OPC — Audit Report / Information 2022

Nov 8, 2022

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Stock Code:1321

Ocean Plastics Co., Ltd.

Parent Company Only Financial Statements

With Independent Auditors’ Report For the Years Ended December 31, 2022 and 2021

Address: 5、6F., No. 310, Juguang Rd., Wanhua Dist., Taipei City 108, Taiwan (R.O.C.) Telephone: (02)2308-2131

The independent auditors’ report and the accompanying parent company only financial statements are the English translation of the Chinese version prepared and used in the Republic of China. If there is any conflict between, or any difference in the interpretation of the English and Chinese language independent auditors’ report and parent company only financial statements, the Chinese version shall prevail.

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Table of contents

Contents 1. Cover Page 2. Table of Contents 3. Independent Auditors’ Report 4. Balance Sheets 5. Statements of Comprehensive Income 6. Statements of Changes in Equity 7. Statements of Cash Flows 8. Notes to the Financial Statements (1) Company history (2) Approval date and procedures of the financial statements (3) New standards, amendments and interpretations adopted (4) Summary of significant accounting policies (5) Significant accounting assumptions and judgments, and major sources of estimation uncertainty (6) Explanation of significant accounts (7) Related-party transactions (8) Pledged assets (9) Commitments and contingencies (10) Losses due to major disasters (11) Subsequent Events (12) Others (13) Other disclosures (a) Information on significant transactions (b) Information on investees (c) Information on investment in mainland China (d) Major shareholders (14) Segment information 9. List of major account titles

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KPMG

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Independent Auditors’ Report

To the Board of Directors of Ocean Plastics Co., Ltd.:

Opinion

We have audited the financial statements of Ocean Plastics Co., Ltd.(“the Company”), which comprise the balance sheets as of December 31, 2022 and 2021, the statements of comprehensive income, changes in equity and cash flows for the years then ended and notes to the financial statements, including a summary of significant accounting policies.

In our opinion, based on our audits and the reports of other auditors (please refer to Other Matter paragraph), the accompanying financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2021, and its financial performance and its cash flows for the years then ended in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers.

Basis for Opinion

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

Other Matter

We did not audit the financial statements of Ocean Group Ltd., Fermat Enterprises Ltd., Universe Enterprises Ltd. and Chun Pin Enterprise Co., Ltd., which represented investment in another entity accounted for using the equity method. Those statements were audited by other auditors, whose reports have been furnished to us, and our opinion, insofar as it relates to the amounts included for Ocean Group Ltd., Fermat Enterprises Ltd., Universe Enterprises Ltd., and Chun Pin Enterprise Co., Ltd., is based solely on the reports of other auditors. The investment in Ocean Group Ltd., Fermat Enterprises Ltd. and Universe Enterprises Ltd. and Chun Pin Enterprise Co., Ltd. accounted for using the equity method constituting 12% and 10% of total assets at both December 31, 2022 and 2021, and the related share of profit of associates and joint ventures accounted for using the equity method constituting (553)% and 21% of total profit before tax for the years then ended, respectively.

KPMG, a Taiwan partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee.

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Key Audit Matters

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

1. Inventory valuation

Please refer to note 4(g) for the accounting policy on “ Inventory” and note 6(e) for components of inventories and expenses.

Description of key audit matter:

The Company's inventories are mainly midstream and downstream products of petrochemicals (PVC) and related products. The measurement of the net realizable value and obsolescence of inventories is uncertain because of involvement of management's subjective judgement. Therefore, we have considered inventory valuation to be a key audit matter.

How the matter was addressed in our audit:

Our principal audit procedures in this area included, among others: understanding inventory valuation policies to ensure that the process of inventory valuation was in conformity with the accounting policies, which included sampling the sources of the market prices adopted in inventory valuation to ascertain the appropriateness, and sampling inventories to test the accuracy of the aging report, reviewing the estimate of allowance for inventory loss in prior periods, and comparing it with the method and assumption used in estimating allowance for inventory loss for the current period, so as to assess the reasonableness, inspecting the sales after the balance sheet date in order to ensure that inventory valuation was appropriate.

2.Revenue recognition

Please refer to note 4(n) for the accounting policy on “Revenue recognition” and note 6(s) for information about revenue recognition.

Description of key audit matter:

The Company engages in manufacturing and selling plastics materials and downstream plastic products (plastic construction tubing, plastic cloth, plasticized synthetic leather, etc.). Considering the high trade volume and decentral customers of the Company, the control of products transfers at different time points might impact the time of revenue recognition. Therefore, revenue recognition has been identified as a key matter in our audit.

How the matter was addressed in our audit:

Our principal audit procedures in this area included, among others: evaluating the reasonableness of revenue recognition, understanding and testing the internal control of sales and collection cycles to ascertain if the implement was operative, checking individual sales transactions, customer orders, shipping certificates, invoices and other documents, delving into the periods before and after the balance sheet date in order to evaluate if the period of revenue recognition tallied with the trade condition and shipping documents.

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

Management is responsible for the preparation and fair presentation of the financial statements in accordance with Regulations Governing the Preparation of Financial Reports by Securities Issuers and IFRSs, IASs, interpretation as well as related guidance endorsed by the Financial Supervisory Commission of the Republic of China, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

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

Those charged with governance (including the Audit Committee) are responsible for overseeing the Company’s financial reporting process.

Auditors’ Responsibilities for the Audit of the Financial Statements

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

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

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

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

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

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

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

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1. Obtain sufficient and appropriate audit evidence regarding the financial information of the investment in other entities accounted for using the equity method to express an opinion on this financial statements. We are responsible for the direction, supervision and performance of the audit. We remain solely responsible for our audit opinion.

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

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

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditors’ report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

The engagement partners on the audit resulting in this independent auditors’ report are Sheng-Ho Yu and YungHua Huang.

KPMG

Taipei, Taiwan (Republic of China) March 15, 2023

Notes to Readers

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

The auditors’ report and the accompanying parent company only financial statements are the English translation of the Chinese version prepared and used in the Republic of China. If there is any conflict between, or any difference in the interpretation of the English and Chinese language auditors’ report and parent company only financial statements, the Chinese version shall prevail.

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(English Translation of Parent Company Only Financial Statements and Report Originally Issued in Chinese) Ocean Plastics Co., Ltd.

Balance Sheets

December 31, 2022 and 2021

(Expressed in Thousands of New Taiwan Dollars)

Assets Current assets: 1100 Cash and cash equivalents (note 6(a)) 1110 Current financial assets at fair value through profit or loss (note 6(b)) 1170 Notes and trade receivables, net (note 6(d)(s) and 7) 130X Inventories (note 6(e)) 1470 Other current assets (note 7) Non-current assets: 1517 Non-current financial assets at fair value through other comprehensive income (note 6(c)) 1550 Investments accounted for using equity method (note 6(f)) 1600 Property, plant and equipment (note 6(g) and 8) 1755 Right-of-use assets (note 6(h)) 1760 Investments property, net (note 6(i) and 8) 1840 Deferred tax assets (note 6(p)) 1900 Other non-current assets (note 8) 1942 Long-term accounts receivables due from related parties (note 7) Total assets	December 31, 2022 Amount % $ 134,045 2 131,774 2 613,720 7 368,207 4 58,687 1 1,306,433 16 592,012 7 2,641,681 31 3,241,123 38 76,423 1 436,740 5 13,326 - 51,074 1 75,696 1 7,128,075 84 $ 8,434,508 100	December 31, 2021 Amount % 145,788 1 206,422 2 755,741 8 714,678 7 63,270 1 1,885,899 19 1,091,906 11 2,710,818 28 3,304,874 34 100,066 1 458,209 5 12,397 - 52,277 1 83,382 1 7,813,929 81 9,699,828 100 Liabilities and Equity Current liabilities: 2100 Short-term borrowings (note 6(k) and 8) 2171 Notes and trade payables 2200 Other payables 2300 Other current liabilities (note 6(j)(m) and 8) 2230 Current tax liabilities (note 6(p)) 2320 Long-term liabilities, current portion (note 6(l) and 8) Non-Current liabilities: 2540 Long-term borrowings (note 6(l) and 8) 2570 Deferred tax liabilities (note 6(p)) 2640 Net defined benefit liability, non-current (note 6(o)) 2670 Other non-current liabilities, others (note 6(m)(o)) Total liabilities Equity attributable to owners of parent (note 6(q)): 3100 Capital stock 3200 Capital surplus 3300 Retained earnings 3400 Other equity 3500 Treasury shares Total equity Total liabilities and equity	December 31, 2022		December 31, 2021
			Amount %		Amount %
			$ 250,000 3 467,424 6 178,602 2 32,140 - 5,321 - 43,056 1 976,543 12 922,917 11 425,452 5 92,261 1 103,475 1 1,544,105 18 2,520,648 30 2,272,283 27 18,915 - 3,412,027 40 246,824 3 (36,189) - 5,913,860 70 $ 8,434,508 100		150,000 2 892,100 9 201,009 2 36,852 - 11,223 - 54,167 1 1,345,351 14 1,080,417 11 417,666 5 105,337 1 124,460 1 1,727,880 18 3,073,231 32 2,272,283 23 14,335 - 3,603,417 37 772,751 8 (36,189) - 6,626,597 68 9,699,828 100

See accompanying notes to parent company only financial statements.

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(English Translation of Parent Company Only Financial Statements Originally Issued in Chinese)

Ocean Plastics Co., Ltd.

Statements of Comprehensive Income

For the years ended December 31, 2022 and 2021

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

4100 Operating revenues, net (note 6(s) and 7) 5000 Operating costs (note 6(e)(g)(o) and 7) 5900 Gross profit from operation 6000 Operating expenses (note 6(d)(g)(h)(i)(n)(o)): 6100 Selling expenses 6200 Administrative expenses 6300 Research and development expenses 6450 Impairment gain and reversal of impairment loss determined in accordance with IFRS 9 Total operating expenses 6900 Net operating loss 7000 Non-operating income and expenses: 7100 Interest income (note 6(u)) 7010 Other income (note 6(u)) 7020 Other gains and losses, net (note 6(u)) 7050 Finance costs 7070 Share of profit (loss) of associates and joint ventures accounted for using equity method, net (note6(f)) Total non-operating income and expenses Profit (loss) before income tax 7950 Less: Income tax expenses (note 6(p)) Profit (loss) 8300 Other comprehensive income: 8310 Items that will not be reclassified to profit or loss 8311 Gains (losses) on remeasurements of defined benefit plans 8316 Unrealized gains (losses) from investments in equity instruments measured at fair value through other comprehensive income 8330 Share of other comprehensive income of subsidiaries, associates and joint ventures accounted for using equity method, components of other comprehensive income that will not be reclassified to profit or loss 8349 Income tax related to components of other comprehensive income that will not be reclassified to profit or loss 8360 Items that will be reclassified to profit or loss 8361 Exchange differences on translation 8399 Income tax related to components of other comprehensive income that will be reclassified to profit or loss 8300 Other comprehensive income Total comprehensive income Earnings per share (NT dollars) (note 6(r)) 9750 Basic (loss) earnings per share Diluted (loss) earnings per share	2022 Amount % $ 5,649,875 100 5,430,573 96 219,302 4 363,769 6 88,407 2 10,266 - 1,288 - 463,730 8 (244,428) (4) 626 - 168,246 3 (17,577) - (17,493) - 80,783 1 214,585 4 (29,843) - 12,814 - (42,657) - 10,326 - (499,894) (9) (32,458) (1) - - (522,026) (10) 6,425 - - - 6,425 - (515,601) (10) $ (558,258) (10) $ (0.19) $ (0.19)	2021 Amount % 5,730,874 100 5,321,209 93 409,665 7 338,874 6 90,578 2 9,926 - 434 - 439,812 8 (30,147) (1) 79 - 155,138 3 83,170 1 (14,854) - 151,772 3 375,305 7 345,158 6 25,790 - 319,368 6 3,378 - (97,103) (2) 14,970 - - - (78,755) (2) 2,552 - - - 2,552 - (76,203) (2) 243,165 4 1.45 1.45

See accompanying notes to parent company only financial statements.

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(English Translation of Parent Company Only Financial Statements Originally Issued in Chinese) Ocean Plastics Co., Ltd.

Statements of Changes in Equity

For the years ended December 31, 2022 and 2021

(Expressed in Thousands of New Taiwan Dollars)

Share capital Ordinary shares Balance at January 1, 2021 $ 2,272,283 Profit - Other comprehensive income - Total comprehensive income - Appropriation and distribution of retained earnings: Legal reserve appropriated - Cash dividends of ordinary share - Adjustments of capital surplus for company's cash dividends received by subsidiaries - Balance at December 31, 2021 2,272,283 Profit - Other comprehensive income - Total comprehensive income - Appropriation and distribution of retained earnings: Legal reserve - Cash dividends of ordinary share - Adjustments of capital surplus for company's cash dividends received by subsidiaries - Balance at December 31, 2022 $ 2,272,283	Share capital		Capital surplus				Retained earnings	Retained earnings	Retained earnings				Total other equity interest	Total other equity interest	Total other equity interest				Treasury shares	Total equity
													Exchange differences on translation of foreign financial statements		Unrealized gains (losses) on financial assets measured at fair value through other comprehensive income		Total other equity interest
	Ordinary shares				Legal reserve		Special reserve		Unappropriated retained earnings		Total retained earnings
			7,792		-		2,978,245		529,654		3,507,899		(39,407) - 2,552 2,552 - - - (36,855) - 6,425 6,425 - - - (30,430)		891,739		852,332		(36,189) - - - - - - (36,189) - - - - - - (36,189)	6,604,117
			- -		- -		- -		319,368 3,378		319,368 3,378									319,368 (76,203)
			-		-		-		322,746		322,746									243,165
			- - 6,543		52,965 - -		- - -													- (227,228) 6,543
			14,335 - -		52,965 - -		2,978,245 - -													6,626,597 (42,657) (515,601)
			-		-		-													(558,258)
			- - 4,580		32,275 - -		- - -													- (159,059) 4,580
			18,915		85,240		2,978,245													5,913,860

See accompanying notes to parent company only financial statements.

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(English Translation of Parent Company Only Financial Statements Originally Issued in Chinese) Ocean Plastics Co., Ltd.

Statements of Cash Flows

For the years ended December 31, 2022 and 2021

(Expressed in Thousands of New Taiwan Dollars)

Cash flows from (used in) operating activities: Profit (loss) before tax Adjustments: Adjustments to reconcile loss: Depreciation expense Expected credit loss Net loss (gain) on financial assets or liabilities at fair value through profit or loss Interest expense Interest income Dividend income Share of loss (profit) of subsidiaries,associates and joint ventures accounted for using equity method Property, plant and equipment transferred to expenses Gain on disposal of investment properties Gain on disposal of investments Other Total adjustments to reconcile loss Changes in operating assets and liabilities: Changes in operating assets: Notes and trade receivables Inventories Other current assets Other financial assets Other operating assets Total changes in operating assets Changes in operating liabilities: Contract liabilities Notes and trade payables Other payable Provisions Other current liabilities Net defined benefit liability Total changes in operating liabilities Total changes in operating assets and liabilities Total adjustments	2022 $ (29,843) 192,204 1,288 74,648 17,493 (626) (125,717) (80,783) 335 - - (1,348) 77,494 140,733 346,546 13,482 (1,740) (205) 498,816 (2,749) (424,677) (22,511) 847 (99) (3,176) (452,365) 46,451 123,945	2021 345,158 186,816 434 (61,233) 14,854 (79) (91,832) (151,772) 441 (8,269) (1,385) - (112,025) (134,897) (346,194) (788) (17,843) (3,922) (503,644) 11,874 437,376 (4,008) 1,081 99 (2,924) 443,498 (60,146) (172,171)

See accompanying notes to parent company only financial statements.

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(English Translation of Parent Company Only Financial Statements Originally Issued in Chinese) Ocean Plastics Co., Ltd.

Statements of Cash Flows

For the years ended December 31, 2022 and 2021

(Expressed in Thousands of New Taiwan Dollars)

Cash inflow generated from operations Interest received Dividends received Interest paid Income taxes (paid) refund Net cash flows from operating activities Cash flows from (used in) investing activities: Acquisition of financial assets at fair value through profit or loss Proceeds from disposal of financial assets at fair value through profit or loss Acquisition of investments accounted for using equity method Proceeds from disposal of investments accounted for using equity method Acquisition of property, plant and equipment Decrease in refundable deposits Increase in other receivables due from related parties Proceeds from disposal of investment properties Net cash flows used in investing activities Cash flows from (used in) financing activities: Increase in short-term loans Proceeds from long-term debt Repayments of long-term debt Payment of lease liabilities Cash dividends paid Net cash flows used in financing activities Net decrease in cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period

See accompanying notes to parent company only financial statements.

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(English Translation of Parent Company Only Financial Statements Originally Issued in Chinese)

Ocean Plastics Co., Ltd.

