Skip to main content

AI assistant

Sign in to chat with this filing

The assistant answers questions, extracts KPIs, and summarises risk factors directly from the filing text.

Sign up Log in

HYC Annual Report 2022

Jul 3, 2023

51976_rns_2023-07-03_50fb95d3-3c47-4f87-a9d7-f4baca504652.pdf

Annual Report

Open in viewer

Opens in your device viewer

Stock Code: 2114

==> picture [115 x 53] intentionally omitted <==

Hsin Yung Chien Co., Ltd.

2022 Annual Report

Annual report URL: http://mops.twse.com.tw - http://www.hyc king.com

Published on May 11, 2023

I. The Company’s spokesperson and acting spokesperson:

Spokesperson

Name: Stella Hu Title: Special Assistant, Chairperson’s Office Telephone: (049) 2263-888 ext. 260 - E-mail:stella@hyc king.com Acting spokesperson Name: Lin, Chiu-Hung Title: Chief Financial Officer Telephone: (049) 2263-888 ext. 266 - E-mail: emily@hyc king.com

II. Addresses and telephone numbers of head office, branch offices and factories:

Address of head office: No. 294 Nan Kung 3rd, Nan Kung Industrial Zone, Nantou,Taiwan Telephone: (049) 2263-888

Factory I: No. 294-2 Nan Kung 3rd, Nan Kung Industrial Zone, Nantou,Taiwan Telephone: (049) 2263-888

Factory II: No. 294 Nan Kung 3rd, Nan Kung Industrial Zone, Nantou,Taiwan Telephone: (049) 2263-888

Factory III: No. 292 Nan Kung 3rd, Nan Kung Industrial Zone, Nantou,Taiwan Telephone: (049) 2263-888

III. Stock transfer agency:

Name: Capital Securities Corp.

Address: B2, No. 97, Section 2, Dunhua South Road, Da’an District, Taipei City, Taiwan URL: http://www.capital.com.tw Telephone: (02) 2703-5000

IV. Certifying CPA for the latest financial report:

Firm name: PricewaterhouseCoopers Taiwan CPA names: Wu, Sung-Yuan; Hung, Shu-Hua Address: 27F, No. 333, Section 1, Keelung Road, Taipei City, Taiwan URL: http://www.pwc.com/tw Telephone: (02) 2729-6666

V. Name of the trading place where overseas securities are listed for trading and the method of inquiry of overseas securities: None.

- VI. The Company’s website: http://www.hyc king.com

Table of Contents

Table of Contents Table of Contents
One. Letter to Shareholders .................................................................................................. 3
Two. Company Profile........................................................................................................... 9
I. Date of establishment: . .....................................................................................................9
II. Company history: ..............................................................................................................9
Three. Corporate Governance Report ................................................................................ 12
I. Organizational System ....................................................................................................12
II. Information about directors, president, vice presidents, assistant vice presidents, and
heads of departments and branches: ..............................................................................15
III. Remuneration paid during the most recent fiscal year to directors, president, and the vice
presidents .......................................................................................................................15
IV. Corporate Governance Operation Status ................................ ……………………………...30
V. Information on the professional fees of the attesting CPAs…………… …………...86
VI. Information on replacement of CPAs. ............................................................................86
VII. The chairperson, president or manager in charge of financial or accounting affairs of the
company who has served in the CPA firm or its affiliated enterprises within the most recent
year. ................................................................................................................................86
VIII. For the most recent year and up to the date of printing of the annual report, the transfer of
shares and changes in pledges of shares by directors, managers, and shareholders
holding more than 10% of the shares ..............................................................................87
IX. For the top ten shareholders in shareholding, the information on their relationships as
related parties or spouses or relatives within the second degree of kinship: ....................89
X. The number of shares held by the company, its directors, supervisors, managers, and
enterprises directly or indirectly controlled by the company in the same reinvested
enterprise, and the consolidated shareholding ratio. .......................................................89
Four. Fund Raising ............................................................................................................. 90
I. Capital and shares: .........................................................................................................90
II. Handling of corporate bonds and convertible corporate bonds: . .....................................98
III. Handling of special shares: . ...........................................................................................98
IV. Handling of overseas depositary receipts: . .....................................................................98
V. Handling of employee stock option certificates: ...............................................................99
VI. Handling of new shares with restricted employee rights:. ..............................................101
VII. Handling of issuance of new shares for the merger or acquisition of shares of other
companies: . ..................................................................................................................101
VIII. Implementation of fund utilization plan: .........................................................................101
Five. An Overview of Operations………………………………………………………………. 102
I. Business Contents: .......................................................................................................102
II. Overview of the Market and Production and Sales Status .............................................108
III. Employee data in the last two years and up to the date of printing of the annual report: ..116
IV. Information on Environmental Protection Expenditure .....................................................116

1

VI. Cybersecurity Management...........................................................................................119
VII. Important Contracts .......................................................................................................120
Six. Financial Status Overview ......................................................................................... 121
I. Condensed Financial Data of the Last Five Years: ........................................................121
II. Financial Information Analysis for teh Past 5 Fiscal Years:…………………………..123
III. Audit Report of the Audit Committee on the Latest Annual Financial Report: ................125
IV. Latest Annual Financial Report. ....................................................................................126
V. The individual financial report of the Company audited and certified by CPAs for the last
year ...............................................................................................................................126
VI. If the Company and its affiliated enterprises have financial turnover difficulties in the last
year and up to the date of printing of the annual report, the impact on the financial situation
of the Company shall be listed: . ...................................................................................126
Seven. Review and Analysis of the Financial Situation and Financial Performance and Risks
................................................................................................................................... 127
I. Financial Position: .........................................................................................................127
II. Financial Performance ...................................................................................................128
III. Cash Flow Analysis .......................................................................................................129
IV. Impact of Major Capital Expenditure in the Last Year on Finance and Business ...........129
V. Reinvestment Policy in the Last Year, Main Reasons for Profit or Loss, Improvement Plan
and Investment Plan for the Next Year: .........................................................................130
VI. Risks .............................................................................................................................130
VII. Other important matters. ...............................................................................................133
Eight. Special Notes ......................................................................................................... 134
I. Affiliated Enterprises .....................................................................................................134
II. Private placement of securities in the last year and up to the date of printing of the annual
report: No such situation. ..............................................................................................135
III. The holding or disposal of the Company’s shares by subsidiaries in the last year and up to
the date of printing of the annual report. ........................................................................135
IV. Other necessary supplementary explanations. ..............................................................135
Nine. In the last year and up to the date of printing of the annual report, if there are any of
the events specified in Article 36, paragraph 2, subparagraph 2 of the Act that have a
significant impact on shareholders’ equity or securities prices, state them one by one
................................................................................................................................... 135

2

One. Letter to Shareholders

Dear shareholders,

First of all, I would like to thank all of you for your support and encouragement over the past year so that Hsin Yung Chien can continue to grow and share the business results with shareholders. The following is a report on our 2021 operating results and the operating outlook for 2022.

I. Report on the 2022 Business Results

(I)Business plan implementation results

The net operating income of the Company in 2022 was NT$1,845,955 thousand, decreased by 4.71% from NT$1,937,193 thousand in 2021, and the operating income in 2022 was NT$596,811 thousand, increased by 14.23% from NT$522,449 thousand in 2021.

The Company's main sales regions are mostly European and U.S. customers. In 2022, major economies gradually raised interest rates to curb inflation, and manufacturing activities in various countries have significantly slowed down; in addition, the conflict between Russia and Ukraine has not been settled; these have affected the Company's operating performance.

In recent years, the Company has been developing products with high added value. Although the revenue has declined, gross profit and operating income have grown from those in 2021, which shows that the Company's operating strategy is appropriate. In 2021, more than 90% of the Company’s business was export due to the soaring ocean freight for export which led to a sharp increase in operating expenses. Therefore, to reduce the dilution effect of high ocean freight on profits, the Company invested in ocean freight stocks in 2021, and the recognized non-operating investment income reached NT$571 million, resulting in a significant increase in the net profit after tax in 2021. However, the ocean freight stock prices fell sharply in 2022, resulting in an unrealized evaluation loss. The Company disposed of all its non-operating investments in 2022, so there was still a net investment income from the overall non-operating investment.

3

Unit: NT$ thousands

Year
Item
2022		 2021 Increase
(decrease)
rate
Net operating
income		 1,845,955 1,937,193 (4.71%)
Operating costs (1,004,048) ( 1,120,881) (10.42%)
Gross operating
profit		 841,907 816,312 3.14%
Operating
expenses		 (245,096) (293,863) (16.60%)
Net operating
income		 596,811 522,449 14.23%
Non-operating
income(expenses)		 (81,048) 542,893 (114.93%)
Income (loss)
before income tax		 515,763 1,065,342 (51.59%)
Income tax
expense		 (123,792) ( 96,948) 27.69%
Profit 391,971 968,394 (59.52%)
EPS after tax Operating 6.07-
non-operating1.04
=5.03		 Operating
5.46+non-
operating6.96=
12.42

(II) Budget execution status:

According to current laws and regulations, the Company did not publicly disclose financial forecast data externally in 2022, and the overall actual operating status and performance are roughly equivalent to the internal business plan formulated by the Company.

(III) Analysis of financial revenue and expenditure and profitability:
Item 2022 2021
Financial
structure(%)		 Debt to asset ratio 15.85 14.75
Solvency (%) Current ratio 567.36 483.66

Quick ratio		 499 411.73
Profitability
(%)		 Return on assets 10.81 29.32
Return on equity 12.75 34.15
Net profit margin
(%)		 21.23 49.99
Earnings per share
(NT$)		 5.03 12.42

4

(IV) Research and Development:

1. Rubber products

In the future, the focus of our research and development will still be on the improvement of materials, structures and manufacturing processes. In addition to continuing to research and develop more specifications for existing products, HYC will focus on mold improvement and innovation. For chemical fiber cloth raw materials, HYC is cooperating with domestic manufacturers to develop high-strength fabrics, which are suitable for high impact products with advantage of replacing multi-layer fiber fabrics. Our efforts in rubber are in line with the current trend towards green energy conveyor belts, energy-saving conveyor belts, super heat-resistant and oil resistant conveyor belts, wearresistant and flame resistant conveyor belts, and other special types of rubber, allowing customers to have a more diversified selection of products. Recently the main direction of R&D is cooperating with customers to jointly develop special products such as rubber dam and wave power sheet for hydropower, to create products with higher added value.

2. Composite material products

Due to the rampant COVID-19 pandemic, global climate change and rising sea levels, people are starting to think about how to co-exist with the natural environment; at the same time, enterprises are also thinking about how to protect the Earth's environment to achieve sustainable operation while growing revenue. What an enterprise needs to reveal is not only its past financial performance, but also its sustainable operations through the achievement of ESG goals. HYC’s composite materials from environment-friendly recyclable materials were promoted at the Eurobike Show and the Taichung Week Bicycle Show in 2022, and gained recognition and appreciation from many brands and customers. HYC will start the relevant cooperation projects with well-known bicycle brands to provide a better material choice for bicycle manufacturers who have long used non-recyclable and non-environment friendly thermally stable carbon fiber composite materials.

  • A. Electric bicycle frames:

In 2022, HYC’s related trial production progress was postponed due to the delayed arrival of purchased machinery and equipment. In 2023, the production line was gradually completed, and the joint development of electric mountain bike frames with a famous U.S bicycle brands entered the final verification stage. The well-known European bicycle brand that HYC previously contacted at the Eurobike Show also hopes to initiate a cooperation plan on new products, and conduct product validation and mass production in the fourth quarter of 2023.

5

B. Thermoplastic carbon fiber composite bicycle wheel rims

In 2023, machines, equipment and production lines will be gradually completed, and product validation and related safety tests of thermoplastic carbon fiber composite bicycle wheel rims are expected to complete in the third quarter, and samples will be sent to relevant customers. If orders can be received and mass production begins in the fourth quarter smoothly, production capacity can be expanded to meet customer needs according to customers’ business promotion schedules.

Through the establishment of new production lines, the proportion of future revenue from new composite products should increase to contribute to the overall revenue of HYC, and hopefully the composite products will be loved by the market and consumers.

II. Summary of the 2023 Business Plan

  • (I) Business policy:

    1. Actively develop the polymer composite product market Accelerate the mass production schedule of new product lines and actively develop domestic and export markets.

    2. Upgrade brand awareness Upgrade product quality, establish brand awareness, and upgrade customer satisfaction.

    3. Product category optimization Create product diversification and differentiation and improve product added value.

    4. Strengthen the training of human resources

      • As HYC is growing day by day, actively cultivate and establish its talent pool, conduct employee training, implement employee performance appraisal and evaluation, and improve employee satisfaction.

  • Carbon reduction

  • Achieving net zero carbon emissions is not only the international trend, but also an important way to enhance the green competitiveness of enterprise HYC will reduce carbon emissions by sustainable design, raw material procurement and green manufacturing. Get ahead of our customers.

  • (II) Expected sales volume and its basis:

The sales volume is determined according to the market demand and development trend, customer operation profile and the current situation of received orders of the Company, taking the output capacity of the Company into account. The target sales volume is 12,000 thousand kg.

6

  • (III) Important production and marketing policies:

  • Sales policy: Actively develop new product markets and customer promotion, create product diversification and differentiation, and improve product added value.

  • Production policy: Comply with customers’ delivery dates, reserve capacity for quick order insertion, and increase machine adaptability.

  • (IV) Future company development strategy:

  • In addition to actively promoting product optimization and increasing the number of high value-added products, the Company focuses on its core business to differentiate rubber products and avoid low price competition. Among its composite material products, the Company combined 50 years of process technology and rubber research and development in its electronic grade heat-resistant cushioning pads, and developed environment-friendly cushioning pads that are stable with the capability of automated production and barcode management, and can be applied in the electronic industry. The thermoplastic composite material the Company developed has the characteristic of high temperature resistance up to 330°C, high strength that can be used to replace metals, environment-friendliness, recyclability and lightweight, and can be widely used in fields such as daily life and automobiles, and is expected to bring revenue in the future.

III. Impact of the external competitive environment, regulatory environment, and overall business environment

(I)External competition ：

This is mainly due to the increasingly fierce price competition among industry peers and the rising cost of raw materials. However, the Company has developed relevant countermeasures to differentiate products, avoid vicious price competition, and face challenges by improving added value and the quality of products.

(II) Impact of the regulatory environment:

The management of the Company pays attention to important domestic and foreign policy and legal changes at all times, and proposes countermeasures at any time.

(III)Operating environment ：

In 2023, the global economy still faces severe challenges, including the threat of inflation, the Russia-Ukraine war, geopolitical risks, China's economic direction, the US-China dispute, and uncertain factors such as climate change. Major

7

international institutions all expect that the global economic growth rate this year will be lower than last year, with poor performance in the first quarter and gradually improving thereafter.

Looking ahead, in addition to prudently responding to international changes, the Company will be committed to developing new products and improving the utilization rate of new factory production capacity, so that the Company can continue to develop steadily and grow continuously.

When the operation is affected by external environmental changes, it is also necessary to adopt corresponding strategies from time to time to minimize the impact or effect on the enterprise, so as to ensure the achievement of goals. This will enable the Company to continue to grow and thrive in its core business, continuously enhance shareholder value, and benefit all employees.

I would like to wish you all good health and good luck.

Hsin Yung Chien Co., Ltd. Lin, Chi-Chin, Chairperson

8

Two. Company Profile

I. Date of establishment: August 22, 1969.

II. Company history:

  • 1969 Hsin Yung Chien Industrial Corp. was founded in Taichung by Mr. Lin, Chin-Chang (the late father of Chairperson Lin, Chi-Chin). With a capital of NT$500,000, a plant of about 100 square meters, and four employees, the Company forged ahead to build a solid foundation, with an annual turnover of NT$2 million.

  • 1978 Lin, Chi-Chin, the founder’s eldest son, took over as the chairperson of the Company. At that time, Lin was only 25 years old, and the business was facing the test of an important turning point.

  • 1980 The Company was renamed Hsin Yung Chien Industrial Co., Ltd. and moved to Nangang Industrial Zone, Nantou City (covering an area of 8,400 square meters).

  • 1985 Under the wise leadership of Chairperson Lin, Chi-Chin, all employees worked as one to make their best effort. In June, the Company received the “CNS Mark” award from the Central Bureau of Standards.

  • 1986 The Company won the title of Excellent Import and Export Manufacturer issued by the Ministry of Economic Affairs.

  • 1994 Hsin Yung Chien cooperated with the Mechanical Institute of Industrial Technology Research Institute to develop a plastic roller press and automatic assembly.

  • 1995 The Company’s chairperson was elected as the chairperson of the Distinguished Citizens Society of Nantou County. The Northern Taiwan Branch was established and the construction of the plant and equipment was completed. The Company also obtained the “ISO 9001 International Quality Standard Certification” issued by the Bureau of Commodity Standards, MOEA. The “Five Year Development Plan” was formulated.

  • 1996 Chairperson Lin won “The 4th Outstanding SME Award” and a national model of respect for the military. He was also summoned by former President Lee, Teng-Hui many times. The chairperson was elected as the chairperson of the Nantou County Import and Export Trade Union.

  • 1999 Introduced the CIS enterprise identification system. The Company planned to stay in Taiwan to build the Hsin Yung Chien Second Factory after the 921 earthquake, and President Chen, Shui-Bian came to the factory to give encouragement.

9

2000 Won “The 4th Outstanding SME Award”. The construction of Hsin Yung Won “The 4th Outstanding SME Award”. The construction of Hsin Yung Won “The 4th Outstanding SME Award”. The construction of Hsin Yung Won “The 4th Outstanding SME Award”. The construction of Hsin Yung
Chien’s Factory II officially started in January 2001.
2001 The new plant introduced the largest calender in Asia. The new plant
introduced six continuous curring machines.
2002 Factory II and the new office building were opened. Introduced the ERP
enterprise resource management system.
2003 Handled the public offering of stock. The Company’s name was
changed to “Hsin Yung Chien Co., Ltd.”.
2004 The company stock is listed in emerging market.
2005 Won the 14th National of Outstanding SEMs.
2006 In September, the Company’s shares were listed in OTC.
In November, the Company won the fourth “Taiwan Enterprise Award”.
2007 Constructed the new Factory I, III and IV.
2008 The three new factories were completed and mass production began.
2009 Obtained the “ISO 14001 Environmental Management System
Certification” issued by the Bureau of Standards, Metrology and
Inspection, MOEA.
Indirectly invested in the mainland subsidiary Hsin Yung Chien Trading
(Tianjin) Co., Ltd. (renamed Hsin Yung Chien Rubber (Tianjin) Co., Ltd.
in 2010).
2010 In December, the Company’s shares were listed (IPO).
Passed the OHSAS “18001/TOSHMS Occupational Safety and Health
Management System (international/Taiwan)”.
2011 The use of “environment-friendly, energy-saving and long-acting
electronic hot pressing cushion pad and “continuous flexible electric
heater application” in the PCB industry’s hot pressing process won the
gold medal and silver medal of the 63rd iENA award.
The “CSR Award” awarded by MOEA.
2012 HYC won the first place in the greening of the industrial park in 2012.
2013 “The 1stMittelstand Award” awarded by MOEA..
2014 The 50th anniversary of the Company.
Registered the trademark of the new product for NEWSheet.
2015 HYC KOREA Co., Ltd. was established in Korea in the form of a joint
venture, with 65% shares held by the Company.
Won number 45 among the top 50 of the Common Wealth Magazine's
2000 Most Profitable Manufacturing Companies in 2015.

10

2016 Won number 42 among the top 50 of the Common Wealth Magazine's
2000 Most Profitable Manufacturing Companies in 2016.
Ended the investment in the Korean subsidiary.
2017 Equipped the plants with solar panels, with a total capacity of 1,000
kilowatts and an average annual output of at least 1.2 million kilowatt
hours.
Jointly contracted the “Houzhuangzi Pi Water Discharge Gate
Improvement Project”, and was awarded the Excellent Agricultural
Construction Project Award by the Agriculture Committee, Executive
Yuan.
2018 Developed the world’s lightest and environment-friendly recyclable
thermoplastic suitcase.
President Tsai, Ing-Wen visited and encouraged the Company to
develop towards green energy technology and circular economy.
2019 The construction of Factory V was completed.
Won number 26 among the top 50 of the Common Wealth Magazine's
2000 Most Profitable Manufacturing Companies in 2019.
2020 The original Factory IV was demolished and a new six-story factory
building was built in 2021.
Won number 23 among the top 50 of the Common Wealth Magazine's
2000 Most Profitable Manufacturing Companies in 2020.
2021 Established the Audit Committee to replace supervisors.
Won number 5 among the top 50 of the Common Wealth Magazine's
2000 Most Profitable Manufacturing Companies in 2021.
2022 Won number 101 among of the CommonWealth Magazine's 2000 Most
Profitable Manufacturing Companies in 2022

11

Three. Corporate Governance Report

I. Organizational System:

(I) Organizational chart:

==> picture [799 x 339] intentionally omitted <==

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

Audit Committee
Board of Directors
Audit Office
Remuneration Committee
Chairperson
Chairperson’s Office R&D
Department
General Manager
Management representative
MIS
Security Office
Tape Department Newsheet Human Finance Marketing Quality
Resources Department Department Assurance
Department
Department
Manufacturing Manufacturing Manufacturing Production
Public
Factory 1 Factory 2 Factory 3 Management
Works Unit
Unit
----- End of picture text -----

12

(II) Business of key departments:

Department Keyresponsibilities
General
Manager
Office		 1.
Assisting in business strategy and policy planning and the
coordination of affairs and manpower.
2.
Managing and supervising the planning and implementation of
employee training and talent cultivation.
3.
Integration, planning and implementation of computer
information.
Audit Office Establishment, modification, promotion and audit of the internal
controlsystem.
R&D Center 1.
Responsible for the development, design, modification, drawing,
approval, and distribution control of new and old products.
2.
Research and development of production technology and
guidance of the production line in solving technical problems.
3.
Assessment and purchase requisition of additional machinery
and equipment.
Quality
Assurance
Department		 1.
Responsible for the implementation of the quality policy and
maintenance of the quality assurance system to promote the
improvement of quality.
2.
Various quality plans and statistical analysis.
3.
Maintenance and regular calibration of measuring instruments.
4.
Review, tracking and experimental reports of the causes of
quality abnormalities.
Marketing
Department		 1.
Expansion of various product businesses.
2.
Responsible for product sales, returns, services, and customer
complaints.
Finance
Department		 1.
Responsible for affairs related to accounting, taxation, cost
settlement, and profit and loss calculation.
2.
Budget management and control.
3.
Responsible for the use and management of funds, bank
transactions, and other matters.
4.
Handling ofstockaffairs.
Human
Resources
Department		 1.
Responsible for the formulation and implementation of personnel
management operations and personnel rules and regulations.
2.
Procurement and management of various business goods and
fixed assets.
3.
Implementation of labor issues and coordination of labor
disputes.
4.
Planning and implementation of safety measures such as
waterproofing, riot, theft, and fire prevention.
5.
Receiving and sending of documents and letters.
6.
Receptionservicefor visitors.
Newsheet
Department		 1.
Responsible for the development and trial production of silicone
products.
2.
Expansion of the silicone product business.
3.
Product manufacture and business promotion of polymer
composite products.

13

Manufacturing
Department
1.
Responsible for production schedule management and product
manufacture.
2.
Preliminarily review of the delivery date of orders received by the
business department and confirmation of the rationality of the
delivery date according to the capacity load.
3.
Formulating production plans according to the capacity load and
material status, supervising material progress and on-site
production progress, and ensuring that production plans can be
carried out as scheduled.
4.
Actively adjusting the production schedule and contact relevant
units in case of abnormal production and urgent orders.
5.
Preparing relevant statistics and analysis on production data and
productivity efficiency.
6.
Putting forward purchase requisitions of raw materials according
to the production plans.
7.
Understanding the non-conforming rate, tracking and solving
abnormal production problems.
8.
Process planning, improvement and integration to improve
process efficiency and productionperformance.
Production
Department		 1.
Product handling, storage, packaging and delivery.
2.
Control of the import and export of raw materials, spare parts,
semi-finished products and finished products.
3.
Purchase of raw materials.
4.
Production management scheduling.
Public Works
Department		 Equipment maintenance and emergency repair.

14

II. Information about directors, supervisors, president, vice presidents, assistant vice presidents, and heads of departments and branches:

(I) Director ：

Title Nationality or
place of
registration
Name		 Gender
Age		 Date of
election
(appointment)		 Term of office Initial election date Number of s
the time		 hares held at
of election		 Number of shares held
currently		 Number of shares held
currently		 Number of shares held by
spouse and minor children
currently		 Number of shares held by
spouse and minor children
currently		 Number of
the nam		 shares held in
es of others
Major experience (education)		 Positions
concurrently
held at the
Company and
other
companies		 Other directors, directors or supervisors
with a spousal relationship or kinship
relationship within the second degree		 Other directors, directors or supervisors
with a spousal relationship or kinship
relationship within the second degree		 Other directors, directors or supervisors
with a spousal relationship or kinship
relationship within the second degree
Remark
Number of
shares		 Shareholding
ratio
Number of
shares		 Shareholding
ratio
Number of
shares		 Shareholding
ratio
Number
of shares		 Shareholding
ratio		 Title Name Relationship
Chairperso~~n~~ Republic of
China		 Lin, Chi-Chin Male
61-70
years
old		 July 7, 2021 3 years September
23, 2003
4,911,823		 6.93% 2,456,000 3.15% 2,579,239 3.31% - - Master of Management, Dominican
University, USA		 ~~N~~one President Lin, Chi-Uo Brothe
r		 -
Special Assistant,
Chairperson’s
Office		 Stella Hu Sister
in-law
-
Director Republic of
China		 Ji Uo Investment
Co., Ltd.
Representative:
Lin, Chi-Uo
Male
61-70
years
old		 July 7, 2021 3 years September
23, 2003
5,203,045		 7.34% 5,723,349 7.34% - - - - Graduated from the Institute of
Business Management, Daye
University		 President, Hsin
~~Y~~ung Chien
Co., Ltd.
Chairperson		 Lin, Chi-Chin Brothe
r		 -
Special Assistant,
Chairperson’s
Office		 Stella Hu Wife -
Director Republic of
China		 Huang, Kuo-
Chen		 Male
71-80
years
old		 July 7, 2021 3 years September
28, 2006
115,500		 0.16% 127,600 0.16% 90,200 0.12% - - Graduated from the International
Trade Department, Chienkuo
Technology University
Accounting Supervisor, Yuantai
Automobile Transportation Company
Chair of the Supervisors, Yuanlin
Credit Cooperative
None		 - - - -
Director Republic of
China		 Chiu, Po-Ta Male
81-90
years
old		 July 7, 2021 3 years May 26,
2010		 130,000 0.18% 150,000 0.19% - - - - Graduated from the Business
Management Department, Feng
Chia University
Chairperson, Lih Hsin Industrial &
TradingCo.,Ltd.		 Chairperson,
Lih Hsin
Industrial &
Trading Co.,
Ltd.		 - - - -
Director Republic of
China		 Chen, Chao-Kao
Male
61-70
years
old		 July 7, 2021 3 years May 26,
2010		 625,800 0.88% 688,380 0.88% - - - - Graduated from Chia Yang High
School
Chairperson, Kong Chou
Construction Co.,Ltd.		 None - - - -
Director Republic of
China		 Chen, Chin-I Male
81-90
years
old		 July 7, 2021 3 years September
28, 2006		 2,200 0.00% Graduated from the Department of
Economics, Tung Hai University
Chief Auditor, Changhua Bank Head
office		 None - - - -
Independent
Director
Republic of
China		 Chen, Chun-Jen Male
71-80
years
old		 July 7, 2021 3 years September
28, 2006
-		 - - - - - - - Graduated from the Bank Insurance
Department, Overseas Chinese
College
President, Tianduofu Enterprise Co.,
Ltd.		 Chairperson,
Wangdehao
International
Development
Co.,Ltd		 - - - -
Independent
Director
Republic of
China		 Lin, Chen-Chih Male
71-80
years
old		 July 7, 2021 3 years June 27,
2012		 - - - - - - - - Master of Philosophy, Tung Hai
University
Graduated from the International
Trade Department, Chienkuo
Commercial College
President, Oudi Enterprise
Development Co.,Ltd.		 President, Oudi
Enterprise
Development
Co., Ltd.
-		 - - -
Independent
Director
Republic of
China		 Lin, Chin-An Male
71-80
years
old		 July 7, 2021 3 years
July 7,
2021		 - - - - - - - - Provincial Fengyuan Senior
Business Vocational School
Manager, Changhua Bank Nantou
and Changhua Branch		 None - - - -

Note: The number of shares as of the book-close date on April 29, 2023 is 77,991,707.

15

  • (II) Major shareholders of legal person shareholders; if the major shareholders are legal person shareholders, their major shareholders:

Table 1: Major shareholders of legal person shareholders

Name of legalperson shareholder Major shareholders of legalperson shareholders
Ji Uo Investment Co.,Ltd. Bo Le Investment Co.,Ltd(100%)

Table 2: If the major shareholders are legal person shareholders, their major shareholders:

shareholders:
Name of legalperson shareholder Major shareholders of legalperson shareholders
Bo Le Investment Co., Ltd(100%) Lin, Chi-Uo(25%); Stella Hu(27%)
Lin,Le-Tian(24%);Lin,Ting-Yu(24%)
  • (III) Disclosure of professional qualifications of directors and independence of independent directors:
Condition
Name		 Professional qualifications and
experience		 Independence status Number of
independent
director positions
concurrently
served in other
public companies
Lin, Chi-Chin 1. Chairperson of the Company
2. Mr. Lin, Chi-Chin has various
professional abilities in operations
management, leadership and decision-
making, crisis management, industrial
knowledge, sustainable management,
and international market outlook,
enabling the Company to develop
steadily and expand internationally and
allowing the Company to operate
towards sustainable development.
3. There are none of the circumstances
of Article 30 of the CompanyAct.
Has a kinship
relationship within the
second degree with
Lin, Chi-Uo, the
representative of the
legal person director Ji
Uo Co., Ltd.		 None
Ji Uo Investment
Co., Ltd.
Representative:
Lin, Chi-Uo
1. President of the Company
2. Mr. Lin, Chi-Uo has various
professional abilities in operations
management, leadership and decision-
making, crisis management, industrial
knowledge, sustainable management,
and international market outlook,
enabling the Company to develop
steadily and expand internationally and
allowing the Company to operate
towards sustainable development.
3. There are none of the circumstances
of Article 30 of the CompanyAct.
Has a kinship
relationship within the
second degree with
Lin, Chi-Chin, the
Chairman.		 None

16

Condition
Name		 Professional qualifications and
experience		 Independence status Number of
independent
director positions
concurrently
served in other
public companies
Huang, Kuo-
Chen		 1. Director of the Company
2. Director Huang, Kuo-Chen once
served as the chair of the supervisors
of Yuanlin Credit Cooperative, and he
has served as a director of the
Company for many years. He has
professional abilities in financial
management, accounting affairs, etc.,
and he continues to make major
decisions on the Board of Directors of
the Company with the other directors,
enabling the Company to move
towards better development and
achieve the goal of sustainable
management.
3. There are none of the circumstances
of Article 30 of the CompanyAct.		 There is no spousal
relationship or kinship
relationship within the
second degree among
the directors.		 None
Chen, Chin-I 1. Director of the Company
2. Mr. Chen, Chin-I once served as the
head of the audit department of the
head office of Changhua Bank, and he
has served as a supervisor of the
Company for many years. He has
professional abilities in finance,
accounting and audit affairs, and he
continues to make major decisions on
the Board of Directors of the Company
with the other directors, enabling the
Company to move towards better
development and achieve the goal of
sustainable management.
3. There are none of the circumstances
of Article 30 of the CompanyAct.		 There is no spousal
relationship or kinship
relationship within the
second degree among
the directors.		 None

17

Condition
Name		 Professional qualifications and
experience		 Independence status Number of
independent
director positions
concurrently
served in other
public companies
Chen, Chao-
Kao		 1. Director of the Company
2. Mr. Chen, Chao-Kao is the
chairperson of the Board of Directors
of Kong Chou Construction Co., Ltd.,
and he has served as a supervisor of
the Company for many years. He has
various professional abilities in
operations management, leadership
and decision-making, crisis
management, industrial knowledge,
sustainable operations and
international market outlook, and he
continues to make major decisions on
the Board of Directors of the Company
with the other directors, enabling the
Company to move towards better
development and achieve the goal of
sustainable management.
3. There are none of the circumstances
of Article 30 of the CompanyAct.		 There is no spousal
relationship or kinship
relationship within the
second degree among
the directors.		 None
Chiu, Po-Ta 1. Director of the Company
2. Mr. Chiu, Po-Ta is the chairperson of
Lih Hsin Industrial & Trading Co., Ltd.
He once served as the managing
supervisor of the Import and Export
Association, the executive director of
the Sino-Indonesia Cultural and
Economic Association, the supervisor
of the Taichung World Trade Center,
and a consultant of Jinding Securities,
and he has served as a supervisor of
the Company for many years. He has
various professional abilities in
operations management, leadership
and decision-making, crisis handling,
industrial knowledge, finance,
sustainable management, and
international market outlook, and he
continues to make major decisions on
the Board of Directors of the Company
with the other directors, enabling the
Company to move towards better
development and achieve the goal of
sustainable management.
3. There are none of the circumstances of
Article 30 of the Company Act.		 There is no spousal
relationship or kinship
relationship within the
second degree among
the directors.		 None

18

Condition
Name		 Professional qualifications and
experience		 Independence status Number of
independent
director positions
concurrently
served in other
public companies
Chen, Chun-
Jen		 1. Independent director, member of the
Audit Committee, convener of the
Remuneration Committee of the
Company.
2. Mr. Chen, Chun-Jen is the president of
Tianduofu Company. He has various
professional abilities in operations
management, leadership and decision-
making, crisis management, industrial
knowledge, sustainable management,
and international market outlook.
During his tenure as an independent
director of the Company, he has
provided appropriate suggestions and
guidance for the Company’s
operations, and finance and operations
analysis. The Company relies on Mr.
Chen, Chun-Jen’s expertise to
continuously supervise its operation.
3. There are none of the circumstances of
Article 30 of the Company Act.		 The following three
independent directors:
1. All meet the
independence
qualification of
independent directors.
2. Fully comply with
independence
requirements:
(1) The person, their
spouse, or any relative
within the second
degree of kinship have
not served as a
director, supervisor, or
employee of the
Company or any other
affiliated enterprise.
(2) The person, their
spouse, or any relative
within the second
degree of kinship have
not held the
Company’s shares.
(3) Has not served as a
director, supervisor or
employee of a
company with a
specific relationship
with the Company (by
reference to Article 6,
paragraph 1,
subparagraphs 5 to 8

None
Lin, Chen-
Chih		 1. Independent director, member of the
Audit Committee, member of the
Remuneration Committee of the
Company.
2. Mr. Lin, Chen-Chih is the president of
Odi Company. He has various
professional abilities in operations
management, leadership and decision-
making, crisis management, industrial
knowledge, sustainable management,
and international market outlook.
During his tenure as an independent
director of the Company, he has
provided appropriate suggestions and
guidance for the Company’s operations
and operations analysis. The Company
relies on Mr. Lin, Chen-Chih’s expertise
to continuously supervise its operation.
3. There are none of the circumstances of
Article 30 of the Company Act.

None

19

  • Condition Professional qualifications and Independence status

  • experience

  • Name 1. Independent director, convener of the of the Regulations Audit Committee, member of the Governing the Remuneration Committee of the Appointment and

  • Company.

of the Regulations Governing the Appointment and Exercise of Powers by the Remuneration Committee of a Company Whose Stock is Listed on the Taiwan Stock Exchange or the Taipei Exchange). (4) No amount of remuneration has been received from providing business, legal, financial, accounting and other services to the Company or its affiliated enterprises in the last two years.

