Interim report
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Aero Win Technology Corporation Financial Statements for the Years Ended December 31, 2024 and 2023 and Independent Auditors’ Report
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- 1 - INDEPENDENT AUDITORS’ REPORT The Board of Directors and Shareholders Aero Win Technology Corporation Opinion We have audited the accompanying financial statements of Aero Win Technology Corporation (the “Company”), which comprise the balance sheets as of December 31, 202 4 and 2023, and the statements of comprehensive income, changes in equity and cash flows for the years then ended, and notes to the financial statements, including material accounting policy information (collectively referred to as the “financial statements”). In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and its financial performance and its cash flows for the years then ended in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers, and International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), IFRIC Interpretations (I FRIC), 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. 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 financial statements for the year ended December 31, 202 4. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
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- 2 - The key audit matter of the Company’s financial statements for the year ended December 31, 202 4 is stated as follows: Revenue Recognition from the Main Export Customers For the year ended December 31, 2024, the sales revenue from the Company’s main export customers amounted to NT$438,437 thousand, accounting for 53% of the Company’s sales revenue, which has a significant impact on the financial statements. Moreover, the authenticity of the revenue is presumed to be a significant risk in the auditing standards; therefore, we identified revenue recognition from the main export customers as a key audit matter. Refer to Note 4 to the financial report for the information on the revenue recognition policy. The main audit procedures performed in respect of the above-mentioned key audit matter are as follows: 1. We obtained an understanding of and evaluated the effectiveness of the design and implementation of the internal controls related to the revenue recognition. 2. We selected samples from the sales details of the main export customers for this period, checked the shipping documents and confirmed that the Company’s performance obligation has been satisfied and the control of the goods had indeed been transferred. 3. We performed cash receipt testing and confirmed the authenticity of sales transactions. Responsibilities of Management and Those Charged with Governance for the Financial Statements Management is responsible for the preparation and fair presentation of the financial statements in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers, and IFRS, IAS, IFRIC, and 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 financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, management is responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so. Those charged with governance, including the audit committee, are responsible for overseeing the Company’s financial reporting process. Auditors’ Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an 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 financial statements.
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- 3 - 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 financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. 2. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control. 3. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. 4. Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’ report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors’ report. However, future events or conditions may cause the Company to cease to continue as a going concern. 5. Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards. From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements for the year ended December 31, 2024 , 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.
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- 4 - The engagement partners on the audit s resulting in this independent auditors’ report are T eng-Wei Wang and Hung-Ju Liao. Deloitte & Touche Taipei, Taiwan Republic of China February 21, 2025 Notice to Readers The accompanying 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 financial statements are those generally applied in the Republic of China. For the convenience of readers, the independent auditors’ report and the accompanying 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 financial statements shall prevail.
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- 5 - AERO WIN TECHNOLOGY CORPORATION BALANCE SHEETS DECEMBER 31, 2024 AND 2023 (In Thousands of New Taiwan Dollars) December 31, 2024 December 31, 2023 ASSETS Amount % Amount % CURRENT ASSETS Cash and cash equivalents (Notes 4 and 6) $ 222,419 10 $ 248,464 17 Accounts receivable, net (Notes 4, 7 and 19) 121,413 6 136,557 9 Other receivables (Notes 4 and 7) 7,978 - 6,953 1 Current tax assets (Note 21) 89 - 1,019 - Inventories (Notes 4, 8 and 27) 714,076 34 545,132 36 Prepayments (Note 9) 5,236 - 8,643 - Other current assets (Note 13) 22,685 1 21,411 1 Total current assets 1,093,896 51 968,179 64 NON-CURRENT ASSETS Property, plant and equipment (Notes 4, 10, 26 and 27) 958,274 45 496,607 33 Right-of-use assets (Notes 4 and 11) 2,591 - 2,097 - Intangible assets (Notes 4 and 12) 7,951 1 10,030 1 Deferred tax assets (Notes 4 and 21) 21,355 1 9,428 - Other non-current assets (Notes 4, 13 and 26) 48,148 2 29,938 2 Total non-current assets 1,038,319 49 548,100 36 TOTAL $ 2,132,215 100 $ 1,516,279 100 LIABILITIES AND EQUITY CURRENT LIABILITIES Short-term borrowings (Note 14) $ 100,000 5 $ 108,442 7 Notes payable (Note 15) 37 - 102 - Accounts payable (Note 15) 127,056 6 83,859 6 Other payables (Note 16) 99,386 5 83,740 6 Lease liabilities - current (Notes 4 and 11) 1,187 - 1,175 - Current portion of long-term borrowings (Notes 14 and 26) 118,414 5 65,605 4 Other current liabilities (Notes 16 and 19) 5,444 - 876 - Total current liabilities 451,524 21 343,799 23 NON-CURRENT LIABILITIES Long-term borrowings (Notes 14 and 26) 760,448 36 335,106 22 Deferred tax liabilities (Notes 4 and 21) 1,304 - - - Lease liabilities - non-current (Notes 4 and 11) 1,419 - 933 - Net defined benefit liabilities - non-current (Notes 4 and 17) 5,551 - 6,130 - Guarantee deposits received - - 30 - Total non-current liabilities 768,722 36 342,199 22 Total liabilities 1,220,246 57 685,998 45 EQUITY ATTRIBUTABLE TO OWNERS OF THE COMPANY (Note 18) Ordinary shares capital 685,735 32 685,735 45 Capital surplus 53,264 2 53,264 4 Retained earnings Legal reserve 59,651 3 56,137 4 Unappropriated earnings 113,319 6 35,145 2 Total retained earnings 172,970 9 91,282 6 Total equity attributable to owners of the Company 911,969 43 830,281 55 TOTAL $ 2,132,215 100 $ 1,516,279 100 The accompanying notes are an integral part of the financial statements.
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- 6 - AERO WIN TECHNOLOGY CORPORATION STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2024 AND 2023 (In Thousands of New Taiwan Dollars, Except Earnings Per Share) 2024 2023 Amount % Amount % OPERATING REVENUE (Notes 4 and 19) $ 824,132 100 $ 683,831 100 OPERATING COSTS (Notes 8 and 20) 638,880 78 550,091 80 GROSS PROFIT 185,252 22 133,740 20 OPERATING EXPENSES (Notes 7 and 20) Selling and marketing expenses 23,479 3 20,300 3 General and administrative expenses 39,491 4 31,397 5 Research and development expenses 52,736 6 45,078 7 Expected credit loss (gain) 40 - (23) - Total operating expenses 115,746 13 96,752 15 OTHER INCOME AND EXPENSES (Note 20) 3,000 - - - PROFIT FROM OPERATIONS 72,506 9 36,988 5 NON-OPERATING INCOME AND EXPENSES (Notes 4 and 20) Interest income 8,016 1 9,803 2 Other income 120 - 120 - Other gains and losses 32,631 3 22,043 3 Finance costs (10,746) (1) (8,328) (1) Total non-operating income and expenses 30,021 3 23,638 4 PROFIT BEFORE INCOME TAX FOR THE YEAR 102,527 12 60,626 9 INCOME TAX EXPENSE (Notes 4 and 21) 439 - - - NET PROFIT FOR THE YEAR 102,088 12 60,626 9 OTHER COMPREHENSIVE INCOME (LOSS) Items that will not be reclassified subsequently to profit or loss: Remeasurement of defined benefit plans (Note 17) 172 - (593) - Other comprehensive income (loss) for the year, net of income tax 172 - (593) - TOTAL COMPREHENSIVE INCOME FOR THE YEAR $ 102,260 12 $ 60,033 9 EARNINGS PER SHARE (Note 22) Basic $ 1.49 $ 0.88 Diluted 1.48 0.88 The accompanying notes are an integral part of the financial statements.
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- 7 - AERO WIN TECHNOLOGY CORPORATION STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31, 2024 AND 2023 (In Thousands of New Taiwan Dollars) Retained Earnings Ordinary Share Capital Capital Surplus Legal Reserve Unappropriated Earnings (Accumulated Deficit) Total Equity BALANCE AT JANUARY 1, 2023 $ 685,735 $ 53,264 $ 56,137 $ (24,888 ) $ 770,248 Net profit for the year ended December 31, 2023 - - - 60,626 60,626 Other comprehensive loss for the year ended December 31, 2023, net of income tax - - - (593 ) (593 ) Total comprehensive income for the year ended December 31, 2023 - - - 60,033 60,033 BALANCE AT DECEMBER 31, 2023 685,735 53,264 56,137 35,145 830,281 Appropriation of 2023 earnings (Note 18) Legal reserve - - 3,514 (3,514 ) - Cash dividends distributed to the shareholder held ordinary shares - - - (20,572 ) (20,572 ) Net profit for the year ended December 31, 2024 - - - 102,088 102,088 Other comprehensive income for the year ended December 31, 2024, net of income tax - - - 172 172 Total comprehensive income for the year ended December 31, 2024 - - - 102,260 102,260 BALANCE AT DECEMBER 31, 2024 $ 685,735 $ 53,264 $ 59,651 $ 113,319 $ 911,969 The accompanying notes are an integral part of the financial statements.