Notes to the Financial Statements

For the years ended December 31, 2022 and 2021

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

(1) Company history

OCEAN PLASTICS CO., LTD.(hereinafter referred to as the “Company”) was incorporated in June 1965, as a company limited by shares under the Company Act of the Republic of China (R.O.C.), and merged with Yee Fong Chemical & Industrial Co., Ltd.. The Company was registered in 5F & 6F., No. 310, Juguang Rd., Wanhua Dist., Taipei City. Please refer to note 14 for related information on the Group entities’ main business activities.

The major business activities of the Company are the manufacture and sale of plastics.

The Company’s common shares were listed on the Taiwan Stock Exchange (TWSE) in January 1999.

(2) Approval date and procedures of the financial statements:

These financial statements were authorized for issue by the Board of Directors on March 14, 2023.

(3) New standards, amendments and interpretations adopted:

• (a) The impact of the International Financial Reporting Standards (“IFRSs”) endorsed by the Financial Supervisory Commission, R.O.C. which have already been adopted.

The Company has initially adopted the following new amendments, which do not have a significant impact on its financial statements, from January 1, 2022:

• －

• ●Amendments to IAS 16 “Property, Plant and Equipment Proceeds before Intended Use”

• －

• ●Amendments to IAS 37 “Onerous Contracts Cost of Fulfilling a Contract”

• ●Annual Improvements to IFRS Standards 2018–2020

• ●Amendments to IFRS 3 “Reference to the Conceptual Framework”

• (b) The impact of IFRS issued by the FSC but not yet effective

The Company assesses that the adoption of the following new amendments, effective for annual period beginning on January 1, 2023, would not have a significant impact on its financial statements:

• ●Amendments to IAS 1 “Disclosure of Accounting Policies”

• ●Amendments to IAS 8 “Definition of Accounting Estimates”

• ●Amendments to IAS 12 “ Deferred Tax related to Assets and Liabilities arising from a Single Transaction”

(Continued)

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Ocean Plastics Co., Ltd. Notes to the Financial Statements

(c) The impact of IFRS issued by IASB but not yet endorsed by the FSC

The following new and amended standards, which may be relevant to the Company, have been issued by the International Accounting Standards Board (IASB), but have yet to be endorsed by the FSC:

Standards or Interpretations Amendments to IAS 1 “Classification of Liabilities as Current or Non-current” Amendments to IAS 1 “Non- current Liabilities with Covenants”

Content of amendment Effective date per IASB Under existing IAS 1 requirements, companies classify a liability as current when they do not have an unconditional right to defer settlement for at least 12 months after the reporting date. The amendments has removed the requirement for a right to be unconditional and instead now requires that a right to defer settlement must exist at the reporting date and have substance. The amendments clarify how a company classifies a liability that can be settled in its own shares – e.g. convertible debt. January 1, 2024 After reconsidering certain aspects of the 2020 amendments1, new IAS 1 amendments clarify that only covenants with which a company must comply on or before the reporting date affect the classification of a liability as current or non-current. Covenants with which the company must comply after the reporting date (i.e. future covenants) do not affect a liability’ s classification at that date. However, when non-current liabilities are subject to future covenants, companies will now need to disclose information to help users understand the risk that those liabilities could become repayable within 12 months after the reporting date. January 1, 2024

The Company is evaluating the impact of its initial adoption of the abovementioned standards or interpretations on its consolidated financial position and financial performance. The results thereof will be disclosed when the Company completes its evaluation.

(Continued)

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Ocean Plastics Co., Ltd. Notes to the Financial Statements

The Company does not expect the following other new and amended standards, which have yet to be endorsed by the FSC, to have a significant impact on its financial statements:

• ●Amendments to IFRS 10 and IAS 28 “Sale or Contribution of Assets Between an Investor and Its Associate or Joint Venture”

• ●IFRS 17 “ Insurance Contracts” and amendments to IFRS 17 “ Insurance Contracts”

• ●Amendments to IFRS 17 “Initial Application of IFRS 17 and IFRS 9 – Comparative Information “

• ●IFRS16 “Requirements for Sale and Leaseback Transactions”

(4) Summary of significant accounting policies:

The significant accounting policies presented in the financial statements are summarized below. Except for those specifically indicated, the following accounting policies were applied consistently throughout the periods presented in the financial statements.

(a) Statement of compliance

This individual financial statement has been prepared accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers.

• (b) Basis of preparation

• (i) Basis of measurement

  • 1) Financial instruments at fair value through profit or loss are measured at fair value;

  • 2) Financial assets at fair value through other comprehensive income are measured at fair value;

  • 3) The defined benefit liabilities (assets) are measured at fair value of the plan assets less the present value of the defined benefit obligation, limited as explained in note 4(p).

• (ii) Functional and presentation currency

The functional currency of each Company entity is determined based on the primary economic environment in which the entity operates. The consolidated financial statements are presented in New Taiwan Dollar (TWD), which is the Company’ s functional currency. All financial information presented in TWD has been rounded to the nearest thousand.

(Continued)

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Ocean Plastics Co., Ltd. Notes to the Financial Statements

(c) Foreign currencies

• (i) Foreign currency transactions

Transactions in foreign currencies are translated into the respective functional currencies of Company entities at the exchange rates at the dates of the transactions. At the end of each subsequent reporting period, monetary item denominated in foreign currencies are translated into the functional currencies using the exchange rate at that date. Non-monetary items denominated in foreign currencies that are measured at fair value are translated into the functional currencies using the exchange rate at the date that the fair value was determined. Non monetary items denominated in foreign currencies that are measured based on historical cost are translated using the exchange rate at the date of the transaction.

Exchange differences are generally recognized in profit or loss, except for those differences relating to the following, which are recognized in other comprehensive income:

• 1) an investment in equity securities designated as at fair value through other comprehensive income;

• 2) financial liability designated as a hedge of the net investment in a foreign operation to the extent that the hedge is effective; or

• 3) qualifying cash flow hedges to the extent that the hedges are effective.

(ii) Foreign operations

The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on acquisition, are translated into the presentation currency at the exchange rates at the reporting date. The income and expenses of foreign operations are translated into the presentation currency at the average exchange rate. Exchange differences are recognized in other comprehensive income.

When a foreign operation is disposed of such that control, significant influence, or joint control is lost, the cumulative amount in the translation reserve related to that foreign operation is reclassified to profit or loss as part of the gain or loss on disposal. When the Company disposes of only part of its interest in a subsidiary that includes a foreign operation while retaining control, the relevant proportion of the cumulative amount is reattributed to noncontrolling interests. When the Company disposes of only part of its investment in an associate or joint venture that includes a foreign operation while retaining significant influence or joint control, the relevant proportion of the cumulative amount is reclassified to profit or loss.

When the settlement of a monetary receivable from or payable to a foreign operation is neither planned nor likely to occur in the foreseeable future, Exchange differences arising from such a monetary item that are considered to form part of the net investment in the foreign operation are recognized in other comprehensive income.

(Continued)

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Ocean Plastics Co., Ltd. Notes to the Financial Statements

• (d) Classification of current and non-current assets and liabilities

An asset is classified as current under one of the following criteria, and all other assets are classified as non-current.

• (i) It is expected to be realized, or intended to be sold or consumed, in the normal operating cycle;

• (ii) It is held primarily for the purpose of trading;

• (iii) It is expected to be realized within twelve months after the reporting period; or

• (iv) The asset is cash or a cash equivalent (as defined in IAS 7) unless the asset is restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.

A liability is classified as current under one of the following criteria, and all other liabilities are classified as non current.

An entity shall classify a liability as current when: (i) It is expected to be settled in the normal operating cycle;

• (ii) It is held primarily for the purpose of trading;

• (iii) It is due to be settled within twelve months after the reporting period; or

• (iv) The Company does not have an unconditional right to defer settlement of the liability for at least twelve months after the reporting period. Terms of a liability that could, at the option of the counterparty, result in its settlement by issuing equity instruments do not affect its classification.

• (e) Cash and cash equivalents

Cash comprises cash on hand and demand deposits. Cash equivalents are short term, highly liquid investments that are readily convertible to known amounts of cash and are subject to an insignificant risk of changes in value. Time deposits which meet the above definition and are held for the purpose of meeting short term cash commitments rather than for investment or other purposes should be recognized as cash equivalents.

• (f) Financial Instruments

Trade receivables and debt securities issued are initially recognized when they are originated. All other financial assets and financial liabilities are initially recognized when the Group becomes a party to the contractual provisions of the instrument. A financial asset (unless it is a trade receivable without a significant financing component) or financial liability is initially measured at fair value plus, for an item not at fair value through profit or loss (FVTPL), transaction costs that are directly attributable to its acquisition or issue. A trade receivable without a significant financing component is initially measured at the transaction price.

(Continued)

13

Ocean Plastics Co., Ltd. Notes to the Financial Statements

(i) Financial assets

All regular way purchases or sales of financial assets are recognized and derecognized on a trade date basis.

On initial recognition, a financial asset is classified as measured at: amortized cost; Fair value through other comprehensive income (FVOCI) – debt investment; FVOCI – equity investment; or FVTPL. Financial assets are not reclassified subsequent to their initial recognition unless the Company changes its business model for managing financial assets, in which case all affected financial assets are reclassified on the first day of the first reporting period following the change in the business model.

• 1) Financial assets measured at amortized cost

A financial asset is measured at amortized cost if it meets both of the following conditions and is not designated as at FVTPL:

• ‧ it is held within a business model whose objective is to hold assets to collect contractual cash flows; and

• ‧ its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

These assets are subsequently measured at amortized cost, which is the amount at which the financial asset is measured at initial recognition, plus/minus, the cumulative amortization using the effective interest method, adjusted for any loss allowance. Interest income, foreign exchange gains and losses, as well as impairment, are recognized in profit or loss. Any gain or loss on derecognition is recognized in profit or loss.

• 2) Fair value through other comprehensive income (FVOCI)

A debt investment is measured at FVOCI if it meets both of the following conditions and is not designated as at FVTPL:

• ‧ it is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets; and

• ‧ its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

On initial recognition of an equity investment that is not held for trading, the Company may irrevocably elect to present subsequent changes in the investment’ s fair value in other comprehensive income. This election is made on an instrument-by-instrument basis.

Debt investments at FVOCI are subsequently measured at fair value. Interest income calculated using the effective interest method, foreign exchange gains and losses and impairment are recognized in profit or loss. Other net gains and losses are recognized in other comprehensive income. On derecognition, gains and losses accumulated in other comprehensive income are reclassified to profit or loss.

(Continued)

14

Ocean Plastics Co., Ltd. Notes to the Financial Statements

Equity investments at FVOCI are subsequently measured at fair value. Dividends are recognized as income in profit or loss unless the dividend clearly represents a recovery of part of the cost of the investment. Other net gains and losses are recognized in other comprehensive income and are never reclassified to profit or loss.

Dividend income is recognized in profit or loss on the date on which the Company’s right to receive payment is established.

3) Fair value through profit or loss (FVTPL)

All financial assets not classified as amortized cost or FVOCI described as above are measured at FVTPL, including derivative financial assets. Trade receivables that the Company intends to sell immediately or in the near term are measured at FVTPL; however, they are included in the ‘accounts receivables’ line item. On initial recognition, the Company may irrevocably designate a financial asset, which meets the requirements to be measured at amortized cost or at FVOCI, as at FVTPL if doing so eliminates or significantly reduces an accounting mismatch that would otherwise arise.

These assets are subsequently measured at fair value. Net gains and losses, including any interest or dividend income, are recognized in profit or loss.

• 4)

Impairment of financial assets

The Company recognizes loss allowances for expected credit losses (ECL) on financial assets measured at amortized cost (including cash and cash equivalents, amortized costs, notes and trade receivables, other receivable, guarantee deposit paid and other financial assets), debt investments measured at FVOCI and contract assets.

The Company measures loss allowances at an amount equal to lifetime expected credit loss (ECL), except for the following which are measured as 12-month ECL:

• ‧ debt securities that are determined to have low credit risk at the reporting date; and

• ‧ other debt securities and bank balances for which credit risk (i.e. the risk of default occurring over the expected life of the financial instrument) has not increased significantly since initial recognition.

Loss allowance for trade receivables and contract assets are always measured at an amount equal to lifetime ECL.

When determining whether the credit risk of a financial asset has increased significantly since initial recognition and when estimating ECL, the Company considers reasonable and supportable information that is relevant and available without undue cost or effort. This includes both quantitative and qualitative information and analysis based on the Company’ s historical experience and informed credit assessment as well as forwardlooking information.

The Company assumes that the credit risk on a financial asset has increased significantly if it is more than 90 days past due.

(Continued)

15

Ocean Plastics Co., Ltd. Notes to the Financial Statements

The Company considers a financial asset to be in default when the financial asset is more than 180 days past due or the debtor is unlikely to pay its credit obligations to the Company in full.

The Company considers a debt security to have low credit risk when its credit risk rating is equivalent to the globally understood definition of ‘ investment grade which is considered to be BBB- or higher per Standard & Poor’s, Baa3 or higher per Moody’s or twA or higher per Taiwan Ratings’.

Lifetime ECLs are the ECLs that result from all possible default events over the expected life of a financial instrument.

12-month ECLs are the portion of ECLs that result from default events that are possible within the 12 months after the reporting date (or a shorter period if the expected life of the instrument is less than 12 months).

The maximum period considered when estimating ECLs is the maximum contractual period over which the Company is exposed to credit risk.

ECLs are a probability-weighted estimate of credit losses. Credit losses are measured as the present value of all cash shortfalls (i.e the difference between the cash flows due to the Company in accordance with the contract and the cash flows that the Company expects to receive). ECLs are discounted at the effective interest rate of the financial asset.

At each reporting date, the Company assesses whether financial assets carried at amortized cost and debt securities at FVOCI are credit-impaired. A financial asset is ‘ credit-impaired’ when one or more events that have a detrimental impact on the estimated future cash flows of the financial asset have occurred. Evidence that a financial asset is credit-impaired includes the following observable data:

• ‧ significant financial difficulty of the borrower or issuer;

• ‧ a breach of contract such as a default or being more than 180 days past due;

• ‧ the lender of the borrower, for economic or contractual reasons relating to the borrower's financial difficulty, having granted to the borrower a concession that the lender would not otherwise consider;

• ‧ it is probable that the borrower will enter bankruptcy or other financial reorganization; or

• ‧ the disappearance of an active market for a security because of financial difficulties.

Loss allowances for financial assets measured at amortized cost are deducted from the gross carrying amount of the assets. For debt securities at FVOCI, the loss allowance is charged to profit or loss and is recognized in other comprehensive income instead of reducing the carrying amount of the asset.

(Continued)

16

Ocean Plastics Co., Ltd. Notes to the Financial Statements

The gross carrying amount of a financial asset is written off when the Company has no reasonable expectations of recovering a financial asset in its entirety or a portion thereof. For corporate customers, the Company individually makes an assessment with respect to the timing and amount of write-off based on whether there is a reasonable expectation of recovery. The Company expects no significant recovery from the amount written off. However, financial assets that are written off could still be subject to enforcement activities in order to comply with the Company’s procedures for recovery of amounts due.

5) Derecognition of financial assets

The Company applied the exemptions at the first-time adoption of IFRSs, and increased its retained earnings by $2,992,372 thousand, which resulted from unrealized revaluation increments, exchange differences on translation of foreign financial statements, and the fair value of investment property being used as the cost on initial recognitions at the transition date.

In accordance with Ruling No. 1010012865 issued by the FSC on April 6, 2012, a portion of current-period earnings and undistributed prior-period earnings shall be reclassified as special earnings reserve during earnings distribution. The amount to be reclassified should equal the current-period total net reduction of other shareholders’ equity. Similarly, a portion of undistributed prior-period earnings shall be reclassified as special earnings reserve (and does not qualify for earnings distribution) to account for cumulative changes to other shareholders’ equity pertaining to prior periods. Amounts of subsequent reversals pertaining to the net reduction of other shareholders’ equity shall qualify for additional distributions. As of December 31, 2022 and 2021, the balance of special earnings reserve were $2,978,245 thousand.

(ii) Financial liabilities and equity instruments

1) Classification of debt or equity

Debt and equity instruments issued by the Company are classified as financial liabilities or equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.

2) Equity instrument

An equity instrument is any contract that evidences residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued are recognized as the amount of consideration received, less the direct cost of issuing.

3) Treasury shares

When shares recognized as equity are repurchased, the amount of the consideration paid, which includes directly attributable costs, is recognized as a deduction from equity. Repurchased shares are classified as treasury shares. When treasury shares are sold or reissued subsequently, the amount received is recognized as an increase in equity, and the resulting surplus or deficit on the transaction is recognized in capital surplus or retained earnings (if the capital surplus is not sufficient to be written down).

(Continued)

17

Ocean Plastics Co., Ltd. Notes to the Financial Statements

4) Financial liabilities

Financial liabilities are classified as measured at amortized cost or FVTPL. A financial liability is classified as at FVTPL if it is classified as held-for-trading, it is a derivative or it is designated as such on initial recognition. Financial liabilities at FVTPL are measured at fair value and net gains and losses, including any interest expense, are recognized in profit or loss.

