SUNKO - Annual Report 2023 | FinancialReports.eu

SUNKO INK CO., LTD

I.	LETTER TOSHAREHOLDERS................................................................................................................... 1	LETTER TOSHAREHOLDERS................................................................................................................... 1
II.	COMPANYPROFILE.................................................................................................................................. 8
	1	Date of Incorporation ......................................................................................................................... 8
	2	Company History ............................................................................................................................... 8
III.	CORPORATEGOVERNANCEREPORT...................................................................................................... 9
	1	Organization ....................................................................................................................................... 9
	2	Directors, Supervisors and Management Team ............................................................................... 11
	3	Remuneration to Directors, General Manager and Deputy General Manager in 2022 ................... 20
	4	Implementation of Corporate Governance....................................................................................... 25
	5	Information on CPA Professional Fees ............................................................................................ 55
	6	Information of Changing CPAs. ....................................................................................................... 55
	7	The Chairman, President and Financial or Accounting Manager of the Company who has, in the
	Most Recent Year, Held a Position at the Accounting Firm of its CPA or at an Affiliated Company. ..... 55
	8	Equity Transfer or Changes in Equity Pledged by The Company's Directors, Supervisors,
	Managerial Officers or Shareholders with Shareholding Percentage Exceeding 10% in the Most Recent
	Fiscal Year Up to the Publication Date of This Annual Report: .............................................................. 55
	9	Information of the shareholder whose shareholding ratio ranks top 10, mutual relation of related
	person or spouse, a relative within the second degree of kinship of another: ......................................... 57
	10	Number of Shares Hold for the Same Reinvestment Business by the Company’S Directors,
	Supervisors, Manager and The Company's Directly or Indirectly Controlled Business, and Combined
	Calculation of The Comprehensive Shareholding Ratio: ........................................................................ 59
IV.	CAPITALOVERVIEW.............................................................................................................................. 60
	1	Source of Capital.............................................................................................................................. 60
	2	Shareholder Structure....................................................................................................................... 62
	3	Shareholding Distribution Status ..................................................................................................... 62
	4	List of Major Shareholders: ............................................................................................................. 62
	5	Share Prices, Net Value, Earnings, Dividends, and Other Relevant Information in the Past Two
	Years ......................................................................................................................................................... 63
	6	Dividend Policy and Implementation Status.................................................................................... 64
	7	The Impacts of Issuing Stock Grants in This Shareholder’S Meeting on the Company’s
	Operational Performance and Earnings per Share. .................................................................................. 64
	8	Employee Compensation and Directors’ and Supervisors’ Remuneration ...................................... 64
	9	Company Share Repurchase Status ................................................................................................. 65
	10	Status of Corporate Bonds. .............................................................................................................. 65
	11	Status of Preferred Stocks. ............................................................................................................... 65
	12	Status of Global Depositary Receipts .............................................................................................. 65

	13 Status of Employee Stock Options .................................................................................................. 65
	14 Restriction on New Employee Shares. ............................................................................................. 65
	15 Status of New Shares Issuance in Connection with Mergers and Acquisitions. .............................. 65
	16 Financing Plans and Implementation. .............................................................................................. 65
V.	OPERATIONHIGHLIGHTS...................................................................................................................... 66
	1 Business Activities ........................................................................................................................... 66
	2 Market and Sales Overview ............................................................................................................. 70
	3 Employee Information ..................................................................................................................... 76
	4 Expenditures on Environmental Protection ..................................................................................... 76
	5 Labor relations ................................................................................................................................. 77
	6 Information Security Management. .................................................................................................78
	7 Important contracts…….…………………………………………………………………………. 79
VI.	FINANCIALINFORMATION..................................................................................................................... 80
	1 Condensed Balance Sheet, Income Statement, Names of the CPAs and their audit opinions ......... 80
	2 Financial analysis for the recent five years ...................................................................................... 84
	3 Audit Committee’s Review Report for the recent years .................................................................. 88
	4 Consolidated Financial Statements of the Most Recent Year with Independent Auditors’ Report .. 89
	5 Parent Only Financial Statements of the Most Recent Year with Independent Auditors’ Report.. 184
	6 Impact on the Company's financial status due to financial difficulties experienced by the Company
	and its affiliate companies in the most recent year and as of the publication date of this Annual Report
	.........................................................................................................................................................285
VII. REVIEW ANDANALYSIS ONFINANCIALSTATUS, FINANCIALPERFORMANCE, ANDRISKS..............286
	1 Analysis of Financial Status........................................................................................................... 286
	2 Analysis of Financial Performance ................................................................................................ 288
	3 Analysis of Cash Flow ................................................................................................................... 290
	4 Major Capital Expenditures and Impact on Financial and Business during recent years: ............. 291
	5 Reinvestment policies, main reasons for profits/ losses generated thereby, improvement plans, and
	investment plans for the coming year: ................................................................................................... 291
	6 Risk Assessment............................................................................................................................. 292
	7 Other Material Matters. .................................................................................................................. 293
VIII.SPECIALNOTES................................................................................................................................... 294
	1 Summary of Affiliated Companies ................................................................................................ 294
	2 Private Placement of Securities in 2022and as of the publication Date of this Annual Report .... 295
	3 Holding or disposal of the Company's shares by the subsidiaries of the most recent year as of the
	publication date of this Annual Report. ................................................................................................. 295
	4 Other necessary supplementary matters to be included ................................................................. 295
IX.	ANYEVENTS IN2022 AND AS OF THE PUBLICATIONDATE OF THISANNUALREPORT THATHAD
MATERIALIMPACTS ONSHAREHOLDERS’ EQUITY ORSECURITIESPRICES ASSTATED INARTICLE36-
2-2 OFSECURITIES ANDEXCHANGELAW OFTAIWAN.............................................................................. 296

I. LETTER TO SHAREHOLDERS

1 The 2022 Business Report

The individual revenue of the Company for the year 2022 was NT$2,976,358thousand, while the Consolidated revenue for the year was NT$3,008,554thousand. The consolidated after-tax profit was NT$61,330thousand, of which NT$61,330,000 was attributable to the owners of the Company. The basic and diluted earnings per share for the consolidated after-tax profit were both NT$0.33.

In the first half of 2022, it had been expected that the post-pandemic economy would recover and customers are actively stocking up to avoid supply chain disruptions. As being driven by demands revenues and profits strongly grew in comparison with the result of the first half of 2021. However, from the second half of the year onwards, the ongoing military conflict between Russia and Ukraine has caused energy prices to surge. Coupled with rising inflation, the US Federal Reserve has raised interest rates to control rapid inflation, which has affected global financial markets and slowed private investment growth. In addition, China's economy has been impacted by the pandemic, causing a significant decline in demand in the three major markets of the US, Europe, and China. Specifically, the demand for specialized materials for consumer electronics, polymer materials for sports shoes, and plastic antioxidants has been significantly affected. Taking all of these factors into account, the economy in 2022 showed a brief recovery in the first half of the year, but quickly turned weak in the second half. The final revenue for the year showed a slight growth of NT$157,916,000, with a year-on-year increase of 5.54%.

1.1 Implementation Results of Operation Plan

Unit: NT$ (in thousands)

Item 2022 2021	Increase (Decrease)
	Difference Rate
Operating Revenue (net) 3,008,554 2,850,638 Operating Costs 2,752,806 2,722,534 Operating Profit 255,748 128,104 Operating Expense 223,186 224,055 Operating Gains (Losses) 32,562 (95,951) Other profits and losses (net) 38,910 42,110 Pre-tax Earnings (losses) 71,472 (53,841) After-tax Earnings(losses) 61,330 (70,016)	157,916 5.54 30,272 1.11 127,644 99.64 (869) (0.39) 128,513 133.94 (3,200) (7.60) 125,313 232.75 131,346 187.59

1.2 Forecast and Implementation

The Company did not publish the 2022 Operating Forecast. Therefore, no information regarding implementation is available.

1.3 Financial Income and Expenditure and Profitability Analysis

		For the years ended 31 December	For the years ended 31 December
	Item	2022	2021
Profitability	Return on asset (%)	1.81	(1.35)
	Return on equity (%)	2.59	(2.91)
	Pre-tax income to paid-in capital (%)	3.78	(2.85)
	Profit margin (%)	2.15	(2.46)
	Earnings per share (NT$)	0.33	(0.38)
	Diluted Earnings per share (NT$)	0.33	(0.38)

1.4 Research and Development progress 1.4.1 R&D Expenses

search and Development progress 1 R&D Expenses
R&D Expenses Ratio to operating revenues	Unit: NT$ (in thousands) For theyears ended 31 December
	2022 2021 2020
	49,847 51,299 54,464 1.66% 1.80% 1.98%

1.4.2 Recent Research and Development Results

Classification	Item	R&D results
Fine Chemical Series	1. Development and promotion of Non- halogenated Flame Retardant derivatives	 Completed laboratory process development of K600 phosphorus- containing flame retardant.  Developed industrial process for K-202 flame retardant outsourcing project (3KL scale).  Completed trial production of new process for non-halogen flame retardant PHZs (SPV-100).
	2. Curing Agent	 Completed CSR: the K339e zero-waste project.
	3. Research on Industrialization Technology of Triazine UV Absorber New	 Amplification, pilot production, and testing of UV absorber intermediate 1064TM (3KL).

Classification	Item	R&D results
	product
Polymer Series	 Development and application research of TPU and polyester polyol products.	 Obtained Taiwan and US patents for “Polyester Polyol, Thermoplastic Polyurethane, and their Molded Products”  Obtained JP utility model patent for "Impact-Resistant Composite Layer.  Completed filing for Taiwan, US, China, and EU patents for “Thermoplastic Polyurethane Foam and Impact-Resistant Composite Layer Comprising the Same” (under review).  Completed filing for US and EU patents for “Applications of Thermoplastic Polyurethane and Impact-Resistant Composite Layer Comprising the Same” (pending review)  Completed trial production of aromatic polyester polyol PAHE2000 at 6KL scale.  Completed amplification, pilot testing, and processing technology evaluation of new inert TPU (SK70588, SK70560, SK-701) suitable for melt-spinning, 3D printing, and supercritical physical foaming, with excellent impact resistance properties in molded products.  Verified feasibility of TPU melt spinning processing.
	 Ultra-film TPV foam material (EPTV)	 Completed recycling program for foamed polyolefin elastomer material, producing second-generation recycled products for E342 flip-flops. Completed development of new TPV product for extrusion foaming (specific gravity of 0.5- 0.7).

2 Overview of 2023 Operation Plan
2.1 Operation Strategy and Policy
- (1) Develop key raw materials and new products
- (2) Expand production capacity to reduce production costs
- (3) Save energy and decarbonize
- (4) Continue to reduce waste, research new treatment methods or processes
- (5) Plant protection product process technology
- (6) Automate labor intensive manufacturing process evaluation
- (7) Advance the process via computer systems
2.2 Important Production and Marketing Strategies
- 2.2.1 Sales Policy
  - (1) Strengthen the relationship with clients, increase both sales and the market share
  - (2) Develop new specifications and new products in line with customer needs.
  - (3) Develop our own patents and create unique-selling-points (USP) to expand the markets
  - (4) Control market and adjust marketing strategies in time
- 2.2.2 Production Policy
```
- (1) Implement industrial safety to reduce accident risks.

- (2) Stabilize raw material supply chain and product supply

- (3) Enhance quality to improve customer satisfaction

- (4) Optimize process and increase utilization rate
```

2.3 Short-term and Long-term Business Development Plan

2.3.1 Short-term Plan

- (1) Strengthen the bonds with international manufacturers and increase the market share.

- (2) Develop and promote new products: PP clarifier (K21), Flame Retardant (PX-202), hair dye, TPE footwear materials, TPU/TPV yarn, TPU anti-vibration materials, TPU air bed materials, Flame Retardant TPV.

- (3) Be certified by the brand dealers on Expanded Elastomer footwear materials

- (4) Develop second level supplier to reduce the risk of raw materials shortage

- (5) Develop new process technology for plant protection agents

2.3.2 Long-term Plan
- 2.3.2.1 Key trends and strategies on industrial transformation
  - Under such shortcomings as strict environmental regulations, limited natural resources, and increasing environmental costs, high-emission industries gradually lost their positions in the competitive market. To successfully navigate this changing landscape, chemical industry will need to develop toward low-pollution and high-economies-ofscale orientation.

2.3.2.2 Research and development and technical services
(1) Self-develop and form patent applications
(2) Provide technical services to meet customer demands
(3) Assist customers in developing customized products and grab the preemptive opportunities in the market
2.3.2.3 Diversification Strategies

Well utilize the Company’s know-hows in chemicals and manufacturing products. For instance:

(1) Produce personal sanitization products (special cosmetic) using cGMP qualifications from Chuansing Factory
(2) Given the recyclable character of polymer, develop footwear using 100% polymer then recycle and reuse
(3) Seek out businesses that are chemical-related and supported by the government
2.3.2.4 “Save Energy, Save Earth”

In response to the “Save Energy, Save Earth” campaign, our future manufacturing process design will take action to promote energy saving, decarbonization, recycle and reuse, and to exploit the decarbonization technology.

3 Overview of Technology and R&D

3.1 Technical Level

The Company values novelty, inventive steps as well as industrial applicability. We mainly target chemicals that are highly demanded in the market and create technical barriers.

The Company’s main research and development team are organic synthesis and polymer chemistry technology experts. They cooperate with a production team with more than 20 years of chemical manufacturing experience, together with trading professionals of great acuity on market development, to invest in research, development, production, OEM and marketing on polymer and fine chemical products.

3.2 Product development plan

More specifically speaking, the Company’s products include PU, POLYOL, TPU, TPV, special plastic material, plant and environmental protection drugs, active pharmaceutical ingredients, cosmetic materials, antioxidant, anti-UV agent, polyolefin synthesis, PCB reducing agent, curing agent and graphene oxide, etc.

To improve the process efficiency, go green, and to recycle, reuse and reduce the energy consumption are the key concepts of polymer material development. As for product development on fine chemicals, the research aims at new structures, new manufacturing processes, new formulations and new applications. To develop low-pollution and low-energy-consumption manufacturing process techniques is deemed as our corporate social responsibility.

Classification	Item
Fine Chemical Series	- K-CLEAR:New product development, continuous improvement and development of new features. - K-NOX:Development of applications for rubber and plastic antioxidants. - K-SORB Triazine:Research on industrialization technology of new Triazine UV absorbent products - K-CURE:Development and applications for rubber and plastic cross-linking curing agent - Development of applications and derivatives for phosphorus trichloride technology. - Continuouslydeveloptechniques on energysavingand decarbonization
Polymer Series	Development, application, and recycling research of new PU materials: - Development and application of functional TPV and TPE elastomers - Research and development of new ETPU and ETPV foamable elastomers

Classification

Item

Fine
Chemical
Series

- K-CLEAR:New product development, continuous improvement and
development of new features.
- K-NOX:Development of applications for rubber and plastic antioxidants.
- K-SORB Triazine:Research on industrialization technology of new Triazine
UV absorbent products
- K-CURE:Development and applications for rubber and plastic cross-linking
curing agent
- Development of applications and derivatives for phosphorus trichloride
technology.
- Continuouslydeveloptechniques on energysavingand decarbonization

Polymer
Series

Development, application, and recycling research of new PU materials:
- Development and application of functional TPV and TPE elastomers
- Research and development of new ETPU and ETPV foamable elastomers

4 Estimated product sales of 2023

Estimated product sales of 2023
Main Product	Classification	Annual Budget Sales Quantity
		Tons
Antioxidants	Fine Chemicals		8,200
Thermoplastic Elastomer TPV (Thermoplastic vulcanized rubber, Thermoplastic polyurethane elastomer) (TPV)	Polymer		3,714
POLYOL and PU	Polymer		1,386
Agrochemicals	Plants and environmental protection drugs		312
Other fine chemicals (crosslinking curing agents, non-halogen flame retardants, electronic chemicals, nucleating agents)	Fine Chemicals		4,304
Others	Others		1,005
Total			18,921

5 The Impact from the external competition, regulatory environment, and business operation

Based on the International Monetary Fund's forecast for global economic growth, the estimated growth rate for the world in 2022 is 3.4%, which is expected to decrease to 2.9% in 2023. Factors such as the inflation crisis caused by COVID-19 and the Russo-Ukrainian conflict, escalating regional conflicts, and rising protectionism create uncertainties for economic recovery and future changes in the economic environment.

The Regional Comprehensive Economic Partnership (RCEP) and the Comprehensive and Progressive for Trans-Pacific Partnership (CPTPP) implement tariff reductions among member states for Taiwanese companies that rely on imports and exports, which will greatly improve Taiwan’s competitiveness and cause adversely influence in the international market as a non-member state.

Driven by a series of policies such as ESG development trends, renewable energy development regulations, and stricter domestic environmental protection regulations, companies must invest in updating air pollution equipment, setting up renewable energy power generation facilities, and switching to high-cost energy sources to meet decree; in terms of carbon reduction, due to the fact that technology has not yet broken through, there is no cost-effective and effective carbon capture method, and small companies are limited by limited resources, so they should research more efficient processes to achieve carbon reduction. The biggest source of carbon emissions is the electricity required for the process. This part is beyond the capabilities of small enterprises. At this stage, it is still necessary for the relevant government units to plan the future national zero-carbon emission path and related policies to guide the industry to follow.

Chairman: HUANG, TING-DI

General Manager: CHANG, CHUN-PIN

Accounting Supervisor: WANG, SHENG-HUI

II. COMPANY PROFILE

1 Date of Incorporation
31 December 1974
2 Company History
Year Important History
1974 SUNKO INK CO., LTD. was founded. The Company specialized in inks and paints.
1977 Acquired Taiping factory and Taiping branch factory to expand production items to primers and adhesives.
1985 Expanded production items to coatings and synthetic resins.
1987 Acquired Dali factory.
1988 Invested Ekiko Resin Co., Ltd. to produce TPU, which was the first professional manufacturer producing TPU in Taiwan.
1990 Expanded production items to antioxidant 168.
1993 Introduced automated equipment to produce wet PU synthetic leather
1995 Renamed the Company’s Chinese name to “Sunko Co., Ltd”. (hereinafter “the Company”)
1996 Publicly listed on the Taiwan Stock Exchange.
2003 Established Sunko Company to indirectly invest in Sunko Fushan Co., Ltd..
2005 Introduced automated continuous production systems to produce TPU.
2006 Merged with Ekiko Resin Co., Ltd. and invested in Sunko Biotech Company, Ltd.
2009 Expanded antioxidant 168 production line.
2013 Sunko Fushan Co., Ltd. closed business.
2014 Expanded production items to antioxidant 3114 and special polymer materials.
2016 Acquired shares of Kuo Ching Chemical Co., Ltd by the issuance of new shares on 30 March

III. CORPORATE GOVERNANCE REPORT

1 Organization
1.1 Organizational Chart

==> picture [540 x 209] intentionally omitted <==

1.2 Responsibilities and functions of major departments

Department		Functions
General Manager’s Office		- Assist the general manager to amend and implement the Company's internal control system and various administrative measures.
Audit Office		- Implement, audit, and inspect the internal control system of the Company; exercise and promote the Company’s self-inspection; and report the implementation of internal audit to the Securities and Futures Bureau.
R&D Department		- Develop new products and conduct research on process improvement.
Sales Department		- Deal with the Company’s product sales and OEM cooperation matters. - Conduct market research and intelligence gathering. - Review the contracts and orders. - Manage quotations. - Formulate and execute the market strategies.
Production Department		Pingjhen Factory, Dajia Factory, Dali Factory, Nangang Factory, Chuansing Factory. - Schedule the production and raw materials demanding arrangement and assist R&D dept. in commissioning and other assignments. - Carry out new product commissioning, process improvement, and SOP revision reporting matters. - Conduct quality control and laboratory analysis. - Responsible for warehouse management, purchase acceptance, shipment registration and other general administrative matters. - Responsible for industrial safety and environmental protection matters. - Responsible for project design, construction acceptance, equipment maintenance.
Procurement Department		- Responsible for the inquiry, price comparison and negotiation of the Company’s various raw materials, procurement and contracting matters.
Management Department		Accounting Division, Finance Division, Administrative Division, and IT Division - Responsible for the registration, summary and tabulation of various accounting books. - Manage the funding budget, bank transactions, cash, notes receivables and note payables. - Responsible for attendance, recruitment, education, training and salary management. - Responsible for administrative miscellaneous affairs and document management. - Plan and manage various computer-related software and hardware, information security maintenance and data backup.

2 Directors, Supervisors and Management Team

2.1 Directors

2.1.1 Information on directors and supervisors

16 April 2023

Title	Nationality or Registration location	Name	Gender/Aged	Date Elected	Term (Years)	Date First Elected	Shareholding percentage when Elected (Note 1)	Shareholding percentage when Elected (Note 1)	Current Shareholding percentage	Current Shareholding percentage	Spouse & Minor Shareholding	Spouse & Minor Shareholding	Shareholding by Nominee Arrangement	Shareholding by Nominee Arrangement	Experience (Education)	Other Position	Executives, Directors or Supervisors who are spouses or within second degrees of kinship	Executives, Directors or Supervisors who are spouses or within second degrees of kinship	Executives, Directors or Supervisors who are spouses or within second degrees of kinship	Remark
							Shares	%	Shares	%	Shares	%	Shares	%			Title	Name	Relation
Chairman	Republic of China	KT Investment Co., Ltd.	-	15 June 2022	3 years	4 May 2016	10,801,010	5.8420%	10,801,010	5.8420%	-	-	-	-	-	-	-	-	-
Representative of Chairman	Republic of China	Representative of KT Investment Co., Ltd.: HUANG, TING- DI	M	15 June 2022	3 y e a rs	4 May 2016	3,332	0.0018%	3,332	0.0018%	3,223,446	1.743%	-	-	Master, The ~~H~~ong Kong Polytechnic University	Supervisor, KT Investment Co., Ltd. Director, Chiaoli Investment Co., Ltd. ~~D~~irector, Macy Investment Co., Ltd. Chairman and legal representative, Director, Power Rich International Ltd. Corporation., Chairman, Seed Foundatino	Director	HUANG, TING- KAI	Brother
																	Director	HUANG, YI-RUNG	Father
Director	Republic of China	Representative of KT Investment Co., Ltd.: HUANG, SHUEN-HSIEN	M	15 June 2022	3 y e a rs	15 June 2022	931,701	0.5039%	911,701	0.4931%	6,664	0.004%	-	-	-	-	-	-	-
Director	Republic of China	Chiaoli Investment Co., Ltd.	-	15 June 2022	3 y e a rs	24 June 2013	6,503,902	3.5178%	6,503,902	3.5178%	-	-
Director Representative	Republic of China	Representative of Chiaoli Investment Co., Ltd.: HUANG, YI- RUNG	M	15 June 2022	3 y e a rs	13 June 2019	7,045,512	3.17%	5,988,685	3.2392%	1,555,855	0.842%	-	-	PhD., National Cheng Kung University	Director, KT Investment Co., Ltd. Director, Macy Investment Co., Ltd.	Chairman Director	HUANG, TING-DI HUANG, TING- KAI	Father and son	Note2
Director	Republic of China	Representative of Chiaoli Investment Co., Ltd.: LIN, YU-PING	F	15 June 2022	3 y e a rs	15 June 2022	3,146,717	1,7020%	3,146,718	1.7020%	3,332	0.002%	-	-	Hungkuang University of Science and Technology	Director, Chiaoli Investment Co., Ltd. Director, Macy Investment Co., Ltd.	Chairman Director	HUANG, TING-DI HUANG, YI-RUNG	Husband Daughter-in- law
Director Representative	Republic of China	Representative of Chiaoli Investment Co., Ltd.: HUANG, ZHAO- WEI	M	15 June 2022	3 y e a rs	15 June 2022	2,666	0.0014%	2,666	0.0014%			-	-	Nanya Institute of Technology	Audit officer, Sunko Ink Co., Ltd.
Director	Republic of China	HSIAO, JUNG- FU	M	15 June 2022	3 y e a rs	4 May 2016	368,994	0.17%	238,645	0.1291%	100,000	0.0541%	-	-	Master, Utah State University, USA	Supervisor, SIN HUN CHEMICAL CO., LTD.	-	-	-	Note2

Title	Nationality or Registration location	Name	Gender/Aged	Date Elected	Term (Years)	Date First Elected	Shareholding percentage when Elected (Note 1)	Shareholding percentage when Elected (Note 1)	Current Shareholding percentage	Current Shareholding percentage	Spouse & Minor Shareholding	Spouse & Minor Shareholding	Shareholding by Nominee Arrangement	Shareholding by Nominee Arrangement	Experience (Education)	Other Position	Executives, Directors or Supervisors who are spouses or within second degrees of kinship	Executives, Directors or Supervisors who are spouses or within second degrees of kinship	Executives, Directors or Supervisors who are spouses or within second degrees of kinship
							Shares	%	Shares	%	Shares	%	Shares	%			Title	Name	Relation
Independent Director	Republic of China	LI, SHIH-JEN	M	15 June 2022	3 y e a rs	4 May 2016	-	-	-	-	41,809	0.0226%	-	-	PhD., University of Southern California, USA	Chairman, TAHO Pharmaceuticals Ltd. Chairman, Transwell Biotech Co., Ltd. Director, Easywell Biomedicals, Inc. Independent Director, Member of Remuneration Committee and Audit Committee, Genovate Biotechnology Co., Ltd. Independent Director, Member of Remuneration Committee and Audit Committee, Taimed Biologics Inc. Director, Industrial Technology Investment Corporation Director, Amphastar Pharmaceuticals,Inc. Director, CapsoVision,Inc.	-	-	-
Independent Director	Republic of China	TSOU, YEN- CHUNG	M	15 June 2022	3 y e a rs	4 May 2016	-	-	-	-	-	-	-	-	National	Representative of Sun Young CPAs Firm Independent director, member of Remuneration Committee and Audit Committee, Universal Microelectronics Co., Ltd. Independent director, member of Remuneration Committee, Liton Technology Corp.	-	-	-
															Cheng Kung
															University
Independent Director	Republic of China	LIN, YEN-TING	F,	15 June 2022	3 y e a rs	4 May 2016	-	-	-	-	-	-	-	-	EMBA of Tunghai University	CEO of Plan-Wise International Corporation Representative, Tiding Golden International Intelligent Management Consulting Co., Ltd. Representative, Bloom Royal Consulting Corporation Shareholder and manager of Fubo International Enterprise Co., Ltd. Director, Jin Wan Man Co., Ltd. Supervisor, JUE-FENG Co., Ltd.	-	-	-

Note:

On 4 May 2016, an Audit Committee was established while the supervisor system was abolished. The percentage of shareholdings was calculated considering the total outstanding shares of 184,884,092 shares.
The Company completed the re-election of directors on 15 June 2022. HUANG, YI-RUNG, the former representative of corporate director, of Chiaoli Investment Co., Ltd, and HSIAO, JUNG-FU, stepped down from their positions.
Where the chairman and president or equivalent position (highest level executive officer) is the same person, the spouse, or a first-degree relative, the reason, reasonableness, necessity, and response measures (such as increasing the number of independent director seats and more than half of all directors not concurrently serving as employees or executive officers) must be disclosed.

2.1.2 Major corporate shareholders

16 April 2023

	16 April 2023
Name of corporate shareholders	Main shareholders of corporate shareholders
KT Investment Co., Ltd.	TUNG, CHING-MEI 82.22%, HUANG, TING-KAI 8.89%, LIN, YU-PIN 8.89%
Fulilu Investment Co., Ltd.	WANG, PAO-LING 52%, HUANG, TING-KAI 34.58%, TUNG, CHING-MEI 1.06%, HUANG, YU-JUN 4.24%, HUANG, YU-HSUAN 4.06%, HUANG, YU-MING 4.06%
Chiaoli Investment Co.,Ltd.	LIN,YU-PIN 86.89%,HUANG,YU-HSI 9.06%,HUANG,TING-DI 1.85%,HUANG,LI-YI 1.64%,TUNG,CHING-MEI 0.56%

2.1.3 Major shareholders of main corporate shareholders: None.

2.1.4 Professional qualifications and independence of the Directors and Supervisors and disclosure of information on the independence of independent directors

16 April 2023

directors			16 April 2023
Conditions Name	Professional Qualifications and Experience	Independent Status	Number of independent directors of other public companies
Chairman Representative of KT Investment Co., Ltd.: HUANG, TING-DI	 He is currently the chairman and general manager of the Company. He has more than five years of work experience in business, finance and has focused on chemical industry-related fields for more than 20 years. He has operational judgement, management and decision-making skills.	Not applicable.-	0
Chairman Representative of KT Investment Co., Ltd.: HUANG, SHUEN-HSIEN	 He is currently the production department manager of the Company. He possesses the necessary work experience for the Company’s business, with over 20 years of experience in the chemical industry and related fields. He also possesses crisis management and decision-making capabilities.	Not applicable.
Representative of Chiaoli Investment Co., Ltd.: HUANG, YI-RUNG	 He used to be the chairman of Kuo Ching Chemical Co., Ltd., with more than five years of work experience in business, finance and company operation, focusing on chemical industry-related fields for more than 20 years, and he has business judgement, management and decision-making skills.	Not applicable.-	0
Representative of Chiaoli Investment Co., Ltd.: LIN, YU-PING	 She is currently the director of Chiao Li Investment Co., Ltd. and Mei Xi Investment Co., Ltd. possesses more than 5 years of work experience in business, finance, and company operations. They also possess capabilities in operational judgment, business management, and decision-making.	Not applicable.-	0
Representative of Chiaoli Investment Co., Ltd.: HUANG,ZHAO-WEI	 He is currently the environmental health and safety auditor of the Company. He has the necessary work experience for the Company’s business, with over 5 years of experience in the chemical industry and environmental regulations related fields. He also possesses crisis management and decision- making capabilities.	Not applicable.	0
HSIAO, JUNG-FU	 He used to be the head of Kaohsiung Ammonium Sulfate Co., Ltd. and Taiwan Agriculture& Industrial Development CO., with over 5 years of working experience in business, finance, and corporate operations. He also possesses strong skills in operational judgment, management, and decision-making.	Not applicable.	3
LI, SHIH-JEN	 He is currently head of TAHO Pharmaceuticals Ltd. and Transwell Biotech Co., Ltd. He has more than five years of work experience in business, finance and company operation and has ability to make business judgement, crisis management, operation management and decision-making.	Comply with the provisions of Article 3, Paragraph 1, Subparagraph 1-9 of [Regulation Governing Appointment of	3

Conditions Name	Professional Qualifications and Experience	Independent Status	Number of independent directors of other public companies
TSOU, YEN-CHUNG	 He is currently head of Sun Young CPAs Firm and has more than five years of work experience in business, finance and company operation and has ability to make business judgement, crisis, management, accounting, finance analysis and decision-making.	Independent Directors and Compliance Matters for Public Companies] , including but not limited to the person, spouse, relatives within the second degree who do not serve as directors, supervisors, employed or its affiliated companies.: Person or employee, not holding the number of shares of the company; not serving as director, supervisor or employee of a company that has a specific relationship with the company: not providing business, legal, financial, accounting for the company or related companies in last two years for received amount of remuneration.	2
LIN, YEN-TING	 He is currently head of Bloom Royal Consulting Corporation and the deputy director of Taichung City Industrial Association Labor Law Committee. He has more than five years of work experience in business, finance and company operation and has ability to make business judgement, crisis management, operation management and decision-making.		0

2.1.5 Diversity and independence of the board of directors:

(1) Diversity of the board of directors: describe the diversity policy, goals and achievement of the board of directors. The diversity policy includes, but not limited to the selection criteria for directors, the professional qualifications and experience that the board of directors should have, the composition or ratio of gender, age, nationality and culture, and the company’s specific goals and their achievement conditions are described in the previous policy.
For the board of directors to achieve the aforementioned goals and enhance its effectiveness, the Company has formulated a policy on diversity of board members. According to Article 20 of the Corporate Governance Best Practice Principle, the board members shall consider diversity, and the number of directors who are also managers of the Company shall not exceed one-third of the total number of directors. Additionally, the Company formulates an appropriate diversification policy based on its own operation, operation type and development needs, including but not limited to the following two standards:
- (1) Basic conditions and value: gender, age, nationality and culture
- (2) Professional knowledge and skills: professional background (such as law, accounting, industry, finance, marketing or technology), professional skills and work experience
The Company currently has a total of 7 seats on the board of directors, of which three are independent directors. At this stage, the target ratio of female directors is 10%. The current board of directors includes 2 female directors, with a ratio of 29%.

(2) Independence of the board of director: describe the proportion of independent directors and the independence of the board of directors, and explain with reasons whether there are no items 3 and 4 stipulated in Article 26-3 of the Securities and Exchange Act, including a description of the directors, circumstance where the supervisors or the directors and supervisors have spouse and relative within the second degree. The Company currently has a total of 7 seats on the board of directors, of which three are independent directors, and there should be more than half of the seats among the directors without spouse or relationship within the second degree amongst themselves. Currently, only 1 director has kinship within the second degree (representative of Chiaoli Investment Co., Ltd., which originally had kinship within the second degree: LIN, YU-PING)
(3) The specific diversification policy, independence and policy achievement are as follows:

The professionalism and independence of the board of directors

1 Appropriate director diversity policies have been formulated and implemented in the Corporate Governance Best Practice Principle formulated and disclosed by the Company.
According to Article 20 of the Corporate Governance Best Practice Principle, to achieve the ideal goals of corporate governance, the board members shall have the overall ability listed below, and the knowledge, skills and qualities necessary for the duties: (1) Business Judgement
(2) Accounting & Financial Analysis
(3) Operation and management
(4) Crisis Management
(5) Industry Knowledge
(6)International Market outlook
(7) Leadership
(8) Decision-making

Board Diversity

Ａ. For the board of directors to achieve the aforementioned goals and enhance its effectiveness, the Company has formulated a policy on diversity of board members. According to Article 20 of the Corporate Governance Best Practice Principle, the board members shall consider diversity, and the number of directors who are also managers of the Company shall not exceed one third of the total number of directors. Additionally, the Company formulates an appropriate diversification policy based on its own operation, operation type and development needs, including but not limited to the following two standards: (1) Basic conditions and value: gender, age, nationality and culture

(2) Professional knowledge and skills: professional background (such as law, accounting, industry, finance, marketing or technology), professional skills and work experience

Ｂ. The Company currently has a total of 7 seats on the board of directors, of which 3 are independent directors. At this stage, the target ratio of female directors is 10%. The current board of directors includes 2 female director, with a ratio of 29%.

Ｃ.The implementation of the policy on diversity of board members is as follows:

Name of Directors				Diversity Core Item	Diversity Core Item	Diversity Core Item
	Gender	Nationality	Tenure of Independent Director	Operational evaluation	Accounting and financial analysis capabilities	Management capabilities	Crisis management capabilities	Industrial knowledge capability	Global market perspective	Leadership capabilities	Decision Making capabilities
HUANG, TING-DI	Male	R.O.C.	-								
HUANG, SHUEN- HSIEN	Male	R.O.C.									
LIN, YU-PING	Female	R.O.C.	-								
HUANG, ZHAO-WEI	Male	R.O.C.	-								
TSOU, YEN-CHUNG	Male	R.O.C.	3-7 Years								
LI, SHIH-JEN	Male	R.O.C.	3-7 Years								
LIN, YEN-TING	Female	R.O.C.	3-7 Years								

2.2 Information on the Company General Manager, Deputy General Manager, Managers of departments or division

16 April 2023

																16 April 202
Title	Nationa lity	Name	Gender	Date Assumed Current Position	Current Shareholdings		Shares Held by Spouse or Minor Children		Shareholding by Nominee Arrangements		Education and Experience	Positions Held Concurrently at Other Companies	Spouse or Relatives Within the Second-Degree of Consanguinity also Holding Management, Directorial, or Supervisory Positions			Remark
					Shares	%	Shares	%	Shares	%			Title	Name	Relationshi p
General Manager	Republic of China	HUANG, TING-DI	M	2016.5.12	3,332	0.0018%	3,223,446	1.743%	-	-	Master; General Manager, Kuo Ching Chemical Co., Ltd.	Supervisor, KT Investment Co., Ltd. Director, Chiaoli Investment Co., Ltd. Director, Macy Investment Co., Ltd. Director, Power Rich International Ltd. Chairman, Seeder Welfare and Charity Foundation	-	-	-	Note 1
General Manager	Republic of China	CHANG, CHUN-PIN	M	2022.9.1	377,564	0.204%	-	-	-	-	Bachelor; General Manager, Sunko Ink Co., Ltd.	Director, Seeder Welfare and Charity Foundation	-	-	-	Note 1
Deputy General Manager	Republic of China	CHANG, CHUN-PIN	M	2016.5.12
Managing Department Manager	Republic of China	HUNG, TING- YI	M	2019.1.1	652	0.00	-	-	-	-	Bachelor; Accounting Manager, Kuo Ching Chemical Co., Ltd.	Director, BNKC Biochemical Technology Co., Ltd. Director, Seeder Welfare and Charity Foundation Director, The First Leasing Corporation	-	-	-
Finance Office Supervisor	Republic of China	WANG, TING- YU	F	2019.1.1	4,000	0.00	-	-	-	-	Master; Deputy section supervisor, Finance Section, Sunko Ink Co., Ltd.	Supervisor, BNKC Biochemical Technology Co., Ltd.-	-	-	-	Note 2
Finance Office Supervisor	Republic of China	ZHANG, CHU- XING	F	2022.9.1	-	-	-	-	-	-	Vocational college; Deputy section supervisor Finance Section, Sunko Ink Co., Ltd.	-	-	-	-	Note 2
Accounting Office Manager	Republic of China	WANG, SHENG-HUI	F	2016.11.9	-	-	-	-	-	-	Master; Assistant Vice President, Ernst & Young	-	-	-	-
Audit Office Supervisor	Republic of China	HSIEH, CHUN-FU	M	2014.8.11	-	-	-	-	-	-	Bachelor; Ardentec Corporation	-	-	-	-
R&D Department Supervisor	Republic of China	TSOU, CHIOU-PENG	F	2016.5.12	346,079	0.187%	-	-	-	-	Doctor; Manager, R&D Department, Kuo Ching Chemical Co., Ltd.	Blessingthoughts Co. Ltd.	-	-	-
Minister of Production	Republic of China	LIN, CHAO- YUAN	M	2016.5.12	-	-	-	-	-	-	Junior College; Minister of Production, Kuo Ching Chemical Co., Ltd.	Blessingthoughts Co. Ltd.	-	-	-

Title	Nationa lity	Name	Gender	Date Assumed Current Position	Current Shareholdings	Current Shareholdings	Shares Held by Spouse or Minor Children	Shares Held by Spouse or Minor Children	Shareholding by Nominee Arrangements	Shareholding by Nominee Arrangements	Education and Experience	Positions Held Concurrently at Other Companies	Spouse or Relatives Within the Second-Degree of Consanguinity also Holding Management, Directorial, or Supervisory Positions	Spouse or Relatives Within the Second-Degree of Consanguinity also Holding Management, Directorial, or Supervisory Positions	Spouse or Relatives Within the Second-Degree of Consanguinity also Holding Management, Directorial, or Supervisory Positions
					Shares	%	Shares	%	Shares	%			Title	Name	Relationshi p
Minister of Production	Republic of China	SHEN, CHI- YUNG	M	2016.5.12	-	-	-	-	-	-	Master; Minister of Production, Kuo Ching Chemical Co., Ltd.	Blessingthoughts Co. Ltd.	-	-	-
Minister of Production	Republic of China	HUANG, SHUEN-HSIEN	M	2018.1.1	911,701	0.4931%	6,664	0.004%	-	-	Junior College; Deputy Factory Director, Pingzhen Factory, Kuo ChingChemical Co.,Ltd.	-	-	-	-

Note 1: HUANG, TING-DI stepped down from his position as general manager on 1 September 2022. CHANG, CHUN-PIN has taken over the position and serves as general manager. Note 2: WANG, TING-YU stepped down from his position as financial supervisor on 1 September 2022. ZHANG, CHU-XING has taken over the position and serves as financial supervisor

3 Remuneration to Directors, General Manager and Deputy General Manager in 2022

3.1 Remuneration to Directors and Independent Directors

Unit: NT$ (in thousands)

==> picture [817 x 351] intentionally omitted <==

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

Remuneration Ratio of total Remuneration to concurrent employees Ratio of total
remuneration compensation
(A+B+C+D+E+ F+G) Salary, bonus, allowance (A+B+C+D+E+ F+G)
Compensation (A) Severance pay (B) Bonus to directors (C) Allowance (D) Severance pay (F) Profit sharing-employee bonus (G) Compensation
to net income (%) (E) to net income (%) paid to
directors from
Title Name reinvested
Companies Companies Companies Companies Companies Companies Companies Companies in Companies companies
The in the The in the The in the The in the The in the The in the The in the The company the financial The in the other than
subsidiary
company financial company financial company financial company financial company financial company financial company financial report company financial
report report report report report report report report
Cash Stock Cash Stock
Representative of KT 107 107 40 40 0.24 0.24 3,148 3,148 62 62 5.47 5.47
Chairman Investment Co,
Ltd.:HUANG, TING-DI
Representative of KT 59 59 25 25 0.14 0.14 1,214 1,214 48 48 9 9 2.21 2.21
Investment Co, Ltd.:
Minister
HUANG, SHUEN-HSIEN
(Note 1)
Representative of Chiaoli 36 36 48 48 0 0 0.14 0.14 - -- - 0.14 0.14
Investment Co., Ltd.:
Director
HUANG, YI-RUNG
(Note 2)
Representative of Chiaoli 59 59 20 20 0.13 0.13 - - - 0.13 0.13
Investment Co., Ltd,:
Director
Lin, YU-PING
(Note 2)
Representative of Chiaoli 59 59 25 25 0.14 0.14 683 683- 30 30 5 5- 1.31 1.31
Investment Co., Ltd.:
Specialist
HUANG, ZHAO-WEI
(Note 2)
HSIAO, JUNG-FU 48 48 15 15 0.10 0.10 0.10 0.10
Director
(Note 3)
Independent 480 480 107 107 40 40 1,02 1,02 1.02 1.02
LI, SHIH-JEN
Director
Independent 480 480 107 10 7 40 40 1,02 1,02 1.02 1.02
TSOU, YEN-CHUNG
Director
Independent 480 480 107 107 40 40 1,02 1,02 1.02 1.02
LIN, YEN-TING
Director
Aside from what is disclosed in the above table, the remuneration earned by Directors providing services (e. g. consultant as a non-employee) to the Company: Yi rong Huang 's consultant fee of $600 thousands.
----- End of picture text -----

Note 1: HUANG, SHUEN-HSIEN has taken over as the new representative director of the Company on 15 June 2022 (including the previous representative HUANG, TING-DI)

Note 2: HUANG, YI-RUNG resigned from his position on 15 June 2022. The new representative directors, LIN, YU-PING, HUANG, ZHAO-WEI, of the Company has taken over the position on 15 June 2022 Note 3: HSIAO, JUNG-FU resigned from his position on 15 June 2022.

Note 4: (C)(G) were draft numbers.

3.2 Remuneration to supervisors

The Company fully reelected the board of directors on 15 June 2022. On 4 May 2016, an Audit Committee was established while the supervisor system was abolished. Therefore, this remuneration is not applicable.

3.3 Remuneration to general managers and deputy managers

Unit: NT$ (in thous

Title	Name	Salary (A)	Salary (A)	Severance pay (B)	Severance pay (B)	Bonus and allowance (C)	Bonus and allowance (C)	Profit sharing-employee bonus (D)	Profit sharing-employee bonus (D)	Profit sharing-employee bonus (D)	Profit sharing-employee bonus (D)	Ratio of total compensation (A+B+C+D) to net income(%)	Ratio of total compensation (A+B+C+D) to net income(%)	Compensation paid to GM and Deputy GM from reinvested companies other than subsidiary
		The company	Companies in the financial report	The company	Companies in the financial report	The company	Companies in the financial report	The company		Companies in the financial report		The company	Companies in the financial report
								Cash	Stock	Cash	Stock
General Manager (Note)	HUANG, TING-DI	3,154	3,154	90	90	439	439	72	- -		- -	6,123	6,123	-
General Manager (Note)	CHANG, CHUN -PIN
Deputy General Manager

Note: The general manager, HUANG, TING-DI, resigned from his position on 1 September 2022. As a result, ZHANG, JUN-BIN has taken over as the new general president of the Company.

3.4 Individual disclosure of the compensation of the top five highest paid executives:

												Unit: NT$(in thousands)	Unit: NT$(in thousands)	Unit: NT$(in thousands)
Title	Name	Salary (A)		Severance pay (B)		Bonus and allowance (C)		Profit sharing-employee bonus (D)				Ratio of total compensation (A+B+C+D) to net income(%)		Compensation paid to GM and Deputy GM from reinvested companies other than subsidiary
		The Company	Companies in the financial report	The Company	Companies in the financial report	The Company	Companies in the financial report	The Company		Companies in the financial report		The Company	Companies in the financial report
								Cash	Stock	Cash	Stock
General Manager	HUA N G, TIN G- D I	2,515	2,515	-		633	633	63	-	63	-	5.236	5.236	-
R&D Department Supervisor	TSO U, CHO U-P EN G	1,798	1,798			429	429	9	-	9	-	3.646	3.646	-
Minister	SH EN, CH I- YUN G	1,607	1,607	100	100	390	390	9	-	9	-	3.434	3.434	-
General Manager	CHA N G, CHU N-P IN	1,466	1,466	90	90	398	398	9	-	9	-	3.201	3.201	-
Minister	HUA N G SH U EN - HS IEN	1,463	1,463	80	80	391	391	9	-	9	-	3.168	3.168	-

3.5 Names of managerial officers who received employees’ bonuses in the preceding year and the distribution

Unit: NT$ (in thousands)

						Unit: NT$ (in
	Title	Name	Stock	Cash	Total	Raito of total amount to net income(%)
Executive officers	General Manager	HUANG,TING-DI	-	136	136	0.22%
	DeputyGeneral Manager	CHANG,CHUN-PIN
	Manager of Management Department	HUNG,TING-YI
	Finance Office Supervisor	WANG,TING-YU
	AccountingOffice Manager	WANG,SHENG-HUI
	Audit Office Supervisor	HSIEH,CHUN-FU
	R&D Department Supervisor	TSOU,CHIOU-PENG
	Minister of Production	LIN,CHAO-YUAN
	Minister of Production	SHEN,CHI-YUNG
	Minister of Production	HUANG,SHUEN-HSIEN

3.6 The Analysis of the Ratio of the Remuneration to Net Income Paid to Directors, Supervisors, General Manager and Vice presidents by the Company and All Companies in the Consolidated Financial Statements in the Last Two Fiscal Years, the Policy and Standard of Paying Remuneration, the Procedure of Combining and Determining Remuneration, and the Relationship Between Business Performance

Title		Ratio of total Remuneration to net income	Ratio of total Remuneration to net income	Ratio of total Remuneration to net income
		2022		2021
	The Company	Companies in the financial report	The Company	Companies in the financial report
Director	18.54	18.54	(15.10)	(15.10)
Supervisor
General Manager and Deputy General Manager

The Company’s Articles of Incorporation also stipulate that no more than 1% of the annual profit will be used as the director’s remuneration. According to the regulation of the company’s remuneration committee. The payment of director’s remuneration should refer to the general level of the industry, and consider the relationship with personal performance, the rationality of the relationship between operating performance and future risks is handled in accordance with the Remuneration Regulations as follows:

The currents director’s remuneration includes monthly remuneration, travel expenses and director’s remuneration.
All independent directors serve as members of the audit committee, the remuneration committee, and have fixed remuneration. 3. The director’s travel expenses are fixed payments and are paid when they attend the board of directors

4 Implementation of Corporate governance

4.1 Operations of the board of directors

The Company convened a total of 8 (A) board of directors meetings in 2022. The attendance was as follows:

follows:
Title Name	Attendance in Person (B)	By Proxy	Attendanc e rate (%) (B/A)	Remarks
Chairman Representative of KT Investment Co., Ltd.: HUANG,TING-DI	8	0	100%	Reelected on 15 June 2022
Director Representative of KT Investment Co., Ltd.: HUANG,SHUEN-HSIEN	8	0	100%	Reelected on 15 June 2022
Director Representative of Chiaoli Investment Co., Ltd.: HUANG,YI-RUNG	5	3	62.5%	Resigned and reelected on 15 June 2022
Director Representative of Chiaoli Investment Co., Ltd.: LIN,YU-PING	4	1	80%	Reelected on 15 June 2022
Independent Director Representative of Chiaoli Investment Co., Ltd.: HUANG,ZHAO-WEI	5	0	100%	Reelected on 15 June 2022
Independent Director HSIAO, JUNG-FU	3	0	100%	Resigned and reelected on 15 June 2022
Independent Director LI, SHIH-JEN	8	0	100%	Reelected on 15 June 2022
Independent Director TSOU, YEN-CHUNG	8	0	100%	Reelected on 15 June 2022
Independent Director LIN, YEN-TING	8	0	100%	Reelected on 15 June 2022
Other items required to be stated:
I. In the event of thefollowing occurrences, the dates of the		meetings, sessions, contents of motion, all
independent directors’ opinions and the Company’s response thereto should be specified:
(I) Items listed in Article 14-3 of the Securities and Exchange Act:

	Date / Session	Proposal
	The 17thBoard of Directors The 27thMeeting (15 March 2022)	1. Independence assessment of certified public accountant and engagement of 2022 financial and tax audits. 2. Renewal of directors’ and managers’ liability insurance. 3. The amendment of Sustainable Development Best Practice Principle (former CSR Best Practice Principle). 4. The amendment of the Corporate Governance Best Practice Principle. 5. The amendment of Acquisition or Disposal of Assets Procedure. 6. Proposal to Release the Board of Directors from Non-Competition Restrictions. Independent director opinions: Approved without any dissent. Independent director opinions handled bythe Company: Not applicable.
	The 17thBoard of Directors The 28thMeeting (10 May2022)	1. The Company’s consolidated financial statements of Q1 for 2022. 2. Application to banks for the loan credit line. Independent director opinions: Approved without any dissent. Independent director opinions handled bythe Company: Not applicable.
	The 18thBoard of Directors, The 1stMeeting (15 June 2022)	1. The election of the 18thchairman. Independent director opinion: Approved without any dissent Independent director opinions handled by the Company: Not applicable
	The 18thBoard of Directors The 2ndMeeting (9 August 2022)	1. Replacement of the Company’s CPA. 2. The Company’s consolidated financial statements of Q2 for 2022. 3. Appointment of members to the 5th Remuneration Committee. 4. Application to banks for the loan credit line. Independent director opinions: Approved without any dissent. Independent director opinions handled bythe Company: Not applicable.
	The 18thBoard of Directors The 3rdMeeting (26 August 2022)	1.Change of the Company’s manager and remuneration. 2.Change of the Company’s financial executive and remuneration. 3.Change of the Company’s production minister and remuneration. 4. Annual salary adjustment for the Company’s managers. 5. Annual salary adjustment to the Company’s audit office supervisors. 6. Annual salary adjustment to the Company’s chairman. 7.Chamge of the Company’s spokesperson. 8. Amendment to the Company’s authority matrix. 9. The amendment of the Company’s Rules of Procedure for Board of Directors Meetings. Independent director opinions: Approved without any dissent. Independent director opinions handled bythe Company: Not applicable.
	The 18thBoard of Directors The 4thMeeting (8 November 2022)	1. The Company’s consolidated financial statements of Q3 for 2022. 2. Salary adjustment to all employees of the Company in 2023. 3.Change of the appointment of managers. 4. Application to banks for the loan credit line. 5. Amendment to the Company’s Repurchase shares and transfer to employee measures. 6. Amendment to the Company’s authority matrix table. Independent director opinions: Approved without anydissent.

