,646,924	$(198,581)	$(205)	$21,785,442
		$5,815,994							$21,785,442 - - (2,326,398) (9,317) 669 2,375,491 103,330
			$453,308 55 669	$5,068,002 310,749 - $5,378,751	$ - 198,786 - $198,786	$10,646,924 (310,749) (198,786) (2,326,398) (9,372) 2,375,491 (86,884)	$(198,581) 189,998	$(205) 216
		-	-			2,288,607	189,998	216	2,478,821
						47,379	(47,379)		-
		$5,815,994	$454,032			$10,137,605	$(55,962)	$11	$21,929,217

(Please refer to Note to Standalone Financial Statements)

296

Feng Hsin Steel Co., Ltd.

Standalone Statements of Cash Flows

January 1 to December 31, 2023 and 2022

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

Unit: NT $thousand
Code Item FY23 FY22
AAAA Cash flow from operating activities::
A10000 Current income before tax $2,901,921 $3,780,618
A20000 Adjustment::
A20010 Adjustments to reconcile profit (loss)::
A20100 Depreciation expenses 1,156,509 1,269,953
A20200 Amortization 2,426 2,500
A20300 Expected credit gain - (1,187)
A20900 Interest expenses 40,805 20,327
A21200 Interest revenue (5,919) (2,088)
A21300 Dividend revenue (110,393) (206,214)
A22300 Share of profit of associates and joint ventures accounted for using equity method (104,890) (233,488)
A22500 Losses on disposals of property, plant and equipment 18,085 4,812
A30000 Changes in operating activities related to Current assets/Liabilities:
A31125 Decrease (increase) in contract assets-current 103,114 (179,204)
A31130 Increase in notes receivable (4,666) (1,752)
A31150 Decrease(increase) in accounts receivable 76,342 (110,540)
A31180 Decrease in other receivable 3,162 33,961
A31200 Decrease (increase) in inventories (1,556,237) 1,165,761
A31230 (Increase) decrease in Prepayment (87,011) 167,626
A31240 Increase in other current assets (10,029) (15,964)
A32125 Decrease in contract liabilities-current (5,923) (87,504)
A32130 Increase in notes payable 119 333
A32150 Increase (decrease) in accounts payable 276,135 (302,870)
A32180 Decrease in other payables (154,138) (161,353)
A32230 Increase(decrease) in other current liabilities 797 (1,058)
A32240 Decrease in net defined benefit liabilities (103,016) (98,934)
A33000 Cash inflow from operations 2,437,193 5,043,735
A33100 Interest collected 5,918 2,114
A33200 Dividends collected 116,693 199,914
A33300 Interest paid (36,384) (17,053)
A33500 Income tax paid (564,304) (1,028,822)
AAAA Cash flow from operating activities 1,959,116 4,199,888
----- End of picture text -----

(Please refer to Note to Standalone Financial Statements)

297

Feng Hsin Steel Co., Ltd.

Standalone Statements of Cash Flows (continued) January 1 to December 31, 2023 and 2022

		Unit: NT $thousand	Unit: NT $thousand
Code	Item	FY23	FY22
BBBB B00010 B00020 B00030 B01800 B02700 B02800 B06800 B07600 BBBB CCCC C00100 C03000 C04020 C04500 CCCC EEEE E00100 E00200	Cash flow 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 Refund of capital decrease from financial assets at fair value through other comprehensive income Acquisition of investment under the equity method Acquisition of property, plant and equipment Disposal of property, plant and equipment Increase in other non-current assets Dividends collected Net cash outflow from investing activities Cash flow from financing activities:: Increase(decrease) in short-term loan Increase in guarantee deposits received Payment of lease liabilities Cash dividends Net cash outflow from financing activities (Decrease) increase in Cash and cash equivalents Balance of cash and cash equivalents, beginning Balance of cash and cash equivalents, ending	- 424,972 - (15,520) (1,528,907) 30 (31,986) 172,975 (978,436) 1,088,027 637 (50,014) (2,326,398) (1,287,748) (307,068) 1,298,576 $991,508	(113,885) 289,909 21,600 (56,882) (1,387,665) 7,091 (27,203) 117,281 (1,149,754) (28,735) - (35,311) (2,907,997) (2,972,043) 78,091 1,220,485 $1,298,576

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(Please refer to Note to Standalone Financial Statements)
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298

Feng Hsin Steel Co., Ltd.

Note to Standalone Financial Statements

For the years ended December 31, 2023 and 2022 (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

6. Company History

Feng Hsin Steel Co., Ltd. (hereinafter referred to as "the Company") was established in 1969, originally engaged in the manufacturing, processing and trading of various triangle iron, angle iron, round iron, flat iron, iron plate, etc., along with the operation and investment of various incidental businesses. June 1989 The No. 2 Steel Rolling Mill was completed and put into operation, and officially entered the field of special steel to produce carbon steel and special steel. The Company No. 2 Steel Mill completed a hot test in 1997 and officially produced the special steel billet required for No. 2 Steel Rolling Mill and No. 1 Steel Rolling Mill, in order to control quality and reduce costs. The Company shares were approved for listing by the competent authority in 1991 and were officially listed on the Taiwan Stock Exchange on May 25, 1992. The registered office and the main business location are No. 998, Sec. 1, Jiahou Rd., Houli Dist., Taichung City.

7. Date and Procedures of Approval of the Financial Reports

The standalone financial statements of the Company (“the Company “) for the years ended December 31, 2023 and 2022 were authorized for issue by the Board of Directors on February 29, 2024.

8. Application of New, Amended and Revised Standards and Interpretations

1. Changes in accounting policies resulting from the initial application of International Financial Reporting Standards.

The Company applied the International Accounting Standards (IAS), IFRIC Interpretations (IFRIC), and Statement on Internal Control (SIC) endorsed and issued by the Financial Supervisory Commission beginning on or after January 1, 2023. The adoption of these new standards and amendments had no material impact on the Company .

1. Standards or interpretations issued, revised or amended, by the International Accounting Standards Board (IASB) which are endorsed by the Financial Supervisory Commission (FSC), but not yet adopted by the Company as of the end of the reporting period are listed below.

299

Items	New, Revised or Amended Standards and Interpretations	Effective Date issued by IASB
1	Classification of Liabilities as Current or Non-current – Amendments to IAS 1	January 1, 2024
2	Lease Liability in a Sale and Leaseback – Amendments to IFRS 16	January 1, 2024
3	Non-current Liabilities with Covenants – Amendments to IAS 1	January 1, 2024
4	Supplier Finance Arrangements – Amendments to IAS 7 and IFRS 7	January 1, 2024

• (5) Classification of Liabilities as Current or Non-current – Amendments to IAS 1

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.

• (6) Lease Liability in a Sale and Leaseback – Amendments to IFRS 16

The amendments add seller-lessees’ additional requirements for the sale and leaseback transactions in IFRS 16, thereby supporting the consistent application of the standard.

• (7) Non-current Liabilities with Covenants – Amendments to IAS 1

The amendments improved the information companies provide about long-term debt with covenants. The amendments specify that covenants to be complied with within twelve months after the reporting period do not affect the classification of debt as current or non-current at the end of the reporting period.

• (8) Supplier Finance Arrangements – Amendments to IAS 7 and IFRS 7

The amendments introduced additional information on supplier finance arrangements and added disclosure requirements for such arrangements.

The abovementioned standards and interpretations were issued by the International Accounting Standards Board (IASB) and endorsed by the Financial Supervisory Commission (FSC) and became applicable for annual periods

300

beginning on or after January 1, 2024. The remaining standards and interpretations have no material impact on the Company.

1. Standards or interpretations issued, revised or amended, by the International Accounting Standards Board (IASB) which are not endorsed by the Financial Supervisory Commission (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 byIASB
1	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 orJoint Ventures	To be determined by IASB
2	IFRS17“Insurance Contracts”	January1,2023
3	Lackof Exchangeability– Amendments toIAS21	January1,2025

• (4) 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.

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(5) 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 fulfillment cash flows and the contractual service margin. 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 2020 and 2021. The amendments include deferral of the date of initial application of IFRS 17 by two years to annual beginning on or after January 1, 2023 (from the original effective date of January 1, 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. This standard will replace the transitional standard (i.e. International Financial Reporting Standards 4 “Insurance Contract”) upon going into effect.

(6) Lack of Exchangeability – Amendments to IAS 21

These amendments specify whether a currency is exchangeable into another currency and, when it is not, to determine the exchange rate to use and the disclosures to provide. The amendments are applicable for annual periods beginning on or after January 1, 2025.

The abovementioned standards and interpretations issued by IASB have not yet been endorsed by FSC at the date when the Company 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

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4. Statement of compliance

The standalone financial statements of the Company for the years ended December 31, 2023, and 2022 have been prepared in accordance with Regulations Governing the Preparation of Financial Reports by Securities Issuers.

5. 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.

6. Foreign currency transactions

The Company 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. 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

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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:

• (4) Exchange differences, arising from foreign currency borrowings for the acquisition of assets that meet the requirements, are treated as an adjustment to interest costs and capitalized as part of the cost of the borrowing for assets.

• (5) Foreign currency items falling under the scope of International Financial Reporting Standards (IFRS) 9 are accounted for in accordance with the “Financial Instruments” accounting policies.

• (6) When a reporting entity holds a portion of its net investment in foreign operations denominated in a foreign currency, any resulting exchange differences are initially recognized in other comprehensive income. Subsequently, upon disposal of the net investment, these exchange differences are reclassified from equity to the income statement.

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.

7. Translation of Foreign Currency Financial Statements

Each entity in the Company determines its own functional currency and items included in the financial statements of each entity are measured using that functional currency. 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

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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 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.

8. Classification of current and non-current assets and liabilities

All assets that meet one of the following criteria are classified as current assets; otherwise, they are classified as non-current assets:

• a. The group expects to realize the assets in its normal operating cycle or intends to sell or consume them.

• b. Holding the assets primarily for trading.

• c. The group expects to realize the assets within twelve months after the reporting period.

• d. Cash or cash equivalents, except that the assets are restricted from being exchanged or used to settle liabilities at least 12 months after the reporting period.

All other assets are classified as non-current. A liability is classified as current when:

• (5) The group expects to settle liabilities in its normal operating cycle.

• (6) Holding the liabilities primarily for trading.

• (7) The liabilities are due to be settled within twelve months after the reporting period.

• (8) Liabilities do not have an unconditional right to defer settlement of the

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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 Company 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.

(2) Financial Instruments: Recognition and Measurement

The Company accounts for regular way purchases 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:

• i. The Company business model for managing the financial assets, and

• ii. The contractual cash flow characteristics of assets

Financial assets measured at amortized cost

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 the balance sheet as at the reporting date:

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• 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 derecognizing, amortizing process or recognizing 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:

• C. For purchased or originated credit-impaired financial assets, multiply the credit-adjusted effective interest rate by the amortized cost of the financial assets.

• D. For financial assets that are not purchased or originated credit-impaired financial assets but subsequently become credit-impaired financial assets, the company applies the effective interest rate to the amortized cost of the financial asset in accordance with assets.