  1. Mr. Lin, Chin-An once served the manager of the Nantou Branch and Changhua Branch of Changhua Bank. He has professional abilities in accounting, finance, finance, industry knowledge, sustainable management, and international market outlook. During his tenure as an independent

Lin, Chin-An director of the Company, he has provided appropriate advice and guidance on the Company’s operations, and finance and operations analysis. The Company relies on Mr. Lin, ChinAn’s expertise to continuously supervise its operation.

  1. There are none of the circumstances of Article 30 of the Company Act.

Number of independent director positions concurrently served in other public companies None

20

  • (IV) Diversification and independence of the Board of Directors:

  • (1) Diversification of the Board of Directors:

Based on the Company’s diversification policy, strengthening corporate governance, and promoting the development of a sound composition and structure of the Board of Directors, the candidate nomination system is adopted for the nomination of candidates for directors of the Company. Candidates are nominated in accordance with the provisions of the Articles of Association to evaluate the qualifications of candidates, measure their professional background, credibility, or relevant professional qualifications, etc. After the nomination are approved by the Board of Directors, they are sent to the shareholders’ meeting for election. At present, there are 9 directors. The implementation of diversification by all directors is as follows:

  • The proportion of directors who are also employees is 22%, the proportion of independent directors is 33%, and the proportion of directors who are not employees is 45%.

  • There are 3 directors aged 61-70, 4 directors aged 71-80, and 2 directors aged 81-90.

  • Term of office of directors: 5 directors above 9 years, and 4 directors below 3

years.

The diversification core items of directors are as follows:

Board members generally have the knowledge, skills, and accomplishments necessary for performing their duties. To achieve the ideal goal of corporate governance, the overall capabilities of the Board of Directors are as follows:

  1. Operational judgment ability.

  2. Accounting and financial analysis ability.

  3. Operations management ability.

  4. Crisis management ability.

  5. Industrial knowledge.

  6. International market outlook.

  7. Leadership.

  8. Decision-making ability.

  9. Implementation of diversification by directors

21

Title Name
of
director
Gender		 Age
Term and
seniority of
independent
directors
Operations
management
Leadership
and
decision-
making
Industrial
knowledge
Finance
and
accounting
Crisis
management
Director Lin,
Chi-
Chin		 Male 61-
70		 V V V V V
Director Lin,
Chi-Uo		 Male 61-
70		 V V V V
Director Huang,
Kuo-
Chen
Male		 71-
80		 V V V
Director Chen,
Chin-I		 Male 81-
90		 V V V
Director Chen,
Chao-
Kao		 Male 61-
70		 V V V V
Director Chiu,
Po-Ta		 Male 81-
90		 V V V
Independent
Director		 Chen,
Chun-
Jen		 Male 71-
80		 Over 9
years		 V V V V V
Independent
Director		 Lin,
Chen-
Chih		 Male 71-
80		 Over 9
years		 V V V
Independent
Director		 Lin,
Chin-
An		 Male 71-
80		 Under 3
years		 V V V

(2) Independence of the Board of Directors:

The Company currently have 9 members on the Board of Directors. As of the end of 2022, all the independent directors had complied with the regulations for independent directors of the Securities and Futures Bureau of the FSC,

and there were no circumstances under paragraphs 3 and 4 of Article 26-3 of the Securities and Exchange Act between directors and independent directors.

The Board of Directors of the Company is independent. Please refer to the disclosure of directors’ professional information and independent directors’ independence information on pages 16-20 of this annual report. Please refer to the directors’ information on page 15 of this annual report for information on the academic experience, gender, and work experience of each director.

22

(V) President, vice presidents, assistant vice presidents, and heads of departments and branches: April 24, 2022; unit: share: %

Title Nationality Name Gender Date of election
(appointment)		 Shareholding Shareholding Shares held by spouse
and minor children		 Shares held by spouse
and minor children		 Number of shares
held in the names
of others		 Number of shares
held in the names
of others		 Major experience and
educational
background		 Positions concurrently
held at other companies		 Managers with a spousal
relationship or kinship
relationship within the
second degree		 Managers with a spousal
relationship or kinship
relationship within the
second degree		 Managers with a spousal
relationship or kinship
relationship within the
second degree		 Remark
Number of
shares		 Shareholding
ratio		 Number of
shares		 Shareholdi
ng ratio		 Number of
shares		 Shareholding
ratio		 Title Name Relationship
President Republic
of China		 Lin, Chi-
Uo		 Male May
2002		 157,281
0.20%
0
0.00%
-		 - Graduated from the
Institute of Business
Management, Daye
University		 - - - - -
Executive
Vice
President		 Republic
of China		 Li,
Chiung-
Tung		 Male August
2019		 2,403
0.00%
10,656
0.01%
-		 - Factory Affairs
Director, Sanjiu
Building Materials Co.,
Ltd.
Graduated from the
Enterprise
Management Institute
of Chaoyang
University of
Technology		 - - - - -
Manager,
Production
Department		 Republic
of China		 Chou, Yi-
Shang		 Male June
2004		 434,006
0.56%
22,722
0.03%
-		 - Universal Scientific
Industrial Co., Ltd.
Graduated from the
Enterprise
Management Institute
of Chaoyang
University of
Technology		 - - - - -
Manager,
R&D Center		 Republic
of China		 Chang,
Wei-Hsiu		 Male March
2012		 0
0.00%
9,350
0.01%
-		 - Kung Long Batteries
Industrial Co., Ltd.
Hardinge Taiwan
Precision Machinery
Limited
Industrial Engineering
Research Institute of
Chaoyang University
of Technology		 - - - - -
Accounting
Supervisor
and
Corporate		 Republic
of China		 Lin, Chiu-
Hung		 Female August
2011		 3,465
0.00%
-		 - - - Graduated from the
Accounting
Department,
Providence University		 - - - - -

23

Title Nationality Name Gender Date of election
(appointment)		 Shareholding Shareholding Shares held by spouse
and minor children		 Shares held by spouse
and minor children		 Number of shares
held in the names
of others		 Number of shares
held in the names
of others		 Major experience and
educational
background		 Positions concurrently
held at other companies		 Managers with a spousal
relationship or kinship
relationship within the
second degree		 Managers with a spousal
relationship or kinship
relationship within the
second degree		 Managers with a spousal
relationship or kinship
relationship within the
second degree		 Remark
Number of
shares		 Shareholding
ratio		 Number of
shares		 Shareholdi
ng ratio		 Number of
shares		 Shareholding
ratio		 Title Name Relationship
Governance
Supervisor		 Deputy Manager,
PricewaterhouseCoop
ers Taiwan
Audit Director, Hsin
Yung ChienCo.,Ltd.
HR Manager Republic
of China		 Lin,
Feng-I		 Female March
2012		 3,811
0.00%
-		 - - - Sen Yong Industrial
Information Secretary
Information Specialist,
Mobiletron Electronics
Co., Ltd.
Cost Accountant,
Yangtie Factory
Graduated from the
Enterprise
Management Institute
of Chaoyang
University of
Technology		 - - - - -

24

III.Remuneration of directors, supervisors, president and vice presidents:

1. Remuneration of directors (including independent directors):

2022; unit: NT$ thousand

職稱 姓名 Remuneration of directors Remuneration of directors Remuneration of directors Remuneration of directors Remuneration of directors Remuneration of directors Remuneration of directors Remuneration of directors Total amount
of items A, B,
C, and D as
a proportion
of the net
profit after
tax		 Total amount
of items A, B,
C, and D as
a proportion
of the net
profit after
tax

Relevant remuneration received for concurrently serving as
employee

Relevant remuneration received for concurrently serving as
employee

Relevant remuneration received for concurrently serving as
employee

Relevant remuneration received for concurrently serving as
employee

Relevant remuneration received for concurrently serving as
employee

Relevant remuneration received for concurrently serving as
employee

Relevant remuneration received for concurrently serving as
employee

Relevant remuneration received for concurrently serving as
employee		 Total amount of items
A, B, C, D, E, F, and
Gas a proportion of
the net profit after tax		 Total amount of items
A, B, C, D, E, F, and
Gas a proportion of
the net profit after tax		 Remuneration
from reinvested
enterprises
other than
subsidiaries or
the parent
company
Remunerati
on (A)		 Retirement
pension (B)		 Directors’
remuneration
(C) (Note 1)		 Business
execution
expenses (D)		 Salary, bonus,
and special
expenses (E)		 Retirement
pension (F)		 Employees’ remuneration (G)
(Note 2)
The Company
 All companies
in the financial
report		 The Company
 All companies
in the financial
report		 The Company
 All companies
in the financial
report		 The Company
 All companies
in the financial
report		 The Company
 All companies
in the financial
report		 The Company All companies
in the financial
report		 The Company
 All companies
in the financial
report		 The
Compa
ny		 All
compan
ies in
the
financia
l report		 The Company All companies
in the financial
report
Cash Stock Cash Stock
Director Lin, Chi-
Chin		 - - - - 7,496 7,496 460 460 7,956 7,956 2,458 2,458 - - 643 - 643 - 11,057 11,057 None
Director Ji Uo
Investment
Co., Ltd. -
Representa
tive: Lin,
Chi-Uo
Director Huang,
Kuo-Chen		 2.03% 2.03% 2.82% 2.82%
Director Chen,
Chao-Kao
Director Chen,
Chin-I
Director Chiu, Po-
Ta
Independe
nt Director		 Chen,
Chun-Jen		 - - - - 510 510 510 510 1,020 1,020 - - - - - - - - 1,020 1,020 None
Independe
nt Director		 Lin, Chen-
Chih
0.26% 0.26% 0.26% 0.26%
Independe
nt Director		 Lin, Chin-
An
1. Please explain the remuneration policy, system, standard and structure of independent directors, and explain the relevance to the amount of remuneration paid according to such factors as
responsibilities, risks, investment time and so on: The remuneration of independent directors of the Company is handled in accordance with the Articles of Association; in addition to taking the
independent directors’ participation in the operation of the Company into account, the value of their contributions and their responsibilities, the level of the industry is taken into account. After
having been evaluated, discussed and recommended by the Remuneration Committee, the proposal is submitted to the Board of Directors for resolution.。
2.Except as disclosed in the table above, the remuneration received by directors of the company for their services (such as serving as non-employee consultants of the parent company/all
companiesinthefinancial report/reinvested enterprises)inthemostrecent year: None.

1. Please explain the remuneration policy, system, standard and structure of independent directors, and explain the relevance to the amount of remuneration paid according to such factors as responsibilities, risks, investment time and so on: The remuneration of independent directors of the Company is handled in accordance with the Articles of Association; in addition to taking the independent directors’ participation in the operation of the Company into account, the value of their contributions and their responsibilities, the level of the industry is taken into account. After having been evaluated, discussed and recommended by the Remuneration Committee, the proposal is submitted to the Board of Directors for resolution. 。

  1. Except as disclosed in the table above, the remuneration received by directors of the company for their services (such as serving as non-employee consultants of the parent company/all companies in the financial report/reinvested enterprises) in the most recent year: None.

25

Remuneration Tier Table

Tiers of remuneration paid to directors of the
Company		 Name ofdirector Name ofdirector Name ofdirector Name ofdirector
Total remuneration of the first four
items (A+B+C+D)		 Total remuneration of the first seven
items (A+B+C+D+E+F+G)
The Company
All companies in the
financial reportI		 The
Company		 All companies in the
financial report J
Less than NT$1,000,000 Huang, Kuo-Chen; Chen, Chao-Kao;
Chen, Chin-I; Chiu, Po-Ta; Chen, Chun-
Jen; Lin, Chen-Chih; Lin, Chin-An		 Huang, Kuo-Chen; Chen, Chao-Kao;
Chen, Chin-I; Chiu, Po-Ta; Chen, Chun-
Jen; Lin, Chen-Chih; Lin, Chin-An
NT$1,000,000(inclusive)~ NT$2,000,000(exclusive) - -
NT$2,000,000(inclusive)~ NT$3,500,000(exclusive) Lin,Chi-Uo -
NT$3,500,000(inclusive)~ NT$5,000,000(exclusive) Lin,Chi-Chin Lin,Chi-Uo
NT$5,000,000(inclusive)~ NT$10,000,000(exclusive) - Lin,Chi-Chin
NT$10,000,000(inclusive)~ NT$15,000,000(exclusive) - -
NT$15,000,000(inclusive)~ NT$30,000,000(exclusive) - - - -
NT$30,000,000(inclusive)~ NT$50,000,000(exclusive) - - - -
NT$50,000,000(inclusive)~ NT$100,000,000(exclusive) - - - -
More than NT$100,000,000 - - - -
Total 9personnels 9personnels 9personnels 9personnels
  • The remuneration disclosed in this table is different from the income concept of the Income Tax Act, so this form is for information disclosure purposes and not for taxation purposes.

Note 1: The disclosed earnings distribution content is the earnings distribution for 2022 approved by the Board of Directors on March 22, 2023, but has not yet been approved by the 2023 shareholders’ meeting and actually distributed. The employees’ remuneration disclosed in the table above is a provisional estimate.

26

2.Remuneration of president and vice presidents:

2022; unit: NT$ thousand 2022; unit: NT$ thousand 2022; unit: NT$ thousand 2022; unit: NT$ thousand 2022; unit: NT$ thousand 2022; unit: NT$ thousand 2022; unit: NT$ thousand
Title Name Salary (A) Retirement
pension (B)		 Bonus and
special
expenses
(C)		 Employees’ remuneration (D)
(Note 1)		 Total amount of items A,
B, C, and D as a
proportion of the net
profit aftertax(%)
Remuneration
from
reinvested
enterprises
other than
subsidiaries or
the parent
company
The Company All companies
in the financial
report		 The Company All companies
in the financial
report		 The Company All companies
in the financial
report		 The Company All companies in
the financial
report		 The
Company
All
companies
in the
financial
report
Cash
amount
Stock
amount
Cash
amount
Stock
amount
President Lin, Chi-Uo 1,566 1,566 31 31 - - 3,021 - 3,021 - 4,618 4,618 None
Executive
VicePresident		 Li, Chiung-Tung 1.18% 1.18%

Remuneration Tier Table

Remuneration Tier Table Tier Table
Tiers of remuneration paid to the president and vice presidents
of the Company		 Names ofthe president andvice presidents
The Company All companies in the
financial reportE
Less than NT$1,000,000 - -
NT$1,000,000 (inclusive)~ NT$2,000,000 (exclusive) Lin, Chi-Uo
NT$2,000,000 (inclusive)~ NT$3,500,000 (exclusive) -
-
NT$3,500,000 (inclusive)~ NT$5,000,000 (exclusive) Li, Chiung-Tung
NT$5,000,000 (inclusive)~ NT$10,000,000 (exclusive) - -
NT$10,000,000 (inclusive)~ NT$15,000,000 (exclusive) - -
NT$15,000,000 (inclusive)~ NT$30,000,000 (exclusive) - -
NT$30,000,000 (inclusive)~ NT$50,000,000 (exclusive) - -
NT$50,000,000 (inclusive)~ NT$100,000,000 (exclusive) - -
More than NT$100,000,000 - -
Total 2personnels 2personnels
  • The remuneration disclosed in this table is different from the income concept of the Income Tax Act, so this form is for information disclosure purposes and not for taxation purposes.

Note 1: The disclosed earnings distribution content is the earnings distribution for 2022 approved by the Board of Directors on March 22, 2023, but has not yet been approved by the 2023 shareholders’ meeting and actually distributed. The employees’ remuneration disclosed in the table above is a provisional estimate.

27

  1. Names of managers who are distributed employees’ remuneration and the distribution status:
unit: NT$ thousand
Title Name Stock
amount		 Cash
amount
(Note)		 Total Proportion of
total amount in
net profit after
tax(%)
Manager Chairperson Lin, Chi-Chin -
 4,840 4,840 1.23%
President Lin, Chi-Uo
Executive
Vice
President		 Li, Chiung-
Tung
Manager Chou, Yi-
Shang
Manager Chang, Wei-
Hsiu
Manager Lin, Chiu-Hung
Manager Lin, Feng-I 
  - Note: The disclosed earnings distribution content is the earnings distribution for 2022 approved by the Board of Directors on March 22, 2023, which has yet not been actually distributed. The employees’ remuneration disclosed in the table above is a provisional estimate.

  • (VII) Compare and explain the proportion of the total remuneration paid by the Company and all companies in the consolidated statements to its directors, supervisors, president, and vice presidents in the last two years to the after-tax net income of the individual financial report, and explain the policies, standards, and procedures for remuneration payment, as well as the relevance to business performance and future risks:

  • Analysis of the proportion of the total remuneration to the after-tax net income of the

    • individual financial report in the last two years
Title 2021 2022 2022
The Company All companies in the
financial report		 The Company All companies in the
financial report
Directors 2.11% 2.11% 3.08% 3.08%
Supervisors 0.05% 0.05% 0.00% 0.00%
President
and vice
presidents		 0.32% 0.32% 1.18% 1.18%
Total 2.48% 2.48% 4.26% 4.26%
  • Note 1: The President (Lin, Chi-Uo) of the Company serves as the legal person director representative of the Company, and his remuneration has been listed in the director’s remuneration, so his remuneration is deducted from the total remuneration of the president in this table.

28

  1. The policy, standard and combination of remuneration, procedure for setting remuneration, and the relationship with business performance and future risk are described as follows:

  2. A. The remuneration of directors and managers of the Company is distributed according to the Articles of Association, which are as follows:

    • Article 21: The remuneration of the directors of the Company shall be determined by the Board of Directors in accordance with the general standards of the industry.

    • Article 22: HYC may establish managers, whose appointment, removal and remuneration shall be in accordance with the Company Act; the retirement of the appointed managers shall be handled in accordance with the retirement rules for the appointed managers of the Company.

Article 24: After making up the losses, if there is any balance in the current year’s profit before tax, HYC shall allocate no less than 2% as employees’ remuneration, and no more than 3% as the directors’ remuneration. Employees’ remuneration may be paid in stock or cash, and may be paid to employees of affiliated companies who meet certain conditions. The distribution of employees’ remuneration and directors’ remuneration shall be made by a resolution adopted by the Board of Directors at which more than two-thirds of the directors are present and the proposal approved by a majority of the directors present, and it shall be reported to the shareholders’ meeting.

Article 24-1: If HYC has a surplus in its annual final accounts, it shall first pay profit-seeking enterprise income tax and make up for its losses in previous years. If there is still a surplus, it shall set aside 10% as the legal reserve in accordance with the law, and set aside or reverse the special reserve in accordance with the law; if there is any remaining balance, then the Board of Directors shall prepare an earnings distribution proposal for it together with and the accumulated undistributed earnings, and submit it to the shareholders’ meeting for resolution on dividend distribution. Since the Company is in a stage of stable growth, considering shareholders’ equity, the Company’s financial structure and longterm development, the total amount of shareholders’ dividends should be more than 20% of the accumulated undistributed earnings, of which cash dividends should not be less than 10% of the total shareholders’ dividends.

29

  • B. Link between performance evaluation and remuneration of directors and managers:

The proportion of remuneration distributed to the directors and managers of the Company is that, in accordance with Article 24 of the Articles of Association of the Company, after making up the losses, if there is any balance in the current year’s profit before tax, the Company shall allocate no less than 2% as employees’ remuneration, and no more than 3% as the directors’ remuneration. The remuneration of directors (including independent directors) and managers of the Company shall be calculated based on the overall consideration of their participation in the operation of the Company and their performance evaluation, and after taking their goal achievement rate, profitability, operating efficiency, contribution, etc. into account. Reasonable remuneration shall be granted, and the remuneration system for directors and managers shall be reviewed from time to time in light of the actual operating conditions and relevant laws and regulations.

IV. Corporate Governance Operation Status

  • (I) Operation status of the board of directors

The board of directors held 5 (A) meetings in the past year (2022), and the attendance status is as follows:

Title Name Number of
actual (non-
voting)
attendances
B
Number
of
attendan
ces by
proxy
Actual (non-
voting)
attendance
rate (%)
[B/A]		 Remark
Chairperson Lin,Chi-Chin 5 - 100%
Director Ji Uo Investment
Co., Ltd.
Representative:
Lin,Chi-Uo		 5 - 100%
Director Huang,Kuo-Chen
4		 - 80%
Director Chen,Chin-I 5 - 100%
Director Chen,Chao-Kao 5 - 100%
Director Chiu,Po-Ta 5 - 100%
Independent
Director
Chen, Chun-Jen		 4 - 80%
Independent
Director
Lin, Chen-Chih		 5 - 100%
Independent
Director
Lin, Chin-An		 5 - 100%

30

Other matters to be recorded:

  • I. In case of any of the following circumstances in the operation of the Board of Directors, state the date of the board meeting, session, content of the proposal, opinions of all independent directors, and the company’s handling of the opinions of independent directors:

  • (I) Items listed in Article 14-3 of the Securities and Exchange Act: Please refer to pages 83 to 85 of the annual report for the contents of the resolutions. None of the independent directors had objections to the matters listed in Article 14-3 of the Securities and Exchange Act, and the proposal was passed accordingly.

  • (II) Except for the matters referred to in the preceding paragraph, other matters decided by the Board of Directors with objections or reservations by independent directors that have been recorded or stated in writing: No such situation.

  • II. For the implementation of the directors’ recusal for proposals involving personal interests, state the name of the director, the content of the proposal, the reason for recusal, and the status of their participation in voting:

voting:
Board
meeting
date		 Content of the
proposal		 Name of
director with
recusal for
personal
interest		 Reason for
recusal		 Status of
their
participatio
n in voting
2022.8.5 Discussion of
the individual
distribution of
directors'
remuneration
for the year
2021, which
was approved
by the
Remuneration
Committee on
August 5,
2022.		 Attending
directors		 Directors
present shall
avoid their
respective
interest issue
in accordance
with the law
when
discussing
their own
remuneration.		 The
proposal
was
passed by
the other
attending
directors
accordingly
without
objection.
  • III.TWSE/TPEx listed companies shall disclose information such as the evaluation cycle and period, evaluation scope, method, and evaluation content of the Board of Directors’ self (or peer) evaluation: The Company has submitted the implementation status of the 2022 performance evaluation of the Board of Directors to the Board of Directors on March 22, 2023, and the evaluation results are excellent.
Evaluation
cycle		 Evaluation period Evaluation
scope		 Evaluation
method		 Evaluation content
Not once
every year		 January 1, 2022,
to December 31,
2022		 Board of
Directors
Individual
board
member		 Internal self-
evaluation of
the Board of
Directors and
self-evaluation
of board
members		 1.
Performance
evaluation items of
the Board of
Directors:
participation in the
operation of the
Company,
improvement of the

31

decision-making
quality of the Board
of Directors,
composition and
structure of the
Board of Directors,
selection and
continuing education
of the Board of
Directors, and
internal control.
2.
Performance
evaluation items for
individual directors:
mastery of the
Company’s
objectives and tasks,
recognition of
directors’
responsibilities,
participation in the
Company’s
operations, internal
relationship
management and
communication,
directors’
professional and
continuous learning,
and internal control.

III.Assessment of the objectives of strengthening the functions of the Board of Directors in the current year and the most recent year (such as establishing an Audit Committee, improving information transparency, etc.) and the implementation:

  • (1) The Company has established the Audit Committee in 2021.

  • (2) In 2022, the Board of Directors of the Company held five board meetings, which was in line with the requirement of the Rules of Procedure of Board of Directors’ Meetings that the board meeting should be held at least once a quarter. Important proposals were announced on the Market Observation Post System in accordance with the law, and at the same time announced on the Company’s website, so that the information was truly open and transparent.

  • (3) In 2020, the Board of Directors of the Company adopted the “Measures for the Performance Evaluation of the Board of Directors” to carry out the internal performance evaluation of the Board of Directors at least once a year.

  • (4) Strengthen professional knowledge: The Company actively provides information on various continuing education courses and encourages the Board of Directors to participate in various corporate governance courses or arrange lecturers to give lectures to the Company from time to time to strengthen the abilities of the board members. In 2022, the 9 directors had 54 hours of continuing education in total.

32

  • (II) The operation of the Audit Committee or the participation of supervisors in the operation of the Board of Directors:

  • Information on the operation of the Audit Committee: Focus of the Audit Committee:

    • (1) Formulating or amending the internal control system in accordance with Article 14-1 of the Securities and Exchange Act.

    • (2) Assessment of the effectiveness of the internal control system.

    • (3) In accordance with Article 36-1 of the Securities and Exchange Act, formulating or amending the procedures for handling major financial and business activities, such as acquisition or disposal of assets, engagement in derivatives trading, lending funds to others, endorsements/guarantees for others.

    • (4) Matters involving directors’ own interests.

    • (5) Significant asset or derivative transactions.

    • (6) Major extension of loans, endorsements or guarantees.

    • (7) Offering, issuing, or private placement of equity securities.

    • (8) Appointment, removal and remuneration of the certifying CPA.

    • (9) Appointment and dismissal of financial, accounting or internal audit supervisors.

    • (10) The annual financial report signed or sealed by the chairperson, manager, and accountant supervisor, and the second quarter financial report audited and certified by CPAs.

    • (11) Other major matters prescribed by the company or the competent authority.

  • The Company has an Audit Committee, which is composed of all independent directors. There are three members on the Committee.

  • 3.In 2022 the Audit Committee held Five (A) meetings. The voting and non-

  • voting attendance of independent directors is as follows:

Title Name Number of
actual non-
voting
attendances B		 Actual (non-voting)
attendance rate (%)
[B/A]		 Remark
Independent
Director		 Lin, Chin-An 5 100%
Independent
Director		 Chen, Chun-
Jen		 5 100%
Independent
Director		 Lin, Chen-
Chih		 5 100%

33

Other matters to be recorded:

  • 一、 In case of any following circumstances in the operation of the Audit Committee meetings, state the date of the Audit Committee meeting, session, content of the proposal, content of the independent directors’ objections, qualified opinions or major recommendations, resolution of the Audit Committee meeting, and the company’s handling of the opinions of the Audit Committee members.

  • (I) Items listed in Article 14-5 of the Securities and Exchange Act.

Meeting date Proposal content Resolution Matters
listed in
Article
14-5 of
the
Securiti
es and
Exchan
ge Act		 Resolutions
not approved
by the Audit
Committee but
approved by
more than two-
thirds of all
directors		 The
Company’s
disposal of the
Audit
Committee’s
opinion
2022.01.20
3rd meeting of
the 1st term		 1. Internal audit
report by the
internal audit
supervisor.		 After the
chairman’s
consultation
with all
attending
members,
the proposal
was passed
accordingly
and sent to
the board
meeting for
resolution.		 V - After the
chairman’s
consultation
with all
attending
members, the
proposal was
passed
accordingly.
2. In accordance
with the
provisions of
the Company's
Articles of
Association,
the
remuneration of
directors and
supervisors for
2021 and the
expected
allocation ratio
for 2022 are
proposed.		 V -
3. Short-term
investment.		 V -
4. Sale of the
Longjing land.		 V -
2022.03.23
4th meeting of
the 1st term		 1. Internal audit
report by the
internal audit
supervisor.		 After the
chairman’s
consultation
with all		 V - After the
chairman’s
consultation
with all

34

2. 2021 “Internal
Control System
Effectiveness
Assessment”
and “Internal
Control System
Declaration”.		 attending
members,
the proposal
was passed
accordingly
and sent to
the board
meeting for
resolution.		 V - attending
members, the
proposal was
passed
accordingly.
3. Amendment to
the
“Procedures for
Acquisition or
Disposal of
Assets”.		 V -
4. Amendment to
the “Corporate
Social
Responsibility
Best Practice
Principles”.		 V -
5. Amendment to
the “Corporate
Governance
Best Practice
Principles” and
“Management
Procedures for
Prevention of
Insider
Trading”.		 V -
6. Partial
amendment to
the “Articles of
Association”.		 V -
7. Distribution of
employees’
remuneration
and directors’
remuneration
for 2021.		 V -
8. 2021 business
report and
financial
statements.		 V -
2022.05.11
5th meeting of
the 1st term		 1. Internal audit
report by the
internal audit
supervisor.		 After the
chairman’s
consultation
with all
attending
members,		 V - After the
chairman’s
consultation
with all
attending
members, the
2. Evaluation of
certifying		 V -

35

CPAs’
independence.		 the proposal
was passed
accordingly
and sent to
the board
meeting for
resolution.		 proposal was
passed
accordingly.
3. Financial report
for Q1 2022.		 V -
4. Partial
amendment to
the “Articles of
Association”.		 V -
5. 2021 Earnings
Distribution.		 V -
2022.08.05
6th meeting of
the 1st term		 1. Internal audit
report by the
internal audit
supervisor.		 After the
chairman’s
consultation
with all
attending
members,
the proposal
was passed
accordingly
and sent to
the board
meeting for
resolution.		 V - After the
chairman’s
consultation
with all
attending
members, the
proposal was
passed
accordingly.
2.
Financial
report for Q2
2022.		 V -
3.
Respective
directors’ and
supervisors’
remuneration
for 2021.		 V -
2022.11.04
7th meeting of
the 1st term		 1. Internal audit
report by the
internal audit
supervisor.		 After the
chairman’s
consultation
with all
attending
members,
the proposal
was passed
accordingly
and sent to
the board
meeting for
resolution.		 V - After the
chairman’s
consultation
with all
attending
members, the
proposal was
passed
accordingly.
2. Formulation of
the annual
audit plan
according to
Article 13 of the
“Regulations
Governing
Establishment
of Internal
Control
Systems by
Public
Companies”.		 V -
3. Amendment to
the “Internal
Material
Information
Processing
Procedure”.		 V -
4. Financial report
for Q3 2022.		 V -

36

  • (II) Except for the matters mentioned above, other matters not approved by the Audit Committee meeting but approved by more than two-thirds of all directors: No such situation.

  • II. For the implementation of the independent directors’ recusal for proposals involving personal interests, state the name of the director, the content of the proposal, the reason for recusal, and the status of their participation in voting: No such situation.

  • III. The communication between the independent directors and the internal audit supervisor and the CPAs (which shall include the major matters, methods and results of communication regarding the company’s financial and business conditions).

  • (I) The internal audit supervisor submits the audit report of the previous month to the independent directors by the end of each month. The independent directors can directly communicate with the audit supervisor.

  • (II) The auditors track the improvement of internal control deficiencies and anomalies, and prepare a tracking report to submit to the independent directors.

  • (III) The audit supervisor also attends the Audit Committee meeting as a nonvoting delegate to provide relevant information to the independent directors.

  • (IV) In addition to reporting to the independent directors on the audit or review of the financial reports, the CPAs of the Company hold at least one legal promotion meeting at the Company every year to update the new knowledge of fiscal and tax laws and regulations and the countermeasures for the related impacts. The independent directors and the CPAs may contact each other at any time by email, telephone or meeting as required. The independent directors and the CPAs of the Company maintain good communication.

  • (V) The communication between the independent directors and the internal audit supervisor and the CPAs in 2022 was as follows:

  • Communication took place without the presence of general directors and management. Please refer to page 25 of this annual report for the meeting date and communication matters.

37

Communication of independent directors with internal audit supervisors and CPAs

Date Communication
object		 Matter communicated Nature of
communication		 Result
2022.01.20 The
Company’s
audit
supervisor		 Internal audit business
execution report		 Audit
Committee		 No
objection
The
Company’s
CPAs		 Explanation of the
basis, opinions, scope,
and key audit points for
financial report audit		 Audit
Committee		 No
objection
2022.03.23 The
Company’s
audit
supervisor		 Internal audit business
execution report
Internal control system
self-evaluation results		 Audit
Committee		 No
objection
2021 Internal Control
System Declaration
Amendment to the
“Procedures for
Acquisition or Disposal
of Assets”.
Amendment to the
“Corporate Social
Responsibility Best
Practice Principles”.
Amendment to the
“Corporate Governance
Best Practice
Principles”.
Amendment to the
“Management
Procedures for
Prevention of Insider
Trading”.		 Submitted
to the
board
meeting
for
resolution
after
review
The
Company’s
CPAs		 Explanation of the
basis, opinions, scope,
and key audit points for
financial report audit		 Audit
Committee		 No
objection
2022.05.11 The
Company’s
audit
supervisor		 Internal audit business
execution report		 Audit
Committee		 No
objection
Explanation of the
basis, opinions, scope,
and key audit points for
financial report audit		 Submitted
to the
board
meeting
for
resolution

38

after
review
The
Company’s
CPAs		 Explanation of the
basis, opinions, scope,
and key audit points for
financial report audit		 Audit
Committee		 No
objection
2022.08.05 The
Company’s
audit
supervisor		 Internal audit business
execution report		 Audit
Committee		 No
objection
The
Company’s
CPAs		 Explanation of the
basis, opinions, scope,
and key audit points for
financial report audit		 Audit
Committee		 No
objection
2022.11.04 The
Company’s
audit
supervisor		 Internal audit business
execution report		 Audit
Committee		 No
objection.
2023 audit plan Submitted
to the
board
meeting
for
resolution
after
review
The
Company’s
CPAs		 Explanation of the
basis, opinions, scope,
and key audit points for
financial report audit		 Audit
Committee		 No
objection

39

(III)The company’s corporate governance operation and its differences from the Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies, and the reasons:

Evaluation item Operationstatus Operationstatus Operationstatus Differences from the
Corporate Governance
Best Practice
Principles for
TWSE/TPEx Listed
Companies and the
reasons
Yes No Summary
I.
Has the company formulated and
disclosed its corporate governance best
practice principles in accordance with
the “Corporate Governance Best
Practice Principles for TWSE/TPEx
Listed Companies”?		 The Company has formulated the “Corporate
Governance Best Practice Principles” in
accordance with the “Corporate Governance
Best Practice Principles for TWSE/TPEx Listed
Companies” and posted them on the Company’s
websitefor inquiry.		 No material difference.
II.
Company equity structure and
shareholders’ equity
(I)
Has the company established internal
operating procedures to deal with
shareholders’ suggestions, doubts,
disputes and litigation, and
implemented them in accordance with
the procedures?
(II)
Does the company have a list of the
major shareholders who actually
control the company and the final
controllers of these major
shareholders?
(III)
Has the company established and
implemented risk control and firewall

(I)
The Company has dedicated personnel
responsible for matters related to stock
affairs and a spokesperson and acting
spokesperson system to deal with matters
proposed by shareholders, and has legal
advisers to consult on relevant legal
issues.
(II)
The structure of major shareholders is
understood and grasped through the
regular reporting of changes in
shareholdings of directors, supervisors and
managers by the stock affairs agency.
(III)
The Company had no affiliated enterprises
in 2022. If there are affiliated enterprises,
No material difference.

40

Evaluation item Operationstatus Operationstatus Operationstatus Differences from the
Corporate Governance
Best Practice
Principles for
TWSE/TPEx Listed
Companies and the
reasons
Yes No Summary
mechanisms between itself and
affiliated enterprises?
(IV)
Has the company established internal
regulations that prohibit insiders of the
company from trading securities using
non-public information on the market
?		 they will be controlled and audited by the
head office in accordance with the
“Subsidiary Supervision Operations”
formulated by the Company.
(IV)
The Company has formulated the
“Procedures for Internal Material
Information Processing”, “Ethical Corporate
Management Best Practice Principles”, and
“Management Operations for Preventing
Insider Trading”, which are applicable to
the directors, managers, and employees of
the Company. Insiders and employees are
regulated to avoid conflicts of interest
related to their duties and disclose the
unpublished information they know to
others to prevent insider trading, and
regular internal training and publicity are
conducted every year.
III.
Composition and responsibilities of the
Board of Directors
(I)
Has the Board of Directors formulated
diversification policies, specific
management objectives and		 1.
The “Corporate Governance Best Practice
Principles” and “Procedures for the
Selection of Directors” formulated bythe		 No material difference.