	Independent director opinions handled by the Company: Not applicable.
The 18thBoard of Directors The 5thMeeting (15 December 2022)	1. 2023 Operational Plan. 2. 2023 Budget Proposal 3. 2023 Audit Plan 4. Amendment of the Company’s Corporate Governance Best Practice Principle. 5. Regulations Governing Risk Management has been stipulated by the Company. Independent director opinions: Approved without any dissent. Independent director opinions handled bythe Company: Not applicable.
The 18thBoard of Directors The 7thMeeting (14 March 2023)	1.Replacement of the Company’s CPA. 2. Independence assessment of certified public accountant and 2023 financial and tax audit engagements. 3. Review of the Company’s 2022 parent only and consolidated financial reports. 4. Review of the Company’s 2022 surplus earning distribution. 5. Review of employee and director remuneration allocation for 2022 by the Company's Remuneration Committee. 6. Amendment of the Company’s Corporate Governance Best Practice Principle. 7. Amendment of the Company’s Rules of Procedure for Shareholder Meetings. 8. Setting the date, venue and reasons for convening of the 2023 general shareholders’ meeting. 9. Matters related to the venue and session of the 2023 general shareholders’ meeting. 10. Renewal of directors’ and managers’ liability insurance. 11. Renewal of consultant contracts. Independent director opinions: Approved without any dissent. Independent director opinions handled bythe Company: Not applicable.
(II) In addition to the above matters, resolutions of the board meetings for which independent directors expressed objection or held reservation and are recorded or presented in writing: None II. With respect to directors excusing themselves in the case of conflict of interest, the directors’ names, contents of motion, reasons for conflict of interest and votes should be specified: (1) On the 17th Board of Directors’ 15th Meeting: During the discussion on creating a mortgage on farmland No. 1416 on Hsin-de-lung Section for $4 million, Chairman HUANG, TING-DI recused himself from participating in the voting process to avoid conflict of interests. The rest of the directors agreed and passed the proposal without any dissent. (2) On the 17th Board of Directors’ 17th Meeting: During the discussion on renewing contracts with the consultants, Director HUANG, YI-RUNG and HUANG, TING-DI recused themselves from participating in the discussion and voting process to avoid conflict of interests. The rest of the directors agreed and passed the proposal without any dissent. (3) On the 17th Board of Directors’ 26th Meeting: During the discussion on adjusting manager’s salary, as the process involved the salary of the individual managers, the chairman and manager recused themselves from participating in the discussion and voting process to avoid conflict of interest. The rest of the directors agreed andpassed theproposal without anydissent.

(1) On the 17th Board of Directors’ 15th Meeting: During the discussion on creating a mortgage on farmland No. 1416 on Hsin-de-lung Section for $4 million, Chairman HUANG, TING-DI recused himself from participating in the voting process to avoid conflict of interests. The rest of the directors agreed and passed the proposal without any dissent.
(2) On the 17th Board of Directors’ 17th Meeting: During the discussion on renewing contracts with the consultants, Director HUANG, YI-RUNG and HUANG, TING-DI recused themselves from participating in the discussion and voting process to avoid conflict of interests. The rest of the directors agreed and passed the proposal without any dissent.
(3) On the 17th Board of Directors’ 26th Meeting: During the discussion on adjusting manager’s salary, as the process involved the salary of the individual managers, the chairman and manager recused themselves from participating in the discussion and voting process to avoid conflict of interest. The rest of the directors agreed and passed the proposal without any dissent.

III. Board of Directors' Evaluation of Implementation Cycle Period Scope Content Once every year 1 January 2022-31 December 2022 The Board members Through the evaluation method of the board members, the performance evaluation of the board of the director is carried out according to the following aspects: The degree of participation in the Company's operations, Improve the quality of decision-making of the board of directors, the composition and structure of the board of directors, the selection and continuous training of directors and internal control system, etc. Individual Board members Through the evaluation method of the individual board members, the performance evaluation of the board of the director is carried out according to the following aspects: The Company’s objectives and tasks, the recognition of directors' responsibilities, the degree of participation in the Company's operations, internal relationship management and communication, the professional and continuous training of directors, internal control, etc. Every other functional committee Through the evaluation method of the performance evaluation of the board of the director is carried out according to the following aspects: The degree of participation in the Company's operations, the recognition of the functional committees' responsibilities, improve the functional committees’ quality of decision-making, the composition and structure of the functional committees, the selection of members and internal control system, etc.	III. Board of Directors' Evaluation of Implementation Cycle Period Scope Content Once every year 1 January 2022-31 December 2022 The Board members Through the evaluation method of the board members, the performance evaluation of the board of the director is carried out according to the following aspects: The degree of participation in the Company's operations, Improve the quality of decision-making of the board of directors, the composition and structure of the board of directors, the selection and continuous training of directors and internal control system, etc. Individual Board members Through the evaluation method of the individual board members, the performance evaluation of the board of the director is carried out according to the following aspects: The Company’s objectives and tasks, the recognition of directors' responsibilities, the degree of participation in the Company's operations, internal relationship management and communication, the professional and continuous training of directors, internal control, etc. Every other functional committee Through the evaluation method of the performance evaluation of the board of the director is carried out according to the following aspects: The degree of participation in the Company's operations, the recognition of the functional committees' responsibilities, improve the functional committees’ quality of decision-making, the composition and structure of the functional committees, the selection of members and internal control system, etc.	III. Board of Directors' Evaluation of Implementation Cycle Period Scope Content Once every year 1 January 2022-31 December 2022 The Board members Through the evaluation method of the board members, the performance evaluation of the board of the director is carried out according to the following aspects: The degree of participation in the Company's operations, Improve the quality of decision-making of the board of directors, the composition and structure of the board of directors, the selection and continuous training of directors and internal control system, etc. Individual Board members Through the evaluation method of the individual board members, the performance evaluation of the board of the director is carried out according to the following aspects: The Company’s objectives and tasks, the recognition of directors' responsibilities, the degree of participation in the Company's operations, internal relationship management and communication, the professional and continuous training of directors, internal control, etc. Every other functional committee Through the evaluation method of the performance evaluation of the board of the director is carried out according to the following aspects: The degree of participation in the Company's operations, the recognition of the functional committees' responsibilities, improve the functional committees’ quality of decision-making, the composition and structure of the functional committees, the selection of members and internal control system, etc.	III. Board of Directors' Evaluation of Implementation Cycle Period Scope Content Once every year 1 January 2022-31 December 2022 The Board members Through the evaluation method of the board members, the performance evaluation of the board of the director is carried out according to the following aspects: The degree of participation in the Company's operations, Improve the quality of decision-making of the board of directors, the composition and structure of the board of directors, the selection and continuous training of directors and internal control system, etc. Individual Board members Through the evaluation method of the individual board members, the performance evaluation of the board of the director is carried out according to the following aspects: The Company’s objectives and tasks, the recognition of directors' responsibilities, the degree of participation in the Company's operations, internal relationship management and communication, the professional and continuous training of directors, internal control, etc. Every other functional committee Through the evaluation method of the performance evaluation of the board of the director is carried out according to the following aspects: The degree of participation in the Company's operations, the recognition of the functional committees' responsibilities, improve the functional committees’ quality of decision-making, the composition and structure of the functional committees, the selection of members and internal control system, etc.
Cycle	Period	Scope	Content	Result
Once every year	1 January 2022-31 December 2022	The Board members	Through the evaluation method of the board members, the performance evaluation of the board of the director is carried out according to the following aspects: The degree of participation in the Company's operations, Improve the quality of decision-making of the board of directors, the composition and structure of the board of directors, the selection and continuous training of directors and internal control system, etc.	1. Improvement on the degree of participation in the quality of decision- making of the board of directors. Suggestions: The Company may organize from time to time pre-meeting discussions and hold board meetings at off-site locations to provide diverse communication channels and interactive opportunities among directors, thus maintaining the quality of decision-making. 2. Improvement on the degree of participation in the quality of decision- making of the board of directors. Suggestions: It is advisable to include important domestic and international policies, regulations, and industry development trends as regular or occasional reporting items to fully inform board members about the Company's current situation and future strategic development direction. The Company will also suggest future agenda themes and adjust the proportion according to the Company's operational needs and development. 3.Improvenment on the degree of participation in composition and structure of the board of directors. Suggestions: It is advisable to designate a corporate governance supervisor in accordance with relevant regulations to improve the corporate governance of the enterprise
		Individual Board members	Through the evaluation method of the individual board members, the performance evaluation of the board of the director is carried out according to the following aspects: The Company’s objectives and tasks, the recognition of directors' responsibilities, the degree of participation in the Company's operations, internal relationship management and communication, the professional and continuous training of directors, internal control, etc.	1. Improvement on the degree of participation in the management of the Company’s objectives and tasks, Suggestions: It is advisable to formulate risk management strategies and objectives, and establish a security risk management framework, which is regularly reviewed and reported to the board of directors 2. Improvement on the degree of participation in the professional and continuous training of directors. Suggestion: It is advisable to share the information on professional development courses with the board members and suggest relevant topics for further learning. The secretariat may assist in arranging courses and inviting experts to share their knowledge with the board members. 3. Improvement on the degree of participation in the diversity of the Board. Suggestion: It is advisable to establish a Nomination Committee that would search, review, and assess director candidates based on diverse standards of professional knowledge, skills, and experiences required by the board.
		Every other functional committee	Through the evaluation method of the performance evaluation of the board of the director is carried out according to the following aspects: The degree of participation in the Company's operations, the recognition of the functional committees' responsibilities, improve the functional committees’ quality of decision-making, the composition and structure of the functional committees, the selection of members and internal control system, etc.	1. Improvement on the degree of participation in the composition and structure of the functional committees. Suggestion: It is advisable to establish non-mandatory functional committee such as Risk Management Committee, Nomination Committee, or Sustainability Committee based on the Company’s needs to respond to the Company's development goals, external regulatory trends, and various

emerging risks. These committees aim to ensure the appropriateness and effectiveness of overall medium- to long-term risk management and resource allocation.

IV. Measures taken to strengthen the functionality of the board of the current periods (such as setting up an audit committee to improve information transparency, etc.) and execution status assessment: The Company already established the Audit Committee in 2016, and constantly strengthen the substantial disclosures on the Company’s website to improve information transparency.
4.2 The operation of the audit committee or the participation of the supervisor in the operation of the board of directors

4.2.1 Operations of the Audit Committee

The Company’s Audit Committee consists of 3 independent directors. The purpose of the Audit

Committee is to assist the Board with the execution of its duties to supervise the Company on accounting, internal audit, financial reporting progress and the quality and integrity of internal control.

Matters reviewed mainly listed below:

(1) Financial statements, auditing and accounting policies and procedures.
(2) Internal control system and related policies and procedures.
(3) Significant asset or derivative transaction.
(4) Significant fund lending and endorsements or guarantees.
(5) Place or issue securities.
(6) Derivatives financial instruments and cash investment.
(7) Regulatory compliance.
(8) Whether the manager and the director have related party transactions and possible conflicts of interest.
(9) Complaint report.
(10) Fraud prevention plan and fraud investigation report.
(11) Information Security.
(12) Corporate risk management.
(13) Appraisal of qualifications, independence and performance of certified accountants.
(14) Appointment, dismissal or remuneration of certified accountants.
(15) Appointment and removal of financial, accounting or internal audit supervisors.
(16) Performance of Audit Committee's duties.

4.2.2 Meetings of the Audit Committee

The Company convened a total of 7 (A) meetings of the Audit Committee over the past fiscal year. The attendance was as follows:

Title	Name	Attendance in Person (B)	By Proxy	Attendance rate (%) (B/A)	Remarks
Independent Director	LI, SHIH-JEN	7	0	100%	Reelected on 15 June 2022
Independent Director	TSOU, YEN-CHUNG	7	0	100%	Reelected on 15 June 2022-
Independent Director	LIN, YEN-TING	7	0	100%	Reelected on 15 June 2022-
Other items required to be stated: I. In the event of the following circumstances in the operation of the Audit Committee, the date, sessions, contents of motion, opinions of independent directors who object, the resolution and the Company’s response thereto should be specified: opinions of independent directors who object, reserve or propose significant recommendations, Audit Committee resolutions, and the Company's response to the opinions of the Audit Committee shall be disclosed: II. Items listed in Article 14-5 of the Securities and Exchange Act Date Session Proposal The 2ndAudit Committee The 20th Meeting (15 March 2022) 1. Review of the Company’s 2021 parent only and consolidated financial reports. 2. Independence assessment of the certified public accountant and engagement of 2022 financial and tax audits. 3.Report on internal control audit. 4. 2021 Statement of Declaration on Internal Control. 5. Renewal of directors’ and managers’ liability insurance. 6. The amendment of Sustainable Development Best Practice Principle (former CSR Best Practice Principle). 7. The amendment of the Corporate Governance Best Practice Principle. 8. The amendment of the Regulations Governing the Acquisition and Disposal of Assets. 9. Proposal to release the board of directors from non-competition restrictions. Audit Committee’s opinion: Approved without any dissent. The Company’s response to the Audit Committee’s opinion: Not applicable. The 2ndAudit Committee The 21st Meeting (10 May 2022) 1. The Company's consolidated financial statement for Q1 of 2022. 2. Report on internal control audit. Audit Committee’s opinion: Approved without any dissent. The Company’s response to the Audit Committee’s opinion: Not applicable. The 3rdAudit Committee The 1nd Election of the Company’s convenor of the 3rdAudit Committee. Audit Committee’s opinion: Approved without any dissent. The Company’s response to the Audit Committee’s opinion: Not applicable.

	Meeting (15 June 2022)
	The 2rdAudit Committee The 3rd Meeting (9 August 2022)	1. Change of the Company’s CPA. 2. The Company’s consolidated financial statements of Q2 for 2022. 3. Report on internal control audit. Audit Committee’s opinion:Approved without any dissent. The Company’s response to the Audit Committee’s opinion: Not applicable.
	The 3rdAudit Committee The 3th Meeting (26 August 2022)	1.Change of the Company’s general manager and remuneration. 2.Change of the Company’s financial executive and remuneration. 3.Change of the Company’s production department head and remuneration. 4. Annual salary adjustment for the Company’s managers. 5. Annual salary adjustment to the Company’s audit office supervisors. 6. Annual salary adjustment to the Company’s chairman. 7. The amendment of the Company’s authority matrix. 8. The amendment of the Company’s Rules of Procedure for Board of Directors Meetings. Audit Committee’s opinion: Approved without any dissent. The Company’s response to the Audit Committee’s opinion: Not applicable.
	The 3rdAudit Committee The 4th Meeting (8 November 2022)	1. Report on internal control audit. 2. The Company's consolidated financial statement for Q3 of 2022. 3. The amendments to Repurchase Shares and Transfer to Employee Measures. 4. The amendment of Purchase and Payment Cycle. 5. The amendment of the Company’s authority matrix. Audit Committee’s opinion: Approved without any dissent. The Company’s response to the Audit Committee’s opinion: Not applicable.
	The 3rdAudit Committee The 5th Meeting (15 December 2022)	1. 2023 Budget Proposal. 2. Plan on internal control audit on 2023. 3. Amendment of Corporate Government Best Practice Principle. 4. Formulation of the Regulations Governing Risk Management. Audit Committee’s opinion: Approved without any dissent. The Company’s response to the Audit Committee’s opinion: Not applicable.
	The 3rdAudit Committee The 6th Meeting (14 March 2023)	1. Change of the Company’s CPA. 2. Independence assessment of CPA and engagement of 2023 financial and tax audits. 3. Drafting the general principles for the pre-approval policy for non-assurance services in the Company. 4. Review of the Company’s 2022 parent company only and consolidated financial reports. 5. Review of the Company’s 2022 Business Report. 6. Review of the Company’s 2022 surplus earning distribution. 7. Internal audit manager's internal audit report. 8. 2022 Statement of Declaration on Internal Control System. 9.The amendment of the Corporate Governance Best Practice Principle. 10. The amendment of Company’s Rules of Procedure for Shareholder Meetings. 11. Renewal of directors’ and managers’ liability insurance. 12. Report on the operation of the Risk Management Policy for 2023. Audit Committee’s opinion: Approved without anydissent.

The Company’s response to the Audit Committee’s opinion: Not applicable.

b. Other matters not passed by the Audit Committee, which were then agreed upon by two-thirds of the entire membership of the Board of Directors: None.

In situations where independent directors recuse themselves due to conflict of interest, the independent director’s name, content of the resolution, reason for recusal, and his or her voting participation should be properly recorded: None.
Communication between independent directors and internal audit managers and external auditors (regarding issues such as Company financial and operational status, procedures, and results): The accountant explained the Company's financial report review to the members of the audit committee (served by all independent directors) on the meeting of audit committee, the audit supervisor submits the Company's internal audit report, and the audit office regularly submits audit reports to the members every month. Furthermore, the audit committee members can contact the internal audit supervisor and accountants at any time to inquire about the Company's financial business execution status, and the responsible department shall be asked to provide explanations, in order to make communication channels smooth.

4.2.3 Supervisor’s participation in the board of directors

The Company fully reelected the board of directors on 15 June 2022. On 4 May 2016, an Audit

Committee was established while the supervisor system was abolished. Therefore, it is not applicable.

4.3 Differences between Company policy and Corporate Governance Best-Practice Principles for TSE/ GTSM Listed Companies and reasons for differences

Items Evaluated	Status	Status	Status	Variations (if any) with the Corporate Governance Best Practice Principles for TWSE/ GTSM Listed Companies and reasons for such discrepancies
	Yes	No	Brief Explanation
1. Does the Company formulate and discloses the Corporate Governance Best Practice based on “Corporate Governance Best Practice Principles for Listed Companies”?			The Company has already formulated the corporate governance code and disclose it in accordance with Corporate Governance Best Practice Principles for Listed Companies.	No deviation.
2. Corporate equity structure and shareholders’ equity (1) Does the company formulate the internal operation procedure to handle shareholder proposal, doubt, dispute and litigation and implements it in accordance with the procedure? (2) Does the company master the principal shareholders actually controlling the company and the final controller list of principal shareholders? (3) Does the company establish and executes the risk control and firewall mechanism with the affiliated enterprise? (4) Does the company formulate the internal specification to prohibit the corporate insiders to buy orsell negotiable securities by using the	   		1. The Company has a spokesperson to accept shareholders’ suggestions and to make clarifications and to have an in- depth understanding of shareholders’ suggestions or concerns to evaluate and respond. The website also has stakeholder contact information to deal with related matters. 2. The Company shall keep abreast of any changes to the shareholders’ ownership of more than 5% of the shares and directors’ shareholding percentage. Information of ownership of directors and shareholders holding more than 10% of the shares are publicly disclosed on the information reporting website designated by the FSC every month in accordance with regulations. 3. The Company has set up “Subsidiary Management Measures”, “Regulations and Procedures for Endorsements”, Operational Procedures for Loaning Funds to Others” and “Procedures on Acquisition or Disposal of Assets” to implement the risk control. 4. The Company has established operating procedures to prevent insider trading.	No deviation. No deviation. No deviation. No deviation.

Items Evaluated	Status	Status	Status	Variations (if any) with the Corporate Governance Best Practice Principles for TWSE/ GTSM Listed Companies and reasons for such discrepancies
	Yes	No	Brief Explanation
informationundisclosedin market?
3. Composition and responsibilities of the board of directors (1) Does the board of directors draft the diversification policy, specific management objective and implements it in terms of the member composition? (2) Does the company voluntarily set other functional committees apart from the Remuneration committee and Audit Committee? (3) Does the company formulate the performance evaluation method and evaluation way of the board of directors, and regularly carries out performance evaluation each year? (4) Does the company regularly evaluate the independence of CPAs?	  		1. The composition of the Company’s board of directors pays attention to diversity elements and generally possesses the necessary knowledge, skills, and qualities required for the execution of their duties. 2. The Company has established Remuneration Committee and Audit Committee in accordance with the law and has not established other functional committees. 3. The Company has established a method and evaluation criteria for the performance evaluation of the board of directors. The evaluation should be conducted at least once every three years by an external independent organization or a team of external professional experts and scholars. In 2022, EY Taiwan completed an external evaluation of the performance evaluation, and the results were submitted to the board of directors. 4. The Company confirms that the certified public accountants and the Company have no other financial interests and business relationships except for certification and taxation expenses, and members of the accountant family do not violate the independence requirements, the certified public accountant’s appointment will be reviewed (Note 1). The Company periodically evaluates the independence and competency of certified public accountants (annually) and obtains the certified public accountant’s Statement of Independence. The appointment and compensation of certification andtaxationwas passed on 15May2022 in the	No deviation. No deviation. No deviation. No deviation.

Items Evaluated	Status	Status	Status	Variations (if any) with the Corporate Governance Best Practice Principles for TWSE/ GTSM Listed Companies and reasons for such discrepancies
	Yes	No	Brief Explanation
			board meeting.
4. Does the Company have a suitable number of competent corporate governance personnel, and has it appointed a corporate governance supervisor responsible for corporate governance matters (including but not limited to providing information for directors and supervisors to perform their duties, assisting directors and supervisors with regulatory compliance, handling matters related to Board meetings and shareholders' meetings, and preparing proceedings for Board meetings and shareholders' meetings)?			The stock affairs specialist in the general manager's office is responsible for corporate governance related businesses, including the establishment and promotion of governance practices, providing necessary information to directors and supervisors for the execution of their duties, assisting them in complying with laws and arranging courses for their further education, handling matters related to the board meetings and shareholders' meetings in accordance with the law, conducting registration and changes in registration, and preparing meeting minutes. A corporate governance officer will be appointed within the designated time frame.	In accordance with relevant regulations, the appointment of a corporate governance officer shall be completed before 30 June 2023.
5. Does the Company establish ?communication channels with stakeholders (including, but not limited to, shareholders, employees, customers, and suppliers) and set up an area dedicated to stakeholders on the Company website and does the Company respond appropriately to corporate social responsibility issues that stakeholders consider important?			The Company has established an area for stakeholders in the Company’s website in accordance with the regulations in order to build the communication channel.	No deviation.
6. Does the Company commission a professional stock affair agency to manage shareholders' meetings and other relevant affairs?			The Company has designated the SinoPac Securities Corp. Stock Registration Division to handle shareholder meeting affairs.	No deviation.
7. Information Disclosure (1) Does the Company establish a public website to disclose operational, financial, and corporate governance information? (2) Does the Company adopt other means of information disclosure (such as establishing an English language website, delegating a professional to collect and disclose company information,	 		1. The Company has established corporate website and designated personnel to be responsible for disclosing operational, financial, and corporate governance information. 2. The Company has spokespersons and acting spokespersons, and designated persons responsible for the collection and disclosure of company information and provide it to the spokesperson and relevant business	No deviation. No deviation.

Items Evaluated	Status	Status	Status	Variations (if any) with the Corporate Governance Best Practice Principles for TWSE/ GTSM Listed Companies and reasons for such discrepancies
	Yes	No	Brief Explanation
implement a spokesperson system, and disclosing the process of investor conferences on the company website)? (3) Does the company announce and report annual financial statements within two months after the end of each fiscal year, and announce and report Q1, Q2, and Q3 financial statements, as well as monthly sales results, before the prescribed time limit?			departments to answer the inquiries of interested parties and competent authorities. 3. The Company filed the first, second and third quarter financial reports before the required deadline.	The Company will continue to improve the timeliness of operations in order to file the annual financial report and the operating results each month as early as possible.
8. Does the Company disclose other important information to facilitate better understanding of the Company’s corporate governance practices (including, but not limited to current status of employee rights, employee care, investor relations, supplier relations, stakeholder rights, director and supervisor training regimes, risk management policies, and risk measurement standards as well as the implementation of client policies and the Company’s purchase of liability insurance for its directors and supervisors)?			1. Employee Rights: The Company and its employees maintain a smooth communication channel, and respect and protect their legitimate rights and interests; when the legitimate rights and interests are infringed, the Company will handle them appropriately based on the principle of justice. 2. Employee Care: The Company has established employee communication channels to encourage employees to communicate directly with management, and appropriately reflect employees' opinions on the Company's business and financial status or major decisions involving employees' interests. 3. Investor Relations: In addition to respecting and safeguarding the legitimate rights and interests of investors, the Company shall perform its business in accordance with the principle of good faith and properly handle transaction disputes. 4. Supplier Relations: The Company cherishes, values and is long-term partners with suppliers. We believe that only partnerships with similar ideas can last. Any supplier or contractor who delivers goods or provides services to the Company must perform in good faith and shall not damage the Company's corporate interests and image. The Company also asks employees to avoid any unethical behavior and conflicts of interest with manufacturers at any time.	No deviation. No deviation. No deviation. No deviation.

Items Evaluated	Status	Status	Status	Variations (if any) with the Corporate Governance Best Practice Principles for TWSE/ GTSM Listed Companies and reasons for such discrepancies
	Yes	No	Brief Explanation
			5. Stakeholder's Rights: Proposals that concern the interests of directors are conducted with proper recusal procedure . 6. Director’s Further Study: Directors of the Company have professional background, and the majority of the directors are currently engaged in their professional field. In addition, the Company provides related information on corporate governance to directors periodically to remind them of their responsibilities. 7. Implementation of Risk Management Policies and Risk Measurement Standards: The Company has stipulated the Regulations Governing Risk Management and has implemented them in accordance with the Regulations. 8. Implementation of Customer Policy: The Company passed the ISO9001 Quality System Certification and has a dedicated department to implement the overall operation to ensure the results of the Company’s customer policy implementation. 9. The Company continues to purchase liability insurance for directors.	No deviation. No deviation. No deviation. No deviation. No deviation.
9. Improvements made in the most recent fiscal year in response to the results of corporate governance evaluation conducted by the Corporate Governance Center of the Taiwan Stock Exchange Corporation, and improvement measures and plans for items yet to be improved.			Based on the corporate governance assessment results for the 2022, the following are the priority matters and measures for strengthening: (1) Does the company have a majority of directors (including at least one independent director) and the convener of the Audit Committee (or at least one supervisor) attend the shareholders' meeting in person and disclose the attendance list in the minutes? (2) Does the company simultaneously release significant information in English? (3) Does the company complete the distribution of cash dividends within 30 days after the ex-dividend date during	(1) It is expected to be implemented starting from 2023. (2) It is expected to be implemented starting from 2023. (3) It is expected to be implemented starting from

Items Evaluated	Status	Status	Status	Variations (if any) with the Corporate Governance Best Practice Principles for TWSE/ GTSM Listed Companies and reasons for such discrepancies
	Yes	No	Brief Explanation
			the assessed year?	2023.

Note: Regardless of whether "Yes" or "No" is selected for the operational status, it should be stated in the summary explanation field.

Note 1: Evaluation on the independence of CPAs

ote 1: Evaluation on the independence of CPAs
Evaluation item	Yes	No
1. Direct or indirect material financial interests between the CPAs and the Company?	V
2. Financing or endorsements with the Company’s Directors?	V
3. Close business relations with the Company?	V
4. Are CPAs or members in the audit team in positions that could seriously impact the audit during these two years?	V
5. Provide Non-audit services that may directly impact auditing tasks?	V
6. Serve as an agent in between to issue stocks and other securities?	V
7. Serve as the Company's defense counsel or represent the Company in mediating conflicts with third parties?	V
8. Are family members or relatives of the Company's Directors, Supervisors, or other individuals in positions that could seriously impact the audit?	V
9. Are the CPAs in line with the independence stated in Article 10 of the Accountant Ethical Codes and do they provide with Independence Declaration”?	V

4.4 Composition, responsibilities, and operation of the Remuneration Committee

4.4.1 Remuneration Committee members

Identity	Condition Name	Professional Qualification& Work Experience	Independence	Number of independent directorship held in other public companies
Independent Director (convener)	LIN, YEN-TING	She is currently head of Plan- Wise International Corporation and the deputy director of Taichung City Industrial Association Labor Law Committee. He has more than five years of work experience in business, finance and company operation and has ability to make business judgement, crisis management, operation management and decision- making.	Comply with the provisions of Regulation Governing the Appointment and Exercise of Powers by Remuneration Committee of a Company Whose Stock is Listed on the Taiwan Stock Exchange or the Taipei Exchange , including but not limited to the person, spouse, relatives within the second degree who do not serve as directors, supervisors, employed or its affiliated companies.: Person or employee, not holding the number of shares of the company; not serving as director, supervisor or employee of a company that has a specific relationship with the company: not providing business, legal,finacial, accounting for the company or related companies in last two years for received amount of remuneration	-
Independent Director	TSOU, YEN-CHUNG	He is currently head of Sun Young CPAs Firm and has more than five years of work experience in business, finance and company operation and has ability to make business judgement, crisis, management, accounting, finance analysis and decision-making.		2
Independent Director	LI, SHIH-JEN	He is currently the chairman of Taxo Pharmaceutical CO ., LTD, Transwell Biotech Co.,Ltd and has more than five years of work experience in business, finance and company operation, and he has business judgement, crisis management, international market outlook and decision-making skills		3

Note: None of the directors of the company has any circumstances related to Article 30 of Company Law.

4.4.2 Operations of the Remuneration Committee

(1) The Company’s Remuneration Committee is composed of three members.
(2) The term of office for current members runs from 9 August 2022 through 8 August 2025.

The Company convened a total of 3 (A) meetings of the Remuneration Committee over the past fiscal year. The attendance was as follows:

Title	Name	Meetings Attended Personally (B)	Meetings Attended by Proxy	Personal Attendance Rate (B/A)	Remarks
Convener	LIN, YEN-TING	3	0	100%	-
Member	LI-SHIH-JEN	3	0	100%	-
Member	TSOU, YEN- CHUNG	3	0	100%	-
Other disclosures: 1. If the board does not adopt or amend the suggestions of the Remuneration committee, it shall state the date, term, proposal content, resolution results of the board of directors and the Company’s response to the Remuneration Committee (such as the remuneration approved by the board of directors is better than the suggestions of the Remuneration committee, should explain the discrepancy and its reasons): None. 2. Should a committee member oppose or retain their opinion regarding any decision made by the Remuneration Committee and their opinion has been recorded or submitted in a written statement, the committee meeting date, session, content of the resolution, opinions of all members, and the response to the opinions shall be recorded. 3. Remuneration Committee functions and powers: (1) Set the remuneration of directors. (2) Set the remuneration of Chairman, vice president, chief executive officer, and general manager (managers). (3) Other cases referred to bythe board of directors for deliberation.

The proposals and results of the meeting and the Company's response to members' opinions

Date and Term	Proposal details and follow-ups
The 4thRemuneration Committee The 11thMeeting (21 January 2022)	1. Discuss remuneration for managers in 2022. Resolution: Unanimously approved. 2. The salary of managers will be increased from 1 January 2022. Resolution: Unanimously approved. 3. Review of 2022 remuneration for managers. The Company’s response to the Remuneration Committee’s opinion: Not applicable.
The 5thRemuneration Committee The 1stMeeting (9 August 2022)	1. Election of the convener of the Remuneration Committee for the current term. Resolution: Lin, Yen-Ting has been elected as the convener of the 5thRemuneration Committee. The Company’s response to the Remuneration Committee’s opinion: Not applicable.
The 5thRemuneration Committee The 2ndMeeting (26 August 2022)	1. Review for the remuneration for the general manager. Resolution: Unanimously approved. 2. Review of the remuneration for chairman. Resolution: Unanimously approved. 3. Review of the remuneration for managers. Resolution: Unanimously approved 4. Review of the remuneration for financial executive. Resolution: Unanimously approved. 5. Review of the salary adjustment of managers from 1 July 2022. Resolution: Unanimously approved. The Company’s response to the Remuneration Committee’s opinion: Not applicable.
The 5thRemuneration Committee The 3rdMeeting (17 January 2023)	1. Settle remuneration for managers in 2022. Resolution: Unanimously approved. 2. The salary of managers will be increased from 1 January 2023. Resolution: Unanimously approved. 3. Review of 2023 remuneration for managers. Resolution: Unanimously approved. 4. Review of the Company’s remuneration for general president. Resolution: Unanimously approved The Company’s response to the Remuneration Committee’s opinion: Not applicable.

	The 5thRemuneration Committee The 4thMeeting (14 March 2023)	1. Remuneration distribution for directors and employees in 2022. Resolution: Unanimously approved The Company’s response to the Remuneration Committee’s opinion: Not applicable.

4.4.5 Information on the members of the nomination committee and information on the operation situation: The Company has not established a Nomination Committee, so it is not applicable.

4.5 Implementation of Sustainable Development

Items Promoted	Status	Status	Status	Variations (if any) with the Sustainable Development Best Practice Principles for TWSE/GTSM Listed Companies and reasons for such discrepancies
	Yes	No	Brief Explanation
1. Does the company establish a governance structure to promote sustainable development, and set up dedicated (part-time) position to promote sustainable development, which is authorized by the board of directors to handle senior manager, and the board of directors supervises the situation?			The Company does not have a dedicated department for promoting corporate social responsibility, but each department is committed to promoting corporate social responsibility within its scope of work.	The Company expected to set up a Sustainable Development Committee in2023 to be responsible for promoting ESG-related issues, which will be implemented by various departments according to their respective work scopes.
2. Does the Company conduct risk assessments on environmental, social and corporate governance issues related to the company’s operations in accordance with the principle of materiality, and formulate relevant risk management policies or strategies?			The risk assessment of the Company includes all subsidiary plants, and through a process of significance assessment, the Company identifies four significant issues related to environment, society, and corporate governance. Accordingly, the following management policies have been formulated.: 1. Operational performance: Continuously develop new products and improve processes to move towards high-value products, reducing operational risks and enhancing operational performance. 2. Chemical safety and environmental management: Comply with local regulations and implement chemical substance safety management to protect the safety and health of employees in chemical usage. 3. Information Security: Strictly adhere to laws and regulations by establishing relevant information security management rules. Implement appropriate protective measures for the company's information systems and electronic data to ensure confidentiality, integrity, availability, and legality. 4. Air Pollution Management: Comply with regulations and meet statutory emission standards.	No deviation.

Items Promoted	Status	Status	Status	Variations (if any) with the Sustainable Development Best Practice Principles for TWSE/GTSM Listed Companies and reasons for such discrepancies
	Yes	No	Brief Explanation
3. Environmental Topic (1) Does the Company establish applicable environmental management system based on its industrial characteristics? (2) Is the Company committed to improving energy efficiency and using recycled materials with low impact on the environment? (3) Does the company assess the present and future risks and opportunities climate change poses on the company? (4) Does the company count greenhouse gas emissions, water consumption and total weight of waste in the past two years, and formulate policies for energy saving and carbon reduction, greenhouse gas reduction, water use reduction or other waste management?	   		(1) The Company set out management rules for air pollution, water pollution, waste and toxic treatment. The Company also promotes the ISO14001 environmental management system and formulates environment policies to comply with the law, conserve energy and reduce waste, protect the environment and continue to decarbonize and has been certified by SGS. 1. Please describe how the Company implements an effective environmental management system and the regulations it follows. 2. Please specify the international certification standards that the Company has passed (as of the date of the annual report printing) and the scope they cover. (2) The Company constructs fractionators to recycle and reuse solvents. Also, the Company promotes digitization of operations by gradually transitioning various forms into electronic format, fully reducing paper usage, and collaborating with the government policies for waste sorting, recycling, and reduction activities. Please specify the Company's policy to improve energy efficiency and use of recycled materials includes, but is not limited to, the following: benchmark data from a reference year, implementation measures, goals, and achievements. (3) The Company continues to monitor climate change issues and conducts risk and opportunity identification, probability assessment, and impact	No deviation. No deviation. No deviation. No deviation. .

Items Promoted	Status	Status	Status	Variations (if any) with the Sustainable Development Best Practice Principles for TWSE/GTSM Listed Companies and reasons for such discrepancies
	Yes	No	Brief Explanation
			analysis. Moreover, the appropriate response measures are also discussed and studied. Please describe how the Company assesses the potential risks and opportunities of climate change to its current and future business, the assessment results, and the related response measures taken. (4) The Company has disclosed relevant statistics in the chapters related to corporate social responsibility in the annual report and has implemented process improvements and energy-saving measures to reduce the use of resources. 1. Please specify the statistical data, intensity (e.g. per unit of product, service, or revenue), and scope of data coverage (e.g. all factories and subsidiaries) for the following items over the past two years: (1) greenhouse gases, including carbon dioxide, methane, nitrous oxide, hydrofluorocarbons, perfluorocarbons, sulfur hexafluoride, nitrogen trifluoride, and other gases as announced by central competent authorities. Please differentiate between direct emissions (Scope 1, i.e. emissions from sources owned or controlled by the Company), energy indirect emissions (Scope 2, i.e. indirect greenhouse gas emissions from the consumption of purchased electricity, heat, or steam), and other indirect emissions (Scope 3, i.e. emissions from activities outside the Company's own operations, such as those from suppliers or customers); (2) water usage; (3) waste, including the total weight of hazardous and non-hazardous waste. If the company is not a manufacturer, it may not need to differentiate between types of waste and only discloses the total

Items Promoted	Status	Status	Status	Variations (if any) with the Sustainable Development Best Practice Principles for TWSE/GTSM Listed Companies and reasons for such discrepancies
	Yes	No	Brief Explanation
			weight, along with an explanation of the statistical method based on industry characteristics. 2. Please describe the policies and measures for managing greenhouse gas reduction, reducing water usage, or other waste reduction efforts, including but not limited to: baseline data, reduction targets, promotion measures, and progress towards achieving these targets. 3. Please describe the verification status of all information provided (valid as of the date of publication of the annual report) and the scope of the information covered.
4. Social Welfare Topic (1) Does the Company set up management policy and procedures in accordance with relevant laws and regulations and international human rights conventions? (2) Does the Company establish appropriately managed employee welfare measures (including salary, leave, and other benefits), and is its operational performance and achievements reflected in their pay?	 		(1) The Company abides by the Labor Standards Act and respects the internationally recognized basic labor human rights principles, and establishes management methods to protect the legitimate rights and interests of employees and employment policies without discrimination. Please describe the policy and specific management plans for safeguarding human rights, including but not limited to human rights assessments, risk mitigation measures, and relevant education and training programs. Additionally, please provide information on the relevant laws and international human rights conventions that are being followed. (2) Employees' salaries and leaves are processed in accordance with the Labor Standards Act and other relevant regulations. Article 30 of the Company's Article of Incorporation stipulates that 3% of pre-tax net profits shall be allocated for employee remuneration and no more than 1% for director remuneration. The allocation ofperformance bonuses	No deviation. No deviation. No deviation.

Items Promoted	Status	Status	Status	Variations (if any) with the Sustainable Development Best Practice Principles for TWSE/GTSM Listed Companies and reasons for such discrepancies
	Yes	No	Brief Explanation
(3) Does the Company provide employees with a safe and healthy work environment and regularly implement safety and health education programs for employees? (4) Does the Company establish an effective competency development career training program for employees?	 		and year-end bonuses is linked to the company's profits and distributed based on performance evaluations. 1. Employee welfare measures should include, but are not limited to: employee remuneration, workplace diversity and equality (including but not limited to: the proportion of female employees and senior executives), vacation time, various allowances, bonuses, and subsidies. 2. Describe how business performance or results are reflected in the employee remuneration policy and its implementation. (3) Implement three-in-one safety education and training regularly at least once a year, cooperate with the Environmental Protection Bureau and the Fire Bureau to conduct ad-hoc drills and hold an annual employee health check. For related instructions, please refer to Chapter 5.4 Friendly Working Environment in the Company’s sustainable development report. 1. Describe measures taken for employee safety and a healthy work environment, as well as the Company's education policies and their implementation. 2. Describe the Company's relevant certification status (valid as of the date of the annual report), and its coverage. 3. Specify the number of occupational accidents, number of employees affected, and the rate of occupational accidents as a percentage of the total workforce, as well as relevant improvement measures. (4) The Company regularly allows employees to participate in training courses organized by supervisory agencies, increasing opportunities for colleagues to acquire relevant professional knowledge. Describe the scope of the training program (e.g., new	No deviation. No deviation. No deviation.

Items Promoted	Status	Status	Status	Variations (if any) with the Sustainable Development Best Practice Principles for TWSE/GTSM Listed Companies and reasons for such discrepancies
	Yes	No	Brief Explanation
(5) Does the Company comply with relevant regulations and international standards in customer health and safety, customer privacy, marketing and labeling of products and services, and does it establish consumer or customer rights protection policies and complaint procedures? (6) Has the Company established supplier management that requires that suppliers adhere to regulations dealing with such issues as the environment, workplace safety and health, worker rights and, if so, what is the status of implementation?	 		employee training, professional development, management training, etc.), the range of participants (e.g., all levels of management, colleagues, etc.), and the implementation status. (5) The marketing and labelling of the company's products ass comply with domestic and foreign and regulations on trademarks and patents and international standards. Describe the regulations and international standards followed in each item, and explain the name, content, and complaint procedures of policies to protect consumer or customer rights. (6) The Company requires its suppliers to comply with relevant regulations and guidelines in corporate governance, quality, environment, and social responsibility, and guides them to follow relevant policies through evaluation and assessment.
5. Does the Company follow international recognized reporting criteria or guides when disclosing non- financial Sustain Development reports? Did it obtain assurance or verification statements from third-party certification bodies for previously disclosed reports?			The Company has referred to GRI (Global Reporting Initiative) and SASB (Sustainability Accounting Standards Board) guidelines as the basis for preparing its sustainability report. The report has been verified by a third-party verification agency, and the relevant information is disclosed on the Company's website and reported on the Market Observation Post System, as required.	No deviation.
6. If PCSC has drawn up a code for Sustainable Development based on the Sustainable Development Best Practice Principles for TWSE/GTSM Listed Companies, please describe any differences between said code and the Best Practice Principles: No deviation.
7. Other important information that helps to understand the implementation of sustainable development: Relevant information of the company is disclosed on the Market Observation Post System.

4.6 Compliance with ethical corporate management and measures implemented:

Items Evaluated	Status	Status	Status	Variations (if any) with the Ethical Corporate Management Best Practice Principles for TWSE/GTSM Listed Companies and reasons for such discrepancies
	Yes	No	Brief Explanation
1. Establishment of ethical operation policies and programs (1) Does the Company clearly specify the policy, practice of ethical management in the regulations and external files, and does the board of directors, management level actively implement the commitment of ethical management? (2) Does the Company implement prevention measures for the business activities with high risk of dishonest behaviors in each clause of Article 7-2 of “Code of Ethical Management of the Listed and Over-the Counter Companies” or within the other business scope? (3) Does the Company formulate the operation procedure, behavior guidelines, punishments, and compliance policy? Does the Company also periodically review and revise the said programs?	  		(1) The Company has formulated the "Code of Integrity Management", clearly indicating the policy of integrity management, and the commitment to actively implement the management policy. (2) The Company has formulated related specifications and evaluation mechanisms in the “Code of Integrity Management”, and designated a dedicated unit to be responsible for implementation. (3) The Company has established the “Integrity Management Operating Procedures and Code of Conduct,” which sets forth operating procedures, codes of conduct, disciplinary measures for violations, and a complaint system to demonstrate our commitment to integrity management and prevent unethical behavior.	No deviation. No deviation. No deviation
2. Implementing ethical corporate management (1) Does the Company evaluate the ethical records of the businesses with which it has dealings and include clear ethical corporate behavior provisions in contracts with such counterparties? (2) Does the Company set up a special unit under the board of directors to promote the integrity management of the enterprise, and regularly (at least once a year) report to the board of directors on its integrity management policies and plans to prevent dishonesty	 		(1) Before establishing a business relationship, the Company will evaluate the legitimacy of the counterparty to ensure that its business operations are transparent and will not request, provide or accept bribes. (2) The Company has clearly designated a dedicated unit responsible for the formulation and supervision of the integrity management policy and precaution	No deviation. No deviation.

Items Evaluated	Status	Status	Status	Variations (if any) with the Ethical Corporate Management Best Practice Principles for TWSE/GTSM Listed Companies and reasons for such discrepancies
	Yes	No	Brief Explanation
and supervision and implementation? (3) Does the Company formulate the policy of preventing conflict of interest, provide the proper statement channel, and carry out the implementation? (4) Has the Company established the effective accounting system, internal control system to implement the ethical management, and are these systems regularly checked by the internal audit unit, or by the CPA? (5) Does the Company hold internal and external ethical corporate behavior training regularly?	  		plan, and regularly (once a year) reports the implementation to the management. (3) The Company has formulated the "Code of Integrity Management", which clearly sets out a policy to prevent conflicts of interest and provides appropriate channels for voicing opinions. (4) The Company has established an effective accounting system and internal control system. In addition to regular audits by internal auditing office, Ernst & Young also conducts regular financial report and internal control reviews. (5) The Company holds at least one internal and external education training on integrity management annually, based on actual management needs.	No deviation. No deviation. No deviation.
3. Status for enforcing whistle-blowing system (1) Does the Company establish a specific whistleblowing and reward system, set up convenient channels, and designate appropriate personnel to handle the investigations, depending on the identity of the person being reported? (2) Does the Company established standard investigation procedures, follow-up measures, and relevant mechanisms to ensure confidentiality? (3) Does the Company adopt protection against possible mistreatment arising from reporting violations?	  		(1) The Company has formulated the "Code of Integrity Management", clearly defining reporting channels and assigning appropriate specialists. (2) The Company has formulated the "Code of Integrity Management", which clearly stipulates that the identity of the informant and the content of the report shall be kept confidential. (3) The Company has formulated the "Code of Integrity Management" to govern related measures.	No deviation. No deviation. No deviation.
4. Enhancing information disclosure Does the Company disclose the content of its Best Practice Principles and its effectiveness on their website and the TWSE market observation post system?			The Company has made relevant disclosures on the Company website and Market Observation Post System.	No deviation.

Items Evaluated	Status	Status	Status
	Yes	No	Brief Explanation
5. If the Company has established a code of ethical corporate management based on the Ethical Corporate Management Best Practice Principles for TWSE/TPEx Listed Companies, please discuss the specifics of the code and implementation below: The Company will plan and handle different items according to actual management needs.
6. Other information that facilitate the understanding of Company ethical corporate management practices: None.

4.7 If the Company has established corporate governance principles and related guidelines, the means of accessing this information should be disclosed: The Company has formulated the corporate governance principles and relevant regulations, please refer to SUNKO’s company website for further information.
4.8 The Company should also disclose other significant information which may improve the understanding of its governance and operation: For further relevant information on the Company, please visit SUNKO’s company website.
4.9 Status of implementation of internal control system
4.9.1 Statement of Declaration on Internal Control System

SUNKO INK CO., LTD

Statement of Declaration on Internal Control System

Date: 14 March 2023

The internal control system of this Company in 2022 is hereby stated as follows according to the self-assessment results.

I. The Company acknowledges that to establish, implement and maintain the internal control system is the responsibility of the Company’s board of directors and manger, and this Company has established such system. Its purpose is to provide reasonable assurance for reaching the goals of effective and efficient operation (including making profits, achieving performance and ensuring the safety of assets, etc.), reliable, timely, transparent guidance and conforming to relevant specification, namely relevant laws and regulations, etc.

II.

III.

IV.

VI.

VII.

The internal control system has inherent constraints, and no matter how comprehensive its design may be, an effective internal control system is only capable of providing adequate assurance for achieving the abovementioned three objectives. Moreover, the effectiveness of the internal control system may be altered as the environment changes and under different situations. Nevertheless, the Company's internal control system contains self-monitoring mechanisms, and the company takes immediate remedial actions in response to any identified deficiencies.

The Company assesses for the effectiveness of the internal control system's design and practices through the effectiveness of internal control system, as stated in the "Regulations Governing the Establishment of Internal Control System in Publicly Listed Companies" (hereinafter referred to as "the Regulations"). The criteria adopted by the Regulations identify five key components of managerial internal control: (1) Control Environment;(2) Risk Assessment; (3) Control Activities;(4) Information and Communication; and (5) Monitoring Activities. Each constituent element includes a number of categories. Please refer to "The Regulations" for the aforementioned categories.

The Company has already adopted the aforementioned internal control system assessment items to evaluate the effectiveness of internal control system design and implementation.

Based on the findings of the evaluation, the Company believes that, on 31 December 2022, it has maintained, in all material respects, an effective internal control system (including the supervision and management toward its subsidiaries), to provide reasonable assurance over our operational effectiveness and efficiency, reliability of financial reporting, and compliance with applicable regulations.

This statement of declaration shall be the primary content of the Company's Annual Report and prospectus and shall be made available to the public. Falsehood, concealment, or other illegality in the content made public will entail legal liability under Articles 20, 32, 171, and 174 of the Securities and Exchange Act.

This Statement was approved by the board on 14 March 2023 where all 7 attending directors hereby stating their consenting opinions.

SUNKO INK CO., LTD

Chairman: HUANG, TING-DI General Manager: CHANG, CHUN-PIN

4.9 If the CPAs are entrusted for review of internal control system, the audit report prepared by the CPAs shall be disclosed: None.
4.10 From the most recent fiscal year up until the date of publication of the Annual Report, explain any legal penalty against the company or its internal personnel, or any disciplinary actions by the company against its personnel for violation of the internal control system, where the result of such penalty could have a material effect on shareholder equity or securities prices, the penalty, material deficiencies, and condition of improvement shall be disclosed: None.
4.11 Material resolutions adopted by the shareholders' meetings and the board meetings in the most recent fiscal year up to the publication date of this Annual Report:
4.11.1 Material resolutions at the board meeting

Date	Term of Meeting	Material Resolutions
21 Jan 2021	The 17thBoard of Directors The 26thMeeting	1. Settle Remuneration for Managers in 2021. 2. Adjustment to the remuneration for managers. 3. Review of the remuneration for manager in 2022. 4. Application to banks for the loan credit line.
15 March 2022	The 17thBoard of Directors The 27thMeeting	1. Review of the 2021 parent only and consolidated financial reports. 2. Review of 2021 Business Report. 3. 2021 earnings appropriation proposal. 4. Independence assessment of certified public accountant and engagement of 2022 financial and tax audits. 5. 2021 Statement of Declaration on Internal Control System. 6. Renewal of directors’ and managers’ liability insurance. 7. Renewal of consultant contracts. 8. Application to banks for the loan credit line. 9. The amendment of Sustainable Development Best Practice Principle (former CSR Best Practice Principle). 10. The amendment of the Corporate Governance Best Practice Principle. 11. The amendment of Acquisition or Disposal Assets Procedure 12. Reelection of the Company’s directors for the 18thterm. 13. The case concerning nomination of director candidates. 14. Proposal to release the board of directors from non-competition restrictions. 15. Setting the date, venue and reasons for convening the 2022 general shareholders’ meeting. 16. Matters related to the venue and session of the 2022 general shareholders’meeting.
10 May 2022	The 17thBoard of Directors The 28thMeeting	1. The Company’s consolidated financial statements of Q1 for 2022. 2. Application to banks for the loan credit line.
15 June 2022	The 18thBoard of Directors The 1stMeeting	1. Election of the 18thchairman.
9 August 2022	The 18thBoard of Directors The 2ndMeeting	1. Change of the Company’s CPA. 2. The Company’s consolidated financial statements of Q2 for 2022.

