Walsin Lihwa Corporation Annual Report 2023

Plain-text annual report

Stock Code: 1605 Walsin Lihwa Corporation 2023 Annual Report Printed on March 20, 2024 For related information, please visit: https://www.walsin.com https://mops.twse.com.tw 1. Spokesperson Name: David Wen Title: Special Assistant to Chairman Tel: +886-2-8726-2211 Email: walsinspk@walsin.com 2. Deputy Spokesperson Name: Sophi Pan Title: Chief of Staff Tel: +886-2-8726-2211 Email: walsinspk@walsin.com 3. Address and Phone Number of Head Office, Branches and Plants Taipei Head Office 25F, No.1, Songzhi Rd., Taipei Taichung Plant No.57, Jing 3rd Rd., Wuqi Dist., Taichung City Tel: +886-2-8726-2211 Tel: +886-4-2659-5552 Hsinchuang Plant No.397, Hsinshu Rd., Hsin Chuang Dist., New Taipei City Tel: +886-2-2202-9121 Yangmei Plant No. 566, Gaoshi Rd., Yangmei Dist., Taoyuan City Tel: +886-3-478-6171 Yenshui Plant No. 3-10, Shi Jou Liau, Chin Shuei Li, Yenshui Dist., Tainan City Tel: +886-6-652-0911 4. Stock Transfer Agent Name: Walsin Lihwa Joint Shareholders Service Office Add: Tel: 8F., No.398, Xingshan Rd., Neihu Dist., Taipei City +886-2-2790-5885 Website: https://stock.walsin.com/ 5. Independent Auditors Company: Deloitte Touche Tohmatsu Limited Auditors: Wen-Yea, Shyu and Ker-Chang Wu Add: Tel: 20F, No. 100, Songren Rd., Xinyi Dist., Taipei +886-2-2725-9988 Website: https://www.deloitte.com.tw 6. Overseas Securities Exchange Issued globally and traded on the Luxembourg Stock Exchange The information is available at https://mops.twse.com.tw 7. Email Address of Investor Relations Contact: opinion@walsin.com 8. Corporate Website: https://www.walsin.com Contents I II Letter to Shareholders ....................................................................................................... 1 Company Profile 1. Date of establishment ..................................................................................................................... 3 2. Company History & Evolution ......................................................................................................... 3 III Corporate Governance Report 1. Organizational Chart ....................................................................................................................... 5 2. Profiles of Board Directors, President, Vice Presidents and Department Heads ........................... 8 3. Remunerations to Directors, President and Vice Presidents in the Most Recent Year ................ 24 4. Corporate Governance Status ...................................................................................................... 28 5. Information on CPAs' fees ........................................................................................................... 100 6. Information on the replacement of CPAs: ................................................................................... 100 7. Chairman, President, or managers responsible for financial or accounting affairs who worked for the firm to which the certifying CPA belongs or its affiliate in the most recent year. ............................................................................................................................................ 100 8. Transfer and pledge of shares of the directors, managers and shareholders holding more than 10% of the company's shares ............................................................................................. 101 9. Information on relationships amongst the top ten shareholders and their relationships with spouses or relatives within the second degree of kinship .......................................................... 102 10. The number of shares of the same investee held by the Company, its directors, managers and which the Company controls directly or indirectly, with the aggregate shareholding percentages ................................................................................................................................ 106 IV Fundraising Overview 1. The Company’s Capital and Shares .............................................................................................. 107 2. Issuance of Corporate Bonds: ...................................................................................................... 113 3. Issuance of Preferred Shares: None. .......................................................................................... .113 4. Issuance of Global Depositary Receipts (GDRs) ........................................................................... 114 5. Exercise of Employee Stock Option Plan (ESOP): None. ............................................................. .114 6. Mergers, acquisitions or issuance of new shares for acquisition of shares of other companies: .................................................................................................................................. 114 7. Implementation of capital allocation plan. .................................................................................. 114 V Business Overview 1. Business activities ........................................................................................................................ 115 2. Market Analysis and Sales Overview ........................................................................................... 125 3. Employee Data ............................................................................................................................ .136 Contents 4. Environmental Protection Expenditure Information ................................................................... 137 5. Employees-employer relations .................................................................................................... 143 6. Information Security Management ............................................................................................ 148 7. Material Contracts ..................................................................................................................... 151 VI Financial Information 1. Brief Balance Sheets and Comprehensive Income Statements of Recent Five Years ................ .155 2. Financial Analysis of Recent Five Years ........................................................................................ 159 3. Audit Committee’s Review Report for the Recent Year .............................................................. 162 4. Financial report of the most recent year ..................................................................................... 163 5. Financial report of the parent company of the most recent year audited and certified by Supervisors .................................................................................................................................. 321 6. Any financial crunch confronted by the Company or its subsidiaries and related impacts in the most recent year and up to the date of annual report publication ..................................... 412 VII Review of Financial Conditions, Financial Performance, and Risk Management 1. Financial Status - Consolidated (Based on IFRSs) ....................................................................... 412 2. Financial Performance - Consolidated (Based on IFRSs) ............................................................ 413 3. Cash Flow - Consolidated (Based on IFRSs) ................................................................................ 414 4. Effect of Major Capital Expenditure on Financial Business Operations: .................................... 415 5. Investment Policy of the Past Year, Profit/Loss Analysis, Improvement Plan and Investment Plan for the Coming Year: ........................................................................................................... 415 6. Risk Management and Assessment of the Following Items for the Past Year and the Year to Date: ............................................................................................................................................ 416 7. Other Major Issues: None ........................................................................................................... 419 VIII Special Disclosures 1. Summary of Affiliates Companies ............................................................................................... 420 2. Progress of private placement of securities during the latest year and up to the date of annual report publication ........................................................................................................... 430 3. The subsidiaries’ shareholding or disposal of the company’s shares during the latest year and up to the date of annual report publication ........................................................................ 430 4. Other supplemental information ................................................................................................ 430 5. Corporate events with material impact on shareholders' equity or stock prices set forth in Subparagraph 2, Paragraph 2, Article 36 of the Securities and Exchange Act during the most recent year and up to the annual report publication date ......................................................... 430 I Letter to Shareholders Dear Shareholders, In recent years, the global economic environment has faced numerous challenges, including geopolitical instability, supply chain restructuring, rapid advancements in artificial intelligence, and the transition to renewable energy sources. These factors have significantly impacted and posed challenges to corporate operations. Walsin Lihwa, adhering to a philosophy of sustainable management, has implemented strategies for technological applications, product and market structure adjustments, and risk governance, and therefore gradually transitioned to high-value of products, entered high-end markets, and made investments in the new energy sector, driving the Company's repositioning in the market. In 2023, Walsin Lihwa established a joint venture with NKT Group (based in Denmark), initiated the construction of a submarine cable plant in Kaohsiung Port, and expanded into the wind energy supply chain, thereby contributing to Taiwan's new energy policies. Cogne steel mill (based in Italy) (in which we invested in 2022) also successfully acquire 100% of the shares of Special Melted Products (SMP) (based in the UK) by leveraging its key position in the European stainless steel supply chain, leading the Company to officially enter the aerospace industry chain. This has established our unique position in the manufacturing of stainless steel and nickel-based alloys in Europe. Accomplishments in 2023 Walsin Lihwa continues to optimize its high-value production capabilities and expand into new industrial domains, actively manage its inventory, and integrate its operations, in order to mitigate impacts from market risk. Upon reviewing the Company's operational results for 2023, its consolidated revenue has grown for four consecutive years, primarily due to the expansions and mergers and acquisitions initiated by the Stainless Steel BG and the Commodity BG. Compared to 2022, where a one-time profit was generated from the disposal of the solar development division of a subsidiary in the United States, the profits from upstream raw materials and end products in the stainless steel sector were also affected by the global economic recession, leading to a decline in gross profit and net income after taxes. The Company's consolidated revenue and consolidated gross profit for the year 2023 was NT$189.8 billion and NT$14.4 billion respectively, and its net income after taxes was NT$5.1 billion, with earnings per share of NT$1.32. Wire and Cable Business: The overall profitability of the Wire & Cable Business has grown compared to the previous year, primarily due to capturing the demand for enterprise factory construction, resilient power grid construction, and the development of industrial cables, thereby maintaining stable gross profit and profitability. Stainless Steel Business: The overall profitability of the Stainless Steel Business has declined compared to the previous year, as the main demand market has not yet recovered, and although the supply chain inventory adjustment period has ended, the prices of end products remain weak, thereby affecting profitability. Commodity Business: The overall profitability of the Commodity Business has declined compared to the previous year, due to weak demand in the stainless steel market and a slowdown in the growth of demand for nickel batteries for electric vehicles, leading to an imbalance in nickel metal supply and demand. However, PT. Sunny Metal Industry has been fully operational since the first quarter of 2023, and its overall nominal annual capacity (along with that of PT. Walsin Nickel Industrial Indonesia) has increased to 95,000 metric tons of nickel. Real Estate Business: 1 Letter to Shareholders The overall operating cash flow of the Real Estate Business has increased compared to the previous year, mainly because the No. 1 office building in the AB plot in Nanjing, China, was completed and delivered in 2022, resulting in an increased occupancy rate. Summary of 2024 Business Plan Wire and Cable Business: We will continue seizing domestic resilient power grid opportunities, actively entering the domestic and international high-voltage power transmission markets, and developing innovative service models to enhance the commercial values for our customers. Additionally, we will focus on the core technological capabilities of industrial cable development to expand into offshore wind power business; the construction of the submarine cable plant in Kaohsiung Port in cooperation with Denmark NKT is expected to meet the demand for domestication of submarine cables as scheduled. Stainless Steel Business: We will continue being committed to product and market structure adjustments, expanding the proportion of high-value products, increasing turnover and gross profit margin; acquiring Inox and MST (both based in Europe) to obtain upstream clean materials and extend to downstream high-end product applications; and through industry chain integration, leveraging product, equipment, certification, and distribution channel synergies, with a view to becoming a global stainless steel long products manufacturer. Commodity Business: Despite facing challenges such as continuous expansion of nickel product lines and intense competition for nickel resources in Indonesia, leading to increased production costs and market price fluctuations, the Commodity BG will focus on maximizing production efficiency and optimizing operational costs. With the completion of the high nickel matte production line this year, through capturing industry demand, enhancing product supply flexibility, strengthening price risk management, and raw material procurement adjustment capabilities, we expect to gradually deepen the nickel battery supply chain, expanding sales channels, and maintaining industry competitiveness. Real Estate Business: Our commercial office buildings in Nanjing, China, meet Grade A International Office Building Standard and, as a first-tier, leading brand, attracts numerous corporate headquarters. We will dynamically adjust the business portfolio of One Mall, with a view to creating stable cash flow and promoting the steady development of the commercial cluster in Nanjing Walsin Centro. Future corporate development strategy under the influence of external competition, regulations and overall business operation Looking forward to 2024, the Company will continue to strengthen its product and market structure, increase the proportion of high-end applications and high value-added products, deepen the synergy of new fields and new markets, utilize innovative technology to achieve excellent management, while aligning with world-class ESG standards, practicing sustainable development goals for the environment, society, and governance, ensuring stable growth in the face of challenges. Here, we would like to express our gratitude to all our shareholders for their continued support along the way. We look forward to joining hands with all our partners in moving forward together into a new chapter! Chairman Yu-Lon Chiao 2 II Company Profile 1. Date of establishment December 2, 1966 2. Company History & Evolution 1966 Walsin Wire & Cable Co., Ltd. established. 1969 Walsin and Lihwa merged and renamed as Walsin Lihwa Wire & Cable Co., Ltd. 1970 Formed technological partnerships with Western Electric in the U.S. and Fujikura in Japan and began production of plastic insulation telephone cable. 1972 Began production of EP rubber high-voltage cables. The Company's shares were listed on the Taiwan Stock Exchange. 1977 1982 Completed the Hsinchuang plant for SCR copper rod production, with annual manufacturing capacity of 50,000 tonnes of low-oxygen copper rods. Expanded SCR production facilities to increase annual manufacturing capacity to 100,000 tonnes of low- oxygen copper rods. 1987 Construction of the Yangmei plant completed. Entered the semiconductor IC industry by investing in Winbond Electronics Corp. and Sumi-Pac Corp. In the following decade, the Company expanded into passive component, LCD panel, PCB thin board and other industries. 1991 Invested in PT. Walsin Lippo Industries in Indonesia to expand aluminum wire business into the Southeast Asian market. 1992 Company renamed Walsin Lihwa Corporation. Electronics division merged with the acquired Wanbang Electronics to form the new Walsin Technology Corp. Established plants in Shanghai and Jiangyin to produce power cables and steel cables, thus beginning a new chapter in China investment. 1993 Expanded into the stainless steel industry by forming Walsin Cartech Specialty Steel, a joint venture with Carpenter Technology Corp. in the U.S. Established the Wuhan wire and cable plant for optical communication cable production. 1995 Formed Walsin (China) Investment Co., Ltd. and set up four operating locations in China's major cities, including Hangzhou, Shanghai and Nanjing, for the production of power cables, bare copper wires and fiber optic cables. 1997 Established specialty steel plants in Changshu and in Baihe, Shanghai, for the production and sale of seamless steel tubes and straight steel bars. Formed HannStar Board Corp. to expand into the PCB industry. 1998 Acquired and incorporated the assets of Walsin Cartech into the company. Conducted enterprise re-engineering and full implementation of the SAP enterprise resource management system. Expanded into the TFT-LCD industry by forming HannStar Display Corp. Established the Dongguan plant for bare copper wire production. Expansion of Yenshui specialty steel plant was carried out to include slab steelmaking facilities. 2000 2002 2003 With Yenshui specialty steel plant beginning slab production, the company expanded into the stainless steel plate market. 2005 Set up new plants in Nanjing, Changshu and Jiangyin to produce copper products as well as seamless steel pipes and steel wire products. Shanghai and Hangzhou power cable plants completed expansion and increased production capacity; began mass production of 220kV EHV cables. 3 Company Profile Expansion of Yenshui specialty steel plant to include slab steelmaking facilities was completed. 2006 New copper production plant in Nanjing completed, with annual production capacity of 250,000 tonnes. Total copper production increased from 400,000 to 650,000 tonnes. Development of 500kV EHV cables for Hangzhou power plant was invested and received certification. The Company's consolidated revenue exceeded NT$100 billion. 2007 Expanded steel production capacity by acquiring stake in Yantai Huanghai Iron and Steel Co., Ltd. Changshu specialty steel plant passed review by the National Nuclear Safety Administration and received certification for nuclear power plant sales. Hangzhou power cable plant began expansion efforts and construction of the second VCV process tower and added high voltage cable production lines. 2008 2009 Expansion of Yantai plant for stainless steel manufacturing process; added new stainless steel billet products. Yantai stainless steel plant completed transformation of stainless steel manufacturing processes; stainless steel and high-grade alloy steel products were added. Changshu plant's seamless steel tube production began Phase 2 expansion to increase production capacity. Completion of the new A6 building in Xinyi Development Zone and the relocation of Walsin Lihwa headquarters. 2010 Nanjing Walsin Centro began construction in Nanjing's Hexi Newtown. A multi-purpose commercial center spanning one million square meters will be developed over several phases. Partnered with Nanjing municipal government to create the Nanjing Taiwan Trade Mart, thus establishing a cross-Strait commercial trading platform. Construction of two office buildings in C1 land plot of Nanjing Walsin Centro completed and transferred to the Jiangsu Branch of the China Development Bank and the Nanjing Branch of China Guangfa Bank. Cold rolled steel coil production officially commenced at the Taichung Harbor stainless steel roll plant. First batch of premium residential buildings in C2 land plot in Nanjing Walsin Centro delivered; phased development of D and AB land plots planned. The Company marked its 50th anniversary. Taiwan and China, have recorded steady increase in overall steelmaking and annual production of 710,000 tonnes. 2012 2013 2014 2016 2017 2018 The roughing mill was launched in Yenshui plant to improve the product quality and yield rate. Phase I office buildings in Nanjing Walsin Centro on AB land plot and Phase II houses on D land plot were delivered. 2019 Walsin shopping mall in Nanjing was open for operation, serving as a representative landmark for Walsin's entrance to shopping mall industry. 2020 2021 The Company established PT Walsin Nickel Industrial Indonesia to extend into the production and sale of upstream raw materials for stainless steel. Construction of nickel iron production line in Indonesia was completed, and nickel metal, the raw material for stainless steel, started to be produced. 2022 Invested in Cogne, Italy to expand into the global market of stainless steel. Invested in PT. Sunny Metal Industry, Indonesia and built a nickel ice plant to enter the battery nickel market. Commissioned Yantai rolling mill, a milestone towards intelligent manufacturing. 2023 Acquisition of a British company SMP to expand high-end stainless steel application markets. Signing of a collaboration agreement with a Danish company NKT to initiate submarine cable business operations. 4 III Corporate Governance Report 1. Organizational Chart (1) Company Organization Chart (March 20, 2024) Shareholder's Meeting Audit Committee Compensation Committee Board of Directors Chairman Sustainable Development Committee Nomination Committee President Auditing Office Chairman's Office Chief Sustainability Officer President's Office Wire & Cable BG Stainless Steel BG Resources BG Commerce & Real Estate BG IT Center Financial Management Center Administration Management Center Procurement Center Commodity Center Strategic Information Management Center TPS Center Information Security and System Maintenance Div. Information Project Development Div. Finance Div. Human Resources Div. Accounting Div. General Affairs Dept. Information Strategy and Planning Div. Strategic Performance Management Div. Corporate Communication Dept. Property Management Dept. Metal Raw Material Procurement Div. Metal Risk Management Div. Procurement Div. of Stainless Steel Business (Mainland China) Procurement Div. of Stainlesss Steel Business (Taiwan) Procurement Div. of Taipei Headquarters Procurement Div. of Wire and Cable Business Legal Div. Business Innovation International Affairs Corporate Planning Div. Environment, Health & Safety Div. Joint Shareholders Service Office 5 Corporate Governance Report (2) Principal Duties of Various Departments Department Job Duties & Functions Assisting the Board of Directors in decision-making and supervising matters, including the correctness Audit Committee and accuracy of the Company’s financial statements, the engagement (dismissal), independence and Compensation Committee performance of attesting CPA, internal control, legal compliance and risk management. Drafting and periodically reviewing the performance evaluation of board directors and managers, as well as the policy, system, standard and structure of compensation. Periodically evaluating and determining the compensation for board directors and managers. Sustainable Formulating corporate social responsibility vision and strategy; inspecting the Group's overall as well as Development various committees' steering and overseeing implementation performances via regular meetings; annual Committee ESG results to be submitted to the Board of Directors in the following year. Nomination Committee Assisting the Board of Directors in developing and identifying candidates for Board members and senior management and their independence standards, establishing and periodically reviewing a continuing education and succession plan, and ensuring that the Company operates in accordance with the Corporate Governance Best Practice Principles. Product Types: Stainless steel slabs (ingots), hot-rolled steel coils, cold-rolled steel coils, hot-rolled rods and cold drawn straight bars, and stainless steel seamless pipes and alloy steel pipes, including ordinary fluid pipes, heat-exchanging pipes, boiler pipes, instrumentation tubes, steel wires for pre-stressed concrete, stranded steel wires, zinc-plated steel wires for bridge cables, zinc-plated stranded steel wires, Stainless Steel BG PE for bridge bracing cables and epoxy-coated stranded steel wires. Responsible for integrating the functions of business, technology, manufacturing, operation and administration of each BU. The managers of this BG are responsible for its profit/loss, improving long-term competitiveness and executing the Company's strategies. Product Types: Copper rods and wires that power cable and wire industries use as basic raw materials for conductors, as well as low-, medium- and high-voltage PVC cables, cross-linking PE cables, specialty & professional fire-resistant, fire-retardant, low-smoke and halogen-free cables for different industries, rubber cables, communication cables, related materials for cable insulation, as well as other plastic accessories. Responsible for integrating the functions of business, technology, manufacturing of each BU. The managers of this BG are responsible for its profit/loss, improving long-term competitiveness and executing the Company's strategies. Product types: Production of nickel pig iron and nickel matte as well as agency sales of stainless steel semi-finished products Responsible for integrating the functions of business, technology, manufacturing of each Indonesia subsidiaries. The managers of this BG are responsible for its profit/loss, improving long-term competitiveness and executing the Company's strategies. Business Items: Developing composite commercial properties, real estate management, etc. The managers of this BG are responsible for its profit/loss, improving long-term competitiveness and executing the Company's strategies. Wire & Cable BG Resources BG Commerce & Real Estate BG Auditing Office Responsible for planning and auditing internal auditing systems. Establishment of information system for Industry 4.0 business operation, establishment of reliable/safe IT Center information system environment, realization of platform for cloud information service and establishment of big data analysis. Administration Management Responsible for human resources, procurement, media and general affairs, etc. Center Financial Management Center Responsible for the operation of financial accounting system and participating in the management and decision-making. 6 Department Job Duties & Functions Strategic Responsible for data utilization indicator design and action plan planning, data analysis and modeling, Information data management and information security, internal and external resources integration and Management management. Center Procurement Center Commodity Center Responsible for establishing procurement policies and standards and performing procurement functions, including capital expenditure, engineering and maintenance, material back up supplies, outsourcing and other non-critical material procurements. Responsible for entering into transactions of important raw material procurements and controlling raw material prices. 1. Creating a learning organization with full employee participation (i.e., learning by doing and doing by learning) via OJT 2. Learning from TPS to train outstanding T-shaped executives at current time and places with current TPS Center resources who are suitable for use by the Group 3. Strengthening the DNA of the Group through TPS improvement activities 4. Implementing the mechanism for cultivating human resources on its own and promoting the sustainable management of the Company. Responsible for legal risk management and the preparation and management of various contracts, legal disputes, litigation or non-litigation cases. Legal Division 1. Conducting research on international market opportunities and trends in the next 5 to 10 years and Business Innovation providing innovative solutions to achieve corporate sustainability goals. Division 2. Collaborating with business units in helping them implement daily improvements, understand International Affairs Division customers' future needs and provide appropriate solutions. 1. Liaison with representatives of overseas offices and other relevant personnel. 2. Compliance with overseas laws and regulations and engagement of external professionals. 3. Reception of overseas visitors and assistance with their itinerary arrangements. 4. Budget control and execution for overseas offices. 5. Support for general administrative tasks in overseas offices. Corporate Planning Responsible for investment planning and execution related to company strategy. Division Environment, Health & Safety Division Joint Shareholders Service Office Responsible for the Company's environmental protection, occupational safety and health management and other related matters, and promoting and implementing business strategies and plans for the company-wide environment, safety and health initiatives and energy and carbon management. Responsible for the planning and execution of the Company's shareholder services and the administration matters relating thereto. 7 Corporate Governance Report 2. Profiles of Board Directors, President, Vice Presidents and Department Heads (1) Information on Directors Title Nationality or Registration Country Chairman R.O.C. Name Gender & Age Term Began Term Date First Elected Shares Held When Elected Shares Currently Held Shares Currently Held by Spouse and Underage Children Number of shares Percentage Number of shares Percentage Number of shares Percentage Yu-Lon Chiao May 19, 2023 Male 61-70 years old 3 years April 10, 50,460,440 1.35% 50,460,440 1.25% 21,011,889 0.52% 1981 Vice Chairman R.O.C. Patricia Chiao May 19, 2023 Female 61-70 years old 3 years May 31, 109,085,587 2.92% 109,085,587 2.71% 0.00 0.00% 2005 (Note2) Director R.O.C. Yu-Cheng Chiao May 19, 2023 Male 61-70 years old 3 years April 10, 41,001,551 1.10% 41,001,551 1.02% 19,502,428 0.48% 1981 Director R.O.C. Yu-Heng Chiao May 19, 2023 Male 61-70 years old 3 years April 18, 65,343,810 1.75% 65,343,810 1.62% 4,324,192 0.11% 1990 8 Key Education/Work Experience Other Current Positions Within the Company Other Officer, Director or Supervisor who are Spouse or Relative within Second Degree Position Name Relationship December 31, 2023 Shares Held in Name of Others Number of shares Percentage 0 0.00% Administration Business Department, of University Washington; The Company's former President and Vice Chairman. 0 0 0.00% MBA at College of Notre Dame; the Company’s former assistant vice president of Investment Dept., assistant vice president of Financial Dept., head of Financial Investment Dept., assistant vice president of Commodity Center and Investment Management Center, President of Insulated Wire & Cable BU. Financial 0.00% University of Washington Masters of Electrical Engineer and Business Administration The Company's former chairman. 0 0.00% Golden Gate University, Master of Business Administration The Company's former vice president and vice chairman. Note (Note 1) None None None Chairman of Concord Venture Capital Group and Walsin Energy Cable System Co., Ltd., Director of Walton Advanced Engineering, Inc., Ltd., and Vice President Commissioner of subsidiaries Lihwa Corporation. of Walsin Director of Yu Xiang Investment Co., Ltd., Qing An Investment Co., Ltd., Walsin Lihwa Holding Co., Ltd., Walsin Specialty Steel Holding Co., Ltd., Walsin Specialty Steel Corporation, and Joint Success Enterprises Limited; President of Chin-Xin Investment Co., Ltd. Vice Chairman Director Director Director Chairman Director Director Director Patricia Chiao Yu-Cheng Chiao Yu-Heng Chiao Wei-Shin Ma Yu-Lon Chiao Yu-Cheng Chiao Yu-Heng Chiao Wei-Shin Ma Younger sister Older brother Younger brother Sister-in-law Older brother Older brother Younger brother Sister-in-law Chairman Vice Chairman Director Director Yu-Lon Chiao Patricia Chiao Yu-Heng Chiao Wei-Shin Ma Younger brother Younger sister Younger brother Sister-in-law Technology Chairman & CEO of Winbond Electronics Corporation, Chin-Xin Investment Co., Ltd and Chenghe Investment Co., Ltd.; Director of Walsin Corporation, Nuvoton Technology Corp, Jincheng Construction Ltd., United Co., Industrial Gases Co., Ltd., MiTAC Holdings Landmark Corporation, Group Holdings Ltd., Winbond International Corporation, Winbond Electronics Corporation America, Marketplace Management Limited, Nuvoton Investment Holding Ltd., and Songyong Investment Co., Ltd.; Officer Independent LLC; of Goldbond Director, member of the Audit Committee, Nomination Committee and convener of the Compensation Committee at Taiwan Cement Corp. Chairman of Walsin Technology Corporation, Walton Advanced Engineering, Inc., HannStar Board Corp., Global Brands Manufacture, Prosperity Dielectrics Co., Ltd., Info- Tek Corp., and Silitech Technology Corporation; Vice Chairman of Career Technology Mfg. Co., Ltd.; Director of Inpaq Technology Co., Ltd. None Chairman Vice Chairman Director Director Yu-Lon Chiao Patricia Chiao Yu-Cheng Chiao Wei-Shin Ma Older brother Older sister Older brother Sister-in-law 9 Corporate Governance Report Title Nationality or Registration Country Director R.O.C. Name Gender & Age Term Began Term Date First Elected Yu-Chi Chiao Male 51-60 years old May 19, 2023 3 years April 18, 1990 Shares Held When Elected Shares Currently Held Number of shares 51,635,470 Percentage Number of shares Percentage 1.38% 52,285,470 1.30% Shares Currently Held by Spouse and Underage Children Number of shares 244,033 Percentage 0.01% Director R.O.C. Andrew Hsia May 19, 2023 Male 71-80 years old 3 years May 19, 0 0.00% 0 0.00% 0 0.00% 2023 - May 19, 2023 3 years 247,399,37 50 6.63% 248,002,375 6.15% - - 0 0.00% 0 0% 0 0.00% Legal Person: May 31, 2005 (Note 4) Represe ntative: May 19, 2023 3 years June 11, 0 0.00% 0 0.00% 0 0.00% 2014 Male 61-70 years old Male 61-70 years old May 19, 2023 Director R.O.C. R.O.C. Independ ent Director Chin-Xin Investme nt Co., Ltd Represen tative: Li- Chin Ku Ming- Ling Hsueh 10 Key Education/Work Experience Other Current Positions Within the Company December 31, 2023 Note (Note 1) None Other Officer, Director or Supervisor who are Spouse or Relative within Second Degree Position Name Relationship Chairman Vice Chairman Director Director Yu-Lon Chiao Patricia Chiao Yu-Cheng Chiao Yu-Heng Chiao Older brother Older Sister Older brother Older brother None None None None of Corp.; Director Chairman and President of HannStar Display Corporation; Chairman of Huali Investment Corp., Hannshine Investment Corp., and Hanns Prosper Investment as HannsTouch Representative Coretronic Company, Holdings Corporation, Bradford, HannSpirit (BVI) Holding, Brightpro Resources Limited, and Hannspree International Holdings; Torch Supervisor Investment Co., Ltd. Vice President & Spokesman of Phu My Hung Holding Group; Chief Representative of Central Trading & Development Corporation. of Shares Held in Name of Others Number of shares 0 Percentage 0.00% 0 0.00% - - 0 0 0.00% 0.00% in Management Ph.D. from City University of Hong Kong, completed doctoral studies in Management at Fudan University in Shanghai; President of Walsin Lihwa Corporation, Supervisor of Windbond Corporation, Director of and HannStar Board Corporation, Chairman of HannsTouch Holdings Company. the Chengchi University; He received his bachelor's degree in law from Fu Jen Catholic University and his master's degree in diplomacy from the National he graduated from Graduate Institute of Legal Studies, University of Oxford, UK (M. Litt); he was Head of the Political Section of the R.O.C. Representative in the United States, Deputy Office R.O.C. of Representative Representative Office in Canada, Head of the R.O.C. Representative Office in New York, R.O.C. Representative Office in India, Political Deputy Minister of Ministry of Foreign Affairs, Deputy Minister of Ministry of National Defense, and Chairman of the Mainland Affairs Council, Executive Yuan. Bachelor's Industrial Engineering from Chung Yuan Christian University; Assistant Vice President, Vice President, and President of Walsin Technology Corporation. degree in President of Walsin Technology Corporation. None None None None Holdings Independent Director of Yuanta Yuanta Financial Commercial Bank, TTY Biopharm and Lite-On Corporation; Technology Director of Tung Hua Book Co., Ltd. & University, Master Soochow in Accountancy; Bloomsburg University of Pennsylvania, Master of Business Administration; PwC Taiwan Director; Executive Director, Taiwan Corporate Governance Adjunct Professor, School of Science and Technology Management, National Tsing Hua University; Adjunct Professor, School of Management, National Taiwan University of Science and Technology. Association; None None None None 11 Corporate Governance Report Nationality or Registration Country R.O.C. Title Indepen dent Director Name Gender & Age Term Began Term Date First Elected Shares Held When Elected Shares Currently Held Shares Currently Held by Spouse and Underage Children Number of shares Percentage Number of shares Percentage Number of shares Percentage Fu- Hsiung Hu Male 61-70 years old May 19, 2023 3 years May 19, 0 0.00% 0 0.00% 0 0.00% 2023 Indepen dent Director R.O.C. Tyzz-Jiun Duh May 19, 2023 Male 61-70 years old 3 years May 19, 0 0.00% 0 0.00% 0 0.00% 2023 Indepen dent Director R.O.C. Wei- Chuan Gau May 19, 2023 Male 61-70 years old 3 years May 19, 0 0.00% 0 0.00% 0 0.00% 2023 Note 1: Where the chairman and the general manager or person of an equivalent post (the highest level manager) of a company are the same person, spouses, or relatives within the first degree of kinship, an explanation shall be given of the reason for, reasonableness of, necessity of, and the measures adopted in response to, the above situation. Note 2: Ms. Patricia Chiao served on the Company’s Board between May 31, 2005 and June 10, 2014 and from May 25, 2016 until March 11, 2024. Note 3: Mr. Yu-Chi Chiao served on the Company’s Board between April 18, 1990 and June 10, 2014 and from May 19, 2023 until now. Note 4: Chin-Xin Investment Co., Ltd served on the Company’s Board between May 31, 2005 and June 10, 2014 and from May 26, 2015 until now. Note 5: Directors whose terms expired and were discharged on May 19, 2023: Ms. Wei-Shin Ma and Mr. Chen, Pei-Ming as the representative of Chin Xin Investment Co., Ltd.; Independent Directors whose terms expired and were discharged on May 19, 2023: Mr. King-Ling Du and Mr. Shiang-Chung Chen. Note 6: The shareholding ratios are rounded to the nearest hundredth percent. Note after Period-End: Ms. Patricia Chiao, Vice Chairman, resigned from her post on March 11, 2024. 12 Shares Held in Name of Others Number of shares 0 0 0 Key Education/Work Experience Other Current Positions Within the Company Independent Managing Director of O- Bank Co., Ltd. Policy Advisor of Taiwan Electrical and Electronics Manufacturers’ Association; Senior Advisor of Taiwan Transportation Vehicle Manufacturers Association and the Chinese National Federation of Industries; Member of Commercial Industrial Taoyuan Development Investment & Promotion Committee; Vice Chairman of ShaCode Foundation; Director of Fair Winds Foundation; Independent Director of USI Corporation, China Development Holding Corporation & CDIB Capital Group, and Macronix International Co., Ltd. CPA of Chuanzhi Shared-Office Accounting Firm; Chairman of KS&A Investment Co. Ltd.; Independent Director of Mercuries F&B Financial Percentage of 0.00% the Department Science Joint and 0.00% M.A., Graduate School of Business, National Taiwan University; Managing Director, Central Trust Bureau; Director of Mega Bank; Director of Department of Economic Energy and Agriculture, Executive Yuan; Vice Chairman of Council of Agriculture; Chairman of National Animal Industry Foundation, and Institute of Animal Credit and Technology, Information Taiwan Center Cooperative Securities Ph.D., Institute of Forestry, National Taiwan University; Director General of the Department of Commerce of the Ministry of Economic Affairs; Director of General Information Technology of the Ministry of Economic Affairs; Director General of the Industrial Development Bureau of the Ministry of Economic Affairs; Minister of the Ministry of Economic Affairs; Chairman of the National Development Council; Vice Premier of the Executive Yuan; CEO of Taoyuan Industrial Commercial Development & Investment Promotion Committee. Ph.D. in Accounting, Business School, Renmin University of China, Master of Business Administration, Baruch College, City University of New York, Computer Diploma, Auditing NYU/Coopers & Lybrand, Bachelor of Accounting, Department of Business, Taiwan University; Vice National Chairman of KPMG Taiwan Inc.; Executive Director of KMPG Taiwan; Head of Insurance Business of KMPG Taiwan; CPA & Counselor of Audit Department of KMPG Taiwan; Director & CFO of Maxpro Capital Acquisition Corp; Counselor of Eco-Green Tech. Co., Ltd. Course 0.00% Joint December 31, 2022 Other Officer, Director or Supervisor who Note are Spouse or Relative within Second (Note Degree 1) Position Name Relationship None None None None None None None None None None None None 13 Corporate Governance Report 1. Major shareholders of institutional shareholder Name of Institutional Shareholder Major Shareholders of Institutional Shareholders (Note) Shareholding December 31, 2023 Chin-Xin Investment Co., Ltd Winbond Electronics Corp. Walsin Lihwa Corporation Huali Investment Corp. Yu-Cheng Chiao Yu-Lon Chiao Yu-Heng Chiao Yu-Chi Chiao Walsin Technology Corporation. HannStar Board Corporation Prosperity Dielectrics Co., Ltd. 37.69% 36.99% 4.43% 3.14% 3.14% 3.14% 3.14% 1.86% 1.34% 0.72% Note 1: Top ten shareholders of the institutional shareholder. Note 2: The shareholding ratios are rounded to the nearest hundredth percent. 2. Major Shareholders in Previous Table who are Institutional Investors and their Major Shareholders Name of Institutional Shareholder Major Shareholders of Institutional Shareholders (Note) December 31, 2023 Shareholding Walsin Lihwa Corporation Chin-Xin Investment Co., Ltd Labor Pension Fund (New System) Investment account of LGT Bank (Singapore) under the custody of Business Department of Standard Chartered Bank Yu-Cheng Chiao Winbond Electronics Corporation Investment account of Norges Bank under the custody of Citibank Taiwan Ltd. Investment account of Vanguard Emerging Markets Stock Index Fund managed by Vanguard Group under the custody of JP Morgan Chase Bank N.A., Taipei Branch Pai-Yung Hong Investment account of PGIA Fund – PGIA General International Stock Index Fund under the custody of JP Morgan Chase Bank N.A., Taipei Branch Huali Investment Corp. HannStar Color Co. Ltd. Patricia Chiao 21.99% 6.22% 1.84% 1.76% 1.64% 1.14% 1.01% 0.99% 0.99% 0.92% 100% Name of Institutional Shareholder Major Shareholders of Institutional Shareholders (Note) March 19, 2024 Shareholding Chin-Xin Investment Co., Ltd Winbond Electronics Corporation TECO Electric and Machinery Co., Ltd. LGT Bank (Singapore) Investment Fund under the custody of Business Department, Standard Chartered Bank (Taiwan) Ltd. Walsin Lihwa Corporation Rong Jiang Co., Ltd. Fund Account of Yuanta Taiwan High Dividend ETF Patricia Chiao Huali Investment Corp. Chunghwa Post Co., Ltd. Yu-Heng Chiao 6.15% 6.14% 5.22% 4.54% 4.27% 3.31% 2.71% 2.65% 1.89% 1.62% 14 Name of Institutional Shareholder Major Shareholders of Institutional Shareholders (Note) December 31, 2023 Shareholding Walsin Lihwa Corporation HannStar Board Corporation Global Brands Manufacture Ltd. Walton Advanced Engineering, Inc. Yu-Heng Chiao Walsin Technology Corporation Investment account of Malayan Banking Berhad Securities Sdn Bhd - Internal Trades Platform - Client Account under the custody of Citibank Taiwan Ltd. Giga Investment Co. Chin-Xin Investment Co., Ltd. Tsai Yi Corporation Winbond Electronics Corporation Walsin Technology Corporation Walsin Lihwa Corporation Career Technology (Mfg.) Co., Ltd. Chin-Xin Investment Co., Ltd. Yu-Heng Chiao HannStar Board Corporation Pai-Yung Hong Xing Xing Investment Co., Ltd. Fund Account of Yuanta Taiwan High Dividend Low Volatility ETF Fund Account of Fuh Hwa Taiwan Technology Dividend Highlight ETF under the custody of Taipei Fubon Commercial Bank Co., Ltd. Prosperity Dielectrics Co., Ltd. Prosperity Dielectrics Co., Ltd. Walsin Technology Corporation Walton Advanced Engineering, Inc. Yu-Heng Chiao Ta-Ho Maritime Corporation ABC Taiwan Electronics Corp Wen-Che Shen Sheng-Chi Liao Tsung-Yuan Huang Ying-Ying Su Yu Yueh Co., Ltd. Note 1: Top ten shareholders of the institutional shareholder. Note 2: The shareholding ratios are rounded to the nearest hundredth percent. 18.30% 7.74% 3.39% 2.74% 2.65% 2.33% 1.37% 1.27% 1.10% 1.09% 20.32% 12.06% 5.44% 3.55% 2.19% 1.86% 1.59% 1.56% 1.43% 1.07% 43.13% 0.75% 0.62% 0.55% 0.47% 0.44% 0.36% 0.30% 0.24% 0.17% 15 Corporate Governance Report 3. Disclosure of Professional Qualifications of Directors and Independence of Independent Directors Qualification Name Professional Qualifications and Experience Independence (Note) Number of Other Public Companies Where He/She Acts as Independent Directors Concurrently - - - - Yu-Lon Chiao Patricia Chiao Yu-Cheng Chiao Yu-Heng Chiao experience Mr. Yu-Lon Chiao joined Walsin Lihwa in 1983 and has served as Vice President, President, Vice Chairman, and CEO, and took over as Chairman in 1996. Mr. Chiao, highly experienced in the wire and cable, stainless steel, electronic technology, commercial and real estate industries, has focused on the management of the Company and led the Company's continuous growth with good results. He has not been involved in any of the circumstances described in the subparagraphs of Article 30 of the Company Act. Patricia Chiao, Vice Chairman, has been with the Company since 1981, has served as Assistant Vice President of the Finance Department, Special Assistant to the President, Associate Manager and Vice President of the Commodity Center and Financial Investment Management Center, General Manager of the Copper Business Group, and General Manager of the Wire and Cable Business Group, and has served as Vice Chairman since 2016. She is familiar with the organization and the Company and has business operations of and knowledge professional in management, judgment and human investment resources. She has not been involved in any of the circumstances described in the subparagraphs of Article 30 of the Company Act. Yu-Cheng Chiao, Director, served as Chairman of the Company from 1986 to 1994. Currently, he serves as Chairman of Winbond Electronics Corporation, Independent Director of Taiwan Cement Corporation, Director of Walsin Technology Corporation. He served as, among others, Chairman of Nuvoton Technology Corporation and Director of Taiwan Electrical and Electronic Manufacturers' Association, received the ERSO Award and was elected as the eighth member of ITRI. Therefore, he has the necessary expertise and experience in management and business development of the Company. In addition, he has not been involved in the in any of the circumstances described subparagraphs of Article 30 of the Company Act. Yu-Heng Chiao, Director, the Vice President and Vice Chairman of the Company from 1990 to 1996. Currently, he acts as Chairman of Walsin Technology Corporation, HannStar Board Corp., Global Brands Manufacture Ltd., Walton Advanced Engineering, Inc., Prosperity Info-Tek Corp., and Silitech Dielectrics Co., Ltd., Technology Corporation. Therefore, he has the necessary expertise and experience in management and business development of the Company. In addition, he has not been involved in any of the circumstances described in the subparagraphs of Article 30 of the Company Act. 0 0 1 0 16 Qualification Name Professional Qualifications and Experience Independence (Note) Yu-Chi Chiao Andrew Hsia Chin-Xin Investment Co., Ltd Representative: Li-Chin Ku Ming-Ling Hsueh Yu-Chi Chiao has previously served as a Director and President of the Company and is currently the Chairman and President of HannStar Display Corporation; he also holds the position of Chairman at Huali Investment Corp., Hannshine Investment Corp., Hanns Prosper Investment Corp. Therefore, he has the necessary expertise and experience in management, commerce, and business development of the Company. In addition, he has not been involved in any of the circumstances described in the subparagraphs of Article 30 of the Company Act. Andrew Hsia, Director, serves as Vice President and Spokesman of Phu My Hung International Corporation and Chief Representative of Central Trading & Development Corporation (Samoa). He served as, among others, a diplomat of the Republic of China, Chairman of the Mainland Affairs Council, Deputy Minister of the Ministry of National Defense, Representative of the Ministry of Foreign Affairs in Indonesia, and Head of Political Section, Ministry of Foreign Affairs. He has a background of legal and diplomatic expertise and an international perspective, and is familiar with the economies and markets of the Southeast Asian region. In addition, he has not been involved in any of the circumstances described in the subparagraphs of Article 30 of the Company Act. Director Li-Chin Ku currently serves as Vice Chairman of Walsin Technology Corporation. He has previously held positions as Assistant Vice President, Vice President, and President of Walsin Technology Corporation. His professional experience is focused on the passive components industry, with a deep familiarity in the manufacturing and sales of passive components, and therefore he possesses expertise in operation and management. In addition, he has not been involved in the in any of subparagraphs of Article 30 of the Company Act. Ming-Ling Hsueh, Independent Director, used to act as PwC Taiwan Director, and is Independent Director of Yuanta Financial Holdings & Yuanta Commercial Bank, Lite-On Technology Corporation, and TTY Biopharm, and Director of Tung Hua Book Co., Ltd. He is also Adjunct Professor, School of Science and Technology Management, National Tsing Hua University, Adjunct Professor, School of Management, National Taiwan University of Science and Technology, and Executive Director, Taiwan Corporate Governance Association. Therefore, he has professional knowledge and background in finance, accounting and corporate governance. In addition, he has not been involved in any of the circumstances described in the subparagraphs of Article 30 of the Company Act. circumstances described the - - - Ming-Ling Hsueh, Independent Director, has not been involved in any of the circumstances described in Paragraph 1, Article 3 of the Regulations Governing Appointment of Independent Directors and Compliance Matters for Public Companies. Besides, neither he nor his spouse nor any of his relatives within second degree of kinship is a director of the Company or its affiliates holding any number and proportion of shares of the Company (which are not held in the name of others). Number of Other Public Companies Where He/She Acts as Independent Directors Concurrently 0 0 0 3 17 Corporate Governance Report Qualification Name Professional Qualifications and Experience Independence (Note) Fu-Hsiung Hu Tyzz-Jiun Duh Wei-Chuan Gau Fu-Hsiung Hu, Independent Director, was Vice Chairman, Council of Agriculture, Executive Yuan; Director of Department of Economic Energy and Agriculture, Executive Yuan; Director of the Office of the President of the Executive Yuan; Chairman of Joint Credit Information Center, Taiwan Cooperative Securities, and National Animal Industry Foundation; Director, Mega International Commercial Bank and Taiwan Cooperative Bank; Managing Director, Central Trust of China; Director, Straits Exchange Foundation. He is currently acting as Managing Director of O-Bank, in with professional knowledge and background business administration, finance and securities, and credit information. In addition, he has not been involved in any of the circumstances described in the subparagraphs of Article 30 of the Company Act. Tyzz-Jiun Duh, Independent Director, has previously held positions such as Director General of the Department of Commerce of the Ministry of Economic Affairs; Director General of the Department of Information Technology of the Ministry of Economic Affairs; Director General of the Industrial Development Bureau of the Ministry of Economic Affairs; Minister of the Ministry of Economic Affairs; Chairman of the National Development Council; and Vice Premier of the Executive Yuan, boasting over 15 years of administrative management experience. He currently serves as Policy Advisor of Electronics Manufacturers’ Association and Independent Director of China Development Financial Holding Corporation & CDIB Capital Group, among others. He is well-versed in the industrial and commercial industry landscape and economic development trends, possessing expertise and experience in financial holding, government and public and information cybersecurity, and international affairs. In addition, he has not been involved in any of the circumstances described in the subparagraphs of Article 30 of the Company Act. Wei-Chuan Gau, Independent Director, has previously served as Vice Chairman of KPMG Taiwan Inc. and Executive Director of KMPG Taiwan. He is currently CPA of Chuanzhi Shared-Office Accounting Firm, Chairman of KS&A Investment Co. Ltd., and Independent Director of Mercuries F&B. He possesses experience, professional capabilities, and practical experience in accounting and audit, risk management, and information technology. In addition, he has not been involved in any of the circumstances described in the subparagraphs of Article 30 of the Company Act. technology Electrical sectors, Taiwan and involved in any of Fu-Hsiung Hu, Independent Director, has the not been circumstances described in Paragraph 1, Article 3 of the Regulations Governing Appointment of Independent Directors and Compliance Matters for Public Companies. Besides, neither he nor his spouse nor any of his relatives within second degree of kinship is a director of the Company or its affiliates holding any number and proportion of shares of the Company (which are not held in the name of others). involved in any of Tyzz-Jiun Duh, Independent Director, has not been the circumstances described in Paragraph 1, Article 3 of the Regulations Governing Appointment of Independent Directors and Compliance Matters for Public Companies. Besides, neither he nor his spouse nor any of his relatives within second degree of kinship is a director of the Company or its affiliates holding any number and proportion of shares of the Company (which are not held in the name of others). Wei-Chuan Gau, Independent Director, has not been involved in any of the circumstances described in Paragraph 1, Article 3 of the Regulations Governing Appointment of Independent Directors and Compliance Matters for Public Companies. Besides, neither he nor his spouse nor any of his relatives within second degree of kinship is a director of the Company or its affiliates holding any number and proportion of shares of the Company (which are not held in the name of others). Number of Other Public Companies Where He/She Acts as Independent Directors Concurrently 1 3 1 Note: None of the Independent Directors of the Company are directors, supervisors or employees of companies with specific relationships with the Company and have not received compensation for providing business, legal, financial or accounting services to the Company or its affiliates in the last two years. Note after Period-End: Ms. Patricia Chiao, Vice Chairman, resigned from her post on March 11, 2024. 18 4. Diversity and Independence of the Board (1) Diversity of the Board In accordance with Article 20 of the Company's Corporate Governance Best Practice Principles and the "Principles of Election of Board Members and Managers and Guidelines for Continuing Education and Succession Planning" established by the Company, the Board of Directors will implement the objectives of diversity and independence in terms of expertise, experience and gender required for Board members, and will continue to invite appropriate candidates to join the Board of Directors in accordance with the above objectives in order to strengthen the balance of the Board of Directors in response to the Company's development strategies and changes in the internal and external environment. In order to achieve the desired objectives of corporate governance, the Board of Directors of the Company is composed of members from the management team, managers of relevant industries and professionals with financial, business and accounting backgrounds, who effectively perform the duties of Board members with different fields and work backgrounds. These duties include establishing and maintaining the Company's vision and values, assisting in promoting corporate governance and strengthening management, overseeing and evaluating the implementation of management policies and operational plans, and being responsible for the Company's overall economic, social, and environmental operations to enhance corporate governance and corporate value from the perspective of stakeholders. The Company has built its strength by being focused on the wire and cable, stainless steel, commodity, and commercial real estate fields and become a model of business excellence moving towards the manufacturing service industry. There are eleven directors on the Company's Board of Directors of 20th term: Yu-Lon Chiao, Chairman, has been working in the business field of the Company for a long time and has a good understanding of the operation and development of the industry, with an open-minded leadership style that encourages adoption of suggestions; Directors Yu-Cheng Chiao, Yu-Heng Chiao, and Yu-Chi Chiao have joined the management team of the Company and therefore are familiar with the organization and business operation of the Company and are good at operation management and investment judgment; Andrew Hsia, Director, comes from a diplomatic background with an international perspective and therefore has a good grasp of the conditions of the Southeast Asian market and can fully assist the Company in making relevant investment decisions; Director Li-Chin Ku is familiar with the industry, manufacturing, and sale of passive components and therefore has operational management experience and expertise; and the female Director, Director Patricia Chiao, specializes in operational management, investment judgment and human resources. The Company's Independent Directors have industry knowledge and an international market perspective: Independent Director Ming-Ling Hsueh specializes in finance, accounting and corporate governance; Independent Director Fu-Hsiung Hu has expertise and experience in business administration, finance and securities, and credit information; Independent Director Tyzz-Jiun Duh is familiar with the general situation of the industry and commerce sector and the trends of economic development; and Independent Director Wei-Chuan Gau possesses professional capabilities in accounting, auditing, and information technology. (2) Independence of the Board: The Company should have only 3 Independent Directors in accordance with the law, but to maintain the independence of its Board of Directors, it has four Independent Directors, which exceed the statutory target and account for 36% of all Directors of the Company; in order to improve the Company's operation and development and operation of corporate governance practices, none of Independent Directors are subject to Paragraphs 3 and 4 of Article 26-3 of the Securities and Exchange Act. 19 Corporate Governance Report (2) Profile of President, Vice Presidents and Department Heads Title Nationality Name Gender R.O.C. Fred Pan Male Shares Held Shares Held by Spouse and Underage Children Shares Held in Name of Others Number of shares Percentage Number of shares Percentage Number of shares Percentage 500,000 0.01% 0 0.00% 0 0.00% Date appointed July 16, 2007 R.O.C. C.C. Chen Male May 1, 2010 356,209 0.01% 0 0.00% 0 0.00% President & President of Commerce & Real Estate BG Executive Vice President & Head of Finance Dept. President of Insulated Wire & Cable BG R.O.C. Jin-Renn Leu Male August 13, 2014 180,900 0.00% 1,000 0.00% 0 0.00% President of Stainless Steel BG R.O.C. Kevin Niu Male December 4, 2017 200,000 0.00% 0 0.00% 0 0.00% President of Commodity BG R.O.C. Josh Chia Male June 13, 2019 49,000 0.00% 1,559 0.00% 0 0.00% 20 Education/Work Experience Other Current Positions at Other Companies MBA of US Tulane University; Finance Chief of Marketing of Philips Taiwan Semiconductor, Finance Chief of Sales of Philips Asia Pacific Semiconductor; the Company's Accounting Division head, Chief of Staff and Vice President. Master of Accounting Graduate School, National Taiwan University; Audit Team Leader of Deloitte Touche Tohmatsu Limited; Partner of Tianyao United Accountants; the Company's Manager of Performance Analysis Department of Financial Service Center, Head of Financial Management Center, Head of Accounting Division, Head of China Management Division, Vice President of Specialty Steel BG, Head of Yantai BU, Head and Vice President of Specialty Steel BU, and President of Commodity BG. M.S. in Electrical Engineering, Yuan Ze University; Assistant Manager of Optical Communication Division/Communication Technology Division, Manager of Communication Technology/Quality Assurance Electrical Technology Division, Production/Communication Operation Division, Director of Hsinchuang BU, Vice President of Cable & Wire BG; Head of Wire BU of the Company. Ph.D., Carnegie Mellon University, Pittsburgh, USA; Quantitative Analyst of U.S. based Provident Capital Management, Special Assistant to CEO of Chinatimes Network Technology, Associate Manager of Financial Trading Department of Yuanta Securities, Vice President of Securities Department of CTBC Bank, Vice President of Derivatives Department of KGI Securities; Chief Marketing Officer and Head of Resources Management Center of the Company. MPA in Finance, New York University; MBA in Accounting, National Taiwan University; Bachelor of Accounting, National Taiwan University; Head Liability Management of Department/Performance Management Department/ Corporate Finance Department of Standard Chartered Bank, Executive Vice President & Accounting Officer of Finance Division of Standard Chartered Bank, Vice President of Accounting Department of Fubon Bank (China) Co., Ltd.; the Company's Project Director of the President Office, Head of Finance Division and Vice President of Financial Management Center. Asset and Manager who is Spouse or Relative within the Second Degree Title Name Relationship None None None December 31, 2023 Shares Acquired by Managers under Employee Stock Options None Note (Note 2) None None None None None None None None None None None Vice Chairman of Nanjing Walsin Property Management Co., Ltd.; Director of Walsin (Nanjing) Development Co., Ltd., Walsin International Joint Success Investment, Enterprises Limited; Director and President of Jincheng Construction Co., Ltd., Walsin China Investment Co., Ltd. Chairman of Walsin Singapore Pte. Ltd.; Director of Walsin Info-Electric Inc., PT. Walsin Nickel Industrial Indonesia, PT. Sunny Metal Industry, PT. Westrong Metal Industry Indonesia, PT CNGR Walsin New Energy and Techology Indonesia, PT. Walhsu Metal Industry, PT. CNGR Walsin New Mining Industry Investment Indonesia, Innovation West Mantewe, Walsin International Investments Limited, and Walsin Lihwa Europe S.aà r.l.; Supervisor of PT. Sultra Sarana Bumi and Walsin (China) Investment Co., Ltd. Director of Walsin Energy Cable System Co., Ltd., Shanghai Walsin Lihwa Power Wire & Cable Co., Ltd., and Taiwan Electric Research & Testing Center Chairman of Yantai Walsin Stainless Steel Co., Ltd.; Director of Cogne Acciai Speciali S.p.A. None None None None None None None None None None Chairman of PT. Walsin Nickel Industrial Indonesia, PT. Sunny Metal Industry, and PT. Walhsu Metal Industry; Director of Walsin Precision Technology Co., Ltd., Walsin Singapore Pte. Ltd., PT. Westrong Metal Industry Indonesia, PT. CNGR Walsin New Energy and Technology Indonesia, Anugerah Barokah Cakrawala, PT. CNGR Walsin New Mining Industry Investment Indonesia, PT. Sultra Sarana Bumi, Innovation West Mantewe, and PT. Transcoal Minergy. 21 Corporate Governance Report Title Nationality Name Gender Date appointed Number of shares Percentage Number of shares Percentage Number of shares Percentage Shares Held Shares Held by Spouse Shares Held in Name and Underage Children of Others Head of Corporate Governance R.O.C. Hueiping Lo Female January 22, 2021 90,000 0.00% 0 0.00% 0 0.00% Director of Accounting R.O.C. Kelly Liu Female November 11, 2023 5,699 0.00% 0 0.00% 0 0.00% Note 1: Date appointed is the first time appointed department heads. Note 2: Where the chairman and the general manager or person of an equivalent post (the highest level manager) of a company are the same person, spouses, or relatives within the first degree of kinship, an explanation shall be given of the reason for, reasonableness of, necessity of, and the measures adopted in response to, the above situation. Note 3: Mr. Richard Wu was transferred to other position effective as of November 3, 2023; therefore, the Director of Accounting was changed to Ms. Kelly Liu. Note 4: The shareholding ratios are rounded to the nearest hundredth percent. 22 Education/Work Experience Other Current Positions at Other Companies M.B.A., National Taiwan University; former Vice President of Taiwan Cooperative Securities, Associate Manager of KGI Commercial Bank, and Associate Manager of China Development Financial Holding Corporation. Director of Hannstar Display Corporation, Global Investment Holdings, PT. Walsin Nickel Industrial Indonesia, Walsin Lihwa Europe S.a.r.l. and Walsin America, LLC; Supervisor of PT. Westrong Metal Industry. MBA in California State Polytechnic University Pomona; Audit Team Leader, PwC Taiwan; Accounting staff and Accounting Manager of the Accounting Division of the Company None. Manager who is Spouse or Relative within the Second Degree Title Name Relationship Shares Acquired by Managers under Employee Stock Options Note (Note 2) None None None None None None None None None None 23 Corporate Governance Report 3. Remunerations to Directors, President and Vice Presidents in the Most Recent Year (1) Remuneration to Directors (including Independent Directors) Title Name Remuneration (A) (Note 1) Pension (B) Remuneration to Directors (C)(Note 2) Business Expense (D) (Note 3) Directors Remuneration Company All Companies In Financial Statements (Note 6) Company All Companies In Financial Statements (Note 6) Company All Companies In Financial Statements (Note 6) Company All Companies In Financial Statements (Note 6) 34,910,000 34,910,000 0 0 22,000,000 24,544,000 4,635,434 4,659,434 Chairman Yu-Lon Chiao Vice Chairman Patricia Chiao Director Director Director Legal Person Director and Representative Yu-Cheng Chiao Yu-Heng Chiao Wei-Shin Ma (Note 9) Chin-Xin Investment Co., Ltd Representative: Li-Chin Ku (Note 10) Andrew Hsia Yu-Chi Chiao (Note 11) D i r e c t o r I n d e p e n d e n t D i r e c t o r 1. Ming-Ling Hsueh King-Ling Du (Note 12) Shiang-Chung Chen (Note 13) Director Director Independent Director Independent Director Independent Director Independent Director Independent Director Independent Director In order to facilitate the management of the remuneration of directors and functional committee members of the Company, the Company has established the "Rules for the Remuneration of Directors and Functional Committee Members", which clearly define the criteria for the remuneration payable to independent directors according to their individual professional input and performance, while taking into account the reasonableness of individual performance, the Company's operating performance and future risks. Wei-Chuan Gau (Note 15) Tyzz-Jiun Duh (Note 14) Fu-Hsiung Hu 2,988,500 8,000,000 8,000,000 2,988,500 6,284,664 6,284,664 0 0 2. Except as disclosed in the above chart, remuneration to directors received due to the services provided to all companies listed in the financial statements (such as acting as advisors of parent companies/all companies /investees listed in the financial statements who are not an employee thereof) in the most recent year: 0 Table of Remuneration Ranges Range of Remuneration Paid to Directors NT$100,000,000 Total Names of Directors Aggregate of First Four Remunerations (A+B+C+D) Aggregate of First Seven Remunerations (A+B+C+D+E+F+G) The Company Wei-Shin Ma Yu-Chi Chiao, King-Ling Du, and Shiang-Chung Chen Yu-Cheng Chiao, Andrew Hsia, Yu-Heng Chiao, Chin-Xin Investment Co., Ltd., Tyzz-Jiun Duh, and Wei-Chuan Gau Ming-Ling Hsueh and Fu- Hsiung Hu All Companies Listed in the Financial Statements Wei-Shin Ma Yu-Chi Chiao, King-Ling Du, and Shiang-Chung Chen Yu-Cheng Chiao, Andrew Hsia, Yu-Heng Chiao, Chin-Xin Investment Co., Ltd., Tyzz-Jiun Duh, and Wei-Chuan Gau Ming-Ling Hsueh and Fu- Hsiung Hu The Company Wei-Shin Ma Yu-Chi Chiao, King-Ling Du, and Shiang-Chung Chen Yu-Cheng Chiao, Andrew Hsia, Yu-Heng Chiao, Chin- Xin Investment Co., Ltd., Tyzz-Jiun Duh, and Wei- Chuan Gau Ming-Ling Hsueh and Fu- Hsiung Hu All Companies Listed in the Financial Statements Wei-Shin Ma Yu-Chi Chiao and King- Ling Du, and Shiang- Chung Chen Yu-Cheng Chiao, Andrew Hsia, Yu-Heng Chiao, Chin- Xin Investment Co., Ltd., Tyzz-Jiun Duh, and Wei- Chuan Gau Ming-Ling Hsueh, and Fu- Hsiung Hu Yu-Lon Chiao and Patricia Chiao Patricia Chiao Yu-Lon Chiao and Patricia Chiao Patricia Chiao Yu-Lon Chiao Yu-Lon Chiao 11 11 11 11 24 Ratio of total (A), (B), (C) and (D) to after-tax loss (Note 7) (%) Remuneration Received as Employee Salary, Bonus and Special Allowance (E) (Note 4) Pension (F) Employee Bonus (G) (Note 5) Company All Companies In Financial Statements Company All Companies In Financial Statements (Note 6) Company All Companies In Financial Statements (Note 6) Company All Companies In Financial Statements (Note 6) Cash Bonus Stock Bonus Cash Bonus Stock Bonus Total of (A), (B), (C), (D), (E), (F) and (G) and its Ratio to After-tax Income (Note 7) (%) Company All Companies In Financial Statements Unit: NT$ Remuneration from Re- investments other than Subsidiaries (Note 8) 61,545,434 1.1987 64,113,434 1.2487 0 0 0 0 0 0 0 0 61,545,434 1.1987 64,113,434 1.2487 101,605,054 17,273,164 0.3364 17,273,164 0.3364 0 0 0 0 0 0 0 0 17,273,164 0.3364 17,273,164 0.3364 2,580,000 Note 1: The Company’s Independent Directors and Directors who are authorized by the Board of Directors to regularly involve in the Company’s operation may receive remuneration; the amount of remuneration shall be reviewed in accordance with Director’s participation and value contributed in the Company’s operation, together with reference of international and domestic industrial practice, by the Remuneration Committee and submitted to the Board of Directors for approval. Note 2: Remunerations to Directors in 2023 approved by the Board of Directors have been listed. Note 3: Refers to the expenses incurred by Directors in 2023 to perform relevant duties (including transportation, attendance fees, special disbursements and various allowances). Note 4: Refers to the salaries, additional pay, severance pay, various rewards, incentives, treasury stock price difference, transportation subsidies, special allowance, various allowances and salary expenses listed in accordance with IFRS 2 "share-based payment", including shares acquired under employee stock option, restricted new shares to employees and shares acquired from participation in cash capital increase option and so forth, received by Directors who are also employees (including as President, vice president, managers and employees) in 2023. In addition, the Company's remuneration to chauffeurs totaled NT$2,470,821/year. Note 5: Refers to Directors also working as an employee (including as President, vice president, managers and employees) and receiving employee bonus (including stocks and cash) in 2023; employee bonus for 2023 was approved by the Board of Directors. Note 6: Refers to the total pay to the Company's Directors from all companies in the consolidated statements (including the Company). Note 7: After-tax net income refers to the after-tax net income of the stand-alone financial statements in 2023, which amounts to Note 8: NT$5,134,316,000. a. This field shows the amount of related remunerations a Director of the Company receives from investees other than subsidiaries of the Company. b. The remuneration refers to remuneration, bonus (including bonuses to employees, Directors and Supervisors) and related remunerations for the performance of duties received by a Director of the Company serving as a Director, Supervisor or manager of an investee of the Company other than subsidiaries. Note 9: Ms. Wei-Shin Ma was relieved of her duties on May 19, 2023. Note 10: Chin-Xin Investment Corporation changed its representative to Mr. Li-Chin Ku on May 19, 2023. Note 11: Mr. Yu-Chi Chiao was newly appointed on May 19, 2023. Note 12: Mr. King-Ling Du was relieved of his duties on May 19, 2023. Note 13: Mr. Shiang-Chung Chen was relieved of his duties on May 19, 2023. Note 14: Mr. Tyzz-Jiun Duh was newly appointed on May 19, 2023. Note 15: Mr. Wei-Chuan Gau was newly appointed on May 19, 2023. ＊ The remuneration content disclosed in this Table differs from the income concept of the Income Tax Act; therefore, this Table acts as a form of information disclosure and does not serve for the purpose of taxation 25 Corporate Governance Report (2) Remunerations to President and Vice Presidents Remuneration (A) (Note 1) Pension (B) Bonus and Special Allowances (C) (Note 2) Title Name Company All Companies In Financial Statements (Note 4) Company All Companies In Financial Statements (Note 4) Company All Companies In Financial Statements (Note 4) President & President of Commerce & Real Estate BG Fred Pan C.C. Chen Executive Vice President President of Stainless Steel BG President of Insulated Wire & Cable BG President of Commodity BG Josh Chia Kevin Niu Jin-Renn Leu 26,936,783 26,936,783 1,301,208 1,301,208 29,440,800 29,464,800 Table of Remuneration Ranges Range of Remuneration Paid to President and Vice Presidents NT$100,000,000 Josh Chia and Kevin Niu Fred Pan Total Note 1: Note 2: Note 3: Note 4: Note 5: The most recent annual salary, managerial bonus, and severance pay of the presidents and vice presidents are presented above. Refers to various bonuses, incentives, company car rental fees, vehicle subsidies, special allowance and salary expenses listed in accordance with IFRS 2 "share-based payment", including shares acquired under employee stock options, restricted new shares to employees and shares acquired from participation in cash capital increase options and so forth, received by managers ranked vice president or above in 2023. In addition, the Company's remuneration to chauffeurs totaled NT$1,032,874/year. Refers to employee bonuses (including stock and cash bonuses) approved by the Board of Directors for distribution to managers ranked vice president or above in 2023. Discloses the total payment to manager’s ranked vice president or above from all companies in the consolidated statements (including the Company). a. This field shows the amount of related remuneration managers ranked vice president or above received from investees other than subsidiaries of the Company. b. The remuneration refers to pay, bonus (including bonuses to employees, Directors and Supervisors) and related remunerations for the performance of duties received by the Company's managers ranked vice president or above while serving as a Director, Supervisor or manager of an investee of the Company other than subsidiaries. 5 5 Note 6: After-tax net income refers to the after-tax net income of the standalone financial statement in 2023, which amounts to NT$5,134,316,000. ＊ The remuneration content disclosed in this Table differs from the income concept of the Income Tax Act; therefore, this Table acts as a form of information disclosure and does not serve for the purpose of taxation. 26 Employee Bonus (D) (Note 3) Company All Companies In Financial Statements (Note 4) Cash Bonus Stock Bonus Cash Bonus Stock Bonus Total of (A), (B), (C) and (D) and Its Ratio to After- tax Income (%) (Note 6) Company All Companies In Financial Statements (Note 4) Unit: NT$ Remuneration from Re-investments or Parent Company other than Subsidiaries (Note 5) 2,062,500 0 3,419,300 0 59,741,291 1.1636 61,122,091 1.1905 702,000 (3) Distribution of Employee Bonus to Managers Title Name Stock bonus Cash Bonus Total March 10, 2023 Percentage of the Total to After-tax Net Income (%) M a n a g e r s C.C. Chen Fred Pan President & President of Commerce & Real Estate BG Executive Vice President & Head of Finance Dept. President of Stainless Steel BG President of Insulated Wire & Cable BG President of Commodity BG Josh Chia Vice President & Head of Corporate Governance Head of Accounting Dept. Kelly Liu Kevin Niu Hueiping Lo Jin-Renn Leu 0 NT$2,342,100 NT$2,342,100 0.0456 ※ This Table lists managers in active duty as of the end of 2023 and their summarized 2023 employee bonus for managers approved by the Board of Directors. ※ After-tax net income refers to the after-tax net income of the stand-alone financial statements in 2023. (4) Analysis of total remunerations to Directors, President, vice presidents etc. as a percentage of the stand- alone after-tax net income in the last two years and description of the policy, standards and packages of remunerations, procedure for making such decision and relation to business performance: 1. Analysis of total remunerations to Directors, President, vice presidents etc. as a percentage of the stand-alone after-tax net income in the last two years: Title Director President and Vice President Total Remunerations as Percentage (%) of After-tax Net Income (Losses) 2023 2022 Company 1.54 1.16 Companies in Consolidated Financial Statements 1.59 1.19 Company 0.99 0.46 Companies in Consolidated Financial Statements 0.99 0.46 2. Description of the policy, standards and packages of remunerations, procedure for making such decision and relation to business performance: (1) The Company's policy for remunerating its directors is formulated based on the Company Act and the Company's Articles of Incorporation. The remuneration of directors for the current year shall be limited to an 27 Corporate Governance Report amount not exceeding 1% of the current year's earnings and shall be paid in accordance with the Rules Governing the Compensation of Directors and Functional Members of the Company. The Company's operating strategy, profitability, future development and industry condition, as well as each director’s participation in and contribution to the Company’s operation (such as serving on functional committees or being invited to important business meetings), have also been taken into account in order to give them reasonable remuneration. The Compensation Committee then submits a proposal, which is passed at a board meeting before the policy takes effect. (2) In order to ensure that the performance of managers is closely linked to the Company's strategy and that their overall compensation is competitive, the Company has established the Regulations for the Evaluation of Managerial Performance and Compensation as the basis for performance evaluation and compensation of managers. The aforementioned regulations include policies, systems, standards and structures for performance evaluation and compensation of managers, which shall be reviewed by the Compensation Committee and submitted to the Board of Directors for approval. Manager's remuneration includes salary and bonus: their salary is based on the Company's business strategy and profitability by taking into account the manager's professional ability, scope of responsibility and market competitiveness; for the bonus, the Company will take into account the results of individual performance evaluation, the reasonableness of the link between its operating performance and future risks. However, if there is a significant risk event that affects the Company's reputation, internal mismanagement, personnel malpractice and other risk events attributable to any manager, the bonus payable to him/her will be reduced or cancelled. The manager's performance evaluation structure consists of "results evaluation" and "function evaluation". After setting targets at the beginning of the year, the management performance review is conducted quarterly and the performance evaluation is conducted semi-annually. Such evaluation is based on, among others, the achievement of profit targets, the improvement of organizational decision-making and execution capabilities, the training of key leaders, and the implementation of CSR and corporate governance. The Compensation Committee will make a proposal for such bonus and the Board of Directors will approve the same. The said principles may be adjusted based on economic conditions, the Company's future development, and profitability and operating risks. 4. Corporate Governance Status (1) Overview of Board of Directors Operation The Board of Directors totally held 9 meetings in 2023. 1. The attendance records for Directors are as follows: Title Name Chairman Yu-Lon Chiao Vice Chairman Patricia Chiao Director Director Director Director Director Yu-Cheng Chiao Yu-Heng Chiao Yu-Chi Chiao Andrew Hsia Wei-Shin Ma Representative of Chin-Xin Investment Co., Ltd.: Pei-Ming Chen Representative of Chin-Xin Investment Co., Ltd.: Li-Chin Ku Director Director Independent Director Independent Director Independent Director Independent Director Independent Director 28 Ming-Ling Hsueh King-Ling Du Shiang-Chung Chen Fu-Hsiung Hu Tyzz-Jiun Duh Attended in Person 9 9 9 5 4 9 4 Attended by Proxy 0 0 0 4 1 0 0 4 5 9 4 4 9 5 0 0 0 0 0 0 0 Attendance Percentage (%) Remarks 100% 100% 100% 55% 80% 100% 100% None None None None Note 2 None Note 1 100% Note 1 100% Note 2 100% None 100% Note 1 100% Note 1 100% None 100% Note 2 Independent Director Note 1: Director Wei-Shin Ma, Director Chen, Pei-Ming, Independent Director King-Ling Du, and Independent Wei-Chuan Gau Note 2 100% 5 0 Director Shiang-Chung Chen were discharged from their positions on May 19, 2023. Note 2: Director Yu-Chi Chiao, Director Li-Chin Ku, Independent Director Tyzz-Jiun Duh, and Independent Director Wei-Chuan Gau were newly elected for the 20th term. 2. The attendance records for Independent Directors are as follows: 19th Term Ming-Ling Hsueh King-Ling Du Shiang-Chung Chen Fu-Hsiung Hu : Attended in Person; ◎: Attended by Proxy; ×: Applied for leave of absence 25th Meeting May 5, 2023     23th Meeting February 24, 2023     24th Meeting March 24, 2023     22nd Meeting January 10, 2023     20th Term Ming-Ling Hsueh Fu-Hsiung Hu Tyzz-Jiun Duh Wei-Chuan Gau 1st Meeting May 19, 2023 2nd Meeting May 29, 2023 3rd Meeting August 11, 2023 4th Meeting November 3, 2023 5th Meeting December 13, 2023                     Other details that need to be recorded in meeting minutes: 1. In the event of the occurrence of any of the following scenarios with the operation of the Board of Directors, the dates of meetings, session number, resolution, opinions of all Independent Directors and the Company's subsequent action in response to these opinions shall be clearly stated: (1) Matters and items stipulated in Article 14-3 of the Securities and Exchange Act. Board of Directors Meeting Content of Proposal and Resolution 19th Term 22nd Meeting January 10, 2023 Proposal: Resolution: Proposal: Resolution: Proposal: Resolution: Proposal: Resolution: Proposal: Resolution: Ratification of the Company's endorsement and guarantee for its subsidiary, Borrego Energy, LLC. Ratification passed. Approval for the Company’s 2023 annual business plan. Proposal passed. Proposal for an evaluation of the independence and qualification of the Company's CPAs and the quality of the CPA firm's audit for each case, as well as the annual compensation payable to the CPA firm. Proposal passed. Yantai Walsin Stainless Steel Co., Ltd. proposes to update its investment plan and amount for its hot rolling plant and cold finished bar plant due to its investment in automated equipment. Proposal passed. Proposal to amend the Company's Derivatives Trading Procedures. Proposal passed. Independent Directors’ Opinion(s) Company’s Handling of Independent Directors’ Opinion(s) December 31, 2023 Independent Directors with Recorded or Written Opposing or Reserved Opinion(s) None None None None None None None None None None None None None None None 29 Corporate Governance Report Board of Directors Meeting Content of Proposal and Resolution Independent Directors’ Opinion(s) Company’s Handling of Independent Directors’ Opinion(s) December 31, 2023 Independent Directors with Recorded or Written Opposing or Reserved Opinion(s) None None None None None None None None None None None None None None None None None None to to the Company and Proposal to amend the Company's Procedures for Lending Funds to Other Parties. Proposal passed. Proposal to approve the loan of funds by Walsin International Investment Co., those Ltd. between the subsidiaries in mainland China, in a total amount of US$1 billion and RMB1.48 billion respectively. Proposal passed. Proposal review manager’s performance as well as 2022 bonuses and compensation. Proposal passed. Advice on Chairman’s and Vice Chairman’s 2022 performance bonus. Proposal passed. Yu-Lon Chiao and Patricia Chiao Advice on Company’s distributions for 2022 director and employee (including officers) remunerations. Proposal passed. Proposal the Company's reports on the internal control system for 2022. Proposal passed. to draft Proposal to amend certain provisions of the Company's Article of Incorporation. Proposal passed. None None None a into a joint technical The Company and its subsidiary, Walsin Energy Cable System Co., Ltd., intends venture to enter agreement, service agreement, and a technology license agreement with NKT HV Cables AB (based in Sweden), a wholly-owned subsidiary of NKT Cables Group A/S (based in Denmark). Please review and approve the same. Proposal passed. Proposal to participate in the capital injection into its subsidiary, Walsin Energy Cable System Co., Ltd., in the amount of NT$2,699 million. Proposal passed. PT. Sunny Metal Industry proposes to upgrade its cold nickel production lines at PT. Indonesia Weda Bay Industrial investment Park, with a proposed amount of USD 93 million. Proposal passed. Yantai Walsin Stainless Steel Co., Ltd. proposes to invest RMB178 million in the purchase of housing for experts and talents to meet operational needs. Proposal passed. Proposal to issue domestic straight corporate bonds within the amount of NT$10 billion. Proposal passed. Walsin Singapore Pte. proposes to lend US$175,750,000 to PT. Sunny Metal None None None None None None None None None None None None None None None None None None Proposal: Resolution: Proposal: Resolution: Proposal: Resolution: Proposal: Resolution: Recusal: Proposal: Resolution: Proposal: Resolution: Proposal: Resolution: Proposal: Resolution: Proposal: Resolution: Proposal: Resolution: Proposal: Resolution: Proposal: Resolution: Proposal: 19th Term 23th Meeting February 24, 2023 30 Board of Directors Meeting Content of Proposal and Resolution Industry under a non-revolving line of credit. Proposal passed. Walsin Singapore Pte. proposes to lend US$27,500,000 to PT Westrong Metal Industry under a non-revolving line of credit. Proposal passed. Borrego Energy, LLC, a U.S. subsidiary of the Company, proposes to sell the business of its solar energy and its energy storage, procurement, and departments. trading Proposal passed. platform Proposal to amend certain articles of the Company's internal control system. Proposal passed. of Proposal to lift the non-compete ban under Article 209 of the Company Act for the Company’s Directors. Proposal passed. Yu-Lon Chiao, Yu-Cheng Chiao, Yu-Heng Chiao, Andrew Hsia, and Ming-Ling Hsueh Proposal for a capital injection through an offering of global depositary receipts (GDRs) by issuing new common shares and/or a capital injection by issuing new common shares. The proposal has been amended to injection for a capital "Proposal through global offering an depositary receipts (GDRs) by issuing new common shares and/or a capital injection by issuing new common shares through book-building." The amended proposal was passed after the Chairman consulted all directors present on whether to approve the same. Proposal to carry out a capital injection into a wholly-owned subsidiary of the Company, Walsin Singapore Pte. Ltd., for an amount of USD 45 million. Proposal passed. Walsin Singapore Pte. proposes to lend USD 90 million to PT Westrong Metal Industry under a non-revolving line of credit. Proposal passed. Investments Walsin International Limited proposes to lend USD 75 million to PT. Sunny Metal Industry under a non-revolving line of credit. Proposal passed. In order to develop its submarine cable business, Walsin Energy Cable System Co., Ltd., a subsidiary of the Company, proposes to acquire the joint right of use for the Kaohsiung Port A6-A land from the Company. Proposal passed. Resolution: Proposal: Resolution: Proposal: Resolution: Proposal: Resolution: Proposal: Resolution: Recusal: Proposal: Resolution: Proposal: Resolution: Proposal: Resolution: Proposal: Resolution: Proposal: Resolution: 19th Term 24th Meeting March 24, 2023 19th Term 25th Meeting May 5, 2023 Independent Directors’ Opinion(s) Company’s Handling of Independent Directors’ Opinion(s) December 31, 2023 Independent Directors with Recorded or Written Opposing or Reserved Opinion(s) None None None None None None None None None None None None None None None None None None None None None None None None None None None 31 Corporate Governance Report Board of Directors Meeting Content of Proposal and Resolution the response For the purpose of developing its submarine cable business, Walsin Energy Cable System Co., Ltd., a subsidiary of the Company, proposes an investment of NT$10.7 billion in the establishment of a submarine cable production plant and equipment. Proposal passed. The Italian subsidiary of the Company, Cogne Acciai Speciali S.p.A., in which the Company indirectly holds a 70% equity, proposes to acquire 100% equity of Special Melted Products Limited (based in the UK) for the needs of business development. Proposal passed. In business to development capital requirements of Cogne Acciai Speciali S.p.A. ("CAS"), in which the Company indirectly holds a 70% equity, the Company proposes to invest in CAS up to EUR 140 million according to its shareholding ratio, and under the shareholding structure, to first inject capital into the subsidiary Walsin Lihwa Europe S.a r.l., and then through its subsidiary MEG S.A., to inject capital into CAS in cash. Proposal passed. the appointment of Proposal members Nomination Committee of the Company of the second term. Proposal passed. Yu-Lon Chiao, Ming-Ling Hsueh, Hu, Fu- Hsiung, Tyzz-Jiun Duh, and Wei-Chuan Gau Request for the Board of Directors to recommend a Convener for the Audit Committee of the third term. Proposal passed. Hu, Fu-Hsiung Proposal the appointment of for members and the recommendation of a Convener for the Compensation Committee of the Company of the fifth term. Proposal passed. Ming-Ling Hsueh, Hu, Fu-Hsiung, Tyzz- Jiun Duh, and Wei-Chuan Gau the appointment of Proposal members and the recommendation of the Sustainable a Convener for Development Committee of the Company of the third term. Proposal passed. Yu-Lon Chiao, Patricia Chiao, Ming-Ling Hsueh, Hu, Fu-Hsiung, Tyzz-Jiun Duh, and Wei-Chuan Gau the for for to Proposal: Resolution: Proposal: Resolution: Proposal: Resolution: Proposal: Resolution: Recusal: Proposal: Resolution: Recusal: Proposal: Resolution: Recusal: Proposal: Resolution: Recusal: Proposal: Resolution: 20th Term 1st Meeting May 19, 2023 20th Term 2nd Meeting May 29, 2023 32 Independent Directors’ Opinion(s) Company’s Handling of Independent Directors’ Opinion(s) December 31, 2023 Independent Directors with Recorded or Written Opposing or Reserved Opinion(s) None None None None None None None None None None None None None None None None None None None None None Proposal for a capital injection through an offering of global depositary receipts (GDRs) by issuing new common shares. Proposal passed. None None None Board of Directors Meeting Content of Proposal and Resolution Proposal: Resolution: Proposal: Resolution: Proposal: Resolution: Proposal: Resolution: Proposal: Resolution: Proposal: Resolution: Proposal: Resolution: Proposal: Resolution: Proposal: 20th Term 3rd Meeting August 11, 2023 finance PT. Sunny Metal Industry (Indonesia) Ltd. and Walsin Singapore Pte. (Singapore) propose to extend a non- revolving loan facility totaling USD 75 million to PT. Walhsu Metal Industry (Indonesia). Proposal passed. Walsin Singapore Pte. Ltd. proposes to extend a non-revolving loan facility totaling USD 20.5 million to Innovation West Mantewe Pte. Ltd. (Singapore). Proposal passed. For the development of its submarine cable business, Walsin Energy Cable System Co., Ltd., a subsidiary of the Company, obtained the joint use right of the land at Kaohsiung Port A62 from the Company on October 26, 2023, due to the need for plant operation. Please ratify the same. Ratification passed. The Italian subsidiary of the Company, Cogne Acciai Speciali S.p.A., proposes its Swedish subsidiary, to Degerfors Long Products AB, with a non-revolving credit facility of EUR 10 million. Proposal passed. The Italian subsidiary of the Company, Cogne Acciai Speciali S.p.A., proposes to finance Special Melted Products Limited (based in the United Kingdom) with a non-revolving credit facility of ERU 12 million. Proposal passed. The Singapore the Company, Walsin Singapore Pte. Ltd., proposes to dispose of its entire shares in PT. Westrong Metal Industry (Indonesia). Proposal passed. The Singapore the Company, Walsin Singapore Pte. Ltd., proposes seventy-five percent equity of Berg Holding Limited (Hong Kong). Proposal passed. In response to its capital expenditure needs, Yantai Walsin Stainless Steel Co., Ltd., a subsidiary of the Company in mainland China, proposes to apply for a mid-term loan from financial institutions, for which the Company will provide and guarantee. Proposal passed. In response to the Company's increase in equity of the Indonesian subsidiary PT. Sunny Metal Industry ("Sunny"), it is proposed to finance Sunny with a loan of USD 70 million from Walsin Singapore Pte. Ltd. ("WLS") and to cancel the limits of loans totaling USD 61.09 million provided by WLS to PT. Walhsu Metal Industry (Indonesia) and subsidiary of subsidiary of endorsement to acquire an Independent Directors’ Opinion(s) Company’s Handling of Independent Directors’ Opinion(s) December 31, 2023 Independent Directors with Recorded or Written Opposing or Reserved Opinion(s) None None None None None None None None None None None None None None None None None None None None None None None None None None None 33 Corporate Governance Report Board of Directors Meeting Content of Proposal and Resolution Independent Directors’ Opinion(s) Company’s Handling of Independent Directors’ Opinion(s) December 31, 2023 Independent Directors with Recorded or Written Opposing or Reserved Opinion(s) None None None None None None None None None None None None None None None None None None None None None None None None None None None its Industry PT. Westrong Metal (Indonesia). Proposal passed. Proposal to amend the Company's internal control system. Proposal passed. Walsin (China) Investment Co., Ltd., a subsidiary of the Company, proposes to finance Hangzhou Walsin Power Cable Co., Ltd. with a non-revolving credit facility of RMB 80 million. Proposal passed. For the development of its submarine cable business, Walsin Energy Cable System Co., Ltd., a subsidiary of the Company, obtained the joint use right of the land at Kaohsiung Port A62 from the Company on October 26, 2023, due to the need for plant operation. Please ratify the same. Ratification passed. To develop submarine cable business, Walsin Energy Cable System Co., Ltd., a subsidiary of the Company, proposes that the Company enter into a lease and port facility operation agreement with Taiwan International Ports Corporation, Ltd., Kaohsiung Branch for the A6 Port and its rear space at Kaohsiung Port. Proposal passed. Proposal to change the position of Chief Accounting Officer and Manager. Proposal passed. the Proposal subscription for new shares issued through a cash capital increase in 2023 by Winbond Electronics Corporation. Proposal passed. Yu-Lon Chiao, Patricia Chiao, Yu-Cheng Chiao, Yu-Heng Chiao, and Yu-Chi Chiao Proposal for Jiangyin Walsin Steel Cable Co., Ltd., a subsidiary of the Company, to sell its factories and office premises to another subsidiary of the Company, Alloy Jiangyin Walsin Materials Co., Ltd., for a transaction price of RMB 62,190,000. Proposal passed. Proposal to extend a non-revolving credit facility totaling US$50,000,000 to a U.S. subsidiary of the Company, Borrego Energy Holdings, LLC, and its subsidiary, Borrego Energy, LLC. Proposal passed. Walsin Info-Electric Corp., a subsidiary of the Company, proposes to extend a non-revolving of facility credit NT$100,000,000 to the Company. The proposal was passed. to participate Specialty in Walsin (China) Investment Co., Ltd., a subsidiary of the Company, proposes to extend a non-revolving credit facility of None None None Resolution: Proposal: Resolution: Proposal: Resolution: Proposal: Resolution: Proposal: Resolution: Proposal: Resolution: Proposal: Resolution: Recusal: Proposal: Resolution: Proposal: Resolution: Proposal: Resolution: Proposal: 20th Term 4th Meeting November 3, 2023 34 Board of Directors Meeting Content of Proposal and Resolution Independent Directors’ Opinion(s) Company’s Handling of Independent Directors’ Opinion(s) December 31, 2023 Independent Directors with Recorded or Written Opposing or Reserved Opinion(s) Resolution: Proposal: Resolution: Proposal: Resolution: Proposal: Resolution: Proposal: 20th Term 5th Meeting December 13, 2023 Resolution: Proposal: Resolution: RMB 190,000,000 to XiAn Walsin Metal Product Co., Ltd. The proposal was passed. Walsin Singapore Pte. Ltd., a subsidiary of the Company, proposes to extend a non-revolving credit facility of USD 75,000,000 to its Indonesian subsidiary, PT. Sunny Metal Industry. Proposal passed. Cogne Acciai Speciali S.p.A., an Italian subsidiary of the Company, proposes to provide and guarantee for its Swedish subsidiary, Degerfors Long Products AB. Proposal passed. Cogne Acciai Speciali S.p.A., an Italian subsidiary of the Company, proposes to extend a non-revolving credit facility of GBP 1,920,000 to its UK subsidiary, Special Melted Products Limited. Proposal passed. endorsement an Dongguan Walsin Wire & Cable Co., Ltd., a subsidiary of the Company, proposes to acquire a 60% equity interest in Hangzhou Walsin Power Cable Co., Ltd. Proposal passed. Walsin (China) Investment Co., Ltd., a subsidiary of the Company, proposes to extend a revolving credit facility of RMB 80,000,000 to Hangzhou Walsin Power Cable Co., Ltd. Proposal passed. None None None None None None None None None None None None None None None (2) In addition to the foregoing, there were other matters to be resolved by directors board meetings about which an independent director expressed objections or reservations that had been included in records or stated in writing: Not applicable 2. Director recusals due to conflicts of interests totaled 7 times. Term/Meeting Date 19th Term 22nd Meeting January 10, 2023 19th Term 23th Meeting February 24, 2023 20th Term 1st Meeting May 19, 2023 No. 1 2 3 4 Name(s) of Directors Yu-Lon Chiao and Patricia Chiao Yu-Lon Chiao, Yu-Cheng Chiao, Yu-Heng Chiao, Andrew Hsia, and Ming-Ling Hsueh Yu-Lon Chiao, Ming-Ling Hsueh, Hu, Fu-Hsiung, Tyzz-Jiun Duh, and Wei-Chuan Gau Hu, Fu-Hsiung Proposal Advice on Chairman’s and Vice Chairman’s 2022 performance bonus Proposal to lift the non- compete ban for the Company’s Directors under Article 209 of the Company Act Proposal for the appointment of members to the Nomination Committee of the Company of the second term. Request for the Board of Directors to recommend a Reason for Recusal Personally interested December 31, 2023 Participated in Vote or Not Recused as provided by law Personally interested Recused as provided by law Personally interested Recused as provided by law Personally interested Recused as provided by law 35 Corporate Governance Report No. Term/Meeting Date Name(s) of Directors Proposal Reason for Recusal Participated in Vote or Not Convener for the Audit Committee of the third term. Proposal for the appointment of members and the recommendation of a Convener for the Compensation Committee of the Company of the fifth term. Proposal for the recommendation of a Convener for the Sustainability Development Committee of the Company of the third term. Proposal to participate in the subscription for new shares issued through a cash capital increase in 2023 by Winbond Electronics Corporation. Ming-Ling Hsueh, Hu, Fu-Hsiung, Tyzz-Jiun Duh, and Wei-Chuan Gau Yu-Lon Chiao, Patricia Chiao, Ming-Ling Hsueh, Hu, Fu-Hsiung, Tyzz-Jiun Duh, and Wei-Chuan Gau Yu-Lon Chiao, Patricia Chiao, Yu- Cheng Chiao, Yu- Heng Chiao, and Yu-Chi Chiao Personally interested Recused as provided by law Personally interested Recused as provided by law Personally interested Recused as provided by law 5 6 7 20th Term 4th Meeting November 3, 2023 Note after Period-End: Ms. Patricia Chiao, Vice Chairman, resigned from her post on March 11, 2024. 3. Frequency, period, scope, method, and items of self-evaluation of the Board of Directors: Scope Frequency Method Period Item Once every year 2023/01/01 ~ 2023/12/31 Board of Directors Internal self- evaluation of the Board of Directors Once every year 2023/01/01 ~ 2023/12/31 Functional Committees (including Compensation Committee, Audit Committee, Sustainable Development Committee, and Nomination Committee) Internal self- evaluation of the functional committees Once every year 2023/01/01 ~ 2023/12/31 Each director Self or peer performance evaluation of board members Once every 3 years 2020/10/01 ~ 2021/09/30 Board of Directors and each functional committee Evaluation by an external organization 1. Involvement in the operation of the Company. 2. Improve the quality of Board decisions. 3. Composition and structure of the board of directors. 4. Selection and Continuing Education of Directors. 5. Internal control. 1. Involvement in the operation of the Company. 2. Awareness of responsibilities of the functional committees. 3. Improve the quality of decision making in the functional committees. 4. Composition and selection of functional committee members. 5. Internal control. 1. Understanding of the company's objectives and tasks. 2. Awareness of directors' responsibilities. 3. Involvement in the operation of the Company. 4. Internal relationship management and communication. 5. Professional and continuing education of directors. 6. Internal control. Eight aspect of evaluation of the Board of Directors: composition, guidance, authorization, supervision, communication, internal control and risk management, self-regulation, among others. 36 4. Evaluation of achievement of enhancing the Board’s performance (e.g. establishing an Audit Committee and increasing information transparency): (1) Formulation of regulations related to the corporate governance: In addition to explicitly stating the powers and duties of the Board of Directors in the company's articles of incorporation, the Company also follows rules and regulations including the "Board of Directors Procedural Regulations", "Guidelines for the Ethical Conduct of Directors and Managerial Officers", "Procedures for the Processing of Critical Internal Information", "Corporate Governance Principles and Practice", "Corporate Management Integrity Principles", "Behavioral Guidelines and Operation Procedures for Honest Practices", "Guidelines for the Ethical Conduct of Employees", "Rules for Suggestions and Complaints from Related Parties", and "Practical Guidelines for Corporate Social Responsibility" in order to strengthen operations of the Board of Directors as well as corporate governance. (2) Evaluation of the Performance of the Board of Directors: To implement corporate governance and enhance the Company's board functions, and to set forth performance objectives to improve the operation efficiency of the board of directors, the Rules of Performance Evaluation of the Board of Directors (these "Rules") were established pursuant to the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies and shall apply to the Board of Directors, functional committee and individual directors. These Rules were established on October 28, 2015, and the most recent amendment to them was approved by the Board of Directors on January 11, 2022. Each agenda working group shall provide a questionnaire for the board members to complete in each December and provide the completed attachments and information related to performance evaluation for the board members' reference. The overall performance self-evaluation of our Board of Directors should cover at least the following five major aspects: A. Regarding external evaluations: In 2018 and 2021, the Company appointed Taiwan Corporate Governance Association ("TCGA"), an independent third party with which the Company has no business dealings, to evaluate the effectiveness of its Board of Directors. The evaluation was conducted by means of questionnaires and on-site interviews on eight major aspects of the board of directors, including composition, guidance, authorization, supervision, communication and self-regulation, as well as internal control and risk management. Through the review by a professional organization and with the guidance of and communications with the evaluation members, the Company obtained professional and objective evaluation results and recommendations. The results of the evaluation serve as the reference for the Board to continue to improve its functions by continually enhancing and optimizing the quality of its meetings. The measures in response to the recommendations of the external evaluation institution in 2021 are as follows: Recommendations of External Evaluation Institution Set up a reporting channel that Strengthen the can Independent whistleblower receive complaints mechanism simultaneously, or engage an external agency to serve as a complaint acceptance window. Directors the to Continue the improve internal control system A comprehensive review of the internal overall Company's control mechanism shall be conducted every five years. Measures The Independent Directors have simultaneously received complaints from the complaint mailbox set up by the audit unit, to facilitate direct reporting by complainants or whistle blowers, and to enhance and ensure the effective operation of the whistleblower mechanism. The Company's Internal Control System has specified that the design and implementation of the internal control system will be adjusted in a timely manner in response to changes in the environment, and that the system will be adopted annually. Starting from 2023, it has been added in the Directors' self-assessment questionnaire that the Company will annually review the effectiveness of the design and implementation of the internal control system and issue a statement on the internal control system after the approval of the Board of Directors. 37 Corporate Governance Report the of Recommendations of External Evaluation Institution The Company should obtain AQI Improve information from the certified quality in advance public accountants financial when for them reporting evaluation purposes, so as to audits and evaluate commitment to enhance the quality of the audit. ability objectively selecting their Measures The Company evaluates the independence and suitability of the certified public accountants on an annual basis. Starting from 2023, the Company has further referred to the AQI disclosure framework released by the FSC on August 19, 2021 as a reference for the evaluation. The evaluation results are reported to the Audit Committee and the Board of Directors as the reference for future appointment of CPAs. The latest revision of Corporate Governance Best Practice Principles of the Company was 2023, approved incorporating Audit Quality Indicators (AQI) into the independence and competence of CPAs to be engaged. assessing February criteria the 24, for on B. Annual internal evaluation for 2023: The 2023 Board of Directors' performance self-evaluation results go as follows: (a) Board of Directors' overall average score 4.83 points (full score: 5 points) (b) Board members' overall average score 4.85 points (full score: 5 points). In December 2023, the Company conducted an internal annual board performance evaluation of the board of directors, individual board members and functional committees in accordance with the evaluation indicators and evaluation procedures specified in these Rules, and compiled and scored the data after the questionnaires were collected, and made recommendations for improvement. This year, the Company has made recommendations for improvement in the level of Directors' participation in the Company's operations, as well as the follow-ups on the recommendations made by an external evaluation institution in 2021, both of which were consolidated and reported to the Nomination Committee on January 19, 2024 and the Board of Directors' meeting on January 26, 2024, the details of which were disclosed on the Company's website. (3) Implementing the performance evaluation of the functional committees: In accordance with the "Regulations for the Evaluation of the Performance of the Board of Directors (including Functional Committees) and their Remunerations" formulated by the Compensation Committee based on the latest version published by the Competent Authority, our functional committees' members in December every year evaluate themselves by the assessment indicators to measure the corporate leadership strategic directions and oversee the corporate operational performance in an effort to improve shareholders' long-term value. (4) Actively participating in corporate governance: In recent years, the Company has actively participated in the promotion of the corporate governance and the transparency in information disclosure. Walsin Lihwa was listed as the top 5% outstanding companies by five consecutive times of Corporate Governance Evaluation from 2017 to 2022. The Company also received four outstanding recognitions: Taiwan's Top 100 Sustainable Model Business Award, Information Security Leadership Award, Platinum Sustainability Report Award (Traditional Manufacturing Industry), and Bronze Prize for English Sustainability Report. The Company will continue making efforts to maintain among the top with respect to the Corporate Governance Evaluation Results. The Company not only will continue to strive to actively participate in the corporate governance evaluation, but also has formed a project to improve corporate governance matters and enhance corporate governance capabilities. The Company is committed to enhancing the transparency of information. In addition to announcing financial information in accordance with laws and regulations, the Company also holds regular investor conferences four times a year. In 2023, the Company was granted a long-term credit rating of 'twA-' and a short-term credit rating of 'twA-2' with a 'stable' outlook by Taiwan Ratings. In addition, it was our first time to volunteer to fill in the DJSI and scored 57 points (ranked 7/188 in ELQ Electrical Components & Equipment for the same industry). The Company's financial structure was certified by an external organization, and the disclosure of information to stakeholders was also enhanced through the external release of credit ratings. (5) Enhancing the board’s functions and decision-making quality: In order to bring into play the functions and decision-making quality of the Board of Directors, our company regularly holds strategic meetings on a quarterly basis to enable the directors to understand our financial and business conditions and the formulation of major business strategies and the implementation of related plans. In addition, quarterly operational meetings are also held to help directors understand the operational content through reporting 38 by operating units, so as to improve the performance of the Board of Directors. In the meantime, the directors may provide their effective guidance out of their expertise and experience to the operating units during such meetings. (6) Heavy reliance on the independent directors’ functions: Authorizing independent directors to utilize their own expertise and regularly participate in our company's investment assessment projects and matters relevant to corporate governance. The Audit Committee was formally established by all independent directors after the shareholders' meeting on May 26, 2017, and the Audit Committee of the third term was formed by all independent directors on May 19, 2023; the Compensation Committee of the fifth term was established on May 19, 2023, with all independent directors acting as its members. On May 19, 2023, Chairman, Vice Chairman and all independent directors were appointed as members of the Sustainable Development Committee of the third term of the Company. On May 19, 2023, Chairman and all Independent Directors were appointed as the members of the Nomination Committee of the second term of the Company. These four functional committees continue to assist the Board of Directors in its oversight responsibilities. (7) Raising the transparency of corporate data: On the MOPS and our official website, we voluntarily disclose the related law and regulations which we follow, the important resolutions adopted at Board meetings and the relevant information to help shareholders understand our activities and to raise transparency in our corporate information. (II) Operation of the Audit Committee 1. The major matters reviewed by the Audit Committee include: (1) Adoption of or amendment to the internal control system pursuant to Article 14-1 of the Securities and Exchange Act. (2) Assessment of the effectiveness of the internal control system. (3) Adoption of or amendment to procedures for financial or operational actions of material significance, such as acquisition or disposal of assets, derivatives trading, extension of loans to others, or endorsements or guarantees for others, pursuant to Article 36-1 of the Securities and Exchange Act. (4) Matters bearing on the personal interest of a director. (5) Material asset or derivatives transactions. (6) Material loans, endorsements, or provision of guarantees. (7) The offering, issuance, or private placement of any equity-type securities. (8) The engagement or dismissal of a CPA, or the compensation given thereto. (9) The appointment or discharge of a financial, accounting, or internal auditing officer. (10) Annual financial reports signed or sealed by the Chairman, manager and accounting officer. (11) Any other material matter so required by the Company or the Competent Authority. 2. Audit Committee's Annual Work Summary: (1) Agenda arrangement (for Audit Committee meetings and communication meetings) (2) Handling matters related to the meeting of the Audit Committee in accordance with the law (meeting notice, proceedings) (3) Follow-ups and execution of improvements requested by the Audit Committee (4) Providing company information required by independent directors to assist them in fully exercising their powers (5) Annual self-assessment of the Audit Committee (6) Establishing and revising the organizational regulations and relevant operating procedures (7) Announcement of relevant matters concerning the Audit Committee pursuant to law (organizational regulations and operational status) (8) Whether any employee, manager and director has entered into related-party transactions and possible conflicts of interest in such transactions (9) Suggestions and complaints from interested parties (10) Management of exchange rate risks (11) Information Security (12) Work safety/environmental protection and legal compliance 39 Corporate Governance Report 3. The Audit Committee of the second term started on May 29, 2020 and ended on May 28, 2023. The meetings were held 5 times in 2023, and the attendance of the independent directors in 2023 is as follows: Title Name Convener Ming-Ling Hsueh Member Member Member King-Ling Du Shiang-Chung Chen Fu-Hsiung Hu Personally Attended Attended by Proxy Attendance rate (%) Remarks 5 5 5 5 0 0 0 0 100% None 100% None 100% None 100% None The Audit Committee of the third term started on May 19, 2023 and will be ending on May 18, 2026. The meetings were held 5 times in 2023, and the attendance of the independent directors in 2023 is as follows: Title Name Convener Ming-Ling Hsueh Member Member Member King-Ling Du Shiang-Chung Chen Fu-Hsiung Hu Personally Attended Attended by Proxy Attendance rate (%) Remarks 5 5 5 5 0 0 0 0 100% None 100% None 100% None 100% None 4. Other matters that need to be recorded in meeting minutes: (1) If any of the following circumstances occurs during the operation of the Audit Committee, the Board meeting date, meeting number, the proposal contents, the resolution of the Audit Committee and our company's handling of the Audit Committee's opinions shall be clearly described. A. Items listed in Article 14-5 of the Securities and Exchange Act: Audit Committee Meeting Number and Date Board of Directors Meeting Number and Date Proposals and Resolutions 2nd Term 25th Meeting January 6, 2023 19th Term 22nd Meeting January 10, 2023 Proposal: Resolution: Proposal: Resolution: Proposal: Resolution: Proposal: Resolution: Proposal: Resolution: Proposal: Resolution: investment Approval for the Company’s 2023 annual business plan. Proposal passed. Proposal for an evaluation of the independence and qualification of the Company's CPAs and the quality of the CPA firm's audit for each case, as well as the annual compensation payable to the CPA firm. Proposal passed. Yantai Walsin Stainless Steel Co., Ltd. proposes to update its investment plan and amount for its hot rolling plant and cold finished bar plant due to in automated its equipment. Proposal passed. Proposal to amend the Company's Derivatives Trading Procedures. Proposal passed. Proposal to amend the Company's Procedures for Lending Funds to Other Parties. Proposal passed. Proposal to approve the loan of funds by Walsin International Investment Co., Ltd. to the Company and those between the subsidiaries in mainland China, in a total amount of US$1 billion and RMB1.48 billion respectively. Proposal passed. Independent Directors' Dissenting Opinions, Reservations or Significant Recommendatio ns None None None None None None December 31, 2023 Company’s Handling of Audit Committee Member’s Opinion All of the Directors present approved the proposal unanimously. All of the Directors present approved the proposal unanimously. All of the Directors present approved the proposal unanimously. All of the Directors present approved the proposal unanimously. All of the Directors present approved the proposal unanimously. All of the Directors present approved the proposal unanimously. 40 Audit Committee Meeting Number and Date Board of Directors Meeting Number and Date Proposals and Resolutions 2nd Term 26th Meeting February 20, 2023 19th Term 23th Meeting February 24, 2023 Proposal: Resolution: Proposal: Resolution: Proposal: Resolution: Proposal: Resolution: Proposal: Resolution: Proposal: Resolution: Proposal: Resolution: Proposal: Resolution: Proposal: Resolution: Proposal: Resolution: Proposal: Resolution: Proposal: Resolution: Proposal: Resolution: Proposal: to 2022 profit Company’s the Articles of The Company’s 2022 business reports and financial statements. Proposal passed. The 2022 consolidated business reports and consolidated financial statements of affiliated enterprises. Proposal passed. The distribution plan. Proposal passed. The Company’s 2022 internal control system statement. Proposal passed. Amendments Incorporation of the Company. Proposal passed. The Company and its subsidiary Walsin Energy Cable System Co., Ltd. intend to sign joint venture agreement, technology consultancy agreement and technology license agreement with NKT Cables Group A/S’s wholly- owned subsidiary NKT HV Cables AB. Proposal passed. Proposal to participate in the capital injection into its subsidiary, Walsin Energy Cable System Co., Ltd., in the amount of NT$2,699 million. Proposal passed. PT. Sunny Metal Industry proposes to upgrade its cold nickel production lines at PT. Indonesia Weda Bay Industrial Park, with a proposed investment amount of USD 93 million. Proposal passed. Yantai Walsin Stainless Steel Co., Ltd. proposes to invest RMB178 million in the purchase of housing for experts and talents to meet operational needs. Proposal passed. Proposal to issue domestic straight corporate bonds within the amount of NT$10 billion. Proposal passed. Walsin Singapore Pte. proposes to lend US$175,750,000 to PT. Sunny Metal Industry under a non-revolving line of credit. Proposal passed. Walsin Singapore Pte. proposes to lend US$27,500,000 to PT Westrong Metal Industry under a non-revolving line of credit. Proposal passed. To enhance the efficiency of capital utilization, it is proposed to carry out capital for Walsin International Investments Limited and Walsin Lihwa Holdings Limited. Proposal passed. reductions Borrego Energy, LLC, a U.S. subsidiary of the Company, proposes to sell the business of its solar energy and its Independent Directors' Dissenting Opinions, Reservations or Significant Recommendatio ns None None None None None None None None None None None None None None Company’s Handling of Audit Committee Member’s Opinion All of the Directors present approved the proposal unanimously. All of the Directors present approved the proposal unanimously. All of the Directors present approved the proposal unanimously. All of the Directors present approved the proposal unanimously. All of the Directors present approved the proposal unanimously. All of the Directors present approved the proposal unanimously. All of the Directors present approved the proposal unanimously. All of the Directors present approved the proposal unanimously. All of the Directors present approved the proposal unanimously. All of the Directors present approved the proposal unanimously. All of the Directors present approved the proposal unanimously. All of the Directors present approved the proposal unanimously. All of the Directors present approved the proposal unanimously. All of the Directors present approved the proposal unanimously. 41 Corporate Governance Report Audit Committee Meeting Number and Date Board of Directors Meeting Number and Date Proposals and Resolutions Company’s Handling of Audit Committee Member’s Opinion Independent Directors' Dissenting Opinions, Reservations or Significant Recommendatio ns energy storage, procurement, and trading platform departments. Proposal passed. Proposal to amend certain articles of the Company's control system. Proposal passed. Proposal to lift the non-compete ban for the Company’s Directors under Article 209 of the Company Act. internal None None (GDRs) by Proposal passed. Ming-Ling Hsueh Proposal for a capital injection through an offering of global depositary issuing new receipts common shares and/or a capital injection by issuing new common shares. Proposal passed. Proposal to carry out a capital injection into a wholly-owned subsidiary of the Company, Walsin Singapore Pte. Ltd., for an amount of USD 45 million. Proposal passed. Walsin Singapore Pte. proposes to lend USD 90 million to PT Westrong Metal Industry under a non-revolving line of credit. Proposal passed. Investments Walsin International Limited proposes to lend USD 75 million to PT. Sunny Metal Industry under a non-revolving line of credit. Proposal passed. In order to develop its submarine cable business, Walsin Energy Cable System Co., Ltd., a subsidiary of the Company, proposes to acquire the joint right of use for the Kaohsiung Port A6-A land from the Company. After the Chairman consulted with the members, all members resolved that the revision to the proposal be postponed the next Audit Committee meeting for discussion. For the purpose of developing its submarine cable business, Walsin Energy Cable System Co., Ltd., a subsidiary of the Company, proposes an investment of NT$10.7 billion in the establishment of a submarine cable production plant and equipment. Proposal passed. In order to develop its submarine cable business, Walsin Energy Cable System Co., Ltd., a subsidiary of the Company, proposes to acquire the joint right of use for the Kaohsiung Port A6-A land from the Company. Proposal passed. to None None None None None None None Resolution: Proposal: Resolution: Proposal: Resolution: Recusal: Proposal: Resolution: Proposal: Resolution: Proposal: Resolution: Proposal: Resolution: Proposal: Resolution: Proposal: Resolution: Proposal: Resolution: 2nd Term 27th Meeting March 24, 2023 19th Term 24th Meeting March 24, 2023 2nd Term 28th Meeting April 28, 2023 19th Term 25th Meeting May 5, 2023 2nd Term 29th Meeting May 5, 2023 19th Term 25th Meeting May 5, 2023 42 All of the Directors present approved the proposal unanimously. due Except for Ming-Ling Hsueh, Independent Director, who recused himself to personal conflict of interests, all of the present Directors approved the proposal unanimously. All of the Directors present approved the proposal unanimously. All of the Directors present approved the proposal unanimously. All of the Directors present approved the proposal unanimously. All of the Directors present approved the proposal unanimously. All of the Directors present approved the proposal unanimously. All of the Directors present approved the proposal unanimously. All of the Directors present approved the proposal unanimously. Audit Committee Meeting Number and Date Board of Directors Meeting Number and Date Proposals and Resolutions Proposal: Resolution: Proposal: Resolution: Proposal: Resolution: Proposal: Resolution: Proposal: Resolution: Proposal: Resolution: Proposal: 3rd Term 1st Meeting May 29, 2023 20th Term 2nd Meeting May 29, 2023 3rd Term 2nd Meeting August 4, 2023 20th Term 3rd Meeting August 11, 2023 Resolution: Proposal: Resolution: Proposal: Resolution: Proposal: the response (GDRs) by The Italian subsidiary of the Company, Cogne Acciai Speciali S.p.A., in which the Company indirectly holds a 70% equity, proposes to acquire 100% equity of Special Melted Products Limited (based in the UK) for the needs of business development. Proposal passed. In business to development capital requirements of Cogne Acciai Speciali S.p.A. ("CAS"), in which the Company indirectly holds a 70% equity, the Company proposes to invest in CAS up to EUR 140 million according to its shareholding ratio, and under the shareholding structure, to first inject capital into the subsidiary Walsin Lihwa Europe S.a r.l., and then through its subsidiary MEG S.A., to inject capital into CAS in cash. Proposal passed. Proposal for a capital injection through an offering of global depositary receipts issuing new common shares. Proposal passed. PT. Sunny Metal Industry (Indonesia) and Walsin Singapore Pte. Ltd. (Singapore) propose to extend a non- revolving loan facility totaling USD 75 million to PT. Walhsu Metal Industry (Indonesia). Proposal passed. Walsin Singapore Pte. Ltd. proposes to extend a non-revolving loan facility totaling USD 20.5 million to Innovation West Mantewe Pte. Ltd. (Singapore). Proposal passed. Proposal for Cogne Acciai Speciali S.p.A., an Italian subsidiary of the Company, to provide an endorsement and guarantee its Swedish subsidiary, Degerfors Long Products AB. Proposal passed. The Italian subsidiary of the Company, Cogne Acciai Speciali S.p.A., proposes to finance its Swedish subsidiary, Degerfors Long Products AB, with a non-revolving credit facility of EUR 10 million. Proposal passed. The Italian subsidiary of the Company, Cogne Acciai Speciali S.p.A., proposes to finance Special Melted Products Limited (based in the United Kingdom) with a non-revolving credit facility of ERU 12 million. Proposal passed. Proposal to amend the Company's internal control system. Proposal passed. In response to its capital expenditure needs, Yantai Walsin Stainless Steel Co., Ltd., a subsidiary of the Company for Independent Directors' Dissenting Opinions, Reservations or Significant Recommendatio ns None Company’s Handling of Audit Committee Member’s Opinion All of the Directors present approved the proposal unanimously. None All of the Directors present approved the proposal unanimously. None None None None None None None None All of the Directors present approved the proposal unanimously. All of the Directors present approved the proposal unanimously. All of the Directors present approved the proposal unanimously. All of the Directors present approved the proposal unanimously. All of the Directors present approved the proposal unanimously. All of the Directors present approved the proposal unanimously. All of the Directors present approved the proposal unanimously. All of the Directors present approved the proposal unanimously. 