Other financial liabilities are subsequently measured at amortized cost using the effective interest method. Interest expense and foreign exchange gains and losses are recognized in profit or loss. Any gain or loss on derecognition is also recognized in profit or loss.

5) Derecognition of financial liabilities

The Company derecognizes a financial liability when its contractual obligations are discharged or cancelled, or expire. The Company also derecognizes a financial liability when its terms are modified and the cash flows of the modified liability are substantially different, in which case a new financial liability based on the modified terms is recognized at fair value.

On derecognition of a financial liability, the difference between the carrying amount of a financial liability extinguished and the consideration paid (including any non-cash assets transferred or liabilities assumed) is recognized in profit or loss.

6) Offsetting of financial assets and liabilities

Financial assets and financial liabilities are offset and the net amount presented in the statement of balance sheet when, and only when, the Company currently has a legally enforceable right to set off the amounts and it intends either to settle them on a net basis or to realize the asset and settle the liability simultaneously.

(g) Inventories

Inventories are measured at the lower of cost and net realizable value. The cost of inventories is calculated using the weighted average method, and includes expenditure incurred in acquiring the inventories, production or conversion costs, and other costs incurred in bringing them to their present location and condition. In the case of manufactured inventories and work in progress, cost includes an appropriate share of production overheads based on normal operating capacity.

Net realizable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses.

(h) Investment in associates

Associates are those entities in which the Company has significant influence, but not control or joint control, over their financial and operating policies.

Investments in associates are accounted for using the equity method and are recognized initially at cost. The cost of the investment includes transaction costs. The carrying amount of the investment in associates includes goodwill arising from the acquisition less any accumulated impairment losses.

(Continued)

18

Ocean Plastics Co., Ltd. Notes to the Financial Statements

The financial statements include the Company’s share of the profit or loss and other comprehensive income of those associates, after adjustments to align their accounting policies with those of the Company, from the date on which significant influence commences until the date on which significant influence ceases. The Company recognizes any changes of its proportionate share in the investee within capital surplus, when an associate’s equity changes due to reasons other than profit and loss or comprehensive income, which did not result in changes in actual proportionate share.

Gains and losses resulting from transactions between the Company and an associate are recognized only to the extent of unrelated Company’s interests in the associate.

When the Company’s share of losses of an associate equals or exceeds its interests in an associate, it discontinues recognizing its share of further losses. After the recognized interest is reduced to zero, additional losses are provided for, and a liability is recognized, only to the extent that the Company has incurred legal or constructive obligations or made payments on behalf of the associate.

(i) Investments in Subsidiaries

On preparing individual financial reports, the Company adopts the equity method to evaluate investees who are under control. In equity method, current incomes and other comprehensive incomes in individual financial report are same with the ones attribute to the parent company in consolidated financial reports. Also, the equity in individual financial report is same with the one attribute to the parent company in consolidated financial reports.

If the Company has change on the ownership equity of the subsidiary that does not result in the loss of control, it can be as the equity transaction between them.

(j) Investment property

Investment property is property held either to earn rental income or for capital appreciation or for both, but not for sale in the ordinary course of business, use in the production or supply of goods or services, or for administrative purposes. Investment property is measured at cost on initial recognition, and subsequently at cost, less accumulated depreciation and accumulated impairment losses. Depreciation expense is calculated based on the depreciation method, useful life, and residual value which are the same as those adopted for property, plant and equipment.

Any gain or loss on disposal of an investment property (calculated as the difference between the net proceeds from disposal and the carrying amount) is recognized in profit or loss.

Rental income from investment property is recognized as other revenue on a straight-line basis over the term of the lease. Lease incentives granted are recognized as an integral part of the total rental income, over the term of the lease.

(k) Property, plant and equipment

• (i) Recognition and measurement

Items of property, plant and equipment are measured at cost, which includes capitalized borrowing costs, less accumulated depreciation and any accumulated impairment losses.

(Continued)

19

Ocean Plastics Co., Ltd. Notes to the Financial Statements

If significant parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment.

Any gain or loss on disposal of an item of property, plant and equipment is recognized in profit or loss.

(ii) Subsequent expenditure

Subsequent expenditure is capitalized only if it is probable that the future economic benefits associated with the expenditure will flow to the Company.

• (iii) Depreciation

Depreciation is calculated on the cost of an asset less its residual value and is recognized in profit or loss on a straight-line basis over the estimated useful lives of each component of an item of property, plant and equipment.

Land is not depreciated.

The estimated useful lives of property, plant and equipment for current and comparative periods are as follows:

1)	buildings	5~50 years
2)	machinery equipment	3~20 years
3)	other facility	2~20 years

Depreciation methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate.

• (iv) Reclassification to investment property

When the use of a property changes from owner-occupied to investment property, the property is remeasured to fair value and reclassified accordingly.

(l) Leases

At inception of a contract, the Group assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.

• (i) As a lessee

The Company recognizes a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located, less any lease incentives received.

(Continued)

20

Ocean Plastics Co., Ltd. Notes to the Financial Statements

The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. In addition, the right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability.

The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be reliably determined, the Company’s incremental borrowing rate. Generally, the Company uses its incremental borrowing rate as the discount rate.

Lease payments included in the measurement of the lease liability comprise the following:

• 1) fixed payments, including in substance fixed payments;

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

• 3) amounts expected to be payable under a residual value guarantee; and

• 4) payments for purchase or termination options that are reasonably certain to be exercised.

The lease liability is measured at amortized cost using the effective interest method. It is remeasured when:

• 1) there is a change in future lease payments arising from the change in an index or rate; or

• 2) there is a change in the Company’s estimate of the amount expected to be payable under a residual value guarantee; or

• 3) there is a change in the lease term resulting from a change of its assessment on whether it will exercise an option to purchase the underlying asset, or

• 4) there is a change of its assessment on whether it will exercise a purchase, extension or termination option; or

• 5) there are any lease modifications

When the lease liability is remeasured, other than lease modifications, a corresponding adjustment is made to the carrying amount of the right-of-use asset, or in profit and loss if the carrying amount of the right-of-use asset has been reduced to zero.

When the lease liability is remeasured to reflect the partial or full termination of the lease for lease modifications that decrease the scope of the lease, the Company accounts for the remeasurement of the lease liability by decreasing the carrying amount of the right-of-use asset to reflect the partial or full termination of the lease, and recognize in profit or loss any gain or loss relating to the partial or full termination of the lease.

The Company presents right-of-use assets that do not meet the definition of investment and lease liabilities as a separate line item respectively in the statement of financial position.

(Continued)

21

Ocean Plastics Co., Ltd. Notes to the Financial Statements

(ii) As a lessor

When the Company acts as a lessor, it determines at lease commencement whether each lease is a finance lease or an operating lease. To classify each lease, the Company makes an overall assessment of whether the lease transfers to the lessee substantially all of the risks and rewards of ownership incidental to ownership of the underlying asset. If this is the case, then the lease is a finance lease; if not, then the lease is an operating lease. As part of this assessment, the Company considers certain indicators such as whether the lease is for the major part of the economic life of the asset.

When the Company is an intermediate lessor, it accounts for its interests in the head lease and the sub-lease separately. It assesses the lease classification of a sub-lease with reference to the right-of-use asset arising from the head lease, not with reference to the underlying asset. If a head lease is a short-term lease to which the Company applies the exemption described above, then it classifies the sub-lease as an operating lease.

If an arrangement contains lease and non-lease components, the Company applies IFRS15 to allocate the consideration in the contract.

(m) Impairment of non-financial assets

At each reporting date, the Company reviews the carrying amounts of its non-financial assets (other than inventories and deferred tax assets less costs) to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated.

An impairment loss is recognized if the carrying amount of an asset or CGU exceeds its recoverable amount.

Impairment losses are recognized in profit or loss. They are allocated first to reduce the carrying amount of any goodwill allocated to the CGU, and then to reduce the carrying amounts of the other assets in the CGU on a pro rata basis.

For other non-financial assets, an impairment loss is reversed only to the extent that the asset’ s carrying amount that would have been determined (net of depreciation or amortization) had no impairment loss been recognized for the assets in prior years.

(n) Revenue from contracts with customers

Revenue is measured based on the consideration to which the Company expects to be entitled in exchange for transferring goods or services to a customer. The Company recognizes revenue when it satisfies a performance obligation by transferring control of a good or a service to a customer. The accounting policies for the Company’s main types of revenue are explained below.

(Continued)

22

Ocean Plastics Co., Ltd. Notes to the Financial Statements

(i) Sale of goods

The Company manufactures and sells plastic materials and products. The Company recognizes revenue when control of the products has transferred, being when the products are delivered to the customer, the customer has full discretion over the channel and price to sell the products. Delivery occurs when the products have been shipped to the specific location, the risks of obsolescence and loss have been transferred to the customer, and either the customer has accepted the products in accordance with the sales contract, or the Company has objective evidence that all criteria for acceptance have been satisfied. A receivable is recognized when the goods are delivered as this is the point in time that the Company has a right to an amount of consideration that is unconditional.

(ii) Financing components

The Company does not expect to have any contracts where the period between the transfer of the promised goods or services to the customer and payment by the customer exceeds one year. As a consequence, the group does not adjust any of the transaction prices for the time value of money.

(o) Employee benefits

(i) Defined contribution plans

Obligations for contributions to defined contribution plans are expensed as the related service is provided.

(ii) Defined benefit plans

The Company’s net obligation in respect of defined benefit plans is calculated separately for each the plan by estimating the amount of future benefit that employees have earned in the current and prior periods, discounting that amount and deducting the fair value of any plan assets.

The calculation of defined benefit obligations is performed annually by a qualified actuary using the projected unit credit method. When the calculation results in a potential asset for the Company, the recognized asset is limited to the present value of economic benefits available in the form of any future refunds from the plan or reductions in future contributions to the plan. To calculate the present value of economic benefits, consideration is given to any applicable minimum funding requirements.

Remeasurements of the net defined benefit liability, which comprise actuarial gains and losses, the return on plan assets (excluding interest) and the effect of the asset ceiling (if any, excluding interest), are recognized immediately in other comprehensive income, and accumulated in retained earnings within equity. The Company determines the net interest expense (income) on the net defined benefit liability (asset) for the period by applying the discount rate used to measure the defined benefit obligation at the beginning of the annual period to the then-net defined benefit liability (asset). Net interest expense and other expenses related to defined benefit plans are recognized in profit or loss.

(Continued)

23

Ocean Plastics Co., Ltd. Notes to the Financial Statements

When the benefits of a plan are changed or when a plan is curtailed, the resulting change in benefit that relates to past service or the gain or loss on curtailment is recognized immediately in profit or loss. The Company recognizes gains and losses on the settlement of a defined benefit plan when the settlement occurs.

(iii) Other long-term employee benefits

The Company’ s net obligation in respect of long-term employee benefits is the amount of future benefit that employees have earned in return for their service in the current and prior periods. That benefit is discounted to determine its present value. Remeasurements are recognized in profit or loss in the period in which they arise.

(iv) Short-term employee benefits

Short-term employee benefits are expensed as the related service is provided. A liability is recognized for the amount expected to be paid if the Group has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably.

(p) Income taxes

Income taxes comprise current taxes and deferred taxes. Except for expenses related to business combinations or recognized directly in equity or other comprehensive income, all current and deferred taxes are recognized in profit or loss.

Current taxes comprise the expected tax payables or receivables on the taxable profits (losses) for the year and any adjustment to the tax payable or receivable in respect of previous years. The amount of current tax payables or receivables are the best estimate of the tax amount expected to be paid or received that reflects uncertainty related to income taxes, if any. It is measured using tax rates enacted or substantively enacted at the reporting date.

Deferred taxes arise due to temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and their respective tax bases. Deferred taxes are recognized except for the following:

• (i) temporary differences on the initial recognition of assets and liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profits (losses) at the time of the transaction;

• (ii) temporary differences related to investments in subsidiaries, associates and joint arrangements to the extent that the Company is able to control the timing of the reversal of the temporary differences and it is probable that they will not reverse in the foreseeable future; and

(iii) taxable temporary differences arising on the initial recognition of goodwill.

Deferred taxes are measured at tax rates that are expected to be applied to temporary differences when they reverse, using tax rates enacted or substantively enacted at the reporting date.

(Continued)

24

Ocean Plastics Co., Ltd. Notes to the Financial Statements

Deferred tax assets and liabilities are offset if the following criteria are met:

• (i) the Company has a legally enforceable right to set off current tax assets against current tax liabilities; and

• (ii) the deferred tax assets and the deferred tax liabilities relate to income taxes levied by the same taxation authority on either:

• 1) the same taxable entity; or

• 2) different taxable entities which intend to settle current tax assets and liabilities on a net basis, or to realize the assets and liabilities simultaneously, in each future period in which significant amounts of deferred tax liabilities or assets are expected to be settled or recovered.

Deferred tax assets are recognized for the carry forward of unused tax losses, unused tax credits, and deductible temporary differences to the extent that it is probable that future taxable profits will be available against which they can be utilized. Deferred tax assets are reviewed at each reporting date, and are reduced to the extent that it is no longer probable that the related tax benefits will be realized.

• (q) Earnings per share

The Company discloses the Company’s basic and diluted earnings per share attributable to ordinary shareholders of the Company. Basic earnings per share is calculated as the profit attributable to ordinary shareholders of the Company divided by the weighted average number of ordinary shares outstanding. Diluted earnings per share is calculated as the profit attributable to ordinary shareholders of the Company divided by the weighted average number of ordinary shares outstanding after adjustment for the effects of all potentially dilutive ordinary shares.

• (r) Operating segments

Segment information was disclosed in consolidated financial statement; therefore, it was not disclosed in the parent company only financial statement.

(5) Significant accounting assumptions and judgments, and major sources of estimation uncertainty:

The preparation of the consolidated financial statements in conformity with the Regulations and the IFRSs endorsed by the FSC requires management to make judgments, estimates, and assumptions that affect the application of the accounting policies and the reported amount of assets, liabilities, income, and expenses. Actual results may differ from these estimates.

The management continues to monitor the accounting estimates and assumptions. The management recognizes any changes in accounting estimates during the period and the impact of those changes in accounting estimates in the following period.

Information about judgments made in applying accounting policies that have the most significant effects on the amounts recognized in the consolidated financial statements is as follows:

• (a) Judgment of whether the Company has substantive control over a subsidiary; please refer to the consolidated financial statements for the year ended December 31, 2022.

(Continued)

25

Ocean Plastics Co., Ltd. Notes to the Financial Statements

• (b) Judgment of whether the Company has substantive control over its investees

Holding 44.62% of the outstanding voting shares in Chun Pin Enterprise Co., Limited., the Company was not the largest shareholder. The Company obtained neither more than half of Chun Pin Enterprise’ s Board seats, nor more than half of the voting rights at a shareholders’ meeting. Therefore, it was determined that the Company only had significant influence on Chun Pin Enterprise.

Holding 40% of preferred stock and 50% of common stock in Foremost-Oceans NueTeq, Ltd., the Company was not the largest shareholder. The Company obtained neither more than half of Foremost-Oceans NueTeq, Ltd.’ s Board seats, nor more than half of the voting rights at a shareholders’ meeting. Therefore, it was determined that the Company only had significant influence on Foremost-Oceans NueTeq, Ltd.

Information about assumptions and estimation uncertainties that has a significant risk of resulting in a material adjustment within the next financial year is as follows:

• (a) Inventory valuation

Inventories are measured at the lower of cost or net realizable value. The Company assesses value of inventories that are worn, obsolete, and unmarketable at the reporting date, and writes down the cost of inventories to their net realizable value. Inventory valuation is based on expected market demand in a period of foreseeable future which may fluctuate by rapid change in industry. For the estimation of inventory valuation, please refer to note 6(e) for details.

The Company’s accounting policies include measuring financial and non financial assets and liabilities at fair value through profit or loss.

The Company’s financial instrument valuation group conducts independent verification on fair value by using data sources that are independent, reliable, and representative of exercise prices. This financial instrument valuation group also periodically adjusts valuation models, conducts back testing, renews input data for valuation models, and makes all other necessary fair value adjustments to assure the rationality of fair value. The Company strives to use market observable inputs when measuring assets and liabilities. Different levels of the fair value hierarchy to be used in determining the fair value of financial instruments are as follows:

• (a) Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.

• (b) Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).

• (c) Level 3: inputs for the assets or liability that are not based on observable market data.

Please refer to Note 6(v) for assumptions used in measuring fair value.

(Continued)

26

Ocean Plastics Co., Ltd. Notes to the Financial Statements

(6) Explanation of significant accounts:

• (a) Cash and cash equivalents

Revolving funds and cash on hand Demand deposits and check deposits Time deposits Cash and cash equivalents in the consolidated statement of cash flows	December 31, 2022 $ 500 102,825 30,720 $ 134,045	December 31, 2021
		500 145,288 -
		145,788

Please refer to note 6(v) for the exchange rate risk, interest rate risk, and sensitivity analysis of the financial assets and liabilities of the Company.