Date	Term of Meeting	Material Resolutions
		3. The appointment of members of the 5thRemuneration Committee. 4. Application to banks for the loan credit line.
26 August 2022	The 18thBoard of Directors The 3rdMeeting	1. Change of the Company’s general manager and remuneration. 2. Change of the Company’s financial executive and remuneration. 3. The remuneration for the Company’s production department head. 4. The salary adjustment for the Company’s managers. 5. The salary adjustment for the Company’s audit office supervisor. 6. The remuneration for the Company’s chairman. 7. Change of the Company’s spokesperson. 8. The amendment of the Company’s authority matrix. 9. The amendment of the Company’s Rules of Procedure for Board of Directors Meetings.
8 November 2022	The 18thBoard of Directors The 4thMeeting	1. The Company’s consolidated financial statements of Q3 for 2022. 2. 2023 All employee salary adjustment plan. 3. Change of the appointment of managers. 4. Application to banks for the loan credit line. 5. The amendment of Repurchase Shares and Transfer to Employee Measures. 6. The amendment of Purchase and Payment Cycle. 7. The amendment of the Company’s authority matrix.
15 December 2022	The 18thBoard of Directors The 5thMeeting	1. 2023 busiess plan. 2. 2023 budget proposal. 3. 2023 audit plan. 4. The amendment of the Corporate Governance Best Practice Principle. 5. Regulations Governing Risk Management has been stipulated by the Company.
17 January 2023	The 18thBoard of Directors The 6thMeeting	1. Settle remuneration for managers in 2022. 2. The salary of managers will be increased from 1 January 2023 3. Review of the remuneration for manager in 2023. 4. Review of the regulation governing the remuneration for the Company’s general manager.
14 March 2023	The 18thBoard of Directors The 7thMeeting	1. Change of the Company’s CPA. 2. Independence assessment of certified public accountant and engagement of 2023 financial and tax audits. 3. Drafting the general principles for the pre-approval policy for non-assurance services in the Company. 4. Review of the 2022 parent only and consolidated financial reports. 5. Review of the Company’s 2022 business report. 6. Review of the Company’s 2022 surplus earning distribution. 7. Review of the Company’s 2022 employee and director remuneration distribution by the Company’s Remuneration. Committee. 8. 2022 Statement of Declaration on Internal control system.

Date	Term of Meeting	Material Resolutions
		9. The amendment of the Company’s Article of Incorporation. 10. The amendment of the Corporate Governance Best Practice Principle. 11. The amendment of the Company’s Rules of Procedure for Board of Directors Meetings. 12. Setting the date, venue and reasons for convening of the 2023 general shareholders’ meeting. 13. Matters related to the venue and session of the 2023 general shareholders’ meeting. 14. Renewal of directors’ and managers’ liability insurance. 15. Renewal of consultant contracts. 16. Application to banks for the loan credit line.

4.11.2 Material resolutions at the 2022 shareholders meeting

Date	Name of Meeting	Material resolutions	Implementations
15 Jun 2022	2022 general shareholders’ meeting	1. Ratification of 2021 business report and financial reports.	Passed upon voting.
		2. Ratification of the 2021 earnings appropriation proposal.	Passed upon voting and shall be distributed in line with the resolution in the meeting.
		3. Discussion on the amendments to the Company’s Acquisition or Disposal Assets Procedure.	Passed upon voting and shall be implemented in line with the resolution in the meeting.

4.12 Major contents of any dissenting opinions on record or stated in a written statement made by Directors or Supervisors regarding material resolutions of the Board Meeting in the most recent year up to the publication date of this Annual Report: None.
4.13 Resignation or dismissal of the company’s key individuals, including the chairman, general manager, and heads of accounting, finance, internal audit and R&D in the most recent fiscal year up to the publication date of this Annual Report: None.

5 Information on certified CPA Professional Fees

5 Information on certified CPA Professional Fees	5 Information on certified CPA Professional Fees	5 Information on certified CPA Professional Fees	5 Information on certified CPA Professional Fees	5 Information on certified CPA Professional Fees	5 Information on certified CPA Professional Fees	5 Information on certified CPA Professional Fees

		Information on Certified CPA	Professional Fee
					Unit: NT$ (in thousands)
Accounting Firm	Name of CPA	Duration of Audit	Audit Fee	Non-Audit Fee	Total	Remark
Ernst & Young	TU, CHIN- YUAN YEN, WEN- PI	1 January 2022- 31 March 2022	3,440	828	4,268	Non-audit fee include Tax compliance audit NT$250 thousands, NT$75 thousands for sustainable consulting services and NT$280 thousands for ESG verification service.
Ernst & Young	CHEN, MING HUNG YEN, WEN- PI	1 April 2022- 31 December 2022

5.1 If the accounting firm was replaced and if the audit fees paid for the fiscal year in which such replacement took place are lower than those for the previous year, the reduction in the amount of audit fees, percentage of reduction and the reason(s) should be disclosed: None.
5.2 If the audit fees paid for the current year are lower than those for the previous fiscal year by 10 percent or more, the reduction in the amount of audit fees, reduction percentage, and reason(s) should be disclosed: None.
6 Information of Changing CPAs: None.
7 The Chairman, President and Financial or Accounting Manager of the Company who has, in the most recent year, held a position at the accounting firm of its CPA or at an affiliated company: None.
8 Equity transfer or changes in equity pledged by the Company's directors, supervisors, managers or shareholders with shareholding percentage exceeding 10% in the most recent fiscal year up to the publication date of this Annual Report.

8.1 Circumstance of changes in equity of directors, supervisors, managers and major shareholders:

Title	Name	2022	2022	As of 31 March 2023	As of 31 March 2023
		Holding Increase (decrease)	Pledged Holding Increase (decrease)	Holding Increase (decrease)	Pledged Holding Increase (decrease)
Chairman	KT Investment Co., Ltd.	-	-	-	-
	Representative of KT Investment Co., Ltd.: HUANG,TING-DI	-	-	-	-
Director	KT Investment Co., Ltd.	~~-~~	-	-	-
	Representative of Fulilu Investment Co.,Ltd.: HUANG,SHUN-HSIEN	-	-	-	-
Director	Chiaoli Investment Co.,Ltd.	-	-	-	-
	Representative of Chiaoli Investment Co.,Ltd.: LIN,YU-PING	-	-	-	-
Director	Chiaoli Investment Co.,Ltd.	-	-	-	-
	Representative of Chiaoli Investment Co.,Ltd.: HUANG,ZHAO-WEI	-	-	-	-
Director	HSIAO, JUNG-FU (Note1)	-	-	-	-
Independent Director	LI,SHIH-JEN	-	-	-	-
Independent Director	TSOU,YEN-CHUNG	-	-	-	-
Independent Director	LIN, YEN-TING	-	-	-	-
General Manager	HUANG, TING-DI (Note2)	-	-	-	-
General Manager	CHANG,CHUN-PIN	-	-	-	-
Minister of Production	LIN, CHAO-YUAN	-	-	-	-
Minister of Production	SHEN, CHI-YUNG	-	-	-	-
Minister of Production	HUANG, SHUN-HSIEN	(330,000)	-	(20,000)	-
Manager of Management Department	HUNG, TING-YI	-	-	-	-
R&D Department Supervisor	TSOU, CHIOU-PENG	(45,000)	-	-	-
Finance Office Supervisor	WANG, TING-YU (Note3)	-	-	-	-
Finance Office Supervisor	ZHANG, CHU-XING	-	-	-	-
Accounting Office Manager	WANG, SHENG-HUI	-	-	-	-

Note 1: The director, HSIAO, JUNG-FU, stepped down from his position on 15 June 2022. Note 2: The general manager, HUANG, TING-DI HUANG, TING-DI, stepped down from his position on 1 September 2022. Note 3: The supervisor of financial office, WANG, TING-YU, stepped down from her position on 1 September 2022.

8.2 Stock transfers or pledge of stock rights to related parties: None.

9 Relationship information, if among the Company’s 10 largest shareholders any one is a related party or a spouse and relative within the second degree of kinship of another

Name	Shares held personally	Shares held personally	Shares held by spouse or minor children	Shares held by spouse or minor children	Shares held by nominee agents	Shares held by nominee agents	Names of spouse or other relatives within two degrees of consanguinity who are also among SUNKO’s top 10 largest shareholders	Names of spouse or other relatives within two degrees of consanguinity who are also among SUNKO’s top 10 largest shareholders
	Shares	%	Shares	%	Shares	%	Title(or Name)	Relationship
Macy Investment Co., Ltd.	16,838,191	9.107%	-	-	(Note 1)	-	HUANG, YI-RUNG HUANG, TING-DI LIN, YU-PING WANG,PAO-LING	Director Director Director Supervisor
Representative of Macy Investment Co., Ltd.: CHIU, CHI- CHIH	-	-	(Note 1)	-	(Note 1)	-	KT Investment Co., Ltd.	Same representative
KT Investment Co., Ltd.	10,801,010	5.842%	-	-	-	-	HUANG,YI-RUNG	Director
							HUANG,TING-DI	Supervisor
							SUNKO INK CO., LTD.	Director of the company
Representative of KT Investment Co., Ltd.: CHIU, CHI- CHIH	-	-	(Note 1)		(Note 1)	-	Macy Investment Co., Ltd.	Same representative
Chiaoli Investment Co., Ltd.	6,503,902	3.518%	-	-	-	-	LIN, YU-PING HUANG, TING-DI SUNKO INK CO., LTD.	Director Director Director of the company
Representative of Chiaoli Investment Co., Ltd.: KAO, CHING-MEI	-	-	(Note 1)	-	(Note 1)	-	LIN, YU-PING HUANG, TING-DI	Daughter Son-in- law
HUANG, YI- RUNG	5,988,685	3.239%	1,555,855	0.842%	-	-	Macy Investment Co., Ltd KT Investment Co., Ltd LIN, YU-PING HUANG,TING-DI	Director Director Daughter-in-law Son
LIN, YU-PING	3,146,718	1.702%	3,332	0.002%	-	-	Macy Investment Co., Ltd. Chiaoli Investment	Director Director

Name	Shares held personally	Shares held personally	Shares held by spouse or minor children	Shares held by spouse or minor children	Shares held by nominee agents	Shares held by nominee agents	Names of spouse or other relatives within two degrees of consanguinity who are also among SUNKO’s top 10 largest shareholders	Names of spouse or other relatives within two degrees of consanguinity who are also among SUNKO’s top 10 largest shareholders	Remarks
	Shares	%	Shares	%	Shares	%	Title(or Name)	Relationship
							Co., Ltd. HUANG, YI-RUNG KAO, CHING-MEI HUANG,TING-DI	Father-in-law Mother Husband
ZHUANG, HONG-DE	1,958,809	1.059%	(Note1)	-	(Note1)	-	(Note1)		-
TONG, CING- MEI	1,555,855	0.842%	5,988,685	3.239%	(Note1)	-	Macy Investment Co., Ltd. KT Investment Co., Ltd. Chiaoli Investment Co., Ltd. HUANG, YI-RUNG HUANG, TING-DI LIN,YU-PING	Director Director Director Spouse Mother and Son Mother-in-law
ZHUANG, XI- LING	1,528,695	0.827%	(Note1)	-	(Note1)	-	(Note1)	-
Fulilu Investment Co.,Ltd.	1,417,109	0.766%	(Note1)	-	(Note1)	-	SUNKO INK CO., LTD.	Director of the company
Representative of Fulilu Investment Co., Ltd.: WANG, PAO- LING	-	-	(Note1)	-	(Note1)	-	Macy Investment Co., Ltd.	Supervisor
ZHANG, SHENG-YEN	1,412,209	0.764%	(Note1)	-	(Note1)	-	(Note 1)	-

Note1:The shareholder is not an insider of the Company. Therefore, information about his/ her spouses, minor children, or other persons holding the shares is not available.

10 Number of shares hold for the same reinvestment business by the company’s directors, supervisors, manager and the company's directly or indirectly controlled business, and combined calculation of the comprehensive shareholding ratio:

	Unit: thousand shares; %	Unit: thousand shares; %	Unit: thousand shares; %	Unit: thousand shares; %	Unit: thousand shares; %	Unit: thousand shares; %
Affiliated Enterprise	Investments by SUNKO		Investments of directors, supervisors, managers and directly or indirectly controlled businesses		Combined Investment
	Shares	%	Shares	%	Shares	%
Sunko Biotech Company, Ltd.	1,674	22.32%	-	-	1,674	22.32%
CHEN CHI TECHNOLOGY CO., LTD.	1,640	41.00%	-	-	1,640	41.00%
Kuo Ching Development Corp.	200	100.00%	-	-	200	100.00%
Blessingthoughts Co. Ltd. (Note1)	1,520	83.52%	-	-	1,520	83.52%
BNKC BIOCHEMICAL TECHNOLOGY CO.,LTD.	49-	49.00%	-	-	49	49.00%
Power Rich International LTD.	990	30.00%	-	-	990	30.00

Note1: Blessingthoughts Co. Ltd. was dissolved on 3 December 2021, and the liquidation process was completed on 14 April 2023.

1 Source of Capital

Ⅳ. CAPITAL OVERVIEW

1.1 Shares issued

Units: NT$; Shares

						Units: NT$; Shares	Units: NT$; Shares	Units: NT$; Shares
Year/ Month	Issuance price	Authorized Capital		Paid-in Capital		Remarks
		Shares	Amount	Shares	Amount	Source of Capital	Capital Increased by Assets other than Cash	Other
1989/09	10.0	19,900,000	199,000,000	19,900,000	199,000,000	Capital Increase by Cash of 30,000,000 Capital Increase byRetained Earnings of 39,000,000	None
1991/12	10.0	22,885,000	228,850,000	22,885,000	228,850,000	Capital Increase byRetained Earnings of 29,850,000	None	Note 1
1992/11	10.0	30,208,200	302,082,000	30,208,200	302,082,000	Capital Increase byRetained Earnings of 73,232,000	None	Note 2
1993/12	10.0	35,343,594	353,435,940	35,343,594	353,435,940	Capital Increase byRetained Earnings of 51,353,940	None	Note 3
1994/10	10.0	42,000,000	420,000,000	42,000,000	420,000,000	Capital Increase by Cash of 20,617,390 Capital Increase byRetained Earnings of 45,946,670	None	Note 4
1995/06	10.0	46,200,000	462,000,000	46,200,000	462,000,000	Capital Increase byRetained Earnings of 42,000,000	None	Note 5
1996/03	10.0	73,900,000	739,000,000	53,130,000	531,300,000	Capital Increase byRetained Earnings of 69,300,000	None	Note 6
1997/07	10.0	73,900,000	739,000,000	71,062,600	710,626,000	Capital Increase by Cash of 115,570,000 Capital Increase byRetained Earnings of 63,756,000	None	Note 7
1998/06	10.0	150,000,000	1,500,000,000	95,934,510	959,345,100	Capital Increase by Retained Earnings of 106,593,900 Capita Increase byCapital surplus of 142,125,200	None	Note 8
2007/08	7.6	150,000,000	1,500,000,000	125,934,510	1,259,345,100	Privateplacement of 300,000,000	None	Note 9
2009/10	10.0	150,000,000	1,500,000,000	73,676,977	736,769,770	Capital reduction to cover losses of 522,575,330	None	Note 10
2012/11	6.0	150,000,000	1,500,000,000	78,676,977	786,769,770	Privateplacement of 50,000,000	None	Note 11
2012/12	5.95	150,000,000	1,500,000,000	83,676,977	836,769,770	Privateplacement of 50,000,000	None	Note 12
2016/04	10.0	250,000,000	2,500,000,000	222,347,344	2,223,473,440	Increase by issuance of new shares due to merger of 1,438,903,670 Reduction due to merger of 52,200,000	None	Note 13
2020/12	10.0	250,000,000	2,500,000,000	188,995,242	1,889,952,420	Capital reduction of 333,521,020.	None	Note 14
2022/02	10.0	250,000,000	2,500,000,000	184,884,092	1,848,840,920	Treasury shares were canceled 41,111,500 accordingly due to capital reduction.	None	Note 15

Note:

(1) Approved by the Securities and Futures Commission, Ministry of Finance with Letter (80) Tai-Cai-Cheng (1) No. 03297 on 27 November 1991.
(2) Approved by the Securities and Futures Commission, Ministry of Finance with Letter (81) Tai-Cai-Cheng (1) No. 02945 on 13 November 1992.
(3) Approved by the Securities and Futures Commission, Ministry of Finance with Letter (82) Tai-Cai-Cheng (1) No. 44324 on 1 December 1993.
(4) Approved by the Securities and Futures Commission, Ministry of Finance with Letter (83) Tai-Cai-Cheng (1) No. 32308 on 30 July 1994.
(5) Approved by the Securities and Futures Commission, Ministry of Finance with Letter (84) Tai-Cai-Cheng (1) No. 37871 on 29 June 1995.
(6) Approved by the Securities and Futures Commission, Ministry of Finance with Letter (85) Tai-Cai-Cheng (1) No. 18743 on 7 March 1996.
(7) The Financial Supervisory Commission approved a capital increase by Retained Earnings of 63,756,000 and capital increase by cash of 115,570,000 on 28 July 1997. (Letter TaiCai-Cheng (1) No. 51554)
(8) Approved by the Securities and Futures Commission, Ministry of Finance with Letter (87) Tai-Cai-Cheng (1) No. 51527 on 15 June 1998.
(9) 30,000,000 privately placed ordinary shares, with a face value of NT$10, issued at a discount of NT$7.6 per share.
(10) The Financial Supervisory Commission of the Executive Yuan approved a capital reduction of NT$522,575,330 by Letter Jin-Guan-Cheng-FA-Zi No. 0980043460 on 18 September 2009. On 23 October 2009, the Ministry of Economic Affairs approved on the application for capital reduction and the registration of changes to the Articles of Association by Letter Jing-Shou-Shang-Zi No. 09801239000.
(11) 5,000,000 privately placed ordinary shares, with a face value of NT$10, issued at a discount of NT$6 per share. On 15 November 2012, the Ministry of Economic Affairs approved on the application for the registration of changes in the issuance of new shares by Letter Jing-Shou-Shang-Zi No. 10101236030.
(12) 5,000,000 privately placed ordinary shares, with a face value of NT$10, issued at a discount of NT$5.95 per share. On 24 December 2012, the Ministry of Economic Affairs approved on the application for the registration of changes in the issuance of new shares by Letter Jing-Shou-Shang-Zi No. 10101260990.
(13) Approved by the Financial Supervisory Commission on 4 March 2016 (Letter Jin-Guan-Cheng-FA-Zi No. 1050005429) on the issue of 143,890,367 ordinary shares with a face value of NT$ 10 due to the merger, and was approved for the registration of changes by Letter Jing-Shou-Shang-Zi No. 10501066910.
(14) Approved by the Financial Supervisory Commission on 15 December 2020 (Letter Jin-Guan-Cheng-FA-Zi No. 1090376896), and was approved for the application for capital reduction and registration of changes by Letter Jing-Shou-Shang-Zi No. 10901243830.
(15) Approved by the Department of Commerce of the Ministry of Economic Affairs Commission on 7 February 2022 (Letter JING-SHOU-SHANG-ZI No. 11101015590), and was approved for the application for that treasury shares were canceled accordingly due to capital reduction in accordance with the shareholding ratio.

	16 April 2023	16 April 2023	16 April 2023	16 April 2023
Type of Stock	Authorized Capital			Remarks
	OutstandingShares	Non-Issued Shares	Total
Common Stock	Public:165,715,572 Private:19,168,520	65,115,908	250,000,000	-

Note: The Company does not issue any preferred stock.

Information related to the Declaration Policy

Class of Securities	~~Estimated shares of~~ issuance	~~Estimated shares of~~ issuance	Issued Shares	Issued Shares	~~Objective and estimated gains of the~~ issued shares	~~Estimated issuance date of the non-~~ issued shares	Remarks
	~~Total Shares~~	~~Amount~~	~~Shares~~	~~Price~~
~~-~~	~~-~~	~~-~~	~~-~~	~~-~~	~~-~~	~~-~~	~~-~~

2 Shareholder structure

16 April 2023

						16 April 2023
Shareholder Quantity	Government Agencies	Financial Institutions	Other Juridical Persons	Individuals	Foreign Institutions and Individuals	Total
Number of Shareholders	0	3	165	43,838	55	44,601
Shares Held	0	171,328	36,762,800	145,296,327	2,653,637	184,884,092
Holding Percentage	0	0.09%	19.89%	78.59%	1.43%	100.00%
As of 16 April 2023,the Companydid not have anyequityholdings from China.

3 Shareholding Distribution Status

hareholding Distribution Status	hareholding Distribution Status	hareholding Distribution Status	hareholding Distribution Status
16 April 2023
Tiers of Shareholding	Number of Shareholders	Total Shares Held	Holding Percentage
1 to 999	25,605	1,668,510	0.90%
1,000 to 5,000	14,250	31,046,596	16.79%
5,001 to 10,000	2,252	18,398,339	9.95%
10,001 to 15,000	581	7,606,653	4.11%
15,001 to 20,000	515	9,723,751	5.26%
20,001 to 30,000	303	7,952,665	4.30%
30,001 to 40,000	160	5,775,239	3.12%
40,001 to 50,000	101	4,708,412	2.55%
50,001 to 100,000	173	12,376,668	6.69%
100,001 to 200,000	57	8,181,987	4.43%
200,001 to 400,000	27	7,568,477	4.09%
400,001 to 600,000	13	6,364,202	3.44%
600,001 to 800,000	7	4,990,596	2.70%
800,001 to1,000,000	4	3,496,272	1.89%
1,000,001 and above	13	55,025,725	29.76%
Total	44,061	184,884,092	100.00%

Note: The Company does not issue any preferred stock.

4 List of Major shareholders: List all shareholders with a stake of 5 percent or greater, and if those are fewer than 10 shareholders, also list all shareholders who rank in the top 10 in shareholding percentage, and specify the number of shares and stake held by each shareholder on the list

16 April 2023

		16 April 2023
Shares Shareholders	Number of Shares Held	Holding Percentage
MacyInvestment Co.,Ltd.	16,838,191	9.107%
KT Investment Co.,Ltd.	10,801,010	5.842%
Chiaoli Investment Co.,Ltd.	6,503,902	3.518%
HUANG,YI-RUNG	5,988,685	3.239%
LIN,YU-PING	3,146,718	1.702%
ZHUANG,HONG-DE	1,958,809	1.059%
TONG,CING-MEI	1,555,855	0.842%
ZHUANG,XI-LING	1,528,695	0.827%

5 Share prices, net value, earnings, dividends, and other relevant information in the past two years

Fulilu Investment Co.,Ltd.	1,417,109	0.766%
ZHANG,SHENG-YEN	1,412,209	0.764%

Unit: NT$

					Unit: NT$
Item	Year		2021	2022	As of 31 March 2023
Market Price per Share (Note 1)	Highest		33.45	29.00	15.75
	Lowest		8.95	12.50	13.80
	Average		13.33	18.19	15.01
Net Value per Share (Note 2)	Before Distribution		12.61	12.97	12.68
	After Distribution		12.61	12.97	12.68
Earnings per Share	Weighted Average Number of Shares(Shares)		184,489,861	185,026,263	184,884,092
	Earnings per Share	Before adjustment	(0.38)	0.33	(0.30)
		After adjustment (Note 3)	(0.38)	0.33	(0.30)
Dividend per Share	Cash	dividend	-	0.1-	-
	Stock Dividends	Dividends from Retained Earnings	-	-	-
		Dividends from Capital Surplus	-	-	-
	Accumulated Undistributed Dividends(Note 4)		-	-	-
Return on Investment	Price-to-earnings Ratio (Note 5)		(35.08)	55.12	(50.03)
	Price-to-dividend Ratio (Note 6)		-	181.9	-
	Cash Dividend Yield (Note 7)		-	0.55	-

Note:

(1) The highest and lowest market price of the shares for each fiscal year are listed and the average market price for each fiscal year is calculated based on trading value and volume in each fiscal year.

(2) Please fill these rows based on the number of shares issued at the end of the fiscal year and the distribution plan approved at the shareholders' meeting in the subsequent fiscal year or the board of director.

(3) If there are any retroactive adjustments needed due to stock grants, earnings per share before and after the adjustment should be listed.

(4) If there are any retroactive adjustments needed due to stock grants, earnings per share before and after the adjustment should be listed.

(5) Price/Earnings Ratio= Average closing price per share for the current fiscal year / earnings per share.

(6) Price/Dividend Ratio= Average closing price per share of the year/cash dividends per share.

(7) Cash Dividend Yield =cash dividend per share / current year average per share closing price.

(8) The net value of each share, surplus of each share shall be filled in with the data checked (checked and approved) by the CPA in the nearest quarter by the end of print date of annual report, while the rest of the fields shall be filled in with the data of current year by the end of print date of annual report.
6 Dividend policy and implementation status
6.1 Dividend policy as outlined in the Company’s Articles of Incorporation

The general final accounts shall be distributed according to the following order in case of surplus:

(1) Income tax obligation
(2) Offsetting accumulated deficits, if any
(3) Set aside 10% as legal reserve. However, when the legal reserve amounts to the authorized capital, this shall not apply.
(4) Set aside or reserve special reserve in accordance with law and regulations.
(5) In combining the balance with the accumulated undistributed surplus of the previous period, the Board shall prepare a proposal for earnings distribution and submit it to the shareholders’ meeting for a resolution distributing dividends to shareholders.
To adhere to the principle of sustainable operation, the Board of Directors shall, pursuant to the Company Act and the Company’s Articles of Incorporation, make the dividend distribution proposal (including cash and share bonus) annually prior to the shareholders’ meeting based on the Company’s operation, financials and capital planning. At least 20% of the dividends must be paid in the form of cash.
6.2 The Company shall distribute the dividends based on the Company’s earnings status, taking future capital needs and the impact of the tax policy on the company and shareholders into accounts. The Company determines the type, the amount and timing of dividend while maintaining stable dividends.
6.3 The proposal for dividends distribution this year

The board of directors of the Company resolved on14 March 2023 to allocate and distribute earnings for 2022 as follows, and the dividend per share was at NT$0.1:

Allocation and Distribution of Earnings

Legal Reserve 6,874 Special Reserve 2,161 Cash Dividend on Common Stock 18,488

7 The impacts of issuing stock grants in this shareholder’s meeting on the Company’s operational performance and earnings per share: None.
8 Employee compensation and directors’ and supervisors’ remuneration
8.1 The amount or scope of the remuneration of employees, directors and supervisors stated in the Articles of Incorporation: According to the Articles of Incorporation, in case of surplus, at least 3% of profit of the current year shall be appropriated as employees’ compensation, and no higher than 1% of profit of the current year shall be appropriated as remuneration to board directors. However, the accumulated deficits, if any, shall first be made up for. The 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 distributed to employees in the form of stock or cash; and in addition thereto a report of such distribution is submitted to the shareholders’ meeting.

8.2 The accounting treatment when there is a discrepancy between the calculation basis of the amount of compensation for employees, directors and supervisors, and the calculation basis of the number of shares for employee remuneration distributed by stocks and the actual distribution amount in the current period:
- Based on earnings as of 31 December 2022 and for the year then ended, the Company appropriated amounts of the employees’ remuneration and directors’ remuneration at 3% and 1% of earnings for 2022, respectively. Employee remuneration and director remuneration recognized for the 2022 were $2,104 thousands and $701 thousands, respectively, and recorded under the payroll expenses.
8.3 Remuneration distribution approved by the board of directors: On 14 March 2023, the Company's board of directors resolved to distribute employee remuneration of $2,104 thousands and director remuneration of $701 thousands for 2022. The proposed distribution amounts are the same as the expenses recognized by the Company.
8.4 Status of actual distribution of remuneration of employees , directors and supervisors of the previous year (including the number, amount and share price of shares distributed), any discrepancies with the recognized remuneration of employees, directors and supervisors, and detailed description of amount, reason and treatment of discrepancy: None.
9 Company Share Repurchase Status

Company Share Repurchase Status
Repurchase time	First(Period)
Repurchasepurpose	Transfer shares to employees
Repurchaseperiod	14 November 2018 - 10 January2019
Price range	NT$6.5 to NT$14
Type andquantityof shares that repurchased	5,319,000 common shares
Amount of shares that repurchased	NT$52,768,285
Ratio of the quantity of shares that are repurchased to thequantityexpected to be repurchased(%)	88.65%
Number of shares cancelled and transferred	-
Accumulated number of companyshares held	4,521,150 shares(Note)
Percentage of total companyshares held(%)	2.39%

Note: Approved by the Financial Supervisory Commission on 15 December 2020 (Jin-Guan-Cheng-Fa-Zi No. 1090376896) and was approved by Letter Jing-Shou-Shang-Zi No. 10901243830 for capital reduction and registration of changes from 5,319,000 shares to 4,521,150 shares.

10 Status of Corporate Bonds: None.
11 Status of Preferred Stocks: None.
12 Status of Global Depositary Receipts: None.
13 Status of Employee Stock Options: None.
14 Restriction on new employee shares: None.
15 Status of New Shares Issuance in Connection with Mergers and Acquisitions: None.
16 Financing Plans and Implementation: None.

Ⅴ. OPERATION HIGHLIGHTS

1 Business Activities
1.1 Business Scope
1.1.1 Main Businesses
- (1) Active Pharmaceutical Ingredients of Agrochemicals
- (2) Rubber and polymer additives
- (3) Cosmetic raw materials
- (4) Elastomer (TPV), and Elastomer (TPU)
- (5) Synthetic resin, primer, adhesive, hardening agent, accelerant
- (6) Other chemicals
1.1.2 Major Product Lines and the breakdowns

Items/Year		Unit: NT$ (in thousands) For the years ended 31December 2020 2021 Amount % Amount % 2,042,155 71.64 2,235,036 74.29 322,897 11.33 388,743 8.64 366,121 12.84 260,007 12.92 106,401 3.73 112,459 3.74 13,064 0.46 12,309 0.41 2,850,638 100.00 3,008,554 100.00

Fine chemicals Agrochemicals Elastomer Resin Others Total

1.1.3 Current Products and New Products Planned

Category Product Name New Products Planned Antioxidant Curing Agent Increasing the derivative Fine Non-halogenated Flame Retardant products with existing Chemicals Electronic Chemicals products. Nucleating Agent TPU Inert elastomer TPV Vibration-absorptive Polymer material Polyol New polyolefin elastomer PU products

1.2 Industry Overview

1.2.1 The present and the future
(1) Chemical industry is the cornerstone of consumer products and technology industry. It can be divided into two broad categories which include commodity chemicals and fine chemicals. Fine chemicals are complex substances that are produced in batches, lesser volumes and at a higher unit price. Prone to variations from different composition, the products have diverse characteristics. As the chemicals are significantly smaller in scale of production, the cost only accounts for an insignificant portion in the total product costs. Considering the fine chemicals’ low ratio in the end-use costs, the users don’t usually take risks changing their suppliers. As a result, fine chemicals customer loyalty is greater than

that of commodity chemicals.

	Output	Composition	Application	Life Cycle	Added Value
Commodity Chemicals	High	Simple	Wide	Long	Low
Fine
Chemicals	low	Complex	Narrow	Short	High

Source: 2020 Petrochemical and Specialty Chemical Industry Yearbook

Widely used in the industry, fine chemicals are a class of specialized products used for various purposes. Therefore, it is ambiguous to state what defines fine chemicals. polymer additives, adhesives, and coatings are the three categories in which fine chemicals are mainly used. Take our products for example: antioxidant, nucleating agent and nonhalogenated flame retardants lie in the “polymer additives” category, while curing agent and electronic chemicals are found with applications such as golf ball core, printed circuit board, etc.

(2) Polymers maintains a certain hardness in room temperature and can be softened and reshaped after heating. Thanks to its excellent physical properties, polymer is gradually replacing the easily-broken rubber and PVC that’s prohibited in phases. Some areas where this chemical is used include: pipe material, membrane, footwear materials, textile, medical devices and adhesives.
Polymer is faced with the fluctuating raw material costs and environmental protection policies as its challenges. As the upstream raw material is trending toward selfmanufacturing, we can reduce our costs. Moreover, the downstream processing market gradually switched from China to Southeast Asia and other regions. Due to the competitive market and the price war on general products, the industry is shifting towards functional or customized products, as well as eco-friendly products, such as expanded elastomer. This development is beneficial to market segmentation and helps maintain profit.
(3) Agrochemicals are particularly important as the population grows and the demand for food increases. According to statistics from the Food and Agriculture Organization of the UN, if every country around the globe fails to exercise plant protection, 60% of the crops will not be harvested, which may immediately cause global famine. Under the future development of the international division of labor and supply chain integration, the Company benefits from its deep OEM relationships with world-class manufacturers in this industry.
(4) Other technical developments such as flame retardants used in PCB: restricted by the EU regulations, phosphorus flame retardants are relatively low in toxicity. Therefore, they will extensively replace brominated flame retardants and become the key selling item in the future.

1.2.2 Correlation with upstream, midstream, and downstream of the industry

Taiwan’s petrochemical industry develops in a reverse integration manner. First, the downstream processing industry is established, and then the petrochemical processing raw materials imported from abroad form a midstream system. Finally, a naphtha cracking plant is built to supply petrochemical basic raw materials to form a complete upstream, midstream, and downstream petrochemical system.

The upstream of the petrochemical and plastic rubber industry chain includes: crude oil, naphtha, gasoline, diesel, kerosene, fuel oil, and lubricants refined from crude oil, and related mining and drilling equipment. The midstream is the basic petrochemical raw materials produced by the cracking of upstream raw materials, such as ethylene, propylene, butadiene, benzene, phenol, etc., as well as plastics, rubber, and man-made fibers made from the above raw materials through chemical reactions such as polymerization, esterification and alkylation. These materials are roughly divided into general-purpose and special-purpose chemicals according to their use. As for downstream, application varies from all kinds of daily necessities made of plastic, rubber, man-made fibers to other chemical raw materials, such as plastic products, rubber products, detergents, man-made fibers, dyes, adhesives, plasticizers, pesticides and cosmetics. The Company’s main products are fine chemicals, thermoplastic elastomers and agrochemicals, which are in the mid and downstream of the industry. The correlation among upper, middle, and downstream are listed as follows:

Upstream	Midstream	Downstream	Downstream
		Plastic products	Rubber products
Raw materials from the upstream in oil industry and related	Raw materials from the midstream in oil	Dyestuff	Adhesive (Synthetic Resin) Artificial fiber
drilling equipment	industry (Ethylene, Propylene, Butadiene, Benzol, Phenol, etc.)	Plasticizer Cosmetics	Agrochemicals

1.2.3 Trends in product development and competition

(1) Fine chemicals – plastic additives

Trends in product development:

The major companies in the industry are BASF from Germany, SI Group from the United States, Songwon from South Korea, Adeka from Japan, Rianlon, Everspring Chemical, and Chang Chun Group from China. Although the additive market is huge, numerous manufacturers in China and India have entered the market, and international giants have continued to consolidate upstream and downstream resources through mergers and acquisitions. Additionally, the reliance on imported key raw materials makes domestic enterprises vulnerable to international situations and fluctuations in crude oil prices. In addition to competing with international giants, domestic companies also face the problem of oversupply of some general-purpose products. Therefore, developing high-tech and high-specification special efficient antioxidants is the key to maintaining better profits.

The increasing global awareness of environmental and health issues has led to related

regulations that restrict plastic additives that are harmful to the environment and human health. In the future, the industry development trend will mainly focus on developing green and eco-friendly products, additives for biodegradable plastics, and additives for recycled plastic materials.

(2) Polymer products

The polymer industry has many competitors for thermoplastic polyurethane (TPU) and thermoplastic elastomers (TPE), including well-known companies such as BASF, Covestro, Huntsman, Lubrizol, and Wanhua Chemical from China. International giants have already consolidated upstream key materials such as MDI and polyol, and small and medium-sized companies do not have an advantage in raw material costs. TPU can adjust the formula to produce finished products of different specifications according to the different physical property requirements of customers. As customer demands are not the same and the technical resources of each manufacturer are also different, few companies can meet all customers' requirements alone. This results in the proliferation of small and medium-sized companies, with lower-level technical items often being oversupplied. In the future, developing high-value-added products through differentiation and customization will be necessary to avoid price competition. The current industry development trend is mainly focused on developing environmentally friendly products that are highly functional and recyclable.

(3) Agrochemicals

The demand for plant and environmental protection products is less affected by economic conditions due to the global shortage of food and the need for disease vector control. However, the long-term demand for plant and environmental protection products will gradually decrease due to the policies advocating environmental friendliness and pesticide reduction in various countries. The development of new plant protection products requires considerable technical expertise and funding. If a company wants to sell new products directly on the market, it must first obtain pesticide licenses from the pesticide regulatory authorities of each country, which can take several years to obtain. Therefore, most companies engaging in new product development and marketing are international industry leaders. Our company mainly cooperates with international industry leaders to provide professional pesticide formulation contract manufacturing services.

1.3 The Overview of Technology and R&D
1.3.1 Research and development expenses

R&D Expense in 2022: NT$49,847 thousand.

R&D Expense as of 31 March 2023: NT$12,055 thousand.

1.3.2 Successfully developed technologies and products

(1) PA-Diol
(2) Inert TPU
(3) TPU vibration-absorptive material (SKEC𝜙𝜙)

(4) New polyolefin elastomer KP800, N65, N80, N90
(5) TPU for spinning
1.4 Short-term and Long-term Business Development Plan
1.4.1 Short-term Plan
(1) Strengthen the cooperation with international manufacturers and increase the market share.
(2) Develop and promote new products: Crosslinking agent (339G), PP clarifier (K21), TPU yarn, TPV flame retardants, Polymer footwear materials, hair dye, Chlorinated PP.
(3) Be certified by the brand dealers on Expanded Elastomer footwear materials
(4) Develop secondary supplier to reduce the risk of raw materials shortage
(5) Optimize the MIC manufacturing process
(6) Promotion of automation processes in labor-intensive production lines
1.4.2 Long-term Plan
(1) Key trends and strategies on industrial transformation Under such shortcomings as strict environmental regulations, limited natural resources, and increasing environmental costs, high-emission industries gradually lost their positions in the competitive market. To successfully navigate this changing landscape, chemical industry will need to develop toward low-pollution and high-economies-ofscale orientation.
(2) Research and development and technical services
- a. Self-develop and form patent applications
- b. Provide technical services to meet customer demands
- c. Assist customers in developing customized products and grab the preemptive opportunities in the market
(3) Diversification Strategies Well utilize the Company’s know-hows in chemicals and manufacturing products. For instance:
- a. Produce personal sanitization products (special cosmetics) using cGMP qualifications from Chuansing Factory
- b. Given the recyclable character of polymer (TPE/TPU), develop footwear using 100% polymer then recycle and reuse
- c. Seek out businesses that are chemical-related and supported by the government
(4) “Save Energy, Save Earth”

2 Market and Sales Overview
2.1 Market Analysis

2.1.1 Sales region of Main Products

Unit: NT$ (in thousands)

Year Region	Year Region	For theyears ended 31 December	For theyears ended 31 December	For theyears ended 31 December	For theyears ended 31 December
		2021		2022
		Amount	%	Amount	%
Domestic sales		2,187,844	76.75	2,046,110	68.01
Export	The U.S.	191,304	6.71	205,512	6.83
	Asia	243,563	8.54	327,656	10.89
	Europe	160,785	5.64	252,613	8.40
	Other countries	67,142	2.36	176,663	5.87
	Subtotal	662,794	23.25	962,444	31.99
Total		2,850,638	100.00	3,008,554	100.00

2.1.2 Market supply and demand and market growth in the future

Items	Description
Fine chemicals	1. Specialty chemicals are influenced by the petrochemical industry and global economic trends. The widespread distribution of COVID-19 vaccines and the gradual return to normal consumption have led to an increase in demand for specialty chemicals. In addition, the conflict between Russia and Ukraine has led to higher energy prices and inflation, which has also driven up specialty chemical prices. According to the Petrochemical and Specialty Chemicals Yearbook, it is estimated that specialty chemicals will experience a stable growth of 3% in the future.
Polymer Products	TPU and TPV products have a wide range of applications and are closely related to people's livelihood and industry. They are widely used in pipe, film, footwear, textile, medical, adhesive and other fields. In recent years, due to the rising environmental awareness and the fact that polymer products can be melted and recycled, do not release harmful substances, and have natural degradation characteristics, the overall market demand is expected to steadily grow.
Agrochemicals	Due to the global trend of reducing pesticide uses, and the small domestic market size for pesticides, Sunko mainly cooperates with foreign companies to produce various pesticide raw materials through strategic partnerships for export. We also maintain a small-scale production of pesticide raw materials to meet the demand of the domestic market.

2.1.3 Sales Volume Forecast and Related Information

For additional details, please refer to Page 3.

2.1.4 Competitive niches, favorable and unfavorable factors for long-term growth and
countermeasures
- (a) Competitive niches and favorable factors
  - ① Varied product specifications are conducive to risk diversification and broaden the market.
  - ② Considering cost reduction, major foreign manufacturers seek out OEM factories with high productivity. The Company has abundant experiences in chemicals synthesis and leads an excellent R&D team. We keep improving and optimizing our manufacturing process to make our products more competitive in the market. Moreover, our R&D team is able to provide what the international manufacturers need.
  - ③ Master the high-quality and highly-effective formulation, set up our technical threshold to customize our products and meet our clients’ needs.
  - ④ As for the polymer applications in the market, we keep developing light-weight and high-rebound products such as expanded polymer composite. The increasing demand, advanced production techniques, and our marketing strategies help increasing our market share.
  - ⑤ Agricultural development relies on agrochemicals to ensure the amount harvested. The Company has experience and know-hows on agrochemicals manufacturing.
- (b) Unfavorable factors and Countermeasures
  - ① Affected by the global economy, the amount and price of raw materials that rely heavily on importing is not easy to control. Countermeasures: Develop secondary supplier to reduce the risk. Also, the sales and procurement departments need to maintain close communication to ensure stable raw material costs.
  - ② The price rivalry to gain customer preference among entities at the same level/ Horizontal competition in price
    - Countermeasures: Maintain the high quality of products to avoid price wars with inferior products; Strengthen the cooperative relationship with major international manufacturers; Optimize processes to save energy, reduce waste, and lower costs, and develop new products or derivatives.
  - ③ High competition of polymer material is a problem that needs to be overcome. Countermeasures: Develop patents on manufacturing process and applications; Develop unique materials; Cooperate with downstream customers to develop various customized products to increase customer loyalty.
  - ④ Both domestic and foreign regulations on environmental protection are becoming stricter.

Countermeasures: Research new methods of waste treatment to reduce waste treatment costs and methods for waste recycling.

2.2 Important Applications and Manufacturing Processes of Main Products
2.2.1 Important Applications of Major Products

Items	Description
Fine chemicals	(1) Antioxidants: The specifications of the antioxidant produced by the Company are mainly used in various plastic products, which can slow down the oxidation of plastic products. The antioxidants are widely used in areas such as: polyolefins (such as polyethylene, polypropylene) and olefin copolymers, polycarbonate, PS resin, PVC, engineering plastics, rubber and petroleum products, ABS resin and other polymer materials. It can also be used in adhesives, natural or synthetic adhesive resins. (2) Flame Retardant: It is mainly used in CCL and PCB as a means of improving the heat resistance and flame retardancy of the boards. Due to the restrictions imposed by EU regulations, substrate materials must be halogen-free and have improved heat resistance and stability to meet process requirements. These products have low toxicity, good processability, and good compatibility with resins. (3) Electronic Chemicals: It is used as a reducing agent for printed circuit boards. (4) Nucleating Agent: Mainly added to PP to enhance its transparency and rigidity, and its end products are used in food containers and packaging films.
Polymer Products	TPUs and TPVs are high-performance elastomer. Due to the rising awareness of global environmental protection, PVC has been gradually banned in the European and American market. Instead, polymer becomes the substitute for PVC. Polymer has characteristics of wear resistance, with high mechanical strength and durability, tensile property, excellent performance against repetitive stress and decent cold resistance. Some areas where this chemical is used include: footwear material market, sporting goods market, medical devices, conveyor belt material, pipe material, roller material, fiber, and membrane. Primer: used in synthetic leather of PVC and PU series for surface treatment purposes. Crosslinker: For synthetic leather lamination application. The physical property of PU resin is used in application of additives and coatings. Polycoat: Synthetic leather of coating materials for manufacturing purses, leather shoes, furniture, and clothes.
Agrochemicals	The products are non-hormonal and contact herbicides. This quick-active chemical behaves inactivated in the soil and affects insignificantly to the roots of crops. Herbicides include Lannate and Furadan, etc. They’re mainly used to deal with pests such as nephotettix cincticeps uhler, nilaparvata lugens, sorghum aphid, corn leaf aphid, etc.

2.2.2 Manufacturing Process of main products

(1) Fine chemicals

Antioxidants:

Raw Material → Reaction → Neutralization → Crystallization → Filtration → Dry → End Product

Flame Retardant:

Raw Material → Reaction → Filtration → Dry → End Product

Electronic Chemicals:

Raw Material → Reaction → Filtration → Washing → Curing → End Product

Nucleating Agent: Raw Material → Reaction → Purification → Filtration → Dry → End Product

(2) Polymer Products

Thermoplastic Elastomers (TPU) Raw Material → Polymerization → Pelletization → Ripening → End Product Thermoplastic Elastomers (TPV)

Raw Material → Synthesis → Dry → Extrusion → End Product

(3) Agrochemicals

Raw Material → Reaction → Crystallization → Filtration → Dry → End Product

(4) Other Products

Crosslinking Agent: Raw Material → Reaction → Titration → End Product Primer:

Raw Material → Stir and heat → Reaction → Grinding→ Filtration → End Product Polycoat:

Raw Material → Stir and heat → Prepolymerization → Polymerization → Viscosity adjustment → End Product

2.2.3 Supply Status of Main Materials
a. Adipic acid (AA): Mainly purchased from Japan, South Korea, and China.
b. Toluene (TOL): 100% purchased from dealers.
c. Dimethylformamide (DMF): 100% purchased from dealers.
d. Methyl Ethyl Ketone (MEK): 100% purchased from dealers.
e. Butylene glycol (1.4 BG): 100% domestically purchased.
f. Ehylene Glycol (EG): 100% purchased from traders.
g. Isocyanate (MDI): Mainly purchased from Japan, South Korea, and China.
h. Phosphorus trichloride: Mainly purchased from Europe and India.
i. 2,4 di-tert-butyl phenol: 100% domestically purchased.
j. Potassium borohydride (KBH): 100% purchased from China.
k. 3,4-Dimethylbenzaldehyde (3.4DMBA): 90% purchased from China.
2.2.4 Names of customers who contributed to more than 10% of total purchase (or sales) amount in one of the most recent two years and the corresponding purchase (or sales) amounts and percentages, as well as reasons for their changes (if applicable):
(1) List of major customers

Unit: NT$ (in thousands)

	(1) List of major customers	(1) List of major customers	(1) List of major customers	(1) List of major customers	(1) List of major customers	(1) List of major customers	(1) List of major customers	(1) List of major customers	Unit: NT$ (in thousands)	Unit: NT$ (in thousands)	Unit: NT$ (in thousands)	Unit: NT$ (in thousands)
	For the years ended 31 December								2023, as of the end of previous quarter
	2021				2022
Item	Name	Amount	As a percentage of net sales (%)	Relations hip with issuer	Name	Amount	As a percentage of net sales (%)	Relati onshi p with issuer	Name	Amount	As a percentage of net sales (%)	Relations hip with issuer
1	Client A	537,782	18.87	None	Client A	412,184	13.70	None	Client A	72,980	12.68	None
2	Others	2,312,856	81.13	-	Others	2,596,370	86.30	-	Others	502,487	87.32	-
	Net sales	2,850,638	100.00	-	Net sales	3,008,554	100.00	-	Net sales	575,467	100.00	-

Reasons for changes:

Client A is due to the growth of demand in the COVID-19 pandemic. Therefore, our

sales to Client A increased.

(2) List of major suppliers

Unit: NT$ (in thousands)

									Unit: NT$(in thousands)	Unit: NT$(in thousands)	Unit: NT$(in thousands)	Unit: NT$(in thousands)
	2021				2022				2023, as of the end of previous quarter
Item	Name	Amount	As a percentage of net purchase (%)	Relation ship with issuer	Name	Amount	As a percentag e of net purchase (%)	Relatio nship with issuer	Name	Amount	As a percentage of net purchase (%)	Relations hip with issuer
1	10243	353,523	20.42	None	10243	383,068	20.08	None	10243	44,090	15.94	None
	Others	1,377,357	79.58	-	Others	1,524,694	79.92	-	Others	232,521	84.06	-
	Net purchase	1,730,880	100.00	-	Net purchase	1,907,762	100.00	-	Net purchase	276,611	100.00	-

Reasons for changes:

The increase in sales demand leads to an increase in production and procurement materials. Thus, the purchasing amount increased in 2021

2.2.5 The Production Volume and Value for the recent two years

Unit: Ton/NT$ thousands

Year Volume PrimaryProduct	As of 31 December	As of 31 December	As of 31 December	As of 31 December	As of 31 December	As of 31 December
	2021			2022
	Production capacity	Yield	Output value	Production capacity	Yield	Output value
Fine chemicals	11,609	16,440	1,869,089	14,233	16,591	2,261,642
Agrochemicals	523	611	231,030	282	623	291,585
TPU	3,462	3,631	386,849	3,626	1,838	220,756
Resin	1,927	1,528	129,291	1,361	1,557	134,776
Others	-	2,895	27,681	-	2,228	12,570
Total	17,521	25,105	2,643,940	19,502	22,837	2,921,329

2.2.6 The Sales Volume and Value for the Recent Two Years

Unit: Ton/NT$ thousands

2.2.6 The	Sales Volume and Value for the Recent Two Years Unit: Ton/NT$ thousands	Sales Volume and Value for the Recent Two Years Unit: Ton/NT$ thousands	Sales Volume and Value for the Recent Two Years Unit: Ton/NT$ thousands	Sales Volume and Value for the Recent Two Years Unit: Ton/NT$ thousands	Sales Volume and Value for the Recent Two Years Unit: Ton/NT$ thousands	Sales Volume and Value for the Recent Two Years Unit: Ton/NT$ thousands	Sales Volume and Value for the Recent Two Years Unit: Ton/NT$ thousands	Sales Volume and Value for the Recent Two Years Unit: Ton/NT$ thousands
Year Primary Product	As of 31 December
	2021				2022
	Domestic Sales		Exports		Domestic Sales		Exports
	Quantity	Value	Quantity	Value	Quantity	Value	Quantit y	Value
Fine chemicals	10,710	1,640,545	2,535	401,610	8,756	1,620,682	3,004	614,353
Agrochemical s	216	106,092	409	216,804	171	86,790	481	301,953
TPU	3,267	355,660	98	10,462	2,238	246,399	105	13,608
Resin	964	72,483	584	33,918	972	79,929	490	32,530
Others	6,282	13,064	-	-	5,736	12,310	-	-
Total	21,439	2,187,844	3,626	662,794	17,873	2,046,110	4,080	962,444

3 Employee Information

Of recent two years as of the publication date of this Annual Report, number of employee, average years of service, average age and education distribution ratio.

