Stock Code: 2015

Feng Hsin Steel Co., Ltd. and its Subsidiaries

Consolidated Financial Statements and Independent Auditor’s Report

January 1 to September 30, 2021 and 2020

Company Address: No. 998, Sec. 1, Jiahou Rd., Houli Dist., Taichung City 42145 Company Tel. No.: (04)2556-5101

The reader is advised that these consolidated financial statements have been prepared originally in Chinese. In the event of a conflict between these financial statements and the original Chinese version or difference in interpretation between the two versions, the Chinese language financial statements shall prevail.

Independent Auditor’s Report

To: Feng Hsin Steel Co., Ltd.

Foreword

We, as the CPAs, have completed the audit on the consolidated balance sheets dated September 30, 2021 and 2020 and the consolidated statements of comprehensive income from July 1 to September 30, 2021 and 2020, and from January 1 to September 30, 2021 and 2020, and consolidated statements of changes in shareholders’ equity, consolidated statements of cash flow, and notes to consolidated financial statements from January 1 to September 30, 2021 and 2020 (including summaries of major accounting policies) of Feng Hsin Steel Co., Ltd.. Based on the Regulations Governing the Preparation of Financial Reports by Securities Issuers, and the International Accounting Standards No. 34 “Interim Financial Reporting” recognized and released by the Financial Supervisory Commission, the management shall be responsible for preparation of financial statements fairly presented. The responsibility of the CPAs is to conclude the financial statements based on the result of the audit.

Scope

The CPAs have performed the review based on Statements on Auditing Standards No. 65 “Audit on financial statement.” The procedures performed during the review of financial statements include inquiries (mainly the inquiries to the personnel in charge of finance and accounting affairs), analytical procedures and other review procedures. The scope of review is apparently smaller than the scope of an audit; therefore, the CPAs may not be able to detect all the material matters that may be identifiable under audit, and thus no audit opinion may be provided.

Conclusion

Based on the results of review by us and other CPAs (please refer to the “Other Matters” paragraph), we do not find any incompliance in the preparation of the above-mentioned consolidated financial statements, in all major respects, with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and the International Accounting Standards No. 34 “Interim Financial Reporting” recognized and released by the Financial Supervisory Commission, that may result in inability to fairly presented the consolidated financial position of Feng Hsin Steel Co., Ltd. and its subsidiaries as of September 30, 2021 and 2020, the consolidated financial performance from July 1 to September 30, 2021 and 2020 and January 1 to

September 30, 2021 and 2020, and the consolidated cash flows from January 1 to September 30, 2021 and 2020.

Other Matters - About other CPAs’ review

The financial statements of some investees referred to in the consolidated financial statements as of September 30, 2021 and 2020 were not reviewed by us but by other CPAs. Therefore, the amount identified by us with respect to said investees in the review conclusion about said consolidated financial statements was based on the other CPA’s review report. Said investees’ investments under the equity method were NT$794,616 thousand and NT$685,653 thousand as of September 30, 2021 and 2020, both accounting for 3% of the total consolidated assets. The shares of profit or loss of associates & joint ventures accounted for using the equity method were NT$19,694 thousand, NT$23,025 thousand, NT$67,417 thousand and NT$35,192 thousand from July 1 to September 30, 2021 and 2020 and January 1 to September 30, 2021 and 2020, accounting for 1%, 2%, 2% and 1% of the consolidated net profit before tax, respectively.

/s/Chen, Ming Hung /s/Yen, Wen Pi

Ernst & Young, Taiwan

October 26 2021

Notice to Readers

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

Feng Hsin Steel Co., Ltd. and its Subsidiaries Consolidated Balance Sheets

September 30, 2021, December 31, 2020 and September 30, 2020

(Those dated September 30, 2021 and 2020 were only reviewed but not audited in accordance with the Generally Accepted Auditing Standards.)

							Unit: NT$ thousand	Unit: NT$ thousand
Assets			September 30,	2021	December 31,	2020	September 30,	2020
Code	Accounting Titles	Notes	Amount	%	Amount	%	Amount	%
1100 1110 1120 1140 1150 1170 1200 130x 1410 1470 11xx 1517 1550 1600 1755 1760 1840 1900 15xx 1xxx	Current assets Cash and cash equivalents Financial assets at fair value through profit or loss - current Financial assets at fair value through other comprehensive income - Contract assets - current Notes receivable - net Accounts receivable - net Other receivables Inventories Prepayment Other current assets Total current assets Non-current assets Financial assets at fair value through other comprehensive income - non-current Investment under the equity method Property, plant and equipment Right-of-use assets Investment property - net Deferred income tax assets Other non-current assets Total non-current assets Total assets	IV and VI.3 IV and VI.7 IV and VI.15.16 IV and VI.4.16 VI.6 IV IV and VI.17 IV and VI.16 IV and VI.5 IV and VI.2 IV and VI.9 IV and VI.8 IV and VI.1 IV and VI.10 IV IV and VI.3	$1,481,761 - 2,340,983 496,929 7,042 1,502,478 33,919 6,295,938 635,062 8,818 12,802,930 1,475,235 1,547,199 9,137,277 174,351 695,421 104,327 233,963 13,367,773 $26,170,703	6 - 9 2 - 6 - 24 2 - 49 5 6 35 1 3 - 1 51 100	$2,175,269 - 1,700,311 397,242 11,006 1,478,967 8,579 3,301,468 668,739 7,352 9,748,933 1,072,262 1,426,954 9,436,032 178,936 698,381 109,222 343,142 13,264,929 $23,013,862	9 - 7 2 - 7 - 14 3 - 42 5 6 41 1 3 - 2 58 100	$1,957,508 10,000 653,354 254,805 4,200 1,244,575 5,695 4,129,463 619,146 7,289 8,886,035 1,000,072 1,360,947 9,388,310 206,245 376,930 107,094 319,230 12,758,828 $21,644,863	9 - 3 1 - 6 - 19 3 - 41 5 6 43 1 2 - 2
								59
								100

(Please refer to the Notes for Consolidated Financial Statements.)

Feng Hsin Steel Co., Ltd. and its Subsidiaries Consolidated Balance Sheets

September 30, 2021, December 31, 2020 and September 30, 2020

(Those dated September 30, 2021 and 2020 were only reviewed but not audited in accordance with the Generally Accepted Auditing Standards.)

							Unit: NT$ thousand	Unit: NT$ thousand
Liabilityand Equity			September 30,	2021	December 31,	2020	September 30,	2020
Code	Accounting Titles	Notes	Amount	%	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 3400 3xxx	Current liabilities Short-term loan Contract liability - current Notes payable Accounts payable Other payables Current income tax liabilities Lease liability - 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 Subtotal of other equity Total equity Total liabilities and equity	IV and VI.17 IV and VI.13 IV IV and VI.15 IV and VI.12 IV IV and VI.17 IV IV and VII IV and VI.11 IV VI.14 VI.14 VI.14	$2,178,990 257,203 1,489 1,180,094 895,363 384,114 4,363 868 4,902,484 29 175,734 141,177 32 316,972 5,219,456 5,815,994 486,181 4,630,509 83,991 9,553,053 14,267,553 381,519 381,519 20,951,247 $26,170,703	8 1 - 5 3 1 - - 18 - 1 1 - 2 20 22 2 18 - 37 55 1 1 80 100	$329,941 134,198 - 1,302,794 1,026,124 414,836 5,109 2,159 3,215,161 - 174,803 155,688 - 330,491 3,545,652 5,815,994 560,097 4,354,532 278,241 8,543,337 13,176,110 (83,991) (83,991) 19,468,210 $23,013,862	1 - - 6 4 2 - - 13 - 1 1 - 2 15 25 3 19 1 37 57 - - 85 100	$245,493 131,044 1,054 1,131,724 911,443 253,384 5,790 878 2,680,810 - 204,300 154,945 - 359,245 3,040,055 5,815,994 572,490 4,354,532 278,241 7,845,015 12,477,788 (261,464) (261,464) 18,604,808 $21,644,863	1 1 - 5 4 1 - - 12 - 1 1 - 2 14 27 3 20 1 36 57 (1) (1) 86 100

(Please refer to the Notes for Consolidated Financial Statements.)

Feng Hsin Steel Co., Ltd. and its Subsidiaries

Consolidated Statements of Comprehensive Income

July 1 to September 30, 2021 and 2020, and January 1 to September 30, 2021 and 2020

(Reviewed only but not audited in accordance with the Generally Accepted Auditing Standards.)

									Unit: NT$ thousand	Unit: NT$ thousand
Code	Accounting Titles	Notes	July 1 to September 30,2021		July 1 to September 30,2020		January 1 to September 30,2021		January 1 to September 30,2020
			Amount	%	Amount	%	Amount	%	Amount	%
4100 5000 5900 6000 6100 6200 6300 6900 7000 7100 7010 7020 7050 7060 7900 7950 8200 8300 8310 8316 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 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 Total non-operating revenue and expenditure Net income Income tax expenses Current net profit Other comprehensive income Items not re-classified into income Equity instrument at fair value through other Unrealized valuation gain or loss on investments Other comprehensive income for the current period Total current comprehensive income Net income attributed to: Owner of parent company Non-controlling equity Total comprehensive income attributed to: Owner of parent company Non-controlling equity EPS (NT$) Basic EPS Diluted EPS	IV and VI.15 VI. 18 and VII VI.18 IV and VI.19 VI.19 VI.19 VI.7 IV and VI.21 VI.20 IV and VI.22	$9,716,551 (8,182,361) 1,534,190 (125,149) (84,520) (12,871) (222,540) 1,311,650 122 87,917 1,305 (2,439) 20,798 107,703 1,419,353 (295,889) 1,123,464 (69,464) (69,464) $1,054,000 $1,123,464 - $1,123,464 $1,054,000 - $1,054,000 $1.93 $1.92	100 (84) 16 (1) (1) - (2) 14 - 1 - - - 1 15 (3) 12 (1) (1) 11	$6,551,923 (5,488,648) 1,063,275 (100,998) (70,449) (10,405) (181,852) 881,423 935 40,303 (7,478) (1,103) 25,266 57,923 939,346 (175,332) 764,014 42,489 42,489 $806,503 $764,014 - $764,014 $806,503 - $806,503 $1.31 $1.31	100 (84) 16 (2) (1) - (3) 13 - 1 - - - 1 14 (3) 11 1 1 12	$27,426,855 (23,467,974)	100 (86) 14 (1) (1) - (2) 12 - 1 - - - 1 13 (3) 10 3 3 13	$19,689,990 (16,855,406) 2,834,584 (306,907) (213,790) (32,942) (553,639) 2,280,945 2,565 55,106 (1,354) (4,985) 39,275 90,607 2,371,552 (456,548) 1,915,004 163,221 163,221 $2,078,225 $1,915,004 - $1,915,004 $2,078,225 - $2,078,225 $3.29 $3.27	100 (85) 15 (2) (1) - (3) 12 - - - - - - 12 (2) 10 1 1 11
							3,958,881
							(382,300) (258,508) (35,329)
							(676,137)
							3,282,744
							896 153,497 16,681 (5,994) 67,698
							232,778
							3,515,522 (695,564)
							2,819,958
							772,593
							772,593
							$3,592,551
							$2,819,958 -
							$2,819,958
							$3,592,551 -
							$3,592,551
							$4.85
							$4.82

(Please refer to the Notes for Consolidated Financial Statements.)

Feng Hsin Steel Co., Ltd. and its Subsidiaries

Consolidated Statements of Changes in Shareholders’ Equity January 1 to September 30, 2021 and 2020

(Reviewed only but not audited in accordance with the Generally Accepted Auditing Standards.)

								Unit: NT$ thousand
	Item			Equityattributed to the	owner ofparent company			Total equity
		Capital stock	Capital surplus		Retained earnings		Other equity
				Legal reserve	Special reserve	Unallocated earnings	Unrealized valuation gain or loss on
Code		3100	3200	3310	3320	3350	3420	3XXX
A1 B1 B5 B17 C7 C17 D1 D3 D5 Q1 Z1 A1 B1 B5 B17 C7 C17 D1 D3 D5 Q1 Z1	Balance on January 1, 2020 Appropriation and distribution of retained earnings 2019 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 Changes in other capital surplus Net income ended September 30, 2020 Other comprehensive income ended September 30, 2020 Total current comprehensive income Disposal of equity instrument at fair value through other comprehensive income Balance on September 30, 2020 Balance on January 1, 2021 Appropriation and distribution of retained earnings 2020 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 Changes in other capital surplus Net income ended September 30, 2021 Other comprehensive income ended September 30, 2021 Total current comprehensive income Disposal of equity instrument at fair value through other comprehensive income Balance on September 30, 2021	$5,815,994 - $5,815,994 $5,815,994 - $5,815,994	$588,123 (16,252) 619 - $572,490 $560,097 (74,725) 809 - $486,181	$4,158,088 196,444 - $4,354,532 $4,354,532 275,977 - $4,630,509	$316,503 (38,262) - $278,241 $278,241 (194,250) - $83,991	$7,686,547 (196,444) (1,744,798) 38,262 1,915,004 1,915,004 146,444 $7,845,015 $8,543,337 (275,977) (2,035,598) 194,250 2,819,958 - 2,819,958 307,083 $9,553,053	$(278,241) 163,221 163,221 (146,444) $(261,464) $(83,991) 772,593 772,593 (307,083) $381,519	$18,287,014 - (1,744,798) - (16,252) 619 1,915,004 163,221
								2,078,225
								-
								$18,604,808
								$19,468,210 - (2,035,598) - (74,725) 809 2,819,958 772,593
								3,592,551
								-
								$20,951,247

(Please refer to the Notes for Consolidated Financial Statements.)

Feng Hsin Steel Co., Ltd. and its Subsidiaries

Consolidated Statements of Cash Flow January 1 to September 30, 2021 and 2020

(Reviewed only but not audited in accordance with the Generally Accepted Auditing Standards.)

			Unit: NT$thousand
Code	Item	January 1 to September 30, 2021	January 1 to September 30, 2020
AAAA A10000 A20000 A20010 A20100 A20200 A20400 A20900 A21200 A21300 A22300 A22500 A30000 A31125 A31130 A31150 A31180 A31200 A31230 A31240 A32125 A32130 A32150 A32180 A32230 A32240 A33000 A33100 A33200 A33300 A33500 AAAA BBBB B00010 B00020 B00030 B00100 B00200 B01800 B02700 B02800 B05400 B06700 B06800 B07600 BBBB CCCC C00100 C03000 C04020 C04500 CCCC EEEE E00100 E00200	Cash flow from operating activities: Current income before tax Adjustment: Adjustments to reconcile profit (loss): Depreciation expenses Amortization Net gain on financial assets at fair value through profit or loss Interest expenses Interest revenue Dividend revenue Share of profit (loss) of associates and joint ventures accounted for using the equity method Gain on disposal of property, plant and equipment Changes in the current assets/liabilities related to operating activities: Increase in contract assets - current Decrease in notes receivable Decrease (increase) in accounts receivable Decrease (increase) in other receivable Decrease (increase) in inventories Decrease (increase) in prepayment Increase in other current assets Increase (decrease) in contract liability - current Increase in notes payable Decrease in accounts payable Decrease in other payables Decrease in other current liabilities Decrease in net defined benefit liabilities Cash inflow from operations Interest collected Dividends collected Interest paid Income tax paid Net cash inflow from operating activities 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 financial assets at fair value through profit or loss Disposal of financial assets at fair value through profit or loss Acquisition of investment under the equity method Acquisition of property, plant and equipment Disposal of property, plant and equipment Acquisition of investment property Increase in other non-current assets Decrease 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 deposits received Payment of lease liabilities Cash dividends Net cash outflow from financing activities Increase (decrease) in the current cash and cash equivalents Balance of cash and cash equivalents, beginning Balance of cash and cash equivalents, ending	$3,515,522 910,605 2,250 (3,753) 5,994 (896) (122,989) (67,698) (3,767) (99,687) 4,773 (23,511) (25,100) (2,990,928) (1,852) (1,466) 123,005 1,489 (122,700) (124,091) (1,291) (23,369) 950,540 954 122,691 (3,442) (721,362) 349,381 (1,899,968) 1,628,210 706 (37,680) 41,433 (196,927) (569,284) 733 - - 106,929 71,232 (854,616) 1,849,049 32 (1,756) (2,035,598) (188,273) (693,508) 2,175,269 $1,481,761	$2,371,552 889,931 2,250 - 4,985 (2,565) (42,092) (39,275) - (15,664) 21,706 287,696 11,408 177,718 26,210 (1,829) (328) 813 (42,034) (147,737) (498) (25,429) 3,476,818 2,178 45,892 (2,897) (319,333) 3,202,658 (1,629,721) 1,303,417 - (10,000) - (29,428) (402,247) - (63) (219,839) - 58,816 (929,065) (135,658) - (2,581) (1,744,798) (1,883,037) 390,556 1,566,952 $1,957,508

(Please refer to the Notes for Consolidated Financial Statements.)