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

December 31, 2022 Current financial assets designated at fair value through profit or loss: Listed domestic stock $ 131,774 Financial assets at fair value through other comprehensive income December 31, 2022 Equity investments at fair value through other comprehensive income: Unlisted domestic stock－Taiwan VCM Corporation $ 547,480 Unlisted domestic stock－Others 44,532 Total $ 592,012	December 31, 2021
	206,422
	December 31, 2021
	1,016,326 75,580
	1,091,906

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

• (i) Fair value through other comprehensive income financial assets

The Company holds this equity investment as long-term strategic investment without any trade purpose, so it is assigned to use fair value through other comprehensive income to evaluate. Hence, the Company recognized dividend revenues $115,116 thousand and $87,178 thousand in 2022 and 2021.

The Company did not dispose strategic investment in 2022 and 2021. The accumulated income and loss in the period did not transfer in equity.

• (ii) Credit risk and market risk information refers to note 6(w).

• (iii) On December 31, 2022 and 2021, the financial assets which held by the Company did not offer any pledge and assurance.

(Continued)

27

Ocean Plastics Co., Ltd. Notes to the Financial Statements

(d) Notes and trade receivables

Notes receivable from operating activities Trade receivables Less: Loss allowance	December 31, 2022 $ 37,737 583,694 (7,711) $ 613,720	December 31, 2021 57,640 704,524 (6,423) 755,741

The Company applies the simplified approach to provide for its expected credit losses, i.e. the use of lifetime expected loss provision for all receivables. To measure the expected credit losses, trade receivables have been grouped based on shared credit risk characteristics and the days past due, as well as the incorporated forward-looking information, including macroeconomic and relevant industry information. The loss allowance provisions were determined as follows:

Current 1 to 180 days past due More than 180 days past due Current 1 to 180 days past due More than 180 days past due	December 31, 2022	December 31, 2022
	Gross carrying amount Weighted- average loss rate $ 573,770 - 44,466 10% 3,195 100% $ 621,431 December 31, 2021		Loss allowance provision - 4,516 3,195 7,711
		Weighted- average loss rate - 9% 100%	Loss allowance provision - 2,579 3,844 6,423

The movement in the allowance for notes and trade receivables were as follows:

Balance at January 1 Impairment losses recognized Impairment losses reversed Balance at December 31	2022 $ 6,423 2,184 (896) $ 7,711	2021 5,989 1,708 (1,274) 6,423

The aforementioned notes and trade receivables of the Company were not pledged as collateral as of December 31, 2022 and 2021.

(Continued)

28

Ocean Plastics Co., Ltd. Notes to the Financial Statements

(e) Inventories

Manufacturing: Raw materials Work in progress Finished goods Construction industry: Construction in progress	December 31, 2022 $ 157,243 17,840 193,049 368,132 75 $ 368,207	December 31, 2021
		292,220 29,370 393,088
		714,678
		-
		714,678

The Company’s relevant inventory details recognized in operating costs in 2022 and 2021 are as follows:

Cost of goods sold Write-down of inventories(Reversal of write-downs) Disposal of inventory Idle capacity Revenue from sale of scraps and others	2022 $ 5,356,863 12,824 - 109,025 (48,139) $ 5,430,573	2021
		5,215,283 1,234 1,602 101,289 1,801
		5,321,209

As of December 31, 2022 and 2021, the Company had not provided any inventories as collateral for its loans.

The impairement loss in inventory was reversed due to the increase in net realizable value which was caused by the scarcity of the inventory and the market price increased.

• (f) Investments accounted for using equity method

A summary of the Company’s financial information for investments accounted for using the equity method at the reporting date is as follows:

Subsidiaries Associates	December 31, 2022 $ 2,193,188 448,493 $ 2,641,681	December 31, 2021
		2,293,571 417,247
		2,710,818

(Continued)

29

Ocean Plastics Co., Ltd. Notes to the Financial Statements

(i) Subsidiary

Please refer to consolidated financial report of 2022.

(ii) Associates

Associates which are material to the Company consisted of the followings:

Name of Associates Chun Pin Enterprise Co., Ltd Foremost-Oceans NueTeq, Ltd.	Nature of Relationship with the Group Wholesale of chemical feedstock and products Wholesale of petrochemical materials manufacturing	Main operating location/ Registered country of the Company Taiwan Taiwan	Proportion of shareholding and voting rights December 31, 2022 December 31, 2021 % 44.62 % 44.62 40.07%、50.00% % -

The financial information of the Associate which has materiality on the Company is as follows. It already adjusted the amount in the Associate’s IFRSs individual financial report to reflect the adjustments for fair values and for accounting policy difference:

1) Chun Pin Enterprise Co., Ltd

Current assets Non-current assets Current liabilities Non-current liabilities Net assets Operating revenue Profit from continuing operations Other comprehensive income Total comprehensive income Share of net assets of associates as of January 1 Comprehensive income attributable to the Group Dividends received from associates Share of net assets of associates as of December 31	December 31, 2022 $ 826,441 271,851 (88,420) (18,113) $ 991,759 2022 $ 467,562 215,346 - $ 215,346 2022 $ 417,247 96,077 (70,847) $ 442,477	December 31, 2021 862,322 238,527 (133,582) (32,059) 935,208 2021 436,102 176,458 - 176,458 2021 407,945 78,728 (69,426) 417,247

(Continued)

30

Ocean Plastics Co., Ltd. Notes to the Financial Statements

2) Foremost-Oceans NueTeq, Ltd.

Current assets Non-current assets Non-current liabilities Net assets Operating revenue Profit from continuing operations Other comprehensive income Total comprehensive income Share of net assets of associates as of January 1 Increase in current period Comprehensive income attributable to the Group Share of net assets of associates as of December 31	December 31, 2022 $ 3,878 13,010 (1,873) $ 15,015 2022 $ - (87) - $ (87) 2022 $ - 6,050 (34) $ 6,016	December 31, 2021
		- - -
		-
		2021
		-
		- -
		-
		2021
		- - -
		-

(iii) Guarantee

As of December 31, 2022 and 2021, the Company had not provided any investment accounted for using equity method as collaterals for its loans.

(g) Property, plant and equipment

The cost, depreciation, and impairment of the property, plant and equipment of the Company for the years ended December 31, 2022 and 2021, were as follows:

Cost or deemed cost: Balance on January 1, 2022 Additions Transfer from construction in progress and testing equip Disposal Transfer to expense Balance on December 31, 2022	Lands $ 1,483,366 - - - - $ 1,483,366	Buildings and constructions 1,240,147 - 5,761 - - 1,245,908	Machinery and equipment 2,019,150 - 65,062 (115,915) -	Other facilities 1,463,643 - 81,137 (23,990) - 1,520,790	Construction in progress 86,301 103,644 (151,960) - (335) 37,650	Total 6,292,607 103,644 - (139,905) (335)
			1,968,297			6,256,011

(Continued)

31

Ocean Plastics Co., Ltd. Notes to the Financial Statements

Balance on January 1, 2021 Additions Transfer from construction in progress and testing equip Disposal Transfer to expense Balance on December 31, 2021 Depreciation and impairments losses: Balance on January 1, 2022 Depreciation and impairment loss for the year Disposal Balance on December 31, 2022 Balance on January 1, 2021 Depreciation and impairment loss for the year Disposal Balance on December 31, 2021 Carrying amount: Balance on December 31, 2022 Balance on January 1, 2021 Balance on December 31, 2021	Lands $ 1,483,366 - - - - $ 1,483,366 $ - - - $ - $ - - - $ - $ 1,483,366 $ 1,483,366 $ 1,483,366	Buildings and constructions 1,236,587 - 3,560 - - 1,240,147 334,442 24,551 - 358,993 310,105 24,337 - 334,442 886,915 926,482 905,705	Machinery and equipment 2,021,215 - 27,859 (29,924) - 2,019,150 1,528,781 68,370 (115,915) 1,481,236 1,491,920 66,787 (29,926) 1,528,781 487,061 529,295 490,369	Other facilities 1,460,922 - 20,981 (18,260) - 1,463,643 1,124,510 74,139 (23,990) 1,174,659 1,071,810 70,958 (18,258) 1,124,510 346,131 389,112 339,133	Construction in progress 39,728 99,414 (52,400) - (441) 86,301 - - - - - - - - 37,650 39,728 86,301	Total 6,241,818 99,414 - (48,184) (441)
						6,292,607
						2,987,733 167,060 (139,905)
						3,014,888
						2,873,835 162,082 (48,184)
						2,987,733
						3,241,123
						3,367,983
						3,304,874

Part of the lands subjected to urban land readjustment plan or were agricultural land, which were not allowed to be held by the Company were held temporarily by third party and registered as mortgage to the Company. As of December 31, 2022 and 2021, carrying amount of above mentioned lands (including investment property) were $84,803 thousands and $141,648 thousands, and the Company is applying for alternation of land use and will transfer their title to the Company once the process of urban land readjustment and alternation of land use complete.

In addition, to enhance the operating efficiency of the Company’ s assets and enhance its competitiveness, the Company resolved on November 10, 2021 by the Board of Directors to transfer 21.3% of the holding percentage of the rezoning land located at land No.1286, Jiankang section, Zhonghe District, New Taipei City on May 24, 2022 (acquisition date) to the investee (subsidiaries). The land title is transfer to the Company from third party and the subsidiary is in charge of planning. Investment property-land, costs that was transferred is amounting to NT$20,155 thousand.

As of December 31, 2022 and 2021, the collateral details of long-term borrowings and credit agreements, please refer to note 8.

(Continued)

32

Ocean Plastics Co., Ltd. Notes to the Financial Statements

(h) Right-of-use-assets

The Company leases many assets including land and buildings and vehicles. Information about leases for which the Company as a lessee was presented below:

Cost: Balance at January 1, 2022 Additions Decrease Balance at December 31, 2022 Balance at January 1, 2021 Additions Decrease Balance at December 31, 2021 Accumulated depreciation: Balance at January 1, 2022 Depreciation for the year Decrease Balance at December 31, 2022 Balance at January 1, 2021 Depreciation for the year Decrease Balance at December 31, 2021 Carrying amount: Balance at December 31, 2022 Balance at December 31, 2021 Balance at January 1, 2021	Lands $ 9,701 - - $ 9,701 $ 9,701 - - $ 9,701 $ 5,820 1,941 - $ 7,761 $ 3,880 1,940 - $ 5,820 $ 1,940 $ 3,881 $ 5,821	Buildings and constructions 26,194 - - 26,194 26,194 - - 26,194 15,717 5,238 - 20,955 10,478 5,239 - 15,717 5,239 10,477 15,716	Other facilities 99,318 257 (3,658) 95,917 34,429 95,660 (30,771) 99,318 13,610 16,721 (3,658) 26,673 28,071 16,310 (30,771) 13,610 69,244 85,708 6,358	Total 135,213 257 (3,658) 131,812 70,324 95,660 (30,771) 135,213 35,147 23,900 (3,658) 55,389 42,429 23,489 (30,771) 35,147 76,423 100,066 27,895

(i) Investment property

Cost : Balance at January 1, 2022 Disposal Reclassification to inventory Balance at December 31, 2022	Land $ 442,776 (20,150) (75) $ 422,551	Buildings 18,391 - - 18,391	Total 461,167 (20,150) (75) 440,942

(Continued)

33

Ocean Plastics Co., Ltd. Notes to the Financial Statements

Balance at January 1, 2021 Reclassification from construction in progress Balance at December 31, 2021 Accumulated depreciation and impairment losses: Balance at January 1, 2022 Depreciation for the year Balance at December 31, 2022 Balance at January 1, 2021 Depreciation for the year Balance at December 31, 2021 Carrying amount: Balance at December 31, 2022 Balance at January 1, 2021 Balance at December 31, 2021 Fair value Balance at December 31, 2022 Balance at December 31, 2021	Land $ 471,834 (29,058) $ 442,776 $ - - $ - $ - - $ - $ 422,551 $ 471,834 $ 442,776	Buildings Total 18,391 490,225 - (29,058) 18,391 461,167 2,958 2,958 1,244 1,244 4,202 4,202 1,713 1,713 1,245 1,245 2,958 2,958 14,189 436,740 16,678 488,512 15,433 458,209 $ 1,650,021 $ 1,857,130

Part of the lands were agricultural land, which's legal title were not allowed to be held by the Company were held temporarily by third party and registered as mortgage to the Company. The Company is applying for alternation of land use for above lands and their title will be transferred to the Company once the process of alternation of land use complete. Please refer to note 6(g) for further details.

In addition, to enhance the operating efficiency of the Company’ s assets and enhance its competitiveness, the Company resolved on November 10, 2021 by the Board of Directors to transfer 21.3% of the holding percentage of the rezoning land located at land No.1286, Jiankang section, Zhonghe District, New Taipei City on May 24, 2022 (acquisition date ) to the investee (subsidiaries). The land title is transfer to the Company from third party and the subsidiary is in charge of planning. Investment property-land, costs that was transferred is amounting to NT$20,155 thousand.

The fair value stated above was according to the latest transaction data announced on the website of Department of Land Administration Ministry of the Interior.

Investment property comprises a number of lands that are leased to third parties. Each of the leases contains a 3 to 15 years non-cancellable period. Subsequent renewals are negotiated with the lessee and no contingent rents are charged. For further information, please refer to note 6(n).

As of December 31, 2022 and 2021, investment property of the Group had been pledged as collateral for long-term borrowings and credit lines, please refer to note 8.

(Continued)

34

Ocean Plastics Co., Ltd. Notes to the Financial Statements

(j) Other current liabilities

The other current liabilities of the Company were as follows:

Lease liabilities-current Other payables-related parties Unearned Revenues Others	December 31, 2022 $ 23,236 3,098 3,961 1,845 $ 32,140	December 31, 2021
		23,453 3,083 8,370 1,946
		36,852

(k) Short-term borrowings

The short-term borrowings of the Company were summarized as follows:

Unsecured bank loans Secured bank loans Total Unused short-term credit line Range of interest rates	December 31, 2022 $ - 250,000 $ 250,000 $ 946,781 1.45%~1.58%	December 31, 2021
		150,000 -
		150,000
		398,156
		1.10%~1.11%

For the collateral for short-term borrowings, please refer to note 8.

(l) Long-term borrowings

The long-term borrowing details and terms of the Company are as follows:

Secured bank loans Less: current portion Total Unused long-term credit lines Secured bank loans Less: current portion Total Unused long-term credit lines		December 31, 2022	December 31, 2022	December 31, 2022
	Currency	Rate
	TWD
				Amount 1,134,584 (54,167) 1,080,417 2,180,000
	Currency	Rate	Maturity year 2022.04.17~2031.06.29 $ $ $
	TWD	0.89%~1.18%

For the collateral for long-term borrowings, please refer to note 8.

(Continued)

35

Ocean Plastics Co., Ltd. Notes to the Financial Statements

(m) Leases Liabilities

The lease liabilities of the Company’s were as follows:

Current Non-current	December 31, 2022 $ 23,236 $ 53,969	December 31, 2021 23,453 77,033

For maturity analysis, please refer to note 6 (v).

The amounts recognized in profit or loss was as follows:

		2022	2021
Interest on lease liabilities	$	1,046	974
The amounts recognized in the statement of cash flows for the Company was as follows:
		2022	2021
Total cash outflow for leases	$	23,236	24,171

The Company leases land and buildings, and raw material storage tanks. The leases run for four to five years. Some leases include an option to renew the lease for an additional period of the same duration after the end of the contract term.

Some leases provide for additional rent payments that are based on changes in local price indices. Some also require the Company to make payments that relate to the property taxes levied on the lessor and insurance payments made by the lessor; these amounts are generally determined annually.

(n) Operating lease

(i) Leases as lessor

The Company leases out its investment property and other facilities. The Company has classified these leases as operating leases, and please refer to Note 6(i) for the relevant information.

A maturity analysis of lease payments, showing the undiscounted lease payments to be received after the reporting date are as follows:

Less than one year One and two years Two and three years Three and four years Four and five years More than five years Total undiscounted lease payment	December 31, 2022 $ 9,444 9,560 9,727 9,846 10,076 69,478 $ 118,131	December 31, 2021 9,281 9,444 9,560 9,727 9,846 79,554 127,412

(Continued)

36

Ocean Plastics Co., Ltd. Notes to the Financial Statements

Rental income from investment properties was $11,473 thousand and $11,689 thousand in 2022 and 2021, respectively.