5 May 2022

				5 May2022
	Year	2021	2022	Current fiscal year up to 30 April 2023
Number of employees	Direct labor	224	224	235
	Indirect labor	173	173	179
	R&Dpersonnel	31	31	30
	Management and Administrative staff	72	72	69
	Total	500	500	513
	Average age	40.78	41.33	41.33
Averageyears of service		9.48	10.17	10.17
Education distribution ratio	Ph.D.	1.4%	1.4%	1.36%
	Masters	6%	6%	5.46%
	Bachelor's degree	53.2%	53.2%	52.63%
	Senior high school	31%	31%	31.77%
	Below senior high school	8.4%	8.4%	8.7%

4 Expenditures on Environmental Protection

4.1 For the loss suffered in the most recent year and up to the publication date of this Annual Report due to environmental pollution incidents (including any compensation occurred and any violations of environmental protection regulations found under inspection, specify the disposition dates, disposition reference numbers, the articles and content of regulation violated, and the content of dispositions):
4.1.1 Huan-Fei-Zi No. 1110013548 dated 16 March 2022, a penalty of NT$60,000 was imposed for violation of Article 31-1, Paragraph 2 of the Waste Disposal Act (improper mass balance of waste

liquid in experimental operation procedures), as reported in the online declaration.

4.2 The estimated amounts and corresponding measures for current and future events, and where it is not reasonably estimable, the explanation of the fact that it cannot be reasonably estimated, are as follows:
4.2.1 Response measures: The discrepancy in the number of joint declarations and reported quantities in the online declaration for the business park was due to operational negligence. To prevent similar incidents from happening again, supervisory assistance will be increased to verify the declaration content in the future.
5 Labor relations
5.1 The Company's employee benefits for studying, training, pension systems and its implementation status as well as labor agreements and measures for preserving employee rights

Items	Implementations
	Annual health checks, injury and emergency assistance, children's education
Employee Benefits	scholarships, wedding and funeral subsidies, pregnancy subsidies, festival benefits,
Measures	birthday cash gifts, staff travel activities; parental leave and paternity leave handled in
	accordance with the Act Of Gender Equality In Employment.
Personnel Service	New Year's allowance and cash gift.
Emergency Relief	The employee’s incident, financial aid approved by the welfare committee, weddings
and Subsidies	and funerals subsidies, injury and sickness subsidies, employee maternity subsidies.
Training and Continuing education	In addition to new employees’ training, employees are selected from time to time to participate in training, and advance study. Hours of 2022 internal training: 3,965 hours. Hours of 2022 external training: 156 hours.
Educational Scholarships	Labor education and scholarships for children.
	In order to ensure employees’ livelihood after retirement, pension regulations are
	established in accordance with the Labor Standards Act and Labor Pension Act.
Pension system	Retirement reserves are allocated on a monthly basis. Also, a retirement reserve
	supervision committee is set up for the purpose of management, supervision and
	implementation.
Labor agreement	A labor-management meeting is held every quarter.
Measures to protect	Through labor-management meeting, both parties are able to communicate with each
employee rights	other and protect the rights and interests of employees.

5.2 Losses suffered in the most recent year and up to the publication date of this Annual Report due to labor disputes (including any violations of the Labor Standards Act found under inspection, specify the disposition dates, disposition reference numbers, the articles and content of regulation violated, and the content of dispositions):
5.2.1 Fu-Shou-Lao-Dong-Zi No. 1110011733 dated 19 January 2022 ， Article 32-2 of Labor Standards Act. Therefore, pursuant to Article 79-1, Paragraph 1, and Article 80-1, Paragraph 1, of the same act, a fine of NT$50,000 was imposed.

5.3 Countermeasures:

If any dispute occurs between the labor and management, the representatives of both parties can fully express their opinions and communicate in a labor-management coordination meeting to find the best solution. The relationship between labor and management is harmonious, and problems can be resolved through coordination. There were no labor disputes or losses in the most recent three years. In addition to the uniform given to the production staff, the Company also offers birthday benefits, festival benefits, emergency relief and subsidies, wedding and funeral subsidies and other welfare. The Company also hold labor trainings and team-building activities to ensure employees’ both mental and physical health.

6 Information Security Management
6.1 State the in ormation security risk management structure, the information security policy, the specific management plan and the resources invested in the security management of the information communication.

In order to protect the security of all information systems and electronic data of the Company, including hardware equipment, operating software, network electronic files, record, etc., from information risk such as destruction, leakage, theft or extortion, this policy is specially formulated.

The Company shall take the following measures:

Comply with laws and regulations to formulate relevant information security management rules, and implement appropriate protection measures for the Company’s information systems and electronic data to ensure their confidentiality, integrity and legality.
Evaluate the impact of various man-made and natural disasters on the Company’s information system and disaster recovery plans to ensure the continuous operation of the Company’s business.
Supervise the Company’s employees to implement information security protection work, and enhance employees’ awareness of information security.
Require employees of the Company and external parties who use or link the Company’s information system to strictly abide by the Company’s information security related regulations. If there is a violation, it will be handled according to the Company’s relevant regulations or contract penalties. Severe cases of violation are punishable by law.

Specific management methods:

Firewall: (1) Firewall sets connection rules to block external attack (2) Set up internet access policies to prevent people from linking to harmful URLs.
Antivirus software: Use antivirus software, and automatically update the virus pattern to reduce the chance of virus infection.
System/file access: The operating system sets the login account, password, and classify access authorization. The password strength should comply with the security rules and be changed regularly.
E-mail security control: (1) Automatic email scanning threat protection (2) Set up spam filtering system.
Data backup mechanism: (1) Daily backups are set for important information system. (2) Database-offsite backup is set for the Company hosts and database.
Strain Recovery Mechanism: Regular system disaster recovery drills are conducted.
6.2 List the losses incurred due to major information security incidents in the most recent year and as of the date publication of the annual report, the possible impact and countermeasures. If it cannot be reasonably estimated, it shall be explained the reason.

In recent years, there has been no financial loss caused by information security incidents.

Important contracts: None.

Ⅵ. FINANCIAL INFORMATION

1 Condensed Balance Sheet, Income Statement, Names of the CPAs and their audit opinions 1.1 Condensed Balance Sheet and Income Statement for the recent five years

Condensed Balance Sheet (Consolidated)

Unit: NT$ (in thousands)

Year Item	Year Item	Financial information for the recent fiveyears(Note 1)	Financial information for the recent fiveyears(Note 1)	Financial information for the recent fiveyears(Note 1)	Financial information for the recent fiveyears(Note 1)	Financial information for the recent fiveyears(Note 1)	As of the first quarter of 2023 (Note 2)
		2018	2019	2020	2021	2022
Current assets		2,131,091	2,073,670	2,654,855	2,030,289	2,248,202	1,939,191
Property, Plant, and Equipment		1,708,859	1,773,778	1,702,885	1,664,358	1,556,541	1,534,739
Intangible assets		11,164	11,164	14,914	13,846	15,117	14,714
Other assets		252,489	386,838	426,767	382,859	364,396	378,618
Total assets		4,103,603	4,245,450	4,799,421	4,091,352	4,184,256	3,867,262
Current Liabilities	Before distribution	1,099,769	1,056,740	1,474,762	1,087,393	1,087,393	872,602
	After distribution	1,099,769	1,056,740	1,566,999	1,105,881	1,105,881	872,602
Long-term liabilities		729.203	911,373	847,282	693,007	698,817	650,356
Total liabilities	Before distribution	1,828,972	1,968,113	2,322,044	1,786,210	1,786,210	1,522,958
	After distribution	1,099,769	1,968,113	2,414,281	1,804,468	1,804,698	1,522,958
Equity Attributable to the Parent company		2,270,336	2,272,871	2,477,198	2,331,468	2,398,046	2,344,304
Capital-Common Stock		2,223,473	2,223,473	1,889,952	1,889,952	1,848,841	1,848,841
Capital Surplus		37,785	37,785	37,848	41,930	42,255	42,255
Retained Earnings	Before distribution	68,305	62,953	599,874	510,316	510,316	455,342
	After distribution	68,305	62,953	507,637	482,793	482,793	455,342
Other Equity		(14,519)	1,428	(5,623)	(1,205)	(3,366)	(2,134)
TreasuryStock		(44,708)	(52,768)	(44,853)	(40,786)	-	-
Prior interests under joint control		-	-	-	-	-	-
Non-controllingInterest		4,295	4,466	179	121	-	-
Total Equity	Before distribution	2,274,631	2,277,337	2,477,377	2,331,589	2,398,046	2,344,304
	After distribution	2,274,631	2,277,337	2,385,140	2,331,589	2,370,523	2,344,304

Note 1: The financial information above have been audited and certified by the CPAs. Note 2: The financial information above have been audited by the CPAs.

Note 3: The amount after distribution shall refer to the amount determined after the resolution in the shareholders’ meeting in the following fiscal year.

Condensed Balance Sheet (Parent Only)

Unit: NT$ (in thousands)

Year Item	Year Item	Financial information for the recent fiveyears(Note 1)	Financial information for the recent fiveyears(Note 1)	Financial information for the recent fiveyears(Note 1)	Financial information for the recent fiveyears(Note 1)	Financial information for the recent fiveyears(Note 1)	As of the first quarter of 2023
		2018	2019	2020	2021	2022
Current assets		2,116,098	2,057,881	2,653,798	2,021,269	2,226,778	-
Property, Plant, and Equipment		1,707,813	1,773,348	1,702,853	1,664,358	1,556,541	-
Intangible assets		11,164	11,164	14,914	13,846	15,117	-
Other assets		263,918	398,583	427,676	386,080	381,879	-
Total assets		4,098,993	4,240,976	4,799,241	4,085,553	4,180,315	-
Current Liabilities	Before distribution	1,099,454	1,056,732	1,474,761	1,061,078	1,083,452	-
	After distribution	1,099,454	1,056,732	1,566,998	1,061,078	1,101,940	-
Long-term liabilities		729,203	911,373	847,282	693,007	698,817	698,817
Total liabilities	Before distribution	1,828,657	1,968,105	2,322,043	1,754,085	1,782,269	-
	After distribution	1,828,657	1,968,105	2,414,280	1,754,085	1,800,757	-
Capital-Common Stock		2,223,473	2,223,473	1,889,952	1,889,952	1,848,841	1,848,841
Capital Surplus		37,785	37,785	37,848	41,930	42,255	42,255
Retained Earnings	Before distribution	68,305	62,953	599,874	441,577	510,316	-
	After distribution	68,305	62,953	507,637	441,577	491,828	-
Other Equity		(14,519)	1,428	(5,623)	(1,205)	(3,366)	-
TreasuryStock		(44,708)	(52,768)	(44,853)	(40,786)	-	-
Prior interests under joint control		-	-	-	-	-	-
Non-jointly controlled equitybefore the merger		-	-	-	-	-	-
Total Equity	Before distribution	2,270,336	2,272,871	2,477,198	2,331,468	2,398,046	-
	After distribution	2,270,336	2,272,871	2,384,961	2,331,468	2,379,558	-

Note 1: The financial information above have been audited and certified by the CPAs. Note 2: The amount after distribution shall refer to the amount determined after the resolution in the shareholders’ meeting in the following fiscal year.

Condensed Income Statement (Consolidated)

Unit: EPS expressed in NT$; others in NT$ thousands

	Condensed Income Statement (Consolidated) Unit: EPS expressed in NT$; others in	Condensed Income Statement (Consolidated) Unit: EPS expressed in NT$; others in	Condensed Income Statement (Consolidated) Unit: EPS expressed in NT$; others in	Condensed Income Statement (Consolidated) Unit: EPS expressed in NT$; others in	Condensed Income Statement (Consolidated) Unit: EPS expressed in NT$; others in	NT$ thousands
Year Item	Financial information for the recent five years (Note 1)					As of the first quarter of 2023 (Note 2)
	2018	2019	2020	2021	2022
OperatingRevenue	3,451,774	3,243,968	2,752,601	2,850,638	3,008,554	575,471
Gross Profit	250,793	282,137	139,355	128,104	255,748	(3,012)
Income (Loss) from Operation	(36,391)	17,323	(243,755)	(95,951)	32,562	(52,078)
Non-operating Income and Expenses	48,253	(26,408)	727,049	42,110	38,910	(8,154)
Income (loss) from continuing operation before income tax	11,862	(9,085)	483,294	(53,841)	71,472	(60,232)
Income Tax Benefits (Expenses)	2,857	2,208	41,012	(16,175)	(10,142)	5,258
Net Income (Loss) from ContinuingOperations	14,719	(6,877)	524,306	(70,0160)	61,330	(54,974)
Income (Loss) from Discontinued Operations	-	-	-	-	-	-
Net Income(Loss)	14,719	(6,877)	524,306	(70,016)	61,330	(54,974)
Other Comprehensive Income (Loss) (after Tax)	(5,780)	17,643	5,466	8,316	5,248	1,232
Total Comprehensive Income (Loss)	8,939	10,766	529,772	(61,700)	66,578	(53,742)
Net Income Attributable to the parent company	16,123	(6,808)	524,404	(61,700)	61,330	(54,974)
Net Income Attributable to Non-jointly controlled equity before the merger	-	-	-	-	-	-
Net Income Attributable to Non-ControllingInterests	(1,404)	(69)	(98)	(58)	-	-
Total Comprehensive Income Attributable to stockholder of theparent	10,353	10,595	529,870	(61,642)	66,578	(53,742)
Total Comprehensive Income Attributable to Non-jointly controlled equity before the merger	-	-	-	-	-	-
Total Comprehensive Income Attributable to Non- ControllingInterests	(1,414)	171	(98)	(58)	-	-
Earnings per Share (NT$) (Note 3)	0.07	(0.03)	2.43	(0.38)	0.33	(0.30)

Note 1: The financial information above have been audited and certified by the CPAs. Note 2: The financial information above have been audited by the CPAs.

Note 3: Earnings per share is calculated retrospectively based on the weighted average number of shares outstanding in the current year.

Condensed Income Statement (Parent Only)

Unit: EPS expressed in NT$; others in NT$ thousands

	Condensed Income Statement (Parent Only) Unit: EPS expressed in NT$; others in	Condensed Income Statement (Parent Only) Unit: EPS expressed in NT$; others in	Condensed Income Statement (Parent Only) Unit: EPS expressed in NT$; others in	Condensed Income Statement (Parent Only) Unit: EPS expressed in NT$; others in	Condensed Income Statement (Parent Only) Unit: EPS expressed in NT$; others in	NT$ thousands
Year Item	Financial information for the recent five years (Note 1)					As of the first quarter of 2023
	2018	2019	2020	2021	2022
OperatingRevenue	3,417,297	3,228,494	2,752,601	2,848,057	2,976,358	-
Gross Profit	245,761	280,761	139,355	125,523	223,552	-
Income (Loss) from Operation	(26,937)	17,813	(243,686)	(97,233)	13,332	-
Non-operating Income and Expenses	40,203	(26,829)	727,078	43,450	54,000	-
Income (loss) from continuing operation before income tax	13,266	(9,016)	483,392	(53,783)	67,332	-
Income Tax Benefits (Expenses)	2,857	2,208	41,012	(16,175)	(6,002)	-
Net Income (Loss) from ContinuingOperations	16,123	(6,808)	524,404	(69,958)	61,330	-
Income (Loss) from Discontinued Operations	-	-	-	-	-	-
Net Income (Loss)	16,123	(6,808)	524,404	(69,958)	61,330	-
Other Comprehensive Income (Loss) (after Tax)	(5,770)	17,403	5,466	8,316	5,248	-
Total Comprehensive Income (Loss)	10,353	10,595	529,870	(61,642)	66,578	-
Earnings per Share (NT$) (Note 2)	0.07	(0.03)	2.43	(0.38)	0.33	-

Note 1: The financial information above have been audited and certified by the CPAs. Note 2: Earnings per share is calculated retrospectively based on the weighted average number of shares outstanding in the current year.

1.2 Names of the CPAs and their audit opinions for the recent five years

Year	Accounting Firm	Name of the CPA	Audit Opinion
2017	Ernst & Young	YEN, WEN-PI/ TU, CHIN-YUAN	Unqualified
2018	Ernst & Young	CHEN, MING-HONG/ YEN, WEN-PI	Unqualified plus other matters paragraph
2019	Ernst & Young	CHEN, MING-HONG/ YEN, WEN-PI	Unqualified plus other matters paragraph
2020	Ernst & Young	TU, CHIN-YUAN/ YEN, WEN-PI	Unqualified
2021	Ernst & Young	TU, CHIN-YUAN/ YEN, WEN-PI	Unqualified
2022	Ernst & Young	CHEN, MING-HONG / YEN, WEN-PI	Unqualified

2 Financial analysis for the recent five years

2.1 Financial analysis (Consolidated)

Item	Year	Financial analysis for the recent five years (Note 1)	Financial analysis for the recent five years (Note 1)	Financial analysis for the recent five years (Note 1)	Financial analysis for the recent five years (Note 1)	Financial analysis for the recent five years (Note 1)	As of the first quarter of 2023 (Note 2)
		2018	2019	2020	2021	2022
Financial Structure	Debt to Assets Ratio(%)	44.57	46.36	48.38	43.01	42.69	39.38
	Long-Term Capital to Property, Plant and Equipment Ratio (%)	175.78	179.77	195.24	181.73	198.96	195.13
Liquidity	Current Ratio (%)	193.78	196.23	180.02	190.32	206.75	222.23
	Quick Ratio(%)	119.71	113.04	128.73	108.34	103.32	103.73
	Interest Coverage	1.62	0.54	30.92	(3.40)	5.17	(9.87)
Operating Performance	Accounts Receivable Turnover (times)	4.83	4.86	4.63	4.25	4.43	4.54
	Average Collection Days	76	75	79	86	82	80
	Inventory Turnover (times)	4.43	3.41	3.07	3.20	2.66	2.03
	Accounts Payable Turnover (times)	9.35	8.87	8.47	8.70	8.79	8.72
	Average Inventory Turnover Days	82	107	119	114	137	180
	Property, Plant and Equipment Turnover (times)	2.03	1.86	1.58	1.69	1.87	1.49
	Total Assets Turnover (times)	0.83	0.78	0.61	0.64	0.73	0.57
Profitability	ROA (%)	0.72	0.21	11.88	(1.35)	1.81	(5.02)
	ROE (%)	0.64	(0.30)	22.05	(2.91)	2.59	(9.37)
	Ratio of Pre-tax Profit to Paid-in Capital (%)	(1.64)	(0.41)	25.57	(2.85)	3.87	(13.03)
	Net Margin (%)	0.43	(0.21)	19.05	(2.46)	2.04	(9.55)
	Earnings per Share (NT$) (Note 3)	0.07	(0.03)	2.43	(0.38)	0.33	(0.30)
Cash Flow	Cash Flow Ratio (%)	16.67	20.69	16.92	(13.90)	27.05	59.43
	Cash Flow Adequacy (%)	140.21	117.52	116.57	37.83	48.58	67.41
	Cash Flow Reinvestment Ratio (%)	2.78	4.27	4.62	(4.62)	5.37	2.05
Leverage	Operating Leverage	(5.36)	15.54	(0.11)	(1.84)	9.12	(0.25)
	Financial Leverage	0.66	(7.80)	(0.94)	0.89	2.11	0.90
~~The reasons for changes in financial ratios above 20% over the past two years:~~ 1. The increase in interest coverage was mainly due to the increase in net income before tax. 2. The increase in each profitability ratio was mainly due to the increase in net income after tax. 3. The increase in cash flow ratio was mainly due to the increase in cash used in operation. 4. The increase in cash flow adequacy ratio was mainly due to the increase in cash used in operation in recently five years. 5. The increase in cash re-investment ratio was mainly due to the increase in cash used in operation. 6. The increase in the operating leverage was mainly due to the increase in operating income and the increase in operating revenues. 7. Theincreaseinthefinancial leverage wasmainly due to theincreaseinoperatingincome andinterest expense.

Note 1: The financial information above have been audited and certified by the CPAs.

Note 2: The financial information above have been audited by the CPAs.

Note 3: Earnings per share was calculated retrospectively based on the weighted average number of shares outstanding in the current year.

2.2 Financial analysis (Parent Only)

Item	Year	Financial analysis for the recent five years (Note 1)	Financial analysis for the recent five years (Note 1)	Financial analysis for the recent five years (Note 1)	Financial analysis for the recent five years (Note 1)	Financial analysis for the recent five years (Note 1)	As of the first quarter of 2023
		2018	2019	2020	2021	2022
Financial Structure	Debt to Assets Ratio(%)	44.61	46.41	48.38	42.93	42.63	-
	Long-Term Capital to Property, Plant and Equipment Ratio (%)	175.64	179.56	195.24	175.64	198.96	-
Liquidity	Current Ratio (%)	192.47	194.74	179.95	190.49	205.53	-
	Quick Ratio(%)	118.44	111.58	128.68	108.12	101.76	-
	Interest Coverage	1.70	0.54	30.93	(3.39)	4.93	-
Operating Performance	Accounts Receivable Turnover (times)	4.78	4.84	4.63	4.21	4.35	-
	Average Collection Days	76	75	79	87	84	-
	Inventory Turnover (times)	4.41	3.39	3.07	3.20	2.66	-
	Accounts Payable Turnover (times)	9.27	8.82	8.47	8.70	8.79	-
	Average Inventory Turnover Days	83	108	119	114	137	-
	Property, Plant and Equipment Turnover (times)	2.01	1.85	1.58	1.69	1.85	-
	Total Assets Turnover (times)	0.82	0.77	0.61	0.64	0.72	-
Profitability	ROA (%)	0.75	0.21	11.89	(1.35)	1,82	-
	ROE (%)	0.70	(0.30)	22.08	(2.91)	2.59	-
	Ratio of Pre-tax Profit to Paid-in Capital (%)	0.60	(0.41)	25.58	(2.85)	3.64	-
	Net Margin (%)	0.47	(0.21)	19.05	(2.46)	2.06	-
	Earnings per Share (NT$) (Note 2)	0.07	(0.03)	2.43	(0.38)	0.33	-
Cash Flow	Cash Flow Ratio (%)	17.58	20.64	16.92	(15.69)	26.91	-
	Cash Flow Adequacy (%)	141.92	118.72	117.33	37.57	47.68	-
	Cash Flow Reinvestment Ratio (%)	2.99	4.27	4.62	(4.97)	5.32	-
Leverage	Operating Leverage	(7.65)	15.11	(0.10)	(1.80)	20.84	-
	Financial Leverage	0.59	(10.28)	(0.94)	0.89	(3.51)	-
~~The reasons for changes in financial ratios above 20% over the past two years:~~ 1. The increase in interest coverage was mainly due to the increase in net income before tax. 2. The increase in each profitability ratio was mainly due to the increase in net income after tax. 3. The increase in cash flow ratio was mainly due to the increase in cash used in operation. 4. The increase in cash flow adequacy ratio was mainly due to the decrease in cash used in operation in recently five years. 5. The increase in cash re-investment ratio was mainly due to the increase in cash used in operation. 6. The increase in the operating leverage was mainly due to the increase in operating income and the increase in operating revenues. 7. Theincreaseinthefinancial leverage wasmainly due to theincreaseinoperatingincome andinterest expense.

Note 1: The financial information above have been audited and certified by the CPAs.

Note 2: Earnings per share was calculated retrospectively based on the weighted average number of shares outstanding in the current year.

Note I. The formulas are as follows:

2.2.1.1 Financial Structure

5.6.1 Debt to Assets Ratio = total liabilities / total assets
5.6.2 Long-term Capital to Property, Plant and Equipment Ratio = (total shareholders’ equity + noncurrent liabilities) / net property, plant and equipment
2.2.1.2 Liquidity
(1) Current Ratio = current assets / current liabilities
(2) Quick Ratio = (current assets – inventory – prepaid expenses) / current liabilities
(3) Interest Coverage = earnings before interest and taxes / interest expenses 2.2.1.3 Operating Performance
(1) Accounts Receivables turnover rate (including bills receivable resulting from accounts receivable and business operations) = Net sales / average accounts receivable in various periods (including bills receivable resulting from accounts receivable and business operations).
(2) Average collection days = 365 / receivables turnover ratio
(3) Inventory turnover rate = cost of goods sold / average inventory
(4) Accounts Payables turnover rate (including bills payable resulting from accounts payable and business operations) = Cost of sales / Average accounts payable in various periods (including bills payable resulting from accounts payable and business operations).
(5) Average inventory turnover days = 365 / inventory turnover rate.
(6) Property, Plant and Equipment turnover rate = net sales / average net property, plant and equipment
(7) Total asset turnover rate = net sales / average total assets. 2.2.1.4 Profitability
(1) Return on Assets = [after-tax net income + interest expense × (1 – effective tax rate)] / average total assets
(2) Return on Equity = after-tax net income / average equity
(3) Net Margin = after-tax net income / net sales
(4) Earnings per Share = (net income attributable to the parent company – preferred stock dividends) / weighted average number of shares outstanding (Note II)
2.2.1.5 Cash Flow
(1) Cash Flow Ratio = net cash flows from operating activities / current liabilities
(2) Cash Flow Adequacy Ratio = net cash flows from operating activities for the recent five years/ sum of (capital expenditures+ increase in inventory + cash dividends) of the recent five years.
(3) Cash Flow Reinvestment Ratio = (net cash flows from operating activities – cash dividends) / (gross property, plant and equipment + long-term investments + other non-current assets + working capital) (Note III)
2.2.1.6 Leverage
(1) Operating Leverage = (net operating revenue – variable operating costs and expenses) / operating profit. (Note IV)

(2) Financial Leverage = operating profit / (operating profit – interest expenses)

Note II. When calculating the Earnings Per Share, the following matters shall be noted:

Based on the weighted average outstanding shares, not the outstanding shares at year-end.
Under circumstances of capital increase by cash or transactions of treasury stock, the outstanding period shall be taken into consideration while calculating the weighted average outstanding shares.
Under circumstances of capital increase by retained earnings or capital increase by capital surplus, the annual and semi-annual EPS shall be adjusted retrospectively based on the ratio of increased capital. The outstanding period is not included.
If the preferred stocks are non-convertible and cumulative, the dividends (whether distributed or not) shall be deducted from the after-tax net income or added to the after-tax net loss. If the preferred stocks are non-cumulative, the dividends shall be deducted from the after-tax net income if applicable; no adjustment needed if net losses occur.

Note III. When analyzing cash flow, the following matters shall be noted:

Net cash flows from operating activities is the amount of cash inflows from operating activities on the Statement of Cash Flows.
Capital expenditure is the amount of cash outflows from annual capital investment.
State the increase in inventory only when the ending inventory is greater than the beginning inventory. If the ending inventory decreases, take 0 into calculation.
Cash dividends include dividends from common stocks and preferred stocks.
Gross property, plant and equipment shall refer to the total amount of property, plant, and equipment prior to the deduction of accumulated depreciation.

Note IV. The issuer shall classify both operating costs and expenses as fixed and variable. If estimation or subjective judgements take place, one shall be aware of the reasonableness and consistency.

Note V. When the stock has no par value or the par value is less than NT$10, the aforementioned ratios to paid-in capital shall be calculated based on the equity attributable to the parent company on the Balance Sheet.

3 Audit Committee’s Review Report for the recent years

SUNKO INK CO., LTD.

Audit Committee’s Review Report

The Board of Directors has prepared the Company’s 2022 Business Report, Consolidated and Parent Only Financial Statements, and proposal of Earnings Appropriation. Both the Consolidated and Parent Only Financial Statements were audited and issued with an audit report by CPA CHEN, MING-HUNG and CPA YEN, WEN-PI from Ernst & Young, Taiwan. The Audit Committee had concluded the aforementioned Business Report, Financial Statements and proposal of Earnings Appropriation complied with Article 14-4 of the Securities and Exchange Act and Article 219 of the Company Act. We hereby submit this report for your review.

Regards,

2023 General Shareholders’ Meeting

SUNKO INK CO., LTD Convener of the Audit Committee: TSOU, YEN-CHUNG 14 March 2023

4 Consolidated Financial Statements of the Most Recent Year with Independent Auditors’ Report with Independent Auditors’ Report

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SUNKO INK CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

For the years Ended 31 December 2022 and 2021

(Expressed in Thousands of New Taiwan Dollars, unless Otherwise Stated)

1. General

Sunko Ink Co., Ltd. (hereinafter “the Company”) was incorporated in December 1974. The Company is engaged in manufacturing and trading of certain chemicals or industrial materials. Major product lines are as follows:

a. Argochemicals

b. Fine Chemicals: curing agent, non-halogenated flame retardant, reducing agent, antioxidant

c. Polymer: PU Based surface treating agent, Polymer-TPU, Polymer-TPV d. UV Absorbers

In May 1996, the Company’s shares were listed on the Taiwan Stock Exchange (TWSE), when the registered office was located at No. 139, Renmei Rd., Dali Dist., Taichung City 412036, Taiwan (R.O.C.). On 30 April 2022, as approved by Ministry of Economic Affairs, the Company’s registered operating office address was changed to 5F, No. 229, Zhongxing St., West Dist., Taichung City 403022, Taiwan (R.O.C.).

On 30 March 2016, the Company merged with Kuo Ching Chemical Co., Ltd. (hereinafter “Kuo Ching”). Kuo Ching was incorporated in April 1977, mainly engaged in production and trading of agrochemicals, fine chemicals, and other polymer materials. In October 2009, Kuo Ching’s shares was listed on the Emerging Stock Board. To improve efficiency and competitive capabilities, the Company merged with Kuo Ching on 30 March 2015 to integrate both entities’ production capacities, research resources, marketing and product lines. The Company was the surviving company which acquired all Kuo Ching’s assets, liabilities, rights, and obligations.

2. Date and procedures of authorization of financial statements for issue

The consolidated financial statements of the Company and its subsidiaries (hereinafter referred to as “the Group”) for the years ended 31 December 2022 and 2021 were approved to release in accordance with a resolution of the board of directors’ meeting on 14 March 2023.

3. Newly issued or revised standards and interpretations

(1) Changes in accounting policies resulting from applying for the first-time certain standards and amendments

The Group applied for the first time International Financial Reporting Standards, International Accounting Standards, and Interpretations issued, revised or amended which are recognized by Financial Supervisory Commission (“FSC”) and become effective for annual periods beginning on or after 1 January 2022. The adoption new standard and amendment is described, had no material impact on the Group.

(2) Standards or interpretations issued, revised or amended, by International Accounting Standards Board (“IASB”) which are endorsed by FSC, but not yet adopted by the Group as at the end of the reporting period are listed below.

Items	New, Revised or Amended Standards and Interpretations	Effective Date issued by IASB
1	Disclosure Initiative - Accounting Policies – Amendments to IAS 1	1 January 2023
2	Definition of Accounting Estimates – Amendments to IAS 8	1 January 2023
3	Deferred Tax related to Assets and Liabilities arising from a Single Transaction – Amendments to IAS 12	1 January 2023

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(a) Disclosure Initiative - Accounting Policies – Amendments to IAS 1

The amendments improve accounting policy disclosures that to provide more useful information to investors and other primary users of the financial statements.

(b) Definition of Accounting Estimates – Amendments to IAS 8

The amendments introduce the definition of accounting estimates and include other amendments to IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors to help companies distinguish changes in accounting estimates from changes in accounting policies.

The amendments narrow the scope of the recognition exemption in paragraphs 15 and 24 of IAS 12 so that it no longer applies to transactions that, on initial recognition, give rise to equal taxable and deductible temporary differences.

The abovementioned standards and interpretations were issued by IASB and endorsed by FSC so that they are applicable for annual periods beginning on or after 1 January 2023. The remaining standards and interpretations have no material impact on the Group.

(3) Standards or interpretations issued, revised or amended, by International Accounting Standards Board (“IASB”) which are not endorsed by FSC, and not yet adopted by the Group as at the end of the reporting period are listed below.

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Items	New, Revised or Amended Standards and Interpretations	Effective Date issued byIASB
a	IFRS 10 “Consolidated Financial Statements” and IAS 28 “Investments in Associates and Joint Ventures” — Sale or Contribution of Assets between an Investor and its Associate or Joint Ventures	To be determined by IASB
b	IFRS 17 “Insurance Contracts”	1 January2023
c	Classification of Liabilities as Current or Non-current – Amendments to IAS 1	1 January 2024
d	Lease Liability in a Sale and Leaseback – Amendments to IFRS 16	1 January 2024
e	Non-current Liabilities with Covenants – Amendments to IAS 1	1 January 2024

(a) IFRS 10“Consolidated Financial Statements” and IAS 28“Investments in Associates and Joint Ventures” — Sale or Contribution of Assets between an Investor and its Associate or Joint Ventures

The amendments address the inconsistency between the requirements in IFRS 10 Consolidated Financial Statements and IAS 28 Investments in Associates and Joint Ventures , in dealing with the loss of control of a subsidiary that is contributed to an associate or a joint venture. IAS 28 restricts gains and loss arising from contributions of non-monetary assets to an associate or a joint venture to the extent of the interest attributable to the other equity holders in the associate or joint ventures. IFRS 10 requires full profit or loss recognition on the loss of control of the subsidiary. IAS 28 was amended so that the gain or loss resulting from the sale or contribution of assets that constitute a business as defined in IFRS 3 between an investor and its associate or joint venture is recognized in full.

IFRS 10 was also amended so that the gains or loss resulting from the sale or contribution of a subsidiary that does not constitute a business as defined in IFRS 3 between an investor and its associate or joint venture is recognized only to the extent of the unrelated investors’ interests in the associate or joint venture.

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(b) IFRS 17 “Insurance Contracts”

IFRS 17 provides a comprehensive model for insurance contracts, covering all relevant accounting aspects (including recognition, measurement, presentation and disclosure requirements). The core of IFRS 17 is the General (building block) Model, under this model, on initial recognition, an entity shall measure a group of insurance contracts at the total of the fulfilment cash flows and the contractual service margin. The carrying amount of a group of insurance contracts at the end of each reporting period shall be the sum of the liability for remaining coverage and the liability for incurred claims.

Other than the General Model, the standard also provides a specific adaptation for contracts with direct participation features (the Variable Fee Approach) and a simplified approach (Premium Allocation Approach) mainly for short-duration contracts.

IFRS 17 was issued in May 2017 and it was amended in June 2021. The amendments include deferral of the date of initial application of IFRS 17 by two years to annual beginning on or after 1 January 2023 (from the original effective date of 1 January 2022); provide additional transition reliefs; simplify some requirements to reduce the costs of applying IFRS 17 and revise some requirements to make the results easier to explain. IFRS 17 replaces an interim Standard – IFRS 4 Insurance Contracts – from annual reporting periods beginning on or after 1 January 2023.

These are the amendments to paragraphs 69-76 of IAS 1 Presentation of Financial statements and the amended paragraphs related to the classification of liabilities as current or non-current.

(d) Lease Liability in a Sale and Leaseback – Amendments to IFRS 16

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

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(e) Non-current Liabilities with Covenants – Amendments to IAS 1

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

The abovementioned standards and interpretations issued by IASB have not yet endorsed by FSC at the date when the Group’s financial statements were authorized for issue, the local effective dates are to be determined by FSC. The standards and interpretations have no material impact on the Group.

4. Summary of significant accounting policies

(1) Statement of Compliance

The consolidated financial statements of the Group for the years ended 31 December 2022 and 2021 have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers (“the Regulations”) and International Financial Reporting Standards, International Accounting Standards, and Interpretations developed by the International Financial Reporting Interpretations Committee, which are endorsed by FSC (TIFRSs).

(2) Basis of Preparation

The consolidated financial statements have been prepared on a historical cost basis, except for financial instruments that have been measured at fair value. The consolidated financial statements are expressed in thousands of New Taiwan Dollars (NTD) unless otherwise stated.

(3) Basis of Consolidation

Preparation principle of consolidated financial statement

Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Specifically, the Group controls an investee if and only if the Group has:

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A. power over the investee (i.e. existing rights that give it the current ability to direct the relevant activities of the investee)
B. exposure, or rights, to variable returns from its involvement with the investee, and
C. the ability to use its power over the investee to affect its returns

When the Group has less than a majority of the voting or similar rights of an investee, the Group considers all relevant facts and circumstances in assessing whether it has power over an investee, including:

A. the contractual arrangement with the other vote holders of the investee
B. rights arising from other contractual arrangements
C. the Group’s voting rights and potential voting rights

The Group re-assesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control.

Subsidiaries are fully consolidated from the acquisition date, being the date on which the Group obtains control, and continue to be consolidated until the date that such control ceases. The financial statements of the subsidiaries are prepared for the same reporting period as the parent company, using uniform accounting policies. All intra-group balances, income and expenses, unrealized gains and loss and dividends resulting from intra-group transactions are eliminated in full.

A change in the ownership interest of a subsidiary, without a change of control, is accounted for as an equity transaction.

Total comprehensive income of the subsidiaries is attributed to the owners of the parent and to the non-controlling interests even if this results in the noncontrolling interests having a deficit balance.

If the Group loses control of a subsidiary, it:

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A. derecognizes the assets (including goodwill) and liabilities of the subsidiary;
B. derecognizes the carrying amount of any non-controlling interest;
C. recognizes the fair value of the consideration received;
D. recognizes the fair value of any investment retained;
E. recognizes any surplus or deficit in profit or loss;
F. reclassifies the parent’s share of components previously recognized in other comprehensive income as changes in profit or loss.

The consolidated entities are as follows:

Investor The Company The Company	Subsidiary Blessingthoughts Co. Ltd. (Blessingthoughts) (Note1) Kuo Ching Development Corp. (KuoChing Development) (Note2)	Main business Drinks, and food vending Wholesale of chemical solvents, industrial additives, and other chemical raw materials or with derivative products	Percentage of ownership (%)	Percentage of ownership (%)
			31 December 2022 - 100%	31 December 2021
				83.52% 100%

Note 1: The company was resolved to be liquidated by the board of directors meeting on 9 November 2021, and the remaining investment funds were remitted on 31 March 2022.
Note2: The establishment registration of Kuo Ching Development’s establishment registration was approved on 14 July 2021.

(4) Foreign currency transactions

The Group’s consolidated financial statements are presented in New Taiwan Dollars (NTD), which is also the Company’s functional currency. Each entity in the Group determines its own functional currency and items included in the financial statements of each entity are measured using that functional currency.

Transactions in foreign currencies are initially recorded by the Group entities at their respective functional currency rates prevailing at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the functional currency closing rate of exchange ruling at the reporting date. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value is determined. Non-monetary items that are measured at historical cost in a foreign currency are translated using the exchange rates as at the dates of the initial

106

transactions.

All exchange differences arising on the settlement of monetary items or on translating monetary items are taken to profit or loss in the period in which they arise except for the following:

A. Exchange differences arising from foreign currency borrowings for an acquisition of a qualifying asset to the extent that they are regarded as an adjustment to interest costs are included in the borrowing costs that are eligible for capitalization.
B. Foreign currency items within the scope of IFRS 9 Financial Instruments are accounted for based on the accounting policy for financial instruments.
C. Exchange differences arising on a monetary item that forms part of a reporting entity’s net investment in a foreign operation is recognized initially in other comprehensive income and reclassified from equity to profit or loss on disposal of the net investment.

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

(5) Translation of Foreign Currency Financial Statements

The assets and liabilities of foreign operations are translated into NT$ at the closing rate of exchange prevailing at the reporting date and their income and expenses are translated at an average rate for the period. The exchange differences arising on the translation are recognized in other comprehensive income. On the disposal of a foreign operation, the cumulative amount of the exchange differences relating to that foreign operation, recognized in other comprehensive income and accumulated in the separate component of equity, is reclassified from equity to profit or loss when the gain or loss on disposal is recognized.

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On the partial disposal of a subsidiary that includes a foreign operation that does not result in a loss of control, the proportionate share of the cumulative amount of the exchange differences recognized in other comprehensive income is reattributed to the non-controlling interests in that foreign operation. In partial disposal of an associate or joint arrangement that includes a foreign operation that does not result in a loss of significant influence or joint control, only the proportionate share of the cumulative amount of the exchange differences recognized in other comprehensive income is reclassified to profit or loss.

Any goodwill and any fair value adjustments to the carrying amounts of assets and liabilities arising on the acquisition of a foreign operation are treated as assets and liabilities of the foreign operation and expressed in its functional currency.

(6) Current and Non-current Distinction

An asset is classified as current when:

A. The Group expects to realize the asset, or intends to sell or consume it, in its normal operating cycle;
B. The Group holds the asset primarily for the purpose of trading;
C. The Group expects to realize the asset within twelve months after the reporting period;
D. The asset is cash or a cash equivalent unless the asset is restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.

All other assets are classified as non-current.

A liability is classified as a current when:

A. The Group expects to settle the liability in normal operating cycle;
B. The Group holds the liability primarily for the purpose of trading;
C. The liability is due to be settled within twelve months after the reporting period;
D. The Group does not have an unconditional right to defer settlement of the liability for at least twelve months after the reporting date. Term of a liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not affect its classification.

All other liabilities are classified as non-current.

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(7) Cash and cash equivalent

Cash and cash equivalents comprise cash on hand, demand deposits and shortterm, highly liquid time deposits (including ones that have maturity within 3 months) or investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

(8) Financial Instruments

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

Financial assets and financial liabilities within the scope of IFRS 9 Financial Instruments are recognized initially at fair value plus or minus, in the case of investments not at fair value through profit or loss, directly attributable transaction costs.

A. Financial instruments: Recognition and Measurement

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

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

(a) the Group’s business model for managing the financial assets
(b) the contractual cash flow characteristics of the financial asset.

Financial assets measured at amortized cost

A financial asset is measured at amortized cost if both of the following conditions are met and presented as note receivables, trade receivables financial assets measured at amortized cost and other receivables etc., on balance sheet as at the reporting date:

(a) the financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows and
(b) the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

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Such financial assets are subsequently measured at amortized cost (the amount at which the financial asset is measured at initial recognition minus the principal repayments, plus or minus the cumulative amortization using the effective interest method of any difference between the initial amount and the maturity amount and adjusted for any loss allowance) and is not part of a hedging relationship. A gain or loss is recognized in profit or loss when the financial asset is derecognized, through the amortization process or in order to recognize the impairment gains or loss.

Interest revenue is calculated by using the effective interest method. This is calculated by applying the effective interest rate to the gross carrying amount of a financial asset except for:

(a) purchased or originated credit-impaired financial assets. For those financial assets, the Group applies the credit-adjusted effective interest rate to the amortized cost of the financial asset from initial recognition.
(b) financial assets that are not purchased or originated credit-impaired financial assets but subsequently have become credit-impaired financial assets. For those financial assets, the Group applies the effective interest rate to the amortized cost of the financial asset in subsequent reporting periods.

Financial asset measured at fair value through other comprehensive income

A financial asset is measured at fair value through other comprehensive income if both of the following conditions are met:

(a) the financial asset is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets and
(b) the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

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Interest revenue is calculated by using the effective interest method. This is calculated by applying the effective interest rate to the gross carrying amount of a financial asset except for:

(c) purchased or originated credit-impaired financial assets. For those financial assets, the Group applies the credit-adjusted effective interest rate to the amortized cost of the financial asset from initial recognition.
(d) financial assets that are not purchased or originated credit-impaired financial assets but subsequently have become credit-impaired financial assets. For those financial assets, the Group applies the effective interest rate to the amortized cost of the financial asset in subsequent reporting periods.

Financial asset measured at fair value through other comprehensive income

A financial asset is measured at fair value through other comprehensive income if both of the following conditions are met:

(c) the financial asset is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets and
(d) the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

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Recognition of gain or loss on a financial asset measured at fair value through other comprehensive income are described as below:

(a) A gain or loss on a financial asset measured at fair value through other comprehensive income recognized in other comprehensive income, except for impairment gains or loss and foreign exchange gains and loss, until the financial asset is derecognized or reclassified.
(b) When the financial asset is derecognized the cumulative gain or loss previously recognized in other comprehensive income is reclassified from equity to profit or loss as a reclassification adjustment.
(c) Interest revenue is calculated by using the effective interest method. This is calculated by applying the effective interest rate to the gross carrying amount of a financial asset except for:
(i)Purchased or originated credit-impaired financial assets. For those financial assets, the Group applies the credit-adjusted effective interest rate to the amortized cost of the financial asset from initial recognition.
(ii)Financial assets that are not purchased or originated creditimpaired financial assets but subsequently have become creditimpaired financial assets. For those financial assets, the Group applies the effective interest rate to the amortized cost of the financial asset in subsequent reporting periods.

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

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

Such financial assets are measured at fair value, the gains or loss resulting from remeasurement is recognized in profit or loss which includes any dividend or interest received on such financial assets.

B. Impairment of financial assets

The Group recognizes a loss allowance for expected credit loss on debt instrument investments measured at fair value through other comprehensive income and financial asset measured at amortized cost. The loss allowance on debt instrument investments measured at fair value through other comprehensive income is recognized in other comprehensive income and not reduce the carrying amount in the balance sheet.

The Group measures expected credit loss of a financial instrument in a way that reflects:

(a)an unbiased and probability-weighted amount that is determined by evaluating a range of possible outcomes
(b)the time value of money
(c)reasonable and supportable information that is available without undue cost or effort at the reporting date about past events, current conditions and forecasts of future economic conditions

The loss allowance is measured as follows:

(a)At an amount equal to 12-month expected credit loss: the credit risk on a financial asset has not increased significantly since initial recognition or the financial asset is determined to have low credit risk at the reporting date. In addition, the Group measures the loss allowance at an amount equal to lifetime expected credit loss in the previous reporting period, but determines at the current reporting date that the credit risk on a financial asset has increased significantly since initial recognition is no longer met.
(b)At an amount equal to the lifetime expected credit loss: the credit risk on a financial asset has increased significantly since initial recognition or financial asset that is purchased or originated credit-impaired financial

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asset.

(c)For trade receivables or contract assets arising from transactions within the scope of IFRS 15, the Group measures the loss allowance at an amount equal to lifetime expected credit loss.
(d)For lease receivables arising from transactions within the scope of IFRS 16, the Group measures the loss allowance at an amount equal to lifetime expected credit loss.

At each reporting date, the Group needs to assess whether the credit risk on a financial asset has increased significantly since initial recognition by comparing the risk of a default occurring at the reporting date and the risk of default occurring at initial recognition. Please refer to Note 12(4) for further details on credit risk.

C. Derecognition of financial assets

A financial asset is derecognized when:

(a) The rights to receive cash flows from the asset have expired.
(b)The Group has transferred the asset and substantially all the risks and rewards of the asset have been transferred.
(c) The Group has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.

On derecognition of a financial asset in its entirety, the difference between the carrying amount and the consideration received or receivable including any cumulative gain or loss that had been recognized in other comprehensive income, is recognized in profit or loss.

D. Financial liabilities and equity

Classification between liabilities or equity

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

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Equity instruments

An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. The transaction costs of an equity transaction are accounted for as a deduction from equity (net of any related income tax benefit) to the extent they are incremental costs directly attributable to the equity transaction that otherwise would have been avoided.

Compound instruments

The Group evaluates the terms of the convertible bonds issued to determine whether it contains both a liability and an equity component. Furthermore, the Group assesses if the economic characteristics and risks of the put and call options contained in the convertible bonds are closely related to the economic characteristics and risk of the host contract before separating the equity element.

For the liability component excluding the derivatives, its fair value is determined based on the rate of interest applied at that time by the market to instruments of comparable credit status. The liability component is classified as a financial liability measured at amortized cost before the instrument is converted or settled.

For the embedded derivative that is not closely related to the host contract (for example, if the exercise price of the embedded call or put option is not approximately equal on each exercise date to the amortized cost of the host debt instrument), it is classified as a liability component and subsequently measured at fair value through profit or loss unless it qualifies for an equity component. The equity component is assigned the residual amount after deducting from the fair value of the instrument as a whole the amount separately determined for the liability component. Its carrying amount is not remeasured in the subsequent accounting periods. If the convertible bond issued does not have an equity component, it is accounted for as a hybrid instrument in accordance with the requirements under IFRS 9 Financial Instruments.

Transaction costs are apportioned between the liability and equity components of the convertible bond based on the allocation of proceeds to the liability and equity components when the instruments are initially recognized.

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On conversion of a convertible bond before maturity, the carrying amount of the liability component being the amortized cost at the date of conversion is transferred to equity.

Financial liabilities

Financial liabilities within the scope of IFRS 9 Financial Instruments are classified as financial liabilities at fair value through profit or loss or financial liabilities measured at amortized cost upon initial recognition.

Financial liabilities at fair value through profit or loss

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

A financial liability is classified as held for trading if:

(a) it is acquired or incurred principally for the purpose of selling or repurchasing it in the near term;
(b) on initial recognition it is part of a portfolio of identified financial instruments that are managed together and for which there is evidence of a recent actual pattern of short-term profit-taking;
(c) it is a derivative (except for a derivative that is a financial guarantee contract or a designated and effective hedging instrument).

If a contract contains one or more embedded derivatives, the entire hybrid (combined) contract may be designated as a financial liability at fair value through profit or loss; or a financial liability may be designated as at fair value through profit or loss when doing so results in more relevant information, because either:

(a) it eliminates or significantly reduces a measurement or recognition inconsistency; or
(b) a group of financial liabilities or financial assets and financial liabilities is managed and its performance is evaluated on a fair value basis, in accordance with a documented risk management or investment strategy, and information about the group is provided internally on that basis to the key management personnel.

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Gains or loss on the subsequent measurement of liabilities at fair value through profit or loss including interest paid are recognized in profit or loss.

Financial liabilities at amortized cost

Financial liabilities measured at amortized cost include interest bearing loans and borrowings that are subsequently measured using the effective interest rate method after initial recognition. Gains and loss are recognized in profit or loss when the liabilities are derecognized as well as through the effective interest rate method amortization process.

Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or transaction costs.

Derecognition of financial liabilities

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

When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified (whether or not attributable to the financial difficulty of the debtor), such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognized in profit or loss.

E. Offsetting of financial instruments

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

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(9) Derivative instruments

The Group uses derivative instruments to hedge its foreign currency risks and interest rate risks. A derivative is classified in the balance sheet as assets or liabilities at fair value through profit or loss except for derivatives that are designated effective hedging instruments which are classified as derivative financial assets or liabilities for hedging.

Derivative instruments are initially recognized at fair value on the date on which a derivative contract is entered into and are subsequently remeasured at fair value. Derivatives are carried as financial assets when the fair value is positive and as financial liabilities when the fair value is negative. The changes in fair value of derivatives are taken directly to profit or loss, except for the effective portion of hedges, which is recognized in either profit or loss or equity according to types of hedges used.