Feng Hsin Steel Co., Ltd. and its Subsidiaries

Notes to Consolidated Financial Statements January 1 to September 30, 2021 And 2020

(Reviewed only but not audited in accordance with the Generally Accepted Auditing

Standards.)

(NT$ Thousand, unless otherwise provided.)

I. History

Feng Hsin Steel Co., Ltd. (hereinafter referred to as the “Company”) was founded in 1969, initially engaged in manufacturing, processing and trading of various triangle steel, angle steel, round steel, flat steel and steel plate products, and management and investment of businesses incidental thereto. The No. 2 Steel Rolling Mill was completed and started operating in September 1989. Then, the Company launched into the area of special steel and engaged in producing carbon steel and special steel. The Company’s No. 2 Steelmaking Shop completed the hot commissioning in 1997 and started to produce the special steel billets needed by No. 2 Steelmaking Shop and No. 1 Steelmaking Shop, hoping to control quality and cut costs. The Company’s stocks were listed upon approval of the competent authority in 1991 and officially traded on TWSE on May 25, 1992. The Company’s registered and principal business places are located at No. 998, Sec. 1, Jiahou Rd., Houli Dist., Taichung City.

II. Date and Procedure for Authorization of Financial Statements

The consolidated financial statements of the Company and its subsidiaries (hereinafter referred to as the “Group”) from January 1 to September 30, 2021 and 2020 were approved and released by the Board of Directors on October 26, 2021.

III. Applicability of newly promulgated and amended standard rules and

interpretations
Changes in accounting policies caused by the first-time application of International Financial Reporting Standards (IFRSs)

The Group has adopted the International Financial Reporting Standards (IFRSs),” International Accounting Standards (IAS), Standing Interpretation Committee (SIC) interpretation and International Financial Reporting Standards Interpretations Committee (IFRSIC) announcement, which has been recognized and applied by the Financial Supervisory Commission

Notes to Consolidated Financial Statements of Feng Hsin Steel Co., Ltd. and its

Subsidiaries (Cont’d)

(NT$ Thousand, unless otherwise provided.)

(“FSC”) as of the fiscal year since January 1, 2021. The first-time application of new and amended standards rendered no material impact to the Company.

Standards or interpretations issued, revised or amended, by International Accounting Standards Board (“IASB”) which FSC recognizes, but not yet

adopted by the Group as at the end of the reporting period are listed below:

Item No.	New/Amended/Revised Standards and Interpretations	Effective date promulgated by the International AccountingStandards Board
1	Limited amendments to IFRSs, including the amendments to IFRS 3, IAS 16, and IAS 37, and annual improvements.	January 1, 2022

(1) Limited amendments to IFRSs, including IFRS 3, IAS 16 and IAS 37, and annual improvements.
A. Updating a Reference to the Conceptual Framework (Amendments to IFRS 3)

The amendments are made in order to replace the old index version for the financial reporting conceptual concept and update IFRS 3 with the latest index version released in March 2018. Meanwhile, an exception is added into the recognition principle to prevent the gain or loss on “2nd day” potentially arising from liabilities or contingent liabilities, and to clarify the existing guidelines which remain unaffected by the replacement of the framework index.

B. Property, Plant and Equipment: Income before the intent to use (amendments to IAS 16)

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

C. Onerous contract - the cost of fulfilling a contract (amendments to IAS 37)

The amendments are made to clarify the costs that a company should include as the cost of fulfilling a contract when assessing whether a

Notes to Consolidated Financial Statements of Feng Hsin Steel Co., Ltd. and its Subsidiaries (Cont’d)

(NT$ Thousand, unless otherwise provided.)

contract is onerous.

D. Improvements to IFRSs from 2018 to 2020.

Amendments to IFRS 1

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

Amendments to IFRS 9 “Financial Instruments”

The amendments are made in order to clarify the expenses to be included when an entity evaluates whether there is any significant difference between the new or amended contractual terms and conditions for financial liabilities and the old ones for the same financial liabilities.

Amendments to the illustrative example accompanying IFRS 16 “Leases”

The amendments to Illustrative Example 13 accompanying IFRS 16 are made in order to amend the lease incentives related to the lessee’s leasehold improvement.

Amendments to IAS 41

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

Said standards and interpretations were issued by IASB and endorsed by FSC so that they are applicable for annual periods beginning on or after 1 January 2022. The Group has assessed that the other new or amended standards or interpretations render no material impact.

By the date for authorization of the financial reports, the Group has not adopted the following new, revised and amended standards and interpretation, which have been released by International Accounting Standards Board but not yet recognized by FSC:

Notes to Consolidated Financial Statements of Feng Hsin Steel Co., Ltd. and its Subsidiaries (Cont’d)

(NT$ Thousand, unless otherwise provided.)

Item No.	New/Amended/Revised Standards and Interpretations	Effective date promulgated by the International Accounting Standards Board
1	Amendments to 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 Venture”	To be decided by the International Accounting Standards Board
2	IFRS17 “InsuranceContracts”	January1,2023
3	Classification of liabilities as current or non-current(Amendments to IAS 1)	January 1, 2023
4	Disclosure Initiative - Accounting policy (amendments to IAS1)	January 1, 2023
5	Definition of Accounting Estimate (amendments to IAS 8)	January 1, 2023
6	Deferred Tax Related to Assets and Liabilities Arising from a Single Transaction (Amendments to IAS 12).	January 1, 2023

(1) Amendments to 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 Venture”

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 requires that gains and losses arising from contributions of non-monetary assets to an associate or a joint venture shall be derecognized through downstream transactions. 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.

Notes to Consolidated Financial Statements of Feng Hsin Steel Co., Ltd. and its Subsidiaries (Cont’d)

(NT$ Thousand, unless otherwise provided.)

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.

(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 Model. Under this model, on initial recognition, an entity shall measure a company of insurance contracts at the total of the fulfillment cash flows and the contractual service margin. At the end of each reporting period, the carrying amount of a company of insurance contracts shall be the sum of the liability for remaining coverage and 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-term contracts.

Upon promulgation of the Standard as of May 2017, the Standard was amended in June 2020, so that the effective date should be deferred for another two years (i.e. to be postponed from January 1, 2021 to January 1, 2023) and additional exemptions should be made available; meanwhile, the costs for the adoption of the Standard may be cut through the simplification and certain circumstances may be explained in an easier way by virtue of the amendments. The Standard will replace the provisional one (namely IFRS 4 “Insurance Contracts) after it becomes effective.

(3) 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

Notes to Consolidated Financial Statements of Feng Hsin Steel Co., Ltd. and its Subsidiaries (Cont’d)

(NT$ Thousand, unless otherwise provided.) Financial statements and the amended paragraphs related to the classification of liabilities as current or non-current.

(4) Disclosure Initiative - Accounting policy (amendments to IAS 1)

The amendments are designed to improve the disclosure of accounting policies in order to provide investors and other primary users of the financial statements with more useful information.

(5) Definition of Accounting Estimate (amendments to IAS 8)

The amendments are made to define the accounting estimates directly and amend IAS 8 “Accounting Policies, Changes in Accounting Estimates and Errors” to help entities distinguish between accounting policies and accounting estimates.

(6) Deferred Tax Related to Assets and Liabilities Arising from a Single Transaction (Amendments to IAS 12).

The narrow-scope amendment would narrow the initial recognition exemption in paragraphs 15 and 24 of IAS 12 so that it would not apply to transactions that give rise to both taxable and deductible temporary differences, to the extent the amounts recognized for the temporary differences are the same.

The effective dates of said standards and interpretations which were already issued by IASB but have not yet been recognized by FSC, shall be decided by FSC. The new or amended standards or interpretations rendered no material effect on the Group.

IV. Summary of significant accounting policies

1. Statement of Compliance

The Group’s consolidated financial statements for the years from January 1 to September 30, 2021 and 2020 have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities

Notes to Consolidated Financial Statements of Feng Hsin Steel Co., Ltd. and its Subsidiaries (Cont’d)

(NT$ Thousand, unless otherwise provided.)

Issuers, and IAS 34 “Interim Financial Reporting” recognized and put to effect by FSC.

2. Basis of preparation

The consolidated financial statements have been prepared on the historical cost basis except for financial instruments which are measured at fair value. Unless otherwise stated, the consolidated financial statements are expressed in thousands of New Taiwan Dollars (“NT$”).

3. Overview of consolidation

Principles for preparation of consolidated financial statements

The Company controls an investee when it 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. Particularly, the Company controls an investee if and only if it satisfies all of the following three elements:

(1) Power over the investee (i.e. the Company has existing rights that allow it to direct the relevant activities).
(2) Exposure, or rights, to variable returns from its involvement with the investee, and
(3) Ability to use its power over the investee to affect the amount of the investor's returns.

When the Company holds, directly or indirectly, the voting rights or other similar rights less than the majority investee’s, the Company evaluates whether it still holds power over the investee by taking into account all critical facts and circumstances, including:

(1) Contractual arrangements with the investee and others with voting rights.
(2) Rights derived from other contractual arrangements.
(3) Voting rights and potential voting rights

When the facts and circumstances show changes of any or more of the three

Notes to Consolidated Financial Statements of Feng Hsin Steel Co., Ltd. and its Subsidiaries (Cont’d)

(NT$ Thousand, unless otherwise provided.)

controlling elements, the Company re-evaluates whether it still holds power over the investee.

The subsidiaries have been included in the consolidated financial statements since the date of acquisition (namely, the date when the Group acquires the controlling power) in whole, until the date when the Company loses the controlling power over the subsidiaries. The fiscal period and accounting policies adopted by the subsidiaries’ financial statements are consistent with those adopted by the parent company. The balance, transactions, and unrealized internal gains and losses and dividends generated from the Group’s internal transactions in the Group’s internal account shall be derecognized accordingly.

If the Company doesn’t lose the controlling power over the subsidiaries as a result of changes in shareholdings in the subsidiaries, the changes in equity should be treated as the equity transaction.

A subsidiary’s total comprehensive income is attributed to the parent company’s owner and non-controlling interests, irrelevant with balance or loss generated from non-controlling interests.

Where the Group loses the controlling power over a subsidiary,

(1) it shall derecognize the subsidiary’s assets (including goodwill) and liabilities;

(2) it shall derecognize any book value of the non-controlling interests;

(3) it shall recognize the fair value of consideration for the acquisition;

(4) it shall recognize the fair value of any retained investments;

(5) it shall recognize any gain or loss as the current income;

(6) it shall re-classify the amount recognized by the parent company to other comprehensive income previously as the current income.

Notes to Consolidated Financial Statements of Feng Hsin Steel Co., Ltd. and its Subsidiaries (Cont’d)

(NT$ Thousand, unless otherwise provided.)

Entities in the preparation of consolidated financial statements:

Name of investor The Company	Name of subsidiary GREAT FORTUNE HOLDING LIMITED	Principal business lines	Percentage of equity	Percentage of equity	Percentage of equity
			September 30,2021 100%	December 31,2020	September 30,2020 100%
		General investment		100%

4. Foreign currency transaction

The Group’s consolidated financial statements are expressed in New Taiwan Dollars, the functional currency adopted by the Company. Each entity in the Group decides its own functional currency independently, and measures its financial statement based on the functional currency.

Transactions in foreign currencies conducted by each entity in the Group are retranslated at its functional currency at the foreign exchange rate prevailing at the date of transaction. At the end of each reporting period, monetary items denominated in foreign currencies are retranslated at the closing foreign exchange rate on the same day; non-monetary items are retranslated at the foreign exchange rate on the same day when the fair value is determined; non-monetary items that are measured at historical cost are retranslated at the foreign exchange rate on the date of 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 an acquisition of a qualifying asset to the extent that they are regarded as an adjustment to interest costs are included in the borrowing costs that are eligible for capitalization.
(2) Foreign currency items within the scope of IFRS 9 “Financial Instruments” are accounted for based on the accounting policy for financial instruments.
(3) Exchange differences arising on a monetary item that forms part of a

Notes to Consolidated Financial Statements of Feng Hsin Steel Co., Ltd. and its Subsidiaries (Cont’d)

(NT$ Thousand, unless otherwise provided.)

reporting entity’s net investment in a foreign operation are recognized initially in other comprehensive income and reclassified from equity to profit or loss on disposal of the net investment.

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

Criteria for classifying assets and liabilities as current or non-current items

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

(1) Assets arising from operating activities that are expected to be realized or consumed, or are intended to be sold within the normal operating cycle;
(2) Assets held mainly for trading purposes;
(3) Assets that are expected to be realized within twelve months from the reporting period;
(4) Cash and cash equivalents, excluding restricted cash and cash equivalents and those to be exchanged or used to pay off liabilities more than twelve months after the reporting period.

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

(1) Liabilities arising from operating activities that are expected to be paid off within the normal operating cycle;
(2) Liabilities arising mainly from trading activities;
(3) Liabilities that are expected to be paid off within twelve months from the reporting period;
(4) Liabilities for which the repayment date cannot be extended unconditionally to more than twelve months after the reporting period. Terms of a liability that could, at the option of the trading counterpart, result in its settlement by the issue of equity instruments do not affect its classification.

Notes to Consolidated Financial Statements of Feng Hsin Steel Co., Ltd. and its Subsidiaries (Cont’d)

(NT$ Thousand, unless otherwise provided.)

Cash and cash equivalents

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

7. Financial instruments

Financial assets and liabilities shall be recognized when the Company becomes a party to the contractual provisions of the instruments.

Financial assets and financial liabilities within the scope of IFRS 9 “Financial Instruments” are recognized initially at fair value, plus or minus transaction costs directly attributable to acquisition or issuance of financial assets and financial liabilities (except those classified into financial assets and financial liabilities at fair value through profit or loss).

(1) Recognition and measurement of financial assets

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

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

A. The Company’s business model for managing the financial assets
B. The contractual cash flow characteristics of the financial asset.

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, accounts receivables, financial assets measured at amortized cost and other receivables etc., on the balance sheet:

Notes to Consolidated Financial Statements of Feng Hsin Steel Co., Ltd. and its Subsidiaries (Cont’d)

(NT$ Thousand, unless otherwise provided.)

A. Business model managing financial assets: To hold financial assets in order to collect contractual cash flows.
B. The contractual cash flow characteristics of the financial asset: Cash flows are solely payments of principal and interest on the principal amount outstanding.

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

Interest calculated by using the effective interest method (calculated by applying the effective interest rate to the gross carrying amount of a financial asset) or under the following circumstances shall be recognized into profit or loss:

A. In the case of purchased or originated credit impaired financial assets, the Company applies the credit adjusted effective interest rate to the amortized cost of the financial asset.
B. In the case of financial assets that are not purchased or originated credit impaired financial assets but subsequently have become credit impaired financial assets, the Company applies the effective interest rate to the amortized cost of the financial assets.

Financial assets 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 and presented as the financial asset at fair value through other comprehensive income on the balance sheet:

A. Business model managing financial assets: To collect contractual

Notes to Consolidated Financial Statements of Feng Hsin Steel Co., Ltd. and its Subsidiaries (Cont’d)

(NT$ Thousand, unless otherwise provided.)

cash flows and sell financial assets.

B. The contractual cash flow characteristics of the financial asset: Cash flows are solely payments of principal and interest on the principal amount outstanding.

