T.S.M.C. — Annual Report 2022

Dec 5, 2022

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Stock Code:1310

TAIWAN STYRENE MONOMER CORPORATION

Parent Company Only Financial Statements

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

Address: 8F.-1, No.6, Sec.1, Roosevelt Rd., Taipei City Telephone: (02)2396-6007

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

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Table of contents

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

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KPMG

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

Independent Auditors’ Report

To the Board of Directors of Taiwan Styrene Monomer Corporation:

Opinion

We have audited the parent company only financial statements of Taiwan Styrene Monomer Corporation (“the Company”), which comprise the statements of financial position as of December 31, 2022 and 2021, and the statements of comprehensive income, changes in equity and cash flows for the years then ended, and notes to the parent company only financial statements, including a summary of significant accounting policies.

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

Basis for Opinion

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

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the parent company only financial statements of the current period. These matters were addressed in the context of our audit of the parent company only financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. We have determined the matters described below to be the key audit matters to be communicated in our report.

1. Revenue recognition

Regarding accounting policies on revenue recognition, please refer to note 4(o) “Revenue recognition” to the parent company only financial statements.

Description of key audit matter:

The Company's sales revenue is easily affected by the external economic environment and changes in market demand; besides, sales revenue in 2022 increased significantly compared to 2021. Therefore, the occurrence of revenue recognition is considered to be one of most significance in the audit.

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

3-1

How the matter was addressed in our audit:

Our principal audit procedures included assessing whether the accounting policies regarding to revenue recognition were inconformity with relevant accounting standards; obtaining understanding and testing the design and implement effectiveness of internal controls over occurrence revenue recognition; selecting samples and examining the transaction terms and vouchers; in addition, we also performed analytical procedures on primary customers and products to evaluate if there is any material abnormality.

Other Matter

We did not audit the financial statements of some equity-accounted investees of the Company (including those statements which were prepard using a difference financial reporting framework). Those statements were audited by other auditors, whose reports have been furnished to us. We have performed audit procedures on the conversion adjustments to the financial statements of those investees, which conform to those financial statements in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers. Our opinion, insofar as it relates to the amounts included for those investees and the amounts prior to the conversion adjustments, is based solely on the reports of other auditors. Investments accounted for using equity method on those investees constituting 13.50% and 15.14% of total assets at December 31, 2022 and 2021, and the related share of profit of subsidiaries, associates and joint ventures accounted for using equity method constituting (0.44)% and (888.64)% of total profit before tax for the years then ended.

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

Management is responsible for the preparation and fair presentation of the parent company only financial statements in accordance with Regulations Governing the Preparation of Financial Reports by Securities and for such internal control as management determines is necessary to enable the preparation of parent company only financial statements that are free from material misstatement, whether due to fraud or error.

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

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

Auditor’s Responsibilities for the Audit of the Parent Company Only Financial Statements

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

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

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

3-2

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

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

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

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

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

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

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

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

The engagement partners on the audit resulting in this independent auditors’ report are Lin Wu and Yuan-Sheng Yin.

KPMG

Taipei, Taiwan (Republic of China) March 8, 2023

Notes to Readers

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

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

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(English Translation of Financial Statements Originally Issued in Chinese) TAIWAN STYRENE MONOMER CORPORATION

Balance Sheets

December 31, 2022 and 2021

(Expressed in Thousands of New Taiwan Dollars)

Assets Current assets: 1100 Cash and cash equivalents (note 6(a)) 1110 Current financial assets at fair value through profit or loss (note 6(b)) 1170 Accounts receivable, net (note 6(c)) 1200 Other receivables (note 7) 1220 Current tax assets 130X Inventories (note 6(d)) 1410 Prepayments (note 6(e)) 1460 Non-current assets(or disposal groups) held for sale, net Total current assets Non-current assets: 1517 Non-current financial assets at fair value through other comprehensive income (note 6(f)) 1550 Investments accounted for using equity method (note 6(g)) 1600 Property, plant and equipment (note 6(h)) 1755 Right-of-use assets (note 6(i)) 1780 Intangible assets (note 6(j)) 1840 Deferred tax assets (note 6(p)) 1920 Refundable deposits 1990 Other non-current assets, others (note 6(k)) Total non-current assets Total assets	December 31, 2022 Amount % $ 317,578 4 120,538 2 963,645 11 2,231 - - - 567,203 7 200,164 2 1,288 - 2,172,647 26 643,571 8 2,803,908 33 2,508,198 30 16,181 - 6,125 - 227,290 3 3,645 - 23,959 - 6,232,877 74 $ 8,405,524 100	December 31, 2021 Amount % 54,783 1 183,037 2 909,849 10 6,075 - 44 - 824,976 9 133,663 2 - - 2,112,427 24 781,428 9 2,960,451 34 2,695,789 31 8,703 - 7,932 - 126,467 1 3,421 - 85,401 1 6,669,592 76 8,782,019 100 Liabilities and Equity Current liabilities: 2100 Total short-term borrowings (note 6(l)) 2130 Current contract liabilities (note 6(t)) 2170 Accounts payable 2200 Other payables (note 6(m)) 2230 Current tax liabilities 2280 Current lease liabilities (note 6(n)) 2399 Other current liabilities Total current liabilities Non-Current liabilities: 2570 Deferred tax liabilities (note 6(p)) 2580 Non-current lease liabilities (note 6(n)) 2640 Net defined benefit liabilities, non-current (note 6(o)) Total non-current liabilities Total liabilities Equity (note 6(q)): 3100 Capital stock 3200 Capital surplus Retained earnings: 3310 Legal reserve 3320 Special reserve 3350 Unappropriated retained earnings 3400 Other equity 3500 Treasury shares Total equity Total liabilities and equity	December 31, 2022		December 31, 2021
			Amount %		Amount %
			$ 700,000 8 7,829 - 889,042 11 89,910 1 4,771 - 4,414 - 2,178 - 1,698,144 20 174,028 2 11,372 - 50,106 1 235,506 3 1,933,650 23 5,278,698 63 70,947 1 639,287 8 8,811 - 688,983 8 1,337,081 16 (214,852) (3) - - 6,471,874 77 $ 8,405,524 100		235,759 3 12,830 - 969,496 10 154,201 2 - - 3,178 - 2,574 - 1,378,038 15 173,561 2 5,347 - 64,100 1 243,008 3 1,621,046 18 5,278,698 60 46,300 1 612,264 7 - - 1,167,693 13 1,779,957 20 56,031 1 (13) - 7,160,973 82 8,782,019 100

See accompanying notes to financial statements.

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(English Translation of Financial Statements Originally Issued in Chinese) TAIWAN STYRENE MONOMER CORPORATION

Statements of Comprehensive Income

For the years ended December 31, 2022 and 2021

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

4000 Operating revenue (note 6(t)) 5000 Operating costs (notes 6(d), (h), (i), (j), (n), (o), (v)) Gross profit (loss) from operations Operating expenses (notes 6(c), (h), (i), (j), (n), (o), (r), (v) and 7): 6100 Selling expenses 6200 Administrative expenses 6300 Research and development expenses 6450 Expected credit impairment loss Operating losses Non-operating income and expenses (notes 6 (f), (g), (n), (u) and 7): 7100 Interest income 7010 Other income 7020 Other gains and losses 7050 Finance costs 7070 Share of profit of subsidiaries, associates and joint ventures accounted for using equity method 9900 Loss before tax 7950 Income tax benefits (note 6(p)) Net income (loss) 8300 Other comprehensive income (loss) : 8310 Components of other comprehensive income (loss) that will not be reclassified to profit or loss 8311 Gains (losses) on remeasurements of defined benefit plans 8316 Unrealized gains from investments in equity instruments measured at fair value through other comprehensive income 8330 Share of other comprehensive income of subsidiaries, associates and joint ventures accounted for using equity method, components of other comprehensive income that will not be reclassified to profit or loss 8349 Less: Income tax related to components of other comprehensive income that will not be reclassified to profit or loss Components of other comprehensive income (loss) that will not be reclassified to profit or loss 8360 Components of other comprehensive income (loss) that will be reclassified to profit or loss 8361 Exchange differences on translation 8380 Share of other comprehensive income of subsidiaries, associates and joint ventures accounted for using equity method, components of other comprehensive income that will be reclassified to profit or loss 8399 Less: Income tax related to components of other comprehensive income that will be reclassified to profit or loss Components of other comprehensive income (loss) that will be reclassified to profit or loss 8300 Other comprehensive income 8500 Comprehensive income Earnings per share (note 6(s)) Basic earnings per share Diluted earnings per share	2022 Amount % $ 12,711,672 100 13,061,198 103 (349,526) (3) 65,622 1 89,364 1 1,817 - 2 - 156,805 2 (506,331) (5) 3,284 - 45,556 - (34,460) - (4,320) - 33,141 - 43,201 - (463,130) (5) 89,225 1 (373,905) (4) 14,771 - (134,696) (1) (153,072) (1) 2,954 - (275,951) (2) 1,334 - 25,908 - - - 27,242 - (248,709) (2) $ (622,614) (6) $ (0.71) $ (0.71)	2021 Amount % 11,579,268 100 11,484,485 99 94,783 1 60,105 1 107,882 1 2,127 - 2 - 170,116 2 (75,333) (1) 1,009 - 9,177 - 7,377 - (448) - 53,421 - 70,536 - (4,797) (1) 109,401 1 104,604 - (3,937) - 16,329 - (46,205) - (787) - (33,026) - (847) - (9,446) - - - (10,293) - (43,319) - 61,285 0.20 0.20

See accompanying notes to financial statements.

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(English Translation of Parent Company Only Financial Statements Originally Issued in Chinese) TAIWAN STYRENE MONOMER CORPORATION

Statements of Changes in Equity

For the years ended December 31, 2022 and 2021

(Expressed in Thousands of New Taiwan Dollars)

Common stock Balance at January 1, 2021 $ 5,278,698 Net income - Other comprehensive income - Total comprehensive income - Appropriation and distribution of retained earnings: Legal reserve appropriated - Cash dividends of ordinary share - Reversal of special reserve - Endowment received from shareholders - Share-based payments transactions - Associates disposal of investments in equity instruments designated at fair value through other comprehensive income - Changes in ownership interests in subsidiaries - Changes in ownership interests for using equity method - Balance at December 31, 2021 5,278,698 Net loss - Other comprehensive income - Total comprehensive income - Appropriation and distribution of retained earnings: Legal reserve appropriated - Special reserve appropriated - Cash dividends of ordinary share - Overdue dividends not received by shareholders - Disposal of investments in equity instruments designated at fair value through other comprehensive income - Associates disposal of investments in equity instruments designated at fair value through other comprehensive income - Changes in ownership interests for using equity method - Treasury shares transactions - Balance at December 31, 2022 $ 5,278,698	Capital surplus 48,224 - - - - - - 13 4,433 - 997 (7,367) 46,300 - - - - - - 24,585 - - 65 (3) 70,947		Retained	earnings	Total 1,773,645 104,604 (3,120) 101,484 - (263,917) - - - 74,637 - 94,108 1,779,957 (373,905) 12,277 (361,628) - - (79,156) - 504 9,393 (11,989) - 1,337,081		O	ther equity interes	t Total 168,463 - (40,199) (40,199) - - - - - (74,637) 546 1,858 56,031 - (260,986) (260,986) - - - - (504) (9,393) - - (214,852)	Treasury shares (15,178) - - - - - - (13) 15,178 - - - (13) - - - - - - - - - - 13 -	Total equity 7,253,852 104,604 (43,319)
						Exchange differences on translation of foreign financial statements		Unrealized gains (losses) on financial assets measured at fair value through other comprehensive income 195,208 - (29,906) (29,906) - - - - - (74,637) - - 90,665 - (288,228) (288,228) - - - - (504) (9,393) - - (207,460)
		Legal reserve 610,435 - - - 1,829 - - - - - - - 612,264 - - - 27,023 - - - - - - - 639,287	Special reserve 581,249 - - - - - (581,249) - - - - - - - - - - 8,811 - - - - - - 8,811	Unappropriated retained earnings 581,961 104,604 (3,120) 101,484 (1,829) (263,917) 581,249 - - 74,637 - 94,108 1,167,693 (373,905) 12,277 (361,628) (27,023) (8,811) (79,156) - 504 9,393 (11,989) - 688,983
						(26,745) - (10,293) (10,293) - - - - - - 546 1,858 (34,634) - 27,242 27,242 - - - - - - - - (7,392)
											61,285 - (263,917) - - 19,611 - 1,543 88,599
											7,160,973 (373,905) (248,709)
											(622,614) - - (79,156) 24,585 - - (11,924) 10
											6,471,874

See accompanying notes to financial statements.