When the host contracts are either non-financial assets or liabilities, derivatives embedded in host contracts are accounted for as separate derivatives and recorded at fair value if their economic characteristics and risks are not closely related to those of the host contracts and the host contracts are not designated at fair value though profit or loss.

(10) Fair value measurement

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

A. In the principal market for the asset or liability, or
B. In the absence of a principal market, in the most advantageous market for the asset or liability

The principal or the most advantageous market must be accessible to by the Group.

The fair value of an asset or a liability is measured using the assumptions that

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market participants would use when pricing the asset or liability, assuming that market participants in their economic best interest.

A fair value measurement of a non-financial asset takes into account a market participant’s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.

The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs.

(11) Inventories

Inventories are valued at lower of cost and net realizable value item by item.

Costs incurred in bringing each inventory to its present location and condition are accounted for as follows:

Raw materials – Purchase cost under weighted average cost method. Finished goods and work in progress – Cost of direct materials and labor and a proportion of manufacturing overheads based on normal operating capacity but excluding borrowing costs.

Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale.

Rendering of services is accounted in accordance with IFRS 15 and not within the scope of inventories.

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(12) Investments accounted for under the equity method

The Group’s investment in its associate is accounted for using the equity method other than those that meet the criteria to be classified as held for sale. An associate is an entity over which the Group has significant influence.

Under the equity method, the investment in the associate is carried in the balance sheet at cost and adjusted thereafter for the post-acquisition change in the Group’s share of net assets of the associate. After the interest in the associate is reduced to zero, additional loss are provided for, and a liability is recognized, only to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of the associate. Unrealized gains and loss resulting from transactions between the Group and the associate are eliminated to the extent of the Group’s related interest in the associate.

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

When the associate issues new stock, and the Group’s interest in an associate is reduced or increased as the Group fails to acquire shares newly issued in the associate proportionately to its original ownership interest, the increase or decrease in the interest in the associate is recognized in additional paid-in capital and investment accounted for using the equity method. When the interest in the associate is reduced, the cumulative amounts previously recognized in other comprehensive income are reclassified to profit or loss or other appropriate items. The aforementioned capital surplus recognized is reclassified to profit or loss on a pro rata basis when the Group disposes the associate.

The financial statements of the associate are prepared for the same reporting period as the Group. Where necessary, adjustments are made to bring the accounting policies in line with those of the Group.

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The Group determines at each reporting date whether there is any objective evidence that the investment in the associate is impaired in accordance with IAS 28 Investments in Associates . If this is the case the Group calculates the amount of impairment as the difference between the recoverable amount of the associate and its carrying value and recognizes the amount in the ‘share of profit or loss of an associate’ in the statement of comprehensive income in accordance with IAS 36 Impairment of Assets . In determining the value in use of the investment, the Group estimates:

(a) Its share of the present value of the estimated future cash flows expected to be generated by the associate, including the cash flows from the operations of the associate and the proceeds on the ultimate disposal of the investment; or
(b) The present value of the estimated future cash flows expected to arise from dividends to be received from the investment and from its ultimate disposal.

Because goodwill that forms part of the carrying amount of an investment in an associate is not separately recognized, it is not tested for impairment separately by applying the requirements for impairment testing goodwill in IAS 36 Impairment of Assets .

Upon loss of significant influence over the associate, the Group measures and recognizes any retaining investment at its fair value. Any difference between the carrying amount of the associate upon loss of significant influence and the fair value of the retaining investment and proceeds from disposal is recognized in profit or loss.

(13) Property, plant and equipment

Property, plant and equipment is stated at cost, net of accumulated depreciation and accumulated impairment loss, if any. Such cost includes the cost of dismantling and removing the item and restoring the site on which it is located and borrowing costs for construction in progress if the recognition criteria are met. Each part of an item of property, plant and equipment with a cost that is significant in relation to the total cost of the item is depreciated separately. When significant parts of property, plant and equipment are required to be replaced in intervals, the Group recognized such parts as individual assets with specific useful lives and depreciation, respectively. The carrying amount of those parts that are replaced is derecognized in accordance with the derecognition provisions of IAS 16 “Property, plant and equipment”. When a major inspection is performed, its cost is recognized in the carrying amount of the plant and equipment as a replacement if the recognition criteria are satisfied. All other repair and maintenance costs are recognized in profit or loss as incurred.

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Depreciation is calculated on a straight-line basis over the estimated economic lives of the following assets:

Items Land improvements Buildings Machinery and equipment Transportation equipment Other equipment	Estimated economic lives
	7～20 years 2～60 years 2～25 years 5～8 years 2～20 years

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

The assets’ residual values, useful lives and methods of depreciation are reviewed at each financial year end and adjusted prospectively, if appropriate, and are treated as changes in accounting estimates.

(14) Leases

The Group assesses whether the 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. To assess whether a contract conveys the right to control the use of an identified asset for a period of time, the Group assesses whether, throughout the period of use, has both of the following:

(a) the right to obtain substantially all of the economic benefits from use of the identified asset; and
(b) the right to direct the use of the identified asset.

For a contract that is, or contains, a lease, the Group accounts for each lease component within the contract as a lease separately from non-lease components of the contract. For a contract that contains a lease component and one or more additional lease or non-lease components, the Group allocates the consideration in the contract to each lease component on the basis of the relative stand-alone price of the lease component and the aggregate stand-alone price of the nonlease components. The relative stand-alone price of lease and non-lease components shall be determined on the basis of the price the lessor, or a similar supplier, would charge the Group for that component, or a similar component, separately. If an observable stand-alone price is not readily available, the Group estimates the stand-alone price, maximising the use of observable information.

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Group as a lessee

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

At the commencement date, the Group measures the lease liability at the present value of the lease payments that are not paid at that date. The lease payments are discounted using the interest rate implicit in the lease, if that rate can be readily determined. If that rate cannot be readily determined, the Group uses its incremental borrowing rate. At the commencement date, the lease payments included in the measurement of the lease liability comprise the following payments for the right to use the underlying asset during the lease term that are not paid at the commencement date:

(a) fixed payments (including in-substance fixed payments), less any lease incentives receivable;
(b) variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the commencement date;
(c) amounts expected to be payable by the lessee under residual value guarantees;
(d) the exercise price of a purchase option if the Group is reasonably certain to exercise that option; and
(e) payments of penalties for terminating the lease, if the lease term reflects the lessee exercising an option to terminate the lease.

After the commencement date, the Group measures the lease liability on an amortised cost basis, which increases the carrying amount to reflect interest on the lease liability by using an effective interest method; and reduces the carrying amount to reflect the lease payments made.

At the commencement date, the Group measures the right-of-use asset at cost. The cost of the right-of-use asset comprises:

(a)the amount of the initial measurement of the lease liability;
(b)any lease payments made at or before the commencement date, less any lease incentives received;
(c)any initial direct costs incurred by the lessee; and
(d)an estimate of costs to be incurred by the lessee in dismantling and removing the underlying asset, restoring the site on which it is located or restoring the underlying asset to the condition required by the terms and conditions of the lease.

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For subsequent measurement of the right-of-use asset, the Group measures the right-of-use asset at cost less any accumulated depreciation and any accumulated impairment loss. That is, the Group measures the right-of-use applying a cost model.

If the lease transfers ownership of the underlying asset to the Group by the end of the lease term or if the cost of the right-of-use asset reflects that the Group will exercise a purchase option, the Group depreciates the right-of-use asset from the commencement date to the end of the useful life of the underlying asset. Otherwise, the Group depreciates the right-of-use asset from the commencement date to the earlier of the end of the useful life of the right-ofuse asset or the end of the lease term.

The Group applies IAS 36 “Impairment of Assets” to determine whether the right-of-use asset is impaired and to account for any impairment loss identified.

Except for those leases that the Group accounted for as short-term leases or leases of low-value assets, the Group presents right-of-use assets and lease liabilities in the balance sheet and separately presents lease-related interest expense and depreciation charge in the statements comprehensive income.

For short-term leases or leases of low-value assets, the Group elects to recognize the lease payments associated with those leases as an expense on either a straight-line basis over the lease term or another systematic basis.

For the related rental concessions that occurred as a direct result of the COVID19 pandemic, the Group chose not to assess whether it was a lease modification, but instead treated the rental concessions as changes in lease payments, and applied this practical expedient on all eligible rental concessions.

Group as a lessor

At inception of a contract, the Group classifies each of its leases as either an operating lease or a finance lease. A lease is classified as a finance lease if it transfers substantially all the risks and rewards incidental to ownership of an underlying asset. A lease is classified as an operating lease if it does not transfer substantially all the risks and rewards incidental to ownership of an underlying asset. At the commencement date, the Group recognizes assets held under a finance lease in its balance sheet and present them as a receivable at an amount equal to the net investment in the lease.

For a contract that contains lease components and non-lease components, the

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Group allocates the consideration in the contract applying IFRS 15.

The Group recognizes lease payments from operating leases as rental income on either a straight-line basis or another systematic basis. Variable lease payments for operating leases that do not depend on an index or a rate are recognized as rental income when incurred.

(15) Intangible assets

Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets acquired in a business combination is its fair value as at the date of acquisition. Following initial recognition, intangible assets are carried at cost less any accumulated amortization and accumulated impairment loss, if any. Internally generated intangible assets which fail to meet the recognition criteria are not capitalized and the expenditures are reflected in profit or loss in the period incurred.

The useful lives of intangible assets are assessed as either finite or indefinite.

Intangible assets with finite lives are amortized over the useful economic life and assessed for impairment whenever there is an indication that the intangible assets may be impaired. The amortization period and the amortization method for an intangible asset with a finite useful life are reviewed at least at the end of each fiscal year. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset is accounted for by changing the amortization period or method, as appropriate, and is treated as changes in accounting estimates.

Intangible assets with indefinite useful lives are not amortized, but are tested for impairment annually, either individually or at the cash-generating unit level. The assessment of indefinite life is reviewed annually to determine whether the indefinite life continues to be supportable. If not, the change in useful life from indefinite to finite is made on a prospective basis.

Gains or loss arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in profit or loss when the asset is derecognized.

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(16) Impairment of non-financial assets

The Group assesses at the end of each reporting period whether there is any indication that an asset in the scope of IAS 36 Impairment of Assets may be impaired. If any such indication exists, or when annual impairment testing for an asset is required, the Group estimates the asset’s recoverable amount. An asset’s recoverable amount is the higher of an asset’s or cash-generating unit’s (“CGU”) fair value less costs to sell and its value in use and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. Where the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount.

For assets excluding goodwill, an assessment is made at each reporting date as to whether there is any indication that previously recognized impairment loss may no longer exist or may have decreased. If such indication exists, the Group estimates the asset’s or cash-generating unit’s recoverable amount. A previously recognized impairment loss is reversed only if there has been an increase in the estimated service potential of an asset which in turn increases the recoverable amount. However, the reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognized for the asset in prior years.

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

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

(17) Post-employment benefits

All regular employees of the Company and its domestic subsidiaries are entitled to a pension plan that is managed by an independently administered pension fund committee. Fund assets are deposited under the committee’s name in the specific bank account and hence, not associated with the Company and its domestic subsidiaries. Therefore, fund assets are not included in the Group’s consolidated financial statements. Pension benefits for employees of the overseas subsidiaries and the branches are provided in accordance with the respective local regulations.

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For the defined contribution plan, the Company and its domestic subsidiaries will make a monthly contribution of no less than 6% of the monthly wages of the employees subject to the plan. The Company recognizes expenses for the defined contribution plan in the period in which the contribution becomes due. Overseas subsidiaries and branches make contribution to the plan based on the requirements of local regulations.

Post-employment benefit plan that is classified as a defined benefit plan uses the Projected Unit Credit Method to measure its obligations and costs based on actuarial assumptions. Re-measurements, comprising of the effect of the actuarial gains and loss, the effect of the asset ceiling (excluding net interest) and the return on plan assets, excluding net interest, are recognized as other comprehensive income with a corresponding debit or credit to retained earnings in the period in which they occur. Past service costs are recognized in profit or loss on the earlier of:

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

(b) the date that the Group recognizes restructuring-related costs

Net interest is calculated by applying the discount rate to the net defined benefit liability or asset, both as determined at the start of the annual reporting period, taking account of any changes in the net defined benefit liability (asset) during the period as a result of contribution and benefit payment.

(18) Share-based payment transactions

The cost of equity-settled transactions between the Group and its subsidiaries is recognized based on the fair value of the equity instruments granted. The fair value of the equity instruments is determined by using an appropriate pricing model.

The cost of equity-settled transactions is recognized, together with a corresponding increase in other capital reserves in equity, over the period in which the performance and/or service conditions are fulfilled. The cumulative expense recognized for equity-settled transactions at each reporting date until the vesting date reflects the extent to which the vesting period has expired and the Group’s best estimate of the number of equity instruments that will ultimately vest. The income statement expense or credit for a period represents the movement in cumulative expense recognized as at the beginning and end of that period.

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No expense is recognized for awards that do not ultimately vest, except for equity-settled transactions where vesting is conditional upon a market or nonvesting condition, which are treated as vesting irrespective of whether or not the market or non-vesting condition is satisfied, provided that all other performance and/or service conditions are satisfied.

Where the terms of an equity-settled transaction award are modified, the minimum expense recognized is the expense as if the terms had not been modified, if the original terms of the award are met. An additional expense is recognized for any modification that increases the total fair value of the sharebased payment transaction, or is otherwise beneficial to the employee as measured at the date of modification.

Where an equity-settled award is cancelled, it is treated as if it vested on the date of cancellation, and any expense not yet recognized for the award is recognized immediately. This includes any award where non-vesting conditions within the control of either the entity or the employee are not met. However, if a new award is substituted for the cancelled award, and designated as a replacement award on the date that it is granted, the cancelled and new awards are treated as if they were a modification of the original award, as described in the previous paragraph.

The dilutive effect of outstanding options is reflected as additional share dilution in the computation of diluted earnings per share.

The cost of restricted stocks issued is recognized as salary expense based on the fair value of the equity instruments on the grant date, together with a corresponding increase in other capital reserves in equity, over the vesting period. The Group recognized unearned employee salary which is a transitional contra equity account; the balance in the account will be recognized as salary expense over the passage of vesting period.

(19) Provisions

Provisions are recognized when the Group has a present obligation (legal or constructive) as a result of a past event, it is probably that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Where the Group expects some or all of a provision to be reimbursed, the reimbursement is recognized as a separate asset but only when the reimbursement is virtually certain. If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects the risks specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is recognized as a finance cost.

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(20) Treasury shares

The Group buys back its parent company’s equity instruments (treasury shares) that are recognized at cost as a deduction item under equity. The valuation difference resulted from transactions of treasury shares is reported under equity.

(21) Revenue recognition

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

Sale of goods

The Group manufactures and sells fitness equipment. Sales are recognized when control of the goods is transferred to the customer and the goods are delivered to the customers (the customer obtains the right and carrying value of the goods). The sales of goods transactions of the revenue is recognized based on the consideration stated in the contract. For certain sales of goods transactions, they are usually accompanied by volume discounts (based on the accumulated total sales amount for a specified period). Therefore, revenue from these sales is recognized based on the price specified in the contract, net of the estimated volume discounts.

The credit period of the Group’s sale of goods is from 30 to 150 days. For most of the contracts, when the Group transfers the goods to customers and has a right to an amount of consideration that is unconditional, these contracts are recognized as trade receivables. The Group usually collects the payments shortly after transfer of goods to customers; therefore, there is no significant financing component to the contract. For some of the contracts, the Group collects the payments when contracts signed-off and has the obligations to transfer the goods or provide the services, these contracts should be presented as contract liabilities.

The period between the transfers of contract liabilities to revenue is usually within one year, thus, no significant financing component has arisen.

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(22) Borrowing cost

Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalized as part of the cost of the respective assets. All other borrowing costs are expensed in the period they occur. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds.

(23) Income Tax

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

Current income tax

Current income tax assets and liabilities for the current period and prior periods are measured using the tax rates and tax laws that have been enacted or substantively enacted by the end of the reporting period. Current income tax relating to items recognized directly in other comprehensive income or equity is recognized in other comprehensive income or equity and not in profit or loss.

The income tax for undistributed earnings is recognized as income tax expense in the subsequent year when the distribution proposal is approved by the Shareholders’ meeting.

Deferred income tax

Deferred income tax is a temporary difference between the tax bases of assets and liabilities and their carrying amounts in financial statement at the reporting date.

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

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A. where the deferred tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss.
B. in respect of taxable temporary differences associated with investments in subsidiaries, associates and interests in joint arrangements, where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.

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

A. where the deferred tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss;
B. in respect of deductible temporary differences associated with investments in subsidiaries, associates and joint ventures, deferred tax assets are recognized only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilized.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realized or the liability is settled, based on tax rates and tax laws that have been enacted or substantively enacted at the reporting date. The measurement of deferred tax assets and deferred tax liabilities reflects the tax consequences that would follow from the manner in which the Group expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.

Deferred tax relating to items recognized outside profit or loss is recognized outside profit or loss. Deferred tax items are recognized in correlation to the underlying transaction either in other comprehensive income or directly in equity. Deferred tax assets are reassessed at each reporting date and are recognized accordingly.

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Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current income tax assets against current income tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.

(24) Business combinations and goodwill

Business combinations are accounted for using the acquisition method. The consideration transferred, the identifiable assets acquired and liabilities assumed are measured at acquisition date fair value. For each business combination, the acquirer measures any non-controlling interest in the acquiree either at fair value or at the non-controlling interest’s proportionate share of the acquiree’s identifiable net assets. Acquisition-related costs are accounted for as expenses in the periods in which the costs are incurred and are classified under administrative expenses.

When the Group acquires a business, it assesses the assets and liabilities assumed for appropriate classification and designation in accordance with the contractual terms, economic circumstances and pertinent conditions as at the acquisition date. The acquiree’s embedded derivatives in host contracts is separately assessed and valued.

If the business combination is achieved in stages, on final acquisition date, acquiree’s equity interests that have been previously acquired by acquirer is required to be remeasured at fair value on the acquisition date, and respective remeasurement gain or loss shall be recorded as current periodical profit or loss.

Any contingent consideration to be transferred by the acquirer will be recognized at the acquisition-date fair value. Subsequent changes to the fair value of the contingent consideration, which is deemed to be an asset or liability, will be recognized in accordance with IFRS 9 Financial Instruments either in profit or loss or as a change to other comprehensive income. However, if the contingent consideration is classified as equity, it should not be remeasured until it is finally settled within equity.

Goodwill is initially measured as the amount of the excess of the aggregate of the consideration transferred and the non-controlling interest over the net fair value of the identifiable assets acquired and the liabilities assumed. If this aggregate is lower than the fair value of the net assets acquired, the difference is recognized in profit or loss.

After initial recognition, goodwill is measured at cost less any accumulated

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impairment loss. Goodwill acquired in a business combination is, from the acquisition date, allocated to each of the Group’s cash-generating units that are expected to benefit from the combination, irrespective of whether other assets or liabilities of the acquiree are assigned to those units. Each unit or group of units to which the goodwill is so allocated represents the lowest level within the Group at which the goodwill is monitored for internal management purpose and is not larger than an operating segment before aggregation.

Where goodwill forms part of a cash-generating unit and part of the operation within that unit is disposed of, the goodwill associated with the operation disposed of is included in the carrying amount of the operation. Goodwill disposed of in this circumstance is measured based on the relative recoverable amounts of the operation disposed of and the portion of the cash-generating unit retained.

5. Significant accounting judgements, estimates and assumptions

In preparation of the Group’s consolidated financial statements, the Group’s management is required to make judgments, estimates and assumptions at the end of the reporting period that affect the reported amounts of revenues, expenses, assets and liabilities, and the disclosure of contingent liabilities. Uncertainties from these assumption and estimate may result in a material adjustment to the carrying amount of relevant assets or liabilities in future periods.

Major resources or factors that are the bases of estimates or assumptions are with uncertainties. Significant risks may exist that may result in material adjustments on the carrying amounts of assets or liabilities in future reporting periods. Major estimate factors are listed as follows:

A. Accounts receivables–estimate of impairment loss

The Group estimates the impairment loss of accounts receivables at an amount equal to lifetime expected credit loss. The credit loss is the present value of the difference between the contractual cash flows that are due under the contract (carrying amount) and the cash flows that are expected to receive (by evaluating forward looking information). However, as the impact from the discounting of short-term receivables is not material, the credit loss is measured by the undiscounted cash flows. Where the actual future cash flows are lower than expected, a material impairment loss may arise. Please refer to Note 6(3) and Note 14 for more details.

B. Inventories

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Estimates of net realizable value of inventories take into consideration that inventories may be damaged, wholly or partially obsolete, or with downward selling prices. The estimates are based on the most reliable evidence available at the time the estimates are made. Refer to Note 6(4) for details.

C. The Fair Value of Financial Instruments

Where the fair value of financial assets and financial liabilities recorded in the balance sheet cannot be derived from active markets, they are determined using valuation Techniques including the income approach (for example the discounted cash flows model) or market approach. Changes in assumptions about these factors could affect the reported fair value of the financial instruments. Please refer to Note 12 for more details.

D. Pension Benefits

The cost of post-employment benefit and the present value of the pension obligation under defined benefit pension plans are determined using actuarial valuations. An actuarial valuation involves making various assumptions, including the discount rate and expected salary raise/cut or changes. Please refer to Note 6(10) for more details.

E. Income Tax

Uncertainties exist with respect to the interpretation of complex tax regulations and the amount and timing of future taxable income. Given the wide range of international business relationships and the long-term nature and complexity of existing contractual agreements, differences arising between the actual results and the assumptions made, or future changes to such assumptions, could necessitate future adjustments to tax income and expense already recorded. The Company make provisions, based on reasonable estimates, for possible consequences of audits by the tax authorities of the respective counties in which it operates. The amount of such provisions is based on various factors, such as experience of previous tax audits and differing interpretations of tax regulations by different jurisdictional tax authorities. Such differences of interpretation may arise on a wide variety of issues depending on the conditions prevailing in the respective Group entities’ domicile.

Deferred tax assets are recognized to the extent where tax loss carryforward, tax credits and deductible temporary differences that are probable with foreseeable taxable profit being available, can be utilized. The amount of deferred tax assets is estimated based upon the likely timing of utilizing taxable temporary differences and forecasted taxable profits as well as future tax planning strategies.

6. Contents of significant accounts

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(1) Cash and cash equivalents

Cash and cash equivalents
Cash on hand Petty cash Demand deposits Total	As of 31 December
	2022 $100 250 453,628 $453,978	2021
		$94 245 382,958
		$383,297

(2) Financial assets measured at amortized cost

inancial assets measured at amortized cost
Time deposits with maturity over three months Pledged time deposits Subtotal Less: loss allowance Total Current Non-current Total	As of 31 December
	2022 $100,000 2,800 102,800 - $102,800 $100,000 2,800 $102,800	2021
		$ - 2,800
		2,800 -
		$2,800
		$ - 2,800
		$2,800

For further information on financial assets measured at amortized cost pledged as collateral and on credit risk, please refer to Note 8 and Note 12 (4), respectively.

(3) Trade receivable, net

Trade receivable, net
Accounts receivable Less: loss allowance Total	As of 31 December
	2022 $551,217 (353) $550,864	2021
		$756,031 (17,885)
		$738,146

Accounts receivable were not pledged.

The collection period is generally net 30~150 days. The carrying amount of accounts receivable of 31 December in both 2022 and 2021 has been assessed with a high likelihood of collection. Please refer to Note 6 (14) for more details regarding loss allowance of accounts receivables for the year periods ended December 2022 and 2021. Please refer to Note 12 (4) for more details on credit risk management.

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100% credit loss provision is reserved for account receivables which are deemed with least possibility to be collected. As of 31 December 2022, and 2021, the respective accounts are $28,163 thousand and $13,679 thousand respectively.

(4) Inventories, net

nventories, net
Raw materials Work in progress Finished goods Merchandise Total	As of 31 December
	2022 $411,426 20,761 626,649 3,331 $1,062,167	2021
		$353,103 42,072 413,672 4,494
		$813,341

The cost of inventories recognized as cost of sales for the years ended 31 December 2022 and 2021 amounted to $2,752,806 and $2,722,534, respectively. The expenses resulted from inventory write-downs were recorded as $37,003 and $23,747 for the years ended 31 December 2022, and 2021 respectively.

No inventories were pledged.

(5) Investments accounted for under the equity method

Details of investments accounted for under the equity method are as follows:

As of 31 December	As of 31 December	As of 31 December
2022 Carrying amount Percentage of ownership (%) $3,411 30.00% 3,044 49.00% - 22.32% - 41.00% $6,455	2021
Carrying amount $3,411 3,044 - - $6,455	Carrying amount $10,460 1,507 - - $11,967	Percentage of ownership (%)
		30.00% 49.00% 22.32% 41.00%

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The Group's share of loss of Sunko Biotech Co. and Chen Chi Technology Co. equaled its interest in Sunko Biotech Co. and Chen Chi Technology Co. Therefore, the Group is not obliged to recognize its share of further loss.

(1) The details of investments recognized as profit and loss in 2022 and 2021 are as follows:

as follows:
Power Rich Bnkc Biochemical Technology Co. Total	For theyears ended 31 December
	2022 $(7,964) 2,201 $(5,763)	2021
		$(3,075) 737
		$(2,338)

(2) The details of the exchange differences on translation of foreign financial statements in 2022 and 2021 are as follows:

Power Rich	For theyears ended 31 December	For theyears ended 31 December
	2022 $915	2021
		$(355)

(3) Investments in associates

The Group’s investments in Bnkc Biochemical Technology Co. and Power Rich are not significant. The investments are valued based on the investee’s financial statements within the same fiscal accounting period. The investments in associates had no contingent liabilities or capital commitments as of 31 December 2022 and 2021. The investments have not been pledged as collaterals.

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100% credit loss provision is reserved for account receivables which are deemed with least possibility to be collected. As of 31 December 2021, and 2020, the receivables with 100% loss allowances being reserved amounted to $13,679 without differences.

(5) Inventories, net

nventories, net
Raw materials Work in progress Finished goods Merchandise Total	As of 31 December
	2021 $353,103 42,072 413,672 4,494 $813,341	2020
		$262,987 20,512 398,212 26,672
		$708,383

The cost of inventories recognized as cost of sales for the years ended 31 December 2021 and 2020 amounted to $2,722,534 and $2,613,246, respectively. The expenses resulted from inventory write-downs were recorded as $23,747 and $2,815 for the years ended 31 December 2021, and 2020 respectively.

No inventories were pledged.

(6) Investments accounted for under the equity method

Details of investments accounted for under the equity method are as follows:

Investees Power Rich International Limited (Power Rich) Bnkc Biochemical Technology Company, Limited (Bnkc Biochemical Technology Co.) Sunko Biotech Company, Limited (Sunko Biotech Co.) Chen Chi Technology Company, Limited (Chen Chi Technology Co.) Total	As of 31 December	As of 31 December
	2021 Carrying amount Percentage of ownership (%) $10,460 30.00% 1,507 49.00% - 22.32% - 41.00% $11,967	2020
	Carrying amount $10,460 1,507 - - $11,967	Carrying amount Percentage of ownership (%) $13,890 30.00% 1,301 49.00% - 22.32% - 41.00% $15,191

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(1) The details of investments recognized as profit and loss in 2021 and 2020 are as follows:

as follows:
Power Rich Bnkc Biochemical Technology Co. Total	For theyears ended 31 December
	2021 $(3,075) 737 $(2,338)	2020
		$(4,578) 590
		$(3,988)

(2) The details of the exchange differences on translation of foreign financial statements in 2021 and 2020 are as follows:

Power Rich Power Hero Total	For theyears ended 31 December 2021 2020 $(355) $(801) - (182) $(355) $(983)
	2021 $(355) - $(355)

(3) Investments in associates

The Group’s investments in Bnkc Biochemical Technology Co. and Power Rich are not significant. The investments are valued based on the investee’s financial statements within the same fiscal accounting period. The investments in associates had no contingent liabilities or capital commitments as of 31 December 2021 and 2020. The investments have not been pledged as collaterals.

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(6) Property, plant and equipment

Land	Land improvements	Buildings	Transportation equipment	Total
$465,109 - - - $465,109 $ - - - - $ - $465,109 - - - $465,109 $ - - - $ - $465,109 $465,109	$3,083 - - - $3,083 $2,047 132 - - $2,179 $3,083 - - - $3,083 $1,915 132 - $2,047 $904 $1,036	$967,406 12,669 (5,695) 22,390 $996,770 $501,714 49,095 (5,472) - $545,337 $950,912 12,788 (6,396) 10,102 $967,406 $458,713 49,248 (6,247) $501,714 $451,433 $465,692	$16,485 301 (675) 129 $16,240 $11,424 841 (675) - $11,590 $15,783 539 (68) 231 $16,485 $10,644 848 (68) $11,424 $4,650 $5,061	$4,232,849 72,533 (46,073) 49,510
				$4,308,819
				$2,568,491 225,624 (41,837) -
				$2,752,278
				$4,202,537 82795 (167,122) 114,639
				$4,232,849
				$2,499,652 231,724 (162,885)
				$2,548,491
				$1,556,541
				$1,664,358

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(a) There is no capitalization of interest due to purchase of property, plant and equipment for the years ended 31 December 2022 and 2021.
(b) Components of buildings that have different useful lives are the main building structure and air condition equipment and elevators, which are depreciated over 60 years and 5 years and 15 years, respectively. Machinery and equipment that have different useful lives are new reaction equipment, piping equipment, and production equipment for expansion, etc., which are depreciated over 10 years and 5 years and 7 years, respectively.
(c) As of 31 December 2022 and 2021, due to legal restrictions, part of the lands belonging to agricultural lands were recorded in the Group's accounts and the amount temporarily registered in the name of another person amounted to $7,011 without differences. The Group obtained the certificates of other rights for each of the lands.
(d) On 26 February 2020, the Group’s board members passed the resolution to dispose of the land, plant and equipment of Dajia Factory. A transfer agreement was signed on 28 May 2020 for this project. However, the transaction was terminated in June 2021 because both parties could not reach a consensus on some of the transaction conditions, and the contract was terminated when mutually agreed and a termination agreement was signed on 17 June 2021. Pursuant to the terms of the termination agreement, the buyer agreed to pay the Group's due commercial interests in the amount of $55,000. At the same time, the Group also returned the transaction price of $186,000 paid by the buyer before the termination of the agreement.
(e) Please refer to Note 8 for property, plant and equipment pledged as collateral .

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(7) Short-term loans

Short-term loans
Unsecured bank loans Interest rates applied for unsecured bank loans	As of 31 December
	2022 2021 $298,991 $295,721 As of 31 December	2021
		$295,721
	2022 1.34%~6.18%	2021
		0.65%~0.95%

The Group’s open short-term lines of credit facilities were $704,791 and $701,758, as of 31 December 2022 and 2021, respectively.

(8) Other payables

her payables
Accrued payroll Accrued expense of pollution remediation Accrued employee compensation Payables on equipment Accrued directors and supervisor’s compensation expense Other expense Total	As of 31 December
	2022 $74,986 32,989 2,104 3,031 701 62,416 $176,227	2021
		$67,072 73,652 - 6,219 - 72,243
		$219,186

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(9) Long-term loans

(1) Details of long-term loans as at 31 December 2022 and 2021 are as follows:

Lenders Mega International Commercial Bank secured bank loans First Commercial Bank secured bank loans First Commercial Bank secured bank loans First Commercial Bank secured bank loans Chang Hwa Commercial Bank unsecured Revolving Loan Hua Nan Ban unsecured Revolving Loan Mega International Commercial Bank unsecured Revolving Loan	As of 31 December 2022 $92,650 66,640 83,320 100,000 50,625 - 70,850	As of 31 December 2021 $106,250 100,000 100,000 - 73,125 12,500 81,250	Redemption Repayable quarterly from 26 December 2016 to 26 December 2024. Principle is repaid in 33 quarterly installments. Repayable quarterly from 24 March 2022 to 24 December 2024. Principle is repaid in 12 quarterly installments. Repayable quarterly from 5 August 2022 to 5 May 2025. Principle is repaid in 12 quarterly installments. Repayable quarterly from 7 January 2025 to 7 October 2027 Principle is repaid in 12 quarterly installments. Repayable quarterly from 24 June 2022 to 24 March 2025. Principle is repaid in 16 quarterly installments. Repayable quarterly from 11 August 2018 to 11 May 2022. Principle is repaid in 16 quarterly installments. Repayable quarterly from 26 December 2016 to 26 December 2024. Principle is repaid in 33 quarterly installments.

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Lenders Taipei Fubon Bank unsecured Revolving Loan O-Bank unsecured Revolving Loan O-Bank unsecured Revolving Loan Taiwan Cooperative Bank unsecured Revolving Loan Taiwan Cooperative Bank unsecured Revolving Loan Subtotal Less: current portion Total Interest rates applied	As of 31 December 2022 As of 31 December 2021 Redemption 27,500 37,500 Repayable quarterly from 1 December 2021 to 1 September 2025. Principle is repaid in 20 quarterly installments. 31,000 31,000 Repayable quarterly from 15 September 2019 to 15 September 2022. Principle is repaid in 9 quarterly installments. 89,000 89,000 Repayable quarterly from 15 July 2022 to 15 July 2025. Principle is repaid in 9 quarterly installments. 35,333 70,667 From 21 March 2021 to 21 December 2023, an advance repayment of the current period was $5,500, and remaining balance was divided into sixteen installments with three months being one installment. Principle is repaid in 16 quarterly installments. 100,000 - Repayable quarterly from 19 November 2023 to 19 August 2027. Principle is repaid in 16 quarterly installments. 746,918 701,292 (191,470) (172,835) $555,448 $528,457 As of 31 December 2022 2021 1.51%~1.83% 1.09%~1.20%	As of 31 December 2022 As of 31 December 2021 Redemption 27,500 37,500 Repayable quarterly from 1 December 2021 to 1 September 2025. Principle is repaid in 20 quarterly installments. 31,000 31,000 Repayable quarterly from 15 September 2019 to 15 September 2022. Principle is repaid in 9 quarterly installments. 89,000 89,000 Repayable quarterly from 15 July 2022 to 15 July 2025. Principle is repaid in 9 quarterly installments. 35,333 70,667 From 21 March 2021 to 21 December 2023, an advance repayment of the current period was $5,500, and remaining balance was divided into sixteen installments with three months being one installment. Principle is repaid in 16 quarterly installments. 100,000 - Repayable quarterly from 19 November 2023 to 19 August 2027. Principle is repaid in 16 quarterly installments. 746,918 701,292 (191,470) (172,835) $555,448 $528,457 As of 31 December 2022 2021 1.51%~1.83% 1.09%~1.20%	As of 31 December 2022 As of 31 December 2021 Redemption 27,500 37,500 Repayable quarterly from 1 December 2021 to 1 September 2025. Principle is repaid in 20 quarterly installments. 31,000 31,000 Repayable quarterly from 15 September 2019 to 15 September 2022. Principle is repaid in 9 quarterly installments. 89,000 89,000 Repayable quarterly from 15 July 2022 to 15 July 2025. Principle is repaid in 9 quarterly installments. 35,333 70,667 From 21 March 2021 to 21 December 2023, an advance repayment of the current period was $5,500, and remaining balance was divided into sixteen installments with three months being one installment. Principle is repaid in 16 quarterly installments. 100,000 - Repayable quarterly from 19 November 2023 to 19 August 2027. Principle is repaid in 16 quarterly installments. 746,918 701,292 (191,470) (172,835) $555,448 $528,457 As of 31 December 2022 2021 1.51%~1.83% 1.09%~1.20%	Redemption




		2022 1.51%~1.83%	2021

(2) Please refer to Note 8 for property, plant and equipment pledged as collateral for long-term loans.

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(10) Post-employment benefits

Defined contribution plan

The Group adopt a defined contribution plan in accordance with the Labor Pension Act of the R.O.C. Under the Labor Pension Act, the Group will make monthly contributions of no less than 6% of the employees’ monthly wages to the employees’ individual pension accounts. The Group has made monthly contributions of 6% of each individual employee’s salaries or wages to employees’ pension accounts.

Pension expenses under the defined contribution plan for the years ended 31 December 2022 and 2021 were $17,575 and $16,948 respectively.

Defined benefits plan

The Group adopt a defined benefit plan in accordance with the Labor Standards Act of the R.O.C. The pension benefits are disbursed based on the units of service years and the average salaries in the last month of the service year. Two units per year are awarded for the first 15 years of services while one unit per year is awarded after the completion of the 15th year. The total units shall not exceed 45 units. Under the Labor Standards Act, the Group contribute an amount equivalent to 6.6% of the employees’ total salaries and wages on a monthly basis to the pension fund deposited at the Bank of Taiwan in the name of the administered pension fund committee. Before the end of each year, the Group assess the balance in the designated labor pension fund. If the amount is inadequate to pay pensions on the assumption that workers meeting retirement terms will be retiring within the coming year, the Group shall make one-time contribution to the fund to eliminate the difference before the end of March in the following year.

The Ministry of Labor is in charge of establishing and implementing the fund utilization plan in accordance with the Regulations for Revenues, Expenditures, Safeguard and Utilization of the Labor Retirement Fund. The pension fund is invested in-house or under mandate, based on a passiveaggressive investment strategy for long-term profitability. The Ministry of Labor establishes checks and risk management mechanism based on the assessment of risk factors including market risk, credit risk and liquidity risk, in order to maintain adequate manager flexibility to achieve targeted return without over-exposure of risk. With regard to utilization of the pension fund, the minimum earnings in the annual distributions on the final financial statement shall not be less than the earnings attainable from the amounts accrued from two-year time deposits with the interest rates offered by local banks. Treasury Funds can be used to cover the deficits after the approval of the competent authority. As the Company does not participate in the operation and management of the pension fund, no disclosure on the fair value of the plan assets categorized in different classes could be made in accordance with paragraph 142 of IAS 19. The Group expects to contribute $3,533 to its defined benefit plan during the 12 months beginning after 31 December 2022.

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The average duration of the defined benefits plan obligation as of 31 December 2022, was 8 years.

Pension costs recognized in profit or loss are as follows:

Current service costs Interest expense	For the years ended 31 December	For the years ended 31 December
	2022	2021 $452 62 2,036 $2,550
	$356 103 -
Settlement loss
Total	$459

Reconciliations of liabilities (assets) of the defined benefit obligation and plan assets at fair value are as follows:

assets at fair value are as follows:
Defined benefit obligation Plan assets at fair value Other non-current liabilities - defined benefit obligation	As of 31 December
	2022	2021
	$67,533 (63,363)	$78,306 (61,898)
	$4,170	$16,408

Reconciliation of liability (assets) of the defined benefit plan are as follows:

As of 1 January 2021 Current period service costs Net interest expense (income) Service cost Liquidation of losses Subtotal Remeasurement of defined benefit liability (asset): Actuarial gains and loss arising from changes in demographic assumptions Actuarial gains and loss arising from changes in financial assumptions Experience adjustments Remeasurements of the defined benefit assets Subtotal	Defined benefit obligation $92,596 452 275 - 2,036 95,359 183 (3,071) (990) - (3,878)	Fair value of plan assets $(70,170) - (213) - - (70,383) - - - (1,006) (1,006)	Benefit liability (asset)
			$22,426 452 62 - 2,036
			24,976
			183 (3,071) (990) (1,006)
			(4,884)

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Benefits paid Contributions by employer As of 31 December 2021 Current period service costs Net interest expense (income) Service cost Liquidation of losses Subtotal Remeasurements of the defined benefit liability (asset): Actuarial gains and loss arising from changes in demographic assumptions Actuarial gains and loss arising from changes in financial assumptions Experience adjustments Remeasurements of the defined benefit assets Subtotal Benefits paid Contributions by employer As of 31 December 2022	Defined benefit obligation (13,175) - 78,306 356 542 - - 79,204 13 (3,147) (723) - (3,857) (7,814) - $67,533	Fair value of plan assets 13,175 (3,684) (61,898) - (439) - - (62,337) - - - (5,404) (5,404) 7,814 (3,436) $(63,363)	Benefit liability (asset)
			- (3,684)
			16,408 356 103 - -
			16,867
			13 (3,147) (723) (5,404)
			(9,261)
			- (3,436)
			$4,170

The following significant actuarial assumptions are used to determine the present value of the defined benefit obligation:

Discount rate Expected rate of salary increases	As of31 December	As of31 December
	2022	2021
	1.25% 2.00%	0.70% 2.00%

A sensitivity analysis for significant assumption as of 31 December 2021 and 2020 is as shown below:

Effect on the defined benefit obligation

Discount rate increase by 0.25% Discount rate increase by 0.10% Discount rate decrease by 0.10% Discount rate decrease by 0.25% Future salary increase by 0.25% Future salary decrease by 0.25%	2022	2022	2021	2021
	Increase defined benefit obligation	Decrease defined benefit obligation	Increase defined benefit obligation	Decrease defined benefit obligation
	$ - - 556 1,404 1,390 -	$1,360 549 - - - 1,354	$ - - 740 1,870 1,841 -	$1,808 730 - - - 1,789

147

The sensitivity analyses above are based on a change in a significant assumption (for example: change in discount rate or future salary), keeping all other assumptions constant. The sensitivity analyses may not be representative of an actual change in the defined benefit obligation as it is unlikely that changes in assumptions would occur in isolation of one another.

The methods and assumptions for preparing sensitivity analyses was consistent with those in the prior fiscal period.

(11) Share-based payment

Treasury stock to employee transactions:

The Company purchases the shares, and the shares are to be transferred to the employees all at once or in installments within three years from the date of the repurchase of the shares. According to board of directors have resolved to issue 410 thousand of treasury shares to employees on 16 December 2021.

As of 2021, the treasury shares issued to employees is based on the evaluation of the fair value on the date of grant in Black-Scholes model. The parameters and assumptions are set in consideration of the terms and conditions in the sharebased payment arrangement.

Information about the treasury shares transfer to employees is as follows:

The transfer of treasury shares to employees	As of 16 December 2021	As of 16 December 2021
	Unit (thousands of shares)	Weighted average exercise price of share options)
Outstanding at beginning of period Granted Exercised Forfeited Outstanding at end of period Exercisable at end of period For share options granted during the period, weighted average fair value of those options at the measurement date (NTD)

148

Expected volatility (%) Risk-free interest rate (%) Expected option life (Years) Weighted average share price (NTD) Option pricing model	Grant date on 16December 2021
	41.26% 0.3605% 0.0219 $19.8751 Black-Scholes option pricing model

Note: The share closing price of the Company was $25.65, but the Company’s treasury shares were issued to employees with a 2-year transfer restriction, so the market price was adjusted to $19.8751.

The remuneration costs recognized by the Company in 2021 and 2020 were $3,364 and $0 respectively.

(12)Equity

A. Common stock

As of 1 January 2021 the Company’s authorized capital was $2,500,000, divided into 250,000 thousand shares with par value of NTD10 each. The number of issued shares was 188,995 thousand shares, and the paid-in capital was $1,889,952.

The Company's board of directors approved to write off treasury shares on the meeting dated 16 December 2021. The applicable closing date of capital reduction was 19 January 2022. The amount of capital reduction was $41,111, and 4,111 thousand shares were eliminated. The modification of registration was completed on 7 February 2022.

The Company’s authorized capital was $2,500,000 as of 31 December 2022 the number of issued shares was 184,884 thousand shares with par value NTD10 each, and the paid-in capital was $1,848,841.

In August 2007, May and December 2012, the Company issued 30,000 thousand shares, 5,000 thousand shares and 5,000 thousand shares of private placement, respectively, in accordance with Article 43-6 of the Securities Exchange Act. The closing dates of the capital increase were August 7, 2007, October 30 and 5 December 2012. The above private shares were canceled in October 2009 as a result of a capital reduction to offset the accumulated loss, with 12,449 thousand shares canceled in proportion to the shareholding ratio. In March 2016, 5,000 thousand private shares were canceled due to the merger. In December 2021, 3,383 thousand shares were canceled as a result of the capital reduction in cash refund to the shareholders.

149

The above private shares and their subsequent allocations are based on the delivery date of the private securities in accordance with the third paragraph of Article 43-8 of the Securities Exchange Act (26 October 2007; 5 December 2012; 10 January 2013). After three years of holding such shares, the holders may apply for approval to the governing authority under Securities Exchange Act and other relevant regulations. The shares may be freely transferred in the open market after obtaining said approval.

As of 31 December 2022, the number of outstanding private 19,168 thousand shares with par value is 10 per share, and the public offering process has not yet been processed.

B. Capital surplus

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

Treasury share transactions Premium from merger Adjustments arising from changes in percentage of ownership in subsidiaries Total	As of 31 December	As of 31 December
	2022 $25,170 15,188 1,897 $42,255	2021
		$24,845 15,188 1,897
		$41,930

C. Treasury stock

In accordance with the Securities and Exchange Law, the proportion of the company's repurchase of the issued shares shall not exceed 10% of the total number of issued shares of the company, and the total amount of the shares purchased shall not exceed the amount of the reserved surplus plus the premium of the issued shares and the realized capital reserve.

150

As of 31 December 2022 and 2021, the Company’s treasury stock amounted to $0 and $40,786, and the number of shares was 0 thousand and 4,111 thousand, respectively.

From 14 November 2018 to 10 January 2019, the Company repurchased 5,319 thousand shares. The purpose of the repurchase is to transfer the shares to the employees, and the shares are to be transferred to the employees all at once or in installments within three years from the date of the repurchase of the shares.

The above treasury shares were written off for 798 thousand shares in proportion to the total issued capital in December 2020 due to the capital reduction in cash refund to the equity shareholders. In December 2021, 410 thousand of treasury stock shares were issued to the employees. Please refer to Notes 6 and Note 11 for details of the relevant share–based payment arrangement. Additionally, on 16 December 2021, the Company's board of directors approved to write off 4,111 thousand treasury shares. For related information, please refer to Note 6. 12(1).

D. Distribution of retained earnings and dividend policies

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

(a) Income tax obligation

(b) Offsetting accumulated deficits, if any

(c)Set aside 10% as legal reserve. However, when the legal reserve amounts to the authorized capital, this shall not apply.

(d)Set aside or reserve special reserve in accordance with law and regulations.

(e)In combining the balance with the accumulated undistributed surplus of the previous period, the board of directors shall prepare a proposal for earnings distribution and submit it to the shareholders' meeting for a resolution distributing dividends to shareholders.

The policy of dividend distribution should reflect factors such as the current and future investment environment, fund requirements, domestic and international competition and capital budgets; as well as the interest of the shareholders, share bonus equilibrium and long-term financial planning etc. The Board of Directors shall make the distribution proposal annually and present it at the shareholders’ meeting. The Company’s Articles of Incorporation further provide that no more than 80% of the dividends to shareholders, if any, could be paid in the form of share dividends. Accordingly, at least 20% of the dividends must be paid in the form of cash.

151

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

When the Company distributing distributable earnings, it shall set aside to special reserve, an amount equal to “other net deductions from shareholders” equity for the current fiscal year, provided that if the Company has already set aside special reserve according to the requirements for the adoption of IFRS, it shall set aside supplemental special reserve based on the difference between the amount already set aside and other net deductions from shareholders’ equity. For any subsequent reversal of other net deductions from shareholders’ equity, the amount reversed may be distributed from the special reserve.

The FSC on 31 March 2021 issued Order No. Jin-Guan-Cheng-Fa- Zi 1100150022, which sets out the following provisions for compliance:

On a public company's first-time adoption of the IFRS, for any unrealized revaluation gains and cumulative translation adjustments (gains) recorded to shareholders’ equity that the company elects to transfer to retained earnings by application of the exemption under IFRS 1, the company shall set aside special reserve. For any subsequent use, disposal or reclassification of related assets, the Company can reverse the special reserve by the proportion of the special reserve first appropriated and distribute it. The Company’s special reserve resulted from first-time adoption of IFRS on 1 January 2012 (adoption date) was $0.

Details of the 2022 and 2021 earnings distribution and dividends per share as being approved and resolved by the Board of Directors’ meeting and shareholders’ meeting on 14 March 2023 and 15 June 2022, respectively, are as follows:

espectively, are as follows:
Legal reserve Recognition (reversal) of special reserve Common stock cash dividend	Appropriation of earnings 2022 2021 $6,874 $ - 2,161 (4,419) 18,488 -	Dividend per share(NTD)
	2022 $6,874 2,161 18,488	2022 $0.1	2021
			$ -

Please refer to Note 6 (16) for further details on employees’ compensation and remuneration to directors.

152

E. Non-controlling interests

Beginning balance Consolidated Net Income Attributed to Non- controlling Interest Changes in subsidiaries’ ownership Ending balance	As of 31 December	As of 31 December
	2022 $121 - (121)	2021
		$179 (58) - $121
	$ -

(13) Operating revenue

The Group’s revenue mainly come from selling products the Group manufactured. Analysis of revenue from contracts with customers during the years ended 31 December 2022 and 2021 are as follows:

A. Disaggregation of revenue

Disaggregation of revenue
Sale of goods	For the years ended 31 December 2022 2021 $3,008,554 $2,850,638
	2022 $3,008,554
		$2,850,638

The Group recognizes revenues when control of the products is transferred to customers. Revenues are earned and reported at the time that respective contract criteria are met.

B. Contract balance

Contract liabilities – current

Sales of goods		As of
	31 December 2022 $81,489	31 December 2021 $4,219	1 January 2021
			$18,752

153

The movement in the Group’s balances of contract liabilities for the years ended December 31, 2022 and 2021 are as follows:

		For theyears ended 31 December	For theyears ended 31 December
		2022 $(4,219) 81,489	2021
Revenue recognized from opening balance Increase in advance receipt within the period (excluding the amount being recognized as periodical revenues)			$(18,752) 4,219

C. Transaction price allocated to unfulfilled contract obligations

None.

D. Assets recognized from costs to fulfil a contract with customers

None.

(14) Expected credit (loss) gains

pected credit (loss) gains
Operating expenses – Expected credit gains (loss) Trade receivables	For the years ended 31 December,
	2022 $3,048	2021 $(839)

Please refer to Note 12 for more details on credit risk.

The Group measures the loss allowance of its trade receivables (including note receivables and trade receivables) at an amount equal to lifetime expected credit loss. The assessment of the Group’s loss allowance as at 31 December 2022 and 2021 are as follows:

31 December 2022

154

Not yet due (note)			Overdue	Overdue		Total
	<=30 days	31-90 days	91-180 days	181-365 days	>=365 days
$563,343 -%	$3,527 5-10%	$ - 15-20%	$ - 40-60%	$ - 70-90%	$28,163 100%	$597,033
-	(353)	-	-	-	(28,163)	(28,516)
$(563,343)	$3,174	$-	$-	$-	$-	$568,517

31 December 2020

Not yet due (note)			Overdue	Overdue		Total
	<=30 days	31-90 days	91-180 days	181-365 days	>=365 days
$750,972 -%	$21,168 5-10%	$ - 15-20%	$ - 40-60%	$ - 70-90%	$29,438 100%	$801,578
-	(2,126)	-	-	-	(29,438)	(31,564)
$750,972	$19,042	$-	$-	$-	$-	$770,014

Note: The Group’s note receivables are not overdue.