Recognition of gain or loss on such financial asset is described as below:

A. Except for the impairment gain or loss and foreign currency exchange gain or loss, which is recognized into the income, the gain or loss thereof should be recognized into other comprehensive income before derecognition or re-classification.
B. At the time of derecognition, the accumulated gains or losses initially recognized into other comprehensive income should be re-classified from equity into income as the reclassification adjustment.
C. Interest calculated by using the effective interest method (calculated by applying the effective interest rate to the gross carrying amount of a financial asset) or under the following circumstances shall be recognized into profit or loss:
(a) In the case of purchased or originated credit impaired financial assets, the Company applies the credit adjusted effective interest rate to the amortized cost of the financial asset.
(b) In the case of financial assets that are not purchased or originated credit impaired financial assets but subsequently have become credit impaired financial assets, the Company applies the effective interest rate to the amortized cost of the financial assets.

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

Notes to Consolidated Financial Statements of Feng Hsin Steel Co., Ltd. and its Subsidiaries (Cont’d)

(NT$ Thousand, unless otherwise provided.)

comprehensive income on the balance sheet. Dividends on such investment are recognized as profit or loss unless the dividends clearly represent a recovery of part of the cost of investment.

Financial assets at fair value through profit or loss

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

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

(2) Impairment of financial assets

The Group recognizes and measures the loss allowance for financial assets at amortized costs based on expected credit losses. The Group measures expected credit losses in a way that reflects:

A. an unbiased and probability weighted amount that is determined by evaluating a range of possible outcomes;
B. the time value of money;
C. reasonable and supportable information (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 follow:

A. At an amount equal to 12 months of 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 balance sheet date. Additionally, the Company measures the loss allowance at an amount equal to lifetime expected credit losses in the previous reporting period. Still, it determines at the

Notes to Consolidated Financial Statements of Feng Hsin Steel Co., Ltd. and its Subsidiaries (Cont’d)

(NT$ Thousand, unless otherwise provided.)

current balance sheet date that the credit risk on a financial asset has increased significantly since initial recognition is no longer met.

B. At an amount equal to the lifetime expected credit losses: the credit risk on a financial asset has increased significantly since initial recognition or financial asset that is purchased or originated credit impaired financial asset.
C. For accounts 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.

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

(3) Derecognition of financial assets

Any financial asset held by the Company is derecognized when any of the following circumstances are met:

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

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 into profit or loss.

(4) Financial liabilities and equity instruments

Notes to Consolidated Financial Statements of Feng Hsin Steel Co., Ltd. and its Subsidiaries (Cont’d)

(NT$ Thousand, unless otherwise provided.)

Classification between liabilities or equity

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

Equity instrument

An equity instrument is any contract that evidences a residual interest in an entity's assets after deducting all of its liabilities. The equity instrument issued by the Group is recognized based on the acquisition price less the direct issue cost.

Financial liabilities

Financial liabilities within the scope of IFRS 9 are classified as financial liabilities measured at amortized cost upon initial recognition.

Financial liabilities measured 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 into 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 any discount or premium on acquisition and fees or transaction costs into account.

Derecognition of financial liabilities

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

When debt instruments subject to contractual terms different from each other significantly are exchanged or the terms of an existing liability are substantially modified (whether or not attributable to the financial difficulty of the debtor) between the Group and creditors, 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

Notes to Consolidated Financial Statements of Feng Hsin Steel Co., Ltd. and its Subsidiaries (Cont’d)

(NT$ Thousand, unless otherwise provided.)

respective carrying amounts and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognized into profit or loss.

(5) Offsetting of financial assets and liabilities

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

8. Fair value measurement

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

(1) In the principal market for the asset or liability, or
(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 acted 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

Notes to Consolidated Financial Statements of Feng Hsin Steel Co., Ltd. and its Subsidiaries (Cont’d)

(NT$ Thousand, unless otherwise provided.)

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 each inventory to its present location and condition are accounted for as follows:

Raw materials - Actual purchase cost on a weighted average method.

Finished goods and work in progress - Cost of direct materials and labor and a proportion of manufacturing overheads based on normal operating capacity. Finished goods and work in progress adopt 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 for in accordance with IFRS 15 and not within the scope of inventories.

10. Investment under the equity method

The Group’s investment in its associates 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 means that the Group has rights over net assets under the joint arrangement (with joint control).

Under the equity method, the investment in the associate or an investment in a joint venture is carried in the balance sheet at cost and adjusted thereafter for the post-acquisition change in the Company’s share of net assets of the associate or joint venture. After the interest in the associate or joint venture is reduced to zero, additional losses are provided for, and a liability is recognized, only to the extent that the Company has incurred legal or

Notes to Consolidated Financial Statements of Feng Hsin Steel Co., Ltd. and its Subsidiaries (Cont’d)

(NT$ Thousand, unless otherwise provided.)

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’s related interest in the associate or joint venture.

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

When the associate or joint venture issues new stock, and the Group’s interest in an associate or a joint venture is reduced or increased as the Group fails to acquire shares newly issued in the associate or joint venture proportionately to its original ownership interest, the increase or decrease in the interest in the associate or joint venture is recognized into “Capital Surplus” and “Investment accounted for using the equity method”. When the interest in the associate or joint venture is reduced, the related items previously recognized into other comprehensive income are reclassified into profit, loss, or other appropriate items. The aforementioned capital surplus recognized is reclassified into 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 the end of each reporting period 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 into the profit or loss of the associate or joint venture in accordance with IAS 36 “Impairment of Assets”. Where said recoverable amount adopts

Notes to Consolidated Financial Statements of Feng Hsin Steel Co., Ltd. and its Subsidiaries (Cont’d)

(NT$ Thousand, unless otherwise provided.)

the value in use of the investment. The Group may determine the related value in use of the investment in the following manners:

(1) The Group’s 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 or joint venture, and the proceeds on the ultimate disposal of the investment; or
(2) The present value of the estimated future cash flows expected by the Group arises from dividends 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 control over the joint venture, the Group measures and recognizes any retaining investment at its fair value. Upon loss of significant influence over the associate or joint control over the joint venture, any difference between the carrying amount of the associate or joint venture and the fair value of the retaining investment plus proceeds from disposal is recognized into profit or loss. Meanwhile, when the investment in the associate becomes that in the joint venture, or the investment in the joint venture becomes that in the associate, the Group continues to apply the equity method without re-measuring the retained equity.

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 necessary interest expenses for construction in progress. Each part of property, plant and equipment that is significant is depreciated separately. When significant parts of property, plant and equipment are required to be replaced in intervals, the Group recognizes such parts as

Notes to Consolidated Financial Statements of Feng Hsin Steel Co., Ltd. and its Subsidiaries (Cont’d)

(NT$ Thousand, unless otherwise provided.)

individual assets with specific useful life and depreciation. 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 the replacement cost 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 life of the following assets:

Asset items House and building Machine & equipment Transportation equipment Office equipment Leasehold improvement	Useful life
	6~56 years 3~41 years 4~16 years 3~17 years 2~25 years

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

The residual values, useful lives and methods of depreciation of property, plant and equipment are reviewed at the end of each reporting period. The changes resulting from the expected value and previous estimate difference 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 investment property. After 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

Notes to Consolidated Financial Statements of Feng Hsin Steel Co., Ltd. and its Subsidiaries (Cont’d)

(NT$ Thousand, unless otherwise provided.)

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 the 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 life of the following assets:

Asset items Building	Useful life
	30~50 years

Investment properties are derecognized and relevant profit or loss is recognized when either they have been disposed of or when the investment property is permanently withdrawn from use. No future economic benefit is expected from its disposal.

The Group decides to transfer to or from investment properties based on the actual usage of the 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. Lease

The Company assesses whether the contract is, or contains, a lease on the date when the contract is established. 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 Group assesses whether, throughout the period of use, has both of the following:

(1) the right to obtain substantially all of the economic benefits from the use of the identified asset; 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

Notes to Consolidated Financial Statements of Feng Hsin Steel Co., Ltd. and its Subsidiaries (Cont’d)

(NT$ Thousand, unless otherwise provided.)

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 a 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.

Company as a lessee

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

At the commencement date, the Group measures the lease liability at the present value of the lease payments that are not paid at that date. The lease payments are discounted using the interest rate implicit in the lease if that rate can be readily determined. If that rate cannot be readily determined, the Group uses its incremental borrowing rate. At the commencement date, the lease payments included in the measurement of the lease liability comprise the following payments for the right to use the underlying asset during the lease term that is 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; and
(5) payments of penalties for terminating the lease, if the lease term reflects the lessee exercising an option to terminate the lease.

Notes to Consolidated Financial Statements of Feng Hsin Steel Co., Ltd. and its Subsidiaries (Cont’d)

(NT$ Thousand, unless otherwise provided.)

After the commencement date, the Group measures the lease liability on an amortized cost basis, increasing the carrying amount to reflect interest on the lease liability using an effective interest method. It 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; and
(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 asset 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 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 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

Notes to Consolidated Financial Statements of Feng Hsin Steel Co., Ltd. and its Subsidiaries (Cont’d)

(NT$ Thousand, unless otherwise provided.)

liabilities in the balance sheet and separately presents lease-related depreciation expense and interest expense 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 during the lease period.

The Group elects not to assess whether the related rent concessions resulting from the pandemic of COVID-19 directly is leasehold improvement, but treats such rent concessions as changes in the lease payment. The Group also has the practical expediency applied to all qualified rent concessions.

Group as a lessor

At the inception of a contract, the Group classifies its leases as either an operating lease or a finance lease. A lease is classified as a finance lease if it substantially transfers all the risks and rewards incidental to ownership of an underlying asset. A lease is classified as an operating lease if it does not so. At the commencement date, the Group recognizes assets held under a finance lease in its balance sheet and presents them as a receivable 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 revenue 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 revenue when incurred.

14. Impairment of non-financial assets

At the end of each reporting period, the Group assesses whether there is any indication that an asset in the scope of IAS 36 “Impairment of Assets” may be impaired. If any such indication exists, or when annual impairment testing for an asset is required, the Group tests the individual assets or cash-generating units of the assets. If the impairment test result shows that the carrying

Notes to Consolidated Financial Statements of Feng Hsin Steel Co., Ltd. and its Subsidiaries (Cont’d)

(NT$ Thousand, unless otherwise provided.)

amount of the asset or cash-generating unit of the asset is more than the recoverable amount thereof, the impairment loss should be recognized. An asset’s recoverable amount is higher than the net fair value or value in use.

For assets excluding goodwill, an assessment is made at the end of each reporting period regarding whether any indication that previously recognized impairment losses 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, increasing the recoverable amount. However, the reversal is limited so that the asset's carrying amount does not exceed its recoverable amount, nor exceed the carrying amount that would have been determined, net of depreciation or amortization, had no impairment loss been recognized for the asset in prior years.

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

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

15. Revenue recognition

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

Sale of goods

Notes to Consolidated Financial Statements of Feng Hsin Steel Co., Ltd. and its Subsidiaries (Cont’d)

(NT$ Thousand, unless otherwise provided.)

The Group manufactures and sells goods. Sales revenue is recognized when control of the goods is transferred to the customer. The goods are delivered to the customers (i.e. the customer directs the use of such goods and obtains the ability of almost residual effects of such goods). The main products of the Group are steel products and revenue is recognized based on the consideration stated in the contract. Transactions of the other goods are generally conditioned at a discount for quantity (based on the total sales accumulated within a specific time limit). Therefore, the revenue is recognized based on the consideration stated in the contract, less the amount of discount for the estimated quantity. The Group estimates the variable considerations generated from the discount for quantity based on the actual shipping quantity, to the extent that the accumulated revenue as recognized is highly unlikely to be reversed significantly after the uncertainty related to variable considerations is eliminated subsequently. The expected discount for quantity is also recognized as the refund liability relatively during the specific time limit as agreed.

The credit period of the Group’s sale of goods is from 10 to 75 days. For most contracts, when the Group transfers the goods to customers and has a right to an amount of unconditional consideration, these contracts are recognized as accounts receivables. Such accounts receivable are generally short-term and free from any important financial components. Few contracts are recognized as contract assets when the Group transfers the goods to customers but has not yet had a right to an unconditional amount of consideration. In the case of contract assets, the loss allowance should be measured at an amount equal to lifetime expected credit losses under IFRS 9.

Rendering of services

The Group provides labor services primarily with respect to the transportation and insurance services for the various steel products sold by the Group. Such services are separately priced or negotiated, provided based on the contract period. Since the Group provides transportation and insurance services during the contract period, customers may obtain the effects of transportation and insurance for such goods during the contract period. Accordingly, the Group recognizes revenues when the Group

Notes to Consolidated Financial Statements of Feng Hsin Steel Co., Ltd. and its Subsidiaries (Cont’d)

(NT$ Thousand, unless otherwise provided.)

satisfied a performance obligation at a point in time.

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

The period between the transfers of the Group’s said contract liabilities to revenue is usually within one year. Thus, no significant financing component arises.

16. Borrowing costs

The borrowing costs of qualifying assets directly attributable to the acquisition, construction or production shall be eligible for capitalization as a part of the costs of such assets. The other borrowing costs are recognized as the expenses when incurred. The borrowing costs include the interests and other costs incurred related to the borrowing of loans.

17. Post employment benefits

The Company’s regulations governing employees’ retirement apply to all employees hired by the Company officially. The employees’ pension fund is managed by the Pension Supervisory Committee and deposited into the pension fund account as a whole. Said pension fund is deposited under the Committee’s name in the specific bank account and hence, not associated with the Company. Therefore, such a fund is not included in said consolidated financial statements.

For the defined contribution plan, the Company will make a monthly contribution of no less than 6% of the employees' monthly wages subject to the plan. The Company recognizes expenses for the defined contribution

Notes to Consolidated Financial Statements of Feng Hsin Steel Co., Ltd. and its Subsidiaries (Cont’d)

(NT$ Thousand, unless otherwise provided.)

plan in the period in which the contribution becomes due.

The post-employment benefit plan classified as a defined benefit plan uses the Projected Unit Credit Method to measure its obligations and costs based on actuarial assumptions. Re-measurements, comprising of the effect of the actuarial gains and losses, the effect of the asset ceiling (excluding net interest) and the return on plan assets, excluding net interest, are recognized as other comprehensive income with a corresponding debit or credit to retained earnings in the period in which they occur. The past service costs are the changes in the present value of defined benefit obligation generated from amendments to or curtailment of the plan and recognized into profit or loss on the earlier of:

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

(2) the date that the Group recognizes restructuring-related costs or termination benefits.

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.

Interim retirement costs are calculated from the beginning until the end of the interim period using the actuarial pension cost rate determined at the end of the previous year, and adjusted for major market changes, plan modifications, settlements and other one-time events that took place after the end of the interim period.

18. Income tax

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

Notes to Consolidated Financial Statements of Feng Hsin Steel Co., Ltd. and its Subsidiaries (Cont’d)

(NT$ Thousand, unless otherwise provided.)

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 into other comprehensive income or directly into equity is recognized into other comprehensive income or equity and not into profit or loss.

The income tax for undistributed earnings is recognized as income tax expense on the date when the Shareholders’ meeting approves the distribution proposal.

Deferred income tax

Deferred income tax is provided on temporary differences at the end of reporting period between the tax bases of assets and liabilities and their carrying amounts in the balance sheet.

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

(1) Where the deferred tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss;
(2) Regarding 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, it is probable that the temporary differences will not be reversed in the foreseeable future.

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

Notes to Consolidated Financial Statements of Feng Hsin Steel Co., Ltd. and its Subsidiaries (Cont’d)

(NT$ Thousand, unless otherwise provided.)

(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 be reversed 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 end of the reporting period. The measurement of deferred tax assets and deferred tax liabilities reflects the tax consequences that would follow from the manner in which the Company expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities. 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 the end of each reporting period 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. The deferred taxes relate to the same taxable entity and the same taxation authority.

Income taxes for the interim period are assessed and disclosed by determining the tax rate applicable to expected total annual earnings, i.e. applying the estimated annual average effective tax rate to interim pre-tax profit. The estimate of the annual average effective rate only comprises current income tax expenses. The deferred income tax shall be recognized and measured in line with the annual financial reporting and under IAS 12 “Income Tax”. If the tax rate is changed during the interim period, the

Notes to Consolidated Financial Statements of Feng Hsin Steel Co., Ltd. and its Subsidiaries (Cont’d)

(NT$ Thousand, unless otherwise provided.)

effect of the tax rate change to deferred income tax is recognized through profit and loss, other comprehensive income or directly into equity in one entry in the period occurred.