43 Corporate Governance Report Audit Committee Meeting Number and Date Board of Directors Meeting Number and Date Proposals and Resolutions Company’s Handling of Audit Committee Member’s Opinion Independent Directors' Dissenting Opinions, Reservations or Significant Recommendatio ns in mainland China, proposes to apply for a mid-term loan from financial institutions, for which the Company will provide an endorsement and guarantee. Proposal passed. The Singapore subsidiary of the Company, Walsin Singapore Pte. Ltd., proposes to dispose of its entire shares in PT. Westrong Metal Industry (Indonesia). Proposal passed. The Singapore subsidiary of the Company, Walsin Singapore Pte. Ltd., proposes to acquire seventy-five percent equity of Berg Holding Limited (Hong Kong). Proposal passed. In response to the Company's increase in equity of the Indonesian subsidiary PT. Sunny Metal Industry ("Sunny"), it is proposed to finance Sunny with a loan of USD 70 million from Walsin Singapore Pte. Ltd. ("WLS") and to cancel the limits of loans totaling USD 61.09 million provided by WLS to PT. Walhsu Metal Industry (Indonesia) and PT. Westrong Metal Industry (Indonesia). Proposal passed. The Italian subsidiary of the Company, Cogne Acciai Speciali S.p.A., proposes to finance Special Melted Products Limited (based in the United Kingdom) with a non-revolving credit facility of ERU 12 million. Proposal passed. Walsin (China) Investment Co., Ltd., a subsidiary of the Company, proposes to finance Hangzhou Walsin Power Cable Co., Ltd. with a non-revolving credit facility of RMB 80 million. Proposal passed. For the development of its submarine cable business, Walsin Energy Cable System Co., Ltd., a subsidiary of the Company, obtained the joint use right of the land at Kaohsiung Port A62 from the Company on October 26, 2023, due to the need for plant operation. Please ratify the same. Ratification passed. To develop its submarine cable business, Walsin Energy Cable System Co., Ltd., a subsidiary of the Company, proposes that the Company enter into a lease and port facility operation agreement with Taiwan International Ports Corporation, Ltd., Kaohsiung Branch for the A6 Port and its rear space at Kaohsiung Port. Proposal passed. Proposal to draft the Company's 2024 Audit Plan. Proposal passed. None None None None None None All of the Directors present approved the proposal unanimously. All of the Directors present approved the proposal unanimously. All of the Directors present approved the proposal unanimously. All of the Directors present approved the proposal unanimously. All of the Directors present approved the proposal unanimously. All of the Directors present approved the proposal unanimously. None All of the Directors present approved the proposal unanimously. None All of the Directors present approved the proposal unanimously. Resolution: Proposal: Resolution: Proposal: Resolution: Proposal: Resolution: Proposal: 3rd Term 3rd Meeting August 11, 2023 20th Term 3rd Meeting August 11, 2023 Resolution: Proposal: Resolution: Proposal: 3rd Term 4th Meeting October 27, 2023 20th Term 4th Meeting November 3, 2023 Resolution: Proposal: Resolution: Proposal: Resolution: 44 Audit Committee Meeting Number and Date Board of Directors Meeting Number and Date Proposals and Resolutions Proposal: Resolution: Proposal: Resolution: Proposal: Resolution: Proposal: Resolution: Proposal: Resolution: Proposal: Resolution: Proposal: Resolution: Proposal: Resolution: Proposal: Resolution: Proposal: 3rd Term 5th Meeting December 13, 2023 20th Term 5th Meeting December 13, 2023 Resolution: Proposal: Resolution: in Proposal to change the position of Chief Accounting Officer and Manager. Proposal passed. Proposal the to participate subscription for new shares issued through a cash capital increase in 2023 by Winbond Electronics Corporation. Proposal passed. Proposal for Jiangyin Walsin Steel Cable Co., Ltd., a subsidiary of the Company, to sell its factories and office premises to another subsidiary of the Company, Jiangyin Walsin Specialty Alloy Materials Co., Ltd., for a transaction price of RMB 62,190,000. Proposal passed. Proposal to extend a non-revolving credit facility totaling US$50,000,000 to a U.S. subsidiary of the Company, Borrego Energy Holdings, LLC, and its subsidiary, Borrego Energy, LLC. Proposal passed. Walsin Info-Electric Corp., a subsidiary of the Company, proposes to extend a non-revolving of facility credit NT$100,000,000 to the Company. The proposal was passed. Walsin (China) Investment Co., Ltd., a subsidiary of the Company, proposes to extend a non-revolving credit facility of RMB 190,000,000 to XiAn Walsin Metal Product Co., Ltd. The proposal was passed. Walsin a Singapore Pte. subsidiary of the Company, proposes to extend a non-revolving credit facility of USD 75,000,000 to its Indonesian subsidiary, PT. Sunny Metal Industry. Proposal passed. Cogne Acciai Speciali S.p.A., an Italian subsidiary of the Company, proposes to provide an endorsement and guarantee for its Swedish subsidiary, Degerfors Long Products AB. Proposal passed. Cogne Acciai Speciali S.p.A., an Italian subsidiary of the Company, proposes to extend a non-revolving credit facility of GBP 1,920,000 to its UK subsidiary, Special Melted Products Limited. Proposal passed. Dongguan Walsin Wire & Cable Co., Ltd., a subsidiary of the Company, proposes to acquire a 60% equity interest in Hangzhou Walsin Power Cable Co., Ltd. Proposal passed. Walsin (China) Investment Co., Ltd., a subsidiary of the Company, proposes to extend a revolving credit facility of RMB 80,000,000 to Hangzhou Walsin Power Cable Co., Ltd. Proposal passed. Ltd., Independent Directors' Dissenting Opinions, Reservations or Significant Recommendatio ns None None None None None None None None None None None Company’s Handling of Audit Committee Member’s Opinion All of the Directors present approved the proposal unanimously. All of the Directors present approved the proposal unanimously. All of the Directors present approved the proposal unanimously. All of the Directors present approved the proposal unanimously. All of the Directors present approved the proposal unanimously. All of the Directors present approved the proposal unanimously. All of the Directors present approved the proposal unanimously. All of the Directors present approved the proposal unanimously. All of the Directors present approved the proposal unanimously. All of the Directors present approved the proposal unanimously. All of the Directors present approved the proposal unanimously. 45 Corporate Governance Report B. Except for the foregoing items, the items that were not approved by the Audit Committee but were resolved by more than two-thirds of all directors: No such situation. (2) Independent directors recusing themselves from conflicts of interest: Item Term Date Name of Director Content of Proposal 1 2nd Term 26th Meeting February 20, 2023 Ming-Ling Hsueh Proposal to lift the non- competition ban for the Company’s Directors under Article 209 of the Company Act. December 31, 2023 Reason for Recusal Due to Conflict of Interests Participation in Voting Personal conflict of interests Recusal from voting required by law (3) Communication between independent directors, the chief internal auditor and CPAs: A. Communication policy between independent directors, chief internal auditor and CPAs: (A) The CPAs are invited to attend Audit Committee meetings at least twice a year and to report to the Audit Committee on the review or audit results of our Company’s and its affiliates’ financial statements and the internal control audit status. The CPA shall fully communicate any material adjustments to entries or any amendments to laws and regulations. (B) If necessary, a communication meeting may be called at any time with the CPAs. (C) The chief internal auditor shall meet with the independent directors regularly in Audit Committee meetings at least once a quarter to report on the internal audit implementation of our Company and the internal control operations. In case of major irregularities, the meeting may be called at any time. (D) The convener of the Audit Committee shall discuss the internal audit operation with the chief internal auditor every quarter non-periodically aside from the above regular meetings. B. Summary of communications between independent directors and CPAs for 2023: Independent directors have good communication with CPAs individually. Directors’ Recommendation None. None. None. Date Communication Highlights 2023/2/20 Audit Committee Meeting 2023/8/4 Audit Committee Meeting The CPAs have provided a description of the key audits of the stand-alone and consolidated financial statements for the year 2022 and the results of the audit. The CPAs provide an explanation of the audit results of the consolidated financial statements for the second quarter of 2023. 2023/12/22 Individual Communication Meeting The CPAs explained the scope, method and discovery of the annual audit for 2023 and discussed with the Audit Committee members on the key audit matters. Execution Result The stand-alone and consolidated financial statements for the year 2022 were approved by the Audit Committee and submitted for discussion at the 23th meeting of the Board of Directors of 19th term on February 24, 2023. The consolidated financial statements for the second quarter of 2023 were approved by the Audit Committee and reported to the 3th Meeting of the Board of Directors of 20th term on August 11, 2023. 1. Key audit matters for the 2023 financial statements were confirmed. 2. The engagement and assessment of the CPAs was submitted to the 6th meeting of the Audit Committee of third term on January 19, 2024 for discussion. 46 C. Summary of communications between independent directors and the chief internal auditor for 2023: Date 2023/2/20 Audit Committee Meeting Key Points of Communications Independent Directors’ Advice Report on audit implementation in the 4th quarter of 2022. None. 2023/4/28 Audit Committee Meeting Report on audit implementation in the 1st quarter of 2023. None. 2023/8/4 Audit Committee Meeting Report on audit implementation in the 2nd quarter of 2023. None. 2023/10/27 Audit Committee Meeting 1. Report on audit 1. None. implementation in the 3rd quarter of 2023. 2. Discussion of 2024 annual audit plan. 2. None. Follow-Ups and Results The report on audit implementation for the fourth quarter of 2022 has been passed by the Audit Committee and reported to the Board of Directors. The report on audit implementation for the first quarter of 2023 has been passed by the Audit Committee and reported to the Board of Directors. The report on audit implementation for the second quarter of 2023 has been passed by the Audit Committee and reported to the Board of Directors. 1. Report on audit implementation in the 3rd quarter of 2023 has been passed by the Audit Committee and reported to 2. the Board of Directors. 2. 2024 annual audit plan has been passed by the Audit Committee and submitted to the Board of Directors for discussion. 2023/12/22 Individual Communication Meeting Between Independent Directors and Chief Internal Auditor 1. Major work results in 2023. 2. Work objectives and key 1. None. 2. None. 1. None. 2. None. points for 2024. 3. Report on the implementation of the computer audit project 3. Continue to execute the project according to the planned schedule and deepen the implementation of computer audit tools. auditors with computer skills.. 3. It merits praise that the implementation of this project showed a great progress compared with the previous year. The use of computerized audit tools shall be strengthened in the future in order to enhance the audit value. 47 Corporate Governance Report (3) Differences between our corporate governance and the Corporate Governance Best-Practice Principles for TWSE- and TPEx-listed Companies and reason(s): Deviations from Corporate Governance Best- Practice Principles for TWSE-/ TPEx- listed Companies and Reason(s) In line with the Corporate Governance Best- Practice Principles for TWSE- TPEx- listed Companies In line with the Corporate Governance Best- Practice Principles for TWSE- and TPEx-listed Companies. Actual Governance (Note 1) Appraisal Items Yes No Summary Description 1. Has the company set and Yes disclosed the principles for practicing corporate governance according to the Corporate Governance Best- Practice Principles for TWSE- TPEx-listed Companies? 2. The Company's ownership structure and shareholders’ equity (1) Has the company Yes implemented a set of internal procedures to handle shareholders' suggestions, queries, disputes and litigations? (2) Has the company had a Yes list of major shareholders who actually control the company or a list of ultimate controller of such shareholders? The Company has formulated the Corporate Governance Principles and Practice according to the "Corporate Governance Best-Practice Principles for TWSE- TPEx-listed Companies", which were amended as approved by the Board of Directors in 2022 and were disclosed on the Company's website. https://www.walsin.com/wp- content/uploads/2023/03/rule13_20230224TC.pdf (1) Our Shareholders Service & Contact Office is in charge of handling various shareholder recommendations, queries and disputes. The Company also provides related contact details on the Company's website and in the annual report and has set up a stakeholder mailbox to collect stakeholders' questions and suggestions. (2) The Company periodically discloses the list of ultimate controllers of its principal shareholders pursuant to the laws and regulations. (3) Has the company Yes (3) 1. The Company has drafted rules governing the established and implemented risk control/management and firewall mechanisms between the company and its affiliated firms? supervision of its subsidiaries, which have been approved by the Board. 2. All of the Company's affiliates are subsidiaries; the Company directly or indirectly retains at least 50% of their shares. Business dealings with affiliates are treated as transactions with third parties. 3. The Company has drawn up rigorous rules governing the lending, the endorsement/ guarantees as well as the management of disposal/acquisition of assets and derivatives transactions to/for/with its affiliates. (4) Has the company set Yes (4) internal regulations that prohibit the company's personnel from taking advantage of information that has not been disclosed to the public to purchase or sell securities? In order to establish an effective handling and disclosure mechanism for major internal information processing operations, so that unauthorized information leakage can be avoided, consistency and accuracy of information disclosed by the Company to the public can be maintained and insider trading can be prevented, the Company has established the "Procedures for Major Internal Information Processing Operations." Such procedures were last revised on November 4, 2022 and renamed as "Procedures for Handling Internal Material Information and Prevention of Insider Trading" to strengthen the corporate culture of prevention of insider trading and the control measures against insider stock trading. The Company's Directors' and Managerial Officers' Code of Ethical Conduct was amended on August 4, 2020. Such code contains regulations pertaining to the prohibition of insider trading pursuant to the Company's internal regulations and the Securities and 48 Actual Governance (Note 1) Appraisal Items Yes No Summary Description Deviations from Corporate Governance Best- Practice Principles for TWSE-/ TPEx- listed Companies and Reason(s) 3. The composition and duties of the Board (1) Has the Board of Yes (1) Directors devised a policy and concrete management objectives for a more diverse composition of the Board? If so, has the plan been implemented? In line with the Corporate Governance Best- Practice Principles for TWSE- and TPEx-listed Companies. Exchange Act. Relevant regulations are uploaded as an electronic copy to the Company's electronic bulletin board of its internal regulations for the perusal by relevant personnel. The Company periodically conducts internal training on ethical management (anti-corruption) and prevention of insider trading (among others) and educates its directors and employees on relevant policies and the importance of delivering integrity and compliance. In addition, some educational and awareness-raising articles on compliance with the regulations prohibiting insider trading have been published on the Company's internal education and training platform "Walsin Liwha College", so that all managers may read and understand information related to ethical management. The details thereof have been disclosed on the Company's website (in the Risk Management_ Prevention of Insider Trading Section): https://www.walsin.com/investors/corporate- governance/#pills-information-security In accordance with Article 20 of the Company's Corporate Governance Best Practice Principles and the "Principles of Election of Board Members and Managers and Guidelines for Continuing Education and Succession Planning" established by the Company, the Board of Directors will implement the objectives of diversity and independence in terms of expertise, experience and gender required for Board members, and will continue to invite appropriate candidates to join the Board of Directors in accordance with the above objectives in order to strengthen the balance of the Board of Directors in response to the Company's development strategies and changes in the internal and external environment. In order to achieve the desired objectives of corporate governance, the Board of Directors of the Company is composed of members from the management team, managers of relevant industries and professionals with financial, business and accounting backgrounds, who effectively perform the duties of Board members with different fields and work backgrounds. These duties include establishing and maintaining the Company's vision and values, assisting in promoting corporate governance and strengthening management, overseeing and evaluating the implementation of management policies and operational plans, and being responsible for the Company's overall economic, social, and environmental operations to enhance corporate governance and corporate value from the perspective of stakeholders. The Company focuses on its board diversity and therefore has a total of 11 directors on the Board of Directors of the 20th term, including one female Director. The Company also values corporate governance and thus has four Independent Directors (one in excess of the number required by its articles of incorporation, which is three), accounting for 36% of 49 Corporate Governance Report Actual Governance (Note 1) Appraisal Items Yes No Summary Description Deviations from Corporate Governance Best- Practice Principles for TWSE-/ TPEx- listed Companies and Reason(s) all directors of the Company. Independent Directors were re-elected for fewer than 3 terms. Among the Directors, 5 are aged 65 years and older, 5 are aged 55 to 64, and 1 are under 55 years old. There are 1, 4, and 6 director(s) in the age group of above 70, 65-69, and 60-64. The Company has built its strength by being focused on the wire and cable, stainless steel, commodity, and commercial real estate fields and become a model of business excellence moving towards the manufacturing service industry. If we look at the list of the Board of Directors of the 20th term, Yu-Lon Chiao, Chairman, has been working in the business field of the Company for a long time and has a good understanding of the operation and development of the industry, with an open-minded leadership style that encourages adoption of suggestions; Director Yu- Cheng Chiao, Director Yu-Heng Chiao, and Director Yu- Chi Chiao have joined the management team of the Company and therefore are familiar with the organization and business operation of the Company and are good at operation management and investment judgment; Andrew Hsia, Director, comes from a diplomatic background with an international perspective and therefore has a good grasp of the conditions of the Southeast Asian market and can fully assist the Company in making relevant investment decisions; Director Li-Chin Ku is familiar with the industry, manufacturing, and sale of passive components and therefore has operational management experience and expertise; and the female Director, Patricia Chiao, specializes in operational management, investment judgment and human resources. The Company's Independent Directors have industry knowledge and an international market perspective: Independent Director Ming-Ling Hsueh specializes in finance, accounting and corporate governance; Independent Director Fu-Hsiung Hu has expertise and experience in business administration, finance and securities, and credit information; Independent Director Tyzz-Jiun Duh is familiar with the general situation of the industry and commerce sector and the trends of economic development; and Independent Director Wei-Chuan Gau possesses professional capabilities in accounting, auditing, and information technology. The elite directors of the Company were selected from the industry to participate in major investment projects related to the Company's business, assist the Company's financial, accounting and corporate governance businesses according to their expertise, and assist the Company in making favorable decisions through their diverse experience, which gives rise to extensive and professional advice. Diversification of the Board of Directors' members has been implemented as shown in Note 2. Board of Directors of Diversification Policy were 50 Actual Governance (Note 1) Appraisal Items Yes No Summary Description Deviations from Corporate Governance Best- Practice Principles for TWSE-/ TPEx- listed Companies and Reason(s) Yes (2) (2) In addition to establishing a Compensation Committee and an Audit Committee, which are required by law, is the company willing to also voluntarily establish other types of functional committees? disclosed on the Company's website:(https://www.walsin.com/investors/corporate -governance/#pills-board-of-directors)。 In addition to the committee established according to the laws, the Company further set up the Sustainable Development Committee and the Nomination Committee. 1. On November 1, 2019, the 17th meeting of the Board of Directors of the 18th term resolved to establish the Sustainable Development Committee. On May 19, 2023, the Board of Directors appointed six members to the Sustainable Development Committee of the third term, in which Independent Director Tyzz-Jiun Duh acts as the Convener, and under which ethical management, environmental safety and health management, green operations, customer service and suppliers management and promotion and employee relations and social care promotion centers were established. The Sustainable Development Committee reviews the annual plans of each promotion center, monitors and tracks the implementation results of each promotion center, and revises its charter. 2. The Nomination Committee was established on August 6, 2021, with Independent Director Fu-Hsiung Hu as the Convener. On May 19, 2023, the Board of Directors appointed five members to the Nomination Committee of the second term, with Wei-Chuan Gau, Independent Director, serving as the Convener. The duties of the Nomination Committee include setting standards for the diversity of expertise, experience, gender and independence required of Board members, and identifying, reviewing and nominating candidates for election as directors. (3) Has the company Yes established methods for appraising the performance of the Board of Directors as well as actual procedures for executing the appraisals? If so, has the company executed appraisals of the performance of the Board annually? Are the results of the performance evaluations reported to the Board of Directors and used as a reference for individual directors' remuneration and nomination for reappointment? (3) In order to improve our corporate governance, the Company's Regulations for the Board of Directors' Performance Appraisal stipulates that the Board of Directors of the Company shall conduct a performance evaluation at least once a year using questionnaires for self-evaluation, that the evaluation of the Board of Directors shall be evaluated at least once every three years by an external professional and independent organization or a team of external experts and scholars, and that the performance evaluation of the current year shall be conducted at the end of the year, so as to measure the directors' strategic direction in leading the Company and to oversee the operation of the Company's management in order to provide board performance and increase long-term shareholder value. The Company engaged the Taiwan Corporate Governance Association in September 2021 for the second time to evaluate the effectiveness of the Company's Board of Directors, and the Company obtained professional, objective evaluation results and suggestions through the guidance of, and idea exchanges with, the evaluation members. Such results and suggestions were used as a reference in the 51 Corporate Governance Report Actual Governance (Note 1) Appraisal Items Yes No Summary Description Deviations from Corporate Governance Best- Practice Principles for TWSE-/ TPEx- listed Companies and Reason(s) compensation of individual directors and nominations for reappointment. The Company conducted its own internal evaluation for 2023 in December 2023 and reported to the Board of Directors on January 26, 2024. The result has been published on the Company's website, and the results of these evaluations will be used as a reference in individual directors' compensation and nominations for reappointment, for the purpose of continuous refinement and optimization of the functions of the Board of Directors.( Note 3) (4) Has the company Yes (4) Before we appoint a new CPA annually, its periodically evaluated the level of independence of the CPA? independence and competency shall be examined by the Audit Committee and Board of Directors for approval by resolution. In addition, we request the CPA to provide an "Impartiality and Independence Statement" and "Audit Quality Indicators (AQIs)"each year. We have to confirm that except for the expenses paid to the CPA for certifying our financial statements and for handling certain financial, tax affairs, we have no other business dealings with the CPA and that their family members have not violated the independence requirements. In addition, by referencing the AQI information, we confirmed that both the CPAs and the CPA firm have audit experience and training hours that are superior to the industry average before proceeding with the appointment of the CPAs and the review of their fees. The evaluation results for the most recent fiscal year were discussed and approved by the Audit Committee on January 19, 2024, and were subsequently reported and resolved by the Board of Directors on January 26, 2024. For the assessment of the CPAs' independence and suitability, please refer to Note 4. In line with the Corporate Governance Best- Practice Principles for TWSE- and TPEx-listed Companies. 4. Has the TWSE- or TPEx-listed Yes 1. The Company appointed a Head of Corporate company designated a proper number of competent staff in charge of the corporate governance- related affairs (including but not limited to providing information for the Directors and Supervisors to execute their duties, assisting the Directors and Supervisors with legal compliance, handling the affairs related to the Board meetings and the Shareholders Meeting as prescribed by law, preparing the minutes of the Board meetings and the Shareholders Meeting, etc.)? Governance as resolved by the Board of Directors on June 12, 2019. The key responsibilities of the Head of Corporate Governance include the meeting affairs in connection with board meetings, preparation of such meetings' minutes, assistance for Directors with the onboarding and continuing education, provision of information required for the business execution by Directors, assistance for Directors with legal compliance and other matters set out in the Articles of Incorporation of the Company or contracts. 2. Vice President of the Company, Hueiping Lo, is currently the Head of Corporate Governance. She has more than three years of experience as a financial officer of a public company and meets the statutory qualifications as the head of corporate governance. 3. On June 12, 2019, the Company's Board of Directors also resolved to approve the "Standard Operating Procedures for Handling Directors' Requests" (which was lastly updated on April 9, 2021) pursuant to the rules, through the establishment of which the Directors have 52 Actual Governance (Note 1) Appraisal Items Yes No Summary Description Deviations from Corporate Governance Best- Practice Principles for TWSE-/ TPEx- listed Companies and Reason(s) appropriate operating procedures for handling information necessary for the performance of their business. 4. The business execution for the year 2023 are explained as follows: i. To manage the meetings of the Board of Directors and related committees, and to strengthen the procedures of meetings and recusal of interests. ii. To provide the directors with the information necessary for the execution of their business within the statutory period, to remind the directors of the relevant laws and regulations that they should comply with in the execution of their business or after the resolution of the board of directors, and to follow up on the situation and progress of the recommendations or opinions of the directors after the meeting. iii. To revise and amend the important regulations of the Company by adapting to the latest laws and regulations related to the Company's business field and corporate governance. iv. Based on the characteristics of the industry where the Company is operating, to handle matters related to directors' further education and regularly forward information on relevant external further education programs to assist directors in implementing the diversified education mechanism. v. To provide directors with the necessary corporate information, maintain smooth communication between directors and business executives, and assist in arranging communication meetings between independent directors and the chief audit executive and accountants to facilitate the execution of business by independent directors. vi. To conduct performance evaluations of the Board of Directors and functional committees. vii. To evaluate the purchase of appropriate directors and officers (D&O) liability insurance. viii. To regularly present to the Board of Directors the international trends in corporate governance and the latest developments in corporate governance laws and regulations. ix. To conduct orientation sessions for new directors, introducing them to the industry, operational status, job responsibilities, and other important matters through interviews with the heads of various departments within the Company. The Company has been maintaining open communication channels with interested parties that include customers, shareholders, banks it has business dealings with, employees, suppliers, communities, competent authorities, or persons so connected with the Company. Communication channels can be found on the Company's internal and external websites as well as in its annual reports, to facilitate understanding of the Company's CSR issues that interested parties are concerned about, so that appropriate responses can be made. The Company has amended in 2020 the "Procedures for Interested Parties to Submit Complaints and In line with the Corporate Governance Best- Practice Principles for TWSE- and TPEx-listed Companies. 53 Yes 5. Has the company established channels for communicating with interested parties (including but not limited to shareholders, employees, customers, suppliers, etc.), set up a dedicated interested parties area on the company's website, as well as appropriately responded to important CSR issues that Corporate Governance Report Actual Governance (Note 1) Appraisal Items Yes No Summary Description Deviations from Corporate Governance Best- Practice Principles for TWSE-/ TPEx- listed Companies and Reason(s) interested parties are concerned about? 6. Has the company appointed a professional shareholders service agency to handle affairs related to the Shareholders Meeting? Recommendations", through which interested parties can communicate with the Company’s supervisory unit directly, propose constructive advice and file complaints. The Company has a contact channel on its website designated to stakeholders; a mailbox also exists on the employee portal site, thus providing internal and external personnel with a means to make suggestions and file complaints to the Company. Information received shall be handled by the Auditing Office. The Company regularly reports to the Board of Directors on its communications with various interested parties on an annual basis starting from 2019. The communications in 2023 have been reported to the Board of Directors at the board meeting on May 5, 2023. Details of both communications were disclosed on the Company's website: https://www.walsin.com/wp- content/uploads/2023/09/Communication_with_Stakehold ers_TC2023v2.pdf No The Company has handled such affairs by itself since March 1993. 7. Information disclosure (1) Has the company established a corporate website to disclose information regarding the company's financial, business and corporate governance statuses? (2) Has the company adopted other ways to disclose information (e.g., maintaining an English- language website, appointing responsible people to handle corporate information collection and disclosure, appointing spokespersons, webcasting investor’s conferences, etc.)? Yes (1) Please visit Walsin Lihwa Corporation's Chinese/English website: https: //www.walsin.com Yes (2) The Company has a dedicated department for collecting its information and periodically updating its website. The Company has implemented one- spokesperson policy. It has also established the "Procedures for Handling Internal Material Information and Prevention of Insider Trading " that requires management as well as employees to properly keep financial as well as business secrets. We also require that personnel follow the "Corporate Governance Principles and Practices". Any change of our spokesperson or deputy spokespersons shall immediately be made public. 54 Such matters are handled by the Company’s shareholder service. Matters related to shareholders’ meetings are conducted in accordance with the Company’s Articles of Incorporation and laws and regulations, so that shareholders’ meetings are convened in a legal, valid and safe fashion. In line with the Corporate Governance Best- Practice Principles for TWSE- and TPEx-listed Companies. Actual Governance (Note 1) Appraisal Items Yes No Summary Description Deviations from Corporate Governance Best- Practice Principles for TWSE-/ TPEx- listed Companies and Reason(s) The Company's website regularly discloses major announcements, transactions with key stakeholders and investors conferences at: https://www.walsin.com/investors/shareholder/#pills- important-announcement (3) Does the Company Yes (3) 1. announce and report its annual financial report within two months after the end of the fiscal year, and announce and report its first, second and third quarter financial report and operations for each month well in advance of the required deadline? In order for investors to obtain adequate and accurate financial information in a timely manner, the Company's annual financial report is submitted to the Audit Committee and the Board of Directors for approval within two months after the end of the year, and the financial report is announced on the Market Observation Post System on the date of approval by the Board of Directors; the financial report for the first, second and third quarter is submitted to the Audit Committee and the Board of Directors for approval one week before the statutory announcement deadline, and the financial report is announced on the Market Observation Post System on the date of report to the Board of Directors. 8. Has the company had other information that is helpful for understanding the status of corporate governance (including but not limited to employee rights and interests, investor relations, supplier relations, rights of interested parties, further education sought by Directors and Supervisors, implementation of risk management policies and risk evaluation standards, implementation of customer policies, the taking out of liability insurance for Directors and Supervisors)? 2. The Company's operations for each month are also fully disclosed on the Company's website and the Market Observation Post System before the statutory deadline. Yes 1. Please refer to "(5) Our Fulfillment of Sustainable Development and differences between Our Fulfillment of Sustainable Development and the Development Best Practice Principles for TWSE/TPEx Listed Companies and reason(s) therefor " and "(6) Performance of ethical operations and differences from the Sustainable Development Best Practice Principles for TWSE/TPEx Listed Companies and the reasons therefor" under 4. Corporate Governance Status in III. Corporate Governance Report of this Annual Report for information concerning employee rights and interests, employee care, investor relations, supplier relations, rights of interested parties, and the implementation of the customer policies. 2. Please refer to "(8) Other important information helpful for improving understanding of the governance of the company" under 4. Corporate Governance Status in III. Corporate Governance Report and "6. Risk Analysis and Assessment for the Following Items as of the Latest Year and up to the Date of Printing of the Annual Report" under VII. Review of Financial Conditions, Financial Performance, and Risk Management of this Annual Report for the information regarding the implementation of directors' and supervisors' continuing education, risk management policies and risk measurement standards. 3. The Company's purchase of D&O liability insurance has been disclosed to the Market Observation Post System. In line with the Corporate Governance Best- Practice Principles for TWSE- and TPEx-listed Companies. 9. With respect to the results of the annual Corporate Governance Evaluation most recently issued by the Corporate Governance Center of Taiwan Stock Exchange, please describe the improvements and provide priority and measures to enhance those matters that have not yet been improved. 1. With respect to the 2022 Corporate Governance Evaluation results, our improvements in 2023 are as follows: We promoted ISO 27001 Information Security Management System (ISMS) and completed SGS third party validation to implement our commitment to information security by way of PDCA. Improvement Priorities and Measures: The revision of the "Risk Management Policy and Procedures" clearly 2. 55 Corporate Governance Report Appraisal Items Actual Governance (Note 1) Deviations from Corporate Governance Best- Practice Principles for TWSE-/ TPEx- listed Companies and Reason(s) specifies the objectives of risk management, management procedures, and control mechanisms. At the same time, emerging risks are incorporated into the risk management system, focusing on global environmental changes and development trends. A comprehensive consideration of the business development and future outlook of the Company is undertaken, with emerging risks being identified regularly every year. Summary Description Yes No Note 1: The Company shall provide explanations in the summary description box, regardless of whether actual governance is ticked "Yes" or "No." Note 2: Diversification of the Board of Directors' members has been implemented as follows. Diversification items Title Name Gender m a n a g e m e n t i A d m n i s t r a t i v e M a k i n g i L e a d e r s h p a n d D e c i s i o n - I n d u s t r y k n o w e d g e l l a w i F n a n c e / a c c o u n t i n g a n d I n d u s t r i a l t e c h n o o g y l M a r k e t i n g P r o c u r e m e n t C o m m e r c e a n d T r a d e I n t e r n a t i o n a l I n f o r m a t i o n t e c h n o o g y l e n v i r o n m e n t a l p r o t e c t i o n l R e n e w a b e e n e r g y a n d R i s k M a n a g e m e n t V V V V V V V V V V V M V V V V V V V V V V V V V V Fu-Hsiung Hu V V V V V V V V V V V V V V V V V V V V V Ming-Ling Hsueh M F M M M M M Yu-Lon Chiao Patricia Chiao Yu-Cheng Chiao Yu-Heng Chiao Yu-Chi Chiao Andrew Hsia Li-Chin Ku Chairman Vice Chairman Director Director Director Director Director Independent Director Independent Director Independent Director Independent Director Note 3: No more than 1% of the earnings of the Company for a given year may be distributed to its directors and managers as their remuneration for such year in accordance with Paragraph 1, Article 25 of the Company's Articles of Incorporation. In order to regularly assess the remuneration of directors and managers, directors and managers are remunerated according to their degree of participation in the Company's operations and personal performance, and in accordance with the Company's "Rules Governing the Compensation of Directors and Functional Members" and "Rules Governing the Evaluation of Manager's Performance and Management of Compensation". Such remuneration will be further calculated and reasonably paid in a proportion of such earnings by taking into consideration the evaluation items specified therein, such as the directors' individual professional input and performance, the manager's business strategy and medium- and long-term strategic plans, and how the policy plans and performance indicators at all levels are carried out in accordance with the current year's operating objectives. In addition, the director and manager remuneration system will be reviewed from time to time based on the actual operating status and relevant laws and regulations. Wei-Chuan Gau Tyzz-Jiun Duh M M M V V V V V V V V V V V V V V V V V V V V V V V V 56 Note 4: Items for assessment of the CPA's independence Appraisal Items 1. The CPA and/or any of his/her family members has/have no direct or indirect significant financial interest in the Company. 2. The CPA and/or any of his/her family members has/have no financing or guarantee relations with the Company or its directors. 3. The CPA and/or any of his/her family members has/have no commercial relations with the Company, or any of its directors or managers. 4. Currently or in the most recent two years, the CPA does/did not hold any posts in the Company, such as the director, manager or any post which significantly influences the auditing work, neither did company promise its CPA any foregoing post. 5. At the time of the audit, no family member of the CPA held any position as a director or manager of the Company or that which had any direct and material influence on the audit. 6. During the audit period, no family member of the CPA held the posts in the Company, such as the director, managers or any post which directly and significantly influences the audit work. 7. The CPA did not receive from the Company or its directors, managers, or major shareholders any offer or gift, the value of which exceeds the usual social etiquette standards. 8. The CPA's audit regarding independence/conflicts of interests without any violation of the independence or any unsettled conflict of interests. the necessary procedures implemented team has Results Compliant with Independence? True True True True True True True True Yes Yes Yes Yes Yes Yes Yes Yes Note: Family members: They mean the CPA's spouse (or cohabitant), minors or other dependents. Audit period: It usually begins from the date on which the members of the audit team start auditing and ends on the date when the audit report is issued. If the audit case is cyclical, the cycle period belongs to the audit period. Items Evaluated under Audit Quality Indicators (AQIs) Five major facets AQIs Focus of measurement Whether CPAs meet the suitability or independence requirement Professionalism Audit Experience Training hours Attrition rate Professional support Quality control CPA workloads Audit input Engagement Quality Control Review Quality control support capabilities Independence Non-audit services Familiarity with customer Supervision External inspection deficiencies and sanctions The competent authority issues a letter demanding improvement Innovative planning or initiatives Whether CPAs and senior auditors have sufficient audit experience to carry out the audit work Whether CPAs and senior auditors have received sufficient education and training every year to continuously acquire professional knowledge and skills Whether the CPA firm maintains sufficient senior human resources Whether the CPA firm has sufficient professionals to support the audit team. Whether the workloads of CPA are too heavy Whether audit team members have made inputs appropriately at each stage of the audit Engagement Quality Control Review (EQCR) is a review of whether CPAs have devoted sufficient hours to the audit case Whether the CPA firm has sufficient quality control manpower to support the audit team The impact of the proportion of annual fees for non-audit services on the independence of the CPA firm and its affiliates The impact of the cumulative number of years of audit of the customer's annual financial reports on the independence of the CPA firm Whether the CPA firm carries out its quality control and audit of the customer in accordance with relevant laws and regulations Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Innovation capabilities Note 5: The further education received by Independent Directors and other Directors is disclosed in " (8) Other important information helpful for improving understanding of the governance of the company" in this annual report. The CPA firm commits to improving audit quality, including the firm's innovation capability and planning Yes Post-Period Note: Ms. Patricia Chiao, Vice Chairman, resigned on March 11, 2024. 57 Corporate Governance Report (4) Composition, duties and operation of the Compensation Committee and the Nomination Committee: 1. Compensation Committee On September 27, 2011, the Company established the Compensation Committee and drew up the "Regulations Governing the Organization of the Compensation Committee". The Compensation Committee of the fourth term has four members and is comprised of four independent directors. The Committee is aimed at helping the Board establish and periodically review the performance appraisal of Directors and managers and the remuneration policy, system, standards and structure, as well as periodically review and determine the remunerations for Directors and managers. (1) Information of the members of the Compensation Committee Title Name Criteria Independent Director (Convener) Independent Director Independent Director Independent Director Ming-Ling Hsueh Fu-Hsiung Hu Tyzz-Jiun Duh Wei-Chuan Gao Qualifications and Experience Independence Number of Other Public Companies in which the Member also Serves as an on the Compensation Committee Please refer to the "Disclosure of Professional Qualifications of Directors and Independence of Independent Directors" form on pages 16 to 18 3 1 3 1 (2) Information on Operation of the Compensation Committee A. The Company's Compensation Committee operates in accordance with the Company's Compensation Committee Charter and holds at least two regular meetings each year. B. There are 4 members of the Compensation Committee of the Company. C. Term of office of the members of the 4th term: It started on August 4, 2020 and ended on May 18, 2023. Term of office of the members of the 5th term: It started on May 19, 2023 and will end on May 18, 2026. The Compensation Committee met three times in 2023. The attendance records of the committee members in 2023 are as follows: Title Convener Member Member Member Convener Member Member Member 4th Term 5th Term Name King-Ling Du Ming-Ling Hsueh Shiang-Chung Chen Fu-Hsiung Hu Ming-Ling Hsueh Fu-Hsiung Hu Tyzz-Jiun Duh Wei-Chuan Gao Attended in Person 2 2 2 2 1 1 1 1 Attended by Proxy 0 0 0 0 0 0 0 0 Attendance Rate (%) 100% 100% 100% 100% 100% 100% 100% 100% D .The matters for discussion and resolution by the Compensation Committee and the Company’s handling of the opinions of the members of the Compensation Committee: Compensation Committee Meeting Number and Date Board of Directors Meeting Number and Date 4th Term 9th Meeting January 6, 2023 19th Term 22nd Meeting January 10, 2023 Proposals and Resolutions Proposal for 2022's managerial performanc evaluation and bonus compensation Proposal for performance bonuses for the Chairman and Vice Chairman of the Company for 2022 Setting of objectives for 2023 the Company's managers' Company’s Handling of Compensation Committee Member’s Opinion Compensation Committee: The relevant proposals were passed with the consent of all members present and 58 Compensation Committee Meeting Number and Date 4th Term 10th Meeting February 20, 2023 Board of Directors Meeting Number and Date 19th Term 23th Meeting February 24, 2023 Proposals and Resolutions Proposal for distribution of the Company's directors' and managers' remuneration for 2022 5th Term 1st Meeting May 29, 2023 20th Term 3rd Meeting August 11, 2023 Nomination and election of the Convener of the Compensation Committee of the fifth term Company’s Handling of Compensation Committee Member’s Opinion submitted to the Board of Directors for resolution. Board of Directors: All of the Directors present approved the proposals unanimously. (3) Other details that need to be recorded: Decisions made by the Compensation Committee for which certain committee members were against or had reservations that were recorded or expressed via written statements: None (4) Scope of Duties of the Compensation Committee A. The Compensation Committee shall exercise the care of a good administrator to faithfully perform the following duties and present its recommendations to the Board of Directors for discussion. (A) Periodically reviewing the Compensation Committee Charter and making recommendations for amendments. (B) Establishing and periodically reviewing the annual and performance goals for the directors and managers of the Company and the policies, systems, standards, and structure for their compensation, as well as disclosing the standards for evaluating their performance in the annual report. (C) Periodically assessing the degree to which performance goals for the directors and managers of the Company have been achieved, and setting the types and amounts of their individual compensation, as well as disclosing the director and manager compensation in the annual report. B. The Committee shall perform the duties under the preceding paragraph in accordance with the following principles: (A) Ensuring that the compensation arrangements of the Company comply with applicable laws and regulations and are sufficient to recruit outstanding talents. (B) Performance assessments and compensation levels of directors and managerial officers shall take into account the general pay levels in the industry, as well as the reasonableness of the correlation between the individual's performance and the Company's operational performance and future risk exposure. (C) There shall be no incentive for the directors or managerial officers to pursue compensation by engaging in activities that exceed the risk appetite of the Company. (D) For directors and senior managerial officers, the percentage of remuneration to be distributed based on their short-term performance and the time for payment of any variable compensation shall be decided with regard to the characteristics of the industry and the nature of the Company's business. (E) Reasonableness shall be taken into account when the contents and amounts of the compensation of the directors, supervisors, and managerial officers are set. It is not advisable for decisions on the compensation of the directors, supervisors, and managerial officers to run counter to financial performance to a material extent. It is not advisable for said compensation to be higher than that in the preceding year in the event of a material decline in profits or of long-term losses. If it is still higher than that in the preceding year, the reasonableness shall be explained in the annual report and reported at a shareholders' meeting. (F) No member of the Committee may participate in discussion and voting when the Committee is deciding on that member's individual compensation. 59 Corporate Governance Report (G) The Committee shall explain at the meeting the remuneration of any of its members that is to be discussed at such meeting. Such members shall not join the discussion and vote if it may do harm to the interests of the Company, and shall recuse themselves from the discussion and voting, and shall not exercise their voting rights on behalf of other members. "Compensation" as used in the preceding two paragraphs includes cash compensation, stock options, profit sharing and stock ownership, retirement benefits or severance pay, allowances or stipends of any kind, and other substantive incentive measures. Its scope shall be consistent with the compensation for directors and managerial officers as set out in the Regulations Governing Information to be published in Annual Reports of Public Companies. If the decision-making and handling of any matter relating to the remuneration of directors and managerial officers of a subsidiary is delegated to the subsidiary but requires ratification by the board of directors of the Company, the Committee shall be asked to make recommendations before the matter is submitted to the board of directors for deliberation. 2. Nomination Committee (1) The Committee shall be composed of at least three directors elected by the Board of Directors, in which a majority of the independent directors shall participate. (2) The Committee, under the authority of the Board of Directors, shall faithfully perform the following duties and responsibilities with the due care as a good administrator and shall submit its recommendations to the Board of Directors for discussion: A. To establish the criteria of diversity and independence in terms of professional knowledge, technology, experience and gender required for board members and managers, and to identify, review and nominate candidates for directors and managers accordingly. B. To establish the organizational structure of each functional committee and to review the establishment and amendment of the organizational rules and regulations of each functional committee. C. To establish and regularly review the directors' continuing education program and succession plans for directors and managers. D. To review the establishment and amendment of the Company's corporate governance and board of directors' operating rules and regulations. E. Other matters to be dealt with by the Committee as resolved by the Board of Directors. (3) Professional qualifications and experience of the members of the Nomination Committee and its operations: There are 5 members in the Nomination Committee of the Company of this term. The term of office of the members: May 19, 2023 to May 18, 2026. For the professional qualifications and experience of the members of the current term, please refer to the table entitled "Disclosure of Professional Qualifications of Directors and Independence of Independent Directors" on pages 13 to 15. The Nomination Committee met five times in 2023, and the attendance of and the matters discussed by the members are as follows: Title Name Convener Wei-Chuan Gao Member Member Member Member Member Member Yu-Lon Chiao Ming-Ling Hsueh Fu-Hsiung Hu Tyzz-Jiun Duh King-Ling Du Shiang-Chung Chen Personally Attended 2 5 5 5 2 3 3 Attended by Proxy 0 0 0 0 0 0 0 Attendance rate (%) 100% 100% 100% 100% 100% 100% 100% Remark 1 Remark 1 Re-elected Re-elected Re-elected Remark 1 Remark 2 Remark 2 Remark 1: Independent Director Tyzz-Jiun Duh, and Independent Director Wei-Chuan Gau were newly elected for the 20th term. 60 Remark 2: Independent Directors whose terms expired and were discharged on May 19, 2023: Mr. King-Ling Du and Mr. Shiang-Chung Chen (4) Other matters that should be specified: The results of the discussions and resolutions of the Nominating Committee and the Company's handling of the opinions of the members in 2023: Term of the Nomination Committee Meeting Date Term of the Board of Directors Meeting Date 1st Term 6th Meeting 2023/01/06 19th Term 22nd Meeting 2023/01/10 1st Term 7th Meeting 2023/02/20 19th 23rd Meeting 2023/02/24 1st Term 8th Meeting 2023/05/05 19th Term 24th Meeting 2023/05/05 2nd Term 1st Meeting 2023/05/19 20th Term 1st Meeting 2023/05/19 Content of the Proposals and Resolutions Matters to be reported Proposal: Please review the Company's 2022 annual report on the self-evaluation of the performance of the Board of Directors and Functional Committees. (All directors present were informed.) Proposal: Proposal to amend some provisions of the Company's Board of Directors Meeting Regulations. Please review and approve the same. Resolution: The proposal was passed and sent to the Board of Directors for resolution. Company’s Handling of Opinions of the Nominating Committee All directors present were informed. All directors present agreed to pass the proposal. Proposal: Proposal to elect the Directors of the Company of the 20th term. Resolution: The proposal was passed and sent to the All directors present agreed to pass the proposal. Board of Directors for resolution. Proposal: Proposal to nominate the candidates for the Directors of the Company of the 20th term. Resolution: The proposal was passed and sent to the Board of Directors for resolution. Proposal: Proposal to amend the Company's Corporate Governance Best Practice Principles. Resolution: The proposal was passed and sent to the Board of Directors for resolution. All directors present agreed to pass the proposal. All directors present agreed to pass the proposal. Matters to be reported Proposal: Please review the results of the Company's All directors present were informed. 2022 annual corporate governance evaluation and the report on its 2023 annual improvement plan. (All directors present were informed.) Proposal: Proposal to elect the Convener of the Nomination Committee of the second term. Resolution: Mr. Wei-Chuan Gao was elected as the Convener of the Nomination Committee of the second term. All directors present agreed to pass the proposal. Proposal: Proposal to recommend the Convener of the Company’s Audit Committee of the third term. Resolution: It is recommended that Mr. Fu-Hsiung Hu All directors present agreed to pass the proposal. serve as the Convener of the Audit Committee of the third term. This proposal was submitted to the Board of Directors for resolution. Proposal: Proposal to recommend the members and Convener of the Compensation Committee of the fifth term of the Company. Resolution: It is proposed that Mr. Ming-Ling Hsueh, Mr. Fu-Hsiung Hu, Mr. Tyzz-Jiun Duh and Mr. Wei- Chuan Gao, Independent Directors, be members of the Compensation Committee of All directors present agreed to pass the proposal. 61 Corporate Governance Report Term of the Nomination Committee Meeting Date Term of the Board of Directors Meeting Date Company’s Handling of Opinions of the Nominating Committee Content of the Proposals and Resolutions the fifth term of the Company, and that Mr. Ming-Ling Hsueh serve as the Convener of the Compensation Committee of the fifth term. This proposal was submitted to the Board of Directors for resolution. Proposal: Proposal to recommend the members and Convener of the Sustainable Development Committee of the third term of the Company. Resolution: It is proposed that Mr. Yu-Lon Chiao, Director, All directors present agreed to pass the proposal. Ms. Patricia Chiao, Director, and Mr. Ming- Ling Hsueh, Mr. Fu-Hsiung Hu, Mr. Tyzz-Jiun Duh and Mr. Wei-Chuan Gao, Independent Directors, be members of the Sustainable Development Committee of the third term of the Company, and that Mr. Tyzz-Jiun Duh serves as the Convener of the Sustainable Development Committee of the third term. This proposal was submitted to the Board of Directors for resolution. 2nd Term 2nd Meeting 2023/11/03 20th Term 4th Meeting 2023/11/03 Proposal: Proposal to revise the relevant schedules of the Company's Regulations Governing Board Performance Evaluation. All directors present agreed to pass the proposal. Resolution: The proposal was passed and sent to the Board of Directors for resolution. (5) Our fulfillment of sustainable development: On November 1, 2019, during the 17th meeting of the Board of Directors of the 18th term, the Company resolved to establish the Sustainable Development Committee and on the same day formulated the Sustainable Development Committee Charter. The committee is composed of four to seven members, at least half of whom must be Independent Directors, with one member being elected by their peers to serve as the Convener. The current term of the committee has six members, and on June 1, 2023, a new position of Chief Sustainability Officer was created to lead the operations of the Sustainability Office and various promotion centers. The details regarding the management matters and organizational structure are as follows: 62 Duties of the Committees Department Sustainable Development Committee Ethical Management Promotion Center Environment, Safety and Health Promotion Center Green Operation Promotion Center Customer Service and Supplier Management Promotion Center Employees Relations and Social Care Promotion Center Sustainability Office Responsibility and function As the highest level of the sustainability organization within Walsin, it is a functional committee led by an Independent Director serving as the Convener. This committee is responsible for formulating policies, strategies, objectives, or management guidelines related to corporate sustainability. It also reviews the annual plans of various promotion centers, supervises and tracks the execution progress, outcomes, and related matters of these centers, and reports regularly to the Board of Directors. At the same time, it focuses on major issues of concern to interested parties, oversees communication plans, and approves the content of the sustainability report. In addition, in accordance with the corporate risk management framework, it identifies risks and opportunities related to sustainability and regularly monitor and control various significant risks. It is responsible for formulating and promoting policies and systems related to ethical management, integrating integrity and ethical values into the Company's business strategies, supervising and reporting the execution results, and evaluating the effectiveness of the preventive measures established to implement ethical management. It is responsible for formulating our environmental protection (including green energy and sustainable ecology and environment), safety, health, energy and carbon management policies and action plans, collaborating with the Human Resources Department to implement measures to protect mothers from illegal abuse, and overseeing and reporting on the implementation performance. It carries out the interdepartmental integration and implementation promotion on related issues above. It is responsible for formulating the green operation strategy, promoting circular economy, optimizing green manufacturing processes, exploring green produces and services with future value, and overseeing and reporting on the implementation performance. It carries out the interdepartmental integration and implementation promotion on related issues above. It is responsible for formulating policies and implementation plans for the improvement of customer service quality and supplier management, overseeing and reporting on the implementation performance. It carries out the interdepartmental integration and implementation promotion on related issues. It is responsible for promoting and building a safe and healthy working environment for employees to fully utilize their talents for reasonable compensation and benefits. It also promotes and deepen the Company's influence in the field of public welfare by actively participating in four major aspects, i.e., corporate citizens, caring for minorities, environmental protection and cultivation, and strengthening community relationships, so as to pay back to society with concrete, continuous action. The committee is tasked with managing meeting affairs, formulating and compiling the structure of the annual sustainability report, identifying sustainability issues that require attention, and developing corresponding action plans. It also assists in the planning and execution of sustainability development strategies, liaises, coordinates, and integrates operations related to various promotion centers, and manages and tracks the performance of sustainability issues across all aspects, while establishing continuous improvement plans, and reporting execution results and work plans to the committee. The Differences between Our Fulfillment of Sustainable Development and the Development Best Practice Principles for TWSE/TPEx Listed Companies and reason(s) therefor: Actual Implementation Promotion items Yes No Summary description I. Yes structure Has the Company established a governance to promote sustainable development and set up a dedicated (or part-time) unit to sustainable promote development, which unit is handled senior by management as authorized by the Board of Directors? And of term approved "Corporate 1. The Company's 7th meeting of the Board of the 17th the Directors of establishment Social the Responsibility Committee" in April 29, 2015, and the 17th meeting of the Board of Directors of the 18th term in November 1, 2019 approved the establishment and organizational charter of the "Sustainable Development Committee" by existing Social the merging Responsibility "Ethical Committee" Management Committee". The establishment and "Corporate and Deviation from Sustainable Development Best Practice Principles for TWSE/TPEx Listed Companies and reasons therefor In line with the Sustainable Development Best Practice Principles for TWSE/TPEx Listed Companies. 63 Corporate Governance Report Actual Implementation Promotion items Yes No Summary description Deviation from Sustainable Development Best Practice Principles for TWSE/TPEx Listed Companies and reasons therefor how does the board of directors supervise the same? the appointment of its members have been approved by the Board of Directors, and the is Sustainable responsible corporate sustainability strategies and visions to promote CSR-related work and management. Development for Committee developing 2. The Committee is composed of six members, with an Independent Director acting as the Convener. The Committee has five promotion centers, including the Ethical Management Promotion Center, the Environment, Safety and Health the Green Management Promotion Center, Operation Promotion Center, the Customer Service and Supplier Management Promotion Center, and the Employee Relations and Social Care Promotion Center. finance, 3. The Board of Directors receives regular reports on operations, corporate governance, sustainability issues, etc. every year. Through the diverse experience of its members, the Board offers broad and professional opinions to assist the Company in making appropriate decisions and guiding the Company in a clear strategic direction. In 2023, three meetings of the Sustainable Development Committee were held: the progress for the first half of 2023 was reported on August 4, 2023, and the execution results for 2023 and 2024 implementation plan were approved by resolution on December 22, 2023. and Does the Company conduct risk assessments of environmental, corporate social governance issues related to the Company's operations and risk formulate management or strategies in accordance with the principle of materiality? (Note 1) relevant policies In line with the Sustainable Development Best Practice Principles for TWSE/TPEx Listed Companies. Yes perspectives, identify and prioritize 1. The Company refers to the five major principles of the AA1000 SES Stakeholder Engagement influence, including accountability, Standard, and diversity tension, of dependency, the to relationship levels of stakeholders. For significant topics, it considers international sustainability standards and norms, international sustainability ratings, United Nations Sustainable Development Goals, and industry trends. Through interaction and communication with stakeholders, senior management draws up a matrix of significant concern issues based on the "degree of positive and negative the economy, impacts on environment, and people" and "the likelihood of impact events" following the principle of double materiality. These issues, after being validated by the Sustainable Development Committee, are incorporated as references for the Company's operations and the promotion of a sustainable development appropriate in a timely manner to measures are taken information strengthen risk assessment and disclosure on various issues, while also integrating into the Company's overall risk management. 2. In order to ensure the sound operation and sustainable development of the Company, it has formulated the Rules for Risk Management Policies and Procedures to establish an overall risk management system. The Board of Directors, the blueprint, and II. 64 Actual Implementation Promotion items Yes No Summary description Deviation from Sustainable Development Best Practice Principles for TWSE/TPEx Listed Companies and reasons therefor Audit Committee, the Auditing Office, the President and the President's Office, each risk management unit, and each unit and subsidiary of the Company are collectively in promoting the implementation of relevant risk management measures. involved 3. On January 26, 2024, the Board of Directors resolved to amend the Risk Management Policy and Procedures, clearly defining risk management objectives, management procedures, and control mechanisms; at the same time, emerging risks are incorporated into the risk management system, with a focus on global environmental changes and development comprehensively considering the business development and future prospects of the Company and annually identifying emerging risks. trends, by Environmental Issues III. (1) Has the Company established a proper environmental management system based on the its characteristics of industry? 4. For the purpose of reducing the impact and influence of internal and external risks, the Company's governance units and other risk management units have identified risks related to environmental, social and corporate governance issues and planned relevant management and control measures in accordance with the principle of materiality, the business and operational characteristics of the Company. The results of risk assessments (including management policies, strategies or mechanisms for each risk category) are summarized in Note 3. and monitored by each 5. Risk identification is regularly carried out in a systematic manner, and the identified risks are risk measured management unit. The above operation in 2023 has been reported to the Board of Directors on November 3, 2023 (for the report, please refer to https://www.walsin.com/wp- content/uploads/2023/12/2023RiskManagement .pdf). Yes 1. The Company's Environmental, Health and Safety Promotion Center under the Sustainable Development Committee has set targets for energy saving and carbon reduction, water management and waste reuse in accordance with Walsin Lihwa Environmental, Health and Safety Policy, including a 10% carbon reduction by 2025 compared to 2014, a 15% reduction in water use in 2030 compared to 2014, and capital expenditures to replace production equipment, develop green processes, and promote source improvement. Please refer to Chapter 1 (Climate Actions and Environment Management) of the 2023 Annual Sustainability Report or the "Climate Actions and Environment Management" page of the Corporate Sustainability Section on the Company's website (https://esg.walsin.com/zh_TW/focus/saving) for related specific results. 2. The environmental management of the In line with the Sustainable Development Best Practice Principles for TWSE/TPEx Listed Companies. 65 Corporate Governance Report Actual Implementation Promotion items Yes No Summary description Deviation from Sustainable Development Best Practice Principles for TWSE/TPEx Listed Companies and reasons therefor (2) Has the company made efforts to improve the efficiency of resources utilization and use recycled materials which have a the impact environment? low on In line with the Sustainable Development Best Practice Principles for TWSE/TPEx Listed Companies. Yes Company's domestic and overseas plants has been carried out in accordance with government regulations and international environmental protection conventions. The plants in Taiwan (Hsinchuang Plant 1, Hsinchuang Plant 2, Yangmei Plant, Taichung Plant and Yenshui Plant) and China (Shanghai Plant, Jiangyin Plant, Yantai Plant and Changshu Plant) have all received the "Environmental Management System" certification (ISO 14001:2015). The Company will also continue to improve and refine our environmental management performance. Please refer to the Company's website - Document Center - Environmental Safety and Health Policy and Related Certificates (https://www.walsin.com/about- us/newsroom/#pills-reports-document) for relevant verification standards. 1. Walsin strives to be an environmentally sustainable enterprise, and increases its investment in energy saving, carbon reduction, and resource recycling software and hardware year by year, such as "control of reasonable energy consumption per unit of the product", "equipment energy efficiency management and improvement", "reduction of smelting process energy consumption and carbon emission", waste heat recovery and process technology improvement (such as pure oxygen combustion technology and yield improvement), and green power installation (such as solar energy). 2. The Company mainly produces wire and cable and stainless steel. After these two types of products have gone through the stages of production, use and disposal, they can be recycled and reused to return to their life cycle, which is in line with the concept of recycling for new products in a circular economy. Regarding the use of raw materials and materials used for packaging, in addition to continuously raising the rate of using recycled stainless steel and carbon steel as raw materials, Walsin also considerably uses recycled pallets, iron frames, iron (wood) shafts, wooden plates, and iron plates as packaging materials for copper wire and cable. In 2023, approximately 92.09% of the products produced by Cable & Wire Business Group used recycled raw materials and approximately 54.69% of those products used recycled packaging materials; approximately 39.92% of the products produced by Stainless Steel Business Group used recycled raw materials for scrap steel and approximately 60.08% of those products used recycled raw materials. For specific results, please refer to Section 4 "Transition to High Value and Smart Manufacturing" of the 2023 Annual Sustainability Report or the "Transition to High Value and Smart Manufacturing" page in the Corporate Sustainability section of the Company's 66 Deviation from Sustainable Development Best Practice Principles for TWSE/TPEx Listed Companies and reasons therefor In line with the Sustainable Development Best Practice Principles for TWSE/TPEx Listed Companies. In line with the Sustainable Development Best Practice Principles for TWSE/TPEx Listed Companies. Actual Implementation Promotion items Yes No Summary description Yes (3) Has the company assessed the current and future potential risks and opportunities of climate change for the business and taken measures to address climate related issues? website (https://esg.walsin.com/zh_TW/focus/creative/gr een). The Company has formulated its risk management policies and procedures to incorporate climate change and environmental risks into its management in accordance with its business operations and operating characteristics. The Company also introduced the Climate Related Financial Disclosures (TCFD) to set up the framework for managing risks and opportunities relating to climate change. In accordance with the recommendations of the Climate Related Financial Disclosures (TCFD), in 2023, we set up different climate scenarios, evaluated possible climate-related risks and opportunities, studied international climate change trends and industry-related trends, and assessed internal and external stakeholder attitudes, thereby identifying the climate-related risks and opportunities for Walsin Lihua. Please refer to Chapter 1 (Climate Actions and Environment Management) of the 2023 Annual Sustainability Report or the "Climate Actions and Environment Management" page of the Corporate Sustainability Section on the Company's website (https://esg.walsin.com/zh_TW/focus/saving) for related contents. (4) Has the Company compiled statistics on greenhouse gas (GHG) water emissions, consumption and total weight of waste in the past two years, and formulated policies on energy conservation, carbon reduction, GHG reduction, water consumption reduction or other waste management? Yes 1. The Company's energy-saving and carbon- reduction strategy is to "implement lean production management", "control reasonable energy consumption per unit of the product", "manage and improve equipment energy efficiency", and "reduce energy consumption and carbon emissions in the smelting process". In addition, the Company will increase the investment in software and hardware for energy saving, carbon reduction and resource recycling year by year, such as green raw materials, waste recycling/regeneration (such as recycling waste metals to replace natural mineral mining, waste plastic recycling plastic pellets, and waste acid regeneration), water resources recycling (such as process cooling water recycling and reuse of reclaimed water), energy recycling (such as waste heat recovery) and process technology improvement (such as pure oxygen combustion technology and yield improvement), end-of-line reuse and disposal (such as furnace slag), and investment in green power constructions (such as solar energy). etc. 2. Our annual statistics on greenhouse gas emissions, water consumption and total waste volume indicate total greenhouse gas emissions of 530,610.58metric tons of CO2e, total water consumption of 14,125 million liters and total waste of 248,175.66metric tons in 2023, a drop by 14.67%, an increase by 0.7%, and an increase by 6%, respectively, compared to 2022. 67 Corporate Governance Report Actual Implementation Promotion items Yes No Summary description Deviation from Sustainable Development Best Practice Principles for TWSE/TPEx Listed Companies and reasons therefor Year Scope 1 Scope 2 Emission (1) Greenhouse gas emissions for the last 2 years (by the plants of the Company based in Taiwan, Mainland China, and Malaysia) Unit: CO2e(metric tons)/Product(metric tons) Emissions per Stainless Steel Product 0.58 0.58 (2) Water consumption for the last 2 years (by the plants of the Company based in Taiwan, Mainland China, and Malaysia) Unit: Million liters / product (metric tons) Emissions per Wire and Cable Product s per Copper Wire Product 2022 194,649.63 427,116.80 0.13 2023 203,986.19 326,624.40 0.13 0.35 0.35 Year Total Water Consumption 14,027 14,125 Water Consumption per Product 11.01 13.76 2022 2023 (3) Waste output for the last 2 years (by all plants of the Company in Taiwan, China, and Malaysia) Unit: metric tons/product (metric tons) Year Hazardous 2022 2023 Wastes 73,718 72,668 Non-Hazardous Wastes 160,539 175,507 Output per Product 0.18 0.24 3. Our Taiwan plants have obtained ISO14064- 1:2018, ISO50001 certification and ISO 14067:2018 (Hsinchuang Plant), and our overseas plants have obtained ISO50001 certification (Yantai ,Shanghai and CAS (Italy) Plants).Please refer to the Company's website - Document Center - Environmental Safety and Health Policy and related certificates (https://www.walsin.com/about- us/newsroom/#pills-reports-document) for relevant verification standards. 1. Implementation of gender work equality: We comply with the Act of Gender Equality in Employment to protect the gender equality in work rights. The Company does not discriminate on the basis of gender in recruitment, screening, hiring, position determination, performance appraisal, promotion, educational training, and welfare and benefits, except when certain positions are only suitable for a specific gender. 2. Employment of people with physical and mental disabilities: We protect the employment opportunities of people with physical and mental disabilities, and the number of our employees with physical and mental disabilities are more than that required by the People with Disabilities Rights Protection Act and the Indigenous Peoples Employment Rights Protection Act. 3. Creating a diverse and inclusive culture: We respect basic human rights that are internationally recognized, do not discriminate our employees In line with the Sustainable Development Best Practice Principles for TWSE/TPEx Listed Companies. Yes IV. Social Issues (1) Has the Company established its management policies and procedures in accordance with relevant laws, regulations, as well international conventions regarding human rights? as 68 Actual Implementation Promotion items Yes No Summary description Deviation from Sustainable Development Best Practice Principles for TWSE/TPEx Listed Companies and reasons therefor on the basis of gender, race, age, marital status, political stance, religious beliefs, nationality, etc., encourage the exchange of ideas, value team members by making them feel kindness and respect, and actively create a diverse and inclusive workplace. 4. Establishing a complaint channel: The Company's Auditing Office has set up an email address for complaints and a dedicated person to receive them. For sexual harassment prevention and control, we have formulated the "Workplace Sexual Harassment Prevention and Control Measures for Complaints and Discipline" to protect gender equality at work and to provide a working environment where employees and visitors to our office are free from sexual the event of any sexual harassment. harassment, the victim or his or her agent may file a complaint with the Sexual Harassment Complaint Committee either verbally or in writing. In addition, the Company has established relevant regulations in its internal documents to protect the human rights of employees and set up a complaint channel for employees in the event that their improperly handled, and that such issue cannot be resolved in a reasonable manner. legal rights are violated or In Yes (2) Has the company established and implemented reasonable employee benefit measures (including compensation, vacation and other benefits) and reflected operating performance or results employee in compensation? properly In line with the Sustainable Development Best Practice Principles for TWSE/TPEx Listed Companies. clubs, 1. The Company attaches importance to the physical and mental health and welfare of our employees by organizing book seminars and competitions from time to time, in order to increase exchanges among colleagues and to achieve work-life balance. The Company also provides comprehensive and diversified welfare measures. The Employee Welfare Committee was established to handle various welfare matters, including wedding and funeral celebrations; maternity; company travel; club subsidies; bonuses for three festivals, Labor Day and birthday; children's scholarships; interest-free loans; and hospitalization grants. To improve the overall operational performance of the Company, it has work rules and management regulations, which cover basic wages, working hours, annual leaves more than what is provided in the Labor Act, Standards subsidies, meal/transportation/communication group insurance and health check-ups, and the provision of staff restaurants, dormitories, transportation vehicles, parking spaces, etc. The Company's main business is wire and cable and stainless steel manufacturing, which is a labor-intensive industry. The operational work at factories is mainly done by male employees, so the proportion of male employees is higher than that of female employees. In 2023, the percentage of our female employees was 13.6% and the percentage of our female management positions was 16.1%. 69 Deviation from Sustainable Development Best Practice Principles for TWSE/TPEx Listed Companies and reasons therefor In line with the Sustainable Development Best Practice Principles for TWSE/TPEx Listed Companies. Corporate Governance Report Actual Implementation Promotion items Yes No Summary description is competitive; 2. The Company conducts regular market salary surveys to ensure that its overall compensation structure it also provides performance bonuses and production bonuses based operational performance, the achievement of team goals and individual employees' performance. We also pay our employees at a rate of not less than 1% of our current year's profit to motivate those who have performed well. Company's the on and (3) Has the company provided a healthy work safe environment for employees and provided education on safety for employees on a regular basis? health and Yes 1. In order to protect the health and safety of employees, in addition to the necessary training required by law and regulations, our annual safety training plan has been conducted according to the operation of each department, each job type on site, and each business unit. In 2023, we offered training to 1,840 participating new recruits, 26,535 participating in-service employees/2,430 11,349 employees entering participating (before factories)/545 sessions, mainly for in-service employees. We also have regular training plans for dedicated ESH personnel, special hazardous operators, and first aid personnel. In addition, a complete certification system has been set up for the management of ESH training and certification, to keep track of the movement and demand for certification at each site. (internal/external), contractors and 2. Our occupational safety and health management system (ISO 45001) applies and covers all workers (employees, contractors and visitors) in Taiwan (Hsinchuang, Yangmei, Taichung, Yenshui), China (Shanghai Walsin, Dongguan Walsin, Jiangyin Walsin, Jiangyin Alloy, Changshu Walsin, Yantai Walsin), PT. Walsin Nickel Industrial Indonesia, and CAS (Italy), with an overall coverage rate of 89.63% and 97.59% for employees and non-employees (i.e., contractors) respectively (Taipei Head Office, Nanjing Walsin (Real Estate), and Walsin Precision (Malaysia) have not yet been verified by third parties). Please refer to the Company's website - Document Center - Environmental Safety and Health certificates (https://www.walsin.com/about- us/newsroom/#pills-reports-document). related Policy and 3. In 2023, there were a total of 84 workplace injury accidents within the factory (including minor injuries, but excluding 19 CAS-19 injuries and 31 minor injuries), with a recordable disaster ratio of 0.55% (the number of injury accidents as a percentage of the total number of employees), incidence among first-line with the highest technical mainly (91.18%), entanglement injuries (26.32%). The related disaster risks and deficiencies were immediately improved through hardware protection and management measures. In addition, plans are in place for 2024 to identify high-risk operations through equipment safety and operational safety, operators 70 Actual Implementation Promotion items Yes No Summary description enhance the hazard awareness of first-line employees through the KYT (Hazard Prediction Training) method, and improve with Total Productive Maintenance (TPM) involving all staff, in order to reduce the occurrence of injuries. 4. In 2023, there were zero fire accidents, no chemical leaks, and no fatal workplace injuries. (4) Has the company established an career effective development and capability training its program employees? for Yes Yes (5) Does the Company comply with relevant regulations and international standards regarding customer health and safety, privacy, customer marketing and labeling of its products and services, and has it formulated relevant policies and complaint procedures to protect consumer rights? internal knowledge The Company has developed a training system according to each profession and level, and promoted three types of training methods: On-Job Training (OJT), Off-Job Training (OJT), and Self Development (SD) to support the development of the Company's talent, so that employees can follow in the capacity enhancement and cross-discipline learning, in order to maintain the competitiveness of the market. We develop knowledge/skill areas and learning blueprints each year according to the needs of our employees at each stage of their work and career development, and provide diversified training resources such as new recruit education and training, basic/advanced sharing, application of scientific tools (data analysis, image recognition, etc.), work skills, leadership training, and industry trends. According to the application level of knowledge and skills, we have planned online knowledge courses, offline learning communities, and mixed-level classroom courses/workshops. In 2023, training expenses were NT$21,109,000, and there were 72,202 training participants trained for 232,358.45 hours in total. On average, 43.79 hours of training were received per employee. At the same time, in the first and second half of each year, during the implementation of performance appraisal, in addition to conducting the annual work review in conjunction with colleagues, supervisors understand the potentials of colleagues, professions and areas to be improved based on their implementation of their work, and jointly formulate development plans for training, rotation and participation in projects. the employee 1. Our products and services are marketed and clearly labeled in accordance with local and international standards or regulations and pursuant to the requirements of our customers. In order to protect business information and customer privacy, the Company establishes a code of ethical conduct for employees and information security policies and relevant regulations (Note 3) to prevent any unauthorized access to, alteration to, or improper disclosure of any information that may infringe on customer privacy and rights. In information, addition to providing product information, and the telephone numbers and e-mail addresses of the persons-in-charge of each business on its website, the Company has established channels through which interested parties can make complaints or communicate with the Company. Upon receipt of any information interested party, the Company will from an latest its Deviation from Sustainable Development Best Practice Principles for TWSE/TPEx Listed Companies and reasons therefor In line with the Sustainable Development Best Practice Principles for TWSE/TPEx Listed Companies. In line with the Sustainable Development Best Practice Principles for TWSE/TPEx Listed Companies. 71 Deviation from Sustainable Development Best Practice Principles for TWSE/TPEx Listed Companies and reasons therefor In line with the Sustainable Development Best Practice Principles for TWSE/TPEx Listed Companies. Corporate Governance Report Actual Implementation Promotion items Yes No Summary description transfer the case to a dedicated person for him/her to confirm or handle, in order to reply to the stakeholders within the time limit. 2. We have not violated any product- or service- related laws or regulations regarding customer health and safety, customer privacy, marketing and labeling of our products and services in 2023. 3. For the latest information, product information, contact phone numbers and emails, please refer to the Company's website. https://www.walsin.com/our-business/ https://www.walsin.com/about-us/contact-us/ Yes relevant (6) Does the company have a supplier management policy requiring suppliers to comply regulations with environmental governing protection, occupational safety and health, or human rights in the workplace, and how is it implemented? 1. In order to strengthen and to the through implement the sustainable management of its suppliers, the Company has established the regulations for sustainability procurement and the principles for suppliers' performance of evaluating corporate social responsibility, and requires suppliers environmental comply with protection, occupational safety and health or labor human rights regulations in purchase orders and contracts. Key suppliers and new suppliers, in addition to signing the "Supplier Management Commitment Letter", also need to conduct self- assessments Supplier Sustainability Assessment Questionnaire, with evaluation items including environmental (i.e., management system, greenhouse gas, air pollution, water resources management, and waste management), social (i.e., human rights, health, and safety), and governance (i.e., sustainable government, supplier management, and trade secret protection) aspects for the purpose of identifying the degree of sustainability risk of each key supplier, in order to comply with CSR-related regulations along with the partnering suppliers and ensure that the supply chain fulfills its CSR commitments and implements the Principles Supplier CSR Performance for Assessment. Key the 2. In 2023, there were 156 key suppliers in the Wire and Cable, Stainless Steel and Commercial, Real Estate Business Groups, and Walsin Precision Technology, among which 153 have been evaluated for their risks. Of them, 18 were high- risk suppliers, 59were medium-risk suppliers, and 76 were low-risk suppliers. In 2023, we kept conducting on-site audits, interviews and guidance with regard to high-risk key suppliers to prevent and reduce the occurrence of risks, and will continue to conduct on-site audits and guidance with regard to high-risk key suppliers. 72 Deviation from Sustainable Development Best Practice Principles for TWSE/TPEx Listed Companies and reasons therefor In line with the Sustainable Development Best Practice Principles for TWSE/TPEx Listed Companies. Actual Implementation Promotion items Yes No Summary description in preparing V. Did the Company make reference international standards or to guidelines for the preparation of reports its sustainability reports and other reports that disclose non- financial information about the Company? Did the Company obtain a third-party certification or agency's confirmation assurance opinion on said reports? Yes 1. Since 2014, we have been compiling sustainability reports (Note 4) by reference to the Global Reporting Initiative's (GRI) G4 Standards, and since 2017, the report structure has followed the latest GRI Standards. In 2020, we introduced the Sustainability Accounting Standards Board (SASB) Industry Standard and the Task Force on the Climate-related Financial Disclosures (TCFD) framework to provide stakeholders with more complete and transparent ESG information. 2. Since 2015, we have engaged Deloitte Taiwan to perform third-party assurance checks on our reports and have obtained the CPA Statement of Limited Assurance. The third-party assurance checks are performed every year in accordance with the standards set forth in Statement of Standard on Assurance No. 3000, "Assurance Cases Other Than Audits or Reviews of Historical Financial Information" and "Rules for the Preparation and Reporting of Sustainability Reports by Public Companies." As of the date of publication, the 2023 Annual Sustainability Report is being under assurance checks by Deloitte Taiwan, which is expected to issue a statement of assurance in April 2024. VI. If your company has established sustainable development principles based on "Sustainable Development Best Practice Principles for TWSE/TPEx Listed Companies", please describe differences between the principles and their implementation: In December 2014, the Company has established, based on "Sustainable Development Best Practice Principles for TWSE/TPEx Listed Companies" (Note 4), its Corporate Governance Best Practice Principles, which has also been approved by the Board of Directors. In line with the amendments to Sustainable Development Best Practice Principles for TWSE/TPEx Listed Companies, the Board of Directors amended the Corporate Governance Best Practice Principles in January 2018, April 2020, January 2022, and February 2023. The Corporate Governance Best Practice Principles serve as the guidelines for the Company to establish and to execute related policies related to corporate governance, ESH management, customer service and supplier management, green operation, employee relations and social care. There are no discrepancies between the principles and actual practice. VII. Other key information useful for explaining the promotion and execution of sustainable development: (1) With regard to developing a sustainable environment, please refer to "V. Operating Status, IV. Environmental Protection Expenditure Status" in the annual report. (2) With regard to the Company's observing relevant labor regulations by safeguarding the lawful rights and interests of its employees and providing a safe and healthy work environment for its employees, please refer to "Operating Status, Labor-Management Relations" in the annual report. (3) "Growth and integration with the local communities" is the philosophy in the social care of Walsin. It is a continuous implementation focused in four directions: "Corporate Citizen", "Minority Support", "Environment Conservation", and "Community Development". The results in 2023 are summarized as below: 1. Supporting Taiwanese Original Arts and Cultural Groups (1) Walsin Lihwa Family Day 2023: A Spectacular Artistic Display Walsin Lihwa supports Taiwanese performing arts, promoting the sustainable development of arts and culture- related groups. To encourage colleagues to engage with cultural and artistic activities, our 2023 Family Day was designed to combine family day with artistic performances, holding four "Walsin Fantasy Circus Party" art carnivals in Taoyuan and Yunlin. Invitations were extended to colleagues and their families from the Taipei Head Office, Hsinchuang Plant, Yangmei Plant, Taichung Plant, and Yenshui Plant, along with approximately 120 children from the Tainan Fund for Children and Families, with over 4,500 people participating in the event. Through the combination of Family Day and artistic performances, we hope to provide substantial encouragement to artistic groups and support the social value of Taiwanese arts and culture. #Sponsoring Team - FOCA Formosa Circus Art #Performance Location - Taoyuan Exhibition Center and YunTay Hall (2) Movie Watching Event (the movie is entitled "BIG") Walsin Lihwa supports outstanding Taiwanese cultural and artistic works. In November 2023, a special screening of Director Wei Te-Sheng's latest film, BIG, was organized, with more than 130 colleagues and friends from the 73 Corporate Governance Report Actual Implementation Promotion items Yes No Summary description Deviation from Sustainable Development Best Practice Principles for TWSE/TPEx Listed Companies and reasons therefor Yenshui Plant attending the screening. #Sponsoring - Storyage Pictures Co., Ltd., Director Wei Te-Sheng # Screening Location - Chiayi Showtime Cinema (3) Traditional Peking Opera "On the Edge of the Plum - Heaven and Earth" Traditional Chinese opera, a performing art that is not easily preserved in its entirety, serves as a bridge between contemporary and ancient times. To support the culture heritage, we sponsored the Wei-Hai-Min Foundation for the Arts of Peking Opera in the production of Peking opera, On the Edge of the Plum - Heaven and Earth, to support the preservation of Peking opera traditional culture, so that more people can appreciate the beauty of the art of traditional Chinese opera. #Sponsoring Team - Wei-Hai-Min Foundation for the Arts of Peking Opera #Performance Location/Date – Big Performance Hall, Taiwan Traditional Theatre Center/March 2024 2. "Illuminating the Corners of Taiwan": The Company has initiated the sponsorship project "Illuminating the Corners of Taiwan" in the end of 2016 to give back to society by offering 5 elementary and junior high schools in rural Taiwan with relatively low resources more comprehensive faculty, environment and equipment and to develop characteristic physical and musical education. We continued to cooperate with five existing schools in 2023 to continue to deepen the various incubation programs. 3. Long-Term Care for Children's Education: The Company and its employees regularly sponsor 12 child welfare organizations, including World Vision Taiwan, Taiwan Funds for Children and Families , the Lotus Heart Garden Nursery School in Houbi District, and Chinese Childrenhome & Shelter Association. 4. Taiwan Native Plant Resources Conservation Project: To promote cultivation of talents for conservation, collection and management of aboriginal Taiwan plant resources, Walsin Lihwa cooperated with College of Agriculture and Natural Resources, National Chung Hsing University to install a screen-house and an outdoors nursery, cultivate seedlings for afforestation applications and, environmental education and promotion for conservation, and protect Taiwan's diverse protected animal and plant resources. Starting from 2018, the Company and Winbond Electronics Corporation cooperated to incorporate Huabao Seed Breeding Co., Ltd., responsible for promoting Taiwan's forest germplasm conservation and indigenous plants revegetation projects. We completed the first phase of the collection of 24 Taiwanese tea varieties in 2023, and continued to implement the related programs for hardware and software installation and training on cultivation techniques. 5. Support Local Agriculture (1) Organic Kiwifruit Contract Farming: In order to support environmental ecological conservation and the development of organic agriculture, starting from 2021, we cooperated with "Jianghao Farm Young Farmers", contracted with them for organically planted Taiwanese native kiwi fruit that is conducive to soil and water conservation. In 2023, the Company produced and released the video documentary and digital feature "The Kiwi Dilemma," which documents the journey of kiwi- friendly cultivation. It explores how local production can enhance sustainable production, reduce waste, and lower carbon emissions. Through exposure in media features, it aims to raise more awareness and understanding of agriculture on this land. "The Kiwi Dilemma" video: https://esg.walsin.com/zh_TW/event/180 "Encounters with Kiwi" feature news report: https://esg.walsin.com/kiwi (2) Support Taiwan's Local Fishers and Social Enterprises: Walsin's Employee Welfare Committee adopts the concept of "buying directly from small farmers" as annual festival gifts for employees every year, and purchases products from local Taiwanese lotus root farmers, tea farmers, and Children Are Us Bakery for the Dragon Boat Festival and the Mid-Autumn Festival in Taiwan as festival gifts for employees in 2023 to support local enterprises. 6. "Elementary and Junior High School Newspaper Reading Project": (1) Starting from 2014, this partnership between Mandarin Daily News sponsors newspapers for primary/junior high schools in the counties and cities in Taiwan where our plants located. The school teachers led students to understand the subjects of newspaper reports, and through interactive discussions, expanded their horizons and laid the foundation for their language skills. In 2023, we sponsored 78 classes in 17 schools in New Taipei City, Taoyuan City, Taichung City, Tainan City and Kaohsiung City, benefiting 1,218 students. Since 2019, Walsin, together with the Walsin Technology Foundation and Mandarin Daily News, has launched a bilingual reading education program. In 2023, we promoted this program in 540 classes in a total of 36 junior high schools in Taoyuan City and Kaohsiung City, benefiting a total of 14,090 students. With the advantage of the English and Chinese bilingual texts in "Junior High School Student Daily" offered by Mandarin Daily News, students' listening, speaking, reading and writing skills in both Chinese and English improved and their interests in the world and reading were opened. (2) In April and December 2023, we also cooperated with Wuqi Elementary School in Taichung City and Huanya Elementary School in Tainan City to organize newspaper reading games and activities, where colleagues 74 Actual Implementation Promotion items Yes No Summary description Deviation from Sustainable Development Best Practice Principles for TWSE/TPEx Listed Companies and reasons therefor volunteered to interact with schoolchildren and make them understand various useful knowledge in their daily life through the game, with the view to inspiring children's interest in learning through educational entertainment and visualization of knowledge. 7. Community Development and Promotion by Plants: Each plant continues to care about and evaluate the social and environmental risks or opportunities faced by its local community through supporting local cultural and activities, cares for the disadvantaged in the community, and effectively uses plant resources to promote neighborhood development. In 2023, we continued to sponsor five elementary schools in the Yenshui area of Tainan in the academic mentoring program, and participated in 111 local civil defense, cultural, folklore, respect for the elderly, care for women and children, and environmental cleanup activities, as well as our long-term care for 12 roads and parks surrounding the plants for cleaning and making them greener. (4) In 2023, Walsin Lihwa was listed as the top 5% outstanding companies as published by the Taiwan Stock Exchange in the 10th "Corporate Governance Evaluation." The Company was also awarded the "Model Donation for Education" by the Yilan County Government for the "Light Up the Corners of Taiwan" project. In 2023, the Company also received Taiwan's Top 100 Sustainable Model Business Award, Information Security Award, and Platinum Corporate Sustainability Report Award for its ESG performance and Sustainability Report, as well as Bronze Prize for English Sustainability Report. (5) For details on the Company's execution of sustainable development, please go to the Walsin Lihwa website Corporate Sustainability section (https://esg.walsin.com/zh_TW) and read our 2023 Sustainability Report. Note 1: "Principle of Materiality" refers to environmental, social and corporate governance issues that have a material impact on the Company's investors and other stakeholders. Note 2: Management Policies, Strategies or Mechanisms of Risk Issues Corporate Governance and Economic Issue Risk Category • Strategy and Operations • Legal • Capital Expenditure • Information Security • Changes in Interest Rates • Changes in Exchange Rates • Raw Material Prices and Supply Chains • Technology Risks Management Policies, Strategies or Mechanisms • Business units regularly report strategic issues to the Directors and therefore reduce strategic risks through the participation, advice and supervision of board members. • The Company's culture of "Ethical Management" emphasizes that all business activities must be conducted in accordance with local laws and regulations. We also require our employees to comply with laws and regulations, corporate rules and procedures, and guide them to conduct themselves in accordance with laws and regulations and ethical standards through education, internal audit, internal control and other management measures. • Major capital expenditures shall be reported to the Audit Committee and the Board of Directors for review and approval. • The Company continuously introduces advanced information security solutions, establishes data protection mechanisms, organizes education and training, promotes new information security knowledge and raises staff awareness of information security. • The Company monitors changes in the interest rate markets, controls existing long and short term borrowing positions and uses market instruments to lock in interest rate costs in a timely manner. • The Company develops a hedging strategy and carries out exchange rate hedging in conjunction with relevant hedging instruments such as spot rate trading and forward rate trading. Control of risks associated with foreign currency exchange rates and related hedging operations are performed with respect to major capital expenditures and capital transfers that may cause changes in foreign currency positions. • The Company carries out market risk management of its raw materials- related operations. It also prudently evaluates and actively develops new material sources to avoid monopoly by a few suppliers. In addition, we establish a safe inventory of raw materials and purchase some raw materials in stock to allow for flexibility. • We deeply understand the needs of customers and end-use applications, and accelerate the technical development of product materials manufacturing processes and applications, in order to strengthen our technical capabilities to respond to rapid changes in the external environment. 75 Corporate Governance Report Issues Environmental Issues Risk Category • Climate Change and Environmental Risks • Emerging Risks Social Issues • Human Resources Management Risks • Occupational Safety Risks • Corporate Image Risks Management Policies, Strategies or Mechanisms • The Company's environment, safety and health and energy policy is "Green Manufacturing, Happy Enterprise and Sustainable Development" and is committed to "Compliance with Regulations, Risk Control, Pollution Prevention, Energy Saving and Waste Reduction and Performance Enhancement." • We promote energy management systems to establish energy management performance indicators, so as to facilitate long-term energy efficiency control. We also Invest in green electricity and gradually build up a product carbon footprint, in order to improve carbon reduction performance and prepare for carbon rights operations in advance. Besides, we continuously identify and develop waste reuse technologies to improve resource recycling efficiency. • Every year, we reference the global environmental changes and development trends and the Global Risk Report published by the World Economic Forum (WEF) to identify emerging risks that we should pay attention to in the long term, by taking into account the Company's business development and future prospect planning. • Employees are Walsin's most important asset and major driving force. Walsin cares about its employees, their families and their lives, listens to their voices and strengthens the communication channels between employees and employers to promote harmonious relationships. We also ensure that the existing human resources management procedures and related administrative practices comply with the laws and regulations. • We maintain the consistency of the environment, safety and health management systems in all plants through ESH education and training, and implement operational risk factor checks and regulations to reduce the incidence of occupational safety incidents. We also require contractors to sign an Environment, Safety and Health Policy Commitment to jointly comply with the requirements of the environment, safety and health law and to reduce occupational safety hazards. • The Company has established in normal times a good crisis management response mechanism for any operational risks that may affect its image, as well as simulated possible events, so that it can immediately initiate the response mechanism promptly. The spokesman will act as the external speaker, or clarify false information through the material information reporting platform, to protect the Company's image, and to make communications with various stakeholders. Note 3: The Ethical Conduct Guidelines for Employees and the rules relating thereto include: the Ethical Conduct Guidelines for Employees and the Guidelines for Suggestions and Complaints by Stakeholders. Information security policies and the rules relating thereto include: the Information Security Policy, the Internal Audit Operation for Information Security Management, the Information Security Risk Management Rules, the Information Security Incident Management Rules, the Information Security Organization Management Rules, the Service Information Security Policy Formulation Standards, the Information Outsourcing Management Rules, the Compliance Management Rules, the Personnel Safety Management Rules, the Network Equipment Maintenance and Operation Standards, the Communication Operation Management Rules, the Access Control Management Rules, the Account Access Management Standards, the Information Asset Management Rules, the Computer Room Maintenance and Operation Management Standards, the System Administrator Password Management Standards, the Entity and Environmental Security Management Rules, the Business Continuity Management Rules, and the Information System Acquisition, Development and Maintenance Management Standards. Note 4: The title of the Corporal Social Responsibility Best Practice Principles for TWSE/TPEx Listed Companies was amended to the "Sustainable Development Best Practice Principles for TWSE/TPEx Listed Companies" on December 7, 2021; the title of the Corporate Social Responsibility Report was amended to the "Sustainability Report." 76 Climate-Related Information 1. Information on Implementation of Climate-Related Initiatives Item 1. Describe the Board of Directors and management's oversight and governance of climate-related risks and opportunities. 2. Describe how the identified climate risks and opportunities affect the Company’s business, strategy and finances (in the short, medium and long term). Execution Walsin Lihwa's climate change governance and management structure is ultimately overseen by the Board of Directors, who are responsible for overseeing the major climate-related risks and the achievement of relevant targets, and guiding management strategies and key action plans. The Sustainable Development Committee, which is a functional committee responsible for formulating corporate sustainability strategies and visions to promote sustainable development related work and management and regularly reporting to the Board of Directors on the implementation of sustainable development (such as climate change issues), has six members, with an Independent Director acting as the Convener. Climate Risk (1) Extreme climate change affects upstream and downstream supply chains and transportation (short- and medium-term risks) Extreme climate change increases transportation costs. Extreme weather has led to delayed product delivery or broken supply chains, resulting in reduced revenues. into a low-carbon market and (2) The cost of low-carbon technology transition (medium-term risk) increasing capital Stepping expenditure. In order to develop and produce green products that meet customer needs, it is necessary to invest in R&D and increase operating expenses. (3) Policies and regulations increase the cost of greenhouse gas emissions (medium-term risk) The cost of greenhouse gas emissions will increase, thereby increasing the operating costs and expenses. Climate Opportunities (1) Use of higher-performance production and distribution/sale processes (short-term opportunity) Establish an efficient plant and set up automation equipment to reduce operating costs. Energy efficiency improvement will reduce operating costs. (2) Entering new markets (short-term opportunities) Enter clean energy technology markets such as wind power, solar energy, and electric vehicle charging cables to increase revenue. 3. Describe the financial impact of extreme weather events and transition actions. 4. Describe how the process of identifying, assessing and managing climate risks is integrated into the overall risk management system. 5. If scenario analysis is used to assess resilience to climate change risks, describe the scenarios, parameters, assumptions, analysis factors and key financial impacts used. and (3) Use of new energy technologies (medium-term opportunity) Use renewable and low-carbon energy to reduce the risk of greenhouse gas emissions, reduce the carbon footprint of products, and improve the competitiveness of products in the market, so as to increase revenue. For financial impacts, please refer to Section 1 of the 2023 Annual Sustainability Report, Climate Action Environmental Management, or the Corporate Sustainability Zone of the Company's website (the Climate Action and Environmental Management webpage) (https://esg.walsin.com/zh_TW/focus/saving). The Company integrates climate change and environmental risks into enterprise risk management, led by the Sustainability Office, continuously monitors impact on operations, such as international regulations and extreme weather, assesses the financial impact, adjusts the management mechanism, and proposes response strategies to enhance operational resilience. All departments work together to assess the impact of climate risks on business processes, and we aim to improve employees' awareness of climate change identify risks and opportunities. Senior through training to management participates in strategy meetings to make management decisions and response strategies for major risks. Simulation of physical and transition risks and opportunities in four scenarios: (1) Nationally Determined Contributions (NDCs): NDCs proposed by the the Republic of China (2) IEA NZE 2050: 1.5°C pathway in the World Energy Outlook (WEO) 77 Corporate Governance Report Item Execution 6. If there is a transition plan to address and manage climate-related risks, describe the content of the plan, and the metrics and targets used to identify and manage physical and transition risks. proposed by the International Energy Agency (IEA) (3) Global Warming Scenarios SSP 3 - 7.0 in IPCC Sixth Scientific Assessment Report (4) Global Warming Scenarios SSP 5 - 8.5 in IPCC Sixth Scientific Assessment Report For major financial impacts, please refer to Section 1 of the 2023 Annual Sustainability Report, Climate Action and Environmental Management, or the Corporate Sustainability Zone of the Company's website (the Climate Action and Environmental Management webpage) (https://esg.walsin.com/zh_TW/focus/saving). Transition Plan for Climate-Related Risks (1) Green products and clean technology Walsin Lihwa is committed to the development of green products and clean technology, and to high-value products and the establishment of a resource-based industrial chain. We will continue to increase the proportion of clean technology products, create shared value with customers, and establish a sustainable business model. (2) Intelligent manufacturing In the manufacturing process, we use intelligent technology to implement green manufacturing and achieve multiple benefits, such as real-time monitoring, efficiency improvement, quality intelligent assurance and material conservation, manufacturing, so as to further improve our operational efficiency. through (3) Energy and greenhouse gas management:  Implement energy-saving measures to reduce electricity consumption.  Plan to use renewable energy to reduce dependence on traditional energy sources.  Implement greenhouse gas management processes to effectively monitor and reduce emissions. Climate-Related Management Indicators and Targets  Disruption of operations due to weather disasters (in days): 0 days  1.5% annual reduction in the use and generation of electricity and carbon from 2022 (Base year: 2021)  Renewable energy and green power will be purchased in 2030. 7. If internal carbon pricing is used as a planning tool, We continue to develop internal carbon pricing. describe the basis for setting carbon prices. 8. If climate-related targets are set, describe information such as the activities covered, the scope of greenhouse gas emissions, the planning timeline, and the progress made in achieving them each year; if carbon offsets or renewable energy certificates (RECs) are used to achieve the relevant targets, describe the source and quantity of carbon offset credits or renewable energy certificates (RECs) to be offset. 9. Please refer to Table 1 below for GHG inventory and assurance and reduction targets, strategies and specific action plans. Activities Related to Climate-Related Targets Increase sales of clean technology and green products. Use smart manufacturing to improve energy efficiency. Net-Zero Pathways Apply scientific methods to set carbon reduction targets and take relevant measures. Cooperate with external supply chains to promote energy management and carbon management. Please refer to Table 2 below and Section 1 of the 2023 Annual Sustainability Report, Climate Action Environmental Management, or the Corporate Sustainability Zone of the Company's website (the Climate Action and Environmental Management webpage) (https://esg.walsin.com/zh_TW/focus/saving). Please refer to Tables 1 and 2 below. and 78 1. GHG Inventory and Assurance Information for the Last Two Years Year 2022 Category Contains stand-alone subsidiaries Total emissions (MTCO2e) Intensity (MTCO2e/ NT$ millions of Sales) Assurance agency Description of assurance The third-party verification has been completed. Please refer to the official website (File Center) for details. https://www.walsin.c om/about- us/newsroom/#pills- reports-document - Walsin Lihwa Corporation TÜV Rheinland Taiwan Ltd. 142,129.42 1.44 Scope 1Note 1 Subsidiaries on a consolidate d basis (Including Dongguan Walsin, Shanghai Walsin, Jiangyin Walsin, Jiangyin Alloy, Yantai Walsin, Changshu Walsin, and Walsin Precision) 56,109.63 1.29 Total emissions (MTCO2e) 2023 Intensity (MTCO2e/ NT$ millions of Sales) Contains stand-alone subsidiariesN ote 2 Walsin Lihwa Corporation 135,284.04 1.66 Subsidiaries on a consolidated basis (Including Shanghai Walsin, Jiangyin Alloy, Yantai Walsin, Changshu Walsin, and Walsin Precision) 68,702.15 2.84 Total Walsin Lihwa Corporation 198,239.05 1.40 TÜV Rheinland Taiwan Ltd. 206,358.99 2.10 Scope 2Note 1 Subsidiaries on a consolidate d basis (Including Dongguan Walsin, Shanghai Walsin, Jiangyin Walsin, Jiangyin Alloy, Yantai Walsin, Changshu Walsin, and Walsin Precision) 214,969.79 4.94 The third-party verification has been completed. Please refer to the official website (File Center) for details. https://www.walsin.c om/about- us/newsroom/#pills- reports-document - Total Walsin Lihwa Corporation 203,986.19 1.93 TÜV Rheinland Taiwan Ltd. 191,192.18 2.35 Subsidiaries on a consolidated basis (Including Shanghai Walsin, Jiangyin Alloy, Yantai Walsin, Changshu Walsin, and Walsin Precision) 135,432.21 5.59 Shanghai Walsin: Beijing CQE Testing and Certification Co., Ltd. Jiangyin Alloy: Beijing Ouya Puxin International Certification Center Yantai Walsin: Shandong LAJ International Certification Co., Ltd. Changshu Walsin: Assurance agency Description of assurance TÜV Rheinland Taiwan Ltd. Shanghai Walsin: Beijing CQE Testing and Certification Co., Ltd. Jiangyin Alloy: Beijing Ouya Puxin International Certification Center Yantai Walsin: Shandong LAJ International Certification Co., Ltd. Changshu Walsin: Shandong LAJ International Certification Co., Ltd. Walsin Precision: BSI (British Standards Institution) The third- party verification is completed on 2024/3/31, and the complete assurance information will be disclosed in the Sustainability Report. The third- party verification is completed on 2024/4/10, and the complete assurance information will be disclosed in the Sustainability Report. The third- party verification is completed on 2024/3/31, and the complete assurance information will be disclosed in the Sustainability Report.. The third- party verification is completed on 2024/4/10, and the complete assurance information will be disclosed in the Sustainability Report. 79 Corporate Governance Report Year 2022 Category Contains stand-alone subsidiaries Total emissions (MTCO2e) Intensity (MTCO2e/ NT$ millions of Sales) Assurance agency Description of assurance Contains stand-alone subsidiariesN ote 2 Total emissions (MTCO2e) 2023 Intensity (MTCO2e/ NT$ millions of Sales) Assurance agency Description of assurance Total (N/A) 427,116.80 3.01 Total Walsin Lihwa Corporation 326,625.01 3.10 TÜV Rheinland Taiwan Ltd. Shandong LAJ International Certification Co., Ltd. Walsin Precision: BSI (British Standards Institution) (N/A) Scope 3Note 1 2,212,164.16 27.23 Subsidiaries on a consolidated basis (Including Shanghai Walsin, Jiangyin Alloy, Yantai Walsin, Changshu Walsin, and Walsin Precision) 2,110,482.66 87.13 Shanghai Walsin: Beijing CQE Testing and Certification Co., Ltd. Jiangyin Alloy: Beijing Ouya Puxin International Certification Center Yantai Walsin: Shandong LAJ International Certification Co., Ltd. Changshu Walsin: Shandong LAJ International Certification Co., Ltd. Walsin Precision: BSI (British Standards Institution) The third- party verification is completed on 2024/3/31, and the complete assurance information will be disclosed in the Sustainability Report. The third- party verification is completed on 2024/4/10, and the complete assurance information will be disclosed in the Sustainability Report. Note 1: Direct emissions (Scope 1, i.e., emissions directly from sources owned or controlled by the Company), indirect energy emissions (Scope 2, indirect greenhouse gas emissions from the input of electricity, heat, or vapor), and other indirect emissions (Scope 3, i.e., emissions from the Company's activities, not indirect emissions from energy, but from sources owned or controlled by other companies). Scope 3 data has been disclosed since 2023. Note 2: In 2023, Dongguan Walsin and Jiangyin Walsin adjusted their operations and were not included in the calculation. Total 4,322,646.82 40.98 80 2. GHG Reduction Targets, Strategies and Specific Action Plans Reduction targets Strategy Specific action plans Short term: Effectively manage energy efficiency, and set a target of continuous power saving and carbon reduction of 1.5% every year from 2022 onwards. (GHG reduction base year: 2021) Medium to long term: Achieve the goal of net-zero carbon emissions by 2050 through carbon inventory and energy conservation, energy creation, green energy trading, low-carbon production of new technologies, and externalization of low- carbon technologies. 1. Introduce a Task Force on Climate-related Financial Disclosure (TCFD) to identify climate-related risks and opportunities by reference to more than two climate change scenarios. 2. Introduce an energy management system and carbon inventory. 3. Promote carbon reduction management, including the implementation of lean production management, management and control of reasonable energy consumption per unit of product, management and improvement of equipment energy efficiency, and reduction of energy consumption and carbon emissions in the smelting process. 1.From 2022 onwards, the Task Force on Climate-related Financial Disclosure (TCFD) has been introduced, and climate-related risks and opportunities have been regularly reviewed annually to identify and respond to them. 2.Introduce an energy management system and carbon inventory: In 2018, the ISO 50001 energy management system was introduced, and from 2019 to 2020, the ISO 50001 energy management E-system was planned and built by the Company to improve the real-time energy management. In 2023, all of our Taiwan and mainland China plants have passed ISO 50001:2018 certification In 2020, our Taiwan plants carried out the inventory of energy consumption and carbon emission per unit of main products, and in 2022, the energy consumption and carbon emission per unit product of the main products of our Taiwan plants (14067 carbon footprint inventory (B2B)) was obtained. Since 2014, the carbon inventory and third-party verification of each plant have been initiated, and in 2023, the carbon inventory and third-party verification have been completed in our plants in Taiwan and mainland China. 3.Every year, we will continue to improve energy efficiency and reduce carbon emissions through project control and administrative management through the implementation of lean production management, management and control of reasonable energy consumption per unit of product, management and improvement of equipment energy efficiency, and reduction of energy consumption and carbon emissions in the smelting process. 4.Since 2015, each plant has set up an energy conservation and carbon reduction management body, set annual goals and various energy conservation and carbon reduction measures, and held regular meetings to review and build an energy management E system for real-time management. In 2023, a total of 133 carbon reduction plans were proposed in our Taiwan and overseas plants, with a total power saving rate of 1.64% and a total carbon reduction of 10,089.7 metric tons of CO2e/year. 5.In 2021, we planned to build 5.5 MWp of renewable energy (solar energy) for self-consumption; 4.9 MWp has been built in 2023, and 1,054,868 kWh of electricity has been connected to the grid. (6) Fulfillment of ethical management and differences between our ethical management and the Ethical Corporate Management Best Practice Principles for TWSE/TPEx Listed Companies and reason(s) Implementation status Assessment items Yes No Summary I. Establishment management solutions of policies ethical and (I) Has the Company formulated its ethical management policies approved by the Board of Directors and stated its ethical management and practices in its internal rules and external documents? Do the Board of Directors and senior management actively fulfill their commitment ethical to management polices? policies Yes (I) The Company has always insisted on honest business practices. We abide by the laws set forth by the government, implement our corporate governance principles and make our utmost effort to fulfill our corporate responsibilities. Our Board passed our "Ethical Corporate Management Best Practice Principles" and our "Procedures for Ethical Management and Guidelines for Conduct" as the Company's policies for ethical management practices. The full texts are also disclosed in electronic form on the Company's website to Deviation from Ethical Corporate Management Best Practice Principles for TWSE/TPEx Listed Companies and reasons for deviation In line with the Ethical Corporate Management Best Practice Principles for TWSE/TPEx Listed Companies. 81 Corporate Governance Report Implementation status Assessment items Yes No Summary Deviation from Ethical Corporate Management Best Practice Principles for TWSE/TPEx Listed Companies and reasons for deviation showcase our commitment to implementing and overseeing ethical management policies. of Ethical Management The directors and senior executives signed a Statement to demonstrate their determination to operate with integrity. At the same time, information related to ethical management was published on the corporate website and internal website for the directors' reference to convey the importance of to actively operating with implement and monitor the implementation of the ethical management policy. integrity and Yes (II) 1. The Company's prevention plan and scope of Article 6 of the Ethical Corporate Management Best Practice Principles have specifically covered the business activities with higher risk of dishonest behavior or other activities specified in each paragraph of Paragraph 2 of Article 7 of the Ethical Corporate Management Best Practice Principles for TWSE/TPEx Listed Companies. The Company has relevant strengthened preventive measures through the establishment of internal rules and regulations and practices, training, daily promotion, education and contractual agreements and inclusion in the employee performance evaluation. the 2. The Company established a risk assessment mechanism for dishonest acts and used the seven major types of dishonest acts listed in Paragraph the Ethical Corporate 2 of Article 7 of Management Best Practice Principles for TWSE/TPEx Listed Companies as the scope of assessment to promote the assessment of dishonest acts. of business, (II) Has the Company established an assessment mechanism for the risk of unethical conduct to regularly analyze and evaluate business activities with a higher risk of unethical conduct in its scope and formulated a plan based on such analysis to prevent unethical conduct, which the should preventive measures under Paragraph 2, Article 7 of the Ethical Corporate Management Best Practice Principles for TWSE/TPEx Listed Companies? and evaluation cover at least for assisting In order to 3. implement the concept of sustainable management and promote corporate governance, we have established the Sustainable the Development Committee, under which is "Ethical Management Promotion Center" the responsible the management of Company's ethical management and the implementation of corporate social responsibility, in while integrity the Company's business management strategy, to ensure ethical management in accordance with the laws implementation of ethical management, and evaluating its effectiveness. The Sustainable Development Committee held two meetings in the annual plan and 2023 to Ethical implementation Management Promotion Center and reported the implement result in 2023 to the board of directors formulating relevant measures regulations, supervising integrating review results into and the of 82 Implementation status Assessment items Yes No Summary meeting on January 26, 2024. Deviation from Ethical Corporate Management Best Practice Principles for TWSE/TPEx Listed Companies and reasons for deviation 4. On February 27, 2020, the Board of Directors approved the "Risk the establishment of Management Policies and Procedures" as the highest guiding principle for the Company's risk management. The Company will regularly assess the risks on an annual basis and formulate and implement management policies for each risk, which objectives, organizational structure, attribution of authority and risk management and procedures, so as to effectively identify, measure and control the Company's risks and control the risks arising from business activities within an acceptable range. responsibility management cover and countermeasures, 5. In respect of the Company's risk management, each risk management unit and audit unit will carry out the Company's risk environment and management the President will organize and oversee implementation and risk coordination of management. The risk control measures and risk management operations will be reported to the Board of Directors in case of material risk events. The risk management operations for 2023 were reported to the Board of Directors on November 3, 2023 Yes the (III) Has the Company defined and implemented operating procedures, conduct guidelines, disciplinary complaint and systems for non-compliance in its unethical conduct prevention program, and regularly reviewed and foregoing program? revised the for Best Procedures its Ethical (III) 1. The Company has formulated Practice Corporate Management Principles Ethical and Management and Guidelines for Conduct setting forth the operational procedures, codes of conduct, and training for the prevention of unethical behavior. In so doing, we cause our staff to behave honestly and uprightly to our stakeholders in compliance with the ethical management have policies. We established reporting system, punishment policies and a complaint filing system for employees who violate relevant regulations, which is linked to the employee performance evaluation. 