KST — Audit Report / Information 2023

Nov 10, 2023

Stock Code: 3003

K.S. TERMINALS INC.

Parent Company-Only Financial Statements and Independent Auditors’ Report

For the Years Ended December 31, 2023 and 2022

Address: No. 8, Changbin East Third Road, Shianxi Township, Changhua County

Tel.: (04) 758-0001

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Parent Company-Only Financial Statements

Table of Contents

Parent Company-Only Financial Statements Table of Contents
Item	Page
I. Cover	1
II. Table of Contents	2
III. CPAs’ Audit Report	3 – 7
IV. Parent Company-only Balance Sheets	8 – 9
V. Parent Company-only Statement of Comprehensive Income	10
VI. Parent Company-only Statement of Changes in Equity	11
VII. Parent Company-only Statement of Cash Flows	12
VIII. Notes to the Parent Company-Only Financial Statements
(I) Company History	13
(II) Date and Procedure for Approval of Financial Statements	13
(III) Application of Newly Issued and Amended Standards and Interpretations	13 – 17
(IV) Summary of Significant Accounting Policies	17 – 44
(V) Critical Accounting Judgments, Assumptions, and Key Sources of Estimation Uncertainty	44 – 45
(VI) Description of Significant Accounting Items	46 – 71
(VII) Related Party Transactions	72 – 73
(VIII) Assets Pledged	74
(IX) Material Contingent Liabilities and Unrecognized Contractual Commitments	74
(X) Major Disaster Loss	74
(XI) Material Events After the Balance Sheet Date	74
(XII) Others	74 – 87
(XIII) Additional Disclosures
1. Information on Material Transactions	87 – 91
2. Information on Investees	91 – 92
3. Information on Investment in Mainland China	92 – 93
4. Information on Major Shareholders	93
IX. Statement of Significant Accounting Items	94 – 105

2

CPAs’ Audit Report

To K.S. TERMINALS INC.,

Audit Opinions

We have audited the accompanying parent company-only balance sheets of K.S. TERMINALS INC., (the “Company”) for the years ended December 31, 2023 and 2022 and the relevant parent company-only statements of comprehensive income, changes in equity and cash flows for the years then ended, and relevant notes, including a summary of significant accounting policies (collectively referred to as the “parent company-only financial statements”).

In our opinion, based on our audits and the reports of other auditors (please refer to the Other Matters section of our report), the accompanying parent company-only financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022 and its financial performance and cash flows for the years then ended in conformity with the Regulations Governing the Preparation of Financial Reports by Securities Issuers.

Basis for Audit Opinion

We conducted our audit in accordance with the Regulations Governing the Auditing and Attestation of Financial Statements by Certified Public Accountants and auditing standards. Our responsibilities under those standards are further described in the paragraph “CPAs’ Responsibilities for the Audit of the Parent Company-only Financial Statements”. We are independent of the Company in accordance with the Norm of Professional Ethics for Certified Public Accountant and have fulfilled our other responsibilities in accordance with these requirements. Based on our audits and the reports of other auditors, we are convinced that we have acquired enough and appropriate audit evidence to serve as the basis for our audit opinion.

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Key Audit Matters

Key audit matters refer to the most vital matters in our audit of the Company’s parent company-only financial statements for the year ended December 31, 2023, based on our professional judgment. These matters are addressed in our audit of the parent company-only financial statements as a whole and in forming our audit opinion. We do not express a separate opinion on these matters.

- Inventory Valuation (including investment using the equity method subsidiary inventory)

The inventories of the Company and its subsidiaries invested using the equity method are material to the financial statements. The main raw materials in the inventories are bronze and copper. Due to the fluctuations of the international copper prices, the prices of raw material inventories may fluctuate greatly, and due to the fluctuations of the international raw material prices, the selling prices of the relevant finished goods may be impacted by the overly low raw material prices. As the amount of the allowance for inventory valuation losses is material to the financial statements, we adopted it as a key audit matter.

Our audit procedures included (but were not limited to) understanding and testing the effectiveness of the internal control system established by the management team for inventory valuation losses, assessing the reasonableness of the allowance for inventory valuation losses provided, inspecting inventories to verify the status of ending inventories, and sampling to verify the costs of inventories per unit, while for the net realizable values adopted by the management, sampling and vouching for documents related to purchases and sales to verify the correctness of the net realizable values of inventories.

We also considered the appropriateness of the disclosures in Notes 4, 5 and 6 to the financial statements related to inventories.

Other Matters – Making Reference to the Audits of Component Auditors

The financial statements of some of the investees included in the Company’s parent company-only financial statements were not audited by us, but by other auditors. Therefore, in our opinion, for the accompanying parent company-only financial statements, amounts stated in the financial statements of these associates and joint ventures accounted for under the equity method are based solely on the reports of other auditors. The investment in these investees under the equity method as of December 31, 2023 and 2022 was NTD 261,862 thousand and NTD 279,411 thousand,

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representing 3% and 4% of total assets, respectively. For the years then ended, the share of profit and loss of subsidiaries, affiliates, and joint ventures were NTD (16,323) thousand and NTD (13,886) thousand, representing (3)% and (1)% of the net profit before tax, respectively. The share of other comprehensive income of subsidiaries, affiliates, and joint ventures under the equity method was NTD (2,626) thousand and NTD (642) thousand, representing 12% and 6% of net other comprehensive income, respectively.

Responsibilities of the management and the governing body for the parent company-only financial statements

The responsibilities of the management are to prepare the parent company-only financial statements with fair presentation in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and to maintain the necessary internal control associated with the preparation in order to ensure that the parent company-only financial statements are free from material misstatement arising from fraud or error.

In preparing the parent company-only financial statements, the management is responsible for assessing the Company’s ability in continuing as a going concern, disclosing relevant matters, and adopting the going concern basis of accounting, unless the management intends to liquidate the Company or cease operations, or has no viable alternatives but to liquidate or cease operations.

The Company’s governing body (including the Audit Committee) is responsible for supervising the financial reporting process.

CPAs’ responsibilities for the audit of the parent company-only financial statements

Our objectives are to obtain reasonable assurance on whether the parent company-only financial statements as a whole are free from material misstatement arising from fraud or error and to issue an independent auditors’ report. Reasonable assurance is a high-level assurance but is not a guarantee that an audit conducted in accordance with auditing standards of the Republic of China will always detect a material misstatement when it exists. Misstatement may arise from fraud or error. If the monetary amounts are misstated, either separately or in aggregate, could reasonably be expected to influence the economic decisions of the users of the parent company-only financial statements, they are considered material.

We have exercised our professional judgment and maintained professional doubt when performing the audit work in accordance with auditing standards. We also performed the following tasks:

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1. We identified and assessed the risks of material misstatement arising from fraud or error within the parent company-only financial statements, designed and executed countermeasures in response to said risks, and obtained sufficient and appropriate audit evidence to provide a basis for our opinion. Fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Therefore, the risk of not detecting a material misstatement resulting from fraud is higher than one resulting from error.

2. We learned about the internal control related to the audit in order to design appropriate audit procedures under the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control.

3. We evaluated the appropriateness of the accounting policies adopted and the reasonableness of the accounting estimates and relevant disclosures made by the management.

4. We made conclusions on the appropriateness of the management’s adoption of the going concern basis of accounting based on the audit evidence obtained and whether a material uncertainty exists for events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we are of the opinion that a material uncertainty exists, we shall remind users of the parent company-only financial statements to pay attention to relevant disclosures in said statements in our audit report. If such disclosures are inadequate, we need to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Company to cease to continue as a going concern.

5. We evaluated the overall presentation, structure, and content of the parent company-only financial statements (including relevant notes) and whether the parent company-only financial statements adequately presented the relevant transactions and events.

6. We are convinced that we have acquired enough and appropriate audit evidence of the financial information of entities within the Group to serve as the basis of audit opinion on the parent company-only financial statements. We are responsible for guiding, supervising, and performing the audit and forming an audit opinion on the Group.

The matters communicated between us and the governing body included the planned scope and time of the audit and significant audit findings (including any significant defects in internal control identified during the audit).

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We also provided the governing body with a declaration that we have complied with the Norm of Professional Ethics for Certified Public Accountant regarding independence and communicated with it all relationships and other matters that might possibly be regarded as detrimental to our independence (including relevant protective measures).

From the matters communicated with the governing body, we determined the key audit matters for the audit of the Company’s parent company-only financial statements for the year ended December 31, 2023. We have clearly indicated such matters in the auditors’ report, unless legal regulations prohibit the public disclosure of specific matters or in extremely rare cases in which we decided not to communicate specific items in the auditors’ report for it could be reasonably anticipated that the negative effects of such disclosure would be greater than the public interest it might bring forth.

EY Taiwan Approved by the Competent Authority to Audit/Review Publicly Listed Companies’ Financial Statements

Case Audit No.: Jin-Guan-Zheng-Shen-Zi No. 1060027042

Jin-Guan-Zheng-Shen-Zi No. 1080326041

Chen Ming-Hung

Certified Public Accountant:

Huang Yu-Ting

March 14, 2024

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K.S. TERMINALS INC.

Parent Company-only Balance Sheets December 31, 2023 and December 31, 2022

(Amounts in Thousands of New Taiwan Dollars,Unless Otherwise Specified)	(Amounts in Thousands of New Taiwan Dollars,Unless Otherwise Specified)	(Amounts in Thousands of New Taiwan Dollars,Unless Otherwise Specified)	(Amounts in Thousands of New Taiwan Dollars,Unless Otherwise Specified)
Assets			December 31, 2	023	December 31,	2022
Code	AccountingItem	Note	Amount	%	Amount	%
1100 1110 1136 1150 1170 1180 1200 130x 1410 1470 11xx 1517 1550 1600 1755 1760 1780 1840 1900 15xx 1XXX	Current Assets Cash and Cash Equivalents Financial Assets at Fair Value Through Profit or Loss – current Financial Assets Measured at Amortized Cost – current Net Notes Receivable Net Accounts Receivable Net Accounts Receivable – Related Parties Other Receivables Inventories Advance Receipts Other Current Assets Total Current Assets Non-current Assets Financial Assets at Fair Value Through Other Comprehensive Income – non-current Investments Using the Equity Method Property, Plants and Equipment Right-of-use Assets Net Investment Property Intangible Assets Deferred Tax Assets Other Non-current Assets Total Non-current Assets Total Assets	4 and 6.1 4 and 6.2 4 4 and 6.15 4, 6.3, and 6.15 4, 6.3, 6.15, and 7 4, 6.4, and 8 4 and 6.5 4 4 and 6.6 4 and 6.7 4, 6.8, and 8 4, 6.16, and 7 4 4 4 and 6.20	$2,193,799 635,350 - 25,819 324,630 67,316 41,871 920,646 36,139 16,580 4,262,150 104,872 2,132,190 1,305,279 4,499 39,870 6,783 10,729 31,488 3,635,710 $7,897,860	28 8 - - 4 1 1 12 - - 54 1 27 17 - 1 - - - 46 100	$1,772,345 301,236 138,381 33,255 345,957 70,973 275,091 1,181,282 27,157 7,115 4,152,792 108,083 2,373,689 1,130,882 7,452 3,941 9,250 13,380 34,088 3,680,765 $7,833,557	23 4 2 - 4 1 4 15 - - 53 1 30 15 - - - - 1 47 100

(Please see the Notes to the Parent Company-only Financial Statements.)

Chairman: Cheng Ke-Pin

General Manager: Cheng Chieh-Yuan

Chief Accounting Officer: Tseng Yu-Chin

8

K.S. TERMINALS INC.

Parent Company-only Balance Sheets (Continued) December 31, 2023 and December 31, 2022

(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

Liabilities and Equity	Liabilities and Equity	Liabilities and Equity			December 31,2023	December 31,2023		December 31,2022	December 31,2022
Code	AccountingItem	Note			Amount	%		Amount	%
2100 2130 2150 2170 2180 2200 2230 2322 2399 21xx 2540 2570 2600 25xx 2xxx 31xx 3100 3110 3200 3300 3310 3320 3350 3400 3410 3420 3XXX	Current Liabilities Short-term Borrowings Contract Liabilities – current Notes Payable Accounts Payable Accounts Payable – Related Parties Other Payables Current Tax Liabilities Long-term Liabilities Due Within One Year or One Business Cycle Other Current Liabilities Sub-total of Current Liabilities Non-current Liabilities Long-term Borrowings Deferred Tax Liabilities Other Non-current Liabilities Sub-total of Non-current Liabilities Total Liabilities Equity Attributable to Owners of the Parent Company Capital Stock Common Stock Capital Surplus Retained Earnings Legal Reserve Special Reserve Undistributed Earnings Subtotal of Retained Earnings Other Equity Exchange differences arising on the translation of the financial statements of foreign operations Unrealized Gain (Loss) on Financial Assets at Fair Value Through Other Comprehensive Income Subtotal of Other Equity Total Equity Total Liabilities and Equity	4 and 6.9 4 and 6.14 4 and 6.10 4 and 6.20 4 and 6.11 4, 6.16, and 7 4 and 6.11 4 and 6.20 4, 6.16, and 7 6.13 6.13 6.13 12			$400,000 5,154 3,629 60,871 1,535 284,530 55,201 104,116 11,706 926,742 473,282 240,184 879 714,345 1,641,087 1,556,549 27,281 803,369 114,850 3,890,871 4,809,090 (59,024) (77,123) (136,147) 6,256,773 $7,897,860	5 - - 1 - 4 1 1 - 12 6 3 - 9 21 20 - 10 2 49 61 (1) (1) (2) 79 100		$439,800 19,210 4,148 75,269 4,260 346,539 124,604 58,606 7,626 1,080,062 402,513 301,356 3,687 707,556 1,787,618 1,556,549 27,281 723,956 205,872 3,647,131 4,576,959 (40,678) (74,172) (114,850) 6,045,939 $7,833,557	6 - - 1 - 4 2 1 - 14 5 4 - 9 23 20 - 9 3 47 59 (1) (1) (2) 77 100

(Please see the Notes to the Parent Company-only Financial Statements.)

Chairman: Cheng Ke-Pin

General Manager: Cheng Chieh-Yuan

Chief Accounting Officer: Tseng Yu-Chin

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K.S. TERMINALS INC.

Parent Company-only Statement of Comprehensive Income For the Years Ended December 31, 2023 and 2022

(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

Cod e	AccountingItem	Note	2023		2022
			Amount	%	Amount	%
4000 5000 5900 5910 5920 5950 6000 6100 6200 6300 6450 6900 7000 7010 7020 7050 7070 7900 7950 8200 8300 8310 8316 8349 8360 8361 8370 8399 8500 9750 9850	Operating Income Operating Costs Operating Gross Profit Unrealized Sales Profit and Loss Realized Sales Profit and Loss Net Operating Gross Profit Operating Expenses Selling Expenses Administrative Expenses Research and Development Expenses Expected Credit Impairment Losses Total Operating Expenses Operating Profit Non-operating Revenue and Expenses Other Income Other Gains and Losses Financial Costs Share of Profit or Loss of Subsidiaries, Associates, and Joint Ventures Recognized Using the Equity Method Total Non-operating Income and Expenses Net Profit Before Tax Income Tax Expenses Current Net Profit Other Comprehensive Income Items That Will not be Reclassified Subsequently to Profit or Loss Unrealized Gain (Loss) From Investments in Equity Instruments Measured at Fair Value Through Other Comprehensive Income Income Tax Related to Items not Reclassified Items That May be Reclassified Subsequently to Profit or Loss Exchange differences arising on the translation of the financial statements of foreign operations Share of Other Comprehensive Income of Associates and Joint Ventures Recognized Using the Equity Method-May be Reclassified to Profit or Loss Income Tax Related to Items That May be Reclassified Other Comprehensive Income in the Current Period (net of tax) Total Comprehensive Income in the Current Period Earnings per Share Basic Earnings per Share (NTD) Diluted Earnings per Share (NTD)	4, 6.14, and 7 6.5, 6.17, and 7 6.17 and 7 6.15 4 and 6.18 6.18 6.18 4 and 6.7 4 and 6.20 6.19 and 6.20 4 and 6.21	$2,714,903 (1,944,684) 770,219 (23,147) 38,702 785,774 (153,710) (131,902) (107,093) (78) (392,783) 392,991 59,624 22,653 (12,789) 178,832 248,320 641,311 (97,870) 543,441 (3,211) 260 (19,650) (2,626) 3,930 (21,297) $522,144 $3.49 $3.48	100 (72) 28 (1) 2 29 (6) (5) (3) - (14) 15 2 1 - 6 9 24 (4) 20 - - (1) - - (1) 19	$3,155,889 (2,172,140) 983,749 (38,702) 42,931 987,978 (161,384) (150,778) (112,219) (6) (424,387) 563,591 62,712 168,849 (13,100) 327,892 546,353 1,109,944 (214,558) 895,386 (38,607) 797 35,270 (642) (7,054) (10,236) $885,150 $5.75 $5.73	100 (69) 31 (1) 1 31 (5) (5) (3) - (13) 18 2 5 - 10 17 35 (7) 28 (1) - 1 - - - 28

(Please see the Notes to the Parent Company-only Financial Statements.)

Chairman: Cheng Ke-Pin

General Manager: Cheng Chieh-Yuan

Chief Accounting Officer: Tseng Yu-Chin

10

K.S. TERMINALS INC.

Parent Company-only Statement of Changes in Equity For the Years Ended December 31, 2023 and 2022

(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

	Item	Common stock	Capital Surplus		Retained Earnings		Other EquityInterest Items	Other EquityInterest Items	Total Equity
				Legal Reserve	Special Reserve	Undistributed Earnings	Exchange differences arising on the translation of the financial statements of foreign operations	Unrealized Gain (Loss) on Financial Assets at Fair Value Through Other Comprehensive Income
Cod e		3110	3200	3310	3320	3350	3410	3420	3xxx
A1 B1 B5 B17 C15 D1 D3 D5 Q1 Z1 A1 B1 B5 B17 D1 D3 D5 Z1	Balance as of January 1, 2022 Earnings Distribution in 2021 Set Aside as Legal Reserve Cash Dividends on Ordinary Shares Reversed Special Reserve Cash Dividends Distributed From Capital Surplus Net Profit for 2022 Other Comprehensive Income for 2022 Total Comprehensive Income in the Current Period Disposal of Equity Instruments at Fair Value Through Other comprehensive Income Balance as of December 31, 2022 Balance as of January 1, 2023 Earnings Distribution in 2022 Set Aside as Legal Reserve Cash Dividends on Ordinary Shares Reversed Special Reserve Net Profit for 2023 Other Comprehensive Income for 2023 Total Comprehensive Income in the Current Period Balance as of December 31, 2023	$1,556,549 - $1,556,549 $1,556,549 - $1,556,549	$73,977 (46,696) - $27,281 $27,281 - $27,281	$646,457 77,499 - $723,956 $723,956 79,413 - $803,369	$256,026 (50,154) - $205,872 $205,872 (91,022) - $114,850	$3,144,961 (77,499) (264,614) 50,154 895,386 895,386 (101,257) $3,647,131 $3,647,131 (79,413) (311,310) 91,022 543,441 543,441 $3,890,871	$(68,252) 27,574 27,574 $(40,678) $(40,678) (18,346) (18,346) $(59,024)	$(137,619) (37,810) (37,810) 101,257 $(74,172) $(74,172) (2,951) (2,951) $(77,123)	$5,472,099 - (264,614) - (46,696) 895,386 (10,236) 885,150 - $6,045,939 $6,045,939 - (311,310) - 543,441 (21,297) 522,144 $6,256,773

(Please see the Notes to the Parent Company-only Financial Statements.)

Chairman: Cheng Ke-Pin

General Manager: Cheng Chieh-Yuan

Chief Accounting Officer: Tseng Yu-Chin

11

K.S. TERMINALS INC.