V. Major sources of major accounting judgments, estimates, and hypotheses

The preparation of the Group’s consolidated financial statements requires the management to make judgments, 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’s accounting policies, management has made the following judgments, which have the most significant effect on the amounts recognized in the consolidated financial statements:

(1) Investment property

Some of the Group’s property is held to earn rent or capital appreciation in one part and for own use in the other part. If each part thereof may be sold independently, it shall be treated as investment property and property, plant and equipment, respectively. If it is impossible to sell each part independently, the property may be classified into an investment property, to the extent that the parts held for own use are considered insignificant.

(2) Operating lease commitment - Group as the lessor

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

Notes to Consolidated Financial Statements of Feng Hsin Steel Co., Ltd. and its Subsidiaries (Cont’d)

(NT$ Thousand, unless otherwise provided.)

2. Estimates and assumptions

The key assumptions concerning the future and other key sources of estimation uncertainty at the end of the reporting period, 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.

(1) Post employment benefits

The cost of post-employment benefit and the present value of the pension obligation under defined benefit pension plans are determined using actuarial valuations. An actuarial valuation involves making various assumptions. These include the determination of the discount rate and increase/decrease in expected salaries.

(2) Revenue recognition - Sales return and allowance

The Group estimates the sales return and allowance based on historical experience and other known reasons. It presents it as a deduction to operating revenue at the time of sale of the goods. Said estimate about sales return and allowance would be done to the extent that the accumulated revenue recognized due to important reversal is very unlikely to be incurred. Please refer to Note 6 for details.

(3) 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. Such provisions are based on various factors, such as the

Notes to Consolidated Financial Statements of Feng Hsin Steel Co., Ltd. and its Subsidiaries (Cont’d)

(NT$ Thousand, unless otherwise provided.)

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’s entity’s domicile.

Deferred tax assets are recognized for all carryforward of unused tax losses and unused tax credits and deductible temporary differences to the extent that it is probable that taxable profit will be available or there are taxable temporary differences. 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.

(4) Accounts receivables–estimation of impairment loss

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

(5) Inventories

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

VI. Notes to major accounting titles

1. Cash and cash equivalents

Notes to Consolidated Financial Statements of Feng Hsin Steel Co., Ltd. and its

Subsidiaries (Cont’d)

(NT$ Thousand, unless otherwise provided.)

Cash on hand Demand deposits Cash equivalents Total	September 30,2021 $935 1,480,826 - $1,481,761	December 31,2020 $948 1,074,729 1,099,592 $2,175,269	September 30,2020 $964 1,156,962 799,582 $1,957,508

2. Financial assets at fair value through profit or loss - current

Mandatorily measured at fair value through profit or loss: Fund	September 30,2021	December 31,2020	September 30,2020
	$ -	$ -	$10,000

The Group’s financial assets at fair value through profit or loss were not pledged.

Financial assets at fair value through other comprehensive income

At fair value through other comprehensive income Equity instrument - current TWSE/TPEx-listed stocks At fair value through other comprehensive income Equity instrument - non-current TWSE/TPEx-listed stocks Unlisted stocks Total	September 30,2021 $2,340,983 $536,529 938,706 $1,475,235	December 31,2020	September 30,2020
		$1,700,311	$653,354
		$245,294 826,968	$213,299 786,773
		$1,072,262	$1,000,072

The Group’s financial assets at fair value through other comprehensive income were not pledged.

The information about dividend revenue from the investment in equity

Notes to Consolidated Financial Statements of Feng Hsin Steel Co., Ltd. and its Subsidiaries (Cont’d)

(NT$ Thousand, unless otherwise provided.)

instrument at fair value through other comprehensive income held by the Group from July 1 to September 30, 2021 and 2020 and January 1 to September 30, 2021 and 2020 is stated as follows:

Related to investment still held on the balance sheet date Related to investment derecognized in the current period Dividend revenue recognized in the current period	July 1, 2021~ September 30,2021	July 1, 2020~ September 30,2020 $27,145 9,433 $36,578	January 1, 2021~ September 30,2021	January 1, 2020~ September 30,2020
	$43,554 36,361		$82,161 40,828	$32,659 9,433
	$79,915		$122,989	$42,092

Ascentek Venture Capital Corporation, in which the Company holds shares, has completed the liquidation on May 31, 2021, and refunded the share capital, NT$706 thousand, on June 24, 2021.

The Group disposed of the investment in equity instrument at fair value through other comprehensive income at the fair value, NT$1,628,210 thousand, from January 1 to September 30, 2021, and re-stated the unrealized valuation loss accumulated at the time of disposal, NT$307,083 thousand, from other equity into retained earnings.

The Group disposed of the investment in equity instrument at fair value through other comprehensive income at the fair value, NT$1,303,417 thousand, from January 1 to September 30, 2020, and re-stated the unrealized valuation gain accumulated at the time of disposal, NT$146,444 thousand, from other equity into retained earnings.

4. Accounts receivable

Accounts receivable
Accounts receivable Less: loss allowance Total	September 30,2021 $1,504,596 (2,118) $1,502,478	December 31,2020 $1,481,085 (2,118) $1,478,967	September 30,2020
			$1,246,693 (2,118)
			$1,244,575

Notes to Consolidated Financial Statements of Feng Hsin Steel Co., Ltd. and its Subsidiaries (Cont’d)

(NT$ Thousand, unless otherwise provided.)

The Group’s accounts receivable were not pledged.

The loan extended by the Group to customers is generally on a 10-75-day term. As of September 30, 2021, December 31, 2020 and September 30, 2020, the total carrying amounts were NT$1,504,596 thousand, NT$1,481,085 thousand and NT$1,246,693 thousand, respectively. Please refer to Note 6(16) for more details on loss allowance for January 1~ September 30, 2021 and 2020. Please refer to Note 12 for more details on credit risk management.

5. Inventories

Inventories
Raw materials Supplies Work in process Finished goods Total	September 30,2021 $2,623,430 385,349 1,729,567 1,557,592 $6,295,938	December 31,2020 $1,405,703 267,145 796,631 831,989 $3,301,468	September 30,2020
			$1,565,653 371,495 1,051,716 1,140,599
			$4,129,463

The inventory costs in the sales recognized by the Group from July 1 to September 30, 2021 and 2020 and from January 1 to September 30, 2021 and 2020 were NT$8,182,361 thousand, NT$5,488,648 thousand, NT$23,467,974 thousand and NT$16,855,406 thousand, respectively.

Said inventories are not pledged.

6. Prepayment

Prepayment
Supplies inventory Payment in advance Other prepayments Total	September 30,2021 $541,851 85,734 7,477 $635,062	December 31,2020 $578,186 86,989 3,564 $668,739	September 30,2020
			$560,038 51,943 7,165
			$619,146

Said payment in advance was not pledged.

Notes to Consolidated Financial Statements of Feng Hsin Steel Co., Ltd. and its

Subsidiaries (Cont’d)

(NT$ Thousand, unless otherwise provided.)

Investment under the equity method

The Group’s investments under the equity method are detailed as follows:

September 30,2021 Amount Shareholding $794,616 22.50 569,468 29.08 183,115 18.00 $1,547,199	December 31,2020 Amount Shareholding $744,203 20.92 510,929 29.71 171,822 18.00 $1,426,954	September 30,2020	September 30,2020
Amount $794,616 569,468 183,115 $1,547,199	Amount $744,203 510,929 171,822	Amount $685,653 513,219 162,075 $1,360,947	Shareholding
			20.65 29.71 18.00
	$1,426,954

The Group increased capital in Taiwan Steel Union Co., Ltd. by NT$129,876 thousand from January 1 to September 30, 2021 and thereby caused its shareholdings to increase from 20.92% to 22.50%. Meanwhile, the Group decreased other capital surpluses by NT$75,648 thousand.

The Group increased capital in Taiwan Steel Union Co., Ltd. by NT$29,428 thousand from January 1, to September 30, 2020 and thereby caused its shareholdings to increase from 20.24% to 20.65%. Meanwhile, the Group decreased other capital surpluses by NT$16,252 thousand.

In the third quarter of 2021, the Group participated in issuance of common stock for cash of Fengyu Resources Co., Ltd., increasing its investment in Fengyu Resources Co., Ltd in the amount of NT$68,628 thousand. However, because the Group did not increase investment according to the shareholding ratio, the shareholding ratio decreased from 29.71% to 29.08%.And the Group increased other capital surplus by NT$923 thousand.

Notes to Consolidated Financial Statements of Feng Hsin Steel Co., Ltd. and its Subsidiaries (Cont’d)

(NT$ Thousand, unless otherwise provided.)

The Group held the shareholding less than 20% in Wen Shan Resort Corporation. Notwithstanding, it still held significant influence over the investee and, therefore, the investee was evaluated under the equity method.

Fair value with quoted market price available: Taiwan Steel Union Co., Ltd. has been listed on TWSE. The fair values of the Group’s investment in it under the equity method were NT$1,885,255 thousand, NT$1,766,921 thousand and NT$1,532,472 thousand, respectively, on September 30, 2021, December 31, 2020 and September 30, 2020.

The investment by the Group in Taiwan Steel Union Co., Ltd., Fengyu Resource Co., Ltd. and Wen Shan Resort Corporation is not considered material. The summarized financial information about the Group’s investment in the associate is stated as follows, by the total shares vested in the Group:

July 1, 2021~ September 30,2021 Current net income from continuin operations $20,798 Other comprehensive income for the current period (net after tax) - Total current comprehensive income $20,798	July 1, 2020~ September 30,2020 $25,266 - $25,266	January 1, 2021~ September 30,2021 $67,698 - $67,698	January 1, 2020~ September 30,2020 $39,275 - $39,275

Said investment in associate was free from any contingent liability or capital commitment and was not pledged, on September 30, 2021, December 31, 2020 and September 30, 2020.

The investments in Taiwan Steel Union Co., Ltd. under the equity method were NT$794,616 thousand and NT$685,653 thousand, respectively, on September 30, 2021 and 2020. The share of profit (loss) of associates and joint ventures accounted for using the equity method was NT$19,694 thousand, NT$23,025 thousand, NT$67,417 thousand and NT$35,192

Notes to Consolidated Financial Statements of Feng Hsin Steel Co., Ltd. and its

Subsidiaries (Cont’d)

(NT$ Thousand, unless otherwise provided.)

thousand, respectively, from July 1 to September 30, 2021 and 2020 and from January 1 to September 30, 2021 and 2020. Said figures are provided based on the financial statements audited by other CPAs.

8. Property, plant and equipment

Unfinished

Machine and equipment $16,867,846 227,643 (494,417) 479,041 $17,080,113 $16,667,078 224,723 (245,908) 128,427	Transportation equipment $409,785 18,151 (6,542) - $421,394 $394,566 12,309 - -	Total
		$22,671,941 569,284 (502,401) 35,529
		$22,774,353
		$22,197,078 402,247 (245,908) 23,223
$16,774,320	$406,875	$22,376,640
$11,461,215 793,798 (493,909) - $11,761,104	$307,332 18,387 (6,542) - $319,177	$13,235,909 903,060 (501,893) -
		$13,637,076

Notes to Consolidated Financial Statements of Feng Hsin Steel Co., Ltd. and its

Subsidiaries (Cont’d)

(NT$ Thousand, unless otherwise provided.)

January 1, 2020 Depreciation Disposal Other changes September 30, 2020 Net carrying amount: September 30, 2021 December 31, 2020 September 30, 2020	Land $ - - - - $ - $1,288,353 $1,285,809 $1,193,967	House and building $1,279,505 77,609 - - $1,357,114 $2,019,486 $2,091,900 $2,104,240	Machine and equipment $10,716,926 775,789 (245,908) - $11,246,807 $5,319,009 $5,406,631 $5,527,513	Office equipment $15,159 1,987 - - $17,146 $29,193 $31,156 $31,810	Transportation equipment $286,391 17,879 - - $304,270 $102,217 $102,453 $102,605	Leasehold improveme nt $52,975 10,018 - - $62,993 $259,842 $263,815 $267,155	Unfinished construction and equipment pending acceptance $ - - - - $ - $119,177 $254,268 $161,020	Total
								$12,350,956 883,282 (245,908) -
								$12,988,330
								$9,137,277
								$9,436,032
								$9,388,310

No interest that is eligible for capitalization arises from the Group’s purchase of property, plant and equipment.

The amounts of land stated by the Group as agricultural land registered under another person’s name preliminarily were NT$149,811 thousand, NT$147,267 thousand and NT$55,425 thousand, respectively, on September 30, 2021, December 31, 2020 and September 30, 2020. The Group has received the commitment for future unconditional transfer of the land.

The Group’s property, plant and equipment were not pledged.

9. Investment property

The investment property included the Group’s own investment property.

Notes to Consolidated Financial Statements of Feng Hsin Steel Co., Ltd. and its Subsidiaries (Cont’d)

(NT$ Thousand, unless otherwise provided.)

The Group has executed commercial property lease contracts for the own investment property, effective for 1~10 years. The contracts included the terms and conditions requiring adjustment on the rental subject to the market environment on a yearly basis.

Cost: January 1, 2021 Addition from acquisition September 30, 2021 Depreciation: January 1, 2021 Current depreciation September 30, 2021 Cost: January 1, 2020 Addition from acquisition Disposal September 30, 2020 Depreciation: January 1, 2020 Current depreciation Disposal September 30, 2020 Net carrying amount: September 30,2021 December 31,2020 September 30,2020	Land $506,477 - $506,477 $ - - $ - $376,867 63 - $376,930 $ - - - $ - $506,477 $506,477 $376,930	Building $192,233 - $192,233 $329 2,960 $3,289 $6,086 - (6,086) $ - $2,536 710 (3,246) $ - $188,944 $191,904 $ -	Total
			$698,710 -
			$698,710
			$329 2,960
			$3,289
			$382,953 63 (6,086)
			$376,930
			$2,536 710 (3,246)
			$ -
			$695,421
			$698,381
			$376,930

Notes to Consolidated Financial Statements of Feng Hsin Steel Co., Ltd. and its

Subsidiaries (Cont’d)

(NT$ Thousand, unless otherwise provided.)

Rental revenue from investment property Less: Direct operating expenses from investment property generating rental revenue in the current period Direct operating expenses from investment property not generating rental revenue in the current period Total	July 1, 2021~ September 30,2021 $610 - (302) $308	July 1, 2020~ September 30,2020 $508 - - $508	January 1, 2021~ September 30,2021	January 1, 2020~ September 30,2020
			$1,878 (2) (1,706)	$1,803
				-
				-
			$170	$1,803

The Group’s investment property were not pledged.

Investment properties held by the Group are not measured at fair value but for which the fair value is disclosed. The fair value measurements of the investment properties are categorized within Level 3. The fair value of the Group’s investment property appraised by the external independent appraiser retained by the Group was NT$627,522 thousand in February 2017, which was evaluated under the comparative method and land development analysis approach. The discount rate as applied primarily was hypothesized as 5.58%.

The fair value of said investment property evaluated by the Group by referring to the information on the Department of Land Administration website, Ministry of the Interior and actual transactions in the neighborhood

Notes to Consolidated Financial Statements of Feng Hsin Steel Co., Ltd. and its Subsidiaries (Cont’d)

(NT$ Thousand, unless otherwise provided.)

area on September 30, 2021, December 31, 2020 and September 30, 2020 appears to be equivalent to that appraised by the external independent appraiser retained by the Group in February 2017.

The fair value of the Group’s 2020 added investment property appraised by the external independent appraiser retained by the Group was NT$441,347 thousand in August 2020, which was evaluated under the comparative method and income method. The income capitalization rate, as applied primarily, was hypothesized as 2.31%. The Group evaluated that no material fluctuation would be caused to the fair value of the investment property on September 30, 2021.

10. Other non-current assets

	September	September	December	September
	30,2021		31,2020	30,2020
Prepayments for	$209,946		$316,530	$260,095
equipment
Prepayments for land and		-	-	32,019
building
Refundable deposits		7,081	7,081	7,181
Others		16,936	19,531	19,935
Total	$233,963		$343,142	$319,230
Short-term loan
	Interest range	September	December	September
		30,2021	31,2020	30,2020
Unsecured bank	0.58%~0.78	$2,178,990	$329,941	$245,493
loans	%

11. Short-term loan

The Group’s short-term credit limits remaining unused have been NT$7,538,245 thousand, NT$6,084,526 thousand and NT$8,767,444 thousand, respectively, until September 30, 2021, December 31, 2020 and September 30, 2020.