2. The Company also daily implements the prevention internal education and measures through contractual promotion, training, employee linkage agreements It also aims to performance assessment. such strengthen measures by making periodic review and revisions thereof. implementation of and the to 3. In 2023, we continued to steadily implement the risk assessment of dishonest behavior, which is data-driven and penetrates from the management level to the entry level of the Company, with a view to identifying gaps or weaknesses in internal control of business 83 Deviation from Ethical Corporate Management Best Practice Principles for TWSE/TPEx Listed Companies and reasons for deviation In line with the Ethical Corporate Management Best Practice Principles for TWSE/TPEx Listed Companies. Corporate Governance Report Implementation status Assessment items Yes No Summary processes and formulating countermeasures and processes accordingly. operational improving Yes 2. Ensuring ethical business practice (I) Has the Company evaluated the ethical management practices records of the companies it does business with as well as explicitly included ethical management practices the clauses contracts? in (I) 1. The Company prevents transacting with companies with unethical management practice records by adopting the following approaches: (1)When selecting a business partner, the Company reviews the partner’s past trading history and credit record. When inviting bids, suppliers shall be informed of the principle of a fair, open and transparent supplier selection policy. (2)Entities we are selling to: Except for procurement projects from the government, the Company shall track the long-term credit information of distributors, with the reputation of new distributors obtained through credit reference agencies and other companies in the industry. 2. Including honest practice provisions in contracts: (1)Procurement contracts: We have either had honest business practices clauses added to the contracts or have our suppliers make a undertaking to comply with the ethical management policy. (2)Sales contracts: Honest business practices clauses have been added to all such contracts. to for the advocate 3. The Company also non-periodically holds supplier conventions for suppliers of different plants integrity management of suppliers. In 2023, a total of 186 companies attended the meetings held by Taipei Head Office, Wire and Cable Business Group (Dongguan, Shanghai, Hsinchuang, and Yangmei Plants), Stainless Steel Business Group (Yantai Plant, Yantai Plant, Jiangyin Alloy Plant, Changshu Plant, Taichung Plant, and Yenshui Plant). Yes (II) Has the company established a dedicated non-dedicated or department under the Board of Directors to ensure honest business practices? Does this department periodically report their status of implementation to the Board of Directors? 84 "Corporate (II) The Company's 7th meeting of the Board of Directors of the 17th term approved the Social the establishment of Responsibility Committee" in April 29, 2015, and the 17th meeting of the Board of Directors of the 18th term in November 1, 2019 approved the establishment and organizational charter of the "Sustainable Development Committee" by Social existing merging the Responsibility "Ethical Committee" Management Committee". The Sustainable Development Committee for developing corporate sustainability strategies and sustainability management-related work and management. "Corporate and is responsible promote visions to Implementation status Assessment items Yes No Summary Deviation from Ethical Corporate Management Best Practice Principles for TWSE/TPEx Listed Companies and reasons for deviation Center, centers, including The Committee is composed of an independent director as the Convener, and the Chairman, the Vice Chairman, and all other independent directors as members. The Committee has five the Ethical promotion the Promotion Management Environment, Safety and Health Management Promotion Center, the Green Operation Promotion Center, the Customer Service and Supplier Management Promotion Center, and the Employee Relations and Social Care Promotion Center. The Company's Ethical Management Promotion Center is the responsible unit for formulating and overseeing the implementation of the Company's ethical management policies and preventive measures. It reported to the Board on the implementation in 2023 and the implementation plan for 2024 on January 26, 2024. (III) The Company has established the Ethical Corporate Management Best Practice Principles and the Procedures for Ethical Management and Guidelines for Conduct to regulate Directors, managers and employees in terms of obligations to the Company, external business activities, pecuniary transactions, avoidance of conflicts of interest and the management of classified information. The Company has set up a complaint mailbox on its website that provides a means for filing complaints about violations of honest business practice and sexual harassments, which the Independent Director may receive in real time. A corporate mailbox also exists on the employee portal site, thus providing internal and external personnel with a means to make suggestions and complaints to the Company. Information received shall be handled by the Auditing Office. (IV) The Company actively works to ensure ethical business practices. The Auditing Office (or hired CPA, when necessary) shall regularly audit relevant compliance statuses according to accounting policies, internal control policies, as well as other relevant regulations. The Auditing Office will periodically report its auditing results during Board meetings. (III) Has the company established policies to prevent conflicts of interest, such policies and provided adequate channels of communication? implemented Yes Yes of (IV) Has the Company established an effective accounting system and internal control system for the implementation ethical management, and has its internal audit unit drawn up an audit plan based on the results of the assessment of risk of unethical conduct, in order to verify compliance with such plan for prevention of unethical conduct, or has it engaged a CPA firm to perform the audit? the (V) Does the Company regularly internal and external conduct educational training on ethical management? Yes (V) During new-employee training, the Company periodically states its principles towards ethical management practices. It also periodically holds courses on corporate governance as well as asks ethical management practices and 85 Corporate Governance Report Implementation status Assessment items Yes No Summary Deviation from Ethical Corporate Management Best Practice Principles for TWSE/TPEx Listed Companies and reasons for deviation to participate. The Company's employees Procurement Department also informs suppliers of our ethical management practices principles in order to prevent unethical business practices. 1. The Company regularly conducts annual training on ethical management (including anti- legal compliance (among corruption) and others), which in the annual sustainability report and annual report. is disclosed 2. Through public commitment, information dissemination and education, the Company deepens its management philosophy of integrity and creates a corporate culture of integrity from top to bottom. In 2023, we offered directors courses related to ethical management to sharpen their professional knowledge and skills, and the implementation of ethical management (including legal compliance training, we have established a culture and good ethical management strengthened our commitment to ethical practices. anti-corruption) through and 3. Status of reporting mechanism the Company's (I) Has the Company established concrete reporting and rewards set up convenient systems, reporting and appointed appropriate, any dedicated staffer to deal with the person who has been reported? channels Yes (I) 3. In 2023, we conducted internal training courses on topics such as ethical management, patent education and the TIPS system. The total number of participants who completed the training on ethical management (including anti- corruption), trade secret, and intellectual property rights (including TIPS) reached 1,353, 1,146, and 1,083 respectively. For external promotion, we invited 186 major suppliers to participate in the training. The Company's website provides a "Reporting Violations of Ethical Management Practices and Sexual Harassment" area, which allows people to file complaints about violations against ethical management practices, which the Independent Director may receive in real time. There is also a "company mailbox" on the employee portal website, providing and external personnel with a means to file complaints. The Auditing Office is responsible for handling related recommendations and violations. If the violations are verified, disciplinary action shall be taken in accordance with the Company's regulations. internal In line with the Ethical Corporate Management Best Practice Principles for TWSE/TPEx Listed Companies. Yes (II) Has the Company established standard operating procedures for investigation of, the follow-up steps after the investigation of, and information confidentiality mechanisms for, complaints? related (II) The Company has formulated the Measures for Stakeholder Recommendations and Complaints and Operational Rules for Event Investigations. Therefore, we have formulated the operational procedure for investigation and the handling system, whereby the identity as well as data of 86 Implementation status Assessment items Yes No Summary (III) Has the company adopted any measure to protect the informers inappropriately lest treated? they be Yes Yes 4. Improved Information Disclosure Has the Company disclosed the content of its Ethical Corporate Management Practice Principles as well as related implementation results on its website and the MOPS? Best those complainants, whistleblowers, or other relevant parties will be protected. (III) All reported cases are filed under the classified category, with a case opened to handle the issue. In addition, dedicated personnel are appointed to handling related tasks and issues in order to ensure the privacy of reporter and avoid unfair revenge or treatment. also discloses information; The Company has established a Corporate Governance page on its website to disclose its ethical management- related the it implementation status and execution results of its ethical management practice annual sustainability report and also the Company's Ethical Corporate Management Best Practice Principles, Procedures for Ethical Management and Guidelines for Conduct, and Ethical Conduct Guidelines for Directors of the Board and Managerial Officers on the MOPS. the in Deviation from Ethical Corporate Management Best Practice Principles for TWSE/TPEx Listed Companies and reasons for deviation In line with the Ethical Corporate Management Best Practice Principles for TWSE/TPEx Listed Companies. 5. If the company has established its ethical corporate management principles in accordance with the "Ethical Corporate Management Best Practice Principles for TWSE- and TPEx-listed Companies", please state the difference between such principles and implementation: In line with the "Ethical Corporate Management Best Practice Principles for TWSE/TPEx Listed Companies." 6. Other key information useful for explaining the status of the implementation of honest business practices: (Such as the status of the Company's efforts to review and correct its Ethical Corporate Management Best Practice Principles): In order to encourage R&D, protect technology and R&D achievements, optimize processes, promote product innovation, upgrade and smart manufacturing through the intellectual property rights system, thereby achieving a high-value transformation strategy for the Company's growth, we introduced the Taiwan Intellectual Property Management System (TIPS) and passed the certification in 2020. Later in 2021, we passed and received the Taiwan Intellectual Property Management System (TIPS Class A) recertification. In 2023, we passed TIPS Level A recertification for the third time. This certificate will be valid until December 31, 2025. In 2023, in response to organizational adjustments, the Procurement Management Center will be incorporated into the scope of execution of the TIPS intellectual property management system. Additionally, we have formulated plans in place for the management system and system design of trade secrets, integrating the systematic electronic document confidentiality labeling introduced in 2022 to gradually enhance the strength of confidential information protection. Following the TIPS standards, the intellectual property management policy and its objectives for the year are established, and the implementation status and annual plan were reported to the Board of Directors on November 3, 2023. (Note 1) Note 1: The operation of the Company's intellectual property rights management: https://www.walsin.com/investors/corporate-governance/#pills-information-security (7) If the company has formulated corporate governance principles as well as other related regulations, it should disclose how they can be looked up: For the Company's corporate governance principles as well as relative regulations, please visit on our Company website: https://www.walsin.com/investors/corporate-governance/#pills-major-internal-policies. 87 Corporate Governance Report (8) Other important information helpful for improving understanding of the governance of the company: 1. Further education on themes encompassing corporate governance the Company's Directors have received in 2023: Title Name Training Date From To Organizer Course Title As of December 31, 2023 Training Hours Total in 2023 On this date Chairman Yu-Lon Chiao Vice Chairman Patricia Chiao Director Yu- Cheng Chiao 2023/05/05 2023/05/05 2023/10/20 2023/10/20 2023/05/05 2023/05/05 2023/10/13 2023/10/13 2023/02/23 2023/02/23 2023/07/13 2023/07/13 2023/07/13 2023/07/13 Taiwan Corporate Governance Association Securities and Futures Institute Taiwan Corporate Governance Association Securities and Futures Institute Taiwan Corporate Governance Association Taiwan Corporate Governance Association Taiwan Corporate Governance Association 2023/10/26 2023/10/26 Taiwan Governance Association Corporate 2023/10/26 2023/10/26 Taiwan Governance Association Corporate 2023/05/05 2023/05/05 Taiwan Corporate Governance Association 2023/11/03 2023/11/03 Director Yu-Heng Chiao 2023/11/06 2023/11/06 2023/11/06 2023/11/06 2023/11/06 2023/11/06 Securities and Futures Institute Securities and Futures Institute Securities and Futures Institute Securities and Futures Institute Director Yu-Chi Chiao Director Andrew Hsia Represent ative of Corporate Director Li-Chin Ku 2023/06/17 2023/06/17 Taipei Foundation of Finance 2023/09/04 2023/09/04 2023/10/13 2023/10/13 2023/11/22 2023/11/22 2023/10/20 2023/10/20 2023/11/06 2023/11/06 2023/11/06 2023/11/06 2023/11/06 2023/11/06 2023/03/10 2023/03/10 2023/03/16 2023/03/16 Financial Supervisory Commission Securities and Futures Institute Securities and Futures Institute Securities and Futures Institute Securities and Futures Institute Securities and Futures Institute Securities and Futures Institute Taiwan Corporate Governance Association Center for Financial Law and Crime Prevention New Trends and Prospects of Global Politics and Economics: China-US Rivalry and Cross-Strait Relations 2023 Insider Trading Prevention Seminar New Trends and Prospects of Global Politics and Economics: China-US Rivalry and Cross-Strait Relations 2023 Insider Trading Prevention Seminar and Inclusion in Amazon; AI Smart Operation Lesson Learned Management and Its Application (2050 carbon neutrality) Starting from the Baoshan Plan; The Political and Economic Situation and Finance under the Development of Global Multipolarization to Connect with Local Using Policy Resources Communities to Achieve CSR; International Net-Zero New Technology Development and Challenges Geopolitical Risks, Regional Economic Resilience and the Wrestling of Various Strategic Policies Cultural in Contemporary Architecture; The Development and Implications of the International Carbon Border Adjustment Mechanism New Trends and Prospects of Global Politics and Economics: China-US Rivalry and Cross-Strait Relations TWSE/TPEx Listed Companies - into the Market and Towards Corporate Derivatives Sustainability Seminar The Understanding of the Directors and Senior Executives of the TWSE/TPEx Listed Companies on the Current Supervision of the Competent Authorities The Technological Development and Application Opportunities of the Chatbot, ChatGPT Innovation Insight Social Responding to the New Situations in the World Corporate Governance - ESG Sustainability Project Workshop - Supply Chain Integration The 14th Taipei Corporate Governance Forum 2023 Insider Trading Prevention Seminar 2023 Annual Insider Trading Compliance and Education Seminar 2023 Insider Trading Prevention Seminar The Technological Development and Application Opportunities of the Chatbot, ChatGPT Responding to the New Situations in the World The Understanding of the Directors and Senior Executives of the TWSE/TPEx Listed Companies on the Current Supervision of the Competent Authorities The Bizarre Global Economic Situations in 2023 Promotion of Anti-Money Laundering and Counter- Terrorism Financing Practices and Directors' Legal Obligations and Responsibilities Independ ent Director Ming- Ling Hsueh 2023/05/18 2023/05/25 2023/07/27 2023/09/01 2023/09/07 2023/10/13 2023/12/28 88 2023/05/25 2023/09/01 2023/07/27 Taiwan Corporate Governance Association Taiwan Corporate Governance Association Taiwan Corporate Governance Association 2023/05/18 Taiwan Securities Association Financial Consumer Protection Act and Fair Treatment Driving ESG from Strengthening the Board of Directors - Case Study of the Connection between Senior Executive Compensation and ESG Performance The Role Financial Decision-Making Plays in Business Operations Performing the Professional Functions of Independent Directors with Profit-Seeking Thinking Assistance and Security Innovation Trends in and Risk Management of Digital Technologies and Artificial Intelligence Wangdao Management Accounting and Corporate Governance Taiwan Corporate Governance Association Taiwan Corporate Governance Association Impact of Emerging for/on 2023/09/07 Taiwan Securities Association Information Financial Digital Technologies 2023/10/13 2023/12/28 6 6 13.5 12 12 6 9 17 3 3 3 3 3 3 3 1.5 3 3 3 3 1.5 1.5 6 6 3 3 3 1.5 1.5 3 1 3 3 1 1 1 3 3 1 Title Name Training Date From To Organizer Course Title Training Hours Total in 2023 On this date Independ ent Director Fu- Hsiung Hu Independ ent Director Tyzz-Jiun Duh Independ ent Director Wei- Chuan Gao 2023/05/03 2023/05/03 2023/05/05 2023/05/05 2023/08/21 2023/08/21 Taiwan Corporate Governance Association Taiwan Corporate Governance Association Taiwan Corporate Governance Association 2023/09/28 2023/09/28 Securities and Futures Institute 2023/10/13 2023/10/13 2023/11/01 2023/11/01 2023/10/13 2023/10/13 2023/10/17 2023/10/17 2023/10/24 2023/10/24 2023/06/02 2023/06/02 112/07/14 112/07/14 2023/07/18 2023/07/18 Securities and Futures Institute Taiwan Corporate Governance Association Securities and Futures Institute Foundation of the Taipei Foundation of Finance Taiwan Corporate Governance Association Securities and Futures Institute Chines National Association of Industry and Commerce, Taiwan Chines National Association of Industry and Commerce, Taiwan 2023/08/07 2023/08/07 Taipei Foundation of Finance Corporate Governance Countermeasures from the Perspective of Technology Trends and Information Security Incidents New Trends and Prospects of Global Politics and Economics: China-US Rivalry and Cross-Strait Relations Anit-Money Risk Management Opportunities and Challenges for the Transformation of Taiwan's Industry under the Geopolitics - Exclusive Analysis of PMI/NMI Carbon Management Applications Trading Mechanism Laundering Enterprise Enterprise and and Ethical Management and Fair Treatment How Can Directors Supervise the Company's Enterprise Risk Management and Crisis MANAGEMENT Corporate Governance - Principle of Fair Treatment in the Financial Services Industry Information Security Governance and Strategy, Geopolitics, and Information Security Risks 2023 Insider Trading Prevention Seminar Trade Secret Litigation Practice, Non-Compete Clauses and Cases Mission under Responsible Innovation the Craze: Generative AI and Corporate Governance - Sustainable Governance - Sustainable Development and Sustainable Governance Trends Taipei Foundation of Finance Corporate Governance - Sustainable Environment Carbon Management - Low-Carbon Transformation Path Planning - Carbon Inventory Taipei Foundation of Finance Corporate Governance - Low-carbon Transition Path Planning - Carbon Credits and Carbon Pricing 2023/09/04 2023/09/04 2023/09/18 2023/09/18 2023/07/11 2023/07/11 2023/08/02 2023/08/02 2023/10/11 2023/10/11 2023/10/23 2023/10/23 2023/10/23 2023/10/23 2023/11/16 2023/11/16 2023/11/21 2023/11/21 [CPA Training] Seminar approved by CPA Associations R.O.C. (Taiwan) [CPA Training] Seminar approved by CPA Associations R.O.C. (Taiwan) [CPA Training] Seminar of CPA Associations R.O.C. (Taiwan) [CPA Training] Seminar of CPA Associations R.O.C. (Taiwan) [CPA Training] Seminar of CPA Associations R.O.C. (Taiwan) [CPA Training] Seminar approved by CPA Associations R.O.C. (Taiwan) [CPA Training] Seminar of CPA Associations R.O.C. (Taiwan) Climate-Related Implications for Financial Reports How to Response to Money Laundering Risk Associated with Emerging Technologies Improving Information Security Literacy Latest Anti-Money Laundering Trends 3 21 Income Taxes on Housing Property Transactions and House and Land Transactions 2.0 Amendments Enterprises to the Accounting Standards for Current ESG Reporting 3 3 3 14 9 18 1 3 2 3 3 2 3 3 3 3 3 3 3 3 3 3 3 3 Post-Period Note: Ms. Patricia Chiao, Vice Chairman, resigned on March 11, 2024. 2. For the attendance of Board meetings by Directors, please refer to "Corporate Governance Report 4. Status of Corporate Governance." 89 Corporate Governance Report 3. Further education in corporate governance participated by the Company's managers (including President, Vice President, Managers of BUs, Accounting head, Finance head, etc.) in 2023: Title Name President & President of Commercial Fred Pan and Real Estate BG Training Date From To Organizer Course Title 2023/02/23 2023/02/23 Taiwan Corporate Lesson Learned in Amazon; AI Smart Operation Governance Association Management and Its Application 2023/05/05 2023/05/05 Economics: China-US Rivalry and Cross-Strait 3 Taiwan Corporate New Trends and Prospects of Global Politics and 6 Governance Association Relations 2023/04/20 2023/04/20 Taiwan Institute for The 29th TCCS Board Meeting and CEO Lecture Sustainable Energy Hall 2 As of December 31, 2023 Training Hours Total in 2023 On this date 3 Head of Corporate Governance 2023/05/05 2023/05/05 Taiwan Corporate Governance Association 2023/07/04 2023/07/04 Taiwan Stock Exchange New Trends and Prospects of Global Politics and Economics: China-US Rivalry and Cross-Strait 3 Relations 2023 Cathay Sustainable Finance & Climate Change Summit Hueiping Lo 2023/07/13 2023/07/13 2023/10/20 2023/10/20 2023/10/26 2023/10/26 2023/11/22 2023/11/22 Institute Taiwan Taiwan Corporate The 29th TCCS Board Meeting and CEO Lecture Governance Association Hall Securities and Futures 2023 Insider Trading Prevention Seminar Corporate The 34th TCCS Board Meeting and CEO Lecture Governance Association Hall Securities and Futures 2023 Annual Insider Trading Compliance and Institute Education Seminar 21 6 2 3 2 3 Head of Accounting Kelly Liu 2023/11/20 2023/11/21 Department Accounting Research and Development Foundation Continuing Education Course for Accounting Supervisors of Issuers, Securities Firms, and 12 12 Taiwan Stock Exchange 90 (10) Implementation Status of Internal Control System 1. Statement on Internal Control Walsin Lihwa Corporation Statement on Internal Control System Date: February 23, 2024 In 2023, the Company conducted an internal examination in accordance with its Internal Control Regulations and hereby declares as follows: 1. The Company is aware that it is the Board’s and managers' responsibility to establish, implement and maintain an internal control system, and the Company has set up such a system. The purpose of the system is to ensure the effectiveness and efficiency (including profitability, performance and protection of assets) of the Company's operations, compliance with relevant laws and regulations and that its financial statements are reliable, up to date and easily accessible. Internal control systems have their inherent limitations. No matter how well they are designed, an effective internal control system can only reasonably ensure achievement of the three above objectives. In addition, an internal control system's effectiveness may change as the environment and circumstances change. The internal control system of the Company features a self-monitoring mechanism. Once identified, the Company will take actions to rectify any deficiency. 2. 3. The Company determines whether the design and implementation of its internal control system is effective by referring to the criteria stated in the Regulations Governing Establishment of Internal Control Systems by Public Companies (hereinafter the "Regulations"). The Regulations provides measures for judging the effectiveness of the internal control system. There are five components of an internal control system, as specified in the Regulations, which are broken down based on the management-control process, namely: (1) control environment, (2) risk evaluation and responses, (3) control operation, (4) information and communication and (5) monitoring. Each of the elements in turn contains certain audit items. Refer to the Regulations for details. 4. The Company uses the above criteria to determine whether the design and implementation of its internal control system is effective. 5. After an evaluation of the Company's internal control system based on the above criteria, the Company is of the opinion that, as of December 31, 2023, its internal control system (including supervision and management of subsidiaries) is effective and therefore can reasonably ensure achievement of the above objectives, which include awareness of the degree to which operating results and goals are achieved, compliance with the law and that its financial reporting is reliable, up to date and easily accessible. 6. This statement shall become a principal part of the Company's annual report and prospectus and be made available to the public. Any illegal misrepresentation or omission relating to the public statement above is subject to the legal consequences under Articles 20, 32, 171 and 174 of the Securities and Exchange Act. 7. This statement has been approved on February 23, 2024 by the Board, with none of the 11 Directors present opposing it. Walsin Lihwa Corporation Chairman: Yu-Lon Chiao President: Fred Pan 91 Corporate Governance Report 2. If CPAs are engaged to review the internal control system, their report shall be disclosed: None. (10) Where the Company and its personnel have been penalized according to the law, or the Company has penalized its personnel for having violated its internal control system (and if the result of the penalty is likely to have a material impact on shareholders' interests or the price of securities) as of the day when the annual report was prepared in the most recent year, the contents of such penalty, major deficiencies and corrective actions shall be specified: None. (11) In the most recent year, resolutions passed at the AGM and board meetings, as of the day the annual report was prepared. The Company hosted its 2023 AGM on May 19, 2023 at the 1st Floor Multimedia Conference Room, No.15, Alley 168, Xingshan Road, Neihu District, Taipei City. The following decisions, with implementation details, were made during the meeting: Matters to Be Ratified, Discussed and Elected Proposal 1 Subject: Acknowledgement of the Company's 2022 Business Report and financial statements. Resolution: According to the voting result, the number of affirmative votes exceeded the legal threshold, so the proposal was passed. Execution: This important resolution was announced as material information on the day of the shareholders’ meeting. Proposal 2 Subject: Acknowledgement of the Company's 2022 Profit Distribution Table. Resolution: According to the voting result, the number of affirmative votes exceeded the legal threshold, so the proposal was passed. Execution: June 12, 2023 was the ex-dividend record date and the dividends were paid out on July 6, 2023. (Cash dividend of $1.8 per share was paid out) Proposal 3 Subject: Discussion of the issuance of new common shares for cash to sponsor issuance of global depositary receipts (GDRs) and/or issuance of new common shares for cash via book building. Resolution: According to the voting result, the number of affirmative votes exceeded the legal threshold, so the proposal was passed. Execution: The issuance of 300,000,000 common shares for cash capital increase to sponsor the issuance of GDRs has been approved for effective registration by the Financial Supervisory Commission dated June 26, 2023 (Ref. No.: Jin-Guan-Zheng-Fa-Zi-1120345884), with the issuance price of GDRs equivalent to NT$40.22 per share and the issue date being June 30, 2023. Proposal 4 Subject: Proposal to amend the Articles of Incorporation of the Company. Resolution: According to the voting result, the number of affirmative votes exceeded the legal threshold, so the proposal was passed. Execution: Changes to the corporate registration card were made in accordance with the law and have been approved by the Ministry of the Economic Affairs on May 31, 2023 via a letter (Ref. No.: Jin-So- Shang-Zi-11230094560), and the revised articles were disclosed on our official website. Proposal 5 Subject: Amendments to the Company's Procedures for Lending Funds to Other Parties. 92 Resolution: According to the voting result, the number of affirmative votes exceeded the legal threshold, so the proposal was passed. Execution: Relevant operations were handled in accordance with the amended procedures and the revised articles were disclosed on the Market Observation Post System (MOPS) website and our official website. Proposal 6 Subject: Amendments to the Company's Derivatives Trading Procedures. Resolution: According to the voting result, the number of affirmative votes exceeded the legal threshold, so the proposal was passed. Execution: Relevant operations were handled in accordance with the amended procedures and the revised articles were disclosed on our official website. Proposal 7 Subject: Election Results: Election of the Board of Directors of the 20th term of the Company Directors: Yu-Lon Chiao, Patricia Chiao, Yu-Cheng Chiao, Yu-Heng Chiao, Yu-Chi Chiao, Andrew Hsia, and Chin-Xin Investment Co., Ltd., a total of 7 persons. Independent Directors: Ming-Ling Hsueh, Fu-Hsiung Hu, Tyzz-Jiun Duh, and Wei-Chuan Gao, a total of 4 persons. Execution: The election results were announced as material information on the day of the shareholders' meeting, and the registration of the change of directors was approved by the Ministry of Economic Affairs on May 31, 2023 by the letter (Ref. No.: Jin-So-Shang-Zi-11230094560). Proposal 8 Subject: Proposal to lift the non-compete ban on directors imposed by Article 209 of the Company Act. Resolution: According to the voting result, the number of affirmative votes exceeded the legal threshold, so the proposal was passed. Execution: The announcement of material information was completed on the day of the shareholders' meeting. Important resolutions adopted by 2023 Board meetings as of the day of this annual report 2023/01/10 (22nd meeting of the 19th term) Important Resolution: Result: Important Resolution: Result: Important Resolution: Result: Important Resolution: Result: Important Resolution: Result: Important Resolution: Result: Acknowledgement of the Company’s endorsement and guarantee for its subsidiary, Borrego Energy, LLC. Proposal passed. Proposal to approve the Company's 2023 annual business plan. Proposal passed. Evaluation of the independence and qualification of the Company's CPAs and the quality of the CPA firm's audit for each case, as well as the annual compensation payable to the CPA firm. Proposal passed. Yantai Walsin Stainless Steel Co., Ltd. intends to update its investment plan and amount for its hot rolling plant and cold finished bar plant due to its investment in automated equipment. Proposal passed. Amendments to certain articles of the Company’s Board of Directors Meeting Regulations. Proposal passed. Amendments to the Company's Derivatives Trading Procedures. Proposal passed. 93 Corporate Governance Report Important Resolution: Result: Important Resolution: Result: Important Resolution: Result: Important Resolution: Result: Important Resolution: Result: Recusal: Proposal to Amendments to the Company's Procedures for Lending Funds to Other Parties. Proposal passed. Proposal to approve the loan of funds by Walsin International Investment Co., Ltd. to the Company and those between the subsidiaries in China, in a total amount of US$1 billion and RMB1.48 billion respectively. Proposal passed. Proposal to lift the non-compete ban on the Company's managerial officers. Proposal passed. Proposal to review managers' performance evaluation as well as bonuses and compensation for 2022. Proposal passed. Proposal for the distribution of the performance bonus for Chairman and Vice Chairman for 2022. Proposal passed. Yu-Lon Chiao and Patricia Chiao. Distribution of remuneration to directors and employees (including managerial officers) for 2022. 2023/02/24 (23rd meeting of the 19th term) Important Resolution: Result: Important Resolution: Result: Important Resolution: Result: Important Resolution: Result: Important Resolution: Proposal passed. Proposal to approve the 2022 Profit Distribution Table. Proposal passed. Proposal to approve the 2022 Internal Control System Statement. Proposal passed. Amendments to certain provisions of the Company's Article of Incorporation. Proposal passed. The Company and its subsidiary, Walsin Energy Cable System Co., Ltd., intends to enter into a joint venture agreement, a technical service agreement, and a technology license agreement with NKT HV Cables AB (based in Sweden), a wholly-owned subsidiary of NKT Cables Group A/S (based in Denmark). Proposal passed. The Company intends to participate in the capital injection into its subsidiary, Walsin Energy Cable System Co., Ltd., in the amount of NT$2,699 million. Proposal passed. PT. Sunny Metal Industry intends to upgrade its cold nickel production lines at PT. Indonesia Weda Bay Industrial Park, with a proposed investment amount of USD 93 million. Proposal passed. Yantai Walsin Stainless Steel Co., Ltd. intends to invest RMB178 million in the purchase of housing for experts and talents to meet operational needs. Proposal passed. Proposal to issue domestic straight corporate bonds within the amount of NT$10 billion. Proposal passed. Walsin Singapore Pte. Ltd. proposes to lend US$175,750,000 to PT. Sunny Metal Industry under a non-revolving line of credit. Proposal passed. Walsin Singapore Pte. Ltd. proposes to lend US$27,500,000 to PT. Westrong Metal Industry under a non-revolving line of credit. Result: Important Resolution: Result: Important Resolution: Result: Important Resolution: Result: Important Resolution: Result: Important Resolution: Result: Important Resolution: Result: Proposal passed. 94 Important Resolution: Result: Important Resolution: Result: Important Resolution: Result: Important Resolution: Result: Important Resolution: Result: Important Resolution: Result: Recusal: Important Resolution: Result: Important Resolution: Result: Borrego Energy, LLC, a U.S. subsidiary of the Company, intends to sell the business of its solar energy and its energy storage, procurement, and trading platform departments. Proposal passed. Amendments to certain provisions of the Company's internal control system. Proposal passed. Amendments to the Company's Sustainable Development Practice Principles. Proposal passed. Amendments to the Company's Corporate Governance Best Practice Principles. Proposal passed. Proposal to nominate the candidates for the Directors of the Company of the 20th term. Proposal passed. Proposal to lift the non-compete ban on directors imposed by Article 209 of the Company Act. Proposal passed. The parties have recused themselves according to their conflicts of interest. Proposal to hold the Company's 2023 Annual General Meeting of Shareholders through video conferencing. Proposal passed. Proposal to lift the non-compete ban on the Company's managerial officers. Proposal passed. 2023/03/24 (24th meeting of the 19th term) Important Resolution: Result: Proposal for a capital injection through an offering of global depositary receipts (GDRs) by issuing new common shares and/or a capital injection by issuing new common shares. The proposal has been amended to "Proposal for a capital injection through an offering of global depositary receipts (GDRs) by issuing new common shares and/or a capital injection by issuing new common shares through book-building." The amended proposal was passed after the Chairman consulted all directors present on whether to approve the same. Proposal to add items to the agenda of the Company's 2023 Annual General Meeting of Shareholders. Proposal passed. Proposal to carry out a capital injection into a wholly-owned subsidiary of the Company, Walsin Singapore Pte. Ltd., for an amount of USD 45 million. Proposal passed. Walsin Singapore Pte. Ltd. proposes to lend US$90,000,000 to PT. Westrong Metal Industry under a non-revolving line of credit. Proposal passed. Walsin International Investments Limited proposes to lend USD 75 million to PT. Sunny Metal Industry under a non-revolving line of credit. Proposal passed. Important Resolution: Result: Important Resolution: Result: Important Resolution: Result: Important Resolution: Result: 2023/05/05 (25th meeting of the 19th term) Important Resolution: In order to develop its submarine cable business, Walsin Energy Cable System Co., Ltd., a subsidiary of the Company, proposes to acquire the joint right of use for the Kaohsiung Port A6-A land from the Company. Proposal passed. Result: 95 Corporate Governance Report Important Resolution: Result: Important Resolution: Result: Important Resolution: Result: For the purpose of developing its submarine cable business, Walsin Energy Cable System Co., Ltd., a subsidiary of the Company, proposes an investment of NT$10.7 billion in the establishment of a submarine cable production plant and equipment. Proposal passed. The Italian subsidiary of the Company, Cogne Acciai Speciali S.p.A., in which the Company indirectly holds a 70% equity, proposes to acquire 100% equity of Special Melted Products Limited (based in the UK) for the needs of business development. Proposal passed. In response to the business development capital requirements of Cogne Acciai Speciali S.p.A. ("CAS"), in which the Company indirectly holds a 70% equity, the Company proposes to invest in CAS up to EUR 140 million according to its shareholding ratio, and under the shareholding structure, to first inject capital into the subsidiary Walsin Lihwa Europe S.a r.l., and then through its subsidiary MEG S.A., to inject capital into CAS in cash. Proposal passed. 2023/05/19 (1st meeting of the 20th term) Important Resolution: Result: Important Resolution: Result: Recusal: Important Resolution: Result: Recusal: Important Resolution: Result: Recusal: Important Resolution: Result: Recusal: Request for the Board of Directors to elect the Chairman and Vice Chairman of the Board of Directors of the Company. Proposal passed. Proposal for the appointment of members to the Nomination Committee of the Company of the second term. Proposal passed. Yu-Lon Chiao, Ming-Ling Hsueh, Fu-Hsiung Hu, Tyzz-Jiun Duh, and Wei-Chuan Gao Request for the Board of Directors to recommend a Convener for the Audit Committee of the third term. Proposal passed. Fu-Hsiung Hu Proposal for the appointment of members and the recommendation of a Convener for the Compensation Committee of the Company of the fifth term. Proposal passed. Ming-Ling Hsueh, Fu-Hsiung Hu, Tyzz-Jiun Duh, and Wei-Chuan Gao Proposal for the appointment of members and the recommendation of a Convener for the Sustainable Development Committee of the Company of the third term. Proposal passed. Yu-Lon Chiao, Patricia Chiao, Ming-Ling Hsueh, Fu-Hsiung Hu, Tyzz-Jiun Duh, and Wei-Chuan Gao 2023/05/29 (2nd meeting of the 20th term) Important Resolution: Result: Important Resolution: Result: Important Resolution: Result: Proposal for a capital injection through an offering of global depositary receipts (GDRs) by issuing new common shares. Proposal passed. PT. Sunny Metal Industry in Indonesia and Walsin Singapore Pte. Ltd. propose to lend US$75,000,000 to PT. Westrong Metal Industry under a non-revolving line of credit. Proposal passed. Walsin Singapore Pte. Ltd. proposes to extend a non-revolving loan facility totaling USD 20.5 million to Innovation West Mantewe Pte. Ltd. Proposal passed. 2023/08/11 (3rd meeting of the 20th term) Important Resolution: For the development of its submarine cable business, Walsin Energy Cable System Co., Ltd., a subsidiary of the Company, obtained the joint use right of the land at Kaohsiung Port A62 from the Company on October 26, 2023, due to the need for plant operation. Please ratify the same. Ratification passed. The Italian subsidiary of the Company, Cogne Acciai Speciali S.p.A., proposes to finance its Swedish subsidiary, Degerfors Long Products AB, with a non-revolving credit facility of EUR 10 million. Proposal passed. Result: Important Resolution: Result: 96 Important Resolution: Result: Important Resolution: Result: Important Resolution: Result: Important Resolution: Result: Important Resolution: Result: Important Resolution: Result: Important Resolution: Result: Important Resolution: Result: The Italian subsidiary of the Company, Cogne Acciai Speciali S.p.A., proposes to finance Special Melted Products Limited (based in the United Kingdom) with a non-revolving credit facility of ERU 12 million. Proposal passed. A wholly-owned subsidiary of the Company, Walsin Singapore Pte. Ltd., proposes to dispose of its equity of Indonesian PT. Westrong Metal Industry. Proposal passed. A wholly-owned subsidiary of the Company, Walsin Singapore Pte. Ltd., proposes to acquire 75% of the shares of Berg Holding Limited (Hong Kong). Proposal passed. Proposal to lift the non-compete ban on the Company's managerial officers. Proposal passed. In response to its capital expenditure needs, Yantai Walsin Stainless Steel Co., Ltd., a subsidiary of the Company in mainland China, proposes to apply for a mid-term loan from financial institutions, for which the Company will provide an endorsement and guarantee. Proposal passed. In response to the Company's increase in equity of the Indonesian subsidiary PT. Sunny Metal Industry ("Sunny"), it is proposed to finance Sunny with a loan of USD 70 million from Walsin Singapore Pte. Ltd. ("WLS") and to cancel the limits of loans totaling USD 61.09 million provided by WLS to PT. Walhsu Metal Industry (Indonesia) and PT. Westrong Metal Industry (Indonesia). Proposal passed. Proposal to amend the Company’s internal control system. Proposal passed. Walsin (China) Investment Co., Ltd., a subsidiary of the Company, proposes to finance Hangzhou Walsin Power Cable Co., Ltd. with a non-revolving credit facility of RMB 80 million. Proposal passed. 2023/11/03 (4th meeting of the 20th term) Important Resolution: For the development of its submarine cable business, Walsin Energy Cable System Co., Ltd., a subsidiary of the Company, obtained the joint use right of the land at Kaohsiung Port A62 from the Company on October 26, 2023, due to the need for plant operation. Please ratify the same. Ratification passed. To develop its submarine cable business, Walsin Energy Cable System Co., Ltd., a subsidiary of the Company, proposes that the Company enter into a lease and port facility operation agreement with Taiwan International Ports Corporation, Ltd., Kaohsiung Branch for the A6 Port and its rear space at Kaohsiung Port. Proposal passed. Formulation of the Company's Procedures for Governing Financial and Business Matters Between this Corporation and its Related Parties. Proposal passed. Proposal to change the position of Chief Accounting Officer and Manager. Proposal passed. Proposal to participate in the subscription for new shares issued through a cash capital increase in 2023 by Winbond Electronics Corporation. Proposal passed. Yu-Lon Chiao, Patricia Chiao, Yu-Cheng Chiao, Yu-Heng Chiao, and Yu-Chi Chiao Proposal for Jiangyin Walsin Steel Cable Co., Ltd., a subsidiary of the Company, to sell its factories and office premises to another subsidiary of the Company, Jiangyin Walsin Specialty Alloy Materials Co., Ltd., for a transaction price of RMB 62,190,000. Proposal passed. Proposal to extend a non-revolving credit facility totaling US$50,000,000 to a U.S. subsidiary of the Company, Borrego Energy Holdings, LLC, and its subsidiary, Borrego Energy, LLC. 97 Result: Important Resolution: Result: Important Resolution: Result: Important Resolution: Result: Important Resolution: Result: Recusal: Important Resolution: Result: Important Resolution: Corporate Governance Report Result: Important Resolution: Result: Important Resolution: Result: Important Resolution: Result: Important Resolution: Result: Important Resolution: Result: Proposal passed. Walsin Info-Electric Corp., a subsidiary of the Company, proposes to extend a non-revolving credit facility of NT$100,000,000 to the Company. Proposal passed. Walsin (China) Investment Co., Ltd., a subsidiary of the Company, proposes to extend a non- revolving credit facility of RMB 190,000,000 to XiAn Walsin Metal Product Co., Ltd. Proposal passed. A wholly-owned subsidiary of the Company, Walsin Singapore Pte. Ltd., proposes to lend funds to its Indonesian subsidiary, PT. Sunny Metal Industry, under a non-revolving line of US$75 million. Proposal passed. Cogne Acciai Speciali S.p.A., an Italian subsidiary of the Company, proposes to provide an endorsement and guarantee for its Swedish subsidiary, Degerfors Long Products AB. Proposal passed. Cogne Acciai Speciali S.p.A., an Italian subsidiary of the Company, proposes to extend a non- revolving credit facility of GBP 1,920,000 to its UK subsidiary, Special Melted Products Limited. Proposal passed. 2023/12/13 (5th meeting of the 20th term) Important Resolution: Result: Important Resolution: Result: Dongguan Walsin Wire & Cable Co., Ltd., a subsidiary of the Company, proposes to acquire a 60% equity interest in Hangzhou Walsin Power Cable Co., Ltd. Proposal passed. Walsin (China) Investment Co., Ltd., a subsidiary of the Company, proposes to finance Hangzhou Walsin Power Cable Co., Ltd. with a revolving credit facility of RMB 80 million. Proposal passed. 2024/01/26 (6th meeting of the 20th term) Important Resolution: Result: Important Resolution: Result: Important Resolution: Proposal to approve the Company's 2024 annual business plan. Proposal passed. Evaluation of the independence and qualification of the Company's CPAs and the quality of the CPA firm's audit for each case, as well as the annual compensation payable to the CPA firm. Proposal passed. In order to expand the production capacity of high-voltage cables in Hsinchuang Plant, improve the voltage level of testing equipment, and expand business, the Company's Wire and Cable Business Group plans to add testing and production equipment. Proposal passed. Proposal to update the investment plan and investment amount of submarine cable production plant and equipment set up by Walsin Energy Cable System Co., Ltd., a subsidiary of the Company. Proposal passed. Cogne Acciai Speciali S.p.A., the Company's Italian subsidiary, intends to acquire 65% of the shares of Com. Steel Inox S.p.A. (Italy). Proposal passed. PT. Walsin Nickel Industrial Indonesia intends to lend the funds to the Company and its Singapore subsidiary, Walsin Singapore Pte. Ltd. in the total amount of US$100 million. Proposal passed. Walsin International Investments Limited, a subsidiary of the Company in Hong Kong, intends to lend the Company US$200 million, and lend Walsin (China) Investment Co., Ltd., the Company's subsidiary in China, US$320 million (or the equivalent of RMB2.22 billion) and RMB1.78 billion. Proposal passed. Amendments to the Company's Risk Management Policy and Procedures. Proposal passed. Amendments to the Company’s Board of Directors Meeting Regulations. Proposal passed. Result: Important Resolution: Result: Important Resolution: Result: Important Resolution: Result: Important Resolution: Result: Important Resolution: Result: Important Resolution: Result: 98 Important Resolution: Result: Important Resolution: Result: Recusal: Proposal to review managers' performance evaluation as well as bonuses and compensation for 2023. Proposal passed. Proposal for the distribution of the performance bonus for Chairman and Vice Chairman for 2023. Proposal passed. Yu-Lon Chiao and Patricia Chiao 2024/02/19 (7th meeting of the 20th term) Important Resolution: Result: Cogne Acciai Speciali S.p.A., the Company's Italian subsidiary, intends to acquire 100% equity interest in Mannesmann Stainless Tubes GmbH (based in Germany). Proposal passed. Distribution of remuneration to directors and employees (including managerial officers) for 2023. 2024/02/23 (8th meeting of the 20th term) Important Resolution: Result: Important Resolution: Result: Important Resolution: Result: Important Resolution: Result: Important Resolution: Proposal passed. Proposal to approve the 2023 Profit Distribution Table. Proposal passed. Proposal to approve the 2023 Internal Control System Statement. Proposal passed. Amendments to certain provisions of the Company's internal control system. Proposal passed. PT. Sunny Metal Industry and PT. Walsin Nickel Industrial Indonesia, the Indonesian subsidiaries of the Company, intend to inject capital into their Indonesian subsidiaries, PT. Walhsu Metal Industry, to support the construction of their high-grade nickel matte production line. Proposal passed. Amendments to the Company's Article of Incorporation. Result: Important Resolution: Result: Important Resolution: Result: Important Resolution: Result: Important Resolution: Result: Important Resolution: Result: Important Resolution: Result: Important Resolution: Result: Recusal: Proposal passed. Proposal to issue domestic straight corporate bonds. Proposal passed. Walsin Energy Cable System Co., Ltd., a subsidiary of the Company, intends to request the Company to provide endorsement and guarantee to the financial institutions for loans in response to the capital needs for the construction of the plant. Proposal passed. Walsin Singapore Pte. Ltd. proposes to lend US$175,750,000 to PT. Sunny Metal Industry under a non-revolving line of credit. Proposal passed. Amendments to the Company's Audit Committee Charter. Proposal passed. Amendments to the Company's Sustainable Development Committee Charter. Proposal passed. Proposal to lift the non-compete ban on directors imposed by Article 209 of the Company Act. Proposal passed. Wei-Chuan Gao. 99 Corporate Governance Report Important Resolution: Result: Important Resolution: Result: Proposal to hold the Company's 2024 Annual General Meeting of Shareholders through video conferencing. Proposal passed. Proposal to lift the non-compete ban on the Company's managerial officers. Proposal passed. 2024/03/11(9th meeting of the 20th term) Important Resolution: Result: Proposal to elect one director of the Company and to add items to the agenda of the Company's 2024 Annual General Meeting of Shareholders. Proposal passed. (12) (13) In the most recent year, as of the day the annual report was prepared, directors held different opinions (on record or with written statement) about important resolutions passed at Board meetings and the major contents are: None. In the most recent year, as of the day the annual report was prepared, any of Chairman, President, accounting manager, financial manager, internal audit manager, corporate governance manager and R&D manager resigned or was discharged: Title Name Onboarding Date Dismissal Date March 20, 2024 Reasons for Resignation or Dismissal Accounting Manager Vice Chairman Richard Wu 2018/03/01 2023/11/03 Position transfer Patricia Chiao 1981/06/01 2024/03/11 Resignation 5. Information on CPAs' fees CPA Firm CPA Audit Period Audit Fee Non-Audit Fee Total Remarks Deloitte Taiwan Wen-Yea Shyu and Ko- Chang Wu 2023/01/01~ 2023/12/31 NT$20,410 NT$25,412 NT$45,822 The non-audit fees were mainly for taxation compliance, advice on, tax analysis and due diligence of investment projects, consultation and assurance of sustainability reports, and issuance of GDRs. (I) Change of CPA firm and the audit fees paid in the year of the change are less than those paid in the previous year: Not applicable. (II) Audit fees paid in the current year are at least 10% less than those paid in the previous year: Not applicable. 6. Information on the replacement of CPAs: None. 7. Chairman, President, or managers responsible for financial or accounting affairs who worked for the firm to which the certifying CPA belongs or its affiliate in the most recent year: None. 100 8. Transfer and pledge of shares of the directors, managers and shareholders holding more than 10% of the company's shares (I) Changes to the shares of the directors, managers and shareholders holding more than 10% of the company's shares: Title Name Chairman Vice Chairman Director Director Director Director Director Director Independent Director Independent Director Independent Director Independent Director Independent Director Independent Director Yu-Lon Chiao Patricia Chiao (Note 5) Yu-Cheng Chiao Yu-Heng Chiao Yu-Chi Chiao (Note 1) Andrew Hsia Wei-Shin Ma (Note 2) Chin-Xin Investment Co., Ltd. Representative: Li-Chin Ku (Note 1) Representative: Pei- Ming Chen (Note 2) Ming-Ling Hsueh Fu-Hsiung Hu Tyzz-Jiun Duh (Note 1) Wei-Chuan Gau (Note 1) King-Ling Du (Note 2) Shiang-Chung Chen (Note 2) Fred Pan 2023 No. of shares held Increase (decrease) 0 0 0 0 650,000 0 0 Shares pledged Increase (decrease) 0 0 0 0 0 0 0 Current fiscal year up to March 19, 2024 Shares No. of pledged shares held Increase Increase (decrease) (decrease) 0 0 0 0 0 0 0 0 0 0 0 0 0 0 603,000 (33,000,000) 0 33,000,000 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 C.C. Chen (114,804) (500,000) (216,000) Jin-Renn Leu President and Senior General Manager of Real Estate BG Executive Vice President & Vice President of Finance President of Insulated Wire & Cable BG President of Stainless Steel BG President of Commodity BG Head of Corporate Governance Hueiping Lo Head of Accounting Dept. Head of Accounting Dept. Shareholders holding over 10% of outstanding shares Note 1: From May 19, 2023, new directors were re-elected, with equity changes calculated from that date. Note 2: They were dismissed upon the expiration of their term on May 19, 2023, with equity changes calculated up to (100,000) (151,000) (140,000) (324,000) 0 (100,000) 0 0 0 0 Richard Wu (Note 3) Kelly Liu (Note 4) Kevin Niu Josh Chia 0 0 0 0 0 None 0 0 0 0 0 0 0 0 0 0 0 - - - - that date. Note 3: From November 3, 2023, adjustments were made to his position, with equity changes calculated up to that date. Note 4: From November 3, 2023, she was newly appointed, with equity changes calculated from that date. Note 5: She resigned on March 11, 2024, with equity changes calculated up to that date. 101 Corporate Governance Report (2) Information on change in the number of shares retained: Name Reason for Share Transfer Transaction Date Counterparty Relationship between the Counterparty and the Company, its Directors, Managerial Officers and Shareholders Holding More Than 10% of the Shares March 19, 2024 No. of Shares Transaction Price Yu-Chi Chiao Acquisition: Gift 2023/6/8 Tzu-Han Chiao Son 650,000 NT$45 (3) Information on Share Pledges: None. 9. Information on relationships amongst the top ten shareholders and their relationships with spouses or relatives within the second degree of kinship March 19, 2024 Shares Held Themselves Shares Held by Spouse and Underage Children Shares Held Under Name of Others Name No. of Shares Shareholding Ratio No. of Shares Shareholding Ratio No. of Shares Shareholding Ratio Chin-Xin Investment Co., Ltd. 248,002,375 6.15% - - - - Chin-Xin Investment Co., Ltd. Representative: Yu-Cheng Chiao 41,001,551 1.02% 19,502,428 0.48% - - Remark - - Name and relationships of related parties to top ten shareholders (spouse and relatives within the second degree) (Note 1) Name Relationship Winbond Electronics Corporation Patricia Chiao Huali Investment Co., Ltd. Yu-Heng Chiao Winbond Electronics Corporation Patricia Chiao Huali Investment Co., Ltd. Yu-Heng Chiao Its chairman is the same as the chairman of said institutional shareholder She is a second- degree relative of the chairman of said institutional shareholder Its chairman is a second-degree relative of the chairman of said institutional shareholder He is a second- degree relative of the chairman of said institutional shareholder Its chairman is the same as the chairman of said institutional shareholder She is a second- degree relative of the chairman of said institutional shareholder Its chairman is a second-degree relative of the chairman of said institutional shareholder He is a second- degree relative of the chairman of said institutional shareholder 102 Shares Held Themselves Shares Held by Spouse and Underage Children Shares Held Under Name of Others Name No. of Shares Shareholding Ratio No. of Shares Shareholding Ratio No. of Shares Shareholding Ratio Name and relationships of related parties to top ten shareholders (spouse and relatives within the second degree) (Note 1) Name Relationship Remark Winbond Electronics Corporation 247,527,493 6.14% - - - - Winbond Electronics Corporation Representative: Yu-Cheng Chiao 41,001,551 1.02% 19,502,428 0.48% - - Chin-Xin Investment Co., Ltd. Patricia Chiao Huali Investment Co., Ltd. Yu-Heng Chiao Chin-Xin Investment Co., Ltd. Patricia Chiao Huali Investment Co., Ltd. Yu-Heng Chiao Its chairman is the same as the chairman of said institutional shareholder She is a second- degree relative of the chairman of said institutional shareholder Its chairman is a second-degree relative of the chairman of said institutional shareholder She is a second- degree relative of the chairman of said institutional shareholder Its chairman is the same as the chairman of said institutional shareholder She is a second- degree relative of the chairman of said institutional shareholder Its chairman is a second-degree relative of the chairman of said institutional shareholder He is a second- degree relative of the chairman of said institutional shareholder TECO Electric and Machinery Co., Ltd. Investment account of LGT Bank (Singapore) under the custody of Business Department of Standard Chartered Bank Rong Chiang International Ltd. Fund Account of Yuanta Taiwan High Dividend ETF 210,332,690 5.22% 183,213,000 4.54% 171,993,651 4.27% 133,328,512 3.31% - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Note 2 - - 103 Corporate Governance Report Shares Held Themselves Shares Held by Spouse and Underage Children Shares Held Under Name of Others Name No. of Shares Shareholding Ratio No. of Shares Shareholding Ratio No. of Shares Shareholding Ratio Patricia Chiao 109,085,587 2.71% - - - - Huali Investment Co., Ltd. 106,994,366 2.65% - - - - Huali Investment Co., Ltd. Representative: Yu-Chi Chiao 52,285,470 1.30% 244,033 0.01% - - Name and relationships of related parties to top ten shareholders (spouse and relatives within the second degree) (Note 1) Name Relationship Chin-Xin Investment Co., Ltd. Winbond Electronics Corporation Huali Investment Co., Ltd. Yu-Heng Chiao Chin-Xin Investment Co., Ltd. Winbond Electronics Corporation Patricia Chiao Yu-Heng Chiao Chin-Xin Investment Co., Ltd. Winbond Electronics Corporation Patricia Chiao Yu-Heng Chiao Its chairman is a second-degree relative of said shareholder Its chairman is a second-degree relative of said shareholder Its chairman is a second-degree relative of said shareholder He is a second- degree relative of said shareholder Its chairman is a second-degree relative of the chairman of said institutional shareholder Its chairman is a second-degree relative of the chairman of said institutional shareholder She is a second- degree relative of the chairman of said institutional shareholder He is a second- degree relative of the chairman of said institutional shareholder Its chairman is a second-degree relative of the chairman of said institutional shareholder Its chairman is a second-degree relative of the chairman of said institutional shareholder She is a second- degree relative of the chairman of said institutional shareholder He is a second- degree relative of the chairman of said institutional shareholder Chunghwa Post Co., Ltd. 76,000,981 1.89% - - - - - - 104 Remark - - - - - - - - - - - - - Shares Held Themselves Shares Held by Spouse and Underage Children Shares Held Under Name of Others Name No. of Shares Shareholding Ratio No. of Shares Shareholding Ratio No. of Shares Shareholding Ratio Yu-Heng Chiao 65,343,810 1.62% 4,324,192 0.11% - - Name and relationships of related parties to top ten shareholders (spouse and relatives within the second degree) (Note 1) Name Relationship Chin-Xin Investment Co., Ltd. Winbond Electronics Corporation Patricia Chiao Huali Investment Co., Ltd. Its chairman is a second-degree relative of said shareholder Its chairman is a second-degree relative of said shareholder She is a second- degree relative of said shareholder Its chairman is a second-degree relative of said shareholder Remark - - - - Note 1: Disclosure of relationship pursuant to rules indicated on the issuer's financial statement. Note 2: The shareholder was a foreign fund account and inquiries have been made of its representative with relevant information requested: None. Note 3: The shareholding ratios are rounded to the nearest hundredth percent. 105 Corporate Governance Report 10. The number of shares of the same investee held by the Company, its directors, managers and which the Company controls directly or indirectly, with the aggregate shareholding percentages Re-Investment Companies (Note 1) Investment by the Company As of December 31, 2023; Units: Shares; % Investment of directors, managers or businesses under their direct or indirect control Combined Investment Walsin Lihwa Holdings Limited Concord Industries Ltd. Ace Result Global Limited Min Maw Precision Industry Corp. Hua Tuo Green Resources Co., Ltd. Chin-Cherng Construction Co. Walsin Info-Electric Corp. PT. Walsin Lippo Industries PT. Walsin Lippo Kabel Joint Success Enterprises Limited Chin-Xin Investment Co., Ltd Tsai Yi Corporation Han-You Venture Capital Co., Ltd. Winbond Electronics Corporation Walton Advanced Engineering, Inc. Walsin Technology Corporation PT. Walsin Nickel Industrial Indonesia Walsin Precision Technology Sdn. Bhd. Walsin Singapore Pte. Ltd. Walsin Energy Cable System Co., Ltd. Walsin Europe S.a r.l. PT Walsin Research Innovation Indonesia Walsin America, LLC PT CNGR Walsin New Energy and Technology Indonesia Innovation West Mantewe Pte. Ltd. PT CNGR Walsin New Mining Industry Investment Indonesia Percentage Number of shares Number of shares 2,730,393 297,498,375 44,739,988 100.00 100.00 100.00 34,837,100 100.00 1,828,287 100.00 529,955,805 29,854,246 10,500 2,999,500 21,344,562 179,468,270 49,831,505 - 99.22 - 99.51 - 70.00 70.00 - 49.05 22,175,438 37.00 64,579,708 33.97 12,070,677 - - - - - Percentage Number of shares 2,730,393 - - 297,498,375 44,739,988 - Percentage 100.00 100.00 100.00 - - 34,837,100 100.00 1,828,287 100.00 - 529,955,805 29,854,246 - 10,500 - - 2,999,500 50.95 43,520,000 13.31 244,047,978 61,902,182 8.23 99.22 99.51 70.00 70.00 100.00 50.31 42.20 26,670,699 26.67 1,934,486 1.94 28,605,185 28.61 919,380,016 21.99 403,096,476 9.65 1,322,476,492 31.64 109,628,376 21.17 16,047,253 3.10 125,675,629 24.27 88,902,325 18.30 135,818,629 27.96 224,720,954 46.26 500,000 50.00 420,000 42.00 920,000 92.00 32,178,385 100.00 733,000,000 100.00 270,000,000 90.00 12,000 100.00 - - - - - 32,178,385 100.00 - 733,000,000 100.00 - 270,000,000 90.00 12,000 100.00 13,930 99.50 70 0.50 14,000 100.00 (Note 2) 100.00 140,651 29.17 40 40.00 22,257 29.17 - - - - - - - - (Note 2) 100.00 140,651 29.17 40 40.00 22,257 29.17 Note 1: These are investments by the Company that adopt the equity method of accounting. Note 2: Walsin America, LLC is a non-stock corporation, with a paid-in capital of USD 81,302,107, which is wholly contributed by the Company. 106 IV Fundraising Overview 1. The Company’s Capital and Shares (1) Sources of Share Capital 1. Historical Sources of Share Capital MM/YY Issua nce Price Authorized capital Paid-in capital Remarks Shares Amount Shares Amount Sources of capital Paid with property other than cash 11/02 10 6,500,000,000 65,000,000,000 3,512,976,276 35,129,762,760 06/03 10 6,500,000,000 65,000,000,000 3,412,976,276 34,129,762,760 11/03 10 6,500,000,000 65,000,000,000 3,366,067,276 33,660,672,760 01/04 10 6,500,000,000 65,000,000,000 3,266,067,276 32,660,672,760 04/04 10 6,500,000,000 65,000,000,000 3,174,491,276 31,744,912,760 07/04 10 6,500,000,000 65,000,000,000 3,078,236,276 30,782,362,760 08/04 10 6,500,000,000 65,000,000,000 3,079,012 601 30,790,126,010 05/05 10 6,500,000,000 65,000,000,000 3,006,294,601 30,062,946,010 08/05 10 6,500,000,000 65,000,000,000 3,310,913,261 33,109,132,610 04/06 10 6,500,000,000 65,000,000,000 3,244,314,261 32,443,142,610 11/08 10 6,500,000,000 65,000,000,000 3,194,314,261 31,943,142,610 02/09 10 6,500,000,000 65,000,000,000 3,179,200,422 31,792,004,220 09/09 10 6,500,000,000 65,000,000,000 3,119,200,422 31,192,004,220 11/09 10 6,500,000,000 65,000,000,000 3,069,200,422 30,692,004,220 12/10 10 6,500,000,000 65,000,000,000 3,609,200,422 36,092,004,220 01/11 10 6,500,000,000 65,000,000,000 3,614,890,804 36,148,908,040 04/11 10 6,500,000,000 65,000,000,000 3,616,000,258 36,160,002,580 06/13 10 6,500,000,000 65,000,000,000 3,576,000,258 35,760,002,580 05/15 10 6,500,000,000 65,000,000,000 3,516,000,258 35,160,002,580 10/16 10 6,500,000,000 65,000,000,000 3,396,000,258 33,960,002,580 06/17 10 6,500,000,000 65,000,000,000 3,366,000,258 33,660,002,580 08/18 10 6,500,000,000 65,000,000,000 3,326,000,258 33,260,002,580 09/20 10 6,500,000,000 65,000,000,000 3,286,000,258 32,860,002,580 12/20 10 6,500,000,000 65,000,000,000 3,226,000,258 32,260,002,580 Treasury stock capital decreased by 100,000,000 shares Treasury stock capital decreased by 100,000,000 shares Treasury stock capital decreased by 46,909,000 shares Treasury stock capital decreased by 100,000,000 shares Treasury stock capital decreased by 91,576,000 shares Treasury stock capital decreased by 96,255,000 shares Bond conversion entitlement certificates converted to common shares Treasury stock capital decreased by 72,718,000 shares Capital increased by earnings recapitalization by 304,618,660 shares Treasury stock capital decreased by 66,599,000 shares Treasury stock capital decreased by 50,000,000 shares Treasury stock capital decreased by 27,124,000 shares and overseas convertible bonds converted to 12,010,161 common shares Treasury stock capital decreased by 60,000,000 shares Treasury stock capital decreased by 50,000,000 shares Cash capital increased by 540,000,000 shares Overseas convertible bonds converted to 5,690,382 shares Overseas convertible bonds converted to 1,109,454 Treasury stock capital decreased by 40,000,000 shares Treasury stock capital decreased by 60,000,000 shares Treasury stock capital decreased by 120,000,000 shares Treasury stock capital decreased by 30,000,000 shares Treasury stock capital decreased by 40,000,000 shares Treasury stock capital decreased by 40,000,000 shares Treasury stock capital decreased by 60,000,000 shares No No No No No No No No No No No No No No No No No No No None None None None None 01/21 09/22 10 10 6,500,000,000 65,000,000,000 3,431,332,948 34,313,329,480 Share swap of 205,332,690 shares None 6,500,000,000 65,000,000,000 3,731,332,948 37,313,329,480 Cash capital increased by 300,000,000 shares 07/23 10 6,500,000,000 65,000,000,000 4,031,332,948 40,313,329,480 Cash capital increased by 300,000,000 shares None None Oth er Note 1 Note 2 Note 3 Note 4 Note 5 Note 6 Non e Note 7 Note 8 Note 9 Note 10 Note 11 Note 12 Note 13 Note 14 Non e Non e Note 15 Note 16 Note 17 Note 18 Note 19 Note 20 Note 21 Note 22 Note 23 Note 24 Note 1: Approval letter Tai-Cai-Zheng (3) No. 0910155823, Note 13: Letter Jin-Guan-Zheng (Jiao) No. 0980050862, dated 2002.10.16 dated 2009.09.21 Note 2: Approval letter Tai-Cai-Zheng (3) No. 0920110106, Note 14: Letter Jin-Guan-Zheng (Fa) No. 0990051578, dated 2003.03.25 dated 2010.09.28 107 Fundraising Overview Note 3: Approval letter (2001) Tai-Cai-Zheng (3) No. 101196, Note 15: Letter Jin-Guan-Zheng (Jiao) No. 0990025440, dated 2001.02.08 dated 2010.05.12 Note 4: Approval letter Tai-Cai-Zheng (3) No. 0920159026, Note 16: Letter Jin-Guan-Zheng (Jiao) No. 1050021717, dated 2003.12.15 dated 2016.05.27 Note 5: Approval letter Tai-Cai-Zheng (3) No. 0930110000, Note 17: Letter Jin-Guan-Zheng (Jiao) No. 1050040371, dated 2004.03.24 dated 2016.10.03 Note 6: Approval letter Tai-Cai-Zheng (3) No. 0930125152, Note 18: Letter Jin-Guan-Zheng (Jiao) No. 1030014322, dated 2004.06.03 dated 2014.04.17 Note 7: Approval letter Jin-Guan-Zheng (3) No. 0940110778, Note 19: Letter Jin-Guan-Zheng (Jiao) No. 1040026231, dated 2005.03.30 dated 2015.07.08 Note 8: Approval letter Jin-Guan-Zheng (1) No. 0940124111, Note 20: Letter Jin-Guan-Zheng (Jiao) No. 1090341078, dated 2005.06.16 dated 2020.05.05 Note 9: Approval letter Jin-Guan-Zheng (3) No. 0950105881, Note 21: Letter Jin-Guan-Zheng (Jiao) No. 1090359858, dated 2006.02.20 dated 2020.09.29 Note 10: Letter Jin-Guan-Zheng (3) No. 09700511511, Note 22: Letter Jin-Guan-Zheng (Fa) No. 1090377120, dated 2008.09.24 dated 2020.12.16 Note 11: Letter Jin-Guan-Zheng (3) No. 0970065169, Note 23: Letter Jin-Guan-Zheng (Fa) No. 1090377120, dated 2008.11.28 dated 2022.03.11 Note 12: Letter Jin-Guan-Zheng (Jiao) No. 0980027679, Note 24: Letter Jin-Guan-Zheng (Fa) No. 1120345884, dated 2009.06.06 dated 2023.06.26 2. Types of Shares Types of Shares Common Shares Shares Issued and Outstanding (Note 1) Authorized Capital Unissued Shares Total As of March 19, 2024 Remarks 4,031,332,948 2,468,667,052 6,500,000,000 (Note 2) Note 1: Publicly-traded shares. Note 2: The Company’s capital includes NT$8,000,000,000 for the issuance of share warrants, corporate bonds with share warrants or preferred shares with share warrants, up to eight hundred million shares at a par value of NT$10 per share, which may be issued in separate tranches. 3. Information on Shelf Registration: None. (2) Shareholder Structure Shareholders Numbers Government Financial Other Legal Institutions Institutions Persons As of March 19, 2024 Foreign Individuals Institutions and Total Individuals Number 7 37 458 237,075 630 238,207 No. of Shares 117,056,795 43,782,424 1,427,247,828 1,733,713,554 709,532,347 4,031,332,948 Held Shareholding 2.90% 1.09% 35.40% 43.01% 17.60% 100% Note 1: Ratio of shares held by investors in China: 0%. Note 2: The shareholding ratios are rounded to the nearest hundredth percent. 108 (3) Distribution of Shareholders 1. Distribution of Common Shares: Shares Held (Note) Number of shareholders Shareholding 75,458 1 to 999 117,888 1,000 to 5,000 23,335 5,001 to 10,000 7,378 10,001 to 15,000 4,593 15,001 to 20,000 3,730 20,001 to 30,000 1,594 30,001 to 40,000 1,027 40,001 to 50,000 1,817 50,001 to 100,000 687 100,001 to 200,000 329 200,001 to 400,000 103 400,001 to 600,000 41 600,001 to 800,000 31 800,001 to 1,000,000 196 1,000,001 and more Total 238,207 Note 1: The shareholding ratios are rounded to the nearest hundredth percent. 14,855,704 258,842,710 181,640,699 93,722,619 84,718,476 94,966,647 57,027,724 47,514,949 128,191,747 96,121,170 91,696,388 50,796,351 28,890,554 27,900,377 2,774,446,833 4,031,332,948 As of March 19, 2024 Shareholding 0.37% 6.42% 4.51% 2.33% 2.10% 2.36% 1.41% 1.18% 3.18% 2.38% 2.27% 1.26% 0.72% 0.69% 68.82% 100% 2. Distribution of Preferred Shares: None. (4) List of Major Shareholders Major Shareholders Chin-Xin Investment Co., Ltd Winbond Electronics Corporation TECO Electric and Machinery Co., Ltd. LGT Bank (Singapore) Investment Fund under the custody of Business Department, Standard Chartered Bank (Taiwan) Ltd. Rong Jiang Co., Ltd. Fund Account of Yuanta Taiwan High Dividend ETF Patricia Chiao Huali Investment Corp. Chunghwa Post Co., Ltd. Yu-Heng Chiao Note: The shareholding ratios are rounded to the nearest hundredth percent. As of March 19, 2024 Shares Number of Shares Held Shareholding (Note) 248,002,375 247,527,493 210,332,690 183,213,000 171,993,651 133,328,512 109,085,587 106,994,366 76,000,981 65,343,810 6.15% 6.14% 5.22% 4.54% 4.27% 3.31% 2.71% 2.65% 1.89% 1.62% 109 Fundraising Overview (5) Stock Price, Net Value, Earnings, Dividends and Related Information for the Past Two Years Item Share Price (Note 1) High Low Average Net Value per Share (Note 2) Basic Diluted Year 2022 49.85 25.10 40.91 33.12 31.32 2023 59.40 33.80 45.97 34.93 33.83 Weighted average shares 3,549,689,000 3,883,388,000 Earnings per Share Earnings per share (Note 3) Cash dividend 5.45 1.80 Dividend per Share Stock dividend Distribution from earnings Distribution from additional paid in capital Accumulated unpaid dividend (Note 4) Price-earnings ratio (Note 5) Price-dividend ratio (Note 6) Cash dividend yield (Note 7) Return Analysis - - - 6.77 20.48 0.05 1.32 1.10 - - - 32.78 39.34 0.03 Current Year up to March 20, 2024 36.95 36.15 36.55 - - - - - - - - - * If shares are distributed in connection with a capital increase out of earnings or capital reserves, information on market prices and cash dividends retroactively adjusted based on the number of shares after distribution shall be disclosed. Note 1: The highest and lowest share prices for each year are provided, with the average price for the year computed based on each year’s transaction amount and volume. Note 2: Use the number of the outstanding issued shares at year’s end and the distribution passed at the following year’s shareholders' meeting to fill in. Note 3: If it is necessary to make adjustments retroactively due to situations such as issuance of bonus shares, the earnings per share before and after the adjustments should be listed. Note 4: If the conditions of the equity issuance require that dividends not yet distributed for the year be accumulated and paid out in a later year with positive earnings, the dividends that have been accumulated up to the current year and not yet distributed shall be disclosed separately. Note 5: Price-earnings ratio = Average per share closing price for the year / earnings per share. Note 6: Price-dividend ratio = Average per share closing price for the year / cash dividend per share. Note 7: Cash dividend yield = Cash dividend per share / average per share closing price for the year. (6) Dividend Policy and Implementation Status 1. Dividends Policy Specified in the Company's Articles of Incorporation Article 28 of the Company's Articles of Incorporation: After the Company has offset its accumulated losses from previous years and paid all tax due, the Company shall set aside 10% of its net profits as legal reserve, except when the legal reserve equals to the total paid-in capital of the Company. From the remainder calculated above plus the surplus retained earnings of previous year, the Company shall set aside or reverse the special reserve as stipulated by the law or the competent authority. Then the Board of Directors shall draft an earning distribution proposal submitted to the Shareholders' meeting for resolution to distribute shareholder's dividends. If the aforementioned distribution of earnings is made in cash, the Board of Directors shall be authorized to distribute the earnings with the presence of at least two-thirds of the Directors and the resolution of a majority of the Directors present, and to report the distribution to the shareholders' meeting. 110 The setting aside of the legal reserve set forth in Paragraph 1 of this Article should be based on the "the total amount of after-tax net income for the period and other profit items adjusted to the current year's undistributed earnings other than after-tax net income for the period." Article 28-1 of the Company's Articles of Incorporation: The share dividend policy of the Company should be stable for the purpose of sustainable operation and development .In case of any earnings on the final account, the Company shall allot as shareholder dividends no lesser than 40% of the balance of such earnings after offsetting its loss, paying income tax, setting aside the legal reserve, and setting aside the special reserve as adjusted based on the net decrease in other shareholders' equity as stipulated in Article 28 hereof, as well as deducting the share of the affiliates' interests recognized by equity method and adding the cash dividends paid out by the affiliates to the Company recognized by equity method. Such dividends shall be distributed in cash or in form of shares; cash dividends shall not be lesser than 70% of the total dividends. To ensure the stability of the financial structure, and based on the principle of equitable dividend payout, if the Company has no earnings to distribute or has earnings but the amount of earnings is significantly less than the actual earnings distributed previously, the Company may distribute all or part of the reserves or the undistributed earnings in the previous period. If there is a non-recurring, material income in the Company's earnings for the year, all or a part of such income may be retained without being subject to the percentage limitation set forth in Paragraph 1 hereof. 2. Dividends Distribution to be proposed to the Shareholders’ Meeting According to the decision of the Company's 8th board meeting of the 20th term, it is proposed to distribute cash dividends from the earnings in 2023 to shareholders shall be NT$4,434,466,243, with NT$1.1 per share (which is calculated based on the Company’s 4,031,332,948 issued and outstanding common shares). After this dividend distribution has been resolve and approved by the Board of Directors, the Chairman of the Board is authorized to determine the distribution record date and the distribution date. In the future, if the Company issues or repurchases shares, thereby influencing the amount of outstanding shares and changing the distributable cash dividend per share, it is proposed that the shareholders meeting authorize the chairman of the board to adjust the number of outstanding stocks on the ex-dividend date. The smallest unit of the cash dividend is NT$1. The distribution of the cash dividends shall be rounded down to the nearest New Taiwan Dollar. The aggregate of the remaining cash will be credited to Other Revenue by the Company. 3. Explanation regarding expected major changes to dividend policy: None. (7) Effect of the proposed stock dividends (to be adopted by the Shareholders' Meeting) on the operating performance and earnings per share: Not applicable. (8) Compensation for employees and directors: 1. The Company's Articles of Incorporation includes the amount and coverage of compensation for employees and directors Article 25-1: If the Company turns a profit in a year, no less than 1% of the profit should be distributed to its employees as compensation and no more than 1% to directors as compensation. The actual amount should be determined by a board meeting where no less than two-thirds of the directors are present and more than half of the directors present votes to approve the suggested amounts. The amounts should be reported to the shareholders meeting. However, if the Company still has accumulated deficit from previous terms, it should first reserve the amount needed to settle the outstanding balance. Employee bonuses may be distributed by way of stock or cash dividends and the Company may issue bonuses to employees of parents or subsidiaries of the Company that meets the conditions set by the board of directors. The board of directors shall be authorized to determine the method of distribution. The qualification requirements of or the distribution rules for the employees who are entitled to the treasury stock transferred, the employee warrants issued, subscription for new shares issued, and the restricted stock awards issued by the Company, including the employees of parents or subsidiaries of the company meeting certain specific requirements, shall be formulated by the board of directors as authorized. 111 Fundraising Overview 2. Basis for estimates of compensations for employees and directors for this term, basis for calculating employee stock compensation and accounting procedures for when there is a discrepancy between the estimated and actual amount (1) Basis for estimates of compensations for employees and directors for this term: Estimated by ratio of the pre-tax income as determined by the Articles of Incorporation. (2) Basis for calculating employee stock compensation: Not applicable. (3) Accounting procedures for when there is a discrepancy between the estimated and actual amount: Please find relevant accounting procedures in “6. Financial Overview: 4. Financial report of the most recent year 22 Net Profit (Loss) From Continuing Operations” of this annual report for further explanation. 3. Information regarding board of directors' approval of employee compensation (1) Amount to be paid in the form of cash and stocks to employees and directors: The board has approved NT$70,700,000 to be paid in cash to employees and NT$30,000,000 to directors for 2023. (2) Difference from estimated amount, reason and actions required: No difference. (3) The amount of employee compensation in the form of stock and its percentage of the Company's after-tax income (as reported in the financial statement of this term) and total employee compensation: Not applicable. 4. Actual payment status (including stocks, cash and stock price) for employee and director compensation from the previous year; discrepancies (if any) between the actual payment and estimated amount, as well as the reasons for and actions required by the discrepancies (1) Cash and stock compensation for employees; compensation amount for directors: for 2022, the Company issued NT$252,000,000 to employees and NT$100,050,000 to directors. (2) Differences between the estimated amount of compensation for employees and directors, as well as the reasons for and actions required by the discrepancies: No differences. (3) Please find relevant accounting procedures in “VI. Financial Overview: 4. Financial report of the most recent year: 23 Profits from Continuing Operating Units” of this annual report for further explanation. (9) Share Repurchases: 1. Those having been executed: None. 2. Those being executed: None. 112 2021 1st Unsecured Straight Corporate Bonds 2023 1st Unsecured Straight Corporate Bonds 2. Issuance of Corporate Bonds: Type of Corporate Bonds Issuance (Processing) Date Denomination Issue Price Lump Sum Interest Rate (p.a.) Octorber 8, 2021 NT$10,000,000 Issued at denomiatnion NT$7,500,000,000 A fixed rate of 0.70% per annum Tenor 5 years; Maturity Date: 2026/10/8 April 11, 2023 NT$10,000,000 Issued at denomiatnion NT$5,300,000,000 Tranche A: 1.70% Tranche B: 2.10% Tranche A: 5 years; Maturity Date: 2028/04/11 Tranche B: 10 years; Maturity Date: 2033/04/11 None Hua Nan Commercial Bank Co., Ltd. KGI Securities Guarantor Trustee Underwriter (Lead Underwriter) Certifying Attorney Certifying CPA Repayment Method Outstanding Principal Terms of Redemption or Prepayment Restrictive Clauses Credit Rating Agency Name, Rating Date, Rating of Corporate Bonds Additional Rights Amt. of Converted Common Shares, Global Depositary Receipts or other Securities Rules for Issuance and Conversion Possible Dilution of Shareholding due to, and Effect on the Current Shareholders' Rights and Interests of, Issuance and Conversion, Rules for Share Swap or Subscription, or the Issuance Terms Name of the Custodian Engaged by the Counterparty of Share Swap None Hua Nan Commercial Bank Co., Ltd. KGI Securities Yicheng United Law Firm Deloitte Taiwan Principal shall be repaid upon due in one installment NT$7,500,000,000 None Yicheng United Law Firm Deloitte Taiwan Principal shall be repaid upon due in one installment NT$5,300,000,000 None None Rating agency: Taiwan Ratings Corporation Rating: TwA- Rating Date: 2021/08/06 Not applicable None Rating agency: Taiwan Ratings Corporation Rating: TwA- Rating Date: 2022/08/09 Not applicable None None None None None None 3. Issuance of Preferred Shares: None. 113 Fundraising Overview 4. Issuance of Global Depositary Receipts (GDRs) Date of Issuance Item October 3, 1995 November 9, 2010 June 30, 2023 Place of issue and Issued globally and traded on the Luxembourg Stock Exchange trading Total amount US$121,800,000 US$290,313,085 US$389,100,000 Offer price per unit US$12.18 US$5.38 US$12.97 Total units issued 10,000,000 units 53,961,540 units 30,000,000 units Source of underlying security Underlying security Issuance of new common Issuance of new common Issuance of new common shares for cash capital shares for cash capital shares for cash capital increase increase increase Common stocks: 100,000,000 Common stocks: 539,615,400 Common stocks: 300,000,000 shares shares shares Rights and obligations Conducted in accordance with the laws of the Republic of China and with the provisions of of depositary receipt the Depository Agreement. Refer to the Covenants of Depository Agreement for the key holder Trustee terms and conditions. None Depository institution: Deutsche Bank None Citibank None Citibank Custodial bank Mega International Citibank (Taiwan) Citibank (Taiwan) Commercial Bank Balance outstanding 21,224 units of global depositary receipts and 212,248 shares of securities represented. Distribution of fees 1. Issuance fees: The issuing company will be responsible for the entirety of this fee. incurred from issuance 2. Fees during outstanding period: The issuing company will be responsible for this fee. and the outstanding period of the GDRs Covenants of Depository Agreement and Omitted Custodial Agreement ( U n i t : U S $ ) M a r k e t p r i c e p e r u n i t 2023 Current year as of March 20, 2024 High Low Average High Low Average 19.00 10.50 14.02 12.43 10.98 11.46 5. Exercise of Employee Stock Option Plan (ESOP) and Restricted Stock: None. 6. Mergers, acquisitions or issuance of new shares for acquisition of shares of other companies: None. 7. Implementation of capital allocation plan: The program for the use of funds from previous issues has not been completed, or has been completed in the last three years but the benefits of the program have not yet been realized: None. 114 V .. Business Overview 1. Business activities (1) Scope of Business 1. Primary business content, primary products and revenue ratio. Business unit Business activities Products Wire cables and Manufacture and sale of bare copper wire, various electrical related wires, cables connection materials and the accessories, as well as contracting and execution of high-voltage cable engineering. and Stainless steel Forging, processing and selling of stainless steel. and cables Bare copper strips, copper stranded wires, copper cables, cables, high-voltage power their connectors and accessories copper/ telecommunication optical and fiber industry power cables. Billets, slabs, hot-rolled coils, cold-rolled coils, wire rods, hot- rolled bars, cold-finished bars, forged bars, steel ingot, seamless pipes and tubes, pierced billets, steel strands, reinforcing steel, and valve steel, machined shaft semi- finished and customized engineering components products, Revenue Ratio The Company and its merged subsidiaries Amount (NT$ million) % 45,293 23.9 94,543 49.8 Commodity Production and sales of stainless steel upstream raw material, nickel pig iron, production and sales of nickel matte (the nickel raw materials for batteries), agency sales of stainless steel semi-finished products, procurement Commercial real estate business Others Real estate Solar power engineering etc. 2. New products under development Nickel pig iron, nickel matte, billets, slabs, and HR coils 41,556 21.9 Housing and parking space sales; commercial and office buildings sales 2,130 6,318 1.1 3.3 Business unit Wire and cables Stainless steel New products under development (1) Cables for Industrial 4.0 applications (2) High voltage cables used within large offshore wind turbines (3) Submarine cables for offshore wind sites (4) Rapid power supplement systems for new energy vehicles (1) Stainless steel and nickel-based alloys of various types, grades, sizes, conditions and product types. (2) Stainless steel and nickel-based alloys with high intensity, heat resistance, free-machining, soft magnetic property, and value-added. (3) Developing stainless steel and nickel-based alloys for various industrial applications, such as aerospace, oil and gas, nuclear energy, automotive, marine, machinery and equipment, chemical and petrochemical industries, construction, energy, consumer electronics, and medical applications. 115 Business Overview (2) Industry overview 1. The current status and development of the industry (1) Wire and Cable Business According to the statistical forecast report by the International Copper Study Group (ICSG), the refined copper production in 2023 is expected to increase by 5.5% year-over-year, with primary production (ore electrolysis) increasing by 5% and secondary production (scrap copper) growing by 7%; it estimates that the annual output to reach 26.78 million metric tons. The consumption of refined copper in 2023, mainly benefiting from the growth of the Chinese market, is expected to increase by 4.0% year-over-year, with an estimated annual consumption of 26.87 million metric tons, resulting in a supply-demand gap of 90,000 metric tons. China continues to expand its copper smelting capacity, with refined copper production continuing to grow. Official estimates predict a 13% increase in refined copper production in 2023, with net imports of refined copper decreasing by about 5%. According to the statistical analysis report published by the International Wrought Copper Council (IWCC), China is the world's largest copper consumer, with copper rod sales in China reaching 9.43 million metric tons in 2023, an annual increase of 2.2%. Taiwan's copper rod annual sales have shown a downward trend for two consecutive years, with sales in the first half of 2023 decreasing by 11.6% year-over-year; the annual sales is estimated to be about 310,000 metric tons. The cable market is dominated by the procurement volume of enterprises in the electric power sector. China's power cable industry has benefited from the continuous advancement of new infrastructure investments, accelerated energy transformation, and steady progress in ultra-high voltage construction, supporting the stable development of the cable industry. According to public data released by the Ministry of Economic Affairs, Taiwan's domestic sales volume of power cables in 2023 increased by about 6.6% year- over-year, showing a continuous growth trend over the past six years. The growth momentum of Taiwan's power cable market in 2023 mainly comes from the government's green energy policy and Taiwan Power Company's resilient power grid plan, which is expected to maintain cautious optimism in the operation of the power cable industry. This motivates us to remain prudently optimistic about the power cable industry. (2) Stainless Steel Business According to market research firm, SMR, the global crude stainless steel production in 2023 is estimated to be 58.35 million metric tons, with China being the largest production region and producing 35.2 million metric tons of crude stainless steel, an increase of 8.8% from 2022 (32.35 million metric tons). Indonesia's crude stainless steel production was 4.025 million metric tons, a decrease of 21.0% from 2022, and other countries produced 19.125 million metric tons of crude stainless steel, a decrease of 1.3% from 2022. In terms of stainless steel product structure, plate products accounted for 85% of the total production in 2023, with hot-rolled coils accounting for 18% and cold-rolled coils for 82%; long products accounted for 15%, with hot-rolled bars accounting for 42%, wire rods for 34%, and billets for 25%. About 48% of the end-use applications of long steel products are used for industrial production (such as machined parts), 25% for industrial production (e.g. machined parts), 17% for consumer durable goods and 10% for transportation. The top five long-strip stainless steel companies around the world by output are Jiangsu Delong, Tsingshan, Walsin Lihwa, Viraj and Yongxing Materials. (The above output figures are based on the data from the statistical report for 2023 published by SMR, a marketing agency.) The steel industry faces overcapacity and severe price competition. Some steel mills have chosen to exit, while others have improved operational efficiency through consolidation, restructuring, and eliminating outdated capacity. In recent years, several stainless steel groups have formed internationally (e.g., Tsingshan, Baosteel/Wuhan Iron and Steel/Taiyuan Iron, and Outokumpu), with each group developing distinct business models. Larger players, such as those in China and Indonesia, who focus on general 116 materials sales, choose to control upstream raw materials to reduce costs; smaller players, on the other hand, opt for the development of high-profit products and application industry. (3) Resources Business Global nickel pig iron production capacity is mainly concentrated in Mainland China and Indonesia. In 2020, due to Indonesia's ban on ore exports, the movement of the nickel pig iron industry chains from Mainland China to Indonesia accelerated, and Indonesia has become the world's largest nickel pig iron producer. In 2023, high nickel pig iron production capacity in China and Indonesia reached 2.73 million metric tons of nickel and the production reached 1.68 million metric tons of nickel, with the production capacity and the production up by 16% and 14%, respectively, compared with 2022. Among them, total high nickel pig iron production in Mainland China was 310,000 metric tons of nickel, down by 7% from 2022, mainly because the raw material supply restrictions and high products costs continued to weaken China's overall competitiveness in high nickel pig iron, while the total high nickel pig iron production in Indonesia was 1,370,000 metric tons of nickel, up by 19% from 2021. We expect that, in 2024, China's nickel pig iron production will continue to be constrained by the uneconomic production caused by the decline in imported nickel ore grade, changes in Philippines' export policies, and other supplementary materials. Although there are still new production lines planned in Indonesia, as the number of production lines has decreased and high-grade ore is becoming scarce, it is expected that the new production capacity will continue to be injected, but the growth rate will continue to slow down. In response to the green energy transformation and the booming development of the downstream of the new energy industry chain, a large amount of capital has been injected into Indonesia since 2020, and the production capacity of intermediate nickel products for batteries, such as nickel matte and mixed nickel‑cobalt hydroxide precipitate (MHP), has been released since 2021 and grew at an accelerated speed from 2022 to 2023. Indonesia's MHP production reached 160,000 metric tons of nickel in 2023, up by 86% compared with 2022; the production of high nickel matte reached 240,000 metric tons of nickel, up by 18% compared with 2022. A large amount of intermediate production capacity was still being planned in Indonesia in the following years. It is expected that the new production capacity will continue to be developed in 2024 and the overall industrial chain will gradually expand downstream. At the end of 2023, the U.S. Treasury Department provided industry guidance on the Foreign Entity of Concern (FEOC) clause in the Inflation Reduction Act. Starting from 2024, the upstream battery industry chains for electric vehicles sold in the United States will actively seek raw materials produced by non-FEOC companies to enjoy the tax credit benefits stipulated by the aforementioned Act. (4) Commercial Real Estate Business In 2023, the Nanjing office market leasing demand gradually released, with the net leasing volume in the fourth quarter increasing by 21.4% quarter-over-quarter, and the citywide vacancy rate decreasing by 0.4% quarter-over-quarter. High-quality buildings in the city's core areas hold a competitive advantage, with the financial industry and professional services industry being the main forces in the leasing market, showing robust performance and maintaining a stable leasing speed. In 2023, the Nanjing retail property market steadily recovered, with the vacancy rate of shopping centers decreasing by 0.3% quarter-over-quarter. The catering industry became the main driving force, ranking first among all industries, with strong demand for hedging products and stable consumption of daily necessities. Nanjing is committed to creating distinctive consumption scenarios, thereby effectively stimulating market vitality. 117 Business Overview 2. Relationships with suppliers in the industry's supply chain: (1) Wire and Cable Business Electrolytic Copper plates (imported) PVC/PC plastic materials Bare copper strips (wires) Chemical coatings Wire and cable Telecommunication cables Electric wires Enamel insulated wires Computer assembly Home appliances Home appliances Electromechanical machines Power generation, Power transmission & distribution, Electromechanical & engineering, Transportation & buildings, New Energy Telecommunications engineering Network engineering (2) Stainless Steel Business 118 (3) Resources Business 3. Product development trends and competition (1) Wire and Cable Business Development trend: In addition to the traditional construction and infrastructure cables, there are many green energy related cable applications and products that have emerged in response to the global developing trend of net zero transition. For example, in the field of energy creation and transmission, solar power cables that need to prevent UV degradation, wind turbine cables that can withstand harsh environments, and submarine cables that transmit power from offshore wind turbines back to land or transfer power across borders between countries, are all products that are actively developed by major cable manufacturers around the world. In addition, in the area of energy storage and use, the electrification of transport equipment and smart power allocation, cable sets for power replenishment systems, and cables for energy storage equipment are all new products that the wire and cable industry is competing for development. Competition: From the historical output of Taiwan's power cable market, there is still an oversupply of capacity in the overall cable market and competition is relatively fierce. However, benefiting from the regional supply chain integration of Taiwan businessmen back to Taiwan to drive the demand for plant expansion, coupled with the government's active promotion of green energy policy and Taipower's grid reinforcement plan to accelerate the deployment and construction of regional grids, demand for various products will emerge in a new type of competitive landscape. (2) Stainless Steel Business Development trend: In terms of product development, apart from actively developing nickel-free steel grades, major stainless steel makers are also developing functional stainless steel for specific applications. For example, in response to the demand for automation, the demand for wear-resistant, high-precision and zero-defect materials has increased. In the past, key technologies were held in Japan, Europe and other countries, but Asian steel makers have also continued to invest in research and development in recent years, and to refine their own technological capabilities. With the rising awareness of environmental protection, stainless steel is more widely used in various fields, and there are many cases of replacing carbon steel with stainless steel in the construction, transportation and other industries. In the renewable energy industry, stainless steel components can also be found in solar panels, wind turbines and renewable energy vehicles. 119 Business Overview Competition: Indonesian steel mills will dominate the Asian market with the advantage of low-cost raw materials. With the promotion of capability control policy in Mainland China, the steel industry has shifted from volume to value-added, and large-scale steel makers have started to consolidate with the strategy of eliminating the weak and leaving the strong. The rest of the steel makers in Europe, America, Japan, and Korea have focused on niche industrial applications with high certification thresholds to add value to their products through end-use differentiation, specializing in the development of specialty steel applications. In addition, in response to the trend towards net-zero carbon emissions, major European steel makers have begun to focus on providing products with low carbon emissions or more sustainable significance. (3) Resources Business Development trend: Stainless steel plants in Mainland China and Indonesia are expanding their production capacity, and the demand for nickel pig iron and scrap steel will continue to rise, while nickel pig iron in Indonesia has a cost advantage and is economical for downstream steel plants. In the following years, there will still be new manufacturers entering Indonesia to invest in RKEF production line. In addition, in response to the continuous growth of the new energy industry chain, some of the RKEF production lines have started to change their processes in 2022 to make their output more flexible to switch between nickel pig iron and nickel matte; therefore, the "nickel matte - nickel sulfate - pure nickel" process has emerged. Price differentials between different nickel products will make their sales portfolios be more diversified, and the overall nickel market will reach a dynamic balance between supply and demand. Competition: Indonesia's RKEF production lines have grown significantly since 2021 and will continue to open up significant capacity. In addition to continuing to provide additional stainless steel production capacity in Indonesia, the production lines will also make up for the possible decline in nickel pig iron supply in China. In addition, in response to the continuous growth of the new energy industry chain, some of the RKEF production lines have started to change their processes to make their output more flexible since 2022, so that they can flexibly switch between iron pig nickel and nickel matte. (4) Commercial Real Estate Business Development trend: As one of the three major cities in the Yangtze River Delta urban agglomeration, Nanjing's gross regional product reached RMB1.75 trillion in 2023, consistently ranking among the top ten nationwide. Due to its continuous population inflow and solid economic foundation, Nanjing is one of the core cities in China's real estate development focus. The market for Grade A office buildings in Nanjing has seen abundant new supply, continuously conducive to tenant upgrades and expansions. With the recovery of the non-banking financial and Internet industries, a foundation for the expansion of office market leasing demand has been laid, with the city's core business districts remaining the most resilient development areas. The leasing demand in Nanjing's retail market has gradually increased under a series of policies promoting the "flagship store economy" and "holiday economy," further improving consumer confidence. Sports, outdoor activities, and dining continue to lead the leasing demand in shopping centers, with brick-and-mortar stores becoming an important scene for immersive consumption. Competition: With the increase in Grade A office space supply, multiple high-quality projects are expected to enter the market in the future, making premium clients a core competitive resource. The retail market's demand for shopping centers in terms of brand personalization and thematization has increased, while non-standard properties in the region have also becomes a strong source of competition. 120 (3) Overview of Technology and R&D 1. R&D Expenses and Results R&D Expenses From Jan. 1, 2023 to March 20, 2024, the R&D expenses were around NT$400 million. (A) Technology Research & Development (1) Develop CCS1/CCS2 80A-300A full-series charging gun cable set (2) Develop 14MW offshore wind turbine high-voltage cables (3) Develop spreader basket cables with fiber optic cables (4) Expand the development of stainless steel material types, sizes, conditions and product types. (5) Innovative research and development of functional stainless steel with high strength, high heat resistance, and easy turning characteristics to increase added value. (6) Continue to invest in the development of stainless steel for automotive components, aiming at energy conservation, environmental protection and high efficiency to meet market demand. (7) Deepen research on stainless steel for welding, and increase the service life of materials in harsh environments such as high temperature resistance, corrosion resistance and high temperature resistance. (8) Cooperate with domestic universities and research institutions to jointly promote various industry- university cooperation and outsourcing research projects, and expand the depth and breadth of process technology through the combination of theoretical knowledge and practical experience, thereby increasing the capacity of research and development. (9) Laboratory equipment for aerospace materials applications. (10) Special quality inspection techniques. (B) Intelligent Manufacturing (1) Smart Power Consumption: Collect and analyze equipment power consumption data, improve the accuracy of power consumption estimation, and reduce wasted power consumption. (2) Development of Intelligent Crane Automatic Storage System: New intelligent cranes are adopted to establish an automatic transportation and storage system for steel billets, which improves the space utilization rate, assists in optimizing the inventory management of incoming materials in the factories, automatically dispatches shipments and loads materials without interruption, improves production efficiency, avoids human operations, and improves work safety. (3) Establishment of Automated Guided Vehicles (AGV) System: A composite automated guided system is adopted to overcome the outdoor climate, realize outdoor unmanned automatic cross-factory transportation, improve transportation efficiency, and reduce forklift operations and operating manpower. (4) Establishment of an automated cable collecting/cutting system and the setup of an unmanned sorting and picking system. (C) Energy and Environmental Protection (1) Replacing Traditional Preheaters: Replace traditional preheaters with pure oxygen preheaters to reduce fuel consumption, improve combustion efficiency, and reduce greenhouse gas emissions. (2) Slag Recycling: The by-product slag produced by the steelmaking electric furnace can be converted into a variety of high- value recycled products after classification and screening, such as low-carbon concrete, red bricks as building materials, and pervious asphalt. (3) New heat treatment technology: Operating heat treatment furnaces at lower temperatures to reduce greenhouse gas emissions. (4) Installation of a cast iron section - baghouse dust collection system: Collecting smoke and dust generated during the casting process with baghouse dust collectors to reduce the emission of gases and hazardous substances. (5) Improvement of flue gas emission systems: Increasing the height of chimneys to facilitate the dispersion of flue gases in the atmosphere. (6) Installation of a wet ore shed - car wash station: Transport vehicle tires tend to carry mud. By adding a car wash station to clean the tires, it improves the road environment and prevents road surface pollution. (7) Installation of a vertical coal shed and wet ore shed - sedimentation pond: To prevent the loss of some raw materials, sedimentation ponds are installed for the coal and ore sheds to enhance the efficiency of recovery and production use. 121 Business Overview 2. Present and future R&D projects, as well as the estimated R&D investment expenditure Plan for the most recent year Current progress We plan to invest NT$213,000,000 for R&D. Mass production completion time Main reasons that future development will succeed Wire harness for renewable energy vehicles and power replenishment system Development of high- voltage cables within wind turbines (1) The development of the full series of CCS1/CCS2 charging gun cable assemblies has been completed, obtaining VPC/UL/CE certification. (2) The design and development of liquid- cooled cables have been completed. (1) The development of offshore 14MW wind turbine internal cables has been completed. (2) Passed the low- temperature torsion test for offshore wind turbine cables. 2024 Low carbon footprint, environmentally friendly eco-packaging materials We have confirmed the source of technical cooperation and verified that waste plastic can be applied to the regeneration of packaging materials. 2025 Trial manufacturing phase 2024 Trial manufacturing phase 2024 Trial manufacturing phase 2024 (1) We are the only player in Taiwan with complete dynamic cable development and testing capabilities 2024 (2) We have completed UL/IEC full range of charging cable certification (3) We have the ability to independently develop and certify materials (1) We are the only player in Taiwan with complete dynamic cable development and testing capabilities (2) We have the ability to independently evaluate and certify materials (1) We are the only player in Taiwan with complete power cable testing and certification capabilities and equipment (2) We have the ability to independently develop and certify materials (3) We have the ability to develop business service models and customized information systems Setting of hot rolling process parameters and heat treatment parameters Setting of hot rolling process parameters and heat treatment parameters Setting of hot rolling process parameters and heat treatment parameters Trial manufacturing phase Second half of 2024 to 2025 Setting of alloy element composition, re-melting, hot rolling, and heat treatment parameters Concept verification 2025 Setting of alloy element composition, hot rolling, and heat treatment parameters Free-cutting soft magnetic stainless steel High heat-resistant stainless steel for automotive components High heat-resistant stainless steel for automotive components Stainless steel and nickel- based alloy vacuum melting and re-melting technology Stainless steel for improved machinability quality of seamless pipes and tubes 122 (4) Business Plan – Long-term and Short-term 1. Wire and Cable Business Short-Term: In response to the end-customer demand for building construction, we will be able to precisely supply goods with the help of smart manufacturing, enhance customer satisfaction with delicate services, change our operating models, and expand our market share, in order to promote sustainable management. We also aim to respond to the government's policy for domestic production of core components for offshore wind power plants, with the goal of exclusively researching and manufacturing cables for offshore wind turbines for 14 MW capacity or above in Taiwan, as well as developing the ability to produce and manufacture submarine cables. Following the global trend of popularizing electric vehicles and speeding up the construction of supporting infrastructure, we are developing wire harnesses for new energy vehicles and power replenishment systems that meet global standards. Long-Term: We will seize the business opportunities brought by the global smart grid and new energy industries by marching into high-voltage markets both home and abroad and expanding our business scope of Energy Solution. 2. Stainless Steel Business Short-Term: Taiwan: In response to the trend of small amount but diversified products in the high-value market, Walsin has adjusted its direction and gradually built up its product and service capabilities to meet the needs of different customer segments. For the wire rod, we will actively expand niche steel sales portfolio in line with market conditions to expand the volume of orders of favorable steel grades, while continuing the research and development and the capital expenditure to increase the application of new steel types and new industries and stabilize product quality. For cold finished bars, we will focus on the development of direct customer channels in the industry and the expansion of available specifications in order to expand our market share; for plate products, we will use digital analysis to assist in material preparation and production scheduling, so that the delivery time can be close to customer expectations. We will also implement the e-companion system to satisfy our customers' demand for monitoring orders and to enhance our customer retention. Mainland China: The new intelligent production lines for hot rolled bars/wire rods will be commissioned, which utilize advanced manufacturing process and intelligent production to supply high precision and quality stainless steel products. In this way, we will effectively achieve import substitution, increase our market share, and reach the goal of selling all of the products we produce. We will continue to develop high-value steel grades for hot rolled bars and seamless steel pipes in the hope of increasing value added to our products. For the cold refined rods, we will increase the volume of orders from direct customers and strengthen the collaboration between marketing/technology/business for serving customers, to ensure the completion of the integrated material application supply chain, so that the upstream and downstream can work more closely together. Europe: Our Italian subsidiary, Cogne Acciai Speciali, acquired a Swedish rolling mill, Degerfors Long Products, and a British stainless steel and nickel-based alloy leader, Special Melted Products, in 2023. These two acquisitions are expected to enhance CAS's steelmaking capacity utilization and expand Walsin's share in high- end industries, such as aerospace, oil and gas, and new energy, while also broadening our sales network. Long-term: Taiwan: We will grasp upstream raw materials to enhance the competitiveness of Walsin's stainless steel products. For bar materials, in addition to maintaining the major customers with high demand, the Company will actively develop new customer bases and expand suitable markets for export. For cold finished bars, in addition to continuing to strengthen the advantages in our integrated production lines, we will increase the quality and output of deep-processed products. For wire rods, the long-term goal is to increase the proportion of niche steel grades in our sales mix. In terms of operations, we are strengthening our competitiveness by accelerating internal process improvement and Industry 4.0 automation projects. Mainland China: We will focus on certification application markets, such as transportation, petrochemical, boiler, nuclear power, and food, as key development industries, in cooperation with China's nationalization 123 Business Overview policy and industry development potentials. We will also expand our technical service capacity and market management, hoping to enhance the added value of our products and brands. We will set up distribution centers in major markets to enhance our market penetration in each region through rapid logistics and distribution. Europe: By establishing a vertically integrated supplier in Europe with a sustainable product portfolio and a stable market share in high-end products, the Company aims to achieve cost excellence through lean manufacturing and agile management. Moreover, it is committed to driving sustainable growth in the European region through a balanced strategy of organic growth and acquisitions. 3. Resources Business Short-term: PT. Walsin Nickel Industrial Indonesia's nickel pig iron production lines were fully commissioned. We will continue to ensure that those production lies have stable capacity utilization rates and are fully in operation for production, and to strengthen the stability of upstream raw materials for stainless steel, so as to enhance our competitiveness. The nickel matte production lines acquired from PT. Sunny Metal Industry in the second half of 2022 were commissioned for trial production at the end of the same year. In the first quarter of 2023, the company commenced full production operations, entering the battery nickel supply chain through the nickel matte production line, thereby opening opportunities in the power battery materials market and initiating expansions for new energy. Regarding our agency services, considering the uncertainty of competing global markets and international political and economic conditions, we continue to negotiate with Indonesian suppliers in order to source competitive raw materials in terms of costs, stable supply, and accurate delivery, to meet the needs of our customers and to strengthen the cooperative relationship between the Taiwanese industry and upstream suppliers, thereby enhancing the competitiveness of Taiwan stainless steel players in the international markets and further increasing the volume of orders received by our agency services. Additionally, with the Indonesian subsidiary's production lines entering mass production in 2023, the focus is not only on securing raw materials for stainless steel production but also on extending to the new energy industry supply chain, aiming for stable development in nickel pig iron and high-grade nickel matte business. Long-term: In response to the trend of climate change and sustainable development, we will continue to pay attention to the development of environmental protection policies and the trend of the industry. In addition to continuing to promote the production of nickel resources products, we will also develop green cycle projects by ensuring the effective use of resources, to create a win-win situation for both the economy and the environment. Regarding our agency service, we will leverage our agency advantage to ensure stable supplies for the demand in the Taiwan stainless steel market, provide a stable source of materials with competitive costs, avoid the risk of price fluctuations and reduce the pressure on inventory capital (i.e., value-added services) to promote the overall effectiveness of the value chain of the stainless steel industry in Taiwan, and strive to achieve the long- term goal of simultaneous growth in the volume of orders received by the agency and the price of the stainless steel industry in Taiwan. We also aim to stabilize sales channels of ferro-nickel and nickel matte to increase product diversification of our business. 4. Commercial Real Estate Business Short-Term: For the second phase of the Company's real estate business, Phase II Lot AB, Building No. 6, the office spaces have been almost fully leased and operating, while the leasing for high-end restaurants on the 1st to 4th floors continues to operate, generating stable rental income. Building No. 1, which meets the International Grade A Office Standards, has entered into leasing contracts for 26,000 square meters of the offices, continuously generating effective rental income flows. Long-term: Walsin Centro integrates various residential, commercial and office properties with a complementary relationships and we will increase overall brand value and create economies of scale through 124 integrated marketing. High-end residential will bring brand reputation and market influence to the commercial, while high-quality commercial will bring support and services to the office. The landmark Grade A office will further enhance the brand status of the commercial and residential sectors, bringing abundant traffic and consumption to the commercial sector. The maturation of each new industry is consolidating the competitive advantage of the existing industry and enhancing the value of the existing industry. After more than ten years of continuous development, Walsin Centro has become an urban landmark in Nanjing and the Walsin Centro project has become a successful model for commercial development in Nanjing, with its market influence and brand reputation continuing to expand and its commercial and business value continuing to rise. 2. Market Analysis and Sales Overview (1) Market Analysis 1. Sales region(s) and market share of main products (1) Wire and Cable Business The Company is focused on the development of the wire and cable business and offers a one-stop comprehensive production series from the upstream bare copper wire, copper rod production, to the research and production of all types of cables such as power cables, communication copper cables, fiber optic cables, industry cables, and submarine cables. The main sales regions include Taiwan and Mainland China. In 2023, the sales of the Company's power cable products was approximately NT$18.2 billion, and that of bare copper wise was about NT$26.3 billion. The Company maintains leadership in Taiwan's power cable and copper bar markets. (2) Stainless Steel Business The Company is a major global stainless steel material company, with stainless steel products such as stainless steel billet, cold- and hot-rolled steel coils, wire rods, cold finished bars, seamless steel pipe and precision roll bonding steel. The main sales regions include Taiwan, Mainland China, Japan, Korea, Southeast Asia, Australia, Europe and North and South America, etc. Our stainless steel wire rod and cold finished bars occupy a significant position on the global market and we offer customers optimal lead times and services with sales offices distributed across the Taiwan Strait, a vertically integrated supply chain and a standardized production process. For the sales of stainless steel products made by the Company in 2023, its domestic market shares reach 70% (wire rods), 30% (hot-rolled steel coils), 20% (cold-rolled steel coils) and 30% (cold finished bars); its market shares in China are 9% (hot-rolled steel bars) and 9% (cold finished bars); the Company’s global market shares are 7% (wire rods), 7% (hot-rolled steel coils) and 2% (cold finished bars). Market share in Europe: 20% in automotive industry, and 22% in oil & gas industry. Note: The above market shares are estimated only in respect of the territories to which we sell products and our available specifications. (3) Resources Business Nickel pig iron produced by PT. Walsin Nickel Industrial Indonesia is the upstream raw material for stainless steel manufacturing, which is mainly supplied to local steel mills in Indonesia for smelting stainless steel. The sales of nickel pig iron in 2023 were 380,000 metric tons, with full production and sales. PT. Sunny Metal Industry primarily produces nickel matte for downstream battery material manufacturers, with the flexibility to produce nickel pig iron depending on market conditions. In 2023, nickel matte sales amounted to 33,000 metric tons of nickel, and nickel pig iron sales reached 17,000 metric tons, achieving full production and sales. The Company's 2023 nickel pig iron production accounted for approximately 4% of Indonesia's total production. In 2023, high-grade nickel matte production in Indonesia was 240,000 metric tons of nickel, with the use of the Company's nickel matte accounting for approximately 12.7%. 125 Business Overview In terms of agency service, the Company has been acting as an agent for the sales of Indonesia Tsingshan since May 2020. We sell as an agent mainly stainless steel products, such as stainless steel billets, slabs and hot rolled steel coils, to mainly Taiwan enterprises, with the aim of maintaining the international competitiveness of Taiwan's stainless steel plate products and promoting the overall efficiency of the value chain of the stainless steel industry. The Company received orders of about 680,000 metric tons in 2020, about 980,000 metric tons in 2021, and over 800,000 metric tons in both 2022 and 2023, stably accounting for more than 80% of Taiwan's 300 series hot rolled stainless steel imports. (4) Real Estate Business In 2023, the area of business land transactions in Nanjing totaled 4.101 million square meters, down by 18% year-on-year, with the total transaction amount of RMB104.73 billion, down by 36% year-on-year, which signals a continued reduction in and the bottoming out of supply and sales. The development scale of Walsin Centro in Nanjing Hexi exceeds 1 million square meters, and the finished residential units have been sold out. The commercial shopping center has been successfully opened and operated. Currently, the main products are the leasing and operation of Office Building No. 1 and the design and planning of plots in Phase 3. 2. Overview of supply and demand and projected growth (1) Wire and Cable Business According to the global copper production forecast by the International Copper Study Group (ICSG), global copper supply will grow by about 3.7% in 2024. In terms of refined copper production, ICSG expects refined copper production to grow by 4.6% in 2024. In terms of the refined copper consumption, despite a challenging global economic outlook, the anticipated improvement in manufacturing activities, ongoing energy transition, and the development of new semiconductor capacities globally are expected to support the growth in refined copper consumption, with a projected increase of 2.7% in 2024. Infrastructure development in major countries and the global trend towards clean energy and electric vehicle development are expected to continue to support the long-term growth of copper demand. Mainland China continues to promote infrastructure construction, with investments in power supply and grid projects expected to rise. The State Grid announced at its annual work conference that it would continue to enhance the construction of a smart and strong power grid, promote green and low-carbon energy transformation, and initiate ultra-high voltage project constructions, with the total investment in 2024 expected to exceed RMB 500 billion. Additionally, with the continuous expansion of the automotive industry, both domestic and export sales of new energy vehicles are expected to maintain double-digit growth, with a positive growth outlook for 2024. In the real estate sector, Mainland China's continued relaxation of related policies is expected to stabilize the industry gradually. Overall, the development of the aforementioned industries should drive copper consumption demand, support copper prices, and stabilize and potentially promote the production and sales of cable-related products. In view of the shift of global supply chains and the change of regionalization in Taiwan, the number of Taiwanese businesses returning to Taiwan to build factories continues to increase. The Executive Yuan has approved to extend the period of acceptance of the Action Plan for Welcoming Taiwan Businesses to Invest in Taiwan to 2024, in order to maintain the strength of private investment. In addition, the Ministry of Economic Affairs (MOEA) estimates that Taiwan's electricity consumption will grow at an average annual rate of 2.5% from 2021 to 2050, and the national electricity consumption will reach 573.1 billion kWh by 2050, which is expected to increase the demand for electricity from the public. Following significant power outages across Taiwan (such as 303 and 517 Outages), public concern over power outage crises prompted the MOEA to announce the "Strengthening Power Grid Resilience Construction Plan," aiming to invest NT$564.5 billion over ten years, focusing on distributing, strengthening, and protecting against power grids. Taiwan Power Company, tasked with great responsibility of energy transformation and stable power supply, has significantly invested in power plant renewal, hydropower, offshore wind power, solar power, and 126 constructions of power transmission and transformation projects, with capital expenditures reaching NT$85.3 billion in 2023 and increasing to NT$130.9 billion NTD in 2024, a 54% annual increase, boosting orders and revenues for related businesses, with the wire and cable industry being one of the biggest beneficiaries. With the demand generated by various projects promoted by the government, future orders for the cable will be highly predicable for us. (2) Stainless Steel Business The expansion of global stainless steel and crude steel production capacity has reached a plateau. Under the carbon emission control policy in mainland China, factories are replacing old instead of creating new capacity, while European and American steel mills, after years of consolidation, have ceased increasing capacity and shifted their focus to high-end industry applications and nickel-based alloy production. In Indonesia, the pace of capacity investments has slowed down, while stainless steel makers in the rest of the countries around the world will operate only through the development of steelmaking technology, so that the existing capacity may be slightly increased; therefore, we will not see the previous annual growth of capacity in double-digits any longer. On the demand side, the International Stainless Steel Forum (Worldstainless) estimates that global stainless steel consumption will grow by 3.4% in 2024, maintaining a positive growth rate. However, considering the impact of the current global economic uncertainty, such growth may be very limited. Although the increase or decrease in stainless steel consumption is susceptible to fluctuations due to changes in the current year's economy, the compound annual growth rate of stainless steel consumption during the past 10 years is about 2% to 3%, and we expect this trend to be maintained in the coming years. The growth of demand also varies depending on the product type. Flat panel products account for more than 80% of the total stainless steel usage and are widely used in various end-use applications, with a high correlation between the increase or decrease in demand and the economic conditions. The application of long strip products are industry-specific; it is expected that the robust development of infrastructure, machinery and equipment, transportation, new energy, and semiconductor in recent years will drive the demand for long strip products, which will increase at a rate faster than the flat panel products in the next few years. (3) Resources Business According to SMM's research report, Indonesia's nickel pig iron production increased by 231,300 metric tons of nickel in 2023. The production of nickel pig iron by smelters in mainland China reduced by 5.12% in 2023 due to profitability factors and replenishments from Indonesia, and is expected to slightly reduce or remain flat in 2024. As far as the demand side is concerned, it is more economic for stainless steel mills to use nickel pig iron than scrap steel; therefore, we expect that the proportion of China's use of nickel pig iron to produce stainless steel will continue to increase, while Japan, South Korea, India and other countries are also likely to increase the use of nickel pig iron from Indonesia, coupled with the possible smooth transition of nickel pig iron to nickel matte production lines, it is expected that nickel pig iron supply and demand will be in a dynamic balance. In response to the green energy transition and the booming development of the downstream new energy industry chain, the capacity for battery nickel intermediates, including nickel matte, has been released since 2021, with rapid growth from 2022 to 2023. In 2023, Indonesia's high-grade nickel matte production reached 240,000 metric tons of nickel, an 18% increase from 2022. Indonesia plans to continue expanding intermediate product capacity in the coming years, with new capacity expected to be commissioned in 2024, and the overall industry chains gradually extending downstream. In terms of our agency services, in 2022, the supply chain anomalies normalized, and the total quantity of 300 series hot rolled stainless steel imported into Taiwan was about 900,000 to 950,000 metric tons in 2023, which is almost the same as the import quantity in 2022. This level of import volume is equivalent to the rigid demand for the Taiwan market. However, considering recent trade barriers and anti-circumvention 127 Business Overview investigations on Indonesian stainless steel semi-finished materials, the import volume of stainless steel from Indonesia to Taiwan is expected to remain flat in 2024. (4) Real Estate Business Nanjing Jiangyou District is building a Yuantong shopping district centered on the Yuantong subway station to create a "demonstration area of international consumer center city." Yuantong is becoming the business office center with the highest standard of construction and the largest number of new projects in Nanjing, and the position of the Jiangyou District and the business center of Hexi in the urban structure of Nanjing has become more solid. After becoming a financial center, the core area of Yuantong will also become the center of business offices and commercial consumption in Nanjing. Looking ahead to the development of Walsin Centro, Nos. One and Six Office Buildings continue to operate and have established Walsin's position as the first tier and leading brand in Nanjing's quality business office industry. The arrival of many headquarters-type office enterprises in the future will provide stable rental income and bring sufficient customer flow and stable consumption to the shopping center of One Mall, thus promoting the steady development of the real estate sector. 