The movement in the impairment provision of note receivables and trade receivables for the years ended 31 December 2022 and 2021 is as follows:

Note receivables $ - - - $ - $ - -	Trade receivables	Overdue receivables	Total $31,564 (3,048) -
	$17,885 (1,774) (15,758)	$13,679 (1,274) 15,758
	$353	$28,163	$28,516
	$17,046 839	$13,679 -	$30,725 839
$-	$17,885	$13,679	$31,564

(15) Leases

155

A. The Group is a lessee

The Group leases various properties, including land, buildings, transportation equipment and other equipment. The lease terms range from 2 to 10 years.

The impact of Group’s leases on the financial position, financial performance and cash flows is as follows:

(a) Amounts recognized in the balance sheet
(i) Right-of-use asset

Cost:

Cost:
As of 1 January 2022 Additions Disposals As of 31 December 2022	Land	Buildings	Transportation equipment $7,637 699 (5,211) $3,125	Other equipment $894 - (230) $664	Total
	$84,450 782 -	$91,131 21,903 (21,771)			$184,112 23,384 (27,212)
	$85,232	$91,263			$180,284

Depreciation and impairment:

As of 1 January 2022 Depreciation Disposals As of 31 December 2022	Land	Buildings	Transportation equipment $5,716 1,391 (5,211) $1,896	Other equipment	Total
	$25,146 9,147 -	$47,936 22,679 (21,771)		$613 138 (230)	$79,411 33,355 (27,212)
	$34,293	$48,844		$521	$85,554

Cost:

Cost:
As of 1 January 2021 Additions Disposals As of 31 December 2021	Land	Buildings	Transportation equipment	Other equipment	Total
	$83,082 1,368 -	$61,872 29,259 -	$5,211 2,426 -	$1,295 - (401) $894	$151,460 33,053 (401)
	$84,450	$91,131	$7,637		$184,112

156

Depreciation and

impairment:

Depreciation and impairment:
As of 1 January 2021 Depreciation Disposals As of 31 December 2021 Net carrying amount: As of 31 December 2022 As of 31 December 2021	Land	Buildings	Transportation equipment	Other equipment $746 189 (322) $613 $143	Total
	$16,332 8,814 -	$26,886 21,050 -	$4,109 1,607 -		$48,073 31,660 (322)
	$25,146	$47,936	$5,716		$79,411
	$50,939	$42,419	$1,229		$94,730
	$59,304	$43,195	$1,921	$281	$104,701

(ii) Lease liabilities

Lease liabilities
Current Non-Current Total	As of 31 December
	2022	2021
	$28,948 64,453	$30,439 73,235
	$93,401	$103,674

Please refer to Note 6(17)(d) for the interest expense regarding with lease liabilities recognized during the years ended 31 December 2022 and 2021. Please refer to Note 12 (5) Liquidity risk management for the maturity analysis on lease liabilities as of 31 December 2022 and 2021.

B. Amounts recognized in the statement of comprehensive income

Depreciation on right-of-use assets

Land Buildings Transportation equipment Other equipment Total	Forthe years ended 31 December	Forthe years ended 31 December
	2022 $9,147 22,679 1,391 138 $33,355	2021
		$8,814 21,050 1,607 189
		$31,660

157

C. Income (gain) or expense (loss) relating with leases

The expenses relating to short-term leases	For theyears ended 31 December 2022 2021 $6,394 $7,709
	2022 $6,394

D. Cash outflow related to lessee and lease activity

During the year ended 31 December 2022 and 2021, the Group’s total cash outflows for leases amounting to $41,377 and $41,096.

(16) Summary of employee benefits, depreciation and amortization expenses by function for the years ended 31 December 2022 and 2021:

function for the	years ended 31 December 2022 and 2021:	years ended 31 December 2022 and 2021:	years ended 31 December 2022 and 2021:	years ended 31 December 2022 and 2021:	years ended 31 December 2022 and 2021:	years ended 31 December 2022 and 2021:
Function Nature	For the years ended 31 December
	2022			2021
	Operating costs	Operating expenses	Total amount	Operating costs	Operating expenses	Total amount
Employee benefits expenses
Salaries	$281,937	$92,160	$374,097	$272,961	$88,166	$361,127
Labor and health insurance	29,218	8,909	38,127	28,330	9,113	37,443
Pension	13,789	4,354	18,143	13,262	6,236	19,498
Director’s remuneration	-	2,459	2,459	-	1,788	1,788
Other employee benefits	17,949	4,133	22,082	17,078	4,265	21,343
Share-based payment	-	-	-	-	3,364	3,364
Depreciation	241,456	17,523	258,979	246,189	17,195	263,384
Amortization	1,183	4,389	5,572	2,977	4,947	7,924

According to the Articles of Incorporation, at least 3% of profit of the current year shall be appropriated as employees’ compensation, and no higher than 1% of profit of the current year shall be appropriated as remuneration to board directors, however, the accumulated deficits, if any, shall first be made up for. The 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 in the form of shares or cash; and in addition thereto a report of such distribution is submitted to the shareholders’ meeting. Information on the Board of Directors’ resolution regarding the employees’ compensation and remuneration to directors and supervisors can be obtained from the “Market Observation Post System” on the website of the TWSE.

158

In 2022, the Company recorded compensations for employees and directors based on profitability, at rates of 3% and 1%, respectively. Employees’ and directors’ compensations were recognized at amounts of $2,104 and $701 respectively.

On March 14, 2023, the Company’s board directors resovled that compensations to employees and directors in the amount of $2,104 and $701 were all paid in cash respectively. There are no differences between the amounts being paid and expenses being recorded in the 2022 financial reports.

(17) Non-operating income and expenses
A. Interest income

rest income
Financial assets measured at amortized cost er income Dividend income Rental income Others Total	For the years ended 31 December
	2022 2021 $1,296 $1,640 For the years ended 31 December	2021
		$1,640
	2022 $10,195 679 2,169 $13,043	2021
		$5,034 796 58,468
		$64,298

B. Other income
C. Other gains and loss

er gains and loss
Foreign exchange gain (loss), net Loss on disposal of property, plant and equipment Loss (Gains) on valuation of financial assets at fair value through profit or loss (Note) Others expense Total	For the years ended 31 December
	2022 $52,156 (3,137) (1,516) (39) $47,464	2021
		$(6,824) (2,671) 350 (101)
		$(9,246)

Note: Generated as financial assets or liabilities were measured at fair value through profit or loss.

159

D. Finance costs

ance costs
Interest on bank loans Interest on lease liabilities Total	For the years ended 31 December
	2022	2021
	$(15,804) (1,326)	$(10,701) (1,543)
	$(17,130)	$(12,244)

(18) Components of other comprehensive income (loss)

A. For the year ended 31 December 2022

Items not to be reclassified to profit or loss subsequently: Remeasurements of defined benefit plans Unrealized gains from equity instruments investments measured at fair value through other comprehensive income Items that may be reclassified to profit or loss subsequently: Share of other comprehensive income of associates accounted for under the equity method Total of other comprehensive income	Arising during the period $9,261 (2,893) 915 $7,283	Reclassification adjustments duringtheperiod $ - - - $ -	Other comprehensive income (loss), before tax $9,261 (2,893) 915 $7,283	Income tax effect $(1,852) - (183) $(2,035)	Other comprehensive income (loss), net of tax
					$7,409 (2,893) 732
					$5,248

160

B. For the year ended 31 December 2021

Items not to be reclassified to profit or loss subsequently: Remeasurements of defined benefit plans Unrealized gains from equity instruments investments measured at fair value through other comprehensive income Items that may be reclassified to profit or loss subsequently: Share of other comprehensive income of associates accounted for under the equity method Total of other comprehensive income (19) Income tax	Arising during the period $4,884 4,693 (355) $9,222	Reclassification adjustments duringtheperiod $ - - $ - $ -	Other comprehensive income (loss), before tax $4,884 4,693 (355) $9,222	Income tax effect $(977) - 71 $(906)	Other comprehensive income (loss), net of tax
					$3,907 4,693 (284)
					$8,316

For the years ended 31 December 2022 and 2021 the major components of income tax (expense) benefit are as follows:

A. Income tax recognized in profit or loss

. Income tax recognized in profit or loss
Current income tax (expense) benefit: Current income tax charge Income tax of prior years Deferred tax (expense) benefit: Deferred tax (expense) benefit relating to origination and reversal of temporary differences Deferred tax relating to origination and reversal of tax loss and tax credit Total income tax expense	For the years ended 31 December
	2022	2021
	$(3,854) (321) 10,493 (16,460)	$(10,421) - (4,375) (1,379)
	$(10,142)	$(16,175)

161

B. Income tax related to components of other comprehensive income

Deferred income tax (expense) benefit: Share of other comprehensive income of associates accounted for under the equity method Remeasurement of defined benefit plans Income tax related to components of other comprehensive income	For the years ended 31 December	For the years ended 31 December
	2022	2021
	$(183) (1,852)	$71 (977)
	$(2,035)	$(906)

C. Reconciliation between tax expense (benefit) and accounting profit at the Company’s applicable tax rates is as follows:

Company’s applicable tax rates is as follows:
Accounting profit (loss) before tax from continuing operations At the Company’s statutory income rate Tax effect of tax-exempt income Tax effect of non-deductible expenses Adjustments of deferred tax assets/liabilities for write- downs or reversals Surtax on undistributed earnings Income tax of prior years Other adjustments according to tax law Total income tax expenses recognized in profit or loss	For the years ended 31 December 2022 2021 $71,472 $(53,841) $(14,294) $10,768 5,991 1,663 (102) (51) (1,408) (18,123) (8) (10,421) (321) - - (11) $(10,142) $(16,175)
	2022
	$71,472
	$(14,294) 5,991 (102) (1,408) (8) (321) -
	$(10,142)	$(16,175)

162

D. Significant components of deferred tax assets (liabilities) are as follows:

(a) For the year ended 31 December 2022

Balance as of 1 January	Recognized in profit or loss	Recognized in other comprehensive income	Balance as of 31 December
$(2,232) 15,717 2,349 (72,514) 32,029 278 33,562 1,367	$ - 7,400 - - - - (16,460) 3,093	$ - - (1,852) - - (183) - -	$(2,332) 23,117 497 (72,514) 32,029 95 17,102 4,460
$10,556	$(5,967)	$(2,035)	$2,554

$85,388			$77,300
$(74,832)			$(74,746)

(b) For the year ended December 31 2021

Balance as of 1 January	Recognized in profit or loss	Recognized in other comprehensive income	Balance as of 31 December
$(2,232) 20,466 3,326 (72,514) 32,029 207 34,941 993	$ - (4,749) - - - - (1,379) 374	$ - - (977) - - 71 - -	$(2,232) 15,717 2,349 (72,514) 32,029 278 33,562 1,367
$17,216	$(5,754)	$(906)	$10,556

$92,221			$85,388
$(75,005)			$(74,832)

163

E. The following table provides the information of the unused loss carryforward:

Year 2018 2020 2021 Total	Tax loss for theperiod $16,949 163,132 76,486 $256,567	Unused tax loss as of 31 December 2022 31 December 2021 $ - $4,677 85,509 163,132 76,486 82,269 $161,995 $250,078	Unused tax loss as of 31 December 2022 31 December 2021 $ - $4,677 85,509 163,132 76,486 82,269 $161,995 $250,078	Expiration Year
			$4,677 163,132 82,269	2028 2030 2031
			$250,078

F. Deferred assets with least possibility to be realized

As of 31 December 2022, and 2021, deductible temporary differences for which no deferred income tax assets have been recognized in amounted to $32,229 and $31,977, respectively.

G. Status of income tax returns assessment

As of 31 December 2022, the status of the Group’s income tax returns which have been assessed by tax authorities is as follows:

The Company The Subsidiary -Blessingthoughts The Subsidiary –KuoChing Development	The assessment of income tax returns
	Assessed and approved up to 2020 Assessed and approved up to 2021 Reported up to 2021

(20) Earnings per share

Basic earnings per share amounts are calculated by dividing net profit for the years attributable to ordinary equity holders of the parent entity by the weighted average number of ordinary shares outstanding during the year.

Diluted earnings per share amounts are calculated by dividing the net profit attributable to ordinary equity holders of the parent entity by the weighted average number of ordinary shares outstanding during the year plus the weighted average number of ordinary shares that would be issued on conversion of all the dilutive potential ordinary shares into ordinary shares.

164

No diluted earnings per share in 2022 shall be accounted for due to that net loss operating loss was concluded for the fiscal.

loss operating loss was concluded for the fiscal.
(1) Basic earnings per share Net (loss) income attributable to the parent company (in thousands of NTD) Weighted average number of ordinary shares outstanding for basic earnings per share (thousand shares) Basic (loss) earnings per share (NTD) (2) Diluted earnings per share Net income (loss) attributable to the parent company Effect of dilution on net income (loss) attributable to ordinary stockholders of the Company after dilution Weighted average number of ordinary shares outstanding for basic earnings per share (thousand shares) Effect of dilution: Employees’ compensation (thousand shares) Weighted average number of ordinary shares outstanding after dilution (thousand shares) Diluted earnings (loss) per share (NTD)	For the years ended 31 December
	2022	2021
	$61,330	$(69,958)
	184,884	184,490
	$0.33	$(0.38)
	2022	2021
	$61,330	$(69,958)
	$61,330	$(69,958)
	184,884 142	184,490 -
	185,026	184,490
	$0.33	$(0.38)

There were no transactions which may significantly change the number of the outstanding ordinary shares from the financial statement date to the date of releasing financial statements.

7. Related party transactions

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

165

Name and nature of relationship of the related parties

Name of the related parties Nature of relationship of the related parties KT Investment Company, Limited The Company’s director Macy Investment Company, Limited The Company’s director Chiaoli Investment Company, Limited The Company’s director Fulilu Investment Company, Limited The Company’s director (Resigned as a corporate director on March 16, 2021)

Significant transactions with the related parties

A. Lease - related parties
(a) Rental income

a) Rental income
KT Investment Company, Limited	For the years ended 31 December
	2022 $549	2021
		$549

The Group leased its plant and building to the said related party, from which rental income and collection were set at arm’s length range.

(b) Right-of-use assets

(b) Right-of-use assets
Macy Investment Company, Limited (c) Lease liabilities Macy Investment Company, Limited (d) Interest expenses Macy Investment Company, Limited	As of 31 December
	2022 2021 $49,707 $58,228 As of 31 December	2021
		$58,228
	2022 2021 $50,410 $58,757 For the years ended 31, December 2022 2021 $797 $917	2021
		$58,757
		2021 $917

166

B. Key management personnel compensation

Short-term employee benefits Post-employment benefits Total	For the years ended 31,December	For the years ended 31,December
	2022 $8,739 241 $8,980	2021
		$7,124 164
		$7,288

8. Assets pledged as collaterals

The following table lists assets of the Group pledged as collaterals:

Property, plant and equipment – buildings, machinery and equipment Financial assets measured at amortized cost Total	Carrying	Amount As of 31 December 2021 $448,891 2,800 $451,691	Purpose ofpledges
	As of 31 December 2022 $446,552 2,800 $449,352
			Long and short-term loans Energy resources guarantee

9. Significant contingencies and derecognized contract commitments

The following items are the contingencies which have not been accrued and recorded on the balance sheet as on 31 December 2022

As of 31 December 2022, the amount available under unused letter of credit was $27,108.
As of 31 December 2022, the Group entered several construction contracts for which the development is in progress. The following provides significant details:

Supplier Counterparty A Counterparty B Counterparty C	Contract Subject Equipment procurement Equipment procurement Equipment procurement	Total Contract Amount $21,500 21,300 39,000	Equipment Payment Made $17,200 7,455 15,242	Unpaid amount as of December 31 2022
				$4,300 13,845 23,758

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10. Significant disaster loss

None.

11. Significant subsequent events

None.

12. Others

(1) Categories of financial instruments

Financial Assets Financial assets at fair value through profit or loss Financial assets at fair value through profit or loss, current (Other current assets) Amortized cost of a financial asset: Cash and cash equivalents (excluding cash on hand) Measured at amortized cost financial assets Notes receivables Trade receivables Other receivables (Other current assets) Subtotal Total	As of 31 December	As of 31 December
	2022	2021
	$95,066 - 453,628 102,800 17,653 550,864 450	$97,959 1,184 382,958 2,800 31,868 738,146 455
	1,125,395	1,156,227
	$1,220,461	$1,255,370

Financial Liabilities Financial liabilities at amortized cost: Short-term loans Notes and accounts payable Other payable Long-term loans (including current portion) Lease liability Subtotal Financial liabilities at fair value through profit or loss (Other current assets) Total	As of 31 December	As of 31 December
	2022	2021
	$298,991 297,467 176,227 746,918 93,401	$295,721 328,959 219,186 701,292 103,674
	1,613,004	1,648,832
	1,086	754
	$1,614,090	$1,649,586

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(2) Financial risk management objectives

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

The Group has established appropriate policies, procedures and internal controls for financial risk management. Before entering into significant activities, approval process by the board of directors and audit committee must be carried out based on related protocols and internal control procedures. The Group complies with its financial risk management policies at all times.

(3) Market risk

Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risks comprise currency risk, interest rate risk and other price risk (such as equity risk).

In practice, it is rarely the case that a single risk factor varies independently from other risk factors. A correlation normally exist among risk factors. However, the following sensitivity analyses do not disclose the correlations among these risk factors.

Foreign currency risk

The Group’s exposure to the risk of changes in foreign exchange rates relates primarily to the Group’s operating activities (when revenue or expenses are denominated in a different currency from the Group’s functional currency) and the Group’s net investments in foreign subsidiaries.

The Group applies natural hedges on the foreign currency risk arising from purchases or sales as certain portion of receivables or payables are denominated as the same currencies, and utilizes spot or forward exchange contracts to manage foreign currency risk. The Group designates certain forward currency contracts as balance sheet hedges to hedge its exposure to foreign currency exchange risk associated with certain balance sheet assets or liabilities. Hedge accounting is not applied as the aforesaid natural hedges or designated forward contracts to hedge currency risk are deemed ineffective hedges. Furthermore, the currency risk exposures due from investments in oversea associates are not hedges as the investments are set for certain operating strategies.

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The foreign currency sensitivity analysis of the possible change in foreign exchange rates on the Group’s profit is performed on significant monetary items denominated in foreign currencies as at the end of the reporting period. The Group’s foreign currency risk mainly resulted from the volatility of exchanging USD or CNY to NTD, and vice versa. The information of the sensitivity analysis is as follows:

a. When NTD strengthens/weakens against USD by 1%, the profit for the years ended 31 December 2022 and 2021 is decreased/increased by $3,169 and $3,304, respectively; and no impact on the equity.
b. When NTD strengthens/weakens against CNY by 1%, the profit for the years ended 31 December 2022 and 2021 is increased/decreased by $236 and by $46, respectively; and no impact on the equity.

Interest rate risk

The Group is exposed to interest rate risk arising from borrowing at floating interest rates. Interest rate risk is the risk that the fair value or forecasted cash flows of a financial instrument fluctuates due to the volatility in market interest rates.

The sensitivity analysis of interest rate fluctuation is performed on items exposed to interest rate risk as at the end of the reporting period, including borrowings with variable interest rates. At the reporting dates, a change of 10 basis points of interest rate in a reporting period could cause the profit for the years ended 31 December 2022 and 2021 to increase/decrease by $1,046 and $997, respectively.

Equity price risk

The Group’s listed and unlisted equity securities are susceptible to market price risk arising from uncertainties about future performance of equity markets. The Company’s equity investments are classified as financial assets at fair value through other comprehensive income. The equity investment portfolio is submitted to the Group’s senior management on a regular basis. The Group’s Board of Directors reviews and approves changes on the equity investment portfolio.

At the reporting date, for equity investments in the listed companies which are recorded as financial assets at fair value through other comprehensive income, an increase/decrease of 10% in the share price could increase/decrease $375 and $425 for the years ended 31 December 2022 and 2021, respectively.

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Please refer to Note 12(9) for sensitivity analysis information of other equity instruments or derivatives that are linked to such equity instruments whose fair value measurement is categorized under Level 3.

(4) Credit risk management

Credit risk is the risk that a financial loss may be triggered when a counterparty defaults its obligations. The Group is exposed to credit risk from operating activities (primarily for, accounts receivables and notes receivables) and from its financing activities, including bank deposits and other financial instruments.

The Group mitigates credit risks by implementing the Group’s credit policy, procedures and controls. Credit limits are set for all counter parties based on their financial positions, credit ratings, historical experience, prevailing economic condition and the Group’s internal rating criteria etc. For dealing with some counterparties with less credit, certain financial instruments of credit enhancement, such as advance receipts or a letter of credit, may be required to be provided to mitigate possible credit risk exposures.

As of 31 December 2022 and 2021 accounts receivables from top ten customers represent 54% and 64% of the total accounts receivables of the Group, respectively. The credit concentration risk of other trade receivables is insignificant.

Credit risk from deposits in banks, fixed income securities and other financial instruments is managed by the Group’s treasury division in accordance with the Group’s policy. The Group only deals with counterparties that are approved through internal control procedures; therefore, the counterparties are limited to banks, financial institutions, companies or government entities with good credit standing.

The Group would write down or write off values of financial assets if these are forecasted to be least possible to be collected in the case of the issuer or debtor being insolvent or in financial distress.

(5) Liquidity risk management

The Group’s objective is to maintain a balance between continuity of funding and flexibility through the use of cash and cash equivalents, highly liquid equity investments and bank borrowings. The table below summarizes the maturity profile of the Group’s financial liabilities based on the contractual undiscounted payments and contractual maturity, including contractual interests. The undiscounted interest payment due from borrowings with variable interest rates is extrapolated based on the estimated interest rate yield curve as of the end of the reporting period.

171

Non-derivative financial instruments

As of 31 December 2022 Short-term loans Notes and accounts payable Long-term loans Lease liabilities As of 31 December 2021 Short-term loans Notes and accounts payable Long-term loans Lease liabilities	Less than 1year	2 to 3years	4 to 5years	>= 5years	Total
	$307,029 297,467 194,765 30,079 $298,073 328,959 174,849 31,667	$ - - 464,207 39,864 $ - - 484,763 36,929	$ - - 118,939 19,511 $ - - 60,428 22,815	$ - - - 6,857 $ - - - 16,000	$307,029 297,467 777,911 96,311 $298,073 328,959 720,040 107,411

Derivative financial assets (liabilities)

Less than 1year	2 to 3years	4 to 5years	>= 5years	Total
$109,150 (110,236)	$ - - $ - $ - - $ -	$ - - $ - $ - - $ -	$ - - $ - $ - - $ -	$109,150 (110,236)
$(1,086)				$(1,086)
$90,115 (89,685)				$90,115 (89,685) $430
$430

(6) Reconciliation of liabilities arising from financing activities

Reconciliation of liabilities for the year ended 31 December 2022:

As of 1 January 2022 Cash flows Non-cash changes As of 31 December 2022	Short-term loans $295,721 3,270 - $298,991	Long-term loans (including current portion) $701,292 45,626 -	Lease liabilities $103,674 (33,657) 23,384	Deposit margin $75 (75) - $ -	Total liabilities from financing activities $1,100,762 15,164 23,384
		$746,918	$93,401		$1,139,310

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Reconciliation of liabilities for the year ended 31 December 2021:

As of 1 January 2021 Cash flows Non-cash changes As of 31 December 2021	Short-term loans $226,246 69,475 - $295,721	Long-term loans (including current portion) $797,901 (96,609) -	Lease liabilities $102,531 (31,844) 32,987	Deposit margin $75 - - $75	Total liabilities from financing activities $1,126,753 (58,978) 32,987
		$701,292	$103,674		$1,100,762

(7) Fair value of financial instruments
A. Valuation methodology and assumptions for fair values:

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

(a)The carrying amount of cash and cash equivalents, accounts receivables, accounts payable and other current liabilities approximate their fair value due to their short maturities.
(b)For financial assets and liabilities traded in an active market with standard terms and conditions, their fair value is determined based on market quoted prices (including listed equity securities) at the reporting date.
(c) Fair value of equity instruments without market quoted prices (including private placement of listed equity securities, unquoted public company and private company equity securities) are valued by market approach which takes industrial comparable entities’ quoted market prices or other relevant information as reference to estimate probable fair values.
(d)Fair value of debt instruments without market quoted prices, bank loans, and other non-current liabilities are determined based on the

173

counterparties’ prices or valuation method. The valuation method uses DCF method as a basis, and the assumptions such as interest rates and discount rate are primarily based on relevant information of equivalent instruments (such as yield curves published by the Taipei Exchange, average prices and credit risks for Fixed Rate Commercial Paper published by Reuters, etc.)

B. Fair value of financial instruments measured at amortized cost

The carrying amount of the Group’s financial instruments, financial assets and liabilities measured at amortized cost approximate their fair value.

C. Fair value measurement hierarchy for financial instruments

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

(8) Derivative financial instruments

The Group’s derivative financial instruments include forward currency contracts and embedded derivatives. The related information for derivative financial instruments not qualified for hedge accounting and not yet settled as of 31 December 2021 and 2020 is as follows:

Forward currency contracts

The Group entered into forward currency contracts to mitigate its exposure to financial risk, but these contracts are not designated as hedging instruments. The table below lists the information related to forward currency contracts:

Items (by contract) Contract Amount Contract Period As of 31 December 2022 Forward currency contract Sell foreign currency USD 3,302 thousand From 2022.11.10 to 2023.03.31 Sell foreign currency EUR 139 thousand From 2022.10.24 to 2023.01.19 Sell foreign currency CNY 1,035 thousand From 2022.12.30 to 2023.02.24 As of 31 December 2021 Forward currency contract Sell foreign currency USD 3,016 thousand From 2021.08.19 to 2022.05.13 Sell foreign currency CNY 1,035 thousand From 2021.12.15 to 2022.02.19

174

(9) Fair value measurement hierarchy

A. Fair value measurement hierarchy

All asset and liabilities for which fair values are measured or disclosed in the financial statements are categorized within the fair value hierarchy, based on the lowest level input that is significant to the fair value measurement as a whole. Level 1, 2 and 3 inputs are described as follows:

Level 1 – Quoted (unadjusted) market prices in active markets for identical assets or liabilities;

Level 2 – Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable;

Level 3 – Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.

For assets and liabilities that are recognized in the financial statements on a recurring basis, the Group determines whether transfers have occurred between levels in the hierarchy by re-assessing categorization at the end of each reporting period.

B. Fair value measurement hierarchy of the Group’s assets and liabilities

The Group does not have assets that are measured at fair value on a nonrecurring basis. Fair values of the Group’s assets and liabilities are measured at fair value on a recurring basis as follows:

As of 31 December 2022

As of 31 December 2022
Financial assets: Financial assets at fair value through other comprehensive income Equity instrument measured at fair value Financial liabilities: Financial liabilities at fair value through profit or loss Forward currency contracts	Level 1	Level 2	Level3	Total
	$3,751	$ -	$91,315	$95,066
	$ -	$1,086	$ -	$1,086

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As of 31 December 2021

As of 31 December 2021
Financial assets: Financial assets at fair value through profit or loss Forward currency contract Financial assets at fair value through other comprehensive income Equity instrument measured at fair value Financial liabilities: Financial liabilities at fair value through profit or loss Forward currency contracts	Level 1	Level 2	Level3	Total
	$-	$1,184	$-	$1,184
	$4,254	$ -	$93,705	$97,959
	$ -	$754	$ -	$754

Re-classifications between Level 1 and Level 2 during the period

During the years ended 31 December 2022 and 2021, there were no reclassifications between Level 1 and Level 2 fair value measurements.

Reconciliation for fair value measurements in Level 3 of the fair value hierarchy for movements during the period is as follows:

hierarchy for movements during the period is as follows:
Beginning balances as of 1 January 2022 Total gains and loss recognized for the year ended 31 December 2022: Amount recognized in OCI (presented in “Unrealized gains (loss) from equity instruments investments measured at fair value through other comprehensive income) Ending balances as of 31 December 2022 Beginning balances as of 1 January 2021 Total gains and loss recognized for the year ended 31 December 2021: Amount recognized in OCI (presented in “Unrealized gains (loss) from equity instruments investments measured at fair value through other comprehensive income) Ending balances as of 31 December 2021	Assets
	At fair value through other comprehensive income
	Stocks
	$93,705 (2,390)
	$91,315
	$87,169 6,356
	$93,705

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Information on significant unobservable inputs of fair value measurement in Level 3 fair value hierarchy

Significant unobservable inputs of fair value measurement in Level 3 fair value hierarchy are as follows:

As of 31 December 2021

Significant

Valuation unobservable Quantitative Correlation between techniques inputs information inputs and fair value

Sensitivity Analysis of correlation between inputs and fair value

Financial

assets: Financial assets at fair value through other comprehensive income Stocks Asset discount for 30% The greater approach lack of degree of lack marketability of marketability, the lower the estimated fair value is determined.

10% increase (decrease) in the discount for lack of marketability would result in (decrease) increase in the Group’s profit or loss by $9,132

As of 31 December 2021

Significant Valuation unobservable Quantitative Correlation between Sensitivity Analysis of correlation techniques inputs information inputs and fair value between inputs and fair value

Financial

assets: Financial assets at fair value through other comprehensive income Stocks Asset discount for 30% The greater 10% increase (decrease) in the approach lack of degree of lack discount for lack of marketability marketability of marketability, would result in (decrease) increase in the lower the the Group’s profit or loss by $9,371 estimated fair value is determined.

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

The Group’s treasury division is responsible for validating the fair value measurements and ensuring that the results of the valuation are in line with market conditions, based on independent and reliable inputs which are consistent with other information, and represent reasonable prices. The team analyses the movements in the values of assets and liabilities which are required to be re-measured or re-assessed as per the Group’s accounting policies at each reporting date.

(10) Significant assets and liabilities denominated in foreign currencies

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

As of 31 December

Financial assets Monetaryitem: USD CNY Financial liabilities Monetaryitem: USD USD		2022	NTD $450,362 23,576 $133,496 $199,324		2021
	Foreign Currency $14,665 5,346 $4,347 $7,201	Exchange rate 30.71 4.41 30.71 27.68		Foreign Currency $19,138 1,051 $7,201 $6,792	Exchange rate 27.68 4.34 27.68 28.48	NTD
						$529,740 4,561 $199,324 $193,436

The Group had $52,156 and $(6,824) foreign exchange gain (loss) for the years ended 31 December 2022 and 2021, respectively.

(11) Capital management

The primary objective of the Group’s capital management is to ensure that it maintains a strong credit rating and healthy capital ratios in order to support its business and maximize the shareholder value. To maintain or adjust the capital structure, the Group may adjust dividend payment to shareholders, return capital to shareholders or issue new shares.

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13. Other disclosures

(1) Information at significant transactions

A. Financing provided: None.
B. Endorsement/Guarantee provided: None.
C. Securities held as at end of the period (excluding subsidiaries and associates):

Holding Company	Type andname ofsecurities	"Relationship	Financialstatement account		As of 31 December,2022	As of 31 December,2022
				Shares	Carrying amount	"Percen tage of	Shares
SUNKO INK CO., LTD.	Stock CHING FENG HOME FASHIONS. CO. LTD LINCO TECHNOLOGY CO. LTD THE FIRST LEASING CORPORATION TOTAL ACRYLIC POLYMER INDUSTRY (TAPI) CORPORATION GLOBAL GRAPHENE GROUP, INC. YAYI CO., LTD. SAR TECHNOLOGY INC. KING SHINE EE TECHNOLOGY ENTERPRISE CO., LTD.	Unrelated party Unrelated party Unrelated party Unrelated party Unrelated party Unrelated party Unrelated party Unrelated party	Financial assets at fair value through other comprehensive income-non-current Financial assets at fair value through other comprehensive income-non-current Financial assets at fair value through other comprehensive income-non-current Financial assets at fair value through other comprehensive income-non-current Financial assets at fair value through other comprehensive income-non-current Financial assets at fair value through other comprehensive income-non-current Financial assets at fair value through other comprehensive income-non-current Financial assets at fair value through other comprehensive income-non-current Less: Unrealized gains (loss) from investments in equity instruments Total	214,309 454,439 2,852,325 100,000 6,155 368,898 4,250,000 1,000	$3,365 4,068 25,930 1,000 16,405 4,883 42,500 10 (3,095)	0.13% 0.80% 12.96% 2.00% 0.87% 1.85% 5.18% 0.01%	$3,751 4,499 29,353 14,963 - - 42,500 -
					$95,066

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D. Individual securities acquired or disposed of with accumulated amount exceeding the lower of $300 million or 20% of the capital stock for the period: None
E. Acquisition of individual real estate with amount exceeding the lower of $300 million or 20% of the capital stock for the period: None
F. Disposal of individual real estate with amount exceeding the lower of $300 million or 20% of the capital stock for the period: None
G. Related party transactions for purchases and sales amounts exceeding the lower of $100 million or 20% of the capital stock for the period: None.
H. Receivables from related parties with amounts exceeding the lower of $100 million or 20% of capital stock as at end of the period: None.
I. Transaction of derivative financial instruments:

Please refer to Note 12(8).

J. Significant intercompany transactions among consolidated entities are as follows:

None.

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(2) Information on investees

Investees’ names, locations, main businesses and products, original investment amount, investment as at end of the period, net income (loss) of the investees and investment income (loss) recognized for the period:

Investor company	Investee company	Address	Main businesses and products	Initial investment amount	Initial investment amount	Investment as at end of the period	Investment as at end of the period	Investment as at end of the period	Net income (loss) of investee company	Investment income (loss) recognized	Note
				Ending balance	Beginning balance	Number of shares (in thousands)	Percentage of ownership (%)	Carrying value
The Company	Power Rich	Anguilla	Investment Services	$30,403 (USD 990,000)	30,403 (USD 990,000)	990,000	30.00%	$3,411	$(26,546)	$(7,964)
The Company	Bnkc Biochemical Technology Co.	Taiwan	Wholesale of Chemical Raw Material, wholesale of Cosmetics, and Retail of Cosmetics	$490	$490	49,000	49.00%	$3,044	$4,491	$2,201
The Company	Sunko Biotech Co.	Taiwan	Biotechnology Services	$60,000	$60,000	1,674,044	22.32%	$ -	$ -	$ -
The Company	Chen Chi Technology Co.	Taiwan	Synthetic resin and plastic manufacturing	$14,360	$14,360	1,640,000	41.00%	$ -	$ -	$ -
The Company	Kuo Ching Development Corporation	Taiwan	Wholesale of chemical solvents, industrial additives, other raw materials with derivative products	$2,000	$2,000	200,000	100%	$17,519	$15,234	$15,234
The Company	Blessingthoughts	Taiwan	Drinks, and food vending	$15,200	$15,200	-	-	$ -	$ -	$ -	Note

Note: The company is undergoing liquidation procedure.

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(3) Information on investments in Mainland China

Significant transactions incurred from the invested company in Mainland China, either directly or indirectly through a third territory: None.

(4) Information on major shareholders

Shares Names of major shareholders	Number of shares held	Shareholding ratio
Macy Investment Company, Limited	16,838,191	9.10 %
KT Investment Company, Limited	10,801,010	5.84 %

14. Operating segment information

(1)Segment revenue and operating results

The Group's business is mainly engaged in the manufacture, processing and trading of various plant protection drug progenitors, specialty chemicals and plastic raw materials, etc. The operating decision makers of the Group review the overall operating results of the Company with a single operating unit to make decisions on company resources and evaluate the overall performance of the Company, without distinguishing between departments, so it is a single operating department.

(2) Geographic information

(i) As of 31 December 2022 and 2021 the Group’s external sales are listed as follows:

For the years ended 31 December

Area Taiwan United States Asia Europe Other Total	2022 $2,046,110 205,512 327,656 252,613 176,663 $3,008,554	2021
		$2,187,844 191,195 243,563 160,785 67,251
		$2,850,638

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Sales by region are grouped based on the regions where the customers are located at.

(ii) Non-current asset:

Area Taiwan	As of 31 December	As of 31 December
	2022 $1,754,433	2021
		$1,862,949

(a) Information about major customers

Company A	For the years ended 31 December	For the years ended 31 December
	2022 $412,184	2021
		$537,783

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5 Parent Only Financial Statements of the Most Recent Year with Independent Auditors’ Report

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SUNKO INK CO., LTD.

Notes to Parent Company Only Financial Statements

For the years Ended 31 December 2022 and 2021

(Expressed in Thousands of New Taiwan Dollars, unless Otherwise Stated)

1. General

Sonko Ink Co., Ltd. (hereinafter “the Company”) was incorporated in December 1974. The Company is engaged in manufacturing and trading of certain chemicals or industrial materials. Major product lines are as follows:

a. Argochemicals

b.Fine Chemicals: curing agent, non-halogenated flame retardant, reducing agent, antioxidant

c. Polymer: PU Based surface treating agent, Polymer-TPU, Polymer-TPV d. UV Absorbers

In May 1996, the Company’s shares were listed on the Taiwan Stock Exchange (TWSE), when the registered office was located at No. 139, Renmei Rd., Dali Dist., Taichung City 412036, Taiwan (R.O.C.). On 30 April 2022, as approved by Ministry of Economic Affairs, the Company’s registered operating office address was changed to 5F., No. 229, Zhongxing St., West Dist., Taichung City 403022, Taiwan (R.O.C.).

On 30 March 2016, the Company merged with Kuo Ching Chemical Co., Ltd. (hereinafter “Kuo Ching”). Kuo Ching was incorporated in April 1977, mainly engaged in production and trading of agrochemicals, fine chemicals, and other polymer materials. In October 2009, Kuo Ching’s shares was listed on the Emerging Stock Board. To improve efficiency and competitive capabilities, the Company merged with Kuo Ching on 30 March 2015 to integrate both entities’ production capacities, research resources, marketing and product lines. The Company was the surviving Company which acquired all of Kuo Ching’s assets, liabilities, rights or obligations.

2. Date and procedures of authorization of financial statements for issue

The parent Company only financial statements of the Company for the years ended 31 December 2022 and 2021 were approved to release in accordance with a resolution of the board of directors’ meeting on 14 March 2023.

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3. Newly issued or revised standards and interpretations

(1) Changes in accounting policies resulting from applying for the first-time certain standards and amendments

The Company applied for the first time International Financial Reporting Standards, International Accounting Standards, and Interpretations issued, revised or amended which are recognized by Financial Supervisory Commission (“FSC”) and become effective for annual periods beginning on or after 1 January 2022. The adoption new standard and amendment is described, had no material impact on the Company.

(2) Standards or interpretations issued, revised or amended, by International Accounting Standards Board (“IASB”) which are endorsed by FSC, but not yet adopted by the Company as at the end of the reporting period are listed below.

Items	New, Revised or Amended Standards and Interpretations	Effective Date issued by IASB
a	Disclosure Initiative – Accounting Policies – Amendments to IAS 1	1 January 2023
b	Definition of Accounting Estimates – Amendments to IAS 8	1 January 2023
c	Deferred Tax related to Assets and Liabilities arising from a Single Transaction–Amendments to IAS 12	1 January 2023

(a) Disclosure Initiative - Accounting Policies – Amendments to IAS 1

The amendments improve accounting policy disclosures that to provide more useful information to investors and other primary users of the financial statements.

195

(b) Definition of Accounting Estimates – Amendments to IAS 8

The abovementioned standards and interpretations were issued by IASB and endorsed by FSC so that they are applicable for annual periods beginning on or after 1 January 2023.The abovementioned amendments that are applicable for annual periods beginning on or after 1 January 2023 have no material impact on the Company.

(3) Standards or interpretations issued, revised or amended, by International Accounting Standards Board (“IASB”) which are not endorsed by FSC, and not yet adopted by the Company as at the end of the reporting period are listed below.

low.
Items	New, Revised or Amended Standards and Interpretations	Effective Date issued by IASB
a	IFRS 10 “Consolidated Financial Statements” and IAS 28 “Investments in Associates and Joint Ventures” — Sale or Contribution of Assets between an Investor and its Associate orJoint Ventures	To be determined by IASB
b	IFRS 17“Insurance Contracts”	1 January 2023
c	Classification of Liabilities as Current or Non-current – Amendments to IAS 1	1 January 2024
d	Lease Liability in a Sale and Leaseback – Amendments to IFRS 16	1 January 2024
e	Non-current Liabilities with Covenants – Amendments to IAS1	1 January 2024

(a) IFRS 10“Consolidated Financial Statements” and IAS 28“Investments in Associates and Joint Ventures” — Sale or Contribution of Assets between an Investor and its Associate or Joint Ventures

196

(b) IFRS 17 “Insurance Contracts”

IFRS 17 was issued in May 2017 and it was amended in June 2020 and 2021. The amendments include deferral of the date of initial application of IFRS 17 by two years to annual beginning on or after 1 January 2023 (from the original effective date of 1 January 2021); provide additional transition reliefs; simplify some requirements to reduce the costs of applying IFRS 17 and revise some requirements to make the results easier to explain. IFRS 17 replaces an interim Standard – IFRS 4 Insurance Contracts – from annual reporting periods beginning on or after 1 January 2023.

(c) Classification of Liabilities as Current or Non-current – Amendments to

197

IAS 1

These are the amendments to paragraphs 69-76 of IAS 1 Presentation of Financial statements and the amended paragraphs related to the classification of liabilities as current or non-current.

(d) Lease Liability in a Sale and Leaseback – Amendments to IFRS 16

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

(e) Non-current Liabilities with Covenants – Amendments to IAS 1

The abovementioned standards and interpretations issued by IASB have not yet endorsed by FSC at the date when the Company’s financial statements were authorized for issue, the local effective dates are to be determined by FSC. The standards and interpretations have no material impact on the Company.

4. Summary of significant accounting policies

(1) Statement of Compliance

The parent Company only financial statements of the Company for the years ended 31 December 2022 and 2021 have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers (“the Regulations”).

198

(2) Basis of Preparation

The Company prepared the parent Company only financial statements in accordance with the Regulations. According to the Article 21 of the Regulation, which provided that the profit or loss and other comprehensive income for the period presented in the parent Company only financial statements shall be the same as the profit or loss and other comprehensive income attributable to stockholders of the parent presented in the consolidated financial statements for the period, and the total equity presented in the parent Company only financial statements shall be the same as the equity attributable to the parent Company presented in the consolidated financial statements. Therefore, the Company accounted for its investments in subsidiaries using equity method and, accordingly, made necessary adjustments.

The parent Company only financial statements have been prepared on a historical cost basis, except for financial instruments that have been measured at fair value. The parent Company only financial statements are expressed in thousands of New Taiwan Dollars (NT$) unless otherwise stated.

(3) Foreign currency transactions

The Company’s parent Company only financial statements are presented in its functional currency, New Taiwan Dollars (NT$). Items included in the financial statements are measured using that functional currency.

Transactions in foreign currencies are initially recorded by the Company at the respective functional currency rates prevailing at the date of transaction. Monetary assets and liabilities denominated in foreign currencies are translated at the functional currency closing rates of exchange at the reporting date. Nonmonetary items measured at fair value in foreign currencies are translated using the exchange rates at the date when the fair value is determined. Non-monetary items that are measured at historical cost in foreign currencies are translated using the exchange rates as at the dates of the initial transactions.

All exchange differences arising on the settlement of monetary items or on translating monetary items are taken to profit or loss in the period in which they arise except for the following:

(a) Exchange differences arising from foreign currency borrowings for an acquisition of a qualifying asset to the extent that they are regarded as an adjustment to interest costs are included in the borrowing costs that are eligible for capitalization.

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(b) Foreign currency items within the scope of IFRS 9 Financial Instruments are accounted for based on the accounting policy for financial instruments.
(c) Exchange differences arising on a monetary item that forms part of a reporting entity’s net investment in a foreign operation is recognized initially in other comprehensive income and reclassified from equity to profit or loss on disposal of the net investment.

(4) Translation of Foreign Currency Financial Statements

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(5) Current and Non-current Distinction

An asset is classified as current when:

E. The Company expects to realize the asset, or intends to sell or consume it, in its normal operating cycle;
F. The Company holds the asset primarily for the purpose of trading;
G. The Company expects to realize the asset within twelve months after the reporting period;
H. The asset is cash or a cash equivalent unless the asset is restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.

All other assets are classified as non-current.

A liability is classified as a current when:

E. The Company expects to settle the liability in normal operating cycle;
F. The Company holds the liability primarily for the purpose of trading; G. The liability is due to be settled within twelve months after the reporting period;
H. The Company does not have an unconditional right to defer settlement of the liability for at least twelve months after the reporting date. Term of a liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not affect its classification.

All other liabilities are classified as non-current.

(6) Cash and cash equivalent

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(7) Financial Instruments

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

A. Financial instruments: Recognition and Measurement

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

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

(a)the Company’s business model for managing the financial assets

(b)the contractual cash flow characteristics of the financial asset.

Financial assets measured at amortized cost

(a)the financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows and
(b)the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

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Interest revenue is calculated by using the effective interest method. This is calculated by applying the effective interest rate to the gross carrying amount of a financial asset except for:

(a)purchased or originated credit-impaired financial assets. For those financial assets, the Company applies the credit-adjusted effective interest rate to the amortized cost of the financial asset from initial recognition.
(b)financial assets that are not purchased or originated credit-impaired financial assets but subsequently have become credit-impaired financial assets. For those financial assets, the Company applies the effective interest rate to the amortized cost of the financial asset in subsequent reporting periods.

Financial asset measured at fair value through other comprehensive income

A financial asset is measured at fair value through other comprehensive income if both of the following conditions are met:

(a)the financial asset is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets and
(b)the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

Recognition of gain or loss on a financial asset measured at fair value through other comprehensive income are described as below:

(a) A gain or loss on a financial asset measured at fair value through other comprehensive income recognized in other comprehensive income, except for impairment gains or loss and foreign exchange gains and loss, until the financial asset is derecognized or reclassified.
(b) When the financial asset is derecognized the cumulative gain or loss previously recognized in other comprehensive income is reclassified from equity to profit or loss as a reclassification adjustment.

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(c) Interest revenue is calculated by using the effective interest method. This is calculated by applying the effective interest rate to the gross carrying amount of a financial asset except for:
(iii)Purchased or originated credit-impaired financial assets. For those financial assets, the Company applies the credit-adjusted effective interest rate to the amortized cost of the financial asset from initial recognition.
(iv)Financial assets that are not purchased or originated creditimpaired financial assets but subsequently have become creditimpaired financial assets. For those financial assets, the Company applies the effective interest rate to the amortized cost of the financial asset in subsequent reporting periods.

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

Financial asset measured at fair value through profit or loss

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B. Impairment of financial assets

The Company recognizes a loss allowance for expected credit loss on debt instrument investments measured at fair value through other comprehensive income and financial asset measured at amortized cost. The loss allowance on debt instrument investments measured at fair value through other comprehensive income is recognized in other comprehensive income and not reduce the carrying amount in the balance sheet.

The Company measures expected credit loss of a financial instrument in a way that reflects:

(a) an unbiased and probability-weighted amount that is determined by evaluating a range of possible outcomes
(b)the time value of money
(c)reasonable and supportable information that is available without undue cost or effort at the reporting date about past events, current conditions and forecasts of future economic conditions

The loss allowance is measured as follows:

(a) At an amount equal to 12-month expected credit loss: the credit risk on a financial asset has not increased significantly since initial recognition or the financial asset is determined to have low credit risk at the reporting date. In addition, the Company measures the loss allowance at an amount equal to lifetime expected credit loss in the previous reporting period, but determines at the current reporting date that the credit risk on a financial asset has increased significantly since initial recognition is no longer met.
(b)At an amount equal to the lifetime expected credit loss: the credit risk on a financial asset has increased significantly since initial recognition or financial asset that is purchased or originated credit-impaired financial asset.
(c)For trade receivables or contract assets arising from transactions within the scope of IFRS 15, the Company measures the loss allowance at an amount equal to lifetime expected credit loss.
(d)For lease receivables arising from transactions within the scope of IFRS 16, the Company measures the loss allowance at an amount equal to lifetime expected credit loss.

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

C. Derecognition of financial assets

A financial asset is derecognized when:

(a)The rights to receive cash flows from the asset have expired.
(b)The Company has transferred the asset and substantially all the risks and rewards of the asset have been transferred.
(c)The Company has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.

D. Financial liabilities and equity

Classification between liabilities or equity

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

Equity instruments

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Compound instruments

The Company evaluates the terms of the convertible bonds issued to determine whether it contains both a liability and an equity component. Furthermore, the Company assesses if the economic characteristics and risks of the put and call options contained in the convertible bonds are closely related to the economic characteristics and risk of the host contract before separating the equity element.

On conversion of a convertible bond before maturity, the carrying amount of the liability component being the amortized cost at the date of conversion is transferred to equity.

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Financial liabilities

Financial liabilities at fair value through profit or loss

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

A financial liability is classified as held for trading if:

(a) it is acquired or incurred principally for the purpose of selling or repurchasing it in the near term;
(b) on initial recognition it is part of a portfolio of identified financial instruments that are managed together and for which there is evidence of a recent actual pattern of short-term profit-taking ;
(c) it is a derivative (except for a derivative that is a financial guarantee contract or a designated and effective hedging instrument).

(a) it eliminates or significantly reduces a measurement or recognition inconsistency; or
(b) a group of financial liabilities or financial assets and financial liabilities is managed and its performance is evaluated on a fair value basis, in accordance with a documented risk management or investment strategy, and information about the Company is provided internally on that basis to the key management personnel.

Gains or loss on the subsequent measurement of liabilities at fair value through profit or loss including interest paid are recognized in profit or loss.

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Financial liabilities at amortized cost

Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or transaction costs.

Derecognition of financial liabilities

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

E. Offsetting of financial instruments

(8) Derivative instruments

The Company uses derivative instruments to hedge its foreign currency risks and interest rate risks. A derivative is classified in the balance sheet as assets or liabilities at fair value through profit or loss except for derivatives that are designated effective hedging instruments which are classified as derivative financial assets or liabilities for hedging.

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(9) Fair value measurement

A. In the principal market for the asset or liability, or
B. In the absence of a principal market, in the most advantageous market for the asset or liability

The principal or the most advantageous market must be accessible to by the Company.

The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants in their economic best interest.

The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs.

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(10) Inventories

Inventories are valued at lower of cost and net realizable value item by item.

Costs incurred in bringing each inventory to its present location and condition are accounted for as follows:

Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale.

Rendering of services is accounted in accordance with IFRS 15 and not within the scope of inventories.

(11) Investments accounted for under the equity method

According to Article 21 of the Regulation, the Company’s investment in subsidiaries was presented as “Investments accounted for using equity method” and made necessary adjustments. The profit or loss during the period and other comprehensive income presented in the parent Company only financial statements shall be the same as the allocations of profit or loss during the period and of other comprehensive income attributable to shareholders of the parent presented in the financial statements prepared on a consolidated basis, and the shareholders’ equity presented in the parent Company only financial statements shall be the same as the equity attributable to shareholders of the parent presented in the financial statements prepared on a consolidated basis. The adjustment was considered the difference between investment in subsidiaries in consolidated financial statements according to IFRS 10 “Consolidated financial statements” and application of IFRS to different reporting entities, debit/credit “Investment accounted for using equity method”, “Share of profit or loss of subsidiaries, associates and joint ventures” or “Share of other comprehensive profit or loss of subsidiaries, associates and joint ventures” etc.