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(English Translation of Financial Statements Originally Issued in Chinese) TAIWAN STYRENE MONOMER CORPORATION

Statements of Cash Flows

For the years ended December 31, 2022 and 2021

(Expressed in Thousands of New Taiwan Dollars)

Cash flows from operating activities: Loss before tax Adjustments: Adjustments to reconcile profit (loss) Depreciation expense Amortization expense Expected credit impairment loss Interest expense Interest income Dividend income Share-based payments Share of gain of subsidiaries, associates and joint ventures accounted for using equity method Gain on disposal of property, plant and equipment Loss on disposal of investments Impairment loss on non-financial assets Gain on bargain purchase transaction Gain on lease modification Loss from decline (gain from recovery) in value of inventories Total adjustments to reconcile profit (loss) Changes in operating assets and liabilities: Changes in operating assets: Financial assets mandatorily measured at fair value through profit or loss Accounts receivable Other receivables Inventories Prepayments Total changes in operating assets Changes in operating liabilities: Contract liabilities Accounts payable Other payables Other current liabilities Net defined benefit liabilities Total changes in operating liabilities Total changes in operating assets and liabilities Cash outflow generated from operations Interest received Dividends received Interest paid Dividends paid Income taxes paid Net cash flows used in operating activities Cash flows from investing activities: Proceeds from disposal of financial assets at fair value through other comprehensive income Proceeds from capital reduction of financial assets at fair value through other comprehensive income Acquisition of investments accounted for using equity method Acquisition of property, plant and equipment Proceeds from disposal of property, plant and equipment Increase in refundable deposits Acquisition of intangible assets Increase in other non-current assets Decrease in other non-current assets Dividends received Net cash flows from (used in) investing activities Cash flows from financing activities: Increase in short-term borrowings Decrease in short-term borrowings Payment of lease liabilities Cash dividends paid Proceeds from sale of treasury shares Proceeds from transfer of treasury shares to employees Net cash flows from (used in) financing activities Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period	2022 $ (463,130) 251,711 1,807 2 4,320 (3,284) (19,616) - (33,141) - - 873 - (6) (114,209) 88,457 62,499 (53,798) 3,844 371,982 (67,374) 317,153 (5,001) (80,454) (26,444) (396) 777 (111,518) 205,635 (169,038) 3,284 19,616 (3,939) (38) (9,270) (159,385) 1,873 - - (73,445) - (224) - - 61,442 51,930 41,576 2,550,000 (2,085,759) (4,491) (79,156) 10 - 380,604 262,795 54,783 $ 317,578	2021 (4,797) 222,462 2,553 2 448 (1,009) (6,843) 4,472 (53,421) (270) 1,858 139 (403) - 130,000
		299,988
		(137,677) (39,305) (1,441) (524,995) (10,789)
		(714,207)
		5,001 186,015 (12,828) 190 955
		179,333
		(534,874)
		(239,683) 1,047 6,843 (348) (57) (35,926)
		(268,124)
		- 15,718 (17,273) (179,328) 270 (39) (915) (24,798) - 24,312
		(182,053)
		435,759 (200,000) (4,382) (263,917) - 15,139
		(17,401)
		(467,578) 522,361
		54,783

See accompanying notes to financial statements.

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(English Translation of Financial Statements Originally Issued in Chinese) TAIWAN STYRENE MONOMER CORPORATION

Notes to the Parent Company Only Financial Statements For the years ended December 31, 2022 and 2021

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

(1) Company history

Taiwan Styrene Monomer Corp. (the “Company”) was incorporated on November 16, 1979, under the approval of Ministry of Economic Affairs, Republic of China (ROC). Registered address is 8F.-1, No.6, Sec.1, Roosevelt Rd., Taipei City. The Company manufactures and sells styrene monomer.

(2) Approval date and procedures of the financial statements

These parent-company-only financial statements were authorized for issue by the Board of Directors on March 8, 2023 .

(3) New standards, amendments and interpretations adopted:

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

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

• －

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

• －

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

• ●Annual Improvements to IFRS Standards 2018–2020

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

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

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

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

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

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

(Continued)

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TAIWAN STYRENE MONOMER CORPORATION Notes to the Parent Company Only Financial Statements

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

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

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

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

• ●Amendments to IAS 1 “Classification of Liabilities as Current or Non-current”

• ●Amendments to IAS 1 “Non-current Liabilities with Covenants”

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

• ●IFRS16 “Requirements for Sale and Leaseback Transactions”

(4) Summary of significant accounting policies

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

(a) Statement of compliance

These parent company only financial statements of the Company have been prepared in accordance with the Regulations Governing the preparation of Financial Reports by Securities Issuers (the "Regulations").

• (b) Basis of preparation

• (i) Basis of measurement

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

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

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

• 3) The defined benefit liabilities are measured at the present value of the defined benefit obligation less fair value of the plan assets.

• (ii) Functional and presentation currency

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

(Continued)

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TAIWAN STYRENE MONOMER CORPORATION Notes to the Parent Company Only Financial Statements

(c) Foreign currencies

• (i) Foreign currency transactions

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

Exchange differences are generally recognized in profit or loss, except for an investment in equity securities designated as at fair value through other comprehensive income, which are recognized in other comprehensive income.

(ii) Foreign operations

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

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

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

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

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

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

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

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

(Continued)

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TAIWAN STYRENE MONOMER CORPORATION Notes to the Parent Company Only Financial Statements

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

An entity shall classify a liability as current when:

• (i) It is expected to be settled in the normal operating cycle;

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

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

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

(e) Cash and cash equivalents

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

(f) Financial instruments

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

(i) Financial assets

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

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

(Continued)

12

TAIWAN STYRENE MONOMER CORPORATION Notes to the Parent Company Only Financial Statements

• 1) Financial assets measured at amortized cost

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

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

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

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

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

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

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

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

• 3) Fair value through profit or loss (FVTPL)

All financial assets not classified as amortized cost or FVOCI described as above are measured at FVTPL. On initial recognition, the Company may irrevocably designate a financial asset, which meets the requirements to be measured at amortized cost or at FVOCI, as at FVTPL if doing so eliminates or significantly reduces an accounting mismatch that would otherwise arise.

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

• 4) Impairment of financial assets

The Company recognizes loss allowances for expected credit losses (ECL) on financial assets measured at amortized cost (including cash and cash equivalents, trade receivables, other receivables and refundable deposits).

(Continued)

13

TAIWAN STYRENE MONOMER CORPORATION Notes to the Parent Company Only Financial Statements

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

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

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

Loss allowance for trade receivables is always measured at an amount equal to lifetime ECL.

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

The Company assumes that the credit risk on a financial asset has increased significantly if it is more than 30 days past due.

The Company considers a financial asset to be in default when the financial asset is more than 90 days past due or the debtor is unlikely to pay its credit obligations to the Company in full.

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

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

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

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

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

• ‧ significant financial difficulty of the borrower or issuer;

• ‧ a breach of contract such as a default;

(Continued)

14

TAIWAN STYRENE MONOMER CORPORATION Notes to the Parent Company Only Financial Statements

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

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

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

Loss allowances for financial assets measured at amortized cost are deducted from the gross carrying amount of the assets.

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

• 5) Derecognition of financial assets

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

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

• (ii) Financial liabilities and equity instruments

• 1) Classification of debt or equity

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

2) Equity instrument

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

(Continued)

15

TAIWAN STYRENE MONOMER CORPORATION Notes to the Parent Company Only Financial Statements

3) Treasury shares

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

4) Financial liabilities

Financial liabilities are classified as measured at amortized cost or FVTPL. A financial liability is classified as at FVTPL if it is classified as held-for-trading or it is designated as such on initial recognition.

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

5) Derecognition of financial liabilities

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

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

• 6) Offsetting of financial assets and liabilities

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

(g) Inventories

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

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

(Continued)

16

TAIWAN STYRENE MONOMER CORPORATION Notes to the Parent Company Only Financial Statements

(h) Investments in associates

Associates are those entities in which the Company has significant influence, but not control or joint control, over their financial and operating policies. Investments in associates are accounted for using the equity method and are recognized initially at cost. The cost of the investment includes transaction costs. The carrying amount of the investment in associates includes goodwill arising from the acquisition less any accumulated impairment losses.

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

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

The Company discontinues the use of the equity method and measures the retained interest at fair value from the date when its investment ceases to be an associate. The difference between the fair value of retained interest and proceeds from disposing, and the carrying amount of the investment at the date the equity method was discontinued is recognized in profit or loss. The Company accounts for all the amounts previously recognized in other comprehensive income in relation to that investment on the same basis as would have been required if the associates had directly disposed of the related assets or liabilities. If a gain or loss previously recognized in other comprehensive income would be reclassified to profit or loss (or retained earnings) on the disposal of the related assets or liabilities, the Company reclassifies the gain or loss from equity to profit or loss (or retained earnings) when the equity method is discontinued. If the Company’ s ownership interest in an associate is reduced while it continues to apply the equity method, the Company reclassifies the proportion of the gain or loss that had previously been recognized in other comprehensive income relating to that reduction in ownership interest to profit or loss.

When the Company subscribes to additional shares in an associate at a percentage different from its existing ownership percentage, the resulting carrying amount of the investment will differ from the amount of the Company’s proportionate interest in the net assets of the associate. The Company records such a difference as an adjustment to investments, with the corresponding amount charged or credited to capital surplus. The aforesaid adjustment should first be adjusted under capital surplus. If the capital surplus resulting from changes in ownership interest is not sufficient, the remaining difference is debited to retained earnings. If the Company’s ownership interest is reduced due to the additional subscription to the shares of the associate by other investors, the proportionate amount of the gains or losses previously recognized in other comprehensive income in relation to that associate will be reclassified to profit or loss on the same basis as would be required if the associate had directly disposed of the related assets or liabilities.

(Continued)

17

TAIWAN STYRENE MONOMER CORPORATION Notes to the Parent Company Only Financial Statements

(i) Non-current assets held for sale and discontinued operations

Non-current assets or disposal groups comprising assets and liabilities that are highly probable to be recovered primarily through sale rather than through continuing use, are reclassified as held for sale. Immediately before classification as held for sale, the assets, or components of a disposal group, are remeasured in accordance with the Company’s accounting policies.

(j) Investment in subsidiaries

In preparing the parent company only financial statements of the Company, investees controlled by the Company are accounted for using equity method. Under equity method, profit or loss and other comprehensive income recognized in the parent company only financial statement are the same as the profit or loss and other comprehensive income attributable to the owners in the consolidated financial statements. In addition, changes in equity recognized in parent company only financial statement is the same as changes in equity attributable to owners of parent in the consolidated financial statements.

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

• (k) Property, plant and equipment

• (i) Recognition and measurement

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

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

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

(ii) Subsequent cost

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

• (iii) Depreciation

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

Land is not depreciated.

(Continued)

18

TAIWAN STYRENE MONOMER CORPORATION Notes to the Parent Company Only Financial Statements

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

1)	Buildings and structures:	4~60 years
2)	Machinery and equipment:	6~20 years
3)	Transportation equipment:	5 years
4)	Other equipment:	3~20 years

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

(l) Leases

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

• (i) As a leasee

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

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

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

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

• － fixed payments, including in-substance fixed payments;

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

• －

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

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

(Continued)

19

TAIWAN STYRENE MONOMER CORPORATION Notes to the Parent Company Only Financial Statements

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

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

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

• －

• there is a change of its assessment on whether it will exercise a purchase option; or

• － there is a change in the lease term resulting from a change of its assessment on whether it will exercise an extension or termination option; or

• －

• there is any lease modifications

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

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

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

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

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

• －

• the rent concessions occurring as a direct consequence of the COVID-19 pandemic;

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

• － any reduction in lease payments that affects only those payments originally due on, or before June 30, 2022; and

• －

• there is no substantive change in other terms and conditions of the lease.

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

(Continued)

20

TAIWAN STYRENE MONOMER CORPORATION Notes to the Parent Company Only Financial Statements

(ii) As a leasor

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

(m) Intangible assets

(i) Recognition and measurement

Other intangible assets, that are acquired by the Company and have finite useful lives are measured at cost less accumulated amortization and any accumulated impairment losses.

(ii) Subsequent expenditure

Subsequent expenditure is capitalized only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure, including expenditure on internally generated goodwill and brands, is recognized in profit or loss as incurred.

• (iii) Amortization

Amortization is calculated over the cost of the asset, less its residual value, and is recognized in profit or loss on a straight-line basis over the estimated useful lives of intangible assets from the date that they are available for use.

The estimated useful lives for current and comparative periods are as follows:

• 1) Technical royalty: 15 years

• 2) Computer software: 3~5 years

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

(n) Impairment of non-financial assets

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

For impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or CGUs.

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

(Continued)

21

TAIWAN STYRENE MONOMER CORPORATION Notes to the Parent Company Only Financial Statements

An impairment loss is recognized if the carrying amount of an asset or CGU exceeds its recoverable amount. Impairment losses are recognized in profit or loss. For non-financial assets, an impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, if no impairment loss had been recognized.

(o) Revenue recognition

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

(1) Sale of goods

The Company manufactures and sells styrene monomer. The Company recognizes revenue when control of the products has transferred, being when the products are delivered to the customer, the customer has full discretion over the channel and price to sell the products, and there is no unfulfilled obligation that could affect the customer’s acceptance of the products. Delivery occurs when the products have been shipped to the specific location, the risks of obsolescence and loss have been transferred to the customer, and either the customer has accepted the products in accordance with the sales contract, the acceptance provisions have lapsed, or the Company has objective evidence that all criteria for acceptance have been satisfied. A receivable is recognized when the goods are delivered as this is the point in time that the Company has a right to an amount of consideration that is unconditional.