3. Competitive niche, favorable and unfavorable factors for long-term growth and response measures Wire and Cable Business Competitive Niche (1) We have the advantage of stable internal supply of important raw materials of copper metal and can give full play to the benefits from the upstream and downstream integration. (2) Long-term supply of products and services related to demand for project engineering, accumulating rich supplier experience and having brand advantages. (3) Advantages such as local supply and branding will help to enter the industrial cable field such as solar energy, offshore wind power and port infrastructure. (1) The performance of quality, service and delivery is highly satisfactory to customers and we have brand power in the Taiwanese engineering market. Favorable Factors (2) The high-voltage cable demand in the public sector may grow steadily, driven by Taipower's construction initiative to reinforce the resilience of its power grids. (3) The increase in investment from Taiwanese business back in Taiwan is driving cable demand for factory expansion, commercial offices and housing. (1) Real estate is susceptible to recessions, inflation, interest rate hikes, stock market volatility, high material prices and labor shortages, as well as the government's implementation of policies to combat property speculation. Therefore, in a strong wait-and-see atmosphere, the recovery of property purchases is delayed in the market, and the fluctuations in demand have intensified and are hard to predict. (2) The private sector faces oversupply and price competition. (1) We will make focused research on technology applications and change the nature of our services by being service-oriented. Through Industry 4.0 and production and sales intelligence, we expect to improve our efficiency and service capacity. (2) We will actively cooperate with the government's policy for net zero and carbon reduction by being technology-oriented, and grasp the infrastructure business opportunities such as renewable energy, new energy vehicles and grid renewal and expansion. Unfavorable Factors Response Measures 128 Competitive Niche Favorable Factors Stainess Steel Business (1) We have production sites in Taiwan, China, Italy, the UK, and Sweden for the long strips, with a stable quality and delivery period, so that we can supply to each market nearby and support each other for any shortage of products. (2) Plate materials have the advantage of short delivery period. We can cooperate with players in ASEAN countries to develop OEM to expand the available specifications. (3) We invest in upstream raw materials by building a nickel pig iron plant in Indonesia to improve the international competitiveness of stainless steel products and increase the hedging capacity for raw materials. (4) Possessing vacuum melting and re-melting technologies and holding a robust market share in high-end markets. (1) Taiwan's cold-rolled steel coils are protected by anti-dumping duties. (2) China's policies have restricted the expansion of crude steel capacity. (3) Trade wars, regional economies, and geopolitics have led to de-globalization/short supply chains, so the industry is paying more attention to local supply sources. (4) The growth potential in high-end markets such as aerospace, oil and gas, and new energy. (1) China-based steel manufacturers have set up integrated production lines from nickel raw materials to products in China and Indonesia, significantly cutting production costs and reducing the general supplies market to pure price competition. Unfavorable Factors (2) Global trade protectionism, frequent anti-dumping cases, EU steel defense measures and China's and Indonesia's increase in exports affect global steel liquidity and reduce the Company's export volume. (3) Increasing awareness of environmental protection and the initiatives of many countries to impose or propose carbon fees and carbon tariffs will increase the operating costs of, and weaken profit margins of, the steel industry. (1) In addition to continuing to strengthen the advantages in our integrated production lines, we will gradually develop product specifications and high value-added steel grades, as well as actively expand the sales volume of niche steel and increase the quality of processed products. (2) Maintaining major customers, actively developing new customer bases and expanding suitable markets for export (3) Continuing to improve internal processes and carrying out industrial 4.0 automation projects to improve the efficiency and reducing costs. Response Measures (4) Utilizing the synergy of horizontal integration among plants, increasing the scale and efficiency of our sales, and positioning ourselves for high-value products, so as to enhance our overall competitiveness. (5) Actively investing in energy-saving and environmental protection equipment and deploying green power industry to enhance our competitiveness in environmental protection costs. (6) Operational vertical integration to control the value chain and cost competitiveness. (7) Through meticulous integration plans, clear communication, diligent work, and seamless team collaboration, maximizing sales and operational synergies. (8) Focusing on ESG sustainable development, actively environmental protection equipment, and expansion environmental cost competitiveness. Additionally, actively monitoring environment to ensure employee safety and health. investing in energy-saving, into green power, enhancing the work Resources Business Competitive Niche (1) Nickel pig iron and nickel matte production line are located in Indonesia, which is a major producer of nickel ore in the world and has advantages in raw material prices and production costs. (2) The production lines are equipped with its own power plant, which can supply electricity for full production without any issue. Favorable Factors (1) With Mainland China's continued shrinking in the nickel pig iron production due to unfavorable production costs, Indonesia nickel pig iron is expected to make up for the 129 Business Overview Resources Business possible production reduction gap in Mainland China. China's abolition of export tax has increased the cost of exports, and our agency service has a cost advantage over the the steel coils produced by Tsingshan Indonesia. (2) The Indonesian government continues to ban the export of nickel ore, and the local raw material has a cost advantage. The Indonesian government may subsequently restrict the issuance of licenses for smelting, which will raise the barrier of entry for later competitors. As environmental awareness is increasing, carbon reduction has become a common issue worldwide. Governments and economies around the world continue to adopt policies to strengthen environmental controls and carbon reduction efforts. We expect that related taxes, charges and other expenses will be unavoidable. In addition to stabilizing capacity utilization and refining production plans, in response to international carbon reduction policy trends and requirements from the United States and the European Union, the Company has begun conducting a comprehensive carbon footprint inventory and source classification, discussing various carbon reduction measures, and preparing for the assessment and execution of carbon reduction benefits in advance. Real Estate Business (1) Walsin Centro is located in the core area of Nanjing Hexi New City, including office buildings, commercial centers, quality houses and other types of products, with the floors under development reaching more than 1 million square meters; thus, Walsin Centro has become a landmark project in Nanjing, with location, business and scale advantages. (2) Office Building No. 1, in line with the new trend of market demand, widely uses energy- saving and environmentally-friendly new materials and new technologies. We've also paid attention to the humanization of our design and the durability and maintainability of our products from the details. Our products have a competitive edge in that they have passed LEED & WELL double gold international certification. (3) Office Building No.1 has established a leading position for Walsin Centro in Nanjing's high- quality business office industry within two years of entering the market, with its high-quality building image, high-standard operational services, and excellent leasing performance becoming the industry benchmark for the high-end office industry in Nanjing. (1) The economy promoted by the Chinese government has continued to develop for many years. The central city has great ability to promote and control the economy, which makes the high-end office building market stable for a long time, and demand growth can be expected. (2) With the delivery of residential housing in the project, the resident population is growing rapidly; transportation facilities and public ancillary services have been completed, the market is fully mature, and business demand continues to grow steadily. (3) The development of CBD is close to completion, and the further concentrated demand for high-end office buildings in the central area of Hexi will lead that in Nanjing. Unfavorable Factors Response Measures Competitive Niche Favorable Factors Unfavorable Factors Response Measures The supply of Grade A office buildings has increased, with government self-built projects being forcefully prioritized for introduction, leading to more severe competition for customer resources and further expanding competition among buildings. Tracking and responding in advance the policy trends of government departments governing relevant industries in a timely manner, and timely seizing the best timing for lease and sales according to market changes, in order to expand our client base. 130 (2) Key applications and production processes of main products 1. Key Applications of Main Products Main Products Key Applications Copper material Power cables Wire and cable conductor, home appliances, electrical and electronic devices, transformers, etc. Primarily used for power plants, power transmission and distribution, plant facilities, transportation construction, construction of power transmission lines, etc. Steel billets Hot-rolled wire rods, hot-rolled straight rods, flanges, seamless steel pipes, etc. Flat billet Wire rods Hot-rolled coil (flat panel category) Hot-rolled steel coils, hot-rolled plates, heavy forgings, etc. Screws and nuts, springs, welding rods, steel wires, braids and hardware wires, etc. Chemical tanks, pipes for industry and building and pipes for petrochemical industry Cold rolled coil (flat panel category) Building decoration, kitchen utensils, appliances, medical equipment, electronic communications, chemical tanks and steel tubes Peeled straight rods Forging materials, turning parts, electric machine accessories, etc. Cold finish straight rods Shafts, medical equipment, furniture decoration items, turning parts, electric machine accessories, etc. Stainless steel seamless pipe Petrochemical heat exchanger; fluid pipe and instrument pipe boiler station pipe; nuclear power station pipe; shipboard fluid pipe and instrument pipe; turning pipe. Mechanical processing shaft semi-finished products Engineering components Nickle pig iron Nickel matte Aircraft engines, oil and gas mud engines, drill bits, etc. Customized products Our products are mainly supplied to and used by steel mills to smelt stainless steel, and processed into semi-finished stainless steel products such as billets, slabs, HR coils and HR straight bars. We supply the product to mainly nickel sulfate factories for processing into nickel sulfate, which can continue to go downstream for the production of electrolytic nickel or ternary cathode materials for batteries. Real estate Housing, office buildings and shopping malls 131 Business Overview 2. Production Process (1) Wire and Cable Business Copper plate Shaft furnace Casting machine Pull-in rolling Dissolution Casting / rolling Cable Extruder Collection machine Extruder Coating / extrusion Collection Insulation / extrusion (2) Stainless Steel Business Reduction Copper bar Wire drawing machine Wire drawing Wire stranding machine Wire stranding 132 (3) Resources Business Nickel Pig Iron Laterite nickel ore Shredding & Sieving Ballast Reducing Agent Drying Dry Kiln Pre-Reduction Rotary Kiln Nickel Matte Sulphidizing Reagent Sieving & Shredding Electric Furnace Smelting in Electric Furnace Electric Furnace Nickel-Iron Alloy Blowing in Rotary Furnace Rotary Furnace Nickel Matte (3) Supply Status of Main Raw Materials Business Unit Main Raw Materials Description of Supply Status Wire and cables Copper plates Polyethylene Other chemical materials Pure nickel, high carbon nickel iron, high carbon ferrochrome, stainless steel scraps, grade 1 steel scraps, molybdenum iron, etc. Stainless Steel Commodity Laterite nickel ore Land Construction Projects and Materials Commercial Real Estate Retailers The main sources are Japan, Australia, Chile and Southeast Asia by signing long-term annual contracts, which sources are supplemented by spot purchases. Therefore, the supply is stable. Purchased by quarterly quantity bargaining, mainly imported from Middle East, Europe and Japan. Adopts monthly/quarterly quantity bargaining method and raw materials should mainly be locally sourced. We seek long-term partnerships with well-established, reputable suppliers and allocate the appropriate proportion of supply sources to diversify risks and enhance the resilience of the supply chain. In addition to being sourced from Taiwan, raw materials are also from Indonesia, Japan, Australia, New Caledonia, South Africa, Europe, United States and China. All laterite nickel ore used for nickel pig iron and nickel matte is sourced from local suppliers in Indonesia, and the supply is stable. Implement land reserves pursuant to the Company’s real estate development strategy and participate in government land auction tenders. reduces costs and enhances The Company selecting good quality construction effectiveness by companies and as well as material and equipment suppliers through tenders. Integrating resources and doing a good job of gathering office demand for high-end enterprises, quality customers and signing contract with merchants according to the Company's project positioning, business objectives and development ideas for the phase 2 of the Office Building No.1, by further leveraging the advantage of high-quality, premium services. further 133 Business Overview (4) The names, procurement (sales) amounts and ratio of our clients whose total procurement (sales) for any year in the last two years reached 10% or more. 1. Major supplier information for the last two years Year 2022 Item Name Amount Supplier A 20,022,193 141,099,498 Other (Note) Net Purchases 161,121,691 Percentage of Total Purchases (%) 12.4 87.6 100 Relationsh ip with Issuer - Name Amount Unit: NT$ thousands 2023 Percentage of Total Purchases (%) Relations hip with Issuer - - - Other (Note) Net Purchases 156,291,794 156,291,794 100 100 - - Reason for the change: 10% of purchases were from a single vendor in 2022, due to the advantages offered by the vendor. Note: There is no supplier accounting for more than 10% of total amount of purchases. 2. Major customer information for the last two years Year 2022 2023 Unit: NT$ thousands Item Name Amount Percentage of Net Sales (%) Name Amount Net Sales 189,839,626 Note: There is no customer accounting for more than 10% of the total sales amount. 180,400,719 Net Sales 100 Relations hip with Issuer - Percentage of Net Sales (%) 100 Relations hip with Issuer - (5) Output volume and value for the last two years Year Production value/main product Bare copper wire Production capacity 252,000 2022 Production volume 165,794 Value 43,760,292 Production capacity 252,000 Volume Unit: Tonne Currency Unit: NT$1,000 2023 Production volume 119,047 Value 26,672,388 Wire and cables 58,920 45,537 14,640,970 52,920 36,848 12,099,505 Steel strands Stainless steel strips and bars 81,200 66,806 615,742 532,241 1,836,131 76,800 41,456 1,174,289 44,569,930 881,643 631,142 63,783,575 Stainless steel coils 300,000 287,058 24,837,187 300,000 303,817 23,659,505 Seamless steel pipes 14,400 14,093 3,193,241 16,130 15,838 4,218,551 Nickle pig iron 40,956 40,956 12,118,333 89,406 89,406 31,759,542 Total 144,956,084 163,367,355 Note1: Product capacity means the quantity that can be produced under normal operation with the existing production equipment while taking into account factors such as work stoppage and holidays. 134 (6) Sales volume and value for the last two years 2022 2023 Volume Unit: Tonne Currency Unit: NT$ 1,000 Domestic Sales Exports Domestic Sales Exports Year Value of Main Products/ Sales volume and value Main Products volume Sales Sales value Sales volume Sales value Sales volume Sales value Sales volume Sales value Bare copper wire Wire and cables Steel strands Stainless steel strips and bars Stainless steel coils Seamless steel pipes Nickel pig iron Others (Note) Total 96,909 19,904,276 64,331 17,370,198 63,131 11,823,845 52,347 14,275,532 48,167 18,671,101 2,643 753,425 38,459 15,548,660 1,844 569,334 64,299 1,939,353 2,956 80,766 36,549 1,068,625 3,470 88,666 350,619 30,734,171 116,776 14,527,314 461,470 47,225,699 144,823 17,843,316 213,100 18,563,523 100,498 9,259,867 238,684 18,360,341 66,046 5,148,862 7,120 1,877,398 7,263 1,748,933 7,675 2,084,293 8,928 2,341,972 40,956 22,086,992 65,996 27,945,666 23,410 11,133,380 - 22,134,155 - 749,247 - 12,443,612 - 1,937,823 135,910,969 44,489,750 136,500,741 53,338,885 Note 1: “Others" include sales of non-core business products as well as real estate business, rental and product income revenues. 135 Business Overview 3. Employee Data (1) Employees of Walsin Lihwa Holdings Limited: Year Number of employees Average age Average years of service Education background (%) Ph.D. Master's University/College High school Below high school 2022 9,691 37.1 6.9 0.3 6.3 37.6 39.8 16.0 As of March 20, 2024 Current Year as of March 20, 2023 10,476 29.1 6.7 0.3 6.8 31.9 43.6 17.4 2023 10,508 36.8 7.3 0.3 6.9 31.9 43.5 17.4 Note: Walsin Lihwa Group includes all of Walsin Lihwa's business divisions and subsidiaries. (2) Employees of Walsin Lihwa Corp.: Year Number of employees Average age Average years of service Education background (%) Ph.D. Master's University/College High school Below high school 2022 2,981 39.0 9.6 1.0 18.7 42.8 23.6 14.0 As of March 20, 2024 Current Year as of March 20, 2024 2960 39.5 10.1 0.9 19.5 42.8 22.5 14.3 2023 2992 39.4 9.9 1.0 19.8 42.5 22.5 14.2 136 4. Environmental Protection Expenditure Information (1) For the most recent year and up to the date of publication of the annual report, the losses suffered by the Company as a result of environmental pollution (including compensations and violations of environmental protection laws and regulations found in environmental protection inspections; the punishment date, the letter number, the legal basis for the punishment, the legal provision and the content of the punishment shall be specified), and the estimated amount of such losses that may occur now and in the future and the countermeasures against them; if they are not reasonably possible to estimate, the facts that they cannot be reasonably estimated should be stated: The Company did not have any major environmental fines in 2023(Note). Note: The standard for disclosure of major fines is NT$100,000/RMB22,000 The Company will continue to enhance its environmental management around its factories. We also plan to prevent the recurrence of violation via internal control, environmental education & training, as well as our annual KPI evaluation system. (2) Future response measures (including improvement measures) and possible expenses: Despite the large amount of manpower, materials and funding invested in environmental protection to comply with international benchmarks over the years, Walsin Holdings was still fined for pollution. To keep pollution under adequate control, the Company requires factories in Taiwan and overseas to step up self-regulation to avoid human errors and to implement economically feasible environmental management projects. Internal audit and environmental education & training (including regulatory identification) will also be applied to assist in reinforcing self-regulation and horizontal development at various factories. Environmental investment plans and management measures are as follows: 1. Obtained ISO-14001 certification for system management: In line with international environmental conventions, factories in both Taiwan (Hsinchuang plant 1, Hsinchuang plant 2, Yangmei plant, Taichung plant and Yenshui plant) and mainland China (Shanghai Walsin Lihwa Power Wire & Cable plant, Nanjing plant, Jiangyin plant, Yantai plant and Changshu plant) have all obtained "Environmental Management System" certification. In order to ensure the operational effectiveness of Walsin's environmental management system, the Company hired a professional consulting team in 2017 to instruct 10 domestic and overseas factories to transition to ISO 14001:2015. Basic operation for ISO 45001 was also introduced as a pilot program, as environmental protection and vocational safety & health management system are integrated into a universal operating model across the entire group while on-site guidance is also provided. Consistency in documentation and stability in system operation are required of these factories. Through educational training at various factories, the spirit of the management system is deeply ingrained in actual factory operation after multiple training sessions focusing on topics ranging from regulatory interpretation to actual operation. Furthermore, with a proactive attitude, we will continue to improve our overall environmental protection efforts and vocational safety & health condition. We will strive to enhance environmental performance, reduce environmental international competitiveness. Walsin has completed the integration and version conversion of its management system at all of its factories at home and abroad in 2018, with the certificates being valid for three years. The relevant certificate documents are placed in the document management section of Walsin Lihwua website image and boost our improve corporate loss, 2. Air pollution management: Comply with the air pollution control laws in Taiwan and in China and apply for permits for fixed (atmospheric) pollution source ranges that are progressively announced. The various plants in Taiwan and in China have obtained operating (emission of pollutants) permits for various manufacturing processes and facilities, reducing atmospheric emissions. 3. Greenhouse gas emission and campaign for reduction: To counter climate change and global warming, reduction in greenhouse gas emission is a necessary measure. GHGs inventories provide compliance basis for efforts to reduce greenhouse gas emission. Since 2015, the Company has established the "Safe Environment Information Platform--the ability to conduct GHGs inventories and to calculate carbon emission for products" to collect greenhouse gas emissions at home and abroad. Through continuous review every year and smart system management, the Company keeps 137 Business Overview optimizing its greenhouse gas emissions. Through the electronic system, we can grasp the current year's quarterly emissions and compare them with the same period last year, and further produce the trend graph for the quarterly meeting of the Environmental, Safety and Health Management Committee to review the carbon emissions regularly, so as to effectively review and manage the Company's carbon emissions. In addition, in order to improve the company-wise operation of the greenhouse gas control system, we also plan to promote the implementation of ISO 14064-1 in each plant. In 2015, our Taichung and Yenshui plants in Taiwan have obtained ISO 14064-1 certification, and the latest certificates and expiration dates are regularly posted on our CSR website every August. Hsinchuang, Yangmei, Taichung, and Yenshui Plants have also obtained the new version of ISO 14064:2018 certification in 2021, and at the same time, we planned to promote the introduction of ISO 14064-1 in overseas plants and have executed the same and obtained a third-party certification in 2023. At the same time, we are also actively participating in overseas carbon emission trading to integrate into China’s carbon trading market, which can not only ensure that the Company has sufficient carbon allowance in the future, but also promote measures such as energy conservation through advanced technology, thereby laying a good foundation for the Company's long-term operation and development. Safety and Environmental Information Platform Since 2015, “Safety and Environmental Information Platform - Greenhouse Gas Inventory and Calculation Product Carbon Inventory” has been established and continuously optimized to collect the greenhouse gas emissions of each plant; the Environment, Health and Safety Committee reviews and manages the greenhouse gas emissions on a quarterly basis. ISO 50001(Energy Management System) ISO 14064-1 (Greenhouse Gas Verification Standards) Since 2018, our Taiwan’s plants and China’s plants have promoted the five-year energy management plan (2022-2027) based on ISO 50001, annual dynamic review has been conducted based on the status of each plant. and an Since 2015, we have promoted the introduction of ISO 14064-1 in all plants, and our Taichung Plant and Yenshui Plant have passed ISO 14064-1 certification. In 2020, our Hsinchuang Plant and Yangmei Plant and in 2022, overseas plants introduced the ISO 14064- 1:2018 standards to conduct internal greenhouse gas emission inventory; From 2022 to 2023, our four plants in Taiwan continued to pass ISO 14064-1:2018 certification. In 2023, our overseas plants passed the ISO 14064- 1:2018 certification. the ISO 14067 (International Standards for Product Carbon Footprint) Our four plants in Taiwan completed product carbon footprint inventory based on ISO 14067:2018, and our Hsinchuang Plant third-party passed product carbon footprint verification. the In addition, Walsin continues to pay attention to the development of carbon emission trading, EU carbon border tax, Taiwan carbon fee, and internal carbon pricing, and to participate in the operation of China’s carbon trading market, in order to ensure the future carbon allowance and the Company's sustainable operation and development. 138 (1) Greenhouse Gas Value Chain Inventory (GHG Scope 1-2) 排放量 1000000 900000 800000 700000 600000 500000 400000 300000 200000 100000 0 GHG Emission by Plants in Taiwan and Overseas (in Asia) 排放量（公噸CO2e） Product volume (in metric tons) 產品量（公噸） 904,500 811,425 948,618 828,147 757,046 364,590 421,178 366,881 391,899 396,225 397,647 350,687 227,751 225,795 219,841 445,571 271,079 326,476 269,214 204,134 臺灣海外臺灣海外臺灣海外臺灣海外臺灣海外 2019 2020 2021 2022 2023 (2) Greenhouse Gas Value Chain Inventory (GHG Scope 3) Walsin Lihwa, in an effort to create a greater impact on climate change and to enhance the highest value of the product value chain, extends its carbon management plan beyond its own operational greenhouse gas emissions. 139 Business Overview Following the ISO 14064:2018 and GHG Protocol standards, and through third-party verification and disclosure, Walsin Lihwa expands its carbon management plan to include its value chain partners. This identifies the most emission-intensive activities within the value chain as a precise guide for emission reduction strategies, also uncovering more opportunities for transformation. In the action plan for 2023, we have established a low-carbon alliance and promoted a sustainable supply chain, working together with our value chain partners to create a sustainable development business model. In our 2023 project of Scope 3 greenhouse gas inventory, we adopted materiality assessment criteria, considering factors such as emission volume, improvement potential, and quantification methods. We identified emissions from upstream raw materials of our purchased products and services, upstream emissions from fuel and energy-related activities, and disclosed a total of 12 items in Scope 3/Categories 3 to 4. Walsin Lihwa continues to collaborate with its value chain partners in developing low-carbon products through strategies such as green product design, jointly combating climate change and global warming with its value chain partners. GHG Protocol ISO 14064-1:2018 Category 4: Emissions from upstream transportation and distribution Category 7: Emissions from employee commuting Category 9: Emissions from downstream transportation and distribution Category 3: Emissions from fuel- and energy- related activities (not covered in Scope 1 or Scope 2) Category 5: Emissions from waste generated in operations Category 3: Greenhouse gas emissions from transportation Category 4: Indirect greenhouse gas emissions from products used by the organization Scope 3 Emissions from Taiwan Plants (MTCO2e) Overseas Plants (Asia) (MTCO2e) 109,684.67 74,840.48 2,102,479.49 2,035,642.18 Note: 1. Scope 1 is direct energy, and Scope 2 and Scope 3 are indirect energy; the sources of greenhouse gas emissions include CO2, N2O, CH4, HFCs, and SF6 2. Taiwan: Yangmei Plant, Hsinchuang Plant, Yenshui Plant, and Taichung Plant 3. Overseas (Asia): Jiangyin Alloy, Shanghai Walsin, Yantai Walsin, Changshu Walsin, and Walsin Precision 4. Overseas (Europe): Italy (CAS) 5. Emission Unit: MTCO2e; Intensity Unit: MTCO2e/metric tons of product 6. The emission factor is based on the Environmental Protection Administration's announced greenhouse gas emission factor management table version 6.02, with the GWP (Global Warming Potential) values taken from the IPCC 6th Assessment Report (2021) . The greenhouse gas compilation method is based on the operational control approach. 7. 2014 is the starting year for the Company’s implementation of the energy-saving plan 8. Scope 2 emissions are calculated based on a location-based approach 4. Wastewater treatment: The wastewater from each of Walsin Lihwa's plants has been properly treated and discharged through wastewater treatment facilities in the plant site and the wastewater quality testing has been regularly conducted to avoid the impact of wastewater discharge on the environment. Management at source is most important in water conservation. Based on water quality characteristics, the treatment procedures were designed and recycling units were installed, so the wastewater has been discharged to nearby rivers according to regulations or piped to recycling units in order to effectively use limited water resources. Each plant site has adjusted equipment and process to reduce water consumption and improve wastewater recycling system, so as to enhance the recycling ratio of the process water. The average pollutant concentration in wastewater discharged by the factories in 2023 met the effluent criteria. The recycling ratio of Taiwan plants reached 90% and above. 5. Strict control of industrial waste: The 4Rs (reduce, reuse, recycle and recovery) have constituted the foundation for Walsin's waste production and control. In 2023, our overall waste recycling rate of copper wire, wire and cable and stainless steel reached 95.61%, of which the non-hazardous waste recycling rate was 97.20% to 98.89%; hazardous waste was 55.9% 140 to 99.55%. Except for some of the waste produced by self-recycling and reuse, the rest are entrusted to qualified manufacturers for removal, treatment or reuse. The output of waste in Taiwan and overseas factories increased by 6% compared with 2022, mainly because of the addition of Yantai rolling mill; for the Taiwan plants, the overall waste recycling rate of harmful waste increased by 1.82% compared with 2022, mainly because all the waste acid from Yenshui Plant was transported to the Taichung Plant for waste acid treatment and reuse and process improvement and adjustment, thereby reducing the dust collection ash and sludge, and the landfill rate of plants in Taiwan and overseas regions stood at <1% target. Aside from continuing to promote source reduction of waste and recycling of waste in the plant, the Company will, in conjunction with the strength of the supply chains, reduce the amount of raw materials and reduce the harm that production may bring to the environment. The Company has established strict control and auditing mechanisms for waste flow and screening of qualified vendors to ensure that waste flows are proper and legal. Waste output and disposal by Taiwan and overseas plants in 2023 (Unit: Tonne): Region Disposal Recycling (for reuse) Incineration Burial Other treatment Total Recycling rate Incineration rate Burial rate Other treatment Taiwan Non- hazardous 112,956.74 57,188.39 170,145.14 Hazardous Total Overseas (China and Malaysia) Non- hazardous 58,631.75 Hazardous 8,509.45 Total 67,141.20 Overseas (Europe) Non- hazardous 15,343.21 Hazardous Total 4,520.58 19,863.79 699.80 27.71 2,530.30 4.92 249.13 4.00 704.72 276.84 2,534.30 339.10 321.99 0 5,686.07 409.36 616.95 6,025.17 731.35 616.95 0 57,201.61 96.08 0.052 0 6,326.84 0.052 57,201.61 6,422.92 116,214.55 57,446.44 173,660.99 97.98% 99.55% 97.20% 59,292.84 98.89% 15,221.83 55.90% 74,514.67 90.10% 72,640.90 21.12% 10,847.47 41.67% 83,488.38 23.97% 0.60% 0.01% 0.41% 0.57% 37.35% 8.09% 0.00% 0.00% 0.00% 0.02% 2.18% 0.43% 0.01% 0.16% 1.46% 0.54% 0.00% 2.69% 4.05% 0.98% 0.83% 78.75% 0. 13% 0.00% 58.33% 68.51% 7.69% Note: 1. Except for the hazardous waste from dust collection by Yenshui Plant, which was recycled in the plant, and the waste acid from Taichung Plant, which was disposed of and recycled in the plant (29,744.27 metric tons in total), all hazardous and non-hazardous waste generated by our plants in Taiwan and Asia was disposed of outside of the plants. 2. The total amount of non-hazardous waste recycled in the European plants was 10,064.82 metric tons, while the remaining hazardous and non-hazardous waste was disposed of outside of the plants. 6. Improving energy use efficiency: Walsin Lihwa upholds the business philosophy of "Green Manufacturing, Happy Enterprise and Sustainable Management". In addition to committing to quality management, pollution prevention, environmental protection, safety and health, our company adopts "Enhancing energy efficiency and promoting clean energy" as its energy management guidelines to fulfill its social responsibility in energy conservation and carbon reduction. We aggressively incorporate energy-saving equipment, efficient technologies, environment-friendly facilities and environmental protection designs and green process into promoting improvement of energy efficiency at source. In response to the governments' energy policies and measures, we educate our employees about energy conservation and inventory the energy consumed by equipment and facilities to seek opportunities for improving our energy performance and to also effectively implement our energy saving plans. 7. Energy conservation and carbon reduction: To reduce energy consumption and greenhouse gas emissions, since 2015, Walsin Lihwa has set up an energy saving and carbon reduction management organization in each plant, set annual targets and various energy saving and carbon reduction measures, and held regular meetings to review and set up an energy management E-system for real-time management. All of our four plants in Taiwan met the 1% energy conservation rate required by the Bureau of Energy, Ministry of Economic Affairs in 2023, with an average electricity saving rate of 1.54%. The total energy saving rate of our Taiwan and China plants was 1.64%, and a total of 133 carbon reduction initiatives were proposed, with a total carbon reduction of 10,089.7 metric tons of CO2e/year. Total carbon reduction in our European plants reached 2,405 metric tons CO2e/year (contributed by 4 carbon reduction plans). 141 Business Overview In 2022, the Environmental, Health and Safety Committee dynamically adjusted the five-year energy management plan, setting an annual goal of reducing energy consumption and carbon emissions by 1.5%. In 2021, the plan included the installation of renewable energy sources (solar energy) for self-consumption at 5.5 MWp. By 2023, 4.9 MWp had been successfully installed and connected to the grid, generating a total of 1,054,868 kWh of electricity. The remaining 0.6 MWp of solar energy for self-consumption is expected to be completed by 2024. In addition, in order to effectively manage the efficiency of energy use, the Environmental Safety and Health Management Committee has formulated its five-year energy management plan from 2020, setting the goal of continuous annual energy savings and carbon reduction of 1%. In doing so, the Company expects to effectively reduce environmental pollution, reduce greenhouse gas emissions, reasonably and most efficiently use energy, to meet the challenges of climate change. How to Achieve Net Zero Inventory & Energy Conservation  Energy management systems and information platforms  Improve production and equipment efficiency  Energy saving solutions to reduce energy consumption by 15%  (Energy saving measures - motors/waste heat/boilers...) Internal Carbon Pricing  Unit carbon emissions and internal carbon pricing  Strengthen carbon reduction management efforts Carbon Management Net Zero by 2050 Inventory & Energy Conservation Externalization of low carbon technologies Low carbon production & new technologies Energy Creation Green Energy Trading Energy Creation  Solar power (PV)  Biomass/hydrogen energy Green Energy Trading  Wind power Opportunities for Low Carbon Technology Recycling & Sustainable Green  Waste reduction and recycling  Sustainable green supply chain  Externalize carbon reduction  Understand and introduce new technologies 1) Equipment electrification / low carbon-free power introduction 2) Hydrogen energy, negative carbon emission technology (CCUS)  Develop low carbon products, raw materials and materials Carbon Reduction Results from 2015 to 2023 (Unit: MTCO2e) 2023 Energy Saving Plans Plant Project Type Energy-Saving Type Project Quantity Energy Savings Taiwan Energy saving in manufacturing processes/office s Overseas (China & Malaysia) Energy saving in manufacturing processes Electricity (kWh) Natural gas (in thousand cubic meters) Others (in metric tons) Total Electricity (kWh) Natural gas (in thousand cubic meters) Vapor (in cubic meters) Total Electricity (kWh) 142 Energy Consumption Reduced (in MJ) 50,978,976 14,276,930 93 5,884 11 379 - - 4,195 - 65,255,906 36,345,480 632 14,276,930 Carbon Reduction (MTCO2e) Carbon Reduction Amount 2,965 1,880 1,104 5,949 2,713 1,309 NTD166,313,141 RMB 15,144,679 MYR 34,526 total equivalent to NT$233,664,074 488 1,344,928 118 - 2,568 51,967,338 9,245 4,140 1,153 2 106 18 8 1 27 2 Plant Project Type Energy-Saving Type Project Quantity Energy Savings Energy Consumption Reduced (in MJ) Carbon Reduction (MTCO2e) Carbon Reduction Amount Overseas (Europe (CAS)) Energy saving in manufacturing processes Natural gas (in thousand cubic meters) Total 2 4 630 22,227,030 1,252 EUR 144,318 (equivalent to NT$4,862,073) - 22,236,275 2,405 Total Carbon Reduction NT$238,526,147 8. 2023 Environmental Investments Walsin actively introduces advanced recycling equipment and combines various management systems and methods to minimize the adverse impact of production activities on the environment, including reducing emissions and improving recycling rates, introducing a complete environmental monitoring system to inventory potential polluted areas, and taking preventive and improvement measures in advance. We spent a total of NT$1,465,410,511 on environmental protection equipment and expenses in 2023. 2023 Environmental Investments by Walsin Category of Environmental Protection Costs Environmental Protection Equipment Costs Environmental Protection- Related Management Costs Other Environmental Protection-Related Costs Taiwan (NTD) China (RMB) Malaysia (MYR) Amount % Amount % Amount % 82,159,000 14% 157,414,508 80% 0.0 0% 497,770,177 83% 26,134,407 13% 17,335.2 51% 17,151,988 3% 13,300,429 7% 16,462.5 49% Total 597,081,165 100% 196,849,344 100% 33,797.7 100% 5. Employees-employer relations (1) Worker-Management Relations and Welfare The pursuit of excellence, innovation and learning and friendly environment form the basis of sustainable development at Walsin Lihwa. Its respect and attention to "people" is reflected in its human resources management systems and various worker-management relations mechanisms, which are described as follows: 1. Smooth worker-management communication channels (1) In 1976 the Company established an industry union to advocate suitable policies and the voice and proposals of workers are communicated using an employer and employee dual-channel communication method. (2) The union's negotiation meetings between employer and employee representatives are held each quarter. Union representative conferences are held every year to establish a good bridge of communication between employers and employees. Walsin has not entered into a group agreement with the industry union. Although the Company has established a union, the Company has not yet entered into a group agreement with it because the union has not requested a group agreement from the Company to date. (3) The Company publishes the "Walsin People Digital Newsletter" to share information on critical business operations and management. The company has also established an international communication platform to hold online events and opinion surveys. 2. The Company's remuneration is established on the principle of being able to attract and retain talent as follows: (1) Salary: The Company ensures that its overall remuneration is competitive in the market through regular market salary surveys every year. The Company's remuneration policy is based on the following principles: • A reasonable and competitive overall remuneration based on the market value of each professional function and the employee's contribution to their responsibilities. • Bonus payments are made in accordance with the Company's operational performance, the achievement of team objectives and the employee's personal contribution and performance. • Employees are paid and compensated on the basis of their academic experience, technical expertise, professional seniority and personal performance, without discrimination based on gender, race, religion, political affiliation, marital status or union affiliation. • The starting salary standards for fresh graduates and foreign workers comply with local laws and regulations. 143 Business Overview • We create harmonious labor relations within the scope of the law, in accordance with the relevant local laws and regulations. (2) Bonuses and Rewards: The reward and compensation system offered by the Company is designed to motivate employees who perform well in their work. Performance bonuses and production bonuses are granted based on the Company's operational performance, achievement of team goals and individual performance, and employees are remunerated according to the Company's profitability. 3. We also provide a diverse welfare system that includes the following: Insurance & Protection insurance (life injury hospitalization insurance, • Labor insurance • Health insurance • Group insurance, accidental insurance, insurance, cancer etc.) • Overseas Travel and Expatriate Insurance • Regular health checks for all staff • Monthly pension payment • Severance payments, pensions Subsidies • Travel Subsidies • Subsidies for club activities • Wedding and Funeral Grant • Maternity benefit • Supervisor's Health Benefits • Hospitalization condolences • Scholarship Children • Various loans interest-free (emergency loans, education loans for employees' children, home purchase loans) for Staff and Other Benefits • Birthday Gift Vouchers • 3 Festival Gift Money (Voucher) • Labor's Day Souvenirs • Staff dorms (for some factories) • Commuter Bus (Factories) • Annual leave of absence on a pro rata basis upon onboarding, which is better than what is provided by law • We invite experts and scholars to life, lectures on quality of give mindfulness, financial management, and travel to colleagues • Discount for employees by signing contracts with vendors • Gold medal for senior staff • Corner of Massage 4. Under the "Walsin Lihwa Employee Learning and Development System," each employee is incorporated into the Company's operating strategies, policies and target objectives based on his/her capabilities, job performance and career development. This enables employees, job performance and the organization to be fully integrated and to achieve synergies in employee learning and development. The content of the system includes the following: (1) Professional talent training in all levels (2) Management talent training (3) New employee orientation (4) Employee general education courses (5) Self-motivation course (6) Quality and safety awareness course In 2023, the Company spent a total of NT$24,109,000 on employee education and training. Details are as follows: Total training participation Total training hours 72,202 232,358.45 Average training hours per employee 43.79 Training statistics above include data from Taiwan and the subsidiaries in China. 5. Retirement system: To provide job security to employees, the Company has established a retirement system pursuant to regulatory requirements with specific measures as follow: (1) Established a "Pension Oversight Committee" in 1986, whereby workers' pension funds are deposited monthly into a pension account at the Bank of Taiwan. (2) The Company has commissioned external consultants to prepare a pension fund actuarial report annually since 1994 and set aside a pension reserve fund each month based on the actuarial report in order to satisfy pension applications made by employees eligible for retirement. (3) In line with the implementation of the new pension system in 2005, the company has continued the issuance of the pension fund to retired employees who have elected to receive the pension under the old system. As for employees adopting the new system, 6% of their salary will be monthly withdrawn as retirement pension and deposited into each employee's personal account at Labor Insurance Bureau. Employees may voluntarily contribute within the 6% to satisfy personal demand in retirement preparation based on personal needs. For the year ended December 31, 2023, the amount of NT$114,765,000 that should have been appropriated according to the percentage specified in the defined benefit plan was recognized in the consolidated statement of income of the Company. 144 (4) According to the revisions of the Labor Standards Act in 2015, the Company assesses the balance in the designated labor pension reserve funds account, calculate required labor pension funds for the laborers who meet the legal retire criteria in the follow following year and make up the difference before the end of March the following year. (5) In addition to compliance with the aforementioned retirement regulations and in recognition of the contributions made by retired employees, the company also issues commemorative medals and awards to retired employees. Meanwhile, the Employee Welfare Committee as well as the industry union has also issued retirement souvenirs to fully reflect the company's gratitude towards retired employees. (6) For employees in China, the subsidiaries enroll their employees in pension plans as required by law and make monthly contributions to the pension plans according to the local regulations in order to provide adequate retirement protection for the employees. 6. Employee Code of Conduct: To ensure that employees comply with obligations to the Company, customers, competitors and suppliers during business operations, the Company has established an Employee Code of Conduct in order to regulate employee behavior. The highlights of this Code are as follows: (1) Obligation to the Company: All Company employees must be dedicated, studious, conform to all rules of the Company and ensure confidentiality. (2) Obligation to customers: When conducting business dealings in representation of this Company, the employee's attitude must be humble and without any arrogance or pride lest damaging the Company's image. (3) Obligation to competitors: The Company's employees should gather competitor information to serve as a reference for Company strategy in a legal and open manner. (4) Obligation to suppliers: Negotiations and transactions with suppliers by employees must uphold the principles of fairness, reasonableness and reciprocity in order to achieve a win-win result. As a guide for employees to follow ethical standards and corporate governance, the Company has established additionally an Employee Code of Ethical Conduct. The highlights of this Code are as follows: (1) Prevention of conflicts of interests (2) Prevention of opportunities to obtain personal gains (3) Duty of confidentiality (4) Fair trade (5) Protection and appropriate use of Company assets (6) Legal compliance (7) Prohibition of gifts, bribes or any improper benefits (8) Prohibition of external communication of information against the Company (9) Equal employment opportunity and prohibition of discrimination (10) Health and safety in workplace (11) Correctly prepared documents and duty to maintain records (12) Respect for intellectual property (2) Protective measures taken to ensure a safe working environment and maintain employees' personal safety Walsin Lihwa's ESH and energy policy is "Green Manufacturing, Happy Enterprise and Sustainable Management". The health and safety system and administrative measures are as follows: 1. To enhance occupational safety and health management (including fire safety management) and fully implement the Occupational Safety and Health Management System (ISO 45001), the application covers all plants in Taiwan (Hsinchuang, Yangmei, Taichung, Yenshui), mainland China plants (Shanghai Walsin, Dongguan Walsin, Jiangyin Walsin, Jiangyin Alloy, Changshu Walsin, Yantai Walsin), PT. Walsin Nickel Industrial Indonesia, and CSA, encompassing all workers (employees, contractors, and visitors). The overall coverage rate is 89.63% for employees and 97.59% for non-employees (contractors), excluding Taipei headquarters, Nanjing Walsin (Real Estate), and Walsin Precision in Malaysia, which have not yet passed certification. The Company continues to use the PDCA cycle for dynamic review and improvement, management methods for prevention of recurrence, and internal audits and exercise, and to set and track annual occupational safety and health performance indicators, in a view to enhancing workplace safety for colleagues and establishing a comprehensive and friendly workplace. In terms of safety and health performance indicators, this includes proactive indicators such as key system promotion, support from senior management at each plant, and disclosure of management systems; reactive indicators such as work-related accidents and penalties from competent authorities; and indicators such as the frequency and items of general (special) health examinations. In fire safety performance management, each plant is fully staffed with fire management personnel (firefighters/security supervisors/fire equipment area autonomous management personnel), implements fire equipment maintenance management, and regularly conducts full-staff fire escape drills and fire self-defense organization drills. 145 Business Overview 2. Designated health and safety and environmental management units or staff Each of Walsin Lihwa's domestic and overseas plants also has its own Occupational Safety and Health Committee (in Taiwan)/Safety Production Committee (in China). Those committees include certain labor representatives to participate in and discuss matters relating to occupational safety and health. The number of labor representatives in the safety and health committees set up in Taiwan factories in accordance with the law are in line with the regulatory requirements. These committees hold meetings every quarter. In addition to the passing down of practical experience and the dissemination of ethical principles in occupational safety, we provide a platform for the exclusive Environmental Safety and Health Committee meeting minutes system and an electronic signature system for quarterly meeting results, and send internal newsletters through the intranet with work-safety-related emails to share our experiences. General Members Labor Representatives Plants Taiwan China Malaysia Indonesia Italy 97 79 22 13 15 63 65 21 11 4 Meetings Times 34 14 1 2 1 Note: Cogne organizes at least one corporate safety meeting annually (according to Italian Legislative Decree No. 81/2008) to discuss and update the above issues, with the participation of workers' health and safety representatives (RLS). Investigations and specialized meetings are also conducted at the request of RLS and/or workers. RLS are also invited to participate in the visits to the workplace conducted alongside with occupational health physicians (according to Italian Legislative Decree No. 81/2008). 3. Safe Workplace and Friendly Management In 2023, a project to strengthen hazard identification and risk assessment was initiated, with plants in Taiwan and mainland China revisiting three major aspects under the existing SJP risk management system: personnel operation safety, equipment safety, and environmental safety. A total of 11 plants (sites) reviewed 147 units, examining 1816 types of operations and identifying 381 hazard factors; among these, physical risks accounted for 84.9%, chemical risks 11.2%, human and other types 1.9%, and biological hazards 0.1%. To avoid underestimating high risks, in 2024, we will include the disaster cases of 2023 (including 84 work-related injury incidents (including minor injuries (Note 1), excluding CAS) and 205 near-miss incidents (near-miss incident rate of 238.98% (Note 2), excluding CAS)) into the calculation. Through the contractor mobile app inspection system and walk-around management methods, predictive danger identification and calling (KYT) activities, and adjusting the existing probability of accidents, severity, operation frequency, and risk level, we hope to shape the safety awareness of all employees and achieve the goal of zero work-related injuries. Note 1: Minor injury: refers to the non-temporarily incapacitated state: unable to work on the day of injury, but can resume normal operation the next day. Note 2: Work-related near miss frequency rate (NMFR) = number of near miss events * 200,000/total hours experienced. 4. Training on occupational safety and health for workers In addition to legally mandated training, necessary training is conducted based on departmental operations, on-site job types, and the annual safety training plan requirements of the business unit. Regular training plans are also established for environmental and safety responsibilities, fire escape drills, special operation personnel, and emergency response drills, along with a comprehensive environmental and safety certification system in place to keep track of the certification trends and needs of each site. Occupational Safety and Health Educational Training Plants Plants in Taiwan Plants in China Plants in Malaysia Plants in Indoneisa Plants in Italy Subtotal New Recruit Training In-Service Personnel Training (internal training) In-Service Personnel Training (external training, including for license acquisition) Pre-Site Training for Contractors Number of Persons Number of Times Number of Persons Number of Times Number of Persons Number of Times Number of Persons 616 764 31 338 91 1,840 498 375 21 215 804 1,913 8,590 7,556 309 3,926 6,154 26,535 176 206 3 24 263 672 382 943 3 80 1,022 2,430 243 110 0 184 8 545 1,836 5,220 0 3,664 629 11,349 5. Optimization of Contractor Management In 2023, no contractor incidents of fire occurred in the Company's working environment. All factories implemented the "Walsin Lihwa Contractor Management Principles," with all contractors required to sign the "Environmental, Safety, and Health Commitment" and comply with the "Contractor Instructions" (coverage rate of 100%). Regular kickoff meetings and contractor agreement meetings are held, and all contractors must undergo relevant contractor training before they can qualify for entry to the site (or the plant). Since the 146 establishment of the "Contractor Management System" in 2020, Walsin has entered its fourth year in 2023, with a cumulative number of contractor entries at 27,324 and a total working hours accumulated at 1,381,069 hours. Walsin plants continue to implement the "Walsin Lihwa Contractor Safety and Health Management Blue Book," "Standardization of Contractor Safety and Health Management Regulations," "Contractor Insurance Standards," and access control, issuing a total of 724 notices for improvement and 98 penalty tickets for violations. This year, two work-related injuries occurred in Yantai Plant, with the related deficiencies immediately rectified, and the focus issues have been promoted. We continue our way towards the goal of zero work-related injuries. Following the 2023 strategic direction of establishing a robust environmental, safety, and health intelligent management system, we promote the execution of the zero work-related injury goal, continuously execute the contractor safety and health management project (contractor management effectiveness confirmation and new plant area inclusion for control), and the make use of the PDCA method for sustainable operation. We continue tracking the operational status of each manufacturing factory system, immediate reporting any system failure, and repairing the system to restore its operation, while optimizing improvements when system defects occur. On December 1, 2023, we completed the new plant system setup and inclusion for the Yantai rolling mill, implementing contractor safety and health management in the plant area, reducing construction hazard risks, and ensuring the health and safety of all workers. 6. Compliance with Occupational Safety and Health Regulations In 2023, there were 5 major violations of occupational safety and health regulations in Taiwan, with total fines of NT$600,000. (No violations in our plants in China and Southeast Asia) We will continue to review each accident and penalty event, as well as high-risk hazardous operations and equipment, high-frequency near miss events by focusing on hidden dangers based on projects, and we will, through information systems, gradually help improve personnel safety awareness, with real-time control of machinery and equipment, (raw) materials and chemicals control, and gradual construction of a regulatory cloud information system, to optimize our occupation, safety, and health management system. In 2023, the Company did not have any fire, explosion, or chemical leakage. Note: The standard for disclosure of major fines is NT$100,000/RMB22,000. 7. Establish friendly, safe and healthy workplace through health promotion (1) Occupational Safety and Health Activity Highlights Employees are the most precious assets of a company, and Walsin Lihwa designs feasible employee health promotion plans every year. The Company conducts health inspections and analysis of results based on risk management, as well as on hazardous operations and special groups of hazardous operations (such as noise, free radiation, dust, high temperature, lead, manganese, nickel, and hexane operations) in the plants, and establishes health protection plans for hazardous operations, to ensure that employees have a good working environment and avoid occupational diseases. In 2023, a total of 8 female pregnant employees received maternal health protection. At the same time, through organizing health promotion lectures and activities, we have enhanced employees' health awareness by positively and actively promoting and guiding employees to change their personal health behaviors and habits, have more correct hygiene knowledge, and embrace the concept of self-efficacy in the health belief model. In 2023, a total of 115 health education lectures were held, with a total of 4,142 participants, showing enthusiastic participation among colleagues. (2) Results of Health Promotion Activities Health Promotion Number of Times Number of Attendees Health Promotion - Dynamic Activities Health Issues - Static Lectures Safety First Aid Education and Training Blood donation for charity 16 30 60 9 (3) 2023 Promotion of Healthy Workplaces 1,002 718 1,777 645 (1,054 bags of blood donated) Taipei Headquarters was awarded 2023 Excellent Health Workplace – Dynamic Award from the Health Promotion Administration, MOHW Taipei Headquarters received 2023 Healthy Workplace Certification-Health Promotion Badge Taipei Headquarters received the Excellent Lactation Room Special Excellence Certification from Health Department, Taipei City Government Hsinchuang Plant received the 2023 Safe Place Certification (4) From the most recent year to the date of publication of this Annual Report, any labor-management disputes and resulting losses suf 147 Business Overview (5) fered by the Company and its countermeasures: None. 6. Information Security Management (1) Describe the risk management framework for information and communications security, information and communications security policies, specific management plans, and resources devoted to information and communications security management. Walsin Lihwa's dedicated information security team is committed to strengthening the overall information security protection capability of the enterprise, to enhance the enterprise's information security rating, meet customers' information security requirements, and fulfill the commitment to information security goals for customers, shareholders, and all stakeholders. We have strengthened our information security year after year from four aspects: IT governance, personnel/device protection, network/system control, and perimeter defense, including enhancing the management of high-privilege accounts, host security monitoring and security testing, application security enhancement, external service vulnerability improvement, network security segmentation, introduction of information security monitoring mechanisms (SOC), strengthening cloud information security management, and enhancing colleagues' awareness of information security. 1. Risk management framework for information and communications security To build a "digitally sustainable" information system architecture and promote the corporate goal of "digital transformation," Walsin Lihwa has promoted an information security strategy plan centered on "strengthening information security resilience" by establishing an overall information security protection platform, perfecting information security technical protection measures, demonstrating proactive defense capabilities, and laying the foundation for digital sustainability, in line with the government's policy goal of "information security equals national security." Walsin has established its information security risk management framework with a dedicated information security organization, senior executive participation, and alignment with international information security standards, specifying relevant information security policies and regulations to implement information security management.  Dedicated Information Security Organization: In response to the corporate transformation and enhancement of information security management, Walsin Lihwa has established a dedicated information security organization - "Information Security and System Operation &Management Division" and, in 2022, appointed a Chief Information Security Officer (CISO), an information security manager, and two or more dedicated information security personnel. The division is responsible for formulating information security policies, planning, coordinating and implementing information security protection measures, performing information security risk assessment and management, developing a complete information security plan, and promoting information security management and solutions year by year.  Participation of Senor Executives: The Company has established the IT Steering Committee, which is the  information security management and decision-making body for the head office and business units, and is responsible for reviewing and deciding on matters related to information security management. There are also several members on the Board of Directors with backgrounds in information security in the Audit Committee to supervise and review the promotion of information security policies. Implementation of Information Security Management: In 2022, Walsin Lihwa implemented ISO 27001 Information Security Management System (ISMS) and obtained certification from a third-party certification body to fully manage its information security through PDCA. We have built up the confidentiality, integrity, and availability of information security management system of our organizations comprehensively, and strengthened our information security management continuously through different management plans in such aspects as prevention beforehand, monitoring during the event, and response after the event. 2. Information Security Policies and Goals The goal of information security at Walsin is to maintain the confidentiality, integrity and availability of sensitive information, such as customer data and business information. Therefore, all of our employees, internal and external information service users and third-party outsourced service providers should work together to follow and achieve the following policies and objectives:  To protect the Company's confidential information from being accessed, altered, or damaged in an unauthorized way or improperly disclosed, in accordance with various laws and regulations. (In compliance with both internal and external regulations)  To protect information on the Company's business activities from unauthorized access or disclosure, and to ensure the accuracy of all business information. (Protection of trade secrets)  To establish a complete business continuity plan and information security incident management procedures, to ensure that incidents are responded to, controlled and handled properly, and by conducting regular drills, to ensure the continuous operation of information systems or services.  To handle and protect personal information and intellectual property rights in a prudent manner in accordance with the relevant domestic and foreign regulations in respect of the Personal Information Protection Act and the intellectual property law. (Intellectual property) 148  To perform regular information security compliance audits to review the implementation of the information security management system. (PDCA)  All employees shall maintain a high level of information security awareness at all times, and supervisors at all levels shall assume ultimate responsibility for information security supervision, management and training, to achieve the goal of reducing the risk of information use through various activities, such as management review, risk assessment, internal audit, education and training, and information security drills. (Participation of all employees)  All staff of the Company shall follow information security policies, management practices and standard procedures, and violations of information security policies and related regulations shall be handled in accordance with relevant laws and regulations or the Company's regulations. (Participation of all employees) 3. Construction of the resilience of corporate information security and implementation of information security management  We have drafted information security plan to promote information security policy year by year, to introduce information security system and process specification, and to continuously establish complete information security technical protection measures.  The specific management plan will be gradually achieved in five stages, "Internal and External Segregation", "Physical Fitness", "Insight", "Smart Security", and "Behavior Analysis", with four components, "IT Governance", "Data and Device Protection", "Network and System Control", and "Boundary Defense".  The specific management plans: 1. Planning and establishing data protection mechanisms to reduce risk of leaking confidential information. 2. Continuously introducing advanced information security solutions to effectively protect and manage system, host and network behavior. 3. Strengthening external information service protection to enhance the ability to block hacker attacks. 4. Regularly organizing educational training to promote new information security knowledge and to raise employees' awareness of information security. 5. Regularly conducting disaster preparedness drills for important systems, so that in the event of a disaster, operations may be quickly resumed to ensure the company's operational sustainability. 6. Improving the protection capability of endpoints, servers and network devices by introducing Endpoint Detection and Response (EDR). 7. Introduction of information security monitoring mechanisms (SOC) to establish effective real-time incident handling and response capabilities. 8. Walsin Lihwa introduced the ISO 27001 Information Security Management System (ISMS) in 2022 and obtained certification from a third-party verification institution, thereby implementing information security management with PDCA. We have comprehensively built the confidentiality, integrity, and availability of the organization's information security management system, and according to different management planning in the aspects of prevention, monitoring, and response, in order to assist the enterprise in continuously strengthening information security management. 149 Business Overview 9. Strengthening cloud information security management and achieving ESG digital sustainability purposes through ZeroTrust. 4. Investment in cyber security management resources  The corresponding information security management issues and the resources to be invested are summarized as follows: 1. Major issue: "Information Security Management" was included as one of the "Major Issues" in the Company's sustainability report for 2023. 2. Dedicated organization: A dedicated information security organization, "Information Security and System Operation & Maintenance Division," was established and a Chief Information Security Officer (CISO), an information security manager, and two or more dedicated information security personnel were appointed, responsible for drafting and amending information security policies, as well as planning, coordinating, and executing information security protection measures. 3. Management review: The IT Steering Committee holds at least one management review meeting annually to audit the information security policy and its implementation and execution, in order to ensure the effectiveness and appropriateness of the standardized information security policy in compliance with relevant laws and the requirements of competent authorities. 4. Information security certification: We pass the ISO27001 Information Security Management System (ISMS) certification annually, while there are no significant deficiencies in our related information security audits. 5. Stakeholder issues: In 2023, no major cyber security incidents or confidential information leakage occurred, nor did any other event cause losses to the Company and its customers. 6. Advocacy and training: The Company continues promoting a month-long information security awareness campaign annually, as well as implementing mandatory information security education training courses for all employees. In 2023, the number of participants exceeded 2500. In 2023, two email social engineering drills were conducted, with more than 5000 participants, and colleagues who failed the social engineering drills were required to participate in online information security courses and complete the test. 7. Information security regulations: In addition to revising all information security regulations in 2022, three information security regulations were revised in 2023 to comply with domestic and international legal requirements and respond to changes in the external environment. 8. Information security testing: Three third-party information security risk testing operations were conducted in 2023. 150 (2) In 2023, no major cyber security incidents or confidential information leakage occurred, nor did any other event cause losses to the Company and its customers. 7. Material Contracts (1) Walsin Lihwa Corporation Nature of Contract Parties (Contracting Entity of the Other Party) Contract Start/End Dates Main Content Restrictive Clauses Loan Agreement DBS Bank The agreement was signed on March 23, 2020, with the maturity of the loan falling on April 15, 2025 The loan is a five-year facility in a total amount of USD 300 million. Guarantee Agreement Lenders of RMB syndicated term loan: CTBC Bank (Arranger), Mega Bank, First Commercial Bank, and Chang Hwa Bank The agreement was signed on February 6, 2024, with the maturity of the loan falling on February 7, 2029 The loan is a five-year facility in a total amount of RMB 800 million. Land Lease Agreement Taiwan International Ports Corporation, Kaohsiung Port Branch Effective from March 21, 2022; 20 years after the commencement of operation 1. Lease of approximately 18.38 hectares of land in A6 of the first phase of the Kaohsiung Port Intercontinental Container Center; 1. Current ratio>=100% 2. Debt ratio<=120% (Net liabilities/Tangible net worth) 3. Interest coverage ratio>=150% 4. Tangible net worth>= NT$55 billion 1. Current ratio>=100% 2. Debt ratio<=120% (Net liabilities/Tangible net worth) 3. Interest coverage ratio>=300% 4. Tangible net worth>= NT$80 billion No rights under the agreement may be transferred without the consent of the Lessor. 2. The is annual NT$13,971,738, the annual fixed management fee is NT$13,971,738. rent and Construction Agreement Land Lease Agreement Chung-Lu Construction Co., Ltd. Taiwan International Ports Corporation, Kaohsiung Port Branch 2021/7/5- 2023/5/15 Effective from November 3, 2023; 20 years from the date of delivery NT$3,249,750,000 None 1. Lease of A6 Port for the first phase of the Kaohsiung Port Intercontinental Container Center and the right to use the rear land of approximately 376 hectares; No rights under the agreement may be transferred without the consent of the Lessor. 2. The annual rent is NT$8,150, and fixed management fee is NT$8.5 million. annual the 151 Business Overview (2) Walsin (Nanjing) Development Co., Ltd. Nature of Contract Construction Agreement Parties (Contracting Entity of the Other Party) 38 companies, including Nanjing Construction Design Research Institute Co., Ltd. Contract Start/End Dates Main Content Restrictive Clauses 2022/01/06- 2028/06/30 1. Design, consultancy, and construction for Walsin Centro Plot AB, Phases II & III. None 2. Cumulative Amount: RMB50,250,000. (3) Yantai Walsin Stainless Steel Co., Ltd. Nature of Contract Sale and Purchase of Real Property Construction Agreement Parties (Contracting Entity of the Other Party) China Merchants Real Estate (Yantai) Co., Ltd. Contract Start/End Dates April 17, 2023 Main Content Restrictive Clauses 1. Acquisition of real property 2. Amount: Approximately None RMB129,765,000 25 companies, including China Construction Eighth Engineering Division. Corp. Ltd. 2022/01/12- 2023/12/31 1. Civil construction for Yantai Plant 2. Cumulative Amount: RMB689,879,000. None Loan Agreement Lenders of RMB syndicated term loan: CTBC Bank (Arranger), Mega Bank, First Commercial Bank, and Chang Hwa Bank The agreement was signed on February 6, 2024, with the maturity of the loan falling on February 7, 2029 (4) Dongguan Walsin Wire & Cable Co., Ltd. Nature of Contract Parties (Contracting Entity of the Other Party) Contract Start/End Dates Equity Trading Hangzhou Futong Group Co., Ltd. Obtaining control on February , 2024 The loan is a five-year facility in a total amount of RMB 800 million. The total amount of shareholders' equity and the amount borrowed by shareholders or affiliates shall not be less than RMB1.8 billion. Main Content Restrictive Clauses 1. Dongguan Walsin Wire & Cable Co., None Ltd. acquired 60% equity of Hangzhou Walsin Power Cable Co., Ltd. 2. Acquisition Price: Approximately RMB301,864,000. (5) Walsin Energy Cable System Co., Ltd. Nature of Contract Parties (Contracting Entity of the Other Party) Contract Start/End Dates Joint Venture Agreement Walsin Lihwa Corporation NKT HV Cables AB Effective from March 1, 2023 Main Content In order to jointly develop the submarine cable business, Walsin Lihwa Corporation and NKT HV Cables AB jointly established Walsin Energy Cable System Co., Ltd. Restrictive Clauses None 152 Nature of Contract Technical Consulting Agreement and Technology Licensing Agreement Land Sublease Agreement Parties (Contracting Entity of the Other Party) NKT HV Cables AB Contract Start/End Dates Effective from March 1, 2023 Walsin Lihwa Corporation Effective from 5 May 2023, and 20 years from the date of commencement of operation Construction Agreement Chung-Lu Construction Co., Ltd. 1. From July 17, 2023 to November 12, 2023 (6) Borrego Energy, LLC Restrictive Clauses None Main Content In order to jointly develop the submarine cable business, NKT HV Cables AB provides technical consultation and licenses its technology to Walsin Energy Cable System Co., Ltd. 1. In order to develop the submarine cable business, it subleased to Walsin Lihwa Corporation a total of about 18.38 hectares of the rear land of the first phase of Kaohsiung Intercontinental Container Terminal Project; 2. The annual rent is NT$13,971,738, and the annual fixed management fee is NT$13,971,738. 1. In order to develop the submarine cable This sublease was carried out with the consent of the Lessor. business, the contractor was commissioned to construct the civil works for the plant. None 2. Cumulative amount of civil works: NT$4,664,625,000 Nature of Contract Equity Trading Parties (Contracting Entity of the Other Party) Contract Start/End Dates Main Content Restrictive Clauses Anza RE Buyer, LLC February 24, 2023 1. Borrego Energy, LLC formed a wholly None owned subsidiary, Anza RE, LLC, with the business of its solar and energy storage sourcing and trading platform division and completed the disposition of the business of the solar and energy storage sourcing and trading platform division through the sale of its equity interest in Anza RE, LLC. 2. Disposition Price: US$26,740,000 153 Business Overview (7) Cogne Acciai Speciali S.p.A Nature of Contract Parties (Contracting Entity of the Other Party) Contract Start/End Dates Equity Trading MUTARES HOLDING-33 GMBH May 5, 2023 Restrictive Clauses None Main Content 1. Cogne Acciai Speciali S.p.A. has acquired 100% equity of Special Melted Products Limited (based in the UK). (This transaction was made the Company's through investment structure in Cogne Acciai Speciali S.p.A.; Walsin Lihwa Corporation ultimately holds a 70% consolidated shareholding in Special Melted Products Limited) 2. Acquisition Price: £142,165,394. 1. Cogne Acciai Speciali S.p.A. has acquired Equity Trading Com.Steel S.p.A. January 26, 2024 65% of the shares of Com. Steel Inox S.p.A. (based in Italy). None 2. Acquisition Price: Up to EUR 28,000,000. (8) Walsin Singapore Pte. Ltd. Nature of Contract Parties (Contracting Entity of the Other Party) PT. Harum Nickel Industry Equity Trading Contract Start/End Dates October 26, 2023 Main Content 1. Disposition of the its 29.5% equity interest Indonesian PT. Westrong Metal in Industry. Restrictive Clauses None Equity Trading Indigo International Investment Limited October 26, 2023 (9) PT. WALHSU METAL INDUSTRY 2. Disposition Price: US$146,000,000 1. Acquisition of 75% equity interest in Berg Holding Limited (based in Hong Kong). None 2. Acquisition Price: US$118,500,000 Parties (Contracting Entity of the Other Party) Contract Start/End Dates PT. PERINTIS MAKMUR INDONESIA June 26, 2023 – September 19, 2024 Main Content Restrictive Clauses 1. Commissioning of construction on land 2. Amount: US$37,400,000 1. Procurement of high-grade nickel matte None Eternal Tsingshan Group Limited June 26, 2023 converter equipment. None 2. Amount: US$49,330,000 Nature of Contract Construction Agreement Buying and Selling of Equipment 154 VI Financial Information 1. Brief Balance Sheets and Comprehensive Income Statements of Recent Five Years (1) Condensed Balance Sheet – Consolidated (Based on IFRSs) Unit：NT $Thousands Year Financial Summary for the Last Five Years Items 2019 2020 2021 2022 2023 Current Assets 60,789,794 56,176,808 69,320,640 92,707,385 78,751,988 Property, Plant and Equipment 27,845,109 34,294,221 41,474,488 65,656,466 78,154,936 Intangible Assets 168,134 175,000 173,430 9,339,422 12,155,696 Other Assets Total Assets Current Liabilities Before Distribution After Distribution 49,263,365 60,917,977 72,066,340 89,194,468 97,307,411 138,066,402 151,564,006 183,034,898 256,897,741 266,370,031 40,743,553 31,458,157 38,852,513 60,869,368 50,759,328 42,406,553 34,546,357 44,342,646 67,585,767 55,193,794 Non-current Liabilities 18,756,735 32,825,019 36,236,117 61,819,250 61,161,390 Total Liabilities Before Distribution After Distribution Equity Attributable to owners of the Company Capital Stock Capital Surplus Retained Earnings Before Distribution After Distribution Other Equity Treasury Stock 59,500,288 64,283,176 75,088,630 122,688,618 111,920,718 61,163,288 67,371,376 80,578,763 129,405,017 116,355,184 77,384,341 84,468,235 105,883,524 123,580,876 140,810,315 33,260,002 32,260,002 34,313,329 37,313,329 40,313,329 16,055,238 15,690,406 18,440,875 24,672,454 33,624,917 31,179,511 36,330,187 47,787,207 62,038,398 60,590,617 29,516,511 33,241,987 42,297,074 55,321,999 56,156,151 (3,110,410) 187,640 5,342,113 (443,305) 6,281,452 0 0 0 0 0 Non-controlling Interests 1,181,773 2,812,595 2,062,744 10,628,247 13,638,998 Total Equity Before Distribution After Distribution 78,566,114 87,280,830 107,946,268 134,209,123 154,449,313 76,903,114 84,192,630 102,456,135 127,492,724 150,014,847 155 Financial Information (2) Condensed Balance Sheet - Unconsolidated (Based on IFRSs) Year Financial Summary for the Last Five Years Items 2019 2020 2021 2022 2023 Current Assets 16,615,466 18,421,337 28,943,268 37,348,050 20,943,624 Unit：NT $Thousands Property,Plant and Equipment Intangible Assets Other Assets Total Assets Current Liabilities Before Distribution After Distribution 17,621,858 17,493,296 17,411,273 18,760,190 20,828,266 0 0 0 0 0 86,140,209 104,556,223 118,325,438 144,973,880 161,093,192 120,377,533 140,470,856 164,679,979 201,082,120 202,865,082 25,700,349 24,192,375 23,762,737 23,723,277 11,474,045 27,363,349 27,280,575 29,252,870 30,439,676 15,908,511 Non-current Liabilities 17,292,843 31,810,246 35,033,718 53,777,967 50,580,722 Total Liabilities Before Distribution After Distribution 42,993,192 56,002,621 58,796,455 77,501,244 62,054,767 44,656,192 59,090,821 64,286,588 84,217,643 66,489,233 Capital Stock 33,260,002 32,260,002 34,313,329 37,313,329 40,313,329 Capital Surplus 16,055,238 15,690,406 18,440,875 24,672,454 33,624,917 Retained Earnings Before Distribution After Distribution Other Equity Treasury Stock Total Equity Before Distribution After Distribution 31,179,511 36,330,187 47,787,207 62,038,398 60,590,617 29,516,511 33,241,987 42,297,074 55,321,999 56,156,151 (3,110,410) 187,640 5,342,113 (443,305) 6,281,452 0 0 0 0 0 77,384,341 84,468,235 105,883,524 123,580,876 140,810,315 75,721,341 81,380,035 100,393,391 116,864,477 136,375,849 156 (3) Condensed Statements of Comprehensive Income - Consolidated (Based on IFRSs) Year Financial Summary for the Last Five Years Unit：NT $Thousands (Excpet EPS:NT$) Items Net Sales Gross Profit Operating Income Non-operating Revenue and Expense Profit before Taxes Gain from Continued Operations Loss from Discontinued Operations Profit for the year Other comprehensive income,net of income tax Total comprehensive income for the year Profit for the year attributable to owners of the company Profit for the year attributable to non- controlling interests Total comprehensive income for the year attributable to owners of the company Total comprehensive income for the year attributable to non- controlling interests Earnings Per Share 2019 2020 2021 2022 2023 134,804,405 112,546,603 156,664,766 180,400,719 189,839,626 9,390,566 12,468,338 19,809,465 17,346,305 14,443,612 4,059,474 7,385,062 13,345,552 9,498,714 6,240,766 680,793 1,865,603 5,776,946 13,903,299 1,197,632 4,740,267 9,250,665 19,122,498 23,402,013 7,438,398 3,783,324 7,005,801 15,257,314 19,140,076 5,941,250 0 0 0 0 0 3,783,324 7,005,801 15,257,314 19,140,076 5,941,250 915,620 3,338,209 5,113,693 (2,768,002) 6,665,891 4,698,944 10,344,010 20,371,007 16,372,074 12,607,141 3,149,679 6,691,149 14,642,629 19,352,097 5,134,316 633,645 314,652 614,685 (212,021) 806,934 4,082,661 10,114,207 19,791,160 16,639,046 11,993,418 616,283 229,803 579,847 (266,972) 613,723 0.95 2.04 4.27 5.45 1.32 157 Financial Information (4) Condensed Statements of Comprehensive Income - Unconsolidated (Based on IFRSs) Year Financial Summary for the Last Five Years Unit：NT $Thousands (Excpet EPS:NT$) Items Net Sales Gross Profit Operating Income Non-operating Revenue and Expense Profit before Taxes Gain from Continued Operations Loss from Discontinued Operations Profit for the year Other comprehensive income,net of income tax Total comprehensive income for the year Earnings Per Share 2019 2020 2021 2022 2023 71,596,648 64,097,690 97,789,648 98,420,045 83,321,352 4,155,851 4,457,566 12,894,560 11,207,400 6,758,790 2,445,178 2,681,141 10,197,929 7,741,047 4,041,947 644,517 3,982,969 8,195,530 16,915,494 2,909,936 3,089,695 6,664,110 18,393,459 24,656,541 6,951,883 3,149,679 6,691,149 14,642,629 19,352,097 5,134,316 0 0 0 0 0 3,149,679 6,691,149 14,642,629 19,352,097 5,134,316 932,982 3,423,058 5,148,531 (2,713,051) 6,859,102 4,082,661 10,114,207 19,791,160 16,639,046 11,993,418 0.95 2.04 4.27 5.45 1.32 (5) Auditors’ Opinion from 2018 to 2022 Year 2019 2020 2021 2022 2023 CPA Deloitte & Touche Wen-Yea, Shyu, Kwan-Chung, Lai Deloitte & Touche Wen-Yea, Shyu, Kwan-Chung, Lai Deloitte & Touche Wen-Yea, Shyu, Ker-Chang Wu Deloitte & Touche Wen-Yea, Shyu, Ker-Chang Wu Deloitte & Touche Wen-Yea, Shyu, Ker-Chang Wu Audit Opinion An Unmodified Opinion with an Other Matter Paragraph An Unmodified Opinion with an Other Matter Paragraph An Unmodified Opinion with an Other Matter Paragraph An Unmodified Opinion with an Other Matter Paragraph An Unmodified Opinion with an Other Matter Paragraph 158 Year Financial Analysis for the Last Five Years 2019 2020 2021 2022 2023 Debt Ratio 43.09 42.41 41.02 48.59 42.01 2.Financial Analysis of Recent Five Years (1) Financial Analysis – Consolidated (Based on IFRSs) Analysis Items Capital structure (％) Liquidity analysis (%) Ratio of long-term Capital to Property, Plant and Equipment Current Ratio Quick Ratio Interest Coverage Ratio (times) Accounts Receivable Turnover (Times) Average Collection Period Inventory Turnover (Times) Operating Accounts Payable Turnover (times) Performance Average Days in Sales Property, plant and equipment Turnover (Times) Total Assets Turnover (Times) Return on Total Assets (%) Profitability Return on Stockholders’ equity (%) Pre-tax Income to Paid-in Capital (%) analysis Profit Ratio (%) Earnings (loss) Per Share (NT$) (Note 1) Cash Flow Ratio (%) Cash Flow Adequacy Ratio (%) Cash Reinvestment Ratio (%) Cash Flow(Note 2) Leverage Operating Leverage Financial Leverage 349.51 350.22 347.64 291.90 275.87 149.20 178.57 178.41 152.30 155.14 89.96 93.29 81.52 79.25 76.59 947.08 1,813.14 4,675.29 2,927.30 448.28 10.06 36.28 5.21 15.32 70.05 5.09 0.99 3.12 4.79 14.25 2.80 10.35 35.26 4.64 13.30 78.66 3.62 0.77 5.12 8.44 28.67 6.22 12.95 28.18 5.18 16.51 70.46 4.13 0.93 9.31 15.63 55.72 9.73 10.16 35.92 4.81 12.10 75.88 3.36 0.82 9.09 16.09 62.71 10.60 10.05 36.31 5.02 10.08 72.70 2.64 0.72 2.92 4.11 18.45 3.12 0.95 2.04 4.27 5.45 1.32 21.17 72.07 4.51 2.93 1.15 22.99 68.21 4.65 2.06 1.07 3.37 45.50 0.00 1.72 1.03 22.77 42.45 4.39 2.27 1.09 44.81 56.72 7.71 3.26 1.52 Analysis of financial ratio difference for the last two years (Not required if the difference does not exceed 20%) A. Compared to 2022, interest coverage ratio in 2023 shows a decrease. This is because that pre-tax income for the year 2023 decreased. Compared to 2022, property, plant and equipment turnover in 2023 shows a decrease. This is because that the increase in net sales was lower than the increase in the average net amount of property, plant and equipment for the year 2023. Compared to 2022, return on total assets, return on stockholders’ equity, and earnings per share in 2023 show a decrease. This is because that pre-tax income for the year 2023 decreased. Compared to 2022, pre-tax Income to paid-in capital in 2023 shows a decrease. This is because that pre-tax income for the year 2023 decreased. Compared to 2022, cash flow ratio and cash reinvestment ratio in 2023 show an increase. This is because that net cash flow from operating activities increased for the year 2023. Compared to 2022, cash flow adequacy ratio in 2023 shows an increase. This is because that net cash flow from operating activities over the past five years increased. Compared to 2022, operating leverage in 2023 show an increase. This is because that operating Income for the year 2023 decreased. Compared to 2022, financial leverage in 2023 show an increase. This is because that interest expense for the year 2023 increasd. B. C. D. E. F. G. H. 159 Financial Information Note : Financial analysis formulas show as the following： 1.Financial Structure： (1)Debt Ratio＝Total liabilities／Total assets (2)Ratio of Long-term Capital to Property, plant and equipment＝(Stockholders’ equity＋non-current liabilities)／net worth of Property, plant and equipment 2.Solvency： (1)Current Ratio＝Current assets／Current liabilities (2)Quick Ratio＝(Current assets－inventories－prepaid expenses)／Current liabilities (3)Interest Coverage Ratio＝Income before tax and interest expenses／Current Interest expenses 3.Operating Performance： (1)Receivable (included trade receivables and operating notes receivable) Turnover＝ Net sales／ Average receivables for each period (included trade receivables and operating notes receivable) (2)Average Collection Period Turnover Days＝365／Receivable turnover (3)Inventory Turnover＝Cost of sales／Average inventories (4) Payables (included trade payables and operating notes payable) Turnover＝Cost of sales／ Average payables for each period (included trade payables and operating notes payable) (5)Average Days in Sales＝365／Inventory turnover (6)Property, Plant and Equipment Turnover＝Net sales／Average of property, plant and equipment, net (7)Total Assets Turnover＝Net sales／Average of total assets 4.Profitability： (1)Return on Total Assets＝〔Net income after tax＋interest expense×（1－tax rate）〕／ Average of total assets (2)Return on Stockholders’ equity＝Net income after tax／Average of stockholders’ equity (3)Profit Ratio＝Net income after tax／Net sales (4)Earnings (loss) Per Share＝Net income attributable to owners－stock dividend -preferred）／ Weighted average of outstanding shares 5.Cash Flow： (1)Cash Flow Ratio＝Net cash provided by operating activities／Current liabilities (2)Cash Flow Adequacy Ratio＝Net cash provided by operating activities in recently five years／ Recently five years of ( capital expenses＋increase of inventories+ cash dividend) (3)Cash Reinvestment Ratio＝(Net cash provided by operating activities- cash dividend)／ (Property, plant and equipment, gross +long-term investment + other non-current assets + working capital) 6.Leverage： (1)Operating Leverage＝(Net sales－variable operating cost and expense)／Operating income (2)Financial Leverage＝Operating income／(Operating income－interest expense) 160 (2) Financial Analysis –Unconsolidated (Based on IFRSs) Year Financial Analysis for the Last Five Years Analysis Items Capital structure (％) Liquidity analysis (%) Debt Ratio Ratio of Long-term Capital to Property, plant and equipment Current Ratio Quick Ratio 2019 2020 2021 2022 2023 35.71 39.86 35.70 38.54 30.58 537.27 664.70 809.34 945.40 918.90 64.65 26.77 76.14 121.80 157.43 182.53 31.25 47.99 99.09 82.86 Interest Coverage Ratio (times) 676.50 1,571.22 4,424.13 3,488.06 962.04 Accounts Receivable Turnover (Times) Average Collection Period Inventory Turnover (Times) Operating Accounts Payable turnover (times) Performance Average Days in Sales Property, plant and equipment Turnover (Times) Total Assets Turnover (Times) Return on Total Assets (%) Return on Stockholders’ equity (%) Profitability Pre-tax Income to Paid-in Capital (%) analysis Profit Ratio (%) Earnings (loss) Per Share (NT$) (Note 1) Cash Flow Ratio (%) Cash Flow Adequacy Ratio (%) Cash Reinvestment Ratio (%) Cash Flow(Note 2) Leverage Operating Leverage Financial Leverage 32.56 11.21 6.53 21.25 55.89 32.75 11.14 6.67 23.75 54.72 28.78 12.68 7.05 30.51 51.77 23.99 15.21 6.36 27.83 57.38 4.20 3.65 5.60 5.44 0.59 3.08 4.07 9.28 4.39 0.49 5.47 8.26 20.65 10.43 0.64 9.81 15.38 53.60 14.97 0.53 10.89 16.86 66.07 19.66 28.66 12.73 6.67 22.27 54.72 4.20 0.41 2.83 3.88 17.24 6.16 0.95 2.04 4.27 5.45 1.32 18.90 46.95 0.89 2.63 1.28 16.56 46.03 15.61 2.52 1.20 14.67 36.66 19.14 1.48 1.04 62.53 41.69 5.39 1.73 1.10 95.69 41.86 2.32 2.30 1.24 Analysis of financial ratio difference for the last two years (Not required if the difference does not exceed 20%) A. Compared to 2022, debt ratio in 2023 shows a decrease. This is because that loans decreased. B. Compared to 2022, interest coverage ratio in 2023 shows a decrease. This is because that pre-tax income for the year 2023 decreased. C. Compared to 2022, property, plant and equipment turnover in 2023 shows a decrease. This is because that net sales for the year 2023 decreased. D. Compared to 2022, return on total assets, return on stockholders’ equity, and earnings per share in 2023 show a decrease. This is because that pre-tax income for the year 2023 decreased. E. Compared to 2022, pre-tax Income to paid-in capital in 2023 shows a decrease. This is because that pre-tax income for the year 2023 decreased. F. Compared to 2022, the cash flow ratio in 2023 show an increase. This is because that short-term loans decreased. G. Compared to 2022, the cash reinvestment ratio in 2023 show a decrease. This is because that net cash flow from operating activities decreased for the year 2023 and non-current assets increased. H. Compared to 2022, operating leverage in 2023 show an increase. This is because that operating Income for the year 2023 decreased. Note 1: Financial analysis formulas see Table (1). 161 Financial Information 3. Audit Committee’s Review Report for the Recent Year Audit Committee’s Review Report The Board of Directors has prepared the Company’s 2023 Business Report, Financial Statements, and proposal for allocation of earnings. The Financial Statements had been audited by Deloitte & Touche Accountants, Wen-Yea, Shyu and Ker-Chang Wu and has issued an audit report. The Business Report, Financial Statements, and earnings allocation proposal have been reviewed and determined to be correct and accurate by the Audit Committee members of Walsin Lihwa Corporation. According to Article 14-4 of the Securities and Exchange Act and Article 219 of the Company Law, we hereby submit this report. Walsin Lihwa Corporation Chairman of the Audit Committee： 162 February 23, 2024 4.Financial Statements of Recent Years INDEPENDENT AUDITORS’ REPORT The Board of Directors and Shareholders Walsin Lihwa Corporation Opinion We have audited the accompanying consolidated financial statements of Walsin Lihwa Corporation and its subsidiaries (collectively referred to as the “Group”), which comprise the consolidated balance sheets as of December 31, 2023 and 2022, and the consolidated statements of comprehensive income, changes in equity and cash flows for the years then ended, and the notes to the consolidated financial statements, including material accounting policy information (collectively referred to as the “consolidated financial statements”). In our opinion, based on our audits and the reports of other auditors (as set out in the Other Matter section of our report), the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as of December 31, 2023 and 2022, and its consolidated financial performance and its consolidated cash flows for the years then ended in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), IFRIC Interpretations (IFRIC), and SIC Interpretations (SIC) endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China. Basis for Opinion We conducted our audits in accordance with the Regulations Governing Financial Statement Audit and Attestation Engagements of Certified Public Accountants and the 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 Accountant of the Republic of China, and we have fulfilled our other ethical responsibilities in accordance with these requirements. Based on our audits and the reports of other auditors, we believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for 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 consolidated financial statements as of and for the year ended December 31, 2023. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. The following are the key audit matters of the consolidated financial statements of the Group as of and for the year ended December 31, 2023: Sales Revenue Recognition In 2023, the main products of the Group's wires and cables business unit include bare copper wires, wires and cables. The fluctuation in prices of bare copper wires is often subject to the movement in prices of raw materials, and thus some of the sales prices are set according to the market prices agreed 163 Financial Information under the contracts at the time of shipments. The Group prepares reports on point-of-sale transactions by referring to the actual shipments and market price adjustments as the basis for revenue recognition. Due to the large number of transactions and different market prices that have been agreed upon by customers, the processing, recording and maintenance of such reports are performed manually, and their amounts are significant to the consolidated financial statements. Therefore, the accuracy of revenue recognized from sales of bare copper wires was considered as a key audit matter. Refer to Notes 4 and 28 to the consolidated financial statements for related accounting policies and disclosure of information relating to revenue recognition. Our audit procedures performed in respect of the above key audit matter were as follows: 1. We obtained an understanding and tested the reasonableness of revenue recognition policy and internal control procedures over the sales of bare copper wires and evaluated the effectiveness of relevant internal controls. 2. We performed sampling and reconciliation of sales prices and quantities with their respective amounts in the contracts and verified the accuracy of market price adjustments. 3. We verified the accuracy of monthly reports by recalculating the sales revenue and confirmed that the recognized amounts were consistent with those recorded in the general ledger. Emphasis of Matter As disclosed in Note 20, the Group acquired 50.10% interest in PT. Sunny Metal Industry on September 23, 2022. The Purchase Price Allocation Report was finalized in 2023. Therefore, the initial accounting treatment and provisionally determined amounts from the acquisition date were adjusted and retrospectively restated for comparative periods. Our review result is not modified in respect of this matter. Other Matter The financial statements of certain subsidiaries included in the consolidated financial statements as of and for the years ended December 31, 2023 and 2022 were audited by other auditors. Our opinion, insofar as it relates to such subsidiaries, is based solely on the reports of other auditors. The total assets of such subsidiaries amounted to NT$38,396,983 thousand and NT$27,113,218 thousand, which constituted 14.41% and 10.55% of the Group’s consolidated total assets, as of December 31, 2023 and 2022, respectively, and the total net operating revenue of such subsidiaries amounted to NT$34,331,965 thousand and NT$3,409,851 thousand, which constituted 18.08% and 1.89% of the Group’s consolidated total net operating revenue, for the years ended December 31, 2023 and 2022, respectively. We did not audit the financial statements of some associates accounted for using the equity method included in the consolidated financial statements of the Group, but such statements were audited by other auditors. As of December 31, 2022, the carrying amount of investments accounted for using the equity method was NT$4,869,105 thousand, representing 1.90% of the consolidated total assets, and the share of losses of these associates was NT$313 thousand, representing 0.00% of the consolidated income before income tax. We have also audited the parent company only financial statements of Walsin Lihwa Corporation as of and for the years ended December 31, 2023 and 2022 on which we have issued an unmodified opinion with other matter. 164 Responsibilities of Management and Those Charged with Governance for the Consolidated Financial Statements Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), IFRIC Interpretations (IFRIC), and SIC Interpretations (SIC) endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error. In preparing the consolidated financial statements, management is responsible for assessing the Group’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 Group 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 Group’s financial reporting process. Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the 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 consolidated financial statements. As part of an audit in accordance with the Standards on Auditing of the Republic of China, we exercise professional judgment and maintain professional skepticism throughout the audit. We also: 1. Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. 2. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control. 3. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. 4. Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’ report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to 165 Financial Information the date of our auditors’ report. However, future events or conditions may cause the Group to cease to continue as a going concern. 5. Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation. 6. Obtain sufficient and appropriate audit evidence regarding the financial information of entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision, and performance of the group 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 consolidated financial statements for the year ended December 31, 2023 and are therefore the key audit matters. We describe these matters in our auditors’ report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. The engagement partners on the audits resulting in this independent auditors’ report are Wen-Yea Shyu and Ker-Chang Wu. Deloitte & Touche Taipei, Taiwan Republic of China February 23, 2024 Notice to Readers The accompanying consolidated financial statements are intended only to present the consolidated financial position, financial performance and cash flows in accordance with 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 consolidated financial statements are those generally applied in the Republic of China. For the convenience of readers, the independent auditors’ report and the accompanying consolidated financial statements have been translated into English from the original Chinese version prepared and used in the Republic of China. If there is any conflict between the English version and the original Chinese version or any difference in the interpretation of the two versions, the Chinese-language independent auditors’ report and consolidated financial statements shall prevail. 166 WALSIN LIHWA CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2023 AND 2022 (In Thousands of New Taiwan Dollars) ASSETS CURRENT ASSETS Cash and cash equivalents (Notes 3, 4 and 6) Financial assets at fair value through profit or loss - current (Notes 4 and 7) Financial assets at amortized cost - current (Notes 4 and 8) Financial assets for hedging - current (Notes 4 and 9) Contract assets - current (Notes 4 and 10) Notes receivable (Notes 4, 11, 38 and 39) Trade receivables (Notes 4, 11, 38 and 39) Finance lease receivables - current (Notes 4, 12 and 39) Other receivables (Note 38) Inventories (Notes 4 and 13) Other financial assets - current (Notes 3, 6 and 39) Other current assets (Note 22) Total current assets NON-CURRENT ASSETS Financial assets at fair value through profit or loss - non-current (Notes 4 and 7) Financial assets at fair value through other comprehensive income - non-current (Notes 4 and 14) Financial assets at amortized cost - non-current (Notes 4 and 8) Financial assets for hedging - non-current (Notes 4 and 9) Investments accounted for using the equity method (Notes 4 and 16) Property, plant and equipment (Notes 4, 17 and 39) Right-of-use assets (Notes 4 and 18) Investment properties (Notes 4 and 19) Goodwill (Notes 4 and 20) Other intangible assets (Notes 4, 20 and 21) Deferred tax assets (Notes 4 and 30) Refundable deposits (Notes 6 and 39) Finance lease receivables - non-current (Notes 4, 12 and 39) Other non-current assets (Notes 6, 22 and 39) Total non-current assets TOTAL LIABILITIES AND EQUITY CURRENT LIABILITIES Short-term borrowings (Note 23) Financial liabilities at fair value through profit or loss - current (Notes 4 and 7) Financial liabilities for hedging - current (Notes 4 and 9) Contract liabilities - current Notes payable (Note 38) Trade payables (Note 38) Other payables (Note 25) Current tax liabilities (Notes 4 and 30) Lease liabilities - current (Notes 4 and 18) Current portion of long-term borrowings and bonds payable (Notes 23 and 24) Other current liabilities Total current liabilities NON-CURRENT LIABILITIES Financial liabilities at fair value through profit or loss - non-current (Notes 4 and 7) Financial liabilities for hedging - non-current (Notes 4 and 9) Bonds payable (Note 24) Long-term borrowings (Note 23) Long-term notes and bills payable (Note 23) Deferred tax liabilities (Notes 4, 20 and 30) Lease liabilities - non-current (Notes 4 and 18) Net defined benefit liabilities - non-current (Notes 4 and 26) Other non-current liabilities (Note 35) Total non-current liabilities Total liabilities EQUITY ATTRIBUTABLE TO OWNERS OF WLC (Note 27) Share capital Capital surplus Retained earnings Legal reserve Special reserve Unappropriated earnings Total retained earnings Other equity Exchange differences on translation of the financial statement of foreign operations Unrealized gain on financial assets at fair value through other comprehensive income Loss on hedging instruments Other equity - others Total other equity Total equity attributable to owners of WLC NON-CONTROLLING INTERESTS Total equity TOTAL The accompanying notes are an integral part of the consolidated financial statements. (With Deloitte & Touche auditors’ report dated February 23, 2024) 2023 2022 (Restated) Amount % Amount % $ 16,347,012 1,508,943 727 346,441 996,025 920,752 14,991,531 62,067 3,707,450 33,704,296 788,894 5,377,850 78,751,988 1,263,649 18,823,172 184,613 53,439 49,640,171 78,154,936 4,719,043 15,514,751 4,157,877 7,997,819 4,234,852 158,940 540,456 2,174,325 187,618,043 6 1 - - - - 6 - 2 13 - 2 30 - 7 - - 19 29 2 6 1 3 2 - - 1 70 $ 19,438,759 7,631 2,202 20,615 3,022,237 4,537,322 17,294,990 60,020 3,857,091 36,080,291 505,340 7,880,887 92,707,385 2,639,755 12,342,232 189,242 144,404 46,189,399 65,656,466 4,309,355 16,123,806 286,139 9,053,283 3,448,277 288,948 602,523 2,916,527 164,190,356 8 - - - 1 2 7 - 1 14 - 3 36 1 5 - - 18 26 2 6 - 4 1 - - 1 64 $ 266,370,031 100 $ 256,897,741 100 $ 11,508,074 22,746 5,878 13,828 317,865 16,390,669 12,069,796 5,861,143 257,859 1,640,420 2,671,050 50,759,328 484,429 2,705 12,951,405 31,924,532 2,998,822 6,587,732 2,765,167 349,381 3,097,217 61,161,390 111,920,718 40,313,329 33,624,917 9,538,222 2,712,250 48,340,145 60,590,617 (4,947,475 ) 14,068,677 (65,100 ) (2,774,650 ) 6,281,452 140,810,315 13,638,998 154,449,313 4 - - - - 6 5 2 - 1 1 19 - - 5 12 1 3 1 - 1 23 42 15 13 4 1 18 23 (2 ) 5 - (1 ) 2 53 5 58 $ 17,120,571 64,772 222,272 6,014 591,536 17,497,315 15,315,705 6,103,462 245,223 1,207,209 2,495,289 60,869,368 363,192 - 7,742,955 40,820,860 1,497,914 5,782,915 2,309,732 348,779 2,952,903 61,819,250 122,688,618 37,313,329 24,672,454 7,564,090 2,712,250 51,762,058 62,038,398 (4,256,774 ) 6,693,877 (105,801 ) (2,774,607 ) (443,305 ) 123,580,876 10,628,247 134,209,123 7 - - - - 7 6 2 - 1 1 24 - - 3 16 1 2 1 - 1 24 48 14 10 3 1 20 24 (2 ) 3 - (1 ) - 48 4 52 $ 266,370,031 100 $ 256,897,741 100 167 Financial Information WALSIN LIHWA CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2023 AND 2022 (In Thousands of U.S. Dollars) ASSETS CURRENT ASSETS Cash and cash equivalents (Notes 3, 4 and 6) Financial assets at fair value through profit or loss - current (Notes 4 and 7) Financial assets at amortized cost - current (Notes 4 and 8) Financial assets for hedging - current (Notes 4 and 9) Contract assets - current (Notes 4 and 10) Notes receivable (Notes 4, 11, 38 and 39) Trade receivables (Notes 4, 11, 38 and 39) Finance lease receivables - current (Notes 4, 12 and 39) Other receivables (Note 38) Inventories (Notes 4 and 13) Other financial assets - current (Notes 3, 6 and 39) Other current assets (Note 22) Total current assets NON-CURRENT ASSETS Financial assets at fair value through profit or loss - non-current (Notes 4 and 7) Financial assets at fair value through other comprehensive income - non-current (Notes 4 and 14) Financial assets at amortized cost - non-current (Notes 4 and 8) Financial assets for hedging - non-current (Notes 4 and 9) Investments accounted for using the equity method (Notes 4 and 16) Property, plant and equipment (Notes 4, 17 and 39) Right-of-use assets (Notes 4 and 18) Investment properties (Notes 4 and 19) Goodwill (Notes 4 and 20) Other intangible assets (Notes 4, 20 and 21) Deferred tax assets (Notes 4 and 30) Refundable deposits (Notes 6 and 39) Finance lease receivables - non-current (Notes 4, 12 and 39) Other non-current assets (Notes 6, 22 and 39) Total non-current assets TOTAL LIABILITIES AND EQUITY CURRENT LIABILITIES Short-term borrowings (Note 23) Financial liabilities at fair value through profit or loss - current (Notes 4 and 7) Financial liabilities for hedging - current (Notes 4 and 9) Contract liabilities - current Notes payable (Note 38) Trade payables (Note 38) Other payables (Note 25) Current tax liabilities (Notes 4 and 30) Lease liabilities - current (Notes 4 and 18) Current portion of long-term borrowings and bonds payable (Notes 23 and 24) Other current liabilities Total current liabilities NON-CURRENT LIABILITIES Financial liabilities at fair value through profit or loss - non-current (Notes 4 and 7) Financial liabilities for hedging - non-current (Notes 4 and 9) Bonds payable (Note 24) Long-term borrowings (Note 23) Long-term notes and bills payable (Note 23) Deferred tax liabilities (Notes 4, 20 and 30) Lease liabilities - non-current (Notes 4 and 18) Net defined benefit liabilities - non-current (Notes 4 and 26) Other non-current liabilities (Note 35) Total non-current liabilities Total liabilities EQUITY ATTRIBUTABLE TO OWNERS OF WLC (Note 27) Share capital Capital surplus Retained earnings Legal reserve Special reserve Unappropriated earnings Total retained earnings Other equity Exchange differences on translation of the financial statement of foreign operations Unrealized gain on financial assets at fair value through other comprehensive income Loss on hedging instruments Other equity - others Total other equity Total equity attributable to owners of WLC NON-CONTROLLING INTERESTS Total equity TOTAL The accompanying notes are an integral part of the consolidated financial statements. (With Deloitte & Touche auditors’ report dated February 23, 2024) 168 2023 2022 (Restated) Amount % Amount % $ 532,389 49,143 24 11,283 32,439 29,987 488,244 2,021 120,744 1,097,681 25,693 175,146 2,564,794 41,155 613,033 6,012 1,740 1,616,680 2,545,349 153,690 505,284 135,414 260,473 137,921 5,176 17,602 70,812 6,110,341 6 1 - - - - 6 - 2 13 - 2 30 - 7 - - 19 29 2 6 1 3 2 - - 1 70 $ 633,081 249 72 671 98,428 147,771 563,263 1,955 125,618 1,175,062 16,458 256,665 3,019,293 85,972 401,962 6,163 4,703 1,504,296 2,138,299 140,347 525,120 9,319 294,847 112,303 9,410 19,623 94,985 5,347,349 8 - - - 1 2 7 - 1 14 - 3 36 1 5 - - 18 26 2 6 - 4 1 - - 1 64 $ 8,675,135 100 $ 8,366,642 100 $ 374,795 741 191 450 10,352 533,811 393,089 190,886 8,398 53,425 86,991 1,653,129 15,777 88 421,801 1,039,718 97,666 214,549 90,056 11,379 100,869 1,991,903 3,645,032 1,312,924 1,095,096 310,641 88,333 1,574,341 1,973,315 (161,130 ) 458,188 (2,120 ) (90,365 ) 204,573 4,585,908 444,195 5,030,103 4 - - - - 6 5 2 - 1 1 19 - - 5 12 1 3 1 - 1 23 42 15 13 4 1 18 23 (2 ) 5 - (1 ) 2 53 5 58 $ 557,583 2,109 7,239 196 19,265 569,852 498,802 198,777 7,986 39,316 81,268 1,982,393 11,828 - 252,172 1,329,453 48,784 188,338 75,223 11,359 96,171 2,013,328 3,995,721 1,215,220 803,532 246,347 88,333 1,685,786 2,020,466 (138,635 ) 218,006 (3,446 ) (90,363 ) (14,438 ) 4,024,780 346,141 4,370,921 7 - - - - 7 6 2 - 1 1 24 - - 3 16 1 2 1 - 1 24 48 14 10 3 1 20 24 (2 ) 3 - (1 ) - 48 4 52 $ 8,675,135 100 $ 8,366,642 100 WALSIN LIHWA CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022 (In Thousands of New Taiwan Dollars, Except Earnings Per Share) 2023 Amount % 2022 (Restated) Amount % OPERATING REVENUE (Notes 4 and 28) $ 189,839,626 100 $ 180,400,719 100 OPERATING COSTS (Note 13) (175,396,014) (93) (163,054,414) (91) GROSS PROFIT 14,443,612 OPERATING EXPENSES Selling and marketing expenses General and administrative expenses Research and development expenses Total operating expenses PROFIT FROM OPERATIONS NON-OPERATING INCOME AND EXPENSES Interest income Dividend income Other income (Note 29) (Loss) gain on disposal of property, plant and equipment Gain on disposal of investments (Note 29) Foreign exchange (loss) gains, net Gain on valuation of financial assets and liabilities at fair value through profit or loss Other expenses Reversal (recognition) of impairment loss (Note 29) Interest expense Share of profit of associates accounted for using the equity method 2,166,373 5,742,908 293,565 8,202,846 6,240,766 541,506 513,679 1,763,119 (11,472) 965,914 (240,593) 169,525 (909,612) 12,427 (2,135,730) 528,869 Total non-operating income and expenses 1,197,632 PROFIT BEFORE INCOME TAX FROM CONTINUING OPERATIONS 7,438,398 7 1 3 - 4 3 - - 1 - 1 - - - - (1) - 1 4 17,346,305 2,880,008 4,748,280 219,303 7,847,591 9,498,714 240,793 766,857 1,130,256 68,051 7,210,043 1,748,708 265,134 (305,781) (87) (827,715) 3,607,040 13,903,299 9 1 3 - 4 5 - - 1 - 4 1 - - - - 2 8 23,402,013 13 INCOME TAX EXPENSE (Notes 4 and 30) (1,497,148) (1) (4,261,937) (2) NET PROFIT FOR THE YEAR 5,941,250 3 19,140,076 11 (Continued) 169 Financial Information WALSIN LIHWA CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022 (In Thousands of New Taiwan Dollars, Except Earnings Per Share) OTHER COMPREHENSIVE INCOME (LOSS) Items that will not be reclassified subsequently to profit or loss: Remeasurement of defined benefit plans Unrealized gain (loss) on investments in equity instruments at fair value through other comprehensive income Share of the other comprehensive income (loss) of associates accounted for using the equity method Items that may be reclassified subsequently to profit or loss: Exchange differences on translation of the financial statements of foreign operations Gain (loss) on hedging instruments Share of the other comprehensive (loss) income of associates accounted for using the equity method 2023 Amount % 2022 (Restated) Amount % $ (109,805) - $ 260,538 - 6,307,904 1,288,908 7,487,007 (833,485) 60,360 (47,991) (821,116) 3 1 4 - - - - 4 (4,067,542) (2) (644,358) (4,451,362) (1) (3) 1,609,132 (105,801) 180,029 1,683,360 1 - - 1 (2,768,002) (2) Other comprehensive income (loss) for the year 6,665,891 TOTAL COMPREHENSIVE INCOME FOR THE YEAR $ 12,607,141 7 $ 16,372,074 9 NET PROFIT ATTRIBUTABLE TO: Owners of WLC Non-controlling interests $ 5,134,316 806,934 3 - $ 19,352,097 (212,021) 11 - TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE TO: Owners of WLC Non-controlling interests $ 5,941,250 3 $ 19,140,076 11 $ 11,993,418 613,723 6 1 $ 16,639,046 (266,972) $ 12,607,141 7 $ 16,372,074 9 - 9 (Continued) 170 WALSIN LIHWA CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022 (In Thousands of New Taiwan Dollars, Except Earnings Per Share) 2023 Amount % 2022 (Restated) Amount % EARNINGS PER SHARE (Note 31) Basic Diluted $ $ 1.32 1.32 $ $ 5.45 5.44 The accompanying notes are an integral part of the consolidated financial statements. (With Deloitte & Touche auditors’ report dated February 23, 2024) (Concluded) 171 Financial Information WALSIN LIHWA CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022 (In Thousands of U.S. Dollars, Except Earnings Per Share) 2023 Amount % 2022 (Restated) Amount % OPERATING REVENUE (Notes 4 and 28) $ 6,182,694 100 $ 5,875,288 100 OPERATING COSTS (Note 13) (5,712,295) (93) (5,310,354) (91) GROSS PROFIT OPERATING EXPENSES Selling and marketing expenses General and administrative expenses Research and development expenses Total operating expenses PROFIT FROM OPERATIONS NON-OPERATING INCOME AND EXPENSES Interest income Dividend income Other income (Note 29) (Loss) gain on disposal of property, plant and equipment Gain on disposal of investments (Note 29) Foreign exchange (loss) gains, net Gain on valuation of financial assets and liabilities at fair value through profit or loss Other expenses Reversal (recognition) of impairment loss (Note 29) Interest expense Share of profit of associates accounted for using the equity method 470,399 70,554 187,035 9,561 267,150 203,249 17,636 16,729 57,421 (374) 31,458 (7,836) 5,521 (29,624) 405 (69,556) 17,224 Total non-operating income and expenses 39,004 PROFIT BEFORE INCOME TAX FROM CONTINUING OPERATIONS 242,253 7 1 3 - 4 3 - - 1 - 1 - - - 564,934 93,796 154,642 7,142 255,580 309,354 7,842 24,975 36,810 2,216 234,817 56,952 8,635 (9,959) - (1) (3) (26,957) 117,474 452,802 - 1 4 9 1 3 - 4 5 - - 1 - 4 1 - - - - 2 8 762,156 13 INCOME TAX EXPENSE (Notes 4 and 30) (48,759) (1) (138,802) (2) NET PROFIT FOR THE YEAR 193,494 3 623,354 11 (Continued) 172 WALSIN LIHWA CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022 (In Thousands of U.S. Dollars, Except Earnings Per Share) OTHER COMPREHENSIVE INCOME (LOSS) Items that will not be reclassified subsequently to profit or loss: Remeasurement of defined benefit plans Unrealized gain (loss) on investments in equity instruments at fair value through other comprehensive income Share of the other comprehensive income (loss) of associates accounted for using the equity method Items that may be reclassified subsequently to profit or loss: Exchange differences on translation of the financial statements of foreign operations Gain (loss) on hedging instruments Share of the other comprehensive (loss) income of associates accounted for using the equity method Other comprehensive income (loss) for the year 2023 Amount % 2022 (Restated) Amount % $ (3,576) - $ 8,485 - 205,436 41,977 243,837 (27,145) 1,966 (1,563) (26,742) 217,095 3 1 4 - - - - 4 (132,471) (2) (20,985) (144,971) (1) (3) 52,406 (3,446) 5,863 54,823 1 - - 1 (90,148) (2) TOTAL COMPREHENSIVE INCOME FOR THE YEAR $ 410,589 7 $ 533,206 9 NET PROFIT ATTRIBUTABLE TO: Owners of WLC Non-controlling interests TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE TO: Owners of WLC Non-controlling interests $ 167,214 26,280 $ 3 - 630,259 (6,905) 11 - $ 193,494 3 $ 623,354 11 $ 390,601 19,988 $ 6 1 541,901 (8,695) 9 - $ 410,589 7 $ 533,206 9 (Continued) 173 Financial Information WALSIN LIHWA CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022 (In Thousands of U.S. Dollars, Except Earnings Per Share) 2023 Amount % 2022 (Restated) Amount % EARNINGS PER SHARE (Note 31) Basic Diluted $ $ 0.04 0.04 $ $ 0.18 0.18 The accompanying notes are an integral part of the consolidated financial statements. (With Deloitte & Touche auditors’ report dated February 23, 2024) (Concluded) 174 WALSIN LIHWA CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022 (In Thousands of New Taiwan Dollars) Share Capital Capital Surplus Legal Reserve Special Reserve Unappropriated Earnings Retained Earnings Exchange Differences on Translation of the Financial Statement of Foreign Operations Other Equity Unrealized Valuation (Loss) Gain on Financial Assets at Fair Value through Other Comprehensive Income Equity Attributable to Owners of WLC Loss on Hedging Instrument Others Total Non-controlling Interests Total Equity BALANCE AT JANUARY 1, 2022 $ 34,313,329 $ 18,440,875 $ 6,109,568 $ 2,712,250 $ 38,965,389 $ (6,100,687 ) $ 11,534,267 $ $ (91,467 ) $ 105,883,524 $ 2,062,744 $ 107,946,268 Appropriation of 2021 earnings (Note 27) Legal reserve Cash dividends distributed by WLC Changes in percentage of ownership interests in subsidiaries Excess of the carrying amount over the consideration received of the subsidiaries' net assets during disposal Disposal of equity instrument measured at fair value through other comprehensive income Changes in capital surplus from investments in associates accounted for using the equity method - - - - - - - - - (994 ) - 887 Issuance of ordinary shares for cash 3,000,000 6,000,000 Net profit for the year ended December 31, 2022 Other comprehensive income (loss) for the year ended December 31, 2022 Total comprehensive income (loss) for the year ended December 31, 2022 Share-based payment transaction (Note 32) Others Changes in non-controlling interests - - - - - - - - - 225,000 6,686 - 1,454,522 - - - - - - - - - - - - - - - - - - - - - - - - - (1,454,522 ) (5,490,133 ) - - (3,589 ) 79,546 - 19,352,097 - - - - - - - - - - - - 3,589 (79,546 ) - - - - - - - - - - - 313,270 1,843,913 (4,764,433 ) (105,801 ) 19,665,367 1,843,913 (4,764,433 ) (105,801 ) - - - - - - - - - - - - - - - (5,490,133 ) (2,683,140 ) (2,683,140 ) (994 ) - 887 9,000,000 - - - - - - - - (5,490,133 ) (2,683,140 ) (994 ) - 887 9,000,000 19,352,097 (212,021 ) 19,140,076 (2,713,051 ) (54,951 ) (2,768,002 ) 16,639,046 (266,972 ) 16,372,074 225,000 6,686 - - 225,000 6,686 - 8,832,475 8,832,475 - - - - - - - - - - BALANCE AT DECEMBER 31, 2022 (AS RESTATED) 37,313,329 24,672,454 7,564,090 2,712,250 51,762,058 (4,256,774 ) 6,693,877 (105,801 ) (2,774,607 ) 123,580,876 10,628,247 134,209,123 Appropriation of 2022 earnings (Note 27) Legal reserve Cash dividends distributed by WLC Changes in capital surplus from investments in associates accounted for using the equity method Changes in percentage of ownership interests in subsidiaries - - - - - - 1,974,132 - (6,932 ) 26,730 Issuance of ordinary shares for cash 3,000,000 8,923,497 Net profit for the year ended December 31, 2023 Other comprehensive (loss) income for the year ended December 31, 2023 Total comprehensive income (loss) for the year ended December 31, 2023 Others Changes in non-controlling interests - - - - - - - - 9,168 - - - - - - - - - - - (1,974,132 ) (6,716,399 ) 204,652 - - 5,134,316 - - - - - - - - (204,652 ) - - - - - - - - - (70,350 ) (690,701 ) 7,579,452 40,701 5,063,966 (690,701 ) 7,579,452 40,701 - - - - - - - - - (6,716,399 ) (6,932 ) - - - 26,730 (26,730 ) - (6,716,399 ) (6,932 ) - 11,923,497 - 11,923,497 5,134,316 806,934 5,941,250 6,859,102 (193,211 ) 6,665,891 11,993,418 613,723 12,607,141 - - - - - - - - (43 ) - 9,125 - 9,125 - 2,423,758 2,423,758 - - - - - - - - BALANCE AT DECEMBER 31, 2023 $ 40,313,329 $ 33,624,917 $ 9,538,222 $ 2,712,250 $ 48,340,145 $ (4,947,475 ) $ 14,068,677 $ (65,100 ) $ (2,774,650 ) $ 140,810,315 $ 13,638,998 $ 154,449,313 The accompanying notes are an integral part of the consolidated financial statements. (With Deloitte & Touche auditors’ report dated February 23, 2024) 1 7 5 1 7 6 WALSIN LIHWA CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022 (In Thousands of U.S. Dollars) Share Capital Capital Surplus Legal Reserve Special Reserve Unappropriated Earnings Retained Earnings Exchange Differences on Translation of the Financial Statement of Foreign Operations Other Equity Unrealized Valuation (Loss) Gain on Financial Assets at Fair Value through Other Comprehensive Income Equity Attributable to Owners of WLC Loss on Hedging Instrument Others Total Non-controlling Interests Total Equity i F n a n c i a l I n f o r m a t i o n BALANCE AT JANUARY 1, 2022 $ 1,117,516 $ 600,581 $ 198,976 $ 88,333 $ 1,269,024 $ (198,688 ) $ 375,648 $ $ (2,979 ) $ 3,448,411 $ 67,180 $ 3,515,591 Appropriation of 2021 earnings (Note 27) Legal reserve Cash dividends distributed by WLC Changes in percentage of ownership interests in subsidiaries Excess of the carrying amount over the consideration received of the subsidiaries' net assets during disposal Disposal of equity instrument measured at fair value through other comprehensive income Changes in capital surplus from investments in associates accounted for using the equity method - - - - - - - - - (32 ) - 29 Issuance of ordinary shares for cash 97,704 195,408 Net profit for the year ended December 31, 2022 Other comprehensive income (loss) for the year ended December 31, 2022 Total comprehensive income (loss) for the year ended December 31, 2022 Share-based payment transaction (Note 32) Others Changes in non-controlling interests - - - - - - - - - 7,328 218 - 47,371 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - (47,371 ) (178,803 ) - - (117 ) 2,591 - 630,259 - - - - - - - - - - - - 117 (2,591 ) - - 10,203 60,053 (155,168 ) (3,446 ) 640,462 60,053 (155,168 ) (3,446 ) - - - - - - - - - - - - BALANCE AT DECEMBER 31, 2022 (AS RESTATED) 1,215,220 803,532 246,347 88,333 1,685,786 (138,635 ) 218,006 (3,446 ) (90,363 ) 4,024,780 Appropriation of 2022 earnings (Note 27) Legal reserve Cash dividends distributed by WLC Changes in capital surplus from investments in associates accounted for using the equity method Changes in percentage of ownership interests in subsidiaries - - - - - - 64,294 - (226 ) 871 Issuance of ordinary shares for cash 97,704 290,620 Net profit for the year ended December 31, 2023 Other comprehensive (loss) income for the year ended December 31, 2023 Total comprehensive income (loss) for the year ended December 31, 2023 Others Changes in non-controlling interests - - - - - - - - 299 - - - - - - - - - - - (64,294 ) (218,740 ) 6,666 - - 167,214 - - - - - - - - (6,665 ) - - - (2,291 ) (22,495 ) 246,847 164,923 (22,495 ) 246,847 - - - - - - - - - - - - 1,326 1,326 - - - - - - - - - - (2 ) - - - - - - - - - BALANCE AT DECEMBER 31, 2023 $ 1,312,924 $ 1,095,096 $ 310,641 $ 88,333 $ 1,574,341 $ (161,130 ) $ 458,188 $ (2,120 ) $ (90,365 ) $ 4,585,908 $ 444,195 $ 5,030,103 The accompanying notes are an integral part of the consolidated financial statements. (With Deloitte & Touche auditors’ report dated February 23, 2024) (88,358 ) (1,790 ) (90,148 ) - - - (178,803 ) (87,384 ) (87,384 ) - - - - - - - - - - (32 ) - 29 293,112 630,259 541,901 7,328 218 - - (218,740 ) (225 ) 871 388,324 167,214 - - - - - - - (6,905 ) - (178,803 ) (87,384 ) (32 ) - 29 293,112 623,354 (8,695 ) 533,206 - - 287,656 346,141 - - - (871 ) - 26,280 7,328 218 287,656 4,370,921 - (218,740 ) (225 ) - 388,324 193,494 223,387 (6,292 ) 217,095 390,601 19,988 410,589 297 - - 78,937 297 78,937 WALSIN LIHWA CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022 (In Thousands of New Taiwan Dollars) CASH FLOWS FROM OPERATING ACTIVITIES Income before income tax Adjustments for: 2023 2022 (Restated) $ 7,438,398 $ 23,402,013 Depreciation expenses Amortization expenses Expected credit loss recognized on trade receivables Net gain on fair value changes of financial assets and liabilities at fair value through profit or loss Interest expenses Interest income Dividend income Compensation costs of employee share options Share of profit of associates accounted for using the equity method Loss (gain) on disposal of property, plant and equipment Gain on disposal of other asset Gain on disposal of investments Impairment loss (reversed) recognized on non-financial assets Unrealized (gain) loss on foreign currency exchange Gain from bargain purchase Loss on lease modification Changes in operating assets and liabilities Decrease (increase) in contract assets Decrease (increase) in notes receivable Decrease in trade receivables Increase in other receivables Decrease (increase) in inventories Decrease in other current assets Increase in other financial assets Decrease (increase) in other operating assets Increase (decrease) in financial liabilities held for trading Increase in contract liabilities (Decrease) increase in notes payable (Decrease) increase in trade payables (Decrease) increase in other payables Increase in other current liabilities Increase (decrease) in net defined benefit liabilities Increase (decrease) in other operating liabilities Cash generated from operations Interest received Dividends received Interest paid Income tax paid 7,016,106 1,192,166 412,281 (169,525) 2,135,730 (541,506) (513,679) - (528,869) 11,472 (121,938) (965,914) (12,427) (63,228) (1,168,686) 1,045 1,618,550 3,616,570 3,675,874 (1,487,488) 3,312,465 914,699 (242,768) 68,712 973,916 5,480 (273,671) (701,919) (1,677,792) 2,377 602 54,659 23,981,692 493,679 1,888,623 (1,926,395) (1,689,669) Net cash generated from operating activities 22,747,930 4,385,647 65,655 105,680 (265,134) 827,715 (240,793) (766,857) 233,077 (3,607,040) (68,051) - (7,210,043) 87 183,114 (339,526) 6 (581,544) (1,909,911) 100,992 (1,225,918) (2,101,272) 631,447 (55,183) (446,591) (823,192) - 244,589 3,673,923 1,094,617 273,773 (211,583) (556,293) 14,813,404 357,042 2,166,803 (740,191) (2,731,958) 13,865,100 (Continued) 177 Financial Information WALSIN LIHWA CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022 (In Thousands of New Taiwan Dollars) CASH FLOWS FROM INVESTING ACTIVITIES Purchase of financial assets at fair value through other comprehensive income $ (173,986) $ (140,417) 2023 2022 (Restated) Disposal of financial assets at fair value through other comprehensive income Purchase of financial assets at amortized cost Purchase of financial assets for hedging Purchase of investments accounted for using the equity method Prepayments for investments Net cash outflow on acquisition of subsidiaries Disposal of subsidiaries Payments for property, plant and equipment Proceeds from disposal of property, plant and equipment Increase in advance receipts Decrease (increase) in refundable deposits Purchase of intangible assets Purchase of investment properties Acquisition of right-of-use assets Other investing activities - - (342,786) (1,077,128) (1,334,026) (5,856,439) - (16,512,380) 32,361 1,779,516 126,456 (37,277) - - 1,894,919 24,004 (183,665) - (4,980,030) (2,204,073) (11,037,204) 9,242,576 (15,499,282) 154,162 - (68,728) (141,056) (182) (283,745) (1,228,906) Net cash used in investing activities (21,500,770) (26,346,546) CASH FLOWS FROM FINANCING ACTIVITIES (Decrease) increase in short-term borrowings Proceeds from issuance of bonds Repayment of bonds Proceeds from long-term borrowings Repayment of long-term borrowings Increase in long-term notes and bills payable (Decrease) increase in other payables Repayment of the principal portion of lease liabilities Cash dividends paid Proceeds from issuance of ordinary shares Changes in non-controlling interests Other financing activities (6,499,696) 5,300,000 (100,066) 13,383,126 (22,027,953) 1,500,908 (2,780,037) (308,747) (6,716,022) 11,923,497 2,355,894 9,168 7,713,149 - (46,684) 21,755,400 (19,732,834) 1,497,914 5,375,736 (120,625) (5,489,781) 9,000,000 359,522 6,685 Net cash (used in) generated from financing activities (3,959,928) 20,318,482 EFFECTS OF EXCHANGE RATE CHANGES ON THE BALANCE OF CASH HELD IN FOREIGN CURRENCIES (378,979) 1,133,649 (Continued) 178 WALSIN LIHWA CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022 (In Thousands of New Taiwan Dollars) 2023 2022 (Restated) NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS $ (3,091,747) $ 8,970,685 CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR 19,438,759 10,468,074 CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR $ 16,347,012 $ 19,438,759 The accompanying notes are an integral part of the consolidated financial statements. (With Deloitte & Touche auditors’ report dated February 23, 2024) (Concluded) 179 Financial Information WALSIN LIHWA CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022 (In Thousands of U.S. Dollars) CASH FLOWS FROM OPERATING ACTIVITIES Income before income tax Adjustments for: Depreciation expenses Amortization expenses Expected credit loss recognized on trade receivables Net gain on fair value changes of financial assets and liabilities at fair value through profit or loss Interest expenses Interest income Dividend income Compensation costs of employee share options Share of profit of associates accounted for using the equity method Loss (gain) on disposal of property, plant and equipment Gain on disposal of other asset Gain on disposal of investments Impairment loss (reversed) recognized on non-financial assets Unrealized (gain) loss on foreign currency exchange Gain from bargain purchase Loss on lease modification Changes in operating assets and liabilities Decrease (increase) in contract assets Decrease (increase) in notes receivable Decrease in trade receivables Increase in other receivables Decrease (increase) in inventories Decrease in other current assets Increase in other financial assets (Decrease) increase in other operating assets Increase (decrease) in financial liabilities held for trading Increase in contract liabilities (Decrease) increase in notes payable (Decrease) increase in trade payables (Decrease) increase in other payables Increase in other current liabilities Increase (decrease) in net defined benefit liabilities Increase (decrease) in other operating liabilities Cash generated from operations Interest received Dividends received Interest paid Income tax paid Net cash generated from (used in) operating activities 2023 2022 (Restated) $ 242,253 $ 762,156 228,500 38,826 13,427 (5,521) 69,556 (17,636) (16,729) - (17,224) 374 (3,971) (31,458) (405) (2,059) (38,062) 34 52,713 117,784 119,716 (48,444) 107,880 29,790 (7,906) 2,238 31,718 178 (8,913) (22,860) (54,642) 77 20 1,780 781,034 16,078 61,509 (62,739) (55,029) 740,853 142,832 2,138 3,442 (8,635) 26,957 (7,842) (24,975) 7,591 (117,474) (2,216) - (234,817) 3 5,964 (11,058) - (18,940) (62,202) 3,289 (39,926) (68,434) 20,565 (1,797) (14,545) (26,810) - 7,966 119,652 35,649 8,916 (6,891) (18,117) 482,441 11,628 70,568 (24,107) (88,974) 451,556 (Continued) 180 WALSIN LIHWA CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022 (In Thousands of U.S. Dollars) CASH FLOWS FROM INVESTING ACTIVITIES Purchase of financial assets at fair value through other comprehensive income Disposal of financial assets at fair value through other comprehensive income Purchase of financial assets at amortized cost Purchase of financial assets for hedging Purchase of investments accounted for using the equity method Prepayments for investments Net cash outflow on acquisition of subsidiaries Disposal of subsidiaries Payments for property, plant and equipment Proceeds from disposal of property, plant and equipment Increase in advance receipts Decrease (increase) in refundable deposits Purchase of intangible assets Purchase of investment properties Acquisition of right-of-use assets Other investing activities 2023 2022 (Restated) $ (5,666) $ (4,573) - - (11,164) (35,080) (43,447) (190,732) - (537,775) 1,054 57,955 4,118 (1,214) - - 61,714 782 (5,982) - (162,190) (71,782) (359,460) 301,012 (504,780) 5,021 - (2,238) (4,594) (6) (9,241) (40,023) Net cash used in investing activities (700,237) (858,054) CASH FLOWS FROM FINANCING ACTIVITIES (Decrease) increase in short-term borrowings Proceeds from issuance of bonds Repayment of bonds Proceeds from long-term borrowings Repayment of long-term borrowings Increase in long-term notes and bills payable (Decrease) increase in other payables Repayment of the principal portion of lease liabilities Cash dividends paid Proceeds from issuance of ordinary shares Changes in non-controlling interests Other financing activities (211,682) 172,610 (3,259) 435,861 (717,406) 48,882 (90,540) (10,055) (218,727) 388,324 76,727 299 251,202 - (1,520) 708,530 (642,659) 48,784 175,077 (3,929) (178,791) 293,112 11,709 218 Net cash (used in) generated from financing activities (128,966) 661,733 EFFECTS OF EXCHANGE RATE CHANGES ON THE BALANCE OF CASH HELD IN FOREIGN CURRENCIES (12,342) 36,922 (Continued) 181 Financial Information WALSIN LIHWA CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022 (In Thousands of U.S. Dollars) 2023 2022 (Restated) NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS $ (100,692) $ 292,157 CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR 633,081 340,924 CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR $ 532,389 $ 633,081 The accompanying notes are an integral part of the consolidated financial statements. (With Deloitte & Touche auditors’ report dated February 23, 2024) (Concluded) 182 WALSIN LIHWA CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022 (In Thousands of New Taiwan Dollars) 1. GENERAL INFORMATION Walsin Lihwa Corporation (WLC) was incorporated in December 1966 and commenced operations in December 1966. To diversify its operations, WLC made various investments in construction, electronics, material science, real estate, etc. WLC’s main products are wires, cables, stainless steel, resource business and real estate. WLC’s shares have been listed on the Taiwan Stock Exchange (TWSE) since November 1972. In October 1995, November 2010 and June 2023, WLC increased its share capital and issued Global Depositary Receipts (GDRs), which were listed on the Luxembourg Stock Exchange. The consolidated financial statements are presented in WLC’s functional currency, the New Taiwan dollar. 2. APPROVAL OF FINANCIAL STATE The consolidated financial statements of WLC and its subsidiaries (collectively, the “Group”) were approved by the board of directors of WLC on February 23, 2024. 3. APPLICATION OF NEW, AMENDED AND REVISED STANDARDS AND INTERPRETATIONS a. Initial application of the amendments to the International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), IFRIC Interpretations (IFRIC), and SIC Interpretations (SIC) (collectively, the “IFRS Accounting Standards”) endorsed and issued into effect by the Financial Supervisory Commission (FSC). Except for the following, the initial application of the IFRS Accounting Standards endorsed and issued into effect by the FSC did not have material impact on the Group’s accounting policies. 1) Amendments to IAS 1 “Disclosure of Accounting Policies” When applying the amendments, the Group refers to the definition of material to determine its material accounting policy information to be disclosed. Accounting policy information is material if it can reasonably be expected to influence decisions that the primary users of general purpose financial statements make on the basis of those financial statements. Moreover:  Accounting policy information that relates to immaterial transactions, other events or conditions is immaterial and need not be disclosed; 183 Financial Information  The Group may consider the accounting policy information material because of the nature of the related transactions, other events or conditions, even if the amounts are immaterial; and  Not all accounting policy information relating to material transactions, other events or conditions is itself material. The accounting policy information is likely to be considered material to the financial statements if that information relates to material transactions, other events or conditions and: a) The Group changed its accounting policy during the reporting period and this change resulted in a material change to the information in the financial statements; b) The Group chose the accounting policy from options permitted by the standards; c) The accounting policy was developed in accordance with IAS 8 “Accounting Policies, Changes in Accounting Estimates and Errors” in the absence of an IFRS that specifically applies; d) The accounting policy relates to an area for which the Group is required to make significant judgments or assumptions in applying an accounting policy, and the Group discloses those judgments or assumptions; or e) The accounting is complex, and users of the financial statements would otherwise not understand those material transactions, other events or conditions. Refer to Note 4 for related accounting policy information. 2) Amendments to IAS 8 “Definition of Accounting Estimates” The Group has applied the amendments since January 1, 2023, which defines accounting estimates as monetary amounts in financial statements that are subject to measurement uncertainty. In applying accounting policies, the Group may be required to measure items at monetary amounts that cannot be observed directly and must instead be estimated. In such a case, the Group uses measurement techniques and inputs to develop accounting estimates to achieve the objective. The effects on an accounting estimate of a change in a measurement technique or a change in an input are changes in accounting estimates unless they result from the correction of prior period errors. 3) Amendments to IAS 12 “Deferred Tax related to Assets and Liabilities arising from a Single Transaction” The amendments clarify that the initial recognition exemption under IAS 12 does not apply to transactions in which equal taxable and deductible temporary differences arise on initial recognition. The Group applied the amendments and recognized a deferred tax asset (to the extent that it is probable that taxable profit will be available against which the deductible temporary difference can be utilized) and a deferred tax liability for all deductible and taxable temporary differences associated with leases and decommissioning obligations on January 1, 2022. The Group shall apply the amendments prospectively to transactions other than leases and decommissioning obligations that occur on or after January 1, 2022. Upon initial application of the amendments to IAS 12, the Group recognized the cumulative effect of retrospective application in retained earnings on 184 January 1, 2022, and restated comparative information. 4) Amendments to IAS 12 “International Tax Reform - Pillar Two Model Rules” The amendments introduce a temporary exception to the requirements in IAS 12 by stipulating that the Group should neither recognize nor disclose information about deferred tax assets and liabilities related to Pillar Two income taxes. The amendments also require the Group to disclose that it has applied the exception and separately disclose its current tax expense (income) related to Pillar Two income taxes. In addition, for periods in which Pillar Two legislation is enacted or substantively enacted but not yet in effect, the Group should disclose qualitative and quantitative information that helps users of financial statements understand the Group’s exposure to Pillar Two income taxes. The requirement that the Group apply the exception and the requirement to disclose that fact are applied immediately and retrospectively upon issuance of the amendments. The remaining disclosure requirements apply for annual reporting periods beginning on or after January 1, 2023, but not for any interim period ending on or before December 31, 2023. b. The IFRS Accounting Standards endorsed by the FSC for application starting from 2024 New, Amended and Revised Standards and Interpretations Effective Date Announced by IASB (Note 1) Amendments to IFRS 16 “Leases Liability in a Sale and January 1, 2024 (Note 2) Leaseback” Amendments to IAS 1 “Classification of Liabilities as January 1, 2024 Current or Non-current” Amendments to IAS 1 “Non-current Liabilities with January 1, 2024 Covenants” Amendments to IAS 7 and IFRS 7 “Supplier Finance January 1, 2024 (Note 3) Arrangements” Note 1: Unless stated otherwise, the above IFRS Accounting Standards are effective for annual reporting periods beginning on or after their respective effective dates. Note 2: A seller-lessee shall apply the Amendments to IFRS 16 retrospectively to sale and leaseback transactions entered into after the date of initial application of IFRS 16. Note 3: The amendments provide some transition relief regarding disclosure requirements. 1) Amendments to IFRS 16 “Leases Liability in a Sale and Leaseback” The amendments clarify that the liability that arises from a sale and leaseback transaction - that satisfies the requirements in IFRS 15 to be accounted for as a sale - is a lease liability to which IFRS 16 applies. However, if the lease in a leaseback that includes variable lease payments that do not depend on an index or rate, the seller-lessee shall measure lease liabilities arising from a leaseback in such a way that it does not recognize any amount of the gain or loss that relates to the right of use it retains. The seller-lessee subsequently recognizes in profit or loss the difference between the payments made for the lease and the lease payments that reduce the carrying amount of the lease liability. 185 Financial Information 2) Amendments to IAS 1 “Classification of Liabilities as Current or Non-current” (referred to as the “2020 amendments”) and “Non-current Liabilities with Covenants” (referred to as the “2022 amendments”) The 2020 amendments clarify that for a liability to be classified as non-current, the Group shall assess whether it has the right at the end of the reporting period to defer settlement of the liability for at least twelve months after the reporting period. If such rights exist at the end of the reporting period, the liability is classified as non-current regardless of whether the Group will exercise that right. The 2020 amendments also stipulate that, if the right to defer settlement is subject to compliance with specified conditions, the Group must comply with those conditions at the end of the reporting period even if the lender does not test compliance until a later date. The 2022 amendments further clarify that only covenants with which an entity is required to comply on or before the reporting date should affect the classification of a liability as current or non-current. Although the covenants to be complied with within twelve months after the reporting period do not affect the classification of a liability, the Group shall disclose information that enables users of financial statements to understand the risk of the Group, which may have difficulty complying with the covenants and repaying its liabilities within twelve months after the reporting period. The 2020 amendments stipulate that, for the purpose of liability classification, the aforementioned settlement refers to a transfer of cash, other economic resources or the Group’s own equity instruments to the counterparty that results in the extinguishment of the liability. However, if the terms of a liability that, at the option of the counterparty, result in its settlement by a transfer of the Group’s own equity instruments, and if such an option is recognized separately as equity in accordance with IAS 32 “Financial Instruments: Presentation”, the aforementioned terms would not affect the classification of the liability. 3) Amendments to IAS 7 and IFRS 7 “Supplier Finance Arrangements” Supplier finance arrangements are characterized by one or more finance providers offering to pay amounts an entity owes its suppliers and the entity agreeing to pay according to the terms and conditions of the arrangements at the same date as, or a date later than, the suppliers are paid. The amendments stipulate that the Group shall disclose the relevant information about its supplier finance arrangements that enables users of financial statements to assess the effects of those arrangements on the Group’s liabilities and cash flows and on the Group’s exposure to liquidity risk. Except for the above impact, as of the date the consolidated financial statements were authorized for issue, the Group has assessed that the application of other standards and interpretations will not have a material impact on the Group’s financial position and financial performance. 186 c. The IFRS Accounting Standards in issue but not yet endorsed and issued into effect by the FSC New, Amended and Revised Standards and Interpretations Effective Date Announced by IASB (Note 1) Amendments to IFRS 10 and IAS 28 “Sale or Contribution of Assets between an Investor and its Associate or Joint Venture” To be determined by IASB IFRS 17 “Insurance Contracts” Amendments to IFRS 17 Amendments to IFRS 17 “Initial Application of IFRS 9 and January 1, 2023 January 1, 2023 January 1, 2023 IFRS 17 - Comparative Information” Amendments to IAS 21 “Lack of Exchangeability” January 1, 2025 (Note 2) Note 1: Unless stated otherwise, the above IFRS Accounting Standards are effective for annual reporting periods beginning on or after their respective effective dates. Note 2: An entity shall apply those amendments for annual reporting periods beginning on or after January 1, 2025. Upon initial application of the amendments, the entity recognizes any effect as an adjustment to the opening balance of retained earnings. When the entity uses a presentation currency other than its functional currency, it shall, at the date of initial application, recognize any effect as an adjustment to the cumulative amount of translation differences in equity. 1) Amendments to IFRS 10 and IAS 28 “Sale or Contribution of Assets between an Investor and its Associate or Joint Venture” The amendments stipulate that, when the Group sells or contributes assets that constitute a business (as defined in IFRS 3) to an associate or joint venture, the gain or loss resulting from the transaction is recognized in full. Also, when the Group loses control of a subsidiary that contains a business but retains significant influence or joint control, the gain or loss resulting from the transaction is recognized in full. Conversely, when the Group sells or contributes assets that do not constitute a business to an associate or joint venture, the gain or loss resulting from the transaction is recognized only to the extent of the Group’s interest as an unrelated investor in the associate or joint venture, i.e., the Group’s share of the gain or loss is eliminated. Also, when the Group loses control of a subsidiary that does not contain a business but retains significant influence or joint control over an associate or a joint venture, the gain or loss resulting from the transaction is recognized only to the extent of the Group’s interest as an unrelated investor in the associate or joint venture, i.e., the Group’s share of the gain or loss is eliminated. 2) Amendments to IAS 21 “Lack of Exchangeability” The amendments stipulate that a currency is exchangeable into another currency when an entity is able to obtain the other currency within a time frame that allows for a normal administrative delay and through a market or exchange mechanism in which an exchange transaction would create enforceable rights and obligations. An entity shall estimate the spot exchange rate at a measurement date when a currency is not exchangeable into another currency to reflect the rate at which an orderly exchange transaction would take place at the measurement date between market participants under prevailing economic 187 Financial Information conditions. In this situation, the Group shall disclose information that enables users of its financial statements to understand how the currency not being exchangeable into the other currency affects, or is expected to affect, its financial performance, financial position and cash flows. Except for the above impact, as of the date the consolidated financial statements were authorized for issue, the Group is continuously assessing the possible impact of the application of other standards and interpretations on the Group’s financial position and financial performance and will disclose the relevant impact when the assessment is completed. d. Presentation reclassification The management of the Group considers the bank deposits repatriated for restricted purpose for the use of substantial investments and financial investments in accordance with the Management, Utilization, and Taxation of Repatriated Offshore Funds Act. do not change the nature of the deposit as the entity can access those amounts on demand. The management concludes that the presentation of cash and cash equivalents is more appropriate and, therefore, has changed the presentation of the consolidated balance sheets and consolidated statements of cash flows in 2023. The other financial assets were reclassified to cash and cash equivalents with a carrying amount of $23,380 thousand and $40,786 thousand on December 31, 2023 and 2022. The impact on cash flows for the year ended December 31, 2022 was as follows: Net cash used in operating activities Net decrease in cash and cash equivalents Adjustments $ (39,707) $ (39,707) 4. SUMMARY OF MATERIAL ACCOUNTING POLICY INFORMATION a. Statement of compliance The consolidated financial statements have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers, other related regulations and IFRS Accounting Standards as endorsed and issued into effect by the FSC. b. Basic of preparation The consolidated financial statements have been prepared on the historical cost basis except for financial instruments, which are measured at fair value and net defined benefit liabilities which are measured at the present value of the defined benefit obligation less the fair value of plan assets. The fair value measurements, which are grouped into Levels 1 to 3 based on the degree to which the fair value measurement inputs are observable and based on the significance of the inputs to the fair value measurement in its entirety, are described as follows: 1) Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities; 188 2) Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for an asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and 3) Level 3 inputs are unobservable inputs for an asset or liability. c. Classification of current and non-current assets and liabilities Current assets include:  Assets held primarily for the purpose of trading;  Assets expected to be realized within 12 months after the reporting period; and  Cash and cash equivalents unless the asset is restricted from being exchanged or used to settle a liability for at least 12 months after the reporting period. Current liabilities include:  Liabilities held primarily for the purpose of trading;  Liabilities due to be settled within 12 months after the reporting period; and  Liabilities for which the Group does not have an unconditional right to defer settlement for at least 12 months after the reporting period. Terms of a liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not affect its classification. Assets and liabilities that are not classified as current are classified as non-current. d. Basis of consolidation The consolidated financial statements incorporate the financial statements of WLC and the entities controlled by WLC. Income and expenses of subsidiaries acquired or disposed of during the period are included in the consolidated statement of comprehensive income from the effective date of acquisition up to the effective date of disposals, as appropriate. When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with those used by the Group. All intra-group transactions, balances, income and expenses are eliminated in full upon consolidation. Total comprehensive income of subsidiaries is attributed to the owners of WLC and to the non-controlling interests even if this results in the non-controlling interests having a deficit balance. Changes in the Group’s ownership interests in subsidiaries that do not result in the Group losing control over the subsidiaries are accounted for as equity transactions. The carrying amounts of the interests of the Group and the non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiaries. Any difference between the amount 189 Financial Information by which the non-controlling interests are adjusted and the fair value of the consideration paid or received is recognized directly in equity and attributed to the owners of the WLC. When the Group loses control of a subsidiary, a gain or loss is recognized in profit or loss and is calculated as the difference between (i) the aggregate of the fair value of the consideration received and any investment retained in the former subsidiary at its fair value at the date when control is lost and (ii) the assets (including any goodwill) and liabilities and any non-controlling interests of the former subsidiary at their carrying amounts at the date when control is lost. The Group accounts for all amounts recognized in other comprehensive income in relation to that subsidiary on the same basis as would be required had the Group directly disposed of the related assets or liabilities. Refer to Note 15 and Table 8 for the percentage of ownership, main businesses and details of the subsidiaries. e. Business combinations Acquisitions of businesses are accounted for using the acquisition method. Acquisition-related costs are generally recognized in profit or loss as they are incurred. Goodwill is measured as the excess of the sum of the consideration transferred and the fair value of the acquirer’s previously held equity interests in the acquiree over the net of the acquisition-date amounts of the identifiable assets acquired and the liabilities assumed. If, after re-assessment, the net of the acquisition date amounts of the identifiable assets acquired and liabilities assumed exceeds the sum of the consideration transferred, and the fair value of the acquirer’s previously held interests in the acquiree, the excess is recognized immediately in profit or loss as a bargain purchase gain. Where the consideration the Group transfers in a business combination includes assets or liabilities resulting from a contingent consideration arrangement, the contingent consideration is measured at its acquisition-date fair value and considered as part of the consideration transferred in a business combination. Changes in the fair value of the contingent consideration that qualify as measurement period adjustments are adjusted retrospectively, with the corresponding adjustments being made against goodwill or gains on bargain purchases. Measurement period adjustments are adjustments that arise from additional information obtained during the measurement period about facts and circumstances that existed as of the acquisition date. The measurement period does not exceed 1 year from the acquisition date. Contingent considerations is remeasured at fair value at the end of subsequent reporting period with any gain or loss recognized in profit or loss. the accounting If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, the Group reports provisional amounts for the items for which incomplete. Those provisional amounts are adjusted retrospectively during the measurement period, or additional assets or liabilities are recognized, to reflect new information obtained about facts and circumstances that existed as of the acquisition date that, if known, would have affected the amounts recognized as of that date. is f. Foreign currencies In preparing the financial statements of each individual company entity, transactions in currencies other than the entity’s functional currency are recognized at the rates of exchange prevailing at the dates of the transactions. 190 At the end of each reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing at that date. Exchange differences on monetary items arising from settlement or translation are recognized in profit or loss in the period in which they arise except for exchange differences on transactions entered into in order to hedge certain foreign currency risks. Non-monetary items denominated in foreign currencies that are measured at fair value are retranslated at the rates prevailing at the date when the fair value is determined. Exchange differences arising from the retranslation of non-monetary items are included in profit or loss for the period except for exchange differences arising from the retranslation of non-monetary items in respect of which gains and losses are recognized directly in other comprehensive income, in which cases, the exchange differences are also recognized directly in other comprehensive income. Non-monetary item denominated in a foreign currency and measured at historical cost is stated at the reporting currency as originally translated from the foreign currency. For the purpose of presenting consolidated financial statements, the financial statements of the Group’s foreign operations (including subsidiaries and associates in other countries) that are prepared using functional currencies which are different from the currency of WLC are translated into the presentation currency, the New Taiwan dollar, as follows: Assets and liabilities are translated at the exchange rates prevailing at the end of the reporting period; and income and expense items are translated at the average exchange rates for the period. The resulting currency translation differences are recognized in other comprehensive income (attributed to the owners of WLC and non-controlling interests as appropriate). On the disposal of a foreign operation (i.e., a disposal of the Group’s entire interest in a foreign operation, or a disposal involving the loss of control over a subsidiary that includes a foreign operation, or a partial disposal of an interest in an associate that includes a foreign operation of which the retained interest becomes a financial asset), all of the exchange differences accumulated in equity in respect of that operation attributable to the owners of the Group are reclassified to profit or loss. In a partial disposal of a subsidiary that does not result in the Group losing control over the subsidiary, the proportionate share of accumulated exchange differences is re-attributed to the non-controlling interests of the subsidiary and is not recognized in profit or loss. For all other partial disposals, the proportionate share of the accumulated exchange differences recognized in other comprehensive income is reclassified to profit or loss. g. Inventories Inventories consist of raw materials, supplies, finished goods and work-in-process and are stated at the lower of cost or net realizable value. Inventory write-downs are made by item, except where it may be appropriate to group similar or related items. The net realizable value is the estimated selling price of inventories less all estimated costs of completion and costs necessary to make the sale. Inventories are recorded at the weighted-average cost on the balance sheet date. Inventories in the construction industry include construction land and work in progress, which are accounted for on the basis of acquisition cost or construction cost, and the cost is calculated separately for each project. Interest expenses incurred before the completion of the project are capitalized as part of its construction cost. 191 Financial Information h. Investment in associates An associate is an entity over which the Group has significant influence and which is neither a subsidiary nor an interest in a joint venture. The Group uses the equity method to account for its investments in associates. Under the equity method, investments in an associate are initially recognized at cost and adjusted thereafter to recognize the Group’s share of the profit or loss and other comprehensive income of the associate. The Group also recognizes the changes in the Group’s share of the equity of associates. Any excess of the cost of acquisition over the Group’s share of the net fair value of the identifiable assets and liabilities of an associate at the date of acquisition is recognized as goodwill, which is included within the carrying amount of the investment and is not amortized. Any excess of the Group’s share of the net fair value of the identifiable assets and liabilities over the cost of acquisition, after reassessment, is recognized immediately in profit or loss. When the Group subscribes for additional new shares of an associate, at a percentage different from its existing ownership percentage, the resulting carrying amount of the investment differs from the amount of the Group’s proportionate interest in the associate. The Group records such a difference as an adjustment to investments with the corresponding amount charged or credited to capital surplus - changes in capital surplus from investments in associates accounted for using the equity method. If the Group’s ownership interest is reduced due to its additional subscription of the new shares of associate, the proportionate amount of the gains or losses previously recognized in other comprehensive income in relation to that associate is reclassified to profit or loss on the same basis as would be required had the investee had directly disposed of the related assets or liabilities. When the adjustment should be debited to capital surplus, but the capital surplus recognized from investments accounted for using the equity method is insufficient, the shortage is debited to retained earnings. When the Group’s share of losses of an associate equals or exceeds its interest in that associate, the Group discontinues recognizing its share of further losses. Additional losses and liabilities are recognized only to the extent that the Group has incurred legal obligations, or constructive obligations, or made payments on behalf of that associate. The entire carrying amount of the investment (including goodwill) is tested for impairment as a single asset by comparing its recoverable amount with its carrying amount. Any impairment loss recognized is not allocated to any asset, including goodwill, that forms part of the carrying amount of the investment. Any reversal of that impairment loss is recognized to the extent that the recoverable amount of the investment subsequently increases. The Group discontinues the use of the equity method from the date on which its investment ceases to be an associate. Any retained investment is measured at fair value at that date, and the fair value is regarded as the investment’s fair value on initial recognition as a financial asset. The difference between the previous carrying amount of the associate attributable to the retained interest and its fair value is included in the determination of the gain or loss on disposal of the associate. The Group accounts for all amounts previously recognized in other comprehensive income in relation to that associate on the same basis as would be required had that associate directly disposed of the related assets or liabilities. If an investment in an associate becomes an investment in a joint venture, or an investment in a joint venture becomes an investment in an associate, the Group continues to apply the equity method and 192 does not remeasure the retained interest. When the Group transacts with its associate, profits and losses resulting from the transactions with the associate are recognized in the Group’s consolidated financial statements only to the extent of interests in the associate that are not related to the Group. i. Property, plant and equipment Property, plant and equipment are initially measured at cost and subsequently measured at cost less accumulated depreciation and accumulated impairment loss. Property, plant and equipment in the course of construction are measured at cost less any recognized impairment loss. Cost includes professional fees and borrowing costs eligible for capitalization. Such assets are depreciated and classified to the appropriate categories of property, plant and equipment when completed and ready for their intended use. The depreciation of property, plant and equipment is recognized using the straight-line method. Each significant part is depreciated separately. The estimated useful lives, residual values and depreciation methods are reviewed at the end of each reporting period, with the effects of any changes in the estimates accounted for on a prospective basis. On derecognition of an item of property, plant and equipment, the difference between the sales proceeds and the carrying amount of the asset is recognized in profit or loss. j. Investment properties Investment properties are properties held to earn rentals and/or for capital appreciation. Investment properties also include land held for a currently undetermined future use. Investment properties are initially measured at cost, including transaction costs. Subsequent to initial recognition, investment properties are measured at cost less accumulated depreciation and accumulated impairment loss. Depreciation is recognized using the straight-line method. For a transfer of classification from investment properties to property, plant and equipment, the deemed cost of the property for subsequent accounting is its carrying amount at the commencement of owner-occupation. For a transfer of classification from property, plant and equipment to investment properties, the deemed cost of the property for subsequent accounting is its carrying amount at the end of owner-occupation. On derecognition of an investment property, the difference between the net disposal proceeds and the carrying amount of the asset is included in profit or loss. k Goodwill Goodwill arising from the acquisition of a business is measured at cost as established at the date of acquisition of the business less accumulated impairment loss. For the purposes of impairment testing, goodwill is allocated to each of the Group’s cash-generating units or groups of cash-generating units (referred to as “cash-generating units”) that are expected to benefit from the synergies of the combination. 193 Financial Information A cash-generating unit to which goodwill has been allocated is tested for impairment annually or more frequently whenever there is an indication that the unit may be impaired, by comparing its carrying amount, including the attributed goodwill, with its recoverable amount. However, if the goodwill allocated to a cash-generating unit was acquired in a business combination during the current annual period, that unit shall be tested for impairment before the end of the current annual period. If the recoverable amount of the cash-generating unit is less than its carrying amount, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then pro rata to the other assets of the unit based on the carrying amount of each asset in the unit. Any impairment loss is recognized directly in profit or loss. Any impairment loss recognized for goodwill is not reversed in subsequent periods. If goodwill has been allocated to a cash-generating unit and the Group disposes of an operation within that unit, the goodwill associated with the operation which is disposed of is included in the carrying amount of the operation when determining the gain or loss on disposal and is measured on the basis of the relative values of the operation disposed of and the portion of the cash-generating unit retained. l. Intangible assets Intangible assets with finite useful lives that are acquired separately are initially measured at cost and subsequently measured at cost less accumulated amortization and accumulated impairment loss. Amortization is recognized on a straight-line basis. The estimated useful lives, residual values, and amortization methods are reviewed at the end of each reporting period, with the effect of any changes in the estimates accounted for on a prospective basis. Intangible assets acquired in a business combination and recognized separately from goodwill are initially recognized at their fair value at the acquisition date (which is regarded as their cost). Subsequent to initial recognition, they are measured on the same basis as intangible assets that are acquired separately. On derecognition of an intangible asset, the difference between the net disposal proceeds and the carrying amount of the asset is recognized in profit or loss. m. Impairment of property, plant and equipment, right-of-use asset, investment properties, intangible assets other than goodwill and assets related to contract costs At the end of each reporting period, the Group reviews the carrying amounts of its property, plant and equipment, right-of-use asset, investment properties and intangible assets excluding goodwill, to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss. When it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs. Corporate assets are allocated to the individual cash-generating units on a reasonable and consistent basis of allocation. Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment at least annually and whenever there is an indication that the assets may be impaired. The recoverable amount is the higher of fair value less costs to sell and value in use. If the recoverable amount of an asset or cash-generating unit is estimated to be less than its carrying amount, the carrying amount of the asset or cash-generating unit is reduced to its recoverable 194 amount, with the resulting impairment loss recognized in profit or loss. Before the Group recognizes an impairment loss from assets related to contract costs, any impairment loss on inventories, property, plant and equipment and intangible assets related to the contract applicable under IFRS 15 shall be recognized in accordance with applicable standards. Then, impairment loss from the assets related to the contract costs is recognized to the extent that the carrying amount of the assets exceeds the remaining amount of consideration that the Group expects to receive in exchange for related goods or services less the costs which relate directly to providing those goods or services and which have not been recognized as expenses. The assets related to the contract costs are then included in the carrying amount of the cash-generating unit to which they belong for the purpose of evaluating impairment of that cash-generating unit. When an impairment loss is subsequently reversed, the carrying amount of the corresponding asset, cash-generating unit or assets related to contract costs is increased to the revised estimate of its recoverable amount, but only to the extent of the carrying amount that would have been determined had no impairment loss been recognized on the asset, cash-generating unit or assets related to contract costs in prior years. A reversal of an impairment loss is recognized in profit or loss. n. Financial instruments Financial assets and financial liabilities are recognized when the Group becomes a party to the contractual provisions of the instruments. Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issuance of financial assets and financial liabilities (other than financial assets and financial liabilities at FVTPL) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at FVTPL are recognized immediately in profit or loss. Financial assets All regular way purchases or sales of financial assets are recognized and derecognized on a trade date basis. 1) Measurement categories Financial assets are classified into the following categories: Financial assets at FVTPL, financial assets at amortized cost and equity instruments at FVTOCI. a) Financial assets at FVTPL Financial assets are classified as at FVTPL when such financial assets are mandatorily classified or designated as at FVTPL. Financial assets mandatorily classified as at FVTPL include investments in equity instruments which are not designated as at FVTOCI and debt instruments that do not meet the amortized cost criteria or the FVTOCI criteria. Financial assets at FVTPL are subsequently measured at fair value, and any remeasurement gains or losses are recognized in other gains or losses. Fair value is determined in the manner described in Note 37. 195 Financial Information b) Financial assets at amortized cost Financial assets that meet the following conditions are subsequently measured at amortized cost: i. The financial assets are held within a business model whose objective is to hold financial assets in order to collect contractual cash flows; and ii. The contractual terms of the financial assets give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. Subsequent to initial recognition, financial assets at amortized cost, including cash and cash equivalents, trade receivables at amortized cost are measured at amortized cost, which equals the gross carrying amount determined using the effective interest method less any impairment loss. Exchange differences are recognized in profit or loss. Interest income is calculated by applying the effective interest rate to the gross carrying amount of such a financial asset, except for: i. Purchased or originated credit-impaired financial assets, for which interest income is calculated by applying the credit-adjusted effective interest rate to the amortized cost of such financial assets; and ii. Financial asset that is not credit impaired on purchase or origination but has subsequently become credit impaired, for which interest income is calculated by applying the effective interest rate to the amortized cost of such financial assets in subsequent reporting periods. Cash equivalents include time deposits with original maturities within 3 months from the date of acquisition or time deposits with original maturities within 3-12 months from the date of acquisition and the interest earned upon early withdrawal exceeds that of regular saving accounts, which are highly liquid, readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value. These cash equivalents are held for the purpose of meeting short-term cash commitments. c) Investments in equity instruments at FVTOCI On initial recognition, the Group may make an irrevocable election to designate investments in equity instruments as at FVTOCI. Designation as at FVTOCI is not permitted if the equity investment is held for trading or if it is contingent consideration recognized by an acquirer in a business combination. Investments in equity instruments at FVTOCI are subsequently measured at fair value with gains and losses arising from changes in fair value recognized in other comprehensive income and accumulated in other equity. The cumulative gain or loss will not be reclassified to profit or loss on disposal of the equity investments, instead, they will be transferred to retained earnings. Dividends on these investments in equity instruments are recognized in profit or loss when the Group’s right to receive the dividends is established, unless the dividends clearly represent a recovery of part of the cost of the investment. 196 2) Impairment of financial assets The Group recognizes a loss allowance for expected credit losses on financial assets at amortized cost (including trade receivables), investments in debt instruments that are measured at FVTOCI, operating lease receivable, finance lease receivables, as well as contract assets. The Group always recognizes lifetime Expected Credit Losses (ECLs) for trade receivables, operating lease receivable, finance lease receivables and contract assets. For all other financial instruments, the Group recognizes lifetime ECLs when there has been a significant increase in credit risk since initial recognition. If, on the other hand, the credit risk on the financial instrument has not increased significantly since initial recognition, the Group measures the loss allowance for that financial instrument at an amount equal to 12-month ECLs. Expected credit losses reflect the weighted average of credit losses with the respective risks of default occurring as the weights. Lifetime ECLs represents the expected credit losses that will result from all possible default events over the expected life of a financial instrument. In contrast, 12-month ECLs represents the portion of lifetime ECLs that is expected to result from default events on a financial instrument that are possible within 12 months after the reporting date. For internal credit risk management purposes, the Group considers the following situations as indication that a financial asset is in default (without taking into account any collateral held by the Group): a) Internal or external information shows that the debtor is unlikely to pay its creditors. b) Financial asset is more than 90 days past due unless the Group has reasonable and corroborative information to support a more lagged default criterion. The impairment loss of all financial assets is recognized in profit or loss by a reduction in their carrying amounts through a loss allowance account. 3) Derecognition of financial assets The Group derecognizes a financial asset only when the contractual rights to the cash flows from the asset expire or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another party. On derecognition of a financial asset at amortized cost in its entirety, the difference between the asset’s carrying amount and the sum of the consideration received and receivable is recognized in profit or loss. On derecognition of an investment in an equity instrument at FVTOCI, the difference between the asset’s carrying amount and the sum of the consideration received and receivable is recognized in profit or loss, and the cumulative gain or loss which had been recognized in other comprehensive income is transferred directly to retained earnings, without recycling through profit or loss. Equity instruments Equity instruments issued by the Group are recognized at the proceeds received, net of direct issue costs. 197 Financial Information The repurchase of WLC’s own equity instruments is recognized in and deducted directly from equity. No gain or loss is recognized in profit or loss on the purchase, sale, issuance or cancellation of WLC’s own equity instruments. Financial liabilities 1) Subsequent measurement Except the following situation, all the financial liabilities are measured at amortized cost using the effective interest method: a) Financial liabilities at FVTPL Financial liabilities are classified as at FVTPL when such financial liabilities are either held for trading or are designated as at FVTPL. Financial liabilities held for trading are stated at fair value, and any remeasurement gains or losses are recognized in other gains or losses. Fair value is determined in the manner described in Note 37. b) Financial guarantee contracts Financial guarantee contracts issued by the Group, if not designated as at FVTPL, are subsequently measured at the higher of: i. The amount of the loss allowance reflecting expected credit losses; and ii. The amount initially recognized less, where appropriate, the cumulative amount of income recognized in accordance with the revenue recognition policies. 2) Derecognition of financial liabilities The difference between the carrying amount of a financial liability derecognized and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognized in profit or loss. Derivative financial instruments The Group enters into a variety of derivative financial instruments to manage its exposure to interest rate and foreign exchange rate risks, including foreign exchange forward contracts and interest rate swaps. Derivatives are initially recognized at fair value at the date on which the derivative contracts are entered into and are subsequently remeasured to their fair value at the end of each reporting period. The resulting gain or loss is recognized in profit or loss immediately unless the derivative is designated and effective as a hedging instrument; in which event, the timing of the recognition in profit or loss depends on the nature of the hedging relationship. When the fair value of a derivative financial instrument is positive, the derivative is recognized as a financial asset; when the fair value of a derivative financial instrument is negative, the derivative is recognized as a financial liability. 198 Derivatives embedded in hybrid contracts that contain financial asset hosts within the scope of IFRS 9 are not separated; instead, the classification is determined in accordance with the entire hybrid contract. Derivatives embedded in non-derivative host contracts that are not financial assets within the scope of IFRS 9 (e.g., financial liabilities) are treated as separate derivatives when they meet the definition of a derivative; their risks and characteristics are not closely related to those of the host contracts; and the host contracts are not measured at FVTPL. o. Hedge accounting The Group designates certain hedging instruments, which include derivatives, embedded derivatives and non-derivatives in respect of foreign currency risk, as either fair value hedges or cash flow hedges. Hedges of foreign exchange risk on firm commitments are accounted for as cash flow hedges. 1) Fair value hedges Gain or losses on derivatives that are designated and qualify as fair value hedges are recognized in profit or loss immediately, together with any changes in the fair value of the hedged asset or liability that are attributable to the hedged risk. The change in the fair value of the hedging instrument and the change in the hedged item attributable to the hedged risk are recognized in profit or loss in the line item relating to the hedged item. The Group discontinues hedge accounting only when the hedging relationship ceases to meet the qualifying criteria; for instance, when the hedging instrument expires or is sold, terminated or exercised. 2) Cash flow hedges The effective portion of gains or losses on derivatives that are designated and qualify as cash flow hedges is recognized in other comprehensive income. The gains or losses relating to the ineffective portion are recognized immediately in profit or loss. The associated gains or losses that were recognized in other comprehensive income are reclassified from equity to profit or loss as reclassification adjustment in the line item relating to the hedged item in the same period when the hedged item affects profit or loss. If a hedge of a forecast transaction subsequently results in the recognition of a non-financial asset or a non-financial liability, the associated gains and losses that were recognized in other comprehensive income are removed from equity and included in the initial cost of the non-financial asset or non-financial liability. The Group discontinues hedge accounting only when the hedging relationship ceases to meet the qualifying criteria; for instance, when the hedging instrument expires or is sold, terminated or exercised. The cumulative gain or loss on the hedging instrument that has been previously recognized in other comprehensive income (from the period when the hedge was effective) remains separately in equity until the forecast transaction occurs. When a forecast transaction is no longer expected to occur, the gains or losses accumulated in equity are recognized immediately in profit or loss. p. Levies Levies imposed by a government are accrued as other liabilities when the transactions or activities that trigger the payment of such levies occur. If the obligating event occurs over a 199 Financial Information period of time, the liability is recognized progressively. If an obligation to pay a levy is triggered upon reaching a minimum threshold, the liability is recognized when that minimum threshold is reached. q. Provisions Provisions are recognized when the Group has a present obligation (legal or constructive) as a result of a past event and it is probable that the Group will be required to settle the obligation and the amount of the obligation can be measured reliably. r. Revenue recognition The Group identifies contracts with customers, allocates the transaction price to the performance obligations and recognizes revenue when performance obligations are satisfied. 1) Revenue from the sale of goods and real estate Revenue from the sale of goods and real estate comes from sales of wires, cables, stainless steel and real estate. Sales of wires, cables and stainless steel are recognized as revenue when the customer has full discretion over the manner of distribution and the price to sell the goods, has the primary responsibility for sales to future customers and bears the risks of obsolescence. Trade receivables are recognized concurrently. The Group does not recognize revenue on materials delivered to subcontractors because this delivery does not involve a transfer of control. For contracts to sell properties in the ordinary course of business, the fixed transaction price is received in instalments and recognized as a contract liability. The transaction price, after adjusting for the effect of the significant financing component, is recognized as revenue when the construction is completed, and the property is transferred to the buyer. 2) Revenue from the others a) Revenue from the rendering of services Revenue from the rendering of services is recognized when services are rendered. Revenue generated from services provided under the contract is recognized according to the completion of the contract. b) Construction contract revenue Contract assets are recognized during the construction and are reclassified to trade receivables at the point at which the customer is invoiced. If the milestone payment exceeds the revenue recognized to date, then the Group recognizes a contract liability for the difference. Certain payments, which are retained by the customer as specified in the contract, are intended to ensure that the Group adequately completes all of its contractual obligations. Such retention receivables are recognized as contract assets until the Group satisfies its performance obligations. When the outcome of a performance obligation cannot be reasonably measured, contract revenue is recognized only to the extent of contract costs incurred in satisfying the performance obligation for which recovery is expected. 200 s. Leases At the inception of a contract, the Group assesses whether the contract is, or contains, a lease. a) The Group as lessor Leases are classified as finance leases whenever the terms of a lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases. Under finance leases, the lease payments comprise fixed payments and variable lease payments which depend on an index or a rate. The net investment in a lease is measured at (a) the present value of the sum of the lease payments receivable by a lessor and any unguaranteed residual value accrued to the lessor plus (b) initial direct costs and is presented as a finance lease receivable. Finance lease income is allocated to the relevant accounting periods so as to reflect a constant, periodic rate of return on the Group’s net investment outstanding in respect of leases. Lease payments less any lease incentives payable from operating leases are recognized as income on a straight-line basis over the terms of the relevant leases. Initial direct costs incurred in obtaining operating leases are added to the carrying amounts of the underlying assets and recognized as expenses on a straight-line basis over the lease terms. b) The Group as lessee The Group recognizes right-of-use assets and lease liabilities for all leases at the commencement date of a lease, except for short-term leases and low-value asset leases accounted for by applying a recognition exemption where lease payments are recognized as expenses on a straight-line basis over the lease terms. Right-of-use assets are initially measured at cost, which comprises the initial measurement of lease liabilities adjusted for lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs needed to restore the underlying assets, and less any lease incentives received. Right-of-use assets are subsequently measured at cost less accumulated depreciation and impairment losses and adjusted for any remeasurement of the lease liabilities. Right-of-use assets are depreciated using the straight-line method from the commencement dates to the earlier of the end of the useful lives of the right-of-use assets or the end of the lease terms. Lease liabilities are initially measured at the present value of the lease payments, which comprise fixed payments, in-substance fixed payments, variable lease payments which depend on an index or a rate, residual value guarantees, the exercise price of a purchase option if the Group is reasonably certain to exercise that option, and payments of penalties for terminating a lease if the lease term reflects such termination, less any lease incentives receivable. The lease payments are discounted using the interest rate implicit in a lease, if that rate can be readily determined. If that rate cannot be readily determined, the lessee’s incremental borrowing rate will be used. 201 Financial Information Subsequently, lease liabilities are measured at amortized cost using the effective interest method, with interest expense recognized over the lease terms. When there is a change in a lease term, a change in the amounts expected to be payable under a residual value guarantee, a change in the assessment of an option to purchase an underlying asset, or a change in future lease payments resulting from a change in an index or a rate used to determine those payments, the Group remeasures the lease liabilities with a corresponding adjustment to the right-of-use-assets. However, if the carrying amount of the right-of-use assets is reduced to zero, any remaining amount of the remeasurement is recognized in profit or loss. Lease liabilities are presented on a separate line in the consolidated balance sheets. Variable lease payments that do not depend on an index or a rate are recognized as expenses in the periods in which they are incurred. t. Government grants Government grants are not recognized until there is reasonable assurance that the Group will comply with the conditions attached to them and that the grants will be received. Government grants are recognized in profit or loss on a systematic basis over the periods in which the Group recognizes as expenses the related costs that the grants intend to compensate. Government grants that are receivable as compensation for expenses or losses already incurred or for the purpose of giving immediate financial support to the Group with no future related costs are recognized in profit or loss in the period in which they are received. The benefit of a government loan received at a below-market rate of interest is treated as a government grant measured as the difference between the proceeds received and the fair value of the loan based on prevailing market interest rates. u. Employee benefits 1) Short-term employee benefits Liabilities recognized in respect of short-term employee benefits are measured at the undiscounted amount of the benefits expected to be paid in exchange for the related service. 2) Retirement benefits Payments to defined contribution retirement benefit plans are recognized as expenses when employees have rendered services entitling them to the contributions. Defined benefit costs (including service cost, net interest and remeasurement) under defined benefit retirement benefit plans are determined using the projected unit credit method. Service cost (including current service cost) and net interest on the net defined benefit liabilities (assets) are recognized as employee benefits expense in the period in which they occur. Remeasurement, comprising actuarial gains and losses and the return on plan assets (excluding interest), is recognized in other comprehensive income in the period in which it occurs. Remeasurement recognized in other comprehensive income is reflected immediately in retained earnings and will not be reclassified to profit or loss. 202 Net defined benefit liabilities (assets) represent the actual deficit (surplus) in the Group’s defined benefit plans. Any surplus resulting from this calculation is limited to the present value of any refunds from the plans or reductions in future contributions to the plans. v. Share-based payment arrangements Employee share options granted to employees and others providing similar services. The fair value at the grant date of the employee share options is expensed on a straight-line basis over the vesting period, based on the Group’s best estimates of the number of shares or options that are expected to ultimately vest, with a corresponding increase in capital surplus - employee share options. The expense is recognized in full at the grant date if the grants are vested immediately. The grant date of issued ordinary shares for cash which are reserved for employees is the date on which the number of shares that the employees purchase is confirmed. w. Taxation Income tax expense represents the sum of the tax currently payable and deferred tax. 1) Current tax Income tax payable (recoverable) is based on taxable profit (loss) for the year determined according to the applicable tax laws of each tax jurisdiction. According to the Income Tax Act in the ROC, an additional tax on unappropriated earnings is provided for in the year the shareholders approve to retain earnings. Adjustments of prior years’ tax liabilities are added to or deducted from the current year’s tax provision. 2) Deferred tax Deferred tax is recognized on temporary differences between the carrying amounts of assets and liabilities and the corresponding tax bases used in the computation of taxable profit. If a temporary difference arises from the initial recognition (other than in a business combination) of assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit and at the time of the transaction, does not give rise to equal taxable and deductible temporary differences, the resulting deferred tax asset or liability is not recognized. In addition, a deferred tax liability is not recognized on taxable temporary differences arising from the initial recognition of goodwill. Deferred tax liabilities are generally recognized for all taxable temporary differences. Deferred tax assets are generally recognized for all deductible temporary differences and unused loss carryforwards to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilized. Deferred tax liabilities are recognized for taxable temporary differences associated with investments in subsidiaries and associates, except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets arising from deductible temporary differences associated with such investments and interests are recognized only to the extent that it is probable that there will be sufficient taxable profits against which to 203 Financial Information utilize the benefits of the temporary differences and they are expected to reverse in the foreseeable future. The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. A previously unrecognized deferred tax asset is also reviewed at the end of each reporting period and recognized to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered. Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which the liabilities are settled or the assets are realized, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Group expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities. The Group has applied the exception from the recognition and disclosure of deferred tax assets and liabilities relating to Pillar Two income taxes. Accordingly, the Group neither recognizes nor discloses information about deferred tax assets and liabilities related to Pillar Two income taxes. 3) Current and deferred taxes Current and deferred taxes are recognized in profit or loss, except when they relate to items that are recognized in other comprehensive income or directly in equity; in which case, the current and deferred taxes are also recognized in other comprehensive income or directly in equity, respectively. Where current tax or deferred tax arises from the initial accounting for a business combination, the tax effect is included in the accounting for the business combination. 5. MATERIAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY In the application of the Group’s accounting policies, management is required to make judgments, estimates and assumptions on the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered relevant. Actual results may differ from these estimates. When developing material accounting estimates, the Group review the estimates and underlying assumptions on an ongoing basis. Revisions to accounting estimates are recognized in the year in which the estimate is revised if the revision affects only that year, or in the year of the revisions and future years if the revision affects both current and future years. 204 6. CASH AND CASH EQUIVALENTS Cash on hand Checking accounts and cash in banks Cash equivalents Time deposits Short-term bills Foreign exchange deposit account for offshore funds December 31 2023 2022 $ 3,613 13,901,500 $ 4,413 15,013,929 2,068,397 350,122 23,380 4,265,727 113,904 40,786 $ 16,347,012 $ 19,438,759 The market rate intervals of cash in the bank at the end of the year were as follows (except for the checking accounts’ interest rate of 0.00%): Bank balance Time deposits Short-term bills December 31 2023 2022 0.001%-2.60% 0.001%-3.80% 0.96%-4.00% 0.755%-5.60% 0.4%-0.5% 0.53%-1.27% Other bank deposits have been reclassified to other accounts for the following purposes: Purpose December 31 2023 2022 Other financial assets - current Restricted deposits To meet contract requirements for completing $ 81,640 $ 34,648 construction To secure short-term borrowings and letters of 25,306 167,546 Refundable deposits Futures deposits credit Refundable deposits 2,348 109,294 303,146 505,340 Other - pledged time deposits To meet contract requirements for completing 62,080 51,718 construction To meet required security deposit - 268 Other non-current assets - other Restricted deposits To meet construction project and performance Pledged time deposits To meet required security deposit letter of guarantee 10,838 1,427 74,345 11,023 1,439 64,448 $ 183,639 $ 569,788 205 Financial Information 7. FINANCIAL INSTRUMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS December 31 2023 2022 Financial assets mandatorily classified as at FVTPL Derivative financial assets (not under hedge accounting) Commodity futures contracts Options Interest rate swap contracts Non-derivative financial assets Contingent consideration (Note 34) Foreign unlisted shares $ $ 68,624 10,142 - - 7,629 2 $ 2,614,285 79,541 $ 2,567,786 71,969 Financial assets at FVTPL $ 2,772,592 $ 2,647,386 Current Non-current Financial liabilities held for trading Derivative financial liabilities (not under hedge accounting) Commodity futures contracts Foreign exchange forward contracts Exchange rate swap contracts Non-derivative financial liabilities Contingent consideration $ 1,508,943 1,263,649 7,631 $ 2,639,755 $ 2,772,592 $ 2,647,386 $ $ - 16,041 6,705 21,189 21,470 22,113 484,429 363,192 Financial liabilities at FVTPL $ 507,175 $ 427,964 Current Non-current $ 22,746 484,429 $ 64,772 363,192 $ 507,175 $ 427,964 a. As of December 31, 2023 and 2022, outstanding commodity futures not under hedge accounting were as follows: Type of Transaction Quantity (Tons) Trade Date Maturity Date Exercise Price (In Thousands) Market Price (In Thousands) Valuation (Loss) Gain (In Thousands) December 31, 2023 Commodity futures contracts Copper Nickel Zinc 206 Buy 13,300 Buy Sell 150 150 2023.08.21- 2023.12.29 2023.11.01- 2023.11.24 2023.10.30 2024.01.17- 2024.06.19 2024.02.01- 2024.02.23 2024.01.01 US$ 110,946 US$ 113,261 US$ 2,315 US$ 2,550 US$ 2,478 US$ (72 ) RMB 3,176 RMB 3,233 RMB (57 ) Type of Transaction Quantity (Tons) Trade Date Maturity Date Exercise Price (In Thousands) Market Price (In Thousands) Valuation (Loss) Gain (In Thousands) December 31, 2022 Commodity futures contracts Copper Copper Copper Nickel Zinc Buy Buy Sell Sell Buy 5,900 555 25 4,188 25 2022.08.15- 2022.12.30 2022.11.11- 2022.12.30 2022.12.02 2022.11.15- 2022.12.30 2022.12.05 2023.01.08- 2023.06.21 2023.01.31- 2023.03.31 2023.03.02 2023.01.18- 2023.03.20 2023.02.28 US$ 48,178 US$ 49,332 US$ 1,154 RMB 36,816 RMB 36,797 RMB (19 ) US$ 210 US$ 122,940 US$ 209 US$ 124,780 US$ US$ 1 (1,840 ) RMB 613 RMB 593 RMB (20 ) b. As of December 31, 2023 and 2022, outstanding foreign exchange forward contracts not under hedge accounting were as follows: Currency Maturity Date Notional Amount (In Thousands) December 31, 2023 Sell Buy December 31, 2022 Sell Buy EUR to USD USD to RMB EUR to MYR USD to RMB USD to JPY USD to IDR USD to SGD EUR to GBP EUR to BRL EUR to KRW EUR to RMB EUR to SEK USD to RMB EUR to MYR EUR to USD USD to IDR USD to JPY USD to RMB EUR to USD USD to SGD EUR to KRW EUR to TRY EUR to ZAR EUR to GBP EUR to BRL 2024.01.02-2024.01.22 2024.01.02-2024.03.04 2024.02.02-2024.04.19 2024.01.02 2024.01.29 2024.01.02-2024.02.01 2024.01.16-2024.02.27 2024.01.31-2024.03.28 2024.01.19-2024.04.23 2024.02.29 2024.03.28 2024.01.31-2024.04.30 EUR7,572/USD8,242 USD32,000/RMB227,033 EUR510/MYR2,583 USD5,000/RMB35,629 USD3,500/JPY495,565 USD78,000/IDR1,205,962,000 USD4,000/SGD5,331 EUR9,795/GBP8,500 EUR3,786/BRL20,420 EUR128/KRW183,000 EUR3,674/RMB28,800 EUR4,177/SEK48,100 2023.01.31-2023.05.05 2023.01.31-2023.06.30 2023.01.03-2023.01.10 2023.01.31 2023.01.05 2023.01.05 2023.01.05 2023.01.30-2023.02.01 2023.01.31-2023.02.28 2023.01.31 2023.01.18-2023.02.17 2023.01.31-2023.03.31 2023.01.17-2023.03.15 USD2,543/RMB17,228 EUR1,499/MYR7,048 EUR7,987/USD8,500 USD91,000/IDR1,429,633,100 USD3,000/JPY412,605 USD16,571/RMB116,504 EUR15,834/USD16,571 USD13,127/SGD17,778 EUR434/KRW592,638 EUR292/TRY6,000 EUR710/ZAR12,483 EUR4,944/GBP4,340 EUR5,485/BRL29,982 207 Financial Information c. As of December 31, 2023 and 2022, outstanding exchange rate swap contracts not under hedge accounting were as follows: Currency Maturity Date Notional Amount (In Thousands) December 31, 2023 USD to RMB USD to NTD 2024.02.07-2024.02.27 2024.01.02-2024.02.29 USD143,988/RMB1,024,564 USD118,000/NTD3,649,647 December 31, 2022 USD to RMB EUR to USD EUR to ZAR 2023.01.18 2023.01.17 2023.01.18 USD75,000/RMB516,585 EUR15,955/USD17,000 EUR133/ZAR2,390 d. As of December 31, 2023 and 2022, outstanding commodity futures option contracts not under hedge accounting were as follows: December 31, 2023 Notional Amount Type of Transaction Buyer/Seller Premium Paid Fair Value US$11,241 Put Buyer US$371 US$330 December 31, 2022 Notional Amount Type of Transaction Buyer/Seller Premium Paid Fair Value US$29,118 Put Buyer US$672 US$249 e. As of December 31, 2022, outstanding interest rate swap contracts not under hedge accounting were as follows: Notional Amount Maturity Date Range of Interest Rates Paid Range of Interest Rates Received December 31, 2022 EUR19,934 2023.02.01 -0.433% Note Note: It is the three-month interest rate of Euro Interbank Offered Rate (Euribor) on the second business day before the issuance date. f. For the years ended December 31, 2023 and 2022, the Group’s strategies for commodity futures contracts, foreign exchange forward contracts, exchange rate swap contracts and interest rate swap contracts were to hedge exposures to fluctuations in the prices of raw material, foreign exchange rates and interest rates. However, those derivative financial instruments did not meet the criteria of hedge effectiveness; therefore, they were not accounted for hedge accounting. g. Financial assets - contingent consideration is the amount of consideration to be received by the Group from the acquirer in the disposal of the subsidiary (the “Target Company”) on July 27, 2022. In accordance with the agreement of contingent consideration, the acquirer shall respectively pay additional payments when the gross profit of Target Company during the 208 period starting from the settlement date to December 31, 2023 and the gross profit in the year 2024 meet the amount agreed upon by Target Company. h. Financial liabilities - contingent consideration according to the agreement of acquisition, the Group is required to make additional payments to the seller if Cogne Acciai Speciali S.p.A.’s earnings before interest, income tax, depreciation and amortization from the settlement date to 2025 meet the contract requirements. 8. FINANCIAL ASSETS AT AMORTIZED COST Current Foreign investments Corporate bonds Mutual funds Non-current Foreign investments Government bonds December 31 2023 2022 $ 15 712 $ 588 1,614 $ 727 $ 2,202 $ 184,613 $ 189,242 The interest rates for the government bonds the Group purchased was 4.45% as of December 31, 2023 and 2022. 9. FINANCIAL INSTRUMENTS FOR HEDGING Financial assets Cash flow hedges - hedged foreign currency deposits Cash flow hedges - interest rate swap contracts $ 346,441 53,439 - $ 165,019 December 31 2023 2022 Current Non-current $ 399,880 $ 165,019 $ 346,441 53,439 $ 20,615 144,404 $ 399,880 $ 165,019 (Continued) 209 Financial Information Financial liabilities Cash flow hedges - foreign exchange forward contracts Cash flow hedges - gas and electricity swap contracts Current Non-current December 31 2023 2022 $ $ $ 4,967 3,616 $ - 222,272 8,583 $ 222,272 5,878 2,705 $ 222,272 - $ 8,583 $ 222,272 (Concluded) a. The Group entered into foreign exchange forward contracts and foreign currency deposits to hedge against the exchange rate fluctuations associated with designated foreign currency receivables and payables. The conditions of the foreign exchange forward contracts are the same as those of the corresponding financial assets, so the management believes that the foreign exchange forward contracts are highly effective hedging instruments. For information regarding the financial instruments used for hedging, refer to Note 37. b. The Group converts some of the issued floating rate financial liabilities from floating rate to fixed rate through the interest rate swap contracts in order to reduce the risk of the cash flow of the issued floating rate financial liabilities due to changes in interest rates. The conditions of the interest rate swap contracts are the same as the one of the related financial liabilities, therefore, the management of the Group considers they can be highly effective hedging instruments. For information regarding the financial instruments used for hedging, refer to Note 37. c. The Group is exposed to the risk that the future cash flows of the assets and liabilities may fluctuate due to changes in market prices of gas and electricity that are required for the Group’s operations. The Group assesses that the risk may be significant and therefore enters into gas and electricity swap contracts for hedging purposes. The breakdown of the cash flow hedge items and derivative financial instruments designated for hedging at the end of the reporting period were as follows: Financial Commodity Type of Transaction Quantity Trade Date Maturity Date Notional Amount (In Thousands) Market Price (In Thousands) Valuation (Loss) Gain (In Thousands) December 31, 2023 Gas Electricity Buy Buy December 31, 2022 Gas Buy 13,600 Tons 22,000 Megawatt hours 2023.12.11 2023.12.14 2024.01.31- 2024.03.31 2024.01.31- 2024.06.30 EUR 502 EUR 435 EUR (67 ) EUR 1,857 EUR 1,817 EUR (40 ) 139,800 Tons 2022.04.22- 2022.12.28 2023.01.31- 2023.12.31 EUR 17,700 EUR 10,907 EUR (6,793 ) 210 10. CONTRACT ASSETS As of December 31, 2023 and 2022, contract balances were as follows: Contract assets Cable installation Solar power systems installation Less: Allowance for impairment loss December 31 2023 2022 $ 735,895 260,130 - $ 1,242,468 1,779,769 - Contract assets - current $ 996,025 $ 3,022,237 The changes in the balance of contract assets primarily resulted from the timing differences between the Group’s satisfaction of performance obligations and the respective customer’s payment. 11. NOTES RECEIVABLE AND TRADE RECEIVABLES Notes receivable Notes receivable Trade receivables Trade receivables Less: Allowance for impairment loss a. Notes receivable December 31 2023 2022 $ 920,752 $ 4,537,322 $ 15,628,930 (637,399) $ 17,575,200 (280,210) $ 14,991,531 $ 17,294,990 The Group entered into a factoring agreement with financial institutions to sell its discounted notes receivable. Although the Group has transferred the contractual rights to receive cash flows, the Group is still obligated to bear the default risk of such discounted notes receivable. Thus, it did not meet the conditions for derecognition of financial assets. The related information is as follows: 211 Financial Information December 31, 2022 Factoring Partners Shanghai Pudong Development Bank Co., Ltd. China Minsheng Banking Corp., Ltd. $ 1,425,350 128,663 Notes Receivable Transferred (Note) Amount Advanced Interest Rate $ 1,425,350 128,663 1.25%-2.20% 1.57%-2.10% $ 1,554,013 $ 1,554,013 Note: Classified under short-term borrowings; for related information on guarantee and short-term borrowings, refer to Notes 23 and 39. b. Trade receivable The average credit period on the sales of goods is 30 to 65 days. In determining the collectability of a trade receivable, the Group considered any change in the credit quality of the trade receivable since the date credit was initially granted to the end of the reporting period. When the Group dealt with new entities, the Group reviewed the credit ratings of the entities and obtained sufficient collateral, where appropriate, as a means of mitigating the risk of financial loss from defaults. The Group uses other publicly available financial information or its own trading records to rate its major customers. The Group’s exposure and the credit ratings of its counterparties are continuously monitored, and the aggregate value of transactions concluded is spread amongst approved counterparties. Credit exposure is controlled by counterparty limits that are reviewed and approved by the risk management committee annually. In this regard, the management believes the Group’s credit risk is significantly reduced. The Group permits the use of a lifetime expected credit losses allowance for all trade receivables. The expected credit losses on trade receivables are estimated using a provision matrix by reference to the past default experience with the respective debtors and an analysis of the debtors’ current financial positions. As the Group’s historical credit loss experience does not show significantly different loss patterns for different customer segments, the loss allowance based on the past due status of receivables is not further distinguished according to different segments of the Group’s customer base. The Group writes off a trade receivable when there is information indicating that the debtor is experiencing severe financial difficulty and there is no realistic prospect of recovery of the receivable. For trade receivables that have been written off, the Group continues to engage in enforcement activity to attempt to recover the receivables which are due. Where recoveries are made, they are recognized in profit or loss. The following table details the loss allowance of trade receivables based on the Group’s provision matrix. 212 December 31, 2023 Not Past Due Less than 90 Days 91 to 180 Days 181 to 365 Days Over 365 Days Total Expected credit loss rate 0%-1% 0%-2% 0%-50% 0%-100% 50%-100% Gross carrying amount $ 11,050,307 Loss allowance $ 3,109,790 $ 585,572 $ 550,249 $ 333,012 $ 15,628,930 (lifetime ECLs) (16,320 ) (34,607 ) (71,766 ) (292,380 ) (222,326 ) (637,399 ) Amortized cost $ 11,033,987 $ 3,075,183 $ 513,806 $ 257,869 $ 110,686 $ 14,991,531 December 31, 2022 Not Past Due Less than 90 Days 91 to 180 Days 181 to 365 Days Over 365 Days Total Expected credit loss rate Gross carrying amount Loss allowance (lifetime ECLs) 0%-1% 0%-2% 0%-50% 0%-100% 50%-100% $ 14,708,361 $ 2,274,401 $ 255,547 $ 172,148 $ 164,743 $ 17,575,200 (8,432 ) (31,422 ) (26,064 ) (71,707 ) (142,585 ) 280,210 ) Amortized cost $ 14,699,929 $ 2,242,979 $ 229,483 $ 100,441 $ 22,158 $ 17,294,990 The movements of the loss allowance of trade receivables were as follows: For the Year Ended December 31 2023 2022 Balance at January 1 Add: Net remeasurement of loss allowance Add: Acquisitions through business combination Less: Amounts written off Foreign exchange gains and losses $ 280,210 412,281 - (51,459) (3,633) $ 92,903 105,680 91,508 (17,859) 7,978 Balance at December 31 $ 637,399 $ 280,210 The amounts and the details of the factoring agreements for accounts receivable of the Group are set out in Notes 23, 37 and 39. 12. FINANCE LEASE RECEIVABLES Undiscounted lease payments Year 1 Year 2 Year 3 Year 4 December 31 2023 2022 $ 81,359 81,359 81,359 81,359 $ 81,359 81,359 81,359 81,359 (Continued) 213 Financial Information Year 5 Year 6 onwards Less: Unearned finance income Net investment in leases presented as finance lease receivables Current Non-current December 31 2023 2022 81,359 287,658 694,453 (91,930) 81,359 369,017 775,812 (113,269) $ 602,523 $ 662,543 $ 62,067 540,456 $ 60,020 602,523 $ 602,523 $ 662,543 (Concluded) The power supply contracts of solar power equipment are processed according to the finance leases accounting policy. The average term of finance leases entered into was 20 years. The interest rate inherent in the leases was fixed at the contract date for the entire lease term. The average effective interest rate contracted was 3.30% per annum as of December 31, 2023 and 2022. The finance lease receivables as of December 31, 2023 and 2022 were neither past due nor impaired. The amounts of finance lease receivables pledged as collateral or for security are set out in Note 39. 13. INVENTORIES Manufacturing and trading industries Raw materials Raw materials in transit Supplies Work-in-process Finished goods and merchandise Contracts in progress Real estate development industry Undeveloped land Buildings and land held for sale Contracts in progress 214 December 31 2023 2022 $ 8,353,682 2,496,691 2,017,810 7,900,218 10,441,129 227,395 31,436,925 $ 7,852,613 1,871,877 2,256,735 8,652,837 12,807,714 462,456 33,904,232 3,434 174,510 2,089,427 2,267,371 3,434 208,551 1,964,074 2,176,059 $ 33,704,296 $ 36,080,291 a. The cost of goods sold related to inventories for the years ended December 31, 2023 and 2022 were NT$174,176,304 thousand and NT$162,026,574 thousand, respectively. b. The cost of goods sold for the years ended December 31, 2023 and 2022 included inventory write-downs of NT$97,969 thousand and reversals of inventory write-downs of NT$101,667 thousand, respectively. c. The inventory for the real estate development business are primarily land and construction costs for future construction and contracts in progress of WLC subsidiary, Walsin (Nanjing) Development Co., Ltd. d. Walsin (Nanjing) Development Co., Ltd. entered into an agreement with third parties for the sale of real estate as of December 31, 2023 and 2022; the selling prices for the related residential buildings and office buildings were RMB13,950 thousand and RMB4,710 thousand, respectively. The sale of the real estate in the amounts of NT$58,663 thousand and NT$19,786 thousand were recognized as operating revenue for the years ended December 31, 2023 and 2022, respectively. 14. FINANCIAL ASSETS MEASURED AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME Domestic listed ordinary and emerging market shares HannStar Display Corp. HannStar Board Corp. TECO Electric & Machinery Corp. K. S. Terminals Inc. Domestic unlisted ordinary shares Foreign unlisted ordinary shares December 31 2023 2022 $ 3,550,641 3,525,594 10,815,701 10,426 812,330 108,480 $ 3,340,899 2,017,812 6,348,587 10,179 564,148 60,607 $ 18,823,172 $ 12,342,232 Non-current $ 18,823,172 $ 12,342,232 These investments in equity instruments are held for medium- to long-term strategic purposes. Accordingly, the management selected to designate these investments in equity instruments as at FVTOCI as they believe that recognizing short-term fluctuations in these investments’ fair value in profit or loss would not be consistent with the Group’s strategy of holding these investments for long-term purposes. For the years ended December 31, 2023 and 2022, the unrealized valuation gains (losses) resulting from instruments were these NT$6,307,904 thousand and NT$(4,067,542) thousand, respectively, which were recognized in other comprehensive income (loss). investments in equity 215 Financial Information 15. SUBSIDIARIES a. Subsidiaries included in the consolidated financial statements The consolidated entities as of December 31, 2023 and 2022 were as follows: Percentage of Ownership (%) December 31 Investor Walsin Lihwa Corporation Investee Main Business Walsin Lihwa Holdings Limited (WLHL) Investment holding Concord Industries Limited (CIL) Ace Result Global Limited Min Maw Precision Industry Corp. (Min Maw) Investment holding Investment holding Solar power systems management, design, and installation Walsin Info-Electric Corp. (Walsin Info-Electric) Mechanical and electrical, communications, and Chin-Cherng Construction Co. (Chin-Cherng) Investment in the construction of residential and power systems Joint Success Enterprises Limited P.T. Walsin Lippo Industries (P.T. Walsin) PT. Walsin Lippo Kabel Waltuo Green Resources Corp. PT. Walsin Nickel Industrial Indonesia Walsin Precision Technology Sdn. Bhd. Walsin Singapore Pte. Ltd. Walsin America, LLC sale of commercial buildings, rental design and interior decoration business Investments Manufacture and sale of cables and wires Cables and wires Waste disposal, resource recovery and cement products Manufacture and sale of nickel pig iron Manufacture and sale of stainless steel Investment holding Investment holding Walsin Lihwa Europe S.a r.l. Investment holding PT. Walsin Research Innovation Indonesia Consulting and Management Walsin Energy Cable System Co., Ltd. Submarine communication cables Walsin Singapore Pte. PT. Walsin Nickel Industrial Indonesia Manufacture and sale of nickel pig iron Ltd. WLHL PT. Sunny Metal Industry Manufacture and sale of nickel matte Walsin (China) Investment Co., Ltd. Jiangyin Walsin Steel Cable Co., Ltd. (JHS) Shanghai Walsin Lihwa Power Wire & Cable Investment holding Manufacture and sale of steel cables and wires Manufacture and sale of cables and wires Co., Ltd. Dongguan Walsin Wire & Cable Co., Ltd. Manufacture and sale of bare copper cables and Walsin International Investments Limited Nanjing Taiwan Trade Mart Management Co., Ltd. wires Investments Business and assets management, consulting and advertising services 2023 100.00 100.00 100.00 100.00 99.51 99.22 49.05 70.00 70.00 100.00 50.00 100.00 100.00 100.00 100.00 (Note 2) 99.50 (Note 5) 90.00 (Note 7) 42.00 50.10 100.00 100.00 95.71 100.00 100.00 100.00 Jiangyin Walsin Specialty Alloy Materials Co., Manufacture and sale of cold-rolled stainless steel 18.37 Ltd. and flat-rolled products CIL Walsin Specialty Steel Corp. Sale of specialty steel products and investment holding Changshu Walsin Specialty Steel Co., Ltd. Manufacture and sale of specialized steel tubes, rods and wires Yantai Walsin Stainless Steel Co., Ltd. Jiangyin Walsin Specialty Alloy Materials Co., Production and sale of new-type alloy materials Manufacture and sale of cold-rolled stainless steel Ltd. and flat-rolled products XiAn Walsin Metal Product Co., Ltd. Production and sale of medium and heavy Chin-Cherng Joint Success Enterprises Limited Construction Co. specialty steel plates Investments Joint Success Walsin (Nanjing) Development Co., Ltd. Construction, rental and sale of buildings and Enterprises Limited industrial factories 100.00 100.00 100.00 81.63 100.00 50.95 100.00 Nanjing Walsin Property Management Co., Ltd. Property management, business management and 100.00 Min Maw Precision PT. Walsin Research Innovation Indonesia Consulting and management housing leasing Industry Corp. (Min Maw) Walsin America, LLC Borrego Energy Holdings, LLC Solar power system Borrego Energy Holdings, LLC Borrego Energy, LLC Solar power system Cleanleaf Energy Holdings, Inc. Investment holding Walsin Lihwa Europe MEG S.A. Investment holding S.a r.l. MEG S.A. Cogne Acciai Speciali S.p.A. Manufacture and sale of stainless steel Cogne Acciai Speciali Cogne France Société par Actions Simplifiée Sale of stainless steel S.p.A. Cogne Edelstahl Gmbh Sale of stainless steel Cogne SG Pte. Ltd. Sale of stainless steel Cogne Hong Kong Limited Investment holding 0.50 (Note 5) 72.55 100.00 100.00 (Note 13) 90.21 (Note 2) 77.60 (Note 3) 100.00 100.00 100.00 100.00 2022 100.00 100.00 100.00 100.00 99.51 99.22 49.05 70.00 70.00 100.00 50.00 100.00 100.00 100.00 (Note 1) 100.00 (Note 2) 99.00 (Note 5) - 42.00 50.10 (Note 6) 100.00 100.00 95.71 100.00 100.00 100.00 18.37 100.00 100.00 100.00 81.63 100.00 50.95 100.00 100.00 1.00 (Note 5) 72.55 (Note 1) 100.00 (Note 1) - 85.03 (Note 2) 82.32 (Note 3) 100.00 (Note 4) 100.00 (Note 4) 100.00 (Note 4) 100.00 (Note 4) (Continued) 216 Investor Investee Main Business Cogne U.K. Limited Sale of stainless steel Cogne Stainless Bars SA Manufacture and sale of stainless steel Cogne Mexico Sociedad Anonima de Capital Manufacture and sale of stainless steel Variable Metalinox Cogne Acos Inoxidaveis Especiais Sale of stainless steel Ltda Cogne Speciality Steel USA, Inc. Sale of stainless steel Cogne Celik Sanayi ve Ticaret Limited Şirketi Sale of stainless steel Dong Guan Cogne Steel Products Co., Ltd. Manufacture and sale of stainless steel Special Melted Products Limited Manufacture and sale of high-quality special Degerfors Long Products AB Sale of special steel steels and nickel-based alloys Cogne Edelstahl Gmbh EMB GmbH Edelstahl & Metallhandel - Sale of stainless steel Beratung & Service Cogne Hong Kong Dong Guan Cogne Steel Products Co., Ltd. Manufacture and sale of stainless steel Limited Cogne Stainless Bars Aosta Servizi Generali S.r.l. Machinery and Electrical maintenance SA Cogne Mexico Sociedad Anonima de Capital Manufacture and sale of stainless steel Variable PT. Walsin Nickel PT. Walhsu Metal Industry Manufacture and sale of nickel matte Industrial Indonesia PT. Sunny Metal PT. Walhsu Metal Industry Manufacture and sale of nickel matte Industry Percentage of Ownership (%) December 31 2023 100.00 100.00 82.53 (Note 10) 100.00 100.00 100.00 100.00 (Note 11) 100.00 (Note 9) 100.00 (Note 9) - (Note 12) - (Note 11) 100.00 0.02 (Note 10) 0.10 (Note 8) 99.90 (Note 8) 2022 100.00 (Note 4) 100.00 (Note 4) 99.00 (Note 4) 100.00 (Note 4) 100.00 (Note 4) 100.00 (Note 4) - - - 100.00 (Note 4) 100.00 (Note 4) 100.00 (Note 4) 1.00 (Note 4) - - (Concluded) Note 1: On May 24, 2022, WLC’s board of directors resolved to establish Walsin America, LLC. After the Group’s organizational restructuring, Walsin America, LLC acquired 72.55% shares of Borrego Energy Holdings, LLC’s shares. Borrego Energy Holdings, LLC owns 100% of Borrego Energy Holdings, LLC’s shares. Due to the adjustment of the investment structure of the Group, Walsin America, LLC was transferred from WLHL to WLC in December 2022. Note 2: On May 31, 2022, WLC’s board of directors resolved to establish Walsin Lihwa Europe S.a r.l. and Walsin Lihwa Europe S.a r.l. acquired 85.03% shares of Luxembourg MEG S.A. On May 5, 2023, WLC’s board of directors approved to increase capital in cash of MEG S.A., and the capital increase base date was August 30, 2023. The Group subscribed for additional new shares at a percentage different from its existing ownership percentage, resulting in an increase in the continuing interest rate from 85.03% to 90.21%. Note 3: On May 31, 2022, WLC’s board of directors resolved that Luxembourg MEG S.A. acquired 82.32% shares of Cogne Acciai Speciali S.p.A. On May 5, 2023, WLC’s board of directors approved to increase capital in cash of Cogne Acciai Speciali S.p.A., and the capital increase base date was September 18, 2023. MEG S.A. subscribed for additional new shares at a percentage different from its existing ownership percentage, resulting in a decrease in the continuing interest rate from 82.32% to 77.60%. Note 4: The subsidiaries of Cogne Acciai Speciali S.p.A. were merged into the Group in November 2022 through the above-mentioned business combination. Note 5: The Group established PT. Walsin Research Innovation Indonesia on August 23, 2022, and injected capital on November 9, 2022. On February 24, 2023, WLC’s board of directors approved to increase capital in cash of PT. Walsin Research Innovation Indonesia, and the capital increase base date was on May 22, 2023. 217 Financial Information Note 6: On September 23, 2022, the Group acquired 50.10% shares of PT. Sunny Metal Industry from Ever Rising Limited and Berg Holding Limited at the price of US$200,000 thousand. On November 4, 2022, WLC’s board of directors resolved to transfer PT. Sunny Metal Industry to Walsin Singapore Pte. Ltd. Note 7: The Group established Walsin Energy Cable System Co., Ltd. on February 13, 2023. On February 24, 2023, WLC’s board of directors approved to increase capital in cash of Walsin Energy Cable System Co., Ltd., and the capital increase base date was on May 23, 2023. The Group did not subscribe according to the shareholding proportion, resulting in a decrease in the shareholding percentage from 100.00% to 90.00%. Note 8: The Group established PT. Walhsu Metal Industry on May 23, 2023, and injected capital on June 5, 2023. Note 9: Cogne Acciai Speciali S.p.A. acquired 100.00% shares of Degerfors Long Products AB and Special Melted Products Ltd. in 2023. Please refer to Note 33. Note 10: On April 13, 2023, the board of directors approved to increase capital in cash of Cogne Mexico Sociedad Anonima de Capital Variable, and the capital increase base date was on August 14, 2023. The Group did not subscribe according to the shareholding proportion, resulting in a decrease in the shareholding percentage from 100.00% to 82.55% Note 11: Due to the adjustment of the investment structure of the Group, it was transferred from Cogne Hong Kong Limited to Cogne Acciai Speciali S.p.A in May 2023. Note 12: In January 2023, Cogne Edelstahl Gmbh merged EMB GmbH Edelstahl & Metallhandel - Beratung & Service through absorption. Note 13: The Group established Cleanleaf Energy Holdings, Inc. on September 14, 2023. As of December 31, 2023, the capital injection had not been completed. b. The following entity was excluded from consolidation as of December 31, 2023 and 2022: Investor Investee Main Business WLHL Walcom Chemicals Industrial Commerce Limited Percentage of Ownership (%) December 31 2023 65.00 2022 Note 65.00 Note Note: The investee has a capital of HK$500 thousand and total assets of HK$1 thousand. As of December 31, 2023 and 2022, the investee had no sales, and its total assets were less than 1% of the Group’s consolidated total assets. The financial statements of certain subsidiaries included in the consolidated financial statements, namely P.T. Walsin Lippo Industries, Walsin Precision Technology Sdn, Bhd., Cogne Acciai Speciali S.p.A. and subsidiaries, and Walsin America LLC’s subsidiary Borrego Energy Holdings, LLC for the years ended December 31, 2023 and 2022 were not audited by the auditor of WLC but by other auditors. As of December 31, 2023 and 2022, the combined total assets of those subsidiaries were NT$38,396,983 thousand and NT$27,113,218 thousand, respectively; for the years ended December 31, 2023 and 2022, the combined net operating 218 revenues of these subsidiaries were NT$34,331,965 thousand and NT$3,409,851 thousand, respectively. 16. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD Investments in associates: December 31 2023 2022 Carrying Amount Ownership Percentage (%) Carrying Amount Ownership Percentage (%) $ 20,335,573 21.99 $ 20,953,105 22.21 2,230,609 8,631,671 21.17 18.30 2,109,400 8,147,080 21.01 18.30 Name of Associate Material associates Winbond Electronics Corp. Walton Advanced Engineering, Inc. Walsin Technology Corp. Associates that are not individually material Others 18,442,318 14,979,814 $ 49,640,171 $ 46,189,399 Refer to Table 8 “Information on Investees” and Table 9 “Information on Investments in Mainland China” for the nature of activities, principal places of business and countries of incorporation of the associates. The Group is the single largest shareholder of the abovementioned material associates in which the Group has an ownership percentage of less than 50%. Considering the relative size and wide dispersion of the voting rights owned by other shareholders, the Group has no ability to direct the relevant activities of the associates and therefore has no control over these associates. Fair values (Level 1) of investments in associates with available published price quotation are summarized as follows: Name of Associate Winbond Electronics Corp. Walton Advanced Engineering, Inc. Walsin Technology Corp. December 31 2023 2022 $ 27,995,121 $ 1,671,833 $ 10,934,986 $ 17,323,429 $ 1,244,282 $ 7,023,284 All the associates were accounted for using the equity method. The Group’s share of profit and other comprehensive income of associates for the years ended December 31, 2023 and 2022 were based on the associates’ financial statements audited by independent auditors for the same period. 219 Financial Information a. Material associates December 31, 2023 Winbond Electronics Corp. Walton Advanced Engineering, Inc. Walsin Technology Corp. Current assets Non-current assets Current liabilities Non-current liabilities Equity Non-controlling interests $ 66,505,389 124,282,555 $ (36,032,759) (54,295,007) 100,460,178 (8,163,361) 5,910,245 11,394,115 (3,608,250) (3,069,785) 10,626,325 $ 38,015,600 56,427,628 (25,474,021) (12,353,431) 56,615,776 (10,036,131) (92,257) $ 92,296,817 $ 10,534,068 $ 46,579,645 Proportion of the Group’s ownership 21.99% 21.17% 18.30% Equity attributable to the Group Other adjustments $ 20,296,070 39,503 $ 2,230,062 547 $ 8,524,075 107,596 Carrying amount $ 20,335,573 $ 2,230,609 $ 8,631,671 Operating revenue $ 75,006,078 $ 7,276,069 $ 32,797,671 Net profit for the year Other comprehensive income (loss) $ 34,449 (1,304,665) $ (112,652) $ 601,516 2,657,922 1,555,362 Total comprehensive income for the year $ (1,270,216) $ 488,864 $ 4,213,284 December 31, 2022 Winbond Electronics Corp. Walton Advanced Engineering, Inc. Walsin Technology Corp. Current assets Non-current assets Current liabilities Non-current liabilities Equity Non-controlling interests $ 68,537,523 115,627,470 $ (27,776,754) (53,654,523) 102,733,716 (8,570,720) 8,080,399 11,240,954 (5,110,938) (3,970,323) 10,240,092 $ 42,078,074 49,653,421 (19,230,081) (18,917,380) 53,584,034 (9,303,110) (200,109) $ 94,162,996 $ 10,039,983 $ 44,280,924 (Continued) 220 Winbond Electronics Corp. Walton Advanced Engineering, Inc. Walsin Technology Corp. Proportion of the Group’s ownership 22.21% 21.01% 18.30% Equity attributable to the Group Other adjustments $ 20,913,601 39,504 $ 2,109,400 - $ 8,103,409 43,671 Carrying amount $ 20,953,105 $ 2,109,400 $ 8,147,080 Operating revenue $ 94,529,790 $ 9,506,348 $ 35,297,163 Net profit for the year Other comprehensive income (loss) $ 14,986,552 2,717,903 $ 156,098 (1,186,315) $ 2,295,275 218,387 Total comprehensive income for the year $ 17,704,455 $ (1,030,217) $ 2,513,662 (Concluded) b. Associates that are not individually material For the Year Ended December 31 2023 2022 The Group’s share of: Net profit from continuing operations Other comprehensive (loss) income $ 361,594 1,059,418 $ 389,057 (893,111) Total comprehensive income for the year $ 1,421,012 $ (504,054) In December 2023, WLC’s board of directors resolved that the subsidiary Dongguan Walsin Wire & Cable Co., Ltd. acquired 60% shares of the associate Hangzhou Walsin Power Cable & Wire Co., Ltd. at a consideration of RMB310,864 thousand. This transaction will cause the Group to increase its shareholding percentage in Hangzhou Walsin Power Cable & Wire Co., Ltd. from 40% to 100%, and the relationship with the Group will change from associate to subsidiary. As of the issuance date of the consolidated financial report, the transaction has not yet been completed. The Group’s shares of profit and other comprehensive income of the associates for the years ended December 2023 and 2022 were based on the associates’ financial statements audited by independent auditors for the same period. PT. Westrong Metal Industry and PT. CNGR Walsin New Energy and Technology Indonesia for the year ended 2022 were not audited by the auditor of WLC but by other auditors. As of December 31, 2022, the carrying amount of investments accounted for using the equity method was NT$4,869,105 thousand; for the year ended 2022, the amount of the share of loss was NT$313 thousand. 221 Financial Information 17. PROPERTY, PLANT AND EQUIPMENT December 31 2023 2022 Assets used by the Group $ 78,154,936 $ 65,656,466 Land Buildings and Improvements Machinery and Equipment Other Equipment Construction in Progress Total Cost Balance at January 1, 2023 Additions Disposals Acquisition through business combinations Reclassified Transfers to investment properties Effects of foreign currency exchange differences $ 3,776,670 207,703 - $ 22,865,186 205,834 (14,619 ) $ 50,428,862 1,327,378 (297,804 ) $ 8,607,005 282,805 (212,726 ) $ 23,862,639 15,148,027 (6,215 ) $ 109,540,362 17,171,747 (531,364 ) 2,169 12,652 - 1,112,763 6,328,748 - 664,434 13,345,299 - 35,147 3,423,208 (4,558 ) 88,900 (23,251,543 ) - 1,903,413 (141,636 ) (4,558 ) 1,191 (229,104 ) 304,032 (127,037 ) 105,959 55,041 Balance at December 31, 2023 $ 4,000,385 $ 30,268,808 $ 65,772,201 $ 12,003,844 $ 15,947,767 $ 127,993,005 Accumulated depreciation and impairment Balance at January 1, 2023 Depreciation expenses Capitalized depreciation expense Disposals Reclassified Impairment losses recognized Effects of foreign currency exchange differences $ $ 8,067 - - - - - 9,790,075 1,215,719 - (10,909 ) - - $ 28,172,188 4,262,838 123 $ (270,836 ) (328 ) 93 $ 5,913,566 724,009 45 (205,783 ) (19,664 ) 43 - (11,775 ) 335,293 (64,695 ) Balance at December 31, 2023 $ 8,067 $ 10,983,110 $ 32,499,371 $ 6,347,521 $ - - - - - - - - $ 43,883,896 6,202,566 168 (487,528 ) (19,992 ) 136 258,823 $ 49,838,069 Carrying amount at December 31, 2023 Cost Balance at January 1, 2022 Additions Disposals Acquisition through business combination Reclassified Transfers from (to) investment properties Transfers from inventories Effects of foreign currency exchange differences $ 3,992,318 $ 19,285,698 $ 33,272,830 $ 5,656,323 $ 15,947,767 $ 78,154,936 $ 3,611,025 80,867 (50,357 ) $ 18,671,274 38,133 (12,016 ) $ 34,969,055 456,243 (294,063 ) $ 7,783,638 558,271 (208,508 ) $ 6,305,375 12,079,434 (401 ) $ 71,340,367 13,212,948 (565,345 ) 27,303 107,209 - - 2,117,040 316,857 87,958 1,291,378 11,468,941 2,574,412 - - 126,563 429,784 (100,679 ) - 8,905,089 (3,428,262 ) 22,644,936 - - - (12,721 ) 1,291,378 623 354,562 1,254,274 17,936 1,404 1,628,799 Balance at December 31, 2022 $ 3,776,670 $ 22,865,186 $ 50,428,862 $ 8,607,005 $ 23,862,639 $ 109,540,362 Accumulated depreciation and impairment Balance at January 1, 2022 Depreciation expenses Disposals Reclassified Impairment losses reversed Transfers from (to) investment properties Acquisition through business combination Effects of foreign currency exchange differences $ 8,067 - - - - - - - $ 7,102,766 879,711 (9,863 ) 156,976 - 5,223 $ $ 17,527,744 2,423,403 (273,116 ) (344,870 ) (111 ) 5,227,302 589,329 (196,262 ) 187,894 (44 ) $ - (17,082 ) 1,566,907 8,513,323 88,355 325,815 70,907 51,522 Balance at December 31, 2022 $ 8,067 $ 9,790,075 $ 28,172,188 $ 5,913,566 $ - - - - - - - - - $ 29,865,879 3,892,443 (479,241 ) - (155 ) (11,859 ) 10,151,137 465,692 $ 43,883,896 Carrying amount at December 31, 2022 $ 3,768,603 $ 13,075,111 $ 22,256,674 $ 2,693,439 $ 23,862,639 $ 65,656,466 222 a. Apart from the machinery equipment of Resource Department which is depreciated on an accelerated basis over their estimated useful lives for 16 years, the property, plant and equipment of the Group are depreciated on a straight-line basis over their estimated useful lives as follows: Buildings and improvements Machinery and equipment Other equipment 3-50 years 3-20 years 3-15 years The Group’s main buildings and electrical and mechanical power equipment are depreciated over their estimated useful lives of 20-50 years and 18-20 years, respectively. b. The Group owns parcels of land which were registered in the name of certain individuals because of certain regulatory restrictions. To secure its ownership of such parcels of land, WLC keeps in its possession the land titles with the annotation of the land being pledged to WLC. As of December 31, 2023 and 2022, the recorded total carrying amount of such parcels of land amounted to NT$491,917 thousand. c. After appropriate evaluation, the Group recognized an impairment loss on property, plant and equipment of NT$136 thousand for the year ended December 31, 2023, and a reversal of impairment loss on property, plant and equipment of NT$155 thousand for the year ended December 31, 2022. 18. LEASE ARRANGEMENTS a. Right-of-use assets Carrying amounts Land Buildings Machinery equipment Office equipment Transportation equipment December 31 2023 2022 $ 3,389,816 526,343 710,189 58,177 34,518 $ 3,443,726 506,666 263,942 61,617 33,404 $ 4,719,043 $ 4,309,355 For the Year Ended December 31 2023 2022 Additions to right-of-use assets Acquisition through business combination Disposals $ $ $ 555,761 53,822 (24,196) $ 1,751,920 933,182 $ (48,913) $ Depreciation charge for right-of-use assets Land Buildings $ 157,629 95,885 $ 115,110 61,748 (Continued) 223 Financial Information Machinery equipment Office equipment Transportation equipment b. Lease liabilities Carrying amounts Current Non-current For the Year Ended December 31 2023 2022 60,308 20,217 15,382 3,357 762 18,211 $ 349,421 $ 199,188 (Concluded) December 31 2023 2022 257,859 $ $ 2,765,167 245,223 $ $ 2,309,732 Range of discount rates for lease liabilities was as follows: Land Buildings Machinery equipment Office equipment Transportation equipment c. Other lease information December 31 2023 2022 0.83%-6.123% 0.83%-6.123% 1.198%-8.00% 3.00%-3.90% 3.00%-3.90% 1.964%-3.44% 1.964%-5.75% 0.83%-8.76% 3.00%-3.90% 3.00%-3.90% For the Year Ended December 31 2023 2022 Expenses relating to short-term leases Expenses relating to low-value asset leases Expenses relating to variable lease payments not included in the measurement of lease liabilities Total cash outflow for leases $ 83,990 1,145 $ $ 52,133 936 $ $ 4,992 $ (398,874) $ 9,052 $ (182,746) 19. INVESTMENT PROPERTIES Completed investment properties $ 15,514,751 $ 16,123,806 December 31 2023 2022 224 Cost Balance at January 1, 2023 Transfers from property, plant and equipments Transfers to inventories Effects of foreign currency exchange differences Balance at December 31, 2023 Balance at January 1, 2022 Additions Transfers from property, plant and equipment Others Transferred from inventories Effects of foreign currency exchange differences Balance at December 31, 2022 Accumulated depreciation and impairment Balance at January 1, 2023 Depreciation expenses Effects of foreign currency exchange differences Balance at December 31, 2023 Balance at January 1, 2022 Depreciation expenses Transfers from property, plant and equipment Others Effects of foreign currency exchange differences Balance at December 31, 2022 Completed Investment Properties $ 19,078,843 4,558 (34,586) (140,232) $ 18,908,583 $ 12,991,354 182 12,721 72,339 5,968,587 33,660 $ 19,078,843 $ 2,955,037 464,119 (25,324) $ 3,393,832 $ 2,560,291 294,016 11,859 76,950 11,921 $ 2,955,037 (Concluded) The completed investment properties are depreciated on a straight-line method over their estimated useful lives of 20 to 50 years. The investment properties of the Group increased because the Group changed the purpose of use of the completed commercial building of Walsin (Nanjing) Development Co., Ltd. and transferred it to investment property. The main investment properties of the Group are Walsin Xin Yi Building and the completed investment properties of Walsin (Nanjing) Development Co., Ltd. The building’s valuation was commissioned by independent appraisal agencies (third parties). As of December 31, 2023 and 2022, the fair values of the investment properties were NT$46,171,839 thousand and NT$45,032,010 thousand, respectively. 225 Financial Information 20. GOODWILL Cost Balance at January 1 Acquisition through business combination Disposal of subsidiary (Note 34) Effects of foreign currency exchange differences Balance at December 31 Accumulated impairment Balance at January 1 Balance at December 31 For the Year Ended December 31 2023 2022 $ $ 286,139 3,900,572 - (28,834) 152,771 295,178 (157,359) (4,451) $ 4,157,877 $ 286,139 $ $ - - $ $ - - Carrying amount at December 31 $ 4,157,877 $ 286,139 The Group acquired Special Melted Products Ltd. on September 19, 2023 and recognized the provisionally determined goodwill of NT$3,900,572 thousand. As of the date of issuance of the consolidated financial statements, the purchase price allocation report has not been finalized. The amount may change afterward. Please refer to Note 33. The Group acquired PT. Sunny Metal Industry on September 23, 2022 and recognized the goodwill of NT$295,178 thousand. Please refer to Note 33. The Group adjusted the initial accounting treatment and provisionally determined amounts from the acquisition date based on the finalized purchase price allocation report in 2023. The comparative period amount was restated accordingly. The adjustments to the Group’s balance sheet items are as follows: December 31, 2022 Amount Before Restatement Adjustment Restated Goodwill 83,393 Other intangible assets-supply contract $ 2,734,203 Other intangible assets-core technology $ 1,922,845 Deferred tax liabilities Non-controlling interests $ 286,139 $ 5,161,890 $ 3,665,300 $ (5,797,938) $ $ (5,782,915) $ (6,240,336) $ (4,387,911) $ (10,628,247) $ 202,746 $ 2,427,687 $ 1,742,455 15,023 $ 226 The adjustments to the Group’s statements of comprehensive income items are as follows: The Effects on Comprehensive Income Amount Before Restatement Adjustment Restated For the Year Ended December 31, 2022 Exchange differences on translation of the financial statement of foreign operations 21. OTHER INTANGIBLE ASSETS $ 1,757,704 $ (148,572) $ 1,609,132 Supply Contract Core Technology Others Total Cost Balance at January 1, 2023 Additions Acquisitions through business combination Effect of foreign currency exchange differences $ 5,161,890 - $ 3,665,300 - $ 873,664 37,599 $ 9,700,854 37,599 - - 18,820 (840) (597) 28,610 18,820 27,173 Balance at December 31, 2023 $ 5,161,050 $ 3,664,703 $ 958,693 $ 9,784,446 Accumulated amortization and impairment Balance at January 1, 2023 Amortization expenses Effect of foreign currency exchange differences $ - 627,287 $ - 432,015 $ 647,571 72,521 647,571 $ 1,131,823 (9,041) (6,226) 22,500 7,233 Balance at December 31, 2023 $ 618,246 $ 425,789 $ 742,592 $ 1,786,627 Carrying amount at December 31, 2023 Cost $ 4,542,804 $ 3,238,914 $ 216,101 $ 7,997,819 Balance at January 1, 2022 Additions Acquisitions through business $ $ - - $ - - 69,229 153,868 $ 69,229 153,868 combination Disposals Effect of foreign currency exchange differences 5,336,699 - 3,789,426 - 630,172 (1,524) 9,756,297 (1,524) (174,809) (124,126) 21,919 (277,016) Balance at December 31, 2022 $ 5,161,890 $ 3,665,300 $ 873,664 $ 9,700,854 (Continued) 227 Financial Information Supply Contract Core Technology Others Total Accumulated amortization and impairment Balance at January 1, 2022 Amortization expenses Acquisitions through business $ combination Disposals Effect of foreign currency exchange differences $ - - - - - - - - - - $ 48,570 40,708 $ 48,570 40,708 545,096 (1,524) 545,096 (1,524) 14,721 14,721 Balance at December 31, 2022 $ - $ - $ 647,571 $ 647,571 Carrying amount at December 31, 2022 $ 5,161,890 $ 3,665,300 $ 226,093 $ 9,053,283 (Concluded) a. The Group acquired PT. Sunny Metal Industry on September 23, 2022. According to the finalized purchase price allocation report being issued in the third quarter of 2023, the Group restated the comparative period amount and recognized the supply contract and core technology of NT$5,336,699 thousand and NT$3,789,426 thousand, respectively. Please refer to Note 33. b. Except for the above description and the recognition of amortization expenses, there were no significant additions, disposals or impairments of other intangible assets of the Group for the nine months ended December 31, 2023 and 2022. c. The supply contract and core technology generated by PT. Sunny Metal Industry are amortized on an accelerated basis over 8 years and 16 years, respectively. d. Apart from stated above, the other intangible assets of the Group are amortized on a straight-line basis over 5-18 years. 22. OTHER ASSETS Prepayment for purchases Prepaid expense Prepaid sales tax Prepayment for investments Others 228 December 31 2023 2022 $ 3,012,629 669,186 1,615,043 1,334,026 921,291 $ 3,694,957 999,406 3,142,781 2,204,073 756,197 $ 7,552,175 $ 10,797,414 (Continued) Current Non-current 23. BORROWINGS Short-term borrowings Current portion of long-term borrowings Long-term borrowings Long-term notes and bills payable December 31 2023 2022 $ 5,377,850 2,174,325 $ 7,880,887 2,916,527 $ 7,552,175 $ 10,797,414 (Concluded) December 31 2023 2022 $ 11,508,074 $ 1,538,480 $ 31,924,532 $ 2,998,822 $ 17,120,571 $ 1,109,049 $ 40,820,860 $ 1,497,914 a. Short-term borrowings as of December 31, 2023 and 2022 were as follows: December 31 2023 2022 Interest Rate % Amount Interest Rate % Amount 0.86-7.60 - $ 11,490,666 - 0.95-6.42 1.25-2.20 $ 15,566,558 1,554,013 1.98 17,408 - - Bank lines of credit Discounted notes receivable Transferred receivables $ 11,508,074 $ 17,120,571 Notes receivable financing is based on notes receivable of the Group which are used to apply for a discounted loan. Refer to Note 39 for the amount of discounted notes receivable and relevant terms with recourse rights. Refer to Note 39 for transferred receivables which were secured by a portion of the Group’s trade receivables. Refer to Notes 6 and 39 for collaterals pledged for short-term borrowings as of December 31, 2023 and 2022. 229 Financial Information b. Long-term borrowings as of December 31, 2023 and 2022 were as follows: Long-term secured loan Cathay United Bank December 31 2023 Significant Covenant Amount 2022 Amount From December 15, 2011 to September 27, 2027; after the grace period, repayments are due monthly $ 179,177 $ 233,439 Taipei Fubon Commercial Bank From December 25, 2013 to October 11, 2028; after Other long-term secured loan Long-term credit loan The Export-Import Bank of the Republic of China the grace period, repayments are due in stages From January 12, 2019 to December 18, 2030; repayments are due according to contracts Loan from December 4, 2020 to December 4, 2027; principal to be repaid evenly in seven phases; 1st repayment is due 48 months after the drawdown date, after which repayments are due once every six months 38,033 56,237 67,375 78,365 273,447 379,179 1,137,770 1,137,770 Bank of Taiwan From September 22, 2020 to October 4, 2027; 9,000,000 9,000,000 Taiwan Cooperative Bank From June 28, 2021 to June 28, 2026; principal to 2,000,000 2,000,000 principal to be repaid in two phases: From the 5th year, repayments are due once every six months; at rates of 20% and 80%, respectively be repaid in two phases: 1st repayment due 48 months after the drawdown date, 2nd repayment due maturity date DBS Bank Principal repayment at maturity, from March 30, - 7,552,100 Hua Nan Commercial Bank Chinatrust Commercial Bank Taiwan Cooperative Bank Far Eastern International Bank KGI Bank 2020 to April 15, 2025 From March 29, 2021 to March 29, 2026; principal to be repaid in two phases: From the 5th year, repayments are due once every six months Principal repayment at maturity, from October 4, 2022 to October 3, 2025 From October 4, 2022 to October 4, 2027; principal to be repaid in two phases: 1st repayment due 48 months after the drawdown date, 2nd repayment due maturity date Loan from October 21, 2022 to October 14, 2027; principal to be repaid evenly in three phases; 1st repayment is due 48 months after the signing date, after which repayments are due once every six months Principal repayment at maturity, from October 24, 2022 to April 24, 2027 Standard Chartered Bank Principal repayment at maturity, from November 16, 2022 to December 31, 2024 2,000,000 2,000,000 - 1,500,000 3,000,000 3,000,000 2,000,000 500,000 - - 1,500,000 1,555,400 Hua Nan Commercial Bank Principal repayment at maturity, from March 8, 2,500,000 2,500,000 2022 to March 28, 2027 Agricultural Bank of Taiwan Principal repayment at maturity, from October 31, - 1,000,000 2022 to October 31, 2025 Chang Hwa Commercial Bank Principal repayment at maturity, from March 8, 2,000,000 3,000,000 Bank of Taiwan 2022 to March 8, 2027 Loan from June 13, 2023 to June 13, 2030; principal to be repaid evenly in forty-eight phases; 1st repayment is due 36 months after the drawdown date. 1,799,194 Chinatrust Commercial Bank Principal repayment at maturity, from August 15, 134,484 2023 to September 22, 2026 - - (Continued) 230 December 31 2023 Significant Covenant Amount 2022 Amount Intesa Sanpaolo S.p.A Principal repayment at maturity, from December 30, $ 2,486,656 $ 1,007,776 Other long-term credit loans 2019 to June 30, 2028 Principal repayments are due according to contracts, from November 1, 2018 to November 15, 2033 5,131,461 4,297,684 Less: Current portion of long-term borrowings 33,189,565 33,463,012 (1,538,480) 41,550,730 41,929,909 (1,109,049) $ 31,924,532 $ 40,820,860 (Concluded) 1) Under the loan agreements with DBS Bank, WLC should maintain certain financial ratios during the loan term, which are based on the annual and semi-annual consolidated financial statements audited by the independent auditors. The financial ratios are as follows: a) Ratio of current assets to current liabilities not less than 100%; b) Ratio of total liabilities less cash and cash equivalents to tangible net worth not more than 120%; c) Ratio of Interest Coverage Ratio which included net income before interest expenses, taxation, depreciation and amortization to interest expenses not less than 150%; and d) Tangible net worth (net worth less intangible assets) not less than NT$55,000,000 thousand. 2) As of December 31, 2023 and 2022, the effective interest rate ranges of the credit borrowings were 0.10%-8.00% and 0.10%-5.56% per annum, respectively. As of December 31, 2023 and 2022, the effective interest rate ranges of the secured borrowings were 2.15%-6.20% and 0.55%-4.70% per annum, respectively. 3) As of December 31, 2023 and 2022, the Group’s current portions of the long-term borrowings under the loan agreements were NT$1,538,480 thousand and NT$1,109,049 thousand, respectively. The Group’s consolidated financial statements for the years ended December 31, 2023 and 2022 showed that the Group was in compliance with the aforementioned financial ratio requirements. 4) Refer to Note 39 for collaterals pledged on bank borrowings as of December 31, 2023 and 2022. 231 Financial Information c. Long-term notes and bills payables as of December 31, 2023 and 2022 were as follows: December 31, 2023 Acceptance Agency Type Interest Rate Amount China Bills, Mega Bills and International Bills Less: Discount on long-term bills payable December 31, 2022 Unsecured 1.521-1.58 $ 3,000,000 (1,178) $ 2,998,822 Acceptance Agency Type Interest Rate Amount China Bills and International Bills Less: Discount on long-term bills payable Unsecured 1.395-1.50 $ 1,500,000 (2,086) 24. BONDS PAYABLE $ 1,497,914 December 31 2023 2022 Domestic unsecured bonds Overseas unsecured bonds Less: Current portion of long-term borrowings $ 12,800,000 253,345 (101,940) $ 7,500,000 341,115 (98,160) $ 12,951,405 $ 7,742,955 On October 8, 2021, WLC issued the first unsecured bond of 2021 at amount of NT$7.5 billion, each with a face value of NT$10 million. The issuance period is 5 years, and the annual rate is 0.7%. The maturity date is on October 8, 2026. Since the issuance date, the interest will be paid once a year, and the principal will be repaid once due. On April 11, 2023, the Company issued the first unsecured bond of 2023 at amount of NT$5.3 billion and were divided into A and B bonds according to different issuance conditions. The issuance amount of Bond A is NT$3 billion, and the issuance period is 5 years. The annual rate is 1.7%, and the maturity date is on April 11, 2028. The issuance amount of Bond B is NT$2.3 billion, and the issuance period is 10 years. The annual rate is 2.1%, and the maturity date is on April 11, 2033. The interest of the two bonds will be paid once a year, and the principal will be repaid at maturity. The overseas unsecured bonds were acquired through business combination and were issued on June 24, 2019 in the amount of EUR15,000 thousand, each with a face value of EUR100 thousand. The insurance period is 7 years, and the annual percentage rate is 3.5%. The maturity date is on June 24, 2026. Since the insurance date, the interest will be paid in half a year, and the principal will be repaid in 10 installments from the second year. 232 25. OTHER PAYABLES Payables for purchases of equipment Payables for salaries or bonuses Payables for dividends Other accrued expenses payables Other financing payables Other payables - other December 31 2023 2022 $ 3,436,394 1,001,161 3,586 4,942,356 2,628,672 57,627 $ 3,211,232 968,942 3,209 5,468,712 5,375,736 287,874 $ 12,069,796 $ 15,315,705 As of December 31, 2023 and 2022, the effective interest rate ranges of other financing payables of the subsidiary PT. Sunny Metal Industry were 6.83%-7.62% and 3.38%-5.21% respectively. 26. RETIREMENT BENEFIT PLANS a. Defined contribution plan WLC and its subsidiaries in the ROC adopted a pension plan under the Labor Pension Act (LPA), which is a state-managed defined contribution plan. Under the LPA, WLC and its subsidiaries in the ROC make monthly contributions to employees’ individual pension accounts at 6% of monthly salaries and wages. The Group recognized expenses of NT$114,765 thousand and NT$109,019 thousand for the years ended December 31, 2023 and 2022, respectively, which is based on the specified ratio in defined contributions plan. b. Defined benefit plans The defined benefit plans adopted by WLC in accordance with the Labor Standards Act are operated by the government of the ROC. Pension benefits are calculated on the basis of the length of service and average monthly salaries of the 6 months before retirement. WLC contributes amounts equal to 2% of total monthly salaries and wages to a pension fund administered by the pension fund monitoring committee. Pension contributions are deposited in the Bank of Taiwan in the committee’s name. Before the end of each year, the Group assesses the balance in the pension fund. If the amount of the balance in the pension fund is inadequate to pay retirement benefits for employees who conform to retirement requirements in the next year, the Group is required to fund the difference in one appropriation that should be made before the end of March of the next year. The pension fund is managed by the Bureau of Labor Funds, Ministry of Labor (the “Bureau”); the Group has no right to influence the investment policy and strategy. Cogne Acciai Speciali S.p.A. of the Group also adopts defined benefit plan. 233 Financial Information The amounts included in the consolidated balance sheets in respect of the Group’s defined benefit plans are as follows: December 31 2023 2022 Present value of defined benefit obligation Fair value of plan assets $ 1,293,149 (1,036,090) $ 1,332,167 (1,060,075) Net defined benefit liabilities $ 257,059 $ 272,092 Present Value of Defined Benefit Obligation Fair Value of Plan Assets Net Defined Benefit Liability (Asset) $ 1,487,554 $ (1,037,916) $ 449,638 10,455 9,721 20,176 - (6,442) (6,442) 10,455 3,279 13,734 - (82,973) (82,973) (63,850) - (63,850) (113,715) - (113,715) (177,565) - (119,731) (82,973) (52,475) 119,731 (260,538) (52,475) - 118,977 2,756 - - 1,332,167 (1,060,075) 120,194 15,119 135,313 - (13,317) (13,317) 118,977 2,756 272,092 120,194 1,802 121,996 - (9,604) (9,604) 119,409 - 119,409 119,409 - (298,379) 4,639 (9,604) (53,180) 100,086 - 109,805 (53,180) (198,293) 4,639 Balance at January 1, 2022 Service cost Current service cost Net interest expense (income) Recognized in profit or loss Remeasurement Return on plan assets (excluding amounts included in net interest) Actuarial gain - changes in financial assumptions Actuarial gain - experience adjustments Recognized in other comprehensive loss Contributions from the employer Benefits paid Acquisition of subsidiaries through business combination Exchange difference Balance at December 31, 2022 Service cost Current service cost Net interest expense (income) Recognized in profit or loss Remeasurement Return on plan assets (excluding amounts included in net interest) Actuarial loss - experience adjustments Recognized in other comprehensive loss Contributions from the employer Benefits paid Exchange difference Balance at December 31, 2023 $ 1,293,149 $ (1,036,090) $ 257,059 234 An analysis by function of the amounts recognized in profit or loss in respect of the defined benefit plans are as follows: Operating costs Selling and marketing expenses General and administrative expenses Research and development expenses For the Year Ended December 31 2023 2022 $ 87,335 7,623 26,923 115 $ 6,982 914 5,638 200 $ 121,996 $ 13,734 Through the defined benefit plans under the Labor Standards Act, the Group is exposed to the following risks: 1) Investment risk: The plan assets are invested in domestic and foreign equity and debt securities, bank deposits, etc. The investment is conducted at the discretion of the Bureau or under the mandated management. However, in accordance with relevant regulations, the return generated by plan assets shall not be below the interest rate for a 2-year time deposit with local banks. 2) Interest risk: A decrease in the government bond interest rate will increase the present value of the defined benefit obligation; however, this will be partially offset by an increase in the return on the plans’ debt investments. 3) Salary risk: The present value of the defined benefit obligation is calculated using the future salaries of plan participants. As such, an increase in the salaries of the plan participants will increase the present value of the defined benefit obligation. The actuarial valuations of the present value of the defined benefit obligation were carried out by qualified actuaries. The significant assumptions used for the purposes of the actuarial valuations were as follows: December 31 2023 2022 Discount rates Expected rates of salary increase 1.25%-3.10% 1.85%-2.25% 1.25%-3.00% 2.25%-2.80% If possible reasonable change in each of the significant actuarial assumptions occurs and all other assumptions remain constant, the present value of the defined benefit obligation will increase (decrease) as follows: Discount rates 0.5% increase 0.5% decrease December 31 2023 2022 $ (43,458) $ 46,068 $ (47,681) $ 50,683 (Continued) 235 Financial Information Expected rates of salary increase 0.5% increase 0.5% decrease December 31 2023 2022 $ 44,682 $ (42,588) $ 49,149 $ (46,718) (Concluded) The above sensitivity analysis may not be representative of the actual changes in the present value of the defined benefit obligation as it is unlikely that the changes in assumptions will occur in isolation of one another as some of the assumptions may be correlated. 27. EQUITY Share capital Ordinary shares Capital surplus Retained earnings Others Non-controlling interests a. Share capital Ordinary shares December 31 2023 2022 $ 40,313,329 33,624,917 60,590,617 6,281,452 13,638,998 $ 37,313,329 24,672,454 62,038,398 (443,305) 10,628,247 $ 154,449,313 $ 134,209,123 December 31 2023 2022 Number of authorized shares (in thousands) Amount of authorized shares Number of issued and fully paid shares (in thousands) Amount of issued shares 6,500,000 $ 65,000,000 4,031,333 $ 40,313,329 6,500,000 $ 65,000,000 3,731,333 $ 37,313,329 As of January 1, 2022, the balances of WLC’s capital account were NT$34,313,329 thousand, which consisted of 3,431,333 thousand shares at par value of NT$10. On June 6, 2022, WLC’s board of directors resolved to issue 300,000 thousand ordinary shares at a price of NT$33 per share with August 10, 2022 as the base date for capital increase. On July 21, 2022, WLC chairman adjusted the new share issuing price from NT$33 to NT$30. On May 29, 2023, WLC’s board of directors resolved to issue ordinary shares for cash to participate in the issuance of GDRs. On June 30, 2023, the Group issued 30,000 thousand units of GDRs on the Luxembourg Stock Exchange, with each unit representing 10 ordinary shares of WLC. This amounted to a total of 300,000 thousand shares with a unit price of 236 US$12.97, raising a total of US$389,100 thousand. As of December 31, 2023, the paid-in capital was NT$40,313,329 thousand, divided into 4,031,333 thousand ordinary shares at par value of NT$10. As of December 31, 2023, 30,002 thousand GDRs of WLC were traded on the Luxembourg Stock Exchange. The number of ordinary shares represented by the GDRs was 300,022 thousand shares (one GDR represents 10 ordinary shares). b. Capital surplus May be used to offset a deficit, distributed as cash dividend or transferred to share capital (Note) Issuance of ordinary shares The difference between the consideration received or paid and the carrying amount of the subsidiaries’ net assets during actual disposal or acquisition Share of changes in capital surplus of associates Treasury share transactions Gain on disposal of property, plant and equipment Others May only be used to offset a deficit Changes in percentage of ownership interests in subsidiaries December 31 2023 2022 $ 27,787,949 $ 18,864,452 2,130 434,243 2,254,074 2,074,231 1,045,560 2,130 441,175 2,254,074 2,074,231 1,036,392 26,730 - $ 33,624,917 $ 24,672,454 Note: The premium from shares issued in excess of par (share premium from issuance of ordinary shares, conversion of bonds and treasury share transactions) and donations may be used to offset a deficit; in addition, when the Group has no deficit, such capital surplus may be distributed as cash dividends or transferred to share capital (limited to a certain percentage of the Group’s capital surplus and to once a year).The capital surplus arises from changes in capital surplus of associates accounted for using the equity method, employee share options and share warrants may not be used for any purposes. c. Retained earnings and dividend policy Under the dividends policy where WLC made a profit in a fiscal year, the profit shall be first utilized for paying taxes, offsetting losses of previous years, setting aside as legal reserve 10% of the remaining profit this requirement is not applicable when the legal reserve has reached the total capital, and then any remaining profit together with prior unappropriated earnings shall be appropriated for special reserve or appropriate reversal of special reserve in accordance with the laws and regulations, and then the balance shall be used by WLC’s board of directors as the basis for proposing a distribution plan, which should be resolved in the shareholders’ meeting for the distribution of dividends to shareholders. If appropriated earnings are distributed in cash, the cash distribution shall be resolved by WLC’s board of directors and reported in the shareholders’ meeting. Other than the aforementioned 237 Financial Information regulations, the distribution shall be after deducting share of profit of associates accounted for using the equity method and adding cash dividends of associates accounted for using the equity method. WLC shall reserve no lesser than 40% of the balance amount as shareholders’ profit after offsetting its loss and tax payments in the previous year, capital reserve, and special reserve adjusted by the accumulated net deduction of other equity. The profits shall be distributed in cash or in form of shares; cash dividends shall not be lesser than 70% of the total dividends. Appropriation of earnings to the legal reserve shall be made until the legal reserve equals WLC’s paid-in capital. The legal reserve may be used to offset any deficits. If WLC has no deficit and the legal reserve has exceeded 25% of WLC’s paid-in capital, the excess may be transferred to capital or distributed in cash. Items referred to under Rule No. 1010012865, Rule No. 1010047490 and Rule No. 1030006415 issued by the FSC and in the directive titled “Questions and Answers for Special Reserves Appropriated Following Adoption of IFRSs” should be appropriated to or reversed from a special reserve by WLC. Refer to Note 29 for the policies on the distribution of employees’ compensation and remuneration of directors. The appropriation of earnings for 2021, which was approved in the shareholders’ meeting on May 13, 2022, was as follows: Legal reserve Cash dividends Appropriation of Earnings Dividends Per Share (NT$) $ 1,454,522 5,490,133 $ - 1.6 $ 6,944,655 The appropriations of earnings for 2023 and 2022 were as follows: Appropriation of Earnings Dividends Per Share (NT$) 2023 2022 2023 2022 Legal reserve Cash dividends 526,862 $ 4,434,466 $ 1,974,132 6,716,399 $ - 1.1 $ - 1.8 $ 4,961,328 $ 8,690,531 The above appropriations for cash dividends were approved by WLC’s board of directors on February 23, 2024 and February 24, 2024, and the other appropriations for 2022 were approved by the shareholders in the meeting on May 19, 2023. The other appropriations for 2023 are yet to be resolved at the shareholders’ meeting scheduled for May 17, 2024. d. Special reserve Special reserve $ 2,712,250 $ 2,712,250 December 31 2023 2022 238 Information regarding the above special reserve did not change for the years ended December 31, 2023 and 2022. e. Other equity items 1) Exchange differences on the translation of the financial statements of foreign operations For the Year Ended December 31 2023 2022 Balance at January 1 Share from subsidiaries and associates accounted $ (4,256,774) $ (6,100,687) for using the equity method (690,701) 1,843,913 Balance at December 31 $ (4,947,475) $ (4,256,774) Exchange differences relating to the translation of the results and net assets of the Group’s foreign operations from their functional currencies to the Group’s presentation currency (the New Taiwan dollar) were recognized directly in other comprehensive income and accumulated in the exchange differences on the translation of the financial statements of foreign operations. Exchange differences previously accumulated in the exchange differences on the translation of the financial statements of foreign operations were reclassified to profit or loss when disposing foreign operation. 2) Unrealized valuation gain (loss) on financial assets at FVOCI Balance at January 1 Unrealized gain (loss) - equity instruments Share from associates accounted for using the equity method Cumulative unrealized loss of equity instruments transferred to retained earnings due to disposal For the Year Ended December 31 2023 2022 $ 6,693,877 6,307,904 $ 11,534,267 (4,067,542) 1,271,548 (696,891) (204,652) (75,957) Balance at December 31 $ 14,068,677 $ 6,693,877 3) Loss on hedging instruments Cash flow hedges Balance at January 1 Loss on hedging instruments For the Year Ended December 31 2023 2022 $ (105,801) (40,701) $ - (105,801) Balance at December 31 $ (65,100) $ (105,801) 239 Financial Information 4) Other equity - others Balance at January 1 Originally recognized equity items arising from the acquisition of subsidiary equity instrument put options Other comprehensive loss from associates accounted for using the equity method For the Year Ended December 31 2023 2022 $ (2,774,607) $ (91,467) - (2,683,140) (43) - Balance at December 31 $ (2,774,650) $ (2,774,607) 28. OPERATING REVENUE Sales revenue Sales of real estate Other revenue For the Year Ended December 31 2023 2022 $ 184,438,249 58,663 5,342,714 $ 175,754,340 19,786 4,626,593 $ 189,839,626 $ 180,400,719 29. NET PROFIT FROM CONTINUING OPERATIONS a. Non-operating income and expense - gain (loss) on disposal of investments For the Year Ended December 31 2023 2022 Gain (loss) on disposal of investments - non-iron commodity futures $ 799,172 $ (646,558) (Loss) gain on disposal of investments - foreign exchange forward contracts Gain (loss) on disposal of investment - exchange rate swap contracts Loss on disposal of investment - future options Gain on disposals of investments - subsidiaries (89,402) 152,471 300,349 (44,205) - (169,573) (25,673) 7,899,376 $ 965,914 $ 7,210,043 240 b. Non-operating income and expense - impairment loss reversed (recognized) Impairment loss (recognized) reversed on property, plant and equipments Others For the Year Ended December 31 2023 2022 $ (136) 12,563 $ 155 (242) $ 12,427 $ (87) c. Non-operating income and expense - other revenue The Group sold its subsidiary Borrego Energy, LLC’s solar PV and energy storage procurement platform division for NT$816,840 thousand in 2023, and the gain of disposal was NT$528,226 thousand. After deducting related operating costs of NT$406,288 thousand, the total was NT$121,938 thousand, which was recognized as “other income”. d. Employee benefits expense, depreciation and amortization For the Year Ended December 31, 2023 Operating Costs Operating Expenses Non-operating Expenses and Losses Total Short-term employment benefits Post-employment benefits Other employee $ 5,273,501 $ 3,332,057 $ - $ 8,605,558 $ 294,417 $ 120,881 $ - $ 415,298 benefits $ 975,917 $ 416,686 $ - $ 1,392,603 Depreciation Property, plant and equipments Right-of-use assets Investment $ 5,535,465 195,826 $ 664,425 153,595 $ 2,676 - $ 6,202,566 349,421 properties 461,939 2,180 - 464,119 $ 6,193,230 $ 820,200 $ 2,676 $ 7,016,106 Amortization $ 1,117,481 $ 74,685 $ - $ 1,192,166 241 Financial Information For the Year Ended December 31, 2022 Operating Costs Operating Expenses Non-operating Expenses and Losses Total Short-term employment benefits Post-employment benefits Other employee $ 4,430,500 $ 2,906,207 $ - $ 7,336,707 $ 222,785 $ 108,317 $ - $ 331,102 benefits $ 674,335 $ 811,982 $ - $ 1,486,317 Depreciation Property, plant and equipments Right-of-use assets Investment $ 3,458,410 44,479 $ 431,174 154,709 $ 2,859 - $ 3,892,443 199,188 properties 291,837 2,179 - 294,016 $ 3,794,726 $ 588,062 $ 2,859 $ 4,385,647 Amortization $ 23,497 $ 42,158 $ - $ 65,655 e. Compensation of employees and remuneration of directors According to the Company’s Articles, the Company accrued employees’ compensation and remuneration of directors at rates of no less than 1% and no higher than 1%, respectively, of net profit before income tax, employees’ compensation, and remuneration of directors. For the years ended December 31, 2023 and 2022, the employees’ compensation amounted to NT$70,700 thousand and NT$252,000 thousand, respectively, and the remuneration of directors amounted to NT$30,000 thousand and NT$100,050 thousand, respectively. The compensation of employees and the remuneration of directors for the years ended December 31, 2023 and 2022 were approved by the Group’s board of directors on February 23, 2023 and February 24, 2023, respectively. Material differences between such estimated amounts and the amounts proposed by the board of directors on or before the issuance date of the annual consolidated financial statements are adjusted in the year the compensation and remuneration were recognized. If there is a change in the amounts after the issuance date of the annual consolidated financial statements, the differences will be recorded as a change in the accounting estimate in the next year. The employees’ compensation and the remuneration of directors for the years ended December 31, 2022 and 2021 resolved by WLC’s board of directors on February 24, 2023 and February 22, 2022, respectively are the same as the amounts recognized in the 2022 and 2021 consolidated financial statements. Information on the employees’ compensation and remuneration of directors resolved by WLC’s board of directors in 2024 and 2023 is available at the Market Observation Post System website of the Taiwan Stock Exchange. 242 30. INCOME TAXES RELATING TO CONTINUING OPERATIONS a. Income tax recognized in profit or loss Major components of income tax expense are as follows: Current tax In respect of the current year Unappropriated earnings Adjustments for prior year Land value-added tax Deferred tax In respect of the current year Adjustments for prior year For the Year Ended December 31 2023 2022 $ 1,207,290 306,498 (37,860) 2,978 1,478,906 $ 792,895 321,642 17,976 175,864 1,308,377 24,987 (6,745) 18,242 2,916,207 37,353 2,953,560 Income tax expense recognized in profit or loss $ 1,497,148 $ 4,261,937 A reconciliation of accounting profit and income tax expense is as follows: Profit before tax from continuing operations $ 7,438,398 $ 23,402,013 For the Year Ended December 31 2023 2022 Income tax expense calculated at the statutory rate Investment income accounted for using equity method Tax-exempt dividend income Loss on investments Others Unrecognized loss carryforwards/deductible temporary $ differences Adjustments for prior years’ tax Income tax on unappropriated earnings Land value-added tax 672,957 670,843 (102,248) - (41,708) $ 4,097,945 262,151 (183,234) (2,630) (58,684) 32,433 (44,605) 306,498 2,978 (406,446) 55,329 321,642 175,864 Income tax expense recognized in profit or loss $ 1,497,148 $ 4,261,937 b. Current tax assets and liabilities Current tax assets Tax refund receivable (recorded under other current and other non-current assets - others) $ 304,113 $ 397,168 Current tax liabilities Income tax payable $ 5,861,143 $ 6,103,462 December 31 2023 2022 243 Financial Information c. Deferred tax assets and liabilities Deferred tax assets Loss carryforwards Pension expense overlimit Unrealized loss on inventories write-down Loss on idle capacity Impairment loss on idle assets Unrealized deferred gross profit Unrealized impairment loss on long-term investments Difference between financial and tax accounting of the depreciation of property, plant and equipment Prepaid expense Loss on liquidation of investments Other Deferred tax liabilities Difference between financial and tax accounting of the depreciation of property, plant and equipment Provision for land value-added tax Unrealized gain on investments Others December 31 2023 2022 $ 1,863,709 14,337 124,673 21,234 - 3,290 7,000 $ 1,001,877 23,000 140,047 - 15,000 - 7,000 3,539 1,170,448 439,000 587,622 22,149 1,165,401 591,000 482,803 $ 4,234,852 $ 3,448,277 $ (66,337) (141,238) (6,049,964) (330,193) $ (81,836) (147,215) (5,364,542) (189,322) $ (6,587,732) $ (5,782,915) d. Deductible temporary differences and unused loss carryforwards for which no deferred tax assets have been recognized in the consolidated balance sheets were as follows: Loss Carryforwards Expiry in 2023 Expiry in 2024 Expiry in 2025 Expiry in 2026 Expiry in 2027 Expiry in 2028 December 31 2023 2022 $ - 3,832 3,187 5,931 24,479 6,560 98 3,898 3,439 6,032 24,897 - $ 43,989 $ 38,364 244 e. As of December 31, 2023, the Group’s tax loss carryforwards were as follows: Expiry Year 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 Indefinite Tax Loss Carryforwards $ 108,466 16,265 196,360 512,688 708,774 - - 3,342 11,324 12,234 338,245 $ 1,907,698 f. WLC’s income tax returns through 2020, have been assessed by the tax authorities. g. Pillar Two income tax legislation In July and December 2023, the governments of the United Kingdom, Luxembourg, Germany, France, Italy, South Korea and Malaysia, where part of WLC’s subsidiaries are registered, enacted the Pillar Two income tax legislation effective on January 1, 2024. Since the Pillar Two income tax legislation was not effective at the reporting date, the Group has no related current tax exposure. Under the legislation, part of WLC’s subsidiaries will be required to pay, in the United Kingdom, Luxembourg, Germany, France, Italy, South Korea and Malaysia, a top-up tax on the profits of its subsidiaries that are taxed at an effective tax rate of less than 15 percent. As of December 31, 2023, no country has yet implemented the Pillar Two income tax legislation, so there may not be a primary jurisdiction for the potential exposure to such income tax. The Group will continue to assess the impact of the Pillar Two income tax legislation on its future financial performance. 31. EARNINGS PER SHARE For the Year Ended December 31 2023 2022 Amounts (Numerator) After Income Tax (Attributable to Parent’s Shareholders) Shares (Denominator) (In Thousands) Earnings Per Share (In Dollars) After Income Tax (Attributable to Parent’s Shareholders) Amounts (Numerator) After Income Tax (Attributable to Parent’s Shareholders) Shares (Denominator) (In Thousands) Basic earnings per share Net income $ 5,134,316 3,883,388 $ 1.32 $ 19,352,097 3,549,689 Earnings Per Share (In Dollars) After Income Tax (Attributable to Parent’s Shareholders) $ 5.45 (Continued) 245 Financial Information For the Year Ended December 31 2023 2022 Amounts (Numerator) After Income Tax (Attributable to Parent’s Shareholders) Shares (Denominator) (In Thousands) Earnings Per Share (In Dollars) After Income Tax (Attributable to Parent’s Shareholders) Amounts (Numerator) After Income Tax (Attributable to Parent’s Shareholders) Earnings Per Share (In Dollars) After Income Tax (Attributable to Parent’s Shareholders) Shares (Denominator) (In Thousands) Effect of potentially dilutive ordinary shares Employees compensation - 2,500 - 5,690 $ 5,134,316 3,885,888 $ 1.32 $ 19,352,097 3,555,379 $ 5.44 (Concluded) 32. SHARE-BASED PAYMENT AGREEMENTS Employee Share Option Plan for Cash Capital Increase WLC was approved by the Securities and Futures Bureau (FSC) on March 11, 2022 to issue 300,000 thousand shares for cash capital increase. The board of directors resolved to retain 10% of the issued shares for employees’ subscription. The number of shares retained for employees’ subscription and the subscription price were confirmed on June 27, 2022. WLC recognized the capital surplus of NT$157,800 thousand on the grant date at the fair value computed based on the Black-Scholes option evaluation model. a. WLC used the Black-Scholes option evaluation model to calculate the fair value of employee subscriptions for cash capital increase on June 27, 2022. Relevant information is as follows: Share Price on the Grant Date (In Dollars) Exercise Price (In Dollars) Expected Ratio of Stock Price Fluctuation Expected Duration Expected Dividend Rate Risk - Free Interest Rate Fair Value Per Share (In Dollars) $37.45 $33 52.95% 38 days 0.00% 0.52% $5.26 b. In view of the dramatic changes in the capital market environment, in order to maintain the shareholders’ rights and ensure the completion of the fundraising, the chairman of the Company, authorized by the board of directors, adjusted the new share issuing price from NT$33 to NT$30 on July 21, 2022. In addition, due to the price adjustment, the remuneration cost of the relevant share-based payment agreement increased by NT$67,200 thousand. WLC used the Black-Scholes option evaluation model to calculate the fair value of employee as remeasurement cash capital increase subscriptions on July 21, 2022. Relevant information is as follows: Share Price on the Grant Date (In Dollars) Exercise Price (In Dollars) Expected Ratio of Stock Price Fluctuation Expected Duration Expected Dividend Rate Risk - Free Interest Rate Fair Value Per Share (In Dollars) $34.05 $30 54.13% 14 days 0.00% 0.72% $2.24 246 33. BUSINESS COMBINATIONS a. Subsidiaries acquired Subsidiary Principal Activity Proportion of Voting Equity Interests Acquired (%) Date of Acquisition Consideration Transferred Degerfors Long Products AB Special Melted Products Ltd. PT. Sunny Metal Industry MEG S.A. Manufacture and sale of stainless steel Manufacture and sale of stainless steel Manufacture and sale of nickel matte Manufacture and sale of stainless steel August 1, 2023 September 19, 2023 September 23, 2022 November 30, 2022 100.00 $ 182,129 100.00 $ 5,668,618 50.10 $ 6,057,005 85.03 $ 6,715,504 To create synergy from the acquired company’s products, technologies, market advantages and also for the purpose of expanding the stainless steel and nickel alloy business. Cogne Acciai Speciali S.p.A. acquired 100% of the shares of Degerfors Long Products AB and Special Melted Products Ltd. at a consideration of NT$182,129 thousand and NT$5,668,618 thousand on August 1, 2023, and September 19, 2023, respectively. To deploy new energy industry, the Group acquired PT. Sunny Metal Industry and increased its investment in Matte and Nickel Pig Iron to increase production capacity. To combine the acquired company’s products, technologies and market advantages and expand its stainless steel business, the Group acquired 85.03% of the shares of MEG S.A. at a consideration of $6,497,972 thousand on November 30, 2022 and held 82.32% of the shares of Cogne Acciai Speciali S.p.A. through MEG S.A. The Group finally held 70% of the shares of Cogne Acciai Speciali S.p.A. b. Consideration transferred Degerfors Long Products AB Special Melted Products Ltd. PT. Sunny Metal Industry MEG S.A. $ 182,129 $ 5,668,618 $ 6,057,005 $ 6,497,972 - - - - - - 355,089 (137,557) Cash Contingent consideration arrangement (Note 1) Issue option (Note 2) $ 182,129 $ 5,668,618 $ 6,057,005 $ 6,715,504 1) According to the agreement of acquisition, the Group is required to pay additional EUR15,000 thousand if MEG S.A.’s earnings before interest, tax, depreciation and amortization from the settlement date to 2025 exceed EUR180,000 thousand. Based on the results of the financial forecast, the management of the Group believes that it is probable to make this payment. The fair value of this obligation at the date of acquisition was 247 Financial Information estimated at $355,089 thousand. 2) According to the agreement of acquisition, the Group has the right to acquire the remaining equity interest from the minority shareholders for a period of 6.5 to 7 years from the settlement date. The fair value of this option at the acquisition date was estimated to be $137,557 thousand. c. Assets acquired and liabilities assumed at the date of acquisition Degerfors Long Products AB Special Melted Products Ltd. PT. Sunny Metal Industry MEG S.A. $ - $ 34,513 $ 103,771 $ 1,373,797 Current assets Cash and cash equivalents Financial asset at fair value through profit - current Hedging derivative financial assets - current Financial assets at amortised cost - current Net trade receivables Other receivables Inventories Other current assets Non-current assets Financial asset at fair value through profit - non-current Property, plant and equipment Right-of-use assets Other intangible assets Deferred tax assets Other non-current assets Current liabilities Short-term borrowings Financial liabilities at fair value through profit - current Hedging derivative financial liabilities - current Trade payables Other payables Current tax liabilities Lease liabilities - current Other current liabilities 248 - - - - 10,456 175,136 - 810,467 56,466 837,726 106,641 - 1,020,964 104,651 644,700 72,961 - - 4,904 29,021 1,603,712 2,153 6,455,973 - 9,550,240 648,923 - - - 71,200 545,318 4,254 - - 58 1,358,095 49,568 18,820 - 380,560 7,853,727 - 9,126,125 - - 4,640,072 933,182 85,076 137,536 15,494 (1,003,296) (587,375) (1,420,750) (442,193) (39,918) - (565,658) - - (2,586) (458,751) (49,493) (298,338) - - - (4,909) - (42,710) (232,779) (5,244,797) (3,885) (617,198) (5,610,735) - - (137,417) (2,480) (1,761,848) (Continued) - - - Degerfors Long Products AB Special Melted Products Ltd. PT. Sunny Metal Industry MEG S.A. Non-current liabilities Bonds payable Long-term payable Deferred tax liabilities Lease liabilities - non-current Defined benefit liabilities Other non-current liabilities - - (57,607) (1,681) - - - - - - - - - - (285,159) (3,347,986) (112,229) (118,866) - - - (710,774) (118,977) (14,515) $ 1,358,194 $ 1,768,047 $ 12,169,025 $10,276,084 (Concluded) The initial accounting for the acquisition of Degerfors Long Products AB and Special Melted Products Ltd. as of the balance sheet date was only provisionally determined. At the date of issuance of these consolidated financial statements, the necessary market valuations and other calculations have not been finalized. The amounts may change when the purchase price allocation report is issued. The purchase price allocation reports of PT. Sunny Metal Industry and MEG S.A. have been finalized before the date of issuance of these consolidated financial statements and therefore adjusted to the fair value as the tax value of the Company. (Gain on bargain purchase) goodwill recognized on acquisitions. Degerfors Long Products AB Special Melted Products Ltd. PT. Sunny Metal Industry MEG S.A. Consideration transferred Plus: $ 182,129 $ 5,668,618 $ 6,057,005 $ 6,715,504 - - 6,072,344 3,082,995 (1,358,194) (1,768,047) (12,169,025) (10,276,084) 7,379 1 334,854 138,059 Non-controllin g interests Less: Carrying value of identifiable net assets acquired Effects foreign currency exchange difference (Gain from bargain purchase) goodwill recognized on acquisitions $ (1,168,686) $ 3,900,572 $ 295,178 $ (339,526) 249 Financial Information The total amount of acquired goodwill is not tax-deductible, and the acquired gain from bargain purchases is recognized as other income. The non-controlling interests of PT. Sunny Metal Industry, NT$6,072,344 thousand, are measured by reference to the fair value of the non-controlling interest. The fair value is based on the proportion of the assets acquired and liabilities assumed at the date of acquisition. The non-controlling interests of MEG S.A., NT$3,082,995 thousand, are measured by reference to the fair value of the non-controlling interest. The fair value is based on the proportion of the assets acquired and liabilities assumed at the date of acquisition. e. Net cash outflow on the acquisition of subsidiaries Consideration paid in cash Less: Cash and cash equivalent balance acquired Degerfors Long Products AB Special Melted Products Ltd. PT. Sunny Metal Industry MEG S.A. $ 182,129 $ 5,668,618 $ 6,057,005 $ 6,497,972 - (34,513) (103,771) (1,373,797) $ 182,129 $ 5,634,105 $ 5,953,234 $ 5,124,175 f. Impact of acquisitions on the results of the Group The financial results of the acquirees since the acquisition dates, were as follows: Degerfors Long Products AB 2023.08.01- 2023.12.31 Special Melted Products Ltd. 2023.09.19- 2023.12.31 PT. Sunny Metal Industry MEG S.A. 2022.11.30- 2022.12.31 2022.09.23- 2022.12.31 Operating revenue Net profit (loss) $ 1,647,068 194,352 $ $ 1,147,085 327,113 $ $ $ - (14,280) $ 1,626,172 (273,406) $ Had Degerfors Long Products AB and Special Melted Products Ltd. concluded the acquisitions at the beginning of 2023, the Group’s revenue and profit for the years ended December 31, 2023 would have been NT$196,466,052 thousand and NT$6,059,573 thousand, respectively. This pro-forma information is for illustrative purposes only and is not necessarily an indication of the revenue and results of operations of the Group that actually would have been achieved had the acquisition been completed at the beginning of the acquisition year, 2023, nor is it intended to be a projection of future results. Had PT. Sunny Metal Industry and MEG S.A. concluded the acquisition at the beginning of 2022, the Group’s revenue and profit for the years ended December 31, 2022 would have been NT$210,605,160 thousand and NT$20,786,576 thousand, respectively. This pro-forma information is for illustrative purposes only and is not necessarily an indication of the revenue and results of operations of the Group that actually would have been achieved had the 250 acquisition been completed at the beginning of the acquisition year 2022, nor is it intended to be a projection of future results. 34. DISPOSAL OF SUBSIDIARIES The Group entered into a sale agreement with ECP (third party) to dispose of its subsidiary New Leaf Energy, Inc. (original name of the announcement: 2022 Solar Development, Inc.) and completed the transaction on July 28, 2022. (United States local time July 27, 2022) a. Consideration received from disposals Consideration received in cash and cash equivalents Contingent consideration (Note) Total consideration received Amount $ 10,029,371 2,195,677 $ 12,225,048 Note: In accordance with the agreement of contingent consideration, the acquirer shall respectively pay additional payments when the gross profit of Target Company during the period starting from the settlement date to December 31, 2023 and the gross profit in the year of 2024 meet the amount agreed upon by Target Company. The fair value of this obligation on acquisition date is estimated to be NT$2,195,677 thousand. b. Analysis of assets and liabilities on the date control was lost: Current assets Cash and cash equivalents Contract assets Other current assets Tax assets Non-current assets Deferred tax assets Goodwill Total assets Current liabilities Notes payable and trade payables Other payables Total current liabilities Net assets disposed of c. Gain on disposal of subsidiaries Consideration received Contingent consideration Net assets disposed of Amount $ 22,836 3,356,257 59,784 48,384 274,265 157,359 $ 3,918,885 $ (150,190) (313,081) (463,271) $ 3,455,614 Amount $ 10,029,371 2,195,677 (3,455,614) (Continued) 251 Financial Information Costs of disposal Non-controlling interests Exchange difference Employee compensation costs - disposal related Gain on disposals (217,679) 905,234 35,417 (1,039,328) $ 8,453,078 (Concluded) The above gain on disposal of equity, which is NT$8,453,078 thousand, deduced the loss due to the reduction of operation after disposal, which is NT$553,702 thousand and the remaining amount of NT$7,899,376 thousand was recognized under “gain on disposal of investments” in 2022. d. Net cash inflow on disposals of subsidiaries Consideration received in cash and cash equivalents Less: Cash and cash equivalent balances disposed of Net cash inflow on disposals of subsidiaries Less: Employee compensation costs and costs of disposal Net cash inflow on disposals of subsidiaries Amount $ 10,029,371 (22,519) 10,006,852 (764,276) $ 9,242,576 The above share transaction was completed on July 28, 2022. (United States local time July 27, 2022) 35. OPERATING LEASE ARRANGEMENTS Operating leases are related to the investment properties owned by the Group with lease terms between 5 and 10 years, with an option to extend for another 10 years. All operating lease contracts contain market review clauses in the event that the lessees exercise their options to renew. The lessees do not have bargain purchase options to acquire the properties at the expiry of the lease periods. As of December 31, 2023 and 2022, deposits received under operating leases amounted to NT$361,813 thousand and NT$339,128 thousand, respectively (recorded under other non-current liabilities). As of December 31, 2023, the Group’s future minimum lease receivables on non-cancelable operating lease commitments are as follows: 2024 2025-2028 After 2029 252 Amount $ 1,321,205 2,494,094 247,232 $ 4,062,531 36. CAPITAL MANAGEMENT The Group’s capital management objective is to ensure that it has the necessary financial resources and operational plan so that it can cope with the next 12 months working capital requirements, capital expenditures, debt repayments and dividends spending. The capital structure of the Group consists of net debt (borrowings offset by cash and cash equivalents) and equity attributable to owners of the Group (comprising issued capital, reserves, retained earnings and other equity). Key management personnel of the Group review the capital structure on a quarterly basis. As part of this review, the key management personnel, consider the cost of capital and the risks associated with each class of capital. Based on recommendations of the key management personnel, in order to balance the overall capital structure, the Group may adjust the amount of dividends paid to shareholders, the number of new shares issued or repurchased, and/or the amount of new debt issued or existing debt redeemed. 37. FINANCIAL INSTRUMENTS a. Fair value of financial instruments that are not measured at fair value Except the following assets and liabilities, the management considers that the carrying amounts of financial assets and financial liabilities not recognized at fair value approximate to their fair values. December 31, 2023 Carrying Amount Level 1 Level 2 Level 3 Total Fair Value Financial assets Financial assets at amortized cost Corporate bonds Mutual funds Government bonds $ $ 15 712 184,613 $ - - - $ - - 184,046 $ 15 712 - 15 712 184,046 $ 185,340 $ - $ 184,046 $ 727 $ 184,773 Financial liabilities Financial liabilities at amortized cost Bonds payable $ 13,053,345 $ - $ 12,656,839 $ - $ 12,656,839 253 Financial Information December 31, 2022 Carrying Amount Level 1 Level 2 Level 3 Total Fair Value Financial assets Financial assets at amortized cost Corporate bonds Mutual funds Government bonds $ $ 588 1,614 189,242 $ - - - $ - - 179,709 $ 588 1,614 - 588 1,614 179,709 $ 191,444 $ - $ 179,709 $ 2,202 $ 181,911 Financial liabilities Financial liabilities at amortized cost Bonds payable $ 7,841,115 $ - $ 7,484,393 $ - $ 7,484,393 The fair values of the financial assets and financial liabilities included in the Level 2 and Level 3 categories above have been determined in accordance with the income approach based on a discounted cash flow analysis. The observable inputs included bond duration, bond interest rates and credit rating. The significant unobservable input used in Level 3 is the discount rate that reflects the credit risk of counterparties. b. Fair value of financial instruments that are measured at fair value on a recurring basis 1) Fair value hierarchy December 31, 2023 Financial assets at FVTPL Derivatives not designated as hedging instruments Foreign unlisted shares Contingent consideration Derivatives financial assets for hedging Level 1 Level 2 Level 3 Total $ 68,624 $ - - 10,142 $ - - $ 79,541 78,766 79,541 - 2,614,285 2,614,285 - 53,439 - 53,439 $ 68,624 $ 63,581 $ 2,693,826 $ 2,826,031 (Continued) 254 Level 1 Level 2 Level 3 Total Financial assets at FVTOCI Investments in equity instruments Listed securities in ROC $ 17,902,362 $ Unlisted securities - - $ - - $ 17,902,362 920,810 920,810 $ 17,902,362 $ - $ 920,810 $ 18,823,172 Financial liabilities at FVTPL Derivatives not designated as hedging instruments Contingent consideration Derivatives financial $ - $ 22,746 $ - $ 22,746 - - 484,429 484,429 liabilities for hedging - 8,583 - 8,583 $ - $ 31,329 $ 484,429 $ 515,758 (Concluded) December 31, 2022 Financial assets at FVTPL Derivatives not designated as hedging instruments Foreign unlisted shares Contingent $ consideration Derivatives financial assets for hedging Level 1 Level 2 Level 3 Total - $ - 7,631 $ - - $ 71,969 7,631 71,969 - - 2,567,786 2,567,786 - 165,019 - 165,019 $ - $ 172,650 $ 2,639,755 $ 2,812,405 (Continued) 255 Financial Information Financial assets at FVTOCI Investments in equity instruments Listed securities in Level 1 Level 2 Level 3 Total ROC $ 11,717,477 $ Unlisted securities - - $ - - $ 11,717,477 624,755 624,755 $ 11,717,477 $ - $ 624,755 $ 12,342,232 Financial liabilities at FVTPL Derivatives not designated as hedging instruments Contingent consideration Derivatives financial $ 21,189 $ 43,583 $ - $ 64,772 - - 363,192 363,192 liabilities for hedging - 222,272 - 222,272 $ 21,189 $ 265,855 $ 363,192 $ 650,236 (Concluded) 2) There were no transfers between Levels 1, 2 and 3 for the years ended December 31, 2023 and 2022. 3) Reconciliation of Level 3 fair value measurements of financial instruments. For the year ended December 31, 2023 Balance at January 1, 2023 Additions Recognized in other comprehensive income Effects of exchange rate changes Balance at December 31, 2023 Financial Assets at FVTOCI Equity Instruments $ 624,755 150,000 147,006 (951) $ 920,810 256 Balance at January 1, 2023 Recognized in profit or loss Effects of exchange difference Financial Assets at FVTPL Financial Liabilities Financial Assets $ 2,639,755 51,680 2,391 $ 363,192 106,359 14,878 Balance at December 31, 2023 $ 2,693,826 $ 484,429 For the year ended December 31, 2022 Financial Assets Balance at January 1, 2022 Additions Capital reduction and refund Recognized in other comprehensive loss Effects of exchange difference Balance at December 31, 2022 Balance at January 1, 2022 Additions Recognized in profit or loss Effects of exchange difference Financial Assets at FVTOCI Equity Instruments $ 663,502 120,000 (335) (159,580) 1,168 $ 624,755 Financial Assets at FVTPL Financial Liabilities Financial Assets $ $ - 2,267,373 372,109 273 - 355,089 - 8,103 Balance at December 31, 2022 $ 2,639,755 $ 363,192 4) Valuation technique and inputs applied for Level 2 fair value measurement Financial Instruments Valuation Technique and Inputs Derivatives - foreign exchange forward contracts Discounted cash flow. Future cash flows are estimated based on observable forward exchange rates at the end of the reporting period and contract forward rates and discounted at a rate that reflects the credit risk of various counterparties. Derivatives - exchange rate swap contracts Discounted cash flow. Future cash flows are estimated based on observable forward exchange rates at the end of the reporting period and contract forward rates and discounted at a rate that reflects the credit risk of various counterparties. (Continued) 257 Financial Information Financial Instruments Valuation Technique and Inputs Derivatives - interest Discounted cash flow. Future cash flows are estimated based rate contracts on observable floating rates at the end of the reporting period and fixed interest rates under contracts. Derivatives - option Black-Scholes Model. The significant unobservable input value is the market price volatility of the commodity. Derivatives - gas swap contracts Discounted cash flow. Future cash flows are estimated based on observable forward gas prices at the end of the reporting period and fixed gas prices under contract. Derivatives - electricity swap contracts Discounted cash flow. Future cash flows are estimated based on observable forward electricity prices at the end of the reporting period and fixed power prices under contract. (Concluded) 5) Valuation technique and inputs applied for Level 3 fair value measurement Financial Instruments Valuation Technique and Inputs Unlisted equity securities Market approach. Fair values are determined based on observable and comparable companies’ fair values at the end of the reporting period, adjusted by price earnings ratio and price-to-book ratio of the investees. Net asset method. Fair values are determined based on the book value of companies. Discounted cash flow. Present values are determined based on future cash flows discounted at market yield. Contingent consideration The estimated fair value is discounted according to the probability of reaching the agreed conditions and based on the credit risk discount rate and other information. c. Categories of financial instruments Financial assets Financial assets at amortized cost Cash and cash equivalents Contract assets - current Notes receivable and trade receivables (including related parties) December 31 2023 2022 $ 16,347,012 996,025 $ 19,438,759 3,022,237 15,912,283 21,832,312 (Continued) 258 Finance lease receivables (current and non-current) Other receivables Other financial assets Refundable deposits Financial assets at amortized cost - (current and non-current) Derivative financial assets for hedging (current and non-current) Financial assets at FVTPL (current and non-current) Financial assets at FVTOCI (current and non-current) Financial liabilities December 31 2023 2022 602,523 3,707,450 788,894 158,940 662,543 3,857,091 505,340 288,948 185,340 191,444 399,880 2,772,592 18,823,172 165,019 2,647,386 12,342,232 Financial liabilities at FVTPL (current and non-current) $ Derivative financial liabilities for hedging (current and non-current) Financial liabilities at amortized cost 507,175 $ 427,964 8,583 222,272 Short-term borrowings Contract liabilities Notes payable and trade payables Other payables Bonds payable Long-term borrowings (including current portion) Long-term notes and bills payable Deposits received (recorded under other current and non-current liabilities) 11,508,074 13,828 16,708,534 12,069,796 13,053,345 33,463,012 2,998,822 17,120,571 6,014 18,088,851 15,315,705 7,841,115 41,929,909 1,497,914 421,207 385,210 (Concluded) d. Financial risk management objectives and policies The Group’s major financial instruments included equity and investments, borrowings, trade receivables, and trade payables. The Group’s corporate treasury function provides services to the business, coordinates access to domestic and international financial markets, and monitors and manages the financial risks relating to the operations of the Group through internal risk reports that analyze exposures by degree and magnitude of risks. These risks include market risk, credit risk and liquidity risk. The Group seeks to minimize the effects of these risks by using derivative financial instruments to hedge risk exposures. The use of financial derivatives is governed by the Group’s policies approved by the board of directors, which provides written principles on foreign exchange risk, interest rate risk and credit risk, the use of financial derivatives and non-derivative financial instruments, and the investment of excess liquidity. Compliance with policies and exposure limits is reviewed by the internal auditors on a continuous basis. The Group did not enter into or trade financial instruments for speculative purposes. 1) Market risk The Group’s activities exposed is primarily to the financial risks of changes in foreign currency exchange rates and interest rates. The Group entered into foreign exchange 259 Financial Information forward contracts and interest rate swaps contracts to hedge foreign currency risk and interest rate risk. There has been no change to the Group’s exposure to market risks or the manner in which these risks were managed and measured. a) Foreign currency risk The Group has foreign currency sales and purchases, which exposed the Group to foreign currency risk. Exchange rate exposures were managed within approved policy parameters utilizing foreign exchange forward contracts. It is the Group’s policy to make the terms of the derivatives instruments match the terms of the hedged items and to maximize the hedge effectiveness. The carrying amounts of the Group’s foreign currency denominated monetary assets and monetary liabilities (including those eliminated on consolidation) at the end of the period are set out in Note 42. The carrying amounts of the Group’s derivatives exposed to foreign currency risk at the end of the reporting period were as follows: Assets U.S. dollar Euro Liabilities U.S. dollar Euro December 31 2023 2022 $ 4,421,152 359,254 $ 3,798,744 1,432,653 7,384,553 1,384,234 2,381,338 310,405 Sensitivity analysis The Group is mainly exposed to the U.S. dollars. The following table details the Group’s sensitivity to a 1% increase and decrease in the New Taiwan dollar (i.e. functional currency) against the relevant foreign currencies. The sensitivity analysis includes only outstanding foreign currency denominated monetary items and adjusts their translation at the end of the year for a 1% change in foreign currency rates. U.S. Dollar Impact For the Year Ended December 31 2023 2022 Profit or loss $ (7,987) $ (7,848) 260 Euro Dollar Impact For the Year Ended December 31 2023 2022 $ (4,896) $ 23,330 Profit or loss Hedge accounting The Group’s hedging strategy is to enter into foreign exchange forward contracts and foreign-currency deposits to avoid the exposure of its foreign currency receipts and payments and to the exchange rate and the procurement of significant capital expenditures in foreign currency. Those transactions are designated as cash flow hedges. When forecast purchases actually take place, basis adjustments are made to the initial carrying amounts of non-financial hedged items when the anticipated purchases take place. December 31, 2023 Hedging Instrument/ Hedged Items Notional Amount Line Item in Balance Sheet Carrying Amount Asset Liability Cash flow hedges Foreign exchange forward contracts/Forecast purchases Hedging foreign-currency deposits/Forecast purchases NT$727,420/ EUR21,666 EUR10,195 Financial liability for hedging Financial assets for hedging $ - $ 4,966 346,441 - Change in Fair Value of Hedging Instruments Used for Calculating Change in Fair Value of Hedged Items Used for Calculating Hedging Instrument/ Hedged Items Hedge Ineffectiveness Hedge Ineffectiveness Balance in Other Equity Hedge Accounting No Longer Applied Continuing Hedges Cash flow hedges Foreign exchange forward contracts/Anticipated equipment purchase payment Hedging foreign-currency deposits/Anticipated equipment purchase payment $ (4,966) $ 4,966 $ (4,966) $ 3,655 (3,655) 3,655 - - For the year ended December 31, 2023 Amount Reclassified to P/L and Adjusted Line Item Hedging Gains (Losses) Recognized in OCI Amount of Hedge Ineffectiveness Recognized in Profit or Loss Line Item in Which Hedge Ineffectiveness is Included Due to Hedged Item Affecting P/L Due to Hedged Future Cash Flows No Longer Expected to Occur $ (1,311) $ - $ - $ - $ - Comprehensive Income Cash flow hedges Anticipated equipment purchase payment 261 Financial Information The key terms of forward foreign exchange contracts outstanding as of the balance sheet date, which have not yet matured, are as follows: Currency Maturity Date Contract Amount (In Thousands) December 31, 2023 Foreign exchange EUR/NTD forward contracts 2024.07.31-202 6.02.26 EUR21,666/NTD727,420 b) Interest rate risk The Group was exposed to interest rate risk because entities in the Group borrow funds at both fixed and floating interest rates. The carrying amounts of the Group’s financial assets and financial liabilities with exposure to interest rates at the end of the year were as follows: Fair value interest rate risk Financial assets Financial liabilities Cash flow interest rate risk Financial assets Financial liabilities Sensitivity analysis December 31 2023 2022 $ 184,613 13,053,345 $ 189,242 7,841,115 727 50,598,580 2,202 65,924,130 The sensitivity analysis below was determined based on the Group’s exposure to interest rates for financial instruments at the end of the year. For floating rate liabilities, the analysis was prepared assuming the amount of each liability outstanding at the end of the year was outstanding for the whole year. If interest rates had been 1% basis points higher and all other variables were held constant, the Group’s pre-tax profit for the years ended December 31, 2023 and 2022 would have decreased by NT$506,015 thousand and NT$660,201 thousand, respectively. Hedge accounting The Group entered into interest rate swap contracts to mitigate the risk of changes in interest rates on cash flow exposure related to its outstanding variable rate debt. Interest rate swaps are settled on a contract basis. The floating rate on interest rate swaps is Euro Interbank Offered Rate (Euribor). The Group will settle the difference between the fixed and floating interest rates on a net basis. The following tables summarize the information relating to the hedges for interest rate risk. 262 For the year ended December 31, 2023 Contract Currency Amount Maturity Range of Interest Rates Paid Range of Interest Rates Received Line Item in Balance Sheet Carrying Amount Asset Liability Change in Value Used for Calculating Hedge Ineffectiveness Hedging Instrument Cash flow hedges Interest rate swap EUR $ 104,643 contracts 2024.12.30- 2030.12.18 -0.255%-3.803% Note Financial assets $ 1,573 $ - $ - for hedging For the year ended December 31, 2022 Contract Currency Amount Maturity Range of Interest Rates Paid Range of Interest Rates Received Line Item in Balance Sheet Carrying Amount Asset Liability Change in Value Used for Calculating Hedge Ineffectiveness Hedging Instrument Cash flow hedges Interest rate swap EUR $ 95,177 2023.05.31- 2030.12.18 -0.255%-3.120% Note Financial assets $ 5,043 $ - $ - for hedging It is the three months interest rate of Euro Interbank Offered Rate (Euribor) on the second business day before the issuance date. contracts Note: 2) Credit risk Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in a financial loss to the Group. As of the end of the reporting period, the Group’s maximum exposure to credit risk, which would cause a financial loss to the Group due to the failure of the counterparty to discharge its obligation and due to financial guarantees provided by the Group, could be equal to the total of the following: a) The carrying amount of the respective recognized financial assets as stated in the condensed balance sheets; and b) The maximum amount the entity would have to pay if the financial guarantee is called upon, irrespective of the likelihood of the guarantee being exercised. The Group adopted a policy of only dealing with creditworthy counterparties and obtaining sufficient collateral, where appropriate, as a means of mitigating the risk of financial loss from defaults. The Group’s exposure and the credit ratings of its counterparties are continuously monitored, and the aggregate value of transactions concluded is spread amongst the approved counterparties. Credit exposure is controlled by setting credit limits that are reviewed and approved by the risk management committee annually. In order to minimize credit risk, the management of the Group has delegated a team responsible for the determination of credit limits, credit approvals and other monitoring procedures to ensure that follow-up action is taken to recover overdue receivables. In addition, the Group reviews the recoverable amount of each individual trade receivables at the end of the reporting period to ensure that adequate impairment losses are made for irrecoverable amounts. In this regard, the directors of the Group consider that the Group’s credit risk was significantly reduced. 263 Financial Information 3) Liquidity risk The Group manages liquidity risk by monitoring and maintaining a level of cash and cash equivalents deemed adequate to finance the Group’s operations and mitigate the effects of fluctuations in cash flows. In addition, management monitors the utilization of bank borrowings and ensures compliance with loan covenants. a) The following table details the Group’s expected maturities for its non-derivative financial liabilities with agreed upon repayment periods. December 31, 2023 Non-derivative financial liabilities 1 Year 1-2 Years 2-5 Years 5+ Years Total Variable interest rate liabilities Lease liabilities Fixed interest rate liabilities Non-interest bearing liabilities $ 15,675,226 $ 4,932,019 $ 27,212,466 $ 303,890 317,576 552,859 2,778,869 $ 50,598,580 3,508,818 2,334,493 101,940 101,940 10,549,465 2,300,000 13,053,345 26,378,229 61,207 2,744,790 26,885 29,211,111 $ 42,459,285 $ 5,412,742 $ 41,059,580 $ 7,440,247 $ 96,371,854 December 31, 2022 Non-derivative financial liabilities 1 Year 1-2 Years 2-5 Years 5+ Years Total Variable interest rate liabilities Lease liabilities Fixed interest rate liabilities Non-interest bearing liabilities $ 23,605,356 $ 13,379,779 $ 28,258,134 $ 254,655 454,115 617,027 680,861 $ 65,924,130 3,265,326 1,939,529 98,160 98,160 7,644,795 - 7,841,115 28,275,365 75,051 59,111 2,546,847 30,956,374 $ 52,233,536 $ 14,007,105 $ 36,579,067 $ 5,167,237 $ 107,986,945 b) The Group’s expected maturities for its derivative financial instruments with agreed upon settlement dates were as follows: December 31, 2023 Net settled On Demand or Less Than 1 Month 1-3 Months 3 Months to 1 Year 1-5 Years 5+ Years Total Commodity futures contracts Foreign exchange forward contracts Exchange rate swap contracts Interest rate swap contracts Gas swap contracts Electricity swap contracts Futures options $ 27,368 (13,465 ) 4,468 - (1,100 ) (216 ) - $ 34,910 $ (2,631 ) (11,173 ) - (1,171 ) (378 ) 10,142 6,346 (2,207 ) $ - $ (2,705 ) - - - (751 ) - - 48,415 - - - - - - 5,024 - - - $ 68,624 (21,008 ) (6,705 ) 53,439 (2,271 ) (1,345 ) 10,142 $ 17,055 $ 29,699 $ 3,388 $ 45,710 $ 5,024 $ 100,876 264 December 31, 2022 Net settled On Demand or Less Than 1 Month 1-3 Months 3 Months to 1 Year 1-5 Years 5+ Years Total Commodity futures contracts Foreign exchange forward contracts Exchange rate swap contracts Interest rate swap contracts Gas swap contracts Futures options $ (44,810 ) (26,741 ) (22,113 ) - (74,893 ) - $ 15,096 6,844 - 2 (122,352 ) 7,629 $ 8,525 (1,573 ) - 20,615 (25,027 ) - $ - - - 116,738 - - $ - - - 27,666 - - $ (21,189 ) (21,470 ) (22,113 ) 165,021 (222,272 ) 7,629 $ (168,557 ) $ (92,781 ) $ 2,540 $ 116,738 $ 27,666 $ (114,394 ) e. Transfers of financial assets 1) Transfers of financial assets with recourse The Group discounted trade receivables with an aggregate carrying amount of $364,741 thousand, to banks during 2023. According to the contract, if the trade receivables are not recoverable at maturity, the banks have the right to require that the Group pay the unsettled balance. As the Group has not transferred the significant risks and rewards relating to the trade receivables, the Group continues to recognize the full carrying amounts of the trade receivables and treats the trade receivables that have been transferred to banks as collateral for borrowings. Refer to Note 23. As of December 31, 2023, the carrying amount of these trade receivables that have been transferred but not derecognized was 67,382 thousand, and the carrying amount of the related liabilities was $17,408 thousand. 2) Transfers of financial assets without recourse The relevant information of the Group’s sales of trade receivables were as follows: Receivables Factoring Proceeds Amount Reclassified to Other Receivables Advances Received - Unused Advances Received - Used Counterparty December 31, 2023 CTBC bank $ 144,250 $ 20,318 US$ 2,700 $ - December 31, 2022 CTBC bank $ 151,902 $ 18,449 US$ 2,700 $ - Annual Interest Rates on Advances Received (Used) (%) - - 38. TRANSACTIONS WITH RELATED PARTIES Balances and transactions between the Company and its subsidiaries, which are related parties of WLC, have been eliminated on consolidation and are not disclosed in this note. Details of transactions between the Group and other related parties are disclosed as below: 265 Financial Information a. Related party name and category Related Party Name Related Party Category Winbond Electronics Corp. Walsin Technology Corp. Walton Advanced Engineering, Inc. Chin-Xin Investment Co., Ltd. Changzhou China Steel Precision Materials Co., Ltd. Hangzhou Walsin Power Cable & Wire Co., Ltd. Tsai Yi Corporation Nuvoton Technology Corporation Prosperity Dielectrics Co., Ltd. PT. Westrong Metal Industry Innovation West Mantewe Pte. Ltd. HannStar Display Corp. Kuang Tai Metal Industrial Co., Ltd. HannStar Board Tech. (Jiangyin) Corp HannStar Board Corp. Global Brands Manufacture Ltd. Info-Tek Corp. Hwa Bao Botanic Conservation Corp. HannsTouch Holdings Company TCC Energy Storage Technology Corporation Trefilados Inoxidables de Mexico, S.A. De C.V. Ferriere di Stabio SA Novametal SA Novametal do Brasil LTDA Wire Products Stainless Steel PTY Ltd T.D.V. Trefileries des Vosges SA Novametal Europe Srl Novametal USA Dongguan Novametal Wire Co., LTD Associate Associate Associate Associate Associate Associate Associate Associate Associate Associate Associate Substantive related party Substantive related party Substantive related party Substantive related party Substantive related party Substantive related party Substantive related party Substantive related party Substantive related party Substantive related party Substantive related party Substantive related party Substantive related party Substantive related party Substantive related party Substantive related party Substantive related party Substantive related party b. Sales Associates Other related parties For the Year Ended December 31 2023 2022 $ 635,432 4,997,847 $ 22,653 1,452,637 $ 5,633,279 $ 1,475,290 266 c. Rental income Associates Other related parties d. Purchases of goods Associates Other related parties e. Administrative expenses Associates Other related parties For the Year Ended December 31 2023 2022 $ 48,748 1,135 $ 48,329 1,135 $ 49,883 $ 49,464 For the Year Ended December 31 2023 2022 $ 8,479 338,496 $ 58,289 4,308 $ 346,975 $ 62,597 For the Year Ended December 31 2023 2022 $ 15,511 15,756 $ 15,053 13,630 $ 31,267 $ 28,683 The share registration matters of WLC and related parties were handled together. The related fees allocated to the related parties were charged against general and administrative expenses. f. Dividend income HannStar Board Corp. HannStar Display Corp. Other related parties g. Notes receivable For the Year Ended December 31 2023 2022 $ $ 153,009 - 5,779 140,259 298,293 7,705 $ 158,788 $ 446,257 December 31 2023 2022 Associates $ 2,892 $ 9,332 267 Financial Information h. Trade receivables Associates Other related parties i. Notes payable Associates j. Trade payables Associates Other related parties k. Other receivables (excluding financing provided) Associates Other related parties l. Financing provided December 31 2023 2022 $ 111,941 497,188 $ 2,481 42,651 $ 609,129 $ 45,132 December 31 2023 2022 $ - $ 16,553 December 31 2023 2022 $ $ - 1,161 $ 1,161 $ 225 504 729 December 31 2023 2022 $ 16,089 3,698 $ 13,056 3,062 $ 19,787 $ 16,118 Financing provided for the years ended December 31, 2023 and 2022 were as follows: Related Parties For the Year Ended December 31, 2023 Highest Balance for the Period Ending Balance Interest Income Interest Rate Hangzhou Walsin Power Cable & Wire Co., Ltd. 361,396 PT. Westrong Metal Industry $ 6,458,450 Innovation West Mantewe $ $ 346,819 $ 15,579 $ - $ 168,250 7.75%-7.99% 4.35% Pte. Ltd. $ 664,713 $ 147,384 $ 1,992 7.99% 268 Related Parties For the Year Ended December 31, 2022 Highest Balance for the Period Ending Balance Interest Income Interest Rate Hangzhou Walsin Power Cable & Wire Co., Ltd. 360,721 PT. Westrong Metal Industry $ 2,780,100 $ m. Guarantee deposits Associates Other related parties 352,747 $ $ 1,228,400 $ 15,563 463 $ 4.35% 6.79% December 31 2023 2022 $ $ 7,362 282 7,362 282 $ 7,644 $ 7,644 n. Disposal of property, plant and equipment For the Year Ended December 31 2023 2022 Price Gain on Disposals Price Gain on Disposals Hwa Bao Botanic Conservation Corp. $ - $ - $ 128,800 $ 78,443 The above transaction prices were determined with reference to the transaction prices of similar real estate in the vicinity and professional valuation reports. o. Remuneration of key management personnel The remunerations of directors and key executives were as follows: Short-term employee benefits Post-employment benefits December 31 2023 2022 $ 137,274 1,301 $ 265,970 1,299 $ 138,575 $ 267,269 The remuneration of directors and key executives, as determined by the remuneration committee, is based on the performance of individuals and market trends. 269 Financial Information 39. ASSETS PLEDGED AS COLLATERAL OR FOR SECURITY The following assets were provided as collaterals for bank borrowings, tariff guarantee for imported raw material and the deposits for completing constructions and futures: December 31 2023 2022 Refundable deposits (recorded under other financial assets - current) $ 2,348 $ 303,146 Restricted deposits (recorded under other financial assets - current) Pledged time deposits (recorded under other financial assets - other) Restricted deposits (recorded under other financial assets - other) Finance lease receivables Long-term finance lease receivables Refundable deposits Discounted notes receivable Trade receivables Property, plant and equipment 106,946 202,194 1,427 1,439 10,838 62,067 540,456 62,080 - 67,382 77,290 11,023 60,020 602,523 51,986 1,554,013 - 79,052 $ 930,834 $ 2,865,396 40. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNIZED COMMITMENTS In addition to those disclosed in other notes, significant contingencies and unrecognized commitments of the Group at December 31, 2023 and 2022 were as follows: a. Outstanding letters of credit not reflected in the consolidated financial statements as of December 31, 2023 and 2022 were as follows (in thousands): U.S. dollar Japanese yen Euro Renminbi New Taiwan dollar December 31 2023 2022 9,130 US$ JPY 107,111 EUR 12,626 2,189 RMB 43,944 NT$ 3,186 US$ JPY 54,144 EUR 34,490 2,189 RMB 20,939 NT$ b. Outstanding standby letters of credit and bid bonds of contingent liabilities not reflected in the consolidated financial statements were as follows (in thousands): New Taiwan dollar U.S. dollar Renminbi 270 December 31 2023 2022 NT$ 846,165 US$ 30 RMB 47,586 NT$ 841,035 US$ 30 RMB 16,884 c. Based on tariff and relevant regulations, the Group issue tariff letters of credit to import goods and to meet the needs of post-release duty payment. The amount of tariff letters of credit were as follows: New Taiwan dollar NT$ 458,000 NT$ 496,000 d. Non-cancelable raw material procurement contracts were as follows: December 31 2023 2022 U.S. dollar Renminbi December 31 2023 2022 US$ 27,839 RMB 133,299 US$ 43,926 RMB 85,530 e. The Group entered into a contract for the construction of new plants on the Group’s own land, the purchase of machinery and equipment, and technique licensing and authorization agreements. The amount of the unrecognized commitments was as follows: New Taiwan dollar U.S. dollar Renminbi Euro Japanese yen Indonesian rupiah December 31 2023 2022 NT$ 5,844,284 NT$ 2,237,159 US$ 72,295 33,842 US$ RMB 780,991 RMB 780,815 70,927 171,579 EUR EUR 11,680 - JPY JPY IDR 87,029,254 IDR 89,743,621 41. SIGNIFICANT EVENTS AFTER THE REPORTING PERIOD In August 2023, the board of directors of WLC resolved to acquire 75% of the shares of Berg Holding Limited at a consideration of US$118,500 thousand. This transaction caused the Group to increase its shareholding percentage in the subsidiary PT. Sunny Metal Industry from 50.10% to 79.61%. The Group completed the transaction in January 2024. According to IFRS 3 “Business Combination”, it was determined not a business and should be accounted for as an acquisition of assets. In August 2023, the board of directors of WLC resolved to dispose of the entire 29.5% shares of the associate PT. Westrong Metal Industry for a consideration of US$146,000 thousand, and the transaction was completed in January 2024. On January and February 2024, the board of directors of WLC resolved to acquire 65% shares of Com.Steel Inox S.p.A. and 100% shares of Mannesmann Stainless Tubes GmbH for a consideration of no more than 28,000 thousand Euros and no more than 135,000 thousand Euros, respectively. As of the issuance date of the consolidated financial report, the transactions have not been completed. 271 Financial Information 42. SIGNIFICANT ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES The Group’s significant financial assets and liabilities dominated in foreign currencies aggregated by the foreign currencies other than functional currencies of the entities in the Group and the related exchange rates between the foreign currencies and the respective functional currencies were as follows: December 31, 2023 Financial assets Monetary items U.S. dollar Japanese yen Euro Singapore dollar Renminbi Indonesian rupiah Korean won Non-monetary items U.S. dollar Renminbi Financial liabilities Monetary items U.S. dollar Renminbi Indonesian rupiah Non-monetary items U.S. dollar December 31, 2022 Financial assets Monetary items U.S. dollar Japanese yen Euro Hong Kong dollar Australian dollar Singapore dollar 272 Foreign Currency Exchange Rate Carrying Amount $ 226,235 635,549 16,337 2,675 2,773 1,439,843,510 983,701 39,447 6,461 $ 30.7050 0.2172 33.98 23.2900 4.33524 0.00198 0.02391 30.705 4.33524 6,946,546 138,041 555,131 62,301 12,022 2,850,890 23,520 1,211,220 28,010 155,735 334,843 257,409,522 30.705 4.33524 0.00198 4,781,843 1,451,625 509,671 1,450 30.705 44,522 Foreign Currency Exchange Rate Carrying Amount $ 575,500 236,526 37,125 2,505 1,298 5,432 $ 30.7100 0.2324 32.7200 3.9380 20.8300 22.8800 17,673,605 54,969 1,214,730 9,865 27,037 124,284 (Continued) Indonesian rupiah Renminbi Korean won Turkish lira Financial liabilities Monetary items U.S. dollar Euro Renminbi Swiss franc Indonesian rupiah Non-monetary items U.S. dollar Renminbi Foreign Currency Exchange Rate Carrying Amount $ 2,267,040,632 21,137 394,230 6,605 $ 0.00198 4.40934 0.02457 1.643167 4,488,740 93,200 9,686 10,854 645,822 121 406,181 17 300,118,783 1,677 233 30.7100 32.7200 4.40934 33.2050 0.00198 30.7100 4.40934 19,833,194 3,959 1,790,990 564 594,235 51,501 1,027 (Concluded) For the years ended December 31, 2023 and 2022, realized and unrealized net foreign exchange (losses) gains were NT$(240,593) thousand and NT$1,748,708 thousand, respectively. It is impractical to disclose net foreign exchange gains (losses) by each significant foreign currency due to the variety of the foreign currency transactions and functional currencies in the Group. 43. SEPARATELY DISCLOSED ITEMS a. Information on significant transactions and information on investees: 1) Financing provided to others (Table 1) 2) Endorsements/guarantees provided (Table 2) 3) Marketable securities held (Table 3) 4) Marketable securities acquired or disposed of at costs or prices of at least NT$300 million or 20% of the paid-in capital (Table 4) 5) Acquisition of individual real estate at costs of at least NT$300 million or 20% of the paid-in capital (Table 5) 6) Disposal of individual real estate at prices of at least NT$300 million or 20% of the paid-in capital (None) 7) Total purchases from or sales to related parties amounting to at least NT$100 million or 20% of the paid-in capital (Table 6) 8) Receivables from related parties amounting to at least NT$100 million or 20% of the paid-in capital (Table 7) 273 Financial Information 9) Trading in derivative instrument (Notes 7 and 8) 10) Information on investees (Table 8) 11) Intercompany relationships and significant intercompany transactions (Table 10) b. Information on investments in mainland China: 1) Information on any investee company in mainland China, showing the name, principal business activities, paid-in capital, method of investment, inward and outward remittance of funds, ownership percentage, net income of investees, investment income or loss, carrying amount of the investment at the end of the year, repatriations of investment income, and limit on the amount of investment in the mainland China area (Table 9) 2) Any of the following significant transactions with investee companies in mainland China, either directly or indirectly through a third party, and their prices, payment terms, and unrealized gains or losses (Table 10): a) The amount and percentage of purchases and the balance and percentage of the related payables at the end of the year; b) The amount and percentage of sales and the balance and percentage of the related receivables at the end of the year; c) The amount of property transactions and the amount of the resultant gains or losses; d) The balance of negotiable instrument endorsements or guarantees or pledges of collateral at the end of the year and the purposes; e) The highest balance, the ending period balance, the interest rate range, and total current period interest with respect to the financing of funds; and f) Other transactions that have a material effect on the profit or loss for the year or on the financial position, such as the rendering or receipt of services. c. Information of major shareholders: List all shareholders with ownership of 5% or greater showing the name of the shareholder, the number of shares owned, and percentage of ownership of each shareholder (Table 11) 44. SEGMENT INFORMATION a. Basic information 1) Classification Information reported to the chief operating decision maker for the purpose of resource allocation and assessment of segment performance focuses on the types of goods or services delivered or provided. Specifically, the Group’s reportable segments were as follows: 274 a) Wires and cables The segment’s main products include copper rods, wires, connector and components which are sold to industries involving cables and wires, communications cable, heavy electronics, home electrical appliances and construction. b) Stainless steel The segment’s main products include smelting, rolled stainless steel, carbon steel and precision alloy wire which are sold to industries involving construction components, crankshaft, machine tools, plumbing, heat exchanger, drainage, petrochemical and construction. c) Resource The segment’s main business include nickel pig iron, sales of stainless steel products as an agent in Taiwan and important metal procurement and hedging. d) Real estate Real estate is responsible for the development of commercial and real estate complex and real estate management. Furthermore, the modes of operation are the construction of residences, offices, markets and hotels, and the offering of rental space, operating management and after-sales services. e) Administration and investing The segment of administration and investing refers to other investment in mainland China. 2) Estimates of operating segment income and expenses, assets and liabilities Accounting policies of operating segments are the same as those summarized in Note 4. Sales and transfers between segments are treated as transactions with third parties and evaluated at fair value. The Group does not allocate income tax expense (benefit), investment income (loss) recognized under equity method, foreign exchange gain (loss), net investment income (loss), gain (loss) on disposal of investments, gain (loss) on valuation of financial assets and liabilities and extraordinary items to reportable segments. The amounts reported are consistent with the report used by chief operating decision makers. 3) Identification of operating segment The reported segments of the Group are strategic business units, providing different products and services. They are managed separately because they use different technologies and sales strategies. 275 Financial Information b. Financial information 1) Segment revenues and results: Wires and Cables Stainless Steel Resource Business Real Estate (NT$ in Thousand) Administration and Investing Total $ 45,292,955 3,207,499 $ 94,542,646 622,917 $ 41,555,782 4,413,465 $ 2,129,913 (54,498 ) $ 6,318,330 (1,948,617 ) $ 189,839,626 6,240,766 (1,594,224 ) 528,869 513,679 (11,472 ) 965,914 (240,593 ) 169,525 12,427 853,507 $ 7,438,398 $ 58,861,592 2,983,318 $ 79,025,174 4,463,460 $ 23,469,051 7,011,709 $ 1,972,699 94,428 $ 17,072,203 (5,054,201 ) $ 180,400,719 9,498,714 (586,922 ) 3,607,040 766,857 68,051 7,210,043 1,748,708 265,134 (87 ) 824,475 $ 23,402,013 For the year ended December 31, 2023 Revenue from external customers Segment profit (loss) Net non-operating income (expenses) Net interest (expenses) income Share of profit of associates accounted for using the equity method Dividend income Loss on disposal of property, plant and equipment Gain on disposal of investments Foreign exchange (loss) gain Gain on financial assets and liabilities at fair value through profit or loss Reversal of impairment loss Net other income Consolidated income before income tax For the year ended December 31, 2022 Revenue from external customers Segment profit (loss) Net non-operating income (expenses) Net interest (expenses) income Share of profit of associates accounted for using the equity method Dividend income Gain on disposal of property, plant and equipment Gain on disposal of investments Foreign exchange gain Gain on financial assets and liabilities at fair value through profit or loss Impairment loss Net other income Consolidated income before income tax 2) Segment assets and liabilities Wires and Cables Stainless Steel Resource Real Estate Administration and Investing Total Segment assets December 31, 2023 December 31, 2022 $ 9,198,949 9,871,071 $ 81,818,015 45,004,557 $ 49,013,066 43,443,642 $ 29,197,011 30,296,978 $ 97,142,990 128,291,493 $ 266,370,031 $ 256,897,741 Segment liabilities December 31, 2023 December 31, 2022 4,722,379 5,690,853 47,929,981 26,924,149 11,434,154 27,486,296 14,924,345 15,638,505 32,909,859 46,948,815 $ 111,920,718 $ 122,688,618 276 3) Geographical information The Group’s non-current assets (exclude financial instruments, deferred tax assets and post-employment benefit assets) and revenue from single geographical location are detailed below. Revenue from External Customers (Note) 2023 2022 Non-current Assets December 31 2023 2022 Asia United States of America Europe Others $ 154,395,268 $ 155,926,113 $ 97,553,322 $ 89,595,772 9,663,309 23,592,668 2,188,381 18,346,783 4,040,919 2,086,904 50,225 13,476,703 - 240,378 5,880,861 - $ 189,839,626 $ 180,400,719 $ 111,080,250 $ 95,717,011 Note: Revenue from external customers is classified by geographical location. 4) Information about major customers No single customer contributed 10% or more to the Group’s revenue for both 2023 and 2022. 277 2 7 8 WALSIN LIHWA CORPORATION AND SUBSIDIARIES FINANCING PROVIDED TO OTHERS FOR THE YEAR ENDED DECEMBER 31, 2023 (In thousands of New Taiwan Dollars and U.S. Dollars) TABLE 1 i F n a n c i a l I n f o r m a t i o n No. Lender Borrower Financial Statement Account Related Party Highest Balance for the Period Ending Balance Actual Amount Borrowed Interest Rate (%) Nature of Financing Business Transaction Amount Reasons for Short-term Financing Allowance for Impairme nt Loss Collateral Item Value Financing Limit for Each Borrower (Note 1) Aggregate Financing Limit (Note 1) 0 Walsin Lihwa Corporation PT. Sunny Metal Other receivables Yes Industry PT. Westrong Metal Industry Other receivables Yes Borrego Energy Other receivables Yes Holdings, LLC & Borrego Energy, LLC $ (US$ (US$ (US$ 7,642,860 250,750) 2,766,600 90,000) 1,562,750 50,000) Notes: $ (US$ - - ) - - ) 1,535,250 (US$ 50,000 ) (US$ $ (US$ - - ) - - ) 875,093 (US$ 28,500 ) (US$ - - Operating capital $ Operating capital - Equipment purchase - Equipment purchase $ - - - - 6.20 Operating capital - Operating capital - Promissory note and property $ - $ 56,324,126 $ 56,324,126 - 56,324,126 56,324,126 1,349,627 56,324,126 56,324,126 1. According to the financing regulations provided by Walsin Lihwa Corporation, the total limit on the amount of financing provided to a subsidiary whose equity is 100% owned, directly or indirectly by WLC cannot exceed 40% of the equity presented in the consolidated financial statements of Walsin Lihwa Corporation. a. The limit on the amount of financing provided to a single enterprise was as follows: PT. Sunny Metal Industry, PT. Westrong Metal Industry and Borrego Energy Holdings, LLC & Borrego Energy, LLC = $140,810,315 × 40% = $56,324,126. b. The limit on the amount of financing provided was as follows: The limit on the amount of financing provided = $140,810,315 × 40% = $56,324,126. 2. Amounts are stated in thousands of New Taiwan dollars, except those stated in thousands of U.S. dollars. 3. The currency exchange rate as of December 31, 2023 was as follows: US$ to NT$ = 1:30.705. WALSIN LIHWA HOLDINGS LIMITED AND SUBSIDIARIES FINANCING PROVIDED TO OTHERS FOR THE YEAR ENDED DECEMBER 31, 2023 (In Thousands of New Taiwan Dollars, U.S. Dollars and Renminbi) No. Lender Borrower Financial Statement Account Related Party Highest Balance for the Period Ending Balance Actual Amount Borrowed Interest Rate (%) Nature of Financing Business Transaction Amount Reasons for Short-term Financing Allowance for Impairment Loss Collateral Item Value Financing Limit for Each Borrower (Note 1) Aggregate Financing Limit (Note 1) TABLE 1-1 Other receivables Yes $ (RMB 361,396 80,000) $ (RMB 346,819 80,000) $ (RMB 346,819 80,000) 4.35 Operating capital $ - Operating capital $ Other receivables Yes 8,583,155 (RMB 1,900,000) 8,236,956 (RMB 1,900,000) 4,365,140 (RMB 1,006,897) 3.50 Operating capital - Operating capital - $ - $ (RMB 402,718 92,894) $ (RMB 402,718 92,894) 1 Walsin (China) Investment Co., Ltd. Hangzhou Walsin Power Cable & Wire Co., Ltd. Walsin (Nanjing) Development Co., Ltd. Yantai Walsin Stainless Steel Co., Ltd. Specialty Alloy Materials Co., Ltd. Changshu Walsin Specialty Steel Co., Ltd. Dongguan Walsin Wire & Cable Co., Ltd. Other receivables Yes Jiangyin Walsin Other receivables Yes 16,700,430 (US$ 320,000) (RMB 1,400,000) 1,910,870 (US$ 45,000) (RMB 100,000) 15,894,936 (US$ 320,000) (RMB 1,400,000) 1,815,249 (US$ 45,000) (RMB 100,000) 5,521,518 173,922) 41,807) 1,363,670 44,412) -) (US$ (RMB (US$ (RMB 3.20-4.82 Operating capital - Operating capital 3.20-4.82 Operating capital - Operating capital Other receivables Yes Other receivables Yes 2,524,740 (US$ 50,000) (RMB 200,000) 810,625 25,000) (US$ 2,402,298 (US$ 50,000) (RMB 200,000) 767,625 25,000) (US$ (US$ (RMB (US$ 699,368 22,777) -) 607,683 19,791) 3.20-4.82 Operating capital - Operating capital 4.82 Operating capital - Operating capital Jiangyin Walsin Other receivables Yes Steel Cable Co., Ltd. XiAn Walsin Metal Product Co., Ltd. Other receivables Yes 2 Dongguan Walsin (China) Other receivables Yes Walsin Wire & Cable Co., Ltd. Investment Co., Ltd. 3 Walsin Walsin (China) Other receivables Yes 1,453,613 (US$ 10,000) (RMB 250,000) 836,194 190,000) (US$ 1,390,860 (US$ 10,000) (RMB 250,000) 823,696 190,000) (US$ (US$ (RMB (US$ 305,882 -) 70,557) 790,917 182,439) 3,388,088 (RMB 750,000) 3,251,430 (RMB 750,000) 1,195,408 (RMB 275,742) 19,655,826 400,000) (US$ (RMB 1,480,000) 18,698,155 400,000) (US$ (RMB 1,480,000) 11,567,051 274,070) (US$ (RMB 727,000) 3.20-4.82 Operating capital - Operating capital 1.35 Operating capital - Operating capital 2.00 Operating capital - Operating capital 2.80-4.65 Operating capital - Operating capital - - International Investments Limited Investment Co., Ltd. Walsin Lihwa Corporation PT. Walsin Nickel Industrial Indonesia Other receivables Yes Other receivables Yes 19,455,000 600,000) 3,048,000 100,000) (US$ (US$ 18,423,000 600,000) - -) (US$ (US$ (US$ (US$ 3,193,320 104,000) - -) 5.36 Operating capital - Operating capital - Operating capital - Operating capital PT. Sunny Metal Other receivables Yes Industry 2,431,875 75,000) (US$ 1,228,200 40,000) (US$ 1,227,832 39,988) (US$ 7.09-7.55 Operating capital - Operating capital 2 7 9 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 56,324,126 56,324,126 56,324,126 56,324,126 56,324,126 56,324,126 56,324,126 56,324,126 56,324,126 56,324,126 56,324,126 56,324,126 56,324,126 56,324,126 56,324,126 56,324,126 56,324,126 56,324,126 56,324,126 56,324,126 6,599,800 (RMB 1,522,361) 6,599,800 (RMB 1,522,361) 6,599,800 (RMB 1,522,361) 6,599,800 (RMB 1,522,361) (Continued) 2 8 0 Notes: 1. According to the financing regulations provided by Walsin (China) Investment Co., Ltd., Dongguan Walsin Wire & Cable Co., Ltd. and Walsin International Investments Ltd., the total limit on the amount of the financing provided to WLC or a overseas subsidiary whose equity is 100%-owned, directly or indirectly by WLC cannot exceed 40% of the equity of the parent company as presented in the consolidated financial statements of Walsin Lihwa Corporation. The limit on the amount of financing provided to a subsidiary whose equity is less than 100%-owned, directly or indirectly by WLC, cannot exceed 40% of the parent company’s equity as presented in its the consolidated financial statements of a subsidiary. If the financing is a one-time funding, the amount for an individual loan shall not exceed 40 % of the financing company’s equity as stated in the financing company’s latest consolidated financial statements. If it is a revolving funding, the amount for an individual loan shall not exceed 10 % of the financing company’s equity in the financing company’s latest consolidated financial statements. a. The limit on the amount of financing provided to a single enterprise was as follows: Jiangyin Walsin Steel Cable Co., Ltd., Walsin (China) Investment Co., Ltd., Walsin Lihwa Corporation, Walsin (Nanjing) Development Co., Ltd., Yantai Walsin Stainless Steel Co., Ltd., Jiangyin Walsin Specialty Alloy Materials Co., Ltd., Changshu Walsin Specialty Steel Co., Ltd., Dongguan Walsin Wire & Cable Co., Ltd. = $140,810,315 × 40% = $56,324,126. Hangzhou Walsin Power Cable & Wire Co., Ltd. = RMB928,944 × 10% = RMB92,894 ($402,718). PT. Walsin Nickel Industrial Indonesia and PT. Sunny Metal Industry = RMB3,805,902 × 40% = RMB1,522,361 ($6,599,800). b. The limit on the amount of financing provided was as follows: Walsin (China) Investment Co., Ltd and Dongguan Walsin Wire & Cable Co., Ltd. = $140,810,315 × 40% = $56,324,126. Walsin (China) Investment Co., Ltd. = RMB928,944 × 10% = RMB92,894 ($402,718). Walsin International Investments Limited = RMB3,805,902 × 40% = RMB1,522,361 ($6,599,800)) 2. Amounts are stated in thousands of New Taiwan dollars, except those stated in thousands of U.S. dollars and Renminbi. 3. The currency exchange rates as of December 31, 2023 were as follows: US$ to NT$ = 1:30.705; RMB to NT$ = 1:4.33524; US$ to RMB = 1:7.0827. (Concluded) i F n a n c i a l I n f o r m a t i o n TABLE 1-2 CONCORD INDUSTRIES LIMITED AND SUBSIDIARIES FINANCING PROVIDED TO OTHERS FOR THE YEAR ENDED DECEMBER 31, 2023 (In Thousands of New Taiwan Dollars and Renminbi) No. Lender Borrower Financial Statement Account Related Party Highest Balance for the Period Ending Balance Actual Amount Borrowed Interest Rate (%) Nature of Financing Business Transactio n Amount Reasons for Short-term Financing Collateral Allowance for Impairment Loss Item Value Financing Limit for Each Borrower (Note 1) Aggregate Financing Limit (Note 1) 4 Changshu Walsin Specialty Steel Co., Ltd. 5 Jiangyin Walsin Specialty Alloy Materials Co., Ltd. Walsin (China) Investment Co., Ltd. Walsin (China) Investment Co., Ltd. Notes: Other receivables Yes $ 451,745 (RMB 100,000) $ 433,524 (RMB 100,000) $ (RMB 186,875 43,106) 2.00 Operating capital $ - Operating capital $ - - $ - $ 56,324,126 $ 56,324,126 Other receivables Yes 677,618 (RMB 150,000) 650,286 (RMB 150,000) 550,424 (RMB 126,965) 2.00 Operating capital - Operating capital - - - 56,324,126 56,324,126 1. According to the financing regulations of Changshu Walsin Specialty Steel Co., Ltd. and Jiangyin Walsin Specialty Alloy Materials Co., Ltd., the limit on the amount of financing provided to WLC or an overseas subsidiary whose equity is 100% owned, directly or indirectly by WLC cannot exceed 40% of the parent company’s equity presented in the consolidated financial statements of Walsin Lihwa Corporation. a. The limit on the amount of financing provided to a single enterprise was as follows: Walsin (China) Investment Co., Ltd. = $140,810,315 × 40% = $56,324,126 b. The limit on the amount of financing provided was as follows: Changshu Walsin Specialty Steel Co., Ltd., Jiangyin Walsin Specialty Alloy Materials Co., Ltd. = $140,810,315 × 40% = $56,324,126. 2. Amounts are stated in thousands of New Taiwan dollars, except those stated in thousands of Renminbi. 3. The currency exchange rates as of December 31, 2023 were as follows: RMB to NT$ = 1:4.33524. 2 8 1 2 8 2 CHIN-CHERNG CONSTRUCTION CO. AND SUBSIDIARIES FINANCING PROVIDED TO OTHERS FOR THE YEAR ENDED DECEMBER 31, 2023 (In Thousands of New Taiwan Dollars and U.S. Dollars) TABLE 1-3 i F n a n c i a l I n f o r m a t i o n No. Lender Borrower Financial Statement Account Related Party Highest Balance for the Period Ending Balance Actual Amount Borrowed Interest Rate (%) Nature of Financing Business Transacti on Amount Reasons for Short-term Financing Allowance for Impairment Loss Collateral Item Value Financing Limit for Each Borrower (Note 1) Aggregate Financing Limit (Note 1) 6 Joint Success Enterprises Limited Walsin (Nanjing) Development Co., Ltd. Other receivables Yes $ (US$ 858,614 26,480) $ (US$ - -) $ (US$ - -) - Operating capital $ - Operating capital $ - - $ - $ 56,324,126 $ 56,324,126 Notes: 1. According to the financing regulations provided by Joint Success Enterprises Limited, the total limit on the amount of the financing provided to WCL or a oversea subsidiary whose equity is 100%-owned, directly or indirectly by WLC, cannot exceed 40% of the equity of the parent company as presented in the consolidated financial statements of Walsin Lihwa Corporation. The limit on the amount of financing provided to a subsidiary whose equity is less than 100%-owned, directly or indirectly by WLC, cannot exceed 40% of the parent company’s equity as presented in the parent company’s latest consolidated financial statements. If the financing is a one-time funding, the amount for an individual loan shall not exceed 40 % of the parent company’s equity in the parent company’s latest consolidated financial statements. If it is a revolving fund, the amount for an individual loan shall not exceed 10% of the parent company’s equity in the parent company’s latest consolidated financial statements. a. The limit on the amount of financing provided to a single enterprise was as follows: Walsin (Nanjing) Development Co., Ltd. = $140,810,315 × 40% = $56,324,126 b. The limit on the amount of financing provided was as follows: Joint Success Enterprises Limited = $140,810,315 × 40% = $56,324,126 2. Amounts are stated in thousands of New Taiwan dollars, except those stated in thousands of U.S. dollars. 3. The currency exchange rates as of December 31, 2023 were as follows: US$ to NT$ = 1:30.705. TABLE 1-4 WALSIN INFO-ELECTRIC CORP. AND SUBSIDIARIES FINANCING PROVIDED TO OTHERS FOR THE YEAR ENDED DECEMBER 31, 2023 (In Thousands of New Taiwan Dollars) No. Lender Borrower Financial Statement Account Related Party Highest Balance for the Period Ending Balance Actual Amount Borrowed Interest Rate (%) Nature of Financing Business Transaction Amount Reasons for Short-term Financing Allowance for Impairment Loss Collateral Item Value Financing Limit for Each Borrower (Note 1) Aggregate Financing Limit (Note 1) 7 Walsin Info-Electric Corporation Notes: Walsin Lihwa Other receivables Yes $ 130,000 $ 100,000 $ 100,000 1.60 Operating capital $ - Operating capital $ - - $ - $ 139,983 $ 139,983 Corporation 1. According to the financing regulations provided by Walsin Info-Electric Corporation, the total limit on the amount of the financing provided to WLC or a oversea subsidiary whose equity is 100% owned, directly or indirectly by WLC, cannot exceed 40% of the equity of the parent company as presented in the consolidated financial statements of Walsin Lihwa Corporation. The limit on the amount of financing provided to a subsidiary whose equity is less than 100% owned, directly or indirectly by WLC, cannot exceed 40% of the parent company’s equity as presented in the parent company’s latest consolidated financial statements. If the financing is a one-time funding, the amount for an individual loan shall not exceed 40% of the parent company’s equity in the parent company’s latest consolidated financial statements. If it is a revolving fund, the amount for an individual loan shall not exceed 10% of the parent company’s equity in the parent company’s latest consolidated financial statements. a. The limit on the amount of financing provided to a single enterprise was as follows: Walsin Lihwa Corporation = $349,957 × 40% = $139,983 b. The limit on the amount of financing provided was as follows: Walsin Info-Electric Corp. = $349,957 × 40% = $139,983 2 8 3 2 8 4 WALSIN SINGAPORE PTE. LTD. AND SUBSIDIARIES FINANCING PROVIDED TO OTHERS FOR THE YEAR ENDED DECEMBER 31, 2023 (In Thousands of New Taiwan Dollars and U.S. Dollars) TABLE 1-5 i F n a n c i a l I n f o r m a t i o n No. Lender Borrower Financial Statement Account Related Party Highest Balance for the Period Ending Balance Actual Amount Borrowed Interest Rate (%) Nature of Financing Business Transactio n Amount Reasons for Short-term Financing Allowance for Impairment Loss Collateral Item Value Financing Limit for Each Borrower (Note 1) Aggregate Financing Limit (Note 1) 8 Walsin PT. Sunny Metal Other receivables Yes Singapore Pte. Ltd. Industry PT. Westrong Other receivables Yes $ (US$ 10,025,041 320,750) $ (US$ 9,848,629 320,750) $ (US$ 8,503,750 276,950) 7.11-7.62 Operating capital $ - Equipment purchase $ Metal Industry PT. Walhsu Metal Industry Innovation West Mantewe Pte. Ltd. Other receivables Yes 3,691,850 117,500) 942,600 30,000) (US$ (US$ (US$ (US$ - -) - -) (US$ (US$ - -) - -) - - Operating capital Operating capital Other receivables Yes (US$ 664,713 20,500) (US$ 629,453 20,500) (US$ 147,384 4,800) 7.99 Operating capital - Equipment purchase - Construction of new plants and equipment purchase - Construction of new plants and equipment purchase 9 PT. Sunny Metal Industry PT. Walhsu Metal Other receivables Yes Industry 1,459,125 45,000) (US$ 1,381,725 45,000) (US$ 1,166,790 38,000) (US$ 7.44-7.62 Operating capital - Construction of - - new plants and equipment purchase - - - - - $ - - - - - - - - $ (US$ 11,224,765 365,568) $ (US$ 11,224,765 365,568) 11,224,765 365,568) 11,224,765 365,568) 11,224,765 365,568) 11,224,765 365,568) (US$ (US$ (US$ (US$ 11,224,765 365,568) 11,224,765 365,568) (US$ (US$ 1,924,405 62,674) (US$ 1,924,405 62,674) (US$ Notes: 1. According to the financing regulations provided by Walsin Singapore Pte. Ltd. and PT. Sunny Metal Industry, the total limit on the amount of the financing provided to WLC or a oversea subsidiary whose equity is 100% owned, directly or indirectly by WLC, cannot exceed 40% of the equity of the parent company as presented in the consolidated financial statements of Walsin Lihwa Corporation. The limit on the amount of financing provided to a subsidiary whose equity is less than 100% owned, directly or indirectly by WLC, cannot exceed 40% of the parent company’s equity as presented in the parent company’s latest consolidated financial statements. If the financing is a one-time funding, the amount for an individual loan shall not exceed 40% of the parent company’s equity in the parent company’s latest consolidated financial statements. If it is a revolving fund, the amount for an individual loan shall not exceed 10% of the parent company’s equity in the parent company’s latest consolidated financial statements. a. The limit on the amount of financing provided to a single enterprise was as follows: PT. Sunny Metal Industry, PT. Westrong Metal Industry, PT. Walhsu Metal Industry, Innovation West Mantewe Pte. Ltd., = US$913,921 × 40% = US$365,568 ($11,224,765). PT. Walhsu Metal Industry = US$156,685 × 40% = US$62,674 ($1,924,405). b. The limit on the amount of financing provided was as follows: Walsin Singapore Pte. Ltd. = US$913,921 × 40% = US$365,568 ($11,224,765). PT. Sunny Metal Industry = US$156,685 × 40% = US$62,674 ($1,924,405). 2. Amounts are stated in thousands of New Taiwan dollars, except those stated in thousands of U.S. dollars. 3. The currency exchange rates as of December 31, 2023 was as follows: US$ to NT$ = 1:30.705. COGNE ACCIAI SPECIALI S.P.A. AND SUBSIDIARIES FINANCING PROVIDED TO OTHERS FOR THE YEAR ENDED DECEMBER 31, 2023 (In Thousands of New Taiwan Dollars, Euro and Pound) No. Lender Borrower Financial Statement Account Related Party Highest Balance for the Period Ending Balance Actual Amount Borrowed Interest Rate (%) Nature of Financing Business Transactio n Amount Reasons for Short-term Financing Allowance for Impairment Loss Collateral Item Value Financing Limit for Each Borrower (Note 1) Aggregate Financing Limit (Note 1) 10 Cogne Acciai Speciali S.p.A. Degerfors Long Products AB Special Melted Products Limited Other receivables Yes Other receivables Yes $ (EUR (GBP 347,100 10,000) 552,485 13,920) $ (EUR (GBP - -) 290,493 7,420) $ (EUR (GBP - -) 240,851 6,152) - Operating capital $ - Operating capital $ 4.95-4.96 Operating capital - Operating capital - - $ - - - - $ (EUR (EUR 3,676,568 108,198) 3,676,568 108,198) $ (EUR (EUR 3,676,568 108,198) 3,676,568 108,198) Notes: 1. According to the financing regulations provided by Cogne Acciai Speciali S.p.A., the total limit on the amount of the financing provided to subsidiary whose equity is 50% owned, directly or indirectly by its parent company, cannot exceed 20% of the parent company’s equity as presented in the latest consolidated financial statements. If it is a revolving fund, the amount for an individual loan shall not exceed 5% of the parent company’s equity as presented in the latest consolidated financial statements. The total limit on the amount of the financing provided to a oversea subsidiary whose equity is 100%-owned, directly or indirectly by its parent company, cannot exceed 20% of the parent company’s equity as presented in the latest consolidated financial statements. TABLE 1-6 a. The limit on the amount of financing provided to a single enterprise was as follows: Degerfors Long Products AB, Special Melted Products Limited = EUR540,989 × 20% = EUR108,198 ($3,676,568). b. The limit on the amount of financing provided was as follows: Cogne Acciai Speciali S.p.A. = EUR540,989 × 20% = EUR108,198 ($3,676,568). 2. Amounts are stated in thousands of New Taiwan dollars, except those stated in thousands of EUR and GBP. 3. The currency exchange rates as of December 31, 2023 were as follows: EUR to NT$ = 1:33.98; GBP to NT$ = 1:39.15; GBP to EUR = 1:1.1521. 2 8 5 2 8 6 WALSIN LIHWA CORPORATION AND SUBSIDIARIES ENDORSEMENTS/GUARANTEES PROVIDED FOR THE YEAR ENDED DECEMBER 31, 2023 (In Thousands of New Taiwan Dollars, U.S. Dollars and Renminbi) Guaranteed Party No. (Note 1) Endorsement/ Guarantee Provider Name Nature of Relationship (Note 2) Limits on Each Guaranteed Party’s Endorsement/ Guarantee Amounts (Note 3) TABLE 2 i F n a n c i a l I n f o r m a t i o n Highest Balance for the Period Ending Balance (Note 4) Actual Amount Borrowed Amount of Endorsement/ Guarantee Collateralized by Properties Ratio of Accumulated Endorsement/ Guarantee to Net Equity Per Latest Financial Statement (%) Maximum Collateral/ Guarantee Amounts Allowable (Note 3) Guaranteed Provided by Parent Company Guarantee Provided by A Subsidiary Guarantee Provided to Subsidiaries in Mainland China 0 Walsin Lihwa Corporation Borrego Energy, LLC Yantai Walsin Stainless Steel Co., Ltd. Notes: b b $ (US$ - -) 6,512,311 (RMB 1,502,180) $ (US$ 365,760 12,000) 4,065,705 (RMB 900,000) $ (US$ - -) 3,901,716 (RMB 900,000) $ (US$ (RMB $ - -) - -) - - - 2.77 $ 140,810,315 140,810,315 Yes Yes No No No Yes 1. The information on Walsin Lihwa Corporation and its subsidiaries is listed and labeled on the entitled “No.” column. “0” represents Walsin Lihwa Corporation. a. b. Subsidiaries are numbered consecutively starting from 1. 2. The relationship between Walsin Lihwa Corporation and the endorsed/guaranteed entities can be classified into the following categories a. A company with which Walsin Lihwa Corporation does business. b. A company in which Walsin Lihwa Corporation directly and indirectly holds more than 50% of the voting shares. c. A company that directly and indirectly holds more than 50% of the voting shares in Walsin Lihwa Corporation. d. A company in which Walsin Lihwa Corporation directly or indirectly holds 90% or more of the voting shares. e. A company that fulfills Walsin Lihwa Corporation’s contractual obligations by providing mutual endorsements/guarantees for another company in the same industry or for joint builders for purposes of undertaking a construction project. f. A company in which all capital contributing shareholders make endorsements/guarantees for it and Walsin Lihwa Corporation’s joint-investment company in proportion to their shareholding percentages. g. A company in the same industry as Walsin Lihwa Corporation whereby either provides among themselves joint and several security for a performance guarantee of a sales contract for pre-construction homes pursuant to the Consumer Protection Act for each other. 3. According to the endorsements/guarantees provided and financing regulations provided by Walsin Lihwa Corporation, the total limit on the amount of endorsements/guarantees cannot exceed 100% of the equity of Walsin Lihwa Corporation’s current financial statements (including the consolidated financial statements). The limit on the amount of endorsements/guarantees provided and financing provided to a single enterprise cannot exceed the equity of the guaranteed company. The amount which is 250% of the net value multiplied by the equity percentage of the guarantee provider. a. The limit on the amount of endorsements/guarantees provided was as follows: NT$140,810,315 × 100% = $140,810,315 b. The limit on the amount of endorsements/guarantees provided to a single entity was as follows: Borrego Energy, LLC: US$0 × 250% × 72.55% = US$0 Yantai Walsin Stainless Steel Co., Ltd.: RMB600,872 × 250% × 100.00% = RMB1,502,180 ($6,512,311) 4. The currency exchange rates as of December 31, 2023 were as follows: US$ to NT$ = 1:30.705; RMB to NT$ = 1:4.33524. TABLE 2-1 COGNE ACCIAI SPECIALI S.P.A. AND SUBSIDIARIES ENDORSEMENTS/GUARANTEES PROVIDED FOR THE YEAR ENDED DECEMBER 31, 2023 (In Thousands of New Taiwan Dollars, Euro and SEK) Guaranteed Party No. (Note 1) Endorsement/ Guarantee Provider Name Nature of Relationship (Note 2) Limits on Each Guaranteed Party’s Endorsement/ Guarantee Amounts (Note 3) Highest Balance for the Period Ending Balance (Note 4) Actual Amount Borrowed Amount of Endorsement/ Guarantee Collateralized by Properties Ratio of Accumulated Endorsement/ Guarantee to Net Equity Per Latest Financial Statement (%) Maximum Collateral/ Guarantee Amounts Allowable (Note 3) Guaranteed Provided by Parent Company Guarantee Provided by A Subsidiary Guarantee Provided to Subsidiaries in Mainland China 1 Cogne Acciai Speciali S.p.A. Degerfors Long Products AB b $ (EUR 1,773,416 52,190) $ (SEK 616,000 200,000) $ (SEK 616,000 200,000) $ (SEK $ - -) - 16.75 $ (EUR 3,676,568 108,198) Yes No No Notes: 1. The information on Cogne Acciai Speciali S.p.A. and its subsidiaries is listed and labeled on the entitled “No.” column. “0” represents Cogne Acciai Speciali S.p.A. a. b. Subsidiaries are numbered consecutively starting at 1. 2. The relationship between Cogne Acciai Speciali S.p.A. and the endorsed/guaranteed entities can be classified into six categories. a. A company with which Cogne Acciai Speciali S.p.A. does business. b. A company in which Cogne Acciai Speciali S.p.A. directly and indirectly holds more than 50% of the voting shares. c. A company that directly and indirectly holds more than 50% of the voting shares in Cogne Acciai Speciali S.p.A. d. A company in which Cogne Acciai Speciali S.p.A. directly or indirectly holds 90% or more of the voting shares. e. A company that fulfills Cogne Acciai Speciali S.p.A.’s contractual obligations by providing mutual endorsements/guarantees for another company in the same industry or for joint builders for purposes of undertaking a construction project. f. A company in which all capital contributing shareholders make endorsements/guarantees for it and Cogne Acciai Speciali S.p.A.’s joint-investment company in proportion to their shareholding percentages. g. A company in the same industry as Cogne Acciai Speciali S.p.A. whereby either provides among themselves joint and several security for a performance guarantee of a sales contract for pre-construction homes pursuant to the Consumer Protection Act for each other. 3. According to the endorsements/guarantees provided and financing regulations provided by Cogne Acciai Speciali S.p.A., the total limit on the amount of endorsements/guarantees cannot exceed 20% of the equity of Cogne Acciai Speciali S.p.A.’s current financial statements (including the consolidated financial statements). The limit on the amount of endorsements/guarantees provided and financing provided to a single enterprise cannot exceed the equity of the guaranteed company. The amount which is 125% of the net value multiplied by the equity percentage of the guarantee provider. a. The limit on the amount of endorsements/guarantees provided was as follows: EUR540,989 × 20% = EUR108,198 ($3,676,568). b. The limit on the amount of endorsements/guarantees provided to a single entity was as follows: Degerfors Long Products AB: EUR41,752 × 125% × 100% = EUR52,190 ($1,773,416). 4. The currency exchange rates as of December 31, 2023 was as follows: EUR to NT$ = 1:33.98; SEK to NT$ = 1:3.08. 2 8 7 2 8 8 WALSIN LIHWA CORPORATION AND SUBSIDIARIES MARKETABLE SECURITIES HELD DECEMBER 31, 2023 (In Thousands of New Taiwan Dollars) TABLE 3 i F n a n c i a l I n f o r m a t i o n Holding Company Name Type and Name of Issuer of Marketable Securities Relationship with the Holding Company Financial Statement Account December 31, 2023 Number of Shares/Units Carrying Amount Percentage of Ownership (%) Fair Value Note Walsin Lihwa Corporation Share HannStar Display Corp. The holding company is a director HannStar Board Corp. of the issuer company The chairman of the holding company and the chairman of the company are second-class relatives Financial assets at fair value through other comprehensive income - non-current Financial assets at fair value through other comprehensive income - non-current 299,632,180 $ 3,550,641 10.19 $ 3,550,641 63,753,952 3,525,594 12.06 3,525,594 TECO Electric & Machinery - Co., Ltd. Kuang Tai Metal Industrial Co., The holding company is a director Ltd. of the issuer company Global Investment Holdings The holding company is a director Universal Venture Capital Investment of the issuer company - Hwa Bao Botanic Conservation The holding company is a Corp. Tung Mung Development Co., supervisor of the issuer company - Ltd. Financial assets at fair value through other comprehensive income - non-current Financial assets at fair value through other comprehensive income - non-current Financial assets at fair value through other comprehensive income - non-current Financial assets at fair value through other comprehensive income - non-current Financial assets at fair value through other comprehensive income - non-current Financial assets at fair value through other comprehensive income - non-current 231,104,730 10,815,701 10.81 10,815,701 9,631,802 295,107 5,221,228 1,400,000 64,327 14,954 9.39 2.97 1.16 27,000,000 284,474 15.00 14,285,000 84,381 3.43 295,107 64,327 14,954 284,474 84,381 TABLE 3-1 CONCORD INDUSTRIES LIMITED AND SUBSIDIARIES MARKETABLE SECURITIES HELD DECEMBER 31, 2023 (In Thousands of Renminbi) Holding Company Name Type and Name of Issuer of Marketable Securities Relationship of Issuer to the Holding Company Financial Statement Account Number of Shares/Units Carrying Amount Percentage of Ownership (%) Fair Value Note December 31, 2023 XiAn Walsin Metal Product Certification of capital verification Co., Ltd. Shaanxi Tianhong Silicon Industrial Corporation Jiangyin Walsin Specialty Alloy Materials Co., Ltd. Certification of capital verification Shaanxi Electronic Group Optoelectronics Technology Co., Ltd. - - Financial assets at fair value through other comprehensive income - non-current Financial assets at fair value through other comprehensive income - non-current N/A $ - 19.00 $ - N/A 18,155 6.02 18,155 2 8 9 2 9 0 CHIN-CHERNG CONSTRUCTION CO. AND SUBSIDIARIES MARKETABLE SECURITIES HELD DECEMBER 31, 2023 (In Thousands of New Taiwan Dollars) TABLE 3-2 i F n a n c i a l I n f o r m a t i o n Holding Company Name Type and Name of Issuer of Marketable Securities Relationship of Issuer to the Holding Company Financial Statement Account December 31, 2023 Number of Shares/Units Carrying Amount Percentage of Ownership (%) Fair Value Note Chin-Cherng Construction Co. Share Gsharp Corporation - Financial assets at fair value through other comprehensive income - non-current 270,000 $ - 2.73 $ - TABLE 3-3 WALSIN INFO-ELECTRIC CORP. MARKETABLE SECURITIES HELD DECEMBER 31, 2023 (In Thousands of New Taiwan Dollars) Holding Company Name Type and Name of Issuer of Marketable Securities Relationship of Issuer to the Holding Company Financial Statement Account Number of Shares/Units Carrying Amount Percentage of Ownership (%) Fair Value Note December 31, 2023 Walsin Info-Electric Corp. Share W T International Inc. Ufi Space Co., Ltd. InSynerger Technology Co., Ltd. K.S. Terminals Inc. Landing AI - - - - - Financial assets at fair value through other comprehensive income - non-current Financial assets at fair value through other comprehensive income - non-current Financial assets at fair value through other comprehensive income - non-current Financial assets at fair value through other comprehensive income - non-current Financial assets at fair value through other comprehensive income - non-current 228,000 $ 2,308 359,549 30,541 750,000 36,240 145,000 10,426 265,583 29,774 5.43 1.03 6.60 0.09 0.54 $ 2,308 30,541 36,240 10,426 29,774 2 9 1 2 9 2 PT. WALSIN LIPPO INDUSTRIES MARKETABLE SECURITIES HELD DECEMBER 31, 2023 (In Thousands of U.S. Dollars) TABLE 3-4 i F n a n c i a l I n f o r m a t i o n Holding Company Name Type and Name of Issuer of Marketable Securities Relationship of Issuer to the Holding Company Financial Statement Account December 31, 2023 Number of Shares/Units Carrying Amount Percentage of Ownership (%) Fair Value Note PT. Walsin Lippo Government bonds Industries Indonesia Government Bonds - Financial assets at amortized cost - $ 6,012 N/A $ 5,994 - non-current COGNE ACCIAI SPECIALI S.P.A. MARKETABLE SECURITIES HELD DECEMBER 31, 2023 (In Thousands of Euro) Holding Company Name Type and Name of Issuer of Marketable Securities Relationship of Issuer to the Holding Company Financial Statement Account December 31, 2023 Number of Shares/Units Carrying Amount Percentage of Ownership (%) Fair Value Note Cogne Acciai Speciali S.p.A. Share Geo Storage Metal Interconnector - - Financial assets at fair value through profit N/A $ 2 or loss - non-current Financial assets at fair value through profit 2,114,787 2,339 or loss - non-current - 1.64 $ 2 2,339 TABLE 3-5 2 9 3 2 9 4 WALSIN LIHWA CORPORATION AND SUBSIDIARIES MARKETABLE SECURITIES ACQUIRED OR DISPOSED OF AT COSTS OR PRICES OF AT LEAST NT$300 MILLION OR 20% OF THE PAID-IN CAPITAL FOR THE YEAR ENDED DECEMBER 31, 2023 (In Thousands of New Taiwan Dollars) TABLE 4 i F n a n c i a l I n f o r m a t i o n Company Name Type and Name of Marketable Securities Financial Statement Account Purpose of Transaction/Count erparty Beginning Balance Acquisition Disposal Ending Balance Relationship Number of Shares Amount Number of Shares Amount Number of Shares Amount Carrying Amount Gain (Loss) on Disposal Number of Shares Amount Walsin Lihwa Corporation Share Walsin Lihwa Holdings Limited Concord Industries Limited Walsin Lihwa Europe S.a r.l. Walsin Singapore Pte. Ltd. PT. Westrong Metal Industry Walsin Energy Cable System Co., Ltd. Innovation West Mantewe Pte. Ltd. Investments accounted for using the equity method Investments accounted for using the equity method Investments accounted for using the equity method Investments accounted for using the equity method Investments accounted for using the equity method Investments accounted for using the equity method Investments accounted for using the equity method Capital reduction Subsidiaries 108,730,393 $ 24,073,818 Capital reduction Subsidiaries 308,498,375 5,210,454 - $ - - 106,000,000 $ 3,214,530 - 11,000,000 336,700 Capital investment Subsidiaries 12,000 4,146,986 Capital investment Subsidiaries 422,000,000 19,603,265 Walsin Singapore Subsidiaries 590,000 4,590,864 - 5,519,286 (Note 2) 311,000,000 11,206,684 (Note 2) - - Pte. Ltd. Capital investment Subsidiaries Glory Merry Limited and non-related individual - - - - - 270,000,000 40 2,657,462 (Note 2) 2,444,727 $ $ 3,490,565 (Note 1) 1,525,182 (Note 1) - - - - - - 2,730,393 $ 20,583,253 297,498,375 3,685,272 12,000 9,666,272 733,000,000 30,809,949 - - - - 590,000 4,680,030 4,680,030 - - - - - - 47,627,598 476,276 - 14,713,622 474,294 (617,532) (Note 2) - - - - 720,191 (Note 1) 846,712 (Note 1) 89,166 (Note 3) - - - - - - - 270,000,000 2,657,462 40 2,444,727 919,380,016 20,335,573 529,955,805 5,462,298 21,344,562 4,237,555 Winbond Electronics Corporation Chin-Cherng Construction Co. Joint Success Enterprises Limited Investments accounted for using the equity method Investments accounted for using the equity method Investments accounted for using the equity method Capital investment Associates 883,848,423 20,953,105 35,531,593 Capital reduction Subsidiaries 577,583,403 6,182,490 Capital reduction Subsidiaries 36,058,184 5,084,267 - - Note 1: The amount included a capital decrease in cash, recognition of investment gains and losses, and changes in other equity. Note 2: The amount included a capital increase in cash, recognition of investment gains and losses, and changes in other equity. Note 3: The amount included exchange differences on the translation of the financial statements of foreign operations. WALSIN LIHWA HOLDINGS LIMITED AND SUBSIDIARIES MARKETABLE SECURITIES ACQUIRED OR DISPOSED OF AT COSTS OR PRICES OF AT LEAST NT$300 MILLION OR 20% OF THE PAID-IN CAPITAL FOR THE YEAR ENDED DECEMBER 31, 2023 (In Thousands of Renminbi) Company Name Type and Name of Marketable Securities Financial Statement Account Purpose of Transaction/ Counterparty Relationship Beginning Balance Acquisition Disposal Ending Balance Number of Shares Amount Number of Shares Amount Number of Shares Amount Carrying Amount Gain (Loss) on Disposal Number of Shares Amount Walsin Lihwa Holdings Limited Share Walsin International Co., Ltd. Investments accounted for using the equity method Capital reduction Subsidiary 4,653,371,702 $ 4,441,707 - $ - 851,207,000 $ 750,438 $ 635,805 (Note) $ - 3,802,164,702 $ 3,805,902 Note: The amount included a capital decrease in cash and recognition of investment gains or losses. TABLE 4-1 2 9 5 2 9 6 WALSIN SINGAPORE PTE. LTD. MARKETABLE SECURITIES ACQUIRED OR DISPOSED OF AT COSTS OR PRICES OF AT LEAST NT$300 MILLION OR 20% OF THE PAID-IN CAPITAL FOR THE YEAR ENDED DECEMBER 31, 2023 (In Thousands of U.S. Dollars) TABLE 4-2 i F n a n c i a l I n f o r m a t i o n Company Name Type and Name of Marketable Securities Financial Statement Account Purpose of Transaction/ Counterparty Beginning Balance Acquisition Disposal Ending Balance Relationship Number of Shares Amount Number of Shares Amount Number of Shares Amount Carrying Amount Gain (Loss) on Disposal Number of Shares Amount Walsin Singapore Share Pte. Ltd. PT. Westrong Metal Industry Investments accounted for using the equity method Walsin Lihwa Corporation Parent company - $ - 59,000 $ 145,850 (Note) - $ - $ $ - 590,000 $ 145,850 (Note) Note: The amount included the purchase amount, recognition of investment gains or losses and changes in other equity. WALSIN LIHWA EUROPE S.A R.L. AND SUBSIDIARIES MARKETABLE SECURITIES ACQUIRED OR DISPOSED OF AT COSTS OR PRICES OF AT LEAST NT$300 MILLION OR 20% OF THE PAID-IN CAPITAL FOR THE YEAR ENDED DECEMBER 31, 2023 (In Thousands of Euro) Company Name Type and Name of Marketable Securities Financial Statement Account Purpose of Transaction/ Counterparty Beginning Balance Acquisition Disposal Ending Balance Relationship Number of Shares Amount Number of Shares Amount Number of Shares Amount Carrying Amount Gain (Loss) on Disposal Number of Shares Amount Walsin Lihwa Europe Share S.a r.l. MEG S.A Investments accounted for using the equity method Capital investment Subsidiaries 5,102 $ 177,148 3,175 $ Cogne Acciai Speciali Special Melted S.p.A. Products Limited Investments accounted for using the equity method MUTARES HOLDING-33 GMBH - - - 4,199,156 Note: The amount included a capital increase in cash, recognition of investment gains and losses and changes in other equity. 161,606 (Note) 173,702 (Note) - $ - $ - $ - - - - - 8,277 $338,754 (Note) 4,199,156 173,702 (Note) TABLE 4-3 2 9 7 2 9 8 WALSIN LIHWA CORPORATION AND SUBSIDIARIES ACQUISITION OF INDIVIDUAL REAL ESTATE AT COSTS OF AT LEAST NT$300 MILLION OR 20% OF THE PAID-IN CAPITAL FOR THE YEAR ENDED DECEMBER 31, 2023 (In Thousands of New Taiwan Dollars, Renminbi and U.S. Dollars) TABLE 5 i F n a n c i a l I n f o r m a t i o n Company Name Property Transaction Date Transaction Amount (Foreign Currencies in Thousands) Payment Term Counterparty Nature of Relationships Owner Relationships Transfer Date Amount Price Reference Purpose of Acquisition Other Terms Prior Transaction of Related Counterparty Walsin Lihwa Corporation Plant Yantai Walsin Plant Stainless Steel Co., Ltd. Yantai Walsin Dormitory Stainless Steel Co., Ltd. PT. Sunny Metal Plant Industry PT. Walhsu Metal Plant Industry Walsin Energy Cable System Co., Ltd. Plant 2023/02/04- 2023/12/26 2023/01/01- 2023/12/28 $ 1,130,651 Based on the terms Chung-Lu Construction in the contract Co., Ltd. RMB 182,764 Based on the terms in the contract 2023/04/27- 2023/12/27 RMB 131,248 Based on the terms in the contract 2023/03/27- 2023/09/30 2023/07/07- 2023/12/29 2023/07/17- 2023/11/23 US$ 59,368 Based on the terms in the contract US$ 23,095 Based on the terms in the contract PT. Perintis Makmur Indonesia etc. PT. Perintis Makmur Indonesia etc. 872,500 Based on the terms Chung-Lu Construction in the contract Co., Ltd. China Construction Eighth Engineering Division. Co., Ltd. China Merchants Property Development (Yantai) Co., Limited - - - - - - N/A N/A N/A N/A Based on the Manufacturing and marketability operating purpose N/A N/A N/A N/A Based on the Manufacturing and marketability operating purpose N/A N/A N/A N/A Based on the Manufacturing and marketability operating purpose N/A N/A N/A N/A Based on the Manufacturing and marketability operating purpose N/A N/A N/A N/A Based on the Manufacturing and marketability operating purpose N/A N/A N/A N/A Based on the Manufacturing and marketability operating purpose - - - - - - TABLE 6 WALSIN LIHWA CORPORATION TOTAL PURCHASES FROM OR SALES TO RELATED PARTIES AMOUNTING TO AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL FOR THE YEAR ENDED DECEMBER 31, 2023 (In Thousands of New Taiwan Dollars) Company Name Related Party Nature of Relationship Transaction Details Abnormal Transaction Notes/Accounts Payable or Receivable Purchase/ Sale Amount % of Total Payment Terms Unit Price Payment Terms Ending Balance % of Total Note Walsin Lihwa Corporation Kuang Tai Metal Industrial Director of the related Sales $ (1,515,412) (2) The payment terms are set by quotations Normal Normal $ 51,392 2 Co., Ltd. party on the local market, and the transaction terms are similar to those of general customers. Jiangyin Walsin Specialty Alloy Materials Co., Ltd. 100% indirectly owned Sales (369,262) - The payment terms are set by quotations Normal Normal 99,469 4 subsidiary on the local market, and the transaction terms are similar to those of general customers. Changshu Walsin 100% indirectly owned Sales (491,550) (1) The payment terms are set by quotations Normal Normal 94,733 4 Specialty Steel Co., Ltd. subsidiary on the local market, and the transaction terms are similar to those of general customers. Novametal SA Substantive related Sales (174,367) - The payment terms are set by quotations Normal Normal 77,568 3 party on the local market, and the transaction terms are similar to those of general customers. Trefilados Inoxidables de Mexico, S.A. De C.V. Substantive related Sales (101,453) - The payment terms are set by quotations Normal Normal 22,675 1 party on the local market, and the transaction terms are similar to those of general customers. Ferriere di Stabio SA Substantive related Sales (131,839) - The payment terms are set by quotations Normal Normal 31,914 1 party on the local market, and the transaction terms are similar to those of general customers. Walsin Singapore Pte. Ltd. 100% directly owned Purchase 8,154,060 10 The payment terms are set by quotations Normal Normal (126,177) (3) subsidiary on the local market, and the transaction terms are similar to those of general customers. 2 9 9 3 0 0 WALSIN LIHWA HOLDINGS LIMITED AND SUBSIDIARIES TOTAL PURCHASES FROM OR SALES TO RELATED PARTIES AMOUNTING TO AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL FOR THE YEAR ENDED DECEMBER 31, 2023 (In Thousands of Renminbi) TABLE 6-1 i F n a n c i a l I n f o r m a t i o n Company Name Related Party Nature of Relationship Transaction Details Abnormal Transaction Notes/Accounts Payable or Receivable Purchase/ Sale Amount % of Total Payment Terms Unit Price Payment Terms Ending Balance % of Total Note Shanghai Walsin Lihwa Power Wire & Cable Co., Ltd. Hangzhou Walsin Power Cable & Wire Co., Ltd. Both are associates of Walsin Lihwa Corporation Sales RMB (139,259) (22) The payment terms are set by quotations Normal Normal RMB 25,398 30 on the local market, and the transaction terms are similar to those of general customers. CONCORD INDUSTRIES LIMITED AND SUBSIDIARIES TOTAL PURCHASES FROM OR SALES TO RELATED PARTIES AMOUNTING TO AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL FOR THE YEAR ENDED DECEMBER 31, 2023 (In Thousands of New Taiwan Dollars, Renminbi and Euro) TABLE 6-2 Company Name Related Party Nature of Relationship Transaction Details Abnormal Transaction Notes/Accounts Payable or Receivable Purchase/ Sale Amount % of Total Payment Terms Unit Price Payment Terms Ending Balance Yantai Walsin Changshu Walsin Both are subsidiaries of Sales RMB (234,587) Stainless Steel Co., Ltd. Specialty Steel Co., Ltd. Concord Industries Limited Jiangyin Walsin Both are subsidiaries of Sales RMB (266,611) Specialty Alloy Materials Co., Ltd. Cogne Acciai Speciali Concord Industries Limited Both are subsidiaries of Purchases EUR 9,462 S.p.a. Walsin Lihwa Corporation Changshu Walsin Both are subsidiaries of Purchases RMB 57,808 Specialty Steel Co., Ltd. Concord Industries Limited Jiangyin Walsin Both are subsidiaries of Purchases RMB 34,229 Specialty Alloy Materials Co., Ltd. Walsin Singapore Pte. Concord Industries Limited Both are subsidiaries of Purchases US$ 19,973 Ltd. Walsin Lihwa Corporation Jiangyin Walsin Yantai Walsin Stainless Both are subsidiaries of Sales RMB (34,229) Specialty Alloy Materials Co., Ltd. Steel Co., Ltd. Concord Industries Limited Walsin Lihwa Corporation Parent company Purchases 369,262 Yantai Walsin Stainless Both are subsidiaries of Purchases RMB 266,611 Steel Co., Ltd. Concord Industries Limited Changshu Walsin Yantai Walsin Stainless Both are subsidiaries of Sales RMB (57,808) Specialty Steel Co., Ltd. Steel Co., Ltd. Concord Industries Limited Walsin Lihwa Corporation Parent company Purchases 491,550 Yantai Walsin Stainless Both are subsidiaries of Purchases RMB 234,587 Steel Co., Ltd. Concord Industries Limited 3 0 1 2 (6) The payment terms are set by quotations on the local market, and the transaction terms are similar to those of general customers. (7) The payment terms are set by quotations on the local market, and the transaction terms are similar to those of general customers. The payment terms are set by quotations on the local market, and the transaction terms are similar to those of general customers. The payment terms are set by quotations on the local market, and the transaction terms are similar to those of general customers. The payment terms are set by quotations on the local market, and the transaction terms are similar to those of general customers. The payment terms are set by quotations on the local market, and the transaction terms are similar to those of general customers. 2 4 1 21 (8) The payment terms are set by quotations on the local market, and the transaction terms are similar to those of general customers. The payment terms are set by quotations on the local market, and the transaction terms are similar to those of general customers. The payment terms are set by quotations on the local market, and the transaction terms are similar to those of general customers. 67 17 (6) The payment terms are set by quotations on the local market, and the transaction terms are similar to those of general customers. The payment terms are set by quotations on the local market, and the transaction terms are similar to those of general customers. The payment terms are set by quotations on the local market, and the transaction terms are similar to those of general customers. 34 Note % of Total 5 5 Normal Normal RMB 28,350 Normal Normal RMB 26,154 Normal Normal EUR (9,462) (16) Normal Normal RMB (4,813) (1) Normal Normal RMB (534) - Normal Normal US$ (15,730) (24) Normal Normal RMB 534 (-) Normal Normal (99,469) (18) Normal Normal RMB (26,154) (21) Normal Normal RMB 4,813 5 Normal Normal (94,733) (11) Normal Normal RMB (28,350) (14) 3 0 2 COGNE ACCIAI SPECIALI S.P.A. AND SUBSIDIARIES TOTAL PURCHASES FROM OR SALES TO RELATED PARTIES AMOUNTING TO AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL FOR THE YEAR ENDED DECEMBER 31, 2023 (In Thousands of Euro) TABLE 6-3 i F n a n c i a l I n f o r m a t i o n Company Name Related Party Nature of Relationship Transaction Details Abnormal Transaction Purchase/ Sale Amount % of Total Payment Terms Unit Price Payment Terms Notes/Accounts Receivable (Payable) % of Total Ending Balance Note Cogne Acciai Yantai Walsin Both are subsidiaries of Sales EUR (9,462) (2) The payment terms are set by quotations Normal Normal $ 9,462 5 Speciali S.p.a. Stainless Steel Co., Ltd. Walsin Lihwa Corporation on the local market, and the transaction terms are similar to those of general customers. TABLE 6-4 WALSIN SINGAPORE PTE. LTD. AND SUBSIDIARIES TOTAL PURCHASES FROM OR SALES TO RELATED PARTIES AMOUNTING TO AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL FOR THE YEAR ENDED DECEMBER 31, 2023 (In Thousands of New Taiwan Dollars and U.S. Dollars) Company Name Related Party Nature of Relationship Transaction Details Abnormal Transaction Purchase/ Sale Amount % of Total Payment Terms Unit Price Payment Terms Notes/Accounts Receivable (Payable) % of Total Ending Balance Note Walsin Singapore Pte. Ltd. Walsin Lihwa Corporation Parent company Sales $ (8,154,060) (93) The payment terms are set by quotations Normal Normal $ 126,177 21 on the local market, and the transaction terms are similar to those of general customers. Yantai Walsin Stainless Steel Co., Ltd. Both are subsidiaries of Walsin Lihwa Corporation Sales US$ (19,973) (7) The payment terms are set by quotations Normal Normal US$ 15,730 79 on the local market, and the transaction terms are similar to those of general customers. 3 0 3 3 0 4 WALSIN LIHWA CORPORATION AND SUBSIDIARIES RECEIVABLES FROM RELATED PARTIES AMOUNTING TO AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL DECEMBER 31, 2023 (In Thousands of New Taiwan Dollars) Company Name Related Party Nature of Relationship Financial Statement Account and Ending Balance Turnover Rate Amount Action Taken Overdue Walsin Lihwa Corporation Walsin Singapore Pte. Ltd. Borrego Energy Holdings, LLC. 72.55% indirectly owned 100% directly owned subsidiary Other receivables Other receivables $ 290,281 230,405 Borrego Energy, LLC. 72.55% indirectly owned Other receivables 648,967 subsidiary subsidiary - - - $ - - - - - - TABLE 7 i F n a n c i a l I n f o r m a t i o n Amounts Received in Subsequent Period $ - - - Allowance for Bad Debts $ - - - WALSIN LIHWA HOLDINGS LIMITED AND SUBSIDIARIES RECEIVABLES FROM RELATED PARTIES AMOUNTING TO AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL DECEMBER 31, 2023 (In Thousands of Renminbi and U.S. Dollars) Company Name Related Party Nature of Relationship Financial Statement Account and Ending Balance Turnover Rate Overdue Amount Action Taken Amounts Received in Subsequen t Period Allowance for Bad Debts TABLE 7-1 Walsin Lihwa Holdings Limited Walsin (China) Investment Co., Ltd. Walsin International Investments Limited 100% directly owned subsidiary Other receivables RMB 230,703 4,500 100% directly owned subsidiary Other receivables US$ Walsin (China) Investment Co., Ltd. Yantai Walsin Stainless Steel Co., Ltd. Both are subsidiaries of Walsin Changshu Walsin Specialty Steel Co., Ltd. Both are subsidiaries of Walsin Lihwa Corporation Lihwa Corporation Other receivables US$ Other receivables US$ 174,630 RMB 181,078 22,880 Jiangyin Walsin Specialty Alloy Materials Both are subsidiaries of Walsin Other receivables US$ 44,596 Co., Ltd. Jiangyin Walsin Steel Cable Co., Ltd. Hangzhou Walsin Power Cable & Wire Co., Lihwa Corporation 100% directly owned subsidiary Other receivables US$ RMB Other receivables RMB Associate of Walsin Lihwa 28 70,686 81,068 Ltd. Corporation XiAn Walsin Metal Product Co., Ltd. Both are subsidiaries of Walsin Other receivables RMB 182,651 Lihwa Corporation Nanjing Taiwan Trade Mart Management Both are subsidiaries of Walsin Other receivables RMB 100,866 Co., Ltd. Lihwa Corporation Dongguan Walsin Wire & Cable Co., Ltd. Walsin (Nanjing) Development Co., Ltd. 100% directly owned subsidiary Other receivables US$ Both are subsidiaries of Walsin 19,881 Other receivables RMB 1,009,637 Lihwa Corporation Walsin International Investments Limited Walsin Lihwa Corporation PT. Sunny Metal Industry Parent company Both are subsidiaries of Walsin Other receivables US$ Other receivables US$ 104,077 41,721 Walsin (China) Investment Co., Ltd. Both are subsidiaries of Walsin Lihwa Corporation Other receivables US$ 257,578 RMB 916,113 Lihwa Corporation Dongguan Walsin Wire & Cable Co., Walsin (China) Investment Co., Ltd. Both are subsidiaries of Walsin Other receivables RMB 276,306 Ltd. Lihwa Corporation $ - - - - - - - - - - - - - - - Shanghai Walsin Lihwa Power Wire & Walsin (China) Investment Co., Ltd. Cable Co., Ltd. Hangzhou Walsin Power Cable & Wire Co., Parent company Both are associates of Walsin Other receivables RMB 201,248 25,398 Trade receivables RMB - 10.97 Ltd. Lihwa Corporation Note: Amounts are stated in thousands of Renminbi, except those stated in thousands of U.S. dollars. 3 0 5 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - $ - $ - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 3 0 6 CONCORD INDUSTRIES LIMITED AND SUBSIDIARIES RECEIVABLES FROM RELATED PARTIES AMOUNTING TO AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL DECEMBER 31, 2023 (In Thousands of Renminbi) TABLE 7-2 i F n a n c i a l I n f o r m a t i o n Company Name Related Party Nature of Relationship Financial Statement Account and Ending Balance Turnover Rate Amount Action Taken Overdue Amounts Received in Subsequent Period Allowance for Bad Debts Yantai Walsin Stainless Changshu Walsin Specialty Steel Co., Ltd. Both are subsidiaries of Concord Trade receivables $ 28,350 8.64 $ Steel Co., Ltd. Industries Limited Jiangyin Walsin Specialty Alloy Materials Both are subsidiaries of Concord Trade receivables 26,154 11.63 Co., Ltd. Industries Limited Walsin (China) Investment Co., Ltd. Both are subsidiaries of Walsin Other receivables 139,045 Lihwa Corporation Changshu Walsin Walsin (China) Investment Co., Ltd. Both are subsidiaries of Walsin Other receivables 43,198 Stainless Steel Co., Ltd. Lihwa Corporation Jiangyin Walsin Walsin (China) Investment Co., Ltd. Both are subsidiaries of Walsin Other receivables 127,136 Stainless Steel Co., Ltd. Lihwa Corporation - - - - - - - - - - - - - $ 19,804 $ 23,105 - - - - - - - - WALSIN SINGAPORE PTE. LTD. AND SUBSIDIARIES RECEIVABLES FROM RELATED PARTIES AMOUNTING TO AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL DECEMBER 31, 2023 (In Thousands of U.S. Dollars) Company Name Related Party Nature of Relationship Financial Statement Account and Ending Balance Turnover Rate Amount Overdue Action Taken Amounts Received in Subsequent Period Allowance for Bad Debts TABLE 7-3 Walsin Singapore Pte. Ltd. Walsin Lihwa Corporation Yantai Walsin Stainless Steel Co., Ltd. Parent company Both are subsidiaries of Walsin Trade receivables Trade receivables $ 4,109 15,730 126.31 2.54 $ PT. Sunny Metal Industry Innovation West Mantewe Pte. Ltd. Associate of Walsin Lihwa Other receivables Other receivables 288,902 4,864 Lihwa Corporation 50.1% owned subsidiary - - - - - - - - - - $ 4,109 15,730 $ - - - - - - - - - - - PT. Sunny Metal Industry PT. Walhsu Metal Industry 99.9% owned subsidiary Other receivables 39,382 Corporation 3 0 7 3 0 8 WALSIN INFO-ELECTRIC CORP. RECEIVABLES FROM RELATED PARTIES AMOUNTING TO AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL DECEMBER 31, 2023 (In Thousands of New Taiwan Dollars) TABLE 7-4 i F n a n c i a l I n f o r m a t i o n Company Name Related Party Nature of Relationship Financial Statement Account and Ending Balance Turnover Rate Amount Action Taken Overdue Amounts Received in Subsequent Period Allowance for Bad Debts Walsin Info-Electric Corp. Walsin Lihwa Corporation Parent company Other receivables $ 100,083 - $ - - $ - $ - COGNE ACCIAI SPECIALI S.P.A RECEIVABLES FROM RELATED PARTIES AMOUNTING TO AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL DECEMBER 31, 2023 (In Thousands of Euro and GBP) Company Name Related Party Nature of Relationship Financial Statement Account and Ending Balance Turnover Rate Amount Action Taken Overdue Cogne Acciai Speciali S.p.a. Yantai Walsin Stainless Steel Co., Both are subsidiaries of Walsin Trade receivables EUR 9,462 2.00 $ Ltd. Lihwa Corporation Special Melted Products Limited Parent to subsidiary Other receivables GBP 6,152 - - - - - Note: Amounts are stated in thousands of Euro, except those stated in thousands of GBP. TABLE 7-5 Amounts Received in Subsequent Period $ - - Allowance for Bad Debts $ - - 3 0 9 3 1 0 WALSIN LIHWA CORPORATION AND SUBSIDIARIES NAMES, LOCATIONS, AND RELATED INFORMATION OF INVESTEES OVER WHICH THE GROUP EXERCISES SIGNIFICANT INFLUENCE FOR THE YEAR ENDED DECEMBER 31, 2023 (In Thousands of New Taiwan Dollars, U.S. Dollars and Hong Kong Dollars) Information of investees that Walsin Lihwa Corporation has controlling power or significant influence over was as follows: Investor Company Investee Company Location Main Businesses and Products Original Investment Amount December 31, 2023 December 31, 2022 TABLE 8 i F n a n c i a l I n f o r m a t i o n Net Income (Loss) of the Investee Investment Gain (Loss) Note Balance as of December 31, 2023 Percentage of Ownership (%) Number of Shares Carrying Amount Walsin Lihwa Corporation Walsin Lihwa Holdings Limited Concord Industries Limited Ace Result Global Limited Min Maw Precision Industry Corp. British Virgin Islands Investments holding British Virgin Islands Investments holding British Virgin Islands Investments holding Taiwan Solar power systems management, $ 103,022 13,274,435 1,587,416 180,368 $ 3,317,552 13,611,135 1,587,416 180,368 2,730,393 297,498,375 44,739,988 34,837,100 100.00 100.00 100.00 100.00 $ 20,583,253 $ 3,685,272 382,041 409,853 design, and installation 281,244 $ (1,147,157) (1,147,157 ) 74,675 33,896 24,677 33,896 21,417 Waltuo Green Resources Corporation Taiwan Waste disposal, resource recovery and 10,000 10,000 1,828,287 100.00 9,251 (8,409) (8,409 ) Chin-Cherng Construction Co. Taiwan Walsin Info-Electric Corp. Taiwan cement products Investment in the construction of residential, sale of commercial buildings, rental design and interior decoration business Mechanical and electrical, communications, and power systems PT. Walsin Lippo Industries PT. Walsin Lippo Kabel Joint Success Enterprises Limited Chin-Xin Investment Co., Ltd. Tsai Yi Corporation Concord II Venture Capital Co., Ltd. Winbond Electronics Corp. Steel wires Production and sale of cables and wires Indonesia Indonesia British Virgin Islands Investments holding Taiwan Taiwan Taiwan Taiwan Investments Management and investments holding Venture capital and consulting affairs Research, development, production and sale of semiconductors and related components 135,412 611,688 529,955,805 99.22 5,462,298 (179,331) (177,932 ) 270,034 270,034 29,854,246 99.51 348,242 4,640 4,618 481,663 12,004 689,979 2,237,969 457,610 257,860 8,211,615 481,663 11,656 1,164,273 2,237,969 457,610 257,860 7,429,920 10,500 2,999,500 21,344,562 179,468,270 49,831,505 26,670,699 919,380,016 70.00 70.00 49.05 37.00 33.97 26.67 21.99 980,706 11,773 4,237,555 8,575,298 1,026,607 169,753 20,335,573 96,593 (823) (388,158) 778,816 23,695 (16,574) (1,146,522) 67,615 (576 ) (308,977 ) 288,162 8,049 (4,420 ) (253,924 ) Walton Advanced Engineering, Inc. Taiwan Production, sale, and testing of 1,185,854 1,185,854 109,628,376 21.17 2,230,609 (29,495) (6,244 ) Walsin Technology Corp. Taiwan Production and sale of ceramic 1,649,039 1,649,039 88,902,325 18.30 8,631,671 2,325,394 427,443 semiconductors PT. Walsin Nickel Industrial Indonesia Walsin Precision Technology Corp. Indonesia Malaysia Production and sale of nickel pig iron Production and sale of stainless steel 1,509,171 434,994 1,509,171 434,994 500,000 32,178,385 50.00 100.00 7,269,121 551,918 2,855,853 13,214 1,458,312 13,214 capacitors Walsin Singapore Pte. Ltd. Walsin Energy Cable System Co., Ltd. Walsin Lihwa Europe S.a r.l. PT. Walsin Research Innovation Indonesia Indonesia Walsin America, LLC PT. CNGR Walsin New Energy and Singapore Taiwan Luxembourg USA Indonesia plates Investments holding Submarine communication cable Investments holding Consulting and management Investments Investments holding 26,357,910 2,700,000 11,560,560 43,669 196,654 300,000 16,790,710 - 6,692,862 22,223 185,752 300,000 733,000,000 270,000,000 12,000 13,930 N/A 140,651 100.00 90.00 100.00 99.50 100.00 29.17 30,809,949 2,657,462 9,666,272 36,315 (374,028 ) 280,654 Technology Indonesia PT. Westrong Metal Industry Innovation West Mantewe Pte. Ltd. PT CNGR Walsin New Mining Industry Investment Indonesia Indonesia Singapore Indonesia Manufacture and sale of nickel matte Investments holding Investments holding - 2,452,575 46,929 4,680,030 - - - 40 22,257 - 40.00 29.17 - 2,444,727 45,131 1,828,395 1,417,688 (45,479) 639,873 (5,663) (372,662) (7,744) (12,635) (15,981) (2,832) (41,660 ) 639,873 (5,625 ) (372,662 ) (Note 4) (2,259 ) (504 ) (Note 3) (6,392 ) (860 ) Walsin Lihwa Holding Limited Walsin International Investments Limited Hong Kong Hong Kong Walcom Chemicals Industrial Limited Walsin America, Borrego Energy Holdings, LLC USA LLC Investments Commerce Investments HK$ 3,802,165 HK$4,653,372 0.030 0.030 US$ US$ 3,802,164,702 325,000 100.00 65.00 16,499,499 0.828 506,162 - 506,162 - US$ 38,147 US$ 38,147 N/A - 72.55 - (379,651 ) (507,325) (368,064 ) (Continued) Investor Company Investee Company Location Main Businesses and Products Original Investment Amount December 31, 2023 December 31, 2022 Balance as of December 31, 2023 Percentage of Ownership (%) Carrying Amount Number of Shares Net Income (Loss) of the Investee Investment Gain (Loss) Note Borrego Energy Borrego Energy, LLC Holdings, LLC Cleanleaf Energy Holdings, Inc USA USA Grid-connected solar electric systems US$ Investments US$ Concord Industries Walsin Specialty Steel Corp. British Virgin Islands Commerce and investments US$ Limited 52,576 (Note 1) - (Note 5) US$ 52,576 N/A 100.00 $ (524,112 ) $ (507,325 ) $ (507,325 ) US$ - 100 100.00 - - - 82,893 (Note 2) US$ 92,393 (Note 2) 82,893,195 100.00 1,344,952 272,968 272,968 Chin-Cherng Joint Success Enterprises Limited British Virgin Islands Investments 725,493 1,202,993 22,175,438 50.95 4,341,711 (388,158 ) (197,766 ) Construction Co. Dinghsin Development Co., Ltd. Concord II Venture Capital Co., Ltd. Chin-Xin Investment Co., Ltd. Taiwan Taiwan Taiwan Investment of real estate and related business Venture capital and consulting affairs Investments 8,540 1,603 54,154 8,540 2,119,200 35.32 37,561 4,158 1,469 1,603 54,154 172,342 3,264,092 0.17 0.67 1,107 157,192 (16,574 ) 778,816 (24 ) 5,235 Walsin Singapore PT. Walsin Nickel Industrial Indonesia Indonesia Production and sale of nickel pig iron US$ 42,000 US$ 42,000 420,000 42.00 6,278,036 2,855,853 1,199,458 Pte. Ltd. PT. Sunny Metal Industry PT. Westrong Metal Industry Indonesia Indonesia Manufacture and sale of nickel matte Manufacture and sale of nickel matte US$ US$ 200,000 146,000 US$ US$ 200,000 - 50,100 590,000 50.10 29.50 6,405,094 4,478,309 1,792,965 (12,635 ) 319,574 (Note 3) (3,210 ) (Note 3) Walsin Lihwa Europe S.a r.l. MEG S.A. Luxembourg Investments holding EUR 347,216 EUR 207,216 8,277 90.21 11,510,849 906,305 770,559 MEG S.A. Cogne Acciai Speciali S.p.A. Italy Production and sale of stainless steel EUR 155,988 EUR 15,988 314,705,934 77.60 14,215,240 1,105,020 909,541 PT. Sunny Metal PT. Walhsu Metal Industry Indonesia Manufacture and sale of nickel matte US$ 9,491 US$ Industry PT. Walsin Nickel PT. Walhsu Metal Industry Indonesia Manufacture and sale of nickel matte US$ 9 US$ - - 9,490,500 99.90 249,671 9,500 0.10 292 724 724 Industrial Indonesia Min Maw Precision Industry Corp. PT. Walsin Research Innovation Indonesia Indonesia Consulting and management 224 224 70 0.50 187 (5,663 ) Note 1: The amount of the payment of US$10,372 thousand was deducted for Borrego Energy, LLC employees’ compensation, which was paid by Walsin Lihwa Corporation. Note 2: The amount included capitalization of retained earnings of US$4,500 thousand. Note 3: Due to adjustments in the investment structure of the Group, it was transferred from Walsin Lihwa Corporation to Walsin Singapore Pte. Ltd. Note 4: Due to adjustments in the investment structure of the Group, it was transferred from Walsin Lihwa Holding Limited to Walsin Lihwa Corporation. Note 5: As of December 31, 2023, the capital injection had not been completed. Note 6: Amounts are stated in thousands of New Taiwan dollars, except those stated in thousands of U.S. dollars, Euro and Hong Kong dollars. 