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- 8 - AERO WIN TECHNOLOGY CORPORATION STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2024 AND 2023 (In Thousands of New Taiwan Dollars) 2024 2023 CASH FLOWS FROM OPERATING ACTIVITIES Income before income tax $ 102,527 $ 60,626 Adjustments for: Depreciation expense 66,369 55,065 Amortization expense 5,674 5,601 Expected credit loss (gain) 40 (23) Finance costs 10,746 8,328 Interest income (8,016) (9,803) Gain on disposal of property, plant and equipment (3,000) - Write-downs of inventories 35,175 14,634 Net loss on foreign currency exchange 1,974 4,063 Changes in operating assets and liabilities Accounts receivable 13,155 (83,576) Other receivables (1,236) (2,982) Inventories (204,119) (192,222) Prepayments 2,674 (4,348) Other current assets (1,274) (6,757) Notes payable (65) 79 Accounts payable 43,192 40,484 Other payables 25,126 12,515 Other current liabilities 4,568 101 Net defined benefit liabilities (407) (499) Cash generated from (used in) operations 93,103 (98,714) Interest received 8,227 9,526 Interest paid (10,525) (8,272) Income tax paid (10,132) (1,019) Net cash generated from (used in) operating activities 80,673 (98,479) CASH FLOWS FROM INVESTING ACTIVITIES Purchase of financial assets at amortized cost - (15,930) Proceeds from sale of financial assets at amortized cost - 15,930 Payment for property, plant and equipment (555,996) (75,967) Proceeds from disposal of property, plant and equipment 3,000 - Increase in refundable deposits (971) (739) Decrease in refundable deposits 777 302 Payment for intangible assets (2,306) (1,888) Increase in other non-current assets 1,062 723 Net cash used in investing activities (554,434) (77,569) CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from short-term borrowings 750,835 308,442 Repayments of short-term borrowings (759,277) (260,000) Proceeds from long-term borrowings 763,860 274,700 Repayments of long-term borrowings (285,709) (279,282) Proceeds from guarantee deposits received - 30 (Continued)
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- 9 - AERO WIN TECHNOLOGY CORPORATION STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2024 AND 2023 (In Thousands of New Taiwan Dollars) 2024 2023 Refund of guarantee deposits received $ (30) $ (30) Repayment of the principal portion of lease liabilities (1,391) (1,129) Dividends paid to owners of the Company (20,572) - Net cash generated from financing activities 447,716 $ 42,731 NET DECREASE IN CASH AND CASH EQUIVALENTS (26,045) (133,317) CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR 248,464 381,781 CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR $ 222,419 $ 248,464 The accompanying notes are an integral part of the financial statements.
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- 10 - AERO WIN TECHNOLOGY CORPORATION NOTES TO FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2024 AND 2023 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise) 1. GENERAL INFORMATION Aero Win Technology Corporation. (the “Company”) was established in October 1974. The Company is primarily engaged in the manufacturing, repairing, and trading of various types of aviation and engine accessories and hardware tools, as well as the trading of various types of aviation alloy material and hardware. Additionally, the Company acts as an agent for domestic and foreign manufacturers in distribution, bidding, quoting, and various import and export trade activities. The Company obtained approval for public issuance of its shares in January 2000, later approved by Taipei Exchange (TPEx) Mainboard for trading on emerging stock market in October 2013, and has been listed on Taiwan Stock Exchange (TWSE) since January 27, 2015. The financial statements are presented in the Company’s functional currency, the New Taiwan dollar. 2. APPROVAL OF FINANCIAL STATEMENTS The financial statements were approved by the Company’s board of directors and authorized for issue on February 21, 2025. 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) The initial application of the IFRS Accounting Standards endorsed and issued into effect by the FSC did not have any material impact on the Company’s accounting policies. b. The IFRS Accounting Standards endorsed by the FSC for application starting from 2025 New, Amended and Revised Standards and Interpretations Effective Date Announced by IASB Amendments to IAS 21 “Lack of Exchangeability” January 1, 2025 (Note) Note: An entity shall apply those amendments for annual reporting periods beginning on or after January 1, 2025. Upon initial application of the amendments to IAS 21, the Company shall not restate the comparative information and shall recognize any effect of initially applying the amendments as an adjustment to the opening balance of retained earnings or, if applicable, to the cumulative amount of translation differences in equity as well as affected assets or liabilities. As of the date the 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.
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- 11 - 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) Annual Improvements to IFRS Accounting Standards - Volume 11 January 1, 2026 Amendments to IFRS 9 and IFRS 7 “Amendments to the Classification and Measurement of Financial Instruments” January 1, 2026 Amendments to IFRS 9 and IFRS 7 “Contracts Referencing Nature-dependent Electricity” January 1, 2026 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” January 1, 2023 Amendments to IFRS 17 January 1, 2023 Amendments to IFRS 17 “Initial Application of IFRS 17 and IFRS 9 - Comparative Information” January 1, 2023 IFRS 18 “Presentation and Disclosure in Financial Statements” January 1, 2027 IFRS 19 “Subsidiaries without Public Accountability: Disclosures” January 1, 2027 Note: Unless stated otherwise, the above IFRS Accounting Standards are effective for annual reporting periods beginning on or after their respective effective dates. IFRS 18 “Presentation and Disclosure in Financial Statements” IFRS 18 will supersede IAS 1 “Presentation of Financial Statements”. The main changes comprise: Items of income and expenses included in the statement of profit or loss shall be classified into the operating, investing, financing, income taxes and discontinued operations categories. The statement of profit or loss shall present totals and subtotals for operating profit or loss, profit or loss before financing and income taxes and profit or loss. Provides guidance to enhance the requirements of aggregation and disaggregation: The Company shall identify the assets, liabilities, equity, income, expenses and cash flows that arise from individual transactions or other events and shall classify and aggregate them into groups based on shared characteristics, so as to result in the presentation in the primary financial statements of line items that have at least one similar characteristic. The Company shall disaggregate items with dissimilar characteristics in the primary financial statements and in the notes. The Company labels items as “other” only if it cannot find a more informative label. Disclosures on Management -defined Performance Measures (MPMs): When in public communications outside financial statements and communicating to users of financial statements management’s view of an aspect of the financial performance of the Company as a whole, the Company shall disclose related information about its MPMs in a single note to the financial statements, including the description of such measures, calculations, reconciliations to the subtotal or total specified by IFRS Accounting Standards and the income tax and non -controlling interests effects of related reconciliation items. Except for the above impact, as of the date the financial statements were authorized for issue, the Company is continuously assessing the other impacts of the above amended standards and interpretations on the Company’s financial position and financial performance and will disclose the relevant impact when the assessment is completed.
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- 12 - 4. SUMMARY OF MATERIAL ACCOUNTING POLICY INFORMATION a. Statement of compliance The financial statements have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and IFRS Accounting Standards as endorsed and issued into effect by the FSC. b. Basis of preparation The financial statements have been prepared on the historical cost basis except for 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 the asset or liability. c. Classification of current and non-current assets and liabilities Current assets include: 1) Assets held primarily for the purpose of trading; 2) Assets expected to be realized within 12 months after the reporting period; and 3) 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: 1) Liabilities held primarily for the purpose of trading; 2) Liabilities due to be settled within 12 months after the reporting period; and 3) Liabilities for which the Company does not have the substantial right at the end of the reporting period to defer settlement for at least 12 months after the reporting period. Assets and liabilities that are not classified as current are classified as non-current. d. Foreign currencies In preparing the Company’s financial statements, transactions in currencies other than the Company’s functional currency (i.e., 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.
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- 13 - 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, work in progress, finished goods, and inventory in transit 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. f. 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. g. Intangible asset 1) Intangible assets acquired separately 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. 2) Derecognition of intangible assets 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. h. Impairment of property, plant and equipment, right-of-use assets and intangible assets At the end of each reporting period, the Company reviews the carrying amounts of its property, plant and equipment, right -of-use assets and intangible assets, 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. 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
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- 14 - amount of the asset or cash -generating unit is reduced to its recoverable amount, with the resulting impairment loss recognized in profit or loss. When an impairment loss is subsequently reversed, the carrying amount of the corresponding asset or cash-generating unit 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 or cash-generating unit in prior years. A reversal of an impairment loss is recognized in profit or loss. i. Financial instruments Financial assets and financial liabilities are recognized when the Company 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. 1) Financial assets All regular way purchases or sales of financial assets are recognized and derecognized on a trade date basis. a) Measurement categories The type of the financial assets held by the Company is financial assets at amortized cost. 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, accounts receivable at amortized cost , other recei vables, and refundable deposits (recognized as other non-current assets), 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 asset, 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
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- 15 - interest rate to the amortized cost of such financial assets in subsequent reporting periods. A financial asset is credit impaired when one or more of the following events have occurred: i. Significant financial difficulty of the issuer or the borrower; ii. Breach of contract, such as a default; iii. It is becoming probable that the borrower will enter bankruptcy or undergo a financial reorganization; or iv. The disappearance of an active market for that financial asset because of financial difficulties. Cash equivalents include time deposits with original maturities within 3 months from the date of acquisition, 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. b) Impairment of financial assets The Company recognizes a loss allowance for expected credit loss on financial assets at amortized cost (including accounts receivable) at the end of each reporting period. The Company always recognizes lifetime expected credit losses (ECLs) for accounts receivable. 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 represent 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 the following situations as indication 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 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.