Notes to Consolidated Financial Statements of Feng Hsin Steel Co., Ltd. and its Subsidiaries (Cont’d)

(NT$ Thousand, unless otherwise provided.)

12. Other payables

Other payables
Salary and year-end bonus payable Discount payable Electricity bills payable Pollution control fees payable Others Total	September 30,2021 $349,801 144,796 139,677 123,997 137,092 $895,363	December 31,2020 $344,290 162,391 194,542 176,499 148,402 $1,026,124	September 30,2020
			$259,413 112,013 128,958 230,487 180,572
			$911,443

13. Post employment benefits

Defined contribution plan

The expenses of the defined contribution plan recognized by the Group from July 1 to September 30, 2021 and 2020 were NT$5,677 thousand and NT$5,283 thousand, respectively, and those from January 1 to September 30, 2021 and 2020 were NT$16,630 thousand and NT$15,513 thousand, respectively.

Defined benefit plan

The expenses of the defined benefit plan recognized by the Group from July 1 to September 30, 2021 and 2020 were NT$2,118 thousand and NT$2,558 thousand, respectively, and the expenses of the defined contribution plan recognized from January 1 to September 30, 2021 and 2020 were NT$6,355 thousand and NT$7,673 thousand, respectively.

14. Equity

(1) Common Stock

The Company’s authorized capitals were both NT$7,000,000 thousand as at September 30, 2021, December 31, 2020 and September 30, 2020, each at a par value of NT$10 for 581,599,424 outstanding shares, with the paid-in capital, NT$5,815,994 thousand. Each share has one voting right and a right to receive dividends.

Notes to Consolidated Financial Statements of Feng Hsin Steel Co., Ltd. and its Subsidiaries (Cont’d)

(NT$ Thousand, unless otherwise provided.)

(2) Capital surplus

Capital surplus
Additional paid-in capital Treasury stock transactions Changes in net worth of equity of associates and joint ventures accounted for using the equity method Gain on sale of fixed assets Donated assets received Others Total	September 30,2021 $271,134 175,263 33,667 665 218 5,234 $486,181	December 31,2020 $271,134 175,263 108,392 665 218 4,425 $560,097	September 30,2020
			$271,134 175,263 121,007 665 218 4,203
			$572,490

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

(3) Legal reserve

According to the Company Act, after the Company has paid its tax and has made up for past loss. When distributing surplus, the first 10% shall be for the legal reserve. The legal reserve can be used to make good the deficit of the Company. When the Company incurs no loss, it may distribute the portion of legal reserve that exceeds 25% of the paid-in capital by issuing new shares or by cash in proportion to the number of shares held by each shareholder.

(4) Special reserve

When distributing earnings, the Company needs to provide the other net deductions from shareholders’ equity, net as the special reserve.

Notes to Consolidated Financial Statements of Feng Hsin Steel Co., Ltd. and its Subsidiaries (Cont’d)

(NT$ Thousand, unless otherwise provided.)

Afterwards, earnings may be distributed for the reversed portion if there is any reversal for the deduction under other equity to shareholders.

(5) Distribution of earnings and dividend policies

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

A. Payment of all taxes and dues pursuant to laws;

B. Offset prior years’ operation losses;

C. Set aside 10% of the remaining amount as legal reserve;

D. Set aside or reverse special reserve in accordance with law and regulations, or the competent authority’s order;

E. If any, the distribution of the remaining portion will be recommended by the Board of Directors and resolved in the shareholders’ meeting.

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 the year may be distributed in the form of stocks.

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

Details of the 2020 and 2019 appropriation of earnings distribution and dividends per share as approved by general shareholders’ meeting on July 22, 2021 and June 10, 2020, respectively, are as follows:

Notes to Consolidated Financial Statements of Feng Hsin Steel Co., Ltd. and its

Subsidiaries (Cont’d)

(NT$ Thousand, unless otherwise provided.)

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

Please refer to Note 6(18) for details on basis of estimation and recognized amount of employees’ compensation and remuneration to directors and supervisors.

15. Operating revenue

July 1, 2021~ September 30, 2021	July 1, 2020~ September 30, 2020	January 1, 2021~ September 30, 2021	January 1, 2020~ September 30, 2020

$9,683,951 32,600	$6,522,184 29,739	$27,324,605 102,250	$19,607,172 82,818
$9,716,551	$6,551,923	$27,426,855	$19,689,990

Revenue from Contracts with Customers generated by the Group from July 1 to September 30, 2021 and 2020, and January 1 to September 30, 2021 and 2020:

(1) Revenue breakdown

A. The Group refers to a single operating department. For the information about revenue disclosed by the department to be

Notes to Consolidated Financial Statements of Feng Hsin Steel Co., Ltd. and its Subsidiaries (Cont’d)

(NT$ Thousand, unless otherwise provided.)

reported, please refer to the descriptions in the preceding paragraph.

B. Revenue from Contracts with Customers from July 1 to September
- 30, 2021 and 2020, and January 1 to September 30, 2021 and 2020 refers to that recognized at a point in time.
(2) Contract balances
A. Contract assets-current

Sale of goods	September 30,2021	December 31,2020	September 30,2020	January 1, 2020
	$496,929	$397,242	$254,805	$239,141

The significant changes in the Group’s balances of contract assets from January 1 to September 30, 2021 and 2020 are as follows:

January 1, January 1, 2021~ 2020~ September 30, September 30, 2021 2020 The opening balance transferred to current $(397,242) $(239,141) accounts receivable Increase in the current accounts receivable 496,929 254,805 (excluding the amount incurred and transferred to accounts receivable during the period)

B. Contract liability-current

Sale of goods	September 30,2021	December 31,2020	September 30,2020	January 1, 2020
	$257,203	$134,198	$131,044	$131,372

The changes in the Group’s balances of contract assets from January 1 to September 30, 2021 and 2020 result from the order quantity of steel products, customers’ requirement about shipping schedule and construction progress.

Notes to Consolidated Financial Statements of Feng Hsin Steel Co., Ltd. and its Subsidiaries (Cont’d)

(NT$ Thousand, unless otherwise provided.)
(3) Transaction price allocated to the performance obligation which still has not yet been performed.

As the Group’s contracts with customers for the sale of goods were all no longer than one year until September 30, 2021, December 31, 2020 and September 30, 2020, it is not required for the Group to provide information about the performance obligation which has not yet been performed.

(4) Assets recognized the cost of acquisition or performance of contracts with customers.

None.

Expected credit impairment losses

The Group had no expected credit impairment losses from July 1 to September 30, 2021 and 2020, and January 1 to September 30, 2021 and 2020.

Please refer to Note 12 for information about credit risks.

The Group measures the loss allowance of its contract assets and accounts receivables (including note receivables and accounts receivables) at an amount equal to lifetime expected credit losses. The assessment of the Group’s loss allowance as at September 30, 2021, December 31, 2020 and September 30, 2020 is stated as follows:

(1) The historical credit loss experience about contract assets shows that there are no significant different types of loss varying depending on the different customer groups. Therefore, the loss allowance is measured by different groups and based on the expected credit loss rate. The details are provided as follows:

Total carrying amount Expected credit loss rate Loss allowance Total	September 30,2021	December 31,2020	September 30,2020
	$496,929 0% -	$397,242 0% -	$254,805 0% -
	$496,929	$397,242	$254,805

Notes to Consolidated Financial Statements of Feng Hsin Steel Co., Ltd. and its Subsidiaries (Cont’d)

(NT$ Thousand, unless otherwise provided.)

(2) The accounts receivables were grouped by taking into consideration the trading counterpart’s credit rating, region and industry, and the loss allowance thereof is measured by using a provision matrix. Details are as follows:

September 30,2021

Net yet due (Note)			Overdue			Total
	within 30 days	31-60 days	61-90 days	91-120 days	More than 121 days
$1,500,525 0-1%	$11,630 -%	$670 -%	$ - -%	$ - -%	$ - -%	$1,512,825 3,305
3,305	-	-	-	-	-
$1,497,220	$11,630	$670	$ -	$ -	$ -	$1,509,520
Net yet due (Note)			Overdue			Total
	within 30 days	31-60 days	61-90 days	91-120 days	More than 121 days
$1,488,248 0-1%	$5,030 -%	$ - -%	$ - -%	$ - -%	$ - -%	$1,493,278 3,305
3,305	-	-	-	-	-
$1,484,943	$5,030	$ -	$ -	$ -	$ -	$1,489,973

Notes to Consolidated Financial Statements of Feng Hsin Steel Co., Ltd. and its

Subsidiaries (Cont’d)

(NT$ Thousand, unless otherwise provided.)

September 30,2020

Net yet due (Note)			Overdue			Total
	within 30 days	31-60 days	61-90 days	91-120 days	More than 121 days
$1,233,250 0-1%	$18,830 -%	$- -%	$ - -%	$ - -%	$ - -%	$1,252,080 3,305
3,305	-	-	-	-	-
$1,229,945	$18,830	$-	$ -	$ -	$ -	$1,248,775

Note: The Group’s notes receivable are all not yet due, and the lifetime expected credit loss on accounts receivable are the credit losses provided in the past years.

The information about changes in loss allowance for contract assets, notes receivable and accounts receivable from January 1 to September 30, 2021 and 2020 is stated as follows:

and 2020 is stated as follows:
January 1, 2021 Amount of increase (reversal) in the current period Write off for uncollectibility September 30, 2021 January 1, 2020 Amount of increase (reversal) in the current period Write off for uncollectibility September 30, 2020	Contract assets	Contract assets	Accounts receivable $2,118 - - $2,118 $2,118 - - $2,118
	$ - - -	$1,187 - -
	$-	$1,187
	$ - - -	$1,187 - -
	$-	$1,187

Lease

(1) Group as a lessee

Notes to Consolidated Financial Statements of Feng Hsin Steel Co., Ltd. and its Subsidiaries (Cont’d)

(NT$ Thousand, unless otherwise provided.)

The Group leases multiple assets, including property and machine & equipment. The valid terms of various lease contracts range from 1 to 50 years.

The effect posed by lease to the Group’s financial position, financial performance and cash flow is described as follows:

A. Amount recognized in balance sheet

(a) Right-of-use assets

Carrying amount of right-of-use asset

Land Machine and equipment Total	September 30,2021	December 31,2020	September 30,2020
	$173,102 1,249	$176,281 2,655	$203,120 3,125
	$174,351	$178,936	$206,245

The Group had no additions to the right-of-use assets on September 30, 2021, December 31, 2020 and September30, 2020.

(b) Lease liabilities

Lease liabilities
Lease liabilities Current Non-current Total	September 30,2021	December 31,2020	September 30,2020
	$4,363 175,734	$5,109 174,803	$5,790 204,300
	$180,097	$179,912	$210,090

For the Group’s interest expenses on lease liabilities from January 1 to September 30, 2021 and 2020, please refer to Note 6(19).3 Financial Cost. For the analysis about the maturity of lease liabilities dated September 30, 2021, December 31, 2020 and September 30, 2020, please refer to Note 12(5) Liquidity Risk Management.

B. Amount recognized in the statement of comprehensive income

Notes to Consolidated Financial Statements of Feng Hsin Steel Co., Ltd. and its Subsidiaries (Cont’d)

(NT$ Thousand, unless otherwise provided.)

Depreciation of right-of-use assets

Land Machine and equipment Total	July 1, 2021~ September 30,2021	July 1, 2020~ September 30, 2020	January 1, 2021~ September 30,2021	January 1, 2020~ September 30, 2020
	$1,059 469	$1,454 468	$3,179 1,406	$4,534 1,405
	$1,528	$1,922	$4,585	$5,939

C. Lessee’s income and expenses related to lease activities

Short-term lease expenses	July 1, 2021~ September 30,2021	July 1, 2020~ September 30, 2020	January 1, 2021~ September 30,2021	January 1, 2020~ September 30, 2020
	$1,311	$1,215	$3,931	$3,422

D. Lessee’s cash outflow related to lease activities

The Group’s total cash outflows from lease from January 1 to September 30, 2021 and 2020 were NT$6,162 thousand and NT$6,566 thousand, respectively.

E. Other information related to lease activities

(a) Variable lease payments

Some of the Group’s property lease contracts include the clauses about variable lease payments of the present value of land, which amount is structured with the present value of the leased land. Such variable lease payments lease is very common in the industry in which the Group is engaged. As the variable lease payments do not satisfy the definition of lease payment, they are excluded from the measurement of assets and liabilities.

(b) Options for extension of lease and options for termination of lease

Some of the Group’s property lease contracts include the option

Notes to Consolidated Financial Statements of Feng Hsin Steel Co., Ltd. and its Subsidiaries (Cont’d)

(NT$ Thousand, unless otherwise provided.)

for extension of lease and the option for termination of lease. The non-cancellable period for which the lessee has the right to use an underlying asset, including optional periods when the Group is reasonably certain to exercise an option to extend (or not to terminate) a lease shall be included when deciding the lease period. The exercise of such options may maximize resilience in contract management. Most of the options to extend and terminate a lease can only be exercised by the Group. The Group must reassess the lease period if there is either a significant event or change after the commencement of the lease (as to whether it is still controllable by the Group or whether the Group is still reasonably certain to exercise an option excluded when deciding the lease period previously, or not to exercise an option included when deciding the lease period previously).

(c) Residual value guarantee

N/A.

(2) Group as a lessor

For the disclosure related to the Group’s own investment property, please refer to Note 6(9). The investment property is classified as an operating lease if it doesn’t transfer substantially all the risks and rewards incidental to ownership of an underlying asset.

Lease income recognized from operating lease Fixed asset payment and income related to variable lease payments that depend on an index or a rate	July 1, 2021~ September 30,2021	July 1, 2020~ September 30, 2020	January 1, 2021~ September 30,2021	January 1, 2020~ September 30, 2020
	$610	$508	$1,878	$1,803

For the Group’s disclosure of property, plant and equipment for operating leases applicable under IAS 16, please refer to Note 6(9). The undiscounted lease payments and the total amount of the residual years

Notes to Consolidated Financial Statements of Feng Hsin Steel Co., Ltd. and its Subsidiaries (Cont’d)

(NT$ Thousand, unless otherwise provided.)

to be collected by the Group on September 30, 2021, December 31, 2020 and September 30, 2020, for the operating lease contracts executed by the Group, are stated as follows:

More than one year More than one year but no more than five years More than two years but no more than three years More than three years but no more than four years More than four years but no more than five years More than five years Total	September 30,2021	December 31,2020	September 30,2020
	$1,969 1,529 991 991 785 10,205	$1,849 1,552 1,323 785 785 10,205	$1,849 1,643 1,323 785 785 10,990
	$16,469	$16,499	$17,375

Summary statement of employee benefits, depreciation and amortization expenses by function:

By function By nature	July1,2021~ September 30,2021	July1,2021~ September 30,2021	July1,2021~ September 30,2021	July1,2021~ September 30,2020	July1,2021~ September 30,2020	July1,2021~ September 30,2020
	As operating cost	As operating expenses	Total	As operating cost	As operating expenses	Total
Employee benefit expenses
Salaries	$231,747	$86,179	$317,926	$180,477	$63,538	$244,015
Labor and national health insurance expenses	14,379	3,437	17,816	13,117	2,909	16,026
Pension	6,524	1,271	7,795	6,510	1,331	7,841
Other employee benefit expenses	10,921	2,560	13,481	8,102	2,052	10,154
Depreciation expenses	287,511	12,882	300,393	286,253	12,144	298,397
Amortization expenses	750	-	750	750	-	750

Notes to Consolidated Financial Statements of Feng Hsin Steel Co., Ltd. and its Subsidiaries (Cont’d)

(NT$ Thousand, unless otherwise provided.)

By function By nature	January 1, 2021~ September 30, 2021	January 1, 2021~ September 30, 2021	January 1, 2021~ September 30, 2021	January 1, 2021~ September 30, 2020	January 1, 2021~ September 30, 2020	January 1, 2021~ September 30, 2020
	As operating cost	As operating expenses	Total	As operating cost	As operating expenses	Total
Employee benefit expenses
Salaries	$621,007	$222,105	$843,112	$536,610	$176,937	$713,547
Labor and national health insurance expenses	42,827	15,592	58,419	38,866	12,952	51,818
Pension	19,231	3,754	22,985	19,208	3,978	23,186
Other employee benefit expenses	31,364	7,227	38,591	23,902	5,976	29,878
Depreciation expenses	872,330	38,275	910,605	852,997	36,934	889,931
Amortization expenses	2,250	-	2,250	2,250	-	2,250

The Group had 907 employees and 884 employees on September 30, 2021 and 2020.