Parent Company-only Statement of Cash Flows For the Years Ended December 31, 2023 and 2022

(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

Code	Item	2023	2022	Code	Item	2023	2022
AAAA A10000 A20000 A20010 A20100 A20200 A20300 A20400 A20900 A21200 A21300 A22400 A22500 A23100 A23900 A24000 A29900 A30000 A31110 A31130 A31150 A31160 A31180 A31200 A31230 A31240 A32125 A32130 A32150 A32160 A32180 A32230 A33000 A33100 A33200 A33500 AAAA	Cash Flow from Operating Activities: Net Profit Before Tax for This Period Adjustments: Income and Expenses: Depreciation Expenses Amortization Expenses Expected Credit Impairment Losses Net Loss (Gain) on Financial Assets and Liabilities at Fair Value Through Profit or Loss Interest Expenses Interest Income Dividend Income Share of Profit of Subsidiaries, Associates, and Joint Ventures Recognized Using the Equity Method Gain on Disposal and Scrapping of Property, Plants and Equipment Loss (Gain) on Disposal of Investment Unrealized Sales Profit Realized Sales Profit Valuation Losses Changes in Current Assets/Liabilities Related to Operating Activities: Increase in Financial Assets at Fair Value Through Profit or Loss – current Decrease in Notes Receivable Decrease in Accounts Receivable Decrease (Increase) in Accounts Receivable – Related Parties Decrease (Increase) in Other Receivables Decrease in Inventory Decrease (Increase) in Prepayments Decrease (Increase) in Other Current Assets Increase (Decrease) in Contract Liabilities Decrease in Notes Payable Decrease in Accounts Payable (Decrease) Increase in Accounts Payable – Related Parties Decrease in Other Payables Increase in Other Current Liabilities Cash Inflow From Operations Interest Received Dividends Received Income Tax Paid Net Cash Inflow From OperatingActivities	$641,311 84,247 3,143 78 (15,326) 12,789 (38,540) (2,162) (178,832) (103) 2,550 23,147 (38,702) 544 (321,338) 7,436 21,249 3,657 (3,136) 260,092 (8,982) 2,236 (14,056) (519) (14,398) (2,725) (60,040) 3,568 367,188 40,583 2,162 (233,305) 176,628	$1,109,944 83,207 3,233 6 32,260 13,100 (17,975) (4,320) (327,892) (135) (3,636) 38,702 (42,931) 7,543 (105,789) 9,586 152,020 (19,412) 10,831 330,551 17,188 (912) 7,926 (4,014) (24,448) 4,245 (21,077) 128 1,247,929 15,389 4,320 (220,374) 1,047,264	BBBB B00010 B00020 B00060 B01800 B02400 B02700 B02800 B04100 B04500 B05400 B06700 B07600 BBBB CCCC C00100 C00200 C01600 C01700 C04020 C04300 C04500 C05600 CCCC EEEE E00100 E00200	Cash Flow from Investing Activities: Acquisition of Financial Assets at Fair Value Through Other Comprehensive Income Disposal of Financial Assets at Fair Value Through Other Comprehensive Income Decrease (Increase) in Financial Assets Measured at Amortized Cost Acquisition of Investments Using the Equity Method Proceeds from Capital Decrease of Investments Using the Equity Method Acquisition of Property, Plants and Equipment Disposal of Property, Plants and Equipment Decrease in Other Receivables Acquisition of Intangible Assets Acquisition of Investment Property Increase in Other Non-current Assets Dividends Received Net Cash Inflow From Investing Activities Cash Flow from Financing Activities: Increase in Short-term Loans Decrease in Short-term Borrowings Long-term Borrowings Repayments of Long-term Borrowings Lease Principal Repaid Increase in Other Non-current Liabilities Payout of Cash Dividends Interest Paid Net Cash Outflow From Financing Activities Increase in Current Cash and Cash Equivalents Cash and Cash Equivalents at the Beginning of the Period Cash and Cash Equivalents at the End of the Period	- - 138,381 (27,122) - (165,212) 377 234,313 (676) (38,392) (85,671) 440,732 496,730 1,475,000 (1,514,800) 176,274 (59,995) (4,969) 663 (311,310) (12,767) (251,904) 421,454 1,772,345 $2,193,799	(170,720) 451,551 (83,062) (459,951) 166,012 (117,800) 135 259,641 (4,224) - (26,920) 381,320 395,982 2,709,200 (3,459,200) 106,000 (52,856) (5,079) - (311,310) (12,992) (1,026,237) 417,009 1,355,336 $1,772,345

Chairman: Cheng Ke-Pin

(Please see the Notes to the Parent Company-only Financial Statements.) General Manager: Cheng Chieh-Yuan

Chief Accounting Officer: Tseng Yu-Chin

12

K.S. TERMINALS INC.

Notes to the Parent Company-Only Financial Statements

For the Years Ended December 31, 2023 and 2022

(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

I. Company History

K.S. TERMINALS INC. (hereinafter referred to as the “Company”) was incorporated in February 1978. It mainly engages in the production and sales of various terminal parts. It merged with Hongsong Steel Co., Ltd. on September 1, 1998. After the merger, the Company’s manufacturing, processing, and trading of iron materials, stainless steel goods, and molds increased.

The Company was approved by the competent authority to trade its stock on the Taiwan Stock Exchange in October 2011, and the stock was officially listed on the Taiwan Stock Exchange on February 19, 2002. The place of registration and main operating site are located at No. 8, Zhangbin East Third Road Xianxi Township, Changhua County.

II. Date and Procedure for Approval of Financial Statements

The Company’s parent company-only financial statements for the years of 2023 and 2022 were released after approval by the Board of Directors on March 14, 2024.

III. Application of Newly Issued and Amended Standards and Interpretations

1. Changes in accounting policies due to the initial application of the IFRSs

The Company has adopted the IFRSs that have been endorsed by the FSC and are applicable to the fiscal years beginning on or after January 1, 2023, and the initial application of the newly issued and amended standards and interpretations caused no material impact on the Company.

1. Up to the date the financial statements were approved for release, the new or amended IFRSs published by IASB and endorsed by the FSC and not adopted by the Company:

Item	New/Revised/Amended Standards and Interpretations	Effective Date Announced by the IASB
1	Amendments to IAS 1 “Classification of Liabilities as Current orNon-current”	January 1, 2024
2	Lease Liability in a Sale and Leaseback (Amendments to IFRS16)	January 1, 2024

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Notes to the Parent Company-Only Financial Statements of K.S. TERMINALS INC.

(Continued)

(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

Item	New/Revised/Amended Standards and Interpretations	Effective Date Announced by the IASB
3	Non-current Liabilities with Covenants (Amendments to IAS 1)	January 1, 2024
4	Supplier Finance Arrangements (Amendments to IAS 7 and IFRS7)	January 1, 2024

• (1) Amendments to IAS 1 “Classification of Liabilities as Current or

Non-current”

The classification of liabilities as current or non-current in paragraphs 69 to 76 of IAS 1 “Classification of Liabilities as Current or Non-current” was amended.

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

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

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

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

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

In addition to adding a description of supplier finance arrangements, the amendments also adds disclosures related to the supplier finance arrangements.

The Company evaluated the above new, revised, and amended standards and interpretations that have been published by the IASB and endorsed by the FSC and are applicable to the fiscal years beginning on or after January 1,

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Notes to the Parent Company-Only Financial Statements of K.S. TERMINALS INC.

(Continued)

(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

2024, and determined that they did not cause any material impact on the Company.

1. Up to the date the financial statements were approved for release, the new or amended IFRSs published by IASB without endorsement by the FSC and not adopted by the Company:

Item	New/Revised/Amended Standards and Interpretations	Effective Date Announced by the IASB
1	Amendments to IFRS 10 “Consolidated Financial Statements” and IAS 28 “Investments in Associates and Joint Ventures” — Sale or Contribution of Assets Between an Investor and its Associate orJointVenture	To be determined by the IASB
2	IFRS17 InsuranceContracts	January1,2023
3	Lack of Exchangeability (Amendments to IAS21)	January1,2025

• (1) Amendments to IFRS 10 "Consolidated Financial Statements" and IAS

• 28 “Investments in Associates and Joint Ventures” - Sale or Contribution of Assets between an Investor and its Associate or Joint Venture

The amendments aim to address the inconsistency regarding the loss of control due to the investment in an affiliate or a joint venture through a subsidiary between IFRS 10 “Consolidated Financial Statements” and IAS 28 “Investments in Associates and Joint Ventures”. IAS 28 stipulates that when non-monetary assets are invested in exchange for the equity in an affiliate or a joint venture, the share of the resulting profit or loss shall be eliminated as the treatment method adopted for downstream transactions. IFRS 10 stipulates that the total gain or loss upon loss of control over a subsidiary shall be recognized. The amendments restrict the above requirements of IAS 28: when assets that constitute a business as defined in IFRS 3 are sold or purchased, the total resulting gain or loss shall be recognized.

In the amendments, IFRS 10 was amended so that when an investor sells or invests in a subsidiary (affiliate or joint venture) that does not constitute a business as defined by IFRS 3, only the profit or loss arising

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Notes to the Parent Company-Only Financial Statements of K.S. TERMINALS INC. (Continued)

(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

therefrom within the scope not belonging to the investor shall be recognized.

(2) IFRS 17 Insurance Contracts

This standard provides a comprehensive model of insurance contracts, including all accounting-related elements (recognition, measurement, presentation, and disclosure principles). The core of the standard is a regular model. Under this model, during the initial recognition, the group of insurance contracts are measured at the aggregate amount of fulfillment cash flows and contractual service margins. The carrying amount at the end of each reporting period is the sum of the liabilities for the remaining coverage and the liabilities for incurred claims.

In addition to the regular model, it also provides a specific applicable method for contracts with direct participation features (variable fee approach and a simplified method for short-term contracts) (premium allocation approach).

After this standard was published in May 2017, the amendments were published in 2020 and 2021. In these amendments, the effective date in the transitional provisions will be postponed for two years (that is, from January 1, 2021 postponed to January 1, 2023) with additional exemptions provided, while some regulations are simplified to reduce the cost of adopting this standard, and some regulations are amended to make some scenarios easier to interpret. After this standard becomes effective, it will supersede the transitional provisions (i.e. IFRS 4 “Insurance Contracts”).

• (3) Lack of Exchangeability (Amendments to IAS 21)

The amendments explain the exchangeability and lack of exchangeability between currencies, and how the exchange rate is determined when the currency lacks exchangeability, and adds additional disclosure requirements when the currency lacks exchangeability. These amendments apply to fiscal years beginning on or after January 1, 2025.

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Notes to the Parent Company-Only Financial Statements of K.S. TERMINALS INC. (Continued)

(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

The date of applying the above standards or interpretations that have been published by the IASB but have not yet been endorsed by the FSC shall be subject to the decisions made by the FSC. The Company assessed the potential impact of the new or revised standards or interpretations and confirmed that no material impact was caused on the Company.

IV. Summary of Significant Accounting Policies

1. Statement of Compliance

The Company's parent company-only financial statements for 2023 and 2022 were prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers.

2. Basis of Preparation

The Company prepared the parent company-only financial reports in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers. As per Article 21 of the Regulations Governing the Preparation of Financial Reports by Securities Issuers, the current profit or loss and other comprehensive income in the parent company-only financial reports are the same as the share of the current profit or loss and other comprehensive income attributable to the owners of the parent company in the financial reports prepared on a consolidated basis; and the owner's equity in the parent company-only financial reports is the same as the equity attributable to the owners of the parent company in the financial reports prepared on a consolidated basis. Therefore, the investment in subsidiaries is presented as "investments using the equity method" in the parent company-only financial statements, with necessary evaluation adjustments made.

The parent company-only financial statements have been prepared on the historical cost basis except for the financial instruments at fair value. The parent company-only financial statements are presented in thousands of NT dollars (NTD), unless otherwise specified.

17

Notes to the Parent Company-Only Financial Statements of K.S. TERMINALS INC. (Continued)

(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

1. Foreign Currencies

The Company's parent company-only financial statements are presented in NTD, the Company's functional currency.

Transactions in foreign currencies are recognized at the exchange rates prevailing on the transaction dates. On each balance sheet date, monetary items denominated in foreign currencies are translated at the exchange rate prevailing on that date. Non-monetary items in foreign currencies measured at fair value are translated at the exchange rate prevailing on that date when the fair value is determined. Non-monetary items in foreign currencies measured at historical cost are translated at the exchange rates prevailing on the initial transaction dates

Except as stated below, exchange differences arising from settlement or translation of monetary items are recognized in profit or loss for the period in which they occur:

• (1) Regarding foreign-currency borrowings incurred to acquire an eligible asset, if the resulting exchange difference is regarded as an adjustment to interest costs, it is part of the borrowing cost and is capitalized as the cost of the asset.

• (2) Foreign-currency items to which IFRS 9 "Financial Instruments" applies are handled in accordance with the accounting policies for financial instruments.

• (3) Regarding monetary items that form part of a reportable entity's net investment in foreign operations, exchange differences arising therefrom are initially recognized in other comprehensive income and are reclassified from equity to profit or loss when the net investment is disposed of.

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

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Notes to the Parent Company-Only Financial Statements of K.S. TERMINALS INC. (Continued)

(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

1. Translation of Foreign-currency Financial Statements

Each of the Company’s foreign operations determines its own functional currency and measures its financial statements in the functional currency accordingly. When the parent company-only financial statements were prepared, the assets and liabilities of the foreign operations are translated into NTD at the closing exchange rate on the balance sheet date. Income and expense items are translated at the average exchange rates for the period. Any exchange differences arising from translation were recognized in other comprehensive income. When the foreign operations were disposed of, the cumulative exchange differences were previously been recognized in other comprehensive income as an independent component under equity was reclassified from equity to profit or loss when the gains or losses on disposal were recognized. Regarding the disposal of foreign operations over which control is lost and the partial disposal of an interest in an affiliate or a joint arrangement with foreign operations, where the retained interest is a financial asset with foreign operations included, it is also treated as disposal.

Regarding the partial disposal of a subsidiary with foreign operations (over which the control is not lost), the cumulative exchange difference recognized in other comprehensive income is re-attributed to the non-controlling interests of the foreign operations in proportion and is not recognized in profit or loss. The partial disposal of an affiliate or a jointly controlled entity with foreign operations (over which the significant influence or joint control is not lost), when part of the disposal includes affiliated enterprises or jointly arrangements of foreign operating institutions, the cumulative exchange difference is reclassified to profit or loss in proportion.

The goodwill arising from the acquisition of a foreign operation and the adjustment to the fair value of the carrying amounts of its assets and liabilities are regarding as the foreign operation’s assets and liabilities and presented in its functional currency.

1. Criteria for Classification of Current and Non-current Assets and Liabilities

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

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Notes to the Parent Company-Only Financial Statements of K.S. TERMINALS INC. (Continued)

(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

• (1) Assets expected to be realized in the normal operating cycle or intended to be sold or consumed;

• (2) Assets held primarily for the purpose of trading;

• (3) Assets expected to be realized within 12 months after the balance sheet date;

• (4) Cash or cash equivalents, excluding assets restricted from being exchanged or used to settle liabilities for at least 12 months after the balance sheet date.

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

• (1) Liabilities expected to be settled in the normal operating cycle;

• (2) Liabilities held primarily for the purpose of trading;

• (3) Liabilities expected to be settled within 12 months after the balance sheet date;

• (4) Liabilities with a repayment deadline that cannot be unconditionally deferred for at least 12 months after the balance sheet date. However, the terms of a liability that could, at the option of the counterparty, result in its settlement by issuing equity instruments do not affect its classification.

6. Cash and Cash Equivalents

Cash and cash equivalents include cash on hand, demand deposits, and short-term time deposits and investments that are highly liquid and readily convertible into a fixed amount of cash at any time with little risk of value changes (including time deposits within a duration of three months).

7. Financial Instruments

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

Financial assets and financial liabilities within the scope of IFRS 9 "Financial Instruments" are measured at fair value upon initial recognition;

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Notes to the Parent Company-Only Financial Statements of K.S. TERMINALS INC. (Continued)

(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

the transaction costs that are directly attributable to the acquisition or issuance of financial assets and financial liabilities (except financial assets and financial liabilities classified as at fair value through profit or loss) are added to or subtracted from the fair values of the financial assets and financial liabilities.

• (1) Recognition and Measurement of Financial Assets

Regular trading of financial assets is recognized and derecognized in accordance with trade date accounting.

The Company classifies financial assets as those subsequently measured at amortized cost, at fair value through other comprehensive income, or at fair value through profit or loss based on the two bases below:

• A. The business model for financial asset management

• B. Contractual cash flow characteristics of financial assets

Financial Assets at Amortized Cost

Financial assets that meet both of the following criteria are measured at amortized cost and are recognized in the balance sheet as notes or accounts receivable, financial assets at amortized cost, or other receivables:

• A. Business model for financial asset management: Holding financial assets to collect contractual cash flows.

• B. Contractual cash flow characteristics of financial assets: The cash flow is entirely the payment for principal and the interest on the outstanding principal.

Such financial assets (excluding those for hedging) are subsequently measured at the amortized cost [the amount measured upon initial recognition, less the principal repaid, plus or less the cumulative amortization of the differences between the initial amount and the due amount (the effective interest approach adopted), with the allowance for losses adjusted]. The gain or loss is recognized in profit or loss upon

21

Notes to the Parent Company-Only Financial Statements of K.S. TERMINALS INC. (Continued)

(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

de-recognition, through the amortization process, or when an impairment gain or loss is recognized.

Interest accrued using an effective interest method (effective interest rate multiplied by the total book value of a financial asset) or based on the situations below is recognized in profit or loss:

• A. In the case of a credit-impaired financial asset purchased or created, the credit-adjusted effective interest rate is multiplied by the amortized cost of the financial asset;

• B. If it is not the case but subsequently becomes credit-impaired, the effective interest rate is multiplied by the amortized cost of the financial asset.

Financial Assets at Fair Value Through Other Comprehensive Income

Financial assets that meet both of the following criteria are measured at fair value through other comprehensive income and recognized in the balance sheet as financial assets at fair value through other comprehensive income:

• A. The business model for financial asset management: Collection of contractual cash flows and sales of financial assets.

• B. Contractual cash flow characteristics of financial assets: The cash flow is entirely the payment for principal and the interest on the outstanding principal.

The recognition of relevant gains and losses on such financial assets is specified below:

• A. Before de-recognition or reclassification, except for impairment gains or losses and foreign currency exchange gains or losses that are recognized in profit or loss, such gains or losses are recognized in other comprehensive income.

• B. Upon de-recognition, the cumulative gain or loss previously recognized in other comprehensive income is reclassified from equity to profit or loss as a reclassification adjustment.

• C. Interest accrued using an effective interest method (effective interest

22

Notes to the Parent Company-Only Financial Statements of K.S. TERMINALS INC. (Continued)

(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

rate multiplied by the total book value of a financial asset) or based on the situations below is recognized in profit or loss:

• (a) In the case of a credit-impaired financial asset purchased or created, the credit-adjusted effective interest rate is multiplied by the amortized cost of the financial asset;

• (b) If it is not the case but subsequently becomes credit-impaired, the effective interest rate is multiplied by the amortized cost of the financial asset.

In addition, regarding equity instruments within the scope of IFRS 9 that are neither held for trading nor contingent consideration recognized by an acquirer in a business combination to which IFRS 3 applies, the Group, upon initial recognition, elects (irrevocably) to recognize the subsequent changes in the fair values thereof in other comprehensive income. The amount recognized in other comprehensive income must not be subsequently reclassified to profit or loss (when such equity instruments are disposed of, it will be included in the cumulative amount of other equity items and directly transferred to retained earnings) and is recognized in the balance sheet as a financial asset at fair value through other comprehensive income. Investment dividends are recognized in profit or loss unless they clearly represent a recovery of part of the cost of the investment.

Financial Assets at Fair Value Through Profit or Loss

Except for the above financial assets in alignment with specific criteria that are measured at amortized cost or fair value through other comprehensive income, financial assets are measured at fair value through profit or loss and recognized in the balance sheet as financial assets at fair value through profit or loss.

Such financial assets are measured at fair value, and any gain or loss arising from remeasurement is recognized in profit or loss. The gain or loss recognized in profit or loss includes any dividends or interest received due to the financial asset.

23

Notes to the Parent Company-Only Financial Statements of K.S. TERMINALS INC. (Continued)

(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

• (2) Impairment of Financial Assets

The Company's investments in debt instruments at fair value through other comprehensive income and financial assets at amortized cost are recognized as expected credit losses with an allowance for losses provided. An allowance for losses on an investment in a debt instrument measured at fair value through other comprehensive income is recognized in other comprehensive income without reducing the carrying amount of the investment.

The Company measures expected credit losses in a way that reflects the following:

• A. An unbiased, probability-weighted amount determined by evaluating each potential outcome

• B. Time Value of Money

• C. Reasonable and Corroborative Information Related to Past Events, Present Conditions, and Future Economy Forecasts (which can be accessed without an excessive cost or investment on the balance sheet date)

The methods of measuring an allowance for losses are specified below:

• A. Measured at 12-month expected credit losses: Including financial assets with the credit risk not increasing significantly since the initial recognition or those with an estimated low credit risk on the balance sheet date. Also, it also includes an allowance for the lifetime expected credit losses during the prior reporting period, without meeting the indicator that the credit risk has significantly increased since the initial recognition on the balance sheet date of this period.