(1) Financing components

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

(p) Government grants

The Company recognizes an unconditional government grant related to operation in profit or loss as other income when the grant becomes receivable. Other government grants related to assets are initially recognized as deferred income at fair value if there is reasonable assurance that they will be received and the Company will comply with the conditions associated with the grant; they are then recognized in profit or loss as other income on a systematic basis over the useful life of the asset. Grants that compensate the Company for expenses or losses incurred are recognized in profit or loss on a systematic basis in the periods in which the expenses or losses are recognized.

(q) Employee benefits

(i) Defined contribution plans

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

(Continued)

22

TAIWAN STYRENE MONOMER CORPORATION Notes to the Parent Company Only Financial Statements

(ii) Defined benefit plans

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

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

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

(iii) Short-term employee benefits

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

(r) Share-based payment

The grant-date fair value of equity-settled shared-based payment arrangements granted to employees is generally recognized as an expense, with a corresponding increase in equity, over the vesting period of the awards The amount recognized as an expense is adjusted to reflect the number of awards for which the related service and non-market performance conditions are expected to be met, such that the amount ultimately recognized is based on the number of awards that meet the related service and non-market performance conditions at the vesting date. For shared-based payment awards with non-vesting conditions, the grant-date fair value of the share-based payment is measured to reflect such conditions and there is no true-up for differences between expected and actual outcomes.

Grant date of a share-based payment award is the date which the Board of Directors authorized the price and the subscription date.

(s) Income taxes

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

(Continued)

23

TAIWAN STYRENE MONOMER CORPORATION Notes to the Parent Company Only Financial Statements

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

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

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

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

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

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

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

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

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

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

  • a) the same taxable entity; or

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

• (t) Earnings per share

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

(Continued)

24

TAIWAN STYRENE MONOMER CORPORATION Notes to the Parent Company Only Financial Statements

(u) Operating segments

The Company has disclosed information about operating segments in the consolidated financial statements. Therefore, no segmental information is disclosed in the parent company only financial statements.

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

In preparing these parent company only financial statements, management has made judgments, estimates, and assumptions that affect the application of the accounting policies and the reported amount of assets, liabilities, income, and expenses. Actual results may differ from these estimates.

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

The Company is likely to be facing economic uncertainty, such as inflation. Those events may have a significant impact in the next financial year on the following accounting estimates, which depend on the future forecasts.

Information about judgments made in applying accounting policies that have the most significant effects on the amounts recognized in the parent company only financial statements is judgment regarding control of subsidiaries. For related information, please refer to the consolidated financial statements for the year ended December 31, 2022.

Information about assumptions and estimation uncertainties that have a significant risk of resulting in a material adjustment to the carrying amounts of assets and liabilities within the next financial year is as follows. Those assumptions and estimation have been updated to reflect the impact of COVID-19 pandemic:

• (a) Fair value measurements in level 3 equity instruments

If the fair value of financial assets recognized in balance sheets cannot be reached from the active market, the Company will measure the fair value of financial assets based on valuation technique, including market approach and asset-based approach. The measurement of fair value involves in assumptions, estimations and judgements, such as the selection of comparable company, comparable transaction or price of equity transaction, liquidity discount and valuation multiplier. The fluctuation of assumption used in measurements of fair value may influence the fair value of financial instruments recognized. Please refer to note 6(f) and (w) for relevant explanation.

The accounting policies and disclosure of the Company include the adoption of fair value measurement of its financial and non-financial assets and liabilities. The Company has established internal control policies for fair value measurement, including obtaining valuation report issued by external experts for the fair value measurement of significant level 3 equity instruments. The Company will evaluate the supporting evidence for expert's work, and determine if the valuation and the classification of fair value level comply with the rule set by IFRS.

(Continued)

25

TAIWAN STYRENE MONOMER CORPORATION Notes to the Parent Company Only Financial Statements

The Company uses the market observable inputs as much as possible when measuring its assets and liabilities. The levels of fair value are classified with the inputs used in valuation technique as below:

• (i) Level 1: The quoted prices in active market of the same assets or liabilities (not adjusted)

• (ii) Level 2: Except for the quoted prices included in Level 1, the input parameter of assets or liabilities is directly (price) or indirectly (derive from price) observable.

• (iii) Level 3: The input parameter of assets or liabilities is not based on observable market information (unobservable parameter).

(6) Explanation of significant accounts

• (a) Cash and cash equivalents

Petty cash Deposits in bank	December 31, 2022 $ 160 317,418 $ 317,578	December 31, 2021
		160 54,623
		54,783

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

Mandatorily measured at fair value through profit or loss: Listed stocks Derivative instruments not used for hedging-foreign exchange swap contracts	December 31, 2022 $ 120,070 468 $ 120,538	December 31, 2021
		183,037 -
		183,037

The Company uses derivative financial instruments to hedge certain foreign exchange risk exposures arising from its operating activities. The following derivative instruments, without the application of hedge accounting, were classified as mandatorily measured at fair value through profit or loss financial assets and liabilities:

Buy USD / Sell TWD Buy USD / Sell TWD Buy USD / Sell TWD	December 31, 2022 Contract amount (in thousand) Maturity dates USD 8,000 2023.01 USD 6,200 2023.01 USD 1,000 2023.02

(Continued)

26

TAIWAN STYRENE MONOMER CORPORATION Notes to the Parent Company Only Financial Statements

(c) Accounts receivable

Accounts receivable Less: Loss allowance	December 31, 2022 $ 963,693 (48) $ 963,645	December 31, 2021 909,895 (46) 909,849

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

Current Current	December 31, 2022	December 31, 2022
	Gross carrying amount Weighted- average loss rate $ 963,693 0.005% December 31, 2021		Loss allowance provision
			48
		Weighted- average loss rate 0.005%	Loss allowance provision
			46

The movement in the allowance for notes and accounts receivable was as follows:

Beginning balance Impairment losses recognized Ending balance	2022 $ 46 2 $ 48	2021
		44 2
		46

(d) Inventories

Finished goods By-product Semi-finished products Work in progress Raw materials Supplies	December 31, 2022 $ 190,868 9,363 62,616 46,865 178,560 78,931 $ 567,203	December 31, 2021
		241,732 7,160 79,182 46,133 422,913 27,856
		824,976

In 2022 and 2021, inventories recognized as cost of sales amounted to $13,175,407 thousand and $11,354,485 thousand, respectively.

(Continued)

27

TAIWAN STYRENE MONOMER CORPORATION Notes to the Parent Company Only Financial Statements

Except for the transfer of inventory to operating costs from sales, other losses directly included in operating costs are as follows:

Loss from decline (gain on recovery) in value of inventories $	2022 2021 (114,209) 130,000

None of the inventories of the Company was pledged as collateral on December 31, 2022 and 2021.

• (e) Prepayments

Office supplies Prepayment for purchases Overpaid sales tax Others	December 31, 2022 $ 105,822 68 68,557 25,717 $ 200,164	December 31, 2021
		84,407 59 44,702 4,495
		133,663

• (f) Non-current financial assets at fair value through other comprehensive income

Equity investments: Domestic non-listed stocks Foreign non-listed equity investments	December 31, 2022 $ 555,600 87,971 $ 643,571	December 31, 2021
		688,949 92,479
		781,428

• (i) The Company designated the investments shown above at fair value through other comprehensive income because these equity securities represent those investments that the Company intends to hold for long-term strategic purposes not for trading purposes. During 2022 and 2021, the dividends of $13,184 thousand and $4,817 thousand, respectively, related to equity investments at fair value through other comprehensive income held on the years then ended were recognized.

• (ii) In May, 2022, the Company disposed its shares held in Yu-Chie Inc., as a result of the completion of the liquidation. The shares disposed had a fair value of $1,873 thousand and the Company realized a gain of $504 thousand, which was recognized as other comprehensive income, and thereafter, was reclassified to retained earnings. There were no disposals of strategic investments and transfers of any cumulative gain or loss within equity relating to these investments for the year ended December 31, 2021.

(iii) For market risk; please refer to note 6(w).

• (iv) None of the above-mentioned financial assets had been pledged as collateral as of December 31, 2022 and 2021.

(Continued)

28

TAIWAN STYRENE MONOMER CORPORATION Notes to the Parent Company Only Financial Statements

(g) Investments accounted for using equity method

Investment accounted for using the equity method were follows:

Subsidiaries Associates	December 31, 2022 $ 1,651,459 1,152,449 $ 2,803,908	December 31, 2021
		1,613,935 1,346,516
		2,960,451

(i) Subsidiaries

Please refer to the consolidated financial report for the years ended December 31, 2022.

• (ii) Associates

Associates of the Company consisted of the following:

Grand Cathay Venture Capital Co., Ltd. Wonderland Enterprise Co., Ltd. Functional Coating System Technologies Co., Ltd. Universal Investment Limited	December 31, 2022 Amount Share- holding (%) $ 478,292 25.00 630,762 37.04 25,575 34.88 17,820 40.00 $ 1,152,449	December 31, 2021
	Amount $ 478,292 630,762 25,575 17,820 $ 1,152,449	Amount Share- holding (%) 467,450 25.00 835,959 37.04 26,069 34.88 17,038 40.00 1,346,516

The Company acquired 40% of the shares of Universal Investments Limited with $17,273 thousand, getting the significant influence in February 2021. The identifiable net equity on the purchase date was greater than the purchase price, the Company has therefore recognized gain on bargain purchase of $403 thousand as other income in the statement of comprehensive income.

Gvision-USA, Inc. conducted a capital increase by cash of USD2,000 thousand on October 25, 2021. The Company did not participate in the capital increase proportionally, and its shares of the company dropped to 19.61%. The Company decreased the capital surplus of $7,367 thousand due to the decrease of its ownership. Meanwhile, the exchange difference of $(1,858) thousand previously recognized in other comprehensive income had been reclassified to profit or loss. The Company lost the significant influence on the company and reclassified the investment to financial assets at fair value through other comprehensive income.

The Company's financial information for investments accounted for using equity method that are individually insignificant was as follows:

Attributable to the Company: Net income Other comprehensive income Total comprehensive income	2022 $ 1,508 (139,694) $ (138,186)	2021
		40,481 63,494
		103,975

(Continued)

29

TAIWAN STYRENE MONOMER CORPORATION Notes to the Parent Company Only Financial Statements

To assess the impairment of Grand Cathay Venture Capital Co., Ltd., an appraisal report issued by an expert had been prepared based on an asset-based approach.

None of the investments using equity method of the Company was pledged as collateral as of December 31, 2022 and 2021.

(h) Property, plant and equipment

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

Cost: Balance as of January 1, 2022 Additions Disposals Reclassification Balance as of December 31, 2022 Balance as of January 1, 2021 Additions Disposals Reclassification Balance as of December 31, 2021 Accumulated depreciation: Balance as of January 1, 2022 Depreciation Disposals Balance as of December 31, 2022 Balance as of January 1, 2021 Depreciation Disposals Balance as of December 31, 2021 Carrying value: Balance as of December 31, 2022 Balance as of January 1, 2021 Balance as of December 31, 2021		Land $ 812,199 - - - $ 812,199 $ 812,199 - - - $ 812,199 $ - - - $ - $ - - - $ - $ 812,199 $ 812,199 $ 812,199	Land improvements 8,462 - - - 8,462 8,462 - - - 8,462 8,404 21 - 8,425 8,383 21 - 8,404 37 79 58	Buildings and structures 226,405 - - - 226,405 226,405 - - - 226,405 112,998 6,083 - 119,081 106,904 6,094 - 112,998 107,324 119,501 113,407	Machinery and equipment 7,307,108 12,570 (69,331) 282,262 7,532,609 7,280,630 - (356) 26,834 7,307,108 6,008,783 208,585 (69,331) 6,148,037 5,830,383 178,756 (356) 6,008,783 1,384,572 1,450,247 1,298,325	Transportation equipment 1,655 - - - 1,655 8,261 - (6,606) - 1,655 1,496 119 - 1,615 7,983 119 (6,606) 1,496 40 278 159	Other equipment 547,924 811 (1,010) 8,290 556,015 511,715 148 (4,204) 40,265 547,924 374,341 32,623 (1,010) 405,954 345,457 33,088 (4,204) 374,341 150,061 166,258 173,583	Construction in progress 298,058 46,459 - (290,552) 53,965 226,973 138,184 - (67,099) 298,058 - - - - - - - - 53,965 226,973 298,058	Total 9,201,811 59,840 (70,341) -
									9,191,310
									9,074,645 138,332 (11,166) -
									9,201,811
									6,506,022 247,431 (70,341)
									6,683,112
									6,299,110 218,078 (11,166)
									6,506,022
									2,508,198
									2,775,535
									2,695,789

As of December 31, 2022 and 2021, none of the property, plant and equipment of the Company had been pledged as collateral for loans.