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- 16 - 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. 2) Financial liabilities a) Subsequent measurement All financial liabilities are measured at amortized cost using the effective interest method. b) 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. j. Revenue recognition The Company identifies contracts with customers, allocates the transaction price to the performance obligations and recognizes revenue when performance obligations are satisfied. Revenue from the sale of goods Revenue from the sale of goods comes from sales of aerospace equipment. Sales of the aforementioned goods are recognized as revenue when the goods are shipped or delivered to the customer’s specific location pursuant to its trading terms because it is the time when the customer has full discretion over the manner of distribution and price to sell the goods, has the primary responsibility for sales to future customers and bears the risks of obsolescence. Accounts receivable are recognized concurrently. The Company does not recognize revenue on materials delivered to subcontractors because this delivery does not involve a transfer of control. k. Leases 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 a lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating 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 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
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- 17 - 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 presented on a separate line in the balance sheets. 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. 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. l. Borrowing costs Borrowing costs directly attributable to an acquisition, construction or production of qualifying assets are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale. Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalization. Other than those stated above, all other borrowing costs are recognized in profit or loss in the period in which they are incurred. m. 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 related to income are recognized as a reduction of the related costs / in other income 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. n. 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 services. 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,
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- 18 - 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. Net defined benefit liabilities (assets) represent the actual deficit (surplus) in the Company’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. o. 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. Deferred tax liabilities are generally recognized for all taxable temporary differences. Deferred tax assets are generally recognized for all deductible temporary differences, unused loss carryforwards and unused tax credits for purchases of machinery and equipment to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilized. 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 assets 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 Company expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities. 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.
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- 19 - 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, estimations, 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 Company considers the possible impact on the cash flow projection, growth rates, discount rates, profit abilities and other relevant material estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Material accounting judgments on write-down of inventories The net realizable value of inventories is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale. The estimation of net realizable value is based on current market conditions and historical experience in the sale of product of a similar nature. Changes in market conditions may have a material impact on the estimation of the net realizable value. 6. CASH AND CASH EQUIVALENTS December 31 2024 2023 Cash on hand and petty cash $ 50 $ 50 Checking accounts and demand deposits 140,406 94,889 Cash equivalents (investments with original maturities of 3 months or less) Time deposits 81,963 153,525 $ 222,419 $ 248,464 The market rate intervals of time deposits at the end of the year were as follows: December 31 2024 2023 Time deposits 4.65%-4.78% 5.12%-5.45% 7. ACCOUNTS RECEIVABLE AND OTHER RECEIVABLES December 31 2024 2023 Accounts receivable At amortized cost Gross carrying amount $ 121,527 $ 136,631 Less: Allowance for impairment loss 114 74 $ 121,413 $ 136,557 (Continued)
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- 20 - December 31 2024 2023 Other receivables Business tax refund receivable $ 7,808 $ 6,572 Others 170 381 $ 7,978 $ 6,953 (Concluded) The average credit period of the sale of goods is 30 -120 days. No interest was charged on accounts receivable. The Company adopted a policy of only dealing with creditworthy counterparties, continuously monitoring credit risks and the credit ratings of counterparties, and distributing the transaction amount to customers with qualified credit ratings. The Company measures the loss allowance for accounts receivable at an amount equal to lifetime ECLs. The expected credit losses on accounts receivable are estimated using a provision matrix prepared by reference to the past default experience of the customer, the customer’s current financial position, economic condition of the industry in which the customer operates, as well as the GDP forecasts and industry outlook. As the Company’s historical credit loss experience does not show significantly different loss patterns for different customer segments, the provision for loss allowance based on past due status is not further distinguished according to the Company’s different customer base. The following tables detail the loss allowance of accounts receivable based on the Company’s provision matrix. December 31, 2024 Not Past Due 1 to 30 Days Past Due 31 to 180 Days Past Due 181 to 360 Days Past Due Over 361 Days Past Due Total Expected credit loss rate - 0.5% 1% 30% 50% Gross carrying amount $ 99,069 $ 22,123 $ 335 $ - $ - $ 121,527 Loss allowance (Lifetime ECLs) - (111) (3) - - (114) Amortized cost $ 99,069 $ 22,012 $ 332 $ - $ - $ 121,413 December 31, 2023 Not Past Due 1 to 30 Days Past Due 31 to 180 Days Past Due 181 to 360 Days Past Due Over 361 Days Past Due Total Expected credit loss rate - 0.5% 1% 30% 50% Gross carrying amount $ 123,244 $ 12,390 $ 990 $ 7 $ - $ 136,631 Loss allowance (Lifetime ECLs) - (62) (10) (2) - (74) Amortized cost $ 123,244 $ 12,328 $ 980 $ 5 $ - $ 136,557
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- 21 - The movements of the loss allowance of accounts receivable were as follows: For the Year Ended December 31 2024 2023 Balance at January 1 $ 74 $ 97 Add: Net remeasurement of loss allowance 40 - Less: Net remeasurement of loss allowance - (23) Balance at December 31 $ 114 $ 74 8. INVENTORIES December 31 2024 2023 Finished goods $ 176,723 $ 102,220 Work in progress 195,404 200,013 Raw materials 226,418 202,377 Inventory in transit 115,531 40,522 $ 714,076 $ 545,132 The nature of the cost of goods sold is as follows: For the Year Ended December 31 2024 2023 Cost of inventories sold $ 611,799 $ 543,148 Inventory write-downs 35,175 14,634 Revenue from sale of scraps (8,094) (7,691) $ 638,880 $ 550,091 9. PREPAYMENTS December 31 2024 2023 Prepaid insurance $ 2,544 $ 2,609 Prepaid system maintenance fee 711 702 Prepayment for imported commodity tax 653 1,294 Prepayment for purchases - 3,111 Others 1,328 927 $ 5,236 $ 8,643 10. PROPERTY, PLANT AND EQUIPMENT Details of the two-period changes in property, plant and equipment are set out in Table 1.
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- 22 - Property, plant and equipment are depreciated on a straight -line basis over their estimated useful lives as follows: Buildings Main buildings 15-40 years Wall and partition work 3-15 years Machinery and equipment 2-15 years Model equipment 2-10 years Transportation equipment 3-5 years Office equipment 2-5 years Other equipment 2-15 years Property, plant and equipment pledged as collateral for bank borrowings are set out in Note 26. 11. LEASE ARRANGEMENTS a. Right-of-use assets December 31 2024 2023 Carrying amount Buildings $ 972 $ 192 Transportation equipment 1,619 1,905 $ 2,591 $ 2,097 For the Year Ended December 31 2024 2023 Additions to right-of-use assets $ 1,855 $ 1,516 Depreciation charge for right-of-use assets Buildings $ 358 $ 337 Transportation equipment 1,003 795 $ 1,361 $ 1,132 Except for the above -mentioned additions and recognized depreciation expenses, the Company's right-of-use assets did not undergo significant sublease or impairment from January 1 to December 31, 2024 and 2023. b. Lease liabilities December 31 2024 2023 Carrying amount Current $ 1,187 $ 1,175 Non-current $ 1,419 $ 933
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- 23 - Ranges of discount rates for lease liabilities were as follows: December 31 2024 2023 Buildings 1.8792%-1.9908% 1.2864%-1.5828% Transportation equipment 1.1412%-1.9500% 1.0356%-1.8996% c. Material leasing activities and terms The Company leases the above-mentioned transportation equipment with lease terms of 3 years. The Company leases buildings as dormitories with lease terms of 3 years. 12. INTANGIBLE ASSETS Details of the two-period change in intangible assets of the computer software license are set out as follows: Amount Cost Balance at January 1, 2023 $ 32,370 Additions 1,888 Balance at December 31, 2023 $ 34,258 Accumulated amortization Balance at January 1, 2023 $ 19,581 Amortization expense 4,647 Balance at December 31, 2023 $ 24,228 Carrying amount at December 31, 2023 $ 10,030 Cost Balance at January 1, 2024 $ 34,258 Additions 2,306 Disposals (5,454) Balance at December 31, 2024 $ 31,110 Accumulated amortization Balance at January 1, 2024 $ 24,228 Amortization expense 4,385 Disposals (5,454) Balance at December 31, 2024 $ 23,159 Carrying amount at December 31, 2024 $ 7,951
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- 24 - The above -mentioned intangible assets are amortized on a straight -line basis over their estimated useful lives of 2-10 years. 13. OTHER ASSETS December 31 2024 2023 Current Offset against business tax payable $ 18,000 $ 16,875 Input tax 3,346 2,580 Others 1,339 1,956 $ 22,685 $ 21,411 Non-current Prepayments for equipment (Note 26) $ 44,393 $ 24,759 Refundable deposits 1,600 1,406 Others 2,155 3,773 $ 48,148 $ 29,938 14. BORROWINGS a. Short-term borrowings December 31 2024 2023 Unsecured borrowings $ 100,000 $ 108,442 The ranges of interest rates on the above -mentioned bank loans w ere 1.72%-1.8% and 1.6%-1.9437% per annum as of December 31, 2024 and 2023, respectively. b. Long-term borrowings December 31 2024 2023 Secured borrowings (1) $ 817,099 $ 383,836 Unsecured borrowings 61,763 16,875 878,862 400,711 Less: Current portions 118,414 65,605 Long-term borrowings $ 760,448 $ 335,106 1) Refer to Note 26 for information on collateral for the borrowings. 2) The above-mentioned borrowings will be due in December 2044, and the ranges of annual interest rates on December 31, 2024 and 2023 were 1.905%-2.5% and 1.795%-2.12%, respectively.
