CCW — Annual Report 2025

Jun 4, 2026

CATHAY

國泰化工廠股份有限公司

Cathay Chemical Works, Inc.

TWSE Stock Code : 1713

Cathay Chemical Works, Inc.

Annual Report 2025

Publication Date: April 26,2026

Annual Report is available at http://www.ccwi.com.tw

Market Observation Post System: http://mops.twse.com.tw/

This document is prepared in accordance with the Chinese version and is for reference only. 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 version shall prevail

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I. Spokesperson of the Company and Deputy Spokesperson
Spokesman: C.C. Hung, President
Deputy Spokesperson: Shu-Chen Tsai, Head of Audit
Tel:(02)27811161
Email: cathay@cathaychem.com.tw

II. Address and Telephone number
Headquarters: 12F, No. 320, Chung Hsiao E. Rd., Sec.4, Taipei City 106, Taiwan
Tel:(02)27811161
Factory: No. 30, Pingnan Rd., Pingnan Industrial Zone, Donghai Vil., Fangliao Township, Pingtung County 940, Taiwan
Tel:(08)8671390

III. Stock Transfer Agency
Name: Mega Securities Co., Ltd.
Address: 1F, 95 Sec.2, Chung Hsiao E. Rd., Taipei 100, Taiwan
Website: https://www.megasec.com.tw
Tel:(02)3393-0898

IV. Contact Information of the CPA for the Latest Financial Report
Name of CPA: Hsuan-Hsuan Wang, Hui-Yuan Liu
Firm: Ernst & Young Taiwan
Address: 9F, No. 333, Sec.1 Keelung Rd. Taipei City 110, Taiwan
Website: https://www.ey.com
Tel:(02)2757-8888

V. Overseas trade place for listed negotiable securities: None

VI. Company website: http://www.ccwi.com.tw

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2025 Annual Report

| Content | Contents |

| --- | --- |
| One. Report to Shareholders | 1 |
| Two. Corporate Governance Report | 4 |
| I. Background information of the directors, president, vice presidents and heads of various departments | 9 |
| II. Compensation to directors, supervisors, the president, and vice presidents in recent year... | 10 |
| III. Corporate governance status | 15 |
| IV. CPA Fees | 51 |
| V. Change of CPA | 52 |
| VI Any of the Company’s chairperson, president, or manager responsible for financial or accounting affairs being employed by the CPA firm or any of its affiliated companies within the last year | 52 |
| VII. Details of shares transferred or pledged by directors, supervisors, managers, and shareholders with more than 10% shareholding in the last year up to the publication date of the annual report | 52 |
| VIII. Information on the top ten shareholders who are related persons, spouses or relatives within the second degree | 52 |
| IX. Investments jointly held by the Company, the Company’s directors, managers, and enterprises directly or indirectly controlled by the Company, and their aggregate shareholding ratio | 52 |
| Three. Fund Raising Situation | 54 |
| I. Capital and shares | 57 |
| II. Corporate bonds, preferred shares, overseas depositary receipts, employee stock option certificates and new shares with restricted employee rights | 57 |
| III. New shares issued for merger or acquisition | 57 |
| IV. Execution of fund utilization plan | 57 |
| Four. Operational Overview | 58 |
| I. Business activities | 58 |
| II. Market and sales overview | 60 |
| III. Information on employees for the last 2 years and up to the publication date of the annual report | 63 |
| IV. Environmental protection expenses | 63 |
| V. Labor-management relations | 63 |
| VI. Infocom security management | 66 |
| VII. Major contracts | 66 |
| Five. Review and Analysis of Financial Status and Business Performance, and Risk | 68 |
| I. Financial status | 68 |
| II. Financial performance | 68 |

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III. Cash flow ... 69
IV. Material capital expenditures in the last year and the impact on the financial status ... 69
V. Investment policy for the last year, the main reasons for profit or loss, improvement plan and investment plan for the coming year ... 70
VI. Assessment of risk items in the last year up to the date of publication of the annual report ... 70
VII. Other material issues ... 70
Six. Special Disclosures ... 71
I. Information of affiliated companies ... 72
II. Private placement of marketable securities in the last year and up to the publication date of this annual report ... 72
III. Other necessary supplementary explanations ... 72
Seven. Events with Significant Impacts to Shareholders’ Equity or Securities Prices as Defined in Subparagraph 2, Paragraph 2, Article 36 of the Securities and Exchange Act in the Last Year Up to the Publication Date of This Annual Report ... 72

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One. Report to Shareholders

Respected shareholders, Sirs and Madam,

Good day to you!