(Continued)

30

TAIWAN STYRENE MONOMER CORPORATION

Notes to the Parent Company Only Financial Statements

(i) Right-of-use assets

The cost and accumulated depreciation of leased land, buildings and structures, and transportation equipment of the Company were as follows:

Cost: Balance as of January 1, 2022 Additions Lease modification Disposals Balance as of December 31, 2022 Balance as of January 1, 2021 Additions Disposals Balance as of December 31, 2021 Accumulated depreciation: Balance as of January 1, 2022 Depreciation Disposals Balance as of December 31, 2022 Balance as of January 1, 2021 Depreciation Disposals Balance as of December 31, 2021 Carrying amount: Balance as of December 31, 2022 Balance as of January 1, 2021 Balance as of December 31, 2021	Land $ 4,064 - 84 - $ 4,148 $ 387 4,064 (387) $ 4,064 $ 87 214 - $ 301 $ 353 121 (387) $ 87 $ 3,847 $ 34 $ 3,977	Buildings and structures 503 - - (503) - 503 - - 503 335 168 (503) - 167 168 - 335 - 336 168	Transportation equipment 9,569 6,874 - (8,570) 7,873 9,569 - - 9,569 7,658 2,696 (8,570) 1,784 4,526 3,132 - 7,658 6,089 5,043 1,911	Office equipment 4,814 4,800 - - 9,614 4,814 - - 4,814 2,167 1,202 - 3,369 1,204 963 - 2,167 6,245 3,610 2,647	Total 18,950 11,674 84 (9,073)
					21,635
					15,273 4,064 (387)
					18,950
					10,247 4,280 (9,073)
					5,454
					6,250 4,384 (387)
					10,247
					16,181
					9,023
					8,703

(j) Intangible assets

The movements of intangible assets of the Company were as follows:

Technical royalty Cost: Balance as of January 1, 2022 $ 14,623 Disposals - Balance as of December 31, 2022 $ 14,623 Balance as of January 1, 2021 $ 14,623 Additions - Balance as of December 31, 2021 $ 14,623	Computer software 5,945 (4,100) 1,845 5,030 915 5,945	Total 20,568 (4,100) 16,468 19,653 915 20,568

(Continued)

31

TAIWAN STYRENE MONOMER CORPORATION Notes to the Parent Company Only Financial Statements

Technical royalty Accumulated amortization: Balance as of January 1, 2022 $ 8,449 Amortization 975 Disposals - Balance as of December 31, 2022 $ 9,424 Balance as of January 1, 2021 $ 7,474 Amortization 975 Balance as of December 31, 2021 $ 8,449 Carrying value: Balance as of December 31, 2022 $ 5,199 Balance as of January 1, 2021 $ 7,149 Balance as of December 31, 2021 $ 6,174 (k) Other non-current assets Long-term prepaid expenses	Technical royalty

Except catalysts shall be allocated by actual consumption, the rest of prepaid expenses will be expensed on a straight line basis over the economic lives.

• (l) Short-term borrowings

Short-term borrowings of the Company were as follows:

Unsecured bank loans Unused short-term credit lines Range of interest rate (m) Other payables Accrued payroll Compensation payable to directors Employee bonus payable Compensated absences Utility payable Payables on equipment Dividends payable Other payables－other Total	December 31, 2022 $ 700,000 $ 1,237,829 1.725~2.060% December 31, 2022 $ 18,691 - - 14,202 14,064 10,642 452 31,859 $ 89,910	December 31, 2021 235,759 477,117 0.75~0.98% December 31, 2021 12,998 49 49 26,822 14,713 24,247 9,730 65,593 154,201 (Continued)

32

TAIWAN STYRENE MONOMER CORPORATION Notes to the Parent Company Only Financial Statements

(n) Lease liabilities

Lease liabilities of the Company were as follows:

Lease liabilities of the Company were as follows:
Current Non-current	December 31, 2022 $ 4,414 $ 11,372	December 31, 2021
		3,178
		5,347

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

The amounts recognized in profit or loss were as follows:

Interest on lease liabilities Expenses relating to short-term leases Expenses relating to leases of low-value assets, excluding short-term leases of low-value assets	2022 $ 182 $ 265 $ 476	2021
		129
		415
		564

The amounts recognized in the statement of cash flows was as follows:

Total cash outflow for leases	2022 $ 5,414	2021
		5,490

(o) Employee benefits

(i) Defined benefit plans

Reconciliations of defined benefit obligations at present value and plan assets at fair value are as follows:

Present value of defined benefit obligations Fair value of plan assets Net defined benefit liabilities	December 31, 2022 $ 215,541 (165,435) $ 50,106	December 31, 2021
		230,377 (166,277
		64,100

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

(Continued)

33

TAIWAN STYRENE MONOMER CORPORATION Notes to the Parent Company Only Financial Statements

• 1) Composition of plan assets

The Company allocates pension funds in accordance with the Regulations for Revenues, Expenditures, Safeguard and Utilization of the Labor Retirement Fund, and such funds are managed by the Labor Pension Fund Supervisory Committee. With regard to the utilization of the funds, minimum earnings in the annual distributions on the final financial statements shall be no less than the earnings attainable from the amounts accrued from two-year time deposits with interest rates offered by local banks.

The Company’ s Bank of Taiwan labor pension reserve account balance amounted to $165,435 thousand as of December 31, 2022. For information on the utilization of the labor pension fund assets, including the asset allocation and yield of the fund, please refer to the website of the Labor Pension Fund Supervisory Committee.

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

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

Defined benefit obligations at January 1 Current service costs and interest cost Remeasurements of defined benefit liabilities －Actuarial gains and losses arising from financial assumptions －Actuarial gains and losses arising from experience adjustments Benefits paid Defined benefit obligations at December 31	2022 $ 230,377 2,185 (3,115) 2,537 (16,443) $ 215,541	2021 252,647 3,012 2,094 3,741 (31,117) 230,377

• 3) Movements in fair value of plan assets

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

Fair value of plan assets at January 1 Interests income Remeasurements of defined benefit assets －Return on plan assets (excluding interest income) Contributions Benefits paid Fair value of plan assets at December 31	2022 $ 166,277 833 14,193 575 (16,443) $ 165,435	2021 193,439 1,550 1,898 507 (31,117) 166,277

(Continued)

34

TAIWAN STYRENE MONOMER CORPORATION Notes to the Parent Company Only Financial Statements

• 4) Expenses recognized in profit or loss

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

Current service costs Net interest on defined benefit liabilities (assets) Operating cost Operating expenses	2022 $ 1,033 319 $ 1,352 2022 $ 999 353 $ 1,352	2021
		991 471
		1,462
		2021
		1,105 357
		1,462

• 5) Remeasurement values of the defined benefit liabilities recognized in other comprehensive income

The remeasurement values of the defined benefit liabilities recognized in other comprehensive income of the Company were as follows:

Recognized during the period	2022 $ (14,771)	2021
		3,937

• 6) Actuarial assumptions

Principal actuarial assumptions at the end of the reporting period were as follows:

Discount rate Future salary increase rate	December 31, 2022 December 31, 2021 1.00% 0.50% 1.50% 1.50%

The expected allocation payment to be made by the Company to the defined benefit plans for the one-year period after the reporting date is $578 thousand.

The weighted-average lifetime of the defined benefit plans is 3.5 years.

• 7) Sensitivity analysis

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

December 31, 2022 Discount rate(changed by 0.25%) Future salary increase rate(changed by 1%)	Influence of defined benefit obligation Increase Decrease $ (1,503) 1,539 6,254 (5,809) (Continued)

35

TAIWAN STYRENE MONOMER CORPORATION Notes to the Parent Company Only Financial Statements

December 31, 2021 Discount rate(changed by 0.25%) Future salary increase rate(changed by 1%)	Influence of defined benefit obligation Increase Decrease (1,745) 1,789 7,334 (6,785)

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

The calculation and assumptions used in the sensitivity analysis during the year were consistent with prior year.

(ii) Defined benefit plans

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

The pension costs incurred from the contributions to the Bureau of the Labor Insurance amounted to $8,444 thousand and $8,373 thousand for the years ended December 31, 2022 and 2021, respectively.

(p) Income taxes

(i) Income tax benefits

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

Current income tax expense: Current period Adjustment for prior periods Deferred income tax expense: Origination and reversal of temporary difference Income tax benefits	2022 $ 5,195 8,890 14,085 (103,310) $ (89,225)	2021 - 145 145 (109,546) (109,401)

The amount of income tax recognized in other comprehensive income for 2022 and 2021 was as follows:

2022 Items that will not be reclassified subsequently to profit or loss: Remeasurement from defined benefit plans $ (2,954)	2021 787 (Continued)

36

TAIWAN STYRENE MONOMER CORPORATION Notes to the Parent Company Only Financial Statements

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

Loss before tax Income tax using the Company’s domestic tax rate Non-deductible expenses Tax-exempt income Investment loss Current-year losses for which no deferred tax asset was recognized Adjustment for prior periods Tax on undistributed profit Total	2022 $ (463,130) $ (92,626) 10,966 (9,261) (26,361) 13,972 8,890 5,195 $ (89,225)	2021 (4,797) (959) 1,126 (2,245) (113,279) 5,811 145 - (109,401)

• (ii) Deferred tax assets and liabilities

Recognized deferred tax assets and liabilities

Movements of recognized deferred tax assets and liabilities for the years ended December 31, 2022 and 2021 were as follows:

Deferred tax liabilities:

Balance at January 1, 2022 Recognized in profit or loss Balance at December 31, 2022 Balance at January 1, 2021 Recognized in profit or loss Balance at December 31, 2021	Land value increment tax $ 173,509 - $ 173,509 $ 173,509 - $ 173,509	Other 52 467 519 562 (510) 52	Total 173,561 467 174,028 174,071 (510) 173,561

Deferred tax assets:

Decline in Value of Inventories Balance at January 1, 2022 $ 26,149 Recognized in profit or loss (22,842) Recognized in other comprehensive income - Balance at December 31, 2022 $ 3,307 Balance at January 1, 2021 $ 150 Recognized in profit or loss 25,999 Recognized in other comprehensive income - Balance at December 31, 2021 $ 26,149	Tax loss carryforward 12,820 155 (2,954) 10,021 11,841 192 787 12,820	Defined benefit pension plans 5,365 (2,524) - 2,841 4,653 712 - 5,365	Accumulated compensated absences 82,133 128,988 - 211,121 - 82,133 - 82,133	Total 126,467 103,777 (2,954)
				227,290
				16,644 109,036 787
				126,467

(Continued)

37

TAIWAN STYRENE MONOMER CORPORATION Notes to the Parent Company Only Financial Statements

The Company's income tax return for the year 2020 had been examined by the tax authorities.

(q) Capital and other equity

(i) Ordinary shares

As of December 31, 2022 and 2021, the number of authorized ordinary shares were $6,750,000 thousand shares with par value of $10 per share. As of December 31, 2022 and 2021, of 527,870 thousand shares were issued. All issued shares were paid up upon issuance.

(ii) Capital surplus

The balances of capital surplus of the Company were as follows:

Difference arising from subsidiary's share price and its carrying value Changes in ownership interests in subsidiaries Changes in equity of investments in associates using equity method Treasury share transactions Donation from shareholders Overdue dividends not received by shareholders Total	December 31, 2022 $ 8,953 26,307 6,659 4,430 13 24,585 $ 70,947	December 31, 2021
		8,953 26,307 6,594 4,433 13 -
		46,300

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

(iii) Retained earnings

The Company's Article of Incorporation stipulates that Company's net earnings should first be used to offset the prior years' deficits, if any, before paying any income taxes. Of the remaining balance, 10% is to be appropriated as legal reserve, and then any remaining profit together with any undistributed retained earnings shall be distributed according to the distribution plan proposed by the Board of Directors and submitted to the stockholders’ meeting for approval.

(Continued)

38

TAIWAN STYRENE MONOMER CORPORATION Notes to the Parent Company Only Financial Statements

In general, cash dividends shall not be less than 30% of total dividends. However, based on the need to respond to changes in the industry, major investment plans and improve the financial structure, or in the case of sudden major capital needs, the cash dividend payout rate could be adjusted to 10% to 30%. If the cash dividend is less than $0.1 per share, it will not be issued, and the stock dividend will be paid instead.

1) Legal reserve

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

2) Special reserve

In accordance with ruling issued by the FSC, the Company is required to appropriate a special reserve in the amount equal to the sum of debit elements under other equity arising in current period. Special reserve shall be appropriated from currentperiod net income plus items other than net income adjusted to the current year's undistributed earnings and undistributed priorperiod earnings; for debit elements under other equity arising in prior periods, special reserve is appropriated from undistributed priorperiod earnings and is prohibited from distribution. If any of the debit elements are reversed, then the special reserve in the amount equal to the reversal may be released for earnings distribution.