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- 25 - 15. NOTES PAYABLE AND ACCOUNTS PAYABLE All notes payable and accounts payable arise from business operations. 16. OTHER LIABILITIES December 31 2024 2023 Other payables Payables for salaries and bonuses $ 27,041 $ 22,111 Payables for processing fees 15,956 16,212 Compensation of employees and remuneration of directors 15,884 4,417 Payables for purchases of equipment 5,781 15,468 Payables for annual leave 4,709 4,207 Others 30,015 21,325 $ 99,386 $ 83,740 Other current liabilities Deferred revenue $ 3,000 $ - Receipts under custody 2,223 816 Contract liabilities (Note 19) 128 - Guarantee deposits received 30 - Others 63 60 $ 5,444 $ 876 17. RETIREMENT BENEFIT PLANS a. Defined contribution plans 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 their monthly salaries and wages. 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 salary for 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.
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- 26 - The amounts included in the balance sheets with respect to the Company’s defined benefit plans are as follows: December 31 2024 2023 Present value of defined benefit obligation $ 7,142 $ 7,703 Fair value of plan assets (1,591) (1,573) Net defined benefit liabilities $ 5,551 $ 6,130 Movements in net defined benefit liabilities were as follows: Present Value of the Defined Benefit Obligation Fair Value of the Plan Assets Net Defined Benefit Liabilities Balance at January 1, 2023 $ 10,276 $ (4,240) $ 6,036 Service cost Net interest expense (income) 119 (35) 84 Recognized in profit or loss 119 (35) 84 Remeasurement Return on plan assets (excluding amounts included in net interest) - (5) (5) Actuarial loss - changes in financial assumptions 102 - 102 Actuarial loss - experience adjustments 496 - 496 Recognized in other comprehensive income 598 (5) 593 Contributions from the employer - (583) (583) Benefits paid (3,290) 3,290 - Balance at January 1, 2024 7,703 (1,573) 6,130 Service cost Net interest expense (income) 101 (21) 80 Recognized in profit or loss 101 (21) 80 Remeasurement Return on plan assets (excluding amounts included in net interest) - (193) (193) Actuarial loss - changes in financial assumptions 363 - 363 Actuarial gain - experience adjustments (342) - (342) Recognized in other comprehensive income 21 (193) (172) Contributions from the employer - (487) (487) Benefits paid (683) 683 - Balance at December 31, 2024 $ 7,142 $ (1,591) $ 5,551 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
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- 27 - 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 and corporate bond interest rates 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 are as follows: December 31 2024 2023 Discount rate 1.600% 1.300% Expected rate of salary increase 2.875% 2.125% If possible reasonable changes in each of the significant actuarial assumptions occur and all other assumptions remain constant, the present value of the defined benefit obligation would increase (decrease) as follows: December 31 2024 2023 Discount rate 0.25% increase $ (230) $ (256) 0.25% decrease $ 240 $ 267 Expected rate of salary increase 0.25% increase $ 232 $ 259 0.25% decrease $ (224) $ (250) 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 changes in assumptions will occur in isolation of one another as some of the assumptions may be correlated. December 31 2024 2023 Expected contributions to the plans for the next year $ 86 $ 83 Average duration of the defined benefit obligation 14 years 14 years
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- 28 - 18. EQUITY a. Share capital December 31 2024 2023 Shares authorized (in thousands of shares) 100,000 100,000 Shares authorized $ 1,000,000 $ 1,000,000 Shares issued and fully paid (in thousands of shares) 68,574 68,574 Shares issued $ 685,735 $ 685,735 Issued ordinary shares, which have a par value of NT$10, carry one vote per share and carry a right to dividends. Among the shares authorized, 5,000 thousand shares are reserved for the issuance of employee share options. b. Capital surplus December 31 2024 2023 May be used to offset a deficit, distributed as cash dividends, or transferred to share capital (Note) Issuance of ordinary shares $ 53,007 $ 53,007 Expired employee share options 257 257 $ 53,264 $ 53,264 Note: Such capital surplus 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). c. Retained earnings and dividends policy Under the dividends policy as set forth in the Articles, where the Company made a profit in a fiscal year, the profit shall be first utilized for paying taxes, offsetting deficit of previous years, setting aside as a legal reserve 10% of the remaining profit, unless the accumulated legal reserve is equal to the total pain-in capital of the Company; then setting aside or reversing a special reserve in accordance with the laws and regulations, and then at least 50% of remaining profit shall be used by the Company’s board of directors as the basis for proposing a distribution plan, which should be resolved by the shareholders in their meeting for the distribution of dividends to shareholders. For the policies on the distribution of compensation of employees and remuneration of directors, refer to compensation of employees and remuneration of directors in Note 20(h). The Company is currently in an industry growth stage. To consider the characteristics of industry growth, maintain a healthy financial structure for the Company, and take into account the interests of investors, the Company adopts a balanced dividend policy between stock dividends and cash dividends. When the Company obtains sufficient funds from external sources to meet the capital requirements for the current year, at least 50% of the dividends distributed for that year will be distributed as cash dividends.
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- 29 - The legal reserve may be used to offset a deficit. 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. The deficit compensation for 20 22 was approved by the shareholders in their meetings on June 28, 2023. There were no appropriations of earnings due to the accumulated deficits in 2022. The appropriations of earnings for 2023, which was approved in the shareholders’ meetings on June 25, 2024, was as follows: Appropriation of Earnings For the Year Ended December 31 2023 Legal reserve $ 3,514 Cash dividends $ 20,572 Cash dividends per share (NT$) $ 0.3 The appropriations of earnings for 2024 , which was resolved by the Company’s board of directors on February 21, 2025, was as follows: Appropriation of Earnings For the Year Ended December 31 2024 Legal reserve $ 10,226 Cash dividends $ 48,001 Cash dividends per share (NT$) $ 0.7 The appropriation of earnings for 2024 will be resolved by the shareholders in their meeting which is expected to be held in June 2025. 19. REVENUE For the Year Ended December 31 2024 2023 Revenue from contracts with customers Revenue from the sale of goods $ 824,132 $ 683,831 a. Contract information Revenue from the sale of goods The Company recognizes revenue and accounts receivable when the aerospace components are shipped or delivered to the customer's specific location pursuant to the trading terms agreed with the customer. The Company's average credit period for product sales is 30 to 120 days. The contract is recognized as accounts receivable when the commodities are transferred, and there is an unconditional right to receive the consideration amount; however, for some contracts, where part of the consideration is paid by the
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- 30 - customer before the goods are transferred, the Company needs to bear the obligation to transfer the commodities subsequently, which are recognized as contract liabilities. b. Contract balances December 31, 2024 December 31, 2023 January 1, 2023 Accounts receivable $ 121,413 $ 136,557 $ 58,045 Contract liabilities (recognized as other current liabilities) $ 128 $ - $ 125 c. Disaggregation of revenue The Company's sales revenue mainly arises from the sale of aerospace equipment products. 20. PROFIT BEFORE INCOME TAX a. Other operating income and expenses For the Year Ended December 31 2024 2023 Gain on disposal of property, plant and equipment $ 3,000 $ - b. Interest income For the Year Ended December 31 2024 2023 Bank deposits $ 8,003 $ 9,793 Others 13 10 $ 8,016 $ 9,803 c. Other income For the Year Ended December 31 2024 2023 Rental income $ 120 $ 120 d. Other gains and losses For the Year Ended December 31 2024 2023 Net foreign exchange gains $ 22,710 $ 3,491 Subsidy income 14,501 15,283 Compensation for delayed delivery by vendor 28 3,320 Compensation expenses (6,066) - Others 1,458 (51) $ 32,631 $ 22,043
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- 31 - e. Finance costs For the Year Ended December 31 2024 2023 Interest on bank loans $ 11,549 $ 8,661 Interest on lease liabilities 47 23 Less: Amounts included in the cost of qualifying assets (recognized as property, plant, and equipment and prepayment for equipment) 850 356 $ 10,746 $ 8,328 Information on capitalized interest is as follows: For the Year Ended December 31 2024 2023 Capitalized interest amount $ 850 $ 356 Capitalization rate 1.50%-2.09% 1.51%-1.9% f. Depreciation and amortization For the Year Ended December 31 2024 2023 Property, plant, and equipment $ 65,008 $ 53,933 Right-of-use assets 1,361 1,132 Intangible assets 4,385 4,647 Other non-current assets 1,289 954 $ 72,043 $ 60,666 An analysis of depreciation by function Operating costs $ 63,292 $ 52,371 Operating expenses 3,077 2,694 $ 66,369 $ 55,065 An analysis of amortization by function Operating costs $ 1,989 $ 2,265 Operating expenses 3,685 3,336 $ 5,674 $ 5,601
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- 32 - g. Employee benefits expense For the Year Ended December 31 2024 2023 Short-term benefits Salaries $ 155,513 $ 131,605 Labor and health insurance 16,541 14,160 Remuneration of directors 3,936 1,656 Others 5,875 4,828 181,865 152,249 Post-employment benefits Defined contribution plans 6,539 6,242 Defined benefit plans (Note 17) 80 84 6,619 6,326 $ 188,484 $ 158,575 An analysis of employee benefits expense by function Operating costs $ 136,225 $ 115,038 Operating expenses 52,259 43,537 $ 188,484 $ 158,575 h. Compensation of employees and remuneration of directors According to the Company’s Articles, the Company accrues compensation of employees and remuneration of directors at rates of 5 -10% and no higher than 3%, respectively, of net profit before income tax, compensation of employees, and remuneration of directors. The compensation of employees and the remuneration of directors for the years ended December 31, 2024 and 2023 which were approved by the Company’s board of directors on January 27, 2025 and January 2 2, 202 4, respectively, are as follows: Accrual rate For the Year Ended December 31 2024 2023 Compensation of employees 8% 8% Remuneration of directors 3% 3% Amount For the Year Ended December 31 2024 2023 Cash Cash Compensation of employees $ 9,216 $ 3,212 Remuneration of directors $ 3,456 $ 1,205 If there is a change in the amounts after the annual financial statements are authorized for issue, the differences are recorded as a change in the accounting estimate. There is no difference between the actual amounts of compensation of employees and remuneration of directors paid and the amounts recognized in the financial statements for the year ended December 31, 2023.