We appreciate for taking sparing the time to participate in the Company's 2026 shareholders' meeting. Sincerely thank you and welcome your coming. We hereby inform you of the Company's 2025 business result and 2026 business prospects as follows:

I. The effort and performance of the operation plan

The total of the operating revenue in 2025 is about NT$460.04 million and the profit after tax is about NT$ 583.83 million. The comparative report for the same period of the Company between 2025 and 2024 is as follows:

(1) Analysis of operating income/expenditure and profitability:

1. Income Statement
   Unit: NT thousand dollars

Item	2025	2024	Increase/ (Decrease)
			Amount	Amount
Operating Revenue	460,042	527,973	(67,931)	(12.87)
Operating Cost	439,194	463,991	(24,797)	(5.34)
Gross Profit	20,848	63,982	(43,134)	(67.42)
Operating expensive	100,092	163,140	(63,048)	(38.65)
Operating loss	(79,244)	(99,158)	(19,914)	(20.08)
Non-Operating Income and Expenses	680,161	1,647,922	(967,761)	(58.73)
Profit before tax	600,917	1,548,764	(947,847)	(61.20)
Income tax benefit	(17,078)	7,217	(24,295)	(336.64)
Net income	583,839	1,555,981	(972,142)	(62.48)
Earnings per share	3.87	10.31	(6.44)	(62.46)

Note: Net profit after tax for fiscal year 2025 decreased compared with fiscal year 2024, mainly due to the absence of gains from land sales.

1. Financial Structure and Profitability analysis

Item		2025	2024
Return on assets		13.67%	41.03%
Return on Equity		14.32%	43.26%
Paid-in Capital Ratio (%)	Operating loss	-5.25%	-6.57%
	Income Before Tax	39.81%	102.60%
Net profit margin		126.91%	294.71%

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(2) Operational status analysis:

In early 2025, the global economic environment fluctuated dramatically due to the "America First" policy and comprehensive reciprocal tariffs promoted by the newly elected U.S. President Trump. International zinc prices and the exchange rate of the US dollar against the New Taiwan dollar both showed a weakening trend. International zinc prices fell from USD 3,043 in December 2024 to USD 2,625 in April 2025, a drop of 13.7%. During the same period, weak market demand and competition from low-priced foreign goods further squeezed the company's profit margin in the second and

third quarters.

However, as tariff policies gradually became clearer from the third quarter onwards, market confidence stabilized, and international zinc prices rebounded from their low point in April 2025 to USD 3,160 in December 2025, an increase of 20.4%, which led to improved profits for the company in the fourth quarter.

Overall, in 2025, revenue decreased by 12.87% compared to 2024, and gross profit shrank by 67.42% due to market fluctuations and exchange rate changes. However, thanks to the significant profit growth of the reinvestment company, TAIWAN PURITIC CORP., the company's net profit after tax in 2025 reached NT$583.83 million, maintaining stable overall financial performance, with basic earnings per share still at NT$3.87.

(3) The status of research and development:

1. Continue to cooperate with the policy of Energy Saving and Carbon Reduction of the Ministry of Economic Affairs' electricity; plans to achieve the annual electricity saving target of 1%.
2. Using artificial intelligence (AI) combined with technology development, improve product production quality and efficiency
3. Continuous research and development granulating machine, expect to reduce losses and lower production costs

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II. The overview of 2026 business plans

(1) Management guideline :
1. Fulfill corporate social responsibility, and actively participate in public welfare activities.
2. Continue to develop special-grade chemicals and open up new marketing.
3. Actively dispose of idle assets to enrich working capital and diversify operations to improve operating efficiency.

(2) The Company’s expected sales volumes in 2026 as follows:

Sodium Hydrosulfite	1,300 MT
Zinc Oxide	2,300 MT
Sodium Formaldehyde Sulfoxylate	1,800 MT
Sodium Metabisulfite	5,000 MT

III. Marketing Strategy and Production

(1) Marketing Strategy
- Continuously R&D and innovate to reduce the cost of products and obtain greater profits. Develop new products to open up a new business field.
- Actively explore new markets with the slogan “low-price but high-quality.”

(2) Production Policy
- Continue to promote the "Material Saving Bonus" to let all employees work together to reduce costs.
- Put into effect "Energy Saving and Waste Reduction" to reduce costs and protect the environment.
- Actively develop high-value-added products to expand business areas.

After years of hard work, in addition to Taiwan, the Company also exported to the United States, Europe, New Zealand, Australia, South Africa, Northeast Asia, Southeast Asia, and other places. The Company hopes that based on continuously improving quality with research and development technology can increase the market share with "low-price but high-quality products" also can enhance the operating system. We expect to reach the scheduled goal of sales volumes in 2026.

IV. Future Development Strategies and the Impact of External Competition, Regulations, and Changes in the Overall Business Environment

The Company will continue to closely monitor changes in the international political and economic landscape as well as trends in raw material prices, while flexibly adjusting its order-taking strategies and inventory management. It will further deepen the development and market expansion of high value-added products, and strengthen the management of its invested businesses, in order to enhance overall profitability and shareholder equity.