(o) Employee benefits

(i) Defined benefit plans

Reconciliation of defined benefit obligation at present value and plan asset at fair value are as follows:

Present value of the defined benefit obligations Fair value of plan assets Net defined benefit liabilities	December 31, 2022 $ 362,358 (270,097) $ 92,261	December 31, 2021 381,586 (276,249) 105,337

The Company’s employee benefit liabilities were as follows:

Long-term vacation liability Cash-settled share-based payment liability Total employee benefit liabilities	December 31, 2022 $ 14,453 - $ 14,453	December 31, 2021
		14,633 -
		14,633

The Company makes defined benefit plan contributions to the pension fund account with Bank of Taiwan that provides pensions for employees upon retirement. Plans (covered by the Labor Standards Law) entitle a retired employee to receive retirement benefits based on years of service and average monthly salary for the six months prior to retirement.

1) Composition of plan assets

The Company allocates pension funds in accordance with the Regulations for Revenues, Expenditures, Safeguard and Utilization of the Labor Retirement Fund, and such funds are managed by the Bureau of Labor Funds, Ministry of Labor. With regard to the utilization of the funds, minimum earnings shall be no less than the earnings attainable from two-year time deposits with interest rates offered by local banks.

The Company’ s Bank of Taiwan labor pension reserve account balance amounted to $270,097 thousand as of December 31, 2022. For information on the utilization of the labor pension fund assets, including the asset allocation and yield of the fund, please refer to the website of the Bureau of Labor Funds, Ministry of Labor.

(Continued)

37

Ocean Plastics Co., Ltd. Notes to the Financial Statements

• 2) Movements in present value of the defined benefit obligations

The movements in present value of defined benefit obligations for the Company were as follows:

Defined benefit obligation at January 1 Current service costs and interest cost (income) Remeasurements loss(gain): －Experience adjustment －Demographic assumptions －Financial assumptions Benefits paid Defined benefit obligations at December 31	2022 $ 381,586 3,975 25,003 - (12,656) (35,550) $ 362,358	2021 396,840 3,810 (1,241) 9,162 (3,389) (23,596) 381,586

• 3) Movements of defined benefit plan assets

The movements in the present value of the defined benefit plan assets for the Company were as follows:

Fair value of plan assets at January 1 Interest cost (income) Remeasurements of defined benefit liabilities (assets): －Return on plan assets excluding interest income Contribution paid by employer Benefits paid Fair value of plan assets at December 31	2022 $ (276,249) (1,367) (22,247) (5,784) 35,550 $ (270,097)	2021 (288,733) (1,052) (4,379) (5,681) 23,596 (276,249)

• 4) Expenses recognized in profit or loss

The expenses recognized in profit or loss for the Company were as follows:

The expenses recognized in profit or loss for the C	ompany were as foll	ows:
Current service costs Net interest of net liabilities for defined benefit obligations	2022 $ 2,095 513 $ 2,608	2021
		2,363 395
		2,758

(Continued)

38

Ocean Plastics Co., Ltd. Notes to the Financial Statements

Operating cost Selling expenses Administration expenses Research and development expenses	2022 $ 1,957 31 615 5 $ 2,608	2021 2,179 23 553 3 2,758

• 5) Remeasurement of net defined benefit liability (asset) recognized in other comprehensive income

The Company’s remeasurements of the net defined benefit liability (asset) recognized in other comprehensive income for the years ended December 31, 2022 and 2021, were as follows:

Accumulated amount at January 1 Recognized during the period Accumulated amount at December 31	2022 $ 122,725 (10,326) $ 112,399	2021 126,105 (3,378) 122,727

• 6) Actuarial assumptions

The principal actuarial assumptions at the reporting date were as follows:

Discount rate Future salary increase rate	2022 2021 % 1.250 % 0.500 % 2.25 % 2.00

The expected allocation payment to be made by the Company to the defined benefit plans for the one-year period after the reporting date is $5,789 thousand.

The weighted average lifetime of the defined benefits plans is 6.7 years.

• 7) Sensitivity analysis

When calculating and determining the present value of defined benefit obligations, the Company must use judgments and estimates to determine relevant actuarial assumptions on the balance sheet date, including discount rates, employee turnover rates, and future salary adjustments. Any change in actuarial assumptions may materially affect the amounts of the Company’s defined benefit obligations.

(Continued)

39

Ocean Plastics Co., Ltd. Notes to the Financial Statements

If the actuarial assumptions had changed, the impact on the present value of the defined benefit obligation in the years 2022 and 2021 shall be as follows:

December 31, 2022 Discount rate Future salary increasing rate December 31, 2021 Discount rate Future salary increasing rate	Impact on defined benefit obligation Increased 0.25% Decreased 0.25% (5,977) 6,145 5,975 (5,841) (6,792) 6,994 6,769 (6,609)

Reasonably possible changes at the reporting date to one of the relevant actuarial assumptions, holding other assumptions constant, would have affected the defined benefit obligation by the amounts shown above. The method used in the sensitivity analysis is consistent with the calculation of pension liabilities in the balance sheets.

There is no change in the method and assumptions used in the preparation of sensitivity analysis for 2022 and 2021.

(ii) Defined contribution plans

The Company allocates 6% of each employee’s monthly wages to the labor pension personal account at the Bureau of Labor Insurance in accordance with the provisions of the Labor Pension Act. Under these defined contribution plans, the Company allocates a fixed amount to the Bureau of Labor Insurance without additional legal or constructive obligation.

The pension costs incurred from the contributions to the Bureau of the Labor Insurance amounted to $12,526 thousand and $12,148 thousand for the years ended December 31, 2022 and 2021, respectively.

(p) Income tax

The components of income tax in the years 2022 and 2021 were as follows:

(i) Income tax expense

The components of income tax in the years 2022 and 2021 were as follows:

Current period Deferred tax expense Tax expense	2022 $ 5,957 6,857 $ 12,814	2021
		11,221 14,569
		25,790

(Continued)

40

Ocean Plastics Co., Ltd.

Notes to the Financial Statements

Reconciliation of income tax and profit before tax for 2022 and 2021 is as follows:

Profit (loss) excluding income tax Income tax using the Company’s domestic tax rate Tax-exempt income Non-deductible expenses Current-year losses for which no deferred tax asset was recognized Changes in unrecognized temporary differences Change in provision in prior periods Additional tax on undistributed earnings Other Income tax expense	2022 $ (29,843) (5,968) (13,261) 584 45,994 (14,298) 636 5,321 (6,194) $ 12,814	2021 345,158 69,033 (65,385) 491 9,135 1,295 - 11,221 - 25,790

• (ii) Deferred tax assets and liabilities

• 1) Unrecognized deferred tax assets

Deferred tax assets have not been recognized is respect of the following items:

Tax effect of deductible Temporary Differences The carryforward of unused tax losses Total	December 31, 2022 $ 392,323 37,121 $ 429,444	December 31, 2021
		406,621 39,129
		445,750

The deductible temporary differences are mainly the share of overseas investment losses and deferred benefits recognized by the equity method.

The R.O.C. Income Tax Act allows net losses, as assessed by the tax authorities, to offset taxable income over a period of ten years for local tax reporting purposes. Deferred tax assets have not been recognized in respect of these items because it is less than more likely that future taxable profit will be available against which the Company can utilize the benefits therefrom.

As of December 31, 2022, the deduction period of the subsidiaries in Mainland China unused tax losses for which no deferred tax assets were recognized are as follows:

Year of loss	Unused tax loss Expiry date $ 52,882 2028 99,314 2029 33,408 2032 $ 185,604
2018 (Assessed amount) 2019 (Assessed amount) 2022 (Estimated declared amount) Total

(Continued)

41

Ocean Plastics Co., Ltd. Notes to the Financial Statements

• 2) Recognized deferred tax assets and liabilities

Deferred tax assets:

Balance at January 1, 2022 Recognized in profit or loss Balance at December 31, 2022 Balance at January 1, 2021 Recognized in profit or loss Balance at December 31, 2021

Unrealized loss on inventory write-downs $ 10,758 2,565 $ 13,323 $ 10,511 247 $ 10,758	Others 1,639 (1,636) 3 2,106 (467) 1,639	Total 12,397 929 13,326 12,617 (220) 12,397

Deferred tax liabilities:

Balance at January 1, 2022 Recognized in profit or loss Balance at December 31, 2022 Balance at January 1, 2021 Recognized in profit or loss Cash compensation for land sale Balance at December 31, 2021	Reserve for land value increment tax $ 325,211 (6,194) $ 319,017 $ 328,553 - (3,342) $ 325,211	Difference in the useful life of property, plant, and equipment 92,455 13,980 106,435 78,108 14,347 - 92,455	Total 417,666 7,786 425,452 406,661 14,347 (3,342) 417,666

• (iii) Assessment of tax:

The Company’s tax returns for the years through 2020 were assessed by the Taipei National Tax Administration.

(Continued)

42

Ocean Plastics Co., Ltd. Notes to the Financial Statements

(q) Capital and other equity

As of December 31, 2022 and 2021, the number of authorized ordinary shares were 4,000,000 thousand shares with par value of $10 per share, and 227,228 thousand ordinary shares were issued. All issued shares were paid up upon issuance.

(i) Capital surplus

The balances of capital surplus were as follows:

The balances of capital surplus were as follows:
Share premium Treasury share transactions Adjustments of capital surplus for company's cash dividends received by subsidiaries Total	December 31, 2022 $ 680 7,112 11,123 $ 18,915	December 31, 2021
		680 7,112 6,543
		14,335

According to the R.O.C. Company Act, capital surplus can only be used to offset a deficit, and only the realized capital surplus can be used to increase the common stock or be distributed as cash dividends. The aforementioned realized capital surplus includes capital surplus resulting from premium on issuance of capital stock and earnings from donated assets received. According to the Regulations Governing the Offering and Issuance of Securities by Securities Issuers, capital increases by transferring capital surplus in excess of par value should not exceed 10% of the total common stock outstanding.

(ii) Retained earnings

The Company's Articles of Incorporation stipulate that Company's net earnings should first be used to offset the prior years' deficits, if any, before paying any income taxes. Of the remaining balance, 10% is to be appropriated as legal reserve, unless the amount of the legal reserve is already equal to or greater than the total paid-in capital. Additionally, the Company shall allocate special reserve taking into consideration the operating needs and statutory requirements. Any remaining profit, together with any prior-period undistributed retained earnings, shall be distributed according to the distribution plan proposed by the Board of Directors and submitted to the stockholders’ meeting for approval.

In accordance with the Company’ s dividend policy, if there is profitability for the year, dividends can be distributed in three forms—cash dividend, common stock dividend, or capital surplus transferred to common stock. Distribution shall not be less than 20 percent of the income after deducting legal reserve and special reserve, and only when the Company has significant investment plan or intends to improve financial structure can common stock dividends or capital surplus transferred to common stock substitute for cash dividend. However, cash dividends shall account for at least 10 percent of dividend distribution.

(Continued)

43

Ocean Plastics Co., Ltd. Notes to the Financial Statements

1) Legal reserve

When a company incurs no loss, it may, pursuant to a resolution by a shareholders’ meeting, distribute its legal reserve by issuing new shares or by distributing cash, and only the portion of legal reserve which exceeds 25% of capital may be distributed.

2) Special reserve

The Company applied the exemptions at the first-time adoption of IFRSs, and increased its retained earnings by $2,992,372 thousand, which resulted from unrealized revaluation increments, exchange differences on translation of foreign financial statements, and the fair value of investment property being used as the cost on initial recognitions at the transition date.

In accordance with Ruling No. 1010012865 issued by the FSC on April 6, 2012, a portion of current-period earnings and undistributed prior-period earnings shall be reclassified as special earnings reserve during earnings distribution. The amount to be reclassified should equal the current-period total net reduction of other shareholders’ equity. Similarly, a portion of undistributed prior-period earnings shall be reclassified as special earnings reserve (and does not qualify for earnings distribution) to account for cumulative changes to other shareholders’ equity pertaining to prior periods. Amounts of subsequent reversals pertaining to the net reduction of other shareholders’ equity shall qualify for additional distributions. As of December 31, 2022 and 2021, the balance of special earnings reserve were $2,978,245 thousand.

3) Earnings distribution

Earnings distribution for 2021 and 2020 was decided by the resolution adopted, at the general meeting of shareholders held on June 21 2022 and July 27 2021, respectively. The relevant dividend distributions to shareholders were as follows:

Dividends distributed to ordinary shareholders: Cash	2021 Amount per share Amount $ 0.70 159,059	2020	2020
	Amount per share $ 0.70	Amount per sharet 1.00	Amount
			227,228

(iii) Treasury shares

As of December 31, 2022. the company's treasury stock balance is $36,189 thousand.

Before the amendment to the R.O.C. Company Act on November 2001, the Company’ s subsidiaries, Chang Xin Co., Ltd. and Hong Da Investment Co., Ltd., acquired 2,939 thousand and 3,604 thousand of the Company’s shares, respectively.

(Continued)

44

Ocean Plastics Co., Ltd. Notes to the Financial Statements

In accordance with the requirements of the Securities and Exchange Act, treasury shares held by the Company shall not be pledged, and no shareholder rights are granted before their transfer.

(r) Earnings per share

• (i) Basic earnings per share

The details on the calculation of basic earnings per share and diluted earnings per share of the Company as follows:

Basic earnings per share Profit (loss) of the Company for the year Weighted average number of ordinary shares (thousand share) Basic earnings per share (NT dollars) Diluted earnings per share Profit (loss) of the Company for the year Weighted average number of ordinary shares (thousand share) Effects of dilutive potential ordinary shares Weighted average number of ordinary shares (diluted) (thousand share) Diluted earnings per share (NT dollars)	2022 $ (42,657) 220,686 $ (0.19) $ (42,657) 220,686 40 220,726 $ (0.19)	2021
		319,368
		220,686
		1.45
		319,368
		220,686 235
		220,921
		1.45

• (s) Revenue from contracts with customers

• (i) Details of revenue

2022 Primary geographical markets Taiwan $ 2,177,179 India 1,685,671 USA 478,942 China 95,633 Other country 1,212,450 $ 5,649,875 Main product/service line Plastic material $ 3,442,249 Plastic product 2,207,626 $ 5,649,875	2021
	2,600,066 1,962,638 313,942 169,740 684,488
	5,730,874
	3,596,453 2,134,421
	5,730,874

(Continued)

45

Ocean Plastics Co., Ltd. Notes to the Financial Statements

(ii) Contract balances

Notes and trade receivables Less: allowance for impairment Total Contract liabilities	December 31, 2022 $ 621,431 (7,711) $ 613,720 $ 37,741	December 31, 2021 762,164 (6,423) 755,741 40,490

For details on trade receivables and allowance for impairment, please refer to note 6(d).

Contract liabilities mainly arose from advance receipt of loans from customers and payments for real estate. The Company will record revenue when the product is delivered to the customer or when the property is completed and the ownership is transferred.

The amount of revenue recognized for the years ended December 31 2022 and 2021 that was included in the contract liability balance at the beginning of the period were $7,439 thousand and $11,539 thousand, respectively.

• (t) Employee compensation and directors' and supervisors' remuneration

Pursuant to the Company’s the Articles of Incorporation, it shall contribute no less than 1% of the profit as employee compensation and more than 2% as compensation to directors and supervisors when there is profit for the year. However, if the Company has accumulated deficits, the profit shall be reserved to offset the deficit. The persons who are entitled to receive cash or shares as employee stipulated in the preceding paragraph include the employees of the Companyy's affiliates who meet certain conditions.

For the years ended December 31, 2021, the Company estimated its employee remuneration amounting to $6,108 thousand, and directors' and supervisors' remuneration amounting to $4,671 thousand. The estimated amounts mentioned above are calculated based on the net profit before tax, excluding the remuneration to employees, directors and supervisors of each period, multiplied by the percentage of remuneration to employees, directors and supervisors as specified in theCompany's articles. These remunerations were expensed under operating costs or operating expenses during 2021. Because the company had accumulated deficits in 2022, there was no need to estimate the remuneration of employees, directors and supervisors. The actual amounts appropriated and the estimated amounts in the financial statements were the same in 2021.

(u) Non-operating income and expenses

(i) Interest income

For the years ended December 31, 2022 and 2021, the details of other income were as follows:

2022 Interest income from bank deposits $ 626	2021
	79

(Continued)

46

Ocean Plastics Co., Ltd. Notes to the Financial Statements

(ii) Other income

For the years ended December 31, 2022 and 2021, the details of other income were as follows:

Rent income Dividend income Other income, Others	2022 $ 11,473 125,717 31,056 $ 168,246	2021
		11,689 91,832 51,617
		155,138

(iii) Other gains and losses

For the years ended December 31, 2022 and 2021, the details of other gains and losses were as follows:

Gain on disposal of investment properties Gain on disposal of investments Foreign exchange gains (losses) Gains on financial assets at fair value through profit or loss	2022 $ - - 57,071 (74,648) $ (17,577)	2021
		8,269 1,385 12,283 61,233
		83,170

• (v) Financial instruments

• (i) Credit risk

1) Credit risk exposure

The carrying amount of financial assets except for cash and cash equivalents, represents the maximum amount exposed to credit risk. As of December 31, 2022 and 2021, the maximum amount exposed to credit risk were $745,494 thousand and $962,163 thousand, respectively.