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The Company’s investment in its associate is accounted for using the equity method other than those that meet the criteria to be classified as held for sale. An associate is an entity over which the Company has significant influence.

Under the equity method, the investment in the associate is carried in the balance sheet at cost and adjusted thereafter for the post-acquisition change in the Company’s share of net assets of the associate. After the interest in the associate is reduced to zero, additional loss 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. Unrealized gains and loss resulting from transactions between the Company and the associate are eliminated to the extent of the Company’s related interest in the associate.

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

When the associate issues new stock, and the Company’s interest in an associate is reduced or increased as the Company fails to acquire shares newly issued in the associate proportionately to its original ownership interest, the increase or decrease in the interest in the associate is recognized in additional paid-in capital and investment accounted for using the equity method. When the interest in the associate is reduced, the cumulative amounts previously recognized in other comprehensive income are reclassified to profit or loss or other appropriate items. The aforementioned capital surplus recognized is reclassified to profit or loss on a pro rata basis when the Company disposes the associate.

The financial statements of the associate are prepared for the same reporting period as the Company. Where necessary, adjustments are made to bring the accounting policies in line with those of the Company.

The Company determines at each reporting date whether there is any objective evidence that the investment in the associate is impaired in accordance with IAS 28 Investments in Associates . If this is the case the Company calculates the amount of impairment as the difference between the recoverable amount of the associate and its carrying value and recognizes the amount in the ‘share of profit or loss of an associate’ in the statement of comprehensive income in accordance with IAS 36 Impairment of Assets . In determining the value in use of the investment, the Company estimates:

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(a) Its share of the present value of the estimated future cash flows expected to be generated by the associate, including the cash flows from the operations of the associate and the proceeds on the ultimate disposal of the investment; or
(b) The present value of the estimated future cash flows expected to arise from dividends to be received from the investment and from its ultimate disposal.

Upon loss of significant influence over the associate, the Company measures and recognizes any retaining investment at its fair value. Any difference between the carrying amount of the associate upon loss of significant influence and the fair value of the retaining investment and proceeds from disposal is recognized in profit or loss.

(12) Property, plant and equipment

Property, plant and equipment is stated at cost, net of accumulated depreciation and accumulated impairment loss, if any. Such cost includes the cost of dismantling and removing the item and restoring the site on which it is located and borrowing costs for construction in progress if the recognition criteria are met. Each part of an item of property, plant and equipment with a cost that is significant in relation to the total cost of the item is depreciated separately. When significant parts of property, plant and equipment are required to be replaced in intervals, the Company recognized such parts as individual assets with specific useful lives and depreciation, respectively. The carrying amount of those parts that are replaced is derecognized in accordance with the derecognition provisions of IAS 16 “Property, plant and equipment”. When a major inspection is performed, its cost is recognized in the carrying amount of the plant and equipment as a replacement if the recognition criteria are satisfied. All other repair and maintenance costs are recognized in profit or loss as incurred.

Depreciation is calculated on a straight-line basis over the estimated economic lives of the following assets:

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Items Land improvements Buildings Machinery and equipment Transportation equipment Other equipment	Estimated economic lives
	7～20 years 2～60 years 2～25 years 5～8 years 2～20 years

(13) Leases

The Company assesses whether the 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. To assess whether a contract conveys the right to control the use of an identified asset for a period of time, the Company assesses whether, throughout the period of use, has both of the following:

(d) the right to direct the use of the identified asset.

For a contract that is, or contains, a lease, the Company accounts for each lease component within the contract as a lease separately from non-lease components of the contract. For a contract that contains a lease component and one or more additional lease or non-lease components, the Company allocates the consideration in the contract to each lease component on the basis of the relative stand-alone price of the lease component and the aggregate stand-alone price of the non-lease components. The relative stand-alone price of lease and non-lease components shall be determined on the basis of the price the lessor, or a similar supplier, would charge the Company for that component, or a similar component, separately. If an observable stand-alone price is not readily available, the Company estimates the stand-alone price, maximising the use of observable information.

Company as a lessee

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

At the commencement date, the Company measures the lease liability at the present value of the lease payments that are not paid at that date. The lease payments are discounted using the interest rate implicit in the lease, if that rate can be readily determined. If that rate cannot be readily determined, the Company uses its incremental borrowing rate. At the commencement date, the lease payments included in the measurement of the lease liability comprise the following payments for the right to use the underlying asset during the lease term that are not paid at the commencement date:

(a) fixed payments (including in-substance fixed payments), less any lease incentives receivable;
(b) variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the commencement date;
(c) amounts expected to be payable by the lessee under residual value guarantees;
(d) the exercise price of a purchase option if the Company is reasonably certain to exercise that option; and
(e) payments of penalties for terminating the lease, if the lease term reflects the lessee exercising an option to terminate the lease.

After the commencement date, the Company measures the lease liability on an amortised cost basis, which increases the carrying amount to reflect interest on the lease liability by using an effective interest method; and reduces the carrying amount to reflect the lease payments made.

At the commencement date, the Company measures the right-of-use asset at cost. The cost of the right-of-use asset comprises:

(a) the amount of the initial measurement of the lease liability;
(b) any lease payments made at or before the commencement date, less any lease incentives received;
(c) any initial direct costs incurred by the lessee; and
(d) an estimate of costs to be incurred by the lessee in dismantling and removing the underlying asset, restoring the site on which it is located or restoring the underlying asset to the condition required by the terms and conditions of the lease.

For subsequent measurement of the right-of-use asset, the Company measures

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the right-of-use asset at cost less any accumulated depreciation and any accumulated impairment loss. That is, the Company measures the right-of-use applying a cost model.

If the lease transfers ownership of the underlying asset to the Company by the end of the lease term or if the cost of the right-of-use asset reflects that the Company will exercise a purchase option, the Company depreciates the rightof-use asset from the commencement date to the end of the useful life of the underlying asset. Otherwise, the Company depreciates the right-of-use asset 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.

The Company applies IAS 36 “Impairment of Assets” to determine whether the right-of-use asset is impaired and to account for any impairment loss identified.

Except for those leases that the Company accounted for as short-term leases or leases of low-value assets, the Company presents right-of-use assets and lease liabilities in the balance sheet and separately presents lease-related interest expense and depreciation charge in the statements comprehensive income.

For short-term leases or leases of low-value assets, the Company elects to recognize the lease payments associated with those leases as an expense on either a straight-line basis over the lease term or another systematic basis.

For the related rental concessions that occurred as a direct result of the COVID19 pandemic, the Company chose not to assess whether it was a lease modification, but instead treated the rental concessions as changes in lease payments, and applied this practical expedient on all eligible rental concessions.

Company as a lessor

At inception of a contract, the Company classifies each of its leases as either an operating lease or a finance lease. A lease is classified as a finance lease if it transfers substantially all the risks and rewards incidental to ownership of an underlying asset. A lease is classified as an operating lease if it does not transfer substantially all the risks and rewards incidental to ownership of an underlying asset. At the commencement date, the Company recognizes assets held under a finance lease in its balance sheet and present them as a receivable at an amount equal to the net investment in the lease.

For a contract that contains lease components and non-lease components, the Company allocates the consideration in the contract applying IFRS 15.

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The Company recognizes lease payments from operating leases as rental income on either a straight-line basis or another systematic basis. Variable lease payments for operating leases that do not depend on an index or a rate are recognized as rental income when incurred.

(14) Intangible assets

The useful lives of intangible assets are assessed as either finite or indefinite.

(15) Impairment of non-financial assets

The Company assesses at the end of each reporting period whether there is any

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indication that an asset in the scope of IAS 36 Impairment of Assets may be impaired. If any such indication exists, or when annual impairment testing for an asset is required, the Company estimates the asset’s recoverable amount. An asset’s recoverable amount is the higher of an asset’s or cash-generating unit’s (“CGU”) fair value less costs to sell and its value in use and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or Company’s of assets. Where the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount.

For assets excluding goodwill, an assessment is made at each reporting date as to whether there is any indication that previously recognized impairment loss may no longer exist or may have decreased. If such indication exists, the Company estimates the asset’s or cash-generating unit’s recoverable amount. A previously recognized impairment loss is reversed only if there has been an increase in the estimated service potential of an asset which in turn increases the recoverable amount. However, the reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognized for the asset in prior years.

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

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

(16)

(16) Post-employment benefits

All regular employees of the Company are entitled to a pension plan that is managed by an independently administered pension fund committee. Fund assets are deposited under the committee’s name in the specific bank account

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and hence, not associated with the Company and its domestic subsidiaries. Therefore, fund assets are not included in the Company’s parent Company only financial statements.

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

(b) the date that the Company recognizes restructuring-related costs

(17) Share-based payment transactions

The cost of equity-settled transactions between the Company and its subsidiaries is recognized based on the fair value of the equity instruments granted. The fair value of the equity instruments is determined by using an appropriate pricing model.

The cost of equity-settled transactions is recognized, together with a corresponding increase in other capital reserves in equity, over the period in which the performance and/or service conditions are fulfilled. The cumulative expense recognized for equity-settled transactions at each reporting date until the vesting date reflects the extent to which the vesting period has expired and the Company’s best estimate of the number of equity instruments that will

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ultimately vest. The income statement expense or credit for a period represents the movement in cumulative expense recognized as at the beginning and end of that period.

The dilutive effect of outstanding options is reflected as additional share dilution in the computation of diluted earnings per share.

The cost of restricted stocks issued is recognized as salary expense based on the fair value of the equity instruments on the grant date, together with a corresponding increase in other capital reserves in equity, over the vesting period. The Company recognized unearned employee salary which is a transitional contra equity account; the balance in the account will be recognized as salary expense over the passage of vesting period.

(18)

(18) Provisions

Provisions are recognized when the Company has a present obligation (legal or constructive) as a result of a past event, it is probably that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Where the

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Company expects some or all of a provision to be reimbursed, the reimbursement is recognized as a separate asset but only when the reimbursement is virtually certain. If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects the risks specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is recognized as a finance cost.

(19) Treasury shares

The Company buys back its parent Company’s equity instruments (treasury shares) that are recognized at cost as a deduction item under equity. The valuation difference resulted from transactions of treasury shares is reported under equity.

(20) Revenue recognition

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

Sale of goods

The Company manufactures and sells fitness equipment. Sales are recognized when control of the goods is transferred to the customer and the goods are delivered to the customers (the customer obtains the right and carrying value of the goods). The sales of goods transactions of the revenue is recognized based on the consideration stated in the contract. For certain sales of goods transactions, they are usually accompanied by volume discounts (based on the accumulated total sales amount for a specified period). Therefore, revenue from these sales is recognized based on the price specified in the contract, net of the estimated volume discounts.

The credit period of the Company’s sale of goods is from 30 to 150 days. For most of the contracts, when the Company transfers the goods to customers and has a right to an amount of consideration that is unconditional, these contracts are recognized as trade receivables. The Company usually collects the payments shortly after transfer of goods to customers; therefore, there is no significant financing component to the contract. For some of the contracts, the Company

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collects the payments when contracts signed-off and has the obligations to transfer the goods or provide the services, these contracts should be presented as contract liabilities.

The period between the transfers of contract liabilities to revenue is usually within one year, thus, no significant financing component has arisen.

(21) Borrowing cost

(22) Income Tax

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

Current income tax

The income tax for undistributed earnings is recognized as income tax expense in the subsequent year when the distribution proposal is approved by the Shareholders’ meeting.

Deferred income tax

Deferred income tax is a temporary difference between the tax bases of assets and liabilities and their carrying amounts in financial statement at the reporting date.

Deferred tax liabilities are recognized for all taxable temporary differences,

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except:

A. where the deferred tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss.
B. in respect of taxable temporary differences associated with investments in subsidiaries, associates and interests in joint arrangements, where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.

A. where the deferred tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss;
B. in respect of deductible temporary differences associated with investments in subsidiaries, associates and joint ventures, deferred tax assets are recognized only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilized.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realized or the liability is settled, based on tax rates and tax laws that have been enacted or substantively enacted at the reporting date. The measurement of deferred tax assets and deferred tax liabilities reflects the tax consequences that would follow from the manner in which the Company expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.

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(23) Business combinations and goodwill

Business combinations are accounted for using the acquisition method. The consideration transferred, the identifiable assets acquired, and liabilities assumed are measured at acquisition date fair value. For each business combination, the acquirer measures any non-controlling interest in the acquiree either at fair value or at the non-controlling interest’s proportionate share of the acquiree’s identifiable net assets. Acquisition-related costs are accounted for as expenses in the periods in which the costs are incurred and are classified under administrative expenses.

When the Company acquires a business, it assesses the assets and liabilities assumed for appropriate classification and designation in accordance with the contractual terms, economic circumstances and pertinent conditions as at the acquisition date. The aquiree’s embedded derivatives in host contracts is separately assessed and valued.

If the business combination is achieved in stages, on final acquisition date, acquiree’s equity interests that have been previously acquired by acquirer is required to be remeasured at fair value on the acquisition date, and respective remeausrement gain or loss shall be recorded as current periodical profit or loss.

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After initial recognition, goodwill is measured at cost less any accumulated impairment loss. Goodwill acquired in a business combination is, from the acquisition date, allocated to each of the Company’s cash-generating units that are expected to benefit from the combination, irrespective of whether other assets or liabilities of the acquiree are assigned to those units. Each unit or Company of units to which the goodwill is so allocated represents the lowest level within the Company at which the goodwill is monitored for internal management purpose and is not larger than an operating segment before aggregation.

5. Significant accounting judgements, estimates and assumptions

In preparation of the Company’s consolidated financial statements, the Company’s management is required to make judgments, estimates and assumptions at the end of the reporting period that affect the reported amounts of revenues, expenses, assets and liabilities, and the disclosure of contingent liabilities. Uncertainties from these assumption and estimate may result in a material adjustment to the carrying amount of relevant assets or liabilities in future periods.

A. Accounts receivables–estimate of impairment loss

The Company estimates the impairment loss of accounts receivables at an amount equal to lifetime expected credit loss. The credit loss is the present value of the difference between the contractual cash flows that are due under the contract (carrying amount) and the cash flows that are expected to receive (by evaluating forward looking information). However, as the

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impact from the discounting of short-term receivables is not material, the credit loss is measured by the undiscounted cash flows. Where the actual future cash flows are lower than expected, a material impairment loss may arise. Please refer to Note 6(3) and Note 14 for more details.

B. Inventories

C. The Fair Value of Financial Instruments

D. Pension Benefits

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E. Income Tax

6. Contents of significant accounts

(1) Cash and cash equivalents

ash and cash equivalents
Cash on hand Petty cash Demand deposits Total	As of 31 December
	2022 $100 245 432,025 $432,370	2021
		$94 245 363,155
		$363,494

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(2) Financial assets measured at amortized cost

nancial assets measured at amortized cost
Time deposits with maturity over three months Pledged time deposits Subtotal Less: loss allowance Total Current Non-current Total	As of 31 December
	2022	2021
	$100,000 2,800	$ - 2,800
	102,800 -	2,800 -
	$102,800	$2,800
	$100,000 2,800	$ - 2,800
	$102,800	$2,800

For further information on financial assets measured at amortized cost pledged as collateral and on credit risk, please refer to Notes 8 and Note 12 (4), respectively.

(3) Trade receivables, net

rade receivables, net
Accounts receivable(Total) Less: loss allowance Subtotal Accounts receivable- related parties Total	As of 31 December
	2022 $551,612 (353) 551,259 - $551,259	2021
		$756,031 (17,885)
		738,146 11,573
		$749,719

Accounts receivables were not pledged.

100% credit loss provision is reserved for account receivables which are deemed with least possibility to be collected. As of 31 December 2022, and 2021, the receivables with 100% loss allowances being reserved amounted to $28,163 and $13,679 respectively .

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(4) Inventories, net

nventories, net
Raw materials Work in progress Finished goods Merchandise Total	As of 31 December
	2022 $411,426 20,761 626,649 3,331 $1,062,167	2021
		$353,103 42,072 413,672 4,494
		$813,341

The cost of inventories recognized as cost of sales for the years ended 31 December 2022 and 2021 amounted to $2,752,806 and $2,722,534 respectively. The expenses resulted from inventory write-downs were recorded as $37,003 and $23,747 for the years ended 31 December 2022 and 2021 respectively.

No inventories were pledged.

(5) Investments accounted for under the equity method

Details of investments accounted for under the equity method are as follows:

As of 31	December	December
2022 Carrying amount Percentage of ownership (%) $3,411 30.00% 3,044 49.00% - 22.32% - 41.00% 6,455 17,519 100% - - 17,519 $23,974	2021
Carrying amount $3,411 3,044 - - 6,455 17,519 -	Carrying amount $10,460 1,507 - - 11,967 2,606 615	Percentage of ownership (%)
		30.00% 49.00% 22.32% 41.00% 100% 83.52%
17,519 $23,974	3,221 $15,188

The Company's share of loss of Sunko Biotech Co. and Chen Chi Technology Co. equaled its interest in Sunko Biotech Co. and Chen Chi Technology Co. Therefore, the Company is not obliged to recognize its share of further loss.

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In July 2021, the Company established a subsidiary which named Kuo Ching Development Corp. Blessingthoughts Co. Ltd. resolved to undertake liquidation at board of directors meeting on 9 November 2021, and remitted the remaining investment funds on 31 March 2022. Please refer to Note4 (3) of the consolidated financial statements for information of the Company’s subsidiary.

(1) The details of investments recognized as profit and loss in 2022 and 2021 are as follows:

2021 are as follows:
Power Rich Bnkc Biochemical Technology Co. KuoChing Development Blessingthoughts Total	For theyears ended 31 December
	2022 $(7,964) 2,201 15,234 - $9,471	2021
		$(3,075) 737 1,606 (294)
		$(1,026)

(2) The details of the exchange differences on translation of foreign financial statements in 2022 and 2021 are as follows:

Power Rich	For theyears ended 31 December	For theyears ended 31 December
	2022 $915	2021
		$(355)

(3) Investments in associates

The Company’s investment in subsidiaries is expressed in “Investments Accounted for Using Equity Method” in the individual financial report and necessary evaluation adjustments are made. Since the investment had no significant impact on the Company’s financial statements, it was recognized based on the investee Company’s financial statements within the same fiscal accounting period, that have not been audited by an independent auditor.

(4) Investments in associates

The Company’s investments in Bnkc Biochemical Technology Co., and Power Rich are not significant. The investments are valued based on the investee’s financial statements within the same fiscal accounting period. The investments in associates had no contingent liabilities or capital commitments as of 31 December 2022 and 2021. The investments have not been pledged as collaterals.

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(6) Property, plant and equipment

Land	Land improvements $3,083 - - - $3,083 $2,047 132 - $2,179 $3,083 - - -	Transportation equipment	Total
$465,109 - - -		$16,485 301 (675) 129 $16,240 $11,424 841 (675) $11,590 $15,783 539 (68) 231 $16,485	$4,232,849 72,533 (46,073) 49,510
$465,109			$4,308,819
$ - - -			$2,568,491 225,624 (41,837)
$ -			$2,752,278
$465,109 - - -			$4,202,381 82,795 (166,966) 114,639
$465,109	$3,083		$4,232,849

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Land	Land improvements $1,915 132 -	Buildings	Transportation equipment	Total $2,499,528 231,708 (162,745)
$ - - -		$458,713 49,248 (6,247) $501,714 $451,433 $465,692	$10,644 848 (68) $11,424 $4,650 $5,061
$ -	$2,047			$2,568,491
$465,109	$904			$1,556,541
$465,109	$1,036			$1,664,358

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(a) There is no capitalization of interest due to purchase of property, plant and equipment for the years ended 31 December 2022 and 2021.
(b) Components of buildings that have different useful lives are the main building structure and air condition equipment and elevators, which are depreciated over 60 years and 5 years and 15 years, respectively. Machinery and equipment that have different useful lives are new reaction equipment, piping equipment, and production equipment for expansion, etc., which are depreciated over 10 years and 5 years and 7 years, respectively.
(c) As of 31 December 2022 and 2021, due to legal restrictions, part of the lands belonging to agricultural lands were recorded in the Company's accounts and the amount temporarily registered in the name of another person amounted to $7,011 without differences. The Company obtained the certificates of other rights for each of the lands.
(d) On 26 February 2020, the Company’s board members passed the resolution to dispose of the land, plant and equipment of Dajia Factory. A transfer agreement was signed on 28 May 2020 for this project. However, the transaction was terminated in June 2021 because both parties could not reach a consensus on some of the transaction conditions, and the contract was terminated when mutually agreed and a termination agreement was signed on 17 June 2021. Pursuant to the terms of the termination agreement, the buyer agreed to pay the Company's due commercial interests in the amount of $55,000. At the same time, the Company also returned the transaction price of $186,000 paid by the buyer before the termination of the agreement.
(e) Please refer to Note 8 for property, plant and equipment pledged as collateral.
(7) Short-term loans

hort-term loans
Unsecured bank loans Interest rates applied for unsecured bank	As of 31 December
	2022 2021 $298,991 $295,721 As of 31 December,	2021
		$295,721
	2022 1.34%~6.18%	2021
		0.65%~0.95%

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loans

The Company’s open short-term lines of credit facilities were $704,791 and $701,798 as of 31 December 2022 and 2021, respectively.

(8) Other payables

ther payables
Accrued payroll Accrued expense of pollution remediation Accrued employee compensation Payables on equipment Accrued directors and supervisor’s compensation expense Other expense Total	As of 31 December
	2022 $74,955 32,989 2,104 3,031 701 62,300 $176,080	2021
		$67,072 73,652 - 6,219 - 70,781
		$217,724

(9) Long-term loans

(1) Details of long-term loans as at 31 December 2022 and 2021 are as follows:

Lenders Mega International Commercial Bank	As of 31 December 2022 $92,650	As of 31 December 2021 $106,250	Redemption Repayable quarterly from 26 December 2016 to 26 December 2024. Principle is repaid in 33 quarterly intstallments.

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Lenders secured bank loans First Commercial Bank secured bank loans First Commercial Bank secured bank loans Chang Hwa Commercial Bank unsecured Revolving Loan Hua Nan Ban unsecured Revolving Loan Mega International Commercial Bank unsecured Revolving Loan Taipei Fubon Bank unsecured Revolving Loan O-Bank unsecured Revolving Loan O-Bank unsecured Revolving Loan Taiwan Cooperative Bank unsecured Revolving Loan	As of 31 December 2022 66,640 83,320 50,625 - 70,850 27,500 31,000 89,000 35,333	As of 31 December 2021 100,000 100,000 73,125 12,500 81,250 37,500 31,000 89,000 70,667	Redemption
			Repayable quarterly from 24 March 2022 to 24 December 2024. Principle is repaid in 12 quarterly installments. Repayable quarterly from 5 August 2022 to 5 May 2025. Principle is repaid in 12 quarterly installments. Repayable quarterly from 24 June 2021 to 24 March 2025. Principle is repaid in 16 quarterly intsallments. Repayable quarterly from 11 August 2018 to 11 May 2022. Principle is repaid in 16 quarterly installments. Repayable quarterly from 26 December 2016 to 26 December 2024. Principle is repaid in 33 quarterly installments. Repayable quarterly from 1 December 2020 to 1 September 2025. Principle is repaid in 20 quarterly installments. Repayable quarterly from 15 July 2022 to 15 July 2025. Principle is repaid in 9 quarterly installments. Repayable quarterly from 15 July 2022 to 15 July 2025. Principle is repaid in 13 quarterly installments. From 21 March 2021 to 21 December 2023, an advance repayment of the current period was $5,500, and remaining balance was divided into sixteen installments with three months being one installment. Principle is repaid in 16 quarterly installments.

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Lenders Taiwan Cooperative Bank unsecured Revolving Loan First Commercial Bank secured bank loans Subtotal Less: current portion Total Interest rates applied	As of 31 December 2022 As of 31 December 2021 100,000 - 100,000 - 746,918 701,292 (191,470) (172,835) $555,448 $528,457 As of 31 December 2022 2021 1.51%~1.83% 1.09%~1.20%	Redemption
		Repayable quarterly from 19 November 2023 to 19 August 2027. Principle is repaid in 16 quarterly installments. Repayable quarterly from 7 January 2025 to 7 October 2027. Principle is repaid in 12 quarterly installments.
	2022 1.51%~1.83%

(2) Please refer to Note 8 for property, plant and equipment pledged as collateral for long-term loans.

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(10) Post-employment benefits

Defined contribution plan

The Company adopt a defined contribution plan in accordance with the Labor Pension Act of the R.O.C. Under the Labor Pension Act, the Company will make monthly contributions of no less than 6% of the employees’ monthly wages to the employees’ individual pension accounts. The Company has made monthly contributions of 6% of each individual employee’s salaries or wages to employees’ pension accounts.

Pension expenses under the defined contribution plan for the years ended 31 December 2022 and 2021 were $17,750 and $16,948 respectively .

Defined benefits plan

The Company adopt a defined benefit plan in accordance with the Labor Standards Act of the R.O.C. The pension benefits are disbursed based on the units of service years and the average salaries in the last month of the service year. Two units per year are awarded for the first 15 years of services while one unit per year is awarded after the completion of the 15th year. The total units shall not exceed 45 units. Under the Labor Standards Act, the Company contribute an amount equivalent to 6.6% of the employees’ total salaries and wages on a monthly basis to the pension fund deposited at the Bank of Taiwan in the name of the administered pension fund committee. Before the end of each year, the Company assess the balance in the designated labor pension fund. If the amount is inadequate to pay pensions on the assumption that workers meeting retirement terms will be retiring within the coming year, the Company shall make one-time contribution to the fund to eliminate the difference before the end of March in the following year.

The Ministry of Labor is in charge of establishing and implementing the fund utilization plan in accordance with the Regulations for Revenues, Expenditures, Safeguard and Utilization of the Labor Retirement Fund. The pension fund is invested in-house or under mandate, based on a passiveaggressive investment strategy for long-term profitability. The Ministry of Labor establishes checks and risk management mechanism based on the assessment of risk factors including market risk, credit risk and liquidity risk, in order to maintain adequate manager flexibility to achieve targeted return without over-exposure of risk. With regard to utilization of the pension fund, the minimum earnings in the annual distributions on the final financial statement shall not be less than the earnings attainable from the amounts accrued from two-year time deposits with the interest rates offered by local banks. Treasury Funds can be used to cover the deficits after the approval of the competent authority. As the Company does not participate in the operation and management of the pension fund, no disclosure on the fair value of the plan assets categorized in different classes could be made in accordance with paragraph 142 of IAS 19. The Company expects to contribute $3,533 to its defined benefit plan during the 12 months beginning after 31 December 2022.

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The average duration of the defined benefits plan obligation as of 31 December 2022, was 8 years.

Pension costs recognized in profit or loss are as follows:

Pension costs recognized in profit or loss are as follows:
Current service costs Interest expense Settlement loss Total	For the years ended 31 December
	2022	2021 $452 62 2,036 $2,550
	$356 103 -
	$459

Reconciliations of liabilities (assets) of the defined benefit obligation and plan assets at fair value are as follows:

Reconciliations of liabilities (assets) of the defined benefit plan assets at fair value are as follows:	obligation and	obligation and
Defined benefit obligation Plan assets at fair value Other non-current liabilities - defined benefit obligation	As of 31 December
	2022	2021 $78,306 (61,898) $16,408
	$67,533 (63,363)
	$4,170

Reconciliation of liability (assets) of the defined benefit plan are as follows:

As of 1 January 2021 Current period service costs Net interest expense (income) Service cost Subtotal Remeasurement of the defined benefit liability (asset): Actuarial gains and loss arising from changes in demographic assumptions Actuarial gains and loss arising from changes in financial assumptions Experience adjustments Remeasurements of the defined benefit assets	Defined benefit obligation $92,596 452 275 2,036 95,359 183 (3,071) (990) -	Fair value of plan assets $(70,170) - (213) - (70,383) - - - (1,006)	Benefit liability (asset)
			$22,426 452 62 2,036
			24,976
			183 (3,071) (990) (1,006)

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Subtotal Benefits paid Contributions by employer As of 31 December 2021 Current period service costs Net interest expense (income) Subtotal Remeasurements of the defined benefit liability (asset): Actuarial gains and loss arising from changes in demographic assumptions Actuarial gains and loss arising from changes in financial assumptions Experience adjustments Remeasurements of the defined benefit assets Subtotal Benefits paid Contributions by employer As of 31 December 2022	Defined benefit obligation (3,878) (13,175) - 78,306 356 542 79,204 13 (3,147) (723) - (3,857) (7,814) - $67,533	Fair value of plan assets (1,006) 13,175 (3,684) (61,898) - (439) (62,337) - - - (5,404) (5,404) 7,814 (3,436) $(63,363)	Benefit liability (asset)
			(4,884)
			- (3,684)
			16,408 356 103
			16,867
			13 (3,147) (723) (5,404)
			(9,261)
			- (3,436)
			$4,170

The following significant actuarial assumptions are used to determine the present value of the defined benefit obligation:

Discount rate Expected rate of salary increases	As of 31 December	As of 31 December
	2022	2021
	1.25% 2.00%	0.70% 2.00%

A sensitivity analysis for significant assumption as of 31 December 2022 and 2021 is as shown below :

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Effect on the defined benefit obligation

Discount rate increase by 0.25% Discount rate increase by 0.10% Discount rate decrease by 0.10% Discount rate decrease by 0.25% Future salary increase by 0.25% Future salary decrease by 0.25%	2022	2022	2021	2021
	Increase defined benefit obligation	Decrease defined benefit obligation	Increase defined benefit obligation	Decrease defined benefit obligation
	$ - - 556 1,404 1,390 -	$1,360 549 - - - 1,354	$ - - 740 1,870 1,841 -	$1,808 730 - - - 1,789

The methods and assumptions for preparing sensitivity analyses was consistent with those in the prior fiscal period.

(11) Share-based payment

Treasury stock to employee transactions:

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Information about the treasury shares transfer to employees is as follows:

	As of 16 December 2021	As of 16 December 2021
Unit	(thousands of shares)	Weighted average exercise price of share options)




	Grant date on 16 December 2021
	41.26% 0.3605% 0.0219 $19.8751 Black-Scholes option pricing model

Note: The share closing price of the Company was $25.65, but the Company’s treasury shares were issued to employees with a 2-year transfer restriction, so the market price was adjusted to $19.8751.

The remuneration costs recognized by the Company in 2021 $3,364.

(12)Equity

A. Common stock

As of 1 January 2021 the Company’s authorized capital was $2,500,000, divided into 250,000 thousand shares with par value of NTD10 each. The

241

number of issued shares was 188,995 thousand shares, and the paid-in capital was $1,899,952.

The Company's board of directors approved to write offthe treasury share on the meeting dated 16 December 2021. The applicable closing date of capital reduction was 19 January 2022. The amount of capital reduction was $41,111 and 4,111 thousand shares were eliminated. The modification of registration was completed on 7 February 2022.

The Company’s authorized capital was $2,500,000 as of 31 December 2022, the number of issued shares was 184,884 thousand shares with par value NTD10 each, and the paid-in capital was $1,848,841.

In August 2007, May and December 2012, the Company issued 30,000 thousand shares, 5,000 thousand shares and 5,000 thousand shares of private placement, respectively, in accordance with Article 43-6 of the Securities Exchange Act. The closing dates of the capital increase were 7 August 2007, 30 October, and 5 December 2012. The above private shares were canceled in October 2009 as a result of a capital reduction to offset the accumulated loss, with 12,449 thousand shares canceled in proportion to the shareholding ratio. In March 2016, 5,000 thousand private shares were canceled due to the merger. In December 2021 3,383 thousand shares were canceled as a result of the capital reduction in cash refund to the shareholders.

As of 31 December 2022, the number of outstanding private 19,168 thousand shares with par value is 10 per share, and the public offering process has not yet been processed.

B. Capital surplus

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

Treasury share transactions Premium from merger Adjustments arising from changes in percentage of ownership in subsidiaries Total	As of 31 December	As of 31 December
	2022 $25,170 15,188 1,897 $42,255	2021
		$24,845 15,188 1,897
		$41,930

C. Treasury stock

As of 31 December 2022 and 2021, the Company’s treasury stock amounted to $0 and $40,786 , and the number of shares was 0 thousand and 4,111 thousand, respectively.

From 14 November 2018 to 10 January 2019, the Company repurchased 5,319 thousand shares.The purpose of the repurchase is to transfer the shares to the employees, and the shares are to be transferred to the employees all at once or in installments within three years from the date of the repurchase of the shares.

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information, please refer to Note 6. 12(1).

D. Distribution of retained earnings and dividend policies

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

(a)Income tax obligation

(b) Offsetting accumulated deficits, if any
(c)Set aside 10% as legal reserve. However, when the legal reserve amounts to the authorized capital, this shall not apply.
(d)Set aside or reserve special reserve in accordance with law and regulations.
(e)In combining the balance with the accumulated undistributed surplus of the previous period, the board of directors shall prepare a proposal for earnings distribution and submit it to the shareholders' meeting for a resolution distributing dividends to shareholders.

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The FSC on 31 March 2021 issued Order No. Jin-Guan-Cheng-Fa- Zi 1100150022, which sets out the following provisions for compliance:

Legal reserve Recognition (reversal) of special reserve Common stock cash dividend	Appropriation of earnings 2022 2021 $6,874 $ - 2,161 (4,419) 18,488 -	Dividend per share(NTD)	Dividend per share(NTD)
	2022 $6,874 2,161 18,488	2022 $0.1	2021
			$ -

Please refer to Note 6 (16) for further details on employees’ compensation and remuneration to directors.

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(13) Operating revenue

The Company’s revenue mainly come from selling products the Company manufactured. Analysis of revenue from contracts with customers during the years ended 31 December 2022 and 2021 are as follows:

A. Disaggregation of revenue

Disaggregation of revenue
Sale of goods	For the years ended 31 December 2022 2021 $2,976,358 $2,848,057
	2022 $2,976,358
		$2,848,057

The Company recognizes revenues when control of the products is transferred to customers. Revenues are earned and reported at the time that respective contract criteria are met.

B. Contract balance

Contract liabilities – current

	As of
31 December2022 $81,385	31 December2021 $3	1 January2021
		$18,752

The movement in the Company’s balances of contract liabilities for the years ended 31 December 2022 and 2021 are as follows:

		For theyears ended 31 December	For theyears ended 31 December
		2022 $(3) 81,385	2021
Revenue recognized from opening balance Increase in advance receipt within the period (excluding the amount being recognized as periodical revenues)			$(18,752) 3

Trans

C. Transaction price allocated to unfulfilled contract obligations

None.

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D. Assets recognized from costs to fulfil a contract with customers

None.

(14) Expected credit (loss) gains

) Expected credit (loss) gains
Operating expenses – Expected credit (loss) gains Trade receivables	For the years ended 31 December
	2022 $3,048	2021
		$(839)

Please refer to Note 12 for more details on credit risk.

The Company measures the loss allowance of its trade receivables (includes Note receivables 、 Trade receivables and Non-accrual loans) at an amount equal to lifetime expected credit loss. The assessment of the Company’s loss allowance as of 31 December 2022 and 2021 are as follows:

31 December 2022

Not yet due (note)			Overdue	Overdue		Total
	<=30 days	31-90 days	91-180 days	181-365 days	>=365 days
$565,738 -%	$3,527 5-10%	$ - 15-20%	$ - 40-60%	$ - 70-90%	$28,163 100%	$597,428
-	(353)	-	-	-	(28,163)	(28,516)
$565,738	$3,174	$-	$-	$-	$-	$568,912

31 December 2021

Not yet due (note)			Overdue	Overdue		Total
	<=30 days	31-90 days	91-180 days	181-365 days	>=365 days
$762,545 -%	$21,168 5-10%	$ - 15-20%	$ - 40-60%	$ - 70-90%	$15,759 100%	$799,472
-	(2,126)	-	-	-	(15,759)	(17,885)
$762,545	$19,042	$-	$-	$-	$-	$781,587

Note: The Company’s note receivables are not overdue.

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The movement in the impairment provision of Notes receivables 、 Trade receivables and Non-accrual loans for the years ended 31 December 2022 and 2021 is as follows:

As of 1 January 2022 Provision (Reversal) Transfer (out)in As of 31 December 2022 As of 1 January 2021 Provision (Reversal) As of 31 December 2021	Note receivables $ - - - $- $ - - $-	Trade receivables $17,885 (1,774) (15,758) $353 $17,046 839 $17,885	Overdue Receivables $13,679 (1,274) 15,758 $28,163 $13,679 - $13,679	Total
				$31,564 (3,048) -
				$28,516
				$30,725 839
				$31,564

(15) Leases
A. The Company is a lessee

The Company leases various properties, including land, buildings, transportation equipment and other equipment. The lease terms range from 2 to 10 years.

The impact of Company’s leases on the financial position, financial performance and cash flows is as follows:

(a) Amounts recognized in the balance sheet
(i) Right-of-use asset

Cost:

Cost:
As of 1 January 2022 Additions Disposals As of 31 December 2022 Depreciation and impairment: As of 1 January 2022 Depreciation	Land	Buildings	Transportation equipment	Other equipment	Total
	$84,450 782 -	$91,131 21,903 (21,771)	$7,637 699 (5,211)	$894 - (230)	$184,112 23,384 (27,212)
	$85,232	$91,263	$3,125	$664	$180,284
	Land	Buildings	Transportation equipment	Other equipment	Total
	$25,146 9,147	$47,936 22,679	$5,716 1,391	$613 138	$79,411 33,355

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-	(21,771)	(5,211)	(230)	(27,712)
$34,293	$48,844	$1,896	$521	$85,554
Land	Buildings	Transportation equipment		Total $151,460 33,053 (401) $184,112
$83,082 1,368 -	$61,872 29,259 -	$5,211 2,426 -
$84,450	$91,131	$7,637

Depreciation and impairment:

impairment:
As of 1 January 2021 Depreciation Disposals As of 31 December 2021	Land	Buildings	Transportation equipment $4,109 1,607 - $5,716	Other equipment $746 189 (322) $613	Total
	$16,332 8,814 -	$26,886 21,050 -			$48,073 31,660 (322)
	$25,146	$47,936			$79,411

Net carrying amount: As of 31 December 2022 As of 31 December 2021	$50,939	$42,419	$1,229 $1,921	$143 $281	$94,730
	$59,304	$43,195			$104,701

(ii) Lease liabilities

Lease liabilities
Current Non-Current Total	As of December31
	2022	2021
	$28,948 64,453	$30,439 73,235
	$93,401	$103,674

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B. Amounts recognized in the statement of comprehensive income

Depreciation on right-of-use assets

Land Buildings Transportation equipment Other equipment Total	Forthe years ended 31 December	Forthe years ended 31 December
	2022 $9,147 22,679 1,391 138 $33,355	2021
		$8,814 21,050 1,607 189
		$31,660

C. Income (gain) or expense (loss) relating with leases

The expenses relating to short-term leases	For theyears ended 31 December 2022 2021 $6,394 $7,709
	2022
	$6,394

D. Cash outflow related to lessee and lease activity

During the year ended 31 December 2022 and 2021, the Company’s total cash outflows for leases amounting to $41,377 and $41,096.

(16) Summary of employee benefits, depreciation and amortization expenses by function for the years ended 31 December 2022 and 2021:

Function Nature		For the years ended 31 December	For the years ended 31 December	For the years ended 31 December	For the years ended 31 December
		2022			2021
	Operating costs	Operating expenses	Total amount	Operating costs	Operating expenses	Total amount
Employee benefits expenses
Salaries	$281,937	$91,733	$373,670	$272,961	$88,166	$361,127
Labor and health insurance	29,218	8,894	38,112	28,330	9,113	37,443
Pension	13,789	4,347	18,136	13,262	6,236	19,498
Directors' remuneration	-	2,459	2,459	-	1,788	1,788
Other employee benefits expense	17,949	4,123	22,072	17,078	4,265	21,343
Share-basedpayment	-	-	-	-	3,364	3,364
Depreciation	241,456	17,523	258,979	246,189	17,195	263,384
Amortization	1,183	4,398	5,572	2,977	4,947	7,924

The number of employees of the Company in 2022 and 2021 were 509 and 514

respectively. 4 and 5 directors were not the Company’s employees in 2022 and

2021 respectively.

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The Company's average employee benefit expenses for 2022 and 2021 were $895 and $870, respectively.

The Company's average employee salary expenses for 2022 and 2021 were $740 and $709, respectively.

The Company's average employee salary expenses in 2022 increased by approximately 4.37%, compared to 2021.

The Company has set up an audit committee to replace the supervisor in accordance with the regulations.

Article 19 of the Company's articles of incorporation stipulates that when directors perform their duties in the Company, regardless of the Company's operating profit or loss, the Company shall pay remuneration to the directors. The board shall determine the remuneration according to the industry level and negotiated according to the value of their participation in the Company's operations and contribution. Article 30 of the Company’s articles of association provides that the director’s remuneration shall be determined at a rate of no more than 1% when profits are made in the current year and refer to the results of director’s performance evaluation as the basis for individual remuneration. The amount of director’s remuneration shall be submitted to the general meeting of shareholders after the resolution of the board of directors is passed.

The Company’s remuneration principle is to provide market-competitive remuneration to attract and cultivate talents in the long term. The Company formulates "Salary Management Measures" and "Employee Performance Appraisal Procedures" as the basis for evaluation by mainly referring to the salary level in the inter-industry market. Furthermore, the Company considers the overall operating conditions and profitability levels to determine reasonable remuneration based on the results of performance appraisals. The related performance appraisal results and remuneration reasonableness are reported to the compensation committee and the board of directors for review.

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Due to the operating losses, the Company did not accrue the compensation for employees and directors in 2021.

(17) Non-operating income and expenses

A. Interest income

Financial assets measured at amortized cost

For the years ended 31 December	For the years ended 31 December
2022 $1,221	2021
	$1,639

B. Other income

For the years ended
31 December
2022 2021

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Dividend income Rental income Others Total Other gains and loss Foreign exchange loss, net (Loss) gains on disposal of property, plant and equipment (Loss) Gains on valuation of financial assets at fair value through profit or loss (Note) Others expense Total	$10,195 $5,034 679 796 3,535 58,468 $14,409 $64,298 For the years ended 31 December	$5,034 796 58,468
		$64,298
	2022 $50,722 (3,137) (1,516) (40) $46,029	2021
		$(6,814) (2,671) 350 (82)
		$(9,897)

C. Other gains and loss

Note: Generated as financial assets or liabilities were measured at fair value through profit or loss.

D. Finance costs

Finance costs
Interest on bank loans Interest on lease liabilities Total	For the years ended 31 December
	2022 $(15,804) (1,326)	2021
		$(10,701) (1,543)
	$(17,130)	$(12,244)

(18) Components of other comprehensive income (loss)

C. For the year ended 31 December 2022

Items not to be reclassified to profit or loss subsequently: Remeasurements of defined benefit plans Unrealized gains from equity instruments investments measured at fair value through other comprehensive income Items that may be reclassified to profit or loss subsequently:	Arising during the period $9,261 (2,893)	Reclassificatio n adjustments during the period $ - -	Other comprehensiv e income (loss), before tax $9,261 (2,893)	Income tax effect $(1,852) -	Other comprehensiv e income (loss), net of tax
					$7,409 (2,893)

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Share of other comprehensive income

of associates accounted for under the equity method 915 - Total of other comprehensive income $7,283 $ - D. For the year ended 31 December 2021 Arising during the period Reclassificatio n adjustments during the period Items not to be reclassified to profit or loss subsequently: Remeasurements of defined benefit plans $4,884 $ - Unrealized gains from equity instruments investments measured at fair value through other comprehensive income 4,693 - Items that may be reclassified to profit or loss subsequently: Share of other comprehensive income of associates accounted for under the equity method (355) - Total of other comprehensive income $9,222 $ -	915 $7,283 Other comprehensiv e income (loss), before tax $4,884 4,693 (355) $9,222	(183) $(2,035) Income tax effect $(977) - 71 $(906)	732
			$5,248
			Other comprehensiv e income (loss), net of tax
			$3,907 4,693 (284)
			$8,316

(19) Income tax

For the years ended 31 December 2022 and 2021 the major components of income tax (expense) benefit are as follows:

A. Income tax recognized in profit or loss

. Income tax recognized in profit or loss
Current income tax (expense) benefit: Current income tax charge Deferred tax (expense) benefit: Deferred tax (expense) benefit relating to origination and reversal of temporary differences Deferred tax relating to origination and reversal of tax loss and tax credit Total income tax (expense) benefit	For the years ended 31 December
	2022	2021
	$ - 10,458 (16,460)	$(10,421) (4,375) (1,379)
	$(6,002)	$(16,175)

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B. Income tax related to components of other comprehensive income

Deferred income tax (expense) benefit: Share of other comprehensive income of associates accounted for under the equity method Remeasurements of defined benefit plans Income tax related to components of other comprehensive income	For the years ended 31 December	For the years ended 31 December
	2022	2021
	$(183) (1,852)	$71 (977)
	$(2,035)	$(906)

C. Reconciliation between tax expense (benefit) and accounting profit at the Company’s applicable tax rates is as follows:

Accounting (loss) profit before tax from continuing operations At the Company’s statutory income rate Tax effect of tax exempt income Tax effect of non-deductible expenses Adjustments of deferred tax assets/liabilities for write- downs or reversals Tax on undistributed earnings Total income tax benefit recognized in profit or loss	For the years ended 31 December	For the years ended 31 December
	2022	2021
	$67,332	$(53,783)
	$(13,466) 8,974 (102) (1,408) -	$10,757 1,663 (51) (18,123) (10,421)
	$(6,002)	$(16,175)

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D. Significant components of deferred tax assets (liabilities) are as follows:
(a) For the year ended 31 December 2022

Balance as of 1 January	Recognized in profit or loss	Recognized in other comprehensive income	Balance as of 31 December
$(2,232) 15,717 2,349 (72,514) 32,029 278 33,562 1,367	$ - 7,400 - - - - (16,460) 3,058	$ - - (1,852) - - (183) - -	$(2,232) 23,117 497 (72,514) 32,029 95 17,102 4,425
$10,556	$(6,002)	$(2,035)	$2,519

$85,388			$77,265
$(74,832)			$(74,746)

(b) For the year ended 31 December 2021

Balance as of 1 January	Recognized in profit or loss	Recognized in other comprehensive income	Balance as of 31 December
$(2,232) 20,466 3,326 (72,514) 32,029 207 34,941 993	$ - (4,749) - - - - (1,379) 374	$ - - (977) - - 71 - -	$(2,232) 15,717 2,349 (72,514) 32,029 278 33,562 1,367
$17,216	$(5,754)	$(906)	$10,556

$92,221			$85,388
$(75,005)			$(74,832)

E. The following table provides the information of the unused loss carryforward:

Unused tax loss as of

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Year 2018 2020 2021 Total	Tax loss for theperiod $16,949 163,132 76,486 $256,567	31 December 2022 $ - 85,509 76,486 $161,995	31 December 2021	Expiration Year
			$4,677 163,132 82,269	2028 2030 2031
			$250,078

F. Deferred assets with least possibility to be realized

As of 31 December 2022, and 2021, deductible temporary differences for which no deferred income tax assets have been recognized in amounted to $32,229 and $31,977, respectively.

G. Status of income tax returns assessment

As of 31 December 2022, the status of the Company’s income tax returns through 2021 have been assessed by tax authorities.

(20) Earnings per share

No diluted earnings per share in 2022 shall be accounted for due to that net loss operating loss was concluded for the fiscal

loss operating loss was concluded for the fiscal
(1) Basic earnings per share Net income (loss) attributable to the parent Company (in thousands of NTD) Weighted average number of ordinary shares outstanding for basic earnings per share (thousand shares) Basic earnings (loss) per share (NTD)	For theyears ended 31 December
	2022	2021
	$61,330	$(69,958)
	184,884	184,490
	$0.33	$(0.38)

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(2) Diluted earnings (loss)per share Net income (loss) attributable to the parent Company Effect of dilution on net income (loss) attributable to ordinary stockholders of the Company after dilution Weighted average number of ordinary shares outstanding for basic earnings per share (thousand shares) Effect of dilution: Employees’ compensation (thousand shares) Weighted average number of ordinary shares outstanding after dilution (thousand shares) Diluted earnings (loss) per share (NTD)	For theyears ended 31 December 2022 2021	For theyears ended 31 December 2022 2021
	2022
	$61,330	$(69,958)
	$61,330	$(69,958)
	184,884 142	184,490 -
	185,026	184,490
	$0.33	$(0.38)

There were no transactions which may significantly change the number of the outstanding ordinary shares from the financial statement date to the date of releasing financial statements.

7. Related party transactions

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

Name and nature of relationship of the related parties

Name of the related parties	Nature of relationship of the related parties
KT Investment Company, Limited Macy Investment Company, Limited Chiaoli Investment Company, Limited Fulilu Investment Company, Limited Kuo Ching Development Corp.	The Company’s director The Company’s director The Company’s director The Company’s director (Resigned as a corporate director on March 16, 2021) The Company's subsidiary(Established in in July 2021)

Significant transactions with the related parties

A. Sales

Kuo Ching Development Corp.	For the years ended 31 December	For the years ended 31 December
	2022 $89,259	2021
		$11,022

The sales price for related parties and payment condition of the Company's are

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set by both parties with reference to market conditions.

B. Accounts receivable-related parties

Kuo Ching Development Corp.	As of 31 December	As of 31 December
	2022 $2,620	2021
		$11,573

The Company of accounts receivable from related parties were not secured by guarantees, and credit loss provisions were not foreseen.

C. Other receivables

Kuo Ching Development Corp. D. Other revenue Kuo Ching Development Corp.	For the years ended 31 December 2022 2021 $155 $ - For the years ended 31 December 2022 2021 $1,366 $ -	For the years ended 31 December 2022 2021 $155 $ - For the years ended 31 December 2022 2021 $1,366 $ -
		2021 $ -

E. Lease - related parties
(a) Rental income

(a) Rental income
KT Investment Company, Limited	For the years ended 31 December
	2022 $549	2021
		$549

The Company’s leased its plant and building to the said related party, from which rental income and collection were set at arm’s length range.

(b) Right-of-use assets

(b) Right-of-use assets
Macy Investment Company, Limited	As of31 December 2022 2021 $49,707 $58,228
		2021 $58,228

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Macy Investment Company, Limited	As of 31 December	As of 31 December
	2022 $50,410	2021
		$58,757

(d) Interest expenses

(d) Interest expenses
For the years ended 31 December 2022 2021 Macy Investment Company, Limited $797 $917 F. Key management personnel compensation For the years ended 31 December 2022 2021 Short-term employee benefits $8,739 $7,124 Post-employment benefits 241 164 Total $8,980 $7,288	For the years ended 31 December
	2022 $8,739 241 $8,980	2021
		$7,124 164
		$7,288

F. Key management personnel compensation

8. Assets pledged as collaterals

The following table lists assets of the Company pledged as collaterals:

Property, plant and equipment – buildings, machinery and equipment Financial assets measured at amortized cost Total	Carrying	Amount As of 31 December 2021 $448,891 2,800 $451,691	Purpose ofpledges
	As of 31 December 2022 $446,552 2,800 $449,352
			Long and short-term loans Energy resources guarantee

Significant contingencies and derecognized contract commitments

The following items are the contingencies which have not been accrued and recorded on the balance sheet as on 31 December 2022

As of 31 December 2022, the amount available under unused letter of credit was $27,108.
As of 31 December 2022, the Company entered into several construction contracts for which the development is in progress. The following provides

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significant details:

Supplier Counterparty A Counterparty B Counterparty C	Contract Subject Equipment procurement Equipment procurement Plant construction	Total Contract Amount $21,500 21,300 39,000	Equipment Payment Made $17,200 7,455 15,242	Unpaid amount as of December 31 2021
				$4,300 13,845 23,758

10. Significant disaster loss

None.