In the end, may health, joy, and happiness be around you today and always. Thank you again!

Chairwoman, Jou-Er, Ing

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Two. Corporate Governance Report

I. Background information of the directors, president, vice presidents and heads of various departments:

(I-1) Information of directors
April 26, 2026

Position	Nationality or place of registration	Name	Gender/age	Date elected/appointed	Term	Date first elected	Shareholding when elected	Current shareholding	Shareholding of spouse and underage children	Shares held by proxy	Main career (academic) achievements	Concurrent duties in the Company and other companies	Other managers or directors with a relationship of spouse or relative within the second degree of kinship	Remarks
Shares	Shareholding percentage %	Shares	Shareholding percentage %	Shares	Shareholding percentage %	Shares	Shareholding percentage %	Position	Name	Relation
Directors	The Republic of China	Hengchang Investment Corp.	-	2020.05.28	3 years	1993.04.19	19,534,906	12.94	19,571,906	12.97	-	-	-	-
Chairwoman	The Republic of China	Jou-Er, Ing Representative, Hengchang Investment Corp.	Female 80~90	2020.05.28	3 years	2012.06.20	0	0	0	0	0	0	0	0
Directors	The Republic of China	Litai Investment Corp.		2023.06.21	3 years	2023.06.21	15,956,550	10.57	16,212,550	10.74	-	-	-	-
Directors	The Republic of China	C.C. Hung Representative, Litai Investment Corp.	Male 60~70	2020.12.31	3 years	2020.12.31	1,652,000	1.09	1,398,000	0.92	0	0	40,000	0.03
Independent director	The Republic of China	Chi-Ying Tseng	Female 50~60	2023.06.21	3 years	2023.06.21	0	0	0	0	0	0	0	0
Independent director	The Republic of China	Lien-Chu Yeh	Female 70~80	2023.06.21	3 years	2023.06.21	0	0	0	0	0	0	0	0
Independent director	The Republic of China	Wen-Kuei Chi	Male 70~80	2023.06.21	3 years	2023.06.21	0	0	0	0	0	0	0	0

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December 31, 2025

Table I. Major Shareholders of Corporate Shareholders

Name of corporate shareholder (Note 1)	Major shareholders of corporate shareholder (Note 2)
Hengchang Investment Corp.	Hongchang Investment Co., Ltd. (33.27%), Yingchang Go Education Foundation (29.33%), Litai Investment Co., Ltd. (19.33%), Fa-Nuo Ying (16.67%)
Litai Investment Co., Ltd.	Yingchang Go Education Foundation (29.33%), Hengchang Investment Corp.(21.33%), Hongchang Investment Co., Ltd. (21.33%), Ming-Hao Ying(21.33%)[deceased]

Note 1: If a director is the representative of a corporate shareholder, the name of the corporate shareholder shall be filled in.
Note 2: Fill in the name of the major shareholder (whose equity ratio exceeds 10% or the equity ratio is among the top ten) of the corporate shareholder. If the major shareholder is a legal person, fill out the following table.
Note 3: If the corporate shareholder is not a company, the name of the shareholder and shareholding ratio to be disclosed in the preceding paragraph shall be the name of the investor or donor (please refer to the announcement of the Judicial Yuan) and its contribution or donation ratio. If the donor has passed away, a note of "deceased" shall be added.

Table II. Major Corporate Shareholders of the Corporate Shareholder in Table I
December 31, 2025

Name of Institutional Shareholder	Major Shareholders of Institutional Shareholder
Yingchang Go Education Foundation	Jou-Er, Ing, Chairperson
Hongchang Investment Co., Ltd.	Ming-Hao Ying (99.70%) [deceased]