Financial assets 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 business model for managing assets: collecting contractual cash flows and selling financial assets.

• 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 related to this type of financial asset is described as follows:

D. Before derecognition or reclassification, gains or losses are recognized in

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other comprehensive income, except for impairment gains or losses and foreign currency translation gains or losses, which are recognized in profit or loss.

• E. Upon derecognition, 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 (effective interest rate multiplied by the total carrying amount of the financial assets), except:

• (b) When a financial asset is purchased or originated credit-impaired, multiply the credit-adjusted effective interest rate by the amortized cost of the financial assets.

• (b) When the financial asset is not purchased, but subsequently becomes credit-impaired, the effective interest rate is multiplied by the amortized cost of the financial asset in subsequent reporting periods.

Besides, for certain equity investments within the scope of IFRS 9 that are 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 represent a recovery of part of the cost of investment.

(2) Impairment of 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 assets measured at amortized cost.

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

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• F. An unbiased and probability-weighted amount that is determined by evaluating a range of possible outcomes

• G. Time value of money

• H. 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 measured as follows:

• E. 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.

• F. At an amount equal to the lifetime expected credit losses: the credit risk on a financial asset has increased significantly since the initial recognition or a financial asset that is purchased or originated credit-impaired financial asset.

• G. 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.

• H. For lease receivables arising from transactions within the scope of IFRS 16, 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 Assets

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A financial assets is derecognized when:

• D. The rights to receive cash flows from the asset have expired.

• E. The Company has transferred the asset and substantially all the risks and rewards of the asset have been transferred

• F. The Company 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) Liabilities and Equity

Classification of 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



 An equity instrument refers to any contract that recognizes the remaining equity after deducting all liabilities from assets. the equity instrument issued by the Company is recognized at the amount obtained after deducting the direct issuance costs.



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

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

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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 canceled 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 Assets and Liabilities

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:

• (1) In the principal market for the asset or liability

• (2) 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 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 are 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 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 cost and net realizable value item by item.

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

Materials ─ Weighted average of actual procurements

Finished goods and work in process ─ Cost of direct materials and labor and a proportion of 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 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

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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 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 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 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 affect the Company 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 of the associate or joint venture on a pro-rata basis.

When the associate or joint venture issues new stock, and the Company 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 Capital Surplus or Retained Earnings 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

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reclassified to profit or loss on a pro-rata basis when the Company disposes of 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. 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:

• (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 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.

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 are 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 Office 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 from the derecognition of the asset is recognized in profit or loss.

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 Company 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

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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 are 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 Buildings	Useful Lives
	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 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 evaluates whether there are the following two factors throughout

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the period of use:

• (1) The right to obtain substantially all of the economic benefits from the use of the identified assets, and

• (2) 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 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, maximizing 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 for 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:

• (6) Fixed payments (including in-substance fixed payments), less any lease incentives receivable

• (7) Variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the commencement date

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

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• (9) The exercise price of a purchase option if the Company is reasonably certain to exercise that option

• (10) 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 amortized 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:

• (5) The amount of the initial measurement of the lease liability

• (6) Any lease payments made at or before the commencement date, less any lease incentives received

• (7) Any initial direct costs incurred by the lessee

• (8) 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 by 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

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liabilities in the balance sheet and separately presents lease-related interest expense and depreciation charge in the statements of 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.

Company as a lessor

At the 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 finance lease in its balance sheet and presents them as 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 a particular asset is required, the Company estimates the asset recoverable amount. If the result of the impairment test indicates that the carrying amount of the cash-generating unit to which assets or assets belong exceeds its recoverable amount, it is recognized as an impairment loss. An asset recoverable amount is the higher of an asset’s net fair value or its value in use.

At the end of each reporting period, the Company assesses whether there is any indication that the previously recognized goodwill Assets may no longer exist or

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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 groups of cash-generating units, to which goodwill belongs are tested for impairment annually at the same time, irrespective of whether there is any indication of impairment. If an impairment loss is required to be recognized, the impairment loss is first allocated to reduce the carrying amount of goodwill and then to the other assets other than goodwill pro rata on the basis of the carrying amount of each asset in the unit. Impairment losses under goodwill cannot be reversed in future periods for any reason.

Impairment loss and its reversal from continuing operations are recognized in profit or loss.

15. Revenue recognition

The Company revenue arising from contracts with customers is primarily related to the 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, probably, 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

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volume discounts.

The credit period for the Company 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 the 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 have 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 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.

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 arises.

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

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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. Retirement benefit plans

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 Company’s standalone financial statements.

For the post-employment benefit plan which is a defined contribution plan, the Company’s monthly employee pension contribution rate shall not be less than six percent of the employee’s monthly salary, and the amount allocated is recognized as the current expense.For post-employment benefit plans that are defined benefit plans, are presented as actuarial reports at the end of the annual reporting period in accordance with the projected unit credit method. Remeasurement of the net defined benefit liabilities (assets) includes any changes in the plan assets compensation and the impact of the assets cap, less the amount of net interest included in the net defined benefit liabilities (assets) and actuarial gains and losses. The remeasurements of the net defined benefit liabilities (assets) are recognized in other comprehensive income and immediately recognized in retained earnings. Past service costs are recognized in profit or loss on the earlier date of the plan amendment or curtailment, and:

(1) When the plan amendment or curtailment occurs, and

• (2) When 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, 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 tax

Tax expense (profit) refers to the aggregate amount related to current income tax and deferred income tax included in the determination of current profit and loss.

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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:

• (3) The initial recognition of goodwill, or the initial recognition of assets or liabilities resulting from a business combination transaction that does not affect either the accounting profit or taxable profit or loss at the time of the transaction and does not give rise to an equivalent taxable and deductible temporary difference at that time.

• (4) 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, probably, 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 taxable profit will probably be available against which the deductible temporary differences and the carry forward of unused tax credits and unused tax losses can be utilized, except:

• (3) 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

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neither the accounting profit nor taxable profit or loss.

• (4) 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 how the Company 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.

In accordance with the temporary exceptions of the "International Tax Reform-Pillar 2 Rule Template" (International Accounting Standards Amendment No. 12), the deferred tax assets and liabilities of pillar 2 income tax are not recognized, and their related information are not disclosed.

5. Critical Accounting Judgments and Key Sources of Estimation and Uncertainty

The preparation of the Company standalone financial statements requires 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 assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of the asset or liability affected in future periods.

1. Judgment

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

(3) Investment property

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 these portions could be sold separately, the Company accounts for the portions separately as investment properties and property, plant and equipment. If the portions cannot be sold separately, the property is classified as investment property in its entirety only if the owner-occupied portion is insignificant.

(4) Operating lease commitments-Company as lessor

The Company has entered 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

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.

(4) Revenue recognition-sales returns and discounts

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, probably, a significant reversal in the amount of cumulative revenue recognized will not occur. Please refer to Note 6 for more details.

(5) Income tax

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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 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'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 taxable profit will probably 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.

(6) 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 decline. 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. Details of Significant Accounts

1. Cash and cash equivalents

Cash on hand Demand deposits Total	2023.12.31 $926 990,582 $991,508	2022.12.31
		$930 1,297,646
		$1,298,576

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2. Financial assets at fair value through other comprehensive income -current

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	2023.12.31 $1,130,016 $402,808 525,952 $928,760	2022.12.31
		$1,485,055
		$331,596 488,589
		$820,185

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

Information on the Company holding of investments under other comprehensive income using fair value’s equity instruments for the years ended December 31, 2023 and 2022 is as follows:

Related to investments still held on the date of assets liabilities Related to investments derecognized in the current period Dividend revenue recognized in the current period	January 1, 2023~ December31,2023 $108,520 1,873 $110,393	January 1, 2022~ December31,2022
		$201,500 4,714 $206,214

On August 12, 2022, Wen Shan Resort Corporation, a subsidiary of the Company , resolved to reduce its capital by NT$120,000 thousand, and a capital return of NT$21,600 thousand based on its 18% ownership interest.

Information on the Company disposal of investments under other comprehensive income using fair value’s equity instruments for the years ended December 31, 2023 and 2022 is as follows:

Fair value at the date of derecognition	January 1, 2023~ December31,2023 $436,462	January 1, 2022~ December31,2022
		$289,909

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16,963

Cumulative gain on disposal of other equity interest

47,379

transferred to retained earnings

3. Accounts receivable - net

Accounts receivables Less: loss allowance Total	2023.12.31 $1,949,690 (2,118) $1,947,572	2022.12.31
		$2,026,032 (2,118)
		$2,023,914

Accounts receivables were not pledged.

Accounts receivables are generally on 10-75 day terms. The total carrying amount as of December 31, 2023 and 2022 were NT$1,949,690 thousand and NT$2,026,032 thousand, respectively. Please refer to Note 6.15 for more details on loss allowance for the years ended December 31, 2023 and 2022. Please refer to Note 12 for more details on credit risk management.

4. Inventories

Raw materials Supplies Work in progress Finished goods Total	2023.12.31 $3,717,464 279,738 2,271,299 1,518,336 $7,786,837	2022.12.31
		$2,546,422 395,676 1,902,413 1,383,968
		$6,228,479

The costs of Inventories recognized as expenses in 2023 and 2022 are NT $31,326,299 thousand and NT $34,424,330 thousand, respectively.

Inventories was not pledged.

5. Prepayment

Factory supplies Prepayments of purchases Other prepayments Total	2023.12.31 2022.12.31
	$488,722 $436,230 25,540 55,211 20,346 5,480
	$534,608 $496,921

Prepayments were not pledged.

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6. Investments under equity method

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

Investment company Investment in subsidiaries: GREAT FORTUNE HOLDING LIMITED Investments in associates: Listed companies: Taiwan Steel Union Co., Ltd. Unlisted companies: Fong Yu Resources Co., Ltd. Total	2023.12.31 Amount Shareholding $516,502 100.00 $985,686 23.97 540,593 29.08 $2,042,781	2022.12.31	2022.12.31
	Amount $516,502 $985,686 540,593 $2,042,781	Amount $516,516 $1,031,402 556,334 $2,104,252	Shareholding
			100.00 23.82 29.08

(1)The share of profit or loss of associates and joint ventures for the years ended 31 December 2023 and 2022:

December 2023 and 2022:
Investment in subsidiaries: GREAT FORTUNE HOLDING LIMITED Investment in associates: Taiwan Steel Union Co., Ltd. Fong Yu Resources Co., Ltd Wen-Shan Enterprise Co., Ltd. Total	Forthe years ended 31 December
	2023 $(14) 120,915 (16,011) - $104,890	2022
		$94 231,867 (10,973) 12,500
		$233,488

(2)Investment in subsidiaries:

Investment in subsidiaries is represent as “Investments accounted for under the equity method” in standalone statements and necessary evaluation adjustments are made.

(3) Investment in associates:

The Company received dividends of NT$172,975 thousand and NT$104,051 thousand from Taiwan Steel Union Co., Ltd. in 2023 and 2022, respectively.