723 1 - (Concluded) 3 1 1 i F n a n c i a l I n f o r m a t i o n 3 1 2 WALSIN LIHWA CORPORATION AND SUBSIDIARIES INFORMATION ON INVESTMENTS IN MAINLAND CHINA FOR THE YEAR ENDED DECEMBER 31, 2023 (In Thousands of New Taiwan Dollars, U.S. Dollars and Renminbi) TABLE 9 1. The names of investee companies in mainland China, main businesses and products, total amount of paid-in capital, investment type, investment flows, percentage of ownership in investment, investment gain or loss, carrying amount, accumulated inward remittance of earnings and upper limit on investment in mainland China were as follows: Investee Company Main Businesses and Products Paid-in Capital Method of Investment (Note 1) Jiangyin Walsin Steel Cable Manufacture and sale of steel cables Co., Ltd. and wires $ (US$ 614,100 20,000) Shanghai Walsin Lihwa Manufacture and sale of cables and Power Wire & Cable Co., Ltd. wires (US$ 479,827 15,627) Hangzhou Walsin Power Cable & Wire Co., Ltd. Manufacture and sale of cables and wires (US$ 5,467,946 178,080) Walsin (China) Investment Investments Co., Ltd. (US$ 2,413,413 78,600) Changshu Walsin Specialty Manufacture and sale of specialized Steel Co., Ltd. steel tubes (US$ 2,978,385 97,000) Dongguan Walsin Wire & Manufacture and sale of bare copper Cable Co., Ltd. cables and wires (US$ 798,330 26,000) Jiangyin Walsin Specialty Manufacture and sale of cold-rolled Alloy Materials Co., Ltd. stainless steel and flat rolled products (US$ 1,504,545 49,000) XiAn Walsin Metal Product Manufacture and sale of specialized Co., Ltd. (Note 11) stainless steel plates (US$ 1,699,522 55,350) Yantai Walsin Stainless Steel Co., Ltd. Production and sale of electronic components and new alloy materials (US$ 10,288,171 335,065) (Note 9) Changzhou China Steel Melting and forging of nonferrous Precision Materials Co., Ltd. metallic materials and composites as well as new types of alloys (US$ 1,338,738 43,600) (Note 13) Nanjing Taiwan Trade Mart Management Co., Ltd. Business and asset management, consulting and advertising services (US$ 30,705 1,000) Dong Guan Cogne Steel Products Co., Ltd. Stainless Steel Products (EUR 784,564 23,089) b b b b b b b b b b b b Accumulated Outward Remittance for Investment from Taiwan as of January 1, 2023 $ (US$ (US$ (US$ (US$ (US$ (US$ (US$ 799,589 26,041) (Note 2) 459,224 14,956) (Note 3) 2,590,888 84,380) (Note 4) 2,413,413 78,600) (Note 5) 2,978,385 97,000) (Note 6) 798,330 26,000) (Note 7) 1,504,545 49,000) (Note 8) (US$ 925,756 30,150) (US$ 6,537,924 212,927) (US$ 401,621 13,080) (US$ 30,705 1,000) (US$ - -) Remittance of Funds Outward Inward Accumulated Outward Remittance for Investment from Taiwan as of December 31, 2023 Net Income (Loss) of the Investee Ownership of Direct or Indirect Investment (%) Investment Gain (Loss) (Note 17) Carrying Amount as of December 31, 2023 Accumulated Repatriation of Investment Income as of December 31, 2023 $ - - - - - - - - - - - - - - - - - - - - - - - - $ - - $ (US$ 799,589 26,041) (Note 2) 459,224 14,956) (Note 3) 2,590,888 84,380) (Note 4) 2,413,413 78,600) (Note 5) 2,978,385 97,000) (Note 6) 798,330 26,000) (Note 7) 1,504,545 49,000) (Note 8) (US$ (US$ (US$ (US$ (US$ (US$ (US$ 925,756 30,150) (US$ 6,537,924 212,927) (US$ 401,621 13,080) (US$ 30,705 1,000) (US$ - -) - - - - - - - - - - - - - - - - - - - - - - $ (101,194) 100.00 $ (101,194 ) $ 728,251 $ 36,375 95.71 34,816 1,187,786 183,365 40.00 66,364 724,089 (208,895) 100.00 (208,895 ) 4,027,195 273,984 100.00 273,984 1,300,217 (34,993) 100.00 (34,993 ) 1,426,606 (588,772) 100.00 (588,722 ) 1,178,882 (11,931) 100.00 (11,931 ) (791,207 ) (1,452,987) 100.00 (1,452,987 ) 2,604,924 - - - - - - - - - 69,464 30.00 20,841 492,115 (US$ 971,967 31,655) (8,336) 100.00 (8,336 ) (518,360 ) (32,133) 70.00 (22,493 ) 564,831 - - (Continued) Investee Company Main Businesses and Products Paid-in Capital Method of Investment (Note 1) Accumulated Outward Remittance for Investment from Taiwan as of January 1, 2023 Remittance of Funds Outward Inward Accumulated Outward Remittance for Investment from Taiwan as of December 31, 2023 Net Income (Loss) of the Investee Ownership of Direct or Indirect Investment (%) Investment Gain (Loss) (Note 17) Carrying Amount as of December 31, 2023 Accumulated Repatriation of Investment Income as of December 31, 2023 Shaanxi Tianhong Silicon Industrial Corporation Jiangsu Taiwan Trade Mart Development Co., Ltd. Polysilicon production 5,202,288 $ (RMB 1,200,000) Development and management of Nanjing Taiwan Trade Mart Management Co., Ltd. (RMB 43,352 10,000) Shaanxi Electronic Group Communications equipment and Optoelectronics Technology Co., Ltd. (Note 12) electronic components 674,550 (RMB 155,597) Walsin (Nanjing) Development Construction, rental and sale of Co., Ltd. buildings and industrial factories (US$ 1,535,500 50,000) Nanjing Walsin Property Management Co., Ltd. Property management, business management and housing leasing (RMB 4,335 1,000) b b b b b $ (US$ (US$ (RMB $ - -) 9,334 304) - -) (US$ 1,529,109 49,800) (Note 14) (RMB - -) - - - - - - - - - - $ - - $ (US$ $ - -) - 19.00 $ - $ - (Note 10) $ - - - - - - - - (US$ 9,334 304) (RMB - -) (US$ 1,529,109 49,800) (Note 14) (RMB - -) 1,038 20.00 208 9,776 22,638 6.02 - 78,706 (547,393) 99.60 (545,217 ) 8,542,838 (3,962) 99.60 (3,947 ) (21,672 ) - - - - - 2. The upper limit on investment of WLC in mainland China was as follows: Accumulated Outward Remittance for Investment in Mainland China as of December 31, 2023 (NT$ and US$ in Thousands) Investment Amounts Authorized by the Investment Commission, MOEA (NT$ and US$ in Thousands) Upper Limit on the Amount of Investments Stipulated by the Investment Commission, MOEA (NT$ in Thousands) $ (US$ 18,566,945 604,688) $ (US$ 18,876,175 614,759) N/A (Note 18) Notes: 1. Investments can be classified into three categories as follows: a. Direct investment in mainland China. b. Reinvestment in mainland China through companies in a third country companies. c. Others. 2. Including US$15,000 thousand investment through Walsin (China) Investment Co., Ltd. 3. Including US$14,950 thousand investment through Walsin (China) Investment Co., Ltd. 4. Including US$13,300 thousand investment through Walsin (China) Investment Co., Ltd., US$53,000 thousand investment through Ace Result Global Ltd. and US$22,730 thousand dividends appropriated from Dongguan Walsin Wire & Cable Co., Ltd., Jiangying Walsin Steel Cable Co., Ltd., Shanghai Walsin Lihwa Power Wire & Cable Co., Ltd. and Hangzhou Walsin Power Cable & Wire Co., Ltd. 5. Capital investment of US$28,600 thousand was contributed from the accounts payable of Walsin (China) Investment Co., Ltd. to Walsin Lihwa Holdings Limited. 6. Including US$20,000 thousand investment through Walsin Specialty Steel Corp. and US$42,000 thousand dividends appropriated from Changshu Walsin Specialty Steel Co., Ltd. and Shanghai Baihe Walsin Lihwa Specialty Steel Co., Ltd. 7. Investment through Walsin (China) Investment Co., Ltd. (Continued) 3 1 3 3 1 4 8. Including investments through Walsin (China) Investment Co., Ltd. of US$4,500 thousand and US$4,500 thousand of the own capital of Walsin (China) Investment Co., Ltd. 9. Including investments of its own capital of RMB578,796 thousand from Shanghai Baihe Walsin Lihwa Specialty Steel Co., Ltd., Changzhou Wujin NSL Co., Ltd. and Changshu Walsin Specialty Steel Co., Ltd. and RMB3,750 thousand investments through Changzhou Wujin NSL Co., Ltd. Including US$32,927 thousand investment through Yantai Huanghai Iron and Steel Co., Ltd. and Yantai Dazhong Recycling Resource Co., Ltd. which were merged. 10. The amount was adjusted by the capital of XiAn Lv Jing Technology Co., Ltd. of RMB228,000 thousand and the fair value. 11. XiAn Walsin Metal Product Co., Ltd. merged XiAn Lv Jing Technology Co., Ltd. and XiAn Walsin Opto-electronic Limited. 12. Shaanxi Electronic Group Optoelectronics Technology Co., Ltd. was formerly known as Shaanxi Optoelectronics Technology Co., Ltd. 13. The amount included capitalization of retained earnings of US$7,280 thousand. 14. The amount included investment through Joint Success Enterprise Limited approved in the previous years. 15. Amounts are stated in thousands of New Taiwan dollars, except those stated in thousands of U.S. dollars, Renminbi and Euro. 16. The currency exchange rates as of December 31, 2023 were as follows: US$ to NT$ = 1:30.705, RMB to NT$ = 1:4.33524, Euro to NT$ = 1:33.98. The average exchange rates of December 31, 2023 were as follows: US$ to NT$ = 1:31.154, RMB to NT$ = 1:4.41546, Euro to NT$ = 1:33.69722. 17. The basis for recognizing investment gains and losses in the current period is the financial report reviewed by an international accounting firm that has a cooperative relationship with the accounting firm of the Republic of China. 18. Upper limit on investment: WLC was approved as the operation headquarter by the Industrial Development Bureau, Ministry of Economic Affairs and is thus exempted from the related regulations of “Regulations Governing the Approval of Investment or Technical Cooperation in Mainland China”. (Concluded) i F n a n c i a l I n f o r m a t i o n TABLE 9-1 CHIN-CHERNG CONSTRUCTION CO. INFORMATION ON INVESTMENTS IN MAINLAND CHINA FOR THE YEAR ENDED DECEMBER 31, 2023 (In Thousands of New Taiwan Dollars, U.S. Dollars and Renminbi) 1. The names of investee companies in mainland China, main businesses and products, total amount of paid-in capital, investment type, investment flows, percentage of ownership in investment, investment gain or loss, carrying amount, accumulated inward remittance of earnings and upper limit on investment in mainland China were as follows: Investee Company Main Businesses and Products Paid-in Capital Method of Investment (Note 1) Accumulated Outward Remittance for Investment from Taiwan as of January 1, 2023 Remittance of Funds Outward Inward Accumulated Outward Remittance for Investment from Taiwan as of December 31, 2023 Net Income (Loss) of the Investee Ownership of Direct or Indirect Investment (%) Investment Gain (Loss) (Note 2) Carrying Amount as of December 31, 2023 Accumulated Repatriation of Investment Income as of December 31, 2023 (In Thousands of U.S. and Renminbi) Walsin (Nanjing) Development Co., Ltd. Construction, rental and sale of buildings and industrial factories Nanjing Walsin Property Management Co., Ltd. Property management, business management and housing leasing 2. The upper limit on investment in mainland China Accumulated Outward Remittance for Investment in Mainland China as of December 31, 2023 (NT$ and US$ in Thousands) US$ 50,000 Note 1 US$ 25,475 $ - $ - US$ 25,475 $ (123,972) 50.95 $ (63,164) $ 1,008,005 $ 1,000 Note 1 - - - - (897) 50.95 (457) (2,557) - - Investment Amounts Authorized by the Investment Commission, MOEA (NT$ and US$ in Thousands) Upper Limit on the Amount of Investments Stipulated by the Investment Commission, MOEA (NT$ in Thousands) US$25,475 US$25,475 NT$3,294,097 (Note 3) Note 1: Investing in companies in mainland China through the companies already established and existing in the areas other than Taiwan and mainland China. Note 2: The basis for recognizing investment gains and losses in the current period is the financial statements audited by an international accounting firm that has a cooperative relationship with the accounting firm of the Republic of China. Note 3: The upper limit on investment in mainland China was as follows: NT$5,490,161 × 60% = NT$3,294,097 thousand. Note 4: Amounts are stated in thousands of Renminbi, except those stated in thousands of U.S. dollars. 3 1 5 3 1 6 WALSIN LIHWA CORPORATION AND INVESTEES INTERCOMPANY RELATIONSHIPS AND SIGNIFICANT INTERCOMPANY TRANSACTIONS FOR THE YEAR ENDED DECEMBER 31, 2023 (In Thousands of New Taiwan Dollars, U.S. Dollars, Renminbi, Euro and GBP) No. Company Name Counterparty Relationship 0 Walsin Lihwa Corporation Changshu Walsin Specialty Steel Co., Ltd. Transactions between parent company and subsidiaries Jianyin Walsin Specialty Alloy Materials Co., Ltd. Transactions between parent company and subsidiaries Walsin Singapore Pte. Ltd. Borrego Energy Holdings, LLC Borrego Energy, LLC 1 Walsin Lihwa Holdings Walsin (China) Investment Co., Ltd. Limited Walsin International Investment Limited Transactions between parent company and subsidiaries Transactions between parent company and subsidiaries Transactions between parent company and subsidiaries Transactions between parent company and subsidiaries Transactions between parent company and subsidiaries TABLE 10 i F n a n c i a l I n f o r m a t i o n Transaction Details Amount Payment Terms Percentage of Consolidated Total Gross Sales or Total Assets (%) Financial Statement Accounts $ Sales Sales Other receivables 491,550 The terms are set by quotations on the local market and are similar to those of general customers 369,262 The terms are set by quotations on the local market and are similar to those of general customers 290,281 Based on capital demand Other receivables 230,405 Based on capital demand Other receivables 648,967 Based on capital demand Other receivables RMB 230,703 Based on capital demand Other receivables US$ 4,500 Based on capital demand 2 Walsin (China) Yantai Walsin Specialty Steel Co., Ltd. Investment Co., Ltd. Transactions between subsidiaries Other receivables US$ 174,630 RMB 181,078 Based on capital demand Jiangyin Walsin Specialty Alloy Materials Co., Ltd. Transactions between subsidiaries Other receivables US$ 28 Other receivables US$ Jiangyin Walsin Steel Cable Co., Ltd. 70,686 RMB Transactions between subsidiaries Other receivables US$ 22,880 Based on capital demand Changshu Walsin Specialty Steel Co., Ltd. Transactions between subsidiaries Other receivables RMB 1,009,637 Based on capital demand Walsin (Nanjing) Development Co., Ltd. XiAn Walsin Metal Product Co., Ltd. Transactions between subsidiaries Other receivables RMB 182,651 Based on capital demand Nanjing Taiwan Trade Mart Management Co., Ltd. Transactions between subsidiaries Other receivables RMB 100,866 Based on capital demand 19,881 Based on capital demand Dongguan Walsin Wire & Cable Co., Ltd. 44,596 Based on capital demand Based on capital demand Transactions between parent company and subsidiaries Other receivables US$ Transactions between parent company and subsidiaries 3 Walsin International Walsin Lihwa Corporation Investments Limited Transactions between subsidiaries and parent company Other receivables US$ 104,077 Based on capital demand PT. Sunny Metal Industry Walsin (China) Investment Co., Ltd. Transactions between subsidiaries Other receivables US$ Transactions between subsidiaries Other receivables US$ 41,721 Based on capital demand Based on capital demand 257,578 RMB 916,113 4 Yantai Walsin Stainless Steel Co., Ltd. Changshu Walsin Specialty Steel Co., Ltd. Transactions between subsidiaries Trade receivables RMB 28,350 The terms are set by quotations on the local market and are similar to those of general customers - - - - - - - 2 1 - - 2 - - - 1 - 4 - (Continued) No. Company Name Counterparty Relationship Financial Statement Accounts Transaction Details Amount Payment Terms Percentage of Consolidated Total Gross Sales or Total Assets (%) Jiangyin Walsin Specialty Alloy Transactions between subsidiaries Trade receivables RMB 26,154 The terms are set by quotations on the local market Materials Co., Ltd. and are similar to those of general customers Changshu Walsin Specialty Steel Transactions between subsidiaries Sales RMB 234,587 The terms are set by quotations on the local market Co., Ltd. and are similar to those of general customers Jiangyin Walsin Specialty Alloy Transactions between subsidiaries Sales RMB 266,611 The terms are set by quotations on the local market Materials Co., Ltd. Walsin (China) Investment Co., Ltd Transactions between subsidiaries Other receivables RMB 139,045 Based on capital demand and are similar to those of general customers 5 Jiangyin Walsin Specialty Yantai Walsin Stainless Steel Co., Transactions between subsidiaries Sales RMB 34,229 The terms are set by quotations on the local market Alloy Materials Co., Ltd. Ltd. and are similar to those of general customers Walsin (China) Investment Co., Ltd. Transactions between subsidiaries Other receivables RMB 127,136 Based on capital demand 6 Changshu Walsin Specialty Yantai Walsin Stainless Steel Co., Transactions between subsidiaries Sales RMB 57,808 The terms are set by quotations on the local market Steel Co., Ltd. 7 Shanghai Walsin Lihwa Power Wire & Cable Co., Ltd. 8 Dongguan Walsin Wire & Cable Co., Ltd. Ltd. Walsin (China) Investment Co., Ltd. Transactions between subsidiaries Other receivables RMB 43,198 Based on capital demand and are similar to those of general customers Walsin (China) Investment Co., Ltd. Transactions between subsidiaries Other receivables RMB 201,248 Based on capital demand Walsin (China) Investment Co., Ltd. Transactions between subsidiaries and parent company Other receivables RMB 276,306 Based on capital demand 9 Walsin Singapore Pte. Ltd. Walsin Lihwa Corporation Transactions between subsidiaries Trade receivables US$ 4,109 The terms are set by quotations on the local market Yantai Walsin Stainless Steel Co., Ltd. and parent company Transactions between subsidiaries Trade receivables US$ and are similar to those of general customers 15,730 The terms are set by quotations on the local market and are similar to those of general customers Walsin Lihwa Corporation Transactions between subsidiaries Sales US$ 259,494 The terms are set by quotations on the local market Yantai Walsin Stainless Steel Co., Ltd. PT. Sunny Metal Industry and parent company Transactions between subsidiaries Sales US$ and are similar to those of general customers 19,973 The terms are set by quotations on the local market Transactions between parent company and subsidiaries Other receivables US$ 288,902 Based on capital demand and are similar to those of general customers 10 PT. Sunny Metal Industry PT. Walhsu Metal Industry Transactions between parent company and subsidiaries Other receivables US$ 39,382 Based on capital demand 11 Walsin Info-Electric Corp. Walsin Lihwa Corporation Transactions between subsidiaries Other receivables 100,083 Based on capital demand and parent company 12 Cogne Acciai Speciali Yantai Walsin Stainless Steel Co., Transactions between subsidiaries Trade receivables EUR 9,462 The terms are set by quotations on the local market S.p.A. Ltd. and are similar to those of general customers Yantai Walsin Stainless Steel Co., Transactions between subsidiaries Sales EUR 9,462 The terms are set by quotations on the local market Ltd. Special Melted Products Limited Transactions between parent company and subsidiaries Other receivables GBP and are similar to those of general customers 6,152 Based on capital demand - 1 1 - - - - - - 1 - - 4 - 3 - - - - - (Concluded) 3 1 7 Financial Information TABLE 11 WALSIN LIHWA CORPORATION AND SUBSIDIARIES INFORMATION OF MAJOR SHAREHOLDERS DECEMBER 31, 2023 Name of Major Shareholder Chin-Xin Investment Co., Ltd. Winbond Electronics Corp. TECO Electric & Machinery Co., Ltd. Shares Number of Shares Percentage of Ownership (%) 248,002,375 247,527,493 210,332,690 6.15 6.14 5.22 Note 1: The information of major shareholders presented in this table is provided by the Taiwan Depository & Clearing Corporation based on the number of ordinary shares and preferred shares held by shareholders with ownership of 5% or greater, that have been issued without physical registration (included treasury shares) by the Company as of the last business day for the current quarter. The share capital in the consolidated financial statements may differ from the actual number of shares that have been issued without physical registration because of different preparation basis. Note 2: If a shareholder delivers their shareholdings to the trust, the above information will be disclosed by the individual trustee who opened the trust account. For shareholders who declare insider shareholdings with ownership greater than 10% in accordance with Security and Exchange Act, the shareholdings include shares held by shareholders and those delivered to the trust over which shareholders have rights to determine the use of trust property. For information relating to insider shareholding declaration, please refer to Market Observation Post System. 318 5. Financial report of the parent company of the most recent year audited and certified by Supervisors INDEPENDENT AUDITORS’ REPORT The Board of Directors and Shareholders Walsin Lihwa Corporation Opinion We have audited the accompanying parent company only financial statements of Walsin Lihwa Corporation (the “Company”), which comprise the parent company only balance sheets as of December 31, 2023 and 2022, and the parent company only statements of comprehensive income, changes in equity and cash flows for the years then ended, and the notes to the parent company only financial statements, including material accounting policy information (collectively referred to as the “parent company only financial statements”). In our opinion, based on our audits and the reports of other auditors (as set out in the Other Matter section of our report), the accompanying parent company only financial statements present fairly, in all material respects, the parent company only financial position of the Company as of December 31, 2023 and 2022, and its parent company only financial performance and its parent company only 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 audit in accordance with the Regulations Governing Financial Statement Audit and Attestation Engagements of Certified Public Accountants and the 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 Parent Company Only Financial Statements section of our report. We are independent of the Company in accordance with The Norm of Professional Ethics for Certified Public Accountant of the Republic of China, and we have fulfilled our other ethical responsibilities in accordance with these requirements. Based on our audits and the reports of other auditors, we believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for 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 as of and for the year ended December 31, 2023. 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. 319 Financial Information The following are key audit matters of the Company’s parent company only financial statements as of and for the year ended December 31, 2023: Sales Revenue Recognition In 2023, the main products of the Company’s wires and cables business unit include bare copper wires, wires and cables. The fluctuation in prices of bare copper wires is often subject to the movement in prices of raw materials, and thus some of the sales prices are set according to the market prices agreed under the contracts at the time of shipments. The Company prepares reports on point-of-sale transactions by referring to the actual shipments and market price adjustments as the basis for revenue recognition. Due to the large number of transactions and different market prices that have been agreed upon by customers, the processing, recording and maintenance of such reports are performed manually, and their amounts are significant to the parent company only financial statements. Therefore, the accuracy of revenue recognized from sales of bare copper wires was considered as a key audit matter. Refer to Notes 4 and 22 to the parent company only financial statements for related accounting policies and disclosure of information relating to revenue recognition. Our audit procedures performed in respect of the above key audit matter were as follows: 1. We obtained an understanding and tested the reasonableness of revenue recognition policy and internal control procedures over the sales of bare copper wires and evaluated the effectiveness of relevant internal controls. 2. We performed sampling and reconciliation of sales prices and quantities with their respective amounts in the contracts and verified the accuracy of market price adjustments. 3. We verified the accuracy of monthly reports by recalculating the sales revenue and confirmed that the recognized amounts were consistent with those recorded in the general ledger. Other Matter The parent company only financial statements of certain equity-method investees included in the parent company only financial statements as of and for the years ended December 31, 2023 and 2022 were audited by other auditors. Our opinion, insofar as it relates to such investments, is based solely on the reports of other auditors. The investments in such investees amounted to NT$14,356,192 thousand and NT$14,685,608 thousand, which constituted 7.08% and 7.30% of the total assets as of December 31, 2023 and 2022, respectively. The aforementioned investment classified as other non-current liabilities was NT$374,028 thousand, which constituted 0.18% of the total assets as of December 31, 2023. The investment gains (loss) amounted to NT$486,243 thousand and NT$(118,414) thousand for the years ended December 31, 2023 and 2022, respectively. Responsibilities of Management and Those Charged with Governance for the Parent Company Only Financial Statements Management is responsible for the preparation and fair presentation of the parent company only financial statements in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers, and for such internal control as management determines is necessary to enable the preparation of parent company only financial statements that are free from material misstatement, whether due to fraud or error. 320 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 audit committee) are responsible for overseeing the Company’s financial reporting process. Auditors’ Responsibilities for the Audit of the Parent Company Only Financial Statements Our objectives are to obtain reasonable assurance about whether the parent company only financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the 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 parent company only financial statements. As part of an audit in accordance with the Standards on Auditing of the Republic of China, we exercise professional judgment and maintain professional skepticism throughout the audit. We also: 1. Identify and assess the risks of material misstatement of the 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 intentional omissions, resulting from error, as fraud may misrepresentations, or the override of internal control. involve collusion, forgery, 2. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control. 3. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. 4. Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’ report to the related disclosures in the 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 auditors’ report. However, future events or conditions may cause the Company to cease to continue as a going concern. 5. Evaluate the overall presentation, structure and content of the 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. 6. Obtain sufficient and appropriate audit evidence regarding the financial information of entities or business activities within the Company 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. 321 Financial Information 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 for the year ended December 31, 2023 and are therefore the key audit matters. We describe these matters in our auditors’ report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. The engagement partners on the audit resulting in this independent auditors’ report are Wen-Yea Shyu and Ker-Chang Wu. Deloitte & Touche Taipei, Taiwan Republic of China February 23, 2024 Notice 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 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 applied in the Republic of China. For the convenience of readers, the independent auditors’ report and the accompanying parent company only financial statements have been translated into English from the original Chinese version prepared and used in the Republic of China. If there is any conflict between the English version and the original Chinese version or any difference in the interpretation of the two versions, the Chinese-language independent auditors’ report and parent company only financial statements shall prevail. 322 WALSIN LIHWA CORPORATION PARENT COMPANY ONLY BALANCE SHEETS DECEMBER 31, 2023 AND 2022 (In Thousands of New Taiwan Dollars) ASSETS CURRENT ASSETS Cash and cash equivalents (Notes 3, 4 and 6) Financial assets at fair value through profit or loss - current (Notes 4 and 7) Contract assets - current (Notes 4 and 8) Notes receivable (Notes 4, 9 and 32) Trade receivables (Notes 4 and 9) Trade receivables from related parties (Notes 4, 9 and 32) Finance lease receivables (Notes 4, 10 and 32) Other receivables (Note 32) Inventories (Notes 4 and 11) Other current assets (Notes 3, 6, 17 and 33) Total current assets NON-CURRENT ASSETS 2023 Amount % 2022 (Restated) Amount % $ 3,530,594 1,499,047 175,083 15,863 2,119,899 438,177 9,068 1,720,601 11,120,657 314,635 2 1 - - 1 - - 1 5 - $ 10,997,025 - 267,147 25,058 3,652,066 296,053 - 8,272,172 11,819,088 2,019,441 6 - - - 2 - - 4 6 1 20,943,624 10 37,348,050 19 Financial assets at fair value through profit or loss - non-current (Notes 4 and 7) Financial assets at fair value through other comprehensive income - non-current (Notes 4 and 12) Investments accounted for using equity method (Notes 4 and 13) Property, plant and equipment (Notes 4 and 14) Right-of-use assets (Notes 4 and 15) Investment properties (Notes 4 and 16) Deferred tax assets - non-current (Notes 4 and 24) Refundable deposits Finance lease receivables - non-current (Notes 4, 10 and 32) Other non-current assets (Notes 6, 17 and 33) 1,184,108 18,635,179 130,841,304 20,828,266 75,711 8,099,078 680,501 25,700 1,517,217 34,394 1 9 65 10 - 4 - - 1 - 2,567,786 12,206,200 117,556,202 18,760,190 1,459,994 8,170,554 700,710 31,197 - 2,281,237 1 6 59 9 1 4 - - - 1 Total non-current assets TOTAL LIABILITIES AND EQUITY CURRENT LIABILITIES Short-term borrowings (Note 18) Financial liabilities at fair value through profit or loss - current (Notes 4 and 7) Trade payables (Note 32) Other payables Other payables to related parties (Note 32) Current tax liabilities (Notes 4 and 24) Lease liabilities - current (Notes 4 and 15) Other current liabilities Total current liabilities NON-CURRENT LIABILITIES Bonds Payable (Note 19) Long-term borrowings (Note 18) Long-term notes and bills payable (Note 18) Deferred tax liabilities (Notes 4 and 24) Lease liabilities - non-current (Notes 4 and 15) Net defined benefit liabilities - non-current (Notes 4 and 20) Other non-current liabilities (Notes 29 and 32) Total non-current liabilities Total liabilities EQUITY (Note 21) Share capital Capital surplus Retained earnings Legal reserve Special reserve Unappropriated earnings Total retained earnings Other equity Exchange differences on translation of the financial statements of foreign operations Unrealized gain on financial assets at fair value through other comprehensive income Loss on hedging instruments Other equity - other Total other equity Total equity TOTAL The accompanying notes are an integral part of the parent company only financial statements. (With Deloitte & Touche auditors’ report dated February 23, 2024) 181,921,458 90 163,734,070 81 $ 202,865,082 100 $ 201,082,120 100 $ 504,234 44,519 3,648,025 2,163,348 3,308,150 1,361,449 37,025 407,295 11,474,045 - - 2 1 2 1 - - 6 12,800,000 26,446,398 2,998,822 5,974,347 1,675,034 137,005 549,116 6 13 2 3 1 - - $ 6,600,565 51,505 3,226,544 2,884,659 9,273,554 1,420,015 38,519 227,916 3 - 2 1 5 1 - - 23,723,277 12 7,500,000 37,445,270 1,497,914 5,495,675 1,498,347 147,420 193,341 4 18 1 3 1 - - 50,580,722 25 53,777,967 27 62,054,767 31 77,501,244 39 40,313,329 33,624,917 20 16 37,313,329 24,672,454 18 12 9,538,222 2,712,250 48,340,145 60,590,617 5 1 24 30 7,564,090 2,712,250 51,762,058 62,038,398 4 1 26 31 (4,947,475) 14,068,677 (65,100) (2,774,650) 6,281,452 (3) 7 - (1) 3 (4,256,774) 6,693,877 (105,801) (2,774,607) (443,305) (2) 3 - (1) - 140,810,315 69 123,580,876 61 $ 202,865,082 100 $ 201,082,120 100 323 Financial Information WALSIN LIHWA CORPORATION PARENT COMPANY ONLY STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022 (In Thousands of New Taiwan Dol lars, Except Earnings Per Share) 2023 2022 Amount % Amount % OPERATING REVENUE (Notes 4 and 22) $ 83,321,352 100 $ 98,420,045 100 OPERATING COSTS (Note 11) (76,550,777) (92) (87,224,447) (89) (UNREALIZED) REALIZED GAIN (11,785) GROSS PROFIT OPERATING EXPENSES Selling and marketing expenses General and administrative expenses Research and development expenses Total operating expenses PROFIT FROM OPERATIONS NON-OPERATING INCOME AND EXPENSES Interest income Dividend income Other income - other Gain on disposal of property, plant and equipment Foreign exchange gain, net Gain (loss) on valuation of financial assets and liabilities at fair value through profit or loss Other expenses Gain (loss) on disposal of investments (Note 23) Interest expense Share of profit of subsidiaries and associates accounted for using the equity method 6,758,790 845,777 1,659,411 211,655 2,716,843 4,041,947 254,125 510,707 58,360 430 102,135 122,354 (76,810) 1,659,130 Total non-operating income and expenses 2,909,936 PROFIT BEFORE INCOME TAX FROM CONTINUING OPERATIONS 6,951,883 - 8 1 2 - 3 5 - 1 - - - - - 11,802 - 11,207,400 11 1,431,892 1,833,812 200,649 3,466,353 7,741,047 119,155 764,885 405,699 78,846 1,732,956 (165,235) (124,715) 1 2 - 3 8 - 1 - - 2 - - 2 3 8 15,429,151 16 16,915,494 17 24,656,541 25 1,085,948 (806,443) 1 (1) (597,501) (727,747) (1) (1) INCOME TAX EXPENSE (Notes 4 and 24) (1,817,567) (2) (5,304,444) (5) NET PROFIT FOR THE YEAR 5,134,316 6 19,352,097 20 (Continued) 324 WALSIN LIHWA CORPORATION PARENT COMPANY ONLY STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022 (In Thousands of New Taiwan Dollars, Except Earnings Per Share) 2023 2022 Amount % Amount % OTHER COMPREHENSIVE INCOME (LOSS) Items that will not be reclassified subsequently to profit or loss: Remeasurement of defined benefit plans (Notes 4 and 20) $ (34,728) - $ 260,538 - Unrealized gain (loss) on investments in equity instruments at fair value through other comprehensive income Share of the other comprehensive income (loss) of associates accounted for using the equity method Items that may be reclassified subsequently to profit or loss: Exchange differences on translating the financial statements of foreign operations Share of other comprehensive (loss) income of associates accounted for using the equity method 6,254,992 1,288,838 7,509,102 7 2 9 (4,022,988) (4) (688,713) (4,451,163) (1) (5) (642,710) (1) 1,663,884 (7,290) (650,000) - (1) 74,228 1,738,112 2 - 2 Other comprehensive income (loss) for the year, net of income tax 6,859,102 8 (2,713,051) (3) TOTAL COMPREHENSIVE INCOME FOR THE YEAR $ 11,993,418 14 $ 16,639,046 17 EARNINGS PER SHARE (Note 25) Basic Diluted $ $ 1.32 1.32 $ $ 5.45 5.44 The accompanying notes are an integral part of the parent company only financial statements. (With Deloitte & Touche auditors’ report dated February 23, 2024) (Concluded) 325 3 2 6 WALSIN LIHWA CORPORATION PARENT COMPANY ONLY STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022 (In Thousands of New Taiwan Dollars) Share Capital Capital Surplus Legal Reserve Special Reserve Retained Earnings Unappropriated Earnings Exchange Differences on Translating the Financial Statements of Foreign Operations Other Equity Unrealized Valuation Gain (Loss) on Financial Assets at Fair Value through Other Comprehensive Income Loss on Hedging Instrument Others Total Equity BALANCE AT JANUARY 1, 2022 $ 34,313,329 $ 18,440,875 $ 6,109,568 $ 2,712,250 $ 38,965,389 $ (6,100,687 ) $ 11,534,267 $ - $ (91,467 ) $ 105,883,524 i F n a n c i a l I n f o r m a t i o n Appropriation of 2021 earnings (Note 21) Legal reserve Cash dividends distributed by WLC Excess of the carrying amount over the consideration received of the subsidiaries' net assets during disposal Change in ownership interests in subsidiaries Disposal of equity instrument measured at fair value through other comprehensive income Changes in capital surplus from investments in associates accounted for using the equity method - - - - - - - - 1,454,522 - (994 ) - - 887 Issuance of ordinary shares for cash 3,000,000 6,000,000 Net profit for the year ended December 31, 2022 Other comprehensive income (loss) for the year ended December 31, 2022, net of income tax Total comprehensive income (loss) for the year ended December 31, 2022 Share-based payment transaction (Note 26) Others - - - - - - - - 225,000 6,686 Appropriation of 2022 earnings (Note 21) Legal reserve Cash dividends distributed by WLC Changes in capital surplus from investments in associates accounted for using the equity method Change in ownership interests in subsidiaries - - - - - - 1,974,132 - (6,932 ) 26,730 Issuance of ordinary shares for cash 3,000,000 8,923,497 Net profit for the year ended December 31, 2023 Other comprehensive (loss) income for the year ended December 31, 2023, net of income tax Total comprehensive income (loss) for the year ended December 31, 2023 Others - - - - - - - 9,168 BALANCE AT DECEMBER 31, 2023 The accompanying notes are an integral part of the parent company only financial statements. (With Deloitte & Touche auditors’ report dated February 23, 2024) $ 40,313,329 $ 33,624,917 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - (1,454,522 ) (5,490,133 ) - - (3,589 ) 79,546 - 19,352,097 - - - - - - - - - - - - 3,589 (79,546 ) - - - - - - - - - - 313,270 1,843,913 (4,764,433 ) (105,801 ) 19,665,367 1,843,913 (4,764,433 ) (105,801 ) - - - - - - - - - - - - (5,490,133 ) (994 ) (2,683,140 ) (2,683,140 ) - - - - - - - - - 887 9,000,000 19,352,097 (2,713,051 ) 16,639,046 225,000 6,686 - - - - - - - - - (1,974,132 ) (6,716,399 ) 204,652 - - 5,134,316 - - - - - - - - (204,652 ) - - - - - - - - - (70,350 ) (690,701 ) 7,579,452 40,701 5,063,966 (690,701 ) - - 7,579,452 - 40,701 - - - - - - - - - - (6,716,399 ) (6,932 ) 26,730 11,923,497 5,134,316 6,859,102 11,993,418 (43 ) 9,125 BALANCE AT DECEMBER 31, 2022 37,313,329 24,672,454 7,564,090 2,712,250 51,762,058 (4,256,774 ) 6,693,877 (105,801 ) (2,774,607 ) 123,580,876 $ 9,538,222 $ 2,712,250 $ 48,340,145 $ (4,947,475 ) $ 14,068,677 $ (65,100 ) $ (2,774,650 ) $ 140,810,315 WALSIN LIHWA CORPORATION PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022 (In Thousands of New Taiwan Dollars) CASH FLOWS FROM OPERATING ACTIVITIES Income before income tax Adjustments for: Depreciation expenses Amortization expenses Net (gain) loss on fair value changes of financial assets and liabilities at fair value through profit or loss Interest expenses Interest income Dividend income Compensation costs of employee share options Share of profit of subsidiaries and associates accounted for using the equity method Gain on disposal of property, plant and equipment (Gain) loss on disposal of investments Unrealized (realized) gain on the transaction with associates Unrealized loss on foreign currency exchange Loss on lease modification Changes in operating assets and liabilities Decrease (increase) in financial assets mandatorily classified 2023 2022 (Restated) $ 6,951,883 $ 24,656,541 1,408,723 28,191 (122,354) 806,443 (254,125) (510,707) - 1,422,173 11,750 165,235 727,747 (119,155) (764,885) 225,000 (1,659,130) (430) (1,085,948) 11,785 424 8 (15,429,151) (78,846) 597,501 (11,802) 7,352 6 as at fair value through profit or loss Decrease (increase) in contract assets Decrease in notes receivable Decrease in trade receivables Decrease (increase) in other receivables Decrease in inventories Decrease in other current assets Decrease (increase) in other financial assets (Increase) decrease in other operating assets Increase in trade payables (Decrease) increase in other payables Increase (decrease) in other current liabilities Decrease in net defined benefit liabilities Decrease in other operating liabilities Cash generated from operations Interest received Dividends received Interest paid Income tax paid 1,084,190 92,064 9,195 1,390,043 694,938 698,431 1,427,973 280,997 (2) 421,481 (866,064) 167,594 (45,143) (766) 10,929,694 232,104 1,874,051 (706,048) (1,349,412) Net cash generated from operating activities 10,980,389 (555,033) (116,082) 11,935 1,170,524 (625,476) 3,748,184 232,752 (280,997) 93,091 186,320 146,827 (133,155) (43,738) (50,009) 15,194,609 118,408 2,161,080 (649,093) (1,989,646) 14,835,358 (Continued) 327 Financial Information WALSIN LIHWA CORPORATION PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022 (In Thousands of New Taiwan Dollars) 2023 2022 (Restated) CASH FLOWS FROM INVESTING ACTIVITIES Purchase of financial assets at fair value through other comprehensive income $ (173,987) $ (90,000) Disposal of financial assets at fair value through other comprehensive income Purchase of financial assets at fair value through profit or loss Acquisition of investments accounted for using the equity method Increase in prepaid long-term investments Repatriation through capital reduction of investee companies accounted for using the equity method Purchase of property, plant and equipment Proceeds from disposal of property, plant and equipment Decrease (increase) in refundable deposits Decrease (increase) in other receivables Purchase of investment properties Decrease in finance lease receivables Other investing activities - - (19,529,179) (17,423) 4,501,800 (3,507,223) 430 5,497 5,831,227 - 7,475 (458,231) 335 (2,686,100) (17,718,066) (2,204,073) 11,178,225 (2,467,304) 129,210 (3,650) (6,710,599) (183) - (524,195) Net cash used in investing activities (13,339,614) (21,096,400) CASH FLOWS FROM FINANCING ACTIVITIES (Decrease) increase in short-term borrowings Proceeds from bonds payable Proceeds from long-term borrowings Repayment of long-term borrowings Increase in long-term notes and bills payable Increase in other payables to related parties Repayment of the principal portion of lease liabilities Cash dividends paid Proceeds from issuance of ordinary shares Other financing activities (6,096,337) 5,300,000 13,246,152 (24,245,024) 1,500,908 13,634 (43,182) (6,716,022) 11,923,497 9,168 1,518,581 - 21,755,400 (19,450,144) 1,497,914 3,345,925 (30,665) (5,489,781) 9,000,000 6,685 Net cash (used in) generated from financing activities (5,107,206) 12,153,915 NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (7,466,431) 5,892,873 CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR 10,997,025 5,104,152 CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR $ 3,530,594 $ 10,997,025 The accompanying notes are an integral part of the parent company only financial statements. (With Deloitte & Touche auditors’ report dated February 23, 2024) (Concluded) 328 WALSIN LIHWA CORPORATION NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022 (In Thousands of New Taiwan Dollars) 1. GENERAL INFORMATION Walsin Lihwa Corporation (“the Company”) was incorporated in December 1966 and commenced operations in December 1966. To diversify its operations, the Company made various investments in construction, electronics, material science, real estate, etc. The Company’s main products are wires, cables, stainless steel, resource business and real estate. The Company’s shares have been listed on the Taiwan Stock Exchange (TWSE) since November 1972. In October 1995, November 2010 and June 2023, the Company increased its share capital and issued Global Depositary Receipts (GDRs), which were listed on the Luxembourg Stock Exchange under stock number 168527. The parent company only financial statements are presented in the Company’s functional currency, the New Taiwan dollar. 2. APPROVAL OF FINANCIAL STATEMENTS The parent company only financial statements were approved by the board of directors on February 23, 2024. 3. APPLICATION OF NEW, AMENDED AND REVISED STANDARDS, AMENDED AND INTERPRETATIONS a. Initial application of the amendments to the International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), IFRIC Interpretations (IFRIC), and SIC Interpretations (SIC) (collectively, the “IFRS Accounting Standards”) endorsed and issued into effect by the Financial Supervisory Commission (FSC) Except for the following, the initial application of the IFRS Accounting Standards endorsed and issued into effect by the FSC did not have a material impact on the Company’s accounting policies. 1) Amendments to IAS 1 “Disclosure of Accounting Policies” When applying the amendments, the Company refers to the definition of material to determine its material accounting policy information to be disclosed. Accounting policy information is material if it can reasonably be expected to influence decisions that the primary users of general purpose financial statements make on the basis of those financial statements. Moreover:  Accounting policy information that relates to immaterial transactions, other events or conditions is immaterial and need not be disclosed; 329 Financial Information  The Company may consider the accounting policy information material because of the nature of the related transactions, other events or conditions, even if the amounts are immaterial; and  Not all accounting policy information relating to material transactions, other events or conditions is itself material. The accounting policy information is likely to be considered material to the parent company only financial statements if that information relates to material transactions, other events or conditions and: a) The Company changed its accounting policy during the reporting period and this change resulted in a material change to the information in the parent company only financial statements; b) The Company chose the accounting policy from options permitted by the standards; c) The accounting policy was developed in accordance with IAS 8 “Accounting Policies, Changes in Accounting Estimates and Errors” in the absence of an IFRS that specifically applies; d) The accounting policy relates to an area for which the Company is required to make significant judgments or assumptions in applying an accounting policy, and the Company discloses those judgments or assumptions; or e) The accounting is complex, and users of the financial statements would otherwise not understand those material transactions, other events or conditions. Refer to Note 4 for related accounting policy information. 2) Amendments to IAS 8 “Definition of Accounting Estimates” The Company has applied the amendments since January 1, 2023, which defines accounting estimates as monetary amounts in parent company only financial statements that are subject to measurement uncertainty. In applying accounting policies, the Company may be required to measure items at monetary amounts that cannot be observed directly and must instead be estimated. In such a case, the Company uses measurement techniques and inputs to develop accounting estimates to achieve the objective. The effects on an accounting estimate of a change in a measurement technique or a change in an input are changes in accounting estimates unless they result from the correction of prior period errors. 3) Amendments to IAS 12 “Deferred Tax related to Assets and Liabilities arising from a Single Transaction” The amendments clarify that the initial recognition exemption under IAS 12 does not apply to transactions in which equal taxable and deductible temporary differences arise on initial recognition. The Company applied the amendments and recognized a deferred tax asset (to the extent that it is probable that taxable profit will be available against which the deductible temporary difference can be utilized) and a deferred tax liability for all deductible and taxable temporary differences associated with leases and decommissioning obligations on January 1, 2022. The Company shall apply the amendments prospectively to transactions other than leases and decommissioning obligations that occur on or after 330 January 1, 2022. Upon initial application of the amendments to IAS 12, the Company recognized the cumulative effect of retrospective application on January 1, 2022, and restated comparative information. 4) Amendments to IAS 12 “International Tax Reform - Pillar Two Model Rules” The amendments introduce a temporary exception to the requirements in IAS 12 by stipulating that the Company should neither recognize nor disclose information about deferred tax assets and liabilities related to Pillar Two income taxes. The amendments also require the Company to disclose that it has applied the exception and separately disclose its current tax expense (income) related to Pillar Two income taxes. In addition, for periods in which Pillar Two legislation is enacted or substantively enacted but not yet in effect, the Company should disclose qualitative and quantitative information that helps users of financial statements understand the Company’s exposure to Pillar Two income taxes. The requirement that the Company apply the exception and the requirement to disclose that fact are applied immediately and retrospectively upon issuance of the amendments. The remaining disclosure requirements apply for annual reporting periods beginning on or after January 1, 2023, but not for any interim period ending on or before December 31, 2023. b. The IFRS Accounting Standards endorsed by the FSC for application starting from 2024 New, Amended and Revised Standards and Interpretations Effective Date Announced by IFRS Accounting Standards Amendments to IFRS 16 “Leases Liability in a Sale and January 1, 2024 (Note 2) Leaseback” Amendments to IAS 1 “Classification of Liabilities as January 1, 2024 Current or Non-current” Amendments to IAS 1 “Non-current Liabilities with January 1, 2024 Covenants” Amendments to IAS 7 and IFRS 7 “Supplier Finance January 1, 2024 (Note 3) Arrangements” Note 1: Unless stated otherwise, the above IFRS Accounting Standards will be effective for annual reporting periods beginning on or after their respective effective dates. Note 2: The seller concurrently the lessee shall retrospectively apply the amendment to IFRS 16 to the sale and leaseback transactions entered after the initial application date of IFRS 16. Note 3: The amendments provide some transition relief regarding disclosure requirements. 1) Amendments to IFRS 16, “Lease Liability in a Sale and Leaseback” The amendments clarify that for a sale and leaseback transaction, if the transfer of an asset meets the requirements of "Revenue from Contracts with Customers" in IFRS 15 and it is classified as a sale, the liabilities that arise from the leaseback by the seller and lessee, shall be treated according to the lease liability of IFRS 16. However, if it involves variable lease payments that are not dependent on the index or rate, the seller and lessee shall measure the liability in a manner that does not recognize the gain or loss related to the retained right of use. Subsequently, the difference between the current lease payment 331 Financial Information amount and the actual payment amount included in the calculation of lease liabilities is recognized as profit or loss. The 2020 amendments stipulate that, for the purpose of classification of liabilities, the aforementioned settlement refers to the elimination of liabilities due to the transfer of cash, other economic resources, or the Company's equity instruments to the counterparty. However, if the terms of a liability may, at the option of the counterparty, result in its settlement by the transfer of the Company's equity instruments, and if the option is recognized separately in equity in accordance with IAS 32 "Financial Instruments: Presentation," the aforementioned clauses do not affect the classification of liabilities. 2) Amendments to IAS 1 “Classification of Liabilities as Current or Non-current” (referred to as the “2020 amendments”) and “Non-current Liabilities with Covenants” (referred to as the “2022 amendments”) The 2020 amendments clarify that for a liability to be classified as non-current, the Company shall assess whether it has the right at the end of the reporting period to defer settlement of the liability for at least twelve months after the reporting period. If such rights are in existence at the end of the reporting period, the liability is classified as non-current regardless of whether the Company will exercise that right. The 2020 amendments also stipulate that, if the right to defer settlement is subject to compliance with specified conditions, the Company must comply with those conditions at the end of the reporting period even if the lender does not test compliance until a later date. The 2022 amendments further clarify that only covenants with which an entity is required to comply on or before the reporting date should affect the classification of a liability as current or non-current. Although the covenants to be complied with within twelve months after the reporting period do not affect the classification of a liability, the Company shall disclose information that enables users of financial statements to understand the risk of the Company that may have difficulty complying with the covenants and repay its liabilities within twelve months after the reporting period. The 2020 amendments stipulate that, for the purpose of liability classification, the aforementioned settlement refers to a transfer of cash, other economic resources or the Company’s own equity instruments to the counterparty that results in the extinguishment of the liability. However, if the terms of a liability that could, at the option of the counterparty, result in its settlement by a transfer of the Company’s own equity instruments, and if such option is recognized separately as equity in accordance with IAS 32: Financial Instruments: Presentation, the aforementioned terms would not affect the classification of the liability. 3) IAS 7 and IFRS 7 Amendments “Supplier Financing Arrangements” Supplier finance arrangements are characterized by one or more finance providers offering to pay amounts an entity owes its suppliers and the entity agreeing to pay according to the terms and conditions of the arrangements at the same date as, or a date later than, the suppliers are paid. The amendments stipulate that the Company shall disclose the relevant information about its supplier finance arrangements that enables users of financial statements to assess the effects of those arrangements on the Company’s liabilities and cash flows and on the Company’s exposure to liquidity risk. In addition to the above effects, as of the date the parent company only financial statements were authorized for issue, the Company is continuously assessing the possible 332 impact that the amendments of other standards and interpretations will have on the Company’s financial position and financial performance and will disclose the relevant impact when the assessment is completed. Except for the above impact, as of the date the parent company only financial statements were authorized for issue, the Company has assessed that the application of other standards and interpretations will not have a material impact on the Company’s financial position and financial performance. c. The IFRS Accounting Standards in issue but not yet endorsed and issued into effect by the FSC New, Amended and Revised Standards and Interpretations Effective Date Announced by IASB (Note 1) Amendments to IFRS 10 and IAS 28 “Sale or Contribution of Assets between an Investor and its Associate or Joint Venture” To be determined by IASB IFRS 17 “Insurance Contracts” Amendments to IFRS 17 Amendments to IFRS 17 “Initial Application of IFRS 9 and January 1, 2023 January 1, 2023 January 1, 2023 IFRS 17 - Comparative Information” Amendments to IAS 21 “Lack of Convertibility.”. January 1, 2025 (Note 2) Note 1: Unless noted recently released/amended/amended standards or interpretations take effects from the year of reporting period after the dates of release or amendment. otherwise, standards above said the Note 2: An entity shall apply those amendments for annual reporting periods beginning on or after January 1, 2025. Upon initial application of the amendments, the entity recognizes any effect as an adjustment to the opening balance of retained earnings. When the entity uses a presentation currency other than its functional currency, it shall, at the date of initial application, recognize any effect as an adjustment to the cumulative amount of translation differences in equity. 1) Amendments to IFRS 10 and IAS 28 “Sale or Contribution of Assets between an Investor and Its Associate or Joint Venture” The amendments stipulate that, when the Company sells or contributes assets that constitute a business (as defined in IFRS 3) to an associate or joint venture, the gain or loss resulting from the transaction is recognized in full. Also, when the Company loses control of a subsidiary that contains a business but retains significant influence or joint venture, the gain or loss resulting from the transaction is recognized in full. Conversely, when the Company sells or contributes assets that do not constitute a business to an associate or joint venture, the gain or loss resulting from the transaction is recognized only to the extent of the Company’s interest as an unrelated investor in the associate or joint venture, i.e., the Company’s share of the gain or loss is eliminated. Also, when the Company loses control of a subsidiary that does not contain a business but retains significant influence or joint control over an associate or a joint venture, the gain or loss resulting from the transaction is recognized only to the extent of the Company’s interest as an unrelated investor in the associate or joint venture, i.e., the Company’s share 333 Financial Information of the gain or loss is eliminated. 2) Amendments to IAS 21 “Lack of Exchangeability” The amendments stipulate that a currency is exchangeable into another currency when an entity is able to obtain the other currency within a time frame that allows for a normal administrative delay and through a market or exchange mechanism in which an exchange transaction would create enforceable rights and obligations. An entity shall estimate the spot exchange rate at a measurement date when a currency is not exchangeable into another currency to reflect the rate at which an orderly exchange transaction would take place at the measurement date between market participants under prevailing economic conditions. In this situation, the Company shall disclose information that enables users of its financial statements to understand how the currency not being exchangeable into the other currency affects, or is expected to affect, its financial performance, financial position and cash flows. As of the date the parent company only financial statements were authorized for issue, the Company has assessed that the aforesaid amendments to standards and interpretations will not have any material impact on the Company’s financial position and financial performance; provided, the Company is continuously assessing the possible impact that the application of other standards and interpretations will have on the Company’s financial position and financial performance and will disclose the relevant impact when the assessment is completed. d. Presentation of Items Reclassified Subsequently The management of the Company considers that the bank deposits repatriated for restricted purpose for the use of substantial investments and financial investments in accordance with the Management, Utilization, and Taxation of Repatriated Offshore Funds Act. do not change the nature of the deposit as the entity can access those amounts on demand. The management concludes that the presentation of cash and cash equivalents is more appropriate and, therefore, has changed the presentation of the parent company only balance sheets and parent company only statements of cash flows in 2023. The other current assets - other were reclassified to cash and cash equivalents with a carrying amount of $23,380 thousand and $40,786 thousand, on December 31, 2023 and 2022. The impact on cash flows for the year ended December 31, 2022 was as follows: Net cash used in operating activities Net decrease in cash and cash equivalents Adjustments $ (39,707) $ (39,707) 4. SUMMARY OF MATERIAL ACCOUNTING POLICY INFORMATION a. Statement of compliance The parent company only financial statements have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers. b. Basis of preparation The parent company only financial statements have been prepared on the historical cost basis 334 except for financial instruments, which are measured at fair value and net defined benefit liabilities which are measured at the present value of the defined benefit obligation less the fair value of plan assets. The fair value measurements, which are grouped into Levels 1 to 3 based on the degree to which the fair value measurement inputs are observable and based on the significance of the inputs to the fair value measurement in its entirety, are described as follows: 1) Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities; 2) Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for an asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices); and 3) Level 3 inputs are unobservable inputs for an asset or liability. When preparing these parent company only financial statements, the Company used the equity method to account for its investments in subsidiaries and associates. In order for the amounts of the net profit for the year, other comprehensive income for the year and total equity in the parent company only financial statements to be the same with the amounts attributable to the owners of the Company in its consolidated financial statements, adjustments arising from the differences in accounting treatments between the parent company only basis and the consolidated basis were made to investments accounted for using the equity method, the share of profit or loss of subsidiaries and associates, the share of other comprehensive income of subsidiaries and associates and the related equity items, as appropriate, in these parent company only financial statements. c. Classification of current and non-current assets and liabilities Current assets include:  Assets held primarily for the purpose of trading;  Assets expected to be realized within 12 months after the reporting period; and  Cash and cash equivalents unless the asset is restricted from being exchanged or used to settle a liability for at least 12 months after the reporting period. Current liabilities include:  Liabilities held primarily for the purpose of trading;  Liabilities due to be settled within 12 months after the reporting period; and  Liabilities for which the Company does not have an unconditional right to defer settlement for at least 12 months after the reporting period. Terms of a liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not affect its classification. Assets and liabilities that are not classified as current are classified as non-current. 335 Financial Information d. Foreign currencies In preparing the Company’s parent company only financial statements, transactions in currencies other than the Company’s functional currency (foreign currencies) are recognized at the rates of exchange prevailing at the dates of the transactions. At the end of each reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing at that date. Exchange differences on monetary items arising from settlement or translation are recognized in profit or loss in the period in which they arise except for exchange differences on transactions entered into in order to hedge certain foreign currency risks. Non-monetary items denominated in foreign currencies that are measured at fair value are retranslated at the rates prevailing at the date when fair value was determined. Exchange differences arising from the retranslation of non-monetary items are included in profit or loss for the period except for exchange differences arising from the retranslation of non-monetary items in respect of which gains and losses are recognized directly in other comprehensive income; in which cases, the exchange differences are also recognized directly in other comprehensive income. Non-monetary item denominated in a foreign currency and measured at historical cost is stated at the reporting currency as originally translated from the foreign currency. e. Inventories Inventories consist of raw materials, supplies, finished goods and work-in-process and are stated at the lower of cost or net realizable value. Inventory write-downs are made by item, except where it may be appropriate to group similar or related items. The net realizable value is the estimated selling price of inventories less all estimated costs of completion and costs necessary to make the sale. Inventories are recorded at the weighted-average cost on the parent company only balance sheets date. f. Investments accounted for using the equity method The Company uses the equity method to account for its investments in subsidiaries and associates. 1) Investment in subsidiaries A subsidiary is an entity that is controlled by the Company. Under the equity method, an investment in a subsidiary is initially recognized at cost and adjusted thereafter to recognize the Company’s share of the profit or loss and other comprehensive income of the subsidiary. The Company also recognizes the changes in the Company’s share of equity of subsidiaries. Changes in the Company’s ownership interest in a subsidiary that do not result in the Company losing control of the subsidiary are accounted for as equity transactions. The Company recognizes directly in equity any difference between the carrying amount of the investment and the fair value of the consideration paid or received. When the Company’s share of loss of a subsidiary exceeds its interest in that subsidiary (which includes any carrying amount of the investment accounted for using the equity 336 method and long-term interests that, in substance, form part of the Company’s net investment in the subsidiary), the Company continues recognizing its share of further loss, if any. Any excess of the cost of acquisition over the Company’s share of the net fair value of the identifiable assets and liabilities of a subsidiary at the date of acquisition is recognized as goodwill, which is included within the carrying amount of the investment and is not amortized. Any excess of the Company’s share of the net fair value of the identifiable assets and liabilities over the cost of acquisition is recognized immediately in profit or loss. The Company assesses its investment for any impairment by comparing the carrying amount with the estimated recoverable amount as assessed based on the investee’s financial statements as a whole. Impairment loss is recognized when the carrying amount exceeds the recoverable amount. If the recoverable amount of the investment subsequently increases, the Company recognizes a reversal of the impairment loss; the adjusted post-reversal carrying amount should not exceed the carrying amount that would have been recognized (net of amortization or depreciation) had no impairment loss been recognized in prior years. An impairment loss recognized on goodwill cannot be reversed in a subsequent period. When the Company loses control of a subsidiary, it recognizes the investment retained in the former subsidiary at its fair value at the date when control is lost. The difference between the fair value of the retained investment plus any consideration received and the carrying amount of the previous investment at the date when control is lost is recognized as a gain or loss in profit or loss. Besides this, the Company accounts for all amounts previously recognized in other comprehensive income in relation to that subsidiary on the same basis as would be required had the Company directly disposed of the related assets or liabilities. Profit or loss resulting from downstream transactions is eliminated in full only in the parent company only financial statements. Profit and loss resulting from upstream transactions and transactions between subsidiaries is recognized only in the parent company only financial statements and only to the extent of interests in the subsidiaries that are not related to the Company. 2) Investment in associates An associate is an entity over which the Company has significant influence and which is neither a subsidiary nor an interest in a joint venture. The Company uses the equity method to account for its investments in associates. Under the equity method, an investment in an associate is initially recognized at cost and adjusted thereafter to recognize the Company’s share of the profit or loss and other comprehensive income of the associate. The Company also recognizes the changes in the Company’s share of equity of associates. Any excess of the cost of acquisition over the Company’s share of the net fair value of the identifiable assets and liabilities of an associate at the date of acquisition is recognized as goodwill, which is included within the carrying amount of the investment and is not amortized. Any excess of the Company’s share of the net fair value of the identifiable assets and liabilities over the cost of acquisition, after reassessment, is recognized immediately in profit or loss. 337 Financial Information When the Company subscribes for additional new shares of an associate at a percentage different from its existing ownership percentage, the resulting carrying amount of the investment differs from the amount of the Company’s proportionate interest in the associate. The Company records such a difference as an adjustment to investments with the corresponding amount charged or credited to capital surplus - changes in capital surplus from investments in associates accounted for using the equity method. If the Company’s ownership interest is reduced due to its additional subscription of the new shares of the associate, the proportionate amount of the gains or losses previously recognized in other comprehensive income in relation to that associate is reclassified to profit or loss on the same basis as would be required had the investee directly disposed of the related assets or liabilities. When the adjustment should be debited to capital surplus, but the capital surplus recognized from investments accounted for using the equity method is insufficient, the shortage is debited to retained earnings. When the Company’s share of losses of an associate equals or exceeds its interest in that associate, the Company discontinues recognizing its share of further losses. Additional losses and liabilities are recognized only to the extent that the Company has incurred legal obligations, or constructive obligations, or made payments on behalf of that associate. The entire carrying amount of the investment (including goodwill) is tested for impairment as a single asset by comparing its recoverable amount with its carrying amount. Any impairment loss recognized is deducted from investments and the carrying amount of investment is net of impairment loss. Any reversal of that impairment loss is recognized to the extent that the recoverable amount of the investment subsequently increases. The Company discontinues the use of the equity method from the date on which it ceases to have significant influence over the associate. Any retained investment is measured at fair value on that date and the fair value is regarded as its fair value on initial recognition as a financial asset. The difference between the previous carrying amount of the associate attributable to the retained interest and its fair value is included in the determination of the gain or loss on disposal of the associate. The Company accounts for all amounts previously recognized in other comprehensive income in relation to that associate on the same basis as would be required if that associate had directly disposed of the related assets or liabilities. When the Company transacts with its associate, profits and losses resulting from the transactions with the associate are recognized in the Company’s parent company only financial statements only to the extent of interests in the associate that are not related to the Company. g. Property, plant and equipment Property, plant and equipment are initially measured at cost and subsequently measured at cost less accumulated depreciation and accumulated impairment loss. Property, plant and equipment in the course of construction are measured at cost less any recognized impairment loss. Cost includes professional fees and borrowing costs eligible for capitalization. Such assets are depreciated and classified to the appropriate categories of property, plant and equipment when completed and ready for their intended use. The depreciation of property, plant and equipment is recognized using the straight-line 338 method. Each significant part is depreciated separately. The estimated useful lives, residual values and depreciation methods are reviewed at the end of each reporting period, with the effects of any changes in the estimates accounted for on a prospective basis. On derecognition of an item of property, plant and equipment, the difference between the sales proceeds and the carrying amount of the asset is recognized in profit or loss. h. Investment properties Investment properties are properties held to earn rentals and/or for capital appreciation. Investment properties also include land held for a currently undetermined future use. Investment properties are initially measured at cost. Subsequent to initial recognition, investment properties are measured at cost less accumulated depreciation and accumulated impairment loss. Depreciation is recognized using the straight-line method. On derecognition of an investment property, the difference between the net disposal proceeds and the carrying amount of the asset and is included in profit or loss. i. Intangible assets Intangible assets with finite useful lives that are acquired separately are initially measured at cost and subsequently measured at cost less accumulated amortization and accumulated impairment loss. Amortization is recognized on a straight-line basis within useful lives. The estimated useful lives, residual values, and amortization methods are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis. Intangible assets with indefinite useful lives are reported at cost less accumulated impairment loss. Intangible assets are derecognized when they are disposed or are not expected to generate future economic benefits through usage or through disposal. On derecognition of an intangible asset, the differences between the net disposal proceeds and the carrying amount of the asset is recognized in profit or loss. j. Impairment of property, plant and equipment, right-of-use asset, investment properties, intangible assets other than goodwill and assets related to contract costs At the end of each reporting period, the Company reviews the carrying amounts of its property, plant and equipment, right-of-use asset, investment properties and intangible assets, excluding goodwill, to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss. When it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the cash-generating unit to which the asset belongs. Corporate assets are allocated to the individual cash-generating units on a reasonable and consistent basis of allocation. Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment at least annually and whenever there is an indication that the assets may be impaired. 339 Financial Information The recoverable amount is the higher of fair value less costs to sell and value in use. If the recoverable amount of an asset or cash-generating unit is estimated to be less than its carrying amount, the carrying amount of the asset or cash-generating unit is reduced to its recoverable amount, with the resulting impairment loss recognized in profit or loss. Before the Company recognizes an impairment loss from assets related to contract costs, any impairment loss on inventories, property, plant and equipment and intangible assets related to the contract applicable under IFRS 15 shall be recognized in accordance with applicable standards. Then, impairment loss from the assets related to the contract costs is recognized to the extent that the carrying amount of the assets exceeds the remaining amount of consideration that the Company expects to receive in exchange for related goods or services less the costs which relate directly to providing those goods or services and which have not been recognized as expenses. The assets related to the contract costs are then included in the carrying amount of the cash-generating unit to which they belong for the purpose of evaluating impairment of that cash-generating unit. When an impairment loss is subsequently reversed, the carrying amount of the corresponding asset, cash-generating unit or assets related to contract costs is increased to the revised estimate of its recoverable amount, but only to the extent of the carrying amount that would have been determined had no impairment loss been recognized on the asset, cash-generating unit or assets related to contract costs in prior years. A reversal of an impairment loss is recognized in profit or loss. k. Financial instruments Financial assets and financial liabilities are recognized when the Company becomes a party to the contractual provisions of the instrument. Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issuance of financial assets and financial liabilities (other than financial assets and financial liabilities at FVTPL) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at FVTPL are recognized immediately in profit or loss. 1) Financial assets All regular way purchases or sales of financial assets are recognized and derecognized on a trade date basis. a) Measurement categories Financial assets are classified into the following categories: Financial assets at FVTPL, financial assets at amortized cost and investments in equity instruments at FVTOCI. i. Financial assets at FVTPL Financial assets are classified as at FVTPL when such financial asset are mandatorily classified or designated as at FVTPL. Financial assets mandatorily classified as at FVTPL include investments in equity instruments which are not designated as at FVTOCI and debt instruments that do not meet the amortized cost criteria or the FVTOCI criteria. 340 Financial assets at FVTPL are subsequently measured at fair value, and any remeasurement gains or losses are recognized in other gains or losses. Fair value is determined in the manner described in Note 31. ii. Financial assets at amortized cost Financial assets that meet the following conditions are subsequently measured at amortized cost: i) The financial assets are held within a business model whose objective is to hold financial assets in order to collect contractual cash flows; and ii) The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. Subsequent to initial recognition, financial assets at amortized cost, including cash and cash equivalents and trade receivables at amortized cost are measured at amortized cost, which equals the gross carrying amount determined using the effective interest method less any impairment loss. Exchange differences are recognized in profit or loss. Interest income is calculated by applying the effective interest rate to the gross carrying amount of such a financial asset, except for: i) Purchased or originated credit-impaired financial assets, for which interest income is calculated by applying the credit-adjusted effective interest rate to the amortized cost of such financial assets; and ii) Financial assets that are not credit-impaired on purchase or origination but have subsequently become credit-impaired, for which interest income is calculated by applying the effective interest rate to the amortized cost of such financial assets in subsequent reporting periods. Cash equivalents include time deposits with original maturities within 3 months from the date of acquisition or time deposits with original maturities within 3-12 months from the date of acquisition and the interest earned upon early withdrawal exceeds that of regular saving accounts, which are highly liquid, readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value. These cash equivalents are held for the purpose of meeting short-term cash commitments. iii. Investments in equity instruments at FVTOCI On initial recognition, the Company may make an irrevocable election to designate investments in equity instruments as at FVTOCI. Designation as at FVTOCI is not permitted if the equity investment is held for trading or if it is contingent consideration recognized by an acquirer in a business combination. Investments in equity instruments at FVTOCI are subsequently measured at fair value with gains and losses arising from changes in fair value recognized in other comprehensive income and accumulated in other equity. The cumulative gain or 341 Financial Information loss will not be reclassified to profit or loss on disposal of the equity investments; instead, it will be transferred to retained earnings. Dividends on these investments in equity instruments are recognized in profit or loss when the Company’s right to receive the dividends is established, unless the dividends clearly represent a recovery of part of the cost of the investment. b) Impairment of financial assets and contract assets The Company recognizes a loss allowance for expected credit losses on financial assets at amortized cost (including trade receivables), operating lease receivables, finance lease receivables, as well as contract assets. The Company always recognizes lifetime expected credit losses (ECLs) for trade receivables, operating lease receivables, finance lease receivables and contract assets. For all other financial instruments, the Company recognizes lifetime ECLs when there has been a significant increase in credit risk since initial recognition. If, on the other hand, the credit risk on a financial instrument has not increased significantly since initial recognition, the Company measures the loss allowance for that financial instrument at an amount equal to 12-month ECLs. Expected credit losses reflect the weighted average of credit losses with the respective risks of default occurring as the weights. Lifetime ECLs represent the expected credit losses that will result from all possible default events over the expected life of a financial instrument. In contrast, 12-month ECLs represents the portion of lifetime ECLs that is expected to result from default events on a financial instrument that are possible within 12 months after the reporting date. For internal credit risk management purposes, the Company considers that the following situations indicate that a financial asset is in default (without taking into account any collateral held by the Company): i. Internal or external information shows that the debtor is unlikely to pay its creditors. ii. Financial asset is more than 90 days past due unless the Company has reasonable and corroborative information to support a more lagged default criterion. The impairment loss of all financial assets is recognized in profit or loss by a reduction in their carrying amounts through a loss allowance account. c) Derecognition of financial assets The Company derecognizes a financial asset only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another party. On derecognition of a financial asset at amortized cost in its entirety, the difference between the asset’s carrying amount and the sum of the consideration received and receivable is recognized in profit or loss. On derecognition of an investment in an equity instrument at FVTOCI, the difference between the asset’s carrying amount and the sum of the consideration received and receivable is recognized in profit or loss, and the cumulative gain or loss which had been recognized in other comprehensive 342 income is transferred directly to retained earnings, without recycling through profit or loss. 2) Equity instruments Equity instruments issued by the Company are recognized at the proceeds received, net of direct issue costs. The repurchase of the Company’s own equity instruments is recognized in and deducted directly from equity. No gain or loss is recognized in profit or loss on the purchase, sale, issuance or cancellation of the Company’s own equity instruments. 3) Financial liabilities a) Subsequent measurement Except the following situation, all the financial liabilities are measured at amortized cost using the effective interest method: i. Financial liabilities at FVTPL Financial liabilities are classified as at FVTPL when the financial liabilities are held for trading or are designated as at FVTPL. Financial liabilities held for trading are stated at fair value, and any remeasurement gains or losses are recognized in other gains or losses. Fair value is determined in the manner described in Note 31. ii. Financial guarantee contracts Financial guarantee contracts issued by the Company, if not designated as at FVTPL, are subsequently measured at the higher of: i) The amount of the loss allowance reflecting expected credit losses; and ii) The amount initially recognized less, where appropriate, the cumulative amount of income recognized in accordance with the revenue recognition policies. b) Derecognition of financial liabilities The difference between the carrying amount of the financial liability derecognized and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognized in profit or loss. 4) Derivative financial instruments The Company enters into a variety of derivative financial instruments to manage its exposure to interest rate and foreign exchange rate risks, including foreign exchange forward contracts and interest rate swaps. Derivatives are initially recognized at fair value at the date on which the derivative contracts are entered into and are subsequently remeasured to their fair value at the end of 343 Financial Information each reporting period. The resulting gain or loss is recognized in profit or loss immediately unless the derivative is designated and effective as a hedging instrument; in which event, the timing of the recognition in profit or loss depends on the nature of the hedging relationship. When the fair value of a derivative financial instrument is positive, the derivative is recognized as a financial asset; when the fair value of a derivative financial instrument is negative, the derivative is recognized as a financial liability. Derivatives embedded in hybrid contracts that contain financial asset hosts that is within the scope of IFRS 9 are not separated; instead, the classification is determined in accordance with the entire hybrid contract. Derivatives embedded in non-derivative host contracts that are not financial assets within the scope of IFRS 9 (e.g., financial liabilities) are treated as separate derivatives when they meet the definition of a derivative; their risks and characteristics are not closely related to those of the host contracts; and the host contracts are not measured at FVTPL. l. Hedge accounting The Company designates certain hedging instruments, which include derivatives, embedded derivatives and non-derivatives in respect of foreign currency risk, as either fair value hedges or cash flow hedges. Hedges of foreign exchange risk on firm commitments are accounted for as cash flow hedges. 1) Fair value hedges Gain or losses on derivatives that are designated and qualify as fair value hedges are recognized in profit or loss immediately, together with any changes in the fair value of the hedged item that are attributable to the hedged risk and are recognized in the parent company only statement of profit or loss under the line item that relates to the hedged item. The Company discontinues hedge accounting only when the hedging relationship ceases to meet the qualifying criteria; for instance, when the hedging instrument expires or is sold, terminated or exercised. 2) Cash flow hedges The effective portion of gains or losses on derivatives that are designated and qualify as cash flow hedges is recognized in other comprehensive income. The gains or losses relating to the ineffective portion are recognized immediately in profit or loss. The associated gains or losses that were recognized in other comprehensive income are reclassified from equity to profit or loss as reclassification adjustments in the line items relating to the hedged item in the same period in which the hedged item affects profit or loss. If a hedge of a forecasted transaction subsequently results in the recognition of a non-financial asset or a non-financial liability, the associated gains and losses that were recognized in other comprehensive income are removed from equity and included in the initial cost of the non-financial asset or non-financial liability. The Company discontinues hedge accounting only when the hedging relationship ceases to meet the qualifying criteria; for instance, when the hedging instrument expires or is sold, terminated or exercised. The cumulative gain or loss on the hedging instrument that was previously recognized in other comprehensive income (from the period in which the hedge was effective) remains separately in equity until the forecasted transaction occurs. 344 When a forecasted transaction is no longer expected to occur, the gains or losses accumulated in equity are recognized immediately in profit or loss. m. Levies Levies imposed by a government are accrued as other liabilities when the transactions or activities that trigger the payment of such levies occur. If the obligating event occurs over a period of time, the liability is recognized progressively. If an obligation to pay a levy is triggered upon reaching a minimum threshold, the liability is recognized when that minimum threshold is reached. n. Provisions Provisions are recognized when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that the Company will be required to settle the obligation, and the amount of the obligation can be measured reliably. o. Revenue recognition The Company identifies contracts with customers, allocates the transaction price to the performance obligations and recognizes revenue when performance obligations are satisfied. 1) Revenue from the sale of goods Revenue from the sale of goods comes from sales of wires, cables and stainless steel. Sales of wires, cables and stainless steel are recognized as revenue when the customer has full discretion over the manner of distribution and the price to sell the goods, has the primary responsibility for sales to future customers and bears the risks of obsolescence. Trade receivables are recognized concurrently. The Company does not recognize revenue on materials delivered to subcontractors because this delivery does not involve a transfer of control. 2) Revenue from the others a) Revenue from the reading of services Revenue from the reading of services is recognized when services are rendered. Revenue generated from services provided under the contract is recognized according to the completion of the contract. b) Construction contract revenue A contract asset is recognized during the construction and is reclassified to trade receivables at the point at which the customer is invoiced. If the milestone payment exceeds the revenue recognized to date, then the Company recognizes a contract liability for the difference. Certain payments retained by the customer as specified in the contract are intended to ensure that the Company adequately completes all of its contractual obligations. Such retention receivables are recognized as contract assets until the Company satisfies its performance obligation. When the outcome of a performance obligation cannot be reasonably measured, contract revenue is recognized only to the extent of contract costs incurred in 345 Financial Information p. Leases satisfying the performance obligation for which recovery is expected. At the inception of a contract, the Company assesses whether the contract is, or contains, a lease. 1) The Company as lessor Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases. When the Company subleases a right-of-use asset, the sublease is classified by reference to the right-of-use asset arising from the head lease, not with reference to the underlying asset. However, if the head lease is a short-term lease that the Company, as a lessee, has accounted for applying recognition exemption, the sublease is classified as an operating lease. Under finance leases, the lease payments comprise fixed payments and variable lease payments which depend on an index or a rate. The net investment in a lease is measured at (a) the present value of the sum of the lease payments receivable by a lessor and any unguaranteed residual value accrued to the lessor plus (b) initial direct costs and is presented as a finance lease receivable. Finance lease income is allocated to the relevant accounting periods so as to reflect a constant, periodic rate of return on the Company’s net investment outstanding in respect of leases. Lease payments less any lease incentives payable from operating leases are recognized as income on a straight-line basis over the terms of the relevant leases. Initial direct costs incurred in obtaining operating leases are added to the carrying amounts of the underlying assets and recognized as expenses on a straight-line basis over the lease terms. 2) The Company as lessee The Company recognizes right-of-use assets and lease liabilities for all leases at the commencement date of a lease, except for short-term leases and low-value asset leases accounted for applying a recognition exemption where lease payments are recognized as expenses on a straight-line basis over the lease terms. Right-of-use assets are initially measured at cost, which comprises the initial measurement of lease liabilities adjusted for lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs needed to restore the underlying assets, and less any lease incentives received. Right-of-use assets are subsequently measured at cost less accumulated depreciation and impairment losses and adjusted for any remeasurement of the lease liabilities. Right-of-use assets are depreciated using the commencement dates to the earlier of the end of the useful lives of the right-of-use assets or the end of the lease terms. the straight-line method from Lease liabilities are initially measured at the present value of the lease payments, which comprise fixed payments, in-substance fixed payments, variable lease payments which depend on an index or a rate, residual value guarantees, the exercise price of a purchase 346 option if the Company is reasonably certain to exercise that option, and payments of penalties for terminating a lease if the lease term reflects such termination, less any lease incentives receivable. The lease payments are discounted using the interest rate implicit in a lease, if that rate can be readily determined. If that rate cannot be readily determined, the lessee’s incremental borrowing rate will be used. Subsequently, lease liabilities are measured at amortized cost using the effective interest method, with interest expense recognized over the lease terms. When there is a change in a lease term, a change in the amounts expected to be payable under a residual value guarantee, a change in the assessment of an option to purchase an underlying asset, or a change in future lease payments resulting from a change in an index or a rate used to determine those payments, the Company remeasures the lease liabilities with a corresponding adjustment to the right-of-use-assets. However, if the carrying amount of the right-of-use assets is reduced to zero, any remaining amount of the remeasurement is recognized in profit or loss. Lease liabilities are presented on a separate line in the parent company only balance sheets. The Company negotiates with the lessor for rent concessions as a direct consequence of the Covid-19 to change the lease payments originally due by June 30, 2022, that results in the revised consideration for the lease less than, the consideration for the lease immediately preceding the change. There is no substantive change to other terms and conditions. The Company elects to apply the practical expedient to all of these rent concessions and, therefore, does not assess whether the rent concessions are lease modifications. Instead, the Company recognizes the reduction in lease payment in profit or loss as, in the period in which the events or conditions that trigger the concession occur and makes a corresponding adjustment to the lease liability. Variable lease payments that do not depend on an index or a rate are recognized as expenses in the periods in which they are incurred. q. Government grants Government grants are not recognized until there is reasonable assurance that the Company will comply with the conditions attached to them and that the grants will be received. Government grants are recognized profit and loss on a systematic basis over the periods in which the Company recognizes as expenses the related costs that the grants intend to compensate. Government grants that are receivable as compensation for expenses or losses already incurred or for the purpose of giving immediate financial support to the Company with no future related costs are recognized in profit or loss in the period in which they are received. The benefit of a government loan received at a below-market rate of interest is treated as a government grant measured as the difference between the proceeds received and the fair value of the loan based on prevailing market interest rates. r. Employee benefits 1) Short-term employee benefits Liabilities recognized in respect of short-term employee benefits are measured at the undiscounted amount of the benefits expected to be paid in exchange for the related 347 Financial Information service. 2) Retirement benefits Payments to defined contribution retirement benefit plans are recognized as an expense when employees have rendered service entitling them to the contributions. Defined benefit costs (including service cost, net interest and remeasurement) under the defined benefit retirement benefit plans are determined using the projected unit credit method. Service cost (including current service cost) and net interest on the net defined benefit liability (asset) are recognized as employee benefits expense in the period they occur. Remeasurement, comprising actuarial gains and losses and return on plan assets (excluding interest), are recognized in other comprehensive income in the period in which they occur. Remeasurement recognized in other comprehensive income is reflected immediately in retained earnings and will not be reclassified to profit or loss. Net defined benefit liability (asset) represents the actual deficit (surplus) in the Company’s defined benefit plan. Any surplus resulting from this calculation is limited to the present value of any refunds from the plans or reductions in future contributions to the plans. s. Share-based payment transaction agreements Employee share options granted to employees and others providing similar services. The fair value at the grant date of the employee share options is expensed on a straight-line basis over the vesting period, based on the Company’s best estimates of the number of shares or options that are expected to ultimately vest, with a corresponding increase in capital surplus - employee share options. The expense is recognized in full at the grant date if the grants are vested immediately. The grant date of issued ordinary shares for cash which are reserved for employees is the date on which the number of shares that the employees purchase is confirmed. t. Taxation Income tax expense represents the sum of the tax currently payable and deferred tax. 1) Current tax According to the Income Tax Act in ROC, an additional tax on unappropriated earnings is provided for in the year the shareholders approve to retain earnings. Adjustments of prior years’ tax liabilities are added to or deducted from the current year’s tax provision. 2) Deferred tax Deferred tax is recognized on temporary differences between the carrying amounts of assets and liabilities and the corresponding tax bases used in the computation of taxable profit. If a temporary difference arises from the initial recognition (other than in a business combination) of assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit and at the time of the transaction, does not give rise to equal taxable and deductible temporary differences, the resulting deferred tax asset or liability is not recognized. In addition, a deferred tax liability is not recognized on taxable temporary 348 differences arising from the initial recognition of goodwill. Deferred tax liabilities are generally recognized for all taxable temporary differences. Deferred tax assets are generally recognized for all deductible temporary differences and unused loss carryforward to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilized. Deferred tax liabilities are recognized for taxable temporary differences associated with investments in subsidiaries and associates, except where the Company is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets arising from deductible temporary differences associated with such investments and interests are recognized only to the extent that it is probable that there will be sufficient taxable profits against which to utilize the benefits of the temporary differences and they are expected to reverse in the foreseeable future. The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. A previously unrecognized deferred tax asset is also reviewed at the end of each reporting period and recognized to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered. Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realized, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Company expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities. The Company has applied the exception from the recognition and disclosure of deferred tax assets and liabilities relating to Pillar Two income taxes. Accordingly, the Company neither recognizes nor discloses information about deferred tax assets and liabilities related to Pillar Two income taxes. 3) Current and deferred taxes for the year Current and deferred taxes are recognized in profit or loss, except the current and deferred taxes that are recognized in other comprehensive income or directly in equity; in which case, the current and deferred taxes will be recognized in other comprehensive income or directly in equity, respectively. 5. MATERIAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY In the application of the Company’s accounting policies, management is required to make judgments, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates. 349 Financial Information When developing material accounting estimates, the Company reviews the estimates and underlying on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods. 6. CASH AND CASH EQUIVALENTS Cash on hand Checking accounts and cash in banks Cash equivalents Time deposits Repatriation of offshore fund and projects grants December 31 2023 2022 $ 1,000 3,506,214 $ 1,050 7,423,539 - 23,380 3,531,650 40,786 $ 3,530,594 $ 10,997,025 The market rate intervals of cash in the bank at the end of the year were as follows (except for checking accounts’ interest rate of 0.00%): Bank balance Time deposits December 31 2023 2022 0.001%-2.60% - 0.001%-3.80% 1.035% Other bank deposits have been reclassified to other accounts for the following purposes: Other current assets - current Refundable deposits Non-current assets - other Pledged time deposits Purpose December 31 2023 2022 Futures deposits $ - $ 280,997 To meet required security 600 600 deposits $ 600 $ 281,597 350 7. FINANCIAL INSTRUMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS December 31 2023 2022 Financial assets mandatorily classified as at FVTPL Derivative financial assets (not under hedge accounting) Commodity futures contracts Non-derivative financial assets Contingent consideration $ 68,870 $ - 2,614,285 2,567,786 Financial assets at FVTPL $ 2,683,155 $ 2,567,786 Current Non-current Financial liabilities held for trading $ 1,499,047 1,184,108 - $ 2,567,786 $ 2,683,155 $ 2,567,786 Derivative financial liabilities (not under hedge accounting) Commodity futures contracts Foreign exchange forward contracts Exchange rate swap contracts $ $ 9,807 34,712 21,017 30,488 - Financial liabilities at FVTPL $ 44,519 $ 51,505 Current Non-current $ 44,519 - $ 51,505 - $ 44,519 $ 51,505 a. As of December 31, 2023 and 2022, outstanding commodity futures not under hedge accounting were as follows: Type of Transaction Quantity (Tons) Trade Date Maturity Date Exercise Price (In Thousands) Market Price (In Thousands) Valuation (Loss) Gain (In Thousands) December 31, 2023 Commodity futures Copper Nickel December 31, 2022 Commodity futures Copper Copper Nickel Buy Buy Buy Sell Sell 13,300 2023.08.31- 2024.01.17- US$ 110,946 US$ 113,261 US$ 2,315 2023.12.29 2024.06.19 150 2023.11.01- 2024.02.01- US$ 2,550 US$ 2,478 US$ (72 ) 2023.11.24 2024.02.23 5,900 2022.08.15- 2023.01.18- US$ 48,178 US$ 49,332 US$ 1,154 2022.12.30 2023.06.21 25 4,188 2022.12.02 2022.11.15- 2023.03.02 2023.01.18- US$ 209 US$ US$ 122,940 US$ 124,780 US$ 210 US$ 1 (1,840 ) 2022.12.30 2023.03.20 351 Financial Information b. As of December 31, 2023 and 2022, outstanding foreign exchange forward contracts not under hedge accounting were as follows: Currency Maturity Date Notional Amount (In Thousands) December 31, 2023 Buy Sell 2024.01.02-2024.02.01 USD78,000/IDR1,205,962,000 USD to IDR USD to JPY EUR to USD 2024.01.16-2024.01.22 EUR4,000/USD4,342 USD3,500/JPY495,565 2024.01.29 December 31, 2022 Buy USD to IDR USD to JPY 2023.01.31 2023.01.05 USD91,000/IDR1,429,633,100 USD3,000/JPY412,605 c. As of the December 31, 2023, outstanding exchange rate swap contracts not under hedge accounting were as follows: Currency Maturity Date Notional Amount (In Thousands) December 31, 2023 USD to NTD 2024.01.02-2024.02.29 USD118,000/NTD3,649,647 d. For the years ended December 31, 2023 and 2022, the Company’s strategies for commodity futures contracts, forward exchange contracts and foreign exchange swap contracts were to hedge exposures to fluctuations in the prices of raw material and foreign exchange rates. However, those derivative financial instruments did not meet the criteria of hedge effectiveness; therefore, they were not accounted for by hedge accounting. e. Financial assets - contingent consideration is the amount of consideration to be received by the Company from the acquirer in the disposal of the subsidiary on July 27, 2022. In accordance with the agreement of contingent consideration, the acquirer shall respectively pay additional payments when the gross profit of the target company during the period starting from the settlement date to December 31, 2023 and the gross profit in the year of 2024 meet the amount agreed upon by Target Company. 8. CONTRACT ASSETS At the end of the year, contract balances were as follows: Contract assets Cable installation Less: Allowance for impairment loss December 31 2023 2022 $ 175,083 - $ 267,147 - Contract assets - current $ 175,083 $ 267,147 352 The changes in the balance of contract assets primarily resulted from the timing differences between the Company’s satisfaction of performance obligations and the respective customer’s payment. 9. NOTES RECEIVABLE AND TRADE RECEIVABLES Notes receivable Notes receivable Notes receivable - non-operating Notes receivable Notes receivable from related parties Trade receivables Trade receivables Less: Allowance for impairment loss Trade receivables from related parties December 31 2023 2022 $ 12,877 $ 24,016 1,940 1,046 - 1,042 $ 15,863 $ 25,058 $ 2,119,899 - 2,119,899 438,177 $ 3,652,066 - 3,652,066 296,053 $ 2,558,076 $ 3,948,119 The average credit period on the sales of goods is 60 days. In determining the collectability of a trade receivable, the Company considered any change in the credit quality of the trade receivable since the date credit was initially granted to the end of the reporting period. When the Company dealt with new entities, the Company reviewed the credit ratings of the entities and obtained sufficient collateral, where appropriate, as a means of mitigating the risk of financial loss from defaults. The Company uses other publicly available financial information or its own trading records to rate its major customers. The Company’s exposure and the credit ratings of its counterparties are continuously monitored, and the aggregate value of transactions concluded is spread amongst approved counterparties. Credit exposure is controlled by counterparty limits that are reviewed and approved by the risk management committee annually. In this regard, the management believes the Company’s credit risk is significantly reduced. The Company permits the use of a lifetime expected credit loss allowance for all trade receivables. The expected credit losses on trade receivables are estimated using a provision matrix by reference to past default experience with the respective debtors and an analysis of the debtors’ current financial positions. As the Company’s historical credit loss experience does not show significantly different loss patterns for different customer segments, the loss allowance based on the past due status of receivables is not further distinguished according to different segments of the Company’s customer base. The Company writes off a trade receivable when there is information indicating that the debtor is experiencing severe financial difficulty and there is no realistic prospect of recovery of the receivable. For trade receivables that have been written off, the Company continues to engage in 353 Financial Information enforcement activity to attempt to recover the receivables which are due. Where recoveries are made, they are recognized in profit or loss. The following table details the loss allowance of trade receivables based on the Company’s provision matrix. December 31, 2023 Not Past Due Up to 90 Days 91 to 180 Days 181 to 365 Days Over 365 Days Total 0% 0%-2% 0%-50% 0%-100% 50%-100% Expected credit loss rate Gross carrying amount $ 2,499,599 $ 58,477 $ - $ - $ - $ 2,588,076 Loss allowance (lifetime ECLs) - - - - - - Amortized cost $ 2,499,599 $ 58,477 $ - $ - $ - $ 2,558,076 December 31, 2022 Not Past Due Up to 90 Days 91 to 180 Days 181 to 365 Days Over 365 Days Total 0% 0%-2% 0%-50% 0%-100% 50%-100% Expected credit loss rate Gross carrying amount $ 3,763,039 $ 24,816 $ 126,508 $ 33,756 $ - $ 3,948,119 Loss allowance (lifetime ECLs) - - - - - - Amortized cost $ 3,763,039 $ 24,816 $ 126,508 $ 33,756 $ - $ 3,948,119 10. FINANCE LEASE RECEIVABLE Undiscounted lease payments Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 onwards Less: Unearned finance income December 31 2023 2022 $ $ 17,793 17,793 107,457 107,457 107,457 1,829,733 2,187,690 (661,045) - - - - - - - - - (Continued) Net investment in leases presented as finance lease receivables $ 1,526,285 $ 354 Current Non-current December 31 2023 2022 $ 9,068 1,517,217 $ $ 1,526,285 $ - - - (Concluded) a. In July and October 2023, the Company subleased the land leased at the Kaohsiung Port Intercontinental Container Center to related parties and receives lease payments and management fees annually. The average term of the finance lease is 22 years, which is categorized as a finance lease because the remaining lease term of the main lease is fully subleased; please refer to Note 32. b. The interest rate inherent in the leases was fixed at the contract date for the entire lease term. The average effective interest rate contracted was 2.83% to 3.20% per annum as of December 31, 2023. c. The finance lease receivables as of December 31, 2023, neither past due nor impaired. 11. INVENTORIES Raw materials Raw materials in transit Supplies Work-in-process Finished goods and merchandise Construction in progress December 31 2023 2022 $ 2,138,339 1,935,674 1,015,358 1,679,293 4,245,700 106,293 $ 1,905,546 1,488,842 1,208,541 1,746,284 5,251,659 218,216 $ 11,120,657 $ 11,819,088 a. The cost of goods sold related to inventories for the years ended December 31, 2023 and 2022 were NT$75,130,774 thousand and NT$86,967,000 thousand, respectively. b. The cost of goods sold for the years ended December 31, 2023 and 2022 included inventory write-downs of NT$89,173 thousand and NT$74,230 thousand, respectively. 355 Financial Information 12. FINANCIAL ASSETS MEASURED AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME Domestic listed ordinary shares HannStar Display Corp. HannStar Board Corp. Teco Electric & Machinery Corp. Domestic unlisted ordinary shares Current Non-current December 31 2023 2022 $ 3,550,641 3,525,594 10,815,701 743,243 $ 3,340,899 2,017,812 6,348,587 498,902 $ 18,635,179 $ 12,206,200 - $ 18,635,179 - $ 12,206,200 $ 18,635,179 $ 12,206,200 These investments in equity instruments are held for medium- to long-term strategic purposes. Accordingly, the management selected to designate these investments in equity instruments as at FVTOCI as they believe that recognizing short-term fluctuations in these investments’ fair value in profit or loss would not be consistent with the Company’s strategy of holding these investments for long-term purposes. For the years ended December 31, 2023 and 2022, the unrealized valuation gains (losses) resulting from instruments were these NT$6,254,992 thousand and NT$(4,022,988) thousand, respectively, recognized in other comprehensive income (loss). investments in equity 13. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD Investments in subsidiaries Investments in associates a. Investments in subsidiaries December 31 2023 2022 $ 87,101,281 43,740,023 $ 72,758,665 44,797,537 $ 130,841,304 $ 117,556,202 Name of Subsidiary Carrying Value Ownership Percentage Carrying Value Ownership Percentage December 31 2023 2022 Unlisted companies: Walsin Lihwa Holdings Ltd. Concord Industries Ltd. Walsin Precision Technology $ 20,583,253 3,685,272 551,918 100.00 100.00 100.00 $ 24,073,818 5,210,454 563,204 100.00 100.00 100.00 Sdn. Bhd. (Continued) 356 Name of Subsidiary Carrying Value Ownership Percentage Carrying Value Ownership Percentage December 31 2023 2022 Min Maw Precision Industry 409,853 100.00 388,436 100.00 Corp. Ace Result Limited Walsin Info-Electric Inc. Chin-Cherng Construction Co., Ltd. P.T. Walsin Lippo Industries Joint Success Enterprises Limited 382,041 348,242 5,462,298 980,706 4,237,555 100.00 99.51 99.22 70.00 49.05 354,722 314,008 6,182,490 953,239 5,084,267 100.00 99.51 99.22 70.00 49.05 PT. Walsin Nickel Industrial 7,269,121 50.00 5,832,774 50.00 Indonesia Walsin Singapore Pte. Ltd. Walsin Lihwa Europe S.a r.l. 30,809,949 9,666,272 Walsin America, LLC PT. Sunny Metal Industry - - Walsin Energy Cable System 2,657,462 Co., Ltd. Others 100.00 100.00 (Note 3) 100.00 - 90.00 (Note 4) 19,603,265 4,146,986 - - - 57,339 51,002 $ 87,101,281 $ 72,758,665 100.00 100.00 (Note 3) 100.00 (Note 1) - (Note 2) - (Concluded) Note 1: Due to the adjustment of the investment structure of the Group, it was transferred from WLHL to Walsin Lihwa Corporation in December 2022. Note 2: On September 23, 2022, the Company acquired 50.10% shares of PT. Sunny Metal Industry from Ever Rising Limited and Berg Holding Limited at the price of US$200,000 thousand. On November 4, 2022, the board of directors of the Company resolved to transfer PT. Sunny Metal Industry to Walsin Singapore Pte. Ltd. Note 3: On May 31, 2022, the Company’s board of directors resolved to establish Walsin Lihwa Europe S.a r.l. and Walsin Lihwa Europe S.a r.l. acquired 85.03% shares of Luxembourg MEG S.A. On May 5, 2023, the Company’s board of directors approved to increase capital in cash of MEG S.A., and the capital increase base date was August 30, 2023. Walsin Lihwa Europe S.a r.l. subscribed for additional new shares at a percentage different from its existing ownership percentage, resulting in an increase in the continuing interest rate from 85.03% to 90.21%. Note 4: The Company established Walsin Energy Cable System Co., Ltd. with 100% shares, on February 13, 2023. On February 24, 2023, the Company’s board of directors approved to increase capital in cash of Walsin Energy Cable System Co., Ltd., and the capital increase base date was on May 23, 2023. The Company did not subscribe 357 Financial Information according to the shareholding proportion, resulting in a decrease in the shareholding percentage from 100.00% to 90.00% As of December 31, 2023 and 2022, the carrying amount of Company’s long-term investment to Walsin America, LLC was negative, so the difference of NT$374,028 thousand and NT$17,487 thousand were reclassified to other non-current liabilities, respectively. b. Investments in associates Name of Associate Carrying Value Ownership Percentage Carrying Value Ownership Percentage December 31 2023 2022 Material associates Winbond Electronics Corp. $ 20,335,573 Walton Advanced 21.99 $ 20,953,105 22.21 Engineering, Inc. Walsin Technology Corp. 2,230,609 8,631,671 21.17 18.30 2,109,400 8,147,080 21.01 18.30 Associates that are not individually material Others 12,542,170 13,587,952 $ 43,740,023 $ 44,797,537 Refer to Table 8 “Information on Investees” and Table 9 “Information on Investments in Mainland China” for the nature of activities, principal places of business and countries of incorporation of the associates. The Company is the single largest shareholder of the abovementioned material associates in which the Company has an ownership percentage of less than 50%. Considering the relative size and wide dispersion of the voting rights owned by other shareholders, the Company has no ability to direct the relevant activities of the associates and therefore has no control over these associates. Fair values (Level 1) of investments in associates with available published price quotations are summarized as follows: Name of Associate December 31 2023 2022 Winbond Electronics Corp. Walton Advanced Engineering, Inc. Walsin Technology Corp. $ 27,995,121 $ 1,671,833 $ 10,934,986 $ 17,323,429 $ 1,244,282 $ 7,023,284 All the associates were accounted for using the equity method. The summarized financial information below represents amounts shown in the associates’ financial statements prepared in accordance with IFRS Accounting Standards adjusted by the 358 Company for equity accounting purposes. 1) Material associates December 31, 2023 Winbond Electronics Corp. Walton Advanced Engineering, Inc. Walsin Technology Corp. Current assets Non-current assets Current liabilities Non-current liabilities Equity Non-controlling interests $ 66,505,389 $ 124,282,555 (36,032,759) (54,295,007) 100,460,178 (8,163,361) 5,910,245 11,394,115 (3,608,250) (3,069,785) 10,626,325 (92,257) $ 38,015,600 56,427,628 (25,474,021) (12,353,431) 56,615,776 (10,036,131) Proportion of the Company’s ownership Equity attributable to the Company Other adjustments $ 92,296,817 $ 10,534,068 $ 46,579,645 21.99% 21.17% 18.30% $ 20,296,070 39,503 $ 2,230,062 547 $ 8,524,075 107,596 Carrying amount $ 20,335,573 $ 2,230,609 $ 8,631,671 Operating revenue $ 75,006,078 $ 7,276,069 $ 32,797,671 Net profit (loss) for the year Other comprehensive (loss) income Total comprehensive (loss) $ 34,449 $ (112,652) $ 2,657,922 (1,304,665) 601,516 1,555,362 income for the year $ (1,270,216) $ 488,864 $ 4,213,284 December 31, 2022 Winbond Electronics Corp. Walton Advanced Engineering, Inc. Walsin Technology Corp. Current assets Non-current assets Current liabilities Non-current liabilities $ 68,537,523 115,627,470 $ (27,776,754) (53,654,523) 8,080,399 11,240,954 (5,110,938) (3,970,323) $ 42,078,074 49,653,421 (19,230,081) (18,917,380) (Continued) 359 Financial Information Winbond Electronics Corp. Walton Advanced Engineering, Inc. Walsin Technology Corp. Equity Non-controlling interests 102,733,716 (8,570,720) 10,240,092 (200,109) 53,584,034 (9,303,110) $ 94,162,996 $ 10,039,983 $ 44,280,924 Proportion of the Company’s ownership Equity attributable to the Company Other adjustments 22.21% 21.01% 18.30% $ 20,913,601 39,504 $ 2,109,400 - $ 8,103,409 43,671 Carrying amount $ 20,953,105 $ 2,109,400 $ 8,147,080 Operating revenue $ 94,529,790 $ 9,506,348 $ 35,297,163 Net profit for the year Other comprehensive income (loss) Total comprehensive income $ 14,986,552 $ 156,098 $ 2,295,275 2,717,903 (1,186,315) 218,387 (loss) for the year $ 17,704,455 $ (1,030,217) $ 2,513,662 (Concluded) 2) Associates that are not individually material For the Year Ended December 31 2023 2022 The Company’s share of: Net profit from continuing operations Other comprehensive (loss) income 281,776 $ 1,066,695 $ 366,767 (901,548) Total comprehensive income (loss) for the year $ 1,348,471 $ (534,781) The Company’s share of profit and other comprehensive income of associates for the years ended December 31, 2023 and 2022 were based on the associates’ financial statements audited by independent auditors for the same period. The financial statements of certain equity-method investees included in the financial statements were not audited by the auditors of the Company but were audited by other independent auditors. The investment in such investee amounted to NT$14,356,192 thousand and NT$14,685,608 thousand as of December 31, 2023 and 2022, respectively. The equity-method investee classified as other non-current liabilities amounted to NT$374,028 thousand as of December 31, 2023. Investment gain (loss) amounted to NT$486,243 thousand and NT$(118,414) thousand for the years ended December 31, 2023 and 2022, respectively. 360 14. PROPERTY, PLANT AND EQUIPMENT Land Buildings and Improvements Machinery and Equipment Other Equipment Construction in Progress Total Cost Balance at January 1, 2023 Additions Disposals Reclassified $ 3,748,745 207,703 - 12,652 Balance at December 31, $ 7,348,401 67,000 (4,385 ) 12,448 $ 21,165,234 80,539 (56,376 ) 177,078 $ 4,475,494 154,557 (59,206 ) 39,670 $ 3,105,197 2,842,575 - $ 39,843,071 3,352,374 (119,967 ) - (241,848 ) 2023 $ 3,969,100 $ 7,423,464 $ 21,366,475 $ 4,610,515 $ 5,705,924 $ 43,075,478 Accumulated depreciation and impairment Balance at January 1, 2023 Disposals Depreciation expenses $ 8,067 - - $ 4,545,423 $ 13,470,602 $ 3,058,789 $ (4,385 ) 183,088 (56,376 ) 798,711 (59,206 ) 302,499 - - - $ 21,082,881 (119,967 ) 1,284,298 Balance at December 31, 2023 $ 8,067 $ 4,724,126 $ 14,212,937 $ 3,302,082 $ - $ 22,247,212 Carrying amount at December 31, 2023 $ 3,961,033 $ 2,699,338 $ 7,153,538 $ 1,308,433 $ 5,705,924 $ 20,828,266 Cost Balance at January 1, 2022 Additions Disposals Reclassified Balance at December 31, $ 3,611,025 80,867 (50,356 ) 107,209 $ 7,219,012 29,938 (4,979 ) $ 20,438,380 258,714 (78,137 ) 546,277 $ 4,282,943 126,330 (30,930 ) 97,151 104,430 $ 1,779,489 2,180,778 $ 37,330,849 2,676,627 (164,405 ) - (3 ) (855,067 ) 2022 $ 3,748,745 $ 7,348,401 $ 21,165,234 $ 4,475,494 $ 3,105,197 $ 39,843,071 Accumulated depreciation and impairment Balance at January 1, 2022 Disposals Depreciation expenses $ 8,067 - - $ 4,365,668 $ 12,751,878 $ 2,793,963 $ (4,980 ) 184,735 (78,137 ) 796,861 (30,924 ) 295,750 - - - $ 19,919,576 (114,041 ) 1,277,346 Balance at December 31, 2022 $ 8,067 $ 4,545,423 $ 13,470,602 $ 3,058,789 $ - $ 21,082,881 Carrying amount at December 31, 2022 $ 3,740,678 $ 2,802,978 $ 7,694,632 $ 1,416,705 $ 3,105,197 $ 18,760,190 a. Apart from stated above, the above items of property, plant and equipment are depreciated on a straight-line basis over their estimated useful lives as follows: Buildings and improvements Machinery and equipment Other equipment 3-50 years 3-20 years 3-15 years The Company’s main buildings, office buildings and electrical and mechanical power equipment are depreciated over their estimated useful lives of 50 years and 20 years, respectively. b. The Company owns parcels of land which were registered in the name of certain individuals because of certain regulatory restrictions. To secure its ownership of such parcels of land, the 361 Financial Information Company keeps in its possession the land titles with the annotation of the land being pledged to the Company. As of December 31, 2023 and 2022, the recorded total carrying amount of such parcels of land amounted to NT$491,917 thousand. 15. LEASE ARRANGEMENTS a. Right-of-use assets Carrying amounts Land Buildings Transportation equipment Additions to right-of-use assets Disposal Sublease (Note 10) Depreciation charge for right-of-use assets Land Buildings Transportation equipment b. Lease liabilities Carrying amounts Current Non-current December 31 2023 2022 $ 41,463 279 33,969 $ 1,423,924 2,666 33,404 $ 75,711 $ 1,459,994 For the Year Ended December 31 2023 2022 15,910 $ (1,267) $ $ (1,345,977) $ 1,450,985 (511) $ - $ $ $ 35,957 1,647 15,345 56,047 1,714 13,769 $ 52,949 $ 71,530 December 31 2023 2022 37,025 $ $ 1,675,034 38,519 $ $ 1,498,347 Range of discount rates for lease liabilities was as follows: Land Buildings Transportation equipment 362 December 31 2023 2022 2.05%-3.759% 2.05%-3.759% 1.198% 1.198% 1.964%-3.44% 1.964%-3.038% c. Other lease information For the Year Ended December 31 2023 2022 Expenses relating to short-term leases Expenses relating to low-value asset leases Total cash outflow for leases $ 16,436 $ 243 $ (59,861) $ 19,512 $ 108 $ (50,285) 16. INVESTMENT PROPERTIES Completed investment properties $ 8,099,078 $ 8,170,554 December 31 2023 2022 Cost Balance at January 1, 2023 Additions Balance at December 31, 2023 Balance at January 1, 2022 Additions Balance at December 31, 2022 Accumulated depreciation and impairment Balance at January 1, 2023 Depreciation expenses Balance at December 31, 2023 Balance at January 1, 2022 Depreciation expenses Balance at December 31, 2022 Completed Investment Properties $ 9,977,685 - $ 9,977,685 $ 9,977,502 183 $ 9,977,685 $ 1,807,131 71,476 $ 1,878,607 $ 1,733,834 73,297 $ 1,807,131 a. The completed investment properties are depreciated on a straight-line method over their estimated useful lives of 20 to 50 years. b. The investment property of the Company is the Walsin Xin Yi Building and other completed investment properties. The building valuation was commissioned by independent appraisal agencies (third parties). As of December 31, 2023 and 2022, the fair values of the investment properties were NT$32,102,265 thousand and NT$30,844,090 thousand, respectively. 363 Financial Information 17. OTHER ASSETS Prepayment for purchases Prepaid expense Overpaid sales taxes Refundable deposits Prepayment for investments Others Current Non-current 18. BORROWINGS Short-term borrowings Long-term borrowings Long-term notes and bills payable December 31 2023 2022 $ 74,732 198,207 37,717 - 17,423 20,950 $ 1,390,831 348,419 - 280,997 2,204,073 76,358 $ 349,029 $ 4,300,678 $ 314,635 34,394 $ 2,019,441 2,281,237 $ 349,029 $ 4,300,678 December 31 2023 2022 $ $ 26,446,398 $ 2,998,822 504,234 $ 6,600,565 $ 37,445,270 $ 1,497,914 a. Short-term borrowings as of December 31, 2023 and 2022 were as follows: December 31 2023 2022 Interest Rate % Amount Interest Rate % Amount Procurement loans Bank lines of credit 0.86%-1.00% $ 1.60% 4,234 500,000 - 0.95%-1.62% 6,600,565 $ - b. Long-term borrowings as of December 31, 2023 and 2022 were as follows: $ 504,234 $ 6,600,565 December 31 2023 Significant Covenant Amount 2022 Amount Long-term credit loan The Export-Import Bank of the Long-term credit loan from December 04, 2020 to $ 1,137,770 $ 1,137,770 Republic of China December 04, 2027; principal to be repaid evenly in seven phases; 1st repayment due 48 months after the drawdown date, after which repayments are due once every six months (Continued) 364 December 31 2023 Significant Covenant Amount 2022 Amount Bank of Taiwan Principal repayments at maturity, from September 22, 9,000,000 9,000,000 Taiwan Cooperative Bank DBS Bank Hua Nan Commercial Bank 2020 to October 4, 2027; principal to be repaid in two phases: From the 5th year, repayments are due once every six months; at rates of 20% and 80%, respectively Principal repayment at maturity, from June 28, 2021 to June 28, 2026; principal to be repaid in two phases: 1st repayment due 48 months after the drawdown date, 2nd repayment due maturity date. Principal repayments at maturity, from March 30, 2020 to April 15, 2025 Principal repayment at maturity, from March 29, 2021 to March 29, 2026; principal to be repaid in two phases: From the 5th year, repayments are due once every six months $ 2,000,000 $ 2,000,000 - 7,552,100 2,000,000 2,000,000 Chinatrust Commercial Bank Principal repayments at maturity, from October 4, 2022 - 1,500,000 Taiwan Cooperative Bank Far Eastern International Bank KGI Bank to October 3, 2025 Principal repayments at maturity, from October 4, 2022 to October 4, 2027; principal to be repaid in two phases: From the 4th year, repayments are due once every six months; at rates of 20% and 80%, respectively Principal repayments at maturity, from October 21, 2022 to October 14, 2027; principal to be repaid evenly in three phases; 1st repayment due 48 months after the drawdown date, after which repayments are due once every six months Principal repayments at maturity, from October 24, 2022 to April 24, 2027 Standard Chartered Bank Principal repayments at maturity, from November 16, 2022 to December 31, 2024 3,000,000 3,000,000 2,000,000 500,000 - - 1,500,000 1,555,400 Hua Nan Commercial Bank Principal repayments at maturity, from March 8, 2022 2,500,000 2,500,000 to March 8, 2027 Agricultural Bank of Taiwan Principal repayments at maturity, from October 31, - 1,000,000 2022 to October 31, 2025 Chang Hwa Commercial Bank Principal repayments at maturity, from March 8, 2022 2,000,000 3,000,000 Bank of Taiwan to March 8, 2027 Loan from June 13, 2023 to June 13, 2030; principal to be repaid evenly in forty eight phases; 1st repayment is due 36 months after the drawdown date 1,799,194 - Others bank long-term credit Principal repayments at maturity, from September 22, 1,009,434 1,200,000 loan 2022 to November 15, 2033 Less current portion of long-term borrowings 26,446,398 - 37,445,270 - $ 26,446,398 $ 37,445,270 (Concluded) 1) As mentioned above, long-term borrowings are assigned to credit loans. 2) Under the loan agreements with DBS Bank, the Company should maintain certain financial ratios during the loan term, which are based on the annual and semi-annual financial statements audited by the independent auditors. The financial ratios are as follows: a) Ratio of current assets to current liabilities not less than 100%; b) Ratio of total liabilities less cash and cash equivalents to tangible net worth not more than 120%; 365 Financial Information c) Ratio of Interest Coverage Ratio which included net income before interest expenses, taxation, depreciation and amortization to interest expenses not less than 150%; and d) Tangible net worth (net worth less intangible assets) not less than NT$55,000,000 thousand. 3) As of December 31, 2022, Company was in compliance with the aforementioned financial ratio requirements. c. Long-term notes and bills payables December 31, 2023 Acceptance Agency Character Interest Rate (%) Amount China Bills, Mega Bills and Unsecured 1.521-1.58 $ 3,000,000 International Bills Less: Discount on short-term bills payable December 31, 2022 (1,178) $ 2,998,822 Acceptance Agency Character Interest rate (%) Amount China Bills and International Bills Less: Discount on short-term bills payable Unsecured 1.395-1.50 $ 1,500,000 (2,086) $ 1,497,914 19. BONDS PAYABLE December 31 2023 2022 Domestic unsecured bonds $ 12,800,000 $ 7,500,000 On October 8, 2021, the Company issued the first unsecured bonds for $7.5 billion, each with a face value of $10 million. The issuance period is 5 years, and the maturity date is on October 8, 2026. The annual percentage rate is 0.7%. Since the issuance date, the interest will be paid once a year, and the principal will be repaid once due. On April 11, 2023, the Company issued the first unsecured bond of 2023 at amount of NT$5.3 billion and were divided into A and B bonds according to different issuance conditions. The issuance amount of Bond A is NT$3 billion, and the issuance period is 5 years. The annual rate is 1.7%, and the maturity date is on April 11, 2028. The issuance amount of Bond B is NT$2.3 billion, and the issuance period is 10 years. The annual rate is 2.1%, and the maturity date is on April 11, 2033. The interest of the two bonds will be paid once a year, and the principal will be 366 repaid at maturity. 