According to the Company’s Articles of Incorporation, where there are annual profits at the end of a financial year, no less than 2% of the profits for such year shall be distributed to employees as the employees’ compensation, and no more than 2% thereof to directors/supervisors as the remuneration. Notwithstanding, the accumulated losses, if any, shall have been covered first. By a resolution adopted by a majority vote at a meeting of Board of Directors attended by two-thirds of the total number of directors, the Group may have the profit distributable as employees’ compensation in cash and report the same to a 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.

Based on the profit from January 1 to September 30, 2021, the Company

Notes to Consolidated Financial Statements of Feng Hsin Steel Co., Ltd. and its Subsidiaries (Cont’d)

(NT$ Thousand, unless otherwise provided.)

estimated the remunerations to employees and directors/supervisors at the rates of 7.62% and 1.46%. The remunerations to employees and directors/supervisors from July 1 to September 30, 2021 were MT$134,248 thousand and NT$22,950 thousand, and those recognized from January 1 to September 30, 2021 were NT$294,712 thousand and NT$56,645 thousand, respectively. Further, based on the profit from January 1 to September 30, 2020, the Company estimated the remunerations to employees and directors/supervisors at the rates of 8.07% and 1.46%. The remunerations to employees and directors/supervisors from July 1 to September 30, 2020 were MT$80,371 thousand and NT$15,121 thousand, and those recognized from January 1 to September 30, 2020 were NT$211,490 thousand and NT$38,231 thousand, respectively. The estimated amounts were based on the profit of current period and were recognized as salaries.

A resolution was passed at a Board of Directors meeting to distribute NT$305,699 thousand and NT$45,000 thousand in cash as employees’ compensation and remuneration to directors and supervisors of 2020, respectively. No material differences exist between the estimated amounts and the amounts stated as expenses in the 2020 financial report.

19. Non-operating revenue and expenditure

(1)Other revenue

)Other revenue
Dividend revenue Rental revenue Other revenue - others Total	July 1, 2021~ September 30,2021	July 1, 2020~ September 30,2020	January 1, 2021~ September 30,2021	January 1, 2020~ September 30,2020
	$79,915 610 7,392	$36,578 508 3,217	$122,989 1,878 28,630	$42,092 1,803 11,211
	$87,917	$40,303	$153,497	$55,106

Notes to Consolidated Financial Statements of Feng Hsin Steel Co., Ltd. and its

Subsidiaries (Cont’d)

(NT$ Thousand, unless otherwise provided.)

(2)Other gains and losses

)Other gains and losses
Net foreign currency exchange gains Gain on disposal of property, plant and equipment Income from financial assets at fair value through profit or loss Miscellaneous expenditure Total )Financial cost Interest on borrowings from the bank Lease liabilities interest Total	July 1, 2021~ September 30,2021 $7,166 - - (5,861)	July 1, 2020~ September 30,2020 $2,378 - - (9,856)	January 1, 2021~ September 30,2021	January 1, 2020~ September 30,2020
			$17,869 3,767 3,753 (8,708)	$11,154
				-
				-
				(12,508)
	$1,305	$(7,478)	$16,681	$(1,354)
	July 1, 2021~ September 30,2021	July 1, 2020~ September 30,2020	January 1, 2021~ September 30,2021 $4,053 1,941	January 1, 2020~ September 30,2020
	$1,792 647	$348 755		$2,717 2,268
	$2,439	$1,103	$5,994	$4,985

(3)Financial cost

Components of other comprehensive income
(1)Components of other comprehensive income from July 1 to September 30, 2021 are stated as follows:

2021 are stated as follows:
Items not re-classified into income: Unrealized gains (losses) from Investment in equity instrument at fair value through other comprehensive income	Arising during the period	during the period Re-classifica tion adjustments	Others Other comprehensi ve income	Income tax gains (expenses)	net of tax
	$(69,464)	$ -	$(69,464)	$ -	$(69,464)

Notes to Consolidated Financial Statements of Feng Hsin Steel Co., Ltd. and its

Subsidiaries (Cont’d)

(NT$ Thousand, unless otherwise provided.)

(2)Components of other comprehensive income from July 1 to September 30, 2020 are stated as follows:

2020 are stated as follows:
Items not re-classified into income: Unrealized gains (losses) from Investment in equity instrument at fair value through other comprehensive income	Arising during the period	during the period Re-classifica tion adjustments	Others Other comprehensi ve income	Income tax gains (expenses)	net of tax
	$42,489	$ -	$42,489	$ -	$42,489

(3)Components of other comprehensive income from January 1 to September

30, 2021 are stated as follows:

30, 2021 are stated as follows:
Items not re-classified into income: Unrealized gains (losses) from Investment in equity instrument at fair value through other comprehensive income	Arising during the period $772,593	during the period Re-classifica ion adjustments	t Others Other comprehensi ve income	Income tax gains (expenses)	net of tax
		$ -	$772,593	$ -	$772,593

(4)Components of other comprehensive income from January 1 to September 30, 2020 are stated as follows:

30, 2020 are stated as follows:
Items not re-classified into income: Unrealized gains (losses) from Investment in equity instrument at fair value through other comprehensive income	Arising during the period	during the period Re-classifica tion adjustments	Others Other comprehensi ve income	Income tax gains (expenses)	net of tax
	$163,221	$ -	$163,221	$ -	$163,221

21. Income tax

Primary components of the income tax expenses (gains) from July 1 to

September 30, 2021 and 2020, and January 1 to September 30, 2021 and

Notes to Consolidated Financial Statements of Feng Hsin Steel Co., Ltd. and its Subsidiaries (Cont’d)

(NT$ Thousand, unless otherwise provided.)

2020 are stated as follows:

Income tax recognized into profit or loss

Current income tax expenses: Current income tax payable Adjustments in respect of current income tax of prior periods Deferred income tax expenses: Deferred tax expense (income) relating to origination and reversal of temporary differences Income tax expenses	July 1, 2021~ September 30,2021 $292,427 - 3,462 $295,889	July 1, 2020~ September 30,2020 $174,189 - 1,143 $175,332	January 1, 2021~ September 30,2021 $691,729 (1,089) 4,924 $695,564	January 1, 2020~ September 30,2020
				$453,504 (1,372) 4,416
				$456,548

Income tax recognized into other comprehensive income

None.

The assessment of income tax returns

As of September 30, 2021, the Company’s income tax returns through 2019 have been assessed and approved by the tax authority.

22. Earnings per share

Basic earnings per share amounts are calculated by dividing net profit for the year attributable to common stockholders of the parent company by the weighted average number of common shares outstanding during the year.

Diluted earnings per share amounts are calculated by dividing net profit for the year attributable to the common stockholders of the parent company by the weighted average number of common shares outstanding during the

Notes to Consolidated Financial Statements of Feng Hsin Steel Co., Ltd. and its

Subsidiaries (Cont’d)

(NT$ Thousand, unless otherwise provided.)

year, plus the weighted average number of common shares to be issued when dilutive potential common shares are converted into common shares.

July 1, 2021~ September 30, 2021	July 1, 2020~ September 30, 2020	January 1, 2021~ September 30, 2021
$1,123,464	$764,014	$2,819,958
581,599	581,599	581,599
$1.93	$1.31	$4.85
$1,123,464	$764,014	$2,819,958
581,599 3,139	581,599 3,161	581,599 3,139
584,738	584,760	584,738
$1.92	$1.31	$4.82

There have been no other transactions involving common shares or potential common shares between the reporting period and the date of approval and publication of the financial statements.

Notes to Consolidated Financial Statements of Feng Hsin Steel Co., Ltd. and its Subsidiaries (Cont’d)

(NT$ Thousand, unless otherwise provided.)

VII. Related party transaction

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

Name and relationship of the related parties

Name of relatedparty	Relationshipwith the Group The Group’s associate The Group’s associate Subsidiary of the Group’s associate
Taiwan Steel Union Co., Ltd. Fengyu Resource Co., Ltd. Taiwan Steel Resources Co., Ltd.

Significant transactions with related parties

(1) Accounts payable

Accounts payable
The Group’s associate Subsidiary of the Group’s associate Total	September 30,2021 $1,528 5,738 $7,266	December 31,2020 $6,894 12,513 $19,407	September 30,2020
			$9,141 -
			$9,141

(2) Other transactions

The Group contracted Taiwan Steel Union Co., Ltd. to dispose of electric arc furnace dust, and recognized the manufacturing expenses, NT$3,153 thousand, NT$23,069 thousand, NT$ 15,664 thousand and NT$69,193 thousand, from July 1 to September 30, 2021 and 2020 and January 1 to September 30, 2021 and 2020. Until September 30, 2021 and 2020, NT$1,528 thousand and NT$9,141 thousand have been outstanding and stated as accounts payable.

The Group contracted Taiwan Steel Resources Co., Ltd. to dispose of the reducing slag, and recognized the manufacturing expenses, NT$21,094 thousand, NT$3,969 thousand, NT$ 66,910 thousand and NT$35,947

Notes to Consolidated Financial Statements of Feng Hsin Steel Co., Ltd. and its Subsidiaries (Cont’d)

(NT$ Thousand, unless otherwise provided.)

thousand, from July 1 to September 30, 2021 and 2020 and January 1 to September 30, 2021 and 2020. Until September 30, 2021 and 2020, NT$5,738 thousand and NT$0 thousand have been outstanding and stated as accounts payable.

The Group sold the right to emission of Sulfide and Nitride to Fengyu Resource Co., Ltd. and recognized the other revenue, NT$13,920 thousand, from January 1 to September 30, 2021 accordingly. No such transaction has been conducted from January 1 to September 30, 2020.

(3) Key management personnel compensation

Short-term employee benefits Post-employment benefits Total	July 1, 2021~ September 30,2021	July 1, 2020~ September 30, 2020 January 1, 2021~ September 30,2021	July 1, 2020~ September 30, 2020 January 1, 2021~ September 30,2021	January 1, 2020~ September 30, 2020
	$36,540 86	$26,719 87	$97,014 257	$70,199 260
	$36,626	$26,806	$97,271	$70,459

VIII. Pledged assets

The Group has furnished the following assets as collaterals:

The Group has furnished the following	assets as collaterals:	assets as collaterals:	assets as collaterals:
Item	Carryingamount			Contents
	September 30,2021	December 31,2020	September 30,2020
Other non-current assets	$13,686	$13,686	$13,686	Performance bond

IX. Major contingent liabilities and commitments made under unrecognized contracts

The guarantee notes issued for loans that have not yet recalled and cancelled were NT13,018,000 thousand and NT$10,062,450 thousand on September

Notes to Consolidated Financial Statements of Feng Hsin Steel Co., Ltd. and its Subsidiaries (Cont’d)

(NT$ Thousand, unless otherwise provided.)

30, 2021 and 2020.

The letters of guarantee issued by banks upon the Group’s request when importing goods under the “Implementation Regulations Governing Post Release Duty Payment” were both NT$30,000 thousand on September 30, 2021 and 2020.
Amount of letters of credit already issued but unused (in $ thousand in foreign currency)

September USD JPY EUR	September 30,2021 $47,063 199,285 408	December 31,2020 $58,487 213,413 440	September 30,2020
			$27,849 660,194 710

No security bond has been furnished for said letters of credit already issued but unused.

The important purchase contracts already executed by the Group are stated as follows:

Contract parties Company A	Terms and conditions New oxygen plant production project	Total contract price JPY 550,000	Paid amount JPY 495,000	UntilSeptember 30,2021 Outstanding payment
				JPY 55,000

X.Loss of material disaster

None.

XI. Subsequent events None.

XII. Others

Notes to Consolidated Financial Statements of Feng Hsin Steel Co., Ltd. and its Subsidiaries (Cont’d)

(NT$ Thousand, unless otherwise provided.)

1. Categories of financial instruments

1. Categories of financial instruments
Financial assets Financial assets at fair value through profit or loss Mandatorily measured at Fair value through profit or loss Financial assets at fair value through other comprehensive income Financial assets measured at amortized cost Cash and cash equivalents (exclusive of cash on hand) Contract assets Notes and accounts receivable Other receivables Other financial assets - non-current Subtotal Total Financial liabilities Financial liabilities measured at amortized cost: Short-term loan Notes and accounts payable Other payables Lease liabilities Total	September 30,2021		December 31,2020		September 30,2020
		$ - 3,816,218 1,480,826 496,929 1,509,520 33,919 13,686		$ - 2,772,573 2,174,321 397,242 1,489,973 8,579 13,686	$10,000 1,653,426 1,956,544 254,805 1,248,775 5,695 13,686
		3,534,880		4,083,801	3,479,505
	$7,351,098		$6,856,374		$5,142,931
	$2,178,990 1,181,583 895,363 180,097		$329,941 1,302,794 1,026,124 179,912		$245,493 1,132,778 911,443 210,090
	$4,436,033		$2,838,771		$2,499,804

2. Financial risk management objectives and policies

The Group’s principal financial risk management objective is to manage the market risk, credit risk and liquidity risk related to its operating activities. The Group identifies measures and manages the aforementioned risks based on the Group’s policy and risk appetite.

The Group has established appropriate policies, procedures and internal controls for financial risk management. Before entering into significant transactions, due approval process by the Board of Directors and Audit

Notes to Consolidated Financial Statements of Feng Hsin Steel Co., Ltd. and its Subsidiaries (Cont’d)

(NT$ Thousand, unless otherwise provided.)

Committee must be carried out based on related protocols and internal control procedures. The Group shall comply with its financial risk management policies during its financial management activities.

3. Market risk

Market risk is the risk that a financial instrument's fair value or future cash flows will fluctuate because of the changes in market prices. The Group’s market risk primarily includes foreign exchange rate risk, interest rate risk and other price risks.

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 exchange rate risk

The Group ’s exposure to the foreign exchange rate risk relates primarily to the Group’s operating activities (when revenue or expense are denominated in a different currency from the Group’s functional currency).

The Group’s foreign currency receivables and foreign currency payables are denominated in the same foreign currency in part. Accordingly, the equivalent positions would generate the natural hedging effect.

The Group’s foreign exchange rate risk sensitivity analysis is performed on the effect posed to the Company’s income by revaluation/devaluation of foreign currency related to the significant monetary items denominated in foreign currencies as at the end of the reporting period. The Company’s foreign exchange rate risk is mainly related to the volatility in the exchange rates for USD, JPY, and Euro.

Interest rate risk

The interest rate risk arises when the fluctuation of the market interest rate results in fluctuation in financial instruments' fair value or future cash flow.

Notes to Consolidated Financial Statements of Feng Hsin Steel Co., Ltd. and its Subsidiaries (Cont’d)

(NT$ Thousand, unless otherwise provided.)

The Group's interest rate risk arises primarily from the loans with fixed interest rates and floating interest rates.

The sensitivity analysis on the Group’s interest rate risk was primarily intended to be conducted against the interest rate exposure items at the end of the financial reporting period, including the loan with a floating interest rate, under the hypothesis of holding for one fiscal year when interest rate increases/decrease by 10 basis points.

The sensitivity analysis on the changes in related risks before tax from January 1 to September 30, 2021 and 2020 is stated as follows:

January 1 to September 30, 2021

Primaryrisk Foreign exchange rate risk Interest rate risk	Range of change NTD/USD foreign exchange rate+/− 1% NTD/JPY foreign exchange rate+/− 1% Market interest rate +/−10 basis points	Income sensitivity +/-$(1,015) +/-$(79) -/+$2,179	Equitysensitivity
			- - -

January 1 to September 30, 2020

Primaryrisk Foreign exchange rate risk Interest rate risk	Range of change NTD/USD foreign exchange rate+/− 1% NTD/JPY foreign exchange rate+/− 1% NTD/EUR foreign exchange rate+/− 1% Market interest rate +/−10 basis points	Income sensitivity +/-$(563) +/-$(142) +/-$(78) -/+$245	Equitysensitivity
			- - - -

Equity price risk

Notes to Consolidated Financial Statements of Feng Hsin Steel Co., Ltd. and its Subsidiaries (Cont’d)

(NT$ Thousand, unless otherwise provided.)