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Wen Shan Resort Corporation was re-elected their director and supervisor in August 2022, and the Company lost its significant influence on the company, so it was reclassified as a financial asset under fair value through other comprehensive income.

The fair value of the investment in the associate when there is a quoted market price for the investment: Taiwan Steel Union Co., Ltd. is listed on the Taiwan Stock Exchange. The fair value of the investment in investments accounted for using the equity method on December 31, 2023 and December 31, 2022 was NT$2,442,659 thousand and NT$2,438,606 thousand, respectively.

The Company investments in Taiwan Steel Union Co., Ltd., Fong Yu Resources Co., Ltd. and Wen-Shan Enterprise Co., Ltd are not individually material. The following table summarizes the financial information of the Company investment in the associate attributable to the Company interest in total:

Profit from continuing operations Other comprehensive income (post-tax) Total comprehensive income	January 1, 2023~ December31,2023 $104,904 329 $105,233	January 1, 2022~ December31,2022
		$233,394 3,020
		$236,414

As of December 31, 2023 and December 31, 2022, the aforementioned associates did not have any liabilities or capital commitment, nor any guarantee provided.

For the years ended December 31, 2023 and 2022, the investments in Taiwan Steel Union Co. Ltd. using the equity method were $985,686 thousand and $1,031,402 thousand, respectively. For the years ended December 31, 2023 and 2022, the share of profit of associates and joint ventures under equity method were $120,915 thousand and $231,867 thousand, respectively. Additionally, the share of other comprehensive income of associates and joint ventures accounted under the equity method for the years ended December 31, 2023 and 2022 were $141 thousand and $413 thousand, respectively. These amounts were recognized based on others’ audited financial statements.

7. Property, plant and equipment

						Unfinished
						construction
		Machinery and		Transportation	Leasehold	and Equipment
Land	Buildings	equipment	Office	equipment	improvements	to be inspected	Total

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Cost: 2023.01.01 Additions Disposals Other changes 2023.12.31 Depreciation: 2023.01.01 Depreciation Disposals Other changes 2023.12.31 Cost: 2022.01.01 Additions Disposals Other changes 2022.12.31 Depreciation: 2022.01.01 Depreciation Disposals Other changes 2022.12.31 Net carrying amount: 2023.12.31 2022.12.31	$1,288,353	$3,565,992 217,312 (13,536) 759,305 $4,529,073 $1,592,500 134,798 (3,459) - $1,723,839 $3,480,061 14,466 (420) 71,885 $3,565,992 $1,486,819 106,101 (420) - $1,592,500 $2,805,234 $1,973,492	$17,595,994 485,640 (618,362) (360,146)	$48,773 7,000 - 2,870 $58,643 $22,870 2,980 - -	$453,825 5,570 (2,616) - $456,779 $343,915 22,960 (2,616) - $364,259 $427,263 34,403 (7,841) - $453,825 $324,976 26,780 (7,841) - $343,915 $92,520 $109,910	$338,043 4,633 - 40,741 $383,417 $93,643 16,655 - - $110,298 $336,299 1,744 - - $338,043 $79,876 13,767 - - $93,643 $273,119 $244,400	$502,798 808,752 - (995,751) $315,799 $ - - - - $ - $165,284 699,804 - (362,290) $502,798 $ - - - - $ - $315,799 $502,798	$23,793,778 1,528,907 (634,514) (552,981) $24,135,190 $14,656,912 1,107,487 (614,278) (602,305)
	$1,288,353		$17,103,126
	$ - - - -		$12,603,984 930,094 (608,203) (602.305) $12,323,570 $17,131,810 637,248 (511,720) 338,656 $17,595,994 $12,019,654 1,080,525 (496,195) - $12,603,984 $4,779,556 $4,992,010
	$ -			$25,850				$14,547,816
	$1,288,353 - - - $1,288,353 $ - - - - $ - $1,288,353 $1,288,353			$48,956 - (183) - $48,773 $20,417 2,599 (146) - $22,870 $32,793 $25,903				$22,878,026 1,387,665 (520,164) 48,251 $23,793,778 $13,931,742 1,229,772 (504,602) -
								$14,656,912
								$9,587,374 $9,136,866

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

As of December 31, 2023 and 2022, the carrying amounts of certain parcels of land were $149,811 thousand, which were registered in the name of certain individuals. The Company has obtained an unconditional transfer commitment for these

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parcels of land.

Property, plant and equipment were not pledged.

8. Investment property-net

Investment properties include the Company-owned investment properties. The Company has entered commercial property leases on its owned investment properties with terms ranging from 1 to 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: 2023.01.01 Additions-from acquisitions 2023.12.31 Depreciation: 2023.01.01 Depreciations of the year 2023.12.31 Cost: 2022.01.01 Additions-from acquisitions 2022.12.31 Depreciation:： 2022.01.01 Depreciations of the year 2022.12.31 Net carrying amount: 2023.12.31 2022.12.31		Land $506,477 - $506,477 $ - - $- $506,477 - $506,477 $ - - $- $506,477 $506,477	Buildings $192,233 - $192,233 $8,222 3,947 $12,169 $192,233 - $192,233 $4,276 3,946 $8,222 $180,064 $184,011	Total
				$698,710 -
				$698,710
				$8,222 3,947
				$12,169
				$698,710 -
				$698,710
				$4,276 3,946
				$8,222
				$686,541
				$690,488

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Rental revenue from investment property Less: Direct operating expenses incurred for the investment property of rent income during the period Direct operating expenses incurred for the investment property that did not generate rent income during the period Total	January 1, 2023~ December 31,2023 $2,988 - (3,245)	January 1, 2022~ December 31,2022
		$2,760 - (2,914)
	$(257)	$(154)

No investment property was pledged.

Investment properties held by the Company are not measured under fair value but for which the fair value is disclosed. The fair value measurements of the investment properties are categorized within Level 3. The investment properties held by the Company were valued by independent external appraisal experts. The fair value as of December 31, 2023 and 2022 were as follows:

Item A B C	Valuation Method Comparison method and land development analysis method Comparison method and cost method Comparison method and the income method	Valuation Amount $895,315 69,333 331,010 $1,295,658	Valuation Time December 2021 December 2021 August 2020

Item A, B, and C refer to the real estate transaction price inquiry service network of the Ministry of the Interior on December 31, 2023 and December 31, 2022, and inquire about the recent transaction prices in similar locations and the fair value of the latest external appraisal expert.

9. Other non-current assets

ther non-current assets
Prepayments for business facilities Refundable deposits Net defined benefit assets Other Total	2023.12.31 $265,167 13,634 - 13,686 $292,487	2022.12.31
		$139,954 12,786 96,501 13,686
		$262,927

10. Short-term loan

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Unsecured bank loans	Interest Rates(%) 0.58%-6.56%	2023.12.31 $1,950,094	2022.12.31
			$862,067

As of December 31, 2023 and 2022, the Company unused credit lines of short-term borrowings amounted to approximately $7,486,225 thousand and $9,829,242 thousand, respectively.

11. Other payables

Accrued salary and bonus Accrued utilities Accrued discount Accrued remuneration to directors Pollution control payable Other Total	2023.12.31 $320,970 235,259 121,306 48,185 4,870 51,394 $781,984	2022.12.31 $356,838 235,191 127,855 50,685 45,724 119,070 $935,363

12. Retirement benefit plans

Defined contribution plan

The Company adopts a defined contribution plan in accordance with the Labor Pension Act Labor Pension Act. In accordance with the provisions of the Act, the Company's monthly labor pension contribution rate shall not be less than six percent of the employee's monthly salary. The Company has established employee retirement regulations in accordance with the regulations, and contributes six percent of the employee's salary to the individual retirement account of the Labor Insurance Bureau every month.

Expenses under the defined contribution plan for the years ended December 31, 2023 and 2022 were $29,265 thousand and $26,161 thousand, respectively.

Defined benefits plan

The Company adopts a defined benefit plan in accordance with the Labor Standards Act. The pension benefits are based on the number of service years and the average monthly salaries at the time when the retirement is approved. Two bases are given for each full year of service within 15 years (inclusive), and one base is given for each full year of service over 15 years, provided that the cumulative base is limited to a maximum of 45 bases. A retirement pension base is defined as the average monthly salary at the time of retirement. In accordance with the Labor Standards Act, the Company contributes 2% of the employees’ monthly salaries and wages to the pension fund every month, which is deposited in the Bank of Taiwan in the name of the administered pension fund committee.

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Before the end of each year, the Company assesses 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 will make up the difference in one appropriation before the end of March of the following year.

The Ministry of Labor is in accordance with the Regulations for Revenues, Expenditures, Safeguard and Utilization of the Labor Retirement Funds to allocate Assets. The investment of Funds is in the form of self-management and entrusted management, and adopts a medium and long-term investment strategy of active and passive management. The Ministry of Labor establishes funds risk limits and control plans by considering market risk, credit risk and liquidity risk, in order to maintain adequate flexibility to achieve targeted return without over-exposure of risk. With regard to the utilization of funds, its minimum earnings in the annual distributions on the final financial statements shall be no less than the earnings attainable from the amounts accrued from two-year time deposits with the interest rates offered by local banks. 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 Funds, it is not able to disclose the classification of the fair value of the plan Assets in accordance with paragraph 142 of International Accounting Standards. The Company expects to contribute NT $4,362 thousand to its defined benefit plan during the 12 months beginning after December 31, 2023.

As of December 31, 2023, the Company defined benefit plans are expected to expire after 7 years.