3) Earnings distribution

On June 22, 2022 and July 7, 2021, the shareholders’ meetings resolved to distribute the 2021 and 2020 earnings. These earnings were appropriated as follows:

Dividends distributed to ordinary shareholders: Cash	2021 $ 79,156	2020
		263,917

On March 8, 2023, the Board of Directors planned to distribute the 2022 earnings. The earning was appropriated as follows:

earning was appropriated as follows:
Dividends distributed to ordinary shareholders: Cash	2022
	Ratio of allotment of shares (NTD) Amount $ 0.20 $ 105,574

(Continued)

39

TAIWAN STYRENE MONOMER CORPORATION Notes to the Parent Company Only Financial Statements

(iv) Other equity

Changes of other equity of the Company were as follows:

Balance as of January 1, 2022 Exchange differences on foreign operations Exchange differences on subsidiaries, associates and joint ventures accounted for using equity method Unrealized losses from financial assets measured at fair value through other comprehensive income Unrealized losses from financial assets measured at fair value through other comprehensive income, subsidiaries, associates and joint ventures accounted for using equity method Cumulative gains reclassified to retained earnings on disposal of investments in equity instruments designated at fair value through other comprehensive income Cumulative gains reclassified to retained earnings on associates disposal of investments in equity instruments designated at fair value through other comprehensive income Balance as of December 31, 2022 Balance as of January 1, 2021 Exchange differences on foreign operations Exchange differences on subsidiaries, associates and joint ventures accounted for using equity method Unrealized gains from financial assets measured at fair value through other comprehensive income Unrealized losses from financial assets measured at fair value through other comprehensive income, subsidiaries, associates and joint ventures accounted for using equity method Cumulative gains reclassified to retained earnings on associates disposal of investments in equity instruments designated at fair value through other comprehensive income Changes in ownership interests in subsidiaries Changes in ownership interests in associates Balance as of December 31, 2021	Exchange differences on translation of foreign financial statements $ (34,634) 1,334 25,908 - - - - $ (7,392) $ (26,745) (847) (9,446) - - - 546 1,858 $ (34,634)	Unrealized gains (losses) from financial assets measured at fair value through other comprehensive income 90,665 - - (134,696) (153,532) (504) (9,393) (207,460) 195,208 - - 16,329 (46,235) (74,637) - - 90,665	Total 56,031 1,334 25,908 (134,696) (153,532) (504) (9,393) (214,852) 168,463 (847) (9,446) 16,329 (46,235) (74,637) 546 1,858 56,031

(v) Treasury stock

In accordance with the requirements under section 28(2) of the Securities and Exchange Act, the Company repurchased 1,040 thousand shares of treasury stock in order to transfer shares to employees. In 2021, a total of 1,040 thousand shares were all transferred to employees.

(Continued)

40

TAIWAN STYRENE MONOMER CORPORATION Notes to the Parent Company Only Financial Statements

(r) Share-based payment

A resolution was decided during the Board meeting held on March 24, 2021 to award 1,040,000 shares of employee stocks options to employees. These employees with the employee stock option are entitled to purchase shares at the price of $14.6 per share, the Company therefore recognized related remuneration of $4,472 thousand.

The Company used Black-Scholes option pricing model in measuring the fair value of the sharebased payment at the grant date. The measurement inputs were as follows:

Fair value at grant date (NT dollars per share) Share price at grant date Exercise price Expected volatility (%) Expected life (years) Expected dividend (%) Risk-free interest rate (%)	2021 Treasury stock transferred to employees
	4.3 19.05 14.60 25.91% 0.12 2.83% 0.76%

Details of the employee stock options and the transfer of treasury stock were as follows:

(in thousand)

Granted during the year (number) Exercised during the year (number) Outstanding at end of period	2021 Weighted average exercise price (dollars) Number of options 14.60 1,040 14.60 (1,040) -
	Weighted average exercise price (dollars) 14.60 14.60

(s) Earning per share

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

• (i) Basic earnings per share

Profit (loss) attributable to the Company Weighted-average number of ordinary shares outstanding Earnings per share (NTD)	2022 $ (373,905) 527,870 $ (0.71)	2021
		104,604
		527,513
		0.20

(Continued)

41

TAIWAN STYRENE MONOMER CORPORATION Notes to the Parent Company Only Financial Statements

(ii) Diluted earnings per share

Profit (loss) attributable to the Company(diluted) Weighted-average number of ordinary shares outstanding Effect of dilutive potential ordinary shares Employee remuneration in stock Weighted-average number of ordinary shares outstanding (diluted) Diluted earnings per share (NTD) Revenue from contracts with customers (i) Disaggregation of revenue Primary geographical markets: Asia America Europe Major products/services lines: Commodity sales revenue (ii) Contract balances December 31, 2022 Contract liabilities-unearned sales revenue $ 7,829	Profit (loss) attributable to the Company(diluted) Weighted-average number of ordinary shares outstanding Effect of dilutive potential ordinary shares Employee remuneration in stock Weighted-average number of ordinary shares outstanding (diluted) Diluted earnings per share (NTD) Revenue from contracts with customers (i) Disaggregation of revenue Primary geographical markets: Asia America Europe Major products/services lines: Commodity sales revenue (ii) Contract balances December 31, 2022 Contract liabilities-unearned sales revenue $ 7,829	2022 $ (373,905) 527,870 - 527,870 $ (0.71) 2022 $ 12,519,625 145,148 46,899 $ 12,711,672 $ 12,711,672 December 31, 2021 12,830	2021
			104,604
			527,513 244
			527,757
			0.20
			2021
			11,542,203 21,308 15,757
			11,579,268
			11,579,268
			January 1, 2021
	$ 7,829		7,829

(t) Revenue from contracts with customers

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

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

(Continued)

42

TAIWAN STYRENE MONOMER CORPORATION Notes to the Parent Company Only Financial Statements

(u) Non-operating income and expenses

(i) Other income

Details of other income of the Company were as follows:

Rent income Gain from bargain purchase transactions Dividend income Others Total (ii) Other gains and losses Foreign exchange gains Losses on disposals of investments Gains (losses) on financial assets at fair value through profit or loss Gains on disposals of property, plant and equipment Impairment loss Gain on lease modification Others Total (iii) Finance costs Interest expense	2022 $ 48 - 19,616 25,892 $ 45,556 2022 $ 15,705 - (48,496) - (873) 6 (802) $ (34,460) 2022 $ 4,320	2021 48 403 6,843 1,883 9,177 2021 6,989 (1,858) 2,154 270 (139) - (39) 7,377 2021 448

(v) Employee compensation and directors and supervisors' remuneration

According to the Article of Incorporation, once the Company has annual profit, it should appropriate 1%~5% of the profit to its employees and 2.5% or less to its directors as remuneration. However, if the Company still has accumulated deficit, the profit should be reserved to offset the deficit.

For the years ended December 31, 2022, there was no appropriation of remunerations to employees and directors because of net loss before tax.

For the years ended December 31, 2022, the remunerations to employees and directors were both amounted to $49 thousand. These amounts were calculated using the Company's net income before tax without the remunerations to employees and directors for each period, multiplied by the proposed percentage which is stated under the Company's proposed Article of Incorporation. These remunerations were expensed under operating costs or expenses for each period. The information is available on the Market Observation Post System Website. The differences between the amount as stated before and the actual distribution to employees and directors in 2021 were both $(49) thousand which already recognized in profit or loss in 2022.

(Continued)

43

TAIWAN STYRENE MONOMER CORPORATION Notes to the Parent Company Only Financial Statements

• (w) Financial instruments

• (i) Credit risk

  • 1) Credit risk exposure

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

• 2) Concentration of credit risk

As of December 31, 2022 and 2021, the Company reviewed the concentrations of credit risk arising from the major top ten customers, and it was 96% and 97% of the total accounts receivable, respectively. The concentrations of credit risk of the remaining accounts receivable are relatively small.

• 3) Credit risk of receivables

For credit risk exposure of note and trade receivables, please refer to note 6(c). Other financial assets at amortized cost include time deposits and other receivables, etc. The allowance for the receivables is measured by lifetime expected credit losses. The remaining financial assets are measured by 12-month expected credit losses.

• (ii) Liquidity risk

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

December 31, 2022 Non-derivative financial liabilities Short-term borrowings Accounts payable Lease liabilities December 31, 2021 Non-derivative financial liabilities Short-term borrowings Accounts payable Lease liabilities	Carrying amount		Contractual cash flows		Within 1 year		1-2 years		2-5 years	Over 5 years
	$ 700,000 978,952 15,786 $ 1,694,738 $ 235,759 1,117,873 8,525 $ 1,362,157		701,942 978,952 16,774		701,942 978,952 4,701		- - 4,133		- - 4,771 4,771 - - 1,217 1,217	- - 3,169
			1,697,668		1,685,595		4,133			3,169
			235,992 1,117,873 9,151		235,992 1,117,873 3,280		- - 1,307			- - 3,347
			1,363,016		1,357,145		1,307			3,347

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

(Continued)

44

TAIWAN STYRENE MONOMER CORPORATION Notes to the Parent Company Only Financial Statements

(iii) Market risk

1) Currency risk

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

Financial assets Monetary items USD Financial liabilities Monetary items USD EUR	December 31, 2022 Foreign currency Exchange rate NTD $ 8,026 30.710 246,478 7,895 30.710 242,455 19 32.720 622	December 31, 2022 Foreign currency Exchange rate NTD $ 8,026 30.710 246,478 7,895 30.710 242,455 19 32.720 622	December 31, 2021	December 31, 2021
	Foreign currency $ 8,026 7,895 19	Exchange rate 30.710 30.710 32.720	Foreign currency 9,909 16,185 -	Exchange rate NTD 27.680 274,281 27.680 448,024 - -

The Company's exposure to foreign currency risk arises from the translation of the foreign currency exchange gains and losses on cash and cash equivalents, accounts receivable, other receivables, accounts payable and other payables that are denominated in foreign currency. A strengthening (weakening) of 1% of the NTD against the USD as of December 31, 2022 and 2021, for the years ended December 31, 2022 and 2021, respectively, would have increased (decreased) net profit before tax by $34 thousand and $1,737 thousand. The analysis is performed on the same basis.

For years 2022 and 2021, foreign exchange gain (loss) (including realized and unrealized portions) amounted to $15,705 thousand and $6,989 thousand, respectively.

2) Interest rate risk

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

The following sensitivity analysis is based on the exposure to the interest rate risk of derivative and non derivative financial instruments on the reporting date. Regarding assets with variable interest rates, the analysis is based on the assumption that the amount of assets outstanding at the reporting date was outstanding through the year. The rate of change is expressed as the interest rate increases or decreases by 1% when reporting to management internally, which also represents the management's assessment of the reasonably possible interest rate change.

If the interest rate had increased/decreased by 1% the Company profit before tax would have decreased/increased by $7,000 thousand and $2,358 thousand for the years ended December 31, 2022 and 2021, respectively, with all over variable factors remaining constant. This is mainly due to Company’s loan at variable rates.

(Continued)

45

TAIWAN STYRENE MONOMER CORPORATION Notes to the Parent Company Only Financial Statements

• 3) Other market price risk

If the securities price at the reporting date changes (the analysis is performed on the same basis and all other variable factors remaining constant), the effect for comprehensive income is illustrated below:

Prices of securities at the reporting date	2022	Net income 1,201 (1,201)	2021 Other comprehensive income after tax Net income 7,814 1,830 (7,814) (1,830)	2021 Other comprehensive income after tax Net income 7,814 1,830 (7,814) (1,830)
	Other comprehensive income after tax $ 6,449 $ (6,449)		Other comprehensive income after tax 7,814 (7,814)
Increasing 1% Decreasing 1%
				(1,830)

• (iv) Fair value information

• 1) Types and fair value of financial instruments

Financial assets measured at fair value through profit or loss and financial assets at fair value through other comprehensive income are measured at fair value on the basis of repeatability. The carrying amount and fair value of the financial assets and liabilities, including the information on fair value hierarchy were as follows; however, except as described in the following paragraphs, for financial instruments not measured at fair value whose carrying amount is reasonably close to the fair value, and lease liabilities, disclosure of fair value information is not required:

Financial assets at fair value through profit or loss: Listed stocks Derivative instruments not used for hedging-foreign exchange swap contracts Financial assets at fair value through other comprehensive income: Domestic and foreign non- listed stocks (included non- current assets (or disposal groups) held for sale) Financial assets measured at amortized cost: Cash and cash equivalents Accounts receivable Other receivables Refundable deposits Subtotal Total		December 31, 2022	December 31, 2022	December 31, 2022
	Book value $ 120,070 468 644,859 317,578 963,645 2,231 3,645 1,287,099 $ 2,052,496		Fair value
		Level 1 120,070 - - - - - - - 120,070	Level 2 - 468 - - - - - - 468	Level 3 - - 644,859 - - - - - 644,859	Total
					120,070 468 644,859 - - - -
					-
					765,397

(Continued)

46

TAIWAN STYRENE MONOMER CORPORATION Notes to the Parent Company Only Financial Statements

Financial liabilities measured at amortized cost: Short-term borrowings Accounts payable Other payables Lease liabilities Total Financial assets at fair value through profit or loss: Financial assets mandatorily at fair value through profit or loss Financial assets at fair value through other comprehensive income: Domestic and foreign non- listed stocks Financial assets measured at amortized cost: Cash and cash equivalents Accounts receivable Other receivables Refundable deposits Subtotal Total Financial liabilities measured at amortized cost: Short-term borrowings Accounts payable Other Payables Lease liabilities Total		December 31, 2022	December 31, 2022	December 31, 2022
	Book value $ 700,000 889,042 89,910 15,786 $ 1,694,738		Fair value
		Level 1 Level 2 Level 3 - - - - - - - - - - - - - - - December 31, 2021			Total
					- - - -
					-
	Book value $ 183,037 781,428 54,783 909,849 6,119 3,421 974,172 $ 1,938,637 $ 235,759 969,496 148,377 8,525 $ 1,362,157		Fair value
		Level 1 183,037 - - - - - - 183,037 - - - - -	Level 2 - - - - - - - - - - - - -	Level 3 - 781,428 - - - - - 781,428 - - - - -	Total
					183,037 781,428 - - - -
					-
					964,465
					- - - -
					-

(Continued)

47

TAIWAN STYRENE MONOMER CORPORATION Notes to the Parent Company Only Financial Statements

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

• A. Non-derivative financial instruments

A financial instrument is regarded as being quoted in an active market if quoted prices are readily and regularly available from an exchange, dealer, broker, industry group, pricing service, or regulatory agency and those prices represent actual and regularly occurring market transactions on an arm’ s-length basis. Whether transactions are taking place ‘regularly’ is a matter of judgment and depends on the facts and circumstances of the market for the instrument.