The fair value of the Group’s TWSE/TPEx-listed and unlisted equity securities are susceptible to market price risk arising from uncertainties about future values of the investment securities. The Group ’s TWSE/TPEx-listed and unlisted equity securities are classified as at fair value through profit or loss and at fair value through other comprehensive income. The Company manages the equity price risk through diversification of investment and placing limits on individual and total equity instruments. Reports on the equity portfolio are submitted to the Group’s senior management on a regular basis. The Group’s Board of Directors reviews and approves all equity investment decisions.

A change of 1% in the price of the TWSE/TPEx-listed stocks in the investment in equity instruments measured at fair value through profit or loss could impact NT$0 thousand and NT$100 thousand on the Group’s equity from January 1 to September 30, 2021 and 2020.

A change of 1% in the price of the TWSE/TPEx-listed stocks in the investment in equity instruments measured at fair value through other comprehensive income could impact NT$28,775 thousand and NT$8,667 thousand on the Group’s equity from January 1 to September 30, 2021 and 2020.

4. Credit risk management

Credit risk is the risk that a trading counterpart 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 receivables and notes receivables) and from its financing activities (primarily for bank deposits and other financial instruments).

Credit risk is managed by each business unit subject to the Group’s established policy, procedures and control relating to credit risk management. Credit limits are established for all trading counterparts based on their financial position, rating from credit rating agencies, historical experience in transactions, prevailing economic conditions and the Group’s internal rating criteria, etc. The Group also uses certain credit enhancing procedures (such as unearned sales revenue and insurance, etc.) to mitigate certain trading

Notes to Consolidated Financial Statements of Feng Hsin Steel Co., Ltd. and its Subsidiaries (Cont’d)

(NT$ Thousand, unless otherwise provided.)

counterparts’ credit risk.

As of September 30, 2021, December 31, 2020 and September 30, 2020, amounts receivables from the top ten customers and accounts receivable represent 20.90%, 24.53% and 35.06% of the balance of the Group’s contract assets and total accounts receivables, respectively. The credit concentration risk of other contract assets and accounts receivables is insignificant.

The Group’s treasury manages credit risk from balances with bank deposits and other financial instruments in accordance with the Group’s policy. The Group only transacts with trading counterparts approved by the internal control procedures, which are banks and financial institutions, companies and government entities with good credit ratings. Consequently, there is no significant credit risk for these trading counterparts.

5. Liquidity risk management

The Group’s objective is to maintain financial resilience through instruments including cash and cash equivalents and bank loan contracts. The table below summarizes the maturity profile of the Group’s financial liabilities based on the earliest date when the repayment is required and the undiscounted cash flows thereof. The undiscounted interest amounts of the cash flow of interest at floating rate are extrapolated based on the estimated interest rate yield curve as of the end of the reporting period.

Non-derivative financial liabilities

September 30,2021 Short-term loan Notes and accounts payable Other payables Lease liability (Note)	Less than oneyear $2,191,787 1,181,583 895,363 6,880	2~3years $ - - - 10,883	4~5years $ - - - 10,883	More than 5 years $ - - - 212,227	Total
					$2,191,787 1,181,583 895,363 240,873

Notes to Consolidated Financial Statements of Feng Hsin Steel Co., Ltd. and its

Subsidiaries (Cont’d)

(NT$ Thousand, unless otherwise provided.)

December 31,2020 Short-term loan Notes and accounts payable Other payables Lease liability (Note) September 30,2020 Short-term loan Notes and accounts payable Other payables Lease liability (Note)	Less than oneyear $332,860 1,302,794 1,026,124 7,679 Less than oneyear $247,803 1,132,778 911,443 8,726	2~3years $ - - - 11,842 2~3years $ - - - 13,796	4~5years $ - - - 10,883 4~5years $ - - - 12,358	More than 5 years $ - - - 212,226 More than 5 years $ - - - 247,155	Total
					$332,860 1,302,794 1,026,124 242,630 Total
					$247,803 1,132,778 911,443 282,035

Note: The following table provides further details about analysis on maturity of lease liabilities:

September 30,2021 December 31,2020 September 30,2020			Maturityof	lease liabilities
	Less than oneyear	Less than oneyear	Less than oneyear	Less than one year	Less than oneyear	Less than oneyear
	$6,880 7,679 8,726	$21,766 22,725 26,154	$27,209 27,208 30,894	$27,209 27,209 30,894	$157,809 157,809 185,367	$240,873 242,630 282,035

Derivative financial liabilities

None.

Notes to Consolidated Financial Statements of Feng Hsin Steel Co., Ltd. and its

Subsidiaries (Cont’d)

(NT$ Thousand, unless otherwise provided.)

Reconciliation of liabilities from financing activities

The information about adjustment of liabilities from January 1 to September 30, 2021:

January 1, 2021 Cash Flow Not changes in cash September 30,2021	Short-term loan	Lease liabilities	Total
	$329,941 1,849,049 -	$179,912 (1,756) 1,941	$509,853 1,847,293 1,941
	$2,178,990	$180,097	$2,359,087

The information about adjustment of liabilities from January 1 to September 30, 2020:

30, 2020:
January 1, 2020 Cash Flow Not changes in cash September 30, 2020	Short-term loan	Lease liabilities	Total
	$381,151 (135,658) -	$210,403 (2,581) 2,268	$591,554 (138,239) 2,268
	$245,493	$210,090	$455,583

Fair value of financial instruments
(1) The methods and assumptions applied in determining the fair value of financial instruments:

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Group used the following methods and assumptions to measure or disclose the fair values of financial assets and financial liabilities:

A. The carrying amount of cash and cash equivalents, accounts receivables, accounts payable and other current liabilities
approximate their fair value due to their short maturities.
B. For financial assets and liabilities traded in an active market with standard terms and conditions, their fair value is determined based on market quotation price (including TWSE/TPEx-listed stocks and bonds).
C. For equity instruments not traded in an active market (including a public company’s stocks not traded in an active market and stocks issued by an unlisted company), the fair value is assessed under the

Notes to Consolidated Financial Statements of Feng Hsin Steel Co., Ltd. and its

Subsidiaries (Cont’d)

(NT$ Thousand, unless otherwise provided.) market approach. That is, the fair value is estimated based on the price generated from the market where an identical or a comparable company’s equity instruments are traded, and other critical information (e.g. the inputs including discount for lack of marketability, similar company’s P/E ratio, similar company’s P/B ratio, etc.).

D. For investment in debt instruments without active market quotation, bank loans and other non-current liabilities, the fair value is decided based on the trading counterpart’s quotation or valuation technique. The valuation technique is decided based on an analysis of cash flow discounts. The interest rate and discount rate hypotheses are based on the information related to similar instruments (e.g. TWSE reference interest rate yield curve, average quotation of promissory note interest rate and credit risk, etc.).
(2) Fair value of financial instruments measured at amortized cost

The carrying amounts of the Group’s financial assets and financial liabilities measured at amortized cost approximate their fair values.

(3) Fair value measurement hierarchy for financial instruments

Please refer to Note 12(9) for the fair value measurement hierarchy for financial instruments of the Group.

8. Derivatives

The Group has never held the derivative financial instruments for trading by September 30, 2021, December 31, 2020 and September 30, 2020.

9. Fair value hierarchy

(1) Fair value measurement hierarchy

All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorized within the fair value hierarchy, based on the lowest level input that is significant to the fair value measurement as a whole. Each level of inputs is described as follows:

Level 1: quoted (unadjusted) market prices in active markets for identical assets or liabilities that the entity can access at the measurement date.
Level 2: Other than quoted prices included within Level 1 are observable for the asset or liability, either directly or indirectly.
Level 3: Unobservable inputs for the asset or liability.

Notes to Consolidated Financial Statements of Feng Hsin Steel Co., Ltd. and its Subsidiaries (Cont’d)

(NT$ Thousand, unless otherwise provided.)

For assets and liabilities measured at fair value on a recurring basis, the Group reevaluates their classification at the end of each reporting period to determine the amount of any transfer between different fair value hierarchy levels.

(2) Fair value measurement hierarchy

The Group does not have assets that are measured at fair value on a non recurring basis. The fair value measurement hierarchy of the Group’s assets and liabilities measured at fair value on a recurring basis is as follows:

follows:
Assets measured at fair value: At fair value through other comprehensive income Equity instrument at fair value through other comprehensive income Assets measured at fair value: At fair value through other comprehensive income Equity instrument at fair value through other comprehensive income Assets measured at fair value: At fair value through profit or loss Fund At fair value through other comprehensive income Equity instrument at fair value through other comprehensive income		September 30,2021
	Level 1	Level 2 Level 3 $ - $938,706 December 31,2020		Total
	$2,877,512			$3,816,218
	Level 1 $1,945,605	Level 2 Level 3 Total $ - $826,968 $2,772,573 September 30,2020	Level 3
	Level 1 $10,000 866,653	Level 2 $ - -	Level 3 $ - 786,773	Total
				$10,000 1,653,426

Transfers between Level 1 and Level 2 during the period

Notes to Consolidated Financial Statements of Feng Hsin Steel Co., Ltd. and its Subsidiaries (Cont’d)

(NT$ Thousand, unless otherwise provided.)

From January 1 to September 30, 2021 and 2020, there were no transfers between Level 1 and Level 2 fair value measurements for the Group’s assets and liabilities measured at fair value on a recurring basis.

Details about changes in Level 3 fair value measurements

The balances of the Group’s assets and liabilities measured at fair value on a recurring basis categorized into Level 3 of the fair value hierarchy are reconciliated as follows from beginning to ending:

January 1, 2021 Total gains (losses) recognized in the current period: Recognized into other comprehensive income (stated into the “unrealized gains (losses) from Investment in equity instrument at fair value through other comprehensive income”) Sale Refund of share capital Acquisition September 30,2021 January 1, 2020 Total gains (losses) recognized in the current period: Recognized into other comprehensive income (stated into the “unrealized gains (losses) from Investment in equity instrument at fair value through other comprehensive income”) September 30,2020	Assets
	At fair value through other comprehensive income
	Stocks
	$826,968 15,384 (2,940) (706) 100,000
	$938,706
	$779,572 7,201
	$786,773

Notes to Consolidated Financial Statements of Feng Hsin Steel Co., Ltd. and its

Subsidiaries (Cont’d)

(NT$ Thousand, unless otherwise provided.)

Information on significant unobservable inputs to the fair value of Level 3 of the fair value hierarchy

Description of significant unobservable inputs to the Group’s assets measured at fair value on a recurring basis categorized within Level 3 of the fair value hierarchy is as follows:

September 30, 2021

Significant Relationship between Valuation unobservable Quantitative inputs Relationship between inputs and fair value technique inputs information and fair value Sensitivity analysis value relationship Financial assets: Financial assets at fair value through other comprehensive income Stocks and Market Discount for 10%-30% The higher the 10% increase (decrease) in the discount for others approach lack of discount for lack of lack of marketability and discount for marketability marketability, the minority interest would result in (decrease) and discount lower the estimated increase in the Group’s equity by for minority fair value. NT$93,871 thousand. interest

10% increase (decrease) in the discount for lack of marketability and discount for minority interest would result in (decrease) increase in the Group’s equity by NT$93,871 thousand.

December 31, 2020:

Relationship between Valuation Significant Quantitative inputs Relationship between inputs and fair value technique unobservable inputs information and fair value Sensitivity analysis value relationship Financial assets: Financial assets t fair value hrough other omprehensive ncome Stocks and Market Discount for lack 10%-30% The higher the 10% increase (decrease) in the others approach of marketability discount for lack of discount for lack of marketability and discount for marketability, the and discount for minority interest minority interest lower the estimated would result in (decrease) increase fair value. in the Group’s equity by NT$82,697 thousand.

Notes to Consolidated Financial Statements of Feng Hsin Steel Co., Ltd. and its Subsidiaries (Cont’d)

(NT$ Thousand, unless otherwise provided.)

September 30, 2020

Relationship between Valuation Significant Quantitative inputs Relationship between inputs and fair value technique unobservable inputs information and fair value Sensitivity analysis value relationship Financial assets: Financial assets at fair value through other comprehensive income Stocks and Market Discount for lack 10%-30% The higher the 10% increase (decrease) in the discount others approach of marketability discount for lack of for lack of marketability and discount for and discount for marketability, the minority interest would result in minority interest lower the estimated (decrease) increase in the Group’s equity fair value. by NT$78,677 thousand.

Valuation process used for fair value measurements categorized within Level 3 of the fair value hierarchy

The Group ’s Financial Department is responsible for validating the fair value measurements and ensuring that the results of 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 required to be remeasured or reassessed as per the Group ’s accounting policies at each reporting date to ensure that the results of valuation are reasonable.

(3) Fair value measurement hierarchy of the Group’s assets and liabilities not measured at fair value but for which the fair value is disclosed

Financial assets for which only the fair value is disclosed: Investment property (See Note 6(9) for details) Investment under the equity method (See Note 6(7) for details)		September 30,2021	September 30,2021
	Level 1 $ - 1,885,255	Level 2 $ - -	Level 3 $1,068,869 -	Total
				$1,068,869 1,885,255

Notes to Consolidated Financial Statements of Feng Hsin Steel Co., Ltd. and its

Subsidiaries (Cont’d)

(NT$ Thousand, unless otherwise provided.)

	December 31,2020	December 31,2020
Level 1 $ - 1,766,921	Level 2 Level 3 $ - $1,068,869 - - September 30,2020		Total
			$1,068,869 1,766,921
Level 1 $ - 1,532,472	Level 2 $ - -	Level 3 $627,522 -	Total
			$627,522 1,532,472

10. Significant assets and liabilities denominated in foreign currencies

Information regarding the Group’s significant assets and liabilities denominated in foreign currencies is listed below:

Unit: NT$ thousand

							Unit: NT$ thousand	Unit: NT$ thousand	Unit: NT$ thousand
Financial assets	September 30,2021			December 31,2020			September 30,2020
	Foreign currency	Foreign exchange rate	NTD	Foreign currency	Foreign exchange rate	NTD	Foreign currency	Foreign exchange rate	NTD
	$8,359 - $11,967 - 31,642	27.8050 0.2471 27.9050 32.5110 0.2509	$232,417 - $333,901 - 7,939	$7,886 2 $12,744 7 97,060	28.0500 0.2706 28.1500 34.7250 0.2744	$221,203 - $358,720 252 26,633	$5,862 2 $7,776 228 51,324	28.9900 0.2730 29.0900 34.2480 0.2768	$169,931 - $226,185 7,802 14,206
Monetaryitems:
USD JPY Financial liabilities
Monetaryitems:
USD Euro JPY

Notes to Consolidated Financial Statements of Feng Hsin Steel Co., Ltd. and its Subsidiaries (Cont’d)

(NT$ Thousand, unless otherwise provided.)

In consideration of the multiple functional currencies adopted by the Group’s entities, it is impossible for the Group to disclose the information about exchange gains/losses on various significant assets and liabilities denominated in foreign currencies. From January 1 to September 30, 2021 and 2020, the Group’s foreign currency exchange gains (losses) were NT$17,869 thousand and NT$11,154 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’s capital management is to ensure that it maintains a strong credit rating and healthy capital ratios in order to support its business operations and maximize its shareholders’ equity. 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.