41

Evaluation item Operationstatus Operationstatus Operationstatus Differences from the
Corporate Governance
Best Practice
Principles for
TWSE/TPEx Listed
Companies and the
reasons
Yes No Summary
implemented them? Company set the policy that the
diversification of the composition of the
Board of Directors should be considered.
At present, the directors are all persons
with professional backgrounds related to
finance and business. They all have
different expertise in various fields, which
is helpful for the development and
operation of the Company. Among the 9
members of the 19th term of the Board of
Directors of the Company, in addition to
Chairperson Lin, Chi-Chin and President
Lin, Chi-Uo, Director Chen, Chun-Jen
excels at leadership, operational judgment,
operations management, crisis
management, and has industrial
knowledge and international market
audience; Director Huang, Kuo-Chen
excels at finance and accounting; Director
Lin, Chen-Chih excels at business
management and marketing; Director Chen
Chin-I and Director Chiu, Po-Ta specialize
in financial affairs,audit affairs and

42

Evaluation item Operationstatus Operationstatus Operationstatus Differences from the
Corporate Governance
Best Practice
Principles for
TWSE/TPEx Listed
Companies and the
reasons
Yes No Summary
(II)
In addition to the salary and
Remuneration Committee and Audit
Committee established in accordance
with the law, has the company
voluntarily established other functional
committees?
(III)
Has the company established
performance evaluation measures and
evaluation methods for the Board of
Directors, conducted annual and
regular performance evaluation,
submitted the results of the		 securities; Director Chen, Chao-Kao is
familiar with the construction industry.
Each director has their own professional
background, professional skills and
experience.
Please refer to page 21 of this annual
report for the Board of Directors’
diversification policy, specific management
objectives and implementation.
(II)
In addition to the Remuneration Committee
and Audit Committee set up in accordance
with the law, the remaining corporate
governance operations are the
responsibility of each department, and no
other functional committees have been
established; their establishment will be
evaluated as needed in the future.
(III)
In 2020, the Company adopted measures
for the performance evaluation of the
Board of Directors to conduct an internal
performance evaluation of the Board of
Directors once a year, and it may entrust
an externalprofessional independent

43

Evaluation item Operationstatus Operationstatus Operationstatus Differences from the
Corporate Governance
Best Practice
Principles for
TWSE/TPEx Listed
Companies and the
reasons
Yes No Summary
performance evaluation to the Board
of Directors, and used the results as a
reference for individual directors’
remuneration and nomination for
reappointment?
(IV)
Does the company regularly evaluate
the independence of the CPAs?		 institution or an external team of experts
and scholars to perform the evaluation as
needed; it is also disclosed on the
Company’s website, annual report, and
MOPS as required.
1.
On January 17, 2020, the Board of
Directors adopted the “Measures for
Performance Evaluation of the Board
of Directors”.
2.
The 2022 performance evaluation of
the Board of Directors was submitted
to the Board of Directors on March 22,
2023. Please refer to page 31 of this
annual report for the evaluation
results.
3.
The performance appraisal results of
each director are used as reference
for individual salary, remuneration,
and nomination for reappointment.
(IV) The Company’s Audit Committee annually
evaluates the independence and capability
of the certifyingCPAs. In addition to

44

Evaluation item Operationstatus Operationstatus Operationstatus Differences from the
Corporate Governance
Best Practice
Principles for
TWSE/TPEx Listed
Companies and the
reasons
Yes No Summary
requiring the certifying CPAs to provide a
“Detached Independence Statement” and
“Audit Quality Indicators (AQIs)”, the
Committee conducts the evaluation based
on the standards in note 1 and the 13 AQIs.
After confirmation, except the certification
and financial tax case, the CPAs have no
other financial interests or business
relationships with the Company, and the
family members of the CPAs do not violate
the independence requirement. After
referring to the AQI information, it is
confirmed that the CPAs and the CPA firm
have audit experience and training hours
that are superior to the industry average. In
addition, Pwc Global and Taiwan have
developed a series of digital tools to assist
in data analysis based audit work, thus
reducing audit risks and improving
efficiency. The evaluation results of the past
year have been discussed and approved by
the Audit Committee on March 22, 2023,
and submitted to the board meetingon

45

Evaluation item Operationstatus Operationstatus Operationstatus Differences from the
Corporate Governance
Best Practice
Principles for
TWSE/TPEx Listed
Companies and the
reasons
Yes No Summary
March 22, 2023 for approval of the
independence and capability evaluation of
CPAs.
IV. Has the TWSE/TPEx listed company
allocated competent and an appropriate
number of corporate governance
personnel, and designated a corporate
governance supervisor to be responsible
for corporate governance related matters
(including but not limited to providing the
information necessary for directors and
supervisors to perform business,
assisting directors and supervisors in
complying with laws and regulations,
handling matters related to board
meetings and shareholders’ meeting in
accordance with the law, and preparing
minutes of board meetings and
shareholders’ meetings, etc.)?		 Through the resolution of the Board of Directors
on November 6, 2020, the Company appointed
Manager Lin, Chiu-Hung of the Finance
Department as the corporate governance
supervisor to protect shareholders’ rights and
strengthen the functions of the Board of Directors.
Manager Lin, Chiu-Hung has more than three
years of experience in the management of
finance, stock affairs and rules of procedure of
public companies. The main responsibilities of the
corporate governance supervisor are to handle
matters related to board meetings and
shareholders’ meetings in accordance with the
law, prepare minutes of board meetings and
shareholders’ meetings, assist directors and
supervisors in taking up their posts and their
continuing education, provide information
necessary for directors and supervisors to carry
out their business, assist directors and
supervisors in complyingwith laws and

No material difference.

46

Evaluation item Operationstatus Operationstatus Operationstatus Differences from the
Corporate Governance
Best Practice
Principles for
TWSE/TPEx Listed
Companies and the
reasons
Yes No Summary
regulations, etc. Manager Lin, Chiu-Hung has
completed 17 hours of continuing education in
2022in accordance with the regulations. Please
refer to page 77 of this annual report for the
relevant continuingeducation.
V. Has the company established
communication channels with
stakeholders (including but not limited to
shareholders, employees, customers,
and suppliers), set up a section for
stakeholders on the company’s website,
and properly responded to important
corporate social responsibility issues of
concern to stakeholders?		 (1) The Company has a spokesperson and an
acting spokesperson in place. The relevant
contact information is announced on the
MOPS in accordance with the regulations,
and finance and stock related information is
announced on the MOPS and the Company’s
website to establish a good communication
channel with investors.
(II) Interested parties can contact the Company
at any time through telephone or the e-mail of
the Company’s spokesperson and acting
spokesperson if necessary. The
communication channels are smooth, and the
Company also handles matters appropriately
accordingto the current situation.


No material difference.
VI. Does the company appoint a professional
stock affairs agency to handle the
shareholders’ meetingaffairs?
The Company has appointed the Stock
Transferdept, Cpatial Securities Corp. , Ltd. to
handle various stock affairs.		 No material difference.

47

Evaluation item Operationstatus Operationstatus Operationstatus Differences from the
Corporate Governance
Best Practice
Principles for
TWSE/TPEx Listed
Companies and the
reasons
Yes No Summary
VII.
Information disclosure
(I)
Has the company set up a website to
disclose financial business and
corporate governance information?
(II)
Does the company adopt other
methods of information disclosure
(such as setting up an English
website, appointing a special person
to be responsible for the collection
and disclosure of company
information, implementing a
spokesperson system, placing
investor conferences on the company
website, etc.)?
(III)
Has the company announced and filed
its annual financial report within two
months after the end of the fiscal
year, and announced and filed its first,
second, and third quarter financial
reports and monthly operating
conditions before the prescribed time
limit?


(I)Financial business, corporate governance, and
other information is disclosed on the Company
website, which is: www.hyc-king.com
(II) The Company has designated special
personnel to be responsible for the
Company’s information collection and
disclosure of significant information; a
spokesperson system has been set up to
uniformly release information to the outside
world.
(III) Although the Company did not announce and
file its annual financial report within two
months after the end of the fiscal year, it still
completed the announcement and filing
within the time limit. The financial reports for
the first, second and third quarters were
reported in advance within the
announcement period, and the operating
conditions of each month were announced


No material
difference.

48

Evaluation item Operationstatus Operationstatus Operationstatus Differences from the
Corporate Governance
Best Practice
Principles for
TWSE/TPEx Listed
Companies and the
reasons
Yes No Summary
and filed within theperiod as required.
VIII. Does the company have other important
information that can help to understand
the operation of corporate governance
(including but not limited to employee
rights and interests, employee care,
investor relations, supplier relations,
rights of interested parties, directors’ and
supervisors’ continuing education,
implementation of risk management
policies and risk measurement
standards, implementation of customer
policies, and the company’s purchase of
liability insurance for directors and
supervisors)?
(I)
Employee rights and interests: The Company
treats employees in good faith and protects
the legitimate rights and interests of
employees
in accordance with the Labor Act.
(II) Employee care: The Company provides
employees with a welfare system to give
them stability in their lives and a good
training system, and has established a good
relationship of mutual trust and
interdependence with employees. For
example, regular employee discussions,
employee family days, and provision of
cultural and recreational activities, health
examination and medical consultation.
(III) Investor relations: The Company convenes
shareholders’ meetings every year in
accordance with the Company Act and
relevant laws and regulations, and also
provides shareholders with ample
opportunities to ask questions or make
proposals. The Companyalso has a
No material difference.

49

Evaluation item Operationstatus Operationstatus Operationstatus Differences from the
Corporate Governance
Best Practice
Principles for
TWSE/TPEx Listed
Companies and the
reasons
Yes No Summary
spokesperson system to handle shareholder
suggestions and doubts, and handles
relevant information announcements and
reports in accordance with the provisions of
the competent authority, and provides timely
information that may affect investor decision-
making.
(IV) Supplier relations: The Company establishes
partnerships with suppliers on the principle of
equality and mutual benefit to establish a
stable supply chain, and conducts irregular
audits to confirm supply quality.
(V) Rights of interested parties: The Company
maintains smooth communication channels
with banks, employees, consumers, and
suppliers, respects and protects their
legitimate rights and interests, and has a
spokesperson system to answer investors’
questions, with a view to providing investors
and stakeholders with highly transparent
financial and business information.
(VI) Continuing education of directors and
supervisors: The Companyregularly

50

Evaluation item Operationstatus Operationstatus Operationstatus Differences from the
Corporate Governance
Best Practice
Principles for
TWSE/TPEx Listed
Companies and the
reasons
Yes No Summary
provides courses on corporate governance
for directors and supervisors. Please refer to
the description on page 76 of this annual
report.
(VII) Implementation of risk management policies
and risk measurement standards: The
Company has enacted various internal
regulations in accordance with the law to
conduct risk management and assessment.
(VIII) Implementation of customer policies: The
Marketing Department of the Company
handles customer problems in a timely
manner. After a customer has reported a
problem, it will be handled within a time limit
to protect the customer’s rights. In addition,
the Company has purchased product liability
insurance to protect the users of products.
(IX) The Company’s purchase of liability
insurance for directors and important
managers: The Company purchases liability
insurance for directors and important
managers every year, and has submitted an
explanation to the Board of Directors on

51

Evaluation item Operationstatus Operationstatus Operationstatus Differences from the
Corporate Governance
Best Practice
Principles for
TWSE/TPEx Listed
Companies and the
reasons
Yes No Summary
November 4, 2022, regarding the amount of
insurance, coverage, premium rate, and
other important contents.
IX. Please explain the status of improvements that have been made in accordance with the corporate governance evaluation
results issued by the Corporate Governance Center of Taiwan Stock Exchange Corporation in the most recent year, and
propose priority strengthening items and measures for those that have not been improved:
Improvements already made: 1. Board meeting of the Company proposed on May 11, 2022 to promote the implementation of
greenhouse gas inventory and verification planning schedule, and report the progress of implementation in the board meeting
each quarter.
Priority work items for strengthening and measures: 1. Starting uploading the English version of the shareholders' meeting
manual, annual report, and annual financial report in 2023.
2. Set up at least one female director in the next director re-election.

52

  • (IV) If the company has set up a Remuneration Committee, disclose its composition, responsibilities and operation:

  • Responsibilities of the Remuneration Committee

    • Members of the Remuneration Committee shall faithfully perform the following duties and responsibilities to the Board of Directors in accordance with the Organizational Rules of the Remuneration Committee and with the due care of a good manager, and shall submit their suggestions to the Board of Directors for discussion.

    • (1) Formulate and regularly review the policies, systems, standards and structures for the performance evaluation and compensation of directors and managers.

    • (2) Regularly evaluate and determine the salary and remuneration of directors and managers.

  • Information on the members of the Remuneration Committee

Identity
(Note 1)		 Condition
Name		 Professional qualifications
and experience		 Independence status Number of
Remuneration
Committee
member
positions
concurrently
served in other
public companies
Independent
Director		 Chen,
Chun-Jen		 1. Independent director,
member of the Audit
Committee, convener of the
Remuneration Committee
of the Company.
2. Mr. Chen, Chun-Jen has
served as a member
(convener) of the
Company’s Remuneration
Committee for more than
10 years, and has
professional opinions on
the appointment and
dismissal of managers, the
reward and remuneration
system, personnel
formulation, and salary
measures. The Company
relies on Mr. Chen, Chun-
Jen’s expertise to
continuously supervise its
operation.
3. There are none of the
circumstances of Article 30
of the Company Act.
The three members on the left:
1. All meet the independence
qualification of independent
directors.
2. Fully comply with
independence requirements:
(1) The person, their spouse,
or any relative within the
second degree of kinship
have not served as a
director, supervisor, or
employee of the
Company or any other
affiliated enterprise.
(2) The person, their spouse,
or any relative within the
second degree of kinship
have not held the
Company’s shares.
(3) Has not served as a
director, supervisor or
employee of a company
with a specific relationship
with the Company (by
reference to Article 6,
0

53

Identity
(Note 1)		 Condition
Name		 Professional qualifications
and experience		 Independence status Number of
Remuneration
Committee
member
positions
concurrently
served in other
public companies
Independent
Director		 Lin, Chen-
Chih		 1. Independent director,
member of the Audit
Committee, member of the
Remuneration Committee
of the Company.
2. Mr. Lin, Chen-Chih has
served as a member
(convener) of the
Company’s Remuneration
Committee for more than 9
years, and has professional
opinions on the
appointment and dismissal
of managers, the reward
and remuneration system,
personnel formulation, and
salary measures. The
Company replies on Mr.
Lin, Chen-Chih’s expertise
to continuously supervise
its operation.
3. There are none of the
circumstances of Article 30
of the Company Act.
paragraph 1,
subparagraphs 5 to 8 of
the Regulations
Governing the
Appointment and
Exercise of Powers by the
Remuneration Committee
of a Company Whose
Stock is Listed on the
Taiwan Stock Exchange
or the Taipei Exchange).
(4) No amount of
remuneration has been
received from providing
business, legal, financial,
accounting and other
services to the Company
or its affiliated enterprises
in the last two years.
0
Independent
Director		 Lin, Chin-
An		 1. Independent director,
convener of the Audit
Committee, member of the
Remuneration Committee
of the Company.
2. Mr. Lin, Chin-An has served
as the manager of
Changhua Bank Nantou
Branch and Changhua
Branch for more than 10
years. He has professional
opinions on the reward
system, personnel
formulation and salary
measures. The Company
replies on Mr. Lin, Chin-
An’s expertise to
continuously supervise its
operation.
3. There are none of the
circumstances of Article 30
of the Company Act.		 0

54

3.

Information on the operation of the Remuneration Committee

  • (1) There are 3 members on the Remuneration Committee of the Company.

  • (2) The term of office of the current member is from July 22, 2021, to July 6, 2024. The member qualifications and attendance of the Remuneration Committee (A) of the latest year (2022) were as follows:

Title Name Number of
actual non-
voting
attendances
(B)		 Number of
attendances
by proxy		 Actual
attendance
rate (%)
(B/A)		 Remark
Convener Chen,
Chun-
Jen		 2 - 100%
Member Lin,
Chen-
Chih		 2 - 100%
Member Lin,
Chin-An		 2 - 100%
Other matters to be recorded:
I.
Date, session, proposal content, resolution of the meetings of the
Remuneration Committee in the latest year and handling of the opinions
of the Remuneration Committee:
Remunerati
on
Committee
Proposal content
and subsequent
handling
Resolution
The
Company’s
handling of
the opinions
of the
Remuneration
Committee
January 20,
2022
1st session
of 2022
1.Reviewed the
Company’s
proposed
distribution of
directors’ and
supervisors’
remuneration
and
employees’
remuneration
for the year
2021 in
accordance
with the
Articles of
Association of
the Company,
All members of
the committee
agreed and
approved.
The proposal
was submitted
to the Board
of Directors
and approved
by all directors
present.

55

and the
projected
ratio for 2022.
2.Reviewed the
Company’s
dividend and
year-end
bonus
payment
standards for
managers for
2021.
3.Discussed the
work plan of
the
Remuneration
Committee of
the Company
for 2022.
August 5,
2022
2nd session
of 2022		 Reviewed the
remuneration
distribution plan
of the directors
and supervisors
of the Company
for 2021.		 All members of
the committee
agreed and
approved.		 The proposal
was submitted
to the Board
of Directors
and approved
by all directors
present.

  1. If the Board of Directors does not adopt or amend the suggestions of the Remuneration Committee, state the date of the board meeting, the session, the content of the proposal, the resolution of the Board of Directors, and the Company’s handling of the opinions of the Remuneration Committee (if the remuneration adopted by the Board of Directors is superior to the suggestions of the Remuneration Committee, state the circumstances and reasons for the differences): No such situation.

  2. If the members of the Remuneration Committee disagree or reserve their opinions on the resolutions, and there are records or written statements in place, state the date, session, content of the proposal, opinions of all members, and the handling of the opinions of the members: No such situation.

56

(V) The implementation of the company’s promotion of sustainable development and the differences from the Sustainable Development Best Practice Principles for TWSE/TPEx Listed Companies and the reasons:

Promotion item Executionstatus Executionstatus Executionstatus Differences from the
Sustainable Development
Best Practice Principles
for TWSE/TPEx Listed
Companies and the
reasons
Yes No Summary
I.
Has the company established a
governance structure to promote
sustainable development, and set up a
dedicated (concurrent) unit to promote
sustainable development, which is
authorized by the Board of Directors to be
handled by senior management and
supervised by the Board of Directors?		 On March 23, 2022, the Board of Directors of the
Company approved the renaming of the
Corporate Social Responsibility Best Practice
Principles to the Sustainable Development Best
Practice Principles, which serve as the guidelines
for promoting sustainable development. The
Human Resources Department, which is the unit
concurrently responsible for promoting
sustainable development, is responsible for
proposing and implementing sustainable
development policies, systems or related
management policies and specific promotion
plans, and regularly reports to the Board of
Directors.		 No material difference.
II.
Does the company conduct risk
assessment on environmental, social and
corporate governance issues related to the
company’s operations in accordance with
the principle of materiality, and formulate
relevant risk management policies or
strategies?		 The risk assessment of the information disclosed
by the Company mainly focuses on the
Company.
Based on the principle of materiality, the
Company conducts risk assessment on important
issues, and formulates various internal
regulations according to the assessed risks. For
each risk factor category,each responsible unit of
No material difference.

57

Promotion item Executionstatus Executionstatus Executionstatus Differences from the
Sustainable Development
Best Practice Principles
for TWSE/TPEx Listed
Companies and the
reasons
Yes No Summary
the Company conducts risk control at different
levels, and plans all control work after
assessment. At the same time, the Company is
expected to implement the risk assessment to
minimize the uncertainty of its operation. The
Company also focuses on climate change,
energy, resources and other issues, and sets
goals and regularlyreviews the results.
III. Environmental issues
(I)
Has the company established an
appropriate environmental management
system according to its industrial
characteristics?
(II)
Is the company committed to improving
energy efficiency and using renewable
materials with low impact on the
(I) The Company has obtained the ISO
14001:2015 environmental management
system certification, with the latest certificate
period being from August 28, 2021, to
August 27, 2024. The Company continues to
implement regular regulatory audits and
compliance assessments in accordance with
the relevant regulatory requirements of the
environmental management system, so as to
ensure the applicability of relevant
environmental protection policies in the
plants.
(II) In order to promote green production,
circular economy and environmental
sustainability,the Companyactively
No material difference.

58

Promotion item Executionstatus Executionstatus Executionstatus Differences from the
Sustainable Development
Best Practice Principles
for TWSE/TPEx Listed
Companies and the
reasons
Yes No Summary
environment?
(III)
Does the company assess the potential
risks and opportunities of climate change
for the enterprise now and in the future,
and take countermeasures for climate
related issues?
(IV)
Does the company count the greenhouse
gas emissions, water consumption and
total weight of waste in the past two years,
and formulate policies for energy
conservation and carbon reduction,
greenhouse gas reduction, water reduction,
or other waste management?

develops green energy products to
contribute to our environment, and entrusts
qualified recycling manufacturers to recycle
the waste generated in the process to
reduce the amount of waste; burning waste
heat is also recycled to reduce energy
consumption.
(III) In order to respond to global warming and
effectively mitigate the impact of climate
change, the Company actively promotes
energy conservation and carbon reduction,
actively participates in energy conservation
and carbon reduction seminars, regulatory
briefings, etc., and seeks possible
improvement opportunities.
(IV) In response to the government’s policies on
energy conservation and carbon reduction,
the Company actively promotes various
measures conducive to energy conservation
and carbon reduction and the reduction of
greenhouse gases. The total power
consumption, water consumption and waste
weight of all plants in the past two years
were as follows:

59

Promotion item Executionstatus Executionstatus Executionstatus Differences from the
Sustainable Development
Best Practice Principles
for TWSE/TPEx Listed
Companies and the
reasons
Yes No Summary
2021
2022
Power
consumption
(1000kWh)
11,932 10,868
Natural gas
(1000 m3)
1,580 1,436
Water
consumption
(1000L)
11 13
Industrial waste
(ton) - all
harmless
674 566
1.
The Company invested NT$25,600
thousand to improve the boiler
combustion system engineering,
replaced heavy oil with natural gas,
improved the boiler combustion
efficiency, and achieved the purpose of
energy saving and reducing air
pollutants (NOx) and greenhouse gas
emissions. The NOx emission produced
0.49 kgof NOxper ton of output before
2021 2022
Power
consumption
(1000kWh)		 11,932 10,868
Natural gas
(1000 m3)		 1,580 1,436
Water
consumption
(1000L)		 11 13
Industrial waste
(ton) - all
harmless		 674 566

60

Promotion item Executionstatus Executionstatus Executionstatus Differences from the
Sustainable Development
Best Practice Principles
for TWSE/TPEx Listed
Companies and the
reasons
Yes No Summary
improvement, and only 0.04 kg of NOx
per ton of output after improvement. The
actual NOx reduction in 2021 was 4,502
kg/year, and the actual NOx reduction in
2022 is 3,053 kg/year.
2.
The Company invested NT$45,370
thousand to install solar panels on the
roofs of the plants, generating 960,000
kWh of electricity and reducing carbon
emissions by 538 tons in 2021, and
generating 1,163,000 kWh of electricity
and reducing carbon emissions by 653
tons in 2022.
3.
The Company installed natural gas
energy-saving equipment in October
2019. After testing, 10% of the natural
gas consumption could be saved. In
2021, carbon emissions were reduced
by 290 tons, and in 2022, carbon
emissions were reduced by 254 tons.
4.
For the total amount of waste on the use
of recycled rubber, the 2023 goal is to
achieve a reduction of more than 10%.

61

Promotion item Executionstatus Executionstatus Executionstatus Differences from the
Sustainable Development
Best Practice Principles
for TWSE/TPEx Listed
Companies and the
reasons
Yes No Summary
IV.
Social issues
(I)
Has the company formulated relevant
management policies and procedures in
accordance with relevant regulations and
international human rights conventions?
(II) Has the company formulated and
implemented reasonable employee welfare
measures (including salary, vacation, and
other benefits), and appropriately reflected
the business performance or results in
employee compensation?
(I)The Company complies with relevant labor
laws and regulations, as well as international
human rights conventions, such as gender
equality, right to work, prohibition of
discrimination, and other rights. The Company
has formulated relevant management policies
and procedures to fulfill its responsibility to
protect human rights.
(II) In order to take full care of employees,
ensure their livelihood, provide good working
conditions and meet their needs, in addition
to providing basic security according to law,
various employee welfare activities and
subsidies are handled.
The Company has formulated relevant
remuneration, bonus and performance
appraisal measures, effectively linking work
performance with individual remuneration,
and clearly stipulated relevant provisions on
employees’ remuneration in the Articles of
Association.
Article 24 of the Articles of Association: After
making up the losses, if there is any balance
in the current year’s profit before tax, the
Company shallallocatenoless than 2%as		 No material difference.

62

Promotion item Executionstatus Executionstatus Executionstatus Differences from the
Sustainable Development
Best Practice Principles
for TWSE/TPEx Listed
Companies and the
reasons
Yes No Summary
(III)
Does the company provide a safe and
healthy work environment for employees
and conduct regular safety and health
education for employees?
(IV)
Has the company established an effective
career development training program for
employees?
employees’ remuneration, and no more than
3% as the directors’ remuneration.
Employees’ remuneration may be paid in
stock or cash, and may be paid to
employees of affiliated companies who meet
certain conditions.
(III) The Company has obtained the ISO
45001:2018 Occupational Health and Safety
Management System certification, with the
latest certificate period being from October
31, 2022, to October 30, 2025. The
Company conducts annual health inspection
and health training for employees, regularly
provides safety and health information for
employees, improves employees’ safety and
health awareness, implements the “Safety
Operation Manual” for machines, and
reminds employees of work safety through
training and safety observation.
(IV) The Company provides education and
training, has established a good environment
in response to operational needs and
functional planning, and arranged career
development training plans based on
personal career suitability and career
planning.

63

Promotion item Executionstatus Executionstatus Executionstatus Differences from the
Sustainable Development
Best Practice Principles
for TWSE/TPEx Listed
Companies and the
reasons
Yes No Summary
(V) Does the company comply with relevant laws
and regulations and international standards,
and formulate relevant policies and appeal
procedures to protect the rights and interests
of consumers or customers in terms of
customer health and safety, customer
privacy, marketing and labeling of products
and services?
(VI)
Does the company have a supplier
management policy that requires suppliers
to comply with relevant specifications on
issues such as environmental protection,
occupational safety and health, or labor
human rights, and its implementation
status?
(V) To ensure the appropriateness of the
implementation of the quality assurance
system, a quality control laboratory has been
set up to maintain the good quality level of
products. In order to provide customers with
the best products and satisfactory services,
we actively pay attention to the voices of
customers.
In addition to having set up dedicated
personnel to provide procurement services,
consultation and suggestions, a dedicated
email address has been set up to handle and
respond to customers’ opinions and
suggestions.
(VI) Before engaging with suppliers, the
Company requires suppliers to follow the
relevant measures for suppliers, and pays
attention to whether the suppliers have
records that affect the environment and
social responsibility. The “Regulations on the
Selection and Management of Third-party
Manufacturers” stipulate that manufacturers
should comply with the Company’s safety,
health and environmental policies; in case of
any violation, the Company can terminate or
rescind the contract at any time.

64

Promotion item Executionstatus Executionstatus Executionstatus Differences from the
Sustainable Development
Best Practice Principles
for TWSE/TPEx Listed
Companies and the
reasons
Yes No Summary
V. Has the company prepared sustainability
reports and other reports that disclose non-
financial information of the company by
reference to internationally accepted
reporting standards or guidelines? Have the
aforementioned reports obtained the
assurance or guarantee opinion of a third-
party verification organization?		 The Company’s corporate social responsibility
related content has been disclosed on the
Company’s website, and the environmental
safety personnel regularly report relevant
environmental protection information. The
Company has not prepared a corporate social
responsibility report, but relevant corporate social
responsibility information is regularly summarized
in the annual report of the shareholders’ meeting
every year.		 No material difference.
VI. If the company has established its own Sustainable Development Best Practice Principles in accordance with the “Sustainable
Development Best Practice Principles for TWSE/TPEx Listed Companies”, please describe the differences between their operations:
1. The Company renamed its “Corporate Social Responsibility Best Practice Principles” to “Sustainable Development Best Practice
Principles” in compliance with the “Sustainable Development Best Practice Principles for TWSE/TPEx Listed Companies”.
2. The Company strives to integrate corporate social responsibility into the overall operation of the Company. While engaging in
enterprise operations, the Company actively practices corporate social responsibility, improves the quality of life of employees,
communities and society, and promotes competitive advantages based on corporate responsibility. The actual operation is not
significantly different from the Regulations.
VII.Other important information that will help to understand the implementation of sustainable development:
※2022 achievements:
The Company adheres to the concept of building a better society, dedicating itself to charity and social welfare, and continuously gathering internal
and external resources to fulfill corporate social responsibility. We actively participate in public activities through “industry-school cooperation”,
“education support”, “community giveback”, etc. to care for the township, and give back to the society.
I. Supporting disadvantaged families:
Long-term support for totally 10 children from disadvantaged families in terms of tuition and miscellaneous expenses, and holding regular
symposiums andgatherings to care about the livingand learningconditions of school children.

65

Execution status Differences from the Sustainable Development Best Practice Principles Promotion item Yes No Summary for TWSE/TPEx Listed Companies and the reasons

II. Sponsoring local groups and deepening local cultivation:

  1. Long-term funding for the jerseys and equipment of the Nantou County Xinfeng National Baseball Team for approximately NT$120,000 per year, allowing disadvantaged students to stay in school for centralized training and complete school curriculum. In addition to improving their moral character, this can develop their interests in sports, strengthen their body and soul, and enhance their confidence and future competitiveness. Scholarships are also granted when the players win awards for encouragement.

  2. Long-term support of the funding of the Nantou County Police Friendly Association.

  3. Long-term support of the funding of Nantou County Volunteer Police Fire Brigade.

  4. Long-term support of the funding of the family support center to hold a warm-winter garden tour to help many struggling families face the cold winter of life. The period lasted for 22 years without interruption, and the Company was awarded the National Model of Child Care Award.

  5. Supporting the funding of the Nantou County Government to hold the Nantou lantern festival to promote tourism prosperity.

  6. Supporting the subsidy of Friends of Soldiers' 2022 Spring Festival army entertainment, the consolation fund for flight accident (Air Force F- 16V in Chiayi), the consolation fund for joint military exercise accident (solders of 564 Armor Brigade of the Army), and the funding for the Soldier's Day dinner

  7. Social group visits to promote the concept of green beautification and green technology based circular economy.

  8. Invite to give a speech at Chaoyang University of Technology to assist students in understanding the enterprise.

III. Providing students with industrial internships:

Providing a total of three long-term internship opportunities for students from the mechanical related departments of Hsiuping University of Science and Technology and Nan Kai University of Technology.

66

(VI) The implementation of the company’s promotion of ethical corporate management and the differences from the Ethical Corporate Management Best Practice Principles for TWSE/TPEx Listed Companies and the reasons:

Evaluation item Operation status Operation status Operation status Differences from the
Ethical Corporate
Management Best
Practice Principles for
TWSE/TPEx Listed
Companies and the
reasons
Yes No Summary
I.
Formulation of ethical corporate management
policy and plan
(I)
Has the company formulated an ethical
corporate management policy approved by the
Board of Directors and clearly stated the
policies and practices of ethical corporate
management in rules and external documents,
as well as the commitment of the Board of
Directors and senior management to actively
implement the operations policy?
(II)
Has the company established a risk
assessment mechanism for unethical behavior,
regularly analyzed and assessed business
activities within its business scope that have a
high risk of unethical behavior, and formulated
a plan to prevent unethical behavior that at
least covers the preventive measures for acts
under Article 7, paragraph 2 of the “Ethical
Corporate Management Best Practice
Principles for TWSE/TPEx Listed Companies”?
(I) The Company’s Ethical Corporate
Management Best Practice Principles
were adopted by the Board of Directors on
May 8, 2015, and have been disclosed on
the Company’s website and the MOPS,
and all directors, supervisors, managers
and employees are required to abide by
them.
(II) In order to prevent unethical behavior in
business activities, the Company’s Ethical
Corporate Management Best Practice
Principles expressly prohibit unethical
behavior, interests and attitudes, and the
Company has established the “Operating
Procedures and Guidelines for Ethical
Corporate Management” to specifically
regulate and prevent unethical behavior.
The Companyconducts risk assessment		 No material difference.

67

Evaluation item Operation status Operation status Operation status Differences from the
Ethical Corporate
Management Best
Practice Principles for
TWSE/TPEx Listed
Companies and the
reasons
Yes No Summary
(III)
Has the company specified operating
procedures, conduct guidelines, disciplinary
and appeal systems for violations in the
unethical behavior prevention plan,
implemented them, and regularly reviewed and
amended the disclosure plan?		 and formulates necessary preventive
measures every year when each
department carries out its own
assessment of the internal control system.
The Company has also established strict
codes of conduct, ethical standards, and
appeals and related reward and
punishment provisions in the “Rules of
Procedure of Board of Directors’
Meetings”, “Work Rules”, and other rules.
There was no corruption or bribery in
2022.
(III) For areas with high risk of unethical
behavior, the Company strengthened the
promotion and guidance for directors,
managers and employees for them to fully
understand the Company’s ethical
corporate management policy, encourage
them to report unethical behavior, and
cooperate with audits to prevent unethical
behavior.

68

Evaluation item Operation status Operation status Operation status Differences from the
Ethical Corporate
Management Best
Practice Principles for
TWSE/TPEx Listed
Companies and the
reasons
Yes No Summary
II.
Implementation of ethical corporate
management
(I)
Does the company evaluate the ethical
corporate management record of its
counterparties and specify the terms of ethical
behavior in the contracts signed with
counterparties?
(II)
Has the company set up a dedicated unit
subordinate to the Board of Directors to
promote the ethical corporate management of
enterprises, and regularly (at least once a year)
report to the Board of Directors its ethical
corporate management policy and plan to
prevent unethical behavior, as well as the
implementation of supervision?

(I) The Company regulates that employees
shall treat customers and competitors
fairly, and that they shall not ask for gifts,
rebates, entertainment or other improper
benefits from suppliers of the Company.
(II)
1. In order to improve the management of
ethical corporate management, the Company
has set up a human resources unit to be
responsible for the formulation, supervision
and implementation of the ethical corporate
management policy and prevention plan, and
reported to the Board of Directors on
November 4, 2022.
2. The Company has implemented the ethical
corporate management policy.
The relevant implementation in 2022 was as
follows:
A. Training and legal compliance promotion:
The Company regularly holds a consensus
campfor all employees twice ayear. The HR


No material difference.