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- 33 - Information on the compensation of employee and the remuneration of directors resolved by the Company’s board of directors is available at the Market Observation Post System website of the Taiwan Stock Exchange. i. Gains or losses on foreign currency exchange For the Year Ended December 31 2024 2023 Foreign exchange gains $ 44,834 $ 37,947 Foreign exchange losses (22,124) (34,456) Net gains $ 22,710 $ 3,491 21. INCOME TAX a. Income tax recognized in profit or loss Major components of income tax expense are as follows: For the Year Ended December 31 2024 2023 Current tax In respect of the current year $ 4,762 $ - Adjustments for prior year 6,300 - 11,062 - Deferred tax In respect of the current year (10,623) - Income tax expense recognized in profit or loss $ 439 $ - A reconciliation of accounting profit and income tax expense is as follows: For the Year Ended December 31 2024 2023 Profit before tax $ 102,527 $ 60,626 Income tax expense calculated at the statutory rate $ 20,505 $ 12,125 Nondeductible expenses in determining taxable income - 20 Tax-exempt income (214) (177) Unrecognized deductible temporary differences (2,625) (1,542) Unrecognized loss carryforwards (22,982) (9,848) Investment tax credits (545) (578) Adjustments for prior years’ tax 6,300 - Income tax expense recognized in profit or loss $ 439 $ -
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- 34 - b. Current tax assets December 31 2024 2023 Current tax assets Tax refund receivable $ 89 $ 1,019 c. Deferred tax assets and liabilities The movements of deferred tax assets and deferred tax liabilities were as follows: For the year ended December 31, 2024 Deferred Tax Assets Opening Balance Recognized in Profit or Loss Closing Balance Temporary differences Allowance for impairment loss on inventories $ 6,730 $ 6,344 $ 13,074 Unrealized exchange loss 1,438 (1,438) - Annual leave 841 101 942 Loss carryforwards 4 6,997 7,001 Other 415 (77) 338 $ 9,428 $ 11,927 $ 21,355 Deferred Tax Liabilities Unrealized exchange gain $ - $ 1,304 $ 1,304 For the year ended December 31, 2023 Deferred Tax Assets Opening Balance Recognized in Profit or Loss Closing Balance Temporary differences Allowance for impairment loss on inventories $ 6,710 $ 20 $ 6,730 Unrealized exchange loss - 1,438 1,438 Annual leave 813 28 841 Loss carryforwards 2,997 (2,993) 4 Other 390 25 415 $ 10,910 $ (1,482) $ 9,428 Deferred Tax Liabilities Unrealized exchange gain $ 1,482 $ (1,482) $ -
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- 35 - d. Unused loss carryforwards and deductible temporary differences for which no deferred tax assets have been recognized in the balance sheets December 31 2024 2023 Loss carryforwards Expiry in 2031 $ - $ 96,801 Expiry in 2032 - 14,555 $ - $ 111,356 Deductible temporary differences Allowance for impairment loss on inventories $ - $ 13,127 e. Information on unused loss carryforwards December 31 2024 2023 Loss carryforwards In 2021 $ 20,435 $ 96,801 In 2022 14,573 14,573 $ 35,008 $ 111,374 f. Income tax assessments The income tax return of the Company through 2022 has been assessed by the tax authorities. 22. EARNINGS PER SHARE The earnings and weighted average number of ordinary shares outstanding in the computation of earnings per share were as follows: Net Profit for the Year For the Year Ended December 31 2024 2023 Profit for the year of the Company $ 102,088 $ 60,626 Weighted average number of ordinary shares outstanding (in thousands of shares) For the Year Ended December 31 2024 2023 Weighted average number of ordinary shares used in the computation of basic and diluted earnings per share 68,574 68,574 Effect of potentially dilutive ordinary shares - compensation of employees 241 68 Weighted average number of ordinary shares used in the computation of diluted earnings per share 68,815 68,642
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- 36 - The Company may settle the compensation of employees in cash or shares; therefore, the Company assumes that the entire amount of the compensation will be settled in shares, and the resulting potential shares are included in the weighted average number of shares outstanding used in the computation of diluted earnings per share, as the effect is dilutive. Such dilutive effect of the potential shares is included in the computation of diluted earnings per share until the number of shares to be distributed to employees is resolved in the following year. 23. CAPITAL MANAGEMENT The Company conducts capital management by optimizing its debt and equity balances to ensure the efficient utilization of capital and the favorable operation of the Company. Therefore, the Company’s capital management aims to ensure that the necessary financial resources and operational plans are in place to support future needs such as working capital, capital expenditures, research and development expenses, debt repayment, and dividend payments. 24. FINANCIAL INSTRUMENTS a. Fair value of financial instruments not measured at fair value The carrying amounts of the Company’s financial instruments that are not measured at fair value, such as cash and cash equivalents, accounts receivable, refundable deposits (recognized as other non -current assets), short-term borrowings, long-term borrowings (including the current portion), accounts payable, and guarantee deposits received (including recognized as other current liabilities), approximate their fair values. b. Categories of financial instruments December 31 2024 2023 Financial assets Financial assets at amortized cost (Note 1) $ 345,602 $ 386,808 Financial liabilities Financial liabilities at amortized cost (Note 2) 1,205,371 676,884 Note 1: The balances include financial assets measured at amortized cost, which comprise cash and cash equivalents, refundable deposits (recognized as other non -current assets), accounts receivable, and other receivables (excluding business tax refund receivable). Note2: The balances include financial liabilities measured at amortized cost, which comprise short-term borrowings, accounts payable , other payables, guarantee deposits received (including recognized as other current liabilities), and long -term borrowings (including the current portion). c. Financial risk management objectives and policies The Company’s major financial instruments include accounts receivable, accounts payable, notes payable, borrowings 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 (including foreign
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- 37 - currency risk and interest rate risk), credit risk and liquidity risk. 1) Market risk The Company’s activities exposed it primarily to the financial risks of changes in foreign currency exchange rates (see (a) below) and interest rates (see (b) below). There has been no change to the Company’s exposure to market risks or the manner in which these risks are managed and measured. a) Foreign currency risk The Company has foreign currency denominated sales and purchases, which exposes the Company to foreign currency risk. The carrying amounts of the Company’s foreign currency denominated monetary assets and monetary liabilities exposed to foreign currency risk at the end of the year are set out in Note 28. Sensitivity analysis The Company is mainly exposed to the USD. The following table details the Company’s sensitivity to a 1% increase and decrease in the New Taiwan dollar (the functional currency) against the relevant foreign currencies. The sensitivity rate used when reporting foreign currency risk internally to key management personnel and representing management’s assessment of the reasonably possible change in foreign exchange rates is 1%. The sensitivity analysis included only outstanding foreign currency denominated monetary items and adjusted their translation at the end of the year for a 1% change in foreign currency rates. A positive number below indicates an increase in pre -tax profit associated with the New Taiwan dollar strengthening 1% against the relevant currency. For a 1% weakening of the New Taiwan dollar against the relevant currency, there would be an equal and opposite impact on pre-tax profit, and the balances below would be negative. For the Year Ended December 31 2024 2023 Profit or loss $ 1,804 $ 2,929 The result was mainly attributable to the exposure on outstanding cash and cash equivalents, receivables, and payables in USD that were not hedged at the end of the year. The Company’s sensitivity to USD decreased during the current year, mainly due to the reduction in USD denominated net assets.
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- 38 - b) Interest rate risk The Company is exposed to interest rate risk because the Company borrowed funds at floating interest rates. The carrying amount of the Company’s financial assets and financial liabilities with exposure to interest rates at the end of the year was as follows: December 31 2024 2023 Fair value interest rate risk Financial assets $ 81,963 $ 153,525 Financial liabilities 42,606 72,108 Cash flow interest rate risk Financial assets 140,385 94,811 Financial liabilities 938,862 439,153 Sensitivity analysis The sensitivity analysis below was determined based on the Company’s exposure to interest rates for non-derivative instruments at the end of the year. For floating rate assets and liabilities, the analysis was prepared assuming the amount of each asset and liability outstanding at the end of the year was outstanding for the whole year. A 25 basis point increase or decrease is used when reporting interest rate risk internally to key management personnel and represents management’s assessment of the reasonably possible change in interest rates. If interest rates had been 25 basis points higher and all other variables were held constant, the Company’s pre -tax profit for the years ended December 31, 2024 and 2023 would have decreased by $1,996 thousand and $861 thousand, respectively, which was mainly a result of variable-rate deposits and borrowings. 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. 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, could be equal to the failure to collect customer accounts. The accounts receivable include a wide range of customers and are spread across various geographical regions. The balances of accounts receivable where the Company's credit risk is significantly concentrated are as follows: December 31 2024 2023 Amount ％ Amount ％ Company A $ 47,963 39 $ 44,079 32 Company B $ 29,103 24 $ 21,248 16 Company C $ 18,277 15 $ 43,120 32 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.