Quoted market prices may not be indicative of the fair value of an instrument if the activity in the market is infrequent, the market is not well-established, only small volumes are traded, or bid-ask spreads are very wide. Determining whether a market is active involves judgment.

Measurements of fair value of financial instruments without an active market are based on valuation technique or quoted price from a competitor. Fair value, measured by using valuation technique that can be extrapolated from either similar financial instruments or discounted cash flow method or other valuation techniques, including models, is calculated based on available market data at the reporting date. For example, yield curve of Taipei Exchange and average interest rate of commercial paper quoted by Reuters.

Measurements of fair value of equity investments without an active market nor quoted market price are based on comparable listed company method. This method is based on the estimated earnings before interest, taxes, depreciation and amortization and the multipliers that are extrapolated from comparable listed company quoted prices. The estimated fair values are adjusted to the discounting effect of lack of market liquidity.

• B. Derivative financial instruments

Measurement of the fair value of derivative instruments is based on the valuation techniques generally accepted by market participants such as the discounted cash flow or option pricing models. Fair value of currency swap contract is usually determined by the forward currency exchange rate.

• 3) Transfers between Level 1 and Level 2

There is no transfer for the years ended December 31, 2022 and 2021.

(Continued)

48

TAIWAN STYRENE MONOMER CORPORATION Notes to the Parent Company Only Financial Statements

• 4) Reconciliation of Level 3 fair values

Opening balance, January 1, 2022 Total gains and losses recognized Other comprehensive income Reclassification Disposals Ending Balance, December 31, 2022 Opening balance, January 1, 2021 Total gains and losses recognized Other comprehensive income Reclassification Capital reduction by cash Ending Balance, December 31, 2021	Fair value through other comprehensive income
	Unquoted equity instruments
	$ 781,428 (134,696) (1,288) (1,873) $ 643,571 $ 756,428 16,329 24,389 (15,718) $ 781,428

Above-mentioned total gains and losses were included in unrealized gains and losses from financial assets at fair value through other comprehensive income. Among those related to the assets still held on December 31, 2022 and 2021 were as follows:

Total gains and losses recognized: In other comprehensive income, and presented in “unrealized gains and losses from financial assets at fair value through other comprehensive income”	2022 2021 $ (134,696) 16,329

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

The Company’ s financial instruments that use Level 3 inputs to measure fair value include financial assets measured at fair value through profit or loss-equity investments.

The Company’ s equity investments without an active market which are classified as Level 3 have numerous unobservable inputs. The significant unobservable inputs of equity instrument investments are not correlated to each other.

(Continued)

49

TAIWAN STYRENE MONOMER CORPORATION Notes to the Parent Company Only Financial Statements

Quantified information of significant unobservable inputs was as follows:

Item	Valuation technique Market approach (Comparable listed company method) Net asset value method	Significant unobservable inputs Inter-relationship between significant unobservable inputs and fair value measurement ‧ Price to book ratio (0.96~1.75 and 0.96~2.01 as of December 31, 2022 and 2021) ‧ Lack of market liquidity discount (3%~30% and 3%~43% December 31, 2022 and 2021) ‧ The fair value would increase if price to book ratio increase ‧ The fair value would decrease if lack of market liquidity discount increase ‧ Net asset value ‧ The estimated fair value would increase if the net asset value were higher
Financial assets at fair value through other comprehensive income - equity investments without an active market

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

The fair value measurement of financial instruments by the Company is reasonable, but the use of different evaluation models or evaluation parameters may result in different evaluation results. For financial instruments classified as Level 3, changing the price to book ratio or liquidity discount would have the following effects on other comprehensive income:

December 31, 2022 Financial assets at fair value through other comprehensive income December 31, 2021 Financial assets at fair value through other comprehensive income	Inputs Price to book ratio Liquidity discount Price to book ratio Liquidity discount	Increase/ Decrease 10% 10% 10% 10%	Other comprehensive income Favorable Unfavorable 3,419 (3,419) 17,747 (17,747) 348 (348) 17,445 (17,445)

The favorable and unfavorable changes of the Company refer to the fluctuation of fair value, and the fair value is calculated by valuation techniques based on the unobservable input parameters of different degrees.

(Continued)

50

TAIWAN STYRENE MONOMER CORPORATION Notes to the Parent Company Only Financial Statements

(x) Financial risk management

• (i) Overview

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

• 1) credit risk

• 2) liquidity risk

• 3) market risk

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

(ii) Structure of risk management

The Board of Directors has overall responsibility for the establishment and oversight of the risk management framework. The financial department of the Company provides services and coordinates the operation of the financial market. And the important activities are subject to the Board of Directors' approval. The Company must be abided by the financial risk management and operation. Internal Audit undertakes reviews of risk management controls and procedures, the results of which are reported to the Board of Directors regularly.

• (iii) Credit risk

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

1) Accounts receivable and other receivables

The financial department has established a credit policy under which each new customer is analyzed individually for creditworthiness before the Company’ s standard payment and delivery terms and conditions are offered. The Company’s review includes external ratings, when available, and bank references. Purchase limits are established for each customer and represent the maximum open amount without requiring approval from the financial department; these limits are reviewed regularly. Customers that fail to meet the Company’ s benchmark creditworthiness may transact with the Company only on a prepayment basis.

The customers of the Company covered many types and regions. In order to reduce credit risk, the Company review financial status and recoverable of account receivable each customer regularly and accounted loss allowance.

(Continued)

51

TAIWAN STYRENE MONOMER CORPORATION Notes to the Parent Company Only Financial Statements

The Company has allowance for impairment losses account to reflect the estimated loss of account receivable and other receivables. The main components of the allowance account include specific loss components related to individual significant risks, and combined loss components established for similar asset groups that have occurred but have not yet been identified. Portfolio loss allowance accounts are determined based on historical payment statistics for similar financial assets.

2) Investments

The exposure to credit risk for the bank deposits, fixed income investments, and other financial instruments is measured and monitored by the Company’ s finance department. The Company only deals with financial institutions with good credit rating. The Company does not concentrate on specific counterparty hence there is no significant credit risk arising therefrom.

(iv) Liquidity risk

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

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

(v) Market risk

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

1) Currency risk

The Company is exposed to currency risk on sales and purchases are denominated in a currency other than the respective functional currency of the Company. The currency used in these transactions is USD. The Company adopts a natural hedging strategy. When the net assets and liabilities imbalances occur in the short-term, the Company buys or sells foreign currencies to maintain exposures at an acceptable level.

2) Interest rate risk

Interest rate risk is the risk of changes in the fair value of financial instruments caused by changes in market interest rates or the risk of changes in cash flows of financial instruments caused by changes in market interest rates. The interest rate risk of the financial assets and liabilities is described in the note of liquidity risk management.

(Continued)

52

TAIWAN STYRENE MONOMER CORPORATION Notes to the Parent Company Only Financial Statements

3) Other market price risk

The Company is exposed to equity price risk due to the investments in equity securities. The Company actively monitors the performance of this investment portfolios using fair value basis. This is a strategic investment and is not held for trading. The Company does not actively trade in these investments.

(y) Capital management

The Company plan the capital which need in the future (including research and development costs and repayment) based on the characteristics of operating and development, and considering factors such as changes in the external environment to protect sustainable development of the Company, give back to shareowners and maintain the best structure to enhance value. Overall, the Company adopts a prudent risk management strategy.

• (z) Investing and financing activities not affecting current cash flows

There is no non-cash investing activities for the years ended December 31, 2022 and 2021.

Reconciliation of liabilities arising from financing activities in 2022 and 2021 were as follows:

Lease liabilities Lease liabilities	January 1, 2022 $ 8,525 January 1, 2021 $ 8,843	Cash flows (4,491) Cash flows (4,382)	Non-cash changes Lease modification Lease additions 78 11,674 Non-cash changes Lease modification Lease additions - 4,064	December 31, 2022 15,786
				December 31, 2021 8,525
			Lease modification -

(7) Related-party transactions

• (a) Names and relationship with related parties

Name of related party Relationship with the Company YSIC Ltd. Subsidiary Yuan-Shin Materials Technology Co., Ltd. Subsidiary Yangmingshan Tien Lai Resort & SPA Subsidiary Asia Carbons & Technology Inc. Subsidiary Eastern Broadcasting Co., Ltd. A substantive related party

(Continued)

53

TAIWAN STYRENE MONOMER CORPORATION Notes to the Parent Company Only Financial Statements

(b) Significant transactions with related parties

• (i) Receivables from related parties

The amounts of receivables from related parties were as follows:

Accounts	Types of related parties	December 31, 2022 $ - 2022 $ 48	December 31, 2021
Other receivables Rental income Other subsidiaries	Asia Carbons & Technology Inc.		1,560
			2021 48

(ii) Rental income

• (iii) Operating expense

The Company purchased the souvenirs for the shareholders from a related party. The amounts of expenses were as follows:

Yangmingshan Tien Lai Resort & SPA Key management personnel compensation Short-term employee benefits Post-employment benefits	2022 $ 850 2022 $ 19,781 490 $ 20,271	2021
		5,636
		2021
		21,830 505
		22,335

• (c) Key management personnel compensation

Short-term employee benefits include the estimated employee compensation. Please refer to note 6(v) for the estimated method.

(8) Pledged assets: None

(9) Commitments and contingencies:

(a) Letter of credit issued but not expired

Letter of credit outstanding for the import of raw materials	December 31, 2022 December 31, 2021 $ 936,318 1,168,086 (including USD303 thousand) (including USD256 thousand)

(10) Losses due to major disasters: None.

(11) Subsequent events: None.

(Continued)

54

TAIWAN STYRENE MONOMER CORPORATION Notes to the Parent Company Only Financial Statements

(12) Other:

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

By Function By item	2022	2022		2021	2021	2021
	Operating cost	Operating expense	Total	Operating cost	Operating expense	Total
Employee benefits Salary Labor and health insurance Pension Remuneration of directors Others Depreciation Amortization	136,169 13,633 7,559 - 8,756 248,002 1,621	48,997 3,579 2,237 1,271 14,816 3,709 186	185,166 17,212 9,796 1,271 23,572 251,711 1,807	157,511 14,164 7,554 - 7,503 219,678 2,553	54,799 3,978 2,281 3,883 13,272 2,784 -	212,310 18,142 9,835 3,883 20,775 222,462 2,553

The information about employees and salary of the Company for the years ended December 31, 2022 and 2021 are as bellow:

Employees Non-employee directors Average employee benefits Average salary Average salary adjustment Remuneration of supervisors

Information regarding the Company's remuneration policy (including directors, managers, employees) is shown below:

An Audit Committee which is composed of all independent directors is set up according to Security and Exchange Act and replaces the functions of supervisors.

Remuneration policies for Directors and Managers are described as follows:

• (i) The policies, standards and portfolio of remunerating Directors, process of formulating the remuneration, and the connection between operating performance and future risks:

• 1) Remuneration policies, standards and portfolio

Director's (including independent director) remuneration and compensation are handled according to the Articles of Incorporation and "Director's transportation expense/ attendance fee/ remuneration standards" approved by the Board of Directors.

(Continued)

55

TAIWAN STYRENE MONOMER CORPORATION Notes to the Parent Company Only Financial Statements

• a) Directors compensation: Depending on their level of participating in the Company's operation and the value of contribution, compensation is determined based on the general payment level in the same industry and should take into account if the Board members attend Board meetings in person, hold a position in Remuneration Committee, Audit Committee or other functional committees, and the degree of risks they take.

• b) Remuneration for Directors: When the Company profits, remunerates is paid based on rate stated in the Article of Incorporation.

• 2) Process of formulating the remuneration

• a) As required by the Article of Incorporation, the remuneration should not exceed 2.5% of the Company’s profit. If the Company still has accumulated deficit, the profit should be reserved to offset the deficit.

• b) Fixed compensation for directors is handled according to "Director's transportation expense/ attendance fee/ remuneration standards".

• 3)

• The connection between operating performance and future risks

According to the Article of Incorporation, Directors’ compensation is determined based on the level of profit of the Company and depend on the value of contribution to the Company's operation, which can be evaluated by "performance review policy of the Board of Directors" .

• (ii) The policies, standards and portfolio of remunerating managers and employees, process of formulating the remuneration, and the connection between operating performance and future risks:

• 1) Remuneration policies, standards and portfolio

Salary is formed by monthly wage, year-end bonus, and employee remuneration. The amount of year-end bonus and employee remuneration depend on their contribution to the Company's operation and their performance evaluation. Managers' year-end bonus is proposed by Remuneration Committee and approved by the Board of Directors.

• 2) Process of formulating the remuneration

• a) As required by the Article of Incorporation, the remuneration should appropriate 1% to 5% of the Company's profit. If the Company still has accumulated deficit, the profit should be reserved to offset the deficit.

• b) The amount of year-end bonus is based on yearly operational performance.

• 3) The connection between operating performance and future risks

According to the Article of Incorporation, remuneration is based on the profit of the Company. The Company's Remuneration Committee evaluates the rationality of managers remuneration on a regular basis, and will report to the Board of Directors

(Continued)

56

TAIWAN STYRENE MONOMER CORPORATION Notes to Consolidated Financial Statements

(13) Other disclosures:

• (a) Information on significant transactions

The following is the information on significant transactions required by the “Regulations Governing the Preparation of Financial Reports by Securities Issuers” for the Company for the year ended December 31, 2022:

• (i) Lending to other parties: None.

• (ii) Guarantees and endorsements for other parties: None.

• (iii) Information regarding securities held at the reporting day (excluding investment in subsidiaries, associates and joint ventures):

(In Thousands of New Taiwan Dollars)

Name of holder	Category and name of security	Relationship with the security issuer	Account	Ending balance	Ending balance	Ending balance	Ending balance	Note
				Shares	Carrying value	Percentage of ownership (%)	Fair value
The Company	Test Research Inc.	-	Current financial assets at fair value through profit or loss	455,000	28,984	% 0.19	28,984
The Company	Solar Applied Materials Technology Corp.	-	Current financial assets at fair value through profit or loss	2,842,000	91,086	% 0.48	91,086
The Company	Universal Venture Capital Investment Corporation	-	Non-current investment in equity instrument at FVOCI	8,400,000	55,173	% 6.98	55,173
The Company	Euroc Venture Capital Corp.	-	Non-current investment in equity instrument at FVOCI	19,000	144	% 2.38	144
The Company	Euroc III Venture Capital Corp.	-	Non-current investment in equity instrument at FVOCI	15,000	228	% 5.00	228
The Company	Global Investment Holding Co., Ltd	-	Non-current investment in equity instrument at FVOCI	10,233,608	84,339	% 5.82	84,339
The Company	Faith Alliance Corporation	-	Non-current investment in equity instrument at FVOCI	25,720	45	% 0.06	45
The Company	ExcellenceElectron ic Co.,Ltd.	-	Non-current investment in equity instrument at FVOCI	912	7	% 0.01	7
The Company	Leadwell Cnc Machines Mfg., Corp.	-	Non-current investment in equity instrument at FVOCI	37,352	1,100	% 0.06	1,100
The Company	Crownpo Technology Inc.	-	Non-current investment in equity instrument at FVOCI	709	16	% 0.01	16
The Company	Infomedia Inc.	-	Non-current assets (or disposal groups) held for sale	200,000	1,288	% 0.13	1,288
The Company	Vxis Technology Corp.	-	Non-current investment in equity instrument at FVOCI	72,480	865	% 0.61	865
The Company	Asia Global Venture Capital II Co., Ltd	-	Non-current investment in equity instrument at FVOCI	531,300	22,843	% 10.00	22,843
The Company	Shieh Tai Biochemical Technology Co., Ltd	-	Non-current investment in equity instrument at FVOCI	120,339	-	% 0.32	-
The Company	Lof Solar Corp.	-	Non-current investment in equity instrument at FVOCI	600,000	-	% 3.64	-
The Company	Yuan-Jie Investment Co., Ltd.	-	Non-current investment in equity instrument at FVOCI	21,000,000	180,406	% 19.09	180,406
The Company	Yu-Jie Investment Co., Ltd.	-	Non-current investment in equity instrument at FVOCI	21,320,000	219,806	% 19.38	219,806
The Company	Deng Yun Co., Ltd.	-	Non-current investment in equity instrument at FVOCI	591,945	46,445	% 3.09	46,445
The Company	Lidien Inc.	-	Non-current investment in equity instrument at FVOCI	760,000	13,471	% 19.00	13,471
The Company	GVISION-USA, INC.	-	Non-current investment in equity instrument at FVOCI	666,667	18,683	% 19.05	18,683
YSIC Ltd.	OBI Pharma, Inc.	-	Current financial assets at fair value through profit or loss	170,032	11,749	% 0.07	11,749
YSIC Ltd.	Senao Networks, Inc.	-	Current financial assets at fair value through profit or loss	30,000	5,970	% 0.06	5,970
YSIC Ltd.	MPI Corporation	-	Current financial assets at fair value through profit or loss	10,000	1,125	% 0.01	1,125
YSIC Ltd.	Eson Precision Ind. Co., Ltd.	-	Current financial assets at fair value through profit or loss	30,000	1,725	% 0.02	1,725
YSIC Ltd.	Turvo International Co., Ltd.	-	Current financial assets at fair value through profit or loss	20,000	2,020	% 0.03	2,020

(Continued)

57

TAIWAN STYRENE MONOMER CORPORATION Notes to Consolidated Financial Statements

Name of holder	Category and name of security	Relationship with the security issuer	Account	Ending balance	Ending balance	Ending balance	Ending balance	Note
				Shares	Carrying value	Percentage of ownership (%)	Fair value
YSIC Ltd.	BizLink Holding Inc.	-	Current financial assets at fair value through profit or loss	20,000	4,730	% 0.01	4,730
YSIC Ltd.	Yulon Finance Corporation	-	Current financial assets at fair value through profit or loss	20,000	3,110	% -	3,110
YSIC Ltd.	Handa Pharmaceuticals, Inc.	-	Current financial assets at fair value through profit or loss	20,000	2,500	% 0.02	2,500
YSIC Ltd.	Global Unichip Corp.	-	Current financial assets at fair value through profit or loss	2,000	1,282	% -	1,282
YSIC Ltd.	Parade Technologies, Ltd.	-	Current financial assets at fair value through profit or loss	6,000	4,638	% 0.01	4,638
YSIC Ltd.	Lin BioScience, Inc.	-	Current financial assets at fair value through profit or loss	40,000	6,920	% 0.06	6,920
YSIC Ltd.	Ingentec Corporation	-	Current financial assets at fair value through profit or loss	20,000	2,850	% 0.05	2,850
YSIC Ltd.	Xintec Inc.	-	Current financial assets at fair value through profit or loss	40,000	3,852	% 0.01	3,852
YSIC Ltd.	Chip Hope Co., Ltd.	-	Current financial assets at fair value through profit or loss	40,000	4,080	% 0.06	4,080
YSIC Ltd.	China Steel Structure Co.,Ltd.	-	Current financial assets at fair value through profit or loss	20,000	1,180	% 0.01	1,180
YSIC Ltd.	Chunghwa Precision Test Tech. Co., Ltd.	-	Current financial assets at fair value through profit or loss	1,000	465	% -	465
YSIC Ltd.	Actron Technology Corporation	-	Current financial assets at fair value through profit or loss	10,000	1,635	% 0.01	1,635
YSIC Ltd.	Shin Kong Chi- Shin Money- Market Fund	-	Current financial assets at fair value through profit or loss	1,800,000	28,288	% -	28,288
YSIC Ltd.	Fubon Taiwan high dividend 30 ETF	-	Non-current financial assets at fair value through profit or loss	100,000	1,039	% -	1,039
YSIC Ltd.	Cjw International Co., Ltd.	-	Non-current financial assets at fair value through profit or loss	676,413	7,576	% 0.50	7,576
YSIC Ltd.	Cyca nternational Co., Ltd.	-	Non-current investment in equity instrument at FVOCI	101,677	-	% -	-
YSIC Ltd.	Mcm Stamping Co., Ltd.	-	Non-current investment in equity instrument at FVOCI	54,430	331	% 0.63	331
YSIC Ltd.	Vxis Technology Corp.	-	Non-current investment in equity instrument at FVOCI	72,480	865	% 0.61	865
YSIC Ltd.	Infomedia Inc.	-	Non-current assets(or disposal groups) held for sale	650,000	4,186	% 0.43	4,186
YSIC Ltd.	Yuan-Jie Investment Co., Ltd	-	Non-current investment in equity instrument at FVOCI	100,000	859	% 0.09	859
YSIC Ltd.	Yu-Jie Investment Co., Ltd	-	Non-current investment in equity instrument at FVOCI	103,000	1,062	% 0.09	1,062
Grand Capital Co., Ltd.	Deng Yun Co., Ltd.	-	Non-current investment in equity instrument at FVOCI	3,082,453	241,855	% 16.10	241,855
Yuan-Shin Materials Technology Co., Ltd.	Yuanta Financial Holding Co., Ltd.	-	Current financial assets at fair value through profit or loss	309,000	6,705	% -	6,705
Yuan-Shin Materials Technology Co., Ltd.	Weikeng Industrial Co., Ltd.	-	Current financial assets at fair value through profit or loss	40,000	1,052	% 0.01	1,052
Yuan-Shin Materials Technology Co., Ltd.	Wah Lee Industrial Co., Ltd.	-	Current financial assets at fair value through profit or loss	20,000	1,676	% 0.01	1,676
Yuan-Shin Materials Technology Co., Ltd.	China General Plastics Corp.		Current financial assets at fair value through profit or loss	50,000	1,320	% 0.01	1,320
Yuan-Shin Materials Technology Co., Ltd.	Asustek Computer Inc.		Current financial assets at fair value through profit or loss	6,000	1,611	% -	1,611
Yuan-Shin Materials Technology Co., Ltd.	Giga-Byte Technology Co., Ltd.		Non-Current financial assets at fair value through profit or loss	4,000	426	% -	426
Yuan-Shin Materials Technology Co., Ltd.	Supreme Electronics Co., Ltd.		Non-current investment in equity instrument at fair value through profit or loss	30,000	1,074	% 0.01	1,074

(Continued)

58

TAIWAN STYRENE MONOMER CORPORATION Notes to Consolidated Financial Statements

Name of holder	Category and name of security	Relationship with the security issuer	Account	Ending balance	Ending balance	Ending balance	Ending balance	Note
				Shares	Carrying value	Percentage of ownership (%)	Fair value
Yuan-Shin Materials Technology Co., Ltd.	Chang Wah Electromaterials Inc.		Non-current investment in equity instrument at FVOCI	5,000	152	% -	152

• (iv) Information regarding purchase or sale of securities for the period exceeding NTD300 million or 20% of the Company's paid-in capital: None

• (v) Information on acquisition of real estate with purchase amount exceeding NTD300 million or 20% of the Company's paid-in capital: None

• (vi) Information regarding receivables from disposal of real estate exceeding NTD300 million or 20% of the Company's paid-in capital: None

• (vii) Information regarding related-parties purchases and/or sales exceeding NTD100 million or 20% of the Company's paid-in capital: None

• (viii) Information regarding receivables from related-parties exceeding NTD100 million or 20% of the Company's paid-in capital: None

(ix) Information regarding trading in derivative financial instruments: Please refer to note 6(b).

• (b) Information on investees:

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

				(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)
Name of investor	Name of investee	Location	Main businesses and products	Original investment amount		Balance as of December 31, 2022			Net income (losses) of investee	Share of profits/losses of investee	Note
				December 31, 2022	December 31, 2021	Shares	Percentage of ownership	Carrying value
The Company	Grand Cathay Venture Capital Co., Ltd.	Taiwan	Investment business	400,000	400,000	40,000,000	% 25.00	478,292	67,489	16,872
The Company	Wonderland Enterprise Co., Ltd.	Taiwan	General investment business	325,230	325,230	29,629,597	% 37.04	630,762	(38,655)	(14,318)
The Company	Functional Coating System Technologies Co., Ltd.	Taiwan	OEM of Semiconductor and components conformal coating	28,500	28,500	1,744,186	% 34.88	25,575	(1,417)	(494)
The Company	Universal Investments Limited	British Cayman Islands	Real estate investment business	17,273	17,273	80	% 40.00	17,820	(822)	(552)
The Company	YSIC Ltd.	Taiwan	Residential building and industrial plant development rental business	1,638,169	1,638,169	72,446,838	% 99.99	910,762	33,604	33,597	Subsidiary
The Company	Yuan-Shin Materials Technology Co. Ltd	Taiwan	Basic precision chemical materials and plastic raw material manufacturing	145,900	145,900	5,000,000	% 100.00	49,282	(1,456)	(1,456)	Subsidiary
The Company	Yangmingshan Tien Lai Resort & SPA	Taiwan	General hotel industry	630,555	630,555	25,865,618	% 65.07	691,415	3,728	112	Subsidiary
The Company	Asia Carbon & Technology Inc.	Taiwan	Electronic component manufacturing	-	291,064	-	% -	-	(629)	(620)	Subsidiary
YSIC Ltd.	Kun Shan International Ltd.	Seychelles	General investment business	122,572	122,572	3,702,718	% 62.03	203,281	107,686	66,802	Subsidiary
YSIC Ltd.	Grand Capitial Co., Ltd.	Seychelles	General investment business	90,182	90,182	2,698,002	% 100.00	243,721	(252)	(252)	Subsidiary
YSIC Ltd.	Yangmingshan Tien Lai Resort & SPA	Taiwan	General hotel industry	110,836	110,836	4,807,774	% 12.10	118,253	3,728	91	Subsidiary
YSIC Ltd.	Globaltop Technology Inc.	Taiwan	Aluminum Nitride Powder	162,643	162,643	5,255,553	% 23.89	43,363	(27,822)	(6,645)
YSIC Ltd.	Tien Lai Co., Ltd.	Taiwan	Pipe Lines Construction	5,000	5,000	500,000	% 50.00	1,485	90	45	Subsidiary

(Continued)

59

TAIWAN STYRENE MONOMER CORPORATION Notes to Consolidated Financial Statements

(c) Information on investment in mainland China:

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

					(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)
Name of investee	Main businesses and products	Total amount of paid-in capital	Method of investment (Note 1)	Accumulated outflow of investment from Taiwan as of January 1, 2022	Investment flows		Accumulated outflow of investment from Taiwan as of December 31, 2022	Net income (losses) of the investee	Percentage of ownership	Investment income (losses)	Book value	Accumulated remittance of earnings in current period
					Outflow	Inflow
Kun Shan Yu-Fu Technology Education Consulting Co., Ltd.	Educational consulting, information operation consulting, software and data storage consultation	3,071 (USD 100)	( 2 )	112,092 (USD 3,650	) -	-	112,092 (USD 3,650) (Note 4)	90,638 (USD 3,044)	62.03%	56,226	59,231	-
Kun Shan Jia-An Technology Education Consulting Co., Ltd.	Educational consulting, information operation consulting, software and data storage consultation	74,674 (USD 2,432)	( 2 )	(Note 3)	-	-	(Note 3)	24,584 (USD826)	62.03%	15,250	54,843	-

Note 1: The investment methods are divided into the following three types: (1) Direct investment in Mainland China. (2) Indirect investment in Mainland China through a holding company established in other countries. (3) Others.