• 5 -

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(I-2) Directors' background

1. Disclosure of professional qualifications of directors and independence of independent directors:

Criteria Name	Professional qualifications and experience	Independence status	Number of positions as an independent director in other public companies
Jou-Er, Ing	Master, University of California
Professional in accounting, operation, leadership or management
Chairperson, Zhong Cheng Investment Co., Ltd.
Chairperson, Cathay Chemical Works Inc.
Chairperson and President, Reward Wool Industry Corporation
Chairperson, Taiwan Puritic Corp.
No occurrence of any of the circumstances stated in Article 30 of the Company Act.	-	-
C.C. Hung	Accounting Department of Fu Jen Catholic University, Advanced examination of audit personnel qualified, CPA
Professional in accounting, operation, leadership or management
Responsible person, Chicheng Industrial Co., Ltd.
President of the Company
No occurrence of any of the circumstances stated in Article 30 of the Company Act.	-	-
Chi-Ying Tseng	Master of Laws, University of Iowa, Advanced bar examination qualified, attorney at law
Lawyer, Ji-Ying Law Firm
Attorney-at-law, Sun Law Firm
Legal Counsel of Listed Company	1. Not employed by the Company or any of its affiliated companies.
2. Not a director of the Company or any of its affiliated companies.
3. Does not hold more than 1% of the Company’s outstanding shares in his/her own name or under the name of his/her spouse or minor children, or in the name of another person, nor is a top-10 natural-person shareholder of the Company.
4. Not a manager listed in (1), or a spouse, 2nd-degree relative or 3rd-degree direct relative to any personnel listed in (2) or (3).
5. Not a director or employee of a corporate shareholder that directly holds 5% or more of the total number of issued shares of	-
Lien-Chu Yeh	Zhong Li Commercial Senior school. Accountant in charge, Deputy Manager of Management Department, Internal Audit Manager of Reward Wool Industry Corporation Director, Cathay Chemical Works, Inc.		-
Wen-Kuei Chi	National Taiwan University of Science and Technology.
Programmer, Sampo Corporation
Advisory Client representative, Kang Da Information Inc.
Deputy Manager of R&D Department of Reward Wool Industry Corporation		-

• 6 -

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• 7 -

| | | the Company, or is a top 5 shareholder, or designates its representative to serve as a director of the Company pursuant to paragraph 1 or 2, Article 27 of the Company Act.
6. Not a director or employee of another company which has a seat on the board of directors, or more than half of its shares with voting rights are controlled by the same owner of the Company
7. Not a director or employee of another company or institution who is the same person or spouse as the Chairperson, President or an equivalent position of the Company.
8. Not a director or manager of another company or institution which has financial or business dealings with the Company, or is a shareholder holding more than 5% of the shares of the Company.
9. Not a professional, sole proprietor, partner, business owner or partner, or a director, supervisor, manager or the spouse of the above of a company or institution which provides audit services to the Company or its affiliated enterprises, or the cumulative remuneration amount of which in the past two years exceeds NT$500,000 for business, legal affairs, finance or accounting related services.
10. Not a spouse or relative of the second degree of any other director.
11. No occurrence of any of the circumstances stated in Article 30 of the Company Act.
12. Not a government agency, a legal person or its representative as stipulated in Article 27 of the Company Act. |
| --- | --- | --- |

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1. Diversity and Independence of the board of directors:

(1) Diversity of the board of directors:

Corporate Governance Best Practices Guidelines of the Company stipulates that the selection of directors should take into account diversity and the overall composition of the board of directors. The members of the board of directors should have rich experience and expertise in business, legal affairs, management and other professional fields to meet the principle of mutual complementarity. In addition, directors who are also managers of the Company should not exceed one third of the number of seats on the board of directors. The Company also pays attention to gender equality in the composition of the board of directors, target for female directors to be more than one-third. At present, there are 3 women among the 5 directors, reach 60%.

The tenure of independent directors is 3 years.

Among the 5 directors, 1 director is over 50 years old, 3 director is over 70 years old, and 1 director over 80 years old

(2) Independence of the board of directors:

• According to the requirements of the Listing Rules, the Company has obtained a written statement from each independent non-executive director confirming the independence of him/herself and his/her immediate family members relative to the Company.

• The board of directors of the Company consists of 5 directors, including 3 independent directors, accounting for 60% of directors. There are no spouses or relatives within the second degree among the five directors.

• 8 -

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(II) Background information of the president, vice presidents and heads of various departments:
April 26, 2026

Position	Nationality	Name	Gender	Date elected/appointed	Current shareholding		Shareholding of spouse and underage children		Shares held by proxy		Major experience and education	Concurrent positions in other companies	Spouse or relatives of the second degree or closer acting as managers			Remarks
					Shares	Shareholding percentage %	Shares	Shareholding percentage %	Shares	Shareholding percentage %			Position	Name	Relation
President and Head of Finance	The Republic of China	C.C. Hung	Male	2020.12	1,398,000	0.92	0	0	40,000	0.03	Cathay Chemical Works Inc. Supervisor	Director, Chicheng Industrial Co., Ltd.	None
Vice President	The Republic of China	Geng-Sheng Jin	Male	1994.12	37,505	0.03	0	0	0	0	Cathay Chemical Works Inc. Factory Director	None	None
Manager and Factory Director	The Republic of China	Chi-Ming Hou	Male	2017.03	1,175	0	0	0	0	0	Cathay Chemical Works Inc. Chief of Production Section	None	None
Head of Accounting	The Republic of China	Jin-Hua Hsu	Female	2005.01	0	0	0	0	0	0	Cathay Chemical Works Inc. Chief of Bookkeeping Section	None	None
Head of Audit	The Republic of China	Shu-Chen Tsai	Female	2019.08	2,000	0	0	0	0	0	Cathay Chemical Works Inc. Section Chief	None	None