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- 39 - The Company's working capital and the obtained bank financing facilities are sufficient to meet future operational requirements. Therefore, there is no liquidity risk due to the inability to raise funds to fulfill contractual obligations. a) Liquidity and interest rate risk tables for non-derivative financial liabilities The following table details the Company’s remaining contractual maturities for its non-derivative financial liabilities with agreed upon repayment periods. The table has been drawn up based on the undiscounted cash flows of financial liabilities from the earliest date on which the Company can be required to pay. The table includes both interest and principal cash flows. Specifically, bank loans with a repayment on demand clause were included in the earliest time band regardless of the probability of the banks choosing to exercise their rights. The maturity dates for other non -derivative financial liabilities were based on the agreed upon repayment dates. To the extent that interest flows are at floating rates, the undiscounted amount was derived from the borrowing interest rate at the end of the year. December 31, 2024 Less than 3 Months 3 Months to 1 Year 1 to 5 Years 5+ Years Non-derivative financial liabilities Non-interest bearing liabilities $ 226,479 $ 30 $ - $ - Floating interest rate instruments 95,279 101,373 535,478 312,495 Fixed interest rate instruments 40,178 - - - Lease liabilities 358 866 1,439 - $ 362,294 $ 102,269 $ 536,917 $ 312,495 December 31, 2023 Less than 3 Months 3 Months to 1 Year 1 to 5 Years 5+ Years Non-derivative financial liabilities Non-interest bearing liabilities $ 167,701 $ - $ 30 $ - Floating interest rate instruments 48,647 62,421 337,044 3,816 Fixed interest rate instruments 70,228 - - - Lease liabilities 337 863 947 - $ 286,913 $ 63,284 $ 338,021 $ 3,816 The amounts included above for floating interest rate instruments for non -derivative financial liabilities are subject to change if changes in floating interest rates differ from those estimates of interest rates determined at the end of the year.
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- 40 - b) Financing facilities December 31 2024 2023 Unsecured bank loan facilities Amount used $ 161,763 $ 125,317 Amount unused 550,000 426,558 $ 711,763 $ 551,875 Secured bank loan facilities Amount used $ 817,099 $ 383,836 Amount unused 379,057 137,000 $ 1,196,156 $ 520,836 25. TRANSACTIONS WITH RELATED PARTIES Remuneration of key management personnel For the Year Ended December 31 2024 2023 Short-term employee benefits $ 10,315 $ 6,756 Post-employment benefits 99 99 $ 10,414 $ 6,855 The remuneration of directors and key executives, as determined by the remuneration committee, is based on the performance of individuals and market trends. 26. ASSETS PLEDGED AS COLLATERAL The following assets (presented by carrying amounts) were provided as collateral for bank borrowings: December 31 2024 2023 Land $ 582,569 $ 187,155 Buildings 60,310 60,402 Equipment 111,682 81,318 Other equipment 12,281 6,502 Prepayments for equipment 31,466 - $ 798,308 $ 335,377 27. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNIZED COMMITMENTS Significant commitments and contingencies of the Company were as follows: a. As of December 31, 2024 and 2023, the amounts committed for the purchase of property, plant and equipment were $75,395 thousand and $74,269 thousand, respectively. Of these amounts, $43,527
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- 41 - thousand and $24,575 thousand have been paid. b. As of December 31, 202 4 and 20 23, the amounts ordered but not yet received in inventory were $637,933 thousand and $534,112 thousand, respectively. 28. SIGNIFICANT ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES The Company’s significant financial assets and liabilities denominated in foreign currencies aggregated by the foreign currencies other than functional currencies of the Company and the related exchange rates between the foreign currencies and the respective functional currencies were as follows: December 31, 2024 Foreign Currency (In Thousands) Exchange Rate Carrying Amount (In Thousands) Financial assets Monetary items USD $ 7,844 32.785 (USD:NTD) $ 257,163 EUR 84 34.14 (EUR:NTD) 2,822 Financial liabilities Monetary items USD 2,340 32.785 (USD:NTD) 76,729 EUR 105 34.14 (EUR:NTD) 3,582 December 31, 2023 Foreign Currency (In Thousands) Exchange Rate Carrying Amount (In Thousands) Financial assets Monetary items USD $ 11,533 30.705 (USD:NTD) $ 354,128 EUR 58 33.98 (EUR:NTD) 1,979 JPY 6,750 0.2172 (JPY:NTD) 1,466 Financial liabilities Monetary items USD 1,996 30.705 (USD:NTD) 61,274 EUR 104 33.98 (EUR:NTD) 3,533
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- 42 - The significant realized and unrealized foreign exchange gains (losses) were as follows: For the Year Ended December 31 2024 2023 Foreign Currency Exchange Rate (Foreign Currency: Functional Currency) Net Foreign Exchange Gain (Loss) Exchange Rate (Foreign Currency: Functional Currency) Net Foreign Exchange Gain (Loss) USD 32.112 (USD:NTD) $ 22,951 31.155 (USD:NTD) $ 3,590 EUR 34.74 (EUR:NTD) 126 33.7 (EUR:NTD) 93 JPY 0.2121 (JPY:NTD) (367 ) 0.2221 (JPY:NTD) (192 ) $ 22,710 $ 3,491 29. SEPARATELY DISCLOSED ITEMS Except for the acquisition of individual real estate at costs of at least NT$300 million or 20% of the paid -in capital and information on major shareholders, the Company has no other information on significant transactions, information on investees, and information on investments in mainland China that need to be disclosed. a. Information on significant transactions: For details on the acquisition of individual real estate at costs of at least NT$300 million or 20% of the paid-in capital, refer to Table 2. b. 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 the percentage of ownership of each shareholder , refer to Table 3. 30. SEGMENT INFORMATION a. Segment revenue, operation results, assets, and liabilities The Company’s operational decision -makers rely on financial information for resource allocation and segment performance evaluation. Therefore, reporting is done on a single operational segment basis. Additionally, the segment information provided to the Company’s operational decision -makers is measured on the same basis as the financial statements. As a result, the segment revenue, operation results, and asset measurement amounts for 2024 and 2023 can be referred to in the balance sheets and comprehensive income statements for 2024 and 2023, respectively. b. Geographical information: The Company has no foreign operation. c. Information on major customers For the Year Ended December 31 2024 2023 Amount ％ Amount ％ Group A $ 438,437 53 $ 390,519 57 Company B 218,725 27 193,392 28 Company C 107,251 13 64,673 9
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- 43 - TABLE 1 AERO WIN TECHNOLOGY CORPORATION STATEMENT OF CHANGES IN PROPERTY, PLANT AND EQUIPMENT FOR THE YEARS ENDED DECEMBER 31, 2024 AND 2023 (In Thousands of New Taiwan Dollars) Land Buildings Machinery and Equipment Model Equipment Transportation Equipment Office Equipment Other Equipment Construction in Progress Total Cost Balance at January 1, 2023 $ 187,155 $ 202,011 $ 350,578 $ 89,379 $ 85 $ 7,813 $ 56,966 $ - $ 893,987 Additions - 579 56,103 20,369 86 - 3,197 - 80,334 Balance at December 31, 2023 $ 187,155 $ 202,590 $ 406,681 $ 109,748 $ 171 $ 7,813 $ 60,163 $ - $ 974,321 Accumulated depreciation Balance at January 1, 2023 $ - $ 131,572 $ 204,258 $ 48,624 $ 85 $ 5,843 $ 33,399 $ - $ 423,781 Depreciation expense - 4,824 24,645 17,118 20 866 6,460 - 53,933 Balance at December 31, 2023 $ - $ 136,396 $ 228,903 $ 65,742 $ 105 $ 6,709 $ 39,859 $ - $ 477,714 Carrying amount at December 31, 2023 $ 187,155 $ 66,194 $ 177,778 $ 44,006 $ 66 $ 1,104 $ 20,304 $ - $ 496,607 Cost Balance at January 1, 2024 $ 187,155 $ 202,590 $ 406,681 $ 109,748 $ 171 $ 7,813 $ 60,163 $ - $ 974,321 Additions 395,415 5,349 106,600 5,963 - 380 12,068 900 526,675 Disposals - - (11,832) - - - (4,394) - (16,226) Balance at December 31, 2024 $ 582,570 $ 207,939 $ 501,449 $ 115,711 $ 171 $ 8,193 $ 67,837 $ 900 $ 1,484,770 Accumulated depreciation Balance at January 1, 2024 $ - $ 136,396 $ 228,903 $ 65,742 $ 105 $ 6,709 $ 39,859 $ - $ 477,714 Depreciation expense - 5,074 34,198 17,344 27 654 7,711 - 65,008 Disposals - - (11,832) - - - (4,394) - (16,226) Balance at December 31, 2024 $ - $ 141,470 $ 251,269 $ 83,086 $ 132 $ 7,363 $ 43,176 $ - $ 526,496 Carrying amount at December 31, 2024 $ 582,570 $ 66,469 $ 250,180 $ 32,625 $ 39 $ 830 $ 24,661 $ 900 $ 958,274
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- 44 - TABLE 2 AERO WIN TECHNOLOGY CORPORATION ACQUISITION OF INDIVIDUAL REAL ESTATE AT COSTS OF AT LEAST NT$300 MILLION OR 20% OF THE PAID-IN CAPITAL FOR THE YEARS ENDED DECEMBER 31, 2024 (In Thousands of New Taiwan Dollars) Buyer Property Event Date Transaction Amount Payment Status Counterparty Relationship Information on Previous Title Transfer If Counterparty Is A Related Party Pricing Reference Purpose of Acquisition Other Terms Property Owner Relationship Transaction Date Amount Aero Win Technology Corporation Land and factory June 25, 2024 (Date of boards of directors’ resolutions) $ 397,692 Has been paid fully Universal Gloves Corporation None NA NA NA NA Refer to valuation information from a professional valuation agency For future operational use None Note: The transaction amount is the contract price of $397,692 thousand. The total transaction price for the acquisition of the asset was $398,564 thousand (including related taxes and fees of $872 thousands attributable to the asset).