Note 2: The foreign currency transactions have been translated into New Taiwan Dollar at the exchange rate at the end of the financial reporting date and the average exchange rate (USD1= NTD30.71, USD1=NTD29.7748).

Note 3: Kun Shan Yu-Fu Technology Education Consulting Co., Ltd. had been spun-off as Kun Shan Yu-Fu Technology Education Consulting Co., Ltd. and Kun Shan Jia-An Technology Education Consulting Co., Ltd.

Note 4: The amount of USD2,089,543.71 were proceeds of KUN SHAN INTERNATIONAL LTD. due to capital reduction of Kun Shan Yu-Fu Technology Education Consulting Co., Ltd. in 2022 has yet to be remitted to Taiwan, therefore, the amount of accumulated investment in MainlandChina still included the amount.

(ii) Upper limit on investment in Mainland China:

Accumulated Investment in Mainland China as of December 31, 2022	Investment Amounts Authorized by Investment Commission, MOEA	Upper Limit on Investment (Note)
112,092 (Note 4) (USD 3,650)	112,092 (USD 3,650)	546,534

Note: The investment limit was calculated based on the official document 10804600980 announced by the MOEAIC on March 12, 2019.

• (iii) Significant inter-company transactions with the subsidiary in Mainland China: None.

• (d) Major shareholders:

Major shareholders:
Shareholding Shareholder’s Name	Shares	Percentage
Taiwan Steel Group United Co., Ltd.	41,794,000	% 7.91
Frank.C.Chen Foundation for Culture and Education	28,750,000	% 5.44

(14) Segment information:

The Company has provided the operating segments disclosure in the consolidated financial statements.

TAIWAN STYRENE MONOMER CORPORATION

Statement of Cash and Cash Equivalents

December 31, 2022

(Expressed in Thousands of New Taiwan Dollars)

Item Petty cash Deposits in bank Deposits in bank Total	Description Demand deposits in NTD Demand deposits in USD10 thousand@ 30.71	Amount
		$ 160 317,115 303 $ 317,578

〜 60 〜

TAIWAN STYRENE MONOMER CORPORATION

Statement of Financial Assets Measured at Fair Value through Profit or Loss - Current

December 31, 2022

(Expressed in Thousands of New Taiwan Dollars)

Name of investee		Beginning balance	Beginning balance		Addition	Addition	Addition		Decrease	Decrease
		Shares	Amount		Shares		Amount		Shares - 45,000 390,000 -	Amount
Listed stock: Solar Applied Materials Technology Corp. Test Research , Inc. Gloria Material Technology Corp. Derivative instruments not used for hedging- foreign exchange swap contracts		2,842,000 500,000 390,000 -	$ 145,226 29,250 8,561 - $ 183,037		- - - -		- - - 468
							468

〜 61 〜

TAIWAN STYRENE MONOMER CORPORATION

Statement of Accounts Receivable

December 31, 2022

(Expressed in Thousands of New Taiwan Dollars)

Client Name Description Non-related parties: Company A Payment for goods Company B " Company C " Company D " Company E " Others " Less: Loss allowance Total	Amount	Note
	$ 492,886 163,617 94,851 71,281 66,130 74,928 963,693 (48) $ 963,645	Note

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

Statement of Inventories

Item Description Finished goods SM and PDEB By-product Toluene Semi-finished products Ethylbenzene Work in progress Ethylbenzene Raw materials Benzene, Ethylene Supplies Energy, Chemicals Less: Allowance for inventory decline in value	Description
		Cost $ 195,759 9,411 62,616 48,566 188,457 78,931 583,740 (16,537) $ 567,203

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

〜 62 〜

TAIWAN STYRENE MONOMER CORPORATION

Statement of Changes in Financial Assets Measured at Fair Value through Other Comprehensive Income - Non-current

For the year ended December 31, 2022

(Expressed in Thousands of New Taiwan Dollars)

Name of investee Universal Venture Capital Investment Corporation Euroc Venture Capital Corp. Euroc III Venture Capical Corp. Global Investment Holding Co., Ltd Faith Alliance Corporation Multilayer P. C. B. & Assembly Manufacturer Leadwell Cnc Machines Mfg.,Corp. Crownpo Technology Inc. Infomedia Inc. Vxis Technology Corp. Asia Global Venture Capital II Co., Ltd Shieh-Tai Biochemical Lof Solar Corp. Yuan-Jie Investment Co., Ltd. Yu-Jie Investment Co., Ltd. Deng Yun Co., Ltd. Lidien Inc. Yu Chie Inc. GVISION-USA INC.	Beginning balance Shares Amount	Beginning balance Shares Amount	Addition Shares Amount (Note1) - - - - - - - - - - - - - 74 - 1 - 79 - - - 4,465 - - - - - - - - - 3,487 - 79 - - - 1,806 9,991	Decrease Shares Amount (Note2) - 3,639 - 77 - 809 - 14,964 - 36 - 2 - - - - 200,000 1,288 - 279 - 6,035 - - - - - 53,778 - 56,515 - 682 - 602 38,000 1,593 - 7,549 147,848	Ending balance Shares Fair Value 8,400,000 55,173 19,000 144 15,000 228 10,233,608 84,339 25,720 45 912 7 37,352 1,100 709 16 - - 72,480 865 531,300 22,843 120,339 - 600,000 - 21,000,000 180,406 21,320,000 219,806 591,945 46,445 760,000 13,471 - - 666,667 18,683 643,571	Accumulated impairment	Collateral Note Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil
	Shares		Shares - - - - - - - - - - - - - - - - - - -	Shares - - - - - - - - 200,000 - - - - - - - - 38,000 -	Shares 8,400,000 19,000 15,000 10,233,608 25,720 912 37,352 709 - 72,480 531,300 120,339 600,000 21,000,000 21,320,000 591,945 760,000 - 666,667
	8,400,000 19,000 15,000 10,233,608 25,720 912 37,352 709 200,000 72,480 531,300 120,339 600,000 21,000,000 21,320,000 591,945 760,000 38,000 666,667	$ 58,812 221 1,037 99,303 81 9 1,026 15 1,209 1,144 24,413 - - 234,184 276,321 43,640 13,994 1,593 24,426 $ 781,428				NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA

Note1: The amount of addition included gain on financial assets at fair value $9,991 thousand.

Note2: The amount of decrease included reclassification $1,288 thousand, recduction of capital $1,873 thousand and loss on financial assets at fair value $144,687 thousand.

〜 63 〜

TAIWAN STYRENE MONOMER CORPORATION

Statement of Changes in Investments Accounted for Using the Equity Method

For the year ended December 31, 2022

(Expressed in Thousands of New Taiwan Dollars)

Name of investee Yangmingshan Tien Lai Resort & SPA YSIC Ltd. Yuan-Shin Materials Technology Co., Ltd. Asia Carbon & Technology Inc. Grand Carhay Venture Capital Co., Ltd. Wonderland Enterprise Co.,Ltd. Funtional Coating System Technology Co., Ltd. Universal Investments Limited	Beginning balance Shares Amount 25,865,618 $ 690,914 72,446,838 865,025 5,000,000 57,376 9,866,389 620 40,000,000 467,450 29,629,597 835,959 1,744,186 26,069 80 17,038 $ 2,960,451	Addition (Note1) Shares Amount - 501 - 45,737 - - - - - 56,134 - 3,200 - - - 1,334 106,906	Addition (Note1) Shares Amount - 501 - 45,737 - - - - - 56,134 - 3,200 - - - 1,334 106,906	Decrease (Note2) Shares Amount - - - - - 8,094 9,866,389 620 - 45,292 - 208,397 - 494 - 552 263,449	Decrease (Note2) Shares Amount - - - - - 8,094 9,866,389 620 - 45,292 - 208,397 - 494 - 552 263,449	Ending balance	Ending balance	Amount 691,415 910,762 49,282 - 478,292 630,762 25,575 17,820 2,803,908	Market Value or Net Assets Value Unit price Total amount - 691,415 - 910,762 - 49,282 - - - 478,292 - 630,762 - 25,575 - 17,820 2,803,908	Collateral Note Nil Nil Nil Nil Nil Nil Nil Nil
	Shares	Shares		Shares		Shares 25,865,618 72,446,838 5,000,000 - 40,000,000 29,629,597 1,744,186 80	Percentage of ownership % 65.07 % 99.99 % 100.00 - % 25.00 % 37.04 % 34.88 % 40.00		Unit price - - - - - - - -
	25,865,618 72,446,838 5,000,000 9,866,389 40,000,000 29,629,597 1,744,186 80	- - - - - - - -		- - - 9,866,389 - - - -

Note1: The amount of addition included investment income $50,581 thousand, other comprehensive income $56,260 thousand, and changes in ownership interests in investments $65 thousand.

Note2: The amount of decrease included investment losses $17,440 thousand, other comprehensive loss $182,090 thousand, dividend received $51,930 thousand, and changes in ownership interests in investments $11,989 thousand.

〜 64 〜

TAIWAN STYRENE MONOMER CORPORATION

Statement of Accounts Payables

December 31, 2022

(Expressed in Thousands of New Taiwan Dollars)

Item Non-related parties: Company F Company G Company H Company I Company J Company K Others Total	Decrease Payment for goods " " " ″ " "	Amount	Note
		$ 512,115 80,335 75,699 74,646 68,926 62,636 14,685 $ 889,042	Note

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

〜 65 〜

TAIWAN STYRENE MONOMER CORPORATION

Statement of Operating Costs

For the year ended December 31, 2022

(Expressed in Thousands of New Taiwan Dollars)

Item Cost of sales from manufacturing Direct raw materials Balance at 1 January Purchases of raw materials Other Balance at December 31 Indirect supplies Balance at January 1 Purchases of indirect supplies Less: transfer to other prepayments and other non-current assets Balance at December 31 Direct labor Manufacturing overhead Manufacturing cost Work-in -process inventory, January 1 Work-in process inventory, December 31 Cost of goods manufactured Finished goods, January 1 Finished goods, December 31 Gain on recovery in value of inventories Total operating costs	Amount	Amount	Amount
	Subtotal		Total
	$ 521,969 11,207,544 97 (188,457) 28,512 978,814 (5,250) (78,931)	11,541,153 923,145 52,312 569,908 13,086,518 131,638 (111,182) 13,106,974 273,603 (205,170) (114,209) $ 13,061,198

〜 66 〜

TAIWAN STYRENE MONOMER CORPORATION

Statement of Selling Expenses

For the year ended December 31, 2022

(Expressed in Thousands of New Taiwan Dollars)

Item Export expense Shipping expenses Salaries Others Total	Description	Amount Note $ 21,231 32,543 6,754 5,094 Note $ 65,622

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

Statement of Administrative Expenses

Item Salaries Employee welfare Depreciation (common parts) Insurance Others Total	Amount Note $ 41,892 12,936 3,709 4,541 26,286 Note $ 89,364

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

〜 67 〜

Statement of Prepayments: Note 6(e) Statement of Changes in Property, Plant and Equipment: Note 6(h) Statement of Changes in Accumulated Depreciation of Property, Plant and Equipment: Note 6(h) Statement of Changes in Right-of-use assets: Note 6(i) Statement of Changes in Accumulated Depreciation of Right-of-use assets: Note 6(i) Statement of Changes in Intangible Assets: Note 6(j) Statement of Deferred Tax Assets: Note 6(p) Statement of Other Non-current Assets: Note 6(k) Statement of Other Payables: Note 6(m) Statement of Lease Liabilities: Note 6(n) Statement of Deferred Tax Liabilities: Note 6(p) Statement of Operating Revenue: Note 6(t) Statement of the Net Amount of Other Revenues(Gains) and Expenses(Losses): Note 6(u) Statement of Finance Costs: Note 6(u) Statement of Current Period Employee Benefits, Depreciation, and Amortization by Function: Note 12

〜 68 〜