20. RETIREMENT BENEFIT PLANS a. Defined contribution plan The Company adopted a pension plan under the Labor Pension Act (LPA), which is a state-managed defined contribution plan. Under the LPA, the Company makes monthly contributions to employees’ individual pension accounts at 6% of monthly salaries and wages. The total expenses recognized in profit or loss for the years ended December 31, 2023 and 2022 were NT$114,765 thousand and NT$109,019 thousand, respectively, which is based on the specified ratio in defined contributions plan. b. Defined benefit plans The defined benefit plans adopted by the Company in accordance with the Labor Standards Act are operated by the government of the ROC. Pension benefits are calculated on the basis of the length of service and average monthly salaries of the 6 months before retirement. The Company contributes amounts equal to 2% of total monthly salaries and wages to a pension fund administered by the pension fund monitoring committee. Pension contributions are deposited in the Bank of Taiwan in the committee’s name. Before the end of each year, the Company assesses the balance in the pension fund. If the amount of the balance in the pension fund is inadequate to pay retirement benefits for employees who conform to retirement requirements in the next year, the Company is required to fund the difference in one appropriation that should be made before the end of March of the next year. The pension fund is managed by the Bureau of Labor Funds, Ministry of Labor (the “Bureau”); the Company has no right to influence the investment policy and strategy. The amounts included in the balance sheets in respect of the Company’s defined benefit plans are as follows: December 31 2023 2022 Present value of defined benefit obligation Fair value of plan assets $ 1,175,002 (1,036,090) $ 1,209,509 (1,060,075) Net defined benefit liabilities $ 138,912 $ 149,434 367 Financial Information As of December 31, 2023 and 2022, net defined benefit liabilities of NT$1,907 thousand and NT$2,014 thousand, respectively, were recorded under “other payables - accrued expense.” Present Value of Defined Benefit Obligation Fair Value of Plan Assets Net Defined Benefit Liabilities (Assets) $ 1,482,158 $ (1,028,335) $ 453,823 10,007 9,244 19,251 - (6,442) (6,442) 10,007 2,802 12,809 - (82,973) (82,973) (63,850) (113,715) - - (177,565) - (114,335) 1,209,509 (82,973) (56,660) 114,335 (1,060,075) 6,128 15,119 21,247 - (13,317) (13,317) (63,850) (113,715) (260,538) (56,660) - 149,434 6,128 1,802 7,930 $ - $ (9,604) $ (9,604) 44,332 44,332 - (100,086) - 44,332 (9,604) (53,180) 100,086 34,728 (53,180) - Balance at January 1, 2022 Service cost Current service cost Net interest expense (income) Recognized in profit or loss Remeasurement Return on plan assets (excluding amounts included in net interest) Actuarial loss Changes in financial assumptions Experience adjustments Recognized in other comprehensive income Contributions from the employer Benefits paid Balance at December 31, 2022 Service cost Current service cost Net interest expense (income) Recognized in profit or loss Remeasurement Return on plan assets (excluding amounts included in net interest) Actuarial loss Experience adjustments Recognized in other comprehensive income Contributions from the employer Benefits paid Balance at December 31, 2023 $ 1,175,002 $ (1,036,090) $ 138,912 368 An analysis by function of the amounts recognized in profit or loss in respect of the defined benefit plans are as follows: Operating costs Selling and marketing expenses General and administrative expenses Research and development expenses For the Year Ended December 31 2023 2022 $ 4,178 791 2,846 115 $ 6,638 894 5,077 200 $ 7,930 $ 12,809 Through the defined benefit plans under the Labor Standards Act, the Company is exposed to the following risks: 1) Investment risk: The plan assets are invested in domestic and foreign equity and debt securities, bank deposits, etc. The investment is conducted at the discretion of the Bureau or under the mandated management. However, in accordance with relevant regulations, the return generated by plan assets shall not be below the interest rate for a 2-year time deposit with local banks. 2) Interest risk: A decrease in the government bond interest rate will increase the present value of the defined benefit obligation; however, this will be partially offset by an increase in the return on the plan’s debt investments. 3) Salary risk: The present value of the defined benefit obligation is calculated using the future salaries of plan participants. As such, an increase in the salaries of the plan participants will increase the present value of the defined benefit obligation. The actuarial valuations of the present value of the defined benefit obligation were carried out by qualified actuaries. The significant assumptions used for the purposes of the actuarial valuations are as follows: Discount rate(s) Expected rate(s) of salary increase December 31 2023 1.25% 2.25% 2022 1.25% 2.25% If possible reasonable change in each of the significant actuarial assumptions occurs and all other assumptions remain constant, the present value of the defined benefit obligation will increase (decrease) as follows: Discount rate(s) 0.5% increase 0.5% decrease December 31 2023 2022 $ (43,458) $ 46,068 $ (47,681) $ 50,683 (Continued) 369 Financial Information Expected rate(s) of salary increase 0.5% increase 0.5% decrease December 31 2023 2022 $ 44,682 $ (42,588) $ 49,149 $ (46,718) (Concluded) The above sensitivity analysis may not be representative of the actual changes in the present value of the defined benefit obligation as it is unlikely that the changes in assumptions will occur in isolation of one another as some of the assumptions may be correlated. 21. EQUITY Share capital Ordinary shares Capital surplus Retained earnings Others a. Share capital Ordinary shares December 31 2023 2022 $ 40,313,329 33,624,917 60,590,617 6,281,452 $ 37,313,329 24,672,454 62,038,398 (443,305) $ 140,810,315 $ 123,580,876 December 31 2023 2022 Number of authorized shares (in thousands) Amount of authorized shares Number of issued and fully paid shares (in thousands) Amount of issued shares 6,500,000 $ 65,000,000 4,031,333 $ 40,313,329 6,500,000 $ 65,000,000 3,731,333 $ 37,313,329 As of January 1, 2022, the balances of the Company’s capital account were all NT$34,313,329 thousand, which consisted of NT$3,431,333 thousand shares at par value of NT$10. On June 6, 2022, the Company’s board of directors resolved to issue 300,000 thousand ordinary shares at a price of NT$33 per share with August 10, 2022 as the base date for capital increase. On July 21, 2022, the Company’s chairman adjusted the new share issuing price from NT$33 to NT$30. On May 29, 2023, the Company’s board of directors resolved to issue ordinary shares for cash to participate in the issuance of GDRs. On June 30, 2023, the Group issued 30,000 thousand units of GDRs on the Luxembourg Stock Exchange, with each unit representing 10 ordinary shares of the Company. This amounted to a total of 300,000 thousand shares with a unit price 370 of US$12.97, raising a total of US$389,100 thousand. As of December 31, 2023, the paid-in capital was NT$40,313,329 thousand, divided into 4,031,333 thousand ordinary shares at par value of NT$10. As of December 31, 2023, 30,002 thousand GDRs of the Company were traded on the Luxembourg Stock Exchange. The number of ordinary shares represented by the GDRs was 300,022 thousand shares (one GDR represents 10 ordinary shares). b. Capital surplus May be used to offset a deficit, distributed as cash dividend or transferred to share capital (Note) Issuance of ordinary shares The difference between the consideration received or paid and the carrying amount of the subsidiaries’ net assets during actual disposal or acquisition Share of changes in capital surplus of associates Treasury share transactions Gain on disposal of property, plant and equipment Others May only be used to offset a deficit December 31 2023 2022 $ 27,787,949 $ 18,864,452 2,130 434,243 2,254,074 2,074,231 1,045,560 2,130 441,175 2,254,074 2,074,231 1,036,392 The change of interest in subsidiaries 26,730 - $ 33,624,917 $ 24,672,454 Note: The premium from shares issued in excess of par (share premium from issuance of ordinary shares, conversion of bonds and treasury share transactions) and donations may be used to offset a deficit; in addition, when the Company has no deficit, such capital surplus may be distributed as cash dividends or transferred to share capital (limited to a certain percentage of the Company’s capital surplus and to once a year).The capital surplus arises from changes in capital surplus of associates accounted for using the equity method, employee share options and share warrants may not be used for any purposes. c. Retained earnings and dividend policy Under the dividends policy, where the Company made a profit in a fiscal year, the profit shall be first utilized for paying taxes, offsetting losses of previous years, setting aside as legal reserve 10% of the remaining profit this requirement is not applicable when the legal reserve has reached the total capital, and then any remaining profit together with prior unappropriated earnings shall be appropriated for special reserve or appropriate reversal of special reserve in accordance with the laws and regulations, and then the balance shall be used by the Company’s board of directors as the basis for proposing a distribution plan, which should be resolved in the shareholders’ meeting for the distribution of dividends to shareholders. If appropriated earnings are distributed in cash, the cash distribution shall be resolved by the Company’s board of directors and reported in the shareholders’ meeting. Other than the aforementioned regulations, the distribution shall be after deducting the share of profit of 371 Financial Information associates accounted for using the equity method and adding cash dividends of associates accounted for using the equity method. The Company shall reserve no lesser than 40% of the balance amount as shareholders’ profit after offsetting its loss and tax payments in the previous year, capital reserve, and special reserve adjusted by the accumulated net deduction of other equity. The profits shall be distributed in cash or in form of shares; cash dividends shall not be lesser than 70% of the total dividends. Appropriation of earnings to the legal reserve shall be made until the legal reserve equals the Company’s paid-in capital. The legal reserve may be used to offset any deficits. If the Company has no deficit and the legal reserve has exceeded 25% of the Company’s paid-in capital, the excess may be transferred to capital or distributed in cash. Items referred to under Rule No. 1010012865, Rule No. 1010047490 and Rule No. 1030006415 issued by the FSC and in the directive titled “Questions and Answers for Special Reserves Appropriated Following Adoption of IFRSs” should be appropriated to or reversed from a special reserve by the Company. Refer to Note 23 for the policies on the distribution of employees’ compensation and remuneration of directors. The appropriation of earnings for 2021 which was approved in the shareholders’ meeting on May 13, 2022, respectively, was as follows: Legal reserve Cash dividends Appropriation of Earnings Dividends Per Share (NT$) $ 1,454,522 5,490,133 $ - 1.6 $ 6,944,655 The appropriations of earnings and dividends per share for 2023 and 2022 were as follows: Appropriation of Earnings Dividends Per Share (NT$) 2023 2022 Legal reserve Cash dividends $ 526,862 4,434,466 $ 1,454,522 5,490,133 $ 4,961,328 $ 6,944,655 2023 $ - 1.1 2022 $ - 1.8 The above appropriations for cash dividends were approved by the Company’s board of directors on February 23, 2024 and February 24, 2023, respectively. The other appropriations for 2022 were approved by the shareholders in the meeting on May 19, 2023. The other appropriations for 2023 are pending resolution at the shareholder's meeting scheduled for May 17, 2024. d. Special reserve Special reserve $ 2,712,250 $ 2,712,250 December 31 2023 2022 372 Information regarding the above special reserve did not change for 2023 and 2022. e. Other equity items 1) Exchange differences on the translation of the financial statements of foreign operations For the Year Ended December 31 2023 2022 Balance at January 1 Share from subsidiaries and associates accounted $ (4,256,774) $ (6,100,687) for using the equity method (690,701) 1,843,913 Balance at December 31 $ (4,947,475) $ (4,256,774) Exchange differences relating to the translation of the results and net assets of the Company’s foreign operations from their functional currencies to the Company’s presentation currency (the New Taiwan dollar) were recognized directly in other comprehensive income and accumulated in the exchange differences on the translation of the financial statements of foreign operations. Exchange differences previously accumulated in the exchange differences on the translation of the financial statements of foreign operations were reclassified to profit or loss when disposing foreign operation. 2) Unrealized valuation gain (loss) on financial assets at FVTOCI Balance at January 1 Unrealized gain (loss) - equity instruments Share from associates accounted for using the equity method Cumulative unrealized loss of equity instruments transferred to retained earnings due to disposal For the Year Ended December 31 2023 2022 $ 6,693,877 6,254,992 $ 11,534,267 (4,022,988) 1,324,460 (741,445) (204,652) (75,957) Balance at December 31 $ 14,068,677 $ 6,693,877 3) (Loss) gain on the hedging instruments For the Year Ended December 31 2023 2022 Cash flow hedges Balance at January 1 Share from associates accounted for using the equity method $ (105,801) $ - 40,701 (105,801) Balance at December 31 $ (65,100) $ (105,801) 373 Financial Information 4) Other equity - others Balance at January 1 Originally recognized equity items arising from the acquisition of subsidiary equity instrument’s put and call options Other comprehensive loss from associates accounted for using the equity method For the Year Ended December 31 2023 2022 $ (2,774,607) $ (91,467) - (2,683,140) (43) - Balance at December 31 $ (2,774,650) $ (2,774,607) 22. OPERATING REVENUE Sales revenue Other revenue For the Year Ended December 31 2023 2022 $ 80,859,850 2,461,502 $ 95,624,880 2,795,165 $ 83,321,352 $ 98,420,045 23. NET PROFIT FROM CONTINUING OPERATIONS Non-operating Income and Expenses - Gain (Loss) on Disposal of Investments For the Year Ended December 31 2023 2022 Gain (loss) on disposal of investments - commodity futures $ (Loss) gain on disposal of investments - forward exchange contracts Gain (loss) on disposal of investments - exchange rate swap contracts 787,980 $ (640,987) (56,354) 259,332 354,322 (215,846) $ 1,085,948 $ (597,501) Employee Benefits Expense, Depreciation and Amortization For the Year Ended December 31, 2023 Operating Costs Operating Expenses Non-operating Expenses and Losses Total Short-term employment benefits Post-employment benefits Other employee benefits 374 $ 1,733,457 $ 1,526,618 $ $ $ 100,329 $ $ 70,182 $ 167,052 $ 52,513 - - - $ 3,260,075 122,695 267,381 $ $ (Continued) For the Year Ended December 31, 2023 Operating Costs Operating Expenses Non-operating Expenses and Losses Total Depreciation Property, plant and equipments Right-of-use assets Investment properties $ 1,096,208 $ 7,123 69,296 188,090 $ 45,826 2,180 - - - $ 1,284,298 52,949 71,476 $ 1,172,627 $ 236,096 $ - $ 1,408,723 Amortization $ - $ 28,191 $ - $ 28,191 (Concluded) For the Year Ended December 31, 2022 Operating Costs Operating Expenses Non-operating Expenses and Losses Total Short-term benefits employment Post-employment benefits Other employee benefits Depreciation Property, plant and equipments Right-of-use assets Investment properties $ 1,960,313 $ 1,745,879 $ $ $ 100,287 $ $ 70,683 $ 169,398 $ 51,145 - - - $ 3,706,192 121,828 269,685 $ $ $ 1,103,944 $ 5,508 71,118 173,402 $ 66,022 2,179 - - - $ 1,277,346 71,530 73,297 $ 1,180,570 $ 241,603 $ - $ 1,422,173 Amortization $ - $ 11,750 $ - $ 11,750 According to the Company’s Articles, the Company accrued employees’ compensation and remuneration of directors at rates of no less than 1% and no higher than 1%, respectively, of net profit before income tax, employees’ compensation, and remuneration of directors. For the years ended December 31, 2023 and 2022, the compensation of employees’ amounted to NT$70,700 thousand and NT$252,000 thousand, respectively, and the remuneration of directors amounted to NT$30,000 thousand and NT$100,050 thousand, respectively. The compensation of employees and the remuneration of directors for the years ended December 31, 2023 and 2022 were approved by the Company’s board of directors on February 23, 2024 and February 24, 2023, respectively. If there is a change in the amounts before the annual financial statements are authorized for issue, the differences are recorded in the expenses as an adjustment. The employees’ compensation and the remuneration of directors for the years ended December 31, 2022 and 2021 resolved by the Company’s board of directors on February 24, 2023 and February 22, 2022, respectively, are the same as the amounts recognized in the 2022 and 2021 financial statements. 375 Financial Information Information on the employees’ compensation and remuneration of directors resolved by the Company’s board of directors in 2023 and 2022 is available at the Market Observation Post System website of the Taiwan Stock Exchange. 24. INCOME TAXES RELATING TO CONTINUING OPERATIONS a. Income tax recognized in profit or loss Major components of income tax expense are as follows: Current tax In respect of the current year Income tax on unappropriated earnings Adjustments for prior year Land value-added tax Deferred tax In respect of the current year Adjustments for prior year For the Year Ended December 31 2023 2022 $ 1,030,748 306,493 (18,555) - 1,318,686 $ 1,059,128 321,642 (11,548) 248 1,369,470 513,036 (14,155) 498,881 3,898,110 36,864 3,934,974 Income tax expense recognized in profit or loss $ 1,817,567 $ 5,304,444 A reconciliation of accounting profit and income tax expense is as follows: For the Year Ended December 31 2023 2022 Profit before tax from continuing operations $ 6,951,883 $ 24,656,541 Income tax expense calculated at the statutory rate Investment income accounted for using the equity $ 1,390,377 $ 4,931,308 method Tax-exempt dividend income Loss on investments Others Land value-added tax Income tax on unappropriated earnings Adjustments for prior years’ tax 313,200 (102,141) - (57,652) - 306,493 (32,710) 153,441 (152,977) (2,630) 28,096 248 321,642 25,316 Income tax expense recognized in profit or loss $ 1,817,567 $ 5,304,444 376 b. Current tax assets and liabilities Current tax assets Tax refund receivable (recorded under other non-current assets - others) Current tax liabilities Income tax payable c. Deferred tax assets and liabilities December 31 2023 2022 $ 4,166 $ 32,006 $ 1,361,449 $ 1,420,015 December 31 2023 2022 Deferred tax assets $ Pension expense overlimit Unrealized impairment loss on long-term investments Unrealized loss on inventories write-down Loss on idle capacity Impairment loss on idle assets Loss on liquidation of investments Impairment loss on property, plant and equipment Others $ 14,337 7,000 57,183 21,234 - 439,000 110,982 30,765 23,000 7,000 39,000 5,000 15,000 591,000 16,000 4,710 $ 680,501 $ 700,710 Deferred tax liabilities Provision for land value-added tax Unrealized gain of investments $ (131,132) (5,843,215) $ (131,132) (5,364,543) $ (5,974,347) $ (5,495,675) d. The Company’s income tax returns through 2020 have been assessed by the tax authorities. 377 Financial Information 25. EARNINGS PER SHARE For the Year Ended December 31 2023 2022 Amounts (Numerator) After Income Tax (Attributable to Owners of the Company) Shares (Denominator) (In Thousands) Earnings Per Share (In Dollars) After Income Tax (Attributable to Owners of the Company) Amounts (Numerator) After Income Tax (Attributable to Owners of the Company) Earnings Per Share (In Dollars) After Income Tax (Attributable to Owners of the Company) Shares (Denominator) (In Thousands) Basic earnings per share Net income $ 5,134,316 3,883,388 $ 1.32 $ 19,352,097 3,549,689 $ 5.45 Effect of potentially dilutive ordinary shares Employee bonus - 2,500 - 5,690 $ 5,134,136 3,885,888 $ 1.32 $ 19,352,097 3,555,379 $ 5.44 26. SHARE-BASED PAYMENT AGREEMENTS Employee Share Option Plan for Cash Capital Increase The Company was approved by the Securities and Futures Bureau (FSC) on March 11, 2022 to issue 300,000 thousand shares for cash capital increase. The board of directors resolved to retain 10% of the issued shares for employees’ subscription. The number of shares retained for employees’ subscription and the subscription price were confirmed on June 27, 2022. The Company recognized the capital surplus of NT$157,800 thousand on the grant date at the fair value computed based on the Black-Scholes option evaluation model. a. The Company used the Black-Scholes option evaluation model to calculate the fair value of employee subscriptions for cash capital increase on June 27, 2022. Relevant information is as follows: Share Price on the Grant Date (In Dollars) Exercise Price (In Dollars) Expected Ratio of Stock Price Fluctuation Expected Duration Expected Dividend Rate Risk-Free Interest Rate Fair Value Per Share (In Dollars) $37.45 $33 52.95% 38 days 0.00% 0.52% $5.26 b. Because of the dramatic changes in the capital market environment, to maintain the shareholders' rights and ensure the completion of fundraising, the chairman of the Company, authorized by the board of directors, adjusted the new share issuing price from NT$33 to NT$30 on July 21, 2022. In addition, due to the price adjustment, the remuneration cost of the relevant share-based payment agreement increased by NT$67,200 thousand. The Company used the Black-Scholes option evaluation model to calculate the fair value of employee subscriptions for cash capital increase as remeasurement on July 21, 2022. Relevant information is as follows: 378 Share Price on the Grant Date (In Dollars) Exercise Price (In Dollars) Expected Ratio of Stock Price Fluctuation Expected Duration Expected Dividend Rate Risk-Free Interest Rate Fair Value Per Share (In Dollars) $34.05 $30 54.13% 14 days 0.00% 0.72% $2.24 27. ACQUISITION OF A SUBSIDIARY THAT DOES NOT CONSTITUTE A BUSINESS To develop a new energy industry and increase investment in Matte and Nickel pig iron production capacity, the Company acquired 50.10% shares of PT. Sunny Metal Industry for $6,057,005 thousand on September 23, 2022. In addition, to combine the acquired company's products, technologies and market advantages to expand the stainless steel and nickel alloy business, the Company acquired 85.032% of the shares of MEG S.A. for $6,497,972 thousand on November 30, 2022. On August 1, 2023 and September 19, 2023, the Company acquired 100% equity interests in Degerfors Long Products AB and Special Melted Products Ltd. for $182,129 thousand and $5,668,618 thousand, respectively. In accordance with IFRS 3 “Business Combinations”, the aforementioned acquisition of equity does not constitute a business; therefore, the share purchase transaction is accounted for as the acquisition of assets. For the description of the acquisition of the investment in subsidiaries, refer to Note 33 to the Company’s consolidated financial statements for the year ended December 31, 2023. 28. DISPOSAL OF SUBSIDIARIES - WITH LOSS OF CONTROL The Company entered into an agreement with ECP (third party) to dispose of its subsidiary New Leaf Energy, Inc. (original name of the announcement: 2022 Solar Development, Inc.) and completed the transaction on July 28, 2022 (United States local time July 27, 2022). For the description of the disposal of the investment, refer to Note 34 to the Company’s consolidated financial statements for the year ended December 31, 2023. 29. OPERATING LEASE ARRANGEMENTS Operating leases relating to the investment properties owned by the Company with lease terms between 5 and 10 years, with an option to extend for another 10 years. All operating lease contracts contain market review clauses in the event that the lessees exercise its option to renew. The lessees do not have a bargain purchase options to acquire the properties at the expiry of the lease periods. As of December 31, 2023 and 2022, deposits received under operating leases amounted to NT$171,003 thousand and NT$159,118 thousand, respectively (recorded under other non-current liabilities). As of December 31, 2023, the Company’s future minimum lease receivables on non-cancelable operating lease commitments are as follows: 379 Financial Information 2024 2025-2028 After 2029 $ 655,201 1,062,343 21,156 $ 1,738,700 30. CAPITAL MANAGEMENT The Company’s capital management objective is to ensure that it has the necessary financial resources and operational plan so that it can cope with the next 12 months working capital requirements, capital expenditures, debt repayments and dividends spending. The capital structure of the Company consists of net debt (borrowings offset by cash and cash equivalents) and equity attributable to owners of the Company (comprising issued capital, reserves, retained earnings and other equity). Key management personnel of the Company review the capital structure on a quarterly basis. As part of this review, the key management personnel consider the cost of capital and the risks associated with each class of capital. Based on recommendations of the key management personnel, in order to balance the overall capital structure, the Company may adjust the amount of dividends paid to shareholders, the number of new shares issued or repurchased, and/or the amount of new debt issued or existing debt redeemed. 31. FINANCIAL INSTRUMENTS a. Fair value of financial instruments that are not measured at fair value Except the following assets and liabilities, the management considers the carrying amounts of financial assets and financial liabilities not recognized at fair value approximate to their fair values. December 31, 2023 Financial liabilities Financial liabilities at amortized cost Carrying Fair Value Amount Level 1 Level 2 Level 3 Total Bonds payable $ 12,800,000 $ - $ 12,403,494 $ - $ 12,403,494 December 31, 2022 Financial liabilities Financial liabilities at amortized cost Carrying Fair Value Amount Level 1 Level 2 Level 3 Total Bonds payable $ 7,500,000 $ - $ 7,143,278 $ - $ 7,143,278 380 The fair values of the financial assets and financial liabilities included in the Level 2 categories above have been determined in accordance with the income approach based on a discounted cash flow analysis. The observable inputs included bond duration, bond interest rates and credit rating. b. Fair value of financial instruments that are measured at fair value on a recurring basis 1) Fair value hierarchy December 31, 2023 Financial assets at FVTPL Contingent consideration Derivatives not designated as hedging instruments Level 1 Level 2 Level 3 Total $ - $ - $ 2,614,285 $ 2,614,285 68,870 - - 68,870 $ 68,870 $ - $ 2,614,285 $ 2,683,155 Financial assets at FVTOCI Investments in equity instruments Listed securities in ROC Unlisted securities $ 17,891,936 - $ $ - - - 743,243 $ 17,891,936 743,243 $ 17,891,936 $ - $ 743,243 $ 18,635,179 Financial liabilities at FVTPL Derivatives not designated as hedging instruments $ - $ 44,519 $ - $ 44,519 December 31, 2022 Financial assets at FVTPL Level 1 Level 2 Level 3 Total Contingent consideration $ - $ - $ 2,567,786 $ 2,567,786 Financial assets at FVTOCI Investments in equity instruments Listed securities in ROC Unlisted securities $ 11,707,298 - $ $ - - - 498,902 $ 11,707,298 498,902 $ 11,707,298 $ - $ 498,902 $ 12,206,200 Financial liabilities at FVTPL Derivatives not designated as hedging instruments $ 21,017 $ 30,488 $ - $ 51,505 2) There were no transfers between Levels 1, 2 and 3 in 2023 and 2022. 381 Financial Information 3) Reconciliation of Level 3 fair value measurements of financial instruments For the year ended December 31, 2023 Financial Assets Financial Assets at FVTPL Financial Instruments Financial Assets at FVTOCI Equity Instruments Balance at January 1, 2023 Additions Recognized in other comprehensive income Recognized in profit or loss $ $ 2,567,786 - - 46,499 498,902 150,000 94,341 - Balance at December 31, 2023 $ 2,614,285 $ 743,243 For the year ended December 31, 2022 Financial Assets Financial Assets at FVTPL Financial Instruments Financial Assets at FVTOCI Equity Instruments Balance at January 1, 2022 Additions Disposals Recognized in other comprehensive loss Recognized in profit or loss $ $ - 2,686,100 - - (118,314) 528,367 90,000 (335) (119,130) - Balance at December 31, 2022 $ 2,567,786 $ 498,902 4) Valuation technique and inputs applied for Level 2 fair value measurement Financial Instruments Valuation Technique and Inputs Derivatives - foreign exchange Discounted cash flow. Future cash flows are forward contracts estimated based on observable forward exchange rates at the end of the reporting period and contract forward rates, discounted at a rate that reflects the credit risk of various counterparties. Derivatives - exchange rate swap Discounted cash flow. Future cash flows are contracts estimated based on observable forward exchange rates at the end of the reporting period and contract forward rates, discounted at a rate that reflects the credit risk of various counterparties. 382 5) Valuation technique and inputs applied for Level 3 fair value measurement Financial Instruments Valuation Technique and Inputs Unlisted equity securities Contingent consideration c. Categories of financial instruments Financial assets Market approach. Fair values are determined based on observable and comparable companies’ fair values at the end of the reporting period, adjusted by price earnings ratio and price-to-book ratio of the investees. Net asset method. Fair values are determined based on the book value of companies. Discounted cash flow. Present values are determined based on future cash flows discounted at market yield. The estimated fair value is discounted according to the probability of reaching the agreed conditions and based on credit risk discount rate and other information. December 31 2023 2022 Financial assets at amortized cost Cash and cash equivalents Contract assets - current Notes receivable and trade receivables (including related parties) Finance lease receivables (current and non-current) Other receivables Refundable deposits Financial assets at FVTPL (current and non-current) Financial assets at FVTOCI (current and non-current) $ 3,530,594 175,083 $ 10,997,025 267,147 2,573,939 1,526,285 1,720,601 25,700 2,683,155 18,635,179 3,973,177 - 8,272,172 31,197 2,567,786 12,206,200 Financial liabilities Financial liabilities at FVTPL (current and non-current) Financial liabilities at amortized cost 44,519 51,505 Short-term borrowings Notes payables and trade payables Other payables Bonds payable Long-term borrowings Long-term notes and bills payable Deposits received (recorded under other non-current 504,234 3,648,025 5,471,498 12,800,000 26,446,398 2,998,822 6,600,565 3,226,544 12,158,213 7,500,000 37,445,270 1,497,914 liabilities) 175,088 175,854 383 Financial Information d. Financial risk management objectives and policies The Company’s major financial instruments included equity and investments, borrowings, trade receivables, trade payables and lease liabilities. The Company’s corporate treasury function provides services to the business, coordinates access to domestic and international financial markets, and monitors and manages the financial risks relating to the operations of the Company through internal risk reports that analyze exposures by degree and magnitude of risks. These risks include market risk, credit risk and liquidity risk. The Company seeks to minimize the effects of these risks by using derivative financial instruments to hedge risk exposures. The use of financial derivatives is governed by the Company’s policies approved by the board of directors, which provides written principles on foreign exchange risk, interest rate risk and credit risk, the use of financial derivatives and non-derivative financial instruments, and the investment of excess liquidity. Compliance with policies and exposure limits is reviewed by the internal auditors on a continuous basis. The Company did not enter into or trade financial instruments for speculative purposes. 1) Market risk The Company’s activities exposed it primarily to the financial risks of changes in foreign currency exchange rates and interest rates. The Company entered into foreign exchange forward contracts and interest rate swaps contracts to hedge foreign currency risk and interest rate risk. There had been no change to the Company’s exposure to market risks or the manner in which these risks were managed and measured. a) Foreign currency risk The Company had foreign currency sales and purchases, which exposed the Group to foreign currency risk. Exchange rate exposures were managed within approved policy parameters utilizing foreign exchange forward contracts. It is the Company’s policy to negotiate the terms of the derivatives to match the terms of the hedged item to maximize hedge effectiveness. The carrying amounts of the Company’s foreign currency denominated monetary assets and monetary liabilities (including those eliminated on consolidation) at the end of the period are set out in Note 36. The carrying amounts of the Company’s derivatives exposed to foreign currency risk at the end of the reporting period were as follows: Assets U.S. dollar 384 December 31 2023 2022 $ - $ - (Continued) Liabilities U.S. dollar Euro Sensitivity analysis December 31 2023 2022 6,125,648 135,920 2,886,740 - (Concluded) The Company is mainly exposed to the U.S. dollars. The following table details the Company’s sensitivity to a 1% increase and decrease in the New Taiwan dollar (i.e., functional currency) against the relevant foreign currencies. The sensitivity analysis includes only outstanding foreign currency denominated monetary items and adjusts their translation at the end of the year for a 1% change in foreign currency rates. Profit or loss b) Interest rate risk U.S. Dollar Impact For the Year Ended December 31 2023 2022 $ (81,249) $ (7,084) The Company was exposed to interest rate risk because entities in the Company borrow funds at both fixed and floating interest rates. The carrying amounts of the Company’s financial assets and financial liabilities with exposure to interest rates at the end of the year were as follows: Fair value interest rate risk Financial liabilities Cash flow interest rate risk Financial liabilities Sensitivity analysis December 31 2023 2022 $ 12,800,000 $ 7,500,000 $ 29,949,454 $ 45,543,749 The sensitivity analysis below was determined based on the Company’s exposure to interest rates for financial instruments at the end of the year. For floating rate liabilities, the analysis was prepared assuming the amount of each liability outstanding at the end of the year was outstanding for the whole year. If interest rates had been 1% basis points higher and all other variables were held constant, the Company’s pre-tax net profit for the years ended December 31, 2023 and thousand, 2022 would decrease by NT$299,495 thousand and NT$455,437 385 Financial Information respectively. 2) Credit risk Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in a financial loss to the Company. As at the end of the year, the Company’s maximum exposure to credit risk, which would cause a financial loss to the Company due to the failure of the counterparty to discharge its obligation and due to financial guarantees provided by the Company, could be equal to the total of the following: a) The carrying amount of the respective recognized financial assets as stated in the parent company only balance sheets; and b) The maximum amount the entity would have to pay if the financial guarantee is called upon, irrespective of the likelihood of the guarantee being exercised. The Company adopted a policy of only dealing with creditworthy counterparties and obtaining sufficient collateral, where appropriate, as a means of mitigating the risk of financial loss from defaults. The Company’s exposure and the credit ratings of its counterparties are continuously monitored, and the aggregate value of transactions concluded is spread amongst the approved counterparties. Credit exposure is controlled by setting credit limits that are reviewed and approved by the risk management committee annually. In order to minimize credit risk, the management of the Company has delegated a team responsible for the determination of credit limits, credit approvals and other monitoring procedures to ensure that follow-up action is taken to recover overdue receivables. In addition, the Company reviews the recoverable amount of each individual trade receivables at the end of the year to ensure that adequate impairment losses are made for irrecoverable amounts. In this regard, the directors of the Company consider that the Company’s credit risk was significantly reduced. 3) Liquidity risk The Company manages liquidity risk by monitoring and maintaining a level of cash and cash equivalents deemed adequate to finance the Company’s operations and mitigate the effects of fluctuations in cash flows. In addition, management monitors the utilization of bank borrowings and ensures compliance with loan covenants. a) The following table details the Company’s expected maturities for its non-derivative financial liabilities with agreed upon repayment periods. December 31, 2023 Non-derivative financial liabilities Variable interest rate liabilities Lease liabilities 386 1 Year 1-2 Years 2-5 Years 5+ Years Total $ 3,800,013 36,274 $ 3,000,000 32,125 $ 25,644,810 313,986 $ 800,410 1,656,268 $ 33,245,233 2,038,653 (Continued) 1 Year 1-2 Years 2-5 Years 5+ Years Total Fixed interest rate liabilities Non-interest bearing liabilities - - 10,500,000 2,300,000 12,800,000 5,894,405 20,654 69,121 14,652 5,998,832 $ 9,730,692 $ 3,052,779 $ 36,527,917 $ 4,771,330 $ 54,082,718 (Concluded) December 31, 2022 Non-derivative financial liabilities Variable interest rate liabilities Lease liabilities Fixed interest rate liabilities Non-interest bearing 1 Year 1-2 Years 2-5 Years 5+ Years Total $ 10,076,552 33,771 $ 12,307,500 31,007 $ 26,135,684 234,683 $ 500,000 1,752,617 $ 49,019,736 2,052,078 - - 7,500,000 - 7,500,000 liabilities 11,945,959 75,051 59,111 4,503 12,084,624 $ 22,056,282 $ 12,413,558 $ 33,929,478 $ 2,257,120 $ 70,656,438 b) The Company’s expected maturities for its derivative financial instruments with agreed upon settlement date were as follows: December 31, 2023 On Demand or Less Than 1 Month 1-3 Months 3 Months to 1 Year 1-5 Years Total Net settled Commodity futures contracts Foreign exchange forward contracts Exchange rate $ 27,614 $ 34,910 $ 6,346 $ - $ 68,780 (9,371) (436) swap contracts 4,467 (39,179) - - - (9,807) - (34,712) $ 22,710 $ (4,705) $ 6,346 $ - $ 24,351 387 Financial Information December 31, 2022 On Demand or Less Than 1 Month 1-3 Months 3 Months to 1 Year 1-5 Years Total Net settled Commodity futures contracts $ (44,748) $ 15,206 $ 8,525 $ - $ (21,017) Foreign exchange forward contracts e. Transfers of financial assets (30,488) - - - (30,488) $ (75,236) $ 15,206 $ 8,525 $ - $ (51,505) Factored trade receivables that are not overdue at the end of the year were as follows: Proceeds from Receivables Factoring Amount Reclassified to Other Receivables Advances Received - Unused Advances Received - Used Counterparty 2023 CTBC bank $ 144,250 $ 20,318 US$ 2,700 $ - 2022 CTBC bank $ 151,902 $ 18,449 US$ 2,700 $ - Annual Interest Rates on Advances Received (Used) (%) - - 32. TRANSACTIONS WITH RELATED PARTIES Details of transactions between the Company and other related parties are disclosed as follows: a. Related party name and category Related Party Name Related Party Category Walsin Lihwa Holdings Ltd. Subsidiary Walsin Info-Electric Corp. Subsidiary Chin-Cherng Construction Co. Subsidiary Min Maw Precision Industry Corp. Subsidiary Dongguan Walsin Wire & Cable Co., Ltd. Subsidiary Jiangyin Walsin Specialty Alloy Materials Co., Ltd. Subsidiary Subsidiary Changshu Walsin Specialty Steel Co., Ltd. Shanghai Walsin Lihwa Power Wire & Cable Co., Ltd. Subsidiary (Continued) 388 Related Party Name Related Party Category Yantai Walsin Stainless Steel Co., Ltd. PT. Walsin Nickel Industrial Indonesia Walsin Internation Investments Limited Borrego Energy Holdings, LLC Borrego Energy, LLC Waltuo Green Resources Corporation PT. Sunny Metal Industry Walsin Singapore Pte. Ltd. Walsin Energy Cable System Co., Ltd. PT. Walsin Lippo Industries Metalinox Cogne Acos Inoxidaveis Especiais Ltda Dongguan Cogne Steel Products Co., Ltd. Cogne Celik Sanayi ve Ticaret Limited Şirketi Cogne Edelstahl Gmbh Cogne Acciai Speciali S.p.A. Cogne U.K. Limited Cogne France Société par Actions Simplifiée Walsin Technology Corp. Walton Advanced Engineering, Inc. Chin-Xin Investment Co., Ltd. Tsai Yi Corporation Winbond Electronics Corp. Prosperity Dielectrics Co., Ltd. PT. Westrong Metal Industry HannStar Display Corp. Kuang Tai Metal Industrial Co., Ltd. HannStar Board Corp. Global Brands Manufacture Ltd. Info-Tek Corp. Hwa Bao Botanic Conservation Corp. HannsTouch Holdings Company TCC Energy Storage Technology Corporation T.D.V. Trefileries des Vosges SA Novametal SA Trefilados Inoxidables de Mexico, S.A. DE C.V. Novametal do Brasil LTDA Ferriere di Stabio SA Wire Products Stainless Steel PTY Ltd Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Associate Associate Associate Associate Associate Associate Associate Substantive related party Substantive related party Substantive related party Substantive related party Substantive related party Substantive related party Substantive related party Substantive related party Substantive related party Substantive related party Substantive related party Substantive related party Substantive related party Substantive related party b. Sales Subsidiaries Other related parties (Concluded) For the Year Ended December 31 2023 2022 $ 1,002,325 2,032,889 $ 835,245 1,447,563 $ 3,035,214 $ 2,282,808 389 Financial Information c. Rental income Subsidiaries Associates Other related parties d. Purchases of goods Subsidiaries Walsin Singapore Pte. Ltd. Others Other related parties e. Administrative expenses Subsidiaries Associates Other related parties For the Year Ended December 31 2023 2022 $ $ 7,501 37,349 1,135 6,480 36,930 1,135 $ 45,985 $ 44,545 For the Year Ended December 31 2023 2022 $ 8,154,060 38,796 3,239 $ - 5,898 4,308 $ 8,196,095 $ 10,206 For the Year Ended December 31 2023 2022 $ $ 390 15,511 15,756 391 15,053 13,630 $ 31,657 $ 29,074 The stock registration matters of the Company and related parties were handled together. The related fees allocated to the related parties were charged against general and administrative expenses. f. Dividend income HannStar Display Corp. HannStar Board Corp. Other related parties For the Year Ended December 31 2023 2022 $ $ - 153,009 5,779 298,293 140,259 7,705 $ 158,788 $ 446,257 390 g. Notes receivable Not arising from operating activities Associates h. Trade receivables Subsidiaries Other related parties i. Trade payables Subsidiaries Other related parties j. Other receivables (excluding financing provided) Subsidiaries Walsin Singapore Pte. Ltd. Others Associates Other related parties k. Other payables (excluding loans from related parties) Related Party Subsidiaries Other related parties December 31 2023 2022 $ 1,046 $ 1,042 December 31 2023 2022 $ 223,026 215,151 $ 253,402 42,651 $ 438,177 $ 296,053 December 31 2023 2022 $ 137,857 - $ 11,605 504 $ 137,857 $ 12,109 December 31 2023 2022 $ $ 290,281 6,968 16,090 3,698 - 36,471 13,056 3,062 $ 317,037 $ 52,589 December 31 2023 2022 $ 12,371 - $ 5,521,658 275,909 $ 12,371 $ 5,797,567 391 Financial Information l. Acquisitions of property, plant and equipment Related Party For the Year Ended December 31 2023 2022 Min Maw Precision Industry Corp. $ 2,676 $ - m. Disposals of property, plant and equipment Proceeds For the Year Ended December 31 Related Party 2023 2022 Gain on Disposals For the Year Ended December 31 2023 2022 Hwa Bao Botanic Conservation Corp. $ - $ 128,800 $ - $ 78,443 The above transaction prices were determined with reference to the transaction prices of similar real estate in the vicinity and professional valuation reports. n. Lease arrangements - Company is lessee Line Item Related Party Category 2023 2022 For the Year Ended December 31 Interest expense Subsidiaries Lease liabilities Subsidiaries $ $ - - $ 1 $ 4,169 o. Sublease arrangements Sublease of finance lease Line Item Related Party Category 2023 2022 December 31 Finance lease receivables Subsidiaries/Walsin Energy $ 1,526,285 $ - Cable System Co., Ltd. Line Item Related Party Category 2023 2022 For the Year Ended December 31 Interest revenue Subsidiaries/Walsin Energy Cable System Co., Ltd. $ 22,839 $ - 392 p. Guarantee deposits Associates Other related parties q. Loan to related parties (including interest receivable) Related Party Category/Name Subsidiaries Borrego Energy, LLC Borrego Energy Holdings, LLC PT. Sunny Metal Industry December 31 2023 2022 $ $ 7,362 282 7,362 282 $ 7,644 $ 7,644 December 31 2023 2022 $ 648,967 230,405 - $ - - 5,481,736 $ 879,372 $ 5,481,736 Associates PT. Westrong Metal Industry $ - $ 1,228,863 Interest revenue Related Party Category/Name Subsidiaries PT. Sunny Metal Industry Others For the Year Ended December 31 2023 2022 $ 75,231 4,279 $ 84,453 - $ 79,510 $ 84,453 Associates PT. Westrong Metal Industry $ 73,636 $ 463 The interest rate of the Company’s loan to the above-mentioned related parties is equivalent to the market interest rate. r. Loan from related parties (including interest payable) Related Party December 31 2023 2022 Walsin Internation Investments Limited Walsin Info-Electric Corp. $ 3,195,696 100,383 $ 3,475,987 - $ 3,295,779 $ 3,475,987 393 Financial Information Interest expenses Subsidiaries s. Endorsements and guarantees Subsidiaries Amount endorsed Amount utilized t. Remuneration of key management personnel For the Year Ended December 31 2023 2022 $ 73,603 $ 6,535 December 31 2023 2022 $ 3,901,716 - $ $ $ 368,520 - The remunerations of directors and key executives in 2023 and 2022 were as follows: Short-term employee benefits Post-employment benefits For the Year Ended December 31 2023 2022 $ 137,226 1,301 $ 265,922 1,299 $ 138,527 $ 267,221 The remuneration of directors and key executives, as determined by the remuneration committee, was based on the performance of individuals and market trends. 33. ASSETS PLEDGED AS COLLATERAL OR FOR SECURITY The following assets were provided as collaterals for future deposits: Refundable deposits (recorded under other financial assets - current) Pledged time deposits (recorded under other non-current financial assets - other) December 31 2023 2022 $ - $ 280,997 600 600 $ 600 $ 281,597 394 34. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNIZED COMMITMENTS In addition to those disclosed in other notes, significant contingencies and unrecognized commitments of the Company on December 31, 2023 and 2022 were as follows: a. Outstanding letters of credit not reflected in the parent company only financial statements as of December 31, 2023 and 2022 were as follows (in thousands): New Taiwan dollar U.S. dollar Renminbi Japanese yen Euro December 31 2023 2022 43,944 NT$ 9,130 US$ RMB 2,189 JPY 107,111 EUR 12,626 NT$ 20,939 US$ 3,186 RMB 2,189 54,144 JPY EUR 34,490 b. Outstanding standby letters of credit and bid bonds of contingent liabilities not reflected in the accompanying parent company only financial statements were as follows (in thousands): New Taiwan dollar U.S. dollar December 31 2023 2022 NT$ 864,165 30 US$ NT$ 841,035 30 US$ c. Based on the tariff and relevant regulations, the Company issue tariff letters of credit to import goods and to meet the needs of post-release duty payment. The amount of tariff letters of credit were as follows: New Taiwan dollar NT$ 458,000 NT$ 496,000 d. Non-cancelable raw material procurement contracts were as follows: December 31 2023 2022 December 31 2023 2022 U.S. dollar US$ 27,839 US$ 43,926 e. The Company entered into a contract for the construction of new plants on the Company’s own land. The amount of the unrecognized commitments was as follow: U.S. dollar Japanese yen Euro New Taiwan dollar December 31 2023 2022 238 US$ - JPY EUR 35,830 NT$ 2,193,920 18 US$ 11,680 JPY EUR 39,064 NT$ 2,237,157 395 Financial Information 35. SIGNIFICANT SUBSEQUENT EVENTS For the subsequent significant events description in the acquisition of subsidiaries and disposal of associates by the Company, refer to Note 41 in the consolidated financial statements. 36. SIGNIFICANT ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES The Company’s significant financial assets and liabilities dominated in foreign currencies aggregated by the foreign currencies other than functional currencies of the entities in the Company and the related exchange rates between the foreign currencies and the respective functional currencies were as follows: December 31, 2023 Financial assets Monetary items U.S. dollar Japanese yen Euro Hong Kong dollar Australian dollar Singapore dollar Investments accounted for using the equity method U.S. dollar Renminbi Indonesia rupiah Euro Malaysian ringgit Financial liabilities Monetary items U.S. dollar Euro Swiss franc Japanese yen Unit: Foreign Currency/In Thousands of Taiwan Dollars Foreign Currency Exchange Rate Carrying Amount $ 67,802 635,549 15,846 1,005 306 154 1,259,917 6,663,558 1,423,535,240 284,469 86,089 30.7050 0.2172 33.9800 3.9290 20.9800 23.2900 30.7050 4.33524 0.00198 33.9800 6.4110 $ 2,081,860 138,041 538,447 3,949 6,420 3,587 38,685,751 28,888,123 2,818,600 9,666,272 551,917 132,912 581 17 31,554 30.7050 33.9800 36.4850 0.2172 4,081,063 19,742 620 6,854 396 December 31, 2022 Financial assets Monetary items U.S. dollar Japanese yen Euro Hong Kong dollar Australian dollar Investments accounted for using the equity method U.S. dollar Renminbi Indonesia rupiah Euro Malaysian ringgit Financial liabilities Monetary items U.S. dollar Euro Swiss franc Unit: Foreign Currency/In Thousands of Taiwan Dollars Foreign Currency Exchange Rate Carrying Amount $ 382,488 236,526 35,095 1,027 1,298 884,702 7,874,934 2,475,983,068 131,042 84,073 30.7100 0.2324 32.7200 3.9380 20.8300 30.7100 4.40934 0.0020 32.7200 6.6990 $ 11,746,208 54,969 1,148,296 4,043 27,031 27,169,195 34,723,262 4,902,446 4,287,682 563,204 311,554 121 17 30.7100 32.7200 33.2050 9,567,835 3,973 564 For the years ended December 31, 2023 and 2022, realized and unrealized net foreign exchange were gain NT$102,135 thousand and loss NT$1,732,956 thousand, respectively. It is impractical to disclose net foreign exchange gains (losses) by each significant foreign currency due to the variety of the foreign currency transactions and functional currencies of the entities in the Group. 37. SEPARATELY DISCLOSED ITEMS a. Information about significant transactions and b. information on investees: 1) Financing provided to others (Table 1) 2) Endorsements/guarantees provided (Table 2) 3) Marketable securities held (Table 3) 4) Marketable securities acquired or disposed of at costs or prices of at least NT$300 million or 20% of the paid-in capital (Table 4) 5) Acquisition of individual real estate at costs of at least NT$300 million or 20% of the paid-in capital (Table 5) 397 Financial Information 6) Disposal of individual real estate at prices of at least NT$300 million or 20% of the paid-in capital (None) 7) Total purchases from or sales to related parties amounting to at least NT$100 million or 20% of the paid-in capital (Table 6) 8) Receivables from related parties amounting to at least NT$100 million or 20% of the paid-in capital (Table 7) 9) Trading in derivative instruments (Note 7) 10) Information on investees (Table 8) c. Information on investments in mainland China 1) Information on any investee company in mainland China, showing the name, principal business activities, paid-in capital, method of investment, inward and outward remittance of funds, ownership percentage, net income of investees, investment income or loss, carrying amount of the investment at the end of the period, repatriations of investment income, and limit on the amount of investment in the mainland China area (Table 9) 2) Any of the following significant transactions with investee companies in mainland China, either directly or indirectly through a third party, and their prices, payment terms, and unrealized gains or losses (Table 9): a) The amount and percentage of purchases and the balance and percentage of the related payables at the end of the year b) The amount and percentage of sales and the balance and percentage of the related receivables at the end of the year c) The amount of property transactions and the amount of the resultant gains or losses d) The balance of negotiable instrument endorsements or guarantees or pledges of collateral at the end of the year and the purposes e) The highest balance, the ending balance, the interest rate range, and total current period interest with respect to the financing of funds; and f) Other transactions that have a material effect on the profit or loss for the year or on the financial position, such as the rendering or receipt of services d. Information of major shareholders: List all shareholders with ownership of 5% or greater showing the name of the shareholder, the number of shares owned, and percentage of ownership of each shareholder (Table 10). 38. SEGMENT INFORMATION The Company has provided the financial information of the operating segments in the consolidated financial statements. These parent company only financial statements do not provide such information. 398 WALSIN LIHWA CORPORATION FINANCING PROVIDED TO OTHERS FOR THE YEAR ENDED DECEMBER 31, 2023 (In Thousands of New Taiwan Dollars and U.S. Dollars) No. Lender Borrower Financial Statement Account Related Party Highest Balance for the Period Ending Balance Actual Amount Borrowed Interest Rate (%) Nature of Financing Business Transactio n Amount Reasons for Short-term Financing 0 Walsin Lihwa Corporation PT. Sunny Metal Other receivables Yes Industry PT. Westrong Metal Industry Borrego Energy Holdings, LLC & Borrego Energy, LLC Other receivables Yes Other receivables Yes Notes: $ 7,642,860 (US$ 250,750) 2,766,600 90,000) 1,562,750 50,000) (US$ (US$ $ (US$ (US$ (US$ - -) - -) 1,535,250 50,000) $ (US$ (US$ (US$ - -) - -) 875,093 28,500) - - Operating capital Operating capital 6.20 Operating capital $ - - Equipment purchase Equipment purchase TABLE 1 Allowance for Impairme nt Loss $ - - Collateral Item Value Financing Limit for Each Borrower (Note 1) Aggregate Financing Limit (Note 1) - - $ - $ 56,324,126 $ 56,324,126 - 56,324,126 56,324,126 - Operating capital - Promissory note 1,349,627 56,324,126 56,324,126 and property 1. According to the financing regulations provided by Walsin Lihwa Corporation, the limit on the amount of financing provided to a single enterprise that holds directly or indirectly 100% of the voting rights of a subsidiary cannot exceed 40% of the equity presented in the consolidated financial statements of Walsin Lihwa Corporation. a. The limit on the amount of financing provided to a single enterprise was as follows: PT. Sunny Metal Industry, PT. Westrong Metal Industry and Borrego Energy Holdings, LLC & Borrego Energy, LLC = $140,810,315 × 40% = $56,324,126 b. The limit on the amount of financing provided was as follows: The limit on the amount of financing provided = $140,810,315 × 40% = $56,324,126 2. Amounts are stated in thousands of New Taiwan dollars, except those stated in thousands of U.S. dollars. 3. The currency exchange rate as of December 31, 2023 was as follows: US$ to NT$ = 1:30.705. 3 9 9 4 0 0 WALSIN LIHWA CORPORATION ENDORSEMENTS/GUARANTEES PROVIDED FOR THE YEAR ENDED DECEMBER 31, 2023 (In Thousands of New Taiwan Dollars and U.S. Dollars) TABLE 2 i F n a n c i a l I n f o r m a t i o n Endorsee/Guarantee No. (Note 1) Endorsement/ Guarantor Name Relationship (Note 2) Limits on Endorsement/ Guarantee Given on Behalf of Each Party (Note 3) Maximum Amount Endorsed/ Guarantee During the Period Outstanding Endorsement/ Guarantee at the End of the Period (Note 4) Actual Amount Borrowed Amount of Endorsement/ Guarantee by Collateral Ratio of Accumulated Endorsement/ Guarantee to Net Equity in Latest Financial Statements (%) Aggregate Endorsement/ Guarantee Limit (Note 3) Guaranteed Provided by Parent Company Guarantee Provided by A Subsidiary Provided to Subsidiaries Mainland China 0 Walsin Lihwa Corporation Borrego Energy, LLC Yantai Walsin Stainless Steel Co., Ltd. b b $ (US$ - -) 6,512,311 (RMB 1,502,180) $ (US$ 365,760 12,000) 4,065,705 (RMB 900,000) $ (US$ - -) 3,901,716 (RMB 900,000) $ (US$ (RMB $ - -) - -) - - - 2.77 $ 140,810,315 140,810,315 Yes Yes No No No Yes Notes: 1. The information on Walsin Lihwa Corporation and its subsidiaries is listed and labeled on the entitled “No.” column. “0” represents Walsin Lihwa Corporation. a. b. Subsidiaries are numbered consecutively starting from 1. 2. The relationship between Walsin Lihwa Corporation and the endorsed/guaranteed entities can be classified into the following categories: a. A company with which Walsin Lihwa Corporation does business. b. A company in which Walsin Lihwa Corporation directly and indirectly holds more than 50% of the voting shares. c. A company that directly and indirectly holds more than 50% of the voting shares in Walsin Lihwa Corporation. d. A company in which Walsin Lihwa Corporation directly or indirectly holds 90% or more of the voting shares. e. A company that fulfills Walsin Lihwa Corporation’s contractual obligations by providing mutual endorsements/guarantees for another company in the same industry or for joint builders for purposes of undertaking a construction project. f. A company in which all capital contributing shareholders make endorsements/guarantees for it and Walsin Lihwa Corporation’s joint-investment company in proportion to their shareholding percentages. g. A company in the same industry as Walsin Lihwa Corporation whereby either provides among themselves joint and several security for a performance guarantee of a sales contract for pre-construction homes pursuant to the Consumer Protection Act for each other. 3. According to the endorsements/guarantees provided and financing regulations provided by Walsin Lihwa Corporation, the total limit on the amount of endorsements/guarantees cannot exceed 100% of the equity of Walsin Lihwa Corporation’s current financial statements (including the consolidated financial statements). The limit on the amount of endorsements/guarantees provided and financing provided to a single enterprise cannot exceed the equity of the guaranteed company. The amount which is 250% of the net value multiplied by the equity percentage of the guarantee provider. a. The limit on the amount of endorsements/guarantees provided was as follows: NT$140,810,315 × 100% = $140,810,315 b. The limit on the amount of endorsements/guarantees provided to a single entity was as follows: Borrego Energy, LLC: US$0 × 250% × 72.55% = US$0 Yantai Walsin Stainless Steel Co., Ltd.: RMB600,872 × 250% × 100.00% = RMB1,502,180 4. The currency exchange rates as of December 31, 2022 were as follows: US$ to NT$ = 1:30.705. RMB to NT$ = 1:4.33524 TABLE 3 WALSIN LIHWA CORPORATION MARKETABLE SECURITIES HELD DECEMBER 31, 2023 (In Thousands of New Taiwan Dollars) Holding Company Name Type and Name of Issuer of Marketable Securities Relationship with the Holding Company Financial Statement Account December 31, 2023 Number of Shares/Units Carrying Amount Percentage of Ownership (%) Fair Value Note Walsin Lihwa Corporation Share HannStar Display Corp. HannStar Board Corp. The holding company is a director of the issuer company The chairman of the holding company and the chairman of the company are second-class relatives TECO Electric & Machinery Co., Ltd. - Kuang Tai Metal Industrial Co., Ltd. Global Investment Holdings The holding company is a director of the issuer company The holding company is a director of the issuer company Universal Venture Capital Investment - Hwa Bao Botanic Conservation Corp. The holding company is a supervisor of the issuer company Tung Mung Development Co., Ltd. - Financial assets at fair value through other comprehensive income - non-current Financial assets at fair value through other comprehensive income - non-current Financial assets at fair value through other comprehensive income - non-current Financial assets at fair value through other comprehensive income - non-current Financial assets at fair value through other comprehensive income - non-current Financial assets at fair value through other comprehensive income - non-current Financial assets at fair value through other comprehensive income - non-current Financial assets at fair value through other comprehensive income - non-current 299,632,180 $ 3,550,641 10.19 $ 3,550,641 63,753,952 3,525,594 12.06 3,525,594 231,104,730 10,815,701 10.81 10,815,701 9,631,802 295,107 9.39 295,107 5,221,228 64,327 2.97 64,327 1,400,000 14,954 1.16 27,000,000 284,474 15.00 14,954 284,474 14,285,000 84,381 3.43 84,381 4 0 1 4 0 2 WALSIN LIHWA CORPORATION MARKETABLE SECURITIES ACQUIRED OR DISPOSED OF AT COSTS OR PRICES OF AT LEAST NT$300 MILLION OR 20% OF THE PAID-IN CAPITAL FOR THE YEAR ENDED DECEMBER 31, 2023 (In Thousands of New Taiwan Dollars) TABLE 4 i F n a n c i a l I n f o r m a t i o n Company Name Type and Name of Marketable Securities Financial Statement Account Purpose of Transaction Counterparty Beginning Balance Acquisition Disposal Ending Balance Relationship Number of Shares Amount Number of Shares Amount Number of Shares Amount Carrying Amount Gain (Loss) on Disposal Number of Shares Amount Walsin Lihwa Share Corporation Walsin Lihwa Holdings Limited Concord Industries Limited Walsin Lihwa Europe S.a r.l. Walsin Singapore Pte. Ltd. PT. Westrong Metal Industry Walsin Energy Cable System Co., Ltd. Innovation West Mantewe Pte. Ltd. Investments accounted for using the equity method Investments accounted for using the equity method Investments accounted for using the equity method Investments accounted for using the equity method Investments accounted for using the equity method Investments accounted for using the equity method Investments accounted for using the equity method Capital reduction Subsidiaries 108,730,393 $ 24,073,818 Capital reduction Subsidiaries 308,498,375 5,210,454 - $ - - - 106,000,000 $ 3,214,530 11,000,000 336,700 Capital investment Subsidiaries Capital investment Subsidiaries Walsin Singapore Subsidiaries Pte. Ltd. Capital investment Subsidiaries Glory Merry Limited and non-related individual - 4,146,986 12,000 5,519,286 (Note2) 422,000,000 19,603,265 311,000,000 11,206,684 (Note2) - 590,000 4,590,864 - - - - - 270,000,000 - 40 2,657,462 (Note2) 2,444,727 $ $ 3,490,565 (Note1) 1,525,182 (Note1) - - - - - - 2,730,393 $ 20,583,253 297,498,375 3,685,272 12,000 9,666,272 733,000,000 30,809,949 - - - - 590,000 4,680,030 4,680,030 - - - - - - 47,627,598 476,276 - 14,713,622 474,294 (617,532) (Note2) - 89,166 (Note3) - - - - - - - 270,000,000 2,657,462 40 2,444,727 919,380,016 20,335,573 529,955,805 5,462,298 21,344,562 4,237,555 - - - 720,192 (Note1) 846,712 (Note1) Winbond Electronics Corporation Chin-Cherng Construction Co. Joint Success Enterprises Limited Investments accounted for using the equity method Investments accounted for using the equity method Investments accounted for using the equity method Capital investment Associates 883,848,423 20,953,105 35,531,593 Capital reduction Subsidiaries 577,583,403 6,182,490 Capital reduction Subsidiaries 36,058,184 5,084,267 - - Note 1: The amount included a capital decrease in cash, recognition of investment gains and losses, and changes in other equity. Note 2: The amount included a capital increase in cash, recognition of investment gains and losses, and changes in other equity. Note 3: The amount included exchange differences on the translation of the financial statements of foreign operations. WALSIN LIHWA CORPORATION ACQUISITION OF INDIVIDUAL REAL ESTATE AT COSTS OF AT LEAST NT$300 MILLION OR 20% OF THE PAID-IN CAPITAL FOR THE YEAR ENDED DECEMBER 31, 2023 (In Thousands of New Taiwan Dollars) Company Name Property Transaction Date Transaction Amount (Foreign Currencies in Thousands) Payment Term Counterparty Relationships Property Owner Relationships Transaction Date Amount Price Reference Purpose of Acquisition Other Terms Information on Previous Title Transfer If Counterparty Is A Related Party Walsin Lihwa Corporation Plant 2024/02/04- 2024/12/26 $ 1,130,651 Based on the terms in the contract Chung-Lu Construction - N/A N/A N/A N/A Based on the Manufacturing and - Co., Ltd. marketability operating purpose TABLE 5 4 0 3 4 0 4 WALSIN LIHWA CORPORATION TOTAL PURCHASES FROM OR SALES TO RELATED PARTIES AMOUNTING TO AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL FOR THE YEAR ENDED DECEMBER 31, 2023 (In Thousands of New Taiwan Dollars) TABLE 6 i F n a n c i a l I n f o r m a t i o n Company Name Related Party Nature of Relationship Transaction Details Abnormal Transaction Notes/Accounts Payable or Receivable Purchase/ Sale Amount % of Total Payment Terms Unit Price Payment Terms Ending Balance % of Total Note Walsin Lihwa Corporation Co., Ltd. party Kuang Tai Metal Industrial Director of the related Sales $ (1,515,412) (2) The payment terms are set by Normal Normal $ 51,392 2 Jiangyin Walsin Specialty Alloy Materials Co., Ltd. subsidiary 100% indirectly owned Sales (369,262) - Changshu Walsin 100% indirectly owned Sales (491,550) Specialty Steel Co., Ltd. subsidiary Novametal SA Substantive related Sales (174,367) party Trefilados Inoxidables de Mexico, S.A. De C.V. Substantive related Sales (101,453) party Ferriere di Stabio SA Substantive related Sales (131,839) party Walsin Singapore Pte. Ltd. 100% directly owned Purchases 8,154,060 10 subsidiary quotations on the local market, and the transaction terms are similar to those of general customers. The payment terms are set by quotations on the local market, and the transaction terms are similar to those of general customers. (1) The payment terms are set by - - - quotations on the local market, and the transaction terms are similar to those of general customers. The payment terms are set by quotations on the local market, and the transaction terms are similar to those of general customers. The payment terms are set by quotations on the local market, and the transaction terms are similar to those of general customers. The payment terms are set by quotations on the local market, and the transaction terms are similar to those of general customers. The payment terms are set by quotations on the local market, and the transaction terms are similar to those of general customers. Normal Normal 99,469 4 Normal Normal 94,733 4 Normal Normal 77,568 3 Normal Normal 22,675 1 Normal Normal 31,914 1 Normal Normal (126,177) (3) WALSIN LIHWA CORPORATION RECEIVABLES FROM RELATED PARTIES AMOUNTING TO AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL DECEMBER 31, 2023 (In Thousands of New Taiwan Dollars) Company Name Related Party Relationship Financial Statement Account and Ending Balance Turnover Rate Amount Overdue Walsin Lihwa Corporation Walsin Singapore Pte. Ltd. 100% directly owned subsidiary Borrego Energy Holdings, LLC. 72.55% indirectly owned Other receivables Other receivables $ 290,281 230,405 Borrego Energy, LLC. 72.55% indirectly owned Other receivables 648,967 subsidiary subsidiary - - - $ - - - Action Taken - - - Amounts Received in Subsequent Period Allowance for Bad Debts $ $ - - - - - - TABLE 7 4 0 5 4 0 6 WALSIN LIHWA CORPORATION NAMES, LOCATIONS, AND RELATED INFORMATION OF INVESTEES OVER WHICH THE GROUP EXERCISES SIGNIFICANT INFLUENCE FOR THE YEAR ENDED DECEMBER 31, 2023 (In Thousands of New Taiwan Dollars) Information of investees that Walsin Lihwa Corporation has controlling power or significant influence over was as follows: Investor Company Investee Company Location Main Businesses and Products Original Investment Amount December 31, 2023 December 31, 2022 TABLE 8 i F n a n c i a l I n f o r m a t i o n Net Income (Loss) of the Investee Investment Gain (Loss) Note Balance as of December 31, 2023 Percentage of Ownership (%) Carrying Amount Number of Shares Walsin Lihwa Walsin Lihwa Holdings Limited Corporation Concord Industries Limited Ace Result Global Limited Min Maw Precision Industry Corp. British Virgin Islands Investments holding British Virgin Islands Investments holding British Virgin Islands Investments holding Taiwan Solar power systems management, design, and $ 103,022 13,274,435 1,587,416 180,368 $ 3,317,552 13,611,135 1,587,416 180,368 2,730,393 297,498,375 44,739,988 34,837,100 100.00 100.00 100.00 100.00 $ 20,583,253 3,685,272 382,041 409,853 281,244 $ (1,147,157) $ 33,896 24,677 74,675 (1,147,157) 33,896 21,417 Waltuo Green Resources Corporation Taiwan Waste disposal, resource recovery and cement 10,000 10,000 1,828,287 100.00 9,251 (8,409) (8,409) installation Chin-Cherng Construction Co. Taiwan Walsin Info-Electric Corp. Taiwan products Investment in the construction of residential, sale of commercial buildings, rental design and interior decoration business Mechanical and electrical, communications, and power systems 135,412 611,688 529,955,805 99.22 5,462,298 (179,331) (177,932) 270,034 270,034 29,854,246 99.51 348,242 4,640 4,618 PT. Walsin Lippo Industries PT. Walsin Lippo Kabel Joint Success Enterprises Limited Chin-Xin Investment Co., Ltd. Tsai Yi Corporation Concord II Venture Capital Co., Ltd. Winbond Electronics Corp. Steel wires Production and sale of cables and wires Indonesia Indonesia British Virgin Islands Investments holding Taiwan Taiwan Taiwan Taiwan Investments Management and investments holding Venture capital and consulting affairs Research, development, production and sale of semiconductors and related components 481,663 12,004 689,979 2,237,969 457,610 257,860 8,211,615 481,663 11,656 1,164,273 2,237,969 457,610 257,860 7,429,920 10,500 2,999,500 21,344,562 179,468,270 49,831,505 26,670,699 919,380,016 Taiwan Taiwan Walton Advanced Engineering, Inc. Walsin Technology Corp. PT. Walsin Nickel Industrial Indonesia Indonesia Walsin Precision Technology Corp. Malaysia Singapore Walsin Singapore Pte. Ltd. Walsin Energy Cable System Co., Ltd. Taiwan Walsin Lihwa Europe S.a r.l. PT. Walsin Research Innovation Luxembourg Indonesia Indonesia Walsin America, LLC PT. CNGR Walsin New Energy and Technology Indonesia PT. Westrong Metal Industry Innovation West Mantewe Pte. Ltd. PT CNGR Walsin New Mining Industry Investment Indonesia USA Indonesia Indonesia Singapore Indonesia Production, sale, and testing of semiconductors 1,185,854 1,649,039 Production and sale of ceramic capacitors 1,509,171 Production and sale of nickel pig iron 434,994 Production and sale of stainless steel plates 26,357,910 Investments holding 2,700,000 Submarine communication cables 11,560,560 Investments holding 43,669 Consulting and management 1,185,854 1,649,039 1,509,171 434,994 16,790,710 - 6,692,862 22,223 109,628,376 88,902,325 500,000 32,178,385 733,000,000 270,000,000 12,000 13,930 Investments Investments holding Manufacture and sale of nickel matte Investments holding Investments holding 196,654 300,000 - 2,452,575 46,929 185,752 300,000 4,680,030 - - N A 140,651 - 40 22,257 Note 1: Due to adjustments in the investment structure of the Group, it was transferred from Walsin Lihwa Corporation to Walsin Singapore Pte. Ltd. Note 2: Due to adjustments in the investment structure of the Group, it was transferred from Walsin Lihwa Holdings Limited to Walsin Lihwa Corporation. 70.00 70.00 49.05 37.00 33.97 26.67 21.99 21.17 18.30 50.00 100.00 100.00 90.00 100.00 99.50 100.00 29.17 - 40.00 29.17 980,706 11,773 4,237,555 8,575,298 1,026,607 169,753 20,335,573 2,230,609 8,631,671 7,269,121 551,918 30,809,949 2,657,462 9,666,272 36,315 96,593 (823) (388,158) 778,816 23,695 (16,574) (1,146,522) 67,615 (576) (308,977) 288,162 8,049 (4,420) (253,924) (29,495) (6,244) 2,325,394 2,855,853 13,214 1,828,395 (45,479) 639,873 (5,663) 427,443 1,458,312 13,214 1,417,688 (41,660) 639,873 (5,625) (374,028) 280,654 (372,662) (7,744) (372,662) (Note 2) (2,259) - 2,444,727 45,131 (12,635) (15,981) (2,832) (504) (Note 1) (6,392) (860) TABLE 9 WALSIN LIHWA CORPORATION INFORMATION ON INVESTMENTS IN MAINLAND CHINA FOR THE YEAR ENDED DECEMBER 31, 2023 (In Thousands of New Taiwan Dollars, U.S. Dollars and Renminbi) Walsin Lihwa Corporation A. The names of investee companies in mainland China, their main businesses and products, total amount of paid-in capital, investment type, investment flows, percentage of ownership in investment, investment gain or loss, carrying amount, accumulated inward remittance of earnings and upper limit on investment in mainland China were as follows: Investee Company Main Businesses and Products Paid-in Capital Method of Investment (Note 1) Jiangyin Walsin Steel Cable Co., Ltd. Manufacture and sale of steel cables and wires $ (US$ 614,000 20,000) Shanghai Walsin Lihwa Power Wire & Cable Co., Ltd. Manufacture and sale of cables and wires (US$ 479,827 15,627) Hangzhou Walsin Power Cable & Wire Co., Ltd. Manufacture and sale of cables and wires (US$ 5,467,946 178,080) Walsin (China) Investment Investments Co., Ltd. (US$ 2,413,413 78,600) Changshu Walsin Specialty Steel Co., Ltd. Manufacture and sale of specialized steel tubes (US$ 2,978,385 97,000) Dongguan Walsin Wire & Cable Co., Ltd. Manufacture and sale of bare copper cables and wires (US$ 798,330 26,000) Jiangyin Walsin Specialty Alloy Materials Co., Ltd. Manufacture and sale of cold-rolled stainless steel and flat rolled products (US$ 1,504,545 49,000) XiAn Walsin Metal Manufacture and sale of Product Co., Ltd. (Note 11) specialized stainless steel plates (US$ 1,699,522 55,350) Yantai Walsin Stainless Production and sale of Steel Co., Ltd. electronic components and new alloy materials (US$ 10,288,171 335,065) (Note 9) b b b b b b b b b $ Accumulated Outward Remittance for Investment from Taiwan as of January 1, 2023 $ (US$ (US$ (US$ (US$ (US$ (US$ (US$ 799,589 26,041) (Note 2) 459,224 14,956) (Note 3) 2,590,888 84,380) (Note 4) 2,413,413 78,600) (Note 5) 2,978,385 97,000) (Note 6) 798,330 26,000) (Note 7) 1,504,545 49,000) (Note 8) (US$ 925,756 30,150) (US$ 6,537,924 212,927) Remittance of Funds Outward Inward $ - - - - - - - - - - - - - - - - - - Accumulated Outward Remittance for Investment from Taiwan as of December 31, 2023 $ (US$ (US$ (US$ (US$ (US$ (US$ (US$ 799,589 26,041) (Note 2) 459,224 14,956) (Note 3) 2,590,888 84,380) (Note 4) 2,413,413 78,600) (Note 5) 2,978,385 97,000) (Note 6) 798,330 26,000) (Note 7) 1,504,545 49,000) (Note 8) (US$ 925,756 30,150) (US$ 6,537,924 212,927) - - - - - - - - - - - - - - - - - - Net Income (Loss) of the Investee Ownership of Direct or Indirect Investment (%) Investment Gain (Loss) (Note 16) Carrying Amount as of December 31, 2023 Accumulated Repatriation of Investment Income as of December 31, 2023 $ (101,194 ) 100.00 $ (101,194 ) $ 728,251 $ 36,375 95.71 34,816 1,187,786 183,365 40.00 66,364 724,089 (208,895 ) 100.00 (208,895 ) 4,027,195 273,984 100.00 273,984 1,300,217 (34,993 ) 100.00 (34,993 ) 1,426,606 (588,722 ) 100.00 (588,722 ) 1,178,882 (11,931 ) 100.00 (11,931 ) (791,207) (1,452,987 ) 100.00 (1,452,987 ) 2,604,924 - - - -- - - - - - (Continued) 4 0 7 i F n a n c i a l I n f o r m a t i o n 4 0 8 Investee Company Main Businesses and Products Paid-in Capital Method of Investment (Note 1) Accumulated Outward Remittance for Investment from Taiwan as of January 1, 2023 Remittance of Funds Outward Inward Accumulated Outward Remittance for Investment from Taiwan as of December 31, 2023 Net Income (Loss) of the Investee Ownership of Direct or Indirect Investment (%) Investment Gain (Loss) (Note 16) Carrying Amount as of December 31, 2023 Accumulated Repatriation of Investment Income as of December 31, 2023 Changzhou China Steel Precision Materials Co., Ltd. Melting and forging of nonferrous metallic materials and composites as well as new types of alloys $ (US$ 1,338,738 43,600) (Note 13) Nanjing Taiwan Trade Business and asset Mart Management Co., Ltd. management, consulting and advertising services (US$ 30,705 1,000) Dong Guan Cogne Steel Products Co., Ltd. Stainless Steel Products Shaanxi Tianhong Silicon Industrial Corporation Polysilicon production Jiangsu Taiwan Trade Development and Mart Development Co., Ltd. management of Nanjing Taiwan Trade Mart Management Co., Ltd. (EUR 784,564 23,089) 5,202,288 (RMB 1,200,000) (RMB 43,352 10,000) Shaanxi Electronic Group Optoelectronics Technology Co., Ltd. (Note 12) Walsin (Nanjing) Development Co., Ltd. Communications equipment and electronic components 674,550 (RMB 155,597) Construction, rental and sale of buildings and industrial factories (US$ 1,535,500 50,000) Nanjing Walsin Property Management Co., Ltd. Property management, business management and housing leasing (RMB 4,335 1,000) b b b b b b b b $ (US$ 401,621 13,080) $ (US$ 30,705 1,000) (US$ (US$ (US$ - -) - -) 9,334 304) (RMB - -) (US$ 1,529,109 49,800) (Note 14) (RMB - -) - - - - - - - - - - - - - - - - $ - - $ (US$ 401,621 13,080) $ 69,464 30.00 $ 20,841 $ 492,115 $ (US$ 971,967 31,655) - - - - - - - - - - - - - - (US$ 30,705 1,000) (US$ (US$ (US$ - -) - -) 9,334 304) (RMB - -) (US$ 1,529,109 49,800) (Note 14) (RMB - -) (8,336 ) 100.00 (8,336) (518,360) (32,113 ) 70.00 (22,493) 564,831 - 19.00 - - (Note 10) 1,038 20.00 208 9,776 22,638 6.02 - 78,706 (547,393 ) 99.60 (545,217) 8,542,838 (3,962 ) 99.60 (3,947) (21,672) - - - - - - - B. The upper limit on investment of WLC in mainland China was as follows: Accumulated Outward Remittance for Investment in Mainland China as of December 31, 2023 (NT$ and US$ in Thousands) Investment Amounts Authorized by the Investment Commission, MOEA (NT$ and US$ in Thousands) Upper Limit on the Amount of Investments Stipulated by the Investment Commission, MOEA (NT$ in Thousands) $ (US$ 18,566,945 604,688) $ (US$ 18,876,175 614,759) N/A (Note 18) (Continued) Notes: 1. Investments can be classified into three categories as follows: a. Direct investment in mainland China. b. Reinvestment in mainland China through companies in a third country companies. c. Others. 2. Including US$15,000 thousand investment through Walsin (China) Investment Co., Ltd. 3. Including US$14,950 thousand investment through Walsin (China) Investment Co., Ltd. 4. Including US$13,300 thousand investment through Walsin (China) Investment Co., Ltd., US$53,000 thousand investment through Ace Result Global Ltd. and US$22,730 thousand dividends appropriated from Dongguan Walsin Wire & Cable Co., Ltd., Jiangying Walsin Steel Cable Co., Ltd., Shanghai Walsin Lihwa Power Wire & Cable Co., Ltd. and Hangzhou Walsin Power Cable & Wire Co., Ltd. 5. Capital investment of US$28,600 thousand was contributed from the accounts payable of Walsin (China) Investment Co., Ltd. to Walsin Lihwa Holdings Limited. 6. Including US$20,000 thousand investment through Walsin Specialty Steel Corp. and US$42,000 thousand dividends appropriated from Changshu Walsin Specialty Steel Co., Ltd. and Shanghai Baihe Walsin Lihwa Specialty Steel Co., Ltd. 7. Investment through Walsin (China) Investment Co., Ltd. 8. Including investments through Walsin (China) Investment Co., Ltd. of US$4,500 thousand and US$4,500 thousand of the own capital of Walsin (China) Investment Co., Ltd. 9. Including investments of its own capital of RMB578,796 thousand from Shanghai Baihe Walsin Lihwa Specialty Steel Co., Ltd., Changzhou Wujin NSL Co., Ltd. and Changshu Walsin Specialty Steel Co., Ltd. and RMB3,750 thousand made through Changzhou Wujin NSL Co., Ltd. Including US$32,927 thousand investment through Yantai Huanghai Iron and Steel Co., Ltd. and Yantai Dazhong Recycling Resource Co., Ltd. which were merged. 10. The amount was adjusted by the capital of XiAn Lv Jing Technology Co., Ltd. of RMB228,000 thousand and by the fair value. 11. XiAn Walsin Metal Product Co., Ltd. merged XiAn Lv Jing Technology Co., Ltd. and XiAn Walsin Opto-electronic Limited. 12. Shaanxi Electronic Group Optoelectronics Technology Co., Ltd. was formerly known as Shaanxi Optoelectronics Technology Co., Ltd. 13. The amount included capitalization of retained earnings of US$7,280 thousand. 14. The amount included investment through Joint Success Enterprise Limited approved in the previous years. 15. Amounts are stated in thousands of New Taiwan dollars, except those stated in thousands of U.S. dollars and Renminbi. 16. The currency exchange rates as of December 31, 2023 were as follows: US$ to NT$ = 1:30.705, RMB to NT$ = 1:4.33524, EUR to NT$ = 1:33.98. The average exchange rates of December 31, 2023 were as follows: US$ to NT$ = 1:31.154, RMB to NT$ = 1:4.41546, EUR to NT$ = 1:33.69722 17. The basis for recognizing investment gains and losses in the current period is the financial report audited by an international accounting firm that has a cooperative relationship with the accounting firm of the Republic of China. 18. Upper limit on investment: The Company was approved as the operation headquarters by the Industrial Development Bureau, Ministry of Economic Affairs and is thus exempted from the related regulations of “Regulations Governing the Approval of Investment or Technical Cooperation in Mainland China”. (Continued) 4 0 9 4 1 0 C. Significant direct or indirect transactions between the Company and investees in mainland China Related Party Relationship Transaction Type Amount % of Total Jiangyin Walsin Specialty Alloy 100% indirectly owned Sales $ (369,262) - Materials Co., Ltd. subsidiary Changshu Walsin Specialty Steel 100% indirectly owned Sales (491,550) 1 Co., Ltd. subsidiary i F n a n c i a l I n f o r m a t i o n Transaction Terms Unit Price Payment Terms Compare to General Transactions (In Thousands of New Taiwan Dollars) Notes/Accounts Payable or Receivable Ending Balance % of Total Unrealized Loss The price and payment terms are set by quotations on the local market, and the transaction terms are similar to those of general customers. The price and payment terms are set by quotations on the local market, and the transaction terms are similar to those of general customers. The price and payment terms are set by quotations on the local market, and the transaction terms are similar to those of general customers. The price and payment terms are set by quotations on the local market, and the transaction terms are similar to those of general customers. Similar $ (99,469) 4 $ (402) Similar 94,733 4 (16,407) (Concluded) TABLE 10 WALSIN LIHWA CORPORATION AND SUBSIDIARIES INFORMATION OF MAJOR SHAREHOLDERS DECEMBER 31, 2023 Name of Major Shareholder Winbond Electronics Corp. Chin-Xin Investment Co., Ltd. TECO Electric & Machinery Co., Ltd. Shares Number of Shares Percentage of Ownership (%) 247,527,493 248,002,375 210,332,690 6.14 6.15 5.22 Note 1: The information of major shareholders presented in this table is provided by the Taiwan Depository & Clearing Corporation based on the number of ordinary shares and preferred shares held by shareholders with ownership of 5% or greater, that have been issued without physical registration (included treasury shares) by the Company as of the last business day for the current quarter. The share capital in the financial statements may differ from the actual number of shares that have been issued without physical registration because of different preparation basis. Note 2: If a shareholder delivers their shareholdings to the trust, the above information will be disclosed by the individual trustee who opened the trust account. For shareholders who declare insider shareholdings with ownership greater than 10% in accordance with Security and Exchange Act, the shareholdings include shares held by shareholders and those delivered to the trust over which shareholders have rights to determine the use of trust property. For information relating to insider shareholding declaration, please refer to Market Observation Post System. 411 Review of Financial Conditions, Financial Performance, and Risk Management VII Review of Financial Conditions, Financial Performance, and Risk Management 1. Financial Status - Consolidated (Based on IFRSs) Unit: NT$ Thousands Items Year 2022 2023 Difference Amount Current Assets 92,707,385 78,751,988 (13,955,397) Property, Plant and Equipment 65,656,466 78,154,936 12,498,470 Intangible Assets 9,339,422 12,155,696 2,816,274 Other Assets Total Assets 89,194,468 97,307,411 8,112,943 256,897,741 266,370,031 9,472,290 ％ (15.05) 19.04 30.15 9.10 3.69 Current Liabilities 60,869,368 50,759,328 (10,110,040) (16.61) Non-current Liabilities 61,819,250 61,161,390 (657,860) Total Liabilities Capital Stock Capital Surplus 122,688,618 111,920,718 (10,767,900) 37,313,329 40,313,329 3,000,000 24,672,454 33,624,917 8,952,463 Retained Earnings 62,038,398 60,590,617 (1,447,781) (1.06) (8.78) 8.04 36.29 (2.33) Note: The reasons, effects and future plans about that changes in assets, liabilities and equity which over 20% or NT$10 million in last two years: 1. Reasons: (1) The increase in intangible assets in 2023 compared to 2022 is primarily due to obtaining controlling interest in Special Melted Products Ltd. in September 2023 and recognizing goodwill related to the company. (2) The increase in capital surplus in 2023 compared to 2022 is primarily due to premium on issuance of shares from cash increase. 2. Effects: None. 3. Future plans: Keep working on managing working capital and asset and liability structure. 412 2. Financial Performance - Consolidated (Based on IFRSs) Items Year 2022 2023 Operating Revenue 180,400,719 189,839,626 Operating Costs 163,054,414 175,396,014 Gross Profit 17,346,305 14,443,612 Operating Expense Profit from Operations 7,847,591 9,498,714 Non-operating Revenue 13,903,299 and Expense Profit before Taxes Tax Expense Net Income 23,402,013 4,261,937 19,140,076 8,202,846 6,240,766 1,197,632 7,438,398 1,497,148 5,941,250 I. The variance analysis in last two years:(Variable proportion over 20%) Unit: NT$ Thousands Difference Amount ％ 9,438,907 12,341,600 (2,902,693) 355,255 (3,257,948) (12,705,667) (15,963,615) (2,764,789) (13,198,826) 5.23 7.57 (16.73) 4.53 (34.30) (91.39) (68.21) (64.87) (68.96) 1.Non-operating income decrease in 2023 due to profit from US subsidiary solar development department disposal in 2022 and the decrease in share of profit of associates accounted for using the equity method in 2023. 2. The decrease in income tax expenses for 2023 is attributed to lower profits this year influenced by overall market conditions compared to last year. II. The reason for the changes in business content changes: None. III. The expected sales volume in the next year and its main reason: 1. Expected sales volume in the next year: 2023(Unit：ton) Bare copper wire 72,663 Power line Strand 57,666 731,786 Stainless steel 300,000 Seamless steel pipe 18,000 Nickel Pig Iron 90,000 2. The basis of the expected sales volume and Possible future impact on the Company's financial operations and response plans: see the contents (5)-Business Overview 413 Review of Financial Conditions, Financial Performance, and Risk Management 3. Cash Flow - Consolidated (Based on IFRSs) (1) Cash flow analysis for the current year: Cash and Cash Equivalents at the beginning of the year 19,438,759 Net Cash flow from Operating Activities Net Cash flow from Investing Activities Net Cash flow from Financing Activities Unit: NT$ Thousands Effects of Exchange Rates Changes Cash and Cash Equivalents at the ending of the year Note 22,747,930 (21,500,770) (3,959,928) (378,979) 16,347,012 Analysis of change in cash flow in the current year: 1..The inflows of net cash generated by operating activities were due to the decrease of trade receivables. 2.The outflows of net cash used in investing activities were due to the purchase of property, plant, and equipment. 3.The outflows of net cash generated by financing activities were due to the repayment of borrowings. 4.The outflows of net cash in the year was NT$ 3,091,747 thousand and the ending balance of cash was NT$ 16,347,012 thousand. (2) Remedy for cash Deficit and Liquidity Analysis: Not applicable. (3) Cash flow Analysis for the coming year: Unit: NT$ Thousands Cash and Cash Equivalents at the beginning of the year Net Cash flow from Operating Activities Net Cash flow from Investing Activities Net Cash flow from Financing Activities Effects of Exchange Rates Changes 16,347,012 10,303,844 (12,032,507) 512,684 0 Cash and Cash Equivalents at the ending of the year 15,131,033 Note Analysis of change in cash flow for the coming year: 1.The inflows of net cash generated by operating activities due to the anticipated profit generated from core operations. 2.The outflows of net cash used in investing activities due to the strategic project investment, the increase of capital expenditures, renewal of equipment. 3..The inflows of net cash used in financing activities due to an increase in borrowings. 414 4. Effect of Major Capital Expenditure on Financial Business Operations: (1) Utilization of Major Capital Expenditures and Sources of Funds: Project 1. HR Coil Project of Yantai Plant 2. Cold Finished Bar Project of Yantai Plant Source of Funds Working Capital Working Capital Actual or Estimated Completion Date September 2024 December 2024 3. The establishment of nickel pig iron plant Working Capital December 2021 4. The establishment of high-efficiency factories Working Capital September 2024 5. Cable wire project of Walsin Energy Working Capital December 2025 6. Nickel matte factory in Indonesia Working Capital June 2024 (2) Estimated Benefits: Unit: NT$ Million Investment Actual or Expected Status of Spending 2019 2020 2021 2022 2023 2024 2025 2026 9,128 53 594 1,525 3,848 1,048 1,112 881 66 3,264 - - 83 690 1,388 308 795 9,667 - 6,851 2,576 240 - - 5,407 13,800 2,883 - - - 17 565 1,410 2,339 1,076 - - - - - 1,248 6,264 6,288 - 2 ,228 655 - - - - - - - 1. The establishment of steel rolling and cold finished factories of Yantai Plant will help expand economies of scale and improve product quality to meet the needs of the customers. 2. Invest in the construction of a nickel pig iron plant and supporting power plants in Indonesia, with a planned monthly output of 3,000 tons of nickel metal, which will enable the company to securely control the supply of upstream raw materials and make profits for the company. 3. Build high-efficiency factories, deepen the integration of manufacturing service value and integrate manufacturing systems through smart manufacturing, advanced warehousing and logistics, and create competitiveness that is difficult to imitate. 4. Walsin Energy Cable System, with its plan to benchmark international submarine cable plants, advanced submarine cable design, manufacturing, testing, and connection technologies, will become a key supplier for offshore wind power plants in Taiwan and the Asia-Pacific region. 5. Investment Policy of the Past Year, Profit/Loss Analysis, Improvement Plan and Investment Plan for the Coming Year: (1) Investment Policy and Profit/Loss in the Past Year: 1. On a consolidated basis, the Company’s current key reinvestment areas are DRAM, TFT LCD and passive components. 2. On a consolidated basis, in 2023, the gains for affiliated enterprises recognized by equity method was NT$529 million, as a result of the weakened downstream demand in the semiconductor industry, indicating a lower profitability of affiliated enterprises recognized under the equity method compared to 2022. (2) Main Reasons for Profit: Recognition of the gains from Walsin Technology Corporation. 415 Review of Financial Conditions, Financial Performance, and Risk Management (3) Investment Plan for the Coming Year: To continue to focus on upstream and downstream consolidation of core businesses and carefully assess investment plans. 6. Risk Management and Assessment of the Following Items for the Past Year and the Year to Date: (1) Impact of Interest Rate and Exchange Rate Changes and Inflation on the Company’s Profit and Countermeasures. Affected item Interest Rate Change Exchange Rate Change Inflation Impact Response measures: Net interest expense (interest expense less interest income) in 2023 was approximately NT$1.594 billion, accounting for merely 0.84% of the Company's net operating revenues; therefore, the change in interest rates does not yet have a significant impact on the profit or loss of the Company and its subsidiaries. Foreign exchange losses for 2023 were approximately NT$240 million (including profit/loss from trading foreign exchange derivative products). The Company's products are not for general public consumption therefore inflation has no direct impact on the Company. However, it might raise the Company's demand for working capital. The Company will plan and execute plans for funding sources and costs based on business development and needs. Based on foreign currency positions, the Company will utilize market instruments (e.g. forward foreign exchange contracts) for hedging purposes. The Company will strictly control the operating cycle and keep track of the source and use of funds. (2) Policies of Engaging in High-risk, High-leverage Investments, Lending to Others, Providing Endorsements and Guarantees and Derivatives Transactions, Profit/loss Analysis and Future Countermeasures. Major causes of profit or loss None Future response measures None None None None None None None Item Policy High-risk, High- Leverage Investments Lending to Others Endorsements/ Guarantees Derivative Instrument Transactions The Company does not engage in any high- risk, high-leverage investment activities. Conducted in accordance with the provisions of the Company's "Management Guidelines on Lending Company Funds to Others" Conducted in accordance with the provisions of the Company's "Management Guidelines on Endorsement/Guarantee" With respect to derivative instruments, the Company has mainly engaged in hedging transactions related to business operations and investment activities (foreign exchange and non-ferrous metals). For non-ferrous metals, the Company may carry out non- hedging transactions based on authorized positions and under risk management control for the purpose of curbing price volatilities in raw materials. The authorization is conducted in accordance with the Company's "Procedure for Derivatives Products Trades." 416 (3) Future R&D Plans and Projected R&D Investments: The research and development plans of each business group have been included in the business activities section of the Business Overview, and these plans have relatively low risks. Please refer to “V. Business Overview—A. Business Activities— (3) Overview of Technology and R&D”. (4) Major Changes in Domestic and Foreign Government Policies and Laws and Impact on the Company’s Finances and Business: None (5) Impact of Recent Technological and Market Changes on the Company's Finances and Business, and Countermeasures: To achieve the goal of Smart Manufacturing, Walsin has started to promote the new MES (Manufacturing Execution System) and ERP (Enterprise Resource Planning) and move towards CPS (Cyber-Physical System). Through cloud-based, component-based, and parametric design to retain the flexibility and speed, we will ensure the ability to integrate with the supply chains in the future. Global pandemic prevention has made remote work the "new normal", thus providing a new channel for hacker attacks. In order to prevent theft and destruction of sensitive data of the Company, which may affect its industrial productivity and damage corporate image, Walsin has strengthened its identity authentication mechanism for remote work and enhanced the protection of external services in response to this new type of risk. We will establish the defensive capability of the defender by using the protection measures corresponding to the "Cyber Kill Chain" model against the attacking mobile phones and steps of hackers, and set up information security technology products for purposes of inventory, prevention, detection, response and recovery, in order to respond to various information security risks. (6) Impact of Change in Corporate Image on Risk Management and Countermeasures: None (7) Expected Benefits and Potential Risks of Merger and Acquisition: 1. On May 5, 2023, during the 25th meeting of the Board of Directors of the 19th term, the Company resolved that it shall, through its Italian subsidiary, Cogne Acciai Speciali S.p.A., acquire 100% of the shares of Special Melted Products Limited (based in the United Kingdom). The Company ultimately holds a 70% comprehensive shareholding in Special Melted Products Limited, with the transaction completed in September of the same year; the acquisition can help the Company expand into stainless steel and nickel-based alloy products and enter the high-end product markets such as aerospace. 2. On August 11, 2023, during the 3rd meeting of the Board of Directors of the 20th term, the Company resolved that it shall, through its Singapore subsidiary, Walsin Singapore Pte. Ltd., acquire 75% of the shares of Berg Holding Limited (based in Hong Kong), indirectly increasing the Company's comprehensive shareholding in its Indonesian subsidiary, PT. Sunny Metal Industry, to 79.61%, with the transaction completed in January 2024; the acquisition can strengthen our corporate governance, centralizes our management resources, and enhances our investment efficiency. 3. On January 26, 2024, during the 6th meeting of the Board of Directors of the 20th term, the Company resolved that it shall, through its Italian subsidiary, Cogne Acciai Speciali S.p.A., acquire 65% of the shares of Com.Steel Inox S.p.A. (based in Italy). The Company ultimately holds a 45.5% comprehensive shareholding in Com.Steel Inox S.p.A., approved by the Taiwan Fair Trade Commission in March of the same year, currently under review by the Italian Investment Review Board; the acquisition is expected to secure key raw materials for our stainless steel processes and establish a knowledge center for our waste stainless steel management. 417 Review of Financial Conditions, Financial Performance, and Risk Management 4. On February 20, 2024, during the 7th meeting of the Board of Directors of the 20th term, the Company resolved that it shall, through its Italian subsidiary, Cogne Acciai Speciali S.p.A., acquire 100% of the shares of Mannesmann Stainless Tubes GmbH (based in Germany). The Company ultimately holds a 70% comprehensive shareholding in Mannesmann Stainless Tubes GmbH, currently in the reporting stage to various countries' antitrust regulatory authorities and Investment Review Board; the acquisition is expected to integrate the downstream industry chain, enhance utilization of our steel production capacity, and extend our sales network in and tap into high-end markets such as aerospace, oil and gas, and new energy. (8) Expected Benefits and Potential Risks of Capacity Expansion: All capacity expansion for plants under Walsin and its group members has to undergo careful assessments. All major capital expenditure has to be submitted to the Board of Directors for review. Hence, investment benefits and potential risks will have been taken into account. (9) Risks Associated with Over-concentration in Purchases or Sales and Countermeasures: None (10) Impact of Mass Transfer(s) of Equity by or Change of Directors or Shareholders Holding 10% or more Interest on the Company, the Associated Risks and Countermeasures: None. (11) Impact of Change of Control on the Company, Associated risks and Countermeasures: None. (12) Final and Non-appealable and Pending Material Litigious, Non-litigious or Administrative Legal Proceedings involving the Company, the Directors and the President during the Most Recent Year and up to the Annual Report Publication Date: Name of Subsidiary Main Parties Involved in Litigation Commencement Date of Litigation Facts at Issue in Litigation Borrego Energy, LLC Blue Harvest Solar Park LLC & Timber Road Solar LLC (collectively, “EDPR”) July 28, 2023 . Borrego initiated arbitration, requesting the other party to pay the costs incurred due to delays in the project and site conditions in winter caused by the change of the order. . Amount: Over US$25 million. Borrego Energy, LLC Blacksmith Road Solar 1, LLC December 19, 2023 . Blacksmith Road Solar 1, LLC sought damages for delay from Borrego. . Amount: Approximately US$3.6 million. Current Handling Arbitration is pending Arbitration is pending 418 (13) Other significant risks and response measures: 1. The Company's KPIs: (1) Financial indicators: Optimizing financial structure and control of bank financing agreements Ratio Formula Target KPI 2023 2022 Current ratio Current assets / Current liabilities >=100% 155.15% 152.30% Debt ratio Net liabilities (Total liabilities - Cash and cash equivalents) / Tangible assets <=120% 67.17% 82.74% Interest coverage ratio Tangible net value (Net income before income tax, depreciation, amortization and interest >=300% 832.61% 3,465.09% expense / Current interest expense Shareholders' equity - Intangible assets >=NT$80 billion NT$142.3 NT$124.9 billion billion (2) Performance indicators: Return on shareholder's equity and earnings before interest, taxes, depreciation and amortization (EBITDA) Ratio Formula Return on Shareholder's Equity Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) Net Income after tax / Average of total shareholders' equity Earnings before interest & taxes＋depreciation & amortization + interest expenses 2023 3.56% 2022 16.28% NT$17,241 million NT$28,681 million 7. Other Major Issues: None 419 Special Disclosures VIII Special Disclosures 1. Summary of Affiliates Companies (1) Affiliates 1. Affiliated Organization Chart of Walsin Lihwa Corporation (as of 2023/12/31) Walsin Lihwa Corporation 100% 100% 100% WALSIN LIHWA HOLDINGS LIMITED (Please refer to the page below for its investee companies) CONCORD INDUSTRIES LIMITED (Please refer to the page below for its investee companies) ACE RESULT GLOBAL LIMITED 100% Walsin Lihwa Europe S.a r.l. (Please see 3. Affiliated Organization Chart for the information on its affiliates) 99.22% 99.51% 100% 100% 100% 70% 70% 100% Chin-Cherng Construction Co. WALSIN INFO-ELECTRIC INC.. MIN MAW PRECISION INDUSTRY CORP. Waltuo Green Resources Corporation WALSIN PRECISION TECHNOLOGY SDN. BHD. P.T. WALSIN LIPPO INDUSTRIES P.T. Walsin Lippo Kabel Walsin Singapore Pte. Ltd. 50.95% 49.05% 99.50% 0.5% 50% 42% 50.1% 90% Walsin Energy Cable System Co., Ltd. Joint Success Enterprises Limited 100% Walsin (Nanjing) Construction Limited 100% Nanjing Walsin Property Management Co., Ltd. PT Walsin Research Innovation Indonesia PT Walsin Nickel Industrial Indonesia PT Sunny Metal Industry 0.10% 99.90% 100% 100% PT Walhsu Metal Industry Borrego Energy, LLC Cleanleaf Energy Holdings, Inc. 100% Walsin America, LLC 72.55% Borrego Energy Holdings, LLC 420 2. Affiliated Organization Chart of Walsin Lihwa Holdings Limited and Concord Industries Limited (as of 2023/12/31) Walsin Lihwa Corporation 100% Walsin Lihwa Holdings Limited 100% 100% 65% 100% Walsin (China) Investment Co., Ltd. Walsin International Investments Limited Walcom Chemicals Industrial Limited Nanjing Taiwan Trade Mart Management Co., Ltd. 95.71% 100% 100% Shanghai Walsin Lihwa Power Wire & Cable Co., Ltd. Dongguan Walsin Wire & Cable Co., Ltd. Jiangyin Walsin Steel Cable Co., Ltd. 100% Concord Industries Limited 100% Walsin Specialty Steel Corp. 100% 100% Changshu Walsin Specialty Steel Co., Ltd. XiAn Walsin Metal Product Co., Ltd. 3. Affiliated Organization Chart of Walsin Lihwa Corporation (as of 2023/12/31) 18.37% 81.63% Jiangyin Walsin Specialty Alloy Materials Co., Ltd. 34.71% 65.29% Yantai Walsin Stainless Steel Co., Ltd. Walsin Lihwa Corporation 100% Walsin Lihwa Europe S.a r.l. 90.21% MEG S.A. 77.60% Cogne Acciai Speciali S.p.A. 100% 100% 100% 100% 100% 100% Cogne France Société par Actions Simplifiée Cogne Edelstahl Gmbh COGNE SG PTE. LTD. Cogne Hong Kong Limited Cogne U.K. LIMITED Cogne Stainless Bars SA 100% Aosta Servizi Generali S.r.l. 0.0002% 82.53% Cogne Mexico Sociedad Anonima de Capital Variable 100% 100% 100% 100% 100% 100% Metalinox Cogne Acos Inoxidaveis Especiais Ltda Cogne Speciality Steel USA, INC. Cogne Celik Sanayi ve Ticaret Limited Şirketi Dong Guan Cogne Steel Products Co., Ltd. Special Melted Products Limited Degerfors Long Products AB 421 Special Disclosures (2) Background Information of the Affiliated Companies Unit: 1,000 NTD/USD/Other foreign currencies Entity Date of Incorporation Address Paid-in Capital Main Operation or Business Items Walsin Lihwa Holdings Limited 1992/07/15 Walsin (China) Investment Co., Ltd. 1995/11/02 Vistra Corporate Services Centre Wickhams Cay II, Road Town, Tortola, VG1110 British Virgin Islands Rm. 2804, 28th Floor, Shanghai Mart Tower, No. 2299, Yanan Road (West), Shanghai, China USD 2,730,393.00 Investment holding. USD 78,600,000.00 Investment holding. 1995/03/21 No. 1128 Liuxiang Road, Nanxiang Town, Jiading, Shanghai USD 15,627,056.00 Cables and wires. Shanghai Walsin Lihwa Power Wire & Cable Co., Ltd. Dongguan Walsin Wire & Cable Co., Ltd. Jiangyin Walsin Steel Cable Co., Ltd. 2000/01/26 1992/12/16 Walsin International Investments Limited 1993/12/02 Walcom Chemicals Industrial Limited 1988/12/29 No. 680, Meijing West Road, Dalang Town, Dongguan, Guangdong No. 679 Binjiang Road (West), Binjiang Economic & Technology Development Zone, Jiangyin, Jiangsu Room 1102, Level 11, Lee Garden One, 33 Hysan Avenue, Causeway Bay, Hong Kong Unit 714, 7/F, Miramar Tower, 1-23 Kimberley Road, Tsimshatsui, Kowloon, Hong Kong USD 26,000,000.00 USD 20,000,000.00 Bare copper cables and wires. Pre-stressed steel wires and steel strands. HKD 3,802,164,817.00 Investments. HKD 500,000 Commerce. Nanjing Taiwan Trade Mart Management Co., Ltd. 2010/04/14 No. 230 Hexi street, Nanjing USD 1,000,000.00 Enterprise management, property management, marketing planning, consultation on various types of advertising information; leasing of market facilities and management of market operations; import and export of electronics, machinery, agricultural and by-products, textiles and handicrafts; commission agency (except auction). Concord Industries Limited 1992/08/25 Walsin Specialty Steel Corp. 1997/08/07 Changshu Walsin Specialty Steel Co., Ltd. 1997/12/24 Vistra Corporate Services Centre Wickhams Cay II, Road Town, Tortola, VG1110 British Virgin Islands Vistra Corporate Services Centre Wickhams Cay II, Road Town, Tortola, VG1110 British Virgin Islands Haiyu Town, Changshu City, Jiangsu Province (Mailing address: No. 2,Hai Yang Road ,Haiyu Town, Changshu City, Jiangsu Province) USD 297,498,375.00 Investment holding. USD 82,893,195.00 Investment holding. USD 97,000,000.00 Manufacture and sale of special steel pipes, rods, wires, stainless steel pipes, building and household hardware and heating equipment. It develops and produces new alloy materials, carbon steels, alloy steels, stainless steels, steel billets, various types of steel and iron and steel products and sells its own products; engages in the wholesale business of new alloy materials, carbon steels, alloy steels, stainless steels, steel billets, various types of steel and iron and steel products; engages in the import and export of steel and iron products and related technologies. It also engages in recycling and wholesale of used and waste materials. Cold-rolled stainless steel and flat-rolled products. Yantai Huanghai Iron and Steel Co., Ltd. 2007/03/19 No. 2 Wuzhishan Road. ETDZ Yantai City, Shantung Province, USD 335,065,300.00 Jiangyin Walsin Specialty Alloy Materials Co., Ltd. 2005/03/10 No. 677, Binjiang West Road, Jiangyin City, Jiangsu USD 49,000,000.00 422 Entity Date of Incorporation Address Paid-in Capital XiAn Walsin Metal Product Co., Ltd. 2008/06/20 Ace Result Global Limited 2014/10/08 Room 105, 1 floor, block A, long Qi science and Technology Park, No. 29 Jinye Road, Xi'an new and high tech Zone, Shaanxi Vistra Corporate Services Centre Wickhams Cay II, Road Town, Tortola, VG1110 British Virgin Islands Walsin Lihwa Europe S.A.R.L. MEG S.A. Cogne Acciai Speciali S.p.A. 2022/10/24 16, rue Eugène Ruppert, L- 2453, Luxembourg 1995/1/27 16, rue Eugène Ruppert, L- 2453, Luxembourg 11100 Main Operation or Business Items Sales of metal products; research and development of metal products; sales of metal materials; manufacturing of metal materials. USD 55,350,000.00 USD 44,739,988.00 Investment holding. EUR EUR 12,000.00 Investment holding. 91,750.00 Investment holding. 1991/10/24 VIA PARAVERA 16 AOSTA9AO) CAP EUR 405,563,167.00 Production, sales and Cogne France Société par Actions Simplifiée Cogne Edelstahl Gmbh 1997/5/26 16 Rue de la Patelle 95613 Cergy Pontoise Cedex BP 80119 - France 1997/10/16 Carl-Schurz-Str. 2 41460 Neuss - EUR EUR Germany COGNE SG PTE. LTD. 2022/7/13 160 Robinson Road, #14-04, SBF Center SGD Singapore - 068914 Cogne Hong Kong Limited 2003/12/12 5/F, Manulife Place, 348 Kwun Tong USD distribution of stainless steel products. 6,068,446.00 Sales and distribution of stainless steel products. 3,328,000.00 Sales and distribution of stainless steel products. 139,562.00 Sales and distribution of stainless steel products. Investment holding. 28,580,000.00 Cogne U.K. LIMITED Cogne Stainless Bars SA Road, Hong Kong 1996/12/31 Uniformity Steel WorksDon Road Newhall Sheffield S92UD 2015/12/21 Via Laveggio 6a 6855 Stabio - Svizzera GBP 3,000,000.00 Sales and distribution of stainless steel products. CHF 1,000,000.00 Production, sales and distribution of stainless steel products. 2007/4/26 Via Nazionale per Carema 40 - 11026 EUR 200,000.00 Electrical and mechanical Aosta Servizi Generali S.r.l. Cogne Mexico Sociedad Anonima de Capital Variable Metalinox Cogne Acos Inoxidaveis Especiais Ltda Cogne Specialty Steel USA, INC. Cogne Celik Sanayi ve Ticaret Limited Şirketi DongGuan Cogne Steel Products Co.,Ltd. Special Melted Products Limited Degerfors Long Products AB Pont-Saint-Martin (AO) - Italy 2014/10/10 Av. Otomies no sin numero int. 1 - CD industrial Xicohtencatl II Huamantla - 90500 Tlaxcala - Mexico 1977/7/5 Avenida Presidente Wilsom. 4382 R$ Upiranga - Sao Paulo/SP CEP 04220-001 Brazil 1995/8/16 277 Fairfield Road _STE 315. Fairfiled, USD NJ 07004 2010/5/20 Sultan Orhan Mah Keresteciler San. Sit. 2003ada 1Parsel Gebze Kocaeli Türkiye TL MXN 55,025,139.00 Production, sales and repair services and general services. distribution of stainless steel products. 76,501,990.00 Sales and distribution of stainless steel products. 6,849,800.00 Sales and distribution of stainless steel products. 23,952,125.00 Sales and distribution of stainless steel products. 2005/1/21 Building 1, No. 27, WeiJian USD 27,200,000.00 Production, sales and Road,industrial park of ChaShan,ChaShan town,DongGuan city,GuangDong province,China distribution of stainless steel products. 1985/6/5 President Way Works, President Way, GBP 4,199,157.00 Production and sales of high Sheffield, S4 7UR 2021/8/24 Bruksparken 2, 693 81 DEGERFORS SEK quality special steels and nickel-based alloys. 25,000.00 Sales of specialty steel products. Investment in and construction of national housing, sale of commercial buildings, rental design and interior renovation. NTD 5,340,994,320.00 USD 43,520,000.00 Investment holding. Chin-Cherng Construction Co. 1973/06/28 5th Floor, 192 Jingye 1st Road, Jhongshan District, Taipei 104, Taiwan, R.O.C. Joint Success Enterprises Limited 2004/01/08 Vistra Corporate Services Centre Wickhams Cay II, Road Town, Tortola, VG1110 British Virgin Islands No. 236 Jiangdong Road,Jianye District, Nanjing, Jiangsu Province Walsin (Nanjing) Construction Limited 2005/08/09 USD 50,000,000.00 Real estate development, sales, leasing, after-sales service, and property management; hotel and serviced apartments management and consulting, and retail sales and food service management consulting. 423 Main Operation or Business Items Property management, car park management services, corporate marketing planning, management consulting, self-owned house rental, building installation, decoration projects, landscaping design, construction, etc Solar engineering, mechanical and electrical engineering, and power engineering. Assembly of solar panel power systems. Waste removal, resource recycling and cement, soil blending and related businesses. Stainless steel calendered sheets. Special Disclosures Entity Date of Incorporation Address Paid-in Capital Nanjing Walsin Property Management Co., Ltd. 2013/01/30 No. 230, Hexi Avenue, Jianye Zone, Nanjing, Jiangsu RMB 1,000,000.00 Walsin Info-Electric Corp. 1995/6/21 25F., No. 1, Songzhi Rd., Xinyi Dist., Taipei City, Taiwan NTD 300,000,000.00 Min Maw Precision Industry Corp. 1980/10/17 PT Walsin Research Innovation Indonesia 2022/8/23 25F., No. 1, Songzhi Rd., Xinyi Dist., Taipei City, Taiwan Gold Coast Office Eiffel Tower Lt. 23 Unit OTA23WF, Jl. Pantai Indah Kapuk, Desa/Kelurahan Kamal Muara, Kec. Penjaringan, Kota Adm. Jakarta Utara, Provinsi DKI Jakarta NTD 348,371,000.00 USD 1,400,000.00 Other consulting and management. Waltuo Green Resources Corporation 2018/06/06 No. 47, Bade Rd., Yenshui Dist., Tainan City 737, Taiwan NTD 18,282,870.00 Walsin Precision Technology Sdn. Bhd. 2000/03/15 P.T Walsin Lippo Industries 1991/04/29 P.T. Walsin Lippo Kabel 1997/12/29 2115-1,Kawasan Perindustrian air Keroh, Fasa IV, Air Keroh, 75450 Melaka, Malaysia JI. MH. Thamrin Blok A1-1, Delta Silicon Industrial Park, Lippo Cikarang, Bekasi 17550, Indonesia Jl. Jati 3 Blok J7/5, Newton Techno Park, Serang, Cikarang Selatan, Bekasi, Jawa Barat 17550 USD 8,470,000.00 USD 15,000,000 Power cables. USD 4,285,000 Power cables. Walsin Singapore Pte. Ltd. 2019/12/3 727 Clementi West Street 2 #01-280 Singapore (120727) USD 733,000,000 PT Walsin Nickel Industrial Indonesia 2019/12/19 PT Sunny Metal Industry 2021/8/13 PT Walhsu Metal Industry 2023/5/22 Walsin Energy Cable System Co., Ltd. 2023/2/13 Walsin America, LLC 2022/7/1 Borrego Energy Holdings, LLC 2022/4/8 Borrego Energy, LLC 2022/4/8 Cleanleaf Energy Holdings, Inc. 2023/9/14 Gedung IMIP, Jalan Batu Mulia 8, RT. 007 RW. 007, Meruya Utara Kembangan, Kota Adm. Jakarta Barat DKI Jakarta 11620, Indonesia Sopo Del Office Tower A Lantai 21 Jalan Mega Kuningan Barat III Lot 10 1-6 , Kel. Kuningan Timur, Kec. Setiabudi, Kota Adm. Jakarta Selatan,Provinsi DKI Jakarta, Indonesia Sopo Del Office Tower A Lantai 21 Jalan Mega Kuningan Barat III Lot 10 1-6, Desa/Kelurahan Kuningan Timur, Kec. Setiabudi, Kota Adm. Jakarta Selatan, Provinsi DKI Jakarta, 25F., No.1, Songzhi Rd., Xinyi Dist., Taipei City 110, Taiwan 1209 Orange Street, Wilmington, New Castle Country, DE 19801,USA 1455 Frazee Rd.#500 San Diego,California 92108 1455 Frazee Rd.#500 San Diego,California 92108 222 SEVERN AVE SUITE 17 BLDG 7-6 ANNAPOLIS, MD 21403 USD 100,000,000 Investment holding and wholesale of metals and metal ores (e.g. steel pipes). Non-ferrous base metal (nickel pig iron) manufacturing and power plant. USD 100,000,000 Manufacturing and trading of nickel matte. USD 9,500,000 Manufacturing and trading of nickel matte. NTD 3,000,000,000 Submarine cables. USD 81,302,107.00 Investment holding. USD 63,208,688.00 Solar EPC and O&M Services USD 63,208,688.00 Solar EPC and O&M Services USD 0 Investment holding. (3) Presumed to have control and affiliation Common Shareholders Information: Not applicable 424 (4) The main Industries of affiliated companies: 1. Wire and cable industry 2. Stainless steel industry 3. Business real estate 4. Construction and development of solar power systems 5. Production and sales of non-ferrous metals 6. General investment industry Above table include the main operation or business items of each affiliated company. The division of work of affiliated companies: Each line of business affiliates operate independently, partially some affiliates have the purchases, sales, engineering contracting trading and marketing agency services and other projects with each other. (5) Directors, Supervisors, and Presidents of the Affiliated Companies (as of 2023/12/31) Entity Title Name of the Representation No. of Share: Share; 1000 RMB/USD/EUR Shareholding (Contribution) Shares (Contribution) Sharelold Walsin Lihwa Holdings Limited Walsin (China) Investment Co., Ltd. Shanghai Walsin Lihwa Power Wire & Cable Co., Ltd. Dongguan Walsin Wire & Cable Co., Ltd. Jiangyin Walsin Steel Cable Co., Limited (JHS) Walsin International Investments Limited Walcom Chemicals Industrial Limited Director Chairman General manager Director Supervisor Chairman Vice Chairman General manager Director Director Supervisor Chairman General manager Director Supervisor Chairman Vice Chairman Director Supervisor Director President Director Director Director Representative of Walsin Lihwa Corporation: Yu-Lon Chiao, Patricia Chiao, Sophi Pan Jian-Hua Cao Fred Pan Representative of Walsin Lihwa Holdings Limited: Jian-Hua Cao, C.C. Chen, Fred Pan Representative of Walsin Lihwa Holdings Limited: Richard Wu Witty Liao Chien-Ming Chang Jen-Chan Huang Representative of Shanghai Nanxiang Development Zone Industrial Co. Ltd. : Chien-Ming Chang, Chi-Ming Chou Representative of Walsin (China) Investment Co., Ltd.: Witty Liao, Jin-Renn Leu, Wei-Chih Hu, Allen Yang, Jen-Chan Huang Representative of Walsin (China) Investment Co., Ltd.: Richard Wu Witty Liao Chang-Ming Wu Representative of Walsin (China) Investment Co., Ltd.: Witty Liao, Chang-Ming Wu, Kiwi Lan Representative of Walsin (China) Investment Co., Ltd.: Richard Wu Witty Liao Lu Lu Representative of Walsin (China) Investment Co., Ltd.: Witty Liao, Chao-Yang Cheng , Sherry Ho Representative of Walsin (China) Investment Co., Ltd.: Richard Wu Representative of Walsin Lihwa Holdings Limited: C.C. Chen, Fred Pan Tzu-Yi Chiao Hao Chi Qi-Ying Liang Yong-Taig Chen ing 2,730,393 100.00% USD USD 0 0 0.00% 0.00% USD 78,600 100.00% USD USD USD USD USD 78,600 100.00% 0 0 0 0.00% 0.00% 0.00% 671 4.29% USD 14,956 95.71% USD USD USD 14,956 95.71% 0 0 0.00% 0.00% USD 26,000 100.00% USD USD USD USD 26,000 100.00% 0 0 0.00% 0.00% 20,000 100.00% USD 20,000 100.00% 3,802,164,817 100.00% 0 0.00% 174,999 35.00% 0.00% 0.00% 1 0 425 Special Disclosures Entity Title Name of the Representation Min Zhou Min Zhou Representative of Walsin Lihwa Holdings Limited: Min Zhou, Xue-Wu Wu, Chi-Wei Lan Representative of Walsin Lihwa Holdings Limited: Richard Wu Representative of Walsin Lihwa Corporation: Yu-Lon Chiao, Patricia Chiao, Sophie Pan Representative of Walsin Lihwa Corporation: Yu-Lon Chiao, Patricia Chiao, David Wen Witty Liao Hsin-Hung Chen Representative of Walsin Specialty Steel Corp: Witty Liao, Yi- Chung Chen, Pei-Hsuan Li Representative of Walsin Specialty Steel Corp: Richard Wu Kevin Niu Nora Lin Representative of Jiangyin Walsin Specialty Alloy Materials Co., Ltd.: Kevin Niu, Nora Lin Representative of Concord Industries Limited: Allen Yang Representative of Jiangyin Walsin Specialty Alloy Materials Co., Ltd.: Richard Wu Chao-Yang Cheng Lu Lu Shareholding (Contribution) Shares (Contribution) Sharelold USD USD USD USD ing 0.00% 0.00% 0 0 1,000 100.00% 1,000 100.00% 297,498,375 82,893,195 100.00% 100.00% USD USD USD USD USD USD 0 0 0.00% 0.00% 97,000 100.00% 97,000 100.00% 0.00% 0 0 0.00% USD 116,312.7 USD 218,752.6 116,313 34.71% 65.29% 34.71% USD USD USD 0 0 0.00% 0.00% Representatives of Concord Industries Limited/ Walsin (China) Investment Co., Ltd.: Chao-Yang Cheng, Witty Liao, Sherry Ho Representative of Concord Industries Limited/ Walsin (China) Investment Co., Ltd.: Richard Wu USD 49,000 100.00% USD 49,000 100.00% Representative of Concord Industries Limited: Allen Yang USD 55,350 100.00% Representative of Concord Industries Limited: Sophi Pan Representative of Walsin Lihwa Corporation: David Wen, Sophi Pan USD 55,350 100.00% 44,739,988 100.00% Chin-Cherng Construction Co. General manager Wu-Shung Hong Fred Pan Director Supervisor Director Chairman Vice Chairman President Director Supervisor Nanjing Walsin Property Management Co., Ltd. General manager Director Representative of Walsin Lihwa Corporation: Yu-Cheng Chiao, Yu-Lon Chiao, Fred Pan, David Wen Richard Wu Representative of Chin-Cherng Construction Co.: Fred Pan, Sophi Pan, Patricia Chiao Jian-Hua Cao Fred Pan Wei-Hsiung Wang Representative of Joint Success Enterprises Limited: Jian-Hua Cao , Yu-Lon Chiao, Fred Pan Representative of Joint Success Enterprises Limited: Richard Wu Tzu-Yi Chiao Lin Chen Representative of Walsin (Nanjing) Construction Limited: Tzu-Yi Chiao, Fred Pan, Kiwi Lan 403,620 0.08% 0 0.00% 529,955,805 99.22% 0 22,175,438 0.00% 50.95% USD USD USD USD 0 0 0 0.00% 0.00% 0.00% 50,000 100.00% USD 50,000 100.00% RMB 0 0.00% RMB 0 0.00% RMB 1,000 100.00% Chairman General manager Director Supervisor Director Director Chairman General manager Director Supervisor Chairman General manager Director Director Supervisor Chairman General manager Director Supervisor Executive Director Supervisor Director Nanjing Taiwan Trade Mart Management Co., Ltd. Specialty Industries Concord Limited Walsin Steel Corp. Changshu Walsin Specialty Steel Co., Ltd. Yantai Walsin Stainless Steel Co., Ltd. Jiangyin Walsin Specialty Alloy Materials Co., Ltd. XiAn Walsin Metal Product Co., Ltd. Ace Result Global Limited Chin-Cherng Construction Co. Joint Success Enterprises Limited Walsin (Nanjing) Construction Limited Nanjing Walsin Property Management Co., Ltd. 426 Entity Title Name of the Representation Walsin Info-Electric Corp. Min Maw Precision Industry Corp. PT Walsin Research Innovation Indonesia Waltuo Green Resources Corporation Walsin Precision Technology Sdn. Bhd P.T. Walsin Lippo Industries P.T. Walsin Lippo Kabel Walsin Singapore Pte. Ltd. PT Walsin Nickel Industrial Indonesia Supervisor Chairman General manager Director Supervisor Chairman General manager Director Supervisor Chairman Director Supervisor Chairman General manager Director Supervisor Chairman General manager Director President Commissioner Vice President Commissioner President Director Vice President Director Director President Commissioner Vice President Commissioner President Director Vice President Director Director Director President Commissioner Commissioner President Director Director Director Director Representative of Walsin (Nanjing) Construction Limited: Richard Wu David Wen David Wen Representative of Walsin Lihwa Corporation: David Wen, C.C. Chen, Sherry Ho Richard Wu David Wen David Wen Representative of Walsin Lihwa Corporation: David Wen, Sophi Pan, Allen Yang Representative of Walsin Lihwa Corporation: Richard Wu Sherry Ho Representative of Walsin Lihwa Corporation: Sherry Ho, Tsun- Cheng Lin, Ardinand Roynald P Representative of Walsin Lihwa Corporation: Richard Wu David Wen Kuo-Hui Chen Representative of Walsin Lihwa Corporation: David Wen, Kuo-Hui Chen, Allen Yang Representative of Walsin Lihwa Corporation: Richard Wu Juei-Lung Chen Pang Boon Wah Representatives of Walsin Lihwa Corporation: Juei-Lung Chen, Pang Boon Wah, Josh Chia, Goh Lay Hong Representative of P.T. Multi Prima Sejahtera, Tbk,: Agus Arismunandar Shareholding (Contribution) Shares (Contribution) Sharelold ing RMB 1,000 100.00% 0 0 0.00% 0.00% 9,491,461 98.87% 0 0 0 0.00% 0.00% 0.00% 34,837,100 100.00% 34,837,100 100.00% 0 00.00% 13,930 99.50% 13,930 0 99.50% 0.00% 0 0.00% 1,828,287 100.00% 1,828,287 100.00% 0.00% 0 0 0.00% 32,178,385 100.00% 4,500 30.00% Representative of Walsin Lihwa Corporation: Yu-Lon Chiao 10,500 70.00% Representative of Walsin Lihwa Corporation: Wei-Chih Hu 10,500 70.00% Representative of P.T. Multi Prima Sejahtera, Tbk,: Herry Senjaya Representative of Walsin Lihwa Corporation: Sophi Pan, David Karman, Ardinand Roynald P, Andre Kelsen, Foe Representative of PT. MULTI USAHA WISESA: Agus Arismunandar 4,500 30.00% 10,500 70.00% 1,285,500 30.00% Representative of Walsin Lihwa Corporation: Yu-Lon Chiao 2,999,500 70.00% Representative of Walsin Lihwa Corporation: Wei-Chih Hu 2,999,500 70.00% Representative of PT. MULTI USAHA WISESA: Herry Senjaya 1,285,500 30.00% Representative of Walsin Lihwa Corporation: Sophi Pan, David Karman, Ardinand Roynald P, Andre Kelsen, Foe Representatives of Walsin Lihwa Corporation: C.C. Chen, Chen-Yang Chen, Wei-Hsiung Wang, Josh Chia, SUO SAW WAN 2,999,500 70.00% 733,000,000 100.00% Representative of Walsin Lihwa Corporation: Sherry Ho 500,000 50.00% Representative of Perlux Investment Pte. Ltd.: Hsiung-Feng Mei Representative of Walsin Lihwa Corporation: Josh Chia Representative of Perlux Investment Pte. Ltd.: Chi-Chun Lin Representative of Walsin Singapore Pte. Ltd.: Hueiping Lo Representative of Walsin Lihwa Corporation: C.C. Chen, Ardinand Roynald P. 80,000 8.00% 500,000 50.00% 80,000 420,000 8.00% 42.00% 500,000 50.00% 427 Special Disclosures Entity Title Name of the Representation Shareholding (Contribution) Shares (Contribution) Sharelold PT Sunny Metal Industry PT Walhsu Metal Industry Walsin Lihwa Europe S.a r.l. MEG S.A. Cogne Acciai Speciali S.p.A. Cogne France Société par Actions Simplifiée Cogne Edelstahl Gmbh COGNE SG PTE. LTD. Cogne Hong Kong Limited Cogne U.K. LIMITED Cogne Stainless Bars SA Aosta Servizi Generali S.r.l. Cogne Mexico Sociedad Anonima de Capital Variable Metalinox Cogne Acos Inoxidaveis Especiais Ltda Cogne Specialty Steel USA, INC. Cogne Çelik Sanayi ve Ticaret Limited Ş irketi DongGuan Cogne Steel Products Co.,Ltd Special Melted Products Limited Chairman Director Director Supervising Officer Supervisor Chairman Director Director Supervising Officer Supervisor Director Director Director Director Director President Walsin Singapore Pte. Ltd. Representative: Josh Chia Walsin Singapore Pte. Ltd. Representative: C.C. Chen, Sherry Ho Berg Holding Limited Representative: Xiang Binghe, Ye Changqing Berg Holding Limited Representative: Chi-Chun Lin Walsin Singapore Pte. Ltd. Representative: Richard Wu PT Sunny Metal Industry: Josh Chia PT Sunny Metal Industry: C.C. Chen, Sherry Ho PT Sunny Metal Industry: Xiang Binghe, Ye Changqing PT Sunny Metal Industry: Chi-Chun Lin PT Sunny Metal Industry: Richard Wu Walsin Lihwa Corporation Representative: C.C. Chen, Sherry Ho, Hueiping Lo Walsin Lihwa Europe S.a r.l. Representative: Sherry Ho, Wei- Hsiung Wang Eugenio Marzorati MEG S.A. Representative: Yu-Lon Chiao, Kevin Niu, Sherry Ho, Tzu-Chien Chiao, Ono Motoo, Massimiliano Burelli REM HOLDING S.A. Representative: Eugenio Marzorati, Roberto Marzorati, Monica Pirovano HESPEL Davi Supervisor Monica Pirovano CEO Director Supervisor Director Director Director Director President Director Bernd Grotenburg Bernd Grotenburg , Ralf Schmitz , Roberto Marzorati Eugenio Marzorati, Monica Pirovano, Emilio Giacomazzi Sidhu Kamaljit Singh, Monica Pirovano; Giacomazzi Emilio Monica Pirovano Eugenio Marzorati, Monica Pirovano, Jonathan Smit Margherita Marzorati Francesco Turcato Francesco Turcato,Alessandra Perlo 50,100 ing 50.10% 50,100 50.10% 49,900 49.90% 49,900 49.90% 50,100 9,490,500 9,490,500 9,490,500 50.10% 99.90% 99.90% 99.90% 9,490,500 99.90% 9,490,500 99.90% 12,000 100.00% 8,277 90.21% 470 5.12% 314,705,934 77.60% 90,857,233 22.40% 0 0 0 0 0 0 0 0 0 0 0 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% Director Sergio Ramos Vazquez 500 100.00% Director Gilberto Sanches Gonzales CEO President Director Jean Paul Betemps Giulio Girivetto Monica Pirovano Director Monica Pirovano Chairman President Vice Chairman Vice President Director Supervisor Director Supervisor Monica Pirovano Monica Pirovano Roberto Marzorati Roberto Marzorati Emillio Giacomzzi Eugenio Marzorati Massimiliano Burelli, Monica Pirovano, Andy Richardson, Victoria Brown Steve Hall 0 0.00% 0 0 0 0.00% 0.00% 0.00% 0 0.00% 0 0 0 0 0 0 0 0 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 428 Entity Title Name of the Representation Degerfors Long Products AB Walsin Energy Cable System Co., Ltd. Walsin America, LLC Borrego Energy Holdings, LLC Borrego Energy, LLC Cleanleaf Energy Holdings, Inc. Director Chairman Director Director Supervisor Director Director Director Director NA Director Director Director Monica Pirovano, Emilio Giacomazzi, Sherry Ho, Sara Randstroem, Mikael Lija, Ann-Sofie Larsson Yu-Lon Chiao Representative of Walsin Lihwa Corporation: Yu-Lon Chiao, Sherry Ho, Wei-Hsiung Wang, Jin-Renn Leu Representative of NKT HV Cables AB: Michael Francis Yong Montejo Huai-Yu Wang Walsin Lihwa CorporationRepresentative: Hueiping Lo, Tzu- Wei Chiao, Sophie Pan Walsin America, LLCRepresentative: Yu-Lon Chiao, Wei- Hsiung Wang, Sophie Pan Michael Adam Hall Aaron Stephen Hall BE, LLC is member-managed (it does not have directors) Borrego Energy Holdings, LLC：Yi-Fang Wu Andrew Hall Mikael Backman (6) Operating Condition of the Affiliated Companies Shareholding (Contribution) Shares (Contribution) Sharelold ing 0 0.00% 0 0.00% 270,000,000 90.00% 30,000,000 10.00% 0 0.00% USD81,652 100.00% USD 1,460 72.55% NA USD 123 USD 154 6.09% 7.66% NA 100 shares 100.00% 0.00% 0.00% 0 shares 0 shares Entity Capital Stock Total Assets Total Liabilities Net Worth Sales Operating Income (loss) Unit: NT$ thousands Earnings (Loss) Per Share (NT$) Net Income (loss) Concord Industries Limited (Note 2) 9,134,676 29,288,465 25,386,632 3,901,833 20,728,108 -945,920 -1,147,159 Walsin Lihwa Corporation Walsin Lihwa Holdings Limited (Note 1) Subsidiaries of Walsin Lihwa Holdings Limited Walsin (China) Investment Co., Ltd. Shanghai Walsin Lihwa Power Wire & Cable Co., Ltd. Dongguan Walsin Wire & Cable Co., Ltd. Jiangyin Walsin Steel Cable Co., Limited Walsin International Investments Limited Nanjing Taiwan Trade Mart Management Co., Ltd. Walcom Chemicals Industrial Limited Subsidiaries of Concord Industries Limited Jiangyin Walsin Specialty Alloy Materials Co., Ltd. Walsin Specialty Steel Corp Changshu Walsin Specialty Steel Co., Ltd. Yantai Walsin Stainless Steel Co., Ltd. XiAn Walsin Metal Product Co., Ltd. Borrego Energy Holdings, LLC Borrego Energy, LLC Cleanleaf Energy Holdings, Inc. Walsin America, LLC (Note 3) Subsidiary of Walsin America, LLC. Ace Result Limited P.T Walsin Lippo Kabel Walsin Singapore Pte. Ltd.(Note 4) Subsidiary of Walsin PT Sunny Metal Industry PT Walhsu Metal Industry 40,313,329 202,865,082 62,054,767 140,810,315 83,321,352 20,838,965 10,995,096 3,112,737 23,951,702 83,825 4,041,947 -377,222 5,134,316 281,243 2,413,413 20,398,163 16,370,967 4,027,196 35,796 -83,858 -208,895 1.32 N/A N/A 479,827 1,638,387 397,364 1,241,023 2,841,247 6,133 36,375 N/A 798,330 2,137,048 710,437 1,426,611 6,966,982 -80,388 -34,993 N/A 614,100 1,687,913 959,662 728,251 1,159,827 -184,319 -101,194 N/A 14,938,706 16,698,486 198,988 16,499,498 0 -30,842 506,162 N/A 30,705 4,049 522,409 -518,360 1,877 -2,813 -8,336 N/A 1,965 1 68,701 -68,700 0 0 0 N/A N/A N/A N/A N/A 1,504,545 3,184,351 2,005,473 1,178,878 2,014,743 14,359 -588,722 2,545,230 1,345,602 650 1,344,952 0 -71 272,968 2,978,385 3,391,424 2,091,207 1,300,217 4,427,943 374,025 273,984 10,288,171 23,387,194 20,782,274 2,604,920 16,525,301 -1,339,805 -1,452,987 N/A 1,699,522 2,496,378 1,940,832 1,940,832 819 792,027 -791,208 0 -905 -11,931 1,780,176 0 1,773,961 2,298,073 524,112 2,298,073 -517,897 -524,112 -524,112 5,037,005 0 5,037,005 -177,897 0 -173,345 -372,662 -507,325 -507,325 0 0 0 0 0 0 0 1,373,742 131,571 22,506,765 3,070,500 291,698 2,705,878 18,465 0 1,647 44,965,354 10,676,712 20,209,877 15,398,865 2,494,474 2,786,878 2,705,878 16,818 0 0 34,288,642 31,605,016 4,811,012 22,898,502 0 292,404 -498 -2,288 1,851,825 2,851,152 -436 239,169 -823 1,828,397 1,792,975 717 N/A N/A N/A N/A N/A N/A (0.67) N/A N/A N/A 429 Earnings (Loss) Per Share (NT$) N/A -0.21 0.15 N/A N/A N/A Special Disclosures Entity Capital Stock Total Assets Total Liabilities Net Worth Sales Operating Income (loss) Net Income (loss) PT Walsin Research Innovation Indonesia Singapore Pte. Ltd. Walsin Energy Cable System Co., Ltd. Walsin Info-Electric Corp. P.T. Walsin Lippo Industries Chin-Cherng Construction Co. (Note 5) Subsidiaries of Chin- Cherng Construction Co. Joint Success Enterprises Limited Walsin (Nanjing) Development Limited Nanjing Walsin Property Management Co., Ltd. Min Maw Precision Industry Corp. Waltuo Green Resources Corp. PT Walsin Nickel Industrial Indonesia Walsin Precision Technology Sdn. Bhd. Walsin Lihwa Europe S.a r.l. (Note 6) Subsidiaries of Walsin Lihwa Europe S.a r.l. MEG S.A. Cogne Acciai Speciali S.p.A. (Note 7) 42,987 46,413 9,911 36,502 4,038 -5,718 -5,663 3,000,000 300,000 460,575 5,340,994 4,554,488 350,133 1,540,961 1,601,279 171 139,953 20,078,921 10,393,794 2,953,209 349,962 1,401,008 9,685,127 0 0 986,055 1,309,421 -55,486 -566 99,070 -432,587 -45,479 4,645 95,216 -179,331 1,336,282 8,579,310 57,711 8,521,599 0 -1,413 -388,159 1,535,250 18,920,470 10,343,544 8,576,926 1,197,711 -558,534 -547,393 N/A 4,335 38,679 60,438 -21,759 160,895 -3,886 -3,961 348,371 18,283 3,070,500 260,071 408 3,126 729,532 16,374 15,675,087 605,089 316,419 7,122 727,401 53,173 34,429,281 19,220,979 2,159 14,215,395 413,113 9,252 56,570 12,309 14,947,685 17,654,006 636,456 15,208,302 27,672,463 0 14,213,236 551,917 37,069 -10,532 2,995,395 9,771 200,275 -3,066 24,677 -8,409 2,855,856 13,211 639,873 906,305 N/A -4.60 N/A N/A N/A N/A N/A 13,781,031 34,476,966 16,094,145 18,382,821 27,672,463 227,664 1,105,020 N/A Note 1: The assets, liabilities and net income/loss of Walsin Lihwa Holdings Limited include its subsidiaries’. Note 2: The assets, liabilities and net income/loss of Concord Industries Limited include its subsidiaries’. Note 3: The assets, liabilities and net income/loss of Walsin America, LLC include its subsidiaries’. Note 4: The assets, liabilities and net income/loss of Walsin Singapore Pte. Ltd. include its subsidiaries’. Note 5: The assets, liabilities and net income/loss of Chin-Cherng Construction Co. include its subsidiaries’. Note 6: The assets, liabilities and net income/loss of Walsin Lihwa Europe S.A.R.L. include its subsidiaries’. Note 7: The assets, liabilities and net income/loss of Cogne Acciai Speciali S.p.A. include its subsidiaries’. Note 8: The currency exchange rates were as follows: 2023/12/31 US$/NT$=1: 30.705 (exchange rate for profit/loss entries: US$/NT$ =1:31.154) 2023/12/31 RMB/NT$=1: 4.33524 (exchange rate for profit/loss entries: RMB/NT$=1:4.41546) 2023/12/31 EUR/NT$=1: 33.98 (exchange rate for profit/loss entries: RMB/NT$=1:33.69722) 2023/12/31 HKD/NT$=1:3.929 2. 3. Progress of private placement of securities during the latest year and up to the date of annual report publication: None The subsidiaries’ shareholding or disposal of the company’s shares during the latest year and up to the date of annual report publication: None 4. Other supplemental information: None 5. Corporate events with material impact on shareholders' equity or stock prices set forth in Subparagraph 2, Paragraph 2, Article 36 of the Securities and Exchange Act during the most recent year and up to the annual report publication date: None. 430 Walsin Lihwa Corporation Yu-Lon Chiao

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