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- 45 - TABLE 3 AERO WIN TECHNOLOGY CORPORATION INFORMATION OF MAJOR SHAREHOLDERS DECEMBER 31, 2024 Name of Major Shareholder Shares Number of Shares Percentage of Ownership (%) Tseng, Kuo-Hao 6,643,285 9.68 Keytech Investment Co., Ltd 6,049,869 8.82 Note: The information of major shareholders presented in this table is provided by the Taiwan Depository & Clearing Corporation based on the number of ordinary shares held by shareholders with ownership of 5% or greater that have been issued without physical registration 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 preparations.
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- 46 - THE CONTENTS OF STATEMENTS OF MAJOR ACCOUNTING ITEMS Item Statement Index Major Accounting Items in Assets, Liabilities and Equity Statement of cash and cash equivalents 1 Statement of accounts receivable 2 Statement of inventories 3 Statement of prepayments Note 9 Statement of other current assets Note 13 Statement of changes in property, plant and equipment Table 1 Statement of changes in accumulated depreciation of property, plant and equipment Table 1 Statement of changes in intangible assets Note 12 Statement of deferred tax assets Note 21 Statement of other non-current assets Note 13 Statement of short-term borrowings 4 Statement of accounts payable 5 Statement of other payables Note 16 Statement of long-term borrowings 6 Major Accounting Items in Profit or Loss Statement of operating revenues 7 Statement of operating costs 8 Statement of operating expenses 9 Statement of employee benefits, depreciation and amortization by function 10
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- 47 - STATEMENT 1 AERO WIN TECHNOLOGY CORPORATION STATEMENT OF CASH AND CASH EQUIVALENTS DECEMBER 31, 2024 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise) Item Amount Cash on hand and petty cash $ 50 Bank Deposits Checking accounts and demand deposits (Note 1) 140,406 Cash equivalents (investments with original maturities of 3 months or less) Time deposits (Note 2) 81,963 $ 222,419 Note 1: Including NT$80,376 thousand, US$1,827,935.89 (US$1=NT$32.785), and EUR2,980.35 (EUR 1=NT$ 34.14). Note 2: Including US$2,500,000 (US$1=NT$32.785).
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- 48 - STATEMENT 2 AERO WIN TECHNOLOGY CORPORATION STATEMENT OF ACCOUNTS RECEIVABLE DECEMBER 31, 2024 (In Thousands of New Taiwan Dollars) Customer Name Amount Company A $ 47,963 Company B 29,103 Company C 18,277 Company D 6,374 Company E 5,871 Others (Note) 13,939 121,527 Less: Allowance for impairment loss 114 $ 121,413 Note: The balance of individual customer included in others does not exceed 5% of the account balance.
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- 49 - STATEMENT 3 AERO WIN TECHNOLOGY CORPORATION STATEMENT OF INVENTORIES DECEMBER 31, 2024 (In Thousands of New Taiwan Dollars) Amount Market Item Cost Value Finished goods $ 176,723 $ 243,312 Work in progress 195,404 228,428 Raw materials 226,418 226,419 Inventory in transit 115,531 115,531 $ 714,076 $ 813,690 Note: Refer to Note 4 for detailed information regarding the basis of market value of inventory.
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- 50 - STATEMENT 4 AERO WIN TECHNOLOGY CORPORATION STATEMENT OF SHORT-TERM BORROWINGS DECEMBER 31, 2024 (In Thousands of New Taiwan Dollars) Creditors Contract Period Range of Interest Rates (%) Amount Financing Facilities Collateral Unsecured borrowings E.SUN Commercial Bank 2024.10.21 - 2025.01.21 1.72 $ 40,000 $ 100,000 None E.SUN Commercial Bank 2024.10.23 - 2025.01.23 1.72 20,000 100,000 None E.SUN Commercial Bank 2024.12.10 - 2025.03.10 1.80 40,000 100,000 None $ 100,000
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- 51 - STATEMENT 5 AERO WIN TECHNOLOGY CORPORATION STATEMENT OF ACCOUNTS PAYABLE DECEMBER 31, 2024 (In Thousands of New Taiwan Dollars) Vendor Name Description Amount Company A Material purchase $ 37,468 Company B Material purchase 11,938 Company C Material purchase 11,095 Others (Note) 66,555 $ 127,056 Note: The balance of individual vendor included in others does not exceed 5% of the account balance.
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- 52 - STATEMENT 6 AERO WIN TECHNOLOGY CORPORATION STATEMENT OF LONG-TERM BORROWINGS DECEMBER 31, 2024 (In Thousands of New Taiwan Dollars) Amount Creditors Summary Current portion Non-current portion Balance Contract Period Annual Rate (%) Collateral Note E.SUN Commercial Bank Medium-term unsecured borrowings $ 6,820 $ - $ 6,820 2022.08.26-2025.08.26 2.12 None Starting in August 2022, with one installment per month, the principal and interest will be repaid evenly in 36 installments, with each installment repaying $859 thousand. Medium-term unsecured borrowings 8,627 19,316 27,943 2024.02.27-2028.02.27 2.07 None Starting in February 2024, with one installment per month, the principal and interest will be repaid evenly in 36 installments, with each installment repaying $760 thousand. Chang Hwa Commercial Bank Medium-term secured borrowings 14,400 23,200 37,600 2020.08.10-2027.08.10 1.905 Land and Buildings Starting in September 2020, with one installment per month, the principal and interest will be repaid evenly in 84 installments. For the first 83 installments, each month will repay $1,200 thousand, and for the 84th installment, it will repay $400 thousand. Medium-term secured borrowings 14,400 23,200 37,600 2020.08.24-2027.08.24 1.905 Land and Buildings Starting in September 2020, with one installment per month, the principal and interest will be repaid evenly in 84 installments. For the first 83 installments, each month will repay $1,200 thousand, and for the 84th installment, it will repay $400 thousand. Medium-term secured borrowings 10,008 810 10,818 2023.01.19-2026.01.19 1.955 Buildings Starting in January 2023, with one installment per month, the principal and interest will be repaid evenly in 36 installments. For the first 35 installments, each month will repay $834 thousand, and for the 36th installment, it will repay $810 thousand. Medium-term secured borrowings 6,672 3,320 9,992 2023.06.19-2026.06.19 1.955 Buildings Starting in June 2023, with one installment per month, the principal and interest will be repaid evenly in 36 installments. For the first 35 installments, each month will repay $556 thousand, and for the 36th installment, it will repay $540 thousand. Medium-term secured borrowings 16,668 29,165 45,833 2024.09.27-2027.09.27 1.955 Buildings Starting in September 2024, with one installment per month, the principal and interest will be repaid evenly in 36 installments. For the first 35 installments, each month will repay $ 1,389 thousand, and for the 36th installment, it will repay $1,385 thousand. Medium-term secured borrowings 2,800 1,400 4,200 2021.06.01-2026.06.01 2.055 Equipment and Other Equipment Starting in June 2021, with one installment per month, the principal and interest will be repaid evenly in 60 installments. Medium-term secured borrowings 4,940 11,938 16,878 2023.05.18-2028.05.18 2.055 Equipment Starting in May 2023, with one installment per month, the principal and interest will be repaid evenly in 60 installments. Medium-term secured borrowings - 100,000 100,000 2024.03.22-2026.03.22 2.075 Buildings Starting in March 2024, interest will be paid monthly, divided into 24 installments, and the principal will be repaid once upon maturity. Medium-term secured borrowings - 50,000 50,000 2024.09.25-2026.09.25 2.075 Buildings Starting in September 202 4, interest will be paid monthly, divided into 24 installments, and the principal will be repaid once upon maturity. (Continued)