Pension costs recognized in profit or loss were as follows:

Current service costs Net interest of net defined benefit (assets) liabilities Total	January 1, 2023~ December 31,2023 $5,876 (1,232) $4,644	January 1, 2022~ December 31,2022
		$6,978 1,124
		$8,102

Reconciliations of liabilities (assets) of the defined benefit obligation and plan at fair value of assets are as follows:

2023.12.31

2022.12.31

2022.01.01

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Present value of defined benefit obligations Fair value of plan assets Liabilities (assets) Less: Due within one year Liabilities (assets)-Non-current	$753,855 (748,125) 5,730 - $5,730	$666,869 (763,370)	$712,452 (549,769)
		(96,501) -	162,683 (94,228)
		$(96,501)	$68,455

Reconciliations of net defined benefit liabilities (assets):

2022.01.01 Current service costs Interest expense (Revenue) Subtotal Remeasurement of defined benefit Liabilities/Assets: Actuarial gains and losses arising from changes in demographic assumptions Actuarial gains and losses arising from changes in financial assumptions Experience adjustments Remeasurement of defined benefit assets Subtotal Payments from the plan Contributions by employer 2022.12.31 Current service costs Interest expense (Revenue) Subtotal Remeasurement of defined benefit Liabilities/Assets: Actuarial gains and losses arising from changes in demographic assumptions Actuarial gains and losses arising from changes in financial assumptions Experience adjustments Remeasurement of defined benefit Assets	Present value of defined benefit obligation	Assets fair value	Liabilities (assets)
	$712,452 6,978 4,878	$(549,769) - (3,754)	$162,683 6,978 1,124
	11,856	(3,754)	8,102
	14 (47,832) 28,009 -	- - - (43,940)	14 (47,832) 28,009 (43,940)
	(19,809)	(43,940)	(63,749)
	(37,630) -	22,130 (188,037)	(15,500) (188,037)
	666,869 5,876 8,100	(763,370) - (9,332)	(96,501) 5,876 (1,232)
	13,976	(9,332)	4,644
	20 42,275 72,973 -	- - - (6,522)	20 42,275 72,973 (6,522)

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Subtotal Payments from the plan Contributions by employer 2023.12.31	Present value of defined benefit obligation	Assets fair value	Liabilities (assets)
	115,268	(6,522)	108,746
	(42,258) -	36,258 (5,159)	(6,000) (5,159)
	$753,855	$(748,125)	$5,730

The following significant actuarial assumptions are used to determine the present value of the defined benefit obligation:

Discount rate Expected rate of salary increases	2023.12.31 1.20% 1.50%	2022.12.31
		1.25% 0.74%

Sensitivity analysis of each significant actuarial assumption:

Discount rate increase by 0.25% Discount rate decrease by 0.25% Future salary increase by 0.25% Future salary decrease by 0.25%	January1,2023~December31,2023	January1,2023~December31,2023	January1,2022~December31,2022	January1,2022~December31,2022
	Increase in defined benefit obligation	Decrease in defined benefit obligation	Increase in defined benefit obligation	Decrease in defined benefit obligation
	$ - 13,769 13,694 -	$13,392 - - 13,385	$ - 12,666 12,699 -	$12,309 - - 12,401

The sensitivity analyzes above are based on a change in a significant assumption (e.g., changes in the discount rate or expected payroll), keeping all assumptions under other constant. The analysis is limited by the fact that some of the actuarial assumptions are correlated and, in practice, changes in only a single actuarial assumption rarely occur.

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

13. Equity

(1) Common stock

As of December 31, 2023 and 2022, the Company’s authorized share capital was $7,000,000 thousand, with a par value of $10 per share. The total issued

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shares amount to 581,599,424 shares, resulting in paid-in capital of $5,815,994 thousand. Each share has one voting right and a right to receive dividends.

(2) Capital surplus

Additional paid-in capital Treasury share transactions Gain on sale of assets Donated assets Share of changes in net assets of associates and joint ventures accounted for using the equity method Other Total	2023.12.31 $271,134 175,263 665 218 55 6,697 $454,032	2022.12.31
		$271,134 175,263 665 218 - 6,028
		$453,308

According to the Company Act, capital surplus may not be used except to offset a deficit of the Company. When a company incurs no loss, it may distribute the capital 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.

(3) Legal reserve

In accordance with the Company Act, after the current period's earnings are taxed out, the Company should first offset the deficit and then set aside 10% of the remaining balance as legal reserve in the next period. Legal reserve may be used to offset a deficit. If the Company has no deficit, the excess of the legal reserve over 25% of the Company's paid-in capital may be distributed in new shares or cash in proportion to the shareholders' original shares.

(4) Special reserve

Pursuant to existing regulations, the Company is required to set aside an additional special capital reserve equivalent to the net debit balance of the other components of stockholders’ equity that occurred during the financial year. For the subsequent decrease in the deduction amount to stockholders’ equity, any special reserve appropriated may be reversed to the extent that the net debit balance reverses.

338

(5) Earnings distribution and dividend policy

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

• A. Payment of taxes in accordance with the law.

• B. Offsetting losses of previous years.

• C. Legal reserve.

• D. Other provides for or reverses Special reserve in accordance with the law or the order of the competent authority.

• E. The distribution of the remaining portion, if any, will be recommended by the Board of Directors and resolved in the shareholders’ meeting.

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, Legal reserve should contribute until its total amount reaches the total amount of its capital. The legal reserve can be used to offset a deficit. If the Company has no deficit, the excess of the legal reserve over 25% of the Company's paid-in capital may be distributed in new shares or cash in proportion to the shareholders' original shares.

Details of the 2023 and 2022 earnings distribution and dividends per share of Resolution proposed by the Company’s board of directors on February 29, 2024 and in the annual shareholders’ meeting on May 31, 2023, are as follows:

Legal reserve Special reserve Common stock- cash dividend	Appropriation of earnings 2023 2022	Appropriation of earnings 2023 2022	Dividendsper	share(in $NT)
	2023		2023 $3.5	2022
	$232,661 (142,835) 2,035,598	$310,749		$4.0
		198,786
		2,326,398

Please refer to Note 6.17 for further details on employees’ compensation and remuneration to directors and supervisors.

14. Operating revenue

January 1, 2023~

January 1, 2022~

339

Revenue from contracts with customers Sale of goods Revenue from rendering of services Total	December 31,2023 $34,726,695 155,328 $34,882,023	December 31,2022
		$38,465,911 139,018
		$38,604,929

Analysis of revenue from contracts with customers during the years ended December 31, 2023 and 2022 is as follows:

(5) Disaggregation of revenue

• C. The Company is a single operating segment. Please refer to the preceding paragraph for the revenue information to be disclosed by the reportable segment.

• D. For the years ended December 31, 2023 and 2022, the types of revenue from contracts with customers are all recognized at a point in time.

(6) Contract balances

A. Contract assets ─ Current

2023.12.31 2022.12.31 2022.01.01 Sale of goods $537,601 $640,715 $461,511 The significant changes in the Company balances of contracts with assets from January 1 to December 31, 2023 and 2022 are as follows: January 1, 2023~ Decamber31,2023 January 1, 2022~ December31,2023 Equity at beginning of period transferred to accounts receivable $(640,715) $(461,511) Increase in receivables (excluding those incurred and transferred to accounts receivable) 537,601 640,715 Contract liabilities ─ Current 2023.12.31 2022.12.31 2022.01.01 Sale of goods $77,630 $83,553 $171,057	2023.12.31	2022.12.31	2022.01.01
	$537,601	$640,715	$461,511
			$(461,511) 640,715 2022.01.01
	$77,630	$83,553	$171,057

The significant changes in the Company balances of contracts with assets

from January 1 to December 31, 2023 and 2022 are as follows:

B. Contract liabilities ─ Current

The changes in the Company balances of contracts with liabilities from

340

January 1 to December 31, 2023 and 2022 were mainly due to the impact of rebar product orders, customer delivery schedule requirements and project progress.

(7) Transaction price allocated to unsatisfied performance obligations

As of December 31, 2023 and 2022, since the original expected duration of the Company contracts with customers for the sale of goods is within one year, there is no need to provide relevant information on outstanding performance obligations.

(8) Assets “revenue from contracts with customers”

None.

15. Expected credit loss (gains)

xpected credit loss (gains)
Operating expenses-expected credit losses Receivables	January 1, 2023~ December 31,2023	Janary 1, 2022~ December 31,2023
	$ -	$(1,187)

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

The Company contract assets and receivables (including notes receivable and accounts receivable) all use the amount of lifetime expected credit losses to measure the allowance loss. The relevant explanations on the assessment of the allowance loss amount as of December 31, 2023 and 2022 are as follows:

(3) The historical credit loss experience of assets shows that there is no significant difference in loss patterns among different customer groups. Therefore, the loss allowance is measured at an amount equal to lifetime expected credit losses. The relevant information is as follows:

Gross carrying Expected credit loss rate Loss allowance Total	2023.12.31	2022.12.31 $640,715 0% - $640,715
	$537,601 0% -
	$537,601

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• (4) The Company considers the grouping of trade receivables by counterparties’ credit rating, geographical region, industry sector, etc. Its loss allowance is measured by using a provision matrix, details are as follows:

2023.12.31

Gross carrying Loss ratio Lifetime expected credit losses Carrying amount of trade receivables	Overdue not yet due (note)			Overdue			Total
		<=30 days	31-60 days	61-90 days	91to120 days	Over 121days
	$1,931,894 0-1%	$27,810 -%	$ - -%	$ - -%	$ - -%	$ - -%	$1,959,704 (2,118)
	(2,118)	-	-	-	-	-
	$1,929,776	$27,810	$ -	$ -	$ -	$ -	$1,957,586

2022.12.31 Gross carrying Loss ratio Lifetime expected credit losses Carrying amount of trade receivables	Overdue Not yet due (note)			Overdue			Total
		<=30 days	31-60 days	61-90 days	91to120 days	Over 121days
	$1,975,841 0-1%	$53,480 -%	$1,390 -%	$ - -%	$ - -%	$ - -%	$2,030,711 (2,118)
	(2,118)	-	-	-	-	-
	$1,973,723	$53,480	$1,390	$ -	$ -	$ -	$2,028,593

Note: The Company notes receivable is not overdue, and the expected credit losses of the duration of the receivables are all credit losses provided in previous years.

The movements of the loss allowance of assets, notes receivable and accounts receivable for the years ended December 31, 2023 and 2022 were as follows:

2023.01.01 Increase (reversal) in the current period Write-off unrecoverable 2023.12.31	Assets	Receivables
	$ - - -	$2,118 - -
	$ -	$2,118

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2022.01.01 Increase (reversal) in the current period Write-off unrecoverable 2022.12.31	$ - - -	$3,305 (1,187) -
	$ -	$2,118

16. Leases

(1) The Company as 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 lease’s effect on the financial position, financial performance and cash flows are as follow:

A. Amount recognized in Assets Liabilities

(a) Right to use assets

The carrying amount of right-of-use assets

Land Buildings Machinery and equipment Total	2023.12.31	2022.12.31
	$298,119 115,633 2,355	$336,662 1,155 3,044
	$416,107	$340,861

For the years ended December 31, 2023 and 2022, the Company additions to Assets amounted to $120,321 thousand and $207,541 thousand, respectively.

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(b) Lease Liabilities

Lease liabilities Current Non-current Total	2023.12.31	2022.12.31
	$48,199 372,420	$41,116 305,534
	$420,619	$346,650

Please refer to Note 6.18 (3) Liabilities’ Interest expense for the

Company leases from January 1 to December 31, 2023 and 2022. Please refer to Note 12.5 Liquidity risk management for the maturity analysis of the lease liabilities on December 31, 2023 and 2022.

B. Amount recognized in the income statement of total

Assets-Depreciations

Land Buildings Machinery and equipment total	January 1, 2023~ December 31,2023	January 1, 2022~ December 31,2022
	$40,705 3,681 689	$34,722
		330
		1,183
		$36,235
	$45,075

C. Income and expenses relating to leasing activities

Expenses relating to short-term leases Not included in the measurement of leases under liabilities expenses for variable lease payments	January 1, 2023~ December 31,2023	January 1, 2022~ December 31,2022
	$5,676 2,052	$6,557
		-

I. Cash outflow relating to leasing activities

For the years ended December 31, 2023 and 2022, the Company total cash outflow for leases were $56,894 thousand and $39,882 thousand, respectively.