69

Evaluation item Operation status Operation status Operation status Differences from the
Ethical Corporate
Management Best
Practice Principles for
TWSE/TPEx Listed
Companies and the
reasons
Yes No Summary
Department will publicize the matters that
employees should pay attention to when
performing business and ask lawyers to
explain the legal common sense of non-
competition and confidentiality to all
employees.
B. Communication channels:
Employees can reflect to various
management levels and the human
resources unit through multiple smooth
channels, and the Company takes the
initiative to announce the ethical corporate
management policy and the implementation
of ethical corporate management in external
activities such as the website, annual report,
and other external documents.
C. Regular inspection:
The operating activities of all operating sites
are effectively controlled and implemented
through the Company’s annual self-audit and
self-assessment of compliance with laws and
regulations,and theyare independently

70

Evaluation item Operation status Operation status Operation status Differences from the
Ethical Corporate
Management Best
Practice Principles for
TWSE/TPEx Listed
Companies and the
reasons
Yes No Summary
(III)
Has the company developed a prevention
policyfor conflicts of interest, provided		 audited by the audit unit to ensure the
operation of the overall mechanism and joint
management and prevention of unethical
behavior.
D. Whistleblower system and whistleblower
protection:
The Company has enacted the “Measures
for Handling Cases of Illegal or Unethical or
Dishonest Acts”, which stipulate that the
relevant supervisors have the responsibility
to keep confidential the information of the
parties. In addition, the HR Department is the
dedicated unit for reporting and accepting
such cases. The cases accepted in 2022
were mainly due to improvements of
operational procedures, and appropriate
measures have been taken.
(III) The “Work Rules” of the Company clearly
stipulate that an employee is not allowed
to use theirposition to require customers

71

Evaluation item Operation status Operation status Operation status Differences from the
Ethical Corporate
Management Best
Practice Principles for
TWSE/TPEx Listed
Companies and the
reasons
Yes No Summary
appropriate presentation channels, and
implemented them?
(IV)
Has the company established an effective
accounting system and internal control system
for the implementation of ethical corporate
management, and has the internal audit unit
formulated relevant audit plans based on the
assessment results of unethical behavior risks,		 or manufacturers to entertain or give gifts,
or accept commissions, gratuities or other
improper benefits. In addition, the
Company has expressly stipulated that
employees who engage in work that is in
conflict with the Company’s interests
without permission shall be dismissed.
The Company’s “Rules of Procedure for
Board of Directors’ Meetings” have
provisions on interest recusal. In case of
any conflict of interest, the director shall
not participate in the discussion, and shall
not participate in the voting by leaving the
meeting in accordance with the principle of
interest recusal.
(IV) The accounting system of the Company is
formulated with reference to the relevant
laws and regulations of the competent
authority and the actual business situation
of the Company; the internal control
system is formulated with reference to the
“Regulations GoverningEstablishment of

72

Evaluation item Operation status Operation status Operation status Differences from the
Ethical Corporate
Management Best
Practice Principles for
TWSE/TPEx Listed
Companies and the
reasons
Yes No Summary
and audited the compliance with the unethical
behavior prevention plan, or entrusted a CPA
to perform the audit?
(V)
Does the company regularly hold internal and
external training on ethical corporate
management?		 Internal Control Systems by Public
Companies” and other relevant provisions;
both of these have been implemented.
The Audit Office includes the high-risk
operation items in the annual audit plan
according to the risk assessment results,
in order to check the actual
implementation of the operation and report
to the Board of Directors. The CPAs also
review the implementation of the
Company’s internal control system every
year.
(V) The Company continues to promote the
corporate culture of ethical corporate
management through various meetings. It
held internal training on issues related to
ethical corporate management (including
promotion of insider trading prevention,
relevant regulations on ethical corporate
management and other relevant courses)
at the consensus camp for all employees
on July30,2022,with 77participants i for

73

Evaluation item Operation status Operation status Operation status Differences from the
Ethical Corporate
Management Best
Practice Principles for
TWSE/TPEx Listed
Companies and the
reasons
Yes No Summary
a total of 77 hours.
III.
Operation of the Company’s whistleblower
system
(I)
Has the company established a specific
whistleblower and reward system, established
a convenient channel for whistleblowing, and
assigned appropriate personnel to handle
complaints?
(II)
Has the company established standard
operating procedures for the investigation of
reported matters, follow-up measures to be
taken after the investigation, and relevant
confidentiality mechanisms?
(III)
Does the company take measures to protect
whistleblowers from improper handling due to
whistleblowing?

(I) The Company provides unimpeded
whistleblowing channels and keeps the
identity of the whistleblower and the
content of the whistleblowing fully
confidential in accordance with the
relevant procedures.
(II) The Company has formulated the
“Measures for the Report on Illegal,
Immoral and Dishonest Acts”, which
stipulate that the relevant supervisors have
the responsibility to keep confidential the
information of the parties.
(III) The Company will keep whistleblowers
confidential during the whistleblowing
process, and they will not be punished for
whistleblowing.
No material difference.
IV.
Strengthening of information disclosure
(I)
Does the company disclose the content of its
Ethical Corporate Management Best Practice		 The Company has formulated the Ethical
Corporate Management Policy,Ethical		 No material difference.

74

==> picture [747 x 257] intentionally omitted <==

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

Operation status Differences from the
Ethical Corporate
Management Best
Evaluation item Practice Principles for
Yes No Summary
TWSE/TPEx Listed
Companies and the
reasons
Principles and promote its effectiveness on its Corporate Management Best Practice
website and the MOPS? Principles, and Operating Procedures and
Guidelines for Ethical Corporate Management,
and publicly disclosed them on the Company’s
website and in the annual report.
V. If the company has established its own Ethical Corporate Management Best Practice Principles in compliance with the “Ethical
Corporate Management Best Practice Principles for TWSE/TPEx Listed Companies”, please describe the differences between their
operations: No material difference.
----- End of picture text -----

  • VI. Other important information that will help to understand the company’s ethical corporate management (such as the company’s review and revision of its ethical corporate management best practice principles):

The operation of the Company complies with the Securities and Exchange Act, the Company Act, the Business Entity Accounting Act, the relevant rules and regulations for TWSE or TPEx listing, and other laws and regulations related to business conduct, as the basis for implementing ethical corporate management.

In addition, the Audit Office audits each department in accordance with the audit plan, and regularly audits the implementation of the Company’s systems through an external audit unit (such as an accounting firm).

Major operational decisions, investment plans, bank financing, and other matters are evaluated and analyzed by the relevant responsible departments and implemented only after being approved by the Board of Directors.

75

  • (VII) If the company has established corporate governance best practice principles and related regulations, disclose their inquiry method:

  • Please refer to the MOPS at http://mops.twse.com.tw/mops/web/index/ 公司治理 or the Company’s website at https://www.hyc-king.com/investor_tw_4.php Investor Zone/Other Company Operation Overview/Important Professional Procedures and Other Relevant Regulations.

  • (VIII) Other important information sufficient to enhance the understanding of the corporate governance operation may be disclosed together:

  • The directors, supervisors and managers of the Company regularly participate in the continuing education and training of corporate governance related courses. The continuing education and training in 2022 were as follows:

Job title Name Date Organizer Course name No. of
hours
Chairman Lin, Chi-
Chin		 2022/05/11 Taiwan Corporate
Governance
Association		 Explanation of Directors'
and Supervisors'
Responsibilities under
Corporate Governance
and Cases		 3
hours
Chairman Lin, Chi-
Chin		 2022/11/04 Taiwan Corporate
Governance
Association		 Mastering the Global
Economic Situation and
Technological Trends		 3
hours
Corporate
Director
Representative
Lin, Chi-
Uo		 2022/05/11 Taiwan Corporate
Governance
Association		 Explanation of Directors'
and Supervisors'
Responsibilities under
Corporate Governance
and Cases		 3
hours
Corporate
Director
Representative		 Lin, Chi-
Chin		 2022/07/27 Co-organized by the
TWSE and the TPEx		 Sustainable Development
Roadmap Industry Theme
Publicity Meeting		 2
hours
Corporate
Director
Representative		 Lin, Chi-
Uo		 2022/11/04 Taiwan Corporate
Governance
Association		 Mastering the Global
Economic Situation and
Technological Trends		 3
hours
Director Huang,
Kuo-
Chen		 2022/05/11 Taiwan Corporate
Governance
Association		 Explanation of Directors'
and Supervisors'
Responsibilities under
Corporate Governance
and Cases		 3
hours
Director Huang,
Kuo-
Chen		 2022/11/04 Taiwan Corporate
Governance
Association		 Mastering the Global
Economic Situation and
Technological Trends		 3
hours
Director Chiu,
Po-Ta		 2022/05/11 Taiwan Corporate
Governance
Association		 Explanation of Directors'
and Supervisors'
Responsibilities under
Corporate Governance
and Cases		 3
hours
Director Chiu,
Po-Ta		 2022/11/04 Taiwan Corporate
Governance
Association		 Mastering the Global
Economic Situation and
Technological Trends		 3
hours
Director Chen,
Chao-
Kao		 2022/05/11 Taiwan Corporate
Governance
Association		 Explanation of Directors'
and Supervisors'
Responsibilities under
Corporate Governance
and Cases		 3
hours

76

Job title Name Date Organizer Course name No. of
hours
Director Chen,
Chao-
Kao		 2022/11/04 Taiwan Corporate
Governance
Association		 Mastering the Global
Economic Situation and
Technological Trends 動		 3
hours
Director Chen,
Chin-I		 2022/05/11 Taiwan Corporate
Governance
Association		 Explanation of Directors'
and Supervisors'
Responsibilities under
Corporate Governance
and Cases		 3
hours
Director Chen,
Chin-I		 2022/11/04 Taiwan Corporate
Governance
Association		 Mastering the Global
Economic Situation and
Technological Trends		 3
hours
Independent
Director		 Chen,
Chun-
Jen		 2022/05/11 Taiwan Corporate
Governance
Association		 Explanation of Directors'
and Supervisors'
Responsibilities under
Corporate Governance
and Cases		 3
hours
Independent
Director		 Chen,
Chun-
Jen		 2022/11/04 Taiwan Corporate
Governance
Association		 Mastering the Global
Economic Situation and
Technological Trends		 3
hours
Independent
Director		 Lin,
Chen-
Chih		 2022/05/11 Taiwan Corporate
Governance
Association		 Explanation of Directors'
and Supervisors'
Responsibilities under
Corporate Governance
and Cases		 3
hours
Independent
Director		 Lin,
Chen-
Chih		 2022/11/04 Taiwan Corporate
Governance
Association		 Mastering the Global
Economic Situation and
Technological Trends		 3
hours
Independent
Director		 Lin,
Chin-An		 2022/05/11 Taiwan Corporate
Governance
Association		 Explanation of Directors'
and Supervisors'
Responsibilities under
Corporate Governance
and Cases		 3
hours
Independent
Director		 Lin,
Chin-An		 2022/11/04 Taiwan Corporate
Governance
Association		 Mastering the Global
Economic Situation and
Technological Trends		 3
hours
Accounting
Manager		 Lin,
Chiu-
Hung		 2022/08/25
2022/08/26		 Accounting Research
and Development
Foundation		 Continuing Study Courses
for Accounting Supervisors
of Securities Issuers,
Securities Firms and Stock
Exchanges		 12
hours
Corporate
Governance
Manager		 Lin,
Chiu-
Hung		 2022/05/11 Taiwan Corporate
Governance
Association		 Explanation of Directors'
and Supervisors'
Responsibilities under
Corporate Governance
and Cases		 3
hours
Corporate
Governance
Manager		 Lin,
Chiu-
Hung		 2022/05/20 Securities and Futures
Institute		 2022 Publicity Meeting for
Insider Trading Prevention		 3
hours
Corporate
Governance
Manager		 Lin,
Chiu-
Hung		 2022/07/20 Co-organized by the
TWSE and the TPEx		 Sustainable Development
Roadmap Industry Theme
Publicity Meeting		 2
hours

77

Job title Name Date Organizer Course name No. of
hours
Corporate
Governance
Manager		 Lin,
Chiu-
Hung		 2022/09/02 Accounting Research
and Development
Foundation		 Latest Revision of Internal
Control Processing
Standards and Practices of
Information Security Law
Compliance and Fraud
Prevention		 6
hours
Corporate
Governance
Manager		 Lin,
Chiu-
Hung		 2022/11/04 Taiwan Corporate
Governance
Association		 Mastering the Global
Economic Situation and
Technological Trends		 3
hours
Internal Audit
Manager		 Liu, Wei-
Ting		 2022/08/17 Internal Audit
Association of the
Republic of China		 Legal Risks in Enterprise
Management and
Countermeasures by
Internal Auditors		 6
hours
Internal Audit
Manager		 Liu, Wei-
Ting		 2022/08/30 Internal Audit
Association of the
Republic of China		 How Do Auditors Detect
Financial Statement
Frauds		 6
hours
HR Manager Lin,
Feng-Yi		 2022/06/12
2022/12/11		 Labor Employment
Win-win Consulting
Co.,Ltd		 Human Resources and
Labor Law Reading Club		 12
hours
  1. The Company personnel's annual environmental safety training and acquisition of relevant licenses and certificates are as follows:
Job title Name Date Organizer Course name or the license or
certificate received
Vice
President		 Li, Chiung-
Tung		 2022/04/22 Taiwan Boiler
Association Nantou
professional
training
On-the-Job Training for Occupational
Safety and Health Business
Supervisors
College Chang,
Chia-Hao		 2022/04/22 Taiwan Boiler
Association Nantou
professional
training
On-the-Job Training for Occupational
Safety and Health Business
Supervisors
Quality
Assurance
Manager
Chiang,
Hung-Chin		 2022/04/25 Taiwan Boiler
Association Nantou
professional
training
On-the-Job Training for Hazardous
Occupation Supervisors (Organic
Solvents, Specific Chemicals, Dust
and Lead)
Production
Manager
Chou, Yi-
Shang		 2022/07/28 Taichung
Vocational Training
Center of The
Taiwan Provincial
Industrial and
Commercial Safety
and Health
Coordination
Committee
On-the-Job Training for Emergency
Rescue Personnel (refresher training)

78

College Chang,
Chia-Hao		 2022/08/24 Taichung
Vocational Training
Center of The
Taiwan Provincial
Industrial and
Commercial Safety
and Health
Coordination
Committee
On-the-Job Training for Emergency
Rescue Personnel (refresher training)
Quality
Assurance
Manager
Chiang,
Hung-Chin		 2022/10/26 Taiwan Boiler
Association Nantou
professional
training
On-the-Job Training for Hazardous
Occupation Supervisors (Organic
Solvents, Specific Chemicals, Dust
and Lead)
College Chang,
Chia-Hao		 2022/12/01 China Productivity
Center		 On-the-Job Training for Fire
Prevention Supervisors (refresher
training)

79

(IX) For the implementation of the internal control system, disclose the following matters:

1. Internal Control Statement:

Hsin Yung Chien Co., Ltd. Internal Control Statement

Date: March 22, 2023

Based on the results of self-assessment, the Company’s internal control system for 2022 is hereby stated as follows:

  • I. The Company knows that the establishment, implementation and maintenance of the internal control system is the responsibility of the Board of Directors and managers of the Company, and the Company has already established this system. Its purpose is to provide reasonable assurance for the achievement of the objectives of operational effectiveness and efficiency (including profitability, performance and asset security), reliability, timeliness, transparency of reporting, and compliance with relevant norms and relevant laws and regulations.

  • II. An internal control system has its inherent limitations. No matter how perfect the design is, an effective internal control system can only provide reasonable assurance for the achievement of the three objectives above. Moreover, due to changes in environment and circumstances, the effectiveness of the internal control system may change accordingly. However, the Company’s internal control system has a built-in supervision mechanism, and once deficiencies are identified, the Company will take corrective action immediately.

  • III. The Company judges whether the design and implementation of the internal control system is effective in accordance with the judgment items of the effectiveness of the internal control system specified in the “Regulations Governing Establishment of Internal Control Systems by Public Companies” (hereinafter referred to as the “Regulations”). The judgment items of the internal control system adopted in the “Regulations” divide the internal control system into five components according to the process of management control: 1. control environment, 2. risk assessment, 3. control operations, 4. information and communication, and 5. supervision operations. Each component element includes several items. For the items above, please refer to the provisions of the “Regulations”.

  • IV. The Company has adopted the internal control system judgment items above to evaluate the effectiveness of the design and implementation of the internal control system.

  • V. Based on the results of the evaluation referred to in the preceding paragraph, the Company believes that the design and implementation of the internal control system as of December 31, 2022, including the understanding of the effectiveness of operations and the extent to which efficiency goals have been achieved, the

80

reliability, timeliness, transparency of reporting, and the compliance with relevant norms and relevant laws and regulations, as well as the compliance with relevant internal control systems, are effective and can reasonably ensure the achievement of the goals above.

  • VI. This statement will become the main content of the Company’s annual report and prospectus, and will be made public. If there are false, hidden, and other illegal circumstances in the disclosure above, the legal liability under Articles 20, 32, 171, and 174 of the Securities and Exchange Act will be involved.

  • VII. This Statement was approved by the Board of Directors of the Company on March 22, 2023. Of the 9 directors present, all directors agreed to the contents of this Statement.

Hsin Yung Chien Co., Ltd.

Chairperson: Lin, Chi-Chin

General Manager: Lin, Chi-Uo

81

  1. Where a CPA is entrusted to audit the internal control system on a special case basis, the CPA’s audit report shall be disclosed: None.

(X) Where the company and its internal personnel have been penalized in accordance with the law in the most recent year and up to the date of printing of the annual report, or the company has imposed penalties on its internal personnel for violating the provisions of the internal control system, and the results of the penalties may have a significant impact on shareholders’ equity or securities prices, the contents of the penalties, major deficiencies and improvements shall be listed: No such situation.

(XI) Important resolutions of the shareholders’ meeting and the Board of Directors for the most recent year and up to the printing date of the annual report:

  1. Important decisions and implementation status of the 2022 shareholders'

meeting:

Meeting Important decisions and implementation status date 2022.06.22[1. Recognition of 2021 business report and financial ] statements. 2. Recognition of 2021 earnings distribution. Execution status: In addition to the legal reserve set aside from the 2021 earnings in accordance with the Company's Articles of Association, it is planned to combine the earnings with the cumulative undistributed earnings of the past years to distribute a cash dividend of NT$545,941,949 per share to shareholders, at NT$7 per share. The above-mentioned cash dividend was distributed on August 12, 2022. 3. Amendment to the “Procedures for Acquisition or Disposal of Assets”. Implementation status: To be implemented after the resolution of the shareholders' meeting. 4. Amendment to the “Articles of Association”. Implementation status: To be implemented after the resolution of the shareholders' meeting. 5. Amendment to the “Rules of Procedure for Shareholders’ Meetings”. Implementation status: To be implemented after the resolution of the shareholders' meeting.

82

2. Important resolutions of the board meetings from January 1, 2022 to May 11, 2023 (the printing date):

Meetingdate Important resolutions
2022.01.20
5th meeting
of the 19th
term		 1. Approval of the 2022 business plan and budget.
2. Approval of the allocation ratios of directors’ and
supervisors’ remuneration and employee bonus for
2021 in accordance with the provisions of the
Company's 2022 Articles of Association.
3. Approval of the standards of bonus and year-end bonus
distribution for managers in 2021.
4. Approval of short-term investment.
5. Approval of the sale of the Longjing land.
Resolution: The proposal was passed by all attending
directors accordingly without objection.
Implementation status: The meeting resolution above
have been implemented
accordingly.
2022.03.23
6th meeting
of the 19th
term		 1. Extension of the bank financing limit.
2. Approval of the 2021 “Internal Control System
Effectiveness Assessment” and “Internal Control
System Declaration”.
3. Amendment to the “Procedures for Acquisition or
Disposal of Assets”.
4. Amendment to the “Corporate Social Responsibility
Best Practice Principles”.
5. Approval of the amendment to the “Corporate
Governance Best Practice Principles” and
“Management Procedures for Prevention of Insider
Trading”.
6. Partial amendment to the “Articles of Association”.
7. Amendment to the “Rules of Procedure for
Shareholders’ Meetings”.
8. Approval of the distribution of employees’ remuneration
and directors’ remuneration for 2021.
9. Approval of the 2021 business report and financial
statements.
10. Approval of the 2022 general shareholders’ meeting
related matters.
11. Approval of the acceptance of shareholder proposals
for the 2022 general shareholders’ meeting.
Resolution: The proposal was passed by all attending
directors accordingly without objection.
Implementation status: The meetingresolution above

83

have been implemented
accordingly.
2022.05.11
7th meeting
of the 19th
term		 1. Approval of the financial report for Q1 2022.
2. Approval of the 2021 earnings distribution.
3. Approval of partial amendment to the “Articles of
Association”.
Resolution: The proposal was passed by all attending
directors accordingly without objection.
Implementation status: The meeting resolution above
have been implemented
accordingly.
2022.08.05
8th meeting
of the 19th
term		 1. Approval of the amendment to the 2022 budget.
2. Approval of the financial report for Q2 2022.
3. Extension of the bank financing limit.
4. Approval of respective directors’ remuneration for 2021.
Resolution: The proposal was passed by all attending
directors accordingly without objection.
Implementation status: The meeting resolution above
have been implemented accordingly.
2022.11.04
9th meeting
of the 19th
term		 1. Approval of the annual audit plan according to Article 13
of the “Regulations Governing Establishment of Internal
Control Systems by Public Companies”.
2. Approval of the amendment to the “Internal Material
Information Processing Procedure”.
3. Approval of the financial report for Q3 2022.
4. Extension of the bank financing limit.
5. Approval of the reinvestment in a U.K. company.
Resolution: The proposal was passed by all attending
directors accordingly without objection.
Implementation status: The meeting resolution above
have been implemented accordingly.
2023.01.11
10th meeting
of the 19th
term		 1. Approval of the 2022 business plan and budget.
2. Approval of the allocation ratios of directors’ and
supervisors’ remuneration and employee bonus for
2022 in accordance with the provisions of the
Company's 2023 Articles of Association.
3. Approval of the standards of bonus and year-end bonus
distribution for managers in 2022.
4. Approval of the amendment to the “Rules of Procedure
for Board Meetings”.
Resolution: The proposal was passed by all attending
directors accordingly without objection.
Implementation status: The meeting resolution above
have been implemented accordingly.

84

2023.03.22
11th meeting
of the 19th
term		 1. Approval of the extension of the bank financing limit.
2. Approval of the 2022 “Internal Control System
Effectiveness Assessment” and “Internal Control
System Declaration”.
3. Approval of the “Procedures for Transactions with
Related Parties, Specific Companies and Group
Enterprises”, “Rules of Procedure for Board Meetings”,
“Rules for the Scope of Responsibilities of Independent
Directors”, “Regulations on Mutual Financial Operations
of Related Parties”, “Code of Conduct and Voting
Policies for Controlling Corporate Shareholders’
Performance of Responsibilities”, and “Organizational
Rules for Remuneration Committee”.
4. Approval of the appointment and compensation of
certifying CPAs.
5. Approval of the evaluation of certifying 2023 CPAs’
independence and capability.
6. Approval of the distribution of employees’ remuneration
and directors’ remuneration for 2022.
7. Approval of the 2022 business report and financial
statements.
8. Approval of the 2022 earnings distribution.
9. Approval of the 2023 general shareholders’ meeting
related matters.
10. Approval of the acceptance of shareholder proposals
for the 2023 general shareholders’ meeting.
Resolution: The proposal was passed by all attending
directors accordingly without objection.
Implementation status: The meeting resolution above have
been implemented accordingly.
2023.05.10
12th
meeting of
the 19th term		 Approval of the financial report for Q1 2022.
Resolution: The proposal was passed by all attending
directors accordingly without objection.
Implementation status: The meeting resolution above have
been implemented accordingly.

  • (XII) In the most recent year and up to the printing date of the annual report, if the directors had different opinions on important resolutions passed by the Board of Directors, and there are records or written statements, the main contents: None.

  • (XIII) The resignation or dismissal of the chairperson, president, accounting supervisor, financial supervisor, internal audit supervisor, corporate governance supervisor or R&D supervisor of the company in the most recent year and up to the printing date of the annual report: None.

85

V. Information on the professional fees of the attesting CPAs ：

(I) CPA fees

Unit: NT$ thousand

Unit: NT$ thousand
CPA firm
name		 CPA
name		 CPA audit
period		 Audit fees Non-audit
fees		 Total Remark
Pricewaterho
useCoopers
Taiwan		 Wu, Sung-
Yuan		 111/01/01
~
111/12/31		 1,740 657 2,397 note
Hung, Shu-
Hua

Note: Non-audit fees mainly include the tax certification fee, transfer pricing report analysis project fee, direct deduction method verification fee for part-time business owner, and seal certification fee.

(II). If the Company has any of the following circumstances, disclose the CPA fees:

  • (1) If the accounting firm is replaced and the audit fees paid in the year of replacement are less than those paid in the year prior to the replacement, the amounts of the audit fees before and after the replacement and the reasons thereof shall be disclosed: Not applicable.

  • (2) If the audit fee has decreased by more than 10% from that of the previous year, disclose the amount, proportion and reasons for the decrease: There is no such situation. 

。

VI. Information on replacement of CPAs: None.

VII. The chairperson, president or manager in charge of financial or accounting affairs of the company who has served in the CPA firm or its affiliated enterprises within the most recent year: None.

86

VIII. For the most recent year and up to the date of printing of the annual report, the transfer of shares and changes in pledges of shares by directors, managers, and shareholders holding more than 10% of the shares:

  • (I) Changes in equity held by directors, managers, and shareholders holding more than 10% of the shares:
Title Name 2021 2021 Current year as of April
29		 Current year as of April
29
Increase
(decrease)
in the
number of
shares held
Increase
(decrease)
in the
number of
shares
pledged		 Increase
(decrease)
in the
number of
shares held
Increase
(decrease)
in the
number of
shares
pledged
Chairperson Lin,Chi-Chin - - (2,947,005) -
Director Ji Uo Investment Co.,
Ltd. - Representative:
Lin, Chi-Uo

-		 - - -
Independent
Director		 Chen, Chun-Jen - - - -
Independent
Director		 Lin, Chen-Chih - - - -
Independent
Director		 Lin, Chin-An
Director Huang,Kuo-Chen
-		 - - -
Director Chen,Chin-I - - - -
Director Chen, Chao-Kao - - - -
Director Chiu, Po-Ta - - - -
Legal person
representative
and president
Lin, Chi-Uo		 - - (2,482,280)
-
Manager Chou, Yi-Shang (9,000) - - -
Manager Li, Chiung-Tung - - - -
Manager Lin, Chiu-Hung - - - -
Manager Chang, Wei-Hsiu - - - -
Manager Lin, Feng-I - - - -
Major
shareholder		 Chi Kuan Investment
Co., Ltd. -
Representative: Lin,
Chi-Chin
Major
shareholder		 Representative of the
Preparatory Office of
Yu Zhen Co., Ltd.:
Lin, Chi-Uo		 8,187,675

87

Note: The increase (decrease) in the number of shares held includes the transfer in or transfer out due to the handling of shareholding trust.

(II) Information on directors, managers, and shareholders holding more than 10% of the shares whose equity is transferred to a related party:

Name Reason
for equity
transfer
(note 2)
Transaction
date		 Transaction
counterparty		 The
relationship
between the
transaction
counterparty
and the
Company,
directors,
supervisors
and
shareholders
holding more
than 10% of
the shares		 Number of
shares
Transaction
price
Lin, Chi-
Chin		 Establish
ment with
offset
payment
2023/04/10		 Preparation
Office of Ji
Wng Cheng
Co., Ltd.
Responsible
person: Lin,
Chi-Chin		 The Company's
directors are its
initiators		 2,947,005
103.5
Lin, Chi-
Uo		 Establish
ment with
offset
payment
2023/04/10		 Preparation
Office of You
Zhen Co., Ltd.
Representative
: Lin, Chi-Uo		 2,482,280
103.5

(III) Information on directors, managers, and the relative parties of equity pledge with shareholding ratio of more than 10% who are related parties: None.

88

IX. For the top ten shareholders in shareholding, the information on their relationships as related parties or spouses or relatives within the second degree of kinship:

Name Own shares Own shares Shares held by
spouse and minor
children		 Shares held by
spouse and minor
children		 Total shares
held in the
names of
others		 Total shares
held in the
names of
others		 The names and
relationships of the
top ten
shareholders who
are related parties
or spouses or
relativeswithin the
second degree of
kinship.		 The names and
relationships of the
top ten
shareholders who
are related parties
or spouses or
relativeswithin the
second degree of
kinship.		 Remark
Number of
shares		 Shareholding
ratio		 Number of
shares		 Shareholding
ratio		 Number of
shares		 Shareholding
ratio
Name		 Relationship
Chi Kuan Investment
Co., Ltd. -
Responsible person:
Lin,Chi-Chin		 8,392,907 10.76%
-		 - - - Lin, Chi-
Chin
Lin, Chi-Uo		 Director
Director		 None
Preparation Office of
You Zhen Co., Ltd.
Representative: Lin,
Chi-Uo		 8,187,675 10.50%
-
-		 - - Lin, Chi-Uo
Lin, Chi-
Chin		 Director
Director		 None
Preparation Office of
Ji Wng Cheng Co.,
Ltd.
Responsible person:
Lin,Chi-Chin		 6,950,513 8.91%
-
-		 - - Lin, Chi-
Chin
Lin, Chi-Uo		 Director
Director		 None
Ji Uo Investment
Co., Ltd. -
Representative: Lin,
Chi-Uo		 5,723,349 7.34%
-
-		 - - Lin, Chi-Uo
Lin, Chi-
Chin		 Director
Director		 None
Change, Hui-
Kuan		 2,579,239 3.31% - - - Lin, Chi-
Chin		 Husband None
Lin, Chi-Chin 2,456,000 3.15%
2,579,239		 3.31% - - Chi-Kuan
(Ji Uo)
Investment
Co., Ltd.
Lin,Chi-Uo		 Director
Brother		 None
Lin, Fang-Ling 2,250,000 2.89%
-		 - - - Lin, Chi-
Chin
Lin,Chi-Uo		 Brother
Brother		 None
Trust Property
Special Account
Entrusted by Lin,
Chi-Chin		 2,200,000 2.82% - - - - - - None
Trust Property
Special Account
Entrusted by Stella
Hu		 2,200,000 2.82% - - - - - - None
Lin, Pei-Yao 1,100,000 1.41% - - - - Lin, Chi-
Chin		 Father None

X. The number of shares held by the company, its directors, supervisors, managers, and enterprises directly or indirectly controlled by the company in the same reinvested enterprise, and the consolidated shareholding ratio: No such situation.

89

Four. Fund Raising

I. Capital and shares: (I) Source of share capital:

Unit: thousand shares

Month and
year		 Issue
price		 Approved capital Approved capital Paid-incapital Paid-incapital Remark Remark Remark

Number of
shares (in
thousand)		 Amount
(NT$ thousand)		 Number of
shares (in
thousand)		 Amount
(NT$ thousand)		 Source of share capital Using
assets other
than cash to
offset share
capital

Others
August
1969		 10 50 500 50 500 Share capital at establishment - -
September
1978		 10 200 2,000 200 2,000 Capital increase from cash of
150,000 shares		 - Note 1
June 1980 10 1,700 17,000 1,700 17,000 Capital increase from cash of
1,500,000 shares		 - -
January
1991		 10 2,700 27,000 2,700 27,000 Capital increase from cash of
1,000,000 shares		 - -
November
1993		 10 5,700 57,000 5,700 57,000 Capital increase from cash of
3,000,000 shares		 - Note 2
December
1996		 10 7,900 79,000 7,900 79,000 Capital increase from capital
surplus of 2,200,000 shares		 - -
December
1997		 10 10,500 105,000 10,500 105,000 Capital increase from earnings
of 2,600,000 shares
-		 Note 3
December
1999		 10 13,954 139,535 13,954 139,535 Capital increase from earnings
of 3,453,500 shares
-		 Note 4
September
2002		 10 19,577 195,768 19,577 195,768 Capital increase from earnings
of 5,623,260 shares
-		 Note 5
November
2002		 10 19,706 197,060 19,706 197,060 Share swap due to merger of
129,200 shares		 - Note 6
October
2003		 10 25,000 250,000 21,500 215,000 Capital increase from capital
surplus of 1,794,040 shares		 - Note 7
September
2004		 10 30,000 300,000 27,502 275,020 Capital increase from cash of
4,000,000 shares
Capital increase from earnings
of 1,505,000 shares
Capital increase from capital
surplus of 497,000 shares
-		 Note 8
September
2005		 10 44,300 443,000 31,500 315,000 Capital increase from earnings
of 2,200,160 shares
Capital increase from capital
surplus of 1,797,840 shares
-		 Note 9
December
2005		 10 44,300 443,000 33,000 330,000 Capital increase from cash of
1,500,000 shares		 - Note 10
July 2006 10 44,300 443,000 38,050 380,500 Capital increase from earnings
of 2,310,000 shares
Capital increase from capital
surplus of 2,640,000 shares
Capital increase from
employee bonus of 100,000
shares
-		 Note 11
October
2006		 10 44,300 443,000 42,807 428,070 Capital increase from cash of
4,757,000 shares		 - Note 12
October
2007		 10 70,000 700,000 44,947 449,473 Capital increase from earnings
of 2,140,350 shares
-		 Note 13
May 2008 10 70,000 700,000 44,965 449,654 New shares from corporate
bond conversion of 18,041
shares		 - Note 14
July 2008 10 70,000 700,000 45,040 450,398 New shares from corporate
bond conversion of 74,421
shares		 - Note 15

90

Month and
year		 Issue
price		 Approved capital Approved capital Paid-incapital Paid-incapital Remark Remark Remark

Number of
shares (in
thousand)		 Amount
(NT$ thousand)		 Number of
shares (in
thousand)		 Amount
(NT$ thousand)		 Source of share capital Using
assets other
than cash to
offset share
capital

Others
September
2008		 10 70,000 700,000 45,044 450,443 New shares from corporate
bond conversion of4,510
shares		 - Note 16
October
2008		 10 70,000 700,000 47,794 477,943 Capital increase from earnings
of 2,750,000 shares
-		 Note 17
October
2009		 10 70,000 700,000 50,184 501,840 Capital increase from earnings
of 2,389,716 shares
-		 Note 18
August
2000		 10 70,000 700,000 55,202 552,024 Capital increase from earnings
of5,018,404shares
-		 Note
19
September
2010		 10 70,000 700,000 60,202 602,024 Capital increase from cash of
5,000,000 shares		 - Note
20
May 2011 10 70,000 700,000 60,838 608,386 New shares from corporate
bond conversion of 636,170
shares		 - Note
21
July 2011 10 70,000 700,000 61,000 610,002 New shares from corporate
bond conversion of 161,679
shares		 - Note
22
October
2011		 10 70,000 700,000 61,386 613,866 New shares from corporate
bond conversion of 386,334
shares		 - Note
23
August
2014		 10 70,000 700,000 67,525 675,253 Capital increase from earnings
of6,138,663 shares
-		 Note
24
September
2019		 10 100,000 1,000,000 70,902 709,016 Capital increase from earnings
of3,376,264shares
-		 Note
25
September
2021		 10 100,000 1,000,000 77,992 779,917 Capital increase from earnings
of 7,090,155 shares
-		 Note
26

Note 1: Approved via letter Tai-Jian-Shang-Xin-Zi No. 011516 dated October 5, 1978. Note 2: Approved via letter Jing-(1993)-Shang-Zi No. 126019 dated December 28, 1993. Note 3: Approved via letter Jing-1998-Shang-Zi No. 102755 dated February 19, 1998. Note 4: Approved via MOEA letter Jing-(2000)-Shang-Zi No. 089100914 dated January 12, 2000.

  • Note 5: Approved via MOEA letter Jing-Shou-Shang-Zi No. 09101365540 dated September 4, 2002.

  • Note 6: Approved via MOEA letter Jing-Shou-Shang-Zi No. 09101468110 dated November 28, 2002.

  • Note 7: Approved via letter Jing-Shou-Zhong-Zi No. 09232836030 dated October 23, 2003.

  • Note 8: Approved via letter Jing-Shou-Zhong-Zi No. 09332657820 dated September 8, 2004.

  • Note 9: Approved via letter Jing-Shou-Zhong-Zi No. 09432866670 dated September 21, 2005.

  • Note 10: Approved via letter Jing-Shou-Zhong-Zi No. 09433332660 dated December 12, 2005.

  • Note 11: Approved via letter Jing-Shou-Zhong-Zi No. 09532504270 dated July 13, 2006. Note 12: Approved via letter Jing-Shou-Zhong-Zi No. 09532968690 dated October 11, 2006.

  • Note 13: Approved via letter Jing-Shou-Zhong-Zi No. 09632841010 dated October 3, 2007.