• B. Measured at lifetime expected credit losses: Including financial assets with the credit risk increasing significantly since the initial recognition or credit-impaired financial assets purchased or created.

• C. For accounts receivable or contract assets arising from transactions within the scope of IFRS 15, the Company measures an allowance

24

Notes to the Parent Company-Only Financial Statements of K.S. TERMINALS INC. (Continued)

(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

for lifetime expected credit losses.

• D. For accounts receivable or contract assets arising from transactions within the scope of IFRS 16, the Company measures an allowance for lifetime expected credit losses.

On each balance sheet date, the Company evaluates whether the credit risk of a financial instrument has increased significantly after the initial recognition by comparing the default risk of the financial instrument on the balance sheet date and the initial recognition date. Please refer to Note 12 for relevant credit risk information.

• (3) Derecognition of Financial Assets

The Company derecognizes a financial asset held in the case of any of the following circumstances:

• A. The contractual rights to receive the cash flows from the financial asset have expired.

• B. A financial asset is transferred with all the risks and rewards attached to the ownership of the asset substantially transferred to the counterparty.

• C. All the risks and rewards attached to the ownership of the asset are neither substantially transferred nor retained, but the control over the asset is transferred.

When a financial asset as a whole is de-recognized, the difference between its carrying amount and the sum of the consideration received or receivable plus any cumulative gain or loss recognized in other comprehensive income is recognized in profit or loss.

• (4) Financial Liabilities and Equity Instruments

Classification of Liabilities and Equity

Liabilities and equity instruments issued by the Company are classified as financial liabilities or equity as per the substance of the agreement and the definitions of financial liabilities and equity instruments.

Equity Instruments

Equity instrument refers to any contract that demonstrates the Company's remaining interest in assets less all of its liabilities. Equity

25

Notes to the Parent Company-Only Financial Statements of K.S. TERMINALS INC. (Continued)

(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

instruments issued by the Company are recognized at the acquisition prices, less the direct issuance cost.

Hybrid Instruments

The Company recognizes the components of financial liabilities and equity for the convertible corporate bonds issued in accordance with the contractual terms. Also, for the issued convertible corporate bonds, before the equity elements are distinguished, whether the economic characteristics and risks of the embedded call and put options are closely related to the main debt products are assessed.

For the liability without derivatives involved, after the market interest rate assessment of the non-convertible bonds with similar fair values, the amount of the liability is classified as financial liabilities at amortized cost before conversion or redemption. Regarding the embedded derivatives with their economic characteristics and risks not closely related to the master contract (such as the embedded repurchase right and the redemption right with the exercise price confirmed to be unable to be almost equal to the amortized cost of the debt products on each exercise date), except for equity component, they are classified as a liability component and measured at fair value through profit or loss after the balance sheet date. The amount of the equity component is determined at the fair value of the convertible corporate bonds less the liability component, and its book value is not remeasured in the period following the balance sheet date. If the issued convertible corporate bond does not include an equity element, it is handled as a hybrid instrument in accordance with IFRS 9.

Transaction costs are allocated to the liability and the equity components in proportion to the percentage of the initially recognized convertible corporate bonds allocated to the liability and the equity components.

When a holder of the convertible corporate bonds requests the exercise of their conversion right before the convertible corporate bonds matures, the carrying amount of the liability component shall be adjusted to the carrying amount that should have been upon conversion as the basis for accounting for ordinary shares issued.

Financial Liability

Financial liabilities that fall within the scope of IFRS 9 are classified as

26

Notes to the Parent Company-Only Financial Statements of K.S. TERMINALS INC. (Continued)

(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

either financial liabilities at fair value through profit or loss or financial liabilities at amortized cost upon initial recognition.

Financial Liabilities at Fair Value Through Profit or Loss

Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated at fair value through profit or loss.

When satisfying one of the criteria below, it is classified as a liability held for trading:

• A. The acquisition is mainly for short-term sale;

• B. It is part of a portfolio of identifiable financial instruments that are managed on a consolidated basis upon initial recognition, with evidence showing that the portfolio has recently been used to make a short-term profit; or

• C. Derivatives (excluding financial guarantee contracts or effective designated hedging instruments).

For contracts containing one or more embedded derivatives, an overall hybrid (combined) contract can be designated as a financial liability at fair value through profit or loss; when it is aligned with one of the factors below with more relevant information that can be provided, it is designated as a financial liability at fair value through profit or loss upon initial recognition:

• A. The designation eliminates or considerably reduces the measurement or recognition inconsistency; or

• B. The performance of a group of financial assets, a group of financial liabilities, or both are managed and measured at fair value in accordance with the written risk management or investment strategies, and the portfolio information provided to the management team within the Company is also measured at fair value.

Any gain or loss arising from remeasurement of such financial liabilities is recognized in profit or loss. The gain or loss recognized in profit or loss includes any interest paid for the financial liability.

27

Notes to the Parent Company-Only Financial Statements of K.S. TERMINALS INC. (Continued)

(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

Financial Liabilities at Amortized Cost

Financial liabilities measured at amortized cost, including payables and borrowings, are subsequently measured using the effective interest rate method after the initial recognition. When financial liabilities are de-recognized and amortized with the effective interest rate method, the relevant gains or losses and amortizations are recognized in profit or loss.

The amortized cost is calculated with the discount or premium and the transaction cost upon acquisition taken into account.

Derecognition of Financial Liabilities

When the obligations of financial liabilities are lifted, cancelled, or expire, the financial liabilities are derecognized.

When the Company exchanges debt instruments with materially different terms with a creditor or significantly changes all or part of the terms of the existing financial liabilities (financial difficulties or not), the initial liabilities are derecognized and new liabilities are recognized. When a financial liability is derecognized, the difference between its carrying amount and the total consideration paid or payable (including the non-cash assets transferred or the liabilities assumed) is recognized in profit or loss.

• (5) Offset of Financial Assets and Liabilities

Financial assets and financial liabilities can only be offset and presented in the balance sheet as a net amount when the recognized amount is legally entitled to be offset with an intension to be settled in a net amount or realize the asset and settle the liability at the same time.

8. Derivatives

The derivatives held or issued by the Company are used to hedge the exchange rate risk, the interest rate risk, and commodity price risk. Among them, those designated to effectively hedge risks are recognized as

28

Notes to the Parent Company-Only Financial Statements of K.S. TERMINALS INC. (Continued)

(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

derivative assets or liabilities for hedging purposes in the balance sheet; the remaining not designated to effectively hedge risks are presented in the balance sheet as financial assets or financial liabilities at fair value through profit or loss.

A derivative is initially recognized at fair value on the date the derivative contract is signed and subsequently measured at fair value. When the fair value of the derivative is a positive figure, it is a financial asset; a negative figure, it is a financial liability. Any change in the fair value of the derivative is recognized directly in profit or loss; however, those with cash flow hedging involved and net investment in foreign operations with effective hedging are recognized under equity.

Where a master contract is about a non-financial asset or financial liability, if the economic characteristics and risks of the derivative embedded in the master contract are not closely related to the master contract, and the master contract is not measured at fair value through profit or loss, the embedded derivative should be regarded as an independent derivative.

9. Fair Value Measurement

Fair value is the price that can be received from a sale of an asset or paid to transfer a liability in an orderly transaction between market participants. It is assumed that the sale of the asset or transfer of the liability takes place in one of the markets below when the fair value is measured:

• (1) The principal market for the asset or liability, or

• (2) If there is no principal market, the most favorable market for the asset or liability.

The principal or most favorable market should be accessible for the Company to trade.

The measurement of the fair value of an asset or a liability serves as an assumption that market participants would adopt when pricing the asset or liability in the best economic interest of the market participants.

29

Notes to the Parent Company-Only Financial Statements of K.S. TERMINALS INC. (Continued)

(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

The fair value of a non-financial asset is measured based on market participants’ ability to make the most of or put the asset to the best use or by selling the asset to another market participant who will make the most of or put the asset to the best use to generate economic benefits.

The Company measures the fair value using a valuation technique that is appropriate in relevant situations with sufficient information available and maximizes the use of relevant observable inputs while minimizing the use of unobservable inputs.

10. Inventories

Inventories are valued at the lower of cost or net realizable value with an item-by-item comparison method.

Costs refer to the costs incurred in bringing inventories to a condition and location ready for sale or production.

Raw materials are valued at the actual purchase cost with a weighted average method.

Finished goods and works-in-process include direct raw materials, labor, and fixed manufacturing overhead apportioned based on normal production capacity,excluding the borrowing costs.

The net realizable value is calculated based on the estimated selling price, less the costs and selling expenses required till completion in the ordinary course of business.

The provision of services is handled in accordance with IFRS 15 outside the scope of inventories.

11. Investments Using the Equity Method

As per Article 21 of the Regulations Governing the Preparation of Financial Reports by Securities Issuers, the Company’s investments in its subsidiaries are presented as "investments using the equity method" with necessary

30

Notes to the Parent Company-Only Financial Statements of K.S. TERMINALS INC. (Continued)

(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

valuation adjustments made, to bring the current profit or loss and other comprehensive income in the parent company-only financial statements to be the same as the share of the current profit or loss and other comprehensive income attributable to the owners of the parent company in the financial statements prepared on a consolidated basis; and the owner's equity in the parent company-only is the same as the equity attributable to the owners of the parent company in the financial statements prepared on a consolidated basis. Such adjustments are mainly made to the treatment of investments in subsidiaries in the consolidated financial statements in accordance with IFRS 10 "Consolidated Financial Statements" and the differences in the application of IFRS by reportable entities at different levels, while being debited to or credited from “investments using the equity method”, “share of profit or loss of subsidiaries, affiliates, or joint ventures using the equity method”, or “share of other comprehensive income of subsidiaries, affiliates, or joint ventures using the equity method”

The Company's investments in affiliates are accounted for using the equity method, except for assets that are classified as assets held for sale. Affiliates refer to those on which the Company has significant influence. A joint venture refers to a type of arrangement whereby the Company has rights to the net assets of the joint arrangement (those with joint control).

With an equity method adopted, an investment in an affiliate recognized in the balance sheet is the amount of cost, plus the amount of the net change in the Company's net assets in the affiliate after the acquisition in proportion to the Company’s shareholding. After the carrying amount of the investment in the affiliate or joint venture and other relevant long-term interests are reduced to zero using the equity method, additional losses and liabilities are recognized only to the extent that the Group has incurred legal obligations, or constructive obligations, or made payments on behalf of said affiliate. Unrealized gains or losses arising from transactions between the Company and its affiliates are eliminated in proportion to its equity in the affiliates.

When a change in the equity in an affiliate or joint venture does not occur due to an item under profit or loss or other comprehensive income and does not affect the Company's shareholding, the Company recognizes the change in ownership interests in proportion to its shareholding. Therefore, when the affiliate or joint venture is subsequently disposed of, the capital surplus

31

Notes to the Parent Company-Only Financial Statements of K.S. TERMINALS INC. (Continued)

(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

recognized is transferred to profit or loss in proportion to the disposal.

In the event of issuance of new shares by an affiliate or joint venture, when the Company does not subscribe in proportion to its shareholding, resulting in a change in the proportion of investment and an increase or decrease in the Company's share in the affiliate or joint venture’s net assets, "capital surplus" and "investments using the equity method" are adjusted accordingly. When the proportion of investment decreases, the relevant items previously recognized in other comprehensive income will be reclassified to profit or loss or other appropriate accounts depending on the percentage of the decrease. When the affiliate or joint venture is subsequently disposed of, the above capital surplus recognized is transferred to profit or loss in proportion to the disposal.

The affiliates or joint venture’ financial statements are prepared for the same reporting period as the Company’s and adjusted to align their accounting policies with the Company’s.

At the end of each reporting period, the Company confirms if there is objective evidence indicating any impairment of its investments in affiliates in accordance with “IAS 28 — Investments in Associates and Joint Ventures”. If it is the case, the Company calculates the impairment based on the difference between the recoverable amount and the carrying amount of the affiliate in accordance with IAS 36 "Impairment of Assets" and recognizes the amount in the profit or loss on the affiliate. If the value in use of the investment is adopted for the above recoverable amount, the Company determines the relevant values in use based on the estimates below:

• (1) The Company's share of the present value of the estimated future cash flows generated from an affiliate, including the cash flow generated by the affiliate due to its operations and the proceeds from the disposal of the investment; or

• (2) The present value of the estimated future cash flows from dividends from the investment that the Company expects to receive and the proceeds from the disposal of the investment.

32

Notes to the Parent Company-Only Financial Statements of K.S. TERMINALS INC. (Continued)

(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

As the components of goodwill that constitute the carrying amount of an investment in an affiliate or joint venture are not separately recognized, it is not necessary to apply IAS 36 "Impairment of Assets" regarding the goodwill impairment test.

When the significant influence on an affiliate is lost, the Company measures and recognizes the retained investment at fair value. When the significant influence or joint control is lost, the difference between the carrying amount of the investment in the affiliate or joint venture and the fair value of the retained investment, plus the proceeds from the disposal, is recognized in profit or loss. Also, when an investment in an affiliate becomes an investment in a joint venture, or an investment in a joint venture becomes an investment in an affiliate, the Company continues to adopt the equity method without re-measuring the retained equity.

12. Property, plants and equipment

Property, plants and equipment are accounted for on the basis of acquisition cost and recognized after accumulated depreciation and impairment are deducted. The above costs include the cost of dismantling or removing of property, plants and equipment and restoring the location, and necessary interest expenses arising from unfinished projects. Each component of property, plants and equipment is depreciated separately if it is significant. When a major component of property, plants and equipment needs to be replaced regularly, the Company regards it as an individual asset and recognizes it separately with a specific useful life and a depreciation method. The carrying amount of the replaced part should be derecognized in accordance with the requirement for derecognition under IAS 16 "Property, Plants and Equipment". If a major examination or repair cost meets the criteria for recognition, it is regarded as a replacement cost and recognized as part of the carrying amount of plants and equipment, while other repair and maintenance expenses are recognized in profit or loss

33

Notes to the Parent Company-Only Financial Statements of K.S. TERMINALS INC. (Continued)

(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

Assets below are depreciated on a straight-line basis over the estimated useful lives:

Assets Property and Buildings Machinery and Equipment Transportation Equipment Office Equipment Leasehold Improvements Miscellaneous Equipment	Useful Life
	5–50 years 3–15 years 5–10 years 3–10 years 2–5 years 3–15 years

After the initial recognition of property, plants and equipment or any important component, if it is disposed of or no economic effect arising from the use or disposal is expected, it will be derecognized and recognized in income or loss

The residual value, years of useful life, and depreciation method of property, plants and equipment are assessed at the end of each fiscal year. If the expected value is different from the previous estimate, the change is considered as a change in accounting estimation.

13. Investment Property

The Company’s self-owned investment property is initially measured at cost, including transaction cost of the property. The carrying amount of investment property includes the cost of repairing or adding to the existing investment property under the condition that the cost can be recognized; however, the repair or maintenance costs that usually occur on a daily basis are not included as part of the cost. After initial recognition, except for those meeting the criteria for being classified as those held for sale (or included in the disposal group classified as held for sale) in accordance with IFRS 5 “Non-current Assets Held for Sale and Discontinued Operations”; As per IAS 16 “Property, Plants and Equipment” regarding such a situation, if such an asset is held by the lessee as a right-of-use asset and is not held for sale as per IFRS 5, it is handled in accordance with IFRS 16.

Assets below are depreciated on a straight-line basis over the estimated useful lives:

Assets Buildings	Useful Life
	10–15 years

34

Notes to the Parent Company-Only Financial Statements of K.S. TERMINALS INC. (Continued)

(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

Investment property is derecognized and recognized in profit or loss when it is disposed of or will never be used again without future economic benefits expected to be generated from the disposal.

The Company decides to transfer an asset in or out of investment property depending on the actual use of the assets.

When a property meets or no longer meets the definition of investment property with evidence showing that the purpose has changed, the Company will reclassify the property as investment property or transfer it out of investment property.

1. Leasing

The Company assesses whether or not an arrangement is (or includes) a lease arrangement on the inception of the agreement. If an agreement transfers control over the use of an identified asset for a period of time in exchange for consideration, the agreement is (or includes) a lease arrangement. In order to assess whether the agreement transfers control over the use of the identified asset for a period of time, the Company assesses whether it meets both of the following conditions during the entire period of use:

• (1) Obtaining the right to almost all economic benefits from the use of the identified asset; and

• (2) The right to direct the use of the identified asset.

For the agreement that belongs to (or includes) a lease arrangement, the Company treats each lease component in the agreement as a separate lease and treats it separately from the non-lease component in the agreement. For the agreement that includes one lease component and one or more additional lease or non-lease components, the Company adopts the relative standalone price of each lease component and the aggregate standalone prices of the non-lease components as the basis to distribute the consideration in the agreement to the lease component. The relative standalone prices of lease and non-lease components are determined on the basis of the prices charged by the lessor (or similar suppliers) for the components (or similar components). If an observable standalone price is

35

Notes to the Parent Company-Only Financial Statements of K.S. TERMINALS INC. (Continued)

(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

not readily available, the Company maximizes the use of observable information to estimate the standalone price.

The Company as a Lessee

In addition to meeting and selecting short-term leases or leases of low-value underlying assets, when the Company is the lessee of a lease contract, all leases are recognized in right-of-use assets and lease liabilities.

The Company measures the lease liabilities on the inception date based on the present value of the lease payments not yet paid on that date. If the implied interest rate of the lease is easily determined, the lease payments will be discounted to their present value using that interest rate. If such interest rate is not easily determined, the incremental borrowing rate will be used. On the inception date, the lease payments included in the lease liabilities include the following payments related to the right to use the underlying assets during the lease period and not yet paid on that date:

• (1) Fixed payment (including substantive fixed payment) less any lease incentives that can be collected;

• (2) Lease payment that depends on changes in an index or rate (using the index or rate on the inception date for initial measurement);

• (3) The amount expected to be paid by the lessee under the residual value guarantee;

• (4) The exercise price of the purchase option if the lessee is reasonably certain that the option will be exercised.

• (5) The penalty payable for the termination of a lease, if there is a sign that the lessee, in the lease period, will exercise the option of terminating the lease.

After the inception date, the Company measures the lease liabilities at amortized cost, and increases the carrying amount of the lease liabilities using the effective interest method to reflect the interest on the lease liabilities; the lease payments reduce the carrying amount of the lease liabilities.

36

Notes to the Parent Company-Only Financial Statements of K.S. TERMINALS INC. (Continued)

(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

On the inception date, the Company measures the right-of-use assets at cost. The cost of the right-of-use assets includes:

• (1) The monetary amount of the lease liability initially measured;

• (2) Any lease payments made on or before the inception date less any lease incentives received;

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

• (4) An estimate of costs to be incurred in dismantling and removing the underlying asset, restoring the site on which it is located or restoring the underlying asset to the condition required by the terms and conditions of the lease.

Subsequent measurement of the right-of-use assets is presented after the cost less the accumulated depreciation and accumulated impairment loss, i.e. the cost model is applied to measure the right-of-use assets.

If the ownership of the underlying asset is transferred to the Company when the lease period expires, or if the cost of the right-of-use assets reflects that the Company will exercise the call option, the right-of-use assets will be depreciated from the commencement date to the end of the useful life of the underlying asset. Otherwise, the Company depreciates the right-of-use assets from the inception date to the end of the useful life of the right-of-use assets or to the expiration of the lease period, whichever is earlier.

The Company applies IAS 36 Impairment of Assets to determine whether a right-of-use asset is impaired and to deal with any identified impairment losses.

In addition to meeting and selecting short-term leases or leases of low-value underlying assets, the Company presents right-of-use assets and lease liabilities in the balance sheet, and presents lease-related depreciation expenses and interest expenses separately in the statement of comprehensive income.

For short-term leases and leases of low-value underlying assets, the Company chooses to adopt the straight-line basis or another systematic basis to recognize the lease payments related to said leases in expenses over the lease term.

37

Notes to the Parent Company-Only Financial Statements of K.S. TERMINALS INC. (Continued)

(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

The Company as a Lessor

The Company classifies each of its leases as operating leases or financial leases on the contract inception date. If a lease transfers almost all the risks and rewards attached to the ownership of the underlying asset, it is classified as a financial lease; if it does not transfer said matters, it is classified as an operating lease. On the inception date, the Company recognizes the assets held under the finance leases in the balance sheet and presents them as financial lease receivables based on the net lease investment.

For agreements that include lease components and non-lease components, the Company applies IFRS 15 to distribute the consideration in the agreements.

The Company recognizes lease payments from operating leases as rental income on a straight-line basis or another systematic basis. For operating leases, lease payments that are not dependent on change in some index or rate are recognized as rental income when they occur.

15. Intangible Assets

Intangible assets that are acquired separately are initially measured at cost. The cost of intangible assets acquired through a business combination is the fair value at the acquisition date. After initial recognition of intangible assets, the carrying amount is the amount of the cost less accumulated amortization and accumulated impairment losses. Internally generated intangible assets that do not meet the recognition criteria shall not be capitalized, but shall be recognized in profit or loss when they occur.

The useful life of intangible assets is divided into limited and indefinite useful life.

Intangible assets with a limited useful life are amortized over their useful life, and an impairment test is performed when there are signs of impairment. The amortization period and method of intangible assets with

38

Notes to the Parent Company-Only Financial Statements of K.S. TERMINALS INC. (Continued)

(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

limited useful life are reviewed at least at the end of each fiscal year. If the estimated useful life of an asset is different from the previous estimate, or the expected pattern of future economic benefit consumption has changed, the amortization method or period will be adjusted and considered as a change in accounting estimation.

Intangible assets with indefinite useful lives are not amortized, but impairment tests are conducted to each asset or based on the level of cash-generating units each year. Intangible assets with indefinite useful lives are assessed in each period whether there are events and circumstances that continue to support that the asset’s useful life is still indefinite. If the useful life is changed from indefinite to limited, the application will be applied prospectively.

The profit or loss arising from the derecognition of an intangible asset is recognized as profit or loss.

The Company’s accounting policy for intangible assets is summarized as follows:

Useful Life Amortization Method Internal Generation or External Acquisition	Patents Computer Software 13–20 years 3–5 years Straight-line Method Straight-line Method External Acquisition External Acquisition	Other Intangible
		Assets 2–5 years Straight-line Method External Acquisition

16. Impairment of Non-financial Assets

The Company at the end date of each reporting period assesses whether all assets subject to IAS 36 “Impairment of Assets” are showing signs of impairment. If there is any indication of impairment or an impairment test is required for an asset on a regular basis each year, the Company tests the individual asset or the cash-generating unit to which the asset belongs. If the carrying amount of an asset or the cash-generating unit to which the asset

39

Notes to the Parent Company-Only Financial Statements of K.S. TERMINALS INC. (Continued)

(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

belongs is greater than the recoverable amount in an impairment test, the impairment loss is recognized. The recoverable amount is the higher of the net fair value or value in use.

At the end of each reporting period, the Company assesses assets other than goodwill to see whether there are indications that the previously recognized impairment losses may no longer exist or may be decreased. In the event of such an indication, the Company estimates the recoverable amount of the asset or cash-generating unit. If the recoverable amount is increased due to the change in the estimated service potential of the asset, the impairment amount is reversed. However, the reversed carrying amount shall not exceed that before recognizing impairment loss and after deducting depreciation or amortization.

The cash-generating unit or group to which the goodwill belongs, regardless of whether there are signs of impairment, is subject to impairment tests on an annual basis. If the result of an impairment test needs to be recognized as an impairment loss, the goodwill will be deducted first, and the amount after deduction will be allocated to other assets other than goodwill based on the relative proportion of the carrying amount. Once the impairment of goodwill is recognized, it shall not be reversed for any reason thereafter.

The impairment loss and reversal amount of the continuing operations are recognized in profit or loss.

17. Provisions

Provisions are recognized when there is present legal or constructive obligations 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. When the Company expects that some or all of the provisions can be reimbursed, only when the reimbursement is almost completely certain, it will be recognized as a separate asset. If the time value of money has a material impact, the provisions discounted at the current pre-tax interest rate can appropriately reflect the specific risks of the liability. When liability is discounted, the

40

Notes to the Parent Company-Only Financial Statements of K.S. TERMINALS INC. (Continued)

(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

increase in the amount of liability due to the passage of time is recognized as a borrowing cost.

18. Recognition of Revenue

The Company’s revenue from customer contracts mainly include the sale of goods and provision of services. The accounting treatments are specified below:

Product Sales

The Company manufactures and sells products and recognizes revenue when the promised products are delivered to a customer and the customer obtains the control over them (i.e., the customer’s ability to guide the use of the products and obtain almost all the remaining benefits of the products). Its main products are connectors and wires or cables, the sales are recognized in revenue at the prices stated in the contracts.

The credit period of the Company's products sold is 90 days. All contracts are recognized as accounts receivable when the control over the products is transferred with an unconditional right to receive consideration. Such accounts receivable are usually short-term without major financial components.

Provision of Services

The Company mainly provides processing services for connectors. Such services are individually priced or negotiated and recognized in revenue when the promised processed products are delivered to a customer and the customer obtains the control over them (i.e., the customer’s ability to guide the use of the products and obtain almost all the remaining benefits of the products).

19. Borrowing Costs

Borrowing costs that can be directly attributable to the acquisition,

41

Notes to the Parent Company-Only Financial Statements of K.S. TERMINALS INC. (Continued)

(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

construction, or production of qualified assets are capitalized as part of the costs of the assets. All other borrowing costs are recognized as expenses in the period in which they are incurred. Borrowing costs include interest and other costs incurred in relation to borrowings.

20. Post-employment Benefit Plan

The pension plan for the Company’s employees applies to all full-time employees. The employee pension fund is fully contributed to the Labor Pension Reserves Committee and deposited in the pension fund account. The aforementioned pension is deposited in the name of the Labor Pension Reserves Committee, which is completely separated from the Company, so it is not included in the parent company-only financial statements in the preceding paragraph. The pension plan for employees at overseas subsidiaries is handled in accordance with local laws and regulations.

For the defined contribution pension plan, the monthly pension payable rate of the Company shall not be less than 6% of the employees’ monthly salary, and the amount of the provision shall be recognized in current expenses. Overseas subsidiaries make contributions at specified local rates and recognize them in current expenses.

21. Income Tax

Income tax expenses (benefits) refer to the sum related to current income tax and deferred tax included in the current profit or loss.

Current Income Tax

The current income tax liabilities (assets) related to the current and prior periods are measured at the legislated or substantially legislated tax rates and tax laws at the end of the reporting period. The current income tax related to the items recognized in other comprehensive income or directly recognized in the equity is recognized in other comprehensive income or equity instead of being recognized in the profit or loss

42

Notes to the Parent Company-Only Financial Statements of K.S. TERMINALS INC. (Continued)

(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

A surtax of the profit-seeking enterprise income tax levied on the undistributed earnings is recognized as income tax expense on the date when the distribution of earnings is resolved in the shareholders’ meeting.

Deferred Tax

The deferred tax is calculated according to the temporary difference between the taxable amount of assets and liabilities and the carrying amount on the balance sheet at the end of the reporting period.

All taxable temporary differences are recognized as deferred tax liabilities except for the following two items:

• A. The initial recognition of goodwill, or the initial recognition of an asset or liability that does not arise from a business combination, which does not affect accounting profits and taxable income (loss) and give rise to equal taxable and deductible temporary differences at the time of the transaction conducted;

• B. The taxable temporary difference arising from the investment in subsidiaries, associates, and joint equity. Also, the timing of reversal is controllable, and it is not likely to be reversed in the foreseeable future;

Except for the following two items, deductible temporary difference and deferred tax assets arising from the taxable losses and income tax credit are recognized within the range of probable future taxable income:

• A. It is related to the deductible temporary difference from the initial recognition of an asset or liability that does not arise from a business combination, and does not affect accounting profits and taxable income (loss) and give rise to the equal taxable and deductible temporary difference at the time of the transaction conducted;

• B. It is related to the deductible temporary differences arising from the investment in subsidiaries, associates, and interests in joint arrangements. It is recognized within the range of probable reversal in the foreseeable future and there is sufficient taxable income at the time

43

Notes to the Parent Company-Only Financial Statements of K.S. TERMINALS INC. (Continued)

(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

the temporary difference occurred.

Deferred tax assets and liabilities are measured at the tax rate of the expected asset realization or in the period in which the liability is settled. The tax rate is based on the legislated or substantially legislated tax rates and tax laws at the end of the reporting period. The measurement of deferred tax assets and liabilities reflects the tax consequences arising from the manner in which the asset is expected to be recovered or the book value of the liability is settled at the end of the reporting period. If the deferred tax is related to items that are not included in the profit or loss, it will not be recognized in profit or loss, but recognized in other comprehensive income according to the relevant transactions or directly recognized in equity. Deferred tax assets are reexamined and recognized at the end of each reporting period.

Deferred tax assets and liabilities can be legally offset against each other only in the current period, and the deferred tax is related to the same taxation entity and is related to the income tax levied by the same taxation authority.

V. Critical Accounting Judgments, Assumptions, and Key Sources of Estimation Uncertainty

When the parent company-only financial statements are prepared by the Company, the management must make judgments, estimates, and assumptions at the end of the reporting period, which will affect the disclosures of income, expenses, assets and liabilities, and contingent liabilities. However, the uncertainty of these significant assumptions and estimates may result in a significant adjustment to the book value of an asset or liability in the future period.

Estimation and Assumption

The main source of information on the estimation and assumption with uncertainty at the end of the reporting period has significant risks that result in significant adjustments to the carrying amounts of assets and liabilities in the next fiscal year. The explanations are given as follows:

(1) Inventories

The net realizable value of inventories is estimated based on the most

44

Notes to the Parent Company-Only Financial Statements of K.S. TERMINALS INC. (Continued)

(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

reliable evidence of the expected realizable number of inventories available upon estimation by taking into accounting the fact that the inventory may be damaged or wholly or partially obsolete, or the selling price has dropped. Please refer to Note 6 for details.

(2) Fair Values of Financial Instruments

When the fair values of financial assets and financial liabilities recognized in the balance sheet cannot be obtained from the active market, the fair value will be determined using evaluation techniques, including the income approach (such as cash flow discount model) or market approach. The changes in the assumptions of said approaches will affect the fair value of the financial instruments reported. Please refer to Note 12 for details.

(3) Income Tax

The uncertainty of income tax exists in the interpretation of complex tax regulations and the amount and timing of future taxable income. Due to a wide range of international business relationships and the long-term and complexity of contracts, the differences between actual results and assumptions made, or changes in such assumptions in the future, may cause the booked income tax benefits and expenses to be adjusted in the future. The recognition of income tax is a reasonable estimation made according to the possible audit results of the local tax authorities of the countries in which the Company operates. The amount recognized is based on different factors, such as previous tax audit experience and the difference in tax law interpretation between the tax entity and the tax authority. The difference in interpretation may result in a variety of issues due to the local situation of the country where an individual enterprise of the Company operates.

The carryforwards of the taxable loss and income tax credit and deductible temporary differences are recognized as deferred tax assets within the range of probable future taxable income or taxable temporary differences. The amount of the deferred income tax assets to be recognized is estimated according to the possible timing and level of the future taxable income and taxable temporary difference, and also, the future tax planning strategy.

45

Notes to the Parent Company-Only Financial Statements of K.S. TERMINALS INC. (Continued)

(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

VI. Description of Significant Accounting Items

1. Cash and Cash Equivalents

Cash on Hand Time Deposits Demand Deposits Cash Equivalents Total	2023.12.31 $1,863 573,292 1,341,653 276,991 $2,193,799	2022.12.31
		$1,535 880,699 719,954 170,157
		$1,772,345

The Company did not provide cash and cash equivalents as collateral.

1. Financial Assets at Fair Value Through Profit or Loss – current

Mandatorily as at Fair Value Through Profit or Loss: Funds	2023.12.31 $635,350	2022.12.31
		$301,236

The Company did not provide financial assets at fair value through profit or loss as collateral.

1. Accounts Receivable and Accounts Receivable – Related Parties

Accounts Receivable Less: Allowance for Losses Subtotal Accounts Receivable – Related Parties Total	2023.12.31 $328,823 (4,193) 324,630 67,316 $391,946	2022.12.31
		$350,072 (4,115)
		345,957 70,973
		$416,930

The Company did not provide accounts receivable as collateral.

The Company’s credit period to clients is usually 90 days. Please refer to Note 6.15 for information on the allowance for losses during 2023 and 2022; and Note 12 for relevant credit risk information.

46

Notes to the Parent Company-Only Financial Statements of K.S. TERMINALS INC. (Continued)

(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

1. Other Receivables

Restricted Assets Others Total	2023.12.31 $32,664 9,207 $41,871	2022.12.31
		$266,977 8,114
		$275,091

Please refer to Note 8 for details of other receivables provided as collateral by the Company.

1. Inventories

Raw Materials Works-in-Progress Finished Goods Goods in Transit Total	2023.12.31 $165,419 77,077 675,168 2,982 $920,646	2022.12.31
		$214,368 51,324 908,218 7,372
		$1,181,282

The costs of the Company's inventories recognized as cost of goods sold for 2023 and 2022 amounted to NTD 1,944,684 thousand and NTD 2,172,140 thousand, respectively, including inventory valuation losses of NTD 544 thousand and NTD 7,543 thousand, respectively.

The above inventories were not provided as collateral.

1. Financial Assets at Fair Value Through Other Comprehensive Income

Investments in Equity Instruments at Fair Value Through Other Comprehensive Income - non-current: Cayman Engley Industrial Co.,Ltd. Chi Rui (Cayman) Holding Limited Total	2023.12.31 $67,652 37,220 $104,872	2022.12.31
		$69,562 38,521
		$108,083

The Company did not provide financial assets at fair value through other comprehensive income as collateral.

47

Notes to the Parent Company-Only Financial Statements of K.S. TERMINALS INC. (Continued)

(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

The Company’s dividend income related to equity instruments at fair value through other comprehensive income for the years ended December 31, 2023 and 2022 were as follows:

Related to investments held at the end of the reporting period Related to investments disposed during the reporting period Dividend Income recognized during the reporting period	2023 $2,162 - $2,162	2022
		$4,320 -
		$4,320

In consideration of the Company’s investment strategy, the Company disposed and derecognized partial equity instruments at fair value through other comprehensive income. Details of derecognition for the years ended December 31, 2023 and 2022 were as follows:

The fair value of the investments at the date of derecognition The cumulative gain (loss) on disposal reclassified from other equity to retained earnings	2023 $- -	2022
		$451,551 (86,461)

7. Investments Using the Equity Method

• (1) The details of investments accounted for using the equity method by the Company are as follows:

Name of Investee Investments in Subsidiaries: K.S.T. INTERNATIONAL HOLDINGS LTD.	2023.12.31 Amount Shareholding Ratio(%) $1,692,297 100.00%	2022.12.31	2022.12.31
	Amount $1,692,297	Amount $1,942,846	Shareholding Ratio(%)
			100.00%

48

Notes to the Parent Company-Only Financial Statements of K.S. TERMINALS INC.

(Continued)

(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

	2023.12.31	2023.12.31	2022.12.31	2022.12.31
		Shareholding		Shareholding
Name of Investee	Amount	Ratio(%)	Amount	Ratio(%)
IFCHIC INC.	64,884	100.00%	59,599	100.00%
TAIBON HOLDING LIMITED	57,643	100.00%	51,794	100.00%
K.S.TERMINALS USA LLC (originally
DRACO K ENTERPRISES, LLC)	45,980	100.00%	30,896	100.00%
JUNG PANG ENTERPRISE LTD.	9,524	100.00%	9,143	100.00%
HONLEY AUTO. PARTS CO., LTD.	259,088	25.00%	273,901	25.00%
Yangde Technology Co., Ltd.	2,774	35.00%	5,510	35.00%
Total:	$2,132,190		$2,373,689

• (2) Investments in Subsidiaries and Associates

The investment in subsidiaries is presented as "investments using the equity method" in the parent company-only financial statements, with necessary evaluation adjustments made.

The share of profit or loss of subsidiaries, associates, and joint ventures recognized using the equity method for 2023 and 2022 and exchange differences arising on the translation of the financial statements of foreign operations are recognized based on the financial statements for the same periods audited by a CPA. The relevant details are as follows:

Investee K.S.T.INTERNATIONAL HOLDINGS LTD. IFCHIC INC. TAIBON HOLDING LIMITED. K.S.TERMINALS USA LLC (originally DRACO K ENTERPRISES, LLC) JUNG PANG ENTERPRISE LTD. HONLEY AUTO. PARTS CO., LTD. Yangde Technology Co., Ltd. Total	2023 Share of Profit or Loss of Subsidiaries, Associates, and Joint Ventures Recognized Using the Equity Method Exchange differences arising on the translation of the financial statements of foreign operations $193,583 $(18,955) 5,327 (42) 5,440 409 (9,576) (1,062) 381 - (12,187) (2,626) (4,136) - $178,832 $(22,276)	2023 Share of Profit or Loss of Subsidiaries, Associates, and Joint Ventures Recognized Using the Equity Method Exchange differences arising on the translation of the financial statements of foreign operations $193,583 $(18,955) 5,327 (42) 5,440 409 (9,576) (1,062) 381 - (12,187) (2,626) (4,136) - $178,832 $(22,276)	2022	2022
	Share of Profit or Loss of Subsidiaries, Associates, and Joint Ventures Recognized Using the Equity Method $193,583 5,327 5,440 (9,576) 381 (12,187) (4,136) $178,832		Share of Profit or Loss of Subsidiaries, Associates, and Joint Ventures Recognized Using the Equity Method $330,929 5,216 5,712 (1,200) 1,121 (10,996) (2,890) $327,892	Exchange differences arising on the translation of the financial statements of foreign operations
		$(18,955) (42) 409 (1,062) - (2,626) -		$23,513 5,517 3,101 3,139 - (642) -
		$(22,276)		$34,628

49

Notes to the Parent Company-Only Financial Statements of K.S. TERMINALS INC.

(Continued)

(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

The Company's investee, K.S.T. INTERNATIONAL HOLDINGS LTD. repatriated a surplus of NTD 440,732 thousand (USD 14,000 thousand) and NTD 381,320 thousand (USD 12,500 thousand) during 2023 and 2022, respectively, which was recognized as a debit into the investments using the equity method.

1. Property, plants and equipment

Property, Plants and Equipment For Self-use	2023.12.31 $1,305,279	2022.12.31
		$1,130,882

• (1) Property, Plants and Equipment For Self-use

Costs: 2023.01.01 Addition Disposal Transfer 2023.12.31	Land $375,969 - - 59,911 $435,880	Property and Buildings $705,016 1,179 (370) - $705,825	Machinery and Equipment $1,272,555 17,470 (6,266) 26,978 $1,310,737	Transportati on Equipment $37,405 999 (980) 1,177 $38,601	Office Equipment $14,567 1,498 - 205 $16,270	Leasehold Improvem ents $10,493 - - - $10,493	Other Equipment $121,842 5,398 (1,146) - $126,094	Unfinished Construction Work and Equipment to be Tested $72,479 136,677 - - $209,156	Total
									$2,610,326 163,221 (8,762) 88,271
									$2,853,056

Depreciation

and

and
Impairment: 2023.01.01 Depreciation Disposal Transfer 2023.12.31	$- - - - $-	$291,592 23,409 (370) - $314,631	$1,057,151 45,762 (5,992) 32 $1,096,953	$32,855 918 (980) - $32,793	$12,019 658 - - $12,677	$8,134 1,180 - - $9,314	$77,693 4,894 (1,146) (32) $81,409	$- - - - $-	$1,479,444 76,821 (8,488) -
									$1,547,777

50

Notes to the Parent Company-Only Financial Statements of K.S. TERMINALS INC.

(Continued)

(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

Costs: 2022.01.01 Addition Disposal Transfer 2022.12.31	$375,969 - - - $375,969	$659,032 3,501 (111) 42,594 $705,016	$1,225,750 22,231 (4,526) 29,100 $1,272,555	$36,170 330 - 905 $37,405	$13,053 1,220 (152) 446 $14,567	$7,728 2,765 - - $10,493	$116,964 3,703 (498) 1,673 $121,842	$31,352 82,828 - (41,701) $72,479	$2,466,018 116,578 (5,287) 33,017
									$2,610,326

Depreciation and Impairment: 2022.01.01 Depreciation Disposal 2022.12.31 Net Carrying Amount: 2023.12.31 2022.12.31	$- - - $- $435,880 $375,969	$269,478 22,225 (111) $291,592 $391,194 $413,424	$1,013,690 47,987 (4,526) $1,057,151 $213,784 $215,404	$31,859 996 - $32,855 $5,808 $4,550	$11,447 724 (152) $12,019 $3,593 $2,548	$7,269 865 - $8,134 $1,179 $2,359	$73,664 4,527 (498) $77,693 $44,685 $44,149	$- - - $- $209,156 $72,479	$1,407,407 77,324 (5,287)
									$1,479,444
									$1,305,279
									$1,130,882

• (2) The major components of the Company’s buildings are main buildings,

• civil engineering, water, electricity, firefighting equipment, and decoration works, etc., and are depreciated over their useful lives of 5 to 50 years.

• (3) For details of property, plants and equipment provided as collateral, please refer to Note 8.

• (4) The Company did not capitalize the interest accrued on the acquisition of property, plants and equipment during 2023 and 2022.

9. Short-term Borrowings

Unsecured Bank Borrowings Secured Bank Borrowings Total	Interest Rate Range(%) 1.630%-1.870% 1.600%-1.650%	2023.12.31 $325,000 75,000 $400,000	Interest Rate Range(%) 1.390%~1.675% 0.995%~1.400%	2022.12.31
				$280,000 159,800
				$439,800

51

Notes to the Parent Company-Only Financial Statements of K.S. TERMINALS INC. (Continued)

(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

As of December 31, 2023 and 2022, the Company’s undrawn short-term borrowings amounted to roughly NTD 3,272,823 thousand and NTD 3,636,321 thousand, respectively.

Please refer to Note 8 for details of the collateral provided to secure the Company's bank borrowings.

10. Other Payables

Other Payables
Salary and Year-end Bonuses Payable Processing Costs Payable Remuneration Payable to Employees Packaging Costs Payable Consumables Payable Other Expenses Payable - others Total	2023.12.31 $124,571 61,048 23,000 17,100 15,650 43,161 $284,530	2022.12.31
		$160,259 65,361 38,000 15,914 13,593 53,412
		$346,539

11. Long-term Borrowings

Details of the long-term borrowings as of December 31, 2023 and 2022 are as follows:

Creditor Secured Loan from Land Bank of Taiwan Unsecured Loan from E.SUN Bank Unsecured Loan from E.SUN Bank Unsecured Loan from E.SUN Bank	2023.12.31 $140,000 83,000 80,000 72,000	Interest Rate(%) 1.3000% 1.2500% 1.2500% 1.2500%	Repayment Period and Method
			It is repaid in 84 installments (one installment per month) from August 15, 2026 with a term from July 17, 2023 through July 15, 2033, and the interest accrued is paid monthly. It is repaid in 24 installments (one installment per month) from December 15, 2024 with a term from November 29, 2021 through November 15, 2026, and the interest accrued is paid monthly. It is repaid in 24 installments (one installment per month) from June 15, 2024 with a term from September 28, 2021 through May 15, 2026, and the interest accrued is paid monthly. It is repaid in 24 installments (one installment per month) from December 15, 2024 with a term from

52

Notes to the Parent Company-Only Financial Statements of K.S. TERMINALS INC.

(Continued)

(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

Creditor Secured Loan from E.SUN Bank Unsecured Loan from E.SUN Bank Unsecured Loan from E.SUN Bank Secured Loan from Land Bank of Taiwan Unsecured Loan from O-Bank Co., Ltd. Unsecured Loan from E.SUN Bank Secured Loan from Land Bank of Taiwan Secured Loan from Chang Hwa Bank Unsecured Loan from E.SUN Bank	2023.12.31 40,250 35,580 34,000 23,610 21,297 18,200 12,307 8,000 3,600	Interest Rate(%) 1.9000% 1.4500% 1.2500% 2.1000% 1.7812% 1.2500% 2.1000% 1.9400% 1.9000%	Repayment Period and Method
			January 19, 2022 through November 15, 2026, and the interest accrued is paid monthly. It is repaid in 32 installments (one installment every three months) from January 30, 2023 with a term from October 30, 2020 through October 30, 2030, and the interest accrued is paid monthly. It is repaid in 24 installments (one installment per month) from June 15, 2024 with a term from June 12, 2023 through May 15, 2026, and the interest accrued is paid monthly. It is repaid in 24 installments (one installment per month) from June 15, 2024 with a term from March 31, 2022 through May 15, 2026, and the interest accrued is paid monthly. It is repaid in 144 installments (one installment per month) from September 30, 2017 with a term from August 12, 2014 through August 12, 2029, and the interest accrued is paid monthly. It is repaid in 13 installments (one installment every three months) from August 1, 2021 with a term from August 1, 2017 through August 1, 2024, and the interest accrued is paid monthly. It is repaid in 24 installments (one installment per month) from June 15, 2024 with a term from May 28, 2021 through May 15, 2026, and the interest accrued is paid monthly. It is repaid in 156 installments (one installment per month) from January 31, 2013 with a term from December 22, 2010 through December 22, 2025, and the interest accrued is paid monthly. It is repaid in 52 installments (one installment every three months) from January 31, 2013 with a term from October 7, 2010 through October 7, 2025, and the interest accrued is paid monthly. It is repaid in 20 installments (one installment every three months) from January 30, 2021 with a term from October 30, 2020 through October 30, 2025, and the interest accrued is paid monthly.

53

Notes to the Parent Company-Only Financial Statements of K.S. TERMINALS INC.

(Continued)

(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

Creditor Secured Loan from Land Bank of Taiwan Secured Loan from Land Bank of Taiwan Secured Loan from Land Bank of Taiwan Subtotal Less: Current Portion Total Creditor Unsecured Loan from E.SUN Bank Unsecured Loan from E.SUN Bank Unsecured Loan from E.SUN Bank Unsecured Loan from O-Bank Co., Ltd. Secured Loan from E.SUN Bank Unsecured Loan from E.SUN Bank	2023.12.31 3,134 1,248 1,172 577,398 (104,116) $473,282 2022.12.31 $83,000 80,000 72,000 49,702 46,000 34,000	Interest Rate(%) 2.1000% 2.1000% 2.1000% Interest Rate(%) 1.1250% 1.1250% 1.1250% 1.6490% 1.6500% 1.1250%	Repayment Period and Method
			It is repaid in 144 installments (one installment per month) from September 30, 2012 with a term from March 29, 2010 through August 31, 2024, and the interest accrued is paid monthly. It is repaid in 144 installments (one installment per month) from September 30, 2012 with a term from August 31, 2009 through August 31, 2024, and the interest accrued is paid monthly. It is repaid in 144 installments (one installment per month) from September 30, 2012 with a term from January 26, 2010 through August 31, 2024, and the interest accrued is paid monthly. Repayment Period and Method
			It is repaid in 24 installments (one installment per month) from December 15, 2024 with a term from November 29, 2021 through November 15, 2026, and the interest accrued is paid monthly. It is repaid in 24 installments (one installment per month) from June 15, 2024 with a term from September 28, 2021 through May 15, 2026, and the interest accrued is paid monthly. It is repaid in 24 installments (one installment per month) from December 15, 2024 with a term from January 19, 2022 through November 15, 2026, and the interest accrued is paid monthly. It is repaid in 13 installments (one installment every three months) from August 1, 2021 with a term from August 1, 2017 through August 1, 2024, and the interest accrued is paid monthly. It is repaid in 32 installments (one installment every three months) from January 30, 2023 with a term from October 30, 2020 through October 30, 2030, and the interest accrued is paid monthly. It is repaid in 24 installments (one installment per month) from June 15, 2024 with a term from March

54

Notes to the Parent Company-Only Financial Statements of K.S. TERMINALS INC.

(Continued)

(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

Creditor Secured Loan from Land Bank of Taiwan Secured Loan from Land Bank of Taiwan Unsecured Loan from E.SUN Bank Secured Loan from Chang Hwa Bank Secured Loan from Land Bank of Taiwan Unsecured Loan from E.SUN Bank Secured Loan from Land Bank of Taiwan Secured Loan from Land Bank of Taiwan Subtotal Less: Current Portion Total	2022.12.31 27,776 18,461 18,200 12,000 7,298 5,400 4,367 2,915 461,119 (58,606) $402,513	Interest Rate(%) 1.8500% 1.8500% 1.1250% 1.6900% 1.8500% 1.6500% 1.8500% 1.8500%	Repayment Period and Method
			31, 2022 through May 15, 2026, and the interest accrued is paid monthly. It is repaid in 144 installments (one installment per month) from September 30, 2017 with a term from August 12, 2014 through August 12, 2029, and the interest accrued is paid monthly. It is repaid in 156 installments (one installment per month) from January 31, 2013 with a term from December 22, 2010 through December 22, 2025, and the interest accrued is paid monthly. It is repaid in 24 installments (one installment per month) from June 15, 2024 with a term from May 28, 2021 through May 15, 2026, and the interest accrued is paid monthly. It is repaid in 52 installments (one installment every three month) from January 31, 2013 with a term from October 7, 2010 through October 7, 2025, and the interest accrued is paid monthly. It is repaid in 144 installments (one installment per month) from September 30, 2012 with a term from March 29, 2010 through August 31, 2024, and the interest accrued is paid monthly. It is repaid in 20 installments (one installment every three months) from January 30, 2021 with a term from October 30, 2020 through October 30, 2025, and the interest accrued is paid monthly. It is repaid in 144 installments (one installment per month) from September 30, 2012 with a term from January 26, 2010 through August 31, 2024, and the interest accrued is paid monthly. It is repaid in 144 installments (one installment per month) from September 30, 2012 with a term from August 31, 2009 through August 31, 2024, and the interest accrued is paid monthly.

The above bank borrowings are secured, for which land and buildings were prioritized as collateral. Please refer to Note 8 for details of the collateral.

55

Notes to the Parent Company-Only Financial Statements of K.S. TERMINALS INC. (Continued)

(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

12. Post-employment Benefit Plan

Defined Contribution Plans

The Company has an employee retirement plan stipulated in accordance with the “Labor Pension Act,” which is a defined contribution plan. According to the Act, the Company’ monthly labor pension contribution rate shall not be less than 6% of employees’ monthly salary. The Company makes a monthly contribution equivalent to 6% of the employees’ monthly salary to the personal pension account with the Bureau of Labor Insurance.

The amount of expenses of the defined contribution pension plan recognized by the Company for 2023 and 2022 was NTD 18,509 thousand and NTD 17,678 thousand, respectively.

The Company settled the defined benefit plan in 2018, so the Company has no employees who are eligible for the pension scheme under the defined benefit plan. Thus, no sensitivity analysis of actuarial assumptions and major actuarial assumptions was performed.

13. Equity

(1) Ordinary Shares

As of December 31, 2023 and 2022, the Company’s authorized capital was NTD 2,000,000 thousand, with a par value of NTD 10 per share, and the number of issued shares was 155,654,890 shares, with paid-in share capital in the amount of NTD 1,556,549 thousand. Each share is entitled to one voting right and the right to receive dividends.

• (2) Capital Surplus

Capital Surplus
Premium for Conversion of Convertible Corporate Bonds Employee Stock Option Combined Premium Others Total	2023.12.31 $17,074 9,836 352 19 $27,281	2022.12.31
		$17,074 9,836 352 19
		$27,281

56

Notes to the Parent Company-Only Financial Statements of K.S. TERMINALS INC. (Continued)

(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

As per law, paid-in capital shall not be used for any purpose except for making up for the Company’s losses. When the Company has no loss, a certain percentage of the paid-in capital from the stock premium and the gift can be applied to replenish the capital per year. The aforementioned paid-in capital can be allocated in cash to shareholders in proportion to their shareholdings.

(3) Earnings Distribution and Dividend Policy

As per the Articles of Incorporation, where the Company makes a profit for a fiscal year, it shall distribute the earnings in the order specified below:

• A. Paying taxes;

• B. Offsetting a cumulative deficit;

• C. Setting aside 10% of the remaining balance as a legal reserve;

• D. Setting aside an amount for or reversing a special reserve in accordance with laws and regulations or the competent authority’s instructions;

• E. Any remaining profit, together with any undistributed retained earnings, adopted by the Board of Directors as the basis for making a distribution proposal, which shall then be reported to the shareholders’ meeting.

The Company operates in the electronic components industry and strives to be in line with the overall environment and the characteristics of the industry. The Company achieves its sustainability, pursues long-term interests of shareholders, stabilizes business performance targets, while taking into account the Company’s budget for future capital expenditures and the status of capital needs. The Company’s dividend policy is to appropriate at least 10% of its earnings after tax, less legal reserve and special reserve, as shareholder bonus, with cash dividends accounting for at least 10% of the total dividends paid to shareholders. However, if the year’s net income after tax does not reach 15% of the paid-in capital, the earnings may not be distributed; if the Company has no earnings available for the year, the cumulative undistributed earnings from the prior year may be distributed. Where the shareholder bonus or legal reserve or capital surplus as mentioned above is paid in cash, the Board of Directors is authorized to act by approval of two-thirds of the directors at a meeting attended by more than half of the directors, and shall be reported to the shareholders’ meeting.

57

Notes to the Parent Company-Only Financial Statements of K.S. TERMINALS INC. (Continued)

(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

As per the Company Act, the Company shall set aside a legal reserve unless its total amount has reached the amount of the total paid-in capital. The legal reserve may be used to offset a deficit. When the Company has no loss, the portion of the legal reserve that exceeds 25% of the paid-in capital may be used to distribute shares or cash to shareholders in proportion to their shareholdings.

When distributing the distributable earnings, the Company shall retroactively

set aside a special reserve for the difference between the balance of the special reserve and the net deduction of other equity items as per law when the IFRS is adopted for the first time. If there is a subsequent reversal of the net deduction of other equity, the special reserve may be reversed for the portion of the net deduction of other equity reversed to distribute earnings.

In accordance with the Letter Jin-Guan-Zheng- Fa No. 1090150022 issued by the FSC dated March 31, 2021, a special reserve shall be set aside for the unrealized revaluation gains and cumulative translation adjustment (gains), which were reclassified to retained earnings on the conversion date due to the adoption of exemptions under IFRS 1 “First-time Adoption of International Financial Reporting Standards” when IFRS was first adopted. When the Company uses, disposes of, or reclassifies the relevant assets later, it may reverse the portion of the special reserve in the same percentage to distribute earnings.

During the years ended December 31, 2023 and 2022, there was no need to reverse the special reserve due to the use, disposal of, or reclassification of relevant assets.

The Company’s Board of Directors and annual general shareholders’ meetings on March 14, 2024 and June 9, 2023 submitted and approved the 2023 and 2022 earnings appropriation and distribution proposals and the dividends per share, respectively. The details are as follows:

58

Notes to the Parent Company-Only Financial Statements of K.S. TERMINALS INC.

(Continued)

(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

Legal Reserve Set Aside (Reserved) as Special Reserve Cash Dividends on Ordinary Shares (Note)	Earnings Appropriation and Distribution Proposal 2023 2022 $54,344 $79,413 21,297 (91,022) 233,482 311,310	Dividends per Share (NTD)	Dividends per Share (NTD)
	2023 $54,344 21,297 233,482	2023 NTD 1.5 per Share	2022
			NTD 2.0 per Share

Note: The Company’s Board of Directors was authorized by the Articles of Incorporation to pass the proposal for the 2023 cash dividends on common shares by a special resolution on March 14, 2024.

Please refer to Note 6.17 for the relevant information on the estimation

basis and recognized amounts of employee remuneration and directors’ remuneration.

14. Operating income

remuneration. Operating income
Revenue From Customer Contracts Revenue From Product Sales Revenue From Provision of Services Total	2023 $2,710,721 4,182 $2,714,903	2022
		$3,151,223 4,666
		$3,155,889

The Company's revenue from customer contracts during 2023 and 2022 is as follows:

(1) Breakdown of Revenue

Product Sales Provision of Services Total	2023 $2,710,721 4,182 $2,714,903	2022
		$3,151,223 4,666
		$3,155,889

The Company recognizes revenue when the control over the merchandise is transferred to a buyer, i.e., when the performance obligation is fulfilled at a certain point in time.

59

Notes to the Parent Company-Only Financial Statements of K.S. TERMINALS INC.

(Continued)

(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

• (2) Contract Balance

Contract Liabilities – current

Product Sales	2023.12.31	2022.12.31	2022.01.01
	$5,154	$19,210	$11,284

The major changes in the balances of the Company’s contract liabilities for 2023 and 2022 are specified below:

Opening Balance Transferred to Revenue in This Period Increase in Advance Receipts for This Period (those for this period were deducted and transferred to revenue) Movements During This Period	2023	2022
	$(19,210) 5,154	$(11,284) 19,210
	$(14,056)	$7,926

• (3) Transaction Prices Apportioned to the Outstanding Performance Obligations

None.

• (4) Assets Recognized From the Cost of Obtaining or Fulfilling a Customer Contract

None.

1. Expected Credit Impairment Losses

None. Expected Credit Impairment Losses
Operating Expenses - Expected Credit Impairment Losses Accounts Receivable	2023	2022
	$78	$6

Please refer to Note 12 for relevant credit risk information.

The Company’s receivables (including notes and accounts receivable) measured at the lifetime expected credit losses as of December 31, 2023 and 2022 are described as follows:

Regarding accounts receivable, counterparties’ credit ratings and other factors are considered for classification, and a provision matrix is adopted to measure the allowances for losses; the relevant information is as follows:

60

Notes to the Parent Company-Only Financial Statements of K.S. TERMINALS INC. (Continued)

(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

2023.12.31

2023.12.31
Total Carrying Amount Loss Ratio Lifetime Expected Credit Loss Carrying Amount	Not Overdue (Note) $383,339 -%	Number of Days Past Due				Total
		1–90 days	91–180 days	181–365 days	365 days or more
		$26,477 -%	$4,227 5~10%	$3,227 1~5%	$4,688 80~85%	$421,958 (4,193)
	-	-	(254)	(37)	(3,902)
	$383,339	$26,477	$3,973	$3,190	$786	$417,765

2022.12.31

2022.12.31
Total Carrying Amount Loss Ratio Lifetime Expected Credit Loss Carrying Amount	Not Overdue (Note) $379,641 -%	Number of Days Past Due				Total
		1–90 days	91–180 days	181–365 days	365 days or more
		$54,864 0~1%	$9,098 0~1%	$6,795 -%	$3,902 100%	$454,300 (4,115)
	-	(152)	(61)	-	(3,902)
	$379,641	$54,712	$9,037	$6,795	$-	$450,185

Note: None of the Company’s notes receivable were overdue.

The movements in the allowances for losses on the Company's notes and accounts receivable for 2023 and 2022 are as follows:

2023.1.1 Increase in the Current Period 2023.12.31 2022.1.1 Write-off Due to the Inability to Recover Increase in the Current Period 2022.12.31	Notes Receivable	Accounts Receivable
	$- -	$4,115 78
	$-	$4,193
	$- - -	$4,120 (11) 6
	$-	$4,115

61

Notes to the Parent Company-Only Financial Statements of K.S. TERMINALS INC. (Continued)

(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

1. Leasing

2. (1) The Company as a Lessee

The Company has leased a number of different assets, including property (land and buildings) and transportation equipment. The lease terms for each contract range from two to five years.

The impact of leasing on the Company’s financial position, financial performance, and cash flows is specified below:

• A. Amounts Recognized in the Balance Sheet

• (a) Right-of-use Assets

Carrying Amount of Right-of-use Assets 2023.12.31 Property and Buildings $3,001 Transportation Equipment 1,498 Total $4,499	Carrying Amount of Right-of-use Assets 2023.12.31 Property and Buildings $3,001 Transportation Equipment 1,498 Total $4,499	2022.12.31
	$3,001 1,498	$3,991 3,461
	$4,499	$7,452

The Company’s additions to the right-of-use assets during 2023 and 2022 were NTD 2,010 thousand and NTD 3,064 thousand, respectively.

• (b) Lease Liabilities

Lease Liabilities Current Non-current Total	2023.12.31	2022.12.31
	$4,484 86	$3,972 3,557
	$4,570	$7,529

Please refer to Note 6.18 (3) Financial Costs for the details of interest expenses for the Company’s lease liabilities in 2023 and 2022; please refer to Note 12.5 Liquidity Risk Management for the details of the maturity analysis of lease liabilities.

62

Notes to the Parent Company-Only Financial Statements of K.S. TERMINALS INC. (Continued)

(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

• B. Amounts recognized in the statement of comprehensive income. Depreciation of Right-of-use Assets

ciation of Right-of-use Assets
Property and Buildings Transportation Equipment Total	2023.01.01~202 3.12.31	2022.01.01~202 2.12.31
	$3,000 1,963 $4,963	$3,006 2,088
		$5,094

• C. Lessee's Income and Expenses Related to Leasing Activities

Expenses of Short-term Leases	2023.01.01~202 3.12.31 $279	2022.01.01~202 2.12.31
		$257

• D. Lessee's Cash Outflows From Leasing Activities

The amount of the Company’s cash outflows from leasing activities during 2023 and 2022 was NTD 5,327 thousand and NTD 5,433 thousand, respectively.

1. Statement of Employee Benefits, Depreciation, Depletion, and Amortization Expenses by Function is as follows:

By Function ByNature		2023			2022
	Operating Costs	Operating Expenses	Total	Operating Costs	Operating Expenses	Total
Employee Benefit Expenses
Salaryand Wages	$273,423	$159,636	$433,059	$322,437	$195,839	$518,276
Labor and Health InsuranceCosts	32,092	13,523	45,615	29,136	14,383	43,519
Pension Costs	11,802	6,707	18,509	11,204	6,474	17,678
Remuneration to Directors	-	10,755	10,755	-	16,749	16,749
Other Employee Benefit Expenses	22,466	8,653	31,119	23,494	10,074	33,568
Depreciation Expenses	64,583	19,664	84,247	64,117	19,090	83,207
Amortization Expenses	1,381	1,762	3,143	1,469	1,764	3,233

63

Notes to the Parent Company-Only Financial Statements of K.S. TERMINALS INC. (Continued)

(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

As of December 31, 2023 and 2022, the Company had 728 and 717 employees respectively, of which the number of directors who did not concurrently serve as employees was four for both years.

The Company's average employee benefit expenses for 2023 and 2022 were NTD 730 thousand and NTD 860 thousand, respectively; the Company's average employee salary and wages for 2023 and 2022 were NTD 598 thousand and NTD 727 thousand, respectively. The average employee salary decreased by 17.7% YoY.

The Company’s policy on the remuneration to directors, managers, and employees is as follows:

The Company has specified the policy on directors’ remuneration and employee remuneration in the Articles of Incorporation and has established an Audit Committee to evaluate and supervise the directors’ and managers’ remuneration mechanism. The procedure for determining the remuneration to directors and managers was established based on the Company's Regulations Governing the Board Performance Evaluation and employee performance evaluation results. Reasonable remuneration to directors and managers is determined with reference to the Company's operating performance, future risks, development strategies, and industry trends, as well as individuals’ contribution to the Company's performance.

The Company formulated a complete employee benefit system to provide employees with competitive salary and benefits in compliance with laws and regulations and in alignment with each region’s needs. Employee remuneration includes monthly salary as well as dividends and bonuses depending on operating performance and is paid based on the annual profit as per the Articles of Incorporation. The Company regularly conducts company-wide performance evaluations of all employees every year to keep abreast of their work performance and adopts the evaluation results as the basis for promotion, training and development, and salary payout.

In accordance with the Articles of Incorporation, the Company shall set aside profits, if any, for no lower than 3% as employees’ remuneration and no higher than 3% as directors’ remuneration, while the Company shall

64

Notes to the Parent Company-Only Financial Statements of K.S. TERMINALS INC. (Continued)

(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

reserve an amount in advance to offset a cumulative deficit, if any. The above employees’ remuneration may be distributed in stock or cash, which shall be approved by half of all directors present at a Board Meeting attended by more than two-thirds of all directors and then reported to the shareholders’ meeting. Please visit the Market Observation Post System (MOPS) for information on employee remuneration and directors’ remuneration approved by the Board of Directors.

The Company set aside employee remuneration and director’s remuneration at 3.42% and 1.34% of the profit in 2023 and recognized them in the amounts of NTD 23,000 thousand and NTD 9,000 thousand, respectively, accounted for under Salary and Wages and Other Expenses. The Company’s Board of Directors resolved to distribute employee remuneration and directors’ remuneration in cash in the amounts of NTD 23,000 thousand and NTD 9,000 thousand, respectively, on March 14, 2024.

The amounts of employee remuneration and directors’ remuneration distributed for 2022 were NTD 38,000 thousand and NTD 15,000 thousand, respectively. The said amounts were not different from the amounts recognized as expenses in the 2022 financial statements.

18. Non-operating Revenue and Expenses

(1) Other Income

Interest Income Financial Assets at Amortized Cost Dividend Income Rent Income Other Income – Others Total	2023 $38,540 2,162 3,616 15,306 $59,624	2022
		$17,975 4,320 971 39,446
		$62,712

65

Notes to the Parent Company-Only Financial Statements of K.S. TERMINALS INC.

(Continued)

(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

(2) Other Gains and Losses

Net Gain (Loss) on Financial Assets and Liabilities at Fair Value Through Profit or Loss Net Gain on Foreign Exchange Losses (gains) on Disposal of Investment Gain on Disposal of Property, Plants and Equipment Others Total Financial Costs Interest on Bank Borrowings Interest on Lease Liabilities Total	2023 $15,326 9,798 (2,550) 103 (24) $22,653 2023 $12,710 79 $12,789	2022
		$(32,260) 197,413 3,636 135 (75)
		$168,849
		2022
		$13,003 97
		$13,100

• (3) Financial Costs

• Components of Other Comprehensive Income

• (1) The components of 2023 other comprehensive income are as follows:

Items that will not be reclassified subsequently to profit or loss: Unrealized Gain (loss) From Investments in Equity Instruments Measured at Fair Value Through Other Comprehensive Income Items that may be reclassified subsequently to profit or loss: Exchange differences arising on the translation of the financial statements of foreign operations Share of Other Comprehensive Income of Associates and Joint Ventures Recognized Using the Equity Method Total	Generated During This Period $(3,211) (19,650) (2,626) $(25,487)	Other Comprehensi ve Income (loss) $(3,211) (19,650) (2,626) $(25,487)	Income Tax Benefits $260 3,930 - $4,190	After-tax Amount
				$(2,951) (15,720) (2,626)
				$(21,297)

66

Notes to the Parent Company-Only Financial Statements of K.S. TERMINALS INC.

(Continued)

(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

(2) The components of 2022 other comprehensive income are as follows:

Items that will not be reclassified subsequently to profit or loss: Unrealized Gain (loss) From Investments in Equity Instruments Measured at Fair Value Through Other Comprehensive Income Items that may be reclassified subsequently to profit or loss: Exchange differences arising on the translation of the financial statements of foreign operations Share of Other Comprehensive Income of Associates and Joint Ventures Recognized Using the Equity Method Total	Generated During This Period $(38,607) 35,270 (642) $(3,979)	Other Comprehens ive Income (loss) $(38,607) 35,270 (642) $(3,979)	Income Tax Expenses $797 (7,054) - $(6,257)	After-tax Amount
				$(37,810) 28,216 (642)
				$(10,236)

20. Income Tax

The main components of income tax expenses (benefits) for 2023 and 2022 are as follows:

(1) Income Tax Recognized in Profit or Loss

Income Tax Recognized in Profit or Loss
Current Income Tax Expenses: Income Tax Payable For the Current Period Income Taxes For prior Years Adjusted Into This Year Deferred Tax Expenses: Deferred Tax Expenses Related to the Initial Temporary Differences and Reversal of Temporary Differences Income Tax Expenses	2023 $163,165 (10,964) (54,331) $97,870	2022
		$196,425 (1,259) 19,392
		$214,558

67

Notes to the Parent Company-Only Financial Statements of K.S. TERMINALS INC.

(Continued)

(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

(2) Income Tax Recognized in Other Comprehensive Income

Deferred Tax Benefits (Expenses) Unrealized Gain (Loss) From Investments in Equity Instruments Measured at Fair Value Through Other Comprehensive Income Exchange Gains or Losses Arising on the Translation of the Financial Statements of Foreign Operations Income Tax Related to Components of Other Comprehensive Income	2023 $260 3,930 $4,190	2022
		$797 (7,054)
		$(6,257)

(3) The amount of income tax expenses and accounting profit multiplied by the parent company’s applicable income tax rate is adjusted as follows: 2023 2022 Net Income Before Tax of the Continuing Operations $641,311 $1,109,944 Amounts of Taxes Calculated at Relevant Countries’ Domestic Tax Rates Applicable to Income $128,262 $221,989 A Surtax on Undistributed Earnings 24,721 24,152 Income Tax Effect of Non-deductible Expenses on Tax Returns (639) 5,941 Income Taxes for Prior Years Adjusted Into This Period (10,964) (1,259) Other Adjustments to Income Tax in accordance with Income Tax Act (43,510) (36,265) Total Income Tax Expense Recognized in Profit or Loss $97,870 $214,558	(3) The amount of income tax expenses and accounting profit multiplied by the parent company’s applicable income tax rate is adjusted as follows: 2023 2022 Net Income Before Tax of the Continuing Operations $641,311 $1,109,944 Amounts of Taxes Calculated at Relevant Countries’ Domestic Tax Rates Applicable to Income $128,262 $221,989 A Surtax on Undistributed Earnings 24,721 24,152 Income Tax Effect of Non-deductible Expenses on Tax Returns (639) 5,941 Income Taxes for Prior Years Adjusted Into This Period (10,964) (1,259) Other Adjustments to Income Tax in accordance with Income Tax Act (43,510) (36,265) Total Income Tax Expense Recognized in Profit or Loss $97,870 $214,558	(3) The amount of income tax expenses and accounting profit multiplied by the parent company’s applicable income tax rate is adjusted as follows: 2023 2022 Net Income Before Tax of the Continuing Operations $641,311 $1,109,944 Amounts of Taxes Calculated at Relevant Countries’ Domestic Tax Rates Applicable to Income $128,262 $221,989 A Surtax on Undistributed Earnings 24,721 24,152 Income Tax Effect of Non-deductible Expenses on Tax Returns (639) 5,941 Income Taxes for Prior Years Adjusted Into This Period (10,964) (1,259) Other Adjustments to Income Tax in accordance with Income Tax Act (43,510) (36,265) Total Income Tax Expense Recognized in Profit or Loss $97,870 $214,558
	$641,311 $128,262 24,721 (639) (10,964) (43,510) $97,870	$1,109,944
		$221,989 24,152 5,941 (1,259) (36,265)
		$214,558

68

Notes to the Parent Company-Only Financial Statements of K.S. TERMINALS INC. (Continued)

(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

• (4) Balances of deferred tax assets (liabilities) related to the following items:

• A. 2023

A. 2023
Temporary Difference Unrealized Exchange Profit and Loss Valuation of Financial Assets at Fair Value Through Profit or Loss Allowance for Inventory Valuation Loss Investments Using the Equity Method Exchange Differences Arising on the Translation of the Financial Statements of Foreign Subsidiaries Valuation of Financial Assets at Fair Value Through Other Comprehensive Income Long-term Investment Income or Loss Impairment Recognized Using the Equity Method Unrealized Sales Gross Profit Deferred Tax Expenses Net Deferred Tax Assets (liabilities) The information presented in the balance sheet is as follows: Deferred Tax Assets Deferred Tax Liabilities B. 2022 Temporary Difference Unrealized Exchange Profit and Loss Valuation of Financial Assets at Fair Value	Opening Balance $(3,705) 2,522 6,673 (297,440) (211) 1,176 226 2,783 $(287,976) $13,380 $(301,356) Opening Balance $29,280 556	Recognized in Profit or Loss $4,731 (1,322) 109 53,537 - - - (2,724) $54,331 Recognized in Profit or Loss $(32,985) 1,966	Recognized in Other Comprehensi ve Income $- - - - 3,930 260 - - $4,190 Recognized in Other Comprehensi ve Income $- -	Ending Balance
				$1,026 1,200 6,782 (243,903) 3,719 1,436 226 59
				$(229,455)
				$10,729
				$(240,184)
				Ending Balance
				$(3,705) 2,522

69

Notes to the Parent Company-Only Financial Statements of K.S. TERMINALS INC.

(Continued)

(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

Through Profit or Loss Allowance for Inventory Valuation Loss Investments Using the Equity Method Exchange Differences Arising on the Translation of the Financial Statements of Foreign Subsidiaries Valuation of Financial Assets at Fair Value Through Other Comprehensive Income Long-term Investment Income or Loss Impairment Recognized Using the Equity Method Unrealized Sales Gross Profit Deferred Tax Benefit (expense) Net Deferred Tax Assets (liabilities) The information presented in the balance sheet is as follows: Deferred Tax Assets Deferred Tax Liabilities	Opening Balance 5,165 (305,097) 6,843 379 226 321 $(262,327) $35,700 $(298,027)	Recognized in Profit or Loss 1,508 7,657 - - - 2,462 $(19,392)	Recognized in Other Comprehensi ve Income - - (7,054) 797 - - $(6,257)	Ending Balance
				6,673 (297,440) (211) 1,176 226 2,783
				$(287,976)
				$13,380
				$(301,356)

• (5) Unrecognized Deferred Tax Assets

N/A.

• (6) Unrecognized Deferred Tax Liabilities Related to Investments in Subsidiaries

N/A.

• (7) As of December 31, 2023, the Company's profit-seeking enterprise income tax returns filed up to 2021 were approved by the tax authority.

70

Notes to the Parent Company-Only Financial Statements of K.S. TERMINALS INC. (Continued)

(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

21. Earnings per Share

The basic earnings per share is calculated with the net income attributable to the holders of the ordinary shares of the parent company divided by the weighted average number of ordinary share outstanding in the current period.

The diluted earnings per share is calculated by with the net income attributable to the holders of the ordinary shares of the parent company divided by the weighted average number of ordinary shares outstanding in the current period plus the weighted average number of ordinary shares to be issued when all dilutive potential ordinary shares were converted into ordinary shares.

(1) Basic Earnings per Share

(1) Basic Earnings per Share
Net income for the current period (in NTD thousand) Weighted Average Number of Ordinary Shares (in thousand shares) for the Earnings per Share Basic Earnings per Share (NTD) (2) Diluted Earnings per Share Net income for the current period (in NTD thousand) Weighted Average Number of Ordinary Shares (in thousand shares) for the Earnings per Share Dilution Effect: Employee Remuneration - Stock (in thousand shares) Weighted Average Number of Ordinary Shares (in thousand shares) With the Dilution Effect Adjusted Diluted Earnings per Share (NTD)	2023 $543,441 155,655 $3.49 2023 $543,441 155,655 416 156,071 $3.48	2022
		$895,386
		155,655
		$5.75
		2022
		$895,386
		155,655 541
		156,196
		$5.73

There was no other transaction performed to cause significant changes to the outstanding ordinary shares or the potential ordinary shares after the reporting period and before the release of the financial statements.

71

Notes to the Parent Company-Only Financial Statements of K.S. TERMINALS INC. (Continued)

(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

• VII. Related Party Transactions

The related parties with transactions with the Company during the financial reporting period are as follows:

Name of Related Party and Relationship With the Company

Name Relationship With the Company Eleven people including Cheng Yu-Liang The management personnel at the director or the Deputy General Manager level or above in the Company K.S.TERMINALS USA LLC (originally The Company’s Subsidiary DRACO K ENTERPRISES, LLC) IFCHIC INC. The Company’s Subsidiary CHIEN HO HSING TECHNOLOGY The Company’s Sub-subsidiary (SUZHOU) CO., LTD K.S.TERMINALS (THAILAND) CO.,LTD. The Company’s Sub-subsidiary K.S.TERMINALS COMPANY LIMITED The Company’s Sub-subsidiary VIETNAM PT.KSTERMINALS TECHNOLOGY The Company’s Sub-subsidiary INDONESIA

1. Material Transactions With Related Parties

2. (1) Sales

CHIEN HO HSING TECHNOLOGY (SUZHOU) CO., LTD K.S.TERMINALS (THAILAND) CO.,LTD. K.S.Terminals USA LLC K.S.TERMINALS COMPANY LIMITED VIETNAM PT.KSTERMINALS TECHNOLOGY INDONESIA IFCHIC INC. Total	2023 $268,293 40,230 13,582 12,385 3,471 3 $337,964	2022
		$321,282 42,207 15,157 15,236 3,205 27
		$397,114

The above sales terms and conditions are subject to the regular ones.

72

Notes to the Parent Company-Only Financial Statements of K.S. TERMINALS INC.

(Continued)

(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

• (2) Purchases

CHIEN HO HSING TECHNOLOGY (SUZHOU) CO., LTD	2023 $27,829	2022
		$38,500

The above purchase terms and conditions are subject to the regular ones.

• (3) Accounts Receivable

2023.12.31 CHIEN HO HSING TECHNOLOGY (SUZHOU) CO., LTD $40,863 K.S.TERMINALS COMPANY LIMITED VIETNAM 12,201 K.S.TERMINALS (THAILAND) CO.,LTD. 5,555 K.S.Terminals USA LLC 4,494 PT.KSTERMINALS TECHNOLOGY INDONESIA 4,203 Total $67,316 (4) Right-of-use Assets 2023.12.31 The Company’s Key Management Personnel $1,996 (5) Lease Liabilities 2023.12.31 The Company’s Key Management Personnel $2,045 2. Remuneration of the Company’s Key Management Personnel		2023.12.31	2022.12.31
		$40,863 12,201 5,555 4,494 4,203	$30,798 15,698 7,669 14,127 2,681 $70,973 2022.12.31
		$67,316
			$3,991
			2022.12.31
			$4,050

Short-term Employee Benefits Post-employment Benefits Total	2023 $36,960 1,456 $38,416	2022
		$49,984 2,138
		$52,122

73

Notes to the Parent Company-Only Financial Statements of K.S. TERMINALS INC. (Continued)

(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

VIII. Assets Pledged

The Company has the following assets pledged as collateral:

Item	CarryingAmount	CarryingAmount	Details of Collateral for Debts
	2023.12.31	2022.12.31
Property, Plants and Equipment - Land and Buildings Property, Plants and Equipment – Machinery and Equipment Other Receivables - Time Deposits Total	$405,349 2,430 32,664	$294,289 - 266,977	Long-term Borrowings Long-term Borrowings Short-term Borrowings
	$440,443	$561,266

IX. Material Contingent Liabilities and Unrecognized Contractual Commitments

As of December 31, 2023, the unused letters of credit issued by the Company amounted to USD 1,237 thousand.

X. Major Disaster Loss

None.

XI. Material Events After the Balance Sheet Date

None.

XII. Others

1. Types of Financial Instruments

Financial Assets Financial Assets at Fair Value Through Profit or Loss: Mandatorily at Fair Value Through Profit or Loss Financial Assets at Fair Value Through Other Comprehensive Income	2023.12.31	2022.12.31
	$635,350 104,872	$301,236 108,083

74

Notes to the Parent Company-Only Financial Statements of K.S. TERMINALS INC. (Continued)

(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

Financial Assets Financial Assets at Amortized Cost: Cash and Cash Equivalents (excluding cash on hand) Financial Assets at Amortized Cost Notes and Accounts Receivable (including from related parties) Other Receivables Refundable Deposits (stated as other non-current assets) Financial Liability Financial Liabilities at Amortized Cost: Short-term Borrowings Notes and Accounts Payable (including from related parties) Other Payables Long-term Borrowings (including due within one year) Lease Liabilities Deposits Received (stated as other non-current liabilities)	2023.12.31	2022.12.31
	2,191,936 - 417,765 41,871 10,432 2023.12.31	1,770,810 138,381 450,185 275,091 4,759 2022.12.31
	$400,000 66,035 284,530 577,398 4,570 793	$439,800 83,677 346,539 461,119 7,529 130

2. Financial Risk Management Objectives and Policies

The Company's financial risk management objectives are mainly to manage market, credit, and liquidity risks related to operating activities. The Company identifies, measures, and manages the above risks as per the Company's policies and risk preferences.

The Company has established appropriate policies, procedures, and an internal control system in accordance with applicable regulations on the above financial risk management; important financial activities should be reviewed by the Board of Directors in accordance with applicable regulations and the internal control system. During the implementation of the financial management activities, the Company should comply with the

75

Notes to the Parent Company-Only Financial Statements of K.S. TERMINALS INC. (Continued)

(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

applicable regulations on financial risk management.

1. Market Risk

Market risk refers to the risk of fluctuations in the fair value or cash flow of financial instruments due to the movements in market prices. The Company's market risk mainly includes the exchange rate and interest rate risks.

In practice, one movement by a single change in risk variables is rare, and changes in risk variables are always interrelated; however, the sensitivity analysis of the following risks did not consider the interaction between relevant risks and variables.

Exchange Rate Risk

The Company's exchange rate risk is mainly related to operating activities (when a currency used for income or expenses is different from the Company's functional currency) and net investment in foreign operations.

The Company's foreign currency receivables and foreign currency payables are partially in the same currency. Thus, there will be a natural hedging effect for a part of the foreign currency position. The exchange rate risk of some foreign currency payments is managed through forward exchange agreements. The above natural hedging effect and the management of exchange rate risk through forward exchange agreements do not meet the requirement of hedging accounting, so hedging accounting has not been adopted; also, the net investment in foreign operations is a strategic investment, so the Company has not adopted a hedging approach thereto.

76

Notes to the Parent Company-Only Financial Statements of K.S. TERMINALS INC. (Continued)

(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

The sensitivity analysis of the Company’s exchange rate risk is mainly focused on the main foreign currency monetary items on the end date of the financial reporting period. The Company’s exchange rate risk is mainly affected by fluctuations in the exchange rates of USD. The sensitivity analysis information is as follows:

When the NTD appreciates by 1% against the USD, the impact on the Company's equity and profit or loss is as follows:

2023 2022	Increase (decrease) in Equity $- $-	Gain (loss) $(7,892) $(14,219)

Interest Rate Risk

Interest rate risk refers to the risk of fluctuations in the fair value of financial instruments or future cash flows due to the movements in market interest rates. The Company's interest rate fluctuation risk is mainly from borrowings at floating and fixed rates.

The sensitivity analysis of the Company’s interest rate risk was mainly focused on the floating interest rates for borrowings on the end date of the financial reporting period. Assuming that such borrowings are held for one fiscal year, if the market interest rate increased/decreased by 0.1%, the Company’s 2023 and 2022 profit or loss would have decreased/increased by NTD 977 thousand and NTD 901 thousand, respectively.

Equity Price Risk

The fair value of unlisted equity securities held by the Company will be affected by the uncertainty about their future values. The non-listed equity securities held by the Company are included in the category measured at fair value through other comprehensive income. The Company manages the price risk of equity securities by diversifying investments and setting limits

77

Notes to the Parent Company-Only Financial Statements of K.S. TERMINALS INC. (Continued)

(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

for investments in single and overall equity securities. The information on the investment portfolio of equity securities should be regularly provided to the Company’s senior management, and the Board of Directors should review and approve all decisions about investments in equity securities.

The fair values of other equity instruments or derivatives linked to equity instruments belong to Level 3. Please refer to Note 12.8 for the sensitivity analysis information.

4. Credit Risk Management

Credit risk refers to the risk of financial loss arising from default by counterparties on contract obligations. The Company’s credit risk is derived from its operating activities (mainly from notes and accounts receivables) and financial activities (mainly from bank deposits and various financial instruments).

Each business unit adopts the Company's customer credit risk policies, procedures, and control measures to manage the customer credit risk. The credit risk assessment of all customers is based on factors such as the customers’ financial position, ratings by credit rating agencies, historical trading experience from the past, current economic environment, and the Company’s internal rating criteria. The Company also uses certain credit enhancement tools (such as loans and insurance) at appropriate times to reduce specific customers’ credit risk.

As of December 31, 2023 and 2022, the Company’s accounts receivable from the top ten customers accounted for 36.30% and 44.60% of the balances of the Company’s accounts receivable, respectively. The credit concentration risk for the remaining receivables is relatively insignificant.

The Company’s finance department manages the credit risk of bank deposits, fixed-income securities, and other financial instruments in accordance with the Company’s policies. The Company’s counterparties are determined by internal control procedures, such as banks with good credit, financial institutions with investment-grade ratings, corporate

78

Notes to the Parent Company-Only Financial Statements of K.S. TERMINALS INC. (Continued)

(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

organizations, and governmental agencies, and there is no major concern about their contract performance, hence there is no significant credit risk.

5. Liquidity Risk Management

The Company maintains financial flexibility through cash and cash equivalents, highly liquid securities, bank borrowings, convertible corporate bonds, and financing or leasing contracts. The table below summarizes the maturity of the payments contained in the contracts of the Company’s financial liabilities. It is compiled based on the earliest possible date for repayment and its undiscounted cash flow. The amounts listed also include the agreed interest. For the interest cash flow paid at floating interest rates, the undiscounted amount of interest is derived from the yield curve at the end of the reporting period.

Non-derivative Financial Instruments

2023.12.31 Short-term Borrowings Payables Long-term Bank Borrowings Lease Liabilities 2022.12.31 Short-term Borrowings Payables Long-term Bank Borrowings Lease Liabilities	Less than 1 year $400,524 66,035 111,645 4,492 $440,302 83,677 64,394 4,029	2–3years $- - 315,989 86 $- - 267,512 3,558	4–5years $- - 63,708 - $- - 120,062 -	5 years or more $- - 108,955 - $- - 24,721 -	Total
					$400,524 66,035 600,297 4,578 $440,302 83,677 476,689 7,587

Derivative Financial Liabilities

N/A.

79

Notes to the Parent Company-Only Financial Statements of K.S. TERMINALS INC.

(Continued)

(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

1. Reconciliation of Liabilities From Financing Activities

Information on reconciliation of liabilities for the year ended December 31,

2023:

2023.01.01 Cash Flow Non-cash Changes 2023.12.31	Short-term Borrowings	Long-term Borrowings (including due within oneyear)	Lease Liabilities	Other Non-current Liabilities	Total Liabilities From Financing Activities
	$439,800 (39,800) -	$461,119 116,279 -	$7,529 (4,969) 2,010	$130 663 -	$908,578 72,173 2,010
	$400,000	$577,398	$4,570	$793	$982,761

Information on reconciliation of liabilities for the year ended December 31, 2022:

2022.01.01 Cash Flow Non-cash Changes 2022.12.31	Short-term Borrowings	Long-term Borrowings (including due within oneyear)	Lease Liabilities	Other Non-current Liabilities	Total Liabilities From Financing Activities
	$1,189,800 (750,000) -	$407,975 53,144 -	$9,544 (5,079) 3,064	$130 - -	$1,607,449 (701,935) 3,064
	$439,800	$461,119	$7,529	$130	$908,578

Fair Values of Financial Instruments

• (1) Valuation Techniques and Assumptions Adopted to Measure the Fair Values

The fair values of financial assets and financial liabilities were the amounts in which the instruments were bought or sold in real time with willing parties (rather than by force or through liquidation). The methods and assumptions adopted by the Company to estimate the fair

80

Notes to the Parent Company-Only Financial Statements of K.S. TERMINALS INC. (Continued)

(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

values of its financial assets and financial liabilities are as follows:

• A. The fair values of cash and cash equivalents, receivables, payables, and other current liabilities are reasonable approximations of their carrying amounts, mainly due to the short durations of such instruments.

• B. As there is no active market for stocks of non-TWSE/TPEx listed companies, the fair values thereof were estimated using the market approach. The estimation was made based on recent fundraising activities, values of companies of the same types and scales, company technology development, market conditions, and other economic indicators.

• C. The Company signed derivative financial instrument agreements with different counterparties, who are mainly financial institutions with great credit ratings. Derivative financial instruments valuated using valuation techniques based on observable inputs in the market are mainly forward exchange agreements.

• D. Regarding debt instrument investments without quoted prices in an active market, bank borrowings, and other non-current liabilities, the fair values are determined based on the counterparties’ quotes or valuation techniques. The valuation techniques are determined on the basis of discounted cash flow analysis; the assumptions about interest rates and discount rates are made with reference to on similar instruments (such as the Taipei Exchange’s yield curves for reference, the average quotes of Reuters commercial paper interest rates, and credit risks).

• E. As for derivative financial instruments without quoted prices in an active market, if they are non-option derivatives, their fair values are determined based on the counterparties’ quotes or the yield curves that apply during the duration of the discounted cash flow analysis; if they are option derivatives, the fair values are determined based on counterparties’ quotes, appropriate option

81

Notes to the Parent Company-Only Financial Statements of K.S. TERMINALS INC. (Continued)

(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

pricing models (such as Black-Scholes) or other valuation approaches (such as Monte Carlo Simulation).

• (2) Fair Values of Financial Instruments at Amortized Cost

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

• (3) Information on the Financial Instrument Fair Value Hierarchy

Please refer to Note 12.8 for information on the Company's financial instrument fair value hierarchy.

1. Derivatives

As of December 31, 2023 and 2022, the Company did not hold derivatives that do not meet the criteria for hedge accounting and had not yet expired.

8. Fair Value Hierarchy

(1) Fair Value Hierarchy Definitions

All assets and liabilities measured or disclosed at fair value are the lowest level inputs, which are important to the overall fair value measurement, classified to the fair value levels to which they belong. The input at each level is as follows:

Level 1: Quoted (unadjusted) prices in active markets for identical assets or liabilities on the measurement date.

• Level 2: Inputs, other than quoted market prices within Level 1 that are observable, either directly or indirectly, for assets or liabilities.

Level 3: The unobservable input value of an asset or liability.

For assets and liabilities that are recognized in the financial statements on a repetitive basis, the classification is reevaluated at the end of each reporting period to determine whether there is a transfer between the fair value levels.

82

Notes to the Parent Company-Only Financial Statements of K.S. TERMINALS INC. (Continued)

(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

(2) Information on Hierarchy of Fair Value Measurement

The Company does not have assets measured at fair value on a non-recurring basis. The information on the fair value levels of assets and liabilities on a recurring basis is shown below:

December 31, 2023: Assets at Fair Value: Funds of Financial Assets at Fair Value Through Profit or Loss: At Fair Value Through Other Comprehensive Income Equity Instruments at Fair Value Through Other comprehensive Income December 31, 2022: Assets at Fair Value: Funds of Financial Assets at Fair Value Through Profit or Loss: At Fair Value Through Other Comprehensive Income Equity Instruments at Fair Value Through Other comprehensive Income	Level 1 $635,350 67,652 Level 1 $301,236 69,562	Level 2 $- - Level 2 $- -	Level 3 $- 37,220 Level 3 $- 38,521	Total
				$635,350 104,872 Total
				$301,236 108,083

Transfer Between Level 1 and Level 2 Fair Values

The Company’s assets and liabilities measured at fair value on a recurring basis during 2023 and 2022 were not transferred between Level 1 and Level 2.

83

Notes to the Parent Company-Only Financial Statements of K.S. TERMINALS INC. (Continued)

(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

Details of Movements in Level 3 Fair Values

If the Company's assets and liabilities measured at fair value on a recurring basis that belong to Level 3 fair value, the reconciliation of the balances from the beginning of the period through the end of the period is listed as follows:

period is listed as follows:
2023.01.01 Total Losses Recognized for 2023: Recognized in Other Comprehensive Income (recognized in unrealized gains/losses from investments in equity instruments at fair value through other comprehensive income) 2023.12.31 2022.01.01 Total Losses Recognized for 2022: Recognized in Other Comprehensive Income (recognized in unrealized gains/losses from investments in equity instruments at fair value through other comprehensive income) Obtained during 2022 Reclassified as Investments Using the Equity Method during 2022 2022.12.31	Assets
	Financial Assets at Fair Value Through Other Comprehensive Income
	Stock
	$38,521 (1,301) $37,220
	$337,735 (13,675) 166,012 (451,551) $38,521

84

Notes to the Parent Company-Only Financial Statements of K.S. TERMINALS INC.

(Continued)

(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

Significant Unobservable Level 3 Fair Value Inputs

Regarding the Company’s assets at Level 3 fair value on a recurring basis, the significant unobservable inputs at fair value are as follows:

December 31, 2023:

		Significant			Relationship		Sensitivity Analysis of the Value
	Valuation	Unobservable	Quantitative	Between Input and			Relations Between Inputs and
	Techniques	Inputs	Information		FairValue		FairValues
Financial Assets:
At Fair Value
Through Other
Comprehensive
Income
Stock (Chi Rui)	Asset Valuation	Valuation with	30%	The	higher	the	When the percentage of
	Approach	Illiquidity		illiquidity, the lower			illiquidity increases (decreases)
				the fair value estimate			by 1%, the Company’s equity
							would have decreased/increased
							by NTD 372 thousand.
	December 31, 2022:
		Significant			Relationship		Sensitivity Analysis of the Value
	Valuation	Unobservable	Quantitative	Between Input and			Relations Between Inputs and
	Techniques	Inputs	Information		FairValue		FairValues
Financial Assets:
At Fair Value
Through Other
Comprehensive
Income
Stock (Chi Rui)	Asset Valuation	Discount Due to	30%	The	higher	the	When the percentage of
	Approach	Illiquidity		illiquidity, the lower			illiquidity increases (decreases)
				the fair value estimate			by 1%, the Company's equity
							would have decreased/increased
							by NTD385 thousand.

85

Notes to the Parent Company-Only Financial Statements of K.S. TERMINALS INC. (Continued)

(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

Evaluation Process for Level 3 Fair Value

The Company’s Finance Department is responsible for fair value verification, using data from independent sources to bring the valuation results closer to the market, confirming that the sources of the data are independent, reliable, consistent with other resources, and represent executable prices, while analyzing the changes in the value of assets and liabilities that must be remeasured or re-valuated in accordance with the Company’s accounting policies at each balance date, to ensure that the valuation results are reasonable.

• (3) Information on Those Not Measured at Fair Value but Need to be Disclosed

N/A.

1. Information on the foreign currency financial assets and liabilities with significant impact is as follows:

The Company’s foreign currency financial assets and liabilities with significant impact are as follows:

Financial Assets MonetaryItems USD Financial Liability MonetaryItems USD		2023.12.31 Exchang e Rate (NTD) 30.675 $792,151 30.775 $2,954		Unit: NTD thousand 2022.12.31 Exchange Rate (NTD) 30.665 $1,442,175 30.765 $20,274
	Foreign Currency $25,824 $96	Exchang e Rate 30.675 30.775	Foreign Currency $47,030 $659	Exchange Rate 30.665 30.765

86

Notes to the Parent Company-Only Financial Statements of K.S. TERMINALS INC. (Continued)

(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

Due to the wide variety of the Company’s functional currencies, it is not possible to disclose the information on the exchange gains or losses on monetary financial assets and financial liabilities in each significant foreign currency. The Company’s foreign currency exchange gains for 2023 and 2022 were NTD 9,798 thousand and NTD 197,413 thousand, respectively.

11. Capital Management

The Company's capital management aims to confirm and maintain appropriate credit ratings and suitable capital ratios to facilitate business operations and maximize shareholders' equity. The Company manages and adjusts the capital structure based on the economic conditions and may maintain and adjust the capital structure by adjusting dividend payments, returning capital, or issuing new shares.

XIII. Additional Disclosures

The details of the Company’s major transactions, investees, and investments in China during 2023 are as follows:

1. Information on Material Transactions

2. (1) Funds lent to others: N/A.

3. (2) Endorsements/guarantees provided to others: N/A.

4. (3) Securities held at the end of the period:

87

Notes to the Parent Company-Only Financial Statements of K.S. TERMINALS INC.

(Continued)

(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

Type of Securities	Name of Securities	Relationship Between the Securities Issuer and the Company	General Ledger Account	End of Period	End of Period	End of Period	End of Period
				Unit	Carrying Amount	Percent age(%)	Fair Value
Beneficiary Certificates Beneficiary Certificates Beneficiary Certificates Beneficiary Certificates Beneficiary Certificates Beneficiary Certificates Beneficiary Certificates Beneficiary Certificates Beneficiary Certificates Beneficiary Certificates Beneficiary Certificates Beneficiary Certificates	FSITC Taiwan Money Market Fund Franklin Templeton Sinoam Money Market Fund PineBridge Global ESG Quantitative Bond Jih Sun Money Market Fund Hua Nan Kirin Money Market Fund SinoPac TWD Money Market Fund Fubon Chi-Hsiang Money Market Fund Fuh Hwa Global Bond Fund JPMorgan Funds – Global Corporate Bond Fund A (acc) – USD TSMC by Cathay United Bank JPMorgan Investment Funds – Global High Yield Bond Fund – JPM Global High Yield Bond A (acc) – USD Yuanta Goldman Sachs US Credit – Y Dis(M) USD	None None None None None None None None None None None None	Financial Assets at Fair Value Through Profit or Loss – current 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃	6,406,252.60 9,422,526.24 292,223.79 3,816,873.31 4,135,097.70 3,507,123.00 3,108,022.40 2,681,675.60 50,844.51 10,043.07 3,043.70 1,379.27	$100,000 99,540 88,795 57,657 50,336 50,000 50,000 41,563 26,315 30,173 17,615 13,900	- - - - - - - - - - - -	$100,825 100,124 84,543 58,224 50,862 50,155 50,050 40,823 28,990 24,804 19,168 13,642

88

Notes to the Parent Company-Only Financial Statements of K.S. TERMINALS INC.

(Continued)

(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

Type of Securities	Name of Securities	Relationship Between the Securities Issuer and the Company	General Ledger Account		End of Period	End of Period
				Unit	Carrying Amount	Percent age(%)	Fair Value
Beneficiary Certificates Stock Stock	Yuanta Goldman Sachs US Credit – Fund USD Cayman Engley Industrial Co.,Ltd. Chi Rui (Cayman) Holding Limited	None None None	〃 Financial Assets at Fair Value Through Other Comprehensive Income 〃	296.44 Subtotal Less: Financial Asset Value Adjustment Plus: Allowance for Exchange Gains Total 1,137,000 2,336,345 Subtotal Less: Financial Asset Value Adjustment Total	12,157	- 0.94% 5.29%	13,140
					638,051 (11,508) 8,807		$635,350
							$67,652 37,220
					$635,350
					$139,029 44,402
					183,431 (78,559)		$104,872
					$104,872

• (4) Marketable securities acquired or sold amounting to at least NTD300 million or 20% of paid-in capital: N/A.

• (5) Acquisition of real estate amounting to at least NTD300 million or 20% of paid-in capital: N/A.

• (6) Disposal of real estate amounting to at least NTD300 million or 20% of paid-in capital: N/A.

• (7) Total purchases from or sales to related parties amounting to at least NTD100 million or 20% of paid-in capital: Please refer to Note 13.1.(10).

89

Notes to the Parent Company-Only Financial Statements of K.S. TERMINALS INC.

(Continued)

(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

• (8) Receivables from related parties amounting to at least NTD100 million or 20% of paid-in capital: N/A.

• (9) Trading in derivative instruments: None.

(10) Business relationships and important transactions and their amounts

between the parent and subsidiaries and between subsidiaries:

No. (Note 1)	Name of Trader	Counterparty	Relations hip With Trader (Note 2)		Transaction	Transaction		Notes and Accounts Receivable(payable)	Notes and Accounts Receivable(payable)
				Purchase (sales)	Amount	As a percentage of revenue or total assets (Note 3)	Transaction Terms	Balance	As a percentage of revenue or total assets (Note 3)
0	K.S. TERMINALS INC.	CHIEN HO HSING TECHNOLOGY (SUZHOU) CO.,LTD	1	Sales	$268,293	6.43%	Same as Regular Transaction s	Accounts Receivable $ 40,863	0.50%
0	K.S. TERMINALS INC.	CHIEN HO HSING TECHNOLOGY (SUZHOU) CO.,LTD	1	Purchases	$27,829	0.67%	Same as Regular Transaction s	Accounts Payable $ 1,535	0.02%
1	CHIEN HO HSING TECHNOLOG Y (SUZHOU) CO.,LTD	K.S. TERMINALS INC.	2	Purchases	$268,293	6.43%	Same as Regular Transaction s	Accounts Payable $ 40,863	0.50%
1	CHIEN HO HSING TECHNOLOG Y (SUZHOU) CO.,LTD	K.S. TERMINALS INC.	2	Sales	$27,829	0.67%	Same as Regular Transaction s	Accounts Receivable $ 1,535	0.02%

90

Notes to the Parent Company-Only Financial Statements of K.S. TERMINALS INC. (Continued)

(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

Note 1: “0” represents the parent company, and the remaining numbers represent subsidiaries.

Note 2: “1” represents parent-to-subsidiary transactions.

“2” represents subsidiary-to-parent company transactions.

Note 3: The transaction amount as a percentage of the total revenue or total assets shall be calculated as the ratio of the ending balance to the total consolidated assets if it is an asset or liability item, or as the ratio of the interim cumulative amount to the total revenue if it is a profit or loss item.

2. Information on Investees

Investees’ names, location, main business activities, initial investment amounts, shareholdings at the end of the period, current profit or loss, and investment income or loss recognized (excluding investees in mainland China):

Name of Investor	Name of Investee	Address	Main Business Activities	Initial Investment	Amount(Note 1)	Held at End o	Held at End o	f Period	Net Profit (loss) of the Investee for the Period	Investment Income or Loss Recognized by the Company	Rema rks
				End of Current Period	End of Last Period	Number of Shares (equity)	Percen tage (%)	Carrying Amount
K.S. TERMINALS	K.S.T. INTERNATIO NAL HOLDINGS LTD	P.O.3340, Road Town, Tortola, British Virgin Islands	Financial Investment	$484,635	$484,635	14,540,500	100%	$1,692,297	$197,330	$193,583	Note 2
K.S. TERMINALS	JUNG PANG ENTERPRISE LTD.	P.O. BOX 3152, Road Town, Tortola, British Virgin Islands	Trade	347	347	10,000	100%	9,524	381	381
K.S. TERMINALS	K.S. Terminals USA LLC (originally DRACO K ENTERPRISES ,LLC)	2200 Jerrold Avenue, Unit P, San Francisco, California.	Trade	USD 3,300 thousand	USD 2,500 thousand	3,300,000	100%	45,980	(9,576)	(9,576)
K.S. TERMINALS	TAIBON HOLDING LIMITED	No.24, Lesperance, Providence Industrial Estate, MAHE Seychelles	Financial Investment	USD 160 thousand	USD 160 thousand	160,000	100%	57,643	5,440	5,440
K.S. TERMINALS	Ifchic Inc.	2200 Jerrold Avenue, Unit P, San Francisco,California.	Internet retailing	USD 2,500 thousand	USD 2,500 thousand	2,500,000	100%	64,884	5,327	5,327
K.S. TERMINALS	Yangde Technology Co., Ltd.	No. 59, Ln.200, Zhuhe Rd., Changhua City, Changhua County 500041, Taiwan (R.O.C.)	Industrial Plastic Products Manufacturing	9,800	8,400	980,000	35%	2,774	(11,817)	(4,136)
K.S. TERMINALS	HONLEY AUTO. PARTS CO.,LTD.	No. 32, Jingjian Rd., Qianjin Vil., Pingtung City, Pingtung County900,Taiwan(R.O.C.)	Automobile and Parts Manufacturing	285,539	285,539	25,433,438	25%	259,088	(48,748)	(12,187)
K.S.T. INTERNATION AL HOLDINGS LTD	JIAN BANG (HONG KONG) HOLDING LTD.	SURSON COMM BLDG 140-142 AUSTIN RD TSIMSHATSUI	Financial Investment	HKD 93,610 thousand	HKD 93,610 thousand	93,610,000	100%	1,209,934	170,851	170,851
K.S.T. INTERNATION AL HOLDINGS LTD	K.S.Terminals (Asia) Co., Ltd.	Land No. 58, Survey Page 1384, Tasith Sub-district, Pluak DaengDistrict, Rayong Province,Tailand	Production, processing, and sales of terminalparts	THB 82,000 thousand	THB 82,000 thousand	8,200,000	100%	69,174	484	484
TAIBON HOLDING LIMITED	K.S.TERMINA LS (THAILAND) CO.,LTD.	99/4 Moo 13, Soi Kingkeaw 25/1, Kingkeaw Rd., Tambol Rajadeva, Amphur Bangplee Samuthprakarn 11040 Thailand	Trade	THB 4,900 thousand	THB 4,900 thousand	490,000	49%	48,509	11,102	5,440
JIAN BANG (HONG KONG) HOLDING LTD.	K.S.TERMINA LS C0MPANY LIMITED VIETNAM	511 Nguyen Oanh Street, Ward 17, Go Vap District, HCM City Vietnam	Trade	USD 1,000 thousand	USD 1,000 thousand	1,000,000	100%	17,972	2,259	2,259

91

Notes to the Parent Company-Only Financial Statements of K.S. TERMINALS INC.

(Continued)

(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

Name of Investor JIAN BANG (HONG KONG) HOLDING LTD.	Name of Investee	Address	Main Business Activities	Initial Investmen	t Amount(Note 1)	Held at End o	Held at End o	f Period	Net Profit (loss) of the Investee for the Period	Investment Income or Loss Recognized by the Company	Rema rks
				End of Current Period	End of Last Period	Number of Shares (equity)	Percen tage (%)	Carrying Amount
	PT.KSTERMIN ALS TECHNOLOG Y INDONESIA	Jl. Dr. Latumenten Raya No.19F RT.007 RW.008 Kel.Angke Kec.Tambora Kota Administrasi Jakarta Barat	Trade	USD 1,000 thousand	USD 1,000 thousand	1,000,000	100%	8,643	(1,419)	(1,419)

• Note 1: The initial investment amount, equity held at the end of the period, and investment income or

• loss recognized are those recognized by the Company in proportion to its shareholdings.

• Note 2: It includes the unrealized gains and losses from downstream transactions with related parties that were eliminated.

3. Information on Investment in Mainland China

• (1) The Company invested in investees in mainland China through K.S.T.

INTERNATIONAL HOLDINGS LTD. and JIAN BANG (HONG

KONG) HOLDING LTD. The information is as follows.

Name of Investee in China	Main Business Activities	Main Business Activities	Paid-in Capital	Investment Method	Opening Balance of Cumulative Investment Remitted From Taiwan for this Period	The Inve Amount R From Tai Recovered this Pe	stment emitted wan or During riod	stment emitted wan or During riod	Ending Balance of Cumulative Investment Remitted From Taiwan for this Period (Note 5)	The Company’s Shareholdi ngs in Direct or Indirect Investment s	Investment Income or Loss on Investees	Investment Income or Loss Recognize d for this Period (Notes 2 and 3)	Carrying Amount of Investment s at the End of this Period	Cumulative Investment Income Repatriated as of the End of this Period
						Outward	Inward
CHIEN HO HSING TECHNO LOGY (SUZHOU ) CO., LTD	Production, processing, and sales of components of new instruments, such as instrument connectors, and precision electronic ceramics		$230,063 (USD 7.5 million)	Established a Company in a Third Region to Invest in a Company in China	$230,063 (USD 7.5 million)	$-	$-		$230,063 (USD 7.5 million)	100%	$218,656	$218,656	$1,142,387	$1,121,663 (USD 39.50 million)
		Ending balance of cumulative outward remittances for investment in mainland China (Note 1)			Investment amount approved by the Investment Commission, MOEA (Note 1)			Limit on Investment Amount Stipulated by the Investment Commission, MOEA
		$344,358 (USD 11.226 million)			$344,358 (USD 11.226 million)			$3,754,064 (Note 4)

• Note 1: If the above amounts were in foreign currencies, they were converted into NTD at the exchange rates prevailing on the balance sheet date.

• Note 2: The investment income and losses recognized for this period are based on the financial

• statements that have been audited by the parent company’s CPA in Taiwan.

• Note 3: It includes the unrealized gains and losses from downstream transactions with related parties

92

Notes to the Parent Company-Only Financial Statements of K.S. TERMINALS INC. (Continued)

(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

that were eliminated.

Note 4: As per the regulations of the Investment Commission, MOEA, the upper limit of the Company's investment in mainland China is 60% of its net worth.

• Note 5: The differences between the cumulative investment amount and the investment amount approved by the Investment Commission, MOEA, are as follows:

• (1) The investee, RI DUAN CHIEN HO HSING ELECTRONICS TECHNOLOGY (SUZHOU) CO., LTD., was liquidated in 2019, and the initial investment amounting to US$2.636 million has been remitted back to the holding company, K.S.T. INTERNATIONAL HOLDINGS LTD.

• (2) The Company invested in 5.29% of the equity of Chi Rui (Cayman) Holding Limited (the initial investment amounted to US$1.09 million), which was recognized as a financial asset at fair value through other comprehensive income.

• (2) Please refer to Note 13.1. (7) and (10) for information on major transactions with investees in China as well as the prices and payment terms thereof.

4. Information on Major Shareholders

As of December 31, 2023, the Company did not have a shareholder with a shareholding of 5% or higher.

93

K.S. TERMINALS INC.

Statement of Significant Accounting Items

2023

Item	No./Index
Statement of Cash and Cash Equivalents	1
Statement of Financial Assets at Fair Value Through Profit or Loss – Current	2
Statement of Accounts Receivable	3
Other Receivables	Note 6.4
Statement of Inventory	4
Statement of Financial Assets at Fair Value Through Other Comprehensive Income – Non-Current	5
Statement of Changes in Long-term Equity Investments Using the EquityMethod	6
Statement of Changes in Property,Plants and Equipment	Note 6.8
Statement of Net Short-term Borrowings	7
Statement of Other Payables	Note 6.10
Statement of Long-term Borrowings	Note 6.11
Deferred Tax Liabilities	Note 6.20(4)
Statement of OperatingIncome	8
Statement of OperatingCosts	9
Statement of ManufacturingOverhead	10
Statement of OperatingExpenses	11
Statement of Employee Benefits, Depreciation, Depletion, and Amortization Expenses byFunction	Note 6.17
Statement of Non-operatingRevenue and Expenses	Note 6.18

94

K.S. TERMINALS INC.

1. Statement of Cash and Cash Equivalents

December 31, 2023

(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

Item	Abstract	Amount	Remarks
Cash on Hand Bank Deposits Cash Equivalents Total	Demand Deposits - NTD Demand Deposits - Foreign Currency Time Deposits - NTD Time Deposits - Foreign Currency Short-term Bills with Repurchase Agreement	$1,863 981,858 359,795 370,000 203,292 276,991 $2,193,799	Major foreign currencies are as follows: USD 9,987 thousand USD 6,627 thousand

95

K.S. TERMINALS INC.

1. Financial Assets at Fair Value Through Profit or Loss

December 31, 2023

(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

Investment	Opening Balance	Opening Balance	Increase in Cu	rrent Period		Dec	rease in Current Perio	d		Ending	Balance
	Units	Amount	Units	Amount	Units	Cost	Selling Price	Exchange (Losses)Gains	Disposal (Losses) Gains	Units	Amount
FSITC Taiwan Money Market Fund Franklin Templeton Sinoam Money Market Fund PineBridge Global ESG Quantitative Bond Jih Sun Money Market Fund Hua Nan Kirin Money Market Fund SinoPac TWD Money Market Fund Fubon Chi-Hsiang Money Market Fund Fuh Hwa Global Bond Fund TSMC by Cathay United Bank JPMorgan Funds – Global Corporate Bond Fund A (acc) – USD JPMorgan Investment Funds – Global High Yield Bond Fund – JPM Global High Yield Bond A (acc) – USD Yuanta Goldman Sachs US Credit – Y Dis(M) USD Yuanta Goldman Sachs US Credit – Fund USD JPMorgan Funds – Global Corporate Bond Fund A (acc) – USD PineBridge Quantitative Diversified Income Fund Total Cost Allowance for Exchange (Losses) Gains Valuation Adjustment of Financial Assets for Trading Purposes Net Amount	3,215,951.10 4,767,534.99 292,223.79 522,175.80 2,478,908.60 - - 1,362,579.70 10,043.07 - - 2,725.31 - - 50,043.04 12,702,185.40	$50,000 50,000 88,795 7,657 30,000 - - 21,563 30,173 - - 28,172 - - 14,227 $320,587 7,483 (26,834) $301,236	3,190,301.50 16,116,431.72 - 3,294,697.51 4,107,349.70 3,507,123.00 3,108,022.40 1,319,095.90 - 50,844.51 3,043.70 - 296.44 51,194.54 - 34,748,400.92	$50,000 170,000 - 50,000 50,000 50,000 50,000 20,000 - 26,315 17,615 - 12,157 17,400 - $513,487 2,356 12,776 $528,619	- 11,461,440.47 - - 2,451,160.60 - - - - - - 1,346.04 - 51,194.54 50,043.04 14,015,184.69	$ - 120,460 - - 29,664 - - - - - - 14,272 - 17,400 14,227 $196,023 1,032 (2,550) $194,505	$ - 121,000 - - 30,000 - - - - - - 12,156 - 17,831 13,518 $194,505	$ - - - - - - - - - - - - - - 1,032 $1,032	$ - 540 - - 336 - - - - - - (2,116) - 431 (1,741) $(2,550)	6,406,252.60 9,422,526.24 292,223.79 3,816,873.31 4,135,097.70 3,507,123.00 3,108,022.40 2,681,675.60 10,043.07 50,844.51 3,043.70 1,379.27 296.44 0.00 - 33,435,401.63	$100,000 99,540 88,795 57,657 50,336 50,000 50,000 41,563 30,173 26,315 17,615 13,900 12,157 - - $638,051 8,807 (11,508) $635,350

96

K.S. TERMINALS INC.

3. Statement of Accounts Receivable

December 31, 2023

(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

Customer Name	Abstract		Amount	Remarks
Accounts Receivable (Non-related Parties): Customer A Customer B Customer C Others Subtotal Less: Allowance for Exchange Losses Less: Allowance for Losses Net Amount Accounts Receivable (Related Parties): CHIEN HO HSING TECHNOLOGY (SUZHOU) CO., LTD K.S.TERMINALS COMPANY LIMITED VIETNAM K.S.TERMINALS (THAILAND) CO.,LTD. K.S.TERMINALS USA LLC (originally DRACO K ENTERPRISES, LLC) Others Subtotal Less: Allowance for Exchange Losses Net Amount Total			$37,955 21,980 18,234 257,409	(Note) (Note)
			335,578 (6,755) (4,193)
			324,630
			41,976 12,386 5,825 4,663 4,275
			69,125 (1,809)
			67,316
			$391,946

(Note): The balances of customers not exceeding 5% of the amount of this account are presented in a consolidated manner.

97

K.S. TERMINALS INC.

4. Statement of Inventory

December 31, 2023

(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

Item	Abstract	Amount	Amount	Remarks
		Cost	Market Price
Raw Materials Works-in-Progress Finished Goods Goods in Transit Total Less: Allowance for Inventory Valuation and Obsolescence Losses Net Amount		$168,677 78,464 704,433 2,982 954,556 (33,910) $920,646	$177,494 77,568 881,405 2,982 $1,139,449	Please refer to Note 4.10 to the financial statements for the determination of the net realizable value.

98

K.S. TERMINALS INC.

5. Statement of Changes in Financial Assets at Fair Value Through Other Comprehensive Income – Non-Current

January 1 to December 31, 2023

(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

Name	Opening Balance	Opening Balance	Increase in Current Period	Increase in Current Period	Decrease in Current Period	Decrease in Current Period	Valuation Gain or Loss	Ending	Balance	Accumulated Impairment	Collateral or Pledge	Remarks
	Shares	Amount	Shares	Amount	Shares	Amount		Shares	Amount
Chi Rui (Cayman) Holding Limited Cayman Engley Industrial Co.,Ltd. Total	2,336,345 1,137,000	$38,521 69,562 $108,083	- -	$- - $-	- -	$- - $-	$(1,301) (1,910) $(3,211)	2,336,345 1,137,000	$37,220 67,652 $104,872	N/A 〃	None 〃	Note 1

Note 1:[Please refer to Note 6.6 Financial Assets at Fair Value Through Other Comprehensive Income to the ] financial statements for changes in the current period.

99

K.S. TERMINALS INC.

1. Statement of Changes in Long-term Equity Investments Using the Equity Method

January 1 to December 31, 2023

(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

Name	Opening Balance	Opening Balance	Increase in Investment in Current Period	Increase in Investment in Current Period	Decrease in Investment in Current Period	Decrease in Investment in Current Period	Unrealized Gross Profit between Affiliates	Investment (Loss) Income Recognized under the Equity Method	Investment (Loss) Income Recognized under the Equity Method	Conversion Adjustment	Ending Balance	Ending Balance		Collateral or Pledge	Remarks
	Shares	Amount	Shares	Amount	Shares	Amount	Amount				Shares	Shareholding Ratio(%)	Amount
K.S.T. INTERNATIONAL HOLDINGS LTD. Ifchic Inc. K.S.TERMINALS USA LLC (originally DRACO K ENTERPRISES, LLC) TAIBON HOLDING LIMITED JUNG PANG ENTERPRISE LTD. HONLEY AUTO. PARTS CO., LTD. Yangde Technology Co., Ltd. Total	14,540,500 2,500,000 2,500,000 160,000 10,000 25,433,438 840,000	$1,942,846 59,599 30,896 51,794 9,143 273,901 5,510 $2,373,689	- - 800,000 - - 140,000	$- - 25,722 - - 1,400 $27,122	- - - - - -	$(440,732) - - - - - $(440,732)	$15,555 - - - - - - $15,555		$193,583 5,327 (9,576) 5,440 381 (12,187) (4,136)	$(18,955) (42) (1,062) 409 - (2,626) -	14,540,500 2,500,000 3,300,000 160,000 10,000 25,433,438 980,000	100% 100% 100% 100% 100% 25% 35%	$1,692,297 64,884 45,980 57,643 9,524 259,088 2,774	None 〃 〃 〃 〃 〃 〃	Note 1 〃 〃 〃 〃 〃 〃
									$178,832	$(22,276)			$2,132,190

Note 1:[Please refer to Note 6.8 Investments Using the Equity Method to the financial statements for changes in the ] current period.

100

K.S. TERMINALS INC.

7. Statement of Net Short-term Borrowings

December 31, 2023

(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

Type of Borrowing	Creditor		Amount of Borrowings	Contract Duration	Interest Rate Range	Financing Limit	Pledge or Collateral	Remar ks
Secured Loan Secured Loan Credit Loan Credit Loan Credit Loan Credit Loan Credit Loan Credit Loan	Chang Hwa Bank Taiwan Business Bank Mega Bank Yuanta Bank Shin Kong Bank First Commercial Bank Cathay United Bank CTBC Total		$25,000 50,000 50,000 50,000 50,000 50,000 75,000 50,000 $400,000	2023/10/16-2024/01/16 2023/10/26-2024/01/26 2023/11/17-2024/02/15 2023/11/27-2024/02/22 2023/12/08-2024/01/08 2023/12/21-2024/03/21 2023/12/29-2024/06/26 2023/12/28-2024/03/28	1.6500% 1.6000% 1.6500% 1.7000% 1.6300% 1.7000% 1.6400% 1.8700%	$200,000 290,000 120,000 300,000 300,000 100,000 100,000 100,000	Time Deposits Land and Plant None None None None None None

101

K.S. TERMINALS INC.

8. Statement of Operating Income

January 1 to December 31, 2023

(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

Item	Quantity		Amount	Remarks
Terminals Cable Ties Light Source System Parts Others Total	(Note)		$1,984,589 174,864 65,174 490,276 $2,714,903	Note: Due to different quantity units for shipment, such as kg, PCS, SET, etc., no total is calculated.

102

K.S. TERMINALS INC.

9. Statement of Operating Costs

January 1 to December 31, 2023

(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

Item	Amount	Amount	Remarks
	Subtotal	Total
I. Cost of Self-produced Products Sold Direct Raw Materials: Beginning Raw Materials Inventory Plus: Materials Purchased During This Period Finished Goods Transferred in Less: Ending Materials Inventory Raw Materials Sold Direct Raw Materials Consumed During This Period Direct Labor Manufacturing Overhead Manufacturing Cost Plus: Beginning Work-in-process Inventory Less: Ending Work-in-process Inventory Cost of Finished Goods Plus: Beginning Finished Goods Inventory Beginning Inventory In-transit Current Purchases Less: Ending Finished Goods Inventory Ending Inventory In-transit Transferred to Raw Materials Transferred to Expenses Cost of Self-produced Products Sold II. Cost of Raw Materials Sold III. Other Costs Income from Sale of Scraps and Waste Materials Valuation Losses Operating Costs	$219,449 578,544 6,757 (168,677) (230,875) 405,198 119,405 750,507 1,275,110 52,828 (78,464) 1,249,474 934,999 7,372 296,473 (704,433) (2,982) (6,757) (15,103)	$1,759,043 230,875 (45,778) 544 $1,944,684

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K.S. TERMINALS INC.

10. Statement of Manufacturing Overhead

January 1 to December 31, 2023

(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

Item	Amount	Remarks
Expenses for Outsourced Processing Salary Expenses Depreciation Packaging Expenses Utility Bills Insurance Premium Other Expenses Total	$274,126 154,018 64,583 43,777 43,462 39,838 130,703	(Note)
	$750,507

(Note): Items whose amounts are less than 5% of the balance of this account are presented in a consolidated manner.

104

K.S. TERMINALS INC.

11. Statement of Operating Expenses

January 1 to December 31, 2023

(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

Item		Selling Expenses	Administrative and General Expenses	R&D Expenses	Other Expenses	Total	Remarks
Salary Expenses Freight Charges Expected Credit Impairment Losses or Gains Other Expenses Total		$56,368 22,387 - 74,955 $153,710	$63,173 431 - 68,298 $131,902	$40,095 178 - 66,820 $107,093	$- - 78 - $78	$159,636 22,996 78 210,073 $392,783

(Note): Items whose amounts are less than 5% of the balance of this account are presented in a consolidated manner.

105