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J. Other Information about leasing activities

(a) Variable lease payments

Some of the Company real estate lease contracts contain variable lease payment terms that are linked to the sales amount generated by the lease, and the amount is linked to a certain range of sales amount generated by the leased subject. These variable lease payments are linked to sales and it is not uncommon for leases with such variable lease payments to be entered into in the Company's industry. 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. For every NT $100 thousand increase in sales, the Company expects to increase rent expenses by NT $9-15 thousand.

(b) Extension and termination options

Some of the Company property rental agreements contain 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.

(c) Residual value guarantees

None.

(2) The Company as lessor

Please refer to Note 6 (8) for details on the Company owned investment properties and investment properties held by the Company as right-of-use

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assets. Leases of owned investment properties which did not transfer substantially all the risks and rewards incidental to ownership of assets were classified as operating leases.

Lease income from operating leases Income relating to fixed lease payments and variable lease payments that depend on an index or a rate	January 1, 2023~ December 31,2023 $2,988	January 1, 2022~ December 31,2022
		$2,760

Please refer to Note 6 (8) for relevant disclosure of the application of property, plant and equipment on operating lease under International Accounting Standards 16. The Company has entered into operating lease contracts. The undiscounted lease payments to be received as of December 31, 2023 and 2022 and the total amount for the remaining years are as follows:

follows:
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 and not later than four years Later than four years but not later than five years Later than five years Total	2023.12.31 $4,708 5,189 4,997 4,782 4,476 14,795 $38,947	2022.12.31
		$2,485 1,573 1,539 1,334 1,105 8,635
		$16,671

1. Summary of employee benefits, depreciations and amortization expense functions as follows:

Function Nature	2023.01.01~2023.12.31	2023.01.01~2023.12.31	2023.01.01~2023.12.31	2022.01.01~2022.12.31	2022.01.01~2022.12.31	2022.01.01~2022.12.31
	Operating costs	Operating expenses	Total	Operating costs	Operating expenses	Total
Employee benefits expense
Salaries	$794,631	$205,574	$1,000,205	$813,264	$215,437	$1,028,701
Labor and health insurance	69,167	20,361	89,528	63,323	21,540	84,863
Pension	28,371	5,538	33,909	28,534	5,729	34,263
Remuneration to directors	-	66,191	66,191	-	69,027	69,027
Other employee benefits expense	45,373	10,399	55,772	48,220	10,977	59,197
Depreciation	1,065,721	90,788	1,156,509	1,186,703	83,250	1,269,953
Amortization	2,426	-	2,426	2,500	-	2,500

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The number of employees of the Company and other information as of 31 December 2022 and 2021 as below:

Number of employees Non-employee directors Average labor cost Average salary and bonus The average salary and bonus adjustment	As of31 December	As of31 December
	2023	2022
	970 11 $1,240 1,053 -3%	959 11 $1,273 1,085 -7%

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:

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.

347

According to the Articles of Incorporation, no less than 2% of the 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 the 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 of Directors’ 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.

For the year ended December 31, 2023, the Company used 6.99% and 1.50% to estimate the employees' and directors' compensation, respectively, based on the Company's profit for the year. The Company recognized employees' compensation and directors' compensation amounting to $221,567 thousand and $47,500 thousand, respectively, which were based on the Company's profit for the year, and the aforementioned amounts were recorded as salaries and wages.

The Board of Directors of the Company resolved to distribute $221,567 thousand and $47,500 thousand in cash to employees and directors for the year ended December 31, 2023, respectively. Any difference between the estimated amount and the actual amount of cash distribution resolved by the Board of Directors will be recognized as the profit and loss in the following year.

The actual amounts of employees’ compensation and remuneration of directors and supervisors for the year ended December 31, 2022 were $260,603 thousand and $50,000 thousand, respectively. There was no material difference between the amounts and the amounts recognized in the financial statements for the year ended December 31, 2022.

18. Non-operating revenue and expenditure

(3) Other income

Other income
Dividend revenue Rental revenue	January 1, 2023~ December 31,2023 $110,393 2,988	January 1, 2022~ December 31,2022
		$206,214 2,760

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Other revenue - others Total (2) Other gains and losses Net Proceeds from disposal of property, plant and equipment (loss) gain Net foreign exchange gains Miscellaneous expenditure Total (3) Finance costs Interest of bank loan Interest on lease of liabilities Finance costs total	21,286	28,196
	$134,667	$237,170
	January 1, 2023~ December 31,2023 $(18,085) 18,508 (13,556)	January 1, 2022~ December 31,2022 $(4,812) 32,670 (4,093)
	$(13,133)	$23,765
	January 1, 2023~ December 31,2023 $37,143 3,662	January 1, 2022~ December 31,2022 $17,443 2,884
	$40,805	$20,327

19. Other comprehensive income

The components of other comprehensive income for the year 2023 are as follows:

Item that will not be reclassified to profit or loss: Remeasurement of defined benefit plans Unrealized valuation gain or loss from investments in equity instruments measured at fair value through other comprehensive income Share of other comprehensive income of associates and joint ventures accounted for using equity method Total	Arising during the period	Current Reclassification adjustments	Other total	income tax Interest (expense)	Amount after tax
	$(108,746) 189,998 411	$ - - -	$(108,746) 189,998 411	$21,749 - (82)	$(86,997) 189,998 329
	$81,663	$-	$81,663	$21,667	$103,330

The components of other comprehensive income for the year ended December 31, 2022 are as follows:

349

Item that will not be reclassified to profit or loss: Remeasurement of defined benefit plans Unrealized valuation gain or loss from investments in equity instruments measured at fair value through other comprehensive income Share of other comprehensive income of associates and joint ventures accounted for using equity method Total	Arising during the period	Current Reclassification adjustments	Other total	income tax Interest (expense)	Amount after tax
	$63,749 (500,360) 3,775	$ - - -	$63,749 (500,360) 3,775	$(12,750) - (755)	$50,999 (500,360) 3,020
	$(432,836)	$-	$(432,836)	$(13,505)	$(446,341)

20. Income tax expenses

The main composition of tax expense (profit) in 2023 and 2022 is as follows:

(A) Income tax recognized in profit or loss

Current tax expense: Current income tax payable Adjustments in respect of current income tax of prior periods Deferred income tax expenses: Deferred income tax expense related to the original generation and reversal of temporary differences Income tax expenses (B) Other comprehensive income tax Deferred tax expense (interest): Remeasurement of defined benefit plans Share of other comprehensive income of associates and joint ventures accounted for using equity method Other comprehensive income component related to	January 1, 2023~ December 31,2023 $553,022 (26,679) 87 $526,430 January 1, 2023~ December 31,2023 $(21,749) 82	January 1, 2022~ December 31,2022
		$685,091 (16,872) 39,004
		$707,223
		January 1, 2022~ December 31,2022
		$12,750 755

350

$(21,667)

$13,505

income tax

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

Accounting profit before tax from continuing operations Tax at the domestic rates applicable to profits in the country concerned Adjustments in respect of current income tax of prior periods Income tax effect of revenues exempt from taxation Unappropriated retained earnings Income tax effect of expenses not deductible for tax purposes Total tax expense recognized in profit or loss	January 1, 2023~ December 31,2023 $2,901,921 $580,383 (26,679) (43,059) 15,288 497 $526,430	January 1, 2022~ December 31,2022
		$3,780,618
		$756,124 (16,872) (88,179) 55,672 478
		$707,223

(D) Deferred income tax assets (liabilities) balances related to the following items:

351

January 1, 2023 ~ December 31, 2023

Temporary differences Employee benefits payable Unrealized foreign exchange gains Investments accounted for using the equity method Share of equity associates and joint ventures accounted for using other comprehensive income-cash flow hedges Share of equity associates and joint ventures accounted for using other comprehensive income-remeasurement of defined benefit plans Net defined benefit liabilities-non-current Remeasurement of defined benefit plans Depreciations book-tax difference Deferred tax expense (gain) Net deferred tax assets The information expressed in the table of Assets liabilities is as follows: Deferred tax assets Deferred tax liabilities	Equity at beginning of period $5,820 (90) 55,450 51 (103) (28,107) 8,376 9,707 $51,104 $79,404 $28,300	Recognized in profit or loss $614 599 3 - - (1,303) - $(87)	Recognized in other comprehensive income $ - - - (54) (28) - 21,749 - $21,667	Equity at end ofperiod
				$6,434 509 55,453 (3) (131) (29,410) 30,125 9,707
				$72,684
				$102,228
				$29,544

352

January 1, 2022 ~ December 31, 2022

Temporary differences Employee benefits payable Unrealized foreign exchange gains Investments accounted for using the equity method Share of equity associates and joint ventures accounted for using other comprehensive income-cash flow hedges Share of equity associates and joint ventures accounted for using other comprehensive income-remeasurement of defined benefit plans Net defined benefit Liabilities-non-current Remeasurement of defined benefit plans Depreciations book-tax difference Deferred tax expense (Gain) Net deferred tax assets The information expressed in the table of Assets Liabilities is as follows: Deferred tax assets Deferred tax liabilities	Equity at beginning of period $5,553 76 55,468 723 (20) 10,980 21,126 9,707 $103,613 $103,633 $20	Recognized in profit or loss $267 (166) (18) - - (39,087) - - $(39,004)	Recognized in other comprehensive income $ - - - (672) (83) - (12,750) - $(13,505)	Equity at end ofperiod $5,820 (90) 55,450 51 (103) (28,107) 8,376 9,707
				$51,104
				$79,404
				$28,300

income tax declaration and verification

As of December 31, 2023, the income tax of the Company in Taiwan has been approved until 2021.

21. EPS

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.

353

Diluted 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 plus the weighted average of the number of ordinary shares that would be issued on conversion of all the dilutive potential ordinary shares into ordinary shares.

(1) Basic earnings per share Profit attributable to ordinary equity holders of the Company Weighted average number of common shares of basic earnings per share (thousand shares) Basic earnings per share (NT $) (2) Diluted earnings per share Profit attributable to ordinary equity holders of the Company Weighted average number of common shares of basic earnings per share (thousand shares) Effect of dilution: Employee bonus-stock (in thousands) Weighted average number of ordinary shares outstanding after dilution (thousand shares) Diluted earnings per share (NT $)	January 1, 2023~ December 31,2023	January 1, 2022~ December 31,2022
	$2,375,491	$3,073,395
	581,599	581,599
	$4.08	$5.28
	$2,375,491	$3,073,395
	581,599 3,272	581,599 4,597
	584,871	586,196
	$4.06	$5.24

There have been no significant changes to the other transactions that affect common shares or potential common 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 significant transactions with the Company during the financial reporting period is as follows:

Name and nature of relationship of the related parties

Name of related parties Taiwan Steel Union Co., Ltd. Taiwan Steel Resources Co., Ltd.	Relationship withthe Company
	Associates of the Company Subsidiary of associate

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Significant transactions with related parties

(4) Accounts payable

An associate of the Company A subsidiary of an associate of the Company Total	2023.12.31 $2,708 3,806 $6,514	2022.12.31
		$3,509 7,723
		$11,232

(5) Other transaction

The Company commissioned Taiwan Steel Union Co., Ltd. to handle dust collection and transportation, and recognized manufacturing expenses of NT $36,759 thousand and NT $16,717 thousand in 2023 and 2022, respectively. As of December 31, 2023 and December 31, 2022, there were still NT $2,708 thousand and NT $3,509 thousand unpaid, respectively, which were recognized under the account of accounts payable.

The Company engaged Taiwan Steel Resources Co., Ltd. to dispose of the restored slag. For the years ended December 31, 2023 and 2022, the Company recognized manufacturing expenses of NT $46,924 thousand and NT $83,582 thousand, respectively. As of December 31, 2023 and December 31, 2022, the unpaid manufacturing expenses were NT $3,806 thousand and NT $7,723 thousand, respectively, which were recognized under accounts payable.

(6) Compensation of key management personnel

Short-term employee benefits Retirement benefits Total	January 1, 2023~ December 31,2023 $88,973 313 $89,286	January 1, 2022~ December 31,2022
		$93,627 376
		$94,003

8. Pledged assets

The Company has furnished the following assets as collaterals:

Item	Carrying amount oftradereceivables 2023.12.31 2022.12.31 CollateralContents

355

Other non-current assets $13,686 $13,686 Performance bond

9. Significant contingent liabilities and unrecognized commitments liabilities

1. Unredeemed canceled guarantee notes due to loan issuance As of December 31, 2023 and 2022, the guaranteed notes amounted to $12,886,200 thousand and $12,730,000 thousand, respectively.

2. Due to the application for the “Measures for the Implementation of the Post-release Duty for Imported Goods” when importing goods, the letter of guarantee issued by the bank is both NT $30,000 thousand as of December 31, 2023 and 2022.

3. Amounts of unused letters of credit are as follows: (in thousands of foreign currencies)

Currency USD JPY EUR CNY	2023.12.31 $17,036 10,120 945 23,072	2022.12.31
		$21,493 134,229 - -

The amounts that are available under unused letters of credit above are unguaranteed.

1. The Company has signed the following major purchase contracts (in thousands of foreign currencies)

Contract party Company A Company B	Contract content Solar power generation system and installation Shear press machinery	Total contract price $618,213 EUR 3,670	Amountpaid $527,767 EUR 1,101	As of 2023.12.31 amount unpaid
				$90,446 EUR 2,569

10. Significant disaster loss

None.

11. Significant events after the reporting period

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None.

12. Other

1. Categories of financial instruments

Assets Financial asset measured at fair value through other comprehensive income Assets: Cash and cash equivalents (excluding cash on hand) Contract assets Notes and accounts receivable Other receivables Other financial assets -Non Current Sub-total Total Financial liabilities Liabilities: Short-term borrowings Notes and accounts payable Other payables Lease liabilities Total	2023.12.31	2022.12.31
	$2,058,776 990,582 537,601 1,957,586 19,306 13,686	$2,305,240 1,297,646 640,715 2,028,593 17,277 13,686
	3,518,761	3,997,917
	$5,577,537	$6,303,157
	2023.12.31	2022.12.31
	$1,950,094 1,571,441 781,984 420,619	$862,067 1,295,187 935,363 346,650
	$4,724,138	$3,439,267

2. Financial risk management objectives and policies

The Company 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 policy and risk appetite.

The Company 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 Company complies with its financial risk management policies at all times.

357

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 Company exposure to the risk of changes in foreign exchange rates relates primarily to the Company operating activities (when revenue or expense is denominated in a different currency from the Company 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 profit is performed on significant monetary items denominated in foreign currencies as of the end of the reporting period. The Company foreign currency risk is mainly related to the volatility in the exchange rates for USD.

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 exposure to the risk of changes in market interest rates relates primarily to the Company bank borrowings with fixed interest rates and variable interest rates.

The interest rate sensitivity analysis is performed on item exposure to interest rate risk as at the end of the reporting period, including borrowings with variable interest rates and interest rate swaps. At the reporting date, a change of 10 basis points of interest rate in a reporting period could cause the profit.

The sensitivity analysis of the change in the relevant risks from January 1 to December 31, 2023 and 2022 before tax is as follows:

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January 1 to December 31, 2023

Main Risk Extent of variation Foreign currency risk NTD/USD exchange rate +/-1% Interest rate risk Market rate +/− 10 basis points January 1 to December 31, 2022 Main Risk Extent of variation Foreign currency risk NTD/USD exchange rate +/-1% Interest rate risk Market rate +/− 10 basis points Equity price risk	Profit or loss sensitivity +/-$(1,049) -/+ $1,950 Profit or loss sensitivity +/-$(2,525) -/+ $862	Equity sensitivity $ - $ - Equity sensitivity
		$ - $ -

The fair value of the Company listed and unlisted equity securities is susceptible to market price risk arising from uncertainties about the future values of the investment securities. The Company 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. 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 board of directors reviews and approves all equity investment decisions.

Shares of listed companies are included in investments in other comprehensive income under fair value equity. When the price of the securities of equity increased/decreased by 1%, the impact on the Company investment in equity on December 31, 2023 and 2022 was $-15,328 thousand and $18,167 thousand, respectively.

4. Credit risk management

Credit risk is the risk that the 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.

Customer credit risk is managed by each business unit subject to the Company’s established policy, procedures and control relating to customer credit risk

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management. Credit limits are established for all customers based on their financial position, rating from credit rating agencies, historical transaction experience, prevailing economic condition and the Company’s internal rating criteria etc. Certain customers’ credit risks will also be managed by taking credit-enhancing procedures, such as advance sales receipts.

As of December 31, 2023 and December 31, 2022, the percentages of contract assets and receivables of the Company's top ten customers to the Company's contract assets and receivable balances were 31.80% and 24.99%, respectively. The credit concentration risk of the remaining contract assets and accounts receivable is relatively insignificant.

Credit risk from balances with banks, fixed-income securities and other financial instruments is managed by the Company treasury in accordance with the Company 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 ratings and with no significant default risk. Consequently, there is no significant credit risk for these counterparties.

5. Liquidity risk management

The Company 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.

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Non-derivative financial instruments

2023.12.31 Short-term borrowings Notes and accounts payable Other payables Lease liabilities (note) 2022.12.31 Short-term borrowings Notes and accounts payable Other payables Lease liabilities (note)	< 1year $1,988,350 1,571,441 781,984 52,392 $883,936 1,295,187 935,363 43,961	2 to 3years $ - - - 102,528 $ - - - 89,510	4 to 5years $ - - - 47,606 $ - - - 73,159	> 5years $ - - - 288,528 $ - - - 197,717	Total
					$1,988,350 1,571,441 781,984 491,054 $883, 936 1,295,187 935, 363 404,347

Note: The following table provides further information on the maturity analysis of liabilities:

2023.12.31 2022.12.31		LeaseExpirationperiod of Liabilities	LeaseExpirationperiod of Liabilities	LeaseExpirationperiod of Liabilities	LeaseExpirationperiod of Liabilities
	< 1year	2-5 years	6-10 years	11-15 years	> 15 years	Total
	$52,392 43,961	$150,134 162,669	$60,524 26,719	$60,524 26,718	$167,480 144,280	$491,054 404,347

Derivative financial instruments

None.

6. Reconciliation of liabilities arising from financing activities

Adjustment information of liabilities on December 31, 2023:

2023.01.01 Cash flows Non-cash changes 2023.12.31	Short-termborrowings	Leaseliabilities	Total
	$862,067 1,088,027 - $1,950,094	$346,650 (50,014) 123,983	$1,208,717 1,038,013 123,983
		$420,619	$2,370,713

Adjustment information of Liabilities on December 31, 2022:

2022.01.01	Short-termborrowings	Leaseliabilities	Total
	$890,802	$174,804	$1,065,606

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Cash flows Non-cash changes 2022.12.31	(28,735) -	(35,311) 207,157	(64,046) 207,157
	$862,067	$346,650	$1,208,717

7. Fair value of financial instruments

• (1) Valuation techniques and assumptions applied for fair value

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 receivable, accounts payable and other current liabilities approximate their fair value due to their short maturities.

• F. The fair value of assets and liabilities, which are traded in an active market with standard terms and conditions, is determined by reference to quoted market prices (e.g., listed equity securities and bonds).

• G. The fair value of equity instruments without market quotations (including unquoted public company and private company equity securities) is estimated using the market method valuation techniques based on parameters such as prices based on market transactions of identical or comparable entities, equity instruments and relevant information of other (e.g., inputs such as discount for lack of marketability, P/E ratio of similar entities and price-book ratio of similar entities).

• H. The 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 instruments (such as yield curves published by the TPEx, average prices for commercial paper and credit risk, etc.)

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• (2) Fair value of financial instruments measured at amortized cost

The carrying amount of the Company financial assets measured at amortized cost approximates their fair value.

• (3) Fair value measurement hierarchy for financial instruments

Please refer to Note 12 (9) for the fair value measurement hierarchy for the financial instruments of the Company.

8. Derivatives

As of December 31, 2023 and December 31, 2022, the Company did not hold any derivative instruments for trading.

9. Fair value hierarchy

(1) Definition of fair value hierarchy

All fair value disclosures required by assets and liabilities are based on the lowest level input that is significant to the overall fair value. Level 1, 2 and 3 inputs are described as follows:

• Level 1 – Quoted prices (unadjusted) in active markets for identical assets or liabilities available 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.

(2) Hierarchy information of fair value

The Company does not have non-repetitive fair value assets, and the fair

363

value hierarchy information of repetitive assets and liabilities is listed as follows:

Fair value Assets: Through Other comprehensive income, equity instruments measured at fair value through other comprehensive income Fair value Assets: Through Other comprehensive income, equity instruments measured at fair value through other comprehensive income			2023.12.31	2023.12.31
		Level 1 $1,532,824	Level 2 Level 3 $ - $525,952 2022.12.31	Level 3		Total
						$2,058,776 Total $2,305,240
		Level 1 $1,816,651	Level 2 $ -	Level 3 $488,589

Transfers between Level 1 and Level 2 during the period

During the years ended December 31, 2023 and 2022, there was no transfer between Level 1 and Level 2 fair value measurements of fair value assets and liabilities.

Reconciliation for fair value measurements in Level 3 of the fair value hierarchy

Reconciliation for fair value measurements in Level 3 of the fair value hierarchy for the Company fair value assets and liabilities from the beginning of the period to equity at end of period is as follows:

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2023.01.01 Total gains and losses recognized in 2023: Recognition under other comprehensive income (reported as “unrealized gain (loss) on valuation of investments in equity through fair value”) Reclassified 2023.12.31 2022.01.01 Total gains and losses recognized for the year ended December 31, 2022: Recognition under other comprehensive income (reported as “unrealized gain (loss) on valuation of investments in equity through fair value”) Reclassified Proceeds from capital reduction Acquisition 2022.12.31	Assets
	Through other comprehensive income according tofairvalue
	Stock
	$488,589 41,009 (3,646)
	$525,952
	Assets
	Through other comprehensive income according tofairvalue
	Stock
	$447,622 (130,260) 187,619 (21,600) 5,208
	$488,589

Information on significant unobservable inputs to valuation

Description of significant unobservable inputs to the valuation of fair value used by the Company repetitive assets at fair value level 3 is as follows:

December 31, 2023:

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Assets: Financial asset measured at fair value through other comprehensive income other comprehensive income stocks and others December 31, Assets: Financial asset measured at fair value through other comprehensive income other comprehensive income stocks and others	Valuation techniques Market approach 2022: Valuation techniques	Valuation techniques	Valuation techniques	Significant Significant unobservable inputs	Significant Significant unobservable inputs	Quantitative information	Quantitative information	Inputs and Inputs Relationship between inputs and fair value	Inputs and Inputs Relationship between inputs and fair value	Sensitivity analysis of the relationship between inputs and fair value relationship
				Discount for lack of marketability 10%-30% Significant Significant unobservable inputs Quantitative information				The higher the discount for lack of marketability, the lower the fair value of the stocks 10% increase (decrease) in the discount for lack of marketability would result in increase (decrease) in the Company equity by $52,595 thousand. Inputs and Inputs Relationship between inputs and fair value Sensitivity analysis of the relationship between inputs and fair value relationship
	Market approach		Discount for lack of marketability		10%-30%		The higher the discount for lack of marketability, the lower the fair value of the stocks		10% increase (decrease) in the discount for lack of marketability would result in increase (decrease) in the Company equity by $48,859 thousand.

The valuation process used for fair value measurements is categorized within Level 3 of the fair value hierarchy

The Company 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 analyzes the movements in the values of assets and liabilities which are required to be re-measured or re-assessed as per the Company

366

accounting policies at each reporting date.

(3)Hierarchical information of the Company assets and liabilities not measured at fair value but is subject to fair value disclosure

Assets with fair value disclosed only: Investment properties (Notes 6.8) Investments accounted for using equity method (Note 6 (6)) Assets with fair value disclosed only: Investment properties (Notes 6.8) Investments accounted for using equity method (Note 6 (6))		2023.12.31	2023.12.31
	Level 1 $ - 2,442,659	Level 2 Level 3 $ - $1,295,658 - - 2022.12.31		Total
				$1,295,658 2,442,659
	Level 1 $ - 2,438,606	Level 2 $ - -	Level 3 $1,295,658 -	Total
				$1,295,658 2,438,606

10. Significant assets and liabilities denominated in foreign currencies assets and liabilities

Information regarding the significant assets and liabilities denominated in foreign currencies is listed below:

Unit: NT $thousands

Assets Monetary item: USD Financial liabilities Monetary item: USD		2023.12.31 Exchange Rate NTD 30.6450 $197,942 30.8050 $302,847		2022.12.31
	Foreign currencies $6,459 $9,832	Exchange Rate 30.6450 30.8050	Foreign currencies $5,693 $13,879	Exchange Rate 30.6700 30.7700	NTD
					$174,592 $427,052

Due to the wide variety of functional currencies of the Company

367

standard-alone, it is not possible to disclose the exchange gains and losses information of monetary financial assets and financial liabilities by each foreign currency with significant impact. The Company foreign exchange gains for the years 2023 and 2022 are NT $18,508 thousand and NT $32,670 thousand, 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 Company 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 shares.

13. Note disclosures

1. Information at significant transactions

2. (4) Financing provided to others: None.

3. (5) Endorsements/guarantees provided: None.

368

(6) Marketable securities held:

Holding Company	Type of Securities	Securities Company Name	Relations hip with the Securities Issuer	Account		EndingBalance	EndingBalance
					Shares	Carrying Amount of Trade Receivables	Share-hold ing Ratio	Fair Value	Remark
Feng Hsin Steel Co., Ltd. Feng Hsin Steel Co., Ltd.	Stock Stock	Formosa Taffeta Co., Ltd. China steel Corporation Tung Ho steel Enterprise Corporation Cathay Real Estate Development Co., Ltd. Yung Shin Global Holding Corporation Chien Shing Harbor Service Fengshuo Investment Co., Ltd. Gwo Uei Metals Industry Co., Ltd. Kuo Hui Iron & Steel Co., Ltd. China Trade and Development Corporation Pro-Ascentek Investment Corporation Wen-Shan Enterprise Co.,	- - - - - - - - - - - -	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- non-current Financial assets at fair value through other comprehensive income- non-current Financial assets at fair value through other comprehensive income- non-current Financial assets at fair value through other comprehensive income- non-current Financial assets at fair value through other comprehensive income- non-current Financial assets at fair value through other comprehensive income- non-current Financial assets at fair value through othercomprehensiveincome-	3,162,000 21,090,000 4,546,070 3,861,000 1,923,000 8,737,696 3,640,000 3,800,000 3,800,000 1,925 10,000,000 15,840,000	$79,682 569,430 321,407 70,077 89,420	0.19% 0.13% 0.62% 0.33% 0.72% 9.96% 18.20% 19.00% 19.00% - 8.33% 18.00%	$79,682 569,430 321,407 70,077 89,420 $402,808 215,653 52,457 33,355 25 101,065 123,397
						$1,130,016
						$402,808 215,653 52,457 33,355 25 101,065 123,397

369

Holding Company	Type of Securities	Securities Company Name	Relations hip with the Securities Issuer	Account		EndingBalance	EndingBalance
					Shares	Carrying Amount of Trade Receivables	Share-hold ing Ratio	Fair Value	Remark
				non-current Total
						$928,760

(11) Marketable securities acquired or disposed of at costs or prices of at least NT $300,000,000 or 20 percent of the paid-in capital: None.

• (12) Acquisition of individual real estate at costs of at least NT $300,000,000 or 20 percent of the paid-in capital: None.

• (13) Disposal of individual real estate at prices of at least NT $300,000,000 or 20 percent of the paid-in capital: None.

• (14) Total purchases from or sales to related parties amounting to at least NT $100,000,000 or 20 percent of the paid-in capital: None.

• (15) Receivables from related parties amounting to at least NT $100,000,000 or 20 percent of the paid-in capital: None.

(16) Trading in derivative instruments: None.

• (17) Other: Business relationships and significant transactions between the parent company and subsidiaries and between subsidiaries (amounting to NT $100,000,000 or more than 20 percent of the paid-in capital): None.

6. Information on investees

Information on investees over which the Company has significant influence or control, directly or indirectly, is as follows (excluding investees in Mainland China):

Name of Investor	Name of Investee	Location	Main Business Item	Original Investment Amount	Original Investment Amount	Ending Balance	Ending Balance	Ending Balance	Investee Company Current Profit (Loss)	Investment Income (Loss) Recognized in the Current Period	Remar k
				Ending Balance	End of Last Year	Shares	Ratio	Carrying Amount of Trade Receivables
Feng Hsin SteelCo.,	Great fortune holdinglimited	Offshore Chamber,	General investment	$971,367	$971,367	31,406,834	100.00 %	$516,502	$(14)	$(14)	Subsidi aries

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==> picture [550 x 303] intentionally omitted <==

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

Ltd. P.O.
Box217,
Apia, Samoa
Feng Hsin Taiwan Steel No. 36, General business $470,164 $454,644 26,666,587 23.97% $985,686 $504,622 $120,915 Associ
Steel Co., Union Co., Gongbei 1st and hazardous ates
Ltd. Ltd. Road, business waste
Changhua disposal,
Coastal non-ferrous metals
Industrial (zinc oxide),
Park, non-metallic
Changhua mineral products
County manufacturing and
trading business
Feng Hsin Fong Yu No. 18, General business $584,878 $584,878 58,161,000 29.08% $540,593 $(55,059) $(16,011) Associ
Steel Co., Resources Xibin 5th and hazardous ates
Ltd. Co., Ltd. Road, business waste
Shengang disposal
Township,
Changhua
County
----- End of picture text -----

7. Information on investments in mainland China

• (2) The Company invests in mainland China indirectly through Great fortune holding limited.

The relevant information is as follows:

==> picture [544 x 258] intentionally omitted <==

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

Accumulated Remittance or
From Taiwan, End Invested
Investee in Investment Investment % Ending
Main of Period Company Investment Repatriated
Mainland Amount of Amount Ownership Balance of
Busines Paid-in capital Method of Accumulated Company Income Income by
China Remittance from Recovered of Direct or Investment
s Capital Investment Investment Current (Loss) the End of
Company Taiwan-Beginning Indirect Book Value
Item Remitted Profit Recognized the Period
name of the Current Investment (Note 1)
Amount And Loss
Period
Shihlien Sodium USD Investment in $838,227 - - $838,227 Note 1 2.83% $ - $488,816 $ -
Chemical carbona 800,000,000 Mainland (USD 27,352,800) (USD 27,352,800)
Industrial te, China
Jiangsu Co. which companies
is the through a
ingredie company
nt of invested and
Remitted Release
----- End of picture text -----

371

Investee in Mainland China Company name	Main Busines s Item	Paid-in capital Capital	Method of Investment	Accumulated Investment Amount of Remittance from Taiwan-Beginning of the Current Period	Accumulated Investment Amount of Remittance from Taiwan-Beginning of the Current Period	Remittance or Investment Amount Recovered	Remittance or Investment Amount Recovered	From Taiwan, End of Period Accumulated Investment Remitted Amount	Invested Company Company Current Profit And Loss	% Ownership of Direct or Indirect Investment	Investment Income (Loss) Recognized	Ending Balance of Investment Book Value (Note 1)	Repatriated Income by the End of the Period
						Remitted	Release
	glass product ion		established in a third region
Huaian Shihyuan Brine Co., Ltd.	Brine, which is the ingredie nt of sodium carbona te	USD 32,000,000	Investment in Mainland China companies through a company invested and established in a thirdregion	$45,563 (USD 1,486,800)		-	-	$45,563 (USD 1,486,800)	Note 1	3.94%	$ -	$26,595	$ -
Accumulated outflow of investment from Taiwan to Mainland China at the end of the period (Note 3)					Ministry of economic affairs investment commission, MOEA investment amount (Note 3)
$883,790 (USD 28,839,600)					$883,790 (USD 28,839,600)

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: According to Ministry of Economic Affairs Investment Commission, MOEA, the Company investment in mainland China is limited to 60 percent of the net value.

• Note 3: Initial investment amounts denominated in foreign currencies are translated into New Taiwanese Dollars using the spot rates at the financial statement reporting date.

• (4) 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.

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8. Information on major shareholders

Shares Name of major shareholders	Shares Held	Shareholding
Cheng ChuangInvestment Co.,Ltd.	31,593,000	5.43%

14. Segment information

Please refer to the consolidated financial statements of FENG HSIN STEEL CO., LTD. and subsidiaries for operating segment information.

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
Year Item	2023	2022	Variance
			Amount	%
Current assets	12,992,157	12,220,296	771,861	6.32%
Non-current assets	4,175,326	4,034,085	141,241	3.50%
Property, plant and equipment	9,587,374	9,136,866	450,508	4.93%
Other non-current assets	292,487	262,927	29,560	11.24%
Total assets	27,047,344	25,654,174	1,393,170	5.43%
Current liabilities	4,709,765	3,534,867	1,174,898	33.24%
Non-current liabilities	408,362	333,865	74,497	22.31%
Total liabilities	5,118,127	3,868,732	1,249,395	32.29%
Capital stock	5,815,994	5,815,994	0	0.00%
Capital surplus	454,032	453,308	724	0.16%
Retained earnings	15,715,142	15,714,926	216	0.00%
Other equity	-55,951	-198,786	142,835	71.85%
Total shareholders’ equity	21,929,217	21,785,442	143,775	0.66%
The reasons for changes by more than 20% if any:The analysis is provided as follows: I. The increase in current liabilities was primarily the result of increased loan. II. The increase in non-current liabilities was primarily the result of increased lease liabilities. III. The increase in other equity was primarily the result of increased valuation for financial asset. IV. 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.

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II. Financial Analysis

(I) Comparison and Analysis of Financial Performance

Unit: NT$ thousand

Year Item	2023	2022	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	$34,882,023 31,326,299	$38,604,929 34,424,330	-3,722,906 -3,098,031	-9.64% -9.00%
	3,555,724 845,369	4,180,599 876,186	-624,875 -30,817	-14.95% -3.52%
	2,710,355 191,566	3,304,413 476,205	-594,058 -284,639	-17.98% -59.77%
	2,901,921 526,430	3,780,618 707,223	-878,697 -180,793	-23.24% -25.56%
	$2,375,491	$3,073,395	-697,904	-22.71%

1. Analysis on the changes (%):

2. (1) For the changes in operating revenue and cost, please refer to the analysis of changes in gross profit.

3. (2) The non-operating revenue and expenditure was primarily the result of the decrease in investment share recognized under equity method and dividend revenue.

4. (3) Net income ,income tax expenses and current net profit were primarily the result of the decrease in gross profit.

5. 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.

6. Expected sales volume in the coming year and its basis and main factors affecting the growth or decline of sales volume expected by the Company: In October of 2023, World Steel Association forecasts a resumption of 1.8% growth in global steel demand. Rising prices in Europe and the United States are expected to stimulate the Asian steel market. In 2024, steel demand is projected to grow to 1.9%, representing an increase of 36.4 million metric tons compared to 2023.

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The Company's new straight bar inspection facility was completed in Q4 of 2023 and has started the trial run, after which both surface and internal quality of products will be examined and guaranteed as required by customers . In the future, we aim to enter the automotive and high-end steel markets to expand our types of purchase orders and increase sales volume.

The hot-rolled straight-line rolling process at our new rebar factory substantially increased rebar output and reduced energy consumption and carbon emissions, ultimately lowering production cost. This maintains our competitive advantage in accordance with government projects on public infrastructure and construction, the national Forward-looking Infrastructure Development Program, as well as in private construction projects of major electronic manufacturers. With an estimated increase in the sales volume of steel products in 2024, we anticipate a rebound in overall steel demand to overcome unfavourable conditions in 2023.

(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 (%)
2023	35,530,075	648,052	31,326,299	3,555,724	10.19
2022	39,376,424	771,495	34,424,330	4,180,599	10.83
Increase/decre ase from the previous period (%)	-9.77%	-16.00%	-9.00%	-14.95%	-5.91%
Explanation	The decrease in gross profit and gross margin in 2023 from 2022 was primarily the result of the deference of product mix and declination in operating revenue more than operating cost.

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
1,299,681	1,959,102	2,266,184	0	992,599	-	-

1. Analysis on changes of cash flow in this year:

(1) Operating activities: The decrease in cash inflow from operating activities from the previous period by NT$2,240,880 thousand was primarily the result of the increase in inventory.

(2) Investing activities: The decrease in cash outflow from investing activities from the previous period by NT$171,318 thousand was primarily the result of the increase in disposal of financial investment.

(3) Financing activities: The increase in short-term loans by NT$1,116,762 thousand and distribution of cash dividends, NT$2,326,398 thousand resulted in the net cash outflow, NT$1,684,295

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thousand

1. Projected corrective measures against insufficient cash position, and analysis on liquidity: N/A. 3. 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
992,599	3,498,700	3,362,952	1,128,347	-	-

• IV. Impact posed by material capital expenditures in the most recent year to business and finance:

Unit: NT$ thousand

					Unit: NT$ thousand	Unit: NT$ thousand
Project	Actual or expected source of capital	Actual or expected date of completion	Total required capita	Actualor	scheduled capitalutilization
				2022	2023	2024
The solar power system construction	Own capital or bank loan facility	December 2023	916,406	192,146	653,763	70,497
Round bar finishing mill		Febraury 2024	415,843	124,690	234,060	57,093
Shear press machinery		August 2024	144,000	-	37,851	106,149

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 and utilize funds 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 2024, 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$15,520 thousand in 2023 and until April 15 2024.Upon the capital increase, the total trading value amounted to NT$470,164thousand.

• (II) Analysis on profit sought by investment:

  1. The Company’s Share of Profit or Loss of Associates & Joint Ventures Accounted for Using Equity Method amounted to NT$104,904 thousand in 2023, primarily as a result of recognition of the investment income from Taiwan Steel Union Co., Ltd. and Fong Yu Resources Co., Ltd. in Taiwan.

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  2. The company’s unrealized loss from equity instruments investments measured at fair value through other comprehensive income are NT$189,998 thousand and realized gains from equity instruments investments measured at fair value through other comprehensive income are NT$47,379thousand and dividend revenue NT$110,393 thousand in 2023.

• (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$37,143 thousand in 2023, increasing by NT$19,700 thousand from NT$17,443 thousand in 2022.

     • (2) Foreign exchange rate: The Company’s foreign currency exchange gain was NT$18,507thousand in 2023, increasing by NT$14,274 thousand from the exchange gain, NT$32,781 thousand, in 2022.

     • (3) Inflation: The company mainly uses scrap steel as raw material, and the increase in the purchase price of scrap steel will inevitably lead to an increase in operating costs in the short term, which will have a greater impact on the company's finances, but the impact on the overall operation will not be too great.

  2. Future responsive measures:

     • (1) Interest rate:A.Obtain the most suitable interest rate after negotiating the interest rates of multiple banks.

       • B.Compare the difference in loan interest rates between different currencies, and make appropriate fund allocation.

     • (2) Foreign exchange rate: Some of the foreign currency receivables and payables are in the same currency. At this time, a considerable part of the position will have a natural hedging effect; and regularly track the impact of international financial market dynamics on exchange rate fluctuations, so as to adjust relevant operating strategies in a timely manner.

     • (3) Inflation: A.Sign the project price with the supplier and fix the purchase cost.

       • B. Depending on the sales status of finished products, appropriately adjust the purchase ratio of scrap grades. C. Through the production equipment and the improvement of product quality, we can meet the needs of customers and the market, and increase the market share.

• (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

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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 165. 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:refer to page190 VI.Cyber security management

• (VI) Impact on crisis management in the event of a change in corporate identity, and responsive measures:

• Occupational safety protection: In order to ensure the occupational safety of employees, the company continuously improves occupational health and safety management, is committed to reducing and preventing accidents, and creates a friendly and safe working environment for employees.Refer to page 181.

• Energe reduction ：

  • (1) The company is an energy-intensive industry, and under the dual pressures of current energy shortage and climate change, it has received more attention from the society. Therefore, in order to comply with the green trend, the company actively responds to it, strives to plan and hopes to achieve the goal of sustainable development.

  • (2) Refer to ESG report https://www.fenghsin.com.tw/reportdwn.html

• Carbon reduction ： The Climate Change Response Group committed to process improvement, improving energy efficiency, using renewable energy and selecting high-quality raw materials, etc., evaluating, reviewing and introducing various possible solutions, with a view to reaching 2050 Net-zero emissions target. Refer to page 105.

• (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 2023.

• (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.

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• (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 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.

• D. Occupational Safety & Health Division convenes quarterly meetings for the implementation results of sustainable development and future work plans,and discloses the net zero strategy and path and other related management and implementation status.

• (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.

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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.

1. Merit and basis for assessment on provisions under the asset and liability valuation titles

(1)	(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

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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.

Fourteen. Special Notes

• I. Information About Affiliates:

• Overview of affiliates - organizational charts of affiliates

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

The R.O.C. Samoa
Feng Hsin Steel Co., Ltd. GREAT FORTUNE HOLDING
(the Company) LIMITED
Shareholding by the Company:
100% (subsidiary)
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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 HOLDINGLIMITED	May 31, 2010	OFFSHORE CHAMBERS,P.O. BOX 217,APIA,SAMOA	971,367	General investment

1. Information about the Same Shareholder Presumed to Have Control and Affiliation: N/A.

2. Information About Directors and Supervisors of the Various Affiliates

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

Shareholding when elected
Quantity of Shareholding
Name of Affiliate Job Title Name or Representative shares (%)
GREAT FORTUNE Chairman Lin Ming-Ju (Representative of Feng Hsin 31,406,834 100%
HOLDING LIMITED of Board Steel Co., Ltd.)
Director Lin Ta-Chun (Representative of Feng Hsin
Director Steel Co., Ltd.)
Director Lin Chiu-Huang (Representative of Feng
Hsin Steel Co., Ltd.)
Cheng Der-Yih (Representative of Feng
Hsin Steel Co., Ltd.)
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1. Overview of operations of affiliates

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	516,502	-	516,502	-	(28)	(14)	-

• II. Any private placement of securities in the most recent year and until the date of publication of the annual report: N/A.

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• 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 2023, the Company’s products accounted for the following market share: 60.3% for angle steel, 51.1% for channel steel, 48.7% for flat-rolled steel, and 14.0% for steel bar (source of data: “Statistics about Production, Marketing and Inventory of Main Steel Materials” of Taiwan Steel & Iron Industries Association).

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1. Comparison about important financial ratios between the Company and peer companies in the same trade until December 31, 2023:

Name of Company		Financial Analysis in 2023
		Feng Hsin	ChinaSteel	Tung Ho Steel	Wei Chih Steel	Hai Kwang
Analysis Item
Financial			49.58	44.73	48.42	58.09
	Liability to asset ratio	18.92
structure(%)
Solvency	Current ratio	275.86	117.67	139.40	167.72	100.51
(%)	Quick ratio	99.17	33.57	32.97	48.23	40.07
	Inventory turnover (counts)	4.47	2.16	2.69	3.47	4.33
	Average inventory turnover days	81.65	168.98	135.68	105.18	84.29
Operational
ability	Property, plant and equipment turnover	3.64	0.90	3.12	2.98	2.09
	(counts)
	Total asset turnover (counts)	1.29	0.49	1.08	1.24	0.99
	Return on assets (ROA) (%)	9.14	0.94	9.19	5.30	1.04
	Return on equity (ROE) (%)	10.87	1.01	15.85	9.43	0.75
	Income before tax to paid-in capital ratio	49.90	2.91	82.20	15.32	1.95
Profitability
	(%)
	Net profit margin (%)	6.81	1.05	7.81	3.96	0.32
	EPS (NT$)	4.08	0.11	6.48	1.28	0.28

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 Ta-Chun

April 15, 2024

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