Note 14: Approved via letter Jing-Shou-Zhong-Zi No. 09732164930 dated May 1, 2008. Note 15: Approved via letter Jing-Shou-Zhong-Zi No. 09732555100 dated July 8, 2008. Note 16: Approved via letter Jing-Shou-Zhong-Zi No. 09732897980 dated August 22,

91

  2. Note 17: Approved via letter Jing-Shou-Zhong-Zi No. 09733198340 dated October 3, 2008.

  3. Note 18: Approved via letter Jing-Shou-Shang-Zi No. 09801235560 dated October 13, 2009.

  4. Note 19: Approved via letter Jing-Shou-Shang-Zi No. 09901175110 dated August 9, 2010.

  5. Note 20: Approved via letter Jing-Shou-Shang-Zi No. 09901204140 dated September 8, 2010.

  6. Note 21: Approved via letter Jing-Shou-Shang-Zi No. 10001088800 dated May 3, 2011. Note 22: Approved via letter Jing-Shou-Shang-Zi No. 10001148910 dated July 12, 2011. Note 23: Approved via letter Jing-Shou-Shang-Zi No. 10001235200 dated October 14, 2011.

  7. Note 24: Approved via letter Jing-Shou-Shang-Zi No. 10301179560 dated August 29 2014.

  8. Note 25: Approved via letter Jing-Shou-Shang-Zi No. 10801125490 dated September 18, 2019.

  9. Note 26: Approved via letter Jing-Shou-Shang-Zi No. 11001165150 dated September 22, 2021.

Share type Approved capital Approved capital Approved capital Remark
Outstanding
shares		 Unissued
shares		 Total
Bearer form
Common
shares		 77,991,707 22,008,293 100,000,000 Listed shares

Where approval has been obtained to offer and issue securities under the omnibus reporting system, disclose the approved amount, information related to the intended issue

and the issued securities: Not applicable.

(II) Shareholder structure:

April 29,2023 April 29,2023 April 29,2023 April 29,2023 April 29,2023
Shareholder
structure
Number

Government
agencies		 Financial
institutions
Other legal
persons		 Foreign
institutions
and
foreigners		 Individuals Total
Number of
people		 0 0 42 34 5,362 5,438
Shares held 0 0 35,719,001 841,359 41,431,347 77,991,707
Shareholding
ratio		 0.00% 0.00% 45.80% 1.08% 53.12% 100.00%

92

(III)Equity dispersion:

quity dispersion: quity dispersion: quity dispersion: quity dispersion:
April 29,2023
Shareholding tiers
Number of
shareholders
Shares held
Shareholding
ratio
1 to 999
1,828
319,997
0.41%
1,000 to 5,000
2,739
5,215,621
6.69%
5,001 to 10,000
387
2,820,804
3.62%
10,001 to 15,000
163
1,966,115
2.52%
15,001 to 20,000
60
1,071,808
1.37%
20,001 to 30,000
70
1,653,291
2.12%
30,001 to 40,000
31
1,075,718
1.38%
40,001 to 50,000
29
1,326,661
1.70%
50,001 to 100,000
65
4,756,971
6.10%
100,001 to 200,000
31
4,177,900
5.36%
200,001 to 400,000
13
3,899,004
5.00%
400,001 to 600,000
7
3,201,335
4.11%
600,001 to 800,000
2
1,488,380
1.91%
800,001 to 1,000,000
1
831,522
1.06%
1,000,001 and above
12
44,186,580
56.65%
Total
5,438
77,991,707
100.00%
Shareholding tiers Number of
shareholders		 Shares held Shareholding
ratio
1 to 999 1,828 319,997
0.41%
1,000 to 5,000 2,739 5,215,621
6.69%
5,001 to 10,000 387 2,820,804
3.62%
10,001 to 15,000 163 1,966,115
2.52%
15,001 to 20,000 60 1,071,808
1.37%
20,001 to 30,000 70 1,653,291
2.12%
30,001 to 40,000 31 1,075,718
1.38%
40,001 to 50,000 29 1,326,661
1.70%
50,001 to 100,000 65 4,756,971
6.10%
100,001 to 200,000 31 4,177,900
5.36%
200,001 to 400,000 13 3,899,004
5.00%
400,001 to 600,000 7 3,201,335
4.11%
600,001 to 800,000 2 1,488,380
1.91%
800,001 to 1,000,000 1 831,522
1.06%
1,000,001 and above 12 44,186,580
56.65%
Total 5,438 77,991,707
100.00%

93

(IV) List of major shareholders:

  • Name, number of shares held and proportion of shareholding held by shareholders with a shareholding ratio of 5% or more, or shareholders with a top ten shareholding ratio:
top ten shareholding ratio: top ten shareholding ratio: top ten shareholding ratio:
April 29,2023
Shares
Name of major shareholder
Number of shares
held
Shareholding
ratio
Chi Kuan Investment Co., Ltd. -
Responsible person: Lin, Chi-Chin		 8,392,907
10.76%
Preparation Office of You Zhen Co., Ltd.
Representative: Lin, Chi-Uo		 8,187,675
10.50%
Preparation Office of Ji Wng Cheng Co.,
Ltd.
Responsible person: Lin, Chi-Chin		 6,950,513
8.91%
Ji Uo Investment Co., Ltd.
Responsible person: Lin, Chi-Uo		 5,723,349
7.34%
Change,Hui-Kuan 2,579,239 3.31%
Lin, Chi-Chin 2,456,000 3.15%
Lin, Fang-Ling 2,250,000
2.89%
Trust Property Special Account
Entrusted byLin, Chi-Chin		 2,200,000
2.82%
Trust Property Special Account
Entrusted by StellaHu		 2,200,000
2.82%
Lin, Pei-Yao 1,100,000
1.41%
  • (V) Market price, net value, earnings, dividends and related information of each share for the most recent two years:

Unit: NT$/thousand shares

Year
Item		 Year
Item		 Year
Item
2021		 2022 Current year
as of March
31,2023
Market price
per share		 Highest 163.00 143.00 104.50
Lowest 86.50 90.70 94.50
Average 124.30 112.88 99.02
Net value
per share		 Before distribution 40.38 38.55 39.73
After distribution 33.33 33.50 -
Earnings per
share		 Weighted average
number of shares		 77,992 77,992 77,992
Earnings
per share
Before
retroactive
adjustment		 12.42 5.03 1.21

94

Year
Item		 Year
Item		 Year
Item
2021		 2022 Current year
as of March
31,2023
After
retroactive
adjustment		 12.42 5.03 1.21
Dividend per share Cash dividend 7 5 (Note) -
Free
share
allotment		 Earnings
distribution		 - - -

Stock
dividend
from capital
surplus		 - - -
Accumulated unpaid
dividends		 - - -
Investment
return		 P/E ratio 10.01 22.44 -
P/D ratio 17.76 22.58 -
Cash dividend yield 0.06 0.04 -

Note: The dividend per share in 2022 was only passed by resolution of the Board of Directors on March 22, 2023, but has not yet been passed by the 2023 shareholders’ meeting, so it has not yet been actually distributed.

95

  • (VI) Dividend policy and implementation status:

  • Dividend policy:

    • (1) After making up the losses, if there is any balance in the current year’s profit before tax, the Company shall allocate no less than 2% as employees’ remuneration, and no more than 3% as the directors’ remuneration. Employees’ remuneration may be paid in stock or cash, and may be paid to employees of affiliated companies who meet certain conditions. The distribution of employees’ remuneration and directors’ remuneration shall be made by a resolution adopted by the Board of Directors at which more than two-thirds of the directors are present and the proposal approved by a majority of the directors present, and it shall be reported to the shareholders’ meeting.

    • (2) If the Company has a surplus in its annual final accounts, it shall first pay profit-seeking enterprise income tax and make up for its losses in previous years. If there is still a surplus, it shall set aside 10% as the legal reserve in accordance with the law, and set aside or reverse the special reserve in accordance with the law; if there is any remaining balance, then the Board of Directors shall prepare an earnings distribution proposal for it together with and the accumulated undistributed earnings, and submit it to the shareholders’ meeting for resolution on dividend distribution. Since the Company is in a stage of stable growth, considering shareholders’ equity, the Company’s financial structure and long-term development, the total amount of shareholders’ dividends should be more than 20% of the accumulated undistributed earnings, of which cash dividends should not be less than 10% of the total shareholders’ dividends.

  • The proposed dividend distribution at this shareholders’ meeting: The Company’s profit distribution plan for 2022 has been drafted by the Board of Directors, and a cash dividend of NT$5 per share will be distributed. After it has been passed by the resolution of the general shareholders’ meeting, another benchmark date for interest distribution will be set.

  • (VII) The effect of the proposed free share allotment at the current shareholders’ meeting on the company’s operating performance and earnings per share: Not applicable.

  • (VIII) Remuneration of employees and directors:

  • Percentage or range of remuneration of employees and directors as stated in the Articles of Association:

    • Article 24: After making up the losses, if there is any balance in the current year’s profit before tax, the Company shall allocate no less than 2% as employees’ remuneration, and no more

96

than 3% as the directors’ remuneration. Employees’

remuneration may be paid in stock or cash, and may be paid to employees of affiliated companies who meet certain conditions. 

  - The distribution of employees’ remuneration and directors’ remuneration shall be made by a resolution adopted by the Board of Directors at which more than two-thirds of the directors are present and the proposal approved by a majority of the directors present, and it shall be reported to the shareholders’ meeting.

  • Article 24-1: If the Company has a surplus in its annual final accounts, it shall first pay profit-seeking enterprise income tax and make up for its losses in previous years. If there is still a surplus, it shall set aside 10% as the legal reserve in accordance with the law, and set aside or reverse the special reserve in accordance with the law; if there is any remaining balance, then the Board of Directors shall prepare an earnings distribution proposal for it together with and the accumulated undistributed earnings, and submit it to the shareholders’ meeting for resolution on dividend distribution. Since the Company is in a stage of stable growth, considering shareholders’ equity, the Company’s financial structure and long-term development, the total amount of shareholders’ dividends should be more than 20% of the accumulated undistributed earnings, of which cash dividends should not be less than 10% of the total shareholders’ dividends.

  • The basis for estimating the remuneration of employees and directors in the current period, the basis for calculating the number of shares of employees’ remuneration distributed by shares, and the accounting treatment if the actual distribution amount is different from the estimated amount:

  • If there is still any change in the amount after the date of issuance of the annual financial report, it shall be handled according to the change in accounting estimates, and the amount shall be adjusted and recorded in the next year.

  • Remuneration distribution by resolution of the Board of Directors: The Board of Directors of the Company approved the proposal on March 23, 2022. The distribution of earnings for 2021 for the remuneration of employees and directors is as follows:

  • (1) If the amount of remuneration of employees and directors distributed

97

in cash or stock is different from the estimated amount in the year of recognition, disclose the difference, reason and handling: The Company allocated an estimated amount of employee cash remuneration of NT$10,675,157 and directors’ remuneration of NT$8,006,369 in 2022. after deliberation, the Remuneration Committee submitted the proposal to the Board of Directors for approval, and planned to distribute remuneration to employees and directors in cash, which was no different from the estimated amount.

  • (2) The ratio of employees’ remuneration distributed by shares to the total after-tax profit and employees’ remuneration in the current individual or respective financial report: None.

  • Actual distribution of remuneration of employees and directors in the previous year:

Item Amount decided by
the Board of Directors		 Actual amount paid Difference
Employees’
remuneration		 NT$22,079,631 NT$22,079,631 None
Directors’ and
supervisors’
remuneration
NT$16,559,723		 NT$16,559,723 None
  • (IX) The Company’s repurchase of its own shares: None.

II. Handling of corporate bonds and convertible corporate bonds: None.

III. Handling of special shares: None .

IV. Handling of overseas depositary receipts: None.

98

V. Handling of employee stock option certificates:

  • (I) For employee stock option certificates, disclose the status of handling and the impact

on shareholders’ equity as of the printing date of the annual report:

May11,2023
Type of employee stock option
certificates		 1st employee stock option certificates
in 2020
Filingand affective date September 1,2020
Issue date November 24,2020
Number of units issued 2,000,000 shares
Ratio of the number of share
subscriptions issued to the total number
of issued shares		 2.56%
Duration of subscription 10years
Performance mode Delivered by issuing new shares of
the Company.
Restricted subscription period and ratio
(%)		 The stock option holder may not
exercise the stock option within six
years before the expiration of the
employee stock option certificate, and
may exercise the right to subscribe in
full after the expiration of sixyears.
Number of shares acquired 0
Executed subscription amount 0
Number of outstanding shares for
subscription		 2,000,000 shares
Subscription price per share of those
which have not been subscribed to		 82.6
Number of outstanding shares for
subscription to total issued shares(%)		 2.56%
Impact on shareholders’ equity The Company estimates that the
future revenue will show a growth
trend, so the overall assessment
shows that the dilution of earnings
per share of the Company in the
future years is still limited, and there
is no significant impact on existing
shareholders’ equity.

99

  • (II) Names and status of acquisition and subscription of managers and the top ten employees who have obtained stock option certificates:
May12,2022
Not executed
Number of share subscriptions
Subscription price
Subscription amount
Number of subscribed shares as a
percentage of total issued shares
365,000 82.6 30,149,000 0.47%
475,000 82.6 39,235,000 0.61%		 May12,2022
Not executed
Number of share subscriptions
Subscription price
Subscription amount
Number of subscribed shares as a
percentage of total issued shares
365,000 82.6 30,149,000 0.47%
475,000 82.6 39,235,000 0.61%		 May12,2022
Not executed
Number of share subscriptions
Subscription price
Subscription amount
Number of subscribed shares as a
percentage of total issued shares
365,000 82.6 30,149,000 0.47%
475,000 82.6 39,235,000 0.61%		 May12,2022
Not executed
Number of share subscriptions
Subscription price
Subscription amount
Number of subscribed shares as a
percentage of total issued shares
365,000 82.6 30,149,000 0.47%
475,000 82.6 39,235,000 0.61%
Title Name Number of
share
subscriptions
acquired
Acquired Number of share subscriptions as
a percentage of total issued shares (%)		 Already executed Not executed
Number of share subscriptions Subscription price Subscription amount Number of subscribed shares as a
percentage of total issued shares		 Number of share subscriptions Subscription price Subscription amount
 Number of subscribed shares as a
percentage of total issued shares
Manager Executive
Vice
President		 Li, Chiung-
Tung		 365,000 0.51% 0 0 0 0 365,000 82.6 30,149,000 0.47%
Production
Manager		 Chou, Yi-
Shang
Finance
Manager		 Lin, Chiu-
Hung
R&D
Manager		 Chang,
Wei-Hsiu
HR
Manager		 Lin, Feng-I
Employee Special
Assistant		 Hu, X-hui 475,000 0.67% 0 0 0 0 475,000 82.6 39,235,000 0.61%
Senior
Specialist		 Chang, X-
Hao
Section
Chief		 Chang, X-
Hsiang
Section
Chief		 Chou, X-
Sheng
Section
Chief		 Huang, X-
Chin
Section
Chief		 Chen, X-
Yu
Section
Chief		 Wang, X-
Chun
Senior
Specialist		 Chiang, X-
Chin
Head Liu,X-Ting
Sales Liu, X-
Hsuan

100

VI. Handling of new shares with restricted employee rights :None.

  • VII. Handling of issuance of new shares for the merger or acquisition of shares of other companies : None.

VIII. Implementation of fund utilization plan: Not applicable.

101

Five. An Overview of Operations

I. Business Contents:

  • (I) Business scope:

  • Key business contents:

    • (1) Manufacturing, processing and trading of rubber conveyor belts, rubber plates and various rubbers that are oil resistant, acid resistant, heat resistantsw and fire resistant.

    • (2) Manufacturing of other rubber products.

    • (3) Manufacturing, processing and trading of composite products.

  • (4) General import and export business. (Except for licensed businesses)

    1. Business proportions:

    2. The business proportions of the Company’s main products in 2022 are as follows:

Unit: NT$1,000


ws:
Unit: NT$1,000
Product name 2022 business
turnover		 Proportion of 2022
business(%)
Rubber
products		 1,812,181 98.17
Others 33,774 1.83
Total 1,845,955 100.00
  1. The Company’s current products and services:
Product type Product name Key applications and functions
Conveyor belt for
mining/construction
Flat surface, heat-
resistant, oil-
resistant, fire-
resistant, steel
cable, etc.		 It is used for long-distance
transportation in various
industries such as steel, ore,
cement, sand and coal.
Inclined conveyor
belt		 Various tooth
shapes		 It is suitable for transporting all
kinds of coal, mineral sands and
powder materials.
Industrial rubber
conveyor belt		 Flat surface, heat-
resistant, oil-
resistant, fire-
resistant, etc.		 It is suitable for the transporting
of various automatic production
lines such as in anti-static
electronic factories and shoe
factories.
Rubber dam Rubber dam At present, it is widely used in
irrigation, power generation,
water storage, flood control,
ecology, water parks, urban
landscaping, etc.
Composite material
products
Electronic hot-
pressed cushion
gaskets and
thermoplastic
sheets with
environmental
protection, energy
saving and long-
term effect.		 Applied in the PCB industry hot
pressing process and
thermoplastic sheets.

102

4. New products to be developed:

(1) Rubber products

In terms of product development, the Company is also actively engaged in innovation and research to make product projects more diversified and application scopes wider. As for rubber, the products are in line with the current trend towards special rubber types such as green energy conveyor belts, energy saving conveyor belts, super heat-resistant and oil-resistant conveyor belts, and wear-resistant and fire-resistant conveyor belts, so that customers have more diversity in product selection. Recently the main direction of R&D is mainly to cooperate with customers to develop special rubber products and create products with higher added value.

  • (2) Composite material products

The thermoplastic composite material developed by the Company, in addition to having the same characteristics of light weight and high strength, has the advantage of being able to be recycled and remanufactured into different shapes, which completely eliminates the non-recyclable environmental protection issues of traditional thermosetting composite material. In addition, with the advantages of thermoplastic composite material of fewer processes and shorter manufacturing time, it can be fully introduced into the Industry 4.0 mode for automatic mass production, and solve the problem of labor shortage caused by the use of huge amounts of manpower in industries related to thermosetting carbon fiber composite material. The total manufacturing cost is a major advantage compared with traditional thermosetting carbon fiber composite material.

  • (II) Industry overview:

  • Current status and development of the industry:

    • The rubber product industry has a wide range of applications, ranging from sneaker soles to rubber hoses, rubber conveyor belts and tire belts. The rubber conveyor belt industry belongs to traditional industry. Under the longterm competitive market environment, the industry has actively invested in the addition of production equipment, the improvement of process technology, and the development of new products. Now, it has developed from a laborintensive industry in the past to a new value industry which is technology and equipment intensive. Because most rubber conveyor belts in the past were heavy general conveyor belts, their application field was mainly in heavy industries such as the mining industry and power plant industry. In recent years, the demand for rubber conveyor belts decreased due to the slowdown of global economic growth, and the joining of international competitors such

103

as those from South Korea, India, Eastern Europe and China resulted in an overall phenomenon of price cutting in the international market, which affected the profits of general heavy conveyor belts. On the one hand, the Company actively develops the light conveyor belt market, promotes products with high strength, light weight and long service life, and at the same time extends the application of rubber products to the consumer product industry, and develops new market demand for rubber products; on the other hand, the Company strengthens the automation of machinery and equipment to reduce labor costs, and increases production capacity to create the benefits of economic production scale, so as to respond to the increasingly competitive market. The main raw materials of rubber conveyor belts are rubber and cloth, which account for about 80% of the production cost. Therefore, the physical properties, substitutability, procurement sources and bargaining power of raw materials in the future will be the key to determine the profit of the industry. The Company maintains good and stable relationships with raw material suppliers, and our strength accumulated in raw material formulae after years of research and development will be conducive to future market competition. 2. Relevance of upstream, midstream and downstream industries:

==> picture [498 x 226] intentionally omitted <==

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

Upstream Midstream (the Company) Downstream
Agriculture
Raw rubber and
Aviation
artificial rubber
Rubber plant Thermal
power plant
Mining
Black smoke Rubber
conveyor
belt and
rubber Construction
product
Polyester yarn Textile mill industry Domestic and
overseas
dealers
----- End of picture text -----

104

  1. Various development trends and competitive situations of the products: Conveyor belts can be divided into mining conveyor belts, shipping logistics conveyor belts, inclined conveyor belts, agricultural conveyor belts, industrial rubber conveyor belts, and various types of rubber boards based on their applications. In terms of natural resource extraction, they are mainly applied in the fields of coal, mining, cement, sand and thermal power generation. The product market is in a mature stage, and in recent years, due to the global economic slowdown, the demand for iron ore sand has declined, and there is no obvious growth space for the conveyor belt market. We are actively developing products in new application areas to meet customer needs with a high production technology threshold, and there is a large potential for future market demand growth. Since the financial tsunami, the Company has adopted a business model that focuses on quality but not quantity, and doe not blindly sacrifice profits for a high revenue. In recent years, the main product development has been special rubber products jointly developed with customers to create products with higher added values; the Company has also stepped into new operating areas and invested in composite material factories to further improve the Company's business performance.

According to the 2022 Taiwan Manufacturing Industry Top 2000 Survey by CommonWealth Magazine in 2023, the Company ranked the 1071th in the revenue ranking, and the 101th among in the manufacturing industry in terms of profit rate. At present, there is no publicly available industry information for reference in the global conveyor belt industry; the Company is the largest professional conveyor belt manufacturer in the world and a leading manufacturer in the domestic rubber conveyor belt market.

(III) Overview of technology and R&D:

  1. Technical aspect:

The technical level of the Company’s existing products can be divided into three aspects: material, structure, and processing and manufacturing. In terms of rubber materials, we actively develop products beyond the existing specifications, such as corrosion-resistant conveyor belts, which can be used in high acid and alkali environments such as chemical plants and salt farms, and strengthen the investment in environmental protection products. In terms of cloth, we develop new structures with good ductility and produce high-

105

strength and low-shrinkage single-layer cloth conveyor belts, so as to reduce the power cost of users and make energy saving and carbon reduction as the niche of product promotion. In terms of product structure, we are committed to reinforcing cloth fibers, which has the advantage of absolute replacement of multi-layer fiber layers for high-impact products. In terms of the reprocessing process, we continue reducing the manufacturing process, reduce the generation of leftovers, develop various molds and fixtures, promote the paperless work mode in the factory, and strengthen the efficient human-machine combination process.

  1. R&D status:

In the future, the focus of our R&D will still be on material, structure and process improvement. In addition to continuing the product R&D in more specifications for existing products, the Company focuses on mold improvement and innovation as well. In the area of chemical fiber cloth raw material, the Company cooperates with domestic manufacturers to develop high-strength fabrics suitable for high-impact products with the advantage of replacing multi-layer fiber cloth layers. In the area of rubber, we focus on conveyor belts, energy-saving conveyor belts, super heat-resistant and oilresistant conveyor belts and wear-resistant and fire-resistant conveyor belts which are in line with the current trend of environmental friendliness. Our R&D direction is to improve upon the existing basis, and expand the breadth and depth of the Company’s products to achieve the goal of “customer satisfaction”. In recent years, the Company has actively invested in composite material products, and successfully developed thermoplastic composite material plates with the characteristics of being light, thin, strong, tough and beautiful. Under the trend of light weight, high structural efficiency and innovative and beautiful design for industrial, automotive, electric bicycle and consumer products, the composite material products provided by the Company can offer characteristics that cannot be achieved by plastic, rubber or metal plates.

  1. R&D personnel and their academic experience:

The organization of the Company’s overall R&D team is as follows:

==> picture [448 x 120] intentionally omitted <==

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

R&D team
R&D Process R&D Laborator
Group
New product Raw material Process Development of Sample
development development improvement and new molding tools preparation
innovation
----- End of picture text -----

106

Education of the Company’s R&D team as of the end of 2022:

Education of the Company’s R&D team as of the end of 2022: Education of the Company’s R&D team as of the end of 2022: Education of the Company’s R&D team as of the end of 2022:
Unit:person
Year
Education level
2022
2023 (as of March
31)
PhD
0
0
Master’s
2
2
University and college
3
3
High school
0
0
Total
5
5
Year
Education level		 2022 2023 (as of March
31)
PhD 0 0
Master’s 2 2
University and college 3 3
High school 0 0
Total 5 5
  1. R&D expenses invested in the last two years and up to the date of printing of the annual report:

Unit: NT thousand

Unit: NT thousand
Year
Item		 2022 2023 (as of the first
quarter)
R&D expenses 7,757 1,485 
  5. Technologies or products successfully developed in 2022:

  • (1) Super wide conveyor belt.

  • (2) Environment friendly and low-carbon rubber products.

  • (IV) Long-term and short-term business development plans:

  • Short-term plans:

    • (1) Comply with the accuracy of customer delivery time by reserving the capacity of machines for urgent orders and increasing the adaptability of machines, so as to improve customer satisfaction.

    • (2) Accelerate the production schedule of new product lines and actively develop domestic and export markets.

  • Long-term plans:

    • (1) Continue promoting our own brands and market them around the world with the KING and NEWSHEET composite material brands to increase market share.

    • (2) Continue developing low-carbon, green energy and environmental protection products, and understand the needs of customers.

    • (3) Continue process improvement and cost reduction.

107

II. Overview of the Market and Production and Sales Status:

  • (I) Market analysis:

  • Sales regions of key products:

Unit: NT$1,000; %

Year
Salesregion		 2021 2021 2022 2022
Amount Amount 金額 %
North America 960,555 50% 927,616 50%
Europe 468,062 24% 352,965 19%
Asia 463,586 24% 528,059 29%
Other regions 44,990 2% 37,315 2%
Total 1,937,193 100% 1,845,955 100%
  1. Market share:

According to the “Industrial Product Group Data” compiled by the Ministry of Economic Affairs, the production value, sales value and domestic and export sales value of Taiwan’s rubber belt (2102010) industry in 2021 and 2022 were as follows:

rket share:
cording to the “Industrial Product Group Data” compiled by the Ministry of
onomic Affairs, the production value, sales value and domestic and export
es value of Taiwan’s rubber belt (2102010) industry in 2021 and 2022 were
follows:		 rket share:
cording to the “Industrial Product Group Data” compiled by the Ministry of
onomic Affairs, the production value, sales value and domestic and export
es value of Taiwan’s rubber belt (2102010) industry in 2021 and 2022 were
follows:		 rket share:
cording to the “Industrial Product Group Data” compiled by the Ministry of
onomic Affairs, the production value, sales value and domestic and export
es value of Taiwan’s rubber belt (2102010) industry in 2021 and 2022 were
follows:		 rket share:
cording to the “Industrial Product Group Data” compiled by the Ministry of
onomic Affairs, the production value, sales value and domestic and export
es value of Taiwan’s rubber belt (2102010) industry in 2021 and 2022 were
follows:		 rket share:
cording to the “Industrial Product Group Data” compiled by the Ministry of
onomic Affairs, the production value, sales value and domestic and export
es value of Taiwan’s rubber belt (2102010) industry in 2021 and 2022 were
follows:
Unit: NT$1,000
Year Production
value		 Sales value Domestic
sales value		 Export value
2021 3,941,713 4,200,541 1,471,747 2,728,794
2022 3,885,517 4,196,705 1,569,771 2,626,934
Annual
increase rate		 -1.52% -0.09% 6.66% -3.73%

In 2022, because major economies increased interest rates to curb inflation, manufacturing activities in various countries slowed down significantly. In addition, the war between Russia and Ukraine was ongoing, making an impact on the Company's operating revenue. In recent years, the Company has continued developing products with high added values; although the revenue has declined, gross profit and operating income have grown compared with those in 2021, which shows that the Company's operating strategy is appropriate.

If the sales value of conveyor belts in the “Industrial Product Group Data” of the Ministry of Economic Affairs in the above table is used for calculation, the operating revenue of the Company for 2022 and 2021 accounted for 43% and 44% of Taiwan's conveyor belt industry, respectively, and the market share is relatively suitable compared with that in the previous year.

  1. Future supply and demand and growth of the market:

The conveyor belts of the Company can be divided into heavy, light and other types, and can be divided into two categories according to their application

108

fields: one is the heavy conveyor belt used for mining, power plants and other purposes, and the other is the light conveyor belt used for agriculture, animal husbandry, various types of tilt, construction, air transport and aviation stations. Because China, India, Eastern Europe and other countries have joined the supply market with their low price advantages, the market price competition is fierce. At present, most of the world’s major conveyor belt manufacturers are in China, Europe, the United States and Japan. Because there is no organization for the statistics of the market demand for conveyor belts, and Taiwan’s overall industrial output value is very small, it is difficult to extrapolate and estimate the global conveyor belt supply market. Although rubber conveyor belts are mature products, the global market scale is large; that is, the market is growing moderately, but because they are industrial consumer goods, the market will not shrink unless new substitutes appear.

The Company has more than 50 years of experience in production processes, and actively develops special rubber products with high added value together with customers instead of engaging in price competition. In recent years, the Company has also actively developed rubber products for rubber dams and animal husbandry to improve gross profit.

  1. Competitive niche:

  2. A. Possession of a complete conveyor belt product line

The Company’s product line covers heavy, light and special conveyor belts. The physical properties of the products range from general to various types of belts with heat resistance, fire resistance, oil resistance, impact resistance and cutting resistance. Appearances range from flat to various patterns of toothed conveyor belts, with widths ranging from 300 mm to 4000 mm, thicknesses ranging from 3 mm to 40 mm, and lengths up to 500 M. The application fields range from traditional coal, iron ore, sand and stone industries to aviation logistics, agriculture, animal husbandry, construction and aviation. In the future, under the trend of automation and high efficiency, the demand for conveyor systems will increase day by day, and the application of conveyor belts will also become broader. The Company will continue its R&D to provide customers with diversified products and meet their demand for full purchase in one go.

  • B Labor-saving and high-productivity machinery and equipment The sustainable operation of the rubber conveyor belt industry mainly depends on raw material development and process capacity, which

109

includes production technology, machine and equipment functions and capacity scale. At present, the Company has three plants, including two conveyor belt manufacturing plants and one cloth soaking plant, with conveyor belts of a width of 4M. In terms of production technology, the Company has more than50 years of production technology; it can reduce direct labor while at the same time improving the output per unit hour, and effectively reduce the generation of ineffective man-hours for line change. In order to facilitate material preparation and the timeliness of material accounting, it is more convenient to set up automatic warehouse storage equipment in individual plants. The automation of machinery and equipment greatly reduces the Company’s labor demand, and the Company will be able to improve production performance more efficiently, which helps to improve product diversification and quality stability.

  • C. Innovative process capability

The Company has two automatic conveyor belt manufacturing plants, which can quickly meet various conveyor belt schedules for large amounts. The automatic production equipment effectively reduces the labor demand, and the Company constantly seeks innovation and change in the production process. It has made progress year by year in improving unit output and reducing quality anomalies, reducing the consumption cost of traditional molds and improving product output value. Looking forward to the future, the Company will continue to innovate processes in the direction of energy saving and time saving, and provide customers with high-quality products with competitive prices. The Company has been established for more than50 years. During this period, after many internal organizational adjustments and overall external economic recession risks, the Company has always responded to the changes in the overall environment with a flexible organizational structure, and therefore has a complete system in terms of organization management and personnel training. In addition to the products themselves, the key factors for future industrial profits are the full use of internal resources and good production management. To sum it up, under the excellent leadership of the management team, it is expected that the competitiveness of the Company will be greatly improved in the future for a better business performance and profitability.

  1. Favorable and unfavorable factors of the development prospect and countermeasures:

  2. A. Favorable factors

    • (A) Our products are customized with high technical levels.

110

Rubber conveyor belts are generally customized products that need to comply with specific equipment properties and application environments; there is a wide range of product types and specifications and a wide range of applications for the products, which are not mass-produced standardized products. The technical level of the products can be divided into three aspects: material, structure, and processing and manufacturing. In terms of the manufacturing process, it is necessary to adjust the complex manufacturing process in line with the R&D of the rubber formula, and to go through the processes of extrusion, tablet production, molding and sulfur addition. In addition to the matching of the front and rear stages of each piece of processing equipment, the setting of the machine and the operation of the personnel need to undergo repeated tests with a considerable cost of time. Therefore, the sustainable operation of the industry is based on the long-term planning of production content, equipment capacity, manufacturing process and rubber R&D to achieve continuous growth. Since its establishment, the Company has specialized in rubber conveyor belts of various specification as a professional manufacturer of rubber conveyor belts. In the past decade, the Company has invested in the innovation of equipment upgrades, process improvements, product specification expansion and rubber material development, so that the Company can still maintain a stable profit level within the global recession.

  • (B) The new functions of production equipment can effectively reduce costs

The Company has state-of-the-art production equipment that has gone through repeated improvement of functionality, giving the Company a competitive advantage in both quality and price. In 2019, the production width reached up to 11,000 mm, making the product line more complete.

  • (C) The scale of production attracts cooperation from major manufacturers At present, most of the major manufacturers in the conveyor belt industry are concentrated in Europe and the United States. With the rise of the Asian economy and the slowdown of the economic growth of Europe and the United States, it has become a trend for the major conveyor belt manufacturers to move their production bases to Asia. Hsin Yung Chien is the leader among Asian manufacturers in terms of machine equipment function, capacity scale and production technology. For many years, the Company has been focusing on its core business of conveyor belts as a

111

professional manufacturer and striving for excellence, and the Company can quickly meet customer needs in raw material development and product diversification. The Company has established a good reputation in the conveyor belt industry, and has an ample room in the cooperation with and selection of major international manufacturers in the future.

  • B. Unfavorable factors

  • (A) The profit margin of traditional conveyor belts is compressed The traditional conveyor belt market has reached a mature stage, and the market development is limited. The overall demand of the conveyor belt market is still dominated by ordinary flat conveyor belts. Due to the low entry threshold as well as the low cost and preferential tariffs of China, India and Eastern Europe, their low price strategies have led to a sharp decline in the profit of traditional conveyor belts.

Countermeasures:

  • a. In terms of sales strategy, actively develop orders for special conveyor belts and reduce the sales proportion of general conveyor belts, in order to reduce the risk of product elimination and strengthen the Company’s competitiveness.

  • b. In terms of pricing strategy, adopt different pricing strategies for different product requirements to improve the overall profitability of the Company.

  • c. Under the Company’s 50-year production technology platform, actively develop composite materials applied in electronics, consumer product, automobile and other applications, and look forward to injecting new momentum for revenue growth under the stable market supply and demand for conveyor belts.

  • d. Effectively reduce production costs through process improvement and equipment upgrade.

  • e. Increase production capacity to reduce production costs.

  • (B) The price of raw materials fluctuates greatly

  • The main raw materials of rubber conveyor belts are rubber and cloth. Taiwan is not a rubber producing country, and relies entirely on imports. The international rubber price, like the price of crude oil, is generally subject to fluctuations in market economic factors. In recent years, the prices of artificial rubber and natural rubber have been affected by and fluctuating accordingly with the oil price, making the production cost fluctuate greatly.

112

Countermeasures:

  • a. Actively search for rubber suppliers. In the past, rubber was obtained indirectly through domestic agents. At present, rubber suppliers are directly sought from rubber producing countries to reduce the cost of rubber acquisition.

  • b. Engage in the research of rubber raw materials, look for raw material formulae that meet the needs of customers and the production quality requirements, and cooperate with upstream gluing plants in the research and testing of rubber compound formulae.

  • (C) Capital intensive industry with long payback period Due to the long manufacturing process, rubber conveyor belts require a large amount of capital investment in machinery and equipment, which is different from the tires of the rubber product industry which are labor-intensive. Due to the large amount of capital investment required in advance, the industrial operational risk is relatively high, and a long period of operation is required for cost recovery.

Countermeasures: 

     - a Develop new product channels, strive to improve capacity utilization, and reduce the share ratio of fixed costs.

     - b. Obtain lower capital costs through the capital market, and reduce the initial cost burden of investment.

  - (D) Exchange rate changes increase the exchange risk: Our products are mainly exported, so the risks arising from changes in foreign exchange rates have a considerable impact on our profit. Countermeasures:

     - a. The financial department pays attention to exchange rate changes at all times, collects the views of various professional institutions on exchange rates, strengthens the ability to analyze and judge exchange rate trends, reflects costs and adjusts selling prices in a timely manner, and performs appropriate foreign exchange hedging.

     - b. Natural hedging by using foreign currencies for purchase and sales to reduce the risk of loss due to exchange.

  • (II) Important applications and production processes of key products:

  • Applications of key products: The key products of the Company are all kinds of heavy, light and special conveyor belts, which are used in industries such as manufacturing, mining, cement and steel of general automatic production lines and power plants; rubber plates are used in industry, automobile and construction.

113

2. Production processes

==> picture [526 x 398] intentionally omitted <==

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

Face Extrusion
rubber
Retention period Temperature
First in, first out Rubber appearance
5S management Type
Compound IQC Temperature
rubber Pressure
Speed
Thickness
Tension
Tensile strength, extension Temperature Sidebar
Hardness, specific gravity Face Extrusion Tension ROTO
Wear, aging rubber Speed sulfur
Thickness adding
Width
Weatherability…… Retention period 5S management First in, first out Rubber appearance Temperature Type Appearance Length Sheet PQC OQC warehousing Finished goods
production
Plate sulfur
Medicament IQC Solution Record adding
preparation before sulfur
addition and
Ratio quality
certificate Source Response time Hemming confirmation Temperature Time
Pressure
Template
Stretching
Width
Thickness
Cambric IQC Soaking Calendering Forming
cloth cloth
Temperature Temperature Tension
Tension Tension Thickness
Organizing Speed Speed Width
Unit weight Impregnation Thickness Length
Appearance increment Width
Packaging Cloth spot check Length
----- End of picture text -----

(III) Supply of key raw materials:

The main materials of HYC are artificial rubber, black carbon rubber and raw cloth, etc. and the main suppliers are long-term cooperation with HYC. In order to ensure the stability of the supply source, we still keep in touch with other suppliers and the supply status is good to meet customers’ needs.

114

(IV) Major customers:

  1. Data of customers accounting for more than 10% of the total sales in the last two years:

Unit: NT$thousand

two years: two years: Unit: NT$thousand Unit: NT$thousand Unit: NT$thousand Unit: NT$thousand
2021年 2022年 2023 (as of the first quarter)
Item
Name		 Amount Percentag
e of net
annual
sales(%)		 Relationshi
p with the
issuer		 Name Amount Percentag
e of net
annual
sales(%)		 Relationshi
p with the
issuer		 Name Amount Percentag
e of net
annual
sales(%)		 Relations
hip with
the issuer
1 Company
E		 312,887 16 Customer Company
C		 310,183 17 Customer Company
E		 64,477 18 Customer
2 Company
A		 251,039 13 Customer Company
E		 246,334 13 Customer Company
C		 43,961 13 Customer
3 Company
C		 246,658 13 Customer Company
A		 191,436 10 Customer Company
D		 38,290 11 Customer
other 1,126,609 58 Customer other 1,098,002
60		 Customer other 204,437 58 Customer
Net sales 1,937,193 100 Net sales 1,845,955
100		 Net sales 351,165 100

Reasons for changes: In 2022, due to the successive interest rate hikes by countries in Europe and the United States to curb inflation, manufacturing activities in all countries significantly slowed down. In addition, the ongoing conflict between Russia and Ukraine affected the Company's operating performance, resulting in changes in customers with over 10% of total goods sold.

  1. Data of suppliers accounting for more than 10% of the total purchases in the last two years:

Unit: NT$thousand

Unit: NT$thousand Unit: NT$thousand Unit: NT$thousand Unit: NT$thousand
2021 年 2022年 2023 (as of the first quarter)
Item
Name		 Amount Ratio of
net
annual
purchas
es (%)		 Relatio
nship
with the
issuer		 Name Amount Ratio of net
annual
purchases
(%)
Relation
ship with
the
issuer		 Name Amount Ratio of
net annual
purchases
(%)
Relatio
nship
with
the
issuer
1 Clep 182,756 21 Note Clep 203,693 29 Note Clep 43,901 29 Note
2 B 138,530 16 Supplier D 141,430 20 Supplier C 24,523 16 Supplier
3 C 136,222 16 Supplier E 116,321 16 Supplier F 22,998 15 Supplier
4 D 121,514 14 Supplier C 81,159 11 Supplier D 16,329 11 Supplier
5 Other 279,599 33 Supplier Other 169,376 24 Supplier Other 44,429 29 Supplier
Net
purchases
858,621		 100 Net
purchases		 711,979 100 Net
purchases		 152,180 100

Note: The chairperson of this company is a relative within the second degree of kinship of the Chairman of the Company.

Reasons for increase or decrease: The changes in cost, quality coordination and the

Company’s operating mode, and the changes are reasonable.

115

(V) Table of production volumes and values for the last two years:

Table of production volumes and values for the last two years: Table of production volumes and values for the last two years: Table of production volumes and values for the last two years: Table of production volumes and values for the last two years: Table of production volumes and values for the last two years: Table of production volumes and values for the last two years: Table of production volumes and values for the last two years:
Unit: NT$thousand/ thousand k
Year 2021 2022
Sales volume
and value
Key products

Production
capacity		 Production
volume		 Production
value		 Production
capacity		 Production
volume		 Production
value
Rubberproducts 17,146 14,242 1,062,970 15,431
10,911
928,634
Others 250 79 50,866 125 32
23,432
Total 17,396
11,918		 1,113,836 15,556
10,943
952,066

(VI) Table of sales volumes and values for the last two years:

Unit: NT$thousand/ thousand kg

Year 2021 2021 2021 2021 2022 2022 2022 2022
Sales
volume and
value
Key
products
Domestic sales		 Exports Domestic sales Exports


Sales
volume		 Sales
value		 Sales
volume		 Sales
value		 Sales
volume		 Sales
value		 Sales
volume
Sales
value
Rubber
products		 763 196,462
13,322		 1,655,531
1,088		 267,550 10,426 1,544,644
Others 66 63,903 13 21,297 30 19,245 11
14,516
Total 829 260,365 13,335 1,676,828
1,118		 286,795 10,437 1,559,160

III. Employee data in the last two years and up to the date of printing of the annual report:


Item		 Year 2021 2022 2023
(as of the first
quarter)
Number of
employees		 R&Dpersonnel 4 3 3
Management and
business personnel		 24 24 23


Indirect production
personnel		 19 18 18
Direct production
personnel		 64 60 58
Total 111 105 102
Average age 40.84 41.61 42.01
Average years ofservice 10.23 10.89 11.19
Education
level
distribution		 PhD 0% 0% 0%
Master’s 7% 8% 10%
University and college 37% 38% 37%

Highschool		 44% 44% 44%
Below high school 12% 10% 9%

IV. Information on Environmental Protection Expenditure:

Losses suffered due to pollution of the environment (including compensation and environmental protection inspection results that violate environmental regulations, sanction date, sanction reference number, number of article violated, contents of legal provisions violated, and sanction content) in the past year and as of the date of printing of the annual report; also disclose the estimated amount that may occur at present and in the future and countermeasures. If a reasonable estimate cannot be made, explain the fact that no reasonable estimate can be made: None.

116

V.Labor relations

  • (I). The Company’s various employee welfare measures, continuing education, training, retirement system and their implementation status, as well as labor-management agreements and various measures for protection of employee rights and interests:

    1. Employee welfare measures and implementation status:

      • (1). Employees of the Company enjoy labor insurance and national health insurance from the date of arrival.

      • (2). The operation of the Company’s various welfare measures is coordinated by the Welfare Committee. At present, all leave requests, working hours and other working conditions are handled in accordance with the provisions of the Labor Standards Act, and a number of welfare measures have been planned.

    2. The current employee welfare, continuing education and training measures are as follows:

      • (1). Employee birthday gift certificate.

      • (2). Year-end bonus and employee remuneration.

      • (3). Staff travel activities and staff family day activities.

      • (4). Year-end party or spring feast.

      • (5). Subsidies to employees for their weddings, funerals and festivities at the Company’s discretion.

      • (6). Labor insurance, national health insurance and group insurance for employees in accordance with law.

      • (7). Comprehensive pre-service and in-service training.

      • (8). Rights issue and employee stock options to employees.

      • (9). Children’s schooling awards and grants.

      • (10). Annual health examination for employees.

  • (11). Further study and training 

        - In order to comply with sustainable operation and cultivate excellent talents, the Human Resources Department is responsible for coordinating the planning of internal and external training for employees, in order to strengthen their professional abilities and skills, improve their work efficiency, and maximize their potential to achieve the business management rationalization goal.

    • In 2022, there was a total of 403 persons who received training for new employees and various functional training, for totally 255 training hours.

      1. Retirement system and implementation status:

      2. (1). In accordance with the provisions of the Labor Standards Act, the Company has formulated a retirement method for defined benefits, which is applicable to the length of service of all regular employees before the implementation of the Labor Pension Act on July 1, 2005, and the length of service of employees who have chosen to continue to apply the Labor Standards Act after the implementation of the Labor Pension Act. If an employee meets the retirement conditions, the

117

payment of pension is calculated based on the length of service and the average salary of the 6 months before retirement. Two base points will be given for each full year of service within 15 years (inclusive), and one base point will be given for each full year of service beyond 15 years, but the maximum cumulative limit is 45 base points. The Company allocates 2% of the total salary to the pension fund on a monthly basis, and deposits it in the Trust Department of the Bank of Taiwan in a special account in the name of the Labor Retirement Reserve Supervision Committee.

  • (2). The Company has formulated “Measures for the Retirement of Managers”, and sets aside a 4% pension provision from their total salary on a monthly basis. In 2022and 2021, the net pension costs recognized in accordance with the above retirement measures were both NT$31 thousand.

  • (3). On July 1, 2005, the Company formulated retirement measures for a defined allocation in accordance with the Labor Pension Act, which is applicable to employees of local nationality. For employees who choose to apply the labor pension system set forth in the “Labor Pension Act”, the Company will pay 6% of their salary to the individual account at the Labor Insurance Bureau every month, and the employee pension will be received by means of monthly or one-time pension payment according to the amount of the individual pension account and accumulated income. In 2022 and 2021 , the pension costs recognized by the Company in accordance with the above retirement measures were NT$2,180 thousand and NT$2,354 thousand respectively.

  • Labor-management agreements and various measures for protection of employee rights and interests:

  • A harmonious labor-management relationship has always been one of the goals of the Company. The Company pays attention at all times to the welfare of employees, provides a good work environment, and emphasizes two-way communication with employees in order to maintain a harmonious labor-management relationship. So far, no losses have been caused by labor disputes, and the Company’s appeal channel is smooth to safeguard the rights and interests of employees.

  • Code of employee conduct or ethics:

  • The Company has formulated the “Ethical Corporate Management Best Practice Principles”, “Code of Ethical Conduct” and relevant management measures, which are applicable to its directors, managers and employees. The main norms are to prohibit unethical acts, avoid opportunities for selfinterest, prohibit bribery or accepting bribes, protect and properly use the Company’s assets, comply with laws and regulations, and encourage the reporting of any illegal conduct or violation of relevant regulations.

118

  1. Work environment and personal safety protection measures for employees: In view of the importance of work environment and personal safety protection measures for employees, the Company has obtained certification for ISO 14001 and ISO 45001 environmental and occupational safety and health management systems, and the Company continues to carry out major environmental inspections and occupational safety and health risk control according to the systems to ensure the safety and health of the employees’ workplace.

  2. (II) List the losses caused by labor disputes in the last year and up to the date of printing of the annual report (including violations of the Labor Standards Act according to labor inspection results, the date of punishment, the reference number of punishment, the provisions of the regulations violated, the content of the violation, and the content of the punishment), and disclose the estimated amounts that may be incurred at present and in the future and the countermeasures; if no reasonable estimates can be made, explain the reasons: No such situation.

VI. Cybersecurity Management

  • (I) Describe the security risk management framework, security policy, specific management plan, and resources put into cybersecurity management.

  • Infocomm Security Management Structure

  • In accordance with Article 3 of the “Guidelines for the Control of Cyber Security Management of TWSE and TPEx Listed Companies”, the Company established its “Infocomm Security Management Promotion Committee” as the functional organization of the Company's infocomm security governance and operational management mechanism, and uses the PDCA circular management method to ensure the achievement and improvement of the reliability goals of the infocomm security risk management structure.

  • (1) The President approved the establishment of the Company's Infocomm Security Risk Management Committee.

  • (2) Responsible for establishing the core management business, the core business system and system risk policies, processes and procedures.

  • (3) Ensure that the infocomm security management policy is clearly communicated to employees at all levels.

  • (4) Clearly indicate the responsibilities and hierarchical reporting relationship in risk management at all levels of management throughout the Company.

  • (5) Responsible for supervising and assisting in the integration of information security planning and information security affairs.

  • (6) Providing regular reports on the safety implementation of Infocomm for application by the Audit Committee.

  • Infocomm Security Policy

In order to ensure the smooth operation of the Company's business, prevent unauthorized access, use, control, leakage, destruction, tampering, destruction or other infringement of information or information communication systems, and ensure their confidentiality, integrity and usability, the “Infocomm Security Management Promotion Committee” has formulated the following policy for all employees to follow:

119 

  - (1) In response to changes in the infocomm security threats, the Company’s employees should participate in training related to infocomm security to enhance the overall awareness of infocomm security in the Company.

  - (2) Protect the confidentiality and integrity of sensitive enterprise information and the infocomm system, in order to avoid unauthorized access and tampering.

  - (3) Establish and publish various infocomm security management operations and measures, and regularly inspect and adjust according to the actual situation.

  - (4) Regularly conduct internal audits to ensure that all professions are effectively implemented.

  1. Specific Management Plans and Investment in Infocomm Security Management

    • (1) Infocomm safety training for infocomm system operation staff is conducted once a year, and is expected to be completed in the third quarter.

    • (2) Infocomm safety professional training for infocomm staff is conducted once a year, and is expected to be completed in the third quarter.

    • (3) Vulnerability scanning is performed once a year, and high-risk weak points are 100% controlled within one month; it is expected to be completed in the fourth quarter.

    • (4) Penetration testing is performed once a year, and high-risk weak points are 100% controlled within one month; it is expected to be completed in the fourth quarter.

    • (5) Social engineering drills are conducted once a year, and is expected to be completed in the third quarter.

    • (6) If it is known that an infocomm safety incident has occurred, the notification, response and restoration work shall be completed before the specified deadline.

    • (7) The number of unfinished improvement items in the previous internal audit should be ≤ 2.

    • (8) The Company will prepare a budget every year to continuously evaluate and introduce infocom security technology solutions, in order to improve infocomm security management.

  2. (II)In the last year and up to the date of printing of the annual report, the losses suffered due to major cybersecurity incidents, their possible impact and countermeasures; if no reasonable estimates can be made, explain the reasons:

The Company has had no major cybersecurity incidents in the last year and up to the date of printing of the annual report.

VII. Important Contracts:

Contract
nature		 Contract
counterparty		 Contract date Contract
period		 Main
contents
Bank
mortgage
loans		 E.Sun Bank 2020/2/12~2025/4/15 5 years from
the drawdown
date		 Credit
agreement

120

Six. Financial Status Overview

I. Condensed Financial Data of the Last Five Years:

  • (I) Condensed balance sheet and comprehensive income statement:

1. (1) Condensed Balance Sheet - IFRS-based: Individual

Unit: NT$thousand

Year
Item		 Year
Item
Financial data of the last five years (note 1)
Financial data of the last five years (note 1)
Financial data of the last five years (note 1)
Financial data of the last five years (note 1)
Financial data of the last five years (note 1)		 Financial
data of the
current year
as of March
31, 2023
(note1)
2018 2019 2020 2021 2022
(note2)
Current assets 1,461,289 1,560,105 1,694,719 2,468,382 2,137,597
2,212,597
Property, plant and
equipment (note2)		 1,120,535 1,109,827 1,085,370 1,105,119 1,265,940
1,292,879
Intangible assets 1,592
6,755		 6,462
5,295
3,638
3,052
Otherassets 51,937
69,912
129,518		 111,347
161,372
172,508
Totalassets 2,635,352 2,746,599 2,916,069 3,690,143 3,568,547
3,681,036
Current
liabilities		 Before
distribution		 306,250
356,034
356,040
510,353
376,763
412,581
After
distribution		 677,639
710,542
781,450		 1,056,295
776,721
(note3)
412,581
Non-currentliabilities 35,049 41,477
34,918		 34,055
188,962
169,549
Total
liabilities		 Before
distribution		 341,299
397,511
390,958
544,408
565,725
582,130
After
distribution		 712,688
752,019
816,368		 1,090,350
955,683
(note3)

972,088
(note3)
Equity attributable to
owners of the parent
company		 - - - - - -
Share capital 675,253 709,016 709,016 779,918 779,918 779,918
Capitalsurplus 234,250 234,426 235,248 241,826
248,381
250,118
Retained
earnings		 Before
distribution		 1,384,551 1,405,646 1,580,847 2,123,991 1,974,523
2,068,870
After
distribution		 1,013,162 1,051,138 1,155,437 1,578,049 1,584,565
(note3)
1,678,912
(note3)
Otherequity - - - - - -
Treasury shares - - - - - -
Non-controlling
interests		 - - - - - -
Total equity Before
distribution		 2,294,054 2,349,088 2,525,111 3,145,735 3,002,822
3,098,906
After
distribution		 1,956,428 1,994,580 2,099,701 2,599,793 2,612,864
(note3)
2,708,948
(note3)

Note 1: The financial statements of the first quarter of 2023 have been reviewed by CPAs. Note 2: Asset revaluation has not been handled in each year.

Note 3: As of the date of printing, the profit distribution plan for 2022 has been approved by the board meeting on March 22, 2023, but has not yet been approved by the shareholders’ meeting.

Note 4: The Company has not been notified by the competent authority to self-correct or recompile the financial data listed above.

Note 5:There have been no subsidiaries since 2018, so it is not necessary to prepare consolidated financial statements.

121

2. (1) Condensed Comprehensive Income Statement - IFRS-based: Individual

Unit: NT$ thousand

Unit: NT$ Unit: NT$ Unit: NT$ Unit: NT$ Unit: NT$ thousand
Year
Item
Financial data of the last five years (note 1)		 Financial
data of the
current year
as of March
31, 2023
(note2)
2018 2019 2020 2021 2022
Operatingincome 1,843,877 1,658,837 1,596,510 1,937,193 1,845,955
351,165
Gross operating
profit		 640,327
608,209
664,702
816,312
841,907
145,115
Operating profit and
loss		 483,578
455,402
508,135
522,449
596,811
113,673
Non-operating
income and
expenses		 3,352
45,110
110,383
542,893
(81,048)
4,261
Profit before tax 486,930
500,512
615,518		 1,065,342
515,763
117,934
Taxexpense (92,088) (100,988) (94,822) (96,948) (123,792) (23,587)
Profit (loss) in the
period		 394,842
399,524
523,696
968,394
391,971
94,347
Other
comprehensive
income in the period
(net aftertax)		 1,217
(7,040)
6,013
160
4,503
-
Total
comprehensive
incomeinthe period		 396,059
392,484
529,709
968,554
396,474
94,347
Earningsper share 5.85
5.63
6.71
12.42
5.03
1.21

  • Note 1: The financial statements of each year have been audited and certified by CPAs.

  • Note 2: The financial statements of the first quarter of 2022 have been reviewed by CPAs.

  • Note 3: The Company has not been notified by the competent authority to self-correct or recompile the financial data listed above.

  • Note 4: There have been no subsidiaries since 2018, so it is not necessary to prepare consolidated financial statements.

(II) Names and audit opinions of the certifying CPAs for the last five years:

Year Certifying CPA firm Certifying CPA Audit opinion
2018 PricewaterhouseCoo
persTaiwan		 Yang, Ming-Ching;
Hung, Shu-Hua		 Standard
unqualified opinion
2019 PricewaterhouseCoo
persTaiwan		 Yang, Ming-Ching;
Hung, Shu-Hua		 Standard
unqualified opinion
2020 PricewaterhouseCoo
persTaiwan		 Wu, Sung-Yuan;
Hung, Shu-Hua		 Standard
unqualified opinion
2021 PricewaterhouseCoo
persTaiwan		 Wu, Sung-Yuan;
Hung, Shu-Hua		 Standard
unqualified opinion
2022 PricewaterhouseCoo
pers Taiwan		 Wu, Sung-Yuan;
Hung,Shu-Hua		 Standard
unqualified opinion

122

II. Financial Information Analysis for teh Past 5 Fiscal Years ：

(1) Financial Analysis - IFRS-based: Individual

Item Year
Financial data of the last five years
(note 1)
Financial data of the last five years
(note 1)
Financial data of the last five years
(note 1)
Financial data of the last five years
(note 1)
Financial data of the last five years
(note 1)		 Financial
data of the
current year
as of March
31, 2023
(note2)
2018 2019 2020 2021 2022
Financial
structure (%)		 Liabilities to asset ratio 12.95
14.47		 13.41
14.75
15.85
15.81
Ratio of long-term capital to
property, plant and equipment		 207.86
215.40		 235.87
287.73
252.13
252.8
Solvency % Current ratio 477.16
438.19		 475.99
483.66
567.36
536.28
Quick ratio 374.85
350.98		 387.76
411.73
499
474.41
Times interest earned 950.18 1599079.
87
8965.0
3
10051.4
0		 2047.68 504.99
Operating
capacity		 Receivables turnover ratio
(times)		 7.53
6.29
7.05
8.70
8.84
9.81
Average cash collection days 48.47
58.02		 51.77
41.95
41.28
37.20
Inventoryturnover ratio(times) 3.55
3.45
3.19
3.74
3.57
3.26
Payables turnover ratio(times) 7.44
6.07
5.71
6.16
5.71
6.86
Average sales days 102.81
105.79		 114.42
97.59
102.24
111.96
Property, plant and equipment
turnover ratio(times)		 1.64
1.49
1.46
1.77
1.56
1.10
Total asset turnover ratio
(times)		 0.68
0.61
0.56
0.58
0.50
0.38
Profitability Return on assets(%) 14.64
14.85		 18.50
29.32
10.81
2.61
Return on equity (%) 17.44
17.21		 21.49
34.15
12.75
3.09
Ratio of profit before tax to paid-
in capital (%)		 72.11
70.59		 87.24
136.60
66.13
15.12
Netprofit margin(%) 21.41
24.08		 32.80
49.99
21.23
26.87
Earningsper share(NT$) 5.85
5.63
6.71
12.42
5.03
1.21
Cash flow Cash flow ratio(%) 149.46
172.94		 118.64
95.37
218.77
37.86
Cash flow adequacyratio(%) 98.34
99.86		 90.64
89.39
102.16
104.86
Cash reinvestment ratio(%) 3.52
7.89
1.87
3.08
6.36
3.50
Leverage Operatingleverage 1.21
1.20
1.18
1.18
1.14
1.19
Financial leverage 1.00
1.00
1.00
1.00
1.00
1.00
Reasons for changes in various financial ratios in the past two years: (If the increase or
decrease does not reach 20%, the analysis is not required).
1. Quick ratio: The quick ratio increased by 21% mainly due to a decrease of inventory
and advance payment in 2022.
2. Interest coverage ratio: It is mainly due to a significant increase in non-operating
investment income in 2021, resulting in a relative increase in profit before tax and
interest. The decrease in non-operating investment income in 2022 led to a decrease
in profit before tax, resulting in a relative decrease of 79% in the interest coverage
ratio.
3. Return on assets, return on equity, ratio of profit before tax to paid-in capital, net profit
ratio, and earnings per share in profitability:

The main reason is a significant increase in non-operating investment income in 2021

which led to a relative increase in profit after tax. The decrease in non-operating
income in 2022 led to a decrease in profit after tax, resulting in a decrease of 63%,
62%, 51%, 57% and 59% in the ratios above, respectively.
4. Cash flow ratio: It is mainly due to an increase in net cash flow from operating
activities and a decrease in current liabilities in 2022, causing the cash flow ratio to
increase by 129% from that in 2021.
5. Cash reinvestment ratio: It is mainly due to an increase in net cash flow from
operating activities in 2022, causing the cash reinvestment ratio to increase by 106%
fromthatin 2021.

123

  • Note 1: The financial statements of each year have been audited and certified by CPAs.

  • Note 2: The financial statements of the first quarter of 2022 have been reviewed by CPAs.

  • Note 3: There have been no subsidiaries since 2018, so it is not necessary to prepare consolidated financial statements.

  • Note 4:

    1. Financial structure

      • (1) Liabilities to asset ratio = total liabilities / total assets.

      • (2) Ratio of long-term funds to property, plant and equipment = (total equity + noncurrent liabilities) / net property, plant and equipment.

    2. Solvency

      • (1) Current ratio = current assets / current liabilities.

      • (2) Quick ratio = (current assets - inventory - prepaid expenses) / current liabilities.

      • (3) Times interest earned = net profit before income tax and interest expense / interest expense in the period.

    3. Operating capacity

      • (1) Receivables turnover ratio (including accounts receivable and notes receivable arising from operations) = net sales / average balance of accounts receivable (including accounts receivable and notes receivable arising from operations) in each period.

      • (2) Average cash collection days = 365 / receivables turnover rate.

      • (3) Inventory turnover ratio = cost of goods sold / average inventory.

      • (4) Payables turnover ratio (including accounts payable and notes payable arising from operations) = cost of goods sold / average balance of accounts payable (including accounts payable and notes payable arising from operations) in each period.

      • (5) Average sales days = 365 / inventory turnover ratio.

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

      • (7) Total asset turnover ratio = net sales / average total assets.

    4. Profitability

      • (1) Return on assets = [after-tax profit and loss + interest expense × (1 - tax rate)] / average total assets.

      • (2) Return on equity = after-tax profit and loss / average total equity.

      • (3) Net profit margin = after-tax profit and loss / net sales.

      • (4) Earnings per share = (profit and loss attributable to owners of the parent company - preferred stock dividends) / weighted average number of shares issued.

    5. Cash flow

      • (1) Cash flow ratio = net cash flow from operating activities / current liabilities.

      • (2) Net cash flow adequacy ratio = net cash flow from operating activities in the last five years / (capital expenditure + increase in inventory + cash dividends) in the last five years.

      • (3) Cash reinvestment ratio = (net cash flow from operating activities - cash dividends) / (gross property, plant and equipment + long-term investment + other non-current assets + working capital).

    6. Leverage:

      • (1) Operating leverage = (net operating income - variable operating costs and expenses) / operating profit.

      • (2) Financial leverage = operating profit / (operating profit - interest expense).

124

III. Audit Report of the Audit Committee on the Latest Annual Financial Report:

Audit Committee’s Audit Report

The board meeting has submitted the Company’s business report for 2022 and the financial report audited and certified by CPAs Wu, SungYuan and Hung, Shu-Hua of PricewaterhouseCoopers Taiwan. The Audit Committee has reviewed them and found no discrepancies. Therefore, the Audit Report is prepared in accordance with Article 14-4 of the Securities and Exchange Act and Article 219 of the Company Act for your review and approval.

Hsin Yung Chien Co., Ltd.

Convener of the Audit Committee: Lin, Chin-An

March 22, 2023

125

  • IV. Latest Annual Financial Report: Please refer to pages 136 to 193.

  • V. The individual financial report of the Company audited and certified by CPAs for the last year (excluding the details of important accounting items): Please refer to pages 136 to 193.

  • VI. If the Company and its affiliated enterprises have financial turnover difficulties in the last year and up to the date of printing of the annual report, the impact on the financial situation of the Company shall be listed: None.

126

Seven. Review and Analysis of the Financial Situation and Financial Performance and Risks

I. Financial Position:

cial Position: cial Position: cial Position:
Unit: NT$thousand
Year
Item		 2021 2022 Difference
Amount ％
Current assets 2,468,382 2,137,597 (330,785) (13.40)
Property,
plant
and
equipment (note2)		 1,105,119 1,265,940 160,821 14.55
Intangible assets 5,295 3,638 (1,657) (31.29)
Other assets 111,347 161,372 50,025 44.93
Total assets 3,690,143 3,568,547 (121,596) (3.30)
Currentliabilities 510,353 376,763 (133,590) (26.18)
Non-currentliabilities 34,055 188,962 154,907 454.87
Total liabilities 544,408 565,725 21,317 3.92
Share capital 779,918 779,918 0 0.00
Capital surplus 241,826 248,381 6,555 2.71
Retained earnings 2,123,991 1,974,523 (149,468) (7.04)
Other equity 0 0 0 0
Totalequity 3,145,735 3,002,822 (142,913) (4.54)
Change analysis: (the change amount reaches NT$10 million and the increase
or reaches 20%)
1. Other assets: It is mainly due to the pre-payment for equipment and an
increase in deferred income tax assets in 2022, causing other
assets to increase by 44.93% from that in 2021.
2. Current liabilities: It is mainly due to a decrease in the amount of notes
payable and equipment payable in 2022, causing the
current liabilities to decrease by 26.18% from that in 2021.
3. Non-current liabilities: It is mainly due to an increase in long-term borrowings
in 2022, causing the non-current liabilities to increase
by454.87% from that in 2021.

127

II. Financial Performance:

nancial Performance: nancial Performance: nancial Performance: nancial Performance: nancial Performance:
Unit: NT$thousand
Year
Item		 2021 2022 Amount of
increase
(decrease)		 Change ratio
(%)
Operatingrevenue 1,937,193 1,845,955 (91,238) (4.71)
Operating costs 1,120,881 1,004,048 (116,833) (10.42)
Net operatingmargin 816,312 841,907 25,595 3.14
Operating expenses 293,863 245,096 (48,767) (16.60)
Operating profit 522,449 596,811 74,362 14.23
Non-operating income
(expenses)		 542,893 (81,048) (623,941) (114.93)
Profit beforeincome tax 1,065,342 515,763 (549,579) (51.59)
Income taxexpense (96,948) (123,792) 26,844 27.69
Profit for the year 968,394 391,971 (576,423) (59.52)
Other
comprehensive
incomeforthe year		 160 4,503 4,343 2714.37
Total
comprehensive
incomeforthe year		 968,554 396,474 (572,080) (59.07)
1. Change analysis: (the change amount reaches NT$10 million and the increase or
reaches 20%)
Non-operating income and expenses: A decrease by 114.93% in 2022 than in
2021, mainly due to the disposal of all non-
operating investments; the non-operating
income decreased from that in 2021,
resulting in a decrease in non-operating
income and expenses.
Profit before tax and current profit: A decrease of 51.59% and 59.52% in 2022
respectively from those in 2021, mainly due to a
decrease in non-operating investment income.
Income tax expenses: An increase by 27.69% in 2022 from that in 2021, mainly due
to an increase in taxable income in 2022.
2. Expected sales volume and its basis, potential impact on the Company's future
finance and business, and corresponding plans:
The sales volume is determined based on market demand and development
trends, customer operation status, and the Company’s current order taking
situation, and with reference to the Company’s production capacity and scale. In
addition, considering the significant impact of inflation, interest rate hikes and the
Ukraine-Russian war on the external political and economic situation in 2023, the
expected sales volume target is 12,000 thousand kilograms.

128

III. Cash Flow Analysis

  • (I) Liquidity analysis in the last two years:
Year
Item		 2021 2022 Increase
(decrease)%
Cash flow ratio 95.37% 218.77% 129.39%
Cash flow adequacy
ratio		 89.39% 102.16% 14.29%
Cash reinvestment
ratio		 3.08% 6.36% 106.49%
Analysis and description of increase and decrease ratio changes:
1. Cash flow ratio: It is mainly due to an increase in net cash flow from operating
activities and a decrease in current liabilities in 2022, causing the cash flow
ratio to increase from that in 2021.
2. Cash reinvestment ratio: It is mainly due to an increase in net cash flow from
operating activities in 2022, causing the cash reinvestment ratio to increase
from that in 2021.

(II) Cash liquidity analysis for the next year

Unit: NT$thousand

Unit: NT$thousand Unit: NT$thousand
Opening cash
balance		 Estimated
annual net
cash flow
from
operating
activities		 Estimated
annual net
cash flow due
to investing
and financing
activities
Estimated
annual cash
surplus
(shortage)		 Remedial measures
for estimated annual
cash surplus
(shortage)
Investment
plan
Wealth
managem
entplan
1,185,269 420,000 (500,000) 1,105,269 - -
1.
Analysis of changes in cash flows this year:
(1) Operating activities: Mainly due to the net cash income expected to be
generated in future years under the proper control of revenue and raw
materials.
(2) Investing activities: The payment for the purchase of additional machinery
and equipment and the construction of factory buildings resulted in a net
cash outflow from investment activities.
(3) Financing activities: Mainly due to the expected distribution of cash
dividends, resulting in a net cash outflow from financing activities.
2.
Remedial measures and liquidity analysis of estimated cash shortage: There is
no cash shortage.

IV. Impact of Major Capital Expenditure in the Last Year on Finance and Business

In order to develop new products and improve the functions of production equipment, the Company successively invested in the purchase of additional equipment and the replacement of old equipment for new equipment in 2022. The total price of the

129

contracted purchase of equipment and project funds by the end of 2022 was NT$359,933thousand, which will be paid with the Company’s own funds and medium and long-term loans. This equipment investment can effectively expand product lines and improve product quality and competitiveness, so it has a positive impact on the Company’s finance and business in the long term.

V. Reinvestment Policy in the Last Year, Main Reasons for Profit or Loss, Improvement Plan and Investment Plan for the Next Year:

  • (I) Reinvestment policy in the last year and main reasons for its profit or loss: None.

  • (II) Investment plans for the next year: In 2020, the Company will rebuild the one-story Fourth Factory into a six-story steel-structure building as the production base for thermoplastic composites.

VI. Risks:

  • (I) Risk factors: The impact of changes in interest rates and exchange rates and inflation on the Company’s profit and loss and future countermeasures:

  • (1) Impact of interest rate changes and future countermeasures:

The risk of interest rate changes mainly comes from long-term and shortterm borrowings. According to the current domestic economic development trend, the low interest rate policy has not changed significantly, and the Company has no borrowings at present, so the fluctuation of interest rates should not have a significant impact on the Company.

  • (2) Impact of changes in interest rates and exchange rates on the Company’s profit and loss and future countermeasures:

Unit: NT$1,000

Unit: NT$1,000 Unit: NT$1,000
Year
Item
2022
Amount Ratio(%)
Domestic sales 286,795
15.54
Exports 1,559,160
84.46
Total 1,845,955
100.00

The Company's export sales accounted for 84.46% of the total in 2022, with a net exchange gain of NT$55,197 thousand. This was mainly due to the continuous interest rate increase of the US dollar and the significant increase in the exchange rate of the US dollar in 2022. The Company sells goods mostly in US dollars, euros and Japanese yen, which are beneficial for exports. Therefore, the exchange rate change generated a net profit throughout the year.

130

Exchange gains and losses in the last year are as follows:

Year Item 2021 2022
Net exchangegain(loss) (36,799) 55,197
Net operatingincome 1,937,193
1,845,955
Net operating profit 522,449
596,811
Net exchange gain (loss) / net
operatingincome(%)		 (1.90)%
2.99%
Net exchange gain (loss) / net
operating profit(%)		 (7.04)%
9.25%

In order to effectively respond to exchange rate fluctuation, in addition to actively collecting exchange rate change information to understand the exchange rates, the Company has taken the following specific measures to reduce the impact of exchange rate changes: 

  - A. Collecting exchange rate change information provided by banks with business dealings, keeping abreast of exchange rate trends, and adjusting the position of the Company’s net assets or liabilities in foreign currency with hedging instruments such as foreign exchange forward contracts to reduce the risk of exchange rate changes.

  - B. Providing exchange rate information for the reference of the marketing unit, in order to consider the price adjustments caused by exchange rate changes when quoting to customers, so as to ensure the Company’s profit.

  • (3) Impact of inflation and future countermeasures:

    • Faced with the uncertainty of the global economic outlook, the Company is unable to predict whether there will be any significant changes in inflation or deflation in the future. Our products are consumables and their application fields are distributed in the mining, coal, electricity, cement, gravel, shipping, logistics, animal husbandry, construction, and consumer product industries. They are moderately to highly correlated with raw material prices, market demand, and inflation or deflation. Therefore, inflation will have a certain impact on our sales results, but will not have a significant adverse impact on overall operations.