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II. Compensation to directors, supervisors, the president, and vice presidents in recent year:

(I) Compensation to directors, the president, and vice presidents

Unit: NT$ thousand

1. Compensation to general and independent directors

Position	Name	Directors’ compensation							Sum of A, B, C, D and total as a % of the net profit after tax (%)	Compensation received as an employee								Sum of A, B, C, D, E, F, G and total as a percentage of net income after tax (%)	Compensation from the parent company or business investments other than subsidiaries
		Remuneration (A) (Note 2)		Severance and pension (B)		Remuneration for directors (C)		Business execution expenses (D)			Salary, bonus, allowance (E)		Severance and pension (F) (Note 2)		Remuneration for employees (G)
		The Company	All companies included in the financial statements (Note 1)	The Company	All companies included in the financial statements (Note 1)	The Company	All companies included in the financial statements (Note 1)	The Company	All companies included in the financial statements (Note 1)	The Company	All companies included in the financial statements (Note 1)	The Company	All companies included in the financial statements (Note 1)	The Company	All companies included in the financial statements (Note 1)	Amount paid in cash	Amount paid in shares	Amount paid in cash		Amount paid in shares	Amount paid in shares	Amount paid in shares
Corporate director	Hengchang Investment Corp.	-	-	-	-	2,301	-	-	0.39	-	-	-	-	-	-	-	-	-	0.39	-	-
Chairperson	Jou-Er, Ing, Representative, Hengchang Investment Corp.	3,434	-	-	-	-	-	120	-	0.61	-	-	-	-	-	-	-	-	0.61	-	-
Corporate director	Litai Investment Corp.	-	-	-	-	1,790	-	-	0.31	-	-	-	-	-	-	-	-	-	0.31	-	-
Director	C.C. Hung, Representative, Litai Investment Corp.	-	-	-	-	-	-	120	-	0.02	-	3,267	-	-	2,465	-	-	-	1.00	-	-
Independent Directors	Chi-Ying Tseng	-	-	-	-	767	-	140	-	0.16	-	-	-	-	-	-	-	-	0.16	-	-
	Lien-Chu Yeh	-	-	-	-	767	-	140	-	0.16	-	-	-	-	-	-	-	-	0.16	-	-
	Wen-Kuei Chi	-	-	-	-	767	-	140	-	0.16	-	-	-	-	-	-	-	-	0.16	-	-
1. Please explain the policy, system, standards, and structure by which independent director compensation is paid and the association between the amount paid and the independent director’s responsibilities, risks and time invested: Regardless of the Company’s profit or loss, the independent directors of the company will be paid a fixed monthly fee of NT$10,000 per person. Article 28 of the Company’s Articles of Association stipulates that no more than 1% of the profit in the current year shall be the director’s remuneration. 2. Compensation received by the director for providing service (e.g. consultancy service as a non-employee) to any of the companies included in the financial statements in the most recent year: None.

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Remuneration ranges

Remuneration ranges for the directors of the Company	Director's name
	Total amount of the first four remunerations (A+B+C+D)		Total amount of the first seven remunerations (A+B+C+D+E+F+G)
	The Company	All companies included in the financial statements (Note 1)	The Company	All reinvestments
Below NT$ 1,000,000	C.C. Hung Chi-Ying Tseng, Lien-Chu Yeh, Wen-Kuei Chi, (4 people)	—	Chi-Ying Tseng, Lien-Chu Yeh, Wen-Kuei Chi, . (3 people)	—
NT$ 1,000,000 (inclusive) - NT$ 2,000,000 (non-inclusive)	—	—	—	—
NT$ 2,000,000 (inclusive) - NT$ 3,500,000 (non-inclusive)	Jou-Er, Ing	—	Jou-Er, Ing	—
NT$ 3,500,000 (inclusive) - NT$ 5,000,000 (non-inclusive)	—	—		—
NT$ 5,000,000 (inclusive) - NT$ 10,000,000 (non-inclusive)	—	—	C.C. Hung	—
NT$ 10,000,000 (inclusive) - NT$ 15,000,000 (non-inclusive)	—	—	—	—
NT$ 15,000,000 (inclusive) - NT$ 30,000,000 (non-inclusive)	—	—	—	—
NT$ 30,000,000 (inclusive) - NT$ 50,000,000 (non-inclusive)	—	—	—	—
NT$50,000,000 (inclusive) ~ NT$100,000,000 (exclusive)	—	—	—	—
NT$ 100,000,000 and above	—	—	—	—
Total	5 people		5 people

Note 1: The Company is not required to prepare consolidated statements.

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1. Compensation to the president and vice presidents

Unit: NT$ thousand

Note 1: The Company is not required to prepare consolidated statements.

Position	Name	Salary (A)		Severance pay and pension (B) (Note 2)		Bonuses and allowances (C)		Remuneration for employees (D)				Sum of A, B, C, D and total as a % of the net profits after tax(%)		Compensation from the parent company or business investments other than subsidiaries
		The Company	All companies included in the financial statements (Note 1)	The Company	All companies included in the financial statements (Note 1)	The Company	All companies included in the financial statements (Note 1)	The Company		All companies included in the financial statements (Note1)		The Company	All companies included in the financial statements (Note 1)
								Amount paid in cash	Amount paid in shares	Amount paid in cash	Amount paid in shares
President	C.C. Hung	4,584	-	102	-	1,030	-	4,272	-	-	-	9,988/1.71	-	-
Vice President	Geng-Sheng Jin

Remuneration ranges

Remuneration ranges for the president and vice president of the Company	Names of President and vice presidents
	The Company	All investee companies (Note)
Below NT$ 1,000,000
NT$ 1,000,000 (inclusive) - NT$ 2,000,000 (non-inclusive)
NT$ 2,000,000 (inclusive) - NT$ 3,500,000 (non-inclusive)
NT$ 3,500,000 (inclusive) - NT$ 5,000,000 (non-inclusive)	Geng-Sheng Jin
NT$ 5,000,000 (inclusive) - NT$ 10,000,000 (non-inclusive)	C.C. Hung
NT$ 10,000,000 (inclusive) - NT$ 15,000,000 (non-inclusive)
NT$ 15,000,000 (inclusive) - NT$ 30,000,000 (non-inclusive)
NT$ 30,000,000 (inclusive) - NT$ 50,000,000 (non-inclusive)
NT$50,000,000 (inclusive) ~ NT$100,000,000 (exclusive)
NT$ 100,000,000 and above
Total	2 people

Note: The Company is not required to prepare consolidated statements.

1. Names of managers entitled to employee remuneration and distribution status

Unit: NT$ thousand

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	Position (Note 1)	Name (Note 1)	Amount paid in shares	Cash amount	Total	Total amount as a % of the net profits after tax (%)
Managerial Officer:	President	C.C. Hung	0	6,942	6,942	1.19
	Vice President	Geng-Sheng Jin
	Head of Audit	Shu-Chen Tsai
	Head of Accounting	Jin-Hua Hsu
	Factory Director	Chi-Ming Hou

Note 1: Individual names and professional titles shall be disclosed, but earnings distribution may be disclosed in aggregate.

Note 2: The amount of employee remuneration (including stock and cash) of managers proposed to be distributed by the board meeting before the shareholders' meeting for earnings distribution in the most recent year. If it cannot be estimated, the proposed distribution amount of the year shall be calculated according to the proportion of the actual distribution amount of last year. Net profit after tax refers to the net profit after tax of the most recent year; if the International Financial Reporting Standards have been adopted, the net profit after tax refers to the net profit after tax of the individual or respective financial report of the most recent year.

Note 3: The scope of application of managers is as follows in accordance with the provisions of the SFC's letter dated March 27, 2003 referenced Tai-Tsai-Cheng-III No. 0920001301:

(1) President and equivalent
(2) Vice president and equivalent
(3) Assistant vice president and equivalent
(4) Head of Finance
(5) Head of Accounting
(6) Other persons who have the right to manage affairs and sign for the Company

Note 4: If directors, the president and vice presidents receive employee remuneration (including stock and cash), this form shall be filled out in addition to Schedule 1-2.

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(II) In case of any of the following circumstances, disclose the remuneration paid to individual directors:

1. A company that has posted after-tax deficits in the parent company’s financial reports or individual financial reports within the three most recent fiscal years shall disclose the remuneration paid to individual directors. This requirement, however, shall not apply if the company has posted net profit after tax in the parent company only financial report or individual financial report for the most recent fiscal year and such net profit after tax is sufficient to offset the accumulated deficits:

No such situation from 2025 up to the publication date of the annual report.

1. A company that has had an insufficient director shareholding percentage for 3 consecutive months or longer during the most recent fiscal year shall disclose the remuneration of individual directors:

No such situation from 2025 up to the publication date of the annual report.

1. A company that has had an average ratio of share pledging by directors in excess of 50 percent in any 3 months during the most recent fiscal year shall disclose the remuneration paid to each individual director having a ratio of pledged shares in excess of 50 percent for each such month:

No such situation from 2025 up to the publication date of the annual report.

1. If the total amount of remuneration received by all of the directors in their capacities as directors or of all of the companies listed in the financial reports exceeds 2 percent of the net profit after tax, and the remuneration received by any individual director exceeds NT$15 million, the company shall disclose the remuneration paid to that individual director:

No such situation from 2025 up to the publication date of the annual report.

1. A company is ranked within the lowest two tiers in the corporate governance evaluation for the most recent fiscal year, or in the most recent fiscal year or up to the date of publication of the annual report for that year, the company's securities have been placed under an altered trading method, suspended from trading, delisted from the TWSE or the TPEx, or the Corporate Governance Evaluation Committee has resolved that the company shall be excluded from evaluation.

Please refer to page 11 for compensation details of general and independent directors.

1. The average annual salary of the full-time non-management employees in a TWSE or TPEx listed company is less than NT$500,000 in the most recent fiscal year.

No such situation from 2025 up to the publication date of the annual report.

1. A TWSE or TPEx listed company had an increase of 10 percent or more in net profit after tax for the most recent fiscal year, but the average annual salary of its full-time non-management employees did not increase relative to the preceding fiscal year.

No such situation from 2025 up to the publication date of the annual report.

1. A TWSE or TPEX listed company had a decline in after-tax net income reaching 10 percent and exceeding NT$5 million for the most recent fiscal year, along with an increase in its average remuneration per director (not including the remuneration of those who are also employees) reaching 10 percent or more and exceeding NT$100,000.

No such situation from 2025 up to the publication date of the annual report.

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(III) Compare and explain the proportion of the total remuneration paid by the Company to the directors, president and vice presidents of the Company in the past two years to the net profit after tax, and explain the policies, standards and combinations of remuneration, and the procedures for setting the remuneration in relation to business performance and future risks:

Unit: NT$ thousand

Position	2024		2025
	Total amount as a % of the net profit after tax (%)		Total amount as a % of the net profit after tax (%)
Directors	20,390	1.31	10,486	1.80
President Vice President	16,558	1.06	9,988	1.71
Compensation policies, standards and combinations, procedures of setting compensation, and the relationship with business performance and future risks:
1. The compensation of the directors, including travel expenses or remuneration, and directors’ remuneration, shall be paid in accordance with the Articles of Association of the Company.
2. The remuneration of the president and vice presidents, including the base salary, bonus and remuneration, shall be paid in accordance with the principle of the Company’s payment by rank.
3. Relationship between business performance and future risks: The Company’s policies and procedures for paying remuneration to directors, the president and vice presidents are positively related to its business performance, and the amount of payment is disclosed in accordance with laws and regulations. The future risks should be limited.

III. Corporate governance

(I) Functionality of board of directors

Operation of the board meeting

A total of 4 (A) board of board meetings were held in the most recent year, and the attendance status is as follows:

Position	Name		Number of attendances in person B	Number of proxy attendance	Rate of attendance in person (%) [B/A]	Remarks
Chairperson	Jou-Er, Ing	Representative, Hengchang Investment Corp.	4	0	100
Directors	C.C. Hung	Representative, Litai Investment Corp	4	0	100
Independent director	Chi-Ying Tseng		4	0	100
Independent director	Lien-Chu Yeh		4	0	100
Independent director	Wen-Kuei Chi		4	0	100

Other mandatory disclosures:

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1. The operation of the board meeting does not have any of the following circumstances:
   (1) Matters listed in Article 14-3 of the Securities and Exchange Act.
   (2) Any other board resolution(s) with independent directors’ objection or reservation on file or in writing.

2. Directors’ avoidance of motions with personal interests involved:

Meeting name	Date	Motion	Avoidance due to personal interests and voting results
14^{th} board meeting of the 25^{th} term	2025.11.11	Discussion on the Company’s 2026 adjustment to the chairperson’s and manager’s salary and remuneration	Except that the related parties, Chairperson Jou-Er, Ing and President C.C. Hung, avoided the discussion and voting, the other directors present had no objection and passed the proposal.

1. The cycle, period, scope, method and content of directors’ self-assessment:

The board meeting passed the “Measures for Performance Evaluation of the Board of Directors and Functional Committees” at the 11th board meeting of the 23rd term on November 5, 2019. At the end of each year, the board meeting of the Company regularly evaluates the performance of the board of directors, individual board members and functional committees.

The results of the performance evaluation of the board of directors, individual board members and functional committees in 2025 were “excellent”; the self-assessment result of the 5 directors was “Excellent”.

Execution of the performance evaluation of the board of directors

Evaluation frequency	Evaluation duration	Evaluation scope	Evaluation method
Once a year	January 1, 2024 to December 31, 2024	The board of directors, individual board members and functional committees	Self-assessment of the board of directors and individual board members
Evaluation content
1. Performance evaluation of the board of directors: The items and contents of the “Self-Assessment Questionnaire for the Board of Directors’ Performance Evaluation” include five aspects: participation in the company’s operations, improvement of the decision-making quality of the board meeting, composition and structure of the board of directors, election and continuous training of directors, and internal control.
2. Performance evaluation of individual board members: The items and contents of the “Self-Assessment Questionnaire for Individual Board Members’ Performance Evaluation” include six aspects: understanding of the company and its responsibilities, directors’ responsibilities, participation in the company’s operations, internal relationship management and communication, directors’ expertise and continuous learning, and internal control.
3. Performance evaluation of functional committees: The items and contents of the “Self-Assessment Questionnaire for Functional Committees’ Performance Evaluation” include five aspects: participation in the company’s operations, understanding of the functional committee’s responsibilities, improvement of the decision-making quality of the functional committee, committee composition and election of members, and internal control.

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1. Enhancement of the functionality of board of directors (e.g. setup of Audit Committee, improvement of information transparency etc.) in the current and the most recent year, and evaluation of execution status:

(1) Establishment of an audit committee: The shareholders' meeting re-elected directors in 2023; three independent directors were elected and an audit committee was established.
(2) Improvement of information transparency: The Company has a dedicated person responsible for the disclosure of monthly revenue, material information, and resolutions of the board meeting, and for entering such information on the MOPS in accordance with regulations.
(3) The board of directors has formulated the "Corporate Governance Best-Practice Principles", Ethical Corporate Management Best Practice Principles and "Employee Work Rules" to build correct ethical corporate management and ethical conducts with enforceable codes of conduct.

(II) Participation of the Audit Committee in the operation of the board of directors:

Operation of the Audit Committee

1. A total of 4 (A) board meetings were held in the most recent year, and the attendance status is as follows:

Position	Name	No. of persons in actual attendance (B)	Number of proxy attendance	Rate of attendance in person (%) [B/A]	Remarks
Convener	Chi-Ying Tseng	4	0	100
Member	Lien-Chu Yeh	4	0	100
Member	Wen-Kuei Chi	4	0	100

1. Annual work focus:

The Audit Committee of the Company consists of 3 independent directors. The purpose of the Audit Committee is to assist the board of directors in its supervision of the Company's integrity in the implementation of accounting, auditing and financial reporting processes and financial controls. The Audit Committee's main responsibilities include:

(1) Review of financial statements.
(2) Review of the internal audit plan.
(3) Review of the internal control system formulated or amended in accordance with Article 14 of the Securities and Exchange Act.
(4) Evaluation of the effectiveness of the internal control system.
(5) Review of operating procedures for major financial activities such as acquisition or disposal of assets which are formulated or amended in accordance with Article 36-1 of the Securities and Exchange Act.
(6) Review of loan and credit extension cases.
(7) Review of the business report and earnings distribution proposal.
(8) Assessment of the appointment and independence of certifying CPAs.
(9) Review of the proposal for earnings distribution or loss compensation.
(10) Other material matters prescribed by the Company or the competent authority.

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1. Annual operating status:
   (1) If the operation of the Audit Committee meets any of the following conditions, state the date and session of the board meeting, the content of the proposal, the board meeting’s resolution, and how the Company has responded to the Audit Committee’s opinions.

① Matters listed in Article 14-5 of the Securities and Exchange Act:

Meeting date	Content of the proposal by the Audit Committee	Resolutions not approved by the Audit Committee but approved by more than 2/3 of all directors
2025.03.14	1. Change of the CPA who certified the company's financial statements. 2025 accountant's fees and independent competency assessment of accounting firms.
2. The Company’s 2024 business report and financial statements.
3. The Company’s 2024 earnings distribution.
4. The Company’s 2024 “Assessment of the Effectiveness of the Internal Control System”.
5. Amend some provisions of the Company's "Board of Directors' Meeting Rules".
Due to the need for working capital turnover, the Company plans to apply for a short-term financing line from Mega International Commercial Bank.	No
	Audit Committee’s resolution: Agreed and passed by all committee members.
	The Company’s response to the Audit Committees’ opinions: Passed by all attending directors.
2025.05.07	1. The Company’s 2024 Q1 business report and financial statements.	No
	Audit Committee’s resolution: Agreed and passed by all committee members.
	The Company’s response to the Audit Committees’ opinions: Passed by all attending directors.
2025.08.13	1. The Company’s business report and financial statements for the first half of 2025.	No
	2. Due to working capital turnover needs, the Company applied to E.SUN Bank for a short-term financing credit facility.
	Audit Committee’s resolution: Agreed and passed by all committee members.
	The Company’s response to the Audit Committees’ opinions: Passed by all attending directors.
2025.11.11	1. The Company’s business report and financial statements for the first three quarters of 2025.
2. Draw up to reconfirm the list of non-assurance services that Ernst & Young and its affiliated companies expect to provide	No

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| | in fiscal year 2026.
3. The Company's 2026 Annual Audit Plan.
4. Proposal to revise certain provisions of the Company’s “Internal Control System” and “Internal Audit System and Implementation Rules.”
5. Proposal for the Company to enter into related-party agreