SLC — Audit Report / Information 2021

Nov 12, 2021

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Stock Code:2616

SHAN-LOONG TRANSPORTATION CO., LTD.

Parent Company Only Financial Statements

With Independent Auditors’ Report For the Years Ended December 31, 2021 and 2020

Address: 1F., No. 1-2, Sec. 1, Minsheng Rd., Banqiao Dist., New Taipei City 22069, Taiwan (R.O.C.) Telephone: (02)2959-9611

The independent auditors’report and the accompanying 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 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. Statement of Comprehensive Income 6. Statement of Changes in Equity 7. Statement 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) Significant commitments and contingencies (10) Losses due to major disasters (11) Subsequent events (12) Others (13) Additional disclosures (a) Information on significant transactions (b) Information on investees (c) Information on investment in mainland China (d) Major shareholders (14) Segment information 9. The contents of statements of major accounting items

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KPMG

台北市110615信義路5段7號68樓(台北101大樓) 電 話 Tel + 886 2 8101 6666 68F., TAIPEI 101 TOWER, No. 7, Sec. 5, 傳 真 Fax + 886 2 8101 6667 Xinyi Road, Taipei City 110615, Taiwan (R.O.C.) 網 址 Web home.kpmg/tw

Independent Auditors’ Report

To the Board of Directors of Shan-Loong Transportation Co., Ltd.:

Opinion

We have audited the financial statements of Shan-Loong Transportation Co., Ltd.(“ the Company” ), which comprise the balance sheets as of December 31, 2021 and 2020, 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, the accompanying financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, 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 Certification of Financial Statements by Certified Public Accountants, and the auditing standards generally accepted in 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 Certified Public Accountants Code of Professional Ethics in Republic of China (“the Code”), and we have fulfilled our other ethical responsibilities in accordance with the Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis of our opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the 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. The key audit matters we judged shall be presented in the financial report as follows:

1. Revenue recognition

Please refer to note (4)(n) of the financial statements for the accounting policy of revenue recognition. Information regarding the revenue are shown in note (6)(p) of the financial statements.

Description of key audit matter:

The main activities of the Company include freight transportation, container trucking, truck repair and maintenance, and gas station. Revenue recognition is one of the significant matters of the financial statements. The amounts and changes of sales revenue may affect the users' understanding of the entire financial statements. Therefore, the revenue recognition test is one of the significant assessment items in our audit procedures.

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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Audit Procedures:

Our main audit procedures for the aforementioned key audit matters include testing the Company's controls surrounding revenue recognition in the sale and receipt cycle, including reconciliations between the general ledger and sales system; performing the detailed test of relevant vouchers, as well as assessing whether the Company’s timing on revenue recognition and the amounts recognized are in accordance with the related standards.

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

Management is responsible for the preparation and fair presentation of the financial statements in accordance with Regulations Governing the Preparation of Financial Reports by Securities Issuers and for such internal control as management determines is necessary to enable the preparation of 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 its operations, there is no realistic alternative but to do so.

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

Auditors’ Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the auditing standards generally accepted in 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 auditing standards generally accepted in the Republic of China, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

1. Identify and assess the risks of material misstatement of the 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.

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1. 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.

2. 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.

3. 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 the 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 Jui-Lan Lo and YiuKwan Au.

KPMG

Taipei, Taiwan (Republic of China) March 7, 2022

Notes to Readers

The accompanying financial statements are intended only to present the financial position, financial performance, and 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 financial statements are those generally accepted and applied in the Republic of China.

The independent auditors’ audit report and the accompanying 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’ audit report and financial statements, the Chinese version shall prevail.

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(English Translation of Parent Company Only Financial Statements Originally Issued in Chinese) SHAN-LOONG TRANSPORTATION CO., LTD.

Balance Sheets

December 31, 2021 and 2020

(expressed in thousands of New Taiwan Dollars)

Assets Current assets: 1100 Cash and cash equivalents (note (6)(a)) 1170 Notes and accounts receivable, net (note (6)(c)) 1180 Notes and accounts receivable due from related parties, net (notes (6)(c) and (7)) 1476 Other current financial assets (notes (6)(d) and (7)) 1300 Inventories, net (note (6)(e)) 1470 Other current assets Non-current assets: 1517 Non-current financial assets at fair value through other comprehensive income (note (6)(b)) 1550 Investments accounted for using the equity method, net (note (6)(f)) 1600 Property, plant and equipment (notes (6)(g)、(7) and (8)) 1755 Right-of-use assets (note (6)(h)) 1840 Deferred income tax assets (note (6)(m)) 1990 Other non-current assets (note (8)) Total assets	December 31, 2021 Amount % $ 513,998 5 520,683 5 251,985 3 28,350 - 209,587 2 39,624 1 1,564,227 16 806,718 8 2,508,995 26 3,577,741 36 1,067,859 11 36,360 - 232,129 3 8,229,802 84 $ 9,794,029 100	December 31, 2020 Amount % 377,475 4 445,160 5 255,593 3 28,192 - 184,618 2 38,475 - 1,329,513 14 816,536 8 2,220,372 23 3,706,229 39 1,305,262 14 38,002 - 210,134 2 8,296,535 86 9,626,048 100 Liabilities and Equity Current liabilities: 2150 Notes and accounts payable (note (7)) 2200 Other payables (note (7)) 2230 Current income tax liabilities 2280 Current lease liabilities (notes (6)(k) and (7)) 2130 Current contract liabilities (note (p)) 2250 Provisions 2300 Other current liabilities 2320 Long-term borrowings, current portion (note (6)(j)) Non-current liabilities: 2540 Long-term borrowings (note (6)(j)) 2570 Deferred income tax liabilities (note (6)(m)) 2580 Non-current lease liabilities (notes (6)(k) and (7)) 2640 Non-current net defined benefit liability (note (6)(l)) 2645 Guarantee deposits received Total liabilities Equity:(note (6)(n)) 3100 Ordinary shares 3200 Capital surplus 3300 Retained earnings 3400 Other equity 3500 Treasury shares Total equity Total liabilities and equity	December 31, 2021		December 31, 2020
			Amount %		Amount %
			$ 1,449,850 15 420,053 4 32,647 - 206,661 2 21,594 - 18,863 - 5,338 - 1,047,651 11 3,202,657 32 227,049 3 105,780 1 885,136 9 100,185 1 17,112 - 1,335,262 14 4,537,919 46 1,372,818 14 583,359 6 1,944,149 20 1,387,647 14 (31,863) - 5,256,110 54 $ 9,794,029 100		1,314,377 14 394,695 4 62,512 1 231,817 2 13,286 - 25,992 - 2,511 - 150,000 2 2,195,190 23 1,024,700 11 113,495 1 1,094,694 11 96,105 1 15,676 - 2,344,670 24 4,539,860 47 1,372,818 14 580,381 6 1,790,142 19 1,374,710 14 (31,863) - 5,086,188 53 9,626,048 100

See accompanying notes to financial statements.

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(English Translation of Parent Company Only Financial Statements Originally Issued in Chinese) SHAN-LOONG TRANSPORTATION CO., LTD.

Statement of Comprehensive Income

For the years ended December 31, 2021 and 2020

(expressed in thousands of New Taiwan Dollars, except for earnings per share)

2021 Amount % 4000 Operating revenue(notes (6)(p) and (7)) $ 17,237,755 100 5000 Operating costs(notes (6)(e), (6)(l), (7) and (12)) 15,572,968 90 5900 Gross profit from operations 1,664,787 10 Operating expenses(notes (6)(l), (7) and (12)): 6100 Selling expenses 543,308 3 6200 Administrative expenses 828,483 5 6450 Expected credit losses (gains) - - 1,371,791 8 6900 Net operating income 292,996 2 Non-operating income and expenses: 7010 Other income (note (7)) 64,601 - 7020 Other gains and losses, net (note (6)(k)) 3,267 - 7050 Finance costs (notes (6)(k) and (7)) (30,488) - 7100 Interest income 1,853 - 7130 Dividend income 34,877 - 7210 Gains (losses) on disposals of property, plant and equipment (note (7)) 283 - 7375 Shares of profit (loss) of subsidiaries, associates and joint ventures accounted for using the equity method 130,222 1 7590 Miscellaneous disbursements (14,612) - 190,003 1 7900 Profit before tax 482,999 3 7950 Less: Income tax expenses(note (6)(m)) 67,492 - 8200 Profit 415,507 3 8300 Other comprehensive income: 8310 Items that may not be reclassified subsequently to profit or loss: 8311 Gains (losses) on remeasurements of defined benefit plans (note (6)(l)) (5,890) - 8316 Unrealized gains (losses) from investments in equity instruments measured at fair value through other comprehensive income 59,284 - 8330 Share of other comprehensive income (loss) of subsidiaries, associates and joint ventures accounted for using the equity method, components of other comprehensive income that will not be reclassified to profit or loss (8,647) - 8349 Income tax related to components of other comprehensive income that will not be reclassified to profit or loss (note (6)(m)) (7,418) - 52,165 - 8360 Items that may be reclassified subsequently to profit or loss: 8361 Exchange differences on translation of foreign financial statements 1,615 - 8399 Income tax related to components of other comprehensive income that may be reclassified to profit or loss (note (6)(m)) 323 - 1,292 - 8300 Other comprehensive income (loss) 53,457 - 8500 Total comprehensive income $ 468,964 3 Earnings per share(note (6)(o)) 9750 Basic earnings per share $ 3.06 9850 Diluted earnings per share $ 3.04	2020
	Amount % 15,076,884 100 13,415,428 89 1,661,456 11 540,940 4 794,530 5 - - 1,335,470 9 325,986 2 55,633 - 134 - (32,359) - 1,954 - 23,791 - (7,376) - 85,346 1 (15,203) - 111,920 1 437,906 3 66,572 - 371,334 3 (13,406) - 339,770 2 645,775 4 35,416 - 936,723 6 1,940 - 388 - 1,552 - 938,275 6 1,309,609 9 2.73
	2.72

See accompanying notes to financial statements.

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(English Translation of Parent Company Only Financial Statements Originally Issued in Chinese) SHAN-LOONG TRANSPORTATION CO., LTD.

Statement of Changes in Equity

For the years ended December 31, 2021 and 2020

(expressed in thousands of New Taiwan Dollars)

Ordinary shares Balance on January 1, 2020 $ 1,372,818 Appropriation and distribution of retained earnings: Legal reserve appropriated - Cash dividends on ordinary share - - Profit (loss) for the year ended December 31, 2020 - Other comprehensive income (loss) for the year ended December 31, 2020 - Total comprehensive income (loss) for the year ended December 31, 2020 - Adjustments of capital surplus for the Company's cash dividends received by subsidiaries - Balance on December 31, 2020 1,372,818 Appropriation and distribution of retained earnings: Legal reserve appropriated - Cash dividends on ordinary share - - Profit (loss) for the year ended December 31, 2021 - Other comprehensive income (loss) for the year ended December 31, 2021 - Total comprehensive income (loss) for the year ended December 31, 2021 - Adjustments of capital surplus for the Company's cash dividends received by subsidiaries - Disposal of investments in equity instruments designated at fair value through other comprehensive income - Balance on December 31, 2021 $ 1,372,818	Ordinary shares		Capital surplus			Retained earnings	Retained earnings	Retained earnings	Retained earnings				Other equity				Treasury shares Total equity (31,863) 4,021,250 - - - (247,107) - (247,107) - 371,334 - 938,275 - 1,309,609 - 2,436 (31,863) 5,086,188 - - - (302,020) - (302,020) - 415,507 - 53,457 - 468,964 - 2,978 - - (31,863) 5,256,110
											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
					Legal reserve	Unappropriated retained earnings			Total retained earnings
			577,945		415,917		1,260,723		1,676,640		(24,781) - - - - 1,552 1,552 - (23,229) - - - - 1,292 1,292 - - (21,937)		450,491		425,710		(31,863) - - - - - - - (31,863) - - - - - - - - (31,863)
			- -		29,096 -								- -		- -
			-		29,096								-		-
			- -		- -								- 947,448		- 949,000
			-		-								947,448		949,000
			2,436		-								-		-
			580,381		445,013								1,397,939		1,374,710
			- -		36,061 -								- -		- -
			-		36,061								-		-
			- -		- -								- 56,877		- 58,169
			-		-								56,877		58,169
			2,978		-								-		-
			-		-
			583,359		481,074

See accompanying notes to financial statements.

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(English Translation of Parent Company Only Financial Statements Originally Issued in Chinese) SHAN-LOONG TRANSPORTATION CO., LTD.