  • (II) The policy for engaging in high-risk and high-leverage investments, capital lending to others, endorsements and guarantees, and derivative trading, the main reasons for profit or loss, and future countermeasures:

The Company did not engage in high-risk or high-leverage investments in 2022. The following is a description of the policy, profit and loss situation and future countermeasures of capital lending to others, endorsements and guarantees, and foreign exchange hedging:

131

  • (1) Capital lending to others:

    • As of December 31, 2022, the Company has not lent funds to others.

  • (2) Endorsements and guarantees:

    • As of December 31, 2022, the Company has not provided endorsements and guarantees to others.

  • (3) Derivative financial products:

    • As of December 31, 2022, the Company has not engaged in derivative financial product trading.

  • (III) Future R&D plans and expected R&D costs:

  • In addition to continuing in-depth research on the raw materials, structures and manufacturing processes of products, the Company’s recent R&D direction for rubber products has mainly been to cooperate with customers to jointly develop special rubber products, create products with higher added value, and meet customers’ requirements for the convenience of one-time purchases. The Company is also active in developing composite material products applied to the electronics, automobile, 3C and other industries related to the people’s livelihood, and uses thermoplastic plates that can be reprocessed, and environment-friendly and recyclable materials that meet the lightweight/high-strength/special physical property requirements and are bright and novel/high-quality, and simplifies production and integrates the processing of application products with a long life cycle. Therefore, the Company will continue investing R&D costs every year in the future, and estimates to invest about NT$20 million in R&D in 2023.

  • (IV) The impact of major changes in domestic and foreign policies and laws on the Company’s finance and business and countermeasures: The management of the Company pays attention to changes in important policies and laws at home and abroad at any time, and puts forward corresponding measures accordingly.

  • (V) The impact of technological changes (including cybersecurity risks) and industrial changes on the Company’s finance and business and countermeasures: The Company is in the rubber manufacturing industry, mainly producing rubber conveyor belts and rubber plates. The industry is stable, and the industrial boom cycle is not obvious. Therefore, technological changes and industrial changes have no significant impact on the Company’s financial business.

  • The Company formulates its cybersecurity policy with the spirit of the information security management system, lists the implementation of various cybersecurity measures and strengthens the audit management. Strengthen information security management, ensure the availability, integrity and confidentiality of the information system, and avoid being threatened by internal and external intentional or accidental threats.

  • (VI) The impact of corporate image changes on corporate crisis management and countermeasures:

  • The Company’s long-term business philosophy is based on ethics and the

132

  • Company has a deep foundation of mutual trust for both upstream suppliers and downstream customers. Therefore, the Company has not had changes in its corporate image so far and in the foreseeable future which cause a crisis for the enterprise.

  • (VII) The expected benefits and possible risks of mergers, acquisitions and countermeasures:

  • The Company has had no plans for mergers and acquisitions in the most recent year and as of the date of publication of the prospectus, so it is not applicable.

  • (VIII) The expected benefits and possible risks of plant expansion and countermeasures:

  • At the end of 2020, the Company demolished its original four factories to build a six-story factory building, which is expected to obtain the use license in the middle of 2023. After completion, a thermoplastic composite production line will be built in

  • it.

  • (IX) Risks faced by purchase or sales concentration and countermeasures: From the data of customer sales accounting for more than 10% of the total sales volume and the data of supplier purchases accounting for more than 10% of the total purchase volume in the past two years, it can be found that there is no main sales and purchase objects accounting for more than 50%, and there is no risk of purchase or sales concentration.

  • (X) The impact and risks of transfers or replacements of a substantial volume of shares by directors, supervisors or major shareholders holding more than 10% of the shares of the Company and countermeasures: None.

  • (XI) The impact and risks of changes of management right on the Company and countermeasures: No such situation.

  • (XII) For litigation or non-litigation events, list major litigation, non-litigation or

  • administrative disputes that have been determined by judgment or are still under investigation for the Company and its directors, supervisors, president, substantive responsible person, major shareholders with a shareholding ratio of more than 10% and affiliated companies, and the results of which may have a significant impact on shareholders’ equity or securities prices: No such situation.

  • (XIII) Other important risks and countermeasures: None.

VII. Other important matters: None.

133

Eight. Special Notes

I. Affiliated Enterprises

  • (I). Consolidated business report of affiliated enterprises

  • Organization chart of affiliated enterprises:

    • (1) Organization chart of affiliated enterprises:

Hsin Yung Chien Co., Ltd.

  • (2) Companies that are presumed to have a controlling and subordinate relationship in accordance with Article 369-3 of the Company Act, and controlling subsidiary companies in accordance with Article 369-2 of the Company Act: None.

  • (3) Subordinate companies of which the Company directly or indirectly controls the personnel, finance or business operations in accordance with paragraph 2 of Article 369-2 of the Company Act: None.

  • Basic information of affiliated enterprises: None.

  • The industries covered by the businesses of all affiliated enterprises

The businesses of the Company and its affiliated enterprises cover manufacturing, processing and trading of various rubber products such as rubber conveyor belts, rubber plates, and oil-resistant, fire-resistant and heat-resistant rubber products, etc., as well as various investment businesses and the wholesale and import businesses of tire belts.

  1. Data of the same shareholders presumed to have control and subordination relationship: None.

  2. Data of directors, supervisors and presidents of all affiliated enterprises: None.

  3. Operation profile of affiliated enterprises: None.

(II). Consolidated financial statements of affiliated enterprises: Not

applicable.

(III). Relationship report: Not applicable.

134

  • II. Private placement of securities in the last year and up to the date of printing of the annual report: No such situation.

  • III. The holding or disposal of the Company’s shares by subsidiaries in the last year and up to the date of printing of the annual report: No such situation.

  • IV. Other necessary supplementary explanations: None.

Nine. In the last year and up to the date of printing of the annual report, if there are any of the events specified in Article 36, paragraph 2, subparagraph 2 of the Act that have a significant impact on shareholders’ equity or securities prices, state them one by one: None.

135

INDEPENDENT AUDITORS’ REPORT TRANSLATED FROM CHINESE

PWCR 22003424

To the Board of Directors and Shareholders of Hsin Yung Chien Co., Ltd. ：

Opinion

We have audited the accompanying individual balance sheets of Hsin Yung Chien Co., Ltd. (the “Company”) as at December 31, 2022 and 2021, and the related individual statements of comprehensive income, of changes in equity and of cash flows for the years then ended, and notes to the financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying individual financial statements present fairly, in all material respects, the financial position of the Company as at December 31, 2022 and 2021, and its financial performance and its cash flows for the years then ended in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and the International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations, and SIC Interpretations that came into effect as endorsed by the Financial Supervisory Commission.

Basis for opinion

We conducted our audits in accordance with the Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants and Standards on Auditing of the Republic of China. Our responsibilities under those standards are further described in the Auditors’ responsibilities for the audit of the financial statements section of our report. We are independent of the Company in accordance with the Norm of Professional Ethics for Certified Public Accountant of the Republic of China, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key audit matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the Company’s 2022 individual financial statements. These matters were addressed in the

136

context of our audit of the financial statements as a whole and, in forming our opinion thereon, we do not provide a separate opinion on these matters.

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

1. Timing of sales revenue recognition

Description

Refer to Note 4(26) for accounting policies on sales revenue and Note 6(19) for details of sales revenue. The Company is primarily engaged in manufacturing, processing, and sales of various types of rubber products. Sales revenues are recognised when the control of goods is transferred upon the goods arriving at the destination port in accordance with the contract terms. At the end of the month, manually check whether the transaction date is consistent with the actual arrival date, and the revenue is recognised. The process of revenue recognition involves numerous manual judgement and procedures, which may result in improper timing of sales revenue recognition, thus we consider the cut-off of sales revenue as a key audit matter.

How our audit addressed the matter

Our audit procedures in relation to the above key audit matter included:

  • A. Obtained an understanding and assessed the process of sales transactions and internal controls, and then tested theses controls to assess the effectiveness of sales revenue recognition timing determined by management.

  • B. Checked transaction documents to ensure that the sales transaction for a certain period before and after the balance sheet date is recorded in the proper time.

2. Assessment of allowance for inventory valuation losses

Description

Refer to Note 4(11) for accounting policy on inventory valuation, Note 5 for uncertainty of accounting estimates and assumptions in relation to inventory valuation, and Note 6(6) for details of allowance for inventory valuation losses. As of December 31, 2022, the Company’s inventories and allowance for

137

inventory valuation losses amounted to $253,306 thousand and $15,961 thousand, respectively.

The Company is primarily engaged in manufacturing and sales of various types of rubber products. For inventory that is over a certain age and individually identified for impairment, the impairment is measured at the lower of cost and net realisable value, and provides allowance for inventory valuation losses based on individually identified reasonable net realisable value and usable condition of obsolete or slow-moving inventories. Considered the Company’s allowance for inventory valuation losses were material to its financial statements, and the determination of the net realisable value at balance sheet date involved judgements and estimates, we identified the allowance for inventory valuation losses a key audit matter.

How our audit addressed the matter

Our audit procedures in relation to the above key audit matter included:

  • A. Assessed the reasonableness of provision policies on allowance for inventory valuation losses based on our understanding of the Company’s operation and the characteristics of its industry.

  • B. Reviewed the Company’s annual physical inventory count plan and participated in the annual inventory count event in order to assess the classification of obsolete inventory and effectiveness of obsolete inventory internal control.

  • C. Obtained valuation statement of net realisable value of inventory, assessed whether the estimation policy was consistently applied, tested the estimation basis of the net realisable value with relevant information, including verifying the sales and purchase prices with supporting evidence, and recalculated and evaluated the reasonableness of the inventory valuation.

  • D. Obtained the Company’s inventory aging report and verified dates of movements with supporting documents. Ensured the proper categorisation of inventory aging report and recalculated inventory aging range to confirm that the report information was consistent with its policies.

Responsibilities of management and those charged with governance for the financial statements

Management is responsible for the preparation and fair presentation of the financial statements in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers, and for such internal control as management determines is necessary to enable the preparation of

138

financial statements that are free from material misstatement, whether due to fraud or error.

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

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

Auditors’ responsibilities for the audit of the financial statements

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

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

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

139

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

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

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

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

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

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

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditors’ report unless law or regulationprecludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter

140

should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Wu, Sung-Yuan

Hung, Shu-Hua

For and on behalf of PricewaterhouseCoopers, Taiwan

March 22, 2023

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

As the financial statements are the responsibility of the management, PricewaterhouseCoopers cannot accept any liability for the use of, or reliance on, the English translation or for any errors or misunderstandings that may derive from the translation.

141

HSIN YUNG CHIEN CO.,LTD. INDIVIDUAL BALANCE SHEETS DECEMBER 31, 2022 AND 2021

(Expressed in thousands of New Taiwan dollars)

Assets Notes
6(1)
6(2)
6(3) and 8
6(4)
6(4)
6(5)
6(6)
6(9)
6(7)
6(8) and 8
6(25)
6(10)		 December31,2022
AMOUNT
%
$
1,185,269
33
-
-
529,225
15
8,529
-
150,568
4
6,447
-
237,345
7
-
-
20,214
1
2,137,597
60
1,265,940
35
3,638
-
23,527
1
137,845
4
1,430,950
40
$
3,568,547
100		 December31,2021 December31,2021
AMOUNT
$
1,185,269
-
529,225
8,529
150,568
6,447
237,345
-
20,214
2,137,597
1,265,940
3,638
23,527
137,845
1,430,950
$
3,568,547		 AMOUNT
$
587,190
1,102,229
46,681
14,879
235,576
44,058
298,358
70,638
68,773
2,468,382
1,105,119
5,295
10,301
101,046
1,221,761
$
3,690,143		 %
Current assets
1100
Cash and cash equivalents
1110
Financial assets at fair value through
profit or loss - current
1136
Current financial assets at amortised
cost, net
1150
Notes receivable, net
1170
Accounts receivable, net
1200
Other receivables
130X
Inventories
1460
Non-current assets or disposal groups
classified as held for sale, net
1470
Other current assets
11XX
Current Assets
Non-current assets
1600
Property, plant and equipment
1780
Intangible assets
1840
Deferred income tax assets
1900
Other non-current assets
15XX
Non-current assets
1XXX
Total assets		 16
30
1
1
6
1
8
2
2
67
30
-
-
3
33
100

(Continued)

142

HSIN YUNG CHIEN CO.,LTD. INDIVIDUAL BALANCE SHEETS DECEMBER 31, 2022 AND 2021

(Expressed in thousands of New Taiwan dollars)

Liabilities and Equity Notes
6(19)
7(2)
7(2)
6(11)
6(25)
6(12)
6(13)
6(25)
6(16)
6(17)
6(18)
9		 December 31, 2022
AMOUNT
%
$
47,104
1
29,916
1
54,846
2
24,579
1
15,028
1
77,973
2
78,757
2
3,227
-
44,333
1
1,000
-
376,763
11
155,667
4
33,195
1
100
-
188,962
5
565,725
16
779,918
22
248,381
6
656,668
19
1,317,855
37
3,002,822
84
$
3,568,547
100		 December 31, 2021 December 31, 2021
AMOUNT
$
47,104
29,916
54,846
24,579
15,028
77,973
78,757
3,227
44,333
1,000
376,763
155,667
33,195
100
188,962
565,725
779,918
248,381
656,668
1,317,855
3,002,822
$
3,568,547		 AMOUNT
$
28,022
108,819
50,707
51,746
15,904
207,796
38,020
3,227
-
6,112
510,353
-
29,662
4,393
34,055
544,408
779,918
241,826
559,813
1,564,178
3,145,735
$
3,690,143		 %
Current liabilities
2130
Current contract liabilities
2150
Notes payable
2160
Notes payable - related parties
2170
Accounts payable
2180
Accounts payable - related parties
2200
Other payables
2230
Current income tax liabilities
2250
Provisions for liabilities - current
2320
Long-term liabilities, current portion
2399
Other current liabilities, others
21XX
Current Liabilities
Non-current liabilities
2540
Non-current portion of non-current
borrowings
2570
Deferred income tax liabilities
2600
Other non-current liabilities
25XX
Non-current liabilities
2XXX
Total Liabilities
Equity
Equity attributable to owners of
parent
Share capital
3110
Share capital - common stock
Capital surplus
3200
Capital surplus
Retained earnings
3310
Legal reserve
3350
Unappropriated retained earnings
3XXX
Total equity
Significant contingent liabilities and
unrecognized contract commitments
3X2X
Total liabilities and equity		 1
3
1
1
1
6
1
-
-
-
14
-
1
-
1
15
21
6
15
43
85
100

The accompanying notes are an integral part of these individual financial statements.

143

HSIN YUNG CHIEN CO.,LTD.

INDIVIDUAL STATEMENTS OF COMPREHENSIVE INCOME

YEARS ENDED DECEMBER 31, 2022 AND 2021

(Expressed in thousands of New Taiwan dollars, except for earnings per share amounts)

Items YearendedDecember31
2022
2021
Notes
AMOUNT
%
AMOUNT
%
6(19)
$
1,845,955
100
$
1,937,193
100
6(6)(23)(24) and
7(2)
(
1,004,048 ) (
55) (
1,120,881) (
58)
841,907
45
816,312
42
6(23)(24)
(
193,512 ) (
11) (
193,502) (
10)
(
44,827 ) (
2) (
79,941) (
4)
(
7,757 )
- (
21,420) (
1)
12(2)
1,000
-
1,000
-
(
245,096 ) (
13) (
293,863) (
15)
596,811
32
522,449
27
6(20)
9,971
1
6,712
-
6(21)
71,841
4
27,334
2
6(22)
(
162,608 ) (
9)
508,953
26
(
252 )
- (
106)
-
(
81,048 ) (
4)
542,893
28
515,763
28
1,065,342
55
6(25)
(
123,792 ) (
7) (
96,948) (
5)
$
391,971
21
$
968,394
50
6(14)
$
5,629
-
$
200
-
(
1,126 )
- (
40)
-
$
4,503
-
$
160
-
$
396,474
21
$
968,554
50
6(26)
$
5.03
$
12.42
6(26)
$
5.00
$
12.31
4000
Operating revenue
5000
Operating costs
5900
Net operating margin
Operating expenses
6100
Selling expenses
6200
General and administrative
expenses
6300
Research and development
expenses
6450
Impairment loss (impairment
gain and reversal of impairment
loss) determined in accordance
with IFRS 9
6000
Total operating expenses
6900
Operating profit
Non-operating income and
expenses
7100
Interest income
7010
Other income
7020
Other gains and losses
7050
Finance costs
7000
Total non-operating income
and expenses
7900
Profit before income tax
7950
Income tax expense
8200
Profit for the year
8311
Other comprehensive income,
before tax, actuarial gains
(losses) on defined benefit plans
8349
Income tax related to
components of other
comprehensive income that will
not be reclassified to profit or
loss
8300
Total other comprehensive
income for the year
8500
Total comprehensive income for
the year
Basic earnings per share
9750
Total basic earnings per share
Diluted earnings per share
9850
Total diluted earnings per share

The accompanying notes are an integral part of these individual financial statements.

144

HSIN YUNG CHIEN CO.,LTD. INDIVIDUAL STATEMENTS OF CHANGES IN EQUITY YEARS ENDED DECEMBER 31, 2022 AND 2021

(Expressed in thousands of New Taiwan dollars)

Year ended December 31, 2021
Balance at January 1, 2021
Profit for the year
Other comprehensive income for the year
Total comprehensive income
Appropriation and distribution of 2020 earnings:
Legal reserve appropriated
Cash dividends of ordinary share
Stock dividends of ordinary share
Ddividends not received by shareholders
Share-based payments
Balance at December 31, 2021
Year ended December 31, 2022
Balance at January 1, 2022
Profit for the year
Other comprehensive income for the year
Total comprehensive income
Appropriation and distribution of 2021 earnings:
Legal reserve appropriated
Cash dividends of ordinary share
Ddividends not received by shareholders
Share-based payments
Balance at December 31, 2022		 Notes
6(18)
6(15)(17)
6(18)
6(15)(17)		 Share capital -
commonstock
$
709,016
-
-
-
-
-
70,902
-
-
$
779,918
$
779,918
-
-
-
-
-
-
-
$
779,918		 Capitalsurplus
$
235,248
-
-
-
-
-
-
193
6,385
$
241,826
$
241,826
-
-
-
-
-
170
6,385
$
248,381		 Retained Earnings
Unappropriated
retained earnings
$
1,074,005
968,394
160
968,554
(
52,971)
(
354,508)
(
70,902)
-
-
$
1,564,178
$
1,564,178
391,971
4,503
396,474
(
96,855)
(
545,942)
-
-
$
1,317,855		 Totalequity
Legal reserve
$
506,842
-
-
-
52,971
-
-
-
-
$
559,813
$
559,813
-
-
-
96,855
-
-
-
$
656,668



$
2,525,111
968,394
160
968,554
-
(
354,508)
-
193
6,385
$
3,145,735
$
3,145,735
391,971
4,503
396,474
-
(
545,942)
170
6,385
$
3,002,822

The accompanying notes are an integral part of these individual financial statements.

145

HSIN YUNG CHIEN CO.,LTD. INDIVIDUAL STATEMENTS OF CASH FLOWS YEARS ENDED DECEMBER 31, 2022 AND 2021

(Expressed in thousands of New Taiwan dollars)

CASH FLOWS FROM OPERATING ACTIVITIES
Profit before tax
Adjustments
Adjustments to reconcile profit (loss)
Depreciation expense

Amortization expense

Reversal of provision for bad debt expense

Net loss (gain) on financial assets or liabilities at
fair value through profit or loss

Interest expense
Interest income

Dividend income

Share-based payments

(Gain) loss on disposal of property and
equipment

Unrealized foreign exchange (gain) loss
Changes in operating assets and liabilities
Changes in operating assets
Notes receivable, net
Accounts receivable, net
Other receivables
Inventories
Other current assets
Changes in operating liabilities
Contract liabilities
Notes payable
Notes payable - related parties
Accounts payable
Accounts payable - related parties
Other payables
Other current liabilities
Net defined benefit liability
Cash inflow generated from operations
Interest received

Dividends received

Interest paid
Income taxes paid
Net cash flows from operating activities		 YearendedDecember31
Notes
2022
2021
$
515,763 $
1,065,342
6(23)
78,159
81,863
6(23)
6,021
13,663
12(2)
(
1,000 ) (
1,000 )
6(22)
257,800 (
576,447 )
252
106
6(20)
(
9,971 ) (
6,712 )
6(21)
(
65,259 ) (
6,802 )
6(15)
6,385
6,385
6(22)
(
39,995 )
25,655
(
28,161 )
17,275
6,350 (
6,082 )
134,870 (
95,695 )
22,630 (
4,547 )
61,013 (
22,106 )
48,561 (
30,984 )
10,135 (
9,154 )
(
78,903 )
69,774
4,139
6,765
(
27,067 )
11,605
(
876 )
2,110
(
51,991 )
30,617
(
5,112 ) (
109 )
(
654 ) (
703 )
843,089
570,819
6(20)
9,971
6,706
6(21)
65,259
6,802
(
212 ) (
106 )
(
93,875 ) (
97,478 )
824,232
486,743

(Continued)

146

HSIN YUNG CHIEN CO.,LTD. INDIVIDUAL STATEMENTS OF CASH FLOWS YEARS ENDED DECEMBER 31, 2022 AND 2021

(Expressed in thousands of New Taiwan dollars)

CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of financial assets at amortised cost
Proceeds from repayments of financial assets at
amortised cost
Acquisition of financial assets at fair value through
profit or loss
Proceeds from disposal of financial assets at fair
value through profit or loss

Acquisition of property and equipment

Proceeds from disposal of property, plant and
equipment
Decrease (increase) in refundable deposits

Acquisition of intangible assets
Increase in other operating assets
Receipts in advance due to disposal of assets

Net cash flows from (used in) investing
activities
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from long-term debt
Ddividends not received by shareholders
Cash dividends paid

Net cash flows used in financing activities
Effect of exchange rate changes on cash and cash
equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year		 YearendedDecember31
Notes
2022
2021
($
524,080 ) ($
47,591 )
46,681
130,000
(
30,307 ) (
656,374 )
6(2)
859,036
290,866
6(27)
(
359,933 ) (
122,482 )
110,829
-
6(10)
9,256 (
3,888 )
(
960 ) (
983 )
(
3,986 ) (
10,356 )
6(9)
-
5,000
106,536 (
415,808 )
200,000
-
170
193
6(18)
(
545,942 ) (
354,508 )
(
345,772 ) (
354,315 )
13,083 (
1,272 )
598,079 (
284,652 )
587,190
871,842
$
1,185,269 $
587,190

147

HSIN YUNG CHIEN CO., LTD. NOTES TO THE INDIVIDUAL FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021

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

1. History and Organisation

Hsin Yung Chien Co., Ltd. (the “ Company ” ) was incorporated as a company limited by shares under the provisions of the Company Act of the Republic of China (R.O.C.) in August 1969. The Company was formerly named as HSIN YUNG CHIEN CO., LTD. and changed its name to HSIN YUNG CHIEN CO., LTD. in 2003. The Company is primarily engaged in manufacturing, processing and sales of rubber conveyor belt, rubber sheet, oil resistant, acid resistant, heat resistant packer elements and other rubber products. The Company’s stocks have been approved and listed on the Taipei Exchange since September 28, 2006 and transferred to list in the Taiwan Stock Exchange starting from December 29, 2010 after approval.

  1. The Date of Authorisation for Issuance of the Financial Statements and Procedures for Authorisation

These financial statements were authorised for issuance by the Board of Directors on March 22, 2023.

3. Application of New Standards, Amendments and Interpretations

  • (1) Effect of the adoption of new issuances of or amendments to International Financial Reporting Standards (“IFRS”) that came into effect as endorsed by the Financial Supervisory Commission (“FSC”)

New standards, interpretations and amendments endorsed by FSC and became effective from 2022 are as follows:

(“FSC”)
New standards, interpretations and amendments endorsed by FSC and
are as follows:		 became effective from 202
New Standards,Interpretations and Amendments Effective date by
International Accounting
Standards Board
Amendments to IFRS 3, ‘Reference to the conceptual framework’
Amendments to IAS 16, ‘Property, plant and equipment: proceeds
before intended use’
Amendments to IAS 37, ‘Onerous contracts - cost of fulfilling a
contract’
Annual improvements to IFRS Standards 2018–2020		 January 1, 2022
January 1, 2022
January 1, 2022
January 1, 2022

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

148

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

by the Company

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

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

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

(3) IFRSs issued by IASB but not yet endorsed by the FSC

New standards, interpretations and amendments issued by IASB but not yet included in the IFRSs as endorsed by the FSC are as follows:

he above standards and interpretations have no significant impact to the
ndition and financial performance based on the Company’s assessment.
IFRSs issued by IASB but not yet endorsed by the FSC
New standards, interpretations and amendments issued by IASB but not yet
as endorsed by the FSC are as follows:		 Company’s financial
included in the IFRSs
New Standards,Interpretations andAmendments Effective date by
International Accounting
StandardsBoard
Amendments to IFRS 10 and IAS 28, ‘Sale or contribution of assets
between an investor and its associate or joint venture’
Amendments to IFRS 16, ‘Lease liability in a sale and leaseback’
IFRS 17, ‘Insurance contracts’
Amendments to IFRS 17, ‘Insurance contracts’
Amendment to IFRS 17, ‘Initial application of IFRS 17 and IFRS 9 -
comparative information’
Amendments to IAS 1, ‘Classification of liabilities as current or non-
current’
Amendments to IAS 1, ‘Non-current liabilities with covenants’		 To be determined by
International Accounting
Standards Board
January 1, 2024
January 1, 2023
January 1, 2023
January 1, 2023
January 1, 2024
January 1, 2024

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

4. Summary of Significant Accounting Policies

The principal accounting policies applied in the preparation of these financial statements are set out

below. These policies have been consistently applied to all the periods presented, unless otherwise stated.

(1) Compliance statement

The financial statements of the Company have been prepared in accordance with the “Regulations Governing the Preparation of Financial Reports by Securities Issuers”, International Financial R eporting Standards, International Accounting Standards, IFRIC Interpretations, and SIC

149

Interpretations that came into effect as endorsed by the FSC (collectively referred herein as the “IFRSs”).

  • (2) Basis of preparation

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

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

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

  • B. The preparation of financial statements in conformity with IFRSs requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Company’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed in Note 5.

  • (3) Foreign currency translation

Items included in the financial statements of the Company are measured using the currency of the primary economic environment in which the Company operates (the “functional currency”). The financial statements are presented in NTD, which is the Company’s functional currency. Foreign currency transactions and balances

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

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

  • C. Non-monetary assets and liabilities denominated in foreign currencies held at fair value through profit or loss are re-translated at the exchange rates prevailing at the balance sheet date; their translation differences are recognised in profit or loss.

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

(4) Classification of current and non-current items

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

  • (a) Assets arising from operating activities that are expected to be realised, or are intended to be sold or consumed within the normal operating cycle;

  • (b) Assets held mainly for trading purposes;

  • (c) Assets that are expected to be realised within twelve months from the balance sheet date;

150 

  - (d) Cash and cash equivalents, excluding restricted cash and cash equivalents and those that are

     - to be exchanged or used to settle liabilities more than twelve months after the balance sheet date.

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

    • (a) Liabilities that are expected to be settled within the normal operating cycle;

    • (b) Liabilities arising mainly from trading activities;

    • (c) Liabilities that are to be settled within twelve months from the balance sheet date;

    • (d) Liabilities for which the repayment date cannot be extended unconditionally to more than twelve months after the balance sheet date. Terms of a liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not affect its classification.

  • (5) Cash equivalents

  • Cash equivalents refer to short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. Time deposits that meet the definition above and are held for the purpose of meeting short-term cash commitments in operations are classified as cash equivalents.

  • (6) Financial assets at fair value through profit or loss

  • A. Financial assets at fair value through profit or loss are financial assets that are not measured at amortised cost or fair value through other comprehensive income.

  • B. On a regular way purchase or sale basis, financial assets at fair value through profit or loss are recognised and derecognised using trade date accounting.

  • C. At initial recognition, the Company measures the financial assets at fair value and recognises the transaction costs in profit or loss. The Company subsequently measures the financial assets at fair value, and recognises the gain or loss in profit or loss.

  • D. The Company recognises the dividend income when the right to receive payment is established, future economic benefits associated with the dividend will flow to the Company and the amount of the dividend can be measured reliably.

(7) Financial assets at amortised cost

  • A. Financial assets at amortised cost are those that meet all of the following criteria:

  • (a) The objective of the Company’s business model is achieved by collecting contractual cash flows.

  • (b) The assets’ contractual cash flows represent solely payments of principal and interest.

  • B. On a regular way purchase or sale basis, financial assets at amortised cost are recognised and derecognised using trade date accounting.

  • C. The Company’s time deposits which do not fall under cash equivalents are those with a short maturity period and are measured at initial investment amount as the effect of discounting is immaterial.

151

(8) Accounts and notes receivable

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

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

  • C. The Company’s operating pattern of accounts receivable that are expected to be factored is for the purpose of selling, and the accounts receivable are subsequently measured at fair value, with any changes in fair value recognised in profit or loss.

(9) Impairment of financial assets

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

  • (10) Derecognition of financial assets

The Company derecognises a financial asset when the contractual rights to receive the cash flows from the financial asset expire.

(11) Inventories

Inventories are stated at the lower of cost and net realisable value. Cost is determined using the weighted-average method. The cost of finished goods and work in progress comprises raw materials, direct labour, other direct costs and related production overheads (allocated based on normal operating capacity). It excludes borrowing costs. The item by item approach is used in applying the lower of cost and net realisable value. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and applicable variable selling expenses.

  • (12) Held for sale non-current assets

Non-current assets are classified as assets held for sale when their carrying amount is to be recovered principally through a sale transaction rather than through continuing use, and a sale is considered highly probable. They are stated at the lower of carrying amount and fair value less costs to sell.

(13) Property, plant and equipment

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

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

152

during the financial period in which they are incurred.

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

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

Buildings and structures 5~51 years
Machinery and equipment 1~15 year(s)
Transportation equipment 5 years
Office equipment 2~11 years
Other equipment 1~15 year(s)

  • (14) Intangible assets

  • Computer software is stated at cost and amortised on a straight-line basis over its estimated useful life of 1 to 8 years.

(15) Impairment of non-financial assets

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

  • (16) Borrowings

Borrowings comprise long-term bank borrowings. Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognised in profit or loss over the period of the borrowings using the effective interest method.

(17) Accounts and notes payable

  • A. Notes payable are liabilities for purchases of raw materials, goods or services and notes payable are those resulting from operating and non-operating activities.

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

153

(18) Derecognition of financial liabilities

A financial liability is derecognised when the obligation specified in the contract is either discharged or cancelled or expires.

(19) Offsetting financial instruments

Financial assets and liabilities are offset and reported in the net amount in the balance sheet when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously.

(20) Provisions

Provisions are recognised when the Company has a present legal or constructive obligation as a result of past events, and it is probable that an outflow of economic resources will be required to settle the obligation and the amount of the obligation can be reliably estimated. Provisions are measured at the present value of the expenditures expected to be required to settle the obligation on the balance sheet date.

(21) Employee benefits

  • A. Short-term employee benefits

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

  • B. Pensions

  • (a) Defined contribution plans

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

  • (b) Defined benefit plans

  • i Net obligation under a defined benefit plan is defined as the present value of an amount of pension benefits that employees will receive on retirement for their services with the Company in current period or prior periods. The liability recognised in the balance sheet in respect of defined benefit pension plans is the present value of the defined benefit obligation at the balance sheet date less the fair value of plan assets. The net defined benefit obligation is calculated annually by independent actuaries using the projected unit credit method. The rate used to discount is determined by using interest rates of high-quality corporate bonds that are denominated in the currency in which the benefits will be paid, and that have terms to maturity approximating to the terms of the related pension liability; when there is no deep market in high-quality corporate bonds, the rate used to discount is determined by using interest rates of government bonds (at the balance sheet date) of a currency and term consistent with the currency and term of the employment benefit obligations.

  • ii Remeasurements arising on defined benefit plans are recognised in other comprehensive

154

income in the period in which they arise and are recorded as retained earnings. 

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

  • C. Termination benefits

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

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

- (22) Employee share based payment

For the equity-settled share-based payment arrangements, the employee services received are measured at the fair value of the equity instruments granted at the grant date, and are recognised as compensation cost over the vesting period, with a corresponding adjustment to equity. The fair value of the equity instruments granted shall reflect the impact of market vesting conditions and non-vesting conditions. Compensation cost is subject to adjustment based on the service conditions that are expected to be satisfied and the estimates of the number of equity instruments that are expected to vest under the non-market vesting conditions at each balance sheet date. Ultimately, the amount of compensation cost recognised is based on the number of equity instruments that eventually vest.

(23) Income tax

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

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

155

  • C. Deferred tax is recognised, using the balance sheet liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated balance sheet. If the deferred tax arises from initial recognition of goodwill or of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred tax is determined using tax rates (and laws) that have been enacted by the balance sheet date and are expected to apply when the related deferred tax asset is realised or the deferred tax liability is settled.

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

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

  • (24) Share capital

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or stock options are shown in equity as a deduction, net of tax, from the proceeds.

  • (25) Dividends

Dividends are recorded in the Company’s financial statements in the period in which they are resolved by the Company’s shareholders. Cash dividends are recorded as liabilities; stock dividends are recorded as stock dividends to be distributed and are reclassified to ordinary shares on the effective date of new shares issuance.

  • (26) Revenue recognition

Sales of goods:

  • A. The Company manufactures and sells conveyor belt related products. Sales are recognised when control of the products has transferred, being when the products are delivered to the customer, the customer has full discretion over the channel and price to sell the products, and there is no unfulfilled obligation that could affect the customer’s acceptance of the products. Delivery occurs when the products have been shipped to the specific location, the risks of obsolescence and loss have been transferred to the customer, and either the customer has accepted the products in accordance with the sales contract, or the Company has objective evidence that all criteria for acceptance have been satisfied.

  • B. The Company’s obligation to provide a refund for sales of faulty products is recognised as a provision.

  • C. Sales contracts contain the terms for advance sales receipts. The contract liabilities are recognised

156

as revenue when control of the products has transferred to the customer.

(27) Operating segments

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The Company’s chief operating decision-maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Board of Directors that makes strategic decisions.

5. Critical Accounting Judgements, Assumptions and Key Sources of Estimation Uncertainty

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

As inventories are stated at the lower of cost and net realisable value, the Company must determine the net realisable value of inventories on balance sheet date using judgements and estimates. Due to the rapid technology innovation, the Company evaluates the amounts of normal inventory consumption, obsolete inventories or inventories without market selling value on balance sheet date, and writes down the cost of inventories to the net realisable value. Such an evaluation of inventories is principally based on the demand for the products within the specified period in the future. Therefore, there might be material changes to the evaluation.

As of December 31, 2022, the carrying amount of inventories was $237,345 thousand.

6. Details of Significant Accounts

(1) Cash and cash equivalents

==> picture [478 x 103] intentionally omitted <==

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

  • B. Cash and cash equivalents amounting to $813 as engineering bond, were classified as financial assets at amortised cost. Relevant information is provided in Note 8.

  • C. The Company’s time deposits that did not meet short-term cash commitments were classified as financial assets at amortised cost. Relevant information is provided in Note 6(3).

157

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

==> picture [471 x 99] intentionally omitted <==

  • A. The Company recognised net loss and net profit on financial assets measured at fair value through profit or loss amounting to net loss of $578,343 thousand and net profit of $571,383 thousand for the years ended December 31, 2022 and 2021, respectively.

  • B. As of December 31, 2022, the Company sold financial assets at fair value through profit or loss. The fair value at the time of disposal was $859,036 thousand, and the cumulative gain on disposal was $320,543 thousand.

  • C. The Company has no financial assets at fair value through profit or loss pledged to others as collateral.

  • D. Information relating to credit risk of financial assets at fair value through profit or loss is provided in Note 12(2).

(3)Financial assets at amortised cost

==> picture [474 x 86] intentionally omitted <==

  • A. As at December 31, 2022 and 2021, without taking into account any collateral held or other credit enhancements, the maximum exposure to credit risk in respect of the amount that best represents the financial assets at amortised cost held by the Company was $529,225 thousand and $46,681 thousand, respectively.

  • B. Details of the Company’s financial assets at amortised cost pledged to others as collateral are provided in Note 8.

  • C. Information relating to credit risk of financial assets at amortised cost is provided in Note 12(2). The counterparties of the Company’s investments in certificates of deposit are financial institutions with high credit quality, so the Company expects that the probability of counterparty default is remote.

158

(4) Notes and accounts receivable

Notes and accounts receivable
December31,2022 December31,2021
Notes receivable $ 8,529 $ 14,879
Accounts receivable $ 154,143
 $ 240,151
Less: Allowance for bad debts ( 3,575) ( 4,575)
$ 150,568
 $ 235,576
  • A. The ageing analysis of accounts receivable and notes receivable that were past due but not impaired is as follows:
Not past due
Up to 30 days
31 to 90 days
91 to 180 days
Over 180 days		 December Notesreceivable
8,529
$ -
-
-
-
8,529
$ 31,2022		 December 31,2021
Accounts
receivable
135,594
$ 8,986
8,694
517
352
154,143
$		 Accounts
receivable
221,013
$ 7,414
6,181
2,826
2,717
240,151
$		 Notesreceivable
14,879
$ -
-
-
-
14,879
$

The above ageing analysis was based on past due date.

  • B. The Company signed a credit right sales contract relating to accounts receivable without recourse with CHANG HWA COMMERCIAL BANK, LTD. and MEGA INTERNATIONAL COMMERCIAL BANK CO., LTD. As of December 31, 2022 and 2021, the estimated amount of accounts receivable factoring (which was classified as financial assets at fair value through other comprehensive income) both amounted to $0 thousand. Please refer to Note 6(5) for information on transfer of financial assets.

  • C. As of December 31, 2022 and 2021, accounts receivable and notes receivable were all from contracts with customers. And as of January 1, 2021, the balance of accounts receivable and notes receivable from contracts with customers amounted to $173,235 thousand and $8,797 thousand, respectively.

  • D. As of December 31, 2022 and 2021, without taking into account any collateral held or other credit enhancements, the maximum exposure to credit risk in respect of the amount that best represents the Company’s notes and accounts receivable was $8,529 thousand and $14,879 thousand ; $150,568 thousand and $235,576 thousand, respectively.

  • E. Information relating to credit risk of accounts receivable and notes receivable is provided in Note 12(2).

  • (5) Transfer of financial assets

Transferred financial assets that are derecognised in their entirety

  • A. On July 28, 2022, the Company terminated the international factoring and financing agreement with CHANG HWA COMMERCIAL BANK, LTD.

159

  • B. On September 22, 2021, January 20, 2021 and January 14, 2021, the Company entered into an international factoring and financing agreement with CHANG HWA COMMERCIAL BANK, LTD. to sell its accounts receivable. Under the agreement, the Company is not obligated to bear the default risk of the transferred accounts receivable, but is liable for the losses incurred on any business dispute. The Company does not provide collateral and does not have continuing involvement in the transferred accounts receivable. Thus, the Company derecognised the transferred accounts receivable.

  • C. On April 1, 2021, the Company entered into a factoring agreement with MEGA INTERNATIONAL COMMERCIAL BANK CO., LTD. Under the agreement, when the Company sells accounts receivable to MEGA INTERNATIONAL COMMERCIAL BANK CO., LTD., the Company can choose to advance received 80% of the amount from MEGA INTERNATIONAL COMMERCIAL BANK CO., LTD., and MEGA INTERNATIONAL COMMERCIAL BANK CO., LTD. keeps another 20% of the amount to be paid to the Company after the bank collects the money. The Company is not obligated to bear the default risk of the transferred accounts receivable, but is liable for the losses incurred on any business dispute. The Company does not provide collateral and does not have continuing involvement in the transferred accounts receivable. Thus, the Company derecognised the transferred accounts receivable.

  • D. As of December 31, 2022 and 2021, the Company has retention for the factoring of accounts receivable (shown as “Other receivables”) amounting to $0 thousand and $30,681 thousand, respectively. The accounts receivable factored and qualified for derecognition were reclassified to other receivables, and the amount advanced was shown as bank borrowings, and the related information is as follows:

==> picture [440 x 118] intentionally omitted <==

No such transaction on December 31, 2022.

160

(6) Inventories

==> picture [484 x 145] intentionally omitted <==

==> picture [475 x 141] intentionally omitted <==

The cost of inventories recognised as expense for the year:

==> picture [483 x 116] intentionally omitted <==

As the Company sold some inventory with net realisable value lower than its cost, the allowance for

inventory obsolescence and market price decline was reversed for the year ended December 31, 2022.

  • (7) Other current assets

==> picture [482 x 69] intentionally omitted <==

161

(8) Property, plant and equipment

Cost
Land
Land improvements
Buildings and
structures
Machinery and
equipment
Transportation
equipment
Office equipment
Other equipment
Unfinished
construction/equipment
under acceptance
Total
Accumulated
depreciation
Land improvements
Buildings and
structures
Machinery and
equipment
Transportation
equipment
Office equipment
Other equipment		 Year ended December31,2022 Year ended December31,2022 Balance at end
ofyear
Transfers
duringtheyear
-
$ -
-
89,684
-
-
245
89,929)
(
-
$ -
$ -
-
-
-
-
-
$		 347,857
$ 2,519
412,675
1,229,706
4,439
14,660
121,396
340,396
2,473,648
2,354)
($ 158,444)
(
941,670)
(
3,260)
(
10,964)
(
91,016)
(
1,207,708)
(
1,265,940
$

162

Year ended December 31, 2021

Balance at Balance at
beginning of Transfers Balance at end
year Addition Decrease duringtheyear ofyear
Cost
Land $ 418,495
 $ -
 $ -
 ($ 70,638)
 $ 347,857
Land improvements 2,519 - - - 2,519
Buildings and 374,954 9,773 ( 360)
 27,624 411,991
structures
Machinery and 1,177,517 11,338 ( 69,420)
 16,555 1,135,990
equipment
Transportation 4,524 - - - 4,524
equipment
Office equipment 12,280 964 - - 13,244
Other equipment 105,552 7,245 - 5,563 118,360
Unfinished
construction/equipment
under acceptance 86,512 168,585 - ( 49,742) 205,355
Total 2,182,353 $ 197,905 ($ 69,780) ($ 70,638) 2,239,840
Accumulated
depreciation
Land improvements ($ 1,790)
 ($ 282)
 $ -
 $ -
 ($ 2,072)
Buildings and ( 129,640)
 ( 14,071)
 360 - ( 143,351)
structures
Machinery and ( 877,566)
 ( 58,505)
 43,765 - ( 892,306)
equipment
Transportation ( 4,034)
 ( 75)
 - - ( 4,109)
equipment
Office equipment ( 9,395)
 ( 723)
 - - ( 10,118)
Other equipment ( 74,558) ( 8,207) - - ( 82,765)
( 1,096,983) ($ 81,863) $ 44,125 $ - ( 1,134,721)
$ 1,085,370 $ 1,105,119

Information about the property, plant and equipment that were pledged to others as collaterals is provided in Note 8.

(9) Held for sale non-current assets

On December 23, 2021, the Company received a deposit of $5,000 thousand for the sale of land (shown as other current liabilities) and reclassified the related assets as disposal group held for sale. On January 20, 2022, the Company’s Board of Directors approved to sell the land, and the completion date for the transaction was set on April 19, 2022. The disposal group held for sale belongs to other segment, and the net amount of assets as at December 31, 2021 was $70,638 thousand. No such transaction on December 31, 2022.

163

(10) Other non-current assets

==> picture [482 x 97] intentionally omitted <==

(11) Other payables

(12) Current provisions

Current provisions
0
Balance at beginning of year/balance
at end of year		 YearendedDecember31
2022
3,227
$		 2021
3,227
$

The Company’s provision is mainly related to the quality of rubber products sold. Provision is estimated based on historical data of rubber products.

- (13) Long term borrowings

Type of borrowings Borrowing period Collateral December 31, 2022 Long-term bank borrowings Secured borrowings Borrowing period is from Machinery and $ 133,000 August 5, 2022 to April 15, equipment 2025; interest payable monthly; principal is repayable monthly from May 15, 2023.

Secured borrowings Borrowing period is from Plant August 5, 2022 to July 15, 2029; interest payable monthly; principal is repayable monthly from August 15, 2025. 67,000 200,000 Less: Current portion ( 44,333) $ 155,667

A. No such transaction on December 31, 2021.

164

  • B. Details of the Company’s assets pledged as collateral for the purpose of long-term borrowings are provided in Note 8.

(14) Pensions

  • A. (a) The Company has a defined benefit pension plan in accordance with the Labor Standards Act, covering all regular employees’ service years prior to the enforcement of the Labor Pension Act on July 1, 2005 and service years thereafter of employees who chose to continue to be subject to the pension mechanism under the Labor Standards Act. Under the defined benefit pension plan, two units are accrued for each year of service for the first 15 years and one unit for each additional year thereafter, subject to a maximum of 45 units. Pension benefits are based on the number of units accrued and the average monthly salaries and wages of the last 6 months prior to retirement. The Company contributes monthly an amount equal to 2% of the employees’ monthly salaries and wages to the retirement fund deposited with Bank of Taiwan, the trustee, under the name of the independent retirement fund committee. Also, the Company would assess the balance in the aforementioned labor pension reserve account by the end of December 31, every year. If the account balance is insufficient to pay the pension calculated by the aforementioned method to the employees expected to qualify for retirement in the following year, the Company will make contributions for the deficit by next March. In addition, 4% is allocated to the retirement fund for the appointed manager.

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

==> picture [442 x 82] intentionally omitted <==

165

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

==> picture [450 x 320] intentionally omitted <==

==> picture [450 x 305] intentionally omitted <==

166

  • (d) The Bank of Taiwan was commissioned to manage the Fund of the Company’s defined benefit pension plan in accordance with the Fund’s annual investment and utilisation plan and the “Regulations for Revenues, Expenditures, Safeguard and Utilisation of the Labor Retirement Fund” (Article 6: The scope of utilisation for the Fund includes deposit in domestic or foreign financial institutions, investment in domestic or foreign listed, overthe-counter, or private placement equity securities, investment in domestic or foreign real estate securitisation products, etc.). With regard to the utilisation of the Fund, its minimum earnings in the annual distributions on the final financial statements shall be no less than the earnings attainable from the amounts accrued from two-year time deposits with the interest rates offered by local banks. If the earnings is less than aforementioned rates, government shall make payment for the deficit after being authorised by the Regulator. The Company has no right to participate in managing and operating that fund and hence the Company is unable to disclose the classification of plan assets fair value in accordance with IAS 19 paragraph 142. The composition of fair value of plan assets as of December 31, 2022 and 2021 is given in the Annual Labor Retirement Fund Utilisation Report announced by the government.

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

==> picture [436 x 68] intentionally omitted <==

Future mortality rate was estimated based on the 6th Taiwan Standard Ordinary Experience Mortality Table.

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

==> picture [431 x 92] intentionally omitted <==

==> picture [442 x 95] intentionally omitted <==

The sensitivity analysis above is based on one assumption which changed while the other conditions remain unchanged. In practice, more than one assumption may change all at once.

167

The method of analysing sensitivity and the method of calculating net pension liability in the balance sheet are the same.

The methods and types of assumptions used in preparing the sensitivity analysis did not change compared to the previous period.

  • (f) Expected contributions to the defined benefit pension plans of the Company for the year ending December 31, 2023 amount to $663 thousand.

  • (g) As of December 31, 2022, the weighted average duration of the retirement plan is 7 years. The analysis of timing of the future pension payment was as follows:

==> picture [453 x 82] intentionally omitted <==

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

    • (b) The pension costs under defined contribution pension plans of the Company for the years ended December 31, 2022 and 2021, were $2,180 thousand and $2,354 thousand, respectively.

  • (15) Share-based payment

  • A. For the years ended December 31, 2022 and 2021, the Company’s share-based payment arrangements were as follows:

Type of
arrangement		 Grant date Quantity granted
(shares in
thousand)		 Contractperiod Vesting
conditions
Employee stock
options		 2020.11.24 2,000 10 years Note

Note: The lifetime of the issued employee stock options is 10 years. After 6 years from the date that employee stock options were granted, employees can exercise the options in accordance with the regulation.

168

B. Details of the share-based payment arrangements are as follows:

==> picture [471 x 171] intentionally omitted <==

  • C. The fair value of stock options granted is measured using the Black-Scholes option-pricing model. Relevant information is as follows:
Type of
arrangement		 Grant
date		 Stock
price		 Exercise
price		 Expected
price
volatility		 Expected
option
life		 Expected
dividends		 Risk-free
interest
rate		 Fair
value
perunit
Employee
stock options		 2020.
11.24		 82.6 82.6 20.1737%
(Note)		 8 years - 0.2375% 19.1635

Note: Expected price volatility rate was estimated by using the stock prices of the most recent period with length of this period approximate to the length of the stock options’ expected life, and the standard deviation of return on the stock during this period.

  • D. For the years ended December 31, 2022 and 2021, the compensation costs were both recognised amounting to $6,385 thousand.

(16) Share capital

As of December 31, 2022, the Company’s authorised capital was $1,000,000 thousand, consisting of 100,000 thousand shares of ordinary stock, and the paid-in capital was $779,918 thousand with a par value of $10 (in dollars) per share. There was no change in the reporting period. All proceeds from shares issued have been collected.

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

==> picture [470 x 68] intentionally omitted <==

(17)Capital surplus

Pursuant to the R.O.C. Company Act, capital surplus arising from paid-in capital in excess of par value on issuance of common stocks and donations can be used to cover accumulated deficit or to issue new stocks or cash to shareholders in proportion to their share ownership, provided that the Company has no accumulated deficit. Further, the R.O.C. Securities and Exchange Act requires that

169

the amount of capital surplus to be capitalised mentioned above should not exceed 10% of the paidin capital each year. Capital surplus should not be used to cover accumulated deficit unless the legal reserve is insufficient.

==> picture [477 x 99] intentionally omitted <==

(18) Retained earnings

  • A. Under the Company’s Articles of Incorporation, the current year’s earnings, if any, shall first be used to pay all taxes and offset prior years’ operating losses and then 10% of the remaining amount shall be set aside as legal reserve. The remainder, if any, to be retained or to be appropriated shall be resolved by the stockholders at the stockholders’ meeting.

  • B. As the Company is in the growth stage, and taking into consideration of shareholders’ interest, the Company’s financial structure and long-term development, total amount of bonus distributed to shareholders shall be over 20% of accumulated unappropriated earnings. The ratio of cash dividends shall be at least 10% of the total amount of bonus distributed to shareholders.

  • C. Except for covering accumulated deficit or issuing new stocks or cash to shareholders in proportion to their share ownership, the legal reserve shall not be used for any other purpose. The use of legal reserve for the issuance of stocks or cash to shareholders in proportion to their share ownership is permitted, provided that the distribution of the reserve is limited to the portion in excess of 25% of the Company’s paid-in capital.

  • D. In accordance with the regulations, the Company shall set aside special reserve from the debit balance on other equity items at the balance sheet date before distributing earnings. When debit balance on other equity items is reversed subsequently, the reversed amount could be included in the distributable earnings.

  • E. The appropriations of 2021 and 2020 earnings as approved by the shareholders during their meeting on June 22, 2022 and June 7, 2021, respectively, are as follows:

==> picture [460 x 135] intentionally omitted <==

170

  • F. The appropriation of 2022 earnings as approved by the Board of Directors during their meeting on March 22, 2023 are as follows:

==> picture [448 x 101] intentionally omitted <==

As of March 22, 2023, the appropriation of 2022 earnings has not yet been reported to the shareholders.

  • G. For the information relating to employees’ compensation and directors’ and supervisors’ remuneration, please refer to Note 6(24).

(19) Operating revenue

==> picture [479 x 53] intentionally omitted <==

  • A. Disaggregation of revenue from contracts with customers

The Company derives revenue from the transfer of goods and services at a point in time in the following major product lines and geographical regions:

==> picture [468 x 318] intentionally omitted <==

171

  • B. Contract liability and refund liability (shown as other current liabilities)

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

==> picture [463 x 126] intentionally omitted <==

==> picture [463 x 83] intentionally omitted <==

(20) Interest income

==> picture [482 x 100] intentionally omitted <==

(21) Other income

==> picture [482 x 84] intentionally omitted <==

(22) Other gains and losses

==> picture [482 x 161] intentionally omitted <==

172

(23) Expenses by nature

==> picture [482 x 117] intentionally omitted <==

(24) Employee benefit expense

==> picture [483 x 149] intentionally omitted <==

==> picture [483 x 147] intentionally omitted <==

  • A. In accordance with the Articles of Incorporation of the Company, the profit before deducting tax and employees’ compensation and directors’ remuneration shall be used to offset operating losses. The remainder, if any, shall be distributed as employees’ compensation and directors’ remuneration. The ratio shall not be lower than 2% for employees’ compensation and shall not be higher than 3% for directors’ remuneration.

  • B. The accrued amounts of employees’ compensation and directors’ and supervisors’ remuneration are as follows:

173

==> picture [455 x 84] intentionally omitted <==

The above-mentioned amounts were recognised in salary expenses.

For the years ended December 31, 2022 and 2021, the employees’ compensation and directors’ and supervisors’ remuneration were estimated and accrued based on distributable profit of current year as of the end of reporting period, and the estimated and accrued ratios are as follows:

==> picture [452 x 68] intentionally omitted <==

  • C. Employees’ compensation and directors’ and supervisors’ remuneration of 2021 as resolved by the Board of Directors were in agreement with those amounts recognised in the 2021 financial statements, and the employees’ compensation will be distributed in the form of cash.

  • D. Information about employees’ compensation and directors’ and supervisors’ remuneration of the Company as resolved by the Board of Directors will be posted in the “Market Observation Post System” at the website of the Taiwan Stock Exchange.

  • E. As of December 31, 2022 and 2021, the Company had 114 and 120 employees, both including 7 non-employee directors.

  • F. Average employee benefit expense in current and previous year was $750 thousand and $862 thousand, respectively.

  • G. Average employees salaries in current and previous year was $637 thousand and $753 thousand, respectively.

  • H. Adjustments of average employees salaries was (15%).

  • I. Supervisors’ remuneration in current and previous year was $0 thousand and $255 thousand, respectively.

  • J. The Company’s remuneration policy is as follows:

  • (a) The directors’, supervisors’ and managers’ remuneration are distributed in accordance with the Articles of Incorporation of the Company.

  • (b) The correlation between the policy, procedures for paying managers’ remuneration, operational performance and future risk is as follows: The manager’s personal salary and remuneration is determined in accordance with the Company’s relevant regulations, and the remuneration committee regularly evaluates the reasonableness of the salary and remuneration. Salary contains the monthly salary, employees’ bonuses which are calculated and distributed every month according to the Company’s budget achievement andemployees’ compensation which shall be distributed at least 2% of the current year’s earnings in

174

accordance with the annual performance assessment policy.

  • (c) Directors’ emoluments include remuneration and transportation allowance.

  • (d) Managers’ and employees’ emoluments include salaries, bonuses, employee compensation, employee stock option certification, etc.

  • (25) Income tax

  • A. Income tax expense

    • (a) Components of income tax expense:

==> picture [432 x 193] intentionally omitted <==

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

==> picture [449 x 52] intentionally omitted <==

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

==> picture [460 x 222] intentionally omitted <==

175

C. Amounts of deferred tax assets or liabilities as a result of temporary differences are as follows:

==> picture [452 x 474] intentionally omitted <==

176

==> picture [452 x 487] intentionally omitted <==

D. The Company’s income tax returns through 2020 have been assessed and approved by the Tax Authority.

177

(26) Earnings per share

==> picture [462 x 258] intentionally omitted <==

  • A. The diluted earnings per share computation shall assume that distribution will be in the form of stocks in the calculation of the weighted-average number of common shares outstanding during the current year, taking into account the dilutive effects of employees’ compensation on potential common share.

  • B. The abovementioned weighted average number of outstanding shares was retrospectively adjusted proportionately to the capitalised amount of earnings for the year ended December 31, 2021.

178

(27) Supplemental cash flow information

  • A. Investing activities with partial cash payments for property, plant and equipment:

==> picture [436 x 159] intentionally omitted <==

B. Changes in liabilities from financing activities

==> picture [440 x 121] intentionally omitted <==

There was no change in liabilities from financing activities for the year ended December 31, 2021.

7. Related Party Transactions

(1) Names of related parties and relationship

(2) Significant related party transactions

  • A. Purchases

==> picture [472 x 67] intentionally omitted <==

The above price of purchase transactions is based on the market price in mutual agreement. The payment terms were approximately the same as those with general suppliers. The payment to the general suppliers is 60 to 95 days after monthly billings, L/C or T/T based on the different transaction terms.

179

B. Payables to related parties:

==> picture [457 x 83] intentionally omitted <==

The payables to related parties arose mainly from purchase transactions.

(3) Key management compensation

==> picture [474 x 85] intentionally omitted <==

8. Pledged Assets

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

==> picture [484 x 159] intentionally omitted <==

The Company’s long-term and short-term borrowings have been fully repaid, but property, plant and equipment pledged as collateral have not been written off.

9. Significant Contingent Liabilities and Unrecognised Contract Commitments

(4) Contingencies

None.

(5) Commitments

  • A. Capital expenditure contracted for at the balance sheet date but not yet incurred is as follows:

==> picture [471 x 35] intentionally omitted <==

  • B. The Company signs purchase contracts with specific suppliers on a quarterly basis, and the purchase price of each product and the total purchase quantity are in agreement. When the purchase quantity stipulated in the contract is fully purchased in advance, the contract needs to be renewed; When the Company’s product formula changes, specific suppliers need to redeploy the shipment according to the new formula, and the agreed price shall be adjusted.

180

10. Significant Disaster Loss

None.

11. Significant Events after the Balance Sheet Date

None.

12. Others

(1)Capital management

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

(2)Financial instruments

A. Financial instruments by category

==> picture [466 x 236] intentionally omitted <==

==> picture [466 x 175] intentionally omitted <==

181

  • B. Financial risk management policies

  • (a) The Company’s daily sales expose it to a variety of financial risks: market risk (including foreign exchange risk, interest rate risk and price risk), credit risk and liquidity risk.

  • (b) Risk management is carried out by a central treasury department (Company treasury) under policies approved by the Board of Directors. Company treasury identifies, evaluates and hedges financial risks in close co-operation with the Company’s operating units and chairman’s office, and implements in accordance with the Company’s internal management regulation and internal control system. The process and results of the implementation shall comply with the regulations of the law.

    • The board of directors of the Company supervises the management’s compliance with financial risk policies and procedures, and reviews the appropriateness of the Company’s financial risk framework. Internal auditors assist the board of directors of the Company in its supervisory role by conducting regular and exception reviews and reporting the results to the board of directors.

  • C. Significant financial risks and degrees of financial risks

  • (a) Market risk

Exchange rate risk

  • i The Company sells internationally and is exposed to exchange rate risk arising from the transactions of the Company used in various functional currency, primarily with respect to the USD, GBP, JPY, AUD and EUR. Foreign exchange rate risk arises from future commercial transactions and recognised assets and liabilities.

  • ii Management has set up a policy to require the Company to manage its foreign exchange risk against its functional currency. Exchange rate risk is measured through a forecast of highly probable USD expenditures. Forward foreign exchange contracts are adopted to minimise the volatility of sales revenue.

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

182

==> picture [441 x 322] intentionally omitted <==

==> picture [444 x 322] intentionally omitted <==

183

  • iv The total exchange gain (loss), including realised and unrealised, arising from significant foreign exchange variation on the monetary items held by the Company for the years ended December 31, 2022 and 2021, amounted to gain of $55,197 thousand and loss of ($36,799) thousand, respectively.

Price risk

  • i The Company’s equity securities, which are exposed to price risk, are the held financial assets at fair value through profit or loss. To manage its price risk arising from investments in equity securities, the Company diversifies its portfolio. Diversification of the portfolio is done in accordance with the limits set by the Company.

  • ii The Company’s investments in equity securities comprise domestic and foreign funds and shares. The prices of equity securities would change due to the change of the future value of investee companies. If the prices of these equity securities had increased/decreased by 1% with all other variables held constant, post-tax profit for the years ended December 31, 2022 and 2021 would have increased/decreased by $0 thousand and $8,818 thousand, respectively, as a result of gains/losses on equity securities classified as at fair value through profit or loss.

  • (b) Credit risk

  • i Credit risk refers to the risk of financial loss to the Company arising from default by the clients or counterparties of financial instruments on the contract obligations. The main factor is that counterparties could not repay in full the accounts receivable based on the agreed terms, and the contract cash flows of debt instruments stated at amortised cost.

  • ii The Company manages their credit risk taking into consideration the entire company’s concern. For banks and financial institutions, only independently rated parties with a minimum rating of ‘A’ are accepted. According to the Company’s credit policy, the Company is responsible for managing and analysing the credit risk for each of their new clients before standard payment and delivery terms and conditions are offered. Internal risk control assesses the credit quality of the customers, taking into account their financial position, past experience and other factors. Individual risk limits are set based on internal or external ratings in accordance with limits set by the Board of Directors. The utilisation of credit limits is regularly monitored.

  • iii The Company is in line with credit risk management procedure to assess whether there has been a significant increase in credit risk on that instrument since initial recognition. If the contract payments were highly unrecoverable, there has been a significant increase in credit risk on that instrument since initial recognition, and the specific identification was adopted.

  • iv The Company classifies customer’s accounts receivable in accordance with credit rating of customer. The Company applies the modified approach using a provision matrix to estimate the expected credit loss.

184

  • v The Company first evaluates and recognises impairment losses for individual receivables that have objective evidence that they cannot be collected. For the rest of receivables, the loss rate is established based on historical and timely information for a specific period, and future forward-looking considerations are made to assess the loss allowance for receivables. As of December 31, 2022 and 2021, the accumulated amount of loss allowance for the above-mentioned individual provision for receivables was $352 thousand and $1,488 thousand, respectively. The rest of receivables were assessed using expected loss approach, the accumulated loss allowance amounted to $3,223 thousand and $3,087 thousand, respectively.

  • vi Movements in relation to the Company applying the modified approach to provide loss allowance for receivables are as follows:

==> picture [430 x 101] intentionally omitted <==

(c) Liquidity risk

  • i Cash flow forecasting is performed in the operating segments of the Company and aggregated by Company treasury. Company treasury monitors rolling forecasts of the Company’s liquidity requirements to ensure it has sufficient cash to meet operational needs while maintaining sufficient headroom on its undrawn committed borrowing facilities at all times.

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

185

==> picture [441 x 238] intentionally omitted <==

  • (3) Fair

value

information

  • A. The different levels that the inputs to valuation techniques are used to measure fair value of financial and non-financial instruments have been defined as follows:

  • Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date. A market is regarded as active where a market in which transactions for the asset or liability take place with sufficient frequency and volume to provide pricing information on an ongoing basis. The fair value of the Company’s investment in domestic and foreign funds and shares is included in Level 1.

  • Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.

  • Level 3: Unobservable inputs for the asset or liability.

186

  • B. Financial instruments not measured at fair value

  • The carrying amounts of cash and cash equivalents, financial assets at amortised cost, notes receivable, net, accounts receivable, net, other receivables, guarantee deposits paid, notes payable (including related parties), accounts payable (including related parties), other payables and guarantee deposits received are approximate to their fair values.

  • C. The related information of financial and non-financial instruments measured at fair value by level on the basis of the nature, characteristics and risks of the assets and liabilities at December 31, 2022 and 2021 are as follows:

  • (a) No such transaction on December 31, 2022.

==> picture [452 x 145] intentionally omitted <==

  - (c) The methods and assumptions the Company used to measure fair value are as follows: The instruments the Company used market quoted prices as their fair values (that is, Level 1), according to the characteristics of the instruments, open-end funds are net value and listed and foreign shares are closing price.

  • D. For the years ended December 31, 2022 and 2021, there was no transfer between Level 1 and Level 2.

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

  • Supplementary Disclosures

(1)Significant transactions information

  • A. Loans to others: None.

  • B. Provision of endorsements and guarantees to others: None.

  • C. Holding of marketable securities at the end of the period (not including subsidiaries, associates and joint ventures): None.

  • D. Acquisition or sale of the same security with the accumulated cost exceeding $300 million or 20% of the Company’s paid-in capital: Please refer to table 1.

  • E. Acquisition of real estate reaching NT$300 million or 20% of paid-in capital or more: None.

  • F. Disposal of real estate reaching NT$300 million or 20% of paid-in capital or more: None.

  • G. Purchases or sales of goods from or to related parties reaching $100 million or 20% of paidin capital or more: Please refer to table 2.

  • H. Receivables from related parties reaching NT$100 million or 20% of paid-in capital or more: None.

187

  • I. Trading in derivative instruments undertaken during the reporting periods: None.

  • J. Significant inter-company transactions during the reporting periods: None.

(2)Information on investees

Names, locations and other information of investee companies (not including investees in Mainland China): None.

(3)Information on investments in Mainland China

  • A. Basic information: None.

  • B. Significant transactions conducted with investees in Mainland China directly or indirectly through other companies in the third areas: None.

(4)Major shareholders information

Major shareholders information: Please refer to table 3.

14. Segment Information

(1)General information

Management has determined the reportable operating segments based on the reports reviewed by the Chief Operating Decision-Maker that are used to make strategic decisions. Business organisation is divided into rubber products and other segments based on the products. There is no material change in the basis for formation of entities and division of segments in the Company or in the measurement basis for segment information during this period.

(2)Measurement of segment information

The chief operating decision-maker evaluates the performance of the operating segments based on income/(loss) before tax.

(3)Information about segment profit or loss, assets and liabilities

  • A. The segment information provided to the chief operating decision-maker for the reportable segments is as follows:

==> picture [459 x 56] intentionally omitted <==

==> picture [456 x 56] intentionally omitted <==

  • B. The Company’s reportable operating segments are the result of the organisation divided by products.

  • C. The Company generates revenue primarily by manufacturing and selling rubber products.

  • D. The accounting policies of the operating segments are in agreement with the significant accounting policies summarised in Note 4. Segment (profit) loss refers to the profit or loss of each segment, excluding allocated interest income, other income, other expenditures, profit or

188

loss from outside investments, currency exchange gains (losses) and gains (losses) on disposal of property, plant and equipment. The income/(loss) before tax is used as a basis for the Company in assessing the performance of the operating segments.

(4)Reconciliation for segment income (loss)

Sales between segments are carried out at arm’s length. The revenue from external customers reported to the chief operating decision-maker is measured in a manner consistent with that in the statement of comprehensive income.

  • A. The total revenue for the years ended December 31, 2022 and 2021 is the same as the total revenue of continuing operating segments, and there is no reconciling items.

==> picture [463 x 52] intentionally omitted <==

  • B. A reconciliation item of reportable segment income or loss to the income/(loss) before tax from continuing operations for the years ended December 31, 2022 and 2021 is provided as follows:

==> picture [463 x 203] intentionally omitted <==

(5)Information on products

The Company’s business segment mainly engaged in manufacturing, processing and sales of rubber conveyor belt, rubber sheet, oil resistant, acid resistant, heat resistant packer elements and other rubber products. Since the operating revenue, operating profit and identifiable assets used by the segment account for more than 90% of the total operating revenue, total operating profit and total assets, it belongs to one single industry.

(6)Geographical information

Revenue is calculated based on geographic location of customers. Non-current assets are classified based on geographic location of assets and included property, plant and equipment, intangible asset and other non-current asset, but exclude financial instruments, guarantee deposits paid and deferred tax assets. Geographical information for the years ended December 31, 2022 and 2021 is as follows:

189

==> picture [465 x 132] intentionally omitted <==

(7)Major customer information

Major customer information of the Company for the years ended December 31, 2022 and 2021 is as follows:

==> picture [468 x 116] intentionally omitted <==

190

Hsin Yung Chien Co., Ltd.

Acquisition or sale of the same security with the accumulated cost exceeding $300 million or 20% of the Company's paid-in capital

Year ended December 31, 2022

Statement 1

Expressed in thousands of NTD; shares in thousand

(Except as otherwise indicated)

Counterparty Counterparty Balance as at January 1, 2022

Relationship
with the investor
(Note 2)
Number of
shares
Amount
-
2,130
$ 103,670
-
-
2,530
139,215
-		 Balance as at January 1, 2022
 Balance as at January 1, 2022
 Addition (Note 3)
 Disposal (Note 3) Balance as at December 31, 2022 Balance as at December 31, 2022


Number of
shares
Amount
2,130
$ 103,670
-
2,530
139,215
-
Number of
shares

Amount
$ -
-
Number of
shares
2,130
$ 2,530
Selling price
Book value
340,534
$ 103,670
185,220
139,215
Gain (loss) on
Number of
shares
-
-
Amount
$ -
-

(Note 2)
-
-

$
disposal
236,864
46,005

Note 1: Marketable securities in the table refer to stocks, bonds, beneficiary certificates and other related derivative securities.

Note 2: Fill in the columns the counterparty and relationship if securities are accounted for using the equity method; otherwise leave the columns blank. Note 3: Aggregate purchases and sales amounts should be calculated separately at their market values to verify whether they individually reach NT$300 million or 20% of paid-in capital or more. Note 4: Paid-in capital referred to herein is the paid-in capital of parent company. In the case that shares were issued with no par value or a par value other than NT$10 per share, the 20 % of paid-in capital shall be replaced by 10% of equity attributable to owners of the parent in the calculation.

191

Hsin Yung Chien Co., Ltd.

Purchases or sales of goods from or to related parties reaching NT$100 million or 20% of paid-in capital or more

Year ended December 31, 2022

Statement 2

Expressed in thousands of NTD (Except as otherwise indicated)

Purchaser/seller
Counterparty		 Relationship with Transaction

Purchases (sales)
Purchases
Amount
$ 203,693


the counterparty
Other related
parties
HSIN YUNG CHIEN CO., LTD.
CLEP ENTERPRISE CO.,
LTD.

Note 1: If terms of related-party transactions are different from third-party transactions, explain the differences and reasons in the‘Unit price’and‘Credit term’columns. Note 2: In case related-party transaction terms involve advance receipts (prepayments) transactions, explain in the footnote the reasons, contractual provisions, related amounts, and differences in types of transactions compared to third-party transactions.

Note 3: Please refer to Note 7(2) for purchase transaction information with Hsin Yung Chien Co., Ltd.

192

Hsin Yung Chien Co., Ltd. Major shareholders information December 31, 2022

Statement 3

Name of major shareholders
CHI KAUN INVESTMENT CO., LTD
JI UO INVESTMENT CO., LTD
Lin, Chi-Chin
Lin, Pei-Chang		 Name of major shareholders Shares

Name of shares held
Ownership (%)


8,392,907
10.76%
5,723,349
7.33%
5,403,005
6.92%
4,003,508
5.13%

193

Hsin Yung Chien Co., Ltd.

Chairperson: Lin, Chi-Chin

194

More from HYC

Director's Dealing 2026
Jun 1
Director's Dealing 2026
Jun 1
Regulatory Filings 2026
May 25
AGM Information 2026
May 25
Notice of Dividend Amount 2026
May 25
Declaration of Voting Results & Voting Rights Announcements 2026
May 22
Interim / Quarterly Report 2026
May 13
Interim / Quarterly Report 2026
May 13
Regulatory Filings 2026
May 13
Regulatory Filings 2026
May 13
View all filings →