11. Significant subsequent events

None.

12. Others

(1) Categories of financial instruments

Financial Assets Financial assets at fair value through profit or loss Financial assets at fair value through profit or loss, current (Other current assets) Amortized cost of a financial asset: Cash and cash equivalents (excluding cash on hand) Measured at amortized cost financial assets Notes receivables Trade receivables Other receivables (Other current assets) Subtotal Total Financial Liabilities Financial liabilities at amortized cost: Short-term loans Notes and accounts payable Other payable Long-term loans (including current portion) Lease liability Subtotal	As of 31 December	As of 31 December
	2022	2021
	$95,066 - 432,025 102,800 17,653 551,259 604	$97,959 1,184 363,155 2,800 31,869 749,719 217
	1,104,341	1,147,760
	$1,199,407	$1,246,903
	2022	2021
	$298,991 297,467 176,080 746,918 93,401	$295,721 328,959 217,724 701,292 103,674
	1,612,857	1,647,370

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Financial Assets Financial liabilities at fair value through profit or loss (Other current assets) Total	As of 31 December	As of 31 December
	2022	2021
	1,086	754
	$1,613,943	$1,648,124

(2) Financial risk management objectives

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

The Company has established appropriate policies, procedures and internal controls for financial risk management. Before entering into significant activities, approval process by the board of directors and audit committee must be carried out based on related protocols and internal control procedures. The Company complies with its financial risk management policies at all times.

(3) Market risk

Foreign currency risk

The Company’s exposure to the risk of changes in foreign exchange rates relates primarily to the Company’s operating activities (when revenue or expenses are denominated in a different currency from the Company’s functional currency) and the Company’s net investments in foreign subsidiaries.

The Company applies natural hedges on the foreign currency risk arising from purchases or sales as certain portion of receivables or payables are denominated as the same currencies, and utilizes spot or forward exchange contracts to manage foreign currency risk. The Company designates certain forward currency contracts as balance sheet hedges to hedge its exposure to foreign currency exchange risk associated with certain balance sheet assets or liabilities.

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Hedge accounting is not applied as the aforesaid natural hedges or designated forward contracts to hedge currency risk are deemed ineffective hedges. Furthermore, the currency risk exposures due from investments in oversea associates are not hedges as the investments are set for certain operating strategies.

The foreign currency sensitivity analysis of the possible change in foreign exchange rates on the Company’s profit is performed on significant monetary items denominated in foreign currencies as at the end of the reporting period. The Company’s foreign currency risk mainly resulted from the volatility of exchanging USD, CNY to NTD, and vice versa. The information of the sensitivity analysis is as follows:

a. When NTD strengthens/weakens against USD by 1%, the profit for the years ended 31 December 2022 and 2021 is decreased / increased by $3,096 and $3,261, respectively; and no impact on the equity.
b. When NTD strengthens/weakens against CNY by 1%, the profit for the years ended 31 December 2022 and 2021 is increased / decreased by $236 and by $46, respectively; and no impact on the equity.

Interest rate risk

The Company is exposed to interest rate risk arising from borrowing at floating interest rates. Interest rate risk is the risk that the fair value or forecasted cash flows of a financial instrument fluctuates due to the volatility in market interest rates.

Equity price risk

The Company’s listed and unlisted equity securities are susceptible to market price risk arising from uncertainties about future performance of equity markets. The Company’s equity investments are classified as financial assets at fair value through other comprehensive income. The equity investment portfolio is submitted to the Company’s senior management on a regular basis. The Company’s Board of Directors reviews and approves changes on the equity

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investment portfolio.

(4) Credit risk management

Credit risk is the risk that a financial loss may be triggered when a counterparty defaults its obligations. The Company is exposed to credit risk from operating activities (primarily for, accounts receivables and notes receivables) and from its financing activities, including bank deposits and other financial instruments.

The Company mitigates credit risks by implementing the Company’s credit policy, procedures and controls. Credit limits are set for all counter parties based on their financial positions, credit ratings, historical experience, prevailing economic condition and the Company’s internal rating criteria etc. For dealing with some counterparties with less credit, certain financial instruments of credit enhancement, such as advance receipts or a letter of credit, may be required to be provided to mitigate possible credit risk exposures.

As of 31 December 2022 and 2021, accounts receivables from top ten customers represent 54% and 64% of the total accounts receivables of the Company, respectively. The credit concentration risk of other trade receivables is insignificant.

Credit risk from deposits in banks, fixed income securities and other financial instruments is managed by the Company’s treasury division in accordance with the Company’s policy. The Company only deals with counterparties that are approved through internal control procedures; therefore, the counterparties are limited to banks, financial institutions, companies or government entities with good credit standing.

The Company would write down or write off values of financial assets if these

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are forecasted to be least possible to be collected in the case of the issuer or debtor being insolvent or in financial distress.

(5) Liquidity risk management

The Company’s objective is to maintain a balance between continuity of funding and flexibility through the use of cash and cash equivalents, highly liquid equity investments and bank borrowings. The table below summarizes the maturity profile of the Company’s financial liabilities based on the contractual undiscounted payments and contractual maturity, including contractual interests. The undiscounted interest payment due from borrowings with variable interest rates is extrapolated based on the estimated interest rate yield curve as of the end of the reporting period.

Non-derivative financial instruments

Less than 1 year As of 31 December 2022 Short-term loans $307,029 Notes and accounts payable 297,467 Long-term loans 194,765 Lease liabilities 30,079 As of 31 December 2021 Short-term loans $298,073 Notes and accounts payable 328,959 Long-term loans 174,849 Lease liabilities 31,667 Derivative financial assets (liabilities) Less than 1year As of 31 December 2022 Inflows $109,150 Outflows (110,236) Net $(1,086) As of 31 December 2021	Less than 1 year	2 to 3 years	4 to 5 years	>=5 years	Total
		$ - - 464,207 39,864 $ - - 484,763 36,929 2 to 3years	$ - - 118,939 19,511 $ - - 60,428 22,815 4 to 5years	$ - - - 6,857 $ - - - 16,000 >= 5years	$307,029 297,467 777,911 96,311 $298,073 328,959 720,040 107,411 Total
As of 31 December 2022 Inflows Outflows Net As of 31 December 2021
	$109,150 (110,236) $(1,086)	$ - - $ -	$ - - $ -	$ - - $ -	$109,150 (110,236) $(1,086)

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Derivative financial assets (liabilities)

Inflows Outflows Net	Less than 1year	2 to 3years	4 to 5years	>= 5years	Total
	$90,115 (89,685) $430	$ - - $ -	$ - - $ -	$ - - $ -	$90,115 (89,685) $430

(6) Reconciliation of liabilities arising from financing activities

Reconciliation of liabilities for the year ended 31 December 2022:

As of 1 January 2022 Cash flows Non-cash changes As of 31 December 2022	Short-term loans $295,721 3,270 -	Long-term loans (including current portion) $701,292 45,626 -	Lease liabilities $103,674 (33,657) 23,384	Deposit margin $75 (75) -	Total liabilities from financing activities $1,100,762 15,164 23,384
	$298,991	$746,918	$93,401	$ -	$1,139,310

Reconciliation of liabilities for the year ended 31 December 2021:

As of 1 January 2021 Cash flows Non-cash changes As of 31 December 2021	Short-term loans $226,246 69,475 -	Long-term loans (including current portion) $797,901 (96,609) - $701,292	Lease liabilities $102,531 (31,844) 32,987	Deposit margin $75 - -	Total liabilities from financing activities $1,126,753 (58,978) 32,987
	$295,721		$103,674	$75	$1,100,762

(7) Fair value of financial instruments

A. Valuation methodology and assumptions for fair values

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

(a)The carrying amount of cash and cash equivalents, accounts receivables, accounts payable and other current liabilities approximate their fair value due to their short maturities.
(b)For financial assets and liabilities traded in an active market with standard terms and conditions, their fair value is determined based on market quoted prices (including listed equity securities) at the reporting date.
(c) Fair value of equity instruments without market quoted prices (including private placement of listed equity securities, unquoted public Company and private Company equity securities) are valued by market approach which takes industrial comparable entities’ quoted market prices or other relevant information as reference to estimate probable fair values.
(d)Fair value of debt instruments without market quoted prices, bank loans, and other non-current liabilities are determined based on the counterparties prices or valuation method. The valuation method uses DCF method as a basis, and the assumptions such as interest rates and discount rate are primarily based on relevant information of equivalent instruments (such as yield curves published by the Taipei Exchange, average prices and credit risks for Fixed Rate Commercial Paper published by Reuters, etc.)
B. Fair value of financial instruments measured at amortized cost

The carrying amount of the Company’s financial instruments, financial assets and liabilities measured at amortized cost approximate their fair

267

value.

C. Fair value measurement hierarchy for financial instruments

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

(8)

(8) Derivative financial instruments

The Company’s derivative financial instruments include forward currency contracts and embedded derivatives. The related information for derivative financial instruments not qualified for hedge accounting and not yet settled as of 31 December 2022 and 2021 is as follows:

Forward currency contracts

The Company entered into forward currency contracts to mitigate its exposure to financial risk, but these contracts are not designated as hedging instruments. The table below lists the information related to forward currency contracts:

Items (by contract)	Contract Amount Sell foreign currency USD 3,302 thousand Sell foreign currency EUR 139 thousand Sell foreign currency CNY 1,035 thousand Sell foreign currency USD 3,016 thousand Sell foreign currency CNY 1,035 thousand	Contract Period
As of 31 December 2022 Forward currency contract Forward currency contract Forward currency contract As of 31 December 2021 Forward currency contract Forward currency contract		From 2022.11.10 to 2023.03.31 From 2022.10.24 to 2023.01.19 From 2022.12.30 to 2023.02.24 From 2021.08.19 to 2022.05.13 From 2021.12.15 to 2022.02.19

(9) Fair value measurement hierarchy

A. Fair value measurement hierarchy

Level 1 – Quoted (unadjusted) market prices in active markets for identical assets or liabilities;

Level 2 – Valuation techniques for which the lowest level input that is

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significant to the fair value measurement is directly or indirectly observable;

Level 3 – Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.

For assets and liabilities that are recognized in the financial statements on a recurring basis, the Company determines whether transfers have occurred between levels in the hierarchy by re-assessing categorization at the end of each reporting period.

B. Fair value measurement hierarchy of the Company’s assets and liabilities

The Company does not have assets that are measured at fair value on a nonrecurring basis. Fair values of the Company’s assets and liabilities are measured at fair value on a recurring basis as follows:

As of 31 December 2022

As of 31 December 2022
Financial assets: Financial assets at fair value through other comprehensive income Equity instrument measured at fair value Financial liabilities: Financial liabilities at fair value through profit or loss Forward currency contracts As of 31 December 2021 Financial assets: Financial assets at fair value through profit or loss Forward currency contract Financial assets at fair value through other comprehensive income Equity instrument measured at fair value Financial liabilities: Financial liabilities at fair value through profit or loss Forward currency contracts	Level 1 $3,751	Level 2 $ -	Level 3 $91,315	Total $95,066
	$ -	$1,086	$ -	$1,086
	Level 1 $ -	Level 2 $1,184	Level 3 $ -	Total $1,184
	$4,254	$ -	$93,705	$97,959
	$ -	$754	$ -	$754

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Re-classifications between Level 1 and Level 2 during the period

During the years ended 31 December 2022 and 2021, there were no reclassifications between Level 1 and Level 2 fair value measurements.

Reconciliation for fair value measurements in Level 3 of the fair value hierarchy for movements during the period is as follows:

Beginning balances as of 1 January 2022 Total gains and loss recognized for the year ended 31 December 2022: Amount recognized in OCI (presented in “Unrealized gains (loss) from equity instruments investments measured at fair value through other comprehensive income) Ending balances as of 31 December, 2022 Beginning balances as of 1 January, 2021 Total gains and loss recognized for the year ended 31 December 2021: Amount recognized in OCI (presented in “Unrealized gains (loss) from equity instruments investments measured at fair value through other comprehensive income) Ending balances as of 31 December, 2021	Assets
	At fair value through other comprehensive income
	Stocks
	$93,705 (2,390)
	$91,315
	$87,169 6,536
	$93,705

Information on significant unobservable inputs of fair value measurement in Level 3 fair value hierarchy

Significant unobservable inputs of fair value measurement in Level 3 fair value hierarchy are as follows:

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As of 31 December 2022

Financial assets: Financial assets at fair value through other comprehensive income Stocks Financial assets: Financial assets at fair value through other comprehensive income Stocks	Valuation techniques	Significant unobservable inputs	Quantitative information	Correlation between inputs and fair value	Sensitivity Analysis of correlation between inputs and fair value
	Asset approach As of 31 Valuation techniques	discount for lack of marketability 30% December 2021 Significant unobservable inputs Quantitative information		The greater degree of lack of marketability, the lower the estimated fair value is determined. Correlation between inputs and fair value	10% increase (decrease) in the discount for lack of marketability would result in (decrease) increase in the Company’s profit or loss by $9,132 Sensitivity Analysis of correlation between inputs and fair value
	Asset approach	discount for lack of marketability	30%	The greater degree of lack of marketability, the lower the estimated fair value is determined.	10% increase (decrease) in the discount for lack of marketability would result in (decrease) increase in the Company’s profit or loss by $9,371

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

The Company’s treasury division is responsible for validating the fair value measurements and ensuring that the results of the valuation are in line with market conditions, based on independent and reliable inputs which are consistent with other information, and represent reasonable prices. The team analyses the movements in the values of assets and liabilities which are required to be re-measured or re-assessed as per the Company’s accounting policies at each reporting date.

(10) Significant assets and liabilities denominated in foreign currencies

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

		As of 31 December	As of 31 December
	2022	NTD $443,053 23,576 $133,496		2021
Foreign Currency $14,427 5,346 $4,347	Exchange rate 30.71 4.41 30.71		Foreign Currency $18,982 1,051 $7,201	Exchange rate 27.68 4.34 27.68	NTD
					$525,422 4,561 $199,324

The Company had $50,722 and $(6,814) foreign exchange gain (loss) for the years ended 31 December 2022 and 2021, respectively.

(11) Capital management

The primary objective of the Company’s capital management is to ensure that it maintains a strong credit rating and healthy capital ratios in order to support its business and maximize the shareholder value. To maintain or adjust the capital structure, the Company may adjust dividend payment to shareholders, return capital to shareholders or issue new shares.

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13. Other disclosures

(1) Information at significant transactions
A. Financing provided: None.
B. Endorsement/Guarantee provided: None
C. Securities held as at end of the period (excluding subsidiaries and associates):

Holding Company	Type andname ofsecurities	"Relationship	Financialstatement account		As of 31 December 2021	As of 31 December 2021
				Shares	Carrying amount	"Percen tage of	Shares
SUNKO INK CO., LTD.	Stock CHING FENG HOME FASHIONS. CO. LTD LINCO TECHNOLOGY CO. LTD THE FIRST LEASING CORPORATION TOTAL ACRYLIC POLYMER INDUSTRY (TAPI) CORPORATION GLOBAL GRAPHENE GROUP, INC. YAYI CO., LTD. SAR TECHNOLOGY INC. KING SHINE EE TECHNOLOGY ENTERPRISE CO., LTD.	Unrelated party Unrelated party Unrelated party Unrelated party Unrelated party Unrelated party Unrelated party Unrelated party	Financial assets at fair value through other comprehensive income-non-current Financial assets at fair value through other comprehensive income-non-current Financial assets at fair value through other comprehensive income-non-current Financial assets at fair value through other comprehensive income-non-current Financial assets at fair value through other comprehensive income-non-current Financial assets at fair value through other comprehensive income-non-current Financial assets at fair value through other comprehensive income-non-current Financial assets at fair value through other comprehensive income-non-current Less: Unrealized gains (loss) from investments in equity instruments Total	214,309 455,439 2,852,325 100,000 6,155 368,898 4,250,000 1,000	$3,365 4,068 25,930 1,000 16,405 4,883 42,500 10 (3,095)	0.13% 0.80% 12.96% 2.00% 0.87% 1.85% 5.18% 0.01%	$3,751 4,499 29.353 14,963 - - 42,500 -
					$95,066

D. Individual securities acquired or disposed of with accumulated amount exceeding the lower of $300 million or 20% of the capital stock for the period: None.
E. Acquisition of individual real estate with amount exceeding the lower of $300 million or 20% of the capital stock for the period: None
F. Disposal of individual real estate with amount exceeding the lower of $300 million or 20% of the capital stock for the period: None
G. Related party transactions for purchases and sales amounts exceeding the lower of $100 million or 20% of the capital stock for the period: None.
H. Receivables from related parties with amounts exceeding the lower of $100 million or 20% of capital stock as at end of the period: None.

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I. Transaction of derivative financial instruments:

Please refer to Note 12(8).

J. Significant intercompany transactions among consolidated entities are as follows:

None.

(2) Information on investees

Investor Company	Investee Company	Address	Main businesses and products	Initial investment amount	Initial investment amount	Investment as at end of theperiod	Investment as at end of theperiod	Investment as at end of theperiod	Net income (loss) of investee Company	Investment income (loss) recognized	Note
				Ending balance	Beginning balance	Number of shares (thousands)	Percentage of ownership (%)	Carrying value
The Company	Power Rich	Anguilla	Investment Services	$30,403 (USD 990,000)	$30,403 (USD 990,000)	990,000	30.00%	$3,411	$(26,546)	$(7,964)
The Company	Bnkc Biochemical Technology Co.	Taiwan	Wholesale of Chemical Raw Material, wholesale of Cosmetics, and Retail of Cosmetics	$490	$490	49,000	49.00%	$3,044	$4,491	$2,201
The Company	Sunko Biotech Co.	Taiwan	Biotechnology Services	$60,000	$60,000	1,674,044	22.32%	$ -	$ -	$ -
The Company	Chen Chi Technology Co.	Taiwan	Synthetic resin and plastic manufacturing	$14,360	$14,360	1,640,000	41.00%	$ -	$ -	$ -
The Company	Kuo Ching Development Corp	Taiwan	Wholesale of chemical solvents, industrial additives, other raw materials and their products	$2,000	$2,000	200,000	100%	$17,519	$15,234	$15,234
The Company	Blessingthoug hts	Taiwan	Drinks, and food vending	$15,200	$15,200	-	-	$ -	$ -	$ -	Note

274

Note: The company is undergoing liquidation procedure.

(3) Information on investments in Mainland China

Significant transactions with investee companies in Mainland China directly or indirectly through third parties: None.

(4) Information on major shareholders

rmation on major shareholders
Shares Names of major shareholders	Number of shares held	Shareholding ratio
Macy Investment Company, Limited	16,838,191	9.10 %
KT Investment Company, Limited	10,801,010	5.84 %

275

SUNKO INK CO., LTD.

The Contents of Statements of Major Accounting Items

For the year ended 31 December 2022

For the year ended 31 December 2022
Item	Index
Statement of Cash and Cash Equivalents	1
Statement of Accounts Receivable	2
Statement of Inventories	3
Statement of Financial Assets at Fair Value Through Other ComprehensiveIncome, Noncurrent	4
Statement of Changes in Investment Accounted for UsingEquityMethod	5
Statement of Changes in Property,Plant and Equipment	Note 6(6)
Statement of Changes in Accumulated Depreciation of Property, Plant and Equipment	Note 6 (6)
Statement of Changes in Right-of-Use Assets	Note 6(15)
Statement of Changes in Accumulated Depreciation of Right-of-Use Assets	Note 6 (15)
Statement of Short-term Loans	6
Statement of Accounts Payable	7
Statement of Other Payables	Note 6(8)
Statement of Long-term Loans	Note 6(9)
Statement of OperatingRevenues	8
Statement of OperatingCosts	9
Statement of ManufacturingOverheads	10
Statement of OperatingExpenses	11
Statement by Function Of Employee Benefits , Depreciation And Amortization Expenses	Note 6 (16)
Statement of Non-OperatingIncome And Expenses	Note 6(17)

276

SUNKO INK CO., LTD.

1. Statement of Cash and Cash Equivalents

31 December 2022

Unit: Thousands of NTD

Item	Description	Amount
Cash Cash in banks Currency deposits Demand deposits Total	USD $3,523 exchange rate 30.71 CNY $2,635 exchange rate 4.408 Others	$345 108,206 11,617 7,587 304,615
		$432,370

SUNKO INK CO., LTD.

2. Statement of Accounts Receivable

31 December 2022

Unit: Thousands of NTD

Client Name	Description	Amount	Note
Client A Client B Client C Client D Client E Client F Others (Note) Subtotal Less: loss allowance Less: Allowance of loss on exchange Total		$71,880 59,743 49,921 38,451 32,016 34,046 271,713
		557,770 (353) (6,158)
		$551,259

(Note) The amount of individual client grouped in others does not exceed 5% of the

account balance.

277

SUNKO INK CO., LTD.

3. Statement of Inventories

31 December 2022

Unit: Thousands of NTD

Item	Cost	Net Realizable Value	Note
Raw materials Work in process Finished goods Merchandise Total Less: Allowance for inventory valuation loss	$426,714 20,941 726,133 3,964	$432,002 20,941 749,303 3,667	Please refer to Note 4.(10) for more details on net realizable value
	1,177,752 (115,585)	$1,205,913

Net Amount	$1,062,167

278

SUNKO INK CO., LTD.

4. Statement of Financial Assets at Fair Value Through Other Comprehensive Income, Noncurrent

For the year ended 31 December 2022

Unit: Thousands of NTD

Name of Securities	As of 1 January 2022	As of 1 January 2022	Additions	Additions	Decrease	Decrease	Adjustment s	As of 31 December 2022	As of 31 December 2022	Accumulated impairment	Collate ral	Note
	Shares	Fair Value	Shares	Amount	Shares	Amount		Shares	Fair Value
CHING FENG HOME FASHIONS. CO. LTD LINCO TECHNOLOGY CO. LTD THE FIRST LEASING CORPORATION TOTAL ACRYLIC POLYMER INDUSTRY (TAPI) CORPORATIO GLOBAL GRAPHENE GROUP, INC. YAYI CO., LTD SAR TECHNOLOGY INC. KING SHINE EE TECHNOLOGY ENTERPRISE CO., LTD. Total	214,309 422,734 2,852,325 100,000 6,155 368,898 4,250,000 1,000	$4,254 4,554 31,825 14,826 - - 42,500 - $97,959	- 31,705 - - - -	$ - - - - - - $ -	- - - - - - - -	$ - - - - - - - - $ -	$(503) (55) (2,472) 137 - - - - $(2,893)	214,309 455,439 2,852,325 100,000 6,155 368,898 4,250,000 1,000	$3,751 4,499 29,353 14,963 - - 42,500 - $95,066	N/A N/A N/A N/A N/A N/A N/A N/A	None None None None None None None None

279

SUNKO INK CO., LTD.

5. Statement of Changes in Investment Accounted for Using Equity Method

For the year ended 31 December 2022

Unit: Thousands of NTD

Name of Company	1 January2022	1 January2022	Additions	Additions	Decrease	Decrease	Share of profit or loss of subsidiaries and associates	Exchange Differences on Translation of Foreign Operations	Others	31 December 2022	31 December 2022		Collateral	Note
	Number of shares	Amount	Number of shares	Amount	Number of shares	Amount				Number of shares	Percentage of ownership	Amount
POWER RICH BNKC BIOCHEMICAL TECHNOLOGY CO. SUNKO BIOTECH CO. CHEN CHI TECHNOLOGY CO. KUO CHING DEVELOPMENT, CORP BLESSINGTHOUGHTS CO.	990,000 49,000 1,670,044 1,640,000 100,000 1,520,000	$10,460 1,507 - - 2,606 615	- - - - 100,000 -	$ - - - - - -	- - - - - 1,520,000	$ - (664) - - (321) (615)	$(7,964) 2,201 - - 15,234 -	$915 - - - - -	$ - - - - - -	990,000 49,000 1,674,044 1,640,000 200,000 -	30% 49% 22.32% 41% 100% -	$3,411 3,044 - - 17,519 -	None None None None None None	Note2 Note2、 3 Note1
		$15,188		$ -		$(1,600)	$9,471	$915	$ -			$23,974

Note 1:The company is undergoing liquidation procedure. Note 2: The cash dividends and stock dividends received from equity method investments during the current period were $664,000 and 100 thousand shares. Note 3: The decrease of $321 in this period was an adjustment of the prior year’s profit and loss.

280

SUNKO INK CO., LTD.

6. Statement of Short-term Loans

31 December 2022

Unit: Thousands of NTD

Type	Lenders	Amount	Contract Period	Range of Interest Rates (%)	Loan Commitments	Collateral
Operation purposes Operation purposes Operation purposes Operation purposes Operation purposes	Mega Bank E.Sun Bank Taiwan Cooperative Bank Bank of Taiwan First Bank Subtotal Less: Allowance of gains on exchange Total	$72,669 50,983 10,093 90,561 75,018	2022.07.08-2023.06.27 2022.07.11-2023.06.02 2022.10.06-2023.06.28 2022.09.08-2023.05.07 2022.10.06-2023.03.20	3.53%-6.12% 1.43%-6.18% 5.16%-6.04% 1.34%-6.08% 1.40%-5.96%	200,000 200,000 250,000 200,000 300,000	None None None None None
		299,324 (333)
		$298,991

281

SUNKO INK CO., LTD.

Statement of Accounts Payable

31 December 2022

Unit: Thousands of NTD

			Unit
Supplier Name	Description	Amount	Note
Supplier A Supplier B Supplier C Supplier D Others (Note) Subtotal Less: Allowance of gains on exchange Total		$46,236 37,611 23,426 13,430 177,497
		298,200 (1,014)
		$297,186

(Note) The amount of individual supplier in others does not exceed 5% of the account balance.

SUNKO INK CO., LTD.

8. Statement of Operating Revenues

For the year ended 31 December 2022

Unit: Thousands of NTD

Item	Description	Amount	Note
Fine Chemicals Agrochemicals Polymer-TPU&Polymer-TPV Polymer-PU Others Total		$2,202,840 388,743 260,007 112,459 12,309
		$2,976,358

282

SUNKO INK CO., LTD.

9. Statement of Operating Costs

For the year ended 31 December 2022

Unit: Thousands of NTD

Item	Amount
Direct Raw material Beginning balance of raw material Add: Raw material purchased Transferred from finished goods Less: Ending balance of raw materials Cost of raw materials sold Transferred to expenses Others Raw material used Direct labor Manufacturing overheads (Statement 10) Manufacturing cost Add: Beginning balance of work in process Outsourcing Less: Ending balance of work in process Transferred to material Others Cost of finished goods Add: Beginning balance of finished goods Less: Transferred to expenses Others Ending balance of finished goods Cost of sales of goods manufactured Add: Beginning balance of merchandise Merchandise purchased Less: Ending balance of merchandise Transferred to expenses Others Cost of sales of goods purchased Add: Unallocated fixed cost as operating cost Cost of raw materials sold Inventory scrapped Inventory valuation loss on items of cost lower than market price or obsolescences Others Less: Revenue from scraps Operating Costs	$365,721 1,875,999 570,898 (426,714) (2,962) (39,408) (932)
	2,342,602 204,738 810,591
	3,357,931 42,103 15,990 (20,941) (570,898) 821
	2,825,006 478,576 (2,714) (3,520) (725,133)
	2,571,215
	5,523 24,770 (3,964) (10) 1
	2,597,535 113,630 2,962 3,128 37,003 50 (1,502)
	$2,572,806

283

SUNKO INK CO., LTD.

10. Statement of Manufacturing Overheads

For the year ended 31 December 2022

Unit: Thousands of NTD

		Unit: Thousands of NTD
Item	Amount	Note
Depreciation expense Indirect labor Utilities expense Fuel cost Waste disposal Packaging fee Insurance expense Others (Note) Subtotal Unallocated fixed cost as operating cost Net Amount	$241,456 110,824 112,339 86,234 46,419 53,245 44,161 229,543
	924,221 (113,630)
	$810,591

(Note) The amount of individual item in others does not exceed 5% of the account balance.

284

SUNKO INK CO., LTD.

11. Statement of Operating Expenses

For the year ended 31 December 2022

Unit: Thousands of NTD

Item	Selling and Marketing Expenses	General and Administrative Expenses	Research and Development Expenses	Expected credit loss	Total
Payroll expense Freight expense Insurance expense Expected credit gain Operating taxes Depreciation expense Commission Export/import expense Professional expense Others expense (Note) Total	$18,684 9,687 1,845 - 3,916 1,007 5,048 18,668 - 7,260	$49,904 172 5,669 - - 7,915 - - 13,220 20,426	$25,604 45 2,965 - - 8,569 - - - 12,664	$- - - (3,048) - - - - - -	$94,192 9,904 10,479 (3,048) 3,916 17,491 5,048 18,668 13,220 40,350
	$66,115	$97,306	$49,847	$(3,048)	$210,220

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

6 Impact on the Company's financial status due to financial difficulties experienced by the Company and its affiliate companies in the most recent year and as of the publication date of this Annual Report: None.

285

Ⅶ. REVIEW AND ANALYSIS ON FINANCIAL STATUS, FINANCIAL PERFORMANCE, AND RISKS

1 Analysis of Financial Status
1.1 Consolidated (IFRS)

Unit: NT$ (in thousands)

Year Item	As of 31 December,	As of 31 December,	Differences	Differences
	2022	2021	Amount	%
Current Assets Property, plant, equipment Intangible Assets Other Assets Total Assets Current Liabilities Non-current Liabilities Other Liabilities Total Liabilities Common Stock Additional paid-in capital Retained Earnings Other equity Treasury Stock Non-controlling Interest Total Equity	$2,248,202 1,556,541 15,117 364,396 4,184,256 1,087,393 555,448 143,369 1,786,210 1,848,841 42,255 510,316 (3,366) - - 2,398,046	$2,030,289 1,664,358 13,846 382,859 4,091,352 1,066,756 528,457 164,550 1,759,763 1,889,952 41,930 441,577 (1,205) (40,786) 121 2,331,589	217,913 (107,817) 1.271 (18,463) 92,904 20,637 26,991 (21,181) 26,447 (41,111) 325 68,739 (2,161) 40,786 (121) 66,457	10.73 (6.48) 9.18 (4.82) 2.27 1.93 5.11 (12.87) 1.50 (2.18) 0.78 15.57 (179.34) 100.00 (100.00) 2.85
Analysis of deviation over 20% and amount over NT$10,000 thousand: (1)Decrease in treasury stocks: The decrease was mainly because of the cancellation of treasury stocks. 2. Possible major impacts on the Company’s future business: The above deviations had no major impact on SUNKO’s financial position and future business. 3. Future responsive measures: Not applicable.

286

1.2 Parent Only

Unit: NT$ (in thousands)

Year Item	As of 31 December,	As of 31 December,	Differences	Differences
	2022	2021	Amount	%
Current Assets Property, plant, equipment Intangible Assets Other Assets Total Assets Current Liabilities Non-current Liabilities Other Liabilities Total Liabilities Common Stock Additional paid-in capital Retained Earnings Other equity Treasury Stock Total Equity	$2,226,778 1,556,541 15,117 381,879 4,180,315 1,083,452 555,448 143,369 1,782,269 1, 848,841 42,255 510,316 (3,306) - 2,398,046	$2,021,269 1,664,358 13,846 386,080 4,085,553 1,061,078 528,457 164,550 1,754,085 1,889,952 41,930 441,577 (1,205) (40,786) 2,331,468	205,509 (107,817) 1,271 (4,201) 94,762 22,374 26,991 (21,181) 28,184 (41,111) 325 68,739 (2,161) 40,786 66,578	10.17 (6.48) 9.18 (1.09) 2.32 2.11 5.11 (12.87) 1.61 (2.18) 0.78 15.57 (179.34) 100.00 2.86
1. Analysis of deviation over 20% and amount over $10,000 thousand: (1) Decrease in stocks: The decrease was mainly because of the cancellation of treasury stocks. 2. Possible major impacts on the Company’s future business: The above deviations had no major impact on SUNKO’s financial position and future business. 3. Future responsive measures: Not applicable.

287

2 Analysis of Financial Performance
2.1 Analysis of Financial Performance in the last two years
- 2.1.1 Consolidated

Unit: NT$ (in thousands)

2.1.1 Consolidated			Unit: NT$ (in thousands)	Unit: NT$ (in thousands)
Year Item	For theyears ended 31 December		Differences
	2022	2021	Amount	%
Operating Revenues Operating Costs Gross Profit Operating Expenses Other Operating Gains or Losses Operating Income(Loss) Non-operating Income Non-operating Expenses Income (Loss) before Income Tax Income Tax Expense Net Income (Loss) Other Comprehensive Income, net of tax Total Comprehensive Income	$3,008,554 2,752,806 255,748 223,186 - 32,562 61,803 22,893 71,472 (10,142)) 61,330 5,248 66,578	$2,850,638 2,722,534 128,104 224,055 - (95,951) 56,692 14,582 (53,841) (16,175) (70,016) 8,316 (61,770)	$157,916 30,272 127,644 (869) - 128,513 5,111 8,311 125,313 6,033 131,346 (3,068) 128,278	5.54 1.11 99.64 (0.39) - 133.94 9.02 56.99 232.75 37.30 187.59 (36.89) 207.91
1. Analysis of significant changes in financial ratios in the last two years: (1) Increase in gross profit: The increase was mainly due to the slowdown of the COVI-19 pandemic and the market recovery, which led to an increase in operating revenue. (2) The increase in operating profit was mainly due to the growth in gross profit. (3) The increase in non-operating expenses was mainly due to an increase in interest expenses and losses recognized from subsidiaries, affiliated companies, and joint ventures accounted for using the equity method. (4) Decrease in income tax expense: The decrease was mainly due to decrease in tax on undistributed earnings.

288

2.1.2 Parent Only

Unit: NT$ (in thousands)

2.1.2 Parent Only			Unit: NT$ (in thousands)	Unit: NT$ (in thousands)
Year Item	For theyears ended 31 December		Differences
	2022	2021	Amount	%
Operating Revenues Operating Costs Gross Profit Operating Expenses Other Operating Gains or Losses Operating Income(Loss) Non-operating Income Non-operating Expenses Income (Loss) before Income Tax Income Tax Expense Net Income (Loss) Other Comprehensive Income, net of tax Total Comprehensive Income	$2,976,358 2,752,806 223,552 210,220 - 13,332 61,569 7,659 67,332 (6,002) 61,330 5,248 66,578	$2,848,057 2,722,534 125,523 222,756 - (97,233) 56,720 13,270 (53,783) (16,175) (69,958) 8,316 (61,642)	$128,301 30,272 98.029 (12,536) - 110,565 4,939 (5,611) 121,115 10,173 131,288 (3,068) 128,220	4.50 1.11 78.10 (5.63) - 113.71 8.71 (42.28) 225.19 62.89 187.67 (36.89) 208.01
2. Analysis of significant changes in financial ratios in the last two years: (1) Increase in gross profit: The increase was mainly due to the slowdown of the COVI-19 pandemic and the market recovery, which led to an increase in operating revenue. (2) The increase in operating profit was mainly due to the growth in gross profit (3) The increase in non-operating expenses was mainly due to an increase in interest expenses and losses recognized from subsidiaries, affiliated companies, and joint ventures accounted for using the equity method. (4) Decrease in income tax expense: The decrease was mainly due to decrease in tax on undistributed earnings.

2.2 Sales Volume Forecast and Related Information

For additional details, please refer to Page 5.

289

3 Analysis of Cash Flow
3.1 Liquidity analysis

Unit: %

nalysis of Cash Flow .1 Liquidity analysis			Unit:
Item	As of 31 December,		Increase or decrease ratio(%)
	2022	2021
Cash flow ratio	27.05	(13.90)	294.60
Net cash flow adequacyratio	48.58	37.83	28.42
Cash reinvestment ratio	5.37	(4.62)	216.23
Explanation: (1) Cash flow ratio: The increase was mainly due to decrease in account receivable and the increase in contract liabilities (2) Net cash flow adequacy ratio: The increase was mainly due to decrease in account receivable and decrease in capital expenditure. (3) Cash reinvestment ratio: The increase was mainly due to increase in net cash from operating activities.

3.2 Remedial Actions for Liquidity Shortfall: not applicable.
3.3 Cash Flow Liquidity Projection for the coming year

Unit: NT$ (in thousands)

Cash Balance 2021.12.31 (1)	Projected net cash provided by operating activities throughout 2022(2)	Projected cash outflow in 2022 (3)	Projected cash surplus (deficit) (1)+(2)-(3)	Remedyfor LiquidityShortfall	Remedyfor LiquidityShortfall
				Investment Plan	Financing Plan
453,978	110,747	29,277	594,002	-	-
Explanation: (1) Operating activities: Net cash inflows as operating activities take place under normal operating condition. (2) Investment activities: Net cash outflows mainly due to activities such as disposal of property, plant, and equipment. (3) Financing activities: Net cash inflows mainly due to decrease of long-term borrowings.

290

4 Major Capital Expenditures and Impact on Financial and Business during recent years: 2022 significant capital expenditures are as follows:

Factory	Plan	Impact
Nangang	Exhaust gas treatment system	Environmental regulations strictly require the installation of effluent treatment system.
Pingjhen	Exhaust gas treatment system	Environmental regulations strictly require the installation of effluent treatment system.
Pingjhen	Remediation of groundwater contamination	Environmental regulations strictly require the installation of effluent treatment system.
Dali	Remediation of groundwater contamination	Environmental regulations strictly require the installation of effluent treatment system.
Chuansing	Renewable energy by electricity generationproject	Regulations require the installation of solar energy system.

5 Reinvestment policies, main reasons for profits/ losses generated thereby, improvement plans, and investment plans for the coming year:

Reinvestments	Policies	Profits/ losses in 2022	Main Reasons	Improvement plans	Investment plans for the coming year
Blessingthoughts Co. Ltd. (Note)	The purpose of the beverage kiosk is to help the minority group’s employment.	-	Sales revenue failed to achieve the economies of scale.	-.	-
BNKC BIOCHEMICAL TECHNOLOGY CO.,LTD.	Sales of active ingredient for cosmetics.	4,491	Continuous promotion of new sunscreen products.	-	-
Power Rich	Promotion on using polymer pellets as shoe materials.	(26,546)	Sales revenue failed to achieve the economies of scale.	Continually seeking cooperation with internationally famous shoe factories.	-
KUO CHING DEVELOPMENT CORPORATION.	To expand new business of flame retardants	1,5234	-	-	-
Subtotal		(6,821)

Note：Blessingthoughts Co. Ltd was dissolved on 3 December 2021 and was liquidated on 14 April 2023.

291

6 Risk Assessment
6.1 Impacts of changes in interest rates, foreign exchange rates and inflation on the Company's profit and loss and the corresponding countermeasures:
- 6.1.1 Interest Rate

The rates of short-term and long-term borrowings change as the market rate alters, and accordingly, affecting the profits of the Company. When the market rate increases/ decreases in 1%, the income before tax goes up/ down in the amount of NT$1,046 thousand. The Company maintains a good relationship with bank institutions to obtain better exchange rate quotes.

6.1.2 Exchange Rate

The foreign exchange gain amounted to NT$52,156 thousand in 2022, mainly due to the fluctuating USD exchange rate. When the rate of NTD to USD fluctuates by 1%, the income before tax goes up/ down in the amount of $3,169 thousand. Due to the complex circumstances around the globe, the Company may pay up the purchasing expenses with sales revenue in the same functional currency with natural hedge to avert most of the risk and engage in forward contracts to hedge risks to currency exchange fluctuation of its net exposure, and enhance the currency fluctuation risk management, including taking the fluctuating exchange rates into consideration while inquiring and quoting prices and making foreign currency exchange at the appropriate time to minimize the foreign exchange loss.

6.1.3 Inflation:

According to the statistics from the Directorate-General of Budget, Accounting and Statistics, Executive Yuan, the accumulative average consumer price index was 102.95% in 2022. Therefore, there is no indication of inflation.

6.2 Policies for high-risk, high-leverage investments, capital lending, endorsements, guarantees, and derivatives transaction, main reasons for the profits or losses generated thereby, and the corresponding countermeasures:
6.2.1 The Company did not engage in any high-risk and high-leverage investments, endorsements, or guarantees in 2022.
6.2.2 The Company engaged in derivatives transactions in the total amount of NT$310,201 thousand, with a realized gain of NT$2,442 thousand in 2022. The Company mainly conducted forward exchange transactions, targeting actual foreign currency revenue as hedging instruments, to avoid currency fluctuation risks generated by exports.
6.3 Future Research and development (R&D) projects and estimated R&D expenditures: The R&D department mainly works on developing new products and improving the production process to advance the products’ quality. The Company estimates to invest NT$54,183 thousand in the continuous R&D process in 2021.
6.4 Impacts of changes in domestic and foreign important policies and laws on the Company’s financial operations, and the corresponding countermeasures:
The Company undertook appropriate measures in accordance with applicable regulations and so far there has not been any significant impact on the Company’s financial operation.
6.5 Impacts of industry and technology changes to the Company’s financial operations, and the

292

corresponding countermeasures: None.

6.6 Impacts of changes in corporate image on corporate crisis management and the corresponding countermeasures: None.
6.7 Expected benefits and potential risks related to mergers and acquisitions: Not applicable.
6.8 Expected benefits and potential risks of capacity expansion: Not applicable.
6.9 Risks relating to and future countermeasures for the excessive concentration of incoming goods or sales:
6.9.1 Sales: In 2020, the main clients accounted for 16.16% of the entire client base who have already cooperated with us for a long period of time. During recent years, the number of orders steadily grew, and the receivable turnovers were also stable. In addition, the Company formulated strategies on preservation policy to monitor risks. Except as described, there’s no other clients who accounted for over 10% of the sales revenue.
6.9.2 Purchases: The Company has a stable relationship with its raw materials suppliers. For each raw material, we have at least two different suppliers. The main suppliers made up 18.42% of the entire suppliers in 2020. Those main suppliers have long standing relationship with the Company; therefore, the related risk is low.
6.10 Impacts, risks arising from, and future countermeasures for major large share transfers or changes in shareholdings by Directors, supervisors or major shareholders with shareholding of over 10%: None.
6.11 Effects of, risks relating to and future countermeasures for changes in management rights: None.
6.12 Litigation or non-litigation matters:
For litigations, non-litigations or administrative disputes already judged or currently being judged as to the publication date of this Annual Report, the litigation expense are measured along with the Company’s earnings and capital of the past few years. The overall litigation expenses have insignificant impact on the shareholders’ interest and the price of the securities.
6.13 Other major risks and future countermeasures: Cyber Security Risk Assessment:
The three elements of cyber security management are people, processes, and technology. The Company has implemented the following management measures:

People: Annual education and training are provided to enhance job competence and respond to unintentional or intentional cybersecurity incidents.

Processes: The Company has established a sound information internal control process. Internal audits and external audits by accounting firms are conducted annually to check the effectiveness and reliability of the process.
Technology: The Company uses dual data centers for system service backup. The network is managed centrally, and an integrated threat management firewall, endpoint control mechanism, and enterprise-level antivirus software are deployed.

Through the effective operation of the above management measures, the Company's cyber security risks should be under control.

7 Other Material Matters: None.

293

Ⅷ. SPECIAL NOTES

1 Summary of Affiliated Companies

1.1 Organizational chart of the affiliated companies

==> picture [191 x 134] intentionally omitted <==

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

SUNKO INK CO., LTD
83.52% 100.00%
Blessingthoughts Kuo Ching
Co. Ltd. Development
----- End of picture text -----

Note 1: Pursuant to Article 369-2 of the Company Act, the controlling and affiliation relationship is substantially recognized.

Note 2: Kuo Ching Development Corporation was established on 14 July 2021.

Note 3: Blessingthoughts Co. Ltd was disolved on 3 December 2021 and was liquidated on 14 April 2023.

1.2 Basic information of affiliated companies

				(Unit expressed in thousands)
CompanyName	Date of Incorporation	Address	Capital Stock	Business Activities
Blessingthoughts Co.	31 March 2016	Taichung, Taiwan	-	Beverage kiosk
Ltd. (Note1)
Kuo Ching	14 July 2021	Taichung, Taiwan	NT$2,000	Specialized product trade
Development
Corporation

Note1: Blessingthoughts Co. Ltd was dissolved on 3 December 2021 and was liquidated on 14 April 2023.

1.3 Directors, Supervisors, and Managers of all affiliated companies

Company Name	Title	Name or Representative	Shareholdings (Note1) Shares %	Shareholdings (Note1) Shares %
Blessingthoughts Co.	Chairman	Representative of SUNKO INK	-	-
Ltd. (Note1)		CO., LTD: CHANG, JUN-PIN
Kuo Ching	Chairman	HUANG, TING-DI	2,000,000	100.00%
Development
Corporation

Note1: Blessingthoughts Co. Ltd was dissolved on 3 December 2021 and was liquidated on 14 April 2023.

294

1.4 Operational highlights of affiliated companies

(Expressed in Thousands of New Taiwan Dollars, Except for EPS)

Company Name	Capital	Total Assets	Total Liabilities	Net Value	Operating Income	Operating Profit	Net Loss	EPS (NT$) (After-Tax)
Blessingthoughts		-	-	-	-	-	-	-
Co. Ltd.
Kuo Ching	2,000	24,235	6,716	17,518	121,455	17,542	15,234	76.17
Development
Corporation

Note1: Blessingthoughts Co. Ltd was dissolved on 3 December 2021 and was liquidated on 14 April 2023.

1.5 Consolidated Financial Statements of the affiliated companies: Pursuant to the Disclosure Guidelines of the Consolidated Operating Report, Financial Statements and Affiliation Report of The Affiliated Companies, the companies that should be incorporated in the consolidated financial statements of affiliated companies are the same as those that should be incorporated in the consolidated financial statements of parent and subsidiary companies in accordance with IFRS 10. In addition, the related information that must be disclosed in the consolidated financial report of affiliated companies has been fully disclosed in the consolidated financial statements of parent and subsidiary companies. Therefore, the Company is not required to prepare a consolidated financial statements of affiliated companies.
1.6 Reports on affiliated companies: None.
2 Private placement of securities in 2022 and as of the date of this annual report shall disclose the following information regarding the approval date and amount, basis and rationale for the price determination, method of selection of specific individuals, necessity for conducting a private placement, target investors, qualification criteria, subscription quantity, relationship with the company, participation in the company's operations, actual subscription (or conversion) price, difference between the actual subscription (or conversion) price and the reference price, impact on shareholders' equity due to the private placement, utilization of funds from the stock or purchase price until the completion of the fund utilization plan, utilization of funds for the securities issued in the private placement, progress of plan execution, and demonstrated plan benefits: None
3 Holding or disposal of the Company's shares by the subsidiaries of the most recent year as of the publication date of this Annual Report: None.
4 Other necessary supplementary matters to be included: None.

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Ⅸ. ANY EVENTS IN 2022 AND AS OF THE PUBLICATION DATE OF THIS ANNUAL REPORT THAT HAD MATERIAL IMPACTS ON SHAREHOLDERS’ EQUITY OR SECURITIES PRICES AS STATED IN ARTICLE 36-2-2 OF SECURITIES AND EXCHANGE LAW OF TAIWAN: NONE.

SUNKO INK CO., LTD

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Chairman: HUANG, TING-DI

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AI assistant

SUNKO — Annual Report 2023

51901_rns_2023-08-18_aacae14d-dad7-4c90-a0b5-87437bdba48c.pdf

SUNKO INK CO., LTD

Table of Contents

I. LETTER TO SHAREHOLDERS

1 The 2022 Business Report

1.1 Implementation Results of Operation Plan

1.2 Forecast and Implementation

1.3 Financial Income and Expenditure and Profitability Analysis

1.4 Research and Development progress 1.4.1 R&D Expenses

1.4.2 Recent Research and Development Results

3 Overview of Technology and R&D

3.2 Product development plan

5 The Impact from the external competition, regulatory environment, and business operation

II. COMPANY PROFILE

III. CORPORATE GOVERNANCE REPORT

1.2 Responsibilities and functions of major departments

2 Directors, Supervisors and Management Team

2.1 Directors

2.1.1 Information on directors and supervisors

Note:

2.1.2 Major corporate shareholders

2.1.3 Major shareholders of main corporate shareholders: None.

2.1.5 Diversity and independence of the board of directors:

Board Diversity

Ｃ.The implementation of the policy on diversity of board members is as follows:

2.2 Information on the Company General Manager, Deputy General Manager, Managers of departments or division

3 Remuneration to Directors, General Manager and Deputy General Manager in 2022

3.1 Remuneration to Directors and Independent Directors

3.2 Remuneration to supervisors

3.3 Remuneration to general managers and deputy managers

3.4 Individual disclosure of the compensation of the top five highest paid executives:

3.5 Names of managerial officers who received employees’ bonuses in the preceding year and the distribution

4 Implementation of Corporate governance

4.1 Operations of the board of directors

4.2.1 Operations of the Audit Committee

4.2.2 Meetings of the Audit Committee

4.2.3 Supervisor’s participation in the board of directors

Note 1: Evaluation on the independence of CPAs

4.4 Composition, responsibilities, and operation of the Remuneration Committee

4.4.1 Remuneration Committee members

4.4.2 Operations of the Remuneration Committee

4.5 Implementation of Sustainable Development

SUNKO INK CO., LTD

Statement of Declaration on Internal Control System

II.

VI.

VII.

5 Information on certified CPA Professional Fees

Ⅳ. CAPITAL OVERVIEW

1.1 Shares issued

Note:

Information related to the Declaration Policy

Allocation and Distribution of Earnings

Ⅴ. OPERATION HIGHLIGHTS

1.2.2 Correlation with upstream, midstream, and downstream of the industry

1.2.3 Trends in product development and competition

Trends in product development:

1.3.2 Successfully developed technologies and products

2.1.1 Sales region of Main Products

2.1.2 Market supply and demand and market growth in the future

2.1.3 Sales Volume Forecast and Related Information

2.2.2 Manufacturing Process of main products

(1) Fine chemicals

(2) List of major suppliers

2.2.5 The Production Volume and Value for the recent two years

2.2.6 The Sales Volume and Value for the Recent Two Years

3 Employee Information

4 Expenditures on Environmental Protection

Ⅵ. FINANCIAL INFORMATION

Condensed Balance Sheet (Consolidated)

Condensed Balance Sheet (Parent Only)

Condensed Income Statement (Consolidated)

Condensed Income Statement (Parent Only)

1.2 Names of the CPAs and their audit opinions for the recent five years

2 Financial analysis for the recent five years

2.1 Financial analysis (Consolidated)

2.2 Financial analysis (Parent Only)

Note I. The formulas are as follows:

SUNKO Annual Report 2023