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- 53 - Amount Creditors Summary Current portion Non-current portion Balance Contract Period Annual Rate (%) Collateral Note Hua Nan Commercial Bank Long-term secured borrowings $ 1,867 $ 9,333 $ 11,200 2015.12.10-2030.12.10 2.24 Land and Buildings Starting in January 2016, with one installment per month, the principal will be repaid evenly in 180 installments, with each installment repaying $156 thousand. Long-term secured borrowings - 294,000 294,000 2024.12.27-2044.12.27 2.5 Buildings Starting in December 2024, interest will be paid monthly, with the principal repaid over a total of 240 installments. No principal repayment will be made during the first 24 installments. From the 25 th to 240 th installments, a monthly principal repayment of $1,361 thousand will be made. Medium-term secured borrowings 5,306 16,360 21,666 2024.01.26-2029.01.25 2.12 Equipment Starting in January 2024, with one installment per month, the principal and interest will be repaid evenly in 60 installments. Medium-term secured borrowings 1,746 5,966 7,712 2024.05.15-2029.05.14 2.12 Equipment Starting in May 2024, with one installment per month, the principal and interest will be repaid evenly in 60 installments. Medium-term secured borrowings - 100,000 100,000 2024.11.12-2026.11.11 1.915 Buildings Starting in November 202 4, interest will be paid monthly, divided into 24 installments, and the principal will be repaid once upon maturity. Long-term secured borrowings - 19,600 19,600 2024.12.27-2044.12.27 2.5 Land and Buildings Starting in December 2024, interest will be paid monthly, with the principal repaid over a total of 240 installments. No principal repayment will be made during the first 24 installments. From the 25th to the 240th installments, a monthly principal repayment of $90 thousand will be made. Mega International Commercial Bank Medium-term unsecured borrowings 6,000 21,000 27,000 2024.06.25-2029.06.25 2.075 None Starting in June 2024, interest will be paid monthly, and the principal repaid in 20 installments, with one installment every three months. Each installment will repay $150 thousand. CTBC Bank Co., Ltd. Medium-term secured borrowings 8,920 15,610 24,530 2024.08.28-2027.08.28 2.1961 Equipment and Other Equipment Starting in August 2024, interest will be paid monthly. The principal will begin repayment 6 months after the first drawdown, with the first installment due at the time. Subsequent repayments will be made every three months, with a total of 11 installments. Each installment will repay $2,230 thousand. Medium-term secured borrowings 9,240 16,230 25,470 2024.12.10-2027.08.28 2.1941 Equipment and Prepayments for equipment Starting in December 2024, interest will be paid monthly. The principal will begin repayment 6 months after the first drawdown, with the first installment due at that time. Subsequent repayments will be made every three months, with a total of 11 installments. The 1st to the 10th installments will repay $2,310 thousand for each installment, and $2,370 thousand will be repaid for the 11st installment. $ 118,414 $ 760,448 $ 878,862 (Concluded)
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- 54 - STATEMENT 7 AERO WIN TECHNOLOGY CORPORATION STATEMENT OF OPERATING REVENUES FOR THE YEAR ENDED DECEMBER 31, 2024 (In Thousands of New Taiwan Dollars) Item Quantities (EA) Amount Aerospace components 205,389 $ 824,446 Others 3 313 824,759 Less: Sales return and discount 627 $ 824,132
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- 55 - STATEMENT 8 AERO WIN TECHNOLOGY CORPORATION STATEMENT OF OPERATINGS COSTS FOR THE YEAR ENDED DECEMBER 31, 2024 (In Thousands of New Taiwan Dollars) Item Amount Raw materials, beginning of the year $ 202,377 Raw material in transit, beginning of the year 40,522 Add: Raw material purchased 490,281 Less: Inventory (3,173 ) Raw materials, end of the year (226,418 ) Raw material in transit, end of the year (115,531 ) Transferred to expense (16,779 ) Direct raw material consumption 371,279 Direct labor 108,365 Manufacturing expenses 234,313 Manufacturing cost 713,957 Add: Work in progress, beginning of the year 200,013 Less: Work in progress, end of the year (195,404 ) Inventory write-downs (750 ) Work in progress sold (31 ) Cost of finished goods 717,785 Add: Finished goods, beginning of the year 102,220 Less: Finished goods, end of the year (176,723 ) Inventory write-downs (31,252 ) Others (262 ) Cost of goods sold 611,768 Add: Work in progress sold 31 Inventory write-downs 35,175 Less: Revenue from sale of scraps (8,094 ) $ 638,880
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- 56 - STATEMENT 9 AERO WIN TECHNOLOGY CORPORATION STATEMENT OF OPERATING EXPENSES FOR THE YEAR ENDED DECEMBER 31, 2024 (In Thousands of New Taiwan Dollars) Selling and Marketing Expenses General and Administrative Expenses Research and Development Expenses Expected Credit Losses Total Payroll expense $ 3,698 $ 17,000 $ 23,856 $ - $ 44,554 Research expense - - 16,593 - 16,593 Import and export fee 10,752 - - - 10,752 Water, electricity and gas fee 1,645 3,300 4,934 - 9,879 Property insurance expense 3,017 135 7 - 3,159 Amortization 189 2,630 866 - 3,685 Labor fee - 3,003 - - 3,003 Depreciation 251 2,073 753 - 3,077 Travel expenses 1,330 289 712 - 2,331 Expected credit loss - - - 40 40 Others (Note) 2,597 11,061 5,015 - 18,673 Total $ 23,479 $ 39,491 $ 52,736 $ 40 $ 115,746 Note: The balance of each item included in others does not exceed 5% of the account balance.
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- 57 - STATEMENT 10 AERO WIN TECHNOLOGY CORPORATION STATEMENT OF EMPLOYEE BENEFITS, DEPRECIATION AND AMORTIZATION BY FUNCTION FOR THE YEARS ENDED DECEMBER 31, 2024 AND 2023 (In Thousands of New Taiwan Dollars) Year Ended December 31,2024 Year Ended December 31,2023 Operating Costs Operating Expenses Total Operating Costs Operating Expenses Total Employee benefits Salaries $ 114,895 $ 40,618 $ 155,513 $ 96,246 $ 35,360 $ 131,606 Labor and health insurance 12,253 4,288 16,541 10,562 3,598 14,160 Post-employment benefits 4,863 1,756 6,619 4,644 1,682 6,326 Remuneration of directors - 3,936 3,936 - 1,655 1,655 Others 4,214 1,661 5,875 3,586 1,242 4,828 $ 136,225 $ 52,259 $ 188,484 $ 115,038 $ 43,537 $ 158,575 Depreciation $ 63,292 $ 3,077 $ 66,369 $ 52,371 $ 2,694 $ 55,065 Amortization 1,989 3,685 5,674 2,265 3,336 5,601 Note: The Company had 239 and 222 employees, respectively, which included 6 non-employee directors, both, in 2024 and 2023. 1. Average employee benefits for the year ended December 31, 2024 were $792 thousand (amounts of employee benefits for the year ended December 31, 2024 less amounts of remuneration of directors for the year ended December 31, 2024 / number of employees for the year ended December 3 1, 2024 less the number of directors not serving concurrently as employees for the year ended December 31, 2024). Average employee benefits for the year ended December 31, 2023 were $726 thousand (amounts of employee benefits for the year ended December 31, 2023 less amounts of remuneration of directors for the year ended December 31, 2023 / number of employees for the year ended December 3 1, 2023 less the number of directors not serving concurrently as employees for the year ended December 31, 2023).
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- 58 - 2. Average salaries for the year ended December 31, 2024 were $667 thousand (amounts of salaries for the year ended December 31, 2024 / number of employees for the year ended December 31, 2024 less number of directors not serving concurrently as employees for the year ended December 31, 2024). Average salaries for the year ended December 31, 2023 were $609 thousand (amounts of salaries for the year ended December 31, 2023 / number of employees for the year ended December 31, 2023 less number of directors not serving concurrently as employees for the year ended December 31, 2023). 3. Changes in adjustments to average salaries were 9.5% (average salaries for the year ended December 31, 2024 less average sala ries for the year ended December 31, 2023 / average salaries for the year ended December 31, 2023). 4. The Company has established an audit committee and has no supervisor. 5. The Company's salary and remuneration policy is as follows: (including directors, managers and employees). A. The Company’s remuneration of the directors is determined in accordance with Article 21 of the Company's articles of associat ion. It is based on an amount not exceeding 3% of the profits for the fiscal year, taking into consideration the Company's operating results and the direct ors' contributions to the Company's performance. The standards are assessed and established by the company's remuneration committee and then submitted for approval by the board of directors. B. The remuneration policy of the president and vice president is based on the Company's "Manager Salary Remuneration Policy and System", the salary level of the position in the industry, the scope of authority and responsibilities of the position within the Company, and the contrib ution to the Company's operational goals. The remuneration is proposed by the HR department and submitted to the remuneration committee for review and resolution by the board of directors. C. Employee remuneration includes salary and bonus. New Hire Salary Salary Adjustment Direct personnel The proposal for salary is submitted by the employee’s superviso r to the vice president for approval, based on the industry's average salary levels. For employees with outstanding performance, the employee's supervisor may propose a salary adjustment every year, which shall be counter-signed by the manager of the management office and submitted to the president for approval. Indirect personnel The proposal for salary is submitted by the manager of the management office to the president for approval, based on the industry's average salary levels. D. The Company's main compensation policy is designed to link job responsibilities to performance results, with a positive correlati on to business performance. The Company complies with legal regulations for disclosing compensation amounts, and the future risks associated with it are expected to be limited.