XIII. Additional disclosures

Information about significant transactions
(1) Financing provided to others: None.
(2) Endorsements/guarantees provided: None.
(3) Marketable securities held, ending:

Notes to Consolidated Financial Statements of Feng Hsin Steel Co., Ltd. and its

Subsidiaries (Cont’d)

Subsidiaries (Cont’d)	Subsidiaries (Cont’d)
(NT$Thousand,unless otherwise		provided.)
Relationship		Ending

			Subsidiaries (Cont’d)	Subsidiaries (Cont’d)	Subsidiaries (Cont’d)	Subsidiaries (Cont’d)	Subsidiaries (Cont’d)	Subsidiaries (Cont’d)	Subsidiaries (Cont’d)
			(NT$Thousand,unless otherwiseprovided.)
Holding company’s name	Type of securities	securities name of	Relationship		Ending
			with the securities issuer	Financial statement account	Quantity of shares	Carrying amount	Shareholding	Fair value	Rem arks
Feng Hsin Steel Co., Ltd.	Stock	Formosa Taffeta Co., Ltd. Yi Jinn Industrial Co., Ltd. China Steel Corporation TUNG HO STEEL ENTERPRISE CORP. Hon Hai Precision Industry Co., Ltd. Compal Electronics, Inc. Taiwan Semiconductor Manufacturing Company, Ltd. Chicony Electronics Co., Ltd. CATHAY REAL ESTATE DEVELOPMENT CO., LTD. Huaku Development Co., Ltd. Taiwan Fire & Marine Insurance Co., Ltd. YungShin Global Holding Corporation	- - - - - - - - - - - -	Financial assets at fair value through other comprehensive income - current Financial assets at fair value through other comprehensive income - current Financial assets at fair value through other comprehensive income - current Financial assets at fair value through other comprehensive income - current Financial assets at fair value through other comprehensive income - current Financial assets at fair value through other comprehensive income - current Financial assets at fair value through other comprehensive income - current Financial assets at fair value through other comprehensive income - current Financial assets at fair value through other comprehensive income - current Financial assets at fair value through other comprehensive income - current Financial assets at fair value through other comprehensive income - current Financial assets at fair value through other comprehensive income - current	3,162,000 2,721,000 28,615,000 7,674,000 160,000 4,317,000 313,000 641,000 3,861,000 361,000 2,362,000 2,491,000	$95,018 50,203 1,038,725 315,401 16,800 101,881 181,540 49,357 74,324 32,201 46,768 107,362	0.19% 0.90% 0.18% 0.70% - 0.10% - 0.09% 0.33% 0.13% 0.65% 0.93%	$95,018 50,203 1,038,725 315,401 16,800 101,881 181,540 49,357 74,324 32,201 46,768 107,362

Notes to Consolidated Financial Statements of Feng Hsin Steel Co., Ltd. and its

Subsidiaries (Cont’d)

Subsidiaries (Cont’d)	Subsidiaries (Cont’d)
(NT$Thousand,unless otherwise		provided.)
Relationship		Ending

			Subsidiaries (Cont’d)	Subsidiaries (Cont’d)	Subsidiaries (Cont’d)	Subsidiaries (Cont’d)	Subsidiaries (Cont’d)	Subsidiaries (Cont’d)	Subsidiaries (Cont’d)
			(NT$Thousand,unless otherwiseprovided.)
Holding company’s name	Type of securities	securities name of	Relationship				Ending
			with the securities issuer	Financial statement account	Quantity of shares	Carrying amount	Shareholding	Fair value	Rem arks
Feng Hsin Steel Co., Ltd. GREAT FORTUNE HOLDING LIMITED	Stock Stock	Far EasTone Telecommunications Co., Ltd. Zhen Ding Technology Holding Limited SYSTEX CORPORATION Chien Shing Harbour Service Co., Ltd. Blossomhill Investment Limited Gwo Uei Metals Industry Co., Ltd. Gwo Huei Iron & Steel Co., Ltd. China Trade and Development Corporation Pro-Ascentek Investment Corporation SHIHLIEN CHINA HOLDING CO.,LTD.	- - - - - - - - - -	Financial assets at fair value through other comprehensive income - current Financial assets at fair value through other comprehensive income - current Financial assets at fair value through other comprehensive income - current 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 other comprehensive income - non-current Total	1,634,000 830,000 558,000 8,203,800 3,640,000 3,800,000 3,800,000 1,925 10,000,000 27,033,543	100,491 82,087 48,825	0.05% 0.09% 0.21% 10.11% 18.20% 19.00% 19.00% - 8.33% 4.87%	100,491 82,087 48,825 $536,529 247,534 50,872 34,217 25 90,647 515,411
						$2,340,983
						$536,529 247,534 50,872 34,217 25 90,647 515,411
						$1,475,235

(4) Marketable securities acquired and disposed of at costs or prices for at least NT$300 million or 20% of the paid-in capital:

Notes to Consolidated Financial Statements of Feng Hsin Steel Co., Ltd. and its

Subsidiaries (Cont’d)

(NT$ Thousand, unless otherwise provided.)

The Company	Type and name of securities	Financial statement account	Trading counterpart (Note 1)	Relationship (Note 1)	Beginning	Beginning	Buyin	Buyin	Buyin	Sell	Sell	Sell	Sell	Ending	Ending
					Quantity of shares	Amount	Quantity of shares	Cost	Valuation	Quantity of shares	Selling price	Book cost	Profit or loss from disposal	Quantity of shares	Amount
Feng Hsin Steel Co., Ltd.	Stock - China Steel Corporation	Financial assets at fair value through other comprehensive income - current	N/A	N/A	-	$ -	28,615,000	$800,623	$238,102	N/A				28,615,000	$1,038,725
Feng Hsin Steel Co., Ltd.	Stock - TUNG HO STEEL ENTERPRISE CORP.	Financial assets at fair value through other comprehensive income - current	N/A	N/A	-	$ -	7,674,000	$300,323	$15,078	N/A				7,674,000	$315,401

Note 1: Not required to complete the two sections, unless the security is stated as investment under the equity method.
(5) Acquisition of individual real estate at costs of at least NT$300 million or 20% of the paid-in capital: None.
(6) Disposal of individual real estate at costs for at least NT$300 million or 20% of the paid-in capital: None.
(7) Total sales to or purchases from related parties amounting to at least NT$100 million or 20% of the paid-in capital: None.
(8) Receivables from related parties amounting to at least NT$100 million or 20% of the paid-in capital: None.
(9) Trading in derivative instruments: None.
(10) Others: Significant intercompany transactions and amounts between

Notes to Consolidated Financial Statements of Feng Hsin Steel Co., Ltd. and its Subsidiaries (Cont’d)

(NT$ Thousand, unless otherwise provided.)

parent company and subsidiaries, and among various subsidiaries (amounting to at least NT$100 million or 20% of the paid-in capital): None.

2. Information related to investees

The information about investees in which the Group may exert material influence or control directly or indirectly (exclusive of investees in Mainland China) is stated as follows:

Name of investor	Name of investee Name	Location	Scope of Main Business	Initial Investment	Initial Investment	Endingbalance	Endingbalance	Endingbalance	Name of investee Current income (loss) (Note)	Investme nt profit (loss) recognize d in the current period	Remarks
				Ending balance	End of last year	Quantity of shares	Ratio	Carrying amount
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%	$516,448	$(9)	$(9)	The Company’s subsidiary
Feng Hsin Steel Co., Ltd.	Taiwan Steel Union Co., Ltd.	No. 36, Xiangong N. 1st Rd., Keliao vil., Shengang Township, Changhua County 50953, Taiwan (R.O.C.)	Disposal of general industry and hazardous waste, and manufacturing and trading of non-ferrous metals (zinc oxide) and non-metallic mineralproducts.	$329,759	$199,883	25,036,587	22.50%	$794,616	$308,067	$67,417	The Company’s associate
Feng Hsin Steel Co., Ltd.	Fengyu Resource Co., Ltd.	No. 998, Sec. 1, Jiahou Rd., Houli Dist., TaichungCity	Disposal of general industry and hazardous waste	$584,878	$516,250	58,161,000	29.08%	$569,468	$(37,067)	$(11,012)	The Company’s associate
Feng Hsin Steel Co., Ltd.	Wen Shan Resort Corporation	No. 16, Wenquan Ln., Sec.1,	Management of the general business and	$209,777	$209,777	18,000,000	18.00%	$183,115	$62,741	$11,293	The Company’s associate

Notes to Consolidated Financial Statements of Feng Hsin Steel Co., Ltd. and its

Subsidiaries (Cont’d)

(NT$ Thousand, unless otherwise provided.)

Name of investor	Name of investee Name	Location	Scope of Main Business	Initial Investment	Initial Investment	Endingbalance	Endingbalance	Endingbalance	Name of investee Current income (loss) (Note)	Investme nt profit (loss) recognize d in the current period	Remarks
				Ending balance	End of last year	Quantity of shares	Ratio	Carrying amount
		Dongguan Rd., Heping Dist., TaichungCity	motels & hotels

Note: The recognized investment income on each company has been included in the subsidiary’s

investment income, and derecognized from the consolidated financial statements.

3.Information on investments in mainland China:

(1) The information about investees in Mainland China invested by the Group via GREAT FORTUNE HOLDING LIMITED indirectly is stated as follows:

Name of investee in Mainland China	Scope of Main Business	Paid-in Capital	Mode of investment	Accumulated outward remittance for investment from Taiwan, beginning	Amount remitted or recovered in the currentperiod Outwar d remittan ce Recover ed	Amount remitted or recovered in the currentperiod Outwar d remittan ce Recover ed	Accumulated outward remittance for investment from Taiwan, ending Amount	Name of investee Current income	Direct and indirect shareholding of the Company	Investment profit (loss) recognized in the current period	Investme nt, ending Book value (Note 1)	Accumul ated investme nt income received until the end of the period
						Recover ed
Shihlien Chemical Industrial Jiangsu Co., Ltd.	Production of raw materials for glass, soda ash	USD 800,000,000	Investment in Mainland China through companies registered in a third region.	$760,545 (USD27,352,800)	-	-	$760,545 (USD27,352,800)	Note 1	2.83%	$-	$488,816	$ -
Huai'an Shiyuan Cailu Co.,	Production of the raw materials	USD 32,000,000	Investment in Mainland China through	$41,340 (USD1,486,800)	-	-	$41,340 (USD1,486,800)	Note 1	3.94%	$-	$26,595	$ -

Notes to Consolidated Financial Statements of Feng Hsin Steel Co., Ltd. and its

Subsidiaries (Cont’d)

			Subsidiaries (Cont’d)	Subsidiaries (Cont’d)	Subsidiaries (Cont’d)	Subsidiaries (Cont’d)	Subsidiaries (Cont’d)	Subsidiaries (Cont’d)
			(NT$Thousand,unless otherwiseprovided.)
Name of investee in Mainland China	Scope of Main Business	Paid-in Capital	Mode of investment	Accumulated outward remittance for investment from Taiwan, beginning	Amount remitted or recovered in the currentperiod		Accumulated outward remittance for investment from Taiwan, ending Amount	Name of investee Current income	Direct and indirect shareholding of the Company	Investment profit (loss) recognized in the current period	Investme nt, ending Book value (Note 1)	Accumul ated investme nt income received until the end of the period
					Outwar d remittan ce	Recover ed
Ltd.	for soda ash, brine		companies registered in a third region.

Accumulated investment in Mainland China remitted outward from Taiwan, ending (Note 3)	Investment amounts authorized by Investment Commission, MOEA (Note 3)	Upper limit on investment in Mainland China required by Investment Commission,MOEA
		Net value x 60%
$801,885 (USD 28,839,600)	$801,885 (USD 28,839,600)	$12,570,748 (Note 2)

Note 1: The existing investees invested by the Group’s subsidiaries in a third region are stated as financial assets at fair value through other comprehensive income-non-current.

Note 2: According to the requirements by Investment Commission, Ministry of Economic Affairs, the investment amount authorized to the Group for investment in Mainland China is no more than 60% of the net value.

Note 3: The related figures herein shall be expressed in NTD. If a foreign currency is involved, it shall be translated to NTD at the foreign exchange rate referred to in the balance sheet.

(2) Significant intercompany transactions between the Group and investees in Mainland China, directly or indirectly, via a third region: None.

4.Information about major shareholders

Stocks Major shareholders	Quantity of shares	Shareholding
Cheng Chuang Investment Co.,Ltd.	30,039,000	5.16%

Notes to Consolidated Financial Statements of Feng Hsin Steel Co., Ltd. and its

Subsidiaries (Cont’d)

(NT$ Thousand, unless otherwise provided.)

XIV. Information about segment

The Group’s revenue is primarily generated from manufacturing, processing and trading of various angle steel, round bar and flat-rolled steel products. The management judges that the Group should be a single operating segment.

AI assistant

FH — Interim / Quarterly Report 2021

51946_rns_2021-10-26_a28f3079-496a-4c51-bab5-579b541f88c5.pdf

Stock Code: 2015

Feng Hsin Steel Co., Ltd. and its Subsidiaries

Consolidated Financial Statements and Independent Auditor’s Report

Foreword

Scope

Conclusion

Other Matters - About other CPAs’ review

Notice to Readers

Feng Hsin Steel Co., Ltd. and its Subsidiaries Consolidated Balance Sheets

September 30, 2021, December 31, 2020 and September 30, 2020

Feng Hsin Steel Co., Ltd. and its Subsidiaries Consolidated Balance Sheets

September 30, 2021, December 31, 2020 and September 30, 2020

Feng Hsin Steel Co., Ltd. and its Subsidiaries

Consolidated Statements of Comprehensive Income

July 1 to September 30, 2021 and 2020, and January 1 to September 30, 2021 and 2020

Feng Hsin Steel Co., Ltd. and its Subsidiaries

Consolidated Statements of Changes in Shareholders’ Equity January 1 to September 30, 2021 and 2020

Feng Hsin Steel Co., Ltd. and its Subsidiaries

I. History

II. Date and Procedure for Authorization of Financial Statements

III. Applicability of newly promulgated and amended standard rules and

Notes to Consolidated Financial Statements of Feng Hsin Steel Co., Ltd. and its

Subsidiaries (Cont’d)

Notes to Consolidated Financial Statements of Feng Hsin Steel Co., Ltd. and its Subsidiaries (Cont’d)

Amendments to IFRS 1

Amendments to IFRS 9 “Financial Instruments”

Amendments to the illustrative example accompanying IFRS 16 “Leases”

Amendments to IAS 41

Notes to Consolidated Financial Statements of Feng Hsin Steel Co., Ltd. and its Subsidiaries (Cont’d)

(NT$ Thousand, unless otherwise provided.)

(2) IFRS 17 “Insurance Contracts”

1. Statement of Compliance

Notes to Consolidated Financial Statements of Feng Hsin Steel Co., Ltd. and its Subsidiaries (Cont’d)

(NT$ Thousand, unless otherwise provided.)

2. Basis of preparation

3. Overview of consolidation

Principles for preparation of consolidated financial statements

Notes to Consolidated Financial Statements of Feng Hsin Steel Co., Ltd. and its Subsidiaries (Cont’d)

(NT$ Thousand, unless otherwise provided.)

Entities in the preparation of consolidated financial statements:

4. Foreign currency transaction

Notes to Consolidated Financial Statements of Feng Hsin Steel Co., Ltd. and its Subsidiaries (Cont’d)

7. Financial instruments

(1) Recognition and measurement of financial assets

Financial assets measured at amortized cost

Financial assets at fair value through other comprehensive income

Notes to Consolidated Financial Statements of Feng Hsin Steel Co., Ltd. and its Subsidiaries (Cont’d)

(NT$ Thousand, unless otherwise provided.)

Financial assets at fair value through profit or loss

(NT$ Thousand, unless otherwise provided.)

Classification between liabilities or equity

Equity instrument

Financial liabilities

Financial liabilities measured at amortized cost

Derecognition of financial liabilities

Notes to Consolidated Financial Statements of Feng Hsin Steel Co., Ltd. and its Subsidiaries (Cont’d)

(NT$ Thousand, unless otherwise provided.)

8. Fair value measurement

9. Inventories

10. Investment under the equity method

Notes to Consolidated Financial Statements of Feng Hsin Steel Co., Ltd. and its Subsidiaries (Cont’d)

(NT$ Thousand, unless otherwise provided.)

Notes to Consolidated Financial Statements of Feng Hsin Steel Co., Ltd. and its Subsidiaries (Cont’d)

11. Property, plant and equipment

Notes to Consolidated Financial Statements of Feng Hsin Steel Co., Ltd. and its Subsidiaries (Cont’d)

(NT$ Thousand, unless otherwise provided.)

12. Investment property

(NT$ Thousand, unless otherwise provided.)

13. Lease

Notes to Consolidated Financial Statements of Feng Hsin Steel Co., Ltd. and its Subsidiaries (Cont’d)

(NT$ Thousand, unless otherwise provided.)

Company as a lessee

(NT$ Thousand, unless otherwise provided.)

Notes to Consolidated Financial Statements of Feng Hsin Steel Co., Ltd. and its Subsidiaries (Cont’d)

Group as a lessor

14. Impairment of non-financial assets

Notes to Consolidated Financial Statements of Feng Hsin Steel Co., Ltd. and its Subsidiaries (Cont’d)

FH Interim / Quarterly Report 2021