Statement of Cash Flows

For the years ended December 31, 2021 and 2020

(expressed in thousands of New Taiwan Dollars)

Cash flows from (used in) operating activities: Profit before tax Adjustments: Adjustments to reconcile profit (loss): Depreciation expense Net profit on financial assets or liabilities at fair value through profit or loss Interest expense Interest income Dividend income Share of profit of subsidiaries, associates and joint ventures accounted for using the equity method Loss (gain) on disposal of property, plant and equipment and others Changes in operating assets and liabilities: Decrease (increase) in financial assets mandatorily measured at fair value through profit or loss Decrease (increase) in notes and accounts receivable Decrease (increase) in inventories Decrease (increase) in other current financial assets Decrease (increase) in other current assets Increase (decrease) in notes and accounts payable Increase (decrease) in contract liabilities Increase (decrease) in provisions Increase (decrease) in other payables and other current liabilities Increase (decrease) in net defined benefit liabilities Total adjustments Cash inflow (outflow) generated from (used in) operations Dividends received Interest paid Interest received Income taxes paid Net cash flows from (used in) operating activities Cash flows from (used in) investing activities: Acquisition of financial assets at fair value through other comprehensive income Acquisition of investments accounted for using the equity method Acquisition of property, plant and equipment Proceeds from disposal of property, plant and equipment Decrease (increase) in refundable deposits Net cash flows from (used in) investing activities Cash flows from (used in) financing activities: Proceeds from long-term borrowings Repayments of long-term borrowings Increasee (decrease) in guarantee deposits received Payment of lease liabilities Cash dividends paid Net cash flows from (used in) financing activities Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period	2021 $ 482,999 483,523 - 30,488 (1,853) (34,877) (130,222) (6,566) 340,493 - (71,915) (24,969) 2,257 (8,988) 135,473 8,308 (7,129) 28,185 (1,810) 59,412 399,905 882,904 116,078 (30,488) 1,853 (86,070) 884,277 (7,672) (164,000) (216,776) 86,025 (14,389) (316,812) 200,000 (100,000) 1,436 (230,358) (302,020) (430,942) 136,523 377,475 $ 513,998	2020 437,906 485,116 (165) 32,359 (1,954) (23,791) (85,346) 7,367 413,586 300,210 38,026 7,614 (14,816) 46,064 (165,101) 460 12,897 60,755 (20,059) 266,050 679,636 1,117,542 83,747 (32,359) 1,954 (15,700) 1,155,184 - (36,000) (512,351) 12,264 5,159 (530,928) 949,000 (989,300) 475 (225,309) (247,107) (512,241) 112,015 265,460 377,475

See accompanying notes to financial statements.

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(English Translation of Parent Company Only Financial Statements Originally Issued in Chinese) SHAN-LOONG TRANSPORTATION CO., LTD.

Notes to the Financial Statements

For the years ended December 31, 2021 and 2020

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

(1) Company history

Shan-loong Transportation Co., Ltd. (the “ Company”) was incorporated in April 6, 1976 as a company limited by shares and registered under the Ministry of Economic Affairs, R.O.C. The address of the Company’s registered office is 1F, No. 1-2, Sec. 1, Minsheng Rd., Banqiao Dist., New Taipei City. The major business activities of the Company are freight transportation, container trucking, truck repair and maintenance, and gas station, etc.

(2) Approval date and procedures of the financial statements

These financial statements were authorized for issue by the Board of Directors on March 7, 2022.

(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, 2021:

• ●Amendments to IFRS 4 “Extension of the Temporary Exemption from Applying IFRS 9”

• ●Amendments to IFRS 9, IAS39, IFRS7, IFRS 4 and IFRS 16 “Interest Rate Benchmark Reform— Phase 2”

• ●Amendments to IFRS 16 “Covid-19-Related Rent Concessions beyond June 30, 2021”

• (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, 2022, would not have a significant impact on its financial statements:

• －

• ●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”

(Continued)

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SHAN-LOONG TRANSPORTATION CO., LTD. Notes to the Financial Statements

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

The Company does not expect the following 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 IAS 1 “Classification of Liabilities as Current or Non-current”

• ●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”

(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 parent-company-only financial statements.

• (a) Statement of compliance

These financial statements have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers.

• (b) Basis of preparation

• (i) Basis of measurement

Except for the following significant accounts, the financial statements have been prepared on a historical cost basis:

• 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; and

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

(Continued)

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SHAN-LOONG TRANSPORTATION CO., LTD. Notes to the Financial Statements

(c) Foreign currencies

(i) Foreign currency transaction

Transactions in foreign currencies are translated into the respective functional currencies of the Company at the exchange rates at the dates of the transactions. At the end of each subsequent reporting period, monetary items 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 translation. Exchange differences are recognized in profit or loss except for an investment in equity securities designated as at fair value through other comprehensive income, which are recognized in other comprehensive income.

(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.

(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.

(Continued)

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SHAN-LOONG TRANSPORTATION CO., LTD. Notes to the Financial Statements

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

• (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.

Bank overdrafts that are repayable on demand and form an integral part of the Company’ s cash management are included as a component of cash and cash equivalents for the purpose of the statement of cash flows.

(f) Financial instruments

Accounts receivable and debt securities issued are initially recognized when they are originated. All other financial assets and financial liabilities are initially recognized when the Company 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.

(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 – 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:

(Continued)

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SHAN-LOONG TRANSPORTATION CO., LTD. Notes to the Financial Statements

• 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.

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. 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.

(Continued)

13

SHAN-LOONG TRANSPORTATION CO., LTD. Notes to the Financial Statements

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) Business model assessment

The Company makes an assessment of the objective of the business model in which a financial asset is held at portfolio level because this best reflects the way the business is managed and information is provided to management. The information considered includes:

• the stated policies and objectives for the portfolio and the operation of those policies in practice. These include whether management’ s strategy focuses on earning contractual interest income, maintaining a particular interest rate profile, matching the duration of the financial assets to the duration of any related liabilities or expected cash outflows or realizing cash flows through the sale of the assets;

• how the performance of the portfolio is evaluated and reported to the Company’ s management;

• the risks that affect the performance of the business model (and the financial assets held within that business model) and how those risks are managed;

• the frequency, volume and timing of sales of financial assets in prior periods, the reasons for such sales and expectations about future sales activity.

Transfers of financial assets to third parties in transactions that do not qualify for derecognition are not considered sales for this purpose, and are consistent with the Company’s continuing recognition of the assets.

Financial assets that are held for trading or are managed and whose performance is evaluated on a fair value basis are measured at FVTPL.

• 5) Assessment whether contractual cash flows are solely payments of principal and interest

For the purposes of this assessment, ‘ principal’ is defined as the fair value of the financial assets on initial recognition. ‘Interest’ is defined as consideration for the time value of money and for the credit risk associated with the principal amount outstanding during a particular period of time and for other basic lending risks and costs, as well as a profit margin.

In assessing whether the contractual cash flows are solely payments of principal and interest, the Company considers the contractual terms of the instrument. This includes assessing whether the financial asset contains a contractual term that could change the timing or amount of contractual cash flows such that it would not meet this condition. In making this assessment, the Company considers:

• contingent events that would change the amount or timing of cash flows;

• terms that may adjust the contractual coupon rate, including variable rate features;

(Continued)

14

SHAN-LOONG TRANSPORTATION CO., LTD. Notes to the Financial Statements

• prepayment and extension features; and

• terms that limit the Company’s claim to cash flows from specified assets (e.g. nonrecourse features)

• 6) 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, notes and accounts receivable, other receivables, guarantee deposit paid and other financial assets), and contract assets.

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

• bank balances and other receivables 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 accounts receivable 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 60 days past due.

The Company considers a financial asset to be in default when the financial asset is more than 90 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’. The counterparties of the time deposits held by the Company are the financial institutions with investment grade credit ratings. Therefore, the credit risk is considered to be low.

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).

(Continued)

15

SHAN-LOONG TRANSPORTATION CO., LTD. Notes to the Financial Statements

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 overdue;

• 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.

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. 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.

• 7) Derecognition of financial assets

The Company derecognizes a financial asset when the contractual rights to the cash flows from the financial asset expire, or it transfers the rights to receive the contractual cash flows in a transaction in which substantially all of the risks and rewards of ownership of the financial asset are transferred or in which the Company neither transfers nor retains substantially all of the risks and rewards of ownership and it does not retain control of the financial asset.

(Continued)

16

SHAN-LOONG TRANSPORTATION CO., LTD. Notes to the Financial Statements

The Company enters into transactions whereby it transfers assets recognized in its statement of balance sheet, but retains either all or substantially all of the risks and rewards of the transferred assets. In these cases, the transferred assets are not derecognized.

• (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).

4) Compound financial instruments

Compound financial instruments issued by the Company comprise convertible bonds that can be converted to ordinary shares at the option of the holder, when the number of shares to be issued is fixed and does not vary with changes in fair value.

The liability component of compound financial instruments is initially recognized at the fair value of a similar liability that does not have an equity conversion option. The equity component is initially recognized at the difference between the fair value of the compound financial instrument as a whole and the fair value of the liability component. Any directly attributable transaction costs are allocated to the liability and equity components in proportion to their initial carrying amounts.

Subsequent to initial recognition, the liability component of a compound financial instrument is measured at amortized cost using the effective interest method. The equity component of a compound financial instrument is not remeasured.

Interest related to the financial liability is recognized in profit or loss. On conversion at maturity, the financial liability is reclassified to equity and no gain or loss is recognized.

(Continued)

17

SHAN-LOONG TRANSPORTATION CO., LTD. Notes to the Financial Statements

5) 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.

6) 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.

7) 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 other costs incurred in bringing them to their present location and condition. 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, whose investment includes transaction costs. The carrying amount of the investment in associates includes goodwill arising from the acquisition, less any accumulated impairment losses.

The parent-company-only financial statements include the Company’s share of the profit or loss and other comprehensive income of the associates, after adjustments, in order to be consistent with the Company’s accounting policies, from the date on which significant influence commences until the date on which significant influence ceases.

(Continued)

18

SHAN-LOONG TRANSPORTATION CO., LTD. Notes to the Financial Statements

Gains and losses resulting from transactions between the Company and its associate are recognized only to the 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) Investment in subsidiaries

When preparing the parent-company-only financial statements, investment in subsidiaries which are controlled by the Company is accounted for using the equity method. Under the equity method, the amounts of net income, other comprehensive income and equity attributable to shareholders of the Company in the parent-company-only financial statements are equal to those in the consolidated financial statements.

Changes in the Company’s ownership interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions.

(j) 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.

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.

(Continued)

19

SHAN-LOONG TRANSPORTATION CO., LTD. Notes to the Financial Statements

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

• 1) Buildings: 31~56 years

• 2) Building improvements: 1~27 years

• 3) Gasoline equipment: 1~21 years

• 4) Transportation equipment: 5~19 years

• 5) Miscellaneous equipment: 1~21 years

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

(k) Lease

At inception of a contract, the Company 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.

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;

(Continued)

20

SHAN-LOONG TRANSPORTATION CO., LTD. Notes to the Financial Statements

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 of its assessment on whether it will exercise an extension or termination option; or

• 3) there is 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.

The Company has elected not to recognize right-of-use assets and lease liabilities for shortterm leases that have a lease term of 12 months. The Company recognizes the lease payments associated with these leases as an expense on a straight-line basis over the lease term.

As a practical expedient, the Company elects not to assess whether all rent concessions that meets all the following conditions are lease modifications or not:

• 1) the rent concessions occurring as a direct consequence of the covid-19 pandemic;

• 2) the change in lease payments results in revised consideration for the lease that is substantially the same as, or less than, the consideration for the lease immediately preceding the change;

• 3) any reduction in lease payments affects only those payments originally due on, or before, June 30, 2021; and

• 4) there is no substantive change into other terms and conditions of the lease.

In accordance with the practical expedient, the effect of the change in the lease liability is reflected in profit or loss in the period in which the event or condition that triggers the rent concession occurs.

(Continued)

21

SHAN-LOONG TRANSPORTATION 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. 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.

(l) 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) to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated. Goodwill is tested annually for impairment.

For impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or cash-generating units (CGUs). Goodwill arising from a business combination is allocated to CGUs or groups of CGUs that are expected to benefit from the synergies of the combination.

The recoverable amount of an asset or CGU is the greater of its value in use and its fair value less costs to sell. Value in use is based on the estimated future cash flows, discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or CGU.

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.

An impairment loss in respect of goodwill is not reversed. For other assets, an impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, if no impairment loss had been recognized.

(Continued)

22

SHAN-LOONG TRANSPORTATION CO., LTD. Notes to the Financial Statements

(m) Provisions

A provision is recognized if, as a result of a past event, the Company has a present obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects the current market assessments of the time value of money and the risks specific to the liability. The unwinding of the discount is recognized as finance cost.

In accordance with the Company’s applicable legal requirements, a provision for site restoration in respect of contaminated land and the related expense are recognized when the land is contaminated.

• (n) Revenue recognition

• (i) 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.

• 1) Sale of goods

The Company sells gas to clients and consumers. The Company recognizes revenue when control of the products has transferred, being when the products are delivered to the customer, and there is no unfulfilled obligation that could affect the customer’ s acceptance of the products.

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.

• 2) Truck repair and freight transportation services

The Company provides truck repair and freight transportation services. Revenue from providing services is recognized in the accounting period in which the services are rendered.

• 3) 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 Company does not adjust any of the transaction prices for the time value of money.

(o) Government grants

The government grants are recognized as a deduction of the cost of assets if there is reasonable assurance that they will be received and the Company will comply with the conditions associated with the grant; they are then recognized in profit of loss over the life of a depreciable asset as a reduced depreciation expense.

(Continued)

23

SHAN-LOONG TRANSPORTATION CO., LTD. Notes to the Financial Statements

(p) 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 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 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.

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) Termination benefits

Termination benefits are expensed at the earlier of when the Company can no longer withdraw the offer of those benefits and when the Company recognizes costs for a restructuring. If benefits are not expected to be settled wholly within 12 months of the reporting date, then they are discounted.

(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 Company 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.

(Continued)

24

SHAN-LOONG TRANSPORTATION CO., LTD. Notes to the Financial Statements

(q) 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.

The Company has determined that interest and penalties related to income taxes, including uncertain tax treatment, do not meet the definition of income taxes, and therefore accounted for them under IAS37.

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 and joint arrangements 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 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; such reductions are reversed when the probability of future taxable profits improves.

Deferred taxes are measured at tax rates that are expected to be applied to temporary differences when they reserve, using tax rates enacted or substantively enacted at the reporting date, and reflect uncertainty related to income taxes, if any.

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:

(Continued)

25

SHAN-LOONG TRANSPORTATION CO., LTD. Notes to the Financial Statements

• 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.

(r) 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, such as employee compensation and convertible bonds.

(s) Operating segments

The operating segment information is disclosed in the consolidated financial statements. Therefore, the Company will not disclose the operating segment information in the parent-company-only financial statements.

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

In preparing these parent-company-only financial statements, management has made 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.

There are no critical judgments in applying accounting policies that have significant effects on the amounts recognized in the financial statements.

Furthermore, there are no assumptions and estimation uncertainties that have a significant risk of resulting in a material adjustment to the carrying amounts of assets and liabilities within the next financial year.

(6) Explanation of significant accounts:

• (a) Cash and cash equivalents

December 31, 2021 Cash on hand $ 6,674 Checking accounts and demand deposits 507,324 $ 513,998	December 31, 2020
	6,012 371,463
	377,475

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

(Continued)

26

SHAN-LOONG TRANSPORTATION CO., LTD. Notes to the Financial Statements

• (b) Financial assets at fair value through other comprehensive income

December 31, 2021 Equity investments at fair value through other comprehensive income: Stocks listed on domestic markets $ 683,977 Stocks unlisted on domestic markets 122,741 $ 806,718	December 31, 2020
	658,788 157,748
	816,536

• (i) The Company designated the investments shown above as equity securities at fair value through other comprehensive income because these equity securities represent those investments that the Company intends to hold for long-term strategic purposes.

• (ii) In April, 2021, the Company acquired some part of shares of Ko Loong Industry Co., Ltd. (Ko Loong), and the percentage of ownership increased to 19.75%. The Company assessed that it had significant influence over Ko Loong. Therefore, the Company derecognized the assets, which were accounted for under the financial assets measured at fair value through other comprehensive income, at the fair value amounted to $76,774. The gain on disposal of the investments amounting to $45,232 was transferred to retained earnings from other equity. There were no disposals of strategic investments and transfers of any cumulative gain or loss within equity relating to these investments as of for the year ended December 31, 2020.

• (iii) For market risk of the Company, please refer to note (6)(r).

• (iv) The Company had not been pledged any financial assets as collateral for its borrowings.

• (c) Notes and accounts receivable (including related parties)

December 31, 2021 Notes receivable $ 34,899 Accounts receivable 740,262 775,161 Less: allowance for impairment (2,493) $ 772,668 Notes and accounts receivable, net $ 520,683 Notes and accounts receivable due from related parties, net $ 251,985	December 31, 2020 27,822 675,424 703,246 (2,493) 700,753 445,160 255,593

(Continued)

27

SHAN-LOONG TRANSPORTATION CO., LTD. Notes to the Financial Statements

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, notes and accounts receivables have been grouped based on shared credit risk characteristics and the days past due, as well as the incorporated forward-looking information, including the reasonable prediction of historical credit loss experience and the future economic situation. As of December 31, 2021 and 2020, the loss allowance provisions were determined as follows:

Aging under 60 days Aging 61~90 days Aging 91~120 days Aging 121~150 days Aging 151~180 days Aging 181~365 days Aging over 365 days Aging under 60 days Aging 61~90 days Aging 91~120 days Aging 121~150 days Aging 151~180 days Aging 181~365 days Aging over 365 days	December 31, 2021	December 31, 2021	December 31, 2021	December 31, 2021
	Gross carrying amount Weighted-average loss rate Notes receivable Accounts receivable Notes receivable Accounts receivable $ 26,878 735,679 -% -% 5,533 2,114 1% 1% 2,488 - 5% 60% - - 10% 60% - - 10% 80% - 2,381 10% 90% - 88 100% 100% $ 34,899 740,262 December 31, 2020				Loss allowance provision
	Notes receivable
	$ 26,878 5,533 2,488 - - - - $ 34,899				- 76 124 - - 2,145 88
					2,433
				Weighted-average loss rate Notes receivable Accounts receivable -% -% 1% 1% 5% 60% 10% 60% 10% 80% 10% 90% 100% 100%	Loss allowance provision
		Notes receivable		Notes receivable
	$ 17,442 7,821 1,984 575 - - - $ 27,822			-% 1% 5% 10% 10% 10% 100%	- 79 99 57 1,481 513 88
					2,317

The movements in the allowance for notes and accounts receivable were as follows:

Balance on January 1 (same as balance on December 31)	2021 $ 2,493	2020
		2,493

As of December 31, 2021 and 2020, the Company did not pledge any notes and accounts receivable as collateral for its borrowings.

(Continued)

28

SHAN-LOONG TRANSPORTATION CO., LTD. Notes to the Financial Statements

(d) Other current financial assets

December 31, 2021 Other receivables $ 39,035 Less: loss allowance (13,100) 25,935 Refundable deposits-current 2,415 $ 28,350	December 31, 2020 41,292 (13,100) 28,192 - 28,192

For further credit risk information, please refers to note (6)(r).

• (e) Inventories

December 31, 2021 Premium Diesel $ 64,801 Unleaded Gasoline #92 48,328 Unleaded Gasoline #95 67,696 Unleaded Gasoline #98 28,427 By-product and other 335 $ 209,587	December 31, 2020
	52,877 44,618 58,360 28,151 612
	184,618

The Company recognized as cost of sales amounted to $12,258,636 and $9,706,790, respectively, for the years ended December 31, 2021 and 2020.

The gain on physical inventory amounted to $40,492 and $32,082, respectively, which was recorded as cost of sales for the years ended December 31, 2021 and 2020.

As of December 31, 2021 and 2020, the Company did not pledge any inventories as collateral for its borrowings.

(f) Investments accounted for using the equity method

The components of investments accounted for using the equity method at the reporting date were as follows:

Subsidiaries Associates	December 31, 2021 $ 2,437,670 71,325 $ 2,508,995	December 31, 2020
		2,220,372 -
		2,220,372

(Continued)

29

SHAN-LOONG TRANSPORTATION CO., LTD. Notes to the Financial Statements

(i) Subsidiaries

Please refer to the consolidated financial statements for the year ended December 31, 2021.

(ii) Associates

• 1) The Company originally held certain portion of the common shares of Ko Loong, which was accounted for under the financial assets at fair value through other comprehensive income. In April 2021, the Company acquired additional shares of Ko Loong, resulting in its percentage of ownership to increase to 19.75%. Hence, the Company assessed that it had significant influence over Ko Loong, which led the Company to remeasure the fair value of its assets of the acquisition date, and account it for using the equity method.

• 2) The Company’ s financial information on investments accounted for using the equity method that are individually insignificant was as follows:

		2021
Attributable to the Company:
Profit (loss)	$	2,601
Other comprehensive income (loss)		(10,329)
Comprehensive income (loss)	$	(7,728)

• (iii) As of December 31, 2021 and 2020, the Company did not provide any investment accounted for using the equity method as collateral for its loans.

• (g) Property, plant and equipment

The movements in the property, plant and equipment of the Company were as follows:

Land Cost: Balance on January 1, 2021 $ 2,008,967 Additions - Disposals - Reclassifications (2,426) Balance on December 31, 2021$ 2,006,541 Balance on January 1, 2020 $ 1,853,346 Additions 155,621 Disposals - Reclassifications - Balance on December 31, 2020$ 2,008,967	Land		Buildings		Gasoline equipment		Transportation equipment	Miscellaneous equipment	Miscellaneous equipment
			810,856 71,680 (224) 18,983 901,295 732,247 103,008 (24,399) - 810,856		152,190 3,312 - -		2,022,782 51,581 (86,218) - 1,988,145 1,935,933 155,781 (68,932) - 2,022,782		501,787 47,288 (118,889) - 430,186 446,216 67,173 (11,602) - 501,787
					155,502

(Continued)

30

SHAN-LOONG TRANSPORTATION CO., LTD. Notes to the Financial Statements

Land Depreciation: Balance on January 1, 2021 $ - Depreciation - Disposals - Balance on December 31, 2021$ - Balance on January 1, 2020 $ - Depreciation - Disposals - Balance on December 31, 2020$ - Carrying amounts: Balance on December 31, 2021$ 2,006,541 Balance on January 1, 2020 $ 1,853,346 Balance on December 31, 2020$ 2,008,967	Land		Buildings		Gasoline equipment		Transportation equipment	Miscellaneous equipment	Miscellaneous equipment
			335,278 33,405 (48) 368,635 323,810 28,747 (17,279) 335,278 532,660 408,437 475,578		98,318 13,042 -		1,059,219 155,953 (77,628) 1,137,544 961,967 156,355 (59,103) 1,059,219 850,601 973,966 963,563		297,538 44,675 (41,913) 300,300 256,767 49,682 (8,911) 297,538 129,886 189,449 204,249
					111,360

• (i) The Company is restricted by the law and cannot acquire agricultural land in the name of the Company. As of December 31, 2020, some pieces of agricultural land located in Mailiao and Taoyuan amounting to $939,227, which were accounted under property, plant and equipment, were registered in the name of the former chairman of the Company, Wen-Ming Cheng (the chairman at the time of the transaction), and other individuals. In the first quarter of 2021, some part of the abovementioned land had been completed the transfer procedures after the change of land category. As of December 31, 2021, some pieces of agricultural land located in Mailiao and Taoyuan amounting to $228,581, which were accounted under property, plant and equipment, were registered in the name of the chairman of the Company, Jen-Hao Cheng, the former chairman of the Company, Wen-Ming Cheng (the chairman at the time of the transaction) and other individuals. The Company has the “Other rights certificate” of the land or has an agreement with both parties to verify that the Company is the actual owner of the land.

• (ii) In September 2020, the Company entered into a contract with a related party, Cheng Loong Corporation to purchase the land and building for office space located in Banqiao District, New Taipei City amounting to $169,189 (excluding tax). The registration has been completed in December 2020. Please refer to note (7)(b)(iv)(l) for the details.

• (iii) As of December 31, 2021 and 2020, the portion of property, plant and equipment of the Company had been pledged as collateral for its credit lines of the bank. Please refer to note (8).

(Continued)

31

SHAN-LOONG TRANSPORTATION CO., LTD. Notes to the Financial Statements

(h) Right-of-use assets

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

Cost or deemed cost: Balance on January 1, 2021 Additions Reductions Balance on December 31, 2021 Balance on January 1, 2020 Additions Reductions Balance on December 31, 2020 Depreciation: Balance on January 1, 2021 Depreciation Reductions Balance on December 31, 2021 Balance on January 1, 2020 Depreciation Reductions Balance on December 31, 2020 Carrying amount: Balance on December 31, 2021 Balance on January 1, 2020 Balance on December 31, 2020	Land		Buildings 1,279,117 102,765 (3,065) 1,378,817 1,057,744 224,276 (2,903) 1,279,117 335,697 181,132 (2,964) 513,865 161,767 176,084 (2,154) 335,697 864,952 895,977 943,420	Others 14,281 - - 14,281 14,281 - - 14,281 3,885 2,654 - 6,539 1,231 2,654 - 3,885 7,742 13,050 10,396	Total 1,746,353 184,927 (273,774)
					1,657,506
					1,478,805 270,451 (2,903)
					1,746,353
					441,091 236,448 (87,892)
					589,647
					207,569 235,676 (2,154)
					441,091
					1,067,859
					1,271,236
					1,305,262

The Company’s right-of-use assets increased resulting from the new lease contracts including gas stations, parking space and container yard. The decrease mainly came from terminating the lease contract with Cheng Loong which is located in Qingshui District, Taichung City.

(i) Short-term borrowings

December 31, 2021 Short-term borrowings $ - Unused short-term credit lines $ 515,000 Range of interest rates -%	December 31, 2020
	-
	695,000
	-%

For information on interest rate risk and liquidity risk of the Company, please refer to note (6)(r).

(Continued)

32

SHAN-LOONG TRANSPORTATION CO., LTD. Notes to the Financial Statements

(j) Long-term borrowings

Secured bank loans Less: current portion Unused long-term credit lines Range of interest rates	Currency	Maturity year December 31, 2021 2022~2025 $ 1,274,700 1,047,651 $ 227,049 $ 254,300 0.97%~1.3%	December 31, 2020 1,174,700 150,000
	NTD
			1,024,700
			324,300
			0.97%~1.45%

• (i) Issuance and repayment of the loans

The Company’s additional amounts in loans for the years ended December 31, 2021 and 2020, were $200,000 and $949,000, respectively; and the repayments, including prepaying the loans, were $100,000 and $989,300, respectively.

• (ii) As of December 31, 2021, the repayment schedule for the long-term borrowings was as follows:

Period 2022.01.01~2022.12.31 2023.01.01~2023.12.31 2024.01.01~2024.12.31 2025.01.01~2025.12.31	Amount
	$ 1,047,651 154,015 54,666 18,368 $ 1,274,700

• (iii) Please refer to note (6)(r) for the interest rate risk and liquidity risk information of the Company.

• (iv) Please refer to note (8) for the collateral for the long-term borrowings.

• (k) Lease liabilities

The lease liabilities of the Company were as follows:

December 31, 2021 Current $ 206,661 Non-current $ 885,136	December 31, 2020 231,817 1,094,694

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

(Continued)

33

SHAN-LOONG TRANSPORTATION CO., LTD. Notes to the Financial Statements

			2021	2020
The amounts recognized in profit or loss were as follows:
Interest on lease liabilities		$	16,453	18,060
Expenses relating to short-term leases		$	16,754	13,169
Lease modification gains (recorded as other gains and losses)		$	(3,401)	(9)
COVID-19-related rent concessions (recognized as deduction
of rent expenses)		$	-	(803)
The amount recognized in the statement of cash flows for the	Company was as follows:
			2021	2020
Total cash outflow for leases		$	263,565	255,735

(i) Leases of land and buildings

The Company leases a number of office space, gas stations, warehouses and land. These leases typically run for a period of 3 to 10 years.

• (ii) Other leases

The Company leases a number of stackers with short-term contract terms. The Company has chosen not to recognize right-of-use assets and lease liabilities for these leases.

(l) Employee benefits

(i) Defined benefit plans

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

Present value of the defined benefit obligations Fair value of plan assets Net defined benefit liabilities	December 31, 2021 $ (247,658) 147,473 $ (100,185)	December 31, 2020 (305,270) 209,165 (96,105)

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.

(Continued)

34

SHAN-LOONG TRANSPORTATION CO., LTD. Notes to the Financial Statements

The Company’ s Bank of Taiwan labor pension reserve account balance amounted to $171,756 as of December 31, 2021. 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.

2)

Movements in present value of the defined benefit obligations

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

Defined benefit obligations at January 1 Benefits paid Pensions for employees who are transferred from affiliated companies Current service costs and interest cost Remeasurement in net defined benefit liabilities (assets) Defined benefit obligations at December 31	2021 $ (305,270) 72,920 (1,301) (5,704) (8,303) $ (247,658)	2020 (306,942) 27,605 - (7,620) (18,313) (305,270)

• 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 Expected return on plan assets Remeasurement of net defined benefit liabilities (assets) Contributions paid by the employer Benefits paid Fair value of plan assets at December 31	2021 $ 209,165 1,297 2,413 7,518 (72,920) $ 147,473	2020 204,184 2,003 4,907 22,714 (24,643) 209,165

• 4) Movements of the effect of the asset ceiling

In 2021 and 2020, there were no movements on the effect of the Company’s defined benefit plans asset ceiling.

(Continued)

35

SHAN-LOONG TRANSPORTATION CO., LTD. Notes to the Financial Statements

• 5) Expenses recognized in profit or loss

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

Current service costs Interest cost Expected return on plan assets Operating cost Administration expenses	2021 $ 3,829 1,875 (1,297) $ 4,407 $ 2,318 2,089 $ 4,407	2020 4,623 2,997 (2,003) 5,617 2,643 2,974 5,617

• 6) Remeasurement of net defined benefit liabilities (assets) recognized in other comprehensive income

The Company’s remeasurement of the net defined benefit liability (asset) recognized in other comprehensive income, was as follows:

Accumulated amount at January 1 Recognized during the period Accumulated amount at December 31	2021 $ (156,557) (5,890) $ (162,447)	2020 (143,151) (13,406) (156,557)

• 7) Actuarial assumptions

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

Discount rate Future salary increase rate	December 31, 2021 December 31, 2020 % 0.625 % 0.625 % 1.000 % 1.000

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 $5,732.

The weighted average lifetime of the defined benefits plans is 12.93 years.

8) Sensitivity analysis

In determining the present value of the defined benefit obligation, the Company’ s management makes judgements and estimates in determining certain actuarial assumptions of the balance sheet date, which includes discount rate and future salary increase rate. Changes in actuarial assumptions may have significant impact on the amount of defined benefit obligation.

(Continued)

36

SHAN-LOONG TRANSPORTATION CO., LTD. Notes to the Financial Statements

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

December 31, 2021 Discount rate Future salary increasing rate December 31, 2020 Discount rate Future salary increasing rate	Influences of defined benefit obligations Increased 0.25% Decreased 0.25% $ (5,964) 6,182 6,074 (5,887) (7,360) 7,648 7,499 (7,262)

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 2021 and 2020.

(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 Company recognized the pension costs incurred from the contributions to the Bureau of the Labor Insurance amounted to $49,276 and $47,533 for the years ended December 31, 2021 and 2020, respectively.

(Continued)

37

SHAN-LOONG TRANSPORTATION CO., LTD. Notes to the Financial Statements

(m) Income taxes

(i) Income tax expenses

• 1) The components of income tax in the years 2021 and 2020 were as follows:

2021 Current tax expenses Current period $ 63,947 Land value increment tax 2,426 Adjustment for prior periods 97 66,470 Deferred tax expenses Origination and reversal of temporary differences 1,226 Under (over) provision in prior periods (204) 1,022 Income tax expenses $ 67,492 2) The amounts of income tax recognized directly in other comprehensive and 2020 were as follows: 2021 Items that will not be reclassified subsequently to profit or loss: Remeasurement from defined benefit plans $ (1,178) Unrealized gains (losses) on equity instruments at fair value through other comprehensive income 3,813 Share of other comprehensive income of subsidiaries, associates, and joint ventures accounted for using the equity method (10,053) $ (7,418) Items that may be reclassified subsequently to profit or loss: Exchange differences on translation of foreign financial statements $ 323

2020 71,406 - (4,367) 67,039 (2,957) 2,490 (467) 66,572 income for 2021 2020 (2,681) 20,036 18,061 35,416 388

(Continued)

38

SHAN-LOONG TRANSPORTATION CO., LTD. Notes to the Financial Statements

• 3) Reconciliation of income tax and profit before tax for 2021 and 2020 is as follows:

Profit before tax Income tax calculated based on local tax rate Net gains or losses on domestic investments accounted for using the equity method Tax-exempt income Land value increment tax Under (over) provision in prior periods Non-deductible expenses and others Income tax expenses	2021 $ 482,999 96,600 (26,629) (6,975) 2,426 (107) 2,177 $ 67,492	2020 437,906 87,581 (17,606) (4,800) - (1,877) 3,274 66,572

• (ii) Deferred tax assets and liabilities

• 1) Unrecognized deferred tax assets: None.

• 2) Recognized deferred tax assets and liabilities

Changes in the amount of deferred tax assets and liabilities for 2021 and 2020 were as follows:

Defined benefit plans Deferred tax assets: Balance on January 1, 2021 $ 15,816 Recognized in profit (loss) (362) Recognized in other comprehensive income 1,178 Balance on December 31, 2021 $ 16,632 Balance on January 1, 2020 $ 17,147 Recognized in profit (loss) (4,012) Recognized in other comprehensive income 2,681 Balance on December 31, 2020 $ 15,816	Exchange differences on translation 11,222 - (323) 10,899 11,610 - (388) 11,222	Others 10,964 (2,135) - 8,829 10,137 827 - 10,964	Total 38,002 (2,497) 855 36,360 38,894 (3,185) 2,293 38,002

(Continued)

39

SHAN-LOONG TRANSPORTATION CO., LTD. Notes to the Financial Statements

Unrealized gains (losses) on financial assets Deferred tax liabilities: Balance on January 1, 2021 $ 31,244 Recognized in (profit) loss - Recognized in other comprehensive income 3,813 Balance on December 31, 2021 $ 35,057 Balance on January 1, 2020 $ 11,208 Recognized in (profit) loss - Recognized in other comprehensive income 20,036 Balance on December 31, 2020 $ 31,244	Share of other comprehensive income accounted for using the equity method 18,061 - (10,053) 8,008 - - 18,061 18,061	Overseas investment income accounted under the equity method 59,610 (585) - 59,025 60,147 (537) - 59,610	Others 4,580 (890) - 3,690 7,695 (3,115) - 4,580	Total 113,495 (1,475) (6,240) 105,780 79,050 (3,652) 38,097 113,495

• (iii) Assessment of tax

The tax returns of the Company for the years through 2019 were assessed by the Taipei National Tax Administration.

(n) Capital and other equity

(i) Ordinary shares

As of December 31, 2021 and 2020, the number of authorized ordinary shares were both $1,800,000 with a par value of $10 per share, and of which $1,372,818 were issued. All issued shares were paid up upon issuance.

(ii) Capital surplus

The balances of capital surplus were as follows:

Additional paid-in capital Treasury share transactions Other	December 31, 2021 $ 520,206 61,912 1,241 $ 583,359	December 31, 2020
		520,206 58,934 1,241
		580,381

(Continued)

40

SHAN-LOONG TRANSPORTATION CO., LTD. Notes to the Financial Statements

(iii) Retained earnings

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

A portion of current period earnings and undistributed prior period earnings shall be reclassified as a special earnings reserve during earnings distribution. The amount to be reclassified should equal to the current-period total net reduction of other shareholders’ equity. For the year 2019 earnings distribution in 2020, the amount to be reclassified to special reserve shall be a portion of current-period earnings and undistributed priorperiod earnings. As for the year 2020 earnings distribution in 2021, the amount to be reclassified to special reserve shall be a portion of current-period earnings plus other line items in the retained earnings movements and undistributed prior-period earnings. 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.

－ 3) Retained earnings earnings distribution and dividend policy

Based on the Company’s article of incorporation amended before July 1, 2021, if there is any profit after tax after closing of books in a given year, the Company shall first offset the accumulated deficits, if any, and set aside 10% of it as legal reserve. Where such legal reserve amounts to the total paid-in capital, this provision shall not apply. Moreover, Company shall set aside or reserve a special reserve in accordance with laws and regulations. And then any remaining profit together with any 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.

Based on the Company’s article of incorporation amended after July 1, 2021, if there is any profit after tax after closing of books in a given year, the Company shall first offset the accumulated deficits, if any, and set aside 10% of it as legal reserve. The legal reserve shall be based on after-tax net income for the period and other profit items adjusted to the current year's undistributed earnings other than after-tax net income for the period. Where such legal reserve amounts to the total paid-in capital, this provision shall not apply. Moreover, the Company shall set aside or reserve a special reserve in accordance with laws and regulations. And then any remaining profit together with any 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.

(Continued)

41

SHAN-LOONG TRANSPORTATION CO., LTD. Notes to the Financial Statements

The abovementioned distribution shall be declared more than 30% to shareholders. The cash dividends shall not be lower than 10% of the total cash and stock dividends. However, stock dividends instead of cash dividends are declared if the cash dividends per share are less than NT$0.1 (dollars). When there is a deduction from shareholders’ equity, an amount equal to the deduction item is set aside as a special reserve (which does not qualify for earnings distribution). If the dividends per share are less than NT$0.5 (dollars), they can be decided not to distribute.

Based on the resolutions of the annual stockholders’ meetings held on July 1, 2021 and May 29, 2020, the appropriations of dividends from the distributable retained earnings of 2020 and 2019, respectively, were as follows:

==> picture [397 x 80] intentionally omitted <==

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

2020 2019
Amount Total Amount Total
per share amount per share amount
Dividends distributed to
ordinary shareholders:
Cash $ 2.2 302,020 1.8 247,107
----- End of picture text -----

On March 7, 2022, the Company's Board of Directors resolved to appropriate the 2021 earnings. These earnings were appropriated as follows:

Dividends distributed to ordinary shareholders: Cash	2021	2021
	Amount per share $ 2.5	Total amount
		343,204

• (iv) Treasury shares

In accordance with Securities and Exchange Act requirements, the number of shares repurchased should not exceed 10% of all shares outstanding. Also, the value of the repurchased shares should not exceed the sum of the Company’ s retained earnings, share premium, and realized capital reserves.

In accordance with the requirements of Securities and Exchange Act, treasury shares held by the Company should not be pledged, and do not hold any shareholder rights before their transfer.

As of December 31, 2021 and 2020, since the subsidiary of the Company, Shan-Loong Investment, held a number of the ordinary shares of the Company, the Company accounted it under the treasury stock. The total shares and amounts were as follows:

	December 31,	December 31,	2021	December	31, 2020
	Shares			Shares
	(thousands)		Amount	(thousands)	Amount
Shan-Loong Investment	1,353	$	31,863	1,353	31,863
Fair value		$	49,401		43,514

(Continued)

42

SHAN-LOONG TRANSPORTATION CO., LTD. Notes to the Financial Statements

For the years ended December 31, 2021 and 2020, Shan-Loong Investment, received the cash dividend which were distributed by the Company, amounting to $2,978 and $2,436, respectively, which were recorded as capital surplus - treasury share transactions.

(o) Earnings per share

The Company’s basic and diluted earnings per share were calculated as follows:

2021 Basic earnings per share: Profit attributable to ordinary shareholders of the Company $ 415,507 Weighted average number of ordinary shares (thousands) 135,928 Basic earnings per share (dollars) $ 3.06 Diluted earnings per share: Profit attributable to ordinary shareholders of the Company (after adjustment the influence of potential ordinary shares) $ 415,507 Weighted average number of ordinary shares (thousands) 135,928 Dilutive effect of potential ordinary shares (thousands): Employee share bonus 707 Weighted average number of ordinary shares (after adjustment the influence of potential ordinary shares) 136,635 Diluted earnings per share (dollars) $ 3.04	2020
	371,334
	135,928
	2.73
	371,334
	135,928 567
	136,495
	2.72

(p) Revenue from contracts with customers

(i) Disaggregation of revenue

Primary geographical markets: Taiwan Primary geographical markets: Taiwan			2021	2021
	Transportation segment $ 3,649,042		Gasoline station segment Other segment 13,155,382 433,331 2020		Total
					17,237,755
	Transportation segment $ 3,595,373		Gasoline station segment 10,534,961	Other segment 946,550	Total
					15,076,884

(Continued)

43

SHAN-LOONG TRANSPORTATION CO., LTD. Notes to the Financial Statements

(ii) Contract balances

Notes and accounts receivable Less: allowance for impairment Contract liabilities – Unearned revenue	December 31, 2021 $ 775,161 (2,493) $ 772,668 $ 21,594	December 31, 2020 703,246 (2,493) 700,753 13,286	January 1, 2020 741,272 (2,493) 738,779 12,826

For details on accounts receivable and allowance for impairment, please refer to note (6)(c).

The major change in the balance of contract assets and liabilities is the difference between the time frame in the performance obligation to be satisfied and the payment to be received.

(q) Employee compensation and directors' and supervisors' remuneration

Based on the Company’ s articles of incorporation, if there is any profit in a fiscal year, the Company’s pre-tax profits in such fiscal year, prior to deduction of compensations to employees, shall be distributed to employees as compensations in an amount of not less than one percent (1%) of such profits. In the event that the Company has accumulated losses, the Company shall reserve an amount to offset accumulated losses. The compensations to employees as mentioned above may be distributed in the form of stock or cash. Employees who are entitled to receive the above-mentioned employee remuneration, in shares or cash, include the employees of the Company’s controlling and subordinate companies pursuant to the Company Act. A company may, by a resolution adopted by a majority vote at a meeting of board of directors attended by two-thirds of the total number of directors, have the profit distributable as employees’ compensation ; and in addition thereto a report of such distribution shall be submitted to the shareholders’ meeting. A company which has the profit distributed to employees in the form of shares by a resolution of the meeting of board of directors in accordance with the provision of the preceding paragraph may resolve, at the same meeting of the board of directors, to distribute the shares by way of new shares to be issued by the company or existing shares to be re-purchased by the company.

The Company's remuneration to employees were $22,000 and $15,000, respectively, and the remuneration to directors were $0 for the years ended December 31, 2021 and 2020. The estimated amounts mentioned above are calculated based on the net profit before tax, excluding the remuneration to employees and directors of each period, multiplied by the percentage of the remuneration to employees and directors as specified in company's articles. The remuneration were expensed under operating costs or operating expenses during 2021 and 2020.

The amounts, as stated in the financial statements, are identical to those of the actual distributions in 2021 and 2020. Related information would be available at the Market Observation Post System Website.

(Continued)

44

SHAN-LOONG TRANSPORTATION CO., LTD. Notes to the Financial Statements

• (r) Financial instruments

• (i) Credit risk

  • 1) Credit risk exposure

The carrying amount of financial assets represents the maximum amount exposed to credit risk.

• 2) Concentration of credit risk

As of December 31, 2021 and 2020, the accounts receivable amounted to $250,633 and $252,845, respectively, comes from one of the Company’s significant customer, whose main activities is the manufacturing and sale of paper products.

• 3) Receivables credit risk

For credit risk exposure of notes and accounts receivable, please refer to note 6(c). Other financial assets measured at amortized cost include other receivables, please refer to note (6)(d).

The abovementioned other receivables are considered to have low risk, and thus, the impairment provision recognized during the period was limited to 12 months expected losses. Regarding how the financial instruments are considered to have low credit risk, please refer to note (4)(f).

The loss allowance provision of other receivables was determined as follows:

The loss allowance provision of other receivables was determined as follows:
2021 Balance on January 1 (same as balance on December 31) $ 13,100	2020
	13,100

• (ii) Liquidity risk

The following table shows the contractual maturities of financial liabilities, including estimated interest payments.

Carrying amount December 31, 2021 Non-derivative financial liabilities Notes and accounts payable $ 1,449,850 Other payables 420,053 Lease liabilities (including current and non-current) 1,091,797 Long-term borrowings (including current portion) 1,274,700 Guarantee deposits received 17,112 $ 4,253,512	Contractual cash flows (1,449,850) (420,053) (1,143,075) (1,290,233) (17,112) (4,320,323)	Within a year (1,449,850) (420,053) (220,008) (1,057,512) - (3,147,423)	1~2 years - - (189,110) (157,084) - (346,194)	Over 2 years - - (733,957) (75,637) (17,112) (826,706)

(Continued)

45

SHAN-LOONG TRANSPORTATION CO., LTD. Notes to the Financial Statements

Carrying amount December 31, 2020 Non-derivative financial liabilities Notes and accounts payable $ 1,314,377 Other payables 394,695 Lease liabilities (including current and non-current) 1,326,511 Long-term borrowings (inculding current portion) 1,174,700 Guarantee deposits received 15,676 $ 4,225,959	Contractual cash flows (1,314,377) (394,695) (1,391,845) (1,200,915) (15,676) (4,317,508)	Within a year (1,314,377) (394,695) (248,215) (162,480) - (2,119,767)	1~2 years - - (228,108) (906,154) - (1,134,262)	Over 2 years - - (915,522) (132,281) (15,676) (1,063,479)

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

As of December 31, 2021 and 2020, the Company’s financial assets and liabilities were not exposed to significant foreign currency risks.

(iv) Interest rate analysis

The details of financial assets and liabilities exposed to interest rate risk were as follows:

Variable rate instruments (Carrying amount): Financial assets Financial liabilities	December 31, 2021 December 31, 2020 $ 503,014 363,080 - -

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 and liabilities with variable interest rates, the analysis is based on the assumption that the amount of assets and liabilities outstanding at the reporting date were 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’s management’s assessment of the reasonably possible interest rate change.

If the interest rate had increased or decreased by 0.25%, the Company’s net profit before tax would have increased or decreased by $1,258 and $908, respectively, for the years ended December 31, 2021 and 2020, which would be mainly resulted from the bank deposits.

(Continued)

46

SHAN-LOONG TRANSPORTATION CO., LTD. Notes to the Financial Statements

(v) Other market price risk

For the years ended December 31, 2021 and 2020, 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:

Prices of securities at the reporting date Increasing 5% Decreasing 5%	2021	Profit before tax - -	2020
	Other comprehensive income before tax $ 40,336 $ (40,336)		Other comprehensive income before tax 40,827 (40,827)	Profit before tax
				-
				-

• (vi) Fair value of financial instruments

• 1) Procedure of valuation and Fair value hierarchy

The Company’ s accounting policies and disclosure include fair value method on financial assets and financial liabilities. The Company’s management is responsible in performing independent test on fair value by using independent source of information to obtain the fair value which is close to the market status. The management also confirms the independence, reliability and matching of the information source, and regularly test the valuation model, update the input and other information, and make necessary adjustment to ensure the output of valuation is reasonable.

The Company uses observable market data to evaluate its assets and liabilities when it is possible. The different inputs of levels of fair value hierarchy in determining the fair value are as follows:

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

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

• Level 3: inputs for assets or liabilities that are not based on observable market data (unobservable inputs).

• 2)

• The categories and the fair value of financial instruments

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:

(Continued)

47

SHAN-LOONG TRANSPORTATION CO., LTD. Notes to the Financial Statements

Financial assets at fair value through other comprehensive income Stock listed on domestic markets Unquoted equity instruments Subtotal Financial assets measured at amortized cost Cash and cash equivalents Notes and accounts receivable, net Notes and accounts receivable- related parties, net Other current financial assets Refundable deposits (recorded as other non-current assets) Subtotal Financial liabilities measured at amortized costs Notes and accounts payable Other payables Lease liabilities (including current and non-current) Long-term borrowings (including current portion) Guarantee deposits		December 31, 2021	December 31, 2021	December 31, 2021
	Carrying amount $ 683,977 122,741 806,718 513,998 520,683 251,985 28,350 202,150 1,517,166 $ 2,323,884 $ 1,449,850 420,053 1,091,797 1,274,700 17,112 $ 4,253,512		Fair Value
		Level 1 683,977 - - - - - - - - - - -	Level 2 - - - - - - - - - - - -	Level 3 Total - 683,977 122,741 122,741 - - - - - - - - - - - - - - - - - - - -

(Continued)

48

SHAN-LOONG TRANSPORTATION CO., LTD. Notes to the Financial Statements

Financial assets at fair value through other comprehensive income Stock listed on domestic markets Unquoted equity instruments Subtotal Financial assets measured at amortized cost Cash and cash equivalents Notes and accounts receivable, net Notes and accounts receivable- related parties, net Other current financial assets Refundable deposits (recorded as other non-current assets) Subtotal Financial liabilities measured at amortized costs Notes and accounts payable Other payables Lease liabilities (including current and non-current) Long-term borrowings (including current portion) Guarantee deposits		December 31, 2020	December 31, 2020	December 31, 2020
	Carrying amount $ 658,788 157,748 816,536 377,475 445,160 255,593 28,192 190,176 1,296,596 $ 2,113,132 $ 1,314,377 394,695 1,326,511 1,174,700 15,676 $ 4,225,959		Fair Value
		Level 1 658,788 - - - - - - - - - - -	Level 2 - - - - - - - - - - - -	Level 3 Total - 658,788 157,748 157,748 - - - - - - - - - - - - - - - - - - - -

3) Valuation techniques for financial instruments not measured at fair value

The Company’s valuation techniques and assumptions used for financial instruments not measured at fair value are as follows:

Unquoted liability instruments and financial liabilities measured at amortized cost: If there is quoted price generated by transactions, the recent transaction price and quoted price data is used as the basis for fair value measurement. However, if no quoted prices are available, the discounted cash flows are used to estimate fair values.

(Continued)

49

SHAN-LOONG TRANSPORTATION CO., LTD. Notes to the Financial Statements

• 4) Valuation techniques for financial instruments measured at fair value

Non-derivative financial instruments

Financial instruments trade in active markets is based on quoted market prices. The quoted price of a financial instrument obtained from main exchanges and on-the-run bonds from Taipei Exchange can be used as a base to determine the fair value of the listed companies’ equity instrument and debt instrument of the quoted price in an active market.

If a quoted price of a financial instrument can be obtained in time and often from exchanges, brokers, underwriters, industrial union, pricing institute, or authorities and such price can reflect those actual trading and frequently happen in the market, then the financial instrument is considered to have a quoted price in an active market. If a financial instrument is not in accord with the definition mentioned above, then it is considered to be without a quoted price in an active market. In general, market with low trading volume or high bid-ask spreads is an indication of a non-active 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 or other valuation technique including a model using observable market data at the reporting date.

The measurement of fair value of a non-active market financial equity instruments held by the Company which do not have quoted market prices are based on the comparable market approach, with the use of key assumptions of price-to-book ratio of comparable listed companies as its basic measurement. These assumptions have been adjusted for the effect of discount for lack of marketability of the equity securities.

• 5) There were no transfers from one level to another of the Company for the years ended December 31, 2021 and 2020.

• 6) Reconciliation of Level 3 fair values

Balance on January 1, 2021 Total gains and losses recognized: In other comprehensive income Purchase Derecognized Balance on December 31, 2021	Financial assets at fair value through other comprehensive income Unquoted equity instruments $ 157,748 34,095 7,672 (76,774) $ 122,741

(Continued)

50

SHAN-LOONG TRANSPORTATION CO., LTD. Notes to the Financial Statements

Balance on January 1, 2020 Total gains and losses recognized: In other comprehensive income Balance on December 31, 2020	Financial assets at fair value through other comprehensive income	Financial assets at fair value through other comprehensive income
	Unquoted equity instruments $ 102,807 54,941 $ 157,748	Unquoted equity instruments

For the years ended December 31, 2021 and 2020, the total gains and losses that were included in “unrealized gains and losses from financial assets at fair value through other comprehensive income” were as follows:

mprehensive income” were as follows:
		2021	2020
tal 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”	$	1,036	54,941

Total gains and losses recognized:

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

The Company’ s financial instruments that use Level 3 inputs to measure fair value include "fair value through other comprehensive income – equity investments".

Most of fair value measurements of the Company which are categorized as equity investment instruments into level 3 have several significant unobservable inputs. Significant unobservable inputs of equity instruments without quoted price are independent of each other.

Quantified information of significant unobservable inputs was as follows:

Item	Valuation technique Comparable transaction method 〃 Net asset value method	Significant unobservable inputs Inter-relationship between significant unobservable inputs and fair value measurement ‧ Lack-of-Marketability discount rate (30%~35% and 30%, respectively, on December 31, 2021 and 2020) ‧ The higher the Lack- of-Marketability discount rate is, the lower the fair value will be. ‧ Price-Book ratio (0.91~1.6 and 1.13~2.82, respectively, on December 31, 2021 and 2020) ‧ The higher the multiple is, the higher the fair value will be. ‧ Net Asset Value ‧ Not applicable
Financial assets at fair value through other comprehensive income －unquoted equity instruments 〃 〃

(Continued)

51

SHAN-LOONG TRANSPORTATION CO., LTD. Notes to the Financial Statements

• 8) Fair value measurements in Level 3 – sensitivity analysis of reasonably possible alternative assumptions

The Company’s fair value measurement on financial instruments is reasonable. However, the measurement would be different if different valuation models or valuation parameters are used. For financial instruments using level 3 inputs, if the valuation parameters changed, the impacts on other comprehensive income or loss are as follows:

December 31, 2021 Financial assets at fair value through other comprehensive income 〃 December 31, 2020 Financial assets at fair value through other comprehensive income 〃	Input Lack-of- Marketability discount rate Price-to-Book Ratio Lack-of- Marketability discount rate Price-to-Book Ratio	Move up or Other comprehensive income down Favorable change Unfavorable change 5% $ 2,061 (2,097) 5% $ 1,964 (1,999) 5% $ 2,837 (2,786) 1% $ 12,961 (12,873)

The favorable and unfavorable impacts reflect the movement of the fair value, in which the fair value is calculated by using the significant unobservable inputs in the valuation technique. The table above shows the effects of one unobservable input, without considering the inter-relationships with another unobservable input for financial instrument, if there are one or more unobservable inputs.

(s) 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

The following likewise discusses the Company’ s objectives, policies and processes for measuring and managing the above mentioned risks. For more disclosures about the quantitative effects of these risks exposures, please refer to the respective notes in the accompanying financial statements.

(Continued)

52

SHAN-LOONG TRANSPORTATION CO., LTD. Notes to the Financial Statements

(ii) Structure of risk management

The Board of Directors has overall responsibility for the control and oversight of the risk management framework. The financial department proposes the evaluation plan and benefit analysis and reports to management for approving. The transactions are authorized to the chairman of the Company to operate, and will be approved by the Board of Directors at the most recent board meeting.

The internal auditors of the Company perform the regularly or irregularly risk management control and operating activity audit in accordance with the internal audit plans. The result will be reported to the Audit Committee periodically. The Company has no transactions in financial instruments for the purpose of speculation.

(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 cash at bank, receivables from customers and investments in securities.

1) Accounts receivable and other receivables

The Company 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. Purchase limits are established for each customer, these limits are reviewed periodically. Customers that fail to meet the Company’s benchmark creditworthiness may transact with the Company only on a prepayment basis.

In order to mitigate account receivable credit risk, the Company constantly assesses the financial status of the customers, and requests the customers to provide guarantee or security if necessary. The Company regularly accesses the collectability of accounts receivable and recognizes allowance for accounts receivable. The impairment losses are always within management’s expectation.

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, corporate organization 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.

3) Guarantees

Pursuant to the Company’s policy, it is only permissible to provide financial guarantees to the entities listed in the policy. As of December 31, 2021 and 2020, the guarantees provided to the subsidiaries amounted to $150,000 and $0, respectively.

(Continued)

53

SHAN-LOONG TRANSPORTATION CO., LTD. Notes to the Financial Statements

(iv) Liquidity risk

The Company manages sufficient cash and cash equivalents so as to cope with its operations and mitigate the effects of fluctuations in cash flows. The Company’s management supervises the banking facilities to ensures they are in compliance with the terms of loan agreements.

The loans and borrowings from the bank form an important source of liquidity for the Company. Please refer to note 6(i) and 6(j) for the unused credit lines of bank loans as of December 31, 2021 and 2020.

(v) Market risk

Market risk is the risk that changes in market prices, such as 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) Interest rate risk

The Company borrows funds on floating interest rate, therefore, the Company has the risk of cash flow.

2) Other market price risk

The Company is exposed to equity price risk due to the investments in listed stock investments and non-listed stock investments. This is a strategic investment and is not held for trading. The Company does not actively trade in these investments. The material investments of investment portfolio are managed individually and their purchase decision are all approved by the finance department.

(t) Capital management

The policy of capital management made by the Board of Directors is to maintain a strong capital base so as to stabilize the confidence of the investors, creditors and the public market and to sustain future development of the business. Capital consists of ordinary shares, capital surplus and retained earnings. The Board of Directors monitors the return on capital as well as the level of dividends to ordinary shares.

The Company monitors capital structure through the regular review of the asset-debt ratio. As of December 31, 2021 and 2020, the debt ratios of the Company were as follows:

Total liabilities Total assets Debt-to-asset ratio	December 31, 2021 December 31, 2020 $ 4,537,919 4,539,860 9,794,029 9,626,048 46 % 47 %

As of December 31, 2021, there were no changes in the Company’ s approach of capital management.

(Continued)

54

SHAN-LOONG TRANSPORTATION CO., LTD. Notes to the Financial Statements

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

The Company’s investing and financing activities which did not affect the current cash flow for the years ended December 31, 2021 and 2020, were as follows:

• (i) The acquisition of right-of -use assets by lease, please refer to notes (6)(h) and (6)(k).

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

Long-term borrowings Guarantee deposits Lease liabilities Total liabilities from financing activities Long-term borrowings Guarantee deposits Lease liabilities Total liabilities from financing activities	January 1, 2021 $ 1,174,700 15,676 1,326,511 $ 2,516,887 January 1, 2020 $ 1,215,000 15,201 1,282,127 $ 2,512,328	Cash flows 100,000 1,436 (230,358) (128,922) Cash flows (40,300) 475 (225,309) (265,134)	Non-cash changes Changes in lease payments - - (4,356) (4,356) Non-cash changes Changes in lease payments - - 269,693 269,693	December 31, 2021
				1,274,700 17,112 1,091,797
				2,383,609
				December 31, 2020
				1,174,700 15,676 1,326,511
				2,516,887

(7) Related-party transactions:

(a) Names and relationship with related parties

The followings are entities that have had transactions with related party during the periods covered in parent-company-only financial statements:

Name of related party

Cheng Loong Corporation (Cheng Loong)

Shine Far Construction Co., Ltd.

Shine Far Property Co., Ltd.

Gemtech Optoelectronics Corp.

Relationship with the Company

This Company is the corporate director of the Company

• This Company is the corporate director of the Company

• Its parent company is the corporate director of the Company

• The same chairman of the Board with Cheng Loong

(Continued)

55

SHAN-LOONG TRANSPORTATION CO., LTD. Notes to the Financial Statements

Name of related party Relationship with the Company Ko Loong Industry Co., Ltd. It has the same chairman as that of the Board of the Company and became an associate of the Company since April 2021 Sun Favorite Co., Ltd. Half of the directors of this company are the directors of the Company Chung Ming International Limited Taiwan Its ultimate parent company is the corporate Branch director of the Company Wen Gin Development Co., Ltd. (Wen Gin The relationship between the chairman of the Development) Company and of this company is within second degree of kinship Shan Loong Investment Co., Ltd. (Shan Loong A subsidiary of the Company. Investment) Shan Loong International & Customs Broker Co., A subsidiary of the Company. Ltd. (Shan Loong Customs Broker) Shan Loong Motors Co., Ltd. (Shan Loong A subsidiary of the Company. Motors) Shang-Loong International Holdings Co., Ltd. A subsidiary of the Company. (Shang-Loong International) Long Yun Investment Holding Co., Ltd. A subsidiary of the Company. (Long Yun) Loong De Investment Co., Ltd. (Loong De) A subsidiary of the Company. Shanghai Shan Tong Logistic Co., Ltd. A subsidiary of the Company. (Shanghai Shan Tong ) Shan-Loong Logistics Co., Ltd. A subsidiary of the Company.

Ko Loong Industry Co., Ltd.

Sun Favorite Co., Ltd.

Chung Ming International Limited Taiwan Branch Wen Gin Development Co., Ltd. (Wen Gin Development)

• (b) Significant transactions with related parties

(i) Sales

The amounts of significant sales transactions between the Company and related parties were as followings:

Other related parties Subsidiaries Associates	Sales	Sales
	2021 $ 1,483,344 15,697 78 $ 1,499,119	2020
		1,402,439 11,376 -
		1,413,815

Sales prices and other transaction terms for related parties were similar to those of the thirdparty customers.

(Continued)

56

SHAN-LOONG TRANSPORTATION CO., LTD. Notes to the Financial Statements

(ii) Receivables from related parties

The receivables from related parties were as follows:

Account	Related-party categories	December 31, 2021 $ 250,020 656 1,294 15 296 101 94 $ 252,476	December 31, 2020
Accounts receivables 〃 〃 〃 Other receivables (recorded as other current financial assets) 〃 〃	Other related parties—Cheng Loong Other related parties Subsidiaries Associates Other related parties Subsidiaries—Shan Loong Motors Subsidiaries		252,332 513 2,748 - 425 8,394 29
			264,441

• (iii) The costs and expenses paid to related parties

The costs and expenses paid to related parties were as follows:

Account	Relationship	2021 $ 40,553 127,864 5,255 2,245 $ 175,917	2020
Operating costs and operating expenses 〃 〃 〃	Other related parties Subsidiaries—Shan Loong Motors Subsidiaries Associates		46,275 6,956 4,323 -
			57,554

(iv) Purchases of property, plant and equipment

• 1) In December 2020, the Company purchased the land and building located in Banqiao District, New Taipei City amounting to $169,189 (excluding tax) from a related party, Cheng Loong. Pricing of the above land and building was based on the valuation report from CCIS Real Estate Joint Appraisers Firm and Zhonglian Real Estate Appraiser Firm. As of December 31, 2020, the process for transferring the property has been completed and the above payable had been fully paid.

(Continued)

57

SHAN-LOONG TRANSPORTATION CO., LTD. Notes to the Financial Statements

• 2) The Company purchased the transportation equipment from the related parties and engaged related parties to engineer the facilities on the leased land. The total price was as follows:

Other related parties Subsidiaries—Shan Loong Motors Associates	Total price	Total price
	2021	2020
	$ 14,868 34,605 18,969 $ 68,442	8,932 440 -
		9,372

(v) Payable to related parties

The payables to related parties resulting from the above transactions were as follows:

Account Accounts payable 〃 Other payables 〃 〃	Relationship Other related parties Subsidiaries Other related parties Subsidiaries Associates	December 31, 2021 $ 1,008 649 2,618 17,981 3,421 $ 25,677	December 31, 2020
			2,121 268 1,238 7,766 -
			11,393

(vi) Disposal of transportation equipment

The total disposal price and unreceived balance of transportation equipment sold to related parties were as follows:

Other related parties	Total price	Total price	Total price	Other receivables from related parties	Other receivables from related parties
	2021		2020	December 31, 2021	December 31, 2020
	$ 1,262		994	-	-

For the years ended December 31, 2021 and 2020, the losses on disposal of transportation equipment amounted to $483 and $50, respectively.

(Continued)

58

SHAN-LOONG TRANSPORTATION CO., LTD. Notes to the Financial Statements

(vii) Lease

• 1) Lessee

The Company rented several office spaces and lands from Cheng Loong. The rental fee is determined based on nearly office rental rates. The details of the above lease transactions are as follows:

Other related parties－ Cheng Loong	Lease liabilities December 31, 2021 December 31, 2020 $ 50,424 274,504	Lease liabilities December 31, 2021 December 31, 2020 $ 50,424 274,504		Interest expense	Interest expense
	December 31, 2021 $ 50,424			2021 2,586	2020
		274,504			4,042

• 2) Lessor

The Company rented out the office building to other related parties and its subsidiaries. The details of the above lease transactions are as follows:

Other related parties Subsidiaries	Rental income (recorded as other income)	Rental income (recorded as other income)		Other receivables from related parties	Other receivables from related parties
	2021 $ 3,000 1,103 $ 4,103	2020		December 31, 2021	December 31, 2020
		3,000 -		- - -	- -
		3,000			-

(viii) Guarantees

As of December 31, 2021 and 2020, the guarantees provided to subsidiaries were $150,000 and $0, respectively.

• (c) Key management personnel compensation

Key management personnel compensation comprised:

Key management personnel compensation comprised:
2021 Short-term employee benefits $ 42,541 Post-employment benefits 442 $ 42,983	2020
	37,509 652
	38,161

(Continued)

59

SHAN-LOONG TRANSPORTATION CO., LTD. Notes to the Financial Statements

(8) Pledged assets:

The carrying values of pledged assets were as follows:

Pledged assets	Object	December 31, 2021 $ 90,562 17,532 71,414 $ 179,508	December 31, 2020
Property, plant and equipment－land Property, plant and equipment－buildings Refundable deposits (deposit certificate)	Long-term borrowings 〃 Deposits for performance guarantee		90,562 20,026 65,859
			176,447

(9) Significant commitments and contingencies:

• (a) As of December 31, 2021 and 2020, the Company’s unrecognized contractual commitments for gas station engineering and office renovation amounted to $2,671 and $18,394, respectively.

• (b) As of December 31, 2021 and 2020, the Company had outstanding stand-by letters of credit provided by the banks totaling $2,005,000 and $1,755,000, respectively, for purposes of gasoline purchase and transportation, etc.

(10) Losses due to major disasters: None

(11) Subsequent events: None

(12) Others:

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

By function By item		2021			2020
	Operating cost	Operating Expenses	Total	Operating cost	Operating Expenses	Total
Employee benefits Salary Labor and health insurance Pension Remuneration of directors Others Depreciation	402,086 36,544 20,918 - 209 217,114	718,151 71,959 32,765 17,280 22,320 266,409	1,120,237 108,503 53,683 17,280 22,529 483,523	392,787 33,913 20,153 - 253 230,539	719,439 66,456 32,997 18,320 21,913 254,577	1,112,226 100,369 53,150 18,320 22,166 485,116

(Continued)

60

SHAN-LOONG TRANSPORTATION CO., LTD. Notes to the Financial Statements

For the years ended December 31, 2021 and 2020, the information about number of employees and employee benefit expenses of the Company is as follows:

Number of employees Number of directors (non-employees) Average employee benefit expenses Average salary expenses Percentage of change in average salary expense of employees Remuneration for supervisors

The Company's salary and remuneration policy (including directors, managers and employees) is as follows:

• (i) The remuneration to managers and employees is divided into fixed and variable salaries. Fixed salary is paid monthly regardless of profit or loss. On the other hand, variable salary is employee remuneration, development bonus, and year-end performance bonus, which are determined based on the contribution of the Company, the overall environment, and market standards that reflect the performance of the job.

• (ii) The directors who conduct the Company's business shall receive the remuneration regardless of the operating profit or loss. The Board approves the directors’ remuneration, which is determined based on the extent and value of the service provided for the management of the Company and the peer industry level.

(13) Additional 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 for the year ended December 31, 2021.

• (i) Loans to other parties: None

• (ii) Guarantees and endorsements for other parties:

No.	Name of guarantor	Counter-party of guarantee and endorsement	Counter-party of guarantee and endorsement	Limitation on amount of guarantees and endorsements for a specific enterprise	Highest balance for guarantees and endorsements during the period	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	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
0	The Company	Shan-Loong Motors	Note2	2,628,055	150,000	150,000	-	-	% 2.85	5,256,110	Y	-	-

Note 1: The total amount of endorsements shall not exceed the Company's net assets, and the endorsements for a single company shall not exceed 50% of the Company's net assets.

Note 2: Subsidiary whose over 50% common stock is directly or indirectly owned.

(Continued)

61

SHAN-LOONG TRANSPORTATION CO., LTD. Notes to the Financial Statements

(iii) Securities held as of December 31, 2021 (excluding investment in subsidiaries, associates and joint ventures):

(In thousands of shares)

					(In thousands of	(In thousands of	(In thousands of	shares)
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 〃 〃 〃 〃 〃 Shan Loong Investment Co., Ltd. 〃 〃 〃 Shan Loong Customs Broker Shan-Loong Internationl	Stock: Cheng Loong Corporation stock Gemtech Optoelectronics Corp. stock Cheng Loong Investment Co., Ltd. stock Shin Loong Lifecare Corp. stock Yueh Loong Co.,Ltd. Stock Shine Far Co., Ltd. Stock Stocks: Cheng Loong Corporation stock Shan Loong Transportation Co., Ltd. Stock Cheng Loong investment Co., Ltd. Stock Yueh Loong Co., Ltd. stock Stocks: Cheng Loong Corporation stock Chung Loong Paper Holdings Limited	Cheng Loong is the corporate director of the Company The same chairman of the Board with Cheng Loong - - - - - Parent company - - - -	Non current financial assets at fair value through other comprehensive income 〃 〃 〃 〃 〃 Non-current financial assets at fair value through other comprehensive income 〃 〃 〃 Non-current financial assets at fair value through other comprehensive income 〃	19,376 3,644 600 350 323 270 31,819 1,353 1,200 29 7,155 3,349	683,977 72,734 29,214 2,317 5,379 13,097 1,123,200 49,401 58,362 476 252,572 204,805	1.75% 19.29% 4.62% 5.83% 10.78% 0.87% 2.87% 0.99% 9.23% 0.95% 0.65% 5.00%	683,977 72,734 29,214 2,317 5,379 13,097 1,123,200 49,401 58,362 476 252,572 204,805

(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

(Continued)

62

SHAN-LOONG TRANSPORTATION CO., LTD. Notes to the Financial Statements

(vii) Related-party transactions for purchases and sales with amounts exceeding the lower of NT$100 million or 20% of the capital stock:

Name of company	Related party	Nature of relationship	Transaction details	Transaction details	Transaction details	Transaction details	Transaction different fr	s with terms om others	Notes/Trade receivables (payable)	Notes/Trade receivables (payable)	Note
			Purchase/ Sale	Amount	Percentage of total purchases/sales	Payment terms	Unit price	Payment terms	Ending balance	Percentage of total notes/trade receivables (payable)
The Company Shan Loong Motors Shan Loong international & Customs Broker Co., Ltd. Shan Loong international & Customs Broker Co., Ltd. Shan-Loong Logistics Co., Ltd.	Cheng Loong The Company Cheng Loong Chung Ming International Limited Cheng Loong Binh Duong Paper Co., Ltd	Cheng Loong is the corporate director of the Company Parent company This Company is the corporate director of the Company Its ultimate parent company is the corporate director of the Company Its ultimate parent company is the corporate director of the Company	Freight and gas revenue Revenue from truck sales, maintenance and repair Customs agent revenue Customs agent revenue Freight transportation revenue	(1,476,881) (162,469) (101,649) (168,000) (118,969)	% (8.60) % (29.71) % (10.57) % (17.47) % (47.75)	20-80 days 25 days 60 days 25 days 60 days	There is no difference to those of the third-party 〃 〃 〃 〃	No difference 〃 〃 〃 〃	Accounts receivable 250,020 Accounts receivable 17,442 Accounts receivable 16,168 Accounts receivable 8,553 Accounts receivable 17,297	32.36% 62.06% 11.15% 5.90% 56.02%

(viii) Receivables from related parties with amounts exceeding the lower of NT$100 million or 20% of the capital stock:

Name of company	Related-party	Nature of relationship	Ending balance	Turnover rate	Overdue	Overdue	Amounts received in subsequent period	Loss allowance
					Amount	Action taken
The Company	Cheng Loong	Cheng Loong is the corporate director of the Company	250,020	5.88	-		Accounts receivable 242,146	-

Note 1: Information as of February 28, 2022.

(ix) Trading in derivative instruments: None.

(Continued)

63

SHAN-LOONG TRANSPORTATION CO., LTD. Notes to the Financial Statements

(b) Information on investees:

The following is the information on investees (excluding information on investees in Mainland China):

China):	China):
										(In thousands of shares)
Name of investor	Name of investee	Location	Main businesses and products	Original investment amount		Balance as	of ending of	the period	Net income (losses) of investee (Note 2)	Share of profits /losses of investee (Note 2)	Note
				December 31, 2021 (Note 1)	December 31, 2020 (Note 1)	Shares	Percentage of ownership	Carrying value (Note 1)
The Company The Company The Company The Company The Company Shan-Loong International Shan-Loong International Loong De	Shan-Loong Investment Shan Loong Customs Broker Shan-Loong International Shang Loong Motors Ko Loong Industry Long Yun Loong De Shan-Loong Logistics Co., Ltd.	New Taipei City Keelung British Virgin Islands New Taipei CIty New Taipei CIty Samoa Samoa Vietnam	Investing activities Import and export agent services Investing activities Truck repair, maintenance and sales Synthetic resin and plastic manufacturing Investing activities Investing activities Warehousing, freight transportation and related agent	400,000 131,000 278,101 (USD10,047 thousand) 200,000 28,655 22,725 (USD821 thousand) 28,234 (USD1,020 thousand) 28,234 (USD1,020 thousand)	400,000 131,000 278,101 (USD10,047 thousand) 36,000 - 22,725 (USD821 thousand) 28,234 (USD1,020 thousand) 28,234 (USD1,020 thousand)	40,000 13,100 10,047 20,000 2,014 821 1,020 -	100.00% 100.00% 100.00% 100.00% 19.75% 100.00% 100.00% 51.00%	1,200,089 410,023 611,081 216,477 71,325 2,508,995 231,173 48,427 48,451	57,057 60,933 (2,924) 19,384 13,174 1,938 8,029 15,742	54,079 60,933 (2,924) 15,533 2,601	Subsidiary company 〃 〃 〃 - Subsidiary company 〃 〃
										130,222
										Investment gains and losses recognized by its parent company 〃 〃

Note 1: The amounts of New Taiwan Dollars were exchanged by the closing rates on the reporting date.

Note 2: The amounts of New Taiwan Dollars were exchanged by the average rates on the reporting date.

(c) Information on investment in mainland China:

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

Name of investee	Main businesses and products	Total amount of capital surplus	Method of investment	Accumulated outflow of investment from Taiwan as of beginning of the period	Investm	ent flows	Accumulated outflow of investment from Taiwan as of ending of the period	Percentage of ownership	Net income (losses) of the investee (Note 6)	Investment income (losses) (Note 6)	Book value (Note 5)	Accumulated remittance of earnings in current period
					Outflow	Inflow (Note 5)
Shanghai Chung Loong Paper Co., Ltd. (Shanghai Chung Loong) Shanghai Shan Tong	Corrugated medium and kraft linerboard Warehousing, freight transportation and related agent	(Note 8) 21,720 (RMB5,000 thousand) (Note 7)	(Note 1 ) (Note 1 )	160,046 (USD 5,782 thousand) 40,721 (USD812 thousand and RMB4,200 thousand)	- -	- -	160,046 (USD 5,782 thousand) 40,721 (USD812 thousand and RMB4,200 thousand)	-% 60.00%	- 3,348	- 2,009	- 231,183	- -

(Continued)

64

SHAN-LOONG TRANSPORTATION CO., LTD. Notes to the Financial Statements

Name of investee	Main businesses and products	Total amount of capital surplus	Method of investment	Accumulated outflow of investment from Taiwan as of beginning of the period	Investm	ent flows	Accumulated outflow of investment from Taiwan as of ending of the period	Percentage of ownership	Net income (losses) of the investee (Note 6)	Investment income (losses) (Note 6)	Book value (Note 5)	Accumulated remittance of earnings in current period
					Outflow	Inflow (Note 5)
Loong Fu Paper (Kunsan) Co., Ltd. Cheng Loong (Gwangtung) Paper Co., Ltd. Zhangzhou Cheng Loong Paper Co., Ltd. Qingdao Chung Loong Paper Co., Ltd. Tianjin Chung Loong Paper Co., Ltd. Suzhou Cheng Loong Paper Co., Ltd. Chong Qing Cheng Loong Paper Co., Ltd. Chengdu Cheng Loong Packing Products Co., Ltd. Henan Cheng Loong Packing Products Co., Ltd.	Corrugated paper boxes, cardboard and paper products Cardboard, paper boxes, paper products and packing decoration printing Cardboard, paper boxes and paper products Cardboard, paper boxes and paper products Corrugated cardboard, paper boxes, paper pallets and paper products Cardboard Corrugated, cardboard, corrugated boxes, display boxes, paper pallets and paper products Corrugated cardboard, paper boxes, paper pallets and paper products Corrugated cardboard and packaging products	276,800 (USD10,000 thousand) 858,080 (USD31,000 thousand) 353,750 (USD12,780 thousand) (Note 8) (Note 8) 512,080 (USD18,500 thousand) 373,680 (USD13,500 thousand) 111,993 (USD4,046 thousand) 276,523 (USD9,990 thousand)	(Note 1 ) (Note 1 ) (Note 1 ) (Note 1 ) (Note 1 ) (Note 1 ) (Note 1 ) (Note 1 ) (Note 1 )	30,863 (USD1,115 thousand) 23,500 (USD849 thousand) 17,660 (USD638 thousand) 4,152 (USD150 thousand) 13,868 (USD501 thousand) 4,844 (USD175 thousand) 4,678 (USD169 thousand) 3,460 (USD125 thousand) 11,598 (USD419 thousand)	- - - - - - - - -	- - - - - - - - -	30,863 (USD1,115 thousand) 23,500 (USD849 thousand) 17,660 (USD638 thousand) 4,152 (USD150 thousand) 13,868 (USD501 thousand) 4,844 (USD175 thousand) 4,678 (USD169 thousand) 3,460 (USD125 thousand) 11,598 (USD419 thousand)	5.00% 5.00% 5.00% -% -% 5.00% 5.00% 5.00% 5.00%	(Note 4) (Note 4) (Note 4) - - (Note 4) (Note 4) (Note 4) (Note 4)	(Note 4) (Note 4) (Note 4) - - (Note 4) (Note 4) (Note 4) (Note 4)	(Note 4) (Note 4) (Note 4) - - (Note 4) (Note 4) (Note 4) (Note 4)	- - - - - - - - -

(ii) Limitation on investment in Mainland China:

Limitation on investment in Mainland	China:
Accumulated Investment in Mainland China as of December 31, 2021	Investment Amounts Authorized by Investment Commission, MOEA	Upper Limit on Investment
315,390 (USD10,735 thousand and RMB4,200 thousand)	315,390 (USD10,735 thousand and RMB4,200 thousand)	3,153,666

Note1:Indirectly investment in Mainland China through companies registered in the third region. Note2:The amounts of New Taiwan Dollars were exchanged by the rates at the reporting date.

Note3:The recognition of investment profit and loss of Shanghai Shan Tong was based on the financial report which was reviewed by Taiwan accountants. The remaining invested companies did not use the equity method to invest, so there was no profit or loss recognized in this period.

(Continued)

65

SHAN-LOONG TRANSPORTATION CO., LTD. Notes to the Financial Statements

Note4:Indirectly investment in Mainland China through Chung Loong Paper Holdings Limited. Note5:The amounts of New Taiwan Dollars were exchange by the closing rates on the reporting date. Note6:The amounts of New Taiwan Dollars were exchange by the average rates on the reporting date. Note7:Shanghai Shan Tong performed capital reduction RMB32,000 thousand in 2018, and Shan Loong International received capital reduction RMB19,200 thousand. As of the reporting date, the funds have not come back to Taiwan yet.

Note8:Indirectly investment in Mainland China through Chung Loong Paper Holdings Limited. These companies had been disposed in previous years. As of the reporting date, the investment amounts have not been repatriated yet.

(iii) Significant transactions: None

• (d) Major shareholders:

Unit: shares

		Unit: shares
Shareholding Shareholder’s Name	Shares	Percentage
Cheng Loong Corporation	12,690,010	% 9.24
CTBC comprehensive trust account for employees of Shan- Loong Transportation	8,602,899	% 6.26
Shine Far Co., Ltd.	8,367,944	% 6.09

(14) Segment information:

Please refer to the consolidated financial statements for the year ended December 31, 2021.

66

Shan-Loong Transportation Co., Ltd.

Statement of cash and cash equivalents

December 31, 2021

(Expressed in thousands of New Taiwan Dollars; in thousands of foreign currency)

Item Cash on hand Petty cash and revolving funds Checking accounts Demand deposits 〃 〃	Description Amount NTD $ 148 NTD 6,526 6,674 NTD 4,310 NTD 499,712 USD 85 2,349 CNY 220 953 507,324 $ 513,998

Note: The exchange rate is 27.68 New Taiwan dollars for 1 US dollar; 4.344 New Taiwan dollars for 1 CNY dollar.

67

Shan-Loong Transportation Co., Ltd.

Statement of notes and accounts receivable

December 31, 2021

(Expressed in thousands of New Taiwan Dollars)

Client Name Notes receivable: Depo Auto Parts Ind. Co., Ltd. Chien Shing Harbour Service Co., Ltd. Junming Transportation Co., Ltd. Hong Gi Engineering Co., Ltd. Ta Chen Stainless Pipe Co., Ltd. Triocean Industrial Corporation Co., Ltd. Yeng Hsingh Co., Ltd. Others (Note 3) Accounts receivable: KNH Enterprise Co., Ltd. Chang Chun Petrochemical Co., Ltd. Others (Note 3) Less: allowance for uncollectible accounts

Description Amount Revenue of non-related party $ 4,344 〃 2,977 〃 2,383 〃 2,202 〃 2,106 〃 2,036 〃 1,989 〃 16,862 Revenue of non-related party 27,790 〃 25,278 〃 435,209 (2,493) $ 520,683

Note 1: All of the notes and accounts receivable come from operating activities.

Note 2: Notes and accounts receivable due from related parties are not included in the above information, the details please refer to note (7).

Note 3: The amount of individual client included in others does not exceed 5% of the account balance.

Statement of inventories

Item Premium Diesel Unleaded Gasoline #92 Unleaded Gasoline #95 Unleaded Gasoline #98 By-product and other	Cost Net Realizable Value $ 64,801 67,564 48,328 52,653 67,696 73,291 28,427 30,821 335 335 $ 209,587 224,664	Cost Net Realizable Value $ 64,801 67,564 48,328 52,653 67,696 73,291 28,427 30,821 335 335 $ 209,587 224,664
		224,664

68

Shan-Loong Transportation Co., Ltd.

Statement of changes in property, plant and equipment

For the year ended December 31, 2021

(Expressed in thousands of New Taiwan Dollars)

Please refer to note (6)(g).

Statement of changes in right-of-use assets

Please refer to note (6)(h).

69

Shan-Loong Transportation Co., Ltd.

Statement of changes in investments accounted for using the equity method

For the year ended December 31, 2021

(Expressed in thousands of New Taiwan Dollars and thousands of shares)

Unrealized gains

					Unrealized gains
Investee Companies Shan Loong Investment Shan Loong Customs Broker Shan Loong International Shan Loong Motors Ko Loong	Beginning balance Number of shares Amounts 40,000 $ 1,136,329 131,000 384,446 10,047 662,653 3,600 36,944 - $ 2,220,372	Increa	se (decrease) Amounts - - - 164,000 76,774 (Note 4) 240,774	Share of profits (losses) recognized 54,079 60,933 (2,924) 15,533 2,601 130,222	(losses) from investments in equity instruments measured at fair value through other comprehensive income 43,201 8,744 (50,263) - (10,329) (8,647)	Other	adjustment Amounts (33,520) (Note 1) (44,100) (Note 2) 1,615 (Note 3) - 2,279 (Note 5) (73,726)		Ending balance		Net value as of Collaterals or December 31, 2021 pledged assets 1,249,490 None 410,023 〃 611,081 〃 220,328 〃 71,325 〃
	Number of shares	Number of shares - - - 16,400 2,014				Number of shares - - - - -		Number of shares 40,000 131,000 10,047 20,000 2,014	Percentage of ownership % 100.00 % 100.00 % 100.00 % 100.00 % 19.75	Amounts
	40,000 131,000 10,047 3,600									1,200,089 410,023 611,081 216,477 71,325
										2,508,995

Note 1: The changes included the cash dividends amounting to $2,978 from the Company, and the cash dividends amounting to $36,498 distributed from the investee companies. Note 2: The changes included the cash dividends distributed from the investee companies amounting to $44,100. Note 3: The changes included the exchange differences on translation of foreign financial statements amounting to $1,615. Note 4: Transferred in from financial assets at fair value through other comprehensive income. Note 5: The changes included the cash dividends distributed from the investee companies amounting to $603 and other transactions amounting to $2,882.

70

Shan-Loong Transportation Co., Ltd.

Statement of non-current financial assets measured at fair value through other comprehensive income

December 31, 2021

(Expressed in thousands of New Taiwan Dollars)

Investee Company Cheng Loong Gemtech Optoelectronics Corp. Ko Loong Cheng Loong Investment Co., Ltd. Shin Loong Lifecare Corp. Yueh Loong Co., Ltd. Shine Far Co., Ltd.	Beginning balance Number of shares Fair value 19,376 $ 658,788 3,644 68,945 1,800 39,060 600 26,496 350 1,764 302 7,245 270 14,238 $ 816,536	Increase Number of shares Amount - - - - 214 4,655 - - - - 302 3,017 - - 7,672	Decrease Number of shares Amount - - - - 2,014 76,774 - - - - 281 (Note 1) - - 76,774	Financial assets Valuation adjustment 25,189 3,789 33,059 2,718 553 (4,883) (1,141) 59,284	Ending balance Number of shares Fair value Collaterals or pledged assets 19,376 683,977 None 3,644 72,734 〃 - - 〃 600 29,214 〃 350 2,317 〃 323 5,379 〃 270 13,097 〃 806,718
	Number of shares	Number of shares - - 214 - - 302 -	Number of shares - - 2,014 - - 281 -		Number of shares 19,376 3,644 - 600 350 323 270
	19,376 3,644 1,800 600 350 302 270

Note 1: The investee company reduce its capital to offset its loss.

71

Shan-Loong Transportation Co., Ltd.

Statement of other non-current assets

December 31, 2021

(Expressed in thousands of New Taiwan Dollars)

Item Refundable deposits Prepayment for equipments	Description Amount Performance guarantee and rental deposits $ 202,150 Acquisition of equipment and office renovation 29,979 $ 232,129

Statement of notes and accounts payable

Item	Description		Amount
Notes payable:
Others (note)	Operating cost of non-related parties	$	69
Accounts payable:
Chinese Petroleum Corporation	Operating cost of non-related parties		923,952
Formosa Petrochemical Corporation	〞		273,357
Others (note)	Operating cost of related parties and non-
	related parties		252,472
		$	1,449,850

Note: The amount of individual vendor included in others does not exceed 5% of the account balance.

72

Shan-Loong Transportation Co., Ltd.

Statement of other payables

December 31, 2021

(Expressed in thousands of New Taiwan Dollars)

Item Payroll and bonuses payable Employee compensation Indemnity payables Other (note)	Description Payroll for December 2021, estimated year-end bonuses and compensation of vacation pay Employees compensations for 2021 Estimated litigation losses Labor and health insurance, pensions, utilities, value- added business tax, and professional service fees, etc.	Amount
		$ 287,414 22,000 22,400 88,239 $ 420,053

Note: The amount of each item included in others does not exceed 5% of the account balance.

73

Shan-Loong Transportation Co., Ltd.

Statement of lease liabilities

December 31, 2021

(Expressed in thousands of New Taiwan Dollars)

Item Land Buildings Other equipment	Lease term 2-26 years 2-15 years 5-15 years	Discount rate Ending balance 1.37% $ 200,193 1.37% 883,337 1.37% 8,267 $ 1,091,797

Statement of long-term borrowings

Creditor E. SUN Bank Far Eastern Bank First Bank Taiwan Cooperative Bank KGI Bank CTBC Bank Hua Nan Commercial Bank Shin Kong Bank Less: current portion	Nature Working Capital 〃 〃 〃 〃 〃 〃 〃	Amount $ 100,000 100,000 299,000 162,700 200,000 50,000 200,000 163,000 1,274,700 (1,047,651) $ 227,049	Contract period 2021.3~2023.3 2019.9~2023.8 2020.8~2022.8 2020.4~2025.4 2020.12~2022.12 2021.8~2022.1 2021.11~2022.2 2020.11~2022.5	Interest rate Collaterals or pledged assets % 1.00 - % 1.30 - % 1.20 Land and buildings % 1.20 Land and buildings % 1.04 - % 1.30 - % 1.00 - % 1.10 -

74

Shan-Loong Transportation Co., Ltd.

Statement of operating revenue For the year ended December 31, 2021 (Expressed in thousands of New Taiwan Dollars)

	Item		Amount
Revenue:
Gasoline	station revenue	$	13,156,212
Transportation revenue			3,650,388
Others			433,647
			17,240,247
Less: sales	allowance		(2,492)
Net operating revenue		$	17,237,755

Statement of operating costs

Item Cost of gasoline station Cost of transportation Others	Amount
	$ 12,218,144 3,029,609 325,215 $ 15,572,968

Note: The amount of each item included in others does not exceed 5% of the account balance.

75

Shan-Loong Transportation Co., Ltd.

Statement of operating expenses

For the year ended December 31, 2021

(Expressed in thousands of New Taiwan Dollars)

Itme Payroll expenses Insurance expenses Depreciation Others (note)	Selling expenses $ 247,813 32,912 212,593 49,990 $ 543,308	Administrative expenses	Administrative expenses
			487,618 47,114 53,816 239,935
			828,483

Note: The amount of each item included in others does not exceed 5% of the account balance.

Statement of non-operating income and expenses

Item	Description		Amount
Shares of profit (loss) of investments		$	130,222
accounted for using equity method
Gains on disposals of property, plant			283
and equipment
Dividend income			34,877
Interest income			1,853
Other income (note)	Rental income and others, etc.		64,601
Other gains and losses, net (note)	Foreign exchange gains or losses, lease		3,267
	modification gains, and gains (losses) on financial
	assets at fair value through profit or loss
Interest expense			(30,488)
Miscellaneous disbursements (note)	Handling change of performance guarantee for
	gasoline purchase from CPC and FPCC,
	expenditure for compensation, and others, etc.		(14,612)
		$	190,003

Note: The amount of each item included in others does not exceed 5% of the account balance.