2) Concentration of credit risk

The sales of the Company are not significantly concentrated within a few customers. As of December 31, 2022 and 2021, the balance of accounts receivable due from the 10 largest customers were 37% and 35%.

(ii) Liquidity risk

The following table shows the contractual maturities of financial liabilities, including estimated interest payments and excluding the impact of netting agreements.

(Continued)

47

Ocean Plastics Co., Ltd. Notes to the Financial Statements

Carrying amount December 31, 2022 Non-derivative financial liabilities Secured bank loans $ 1,215,973 Notes and trade payables (including related parties) 467,424 Other payables (including related parties) 127,351 Lease liabilities 77,205 $ 1,887,953 December 31, 2021 Non-derivative financial liabilities Secured bank loans $ 1,134,584 Unsecured bank loans 150,000 Notes and trade payables (including related parties) 892,100 Other payables (including related parties) 131,373 Lease liabilities 100,486 $ 2,408,543	Contractual cash flows 1,300,571 467,424 127,351 79,003 1,974,349 1,207,396 150,284 892,100 131,373 103,335 2,484,488	Within 6 months 281,629 467,424 127,351 12,003 888,407 32,842 150,284 892,100 131,373 12,538 1,219,137	6-12 months 31,796 - - 12,003 43,799 32,937 - - - 11,959 44,896	1-2 years 658,312 - - 33,056 691,368 65,779 - - - 23,918 89,697	2-5 years 194,839 - - 21,941 216,780 804,789 - - - 54,920 859,709	Over 5 years
						133,995 - - -
						133,995
						271,049 - - - -
						271,049

The Company does not expect the cash flows included in the maturity analysis to occur significantly earlier or at significantly different amounts.

• (iii) Currency risk

• 1) Exposure to foreign currency risk

The Company’s significant exposure to foreign currency risk were as follows:

Financial assets: Monetary items USD Financial liabilities Monetary items USD	December 31, 2022	December 31, 2022	December 31, 2022	December 31, 2021 Local currency Exchange rate TWD 25,673 27.69 710,757 15,833 27.69 438,337	December 31, 2021 Local currency Exchange rate TWD 25,673 27.69 710,757 15,833 27.69 438,337
	Local currency $ 19,631 5,739	Exchange rate 30.72 30.72	TWD		Exchange rate TWD 27.69 710,757 27.69 438,337
			603,064 176,302

2) Sensitivity analysis

The Company’ s exposure to foreign currency risk arises from the translation of the foreign currency exchange gains and losses on cash and cash equivalents, trade receivables, loans and borrowings; and trade and other payables that are denominated in foreign currency.

(Continued)

48

Ocean Plastics Co., Ltd. Notes to the Financial Statements

A strengthening (weakening) of 1% of the TWD against the JPY and USD as of December 31, 2022 and 2021, would have increased (decreased) the net profit after tax by $3,414 thousand and $2,179 thousand, respectively. This analysis is based on foreign currency exchange rate variances that the Company considered to be reasonably possible at the reporting date. The analysis assumes that all other variables remain constant and ignores any impact of forecasted sales and purchases.The analysis is performed on the same basis for 2022 and 2021.

3) Foreign exchange gain and loss on monetary items

Since the Company has many kinds of functional currency, the information on foreign exchange gain (loss) on monetary items is disclosed by total amount. For years 2022 and 2021, foreign exchange gain (loss) (including realized and unrealized portions) amounted to $57,071 thousand and $12,283 thousand, respectively.

(iv) Interest rate analysis

Please refer to the notes on liquidity risk management and interest rate exposure of the Company’s financial assets and liabilities.

The following sensitivity analysis is based on the exposure to the interest rate risk of derivative and non-derivative financial instruments on the reporting date. Regarding assets with variable interest rates, the analysis is based on the assumption that the amount of assets outstanding at the reporting date was outstanding throughout the year. The rate of change is expressed as the interest rate increases or decreases by 0.25% when reporting to management internally, which also represents the Company management's assessment of the reasonably possible interest rate change.

If the interest rate had increased / decreased by 0.25%, the Company’s net income would have increased / decreased by $1,932 thousand and $2,269 thousand for the year ended December 31, 2022 and 2021 with all other variable factors remaining constant, respectively.

(v) Other market price risk

For the years ended December 31, 2022 and 2021, the sensitivity analyses for the changes in the securities price at the reporting date were performed using the same basis for the profit and loss as illustrated below:

Price of securities at the reporting date Increasing 1% Decreasing 1%	2022			2021 Other comprehensive income after tax Net income 10,919 2,064 (10,919) (2,064)
	Other comprehensive income after tax $ 5,920 $ (5,920)	Net income		Other comprehensive income after tax 10,919 (10,919)
		1,318

(Continued)

49

Ocean Plastics Co., Ltd. Notes to the Financial Statements

(vi) Fair value of financial instruments

• 1) Fair value hierarchy

The carrying amount and fair value of the Company’ s financial assets and liabilities, including the information on fair value hierarchy were as follows; however, except as described in the following paragraphs, for financial instruments not measured at fair value whose carrying amount is reasonably close to the fair value, and lease liabilities, disclosure of fair value information is not required:

Financial assets at fair value through profit or loss Designated at fair value through profit or loss–current Financial assets at fair value through other comprehensive income Fair value through other comprehensive income equity instrument Total Financial assets at fair value through profit or loss Designated at fair value through profit or loss– current Financial assets at fair value through other comprehensive income Domestic unlisted stock Total		December 31, 2022	December 31, 2022	December 31, 2022
	Book Value $ 131,774 592,012 $ 723,786		Fair Value
		Level 1 Level 2 Level 3 131,774 - - - - 592,012 131,774 - 592,012 December 31, 2021			Total
					131,774
					592,012
					723,786
	Book Value $ 206,422 1,091,906 $ 1,298,328		Fair Value
		Level 1 206,422 - 206,422	Level 2 - - -	Level 3 - 1,091,906 1,091,906	Total
					206,422
					1,091,906
					1,298,328

2) Valuation techniques for financial instruments measured at fair value

If quoted prices of financial instruments are readily and regularly available from an exchange, dealer, broker, industry group, pricing service, or regulatory agency, and the prices represent actual and regularly occurring market transactions on an arm’s length basis, then the financial instrument is regarded as quoted in an active market.

If the condition above is not met, the market is inactive. If the activity in the market is infrequent, the market is not well-established, only small volumes are traded, or bid-ask spreads are very wide.

(Continued)

50

Ocean Plastics Co., Ltd. Notes to the Financial Statements

If the financial instruments held by the Company are in active market, its fair value hierarchy and nature are as follows:

• The stock of listed companies and domestic open end funds are financial instruments in active market, and the fair value thereof is decided by the market.

Measurements of fair value of financial instruments without an active market are based on a valuation technique or quoted price from a competitor. Fair value measured by a valuation technique can be extrapolated from similar financial instruments, the discounted cash flow method, or other valuation technique including a model using observable market data at the reporting date.

If the financial instruments held by the Company are in no active market, its fair value category and nature are as follows:

• Unquoted equity instruments: except acquiring the latest transaction price as fair value, others adopt market approach of comparable business. This method mainly assumes price-book of investees, enterprise value, income after tax, and the stock price of comparable listed company to calculate price-book ratio, enterprise value ratio, and earnings per share as a measure basis. This estimated fair value is already adjusted for the lack of liquidity.

• 3) Transfer between level 1 and level 3

There was no transfer between the fair value hierarchy levels for the years ended December 31, 2022 and 2021.

• 4) Reconciliation of Level 3 fair values

Reconciliation of Level 3 fair values
		Fair value
		through other
		comprehensive
		income
		Unquoted equity
		instruments
Opening balance, January 1, 2022	$	1,091,906
Total gains and losses recognized:
In other comprehensive income		(499,894)
Ending Balance, December 31, 2022	$	592,012
Opening balance, January 1, 2021	$	1,189,009
Total gains and losses recognized
In other comprehensive income		(97,103)
Ending Balance, December 31, 2021	$	1,091,906

(Continued)

51

Ocean Plastics Co., Ltd. Notes to the Financial Statements

For the years ended December 31, 2022 and 2021, total gains and losses that were included in “ other gains and losses” and “ unrealized gains and losses from financial assets at fair value through other comprehensive income” were as follows:

Total gains and losses recognized In other comprehensive income, and presented in “unrealized gains and losses from financial assets at fair value through other comprehensive income”	2022 2021 (499,894) (97,103)

• 5) Quantified information on significant unobservable inputs (Level 3) used in fair value measurement

Most of the fair value of the Company classified as level 3 is an equity instrument in no active market which has multiple significant unobservable inputs. Because the inputs are mutual independent, there is no relevance.

Item Financial assets at fair value through other comprehensive income equity investments without an active market	Valuation technique Comparable company analysis	Significant unobservable inputs Inter-relationship between significant unobservable inputs and fair value measurement ‧ P/E ratio (7.67~9.06 and 7.94~15.91 on December 31, 2022 and 2021, respectively) The estimated fair value would increase (decrease) if: ‧ The P/E ratio and control premium were higher (lower); ‧ Lack-of-Marketability Discount (15.24%~22.63% and 23.10%~25.04% on December 31, 2022 and 2021, respectively) ‧ Lack-of-Marketability Discount were lower (higher); ‧ P/B ratio (1.13~2.02 and 1.44~2.78 on December 31, 2022 and 2021, respectively) ‧ The P/B ratio and control premium were higher (lower).

(Continued)

52

Ocean Plastics Co., Ltd. Notes to the Financial Statements

• 6) Fair value measurements in Level 3-sensitivity analysis of reasonably possible alternative assumptions.

The method to derive at the fair value of financial instruments is reasonable but could yield different outcomes when using different multipliers. For fair value measurements in Level 3, changing one or more of the assumptions to reflect reasonably possibilities of alternative assumptions would have the following effects:

December 31, 2022 Financial assets at fair value through other comprehensive income Equity investments without an active market December 31, 2021 Financial assets at fair value through other comprehensive income Equity investments without an active market	Inputs P/E ratio Discount rate P/B ratio P/E ratio Discount rate P/B ratio	Variation 1% 1% 1% 1% 1% 1%	Profit	or loss Unfarourable - - - - - -	Other comprehensive income Favourable Unfarourable 233 (233) 905 (905) 5,996 (5,996) 13,496 (13,496) 3,672 (3,672) 8,205 (8,205)
			Favourable - - - - - -

The favorable and unfavorable effects represent the changes in fair value, and fair value is based on a variety of unobservable inputs calculated using a valuation technique. The analysis above only reflects the effects of changes in a single input, and it does not include the interrelationships with another input.

• (w) Financial risk management

(i) Overview

The Company have exposures to the following risks from its financial instruments:

• 1) credit risk

• 2) liquidity risk

• 3) market risk

This note expresses the risk exposure information of the above-mentioned risk of the Company, and the Company’s objectives, policies and processes for measuring and managing the risks. For more disclosures about the quantitative effects, please refer to the respective notes in the consolidated financial statements.

• (ii) Structure of risk management

The Board of Directors has overall responsibility for the establishment and oversight of the risk management framework.

(Continued)

53

Ocean Plastics Co., Ltd. Notes to the Financial Statements

The Company’ s risk management policies are established to identify and analyze the risks faced by the Company, to set appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Company’s activities. The Company, through its training and management standards and procedures, aims to develop a disciplined and constructive control environment in which all employees understand their roles and obligations.

(iii) Credit risk

Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Company’s receivables from customers and investments in debt securities.

1) Trade and other receivables

The Company’ scredit risk exposure is mainly affected by individual customer’ s conditions. However, management also takes into consideration the statistical data of the Company’s customer, including the default risk of the customer's industry and country, as these factors may affect credit risk.

The accounting Department has established a credit policy under which each new customer is analyzed individually for creditworthiness before the Company’s standard payment and delivery terms and conditions are offered. The Company’s review includes external ratings, when available, and, in some cases, bank references. Purchase limits are established for each customer and represent the maximum open amount without requiring approval from the Risk Management Committee; these limits are reviewed quarterly. Customers that fail to meet the Company’ s benchmark creditworthiness may transact with the Company on a prepayment basis or by providing collateral.

The Company has set up allowances for bad debt accounts to reflect estimates of losses incurred in accounts receivable, other receivables and investments. The main components of the allowance account include specific loss components related to individual major risk insurance and combined loss components established for similar asset groups that have occurred but have not been identified. The combined loss allowance account is determined based on historical payment statistics of similar financial assets.

2) Investments

The exposure to credit risk for the bank deposits and other financial instruments is measured and monitored by the Company’s finance department. The Company only deals with banks, other external parties, corporate organizations, government agencies and financial institutions with good credit rating. The Company does not expect any counterparty above fails to meet its obligations hence there is no significant credit risk arising from these counterparties.

(Continued)

54

Ocean Plastics Co., Ltd. Notes to the Financial Statements

3) Endorsements and guarantees

The Company’s policy states that providing financial guarantees is only between parent company and subsidiaries. As of December 31, 2022 and 2021, endorsement guarantee provided by the Company were $1,200,000 thousand and $1,240,150 thousand, respectively.

(iv) Liquidity risk

Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Company’s approach to managing liquidity is to ensure, as far as possible, that it always has sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company’ s reputation.

Generally, the Company ensures that it has sufficient cash to support expected operating expenditure in a short term, including financial liabilities, but excludes potential impact which can not be predicted reasonably such as nature disasters. Moreover, as of December 31, 2022 and 2021, the Company’ s unused credit line respectively were $2,343,562 thousand and $2,578,156 thousand.

(v) Market risk

Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates, and equity prices, will affect the Company’ s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimizing the return.

1) Currency risk

The Company is exposed to currency risk on sales, purchases, and borrowings that are denominated in a currency other than the respective functional currencies of the Company’s entities. The functional currency of group is mainly TWD, and the currencies used in these transactions are the TWD, USD and JPY.

2) Interest rate risk

The Company’s interest risk arose from short term and long term borrowings. Since the short term borrowings are at floating rate, the fluctuation in interest rates will lead to movements in future cash flows.

3) Other market price risk

The Company is exposed to equity price risk due to the investments in stocks listed on domestic markets, and fund investment on domestic and foreign markets. The equity investment is a strategic investment and is not held for trading. The Company does not actively trade in these investments as the management of the Company manages the risk by holding different investment portfolios. The Company assigned a specific team to supervise the equity price risk, so as to avoid or minimize the risk from the hedging position.

(Continued)

55

Ocean Plastics Co., Ltd. Notes to the Financial Statements

(x) Capital management

The Board of Directors aims to keep a stable capital base to maintain the confidence of investors, creditors and the market, so as to support the development of future operations. Capital includes the share capital, capital reserve, retained earnings and non controlling interests of the Company. The Board of Directors controls the return on capital and at the same time controls the level of ordinary stock dividends.

As of December 31, 2022 and 2021, the Company’s debt-to-equity ratio at the end of the reporting period, were as follows:

Total liabilities Less: cash and cash equivalents Net debt Total equity Debt-to-equity ratio at 31 December	December 31, 2022 $ 2,520,648 (134,045) $ 2,386,603 $ 5,913,860 % 40.36	December 31, 2021 3,073,231 (145,788) 2,927,443 6,626,597 % 44.18

Management believes that there were no changes in the Company’s approach to capital management for the years ended December 31, 2022 and 2021.

(y) Investing and financing activities not affecting current cash flow

The Company’s investing and financing activities which did not affect the current cash flow in the years ended December 31, 2022 and 2021, were as follows:

• (i) For right-of-use asset under lease, please refer to notes 6(h).

• (ii) Reconciliation of liabilities arising from financing activities were as follows:

Long-term borrowings Short-term borrowings Lease liabilities Total liabilities from financing activities Long-term borrowings Short-term borrowings Lease liabilities Total liabilities from financing activities	January 1, 2022 $ 1,134,584 150,000 100,486 $ 1,385,070 January 1, 2021 $ 1,118,750 200,000 28,023 $ 1,346,773	Cash flows (168,611) 100,000 (22,190) (90,801) Cash flows 15,834 (50,000) (23,197) (57,363)	Non-cash changes	Non-cash changes	Changes in lease payments - - (1,348) (1,348) Changes in lease payments - - - -	December 31, 2022 965,973 250,000 77,205
			Acquisition Foreign exchange movement - - - - 257 - 257 - Non-cash changes
						1,293,178
						December 31, 2021 1,134,584 150,000 100,486
			Acquisition - - 95,660 95,660	Foreign exchange movement - - - -
						1,385,070

(Continued)

56

Ocean Plastics Co., Ltd. Notes to the Financial Statements

(7) Related-party transactions:

(a) Names and relationship with related parties

Name of related party

Relationship with the Company

Fine Environment Technologies Co., Ltd The Company's subsidiar Chang Xin Co., Ltd The Company's subsidiar Hong Da Investment Co., Ltd. The Company's subsidiar Fermat Enterprises Ltd. The Company's subsidiar UNIVERSE ENTERPRISES, LTD. The Company's subsidiar Ocean Group Ltd. The Company's subsidiar Sage Holdings Ltd. The Company's subsidiar OPC Holdings Ltd. The Company's subsidiar Rise Future International Ltd. The Company's subsidiar Shen Yang Development Co., Ltd. The Company's subsidiar Ocean Plastics (Hui Zhou) Co., Ltd. The Company's subsidiar HUNAN OCEAN WIDE PLASTICS LTD. The Company's subsidiar Ocean Plastics (Dong Guan) Co., Ltd The Company's subsidiar Chun Pin Enterprise Co., Ltd. An associate Foremost-Oceans NueTeq, Ltd. An associate Chin Yi Ho Hang, Ltd. Same chairman with the Group Yee Fong Chemical & Industrial Co., Ltd. The director of this company is the president of the Group Ocean Plastics Urban Land Redeveloping The member of the council is the chairman of the Council Company

• (b) Significant transactions with related parties

• (i) Operating revenues

Subsidiaries Associates Total	2022 $ 60,588 1,778 $ 62,366	2021
		120,649 -
		120,649

Except for sales to the parent company, the prices charged approximated the market price. The credit terms ranged from 60 to 180 days. Amounts receivable from related parties was uncollateralized, and no expected credit loss were required after the assessment by the management.

(Continued)

57

Ocean Plastics Co., Ltd. Notes to the Financial Statements

(ii) Receivables from related parties

Account	Relationship	December 31, 2022 $ 30,971 1,867 - $ 32,838	December 31, 2021
Accounts payables Notes payables	Subsidiaries Associates Subsidiaries		34,903 - 273
			35,176

The trade receivables from related parties over the credit terms should be recorded under other receivable to related parties and long-term accounts receivables due from related parties.

• (iii) Other transactions with related parties

Account Cost of goods sold	Relationship Associates	2022 $ 21,693	2021
			23,939

The Company commissioned its associate to operate oil storage tanks. The outstanding balances of management expenses on December 31, 2022 and 2021, were $3,098 thousand and $3,083 thousand, which are presented as “other payables to related parties”.

• (iv) Loans to related parties

Ocean Plastics (Dong Guan) Co., Ltd.	December 31, 2022 $ 92,567	December 31, 2021
		91,378

The Company loans to Ocean Plastics (Dong Guan) Co., Ltd., because the trade receivable s from related parties are overdue, that it should be regarded as loans, and the amount was recorded under other receivable to related parties.

(v) Guarantees

As of December 31, 2022 and 2021, the Company had provided a guarantee for loans taken out by subsidiaries, the credit limit of the guarantee was $1,200,000 thousand and $1,240,150 thousand.

At December 31, 2022 and 2021, the Company and some of subsidiaries collectively provided lands as collaterals for its long-term and short-term loans, the credit limit of the guarantee was $5,750,000 thousand.

(Continued)

58

Ocean Plastics Co., Ltd. Notes to the Financial Statements

(vi) Leases

In January 2019, the Company leased an high-pressure spherical tank from its associate. A six year lease contract was entered into, and the rent was determined based on the rental rates in the vicinity. The total value of the contract was $52,800 thousand, the Company entered into a lease agreement with the associate to continue leasing spherical tanks that amounted to $148,102 thousand. For 2022 and 2021, the interest expenses were $866 thousand and $686 thousand. As of December 31, 2022 and 2021, the lease liabilities had amounted to $69,589 thousand and $85,179 thousand.

In May 2017, the Company leased from other related parties an office building as its headquarter on Juguang Road, Taipei City, and the land in Zhongli Dist., Taoyuan City. A five year lease contract was signed, and the rent was determined based on land rental rates in the vicinity. The total value of the contract was $37,000 thousand. For 2022 and 2021, interest expenses were $173 thousand and $271 thousand. As of December 31, 2022 and 2021, lease liabilities had amounted $7,325 thousand and $14,552 thousand.

(vii) Providing administrative services to related party

The Company had signed a contract concerning an urban land redeveloping project with the landlords, which was implemented by Chang Xin Co., Ltd. in November 2014. The Company provided administrative services to a related party for land development procedures and received an income of $24,095 thousand (recognized as Other income) for the years ended December 31, 2021. As of December 31, 2022, there is no outstanding balance.

(viii) Transaction of properties

1) Disposal of investment properties

In October 2021, the Company sold the land at Jiankang Segment, Zhonghe District, New Taipei City, to the Ocean Plastics Urban Lan Redeveloping Council and received cash compensation. The total land area is 515.91, with a total price of $27,312 thousand. As of December 31, 2021, the transfer procedures had been completed, and there is no outstanding balance. Please refer to note 6 (i) for the investment property details.

The Company disposed of the land No. 1286-0000 at a disposal price of $20,150 thousand in the Jiankang Section of Zhonghe District, New Taipei City, with a land area of 570.27 square meters, to its subsidiaries in May 2022 for planning.As of December 31, 2022, all transfer procedures had been completed, and there is no outstanding balance. Please refer to note 6 (i) for the investment property details.

(c) Key management personnel compensation

Key management personnel compensation comprised:

Short-term employee benefits	2022 $ 5,845	2021
		5,847

(Continued)

59

Ocean Plastics Co., Ltd. Notes to the Financial Statements

(8) Pledged assets:

The carrying values of pledged assets were as follows:

Pledged assets	Object	December 31, 2022 $ 2,277,075 404,896 34,414 $ 2,716,385	December 31, 2021
Property, plant and equipment Investment property Other financial assets Total	Long-term and short-term loans Long-term and short-term loans Trust account		2,295,851 425,046 32,674
			2,753,571

(9) Commitments and contingencies:

(a) Significant Commitments and Contingencies were as follows:

(i) The Company’s unrecognized contractual commitments are as follows:

December 31, 2022 Acquisition of property, plant and equipment $ 32,669 (ii) The Company’s outstanding standby letter of credit are as follows: December 31, 2022 Outstanding standby letter of credit $ 3,219	December 31, 2021
	66,266
	December 31, 2021
	1,844

(iii) The joint construction contract signed by the Company for the sale of the built real estate is as follows:

follows:
Joint construction method	Project name
Joint construction and allocation of	Xinglong Section, Wenshan District
housing units

(iv) The amounts of endorsement and guarantee provided by the Company for the borrowings and business of subsidiaries, please refer to note 7.

(b) Major contingent liabilities: None.

(10) Losses due to major disasters: None.

(11) Subsequent Events: None.

(Continued)

60

Ocean Plastics Co., Ltd. Notes to the Financial Statements

(12) Others:

• (a) A summary of current-period employee benefits, depreciation, and amortization, by function, is as follows:

follows:
By function By item		2022		2021
	Cost of Sale	Operating Expense	Total	Cost of Sale	Operating Expense	Total
Employee benefits
Salary	258,311	73,814	332,125	266,206	71,527	337,733
Labor and health insurance	27,613	7,295	34,908	27,644	7,597	35,241
Pension	11,257	3,877	15,134	11,195	3,711	14,906
Director’s remuneration	-	5,561	5,561	-	10,153	10,153
Others	16,016	4,293	20,309	16,064	4,260	20,324
Depreciation	183,192	9,012	192,204	177,320	9,496	186,816
Amortization	-	-	-	-	-	-

For the years ended December 31, 2022 and 2021, additional information of number of employee and employee benefit were as follows:

Number of employees Number of directors who were not employees The average employee benefit The average salaries and wages Rate of change of the average salaries and wages Salaries of supervisor

The Company’s compensation policy (including directors, managers, and employees) is as follows:

Directors’ compensation include compensation, salaries and fees. The compensation policy in in Articles of Incorporation was determined based on operating condition. It was reported to the Compensation Committee, being approved in Board of Directors and being notified to shareholders. The fares for directors were determined in Board of Directors and should be paid regardless of its profit. The ones for the directors who double as employees would be determined in Board of Directors based on the peer industry standards.

In the compensation policy for the Company’s managers and employees, besides their education and experience, it should also consider the operating profit and prospects. The distribution standards depend on production achievement rate, yield rate and net operating profit of the month. Year- end bonus is based on the year profit and varies on each department which means the compensation system is related to the performance of the Company.

(Continued)

61

OCEAN PLASTICS CO., LTD. Notes to the Financial Statements

(13) Other disclosures:

• (a) Information on significant transactions:

The following is the information on significant transactions required by the “Regulations Governing the Preparation of Financial Reports by Securities Issuers” for the Company:

(i) Loans to other parties:

(i) Loans to other parties:	(i) Loans to other parties:	(i) Loans to other parties:	(i) Loans to other parties:	(i) Loans to other parties:	(i) Loans to other parties:	(i) Loans to other parties:	(i) Loans to other parties:	(i) Loans to other parties:	(i) Loans to other parties:	(i) Loans to other parties:	(i) Loans to other parties:	(i) Loans to other parties:	(i) Loans to other parties:	(i) Loans to other parties:	(i) Loans to other parties:	(i) Loans to other parties:
(In Thousands of New Taiwan Dollars)
Number	Name of lender	Name of borrower	Account name	Related party	Highest balance of financing to other parties during the period (Note 4)	Ending balance (Note 5)	Actual usage amount during the period	Range of interest rates during the period	Purposes of fund financing for the borrower (Note 2)	Transaction amount for business between two parties	Reasons for short-term financing	Allowance for bad debt	Collateral		Individual funding loan limits (Note 3)	Maximum limit of fund financing (Note 3
													Item	Value
0	The Company	OCEAN PLASTICS (DONG GUAN) CO., LTD.	Other Receivables and long- term Receivables	Yes	104,998	92,567	92,567	-	1	46,650	Operation Capital	-		-	1,182,772	2,365,544

Note 1: The numbering is as follows:

• 1.“0” represents the parent company.

• 2.Subsidiaries are sequentially numbered from 1.

• Note 2: Financing purposes:

• 1 represents a trading counterparty.

• 2 indicates the necessity of short-term financing.

Note 3: The total loans to others shall not exceed 40% of the net value of the Company, and the loans to an individual party shall not exceed 20% of the net value of the Company. The net value is based on the amount disclosed the latest financial statements.

Note 4: The cumulative maximum balance of loans to others from the current year to the reporting month includes the amount transferred from overdue receivables. Note 5: The highest amounts were approved by the Board of Directors.

(ii) Guarantees and endorsements for other parties:

(In Thousands of New Taiwan Dollars)

No. (Note 1)	Name of guarantor	Counter guaran endor	-party of tee and sement	Limitation on amount of guarantees and endorsements for a specific enterprise (Note 3)	Highest balance for guarantees and endorsements during the period (Note 4)	Balance of guarantees and endorsements as of reporting date	Actual usage amount during the period	Property pledged for guarantees and endorsements (Amount)	Ratio of accumulated amounts of guarantees and endorsements to net worth of the latest financial statements	Maximum amount for guarantees and endorsements (Note 3)	Parent company endorsements/ guarantees to third parties on behalf of subsidiary	Subsidiary endorsements/ guarantees to third parties on behalf of parent company	Endorsements/ guarantees to third parties on behalf of companies in Mainland China
		Name	Relationship with the Company (Note 2)
0	The Company	Chang Xin Co., Ltd.	2	2,956,930	1,220,150	1,200,000	382,510	-	% 20.29	4,731,088	Y	N	N

Note 1: The numbering is as follows:

• 1.“0” represents the parent company.

• 2.Subsidiaries are sequentially numbered from 1.

Note 2: There are the following 7 types of relationship between the guarantee and the guarantor:

1. Trading counterparty.

2. The Company holds more than 50% of the voting shares in the entity, directly and indirectly.

3. The entity holds more than 50% of voting shares in the Company, directly and indirectly.

4. The Company holds more than 90% of voting shares in the entity, directly and indirectly.

5. An entity in the construction industry mutually guaranteed pursuant to a project contract.

6. The stockholders of the Company provide guarantees or endorsements for the entity in proportion to percentage of ownership for joint investment.

7. Performance guarantees for presale contracts for entities in the same industry pursuant to the Consumer Protection Act.

8. Note 3: The endorsement and guarantee, provided by the Company and Fine environment Technology Co., Ltd. for a single entity, shall not exceed 50% of the guarantor’ s net worth, and the total shall not exceed 80% of the net worth of the guarantor. The endorsement and guarantee, provided by Changxin Xinye Co., Ltd. for a single party, shall not exceed 80% of the guarantor’s net worth, and the total shall not exceed 100% of the guarantor’s net worth. The endorsement and guarantee, provided by Hongda Investment Co., Ltd. for a single entity, shall not exceed 20% of the guarantor’s net worth, and the total amount shall not exceed 50% of the guarantor’s net worth.

Note 4: The highest balance of the endorsement guarantee for others in the current year.

Note 5: The company and its 100% direct or indirect subsidiaries pledged their jointly held land as collateral.

(Continued)

62

OCEAN PLASTICS CO., LTD. Notes to the Financial Statements

(iii) Securities held as of December 31, 2022 (excluding investment in subsidiaries, associates and joint ventures):

				(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)
Name of holder	Category and name of security	Relationship with company	Account title	Ending balance				Note
				Shares/Units (thousands)	Carrying value	Percentage of ownership (%)	Fair value
The Company	Taiwan VCM Corporation	-	Fair value through other comprehensive income equity instrument	37,062	547,480	% 12.46	547,480
〃	E'DALE TECHNOLOGY CO., LTD.	-	〃	630	23,777	% 3.38	23,777
〃	PAN OCEAN INC.	-	〃	152	6,890	% 15.07	6,890
〃	ULTRA-PAK INDUSTRIES CO., LTD.	-	〃	2,567	13,865	% 7.00	13,865
〃	MICROCELL COMPOSITE COMPANY	-	〃	237	-	% 4.32	-
〃	FUZETEC TECHNOLOGY CO., LTD.	-	Designated at fair value through profit or loss- current (stock)	2,945	131,774	% 7.87	131,774
CHANG XIN CO., LTD.	ULTRA-PAK INDUSTRIES CO., LTD.	-	Fair value through other comprehensive income equity instrument	1,487	8,032	% 4.06	8,032
〃	COSMACTIVE BROADBAND NETWORKS CO., LTD.	-	〃	1	-	% 0.12	-
HONG DA INVESTMENT CO., LTD.	ACER INCORPORATED	-	Designated at fair value through profit or loss- non-current (stock)	119	2,796	% -	2,796
〃	UNITED MICROELECTRON ICS CORP.	-	〃	29	1,178	% -	1,178
〃	Capital SZSE SME Price Index Exchange Traded Fund-TWD	-	〃	200	2,920	% -	2,920
〃	Cathy US Premium Bond Fund A	-	Financial assets designated at fair value through profit of loss-non current (fund)	500	4,933	% -	4,933
〃	ULTRA-PAK INDUSTRIES CO., LTD.	-	Fair value through other comprehensive income equity instrument	1,265	6,830	% 3.45	6,830
〃	E'DALE TECHNOLOGY CO., LTD.	-	〃	580	21,894	% 3.11	21,894
〃	FUZETEC TECHNOLOGY CO., LTD.	-	Designated at fair value through profit or loss- current (stock)	2,926	130,935	% 7.82	130,935
FINE ENVIRONMENT TECHNOLOGIES CO., LTD.	MINIMA TECHNOLOGY CO., LTD.	-	Fair value through other comprehensive income equity instrument	413	8,704	% 1.05	8,704
〃	MICROCELL COMPOSITE COMPANY	-	〃	237	-	% 4.32	-
FERMAT ENTERPRISES, LTD.	FCP I-Global High Yield Portfolio Class AT USD.	-	Designated at fair value through profit or loss- non-current (fund)	111	10,189	% -	10,189
〃	AB FCP I-Global High Yield Portfolio Class EA USD.	-	〃	24	7,178	% -	7,178
OPC HOLDING LTD.	AB FCP I-Global High Yield Portfolio Class EA USD.		Designated at fair value through profit or loss- non-current (fund)	24	7,072	% -	7,072
〃	AB FCP I-Global High Yield Portfolio Class EA USD.		〃	11	2,685	% -	2,685

(Continued)

63

OCEAN PLASTICS CO., LTD. Notes to the Financial Statements

• (iv) Individual securities acquired or disposed of with accumulated amount exceeding the lower of NT$300 million or 20% of the capital stock: None.

• (v) Acquisition of individual real estate with amount exceeding the lower of NT$300 million or 20% of the capital stock: None.

• (vi) Disposal of individual real estate with amount exceeding the lower of NT$300 million or 20% of the capital stock: None.

• (vii) Related-party transactions for purchases and sales with amounts exceeding the lower of NT$100 million or 20% of the capital stock: None.

• (viii) Receivables from related parties with amounts exceeding the lower of NT$100 million or 20% of the capital stock: None.

• (ix) Trading in derivative instruments: None.

• (b) Information on investees:

The following is the information on investees for the years ended December 31, 2022 (excluding information on investees in Mainland China):

(In Thousands of New Taiwan Dollars)

Name of investor	Name of investee	Location	Main businesses and products	Original investment amount	Original investment amount	Balance as of December 31, 2022	Balance as of December 31, 2022	Balance as of December 31, 2022	Net income (losses) of investee	Share of profits/losses of investee (Note 1)	Note
				December 31, 2022	December 31, 2021	Shares (thousands)	Percentage of ownership	Carrying value
The Company	CHUN PIN ENTERPRISE CO., LTD.	Taiwan	Storage business	290,000	290,000	29,000	% 44.62	442,477	215,346	96,077	Associate
The Company	FINE ENVIRONMENT TECHNOLOGIES CO., LTD.	Taiwan	Plastic product trade	44,792	44,792	1,003	% 60.76	8,033	(21)	(13)	Subsidiary
The Company	CHANG XIN CO., LTD.	Taiwan	Land development	2,900,860	2,900,860	290,086	% 100.00	1,433,794	(15,569)	(17,627)	Subsidiary
The Company	HONG DA INVESTMENT CO., LTD.	Taiwan	Normal investments	190,000	190,000	19,000	% 100.00	195,450	(64,163)	(66,685)	Subsidiary
The Company	FERMAT ENTERPRISES, LTD.	British Virgin Islands	Normal investments	13,887	13,887	450	% 100.00	20,876	(1,067)	(1,067)	Subsidiary
The Company	UNIVERSE ENTERPRISES LTD.	British Virgin Islands	Normal investments	-	93,032	-	% -	-	58	58	Subsidiary
The Company	OCEAN GROUP LTD.	Samoa	Normal investments	1,069,438	1,069,438	32,900	% 100.00	535,035	70,074	70,074	Subsidiary
The Company	Foremost-Oceans NueTeq, Ltd.	Taiwan	Plastic product trade	6,050	-	605	% 40.07	6,016	(87)	(34)	Associate
HONG DA INVESTMENT CO., LTD.	FINE ENVIRONMENT TECHNOLOGIES CO., LTD.	Taiwan	Plastic product trade	6,294	6,294	647	% 39.24	5,188	(21)	(9)	Subsidiary
CHANG XIN CO., LTD.	SHEN YANG DEVELOPMENT CO., LTD.	Taiwan	Land development	535	535	1,000	% 100.00	536	1	1	Subsidiary
OCEAN GROUP LTD.	OPC HOLDINGS, LTD.	British Virgin Islands	Normal investments	27,850	27,850	450	% 100.00	49,592	4,035	4,035	Subsidiary
OCEAN GROUP LTD.	SAGE HOLDINGS LTD.	Samoa	Normal investments	800,217	800,217	25,000	% 100.00	554,490	75,130	75,130	Subsidiary
OCEAN GROUP LTD.	RISE FUTURE INTERNATIONAL LTD.	Seychelles	Normal investments	241,371	241,371	7,450	% 100.00	(69,106)	(9,098)	(9,098)	Subsidiary

(Continued)

64

OCEAN PLASTICS CO., LTD. Notes to the Financial Statements

(c) Information on investment in mainland China:

• (i) The names of investees in Mainland China, the main businesses and products, and other information:

					(In Thousands of New Taiwan Dollars/In Thousands of USD Dollars)	(In Thousands of New Taiwan Dollars/In Thousands of USD Dollars)	(In Thousands of New Taiwan Dollars/In Thousands of USD Dollars)	(In Thousands of New Taiwan Dollars/In Thousands of USD Dollars)	(In Thousands of New Taiwan Dollars/In Thousands of USD Dollars)	(In Thousands of New Taiwan Dollars/In Thousands of USD Dollars)	(In Thousands of New Taiwan Dollars/In Thousands of USD Dollars)	(In Thousands of New Taiwan Dollars/In Thousands of USD Dollars)
Name of investee	Main businesses and products	Total amount of paid-in capital (Note 3)	Method of investment (Note 1)	Accumulated outflow of investment from Taiwan as of January 1, 2021 (Note 3)	Investment flows		Accumulated outflow of investment from Taiwan as of December 31, 2022 (Note 3)	Net income (losses) of the investee	Percentage of ownership	Investment income (losses) (Note 2)	Book value	Accumulated remittance of earnings in current period
					Outflow	Inflow
Ocean Plastics (Hui Zhou) Co.,Ltd	Production and sale of business general soft tape, foamed latex leather and rubber leather	812,643 (USD25,000)	( 3 )	812,643 (USD25,000)	-	-	812,643 (USD25,000))	75,130	100.00%	75,130	554,487	-
Ocean Plastics (Dong Guan) Co., Ltd.	Production and sales of PU synthetic leather, foamed latex leather and rubber leather	242,168 (USD7,450)	( 3 )	242,168 (USD7,450)	-	-	242,168 (USD7,450)	(9,098)	100.00%	(9,098)	(69,108)	-

(ii) Limitation on investment in Mainland China:

Accumulated Investment in Mainland China as of December 31, 2022 (Note 3)	Investment Amounts Authorized by Investment Commission, MOEA (Note 3)	Upper Limit on Investment (Note 4)
1,069,438 (USD32,900 thousand)	1,069,438 (USD32,900 thousand)	3,548,316

• Note 1: Indirect investment in Mainland China through entities registered in a third region.

• Note 2: The investment income (loss) was based on the financial statements audited by the investee’s external accountant.

• Note 3: The amount of accumulated outflow of investment from Taiwan was translated into New Taiwan dollars at the reporting date.

• Note 4: The upper limit on investment, calculated based on the amendments to the Regulations Governing the Approval of Investment or Technical Cooperation in Mainland China, is 60% of the net equity or consolidated net equity.

(iii) Significant transactions:

The significant inter-company transactions with the subsidiary in Mainland China, which were eliminated in the preparation of financial statements, are disclosed in “Information on significant transactions”.

(d) Major shareholders:

Major shareholders:
Shareholding Shareholder’s Name	Shares	Percentage
Yee Fong Chemical & Industrial Co., Ltd.	12,425,769	% 5.46

(14) Segment information:

Please refer to the consolidated financial statements for the year ended December 31, 2022.

65

Ocean Plastics Co., Ltd.

Statement of cash and cash equivalents

December 31, 2022

(Expressed in thousands of New Taiwan Dollars)

Item Petty cash Cash in bank	Description Amount $ 500 Check deposits 5,666 Demand deposits 66,119 Foreign demand deposits (USD $1,010 thousand) 31,040 Foreign time deposits (USD $1,000 thousand) 30,720 Subtotal 133,545 $ 134,045

Statement of notes and trade receivables

Client name Non-related-parties Company A Company B Company C Others (individual amounts with less than 5% of the total amount) Less:Allowance for doubtful accounts Subtotal Related-party transactions Ocean Plastics (Dong Guan) Co., Ltd Fine Environment Technologies Co., Ltd Foremost-Oceans NueTeq, Ltd. Less: Allowance for doubtful accounts Subtotal Total	Description Amount Sales $ 43,795 〃 51,303 〃 68,721 〃 424,774 (7,711) 580,882 〃 30,863 〃 108 〃 1,867 - 32,838 $ 613,720

66

Ocean Plastics Co., Ltd.

Statement of inventories

December 31, 2022

(Expressed in thousands of New Taiwan Dollars)

Item Raw materials Work in progress Finished goods Construction in progress Subtotal Less: Allowance for inventory valuation and obsolescence losses Total	Amount	Amount
	Cost $ 182,206 34,739 217,801 75 434,821 (66,614) $ 368,207	Net Realizable Value
		157,243 17,840 193,049 75
		368,207

Statement of other current assets

Item Business tax refund receivable Other receivables–related parties Excess business tax paid Prepayment for purchases Prepaid expense Others (individual amounts with less than 5% of the total amount)	Description Amount Business tax refund $ 4,964 Loans to related parties 16,871 Overpaid sales tax 16,504 Prepayment of raw materials 3,719 Prepayment of building sales agency expenses 12,775 3,854 $ 58,687

67

Ocean Plastics Co., Ltd.

Statement of changes in investments accounted for using the equity method

For the year ended December 31, 2022

(Expressed in thousands of New Taiwan Dollars)

Name of investee Chun Pin Enterprises Co., Ltd. Fine Environment Technologies Co., Ltd Chang Xin Co., Ltd Hong Da Investment Co., Ltd. Fermat Enterprises Ltd Universe Enterprises Ltd Ocean Group Ltd Foremost-Oceans NueTeq, Ltd. Total	Beginning Balance Number of shares Amount 29,000 $ 417,247 1,003 8,784 290,086 1,459,533 19,000 281,162 450 21,944 3,000 63,612 32,900 458,536 - - $ 2,710,818	Incr	ease Amount - - - - - - - 6,050 6,050	Decr	ease Amount 70,847 (Note2) - - - - 63,670 (Note 3) - - 134,517	Investment income/(loss) recognized under equity method,net 96,077 (13) (15,568) (64,163) (1,068) 58 70,074 (34) 85,363	Exchange difference on translation - - - - - - 6,425 - 6,425	Unrealized gains (losses) on financial assets measured atfair value through other comprehensive. - (738) (10,171) (21,549) - - - - (32,458)	Ending Balanc	Ending Balanc	e Amount 442,477 8,033 1,433,794 195,450 20,876 - 535,035 6,016 2,641,681	Market Asse	Value or Net ts Value Total amount Collateral 442,477 None 8,033 〞 1,433,794 〞 195,450 〞 20,876 〞 - 〞 535,035 〞 6,016 〞 2,641,681
	Number of shares	Number of shares - - - - - - - 605		Number of shares - - - - - 3,000 - -					Number of shares 29,000 1,003 290,086 19,000 450 - 32,900 605	Percentage % 44.62 % 60.76 % 100 % 100 % 100 % - % 100 % 40.07		Unit Price 15.26 8.01 9.92 16.44 46.39 - 16.26 9.94
	29,000 1,003 290,086 19,000 450 3,000 32,900 -

Note1: There is no open market price for these investees, so expressed in net value per share. Note2: Distribute cash dividends.

Note3: The investee company went into liquidation on April 1, 2022, which is basis date for dissolution, has completed liquidation.

68

Ocean Plastics Co., Ltd.

Statement of financial assets measured at fair value through other

comprehensive income - non-current

For the year ended December 31, 2022

(Expressed in thousands of New Taiwan Dollars)

Client name Taiwan VCM Corporation E'dale Technology Co., Ltd. PAN OCEAN, INC Ultra Pak Industries Co., Ltd. Microcell Composite Company	Beginning Balance Shares or units Fair Value 37,062 $ 1,016,326 630 37,269 152 6,890 2,567 31,421 237 - $ 1,091,906	Increase Shares or units Amount - - - - - - - - - - -	Decrease Shares or units Amount - - - - - - - - - - -	Gain or loss on valuation (468,846) (13,492) - (17,556) - (499,894)		Ending Balance Percentage Fair Value % 12.46 547,480 % 3.38 23,777 % 15.07 6,890 % 7.00 13,865 % 4.32 - 592,012	Collateral Accumulated impairment None N/A None N/A None N/A None N/A None N/A
	Shares or units	Shares or units - - - - -	Shares or units - - - - -		Shares or units 37,062 630 152 2,567 237	Percentage % 12.46 % 3.38 % 15.07 % 7.00 % 4.32
	37,062 630 152 2,567 237

69

Ocean Plastics Co., Ltd.

Statement of other non-current assets

December 31, 2022

(Expressed in thousands of New Taiwan Dollars)

Item Refundable deposits Other financial assets Prepayments for equipment	Description Amount The refundable deposits of natural gas pipeline engineering $ 12,532 Trust account of presold house and real estate development 34,414 Prepayments of machinery and equipment 4,128 $ 51,074

Statement of other current liabilities

Item Lease liabilities-current Unearned sales revenue Other payables to related parties Others(individual amounts with less than 5% of the total amount)	Description Amount Lease obligations payable $ 23,236 Unearned sales revenue from clients 3,961 Oil groove operating expenses to related parties 3,098 1,845 $ 32,140

70

Ocean Plastics Co., Ltd.

Statement of short-term borrowings

December 31, 2022

(Expressed in thousands of New Taiwan Dollars)

Creditor	Type of loan Collateral borrowing	End balance $ 150,000 100,000 $ 250,000	Contract Period 111.12.9~112.1.9 111.12.30~112.1.30	Percentage 1.45% 1.58%	Loan 600,000 600,000 1,200,000	Collateral Note Land 〞
Hua Nan Commercial Bank, Ltd. Total

Statement of trade payables

Client name Notes payable Non-related-parties- operating activities Company D Company E Company F Others (individual amounts with less than 5% of the total amount) Subtotal Accounts payable Non-related-parties Company G Company D Others (individual amounts with less than 5% of the total amount) Subtotal Total	Description Amount Purchases $ 85,499 〞 5,955 〞 5,407 〞 12,071 108,932 Purchases 166,656 〞 78,596 〞 113,240 358,492 $ 467,424

71

Ocean Plastics Co., Ltd.

Statement of other payables

December 31, 2022

(Expressed in thousands of New Taiwan Dollars)

Item Non-related-parties Salaries payable Accrued import and export selling expenses Accrued repair and maintenance expense. Others(individual amounts with less than 5% of the total amount) Othe payable Total	Description Amount The employee benefits, year-end bonus and pension $ 54,348 Cost of shipping for sales of goods 93,751 Equipment maintenance expense 15,614 (Packing expense, insurance expense and professional service fees) 1,783 13,106 $ 178,602

Statement of long-term borrowings

Creditor Description Hua Nan Commercial Bank, Ltd. collateral borrowing Yuanta Commercial Bank Co., Ltd. collateral borrowing Subtotal Less: current portion Total	Borrowings amount $ 365,973 600,000 965,973 (43,056) $ 922,917	Contract Period 2016.06.29~2031.06.29, Monthly installments of interest and semiannually repayments of principal for a term of 24-month. 2019.04.17~2024.09.30, Monthly installments of interest and repayment of principal at maturity.	Collateral Note Land Land

72

Ocean Plastics Co., Ltd.

Statement of other non-current liabilities

December 31, 2022

(Expressed in thousands of New Taiwan Dollars)

Item Lease liabilities-non-current Advance real estate receipts Provisions for employee benefits- non- current Guarantee deposits received	Description Amount Lease obligations payable $ 53,969 Receipts of presold land 33,780 Long-term compensated absences liabilities 12,423 Deposit for commissioned for goods production and deposit for land lease 3,303 $ 103,475

73

Ocean Plastics Co., Ltd.

Statement of operating revenue

For the year ended December 31, 2022

(Expressed in thousands of New Taiwan Dollars)

Item Plastic raw materials Plastic products Less: Sales return and sales allowance Net sales revenue	Quantity Amount 97,828tona $ 3,451,055 30,071tona/1,868thousand yard 2,209,802 (10,982) $ 5,649,875

74

Ocean Plastics Co., Ltd.

Statement of operating costs

For the year ended December 31, 2022

(Expressed in thousands of New Taiwan Dollars)

Item Raw materials at the beginning of the year Add: Net purchases Less: Raw materials at the end of the year Cost of material sold and others Raw materials used Direct labor Manufacturing expenses Total Manufacturing costs Add: Work-in-process at the beginning of the year Less: Work-in-process at the end of the year Transferred to expenses and others Cost of finished goods Add: Finished goods at the beginning of the year Gain on finished goods Less: Finished goods at the end of the year Transferred to expenses and others Cost of finished goods sold Merchandise at the beginning of the year Net purchases Less: Merchandise at the end of the year Transferred to manufacturing expenses Cost of merchandise sold Add: Cost of material sold Adjustment:( idle capacity) Others Gain from price recovery of inventory Added of cost of goods sold Cost of goods sold	Amount	Amount	Total 4,128,369 93,038 817,204 5,038,611 45,171 (34,739) (4,559) 5,044,484 412,253 50,276 (217,154) (4,190) 5,285,669 68,479 76,425 5,430,573
	Subtotal $ 310,331 4,005,405 (182,206) (5,161) 713 68,415 (647) (2) 2,714 109,025 (48,138) 12,824 $

75

Ocean Plastics Co., Ltd.

Statement of administrative expenses

For the year ended December 31, 2022

(Expressed in thousands of New Taiwan Dollars)

Item Export charges Salaries expense Freight expense Miscellaneous expenses Insurance expense for employee Professional service fees Depreciation Taxes Others (individual amounts with less than 5% of the total amount) Total	Selling expenses $ 285,434 23,501 29,189 1,385 2,224 94 1,686 - 20,256 $ 363,769	Administrative expenses - 49,567 17 6,118 4,409 5,262 6,832 5,865 10,337 88,407		Research and development expenses - 6,306 - 781 662 - 494 - 2,023 10,266	Total
					285,434 79,374 29,206 8,284 7,295 5,356 9,012 5,865 32,616
					462,442

Statement of Changes in Property, Plant, and Equipment: Note (6(g))

Statement of Changes in Right-of-use-assets: Note (6(h)) Statement of Changes in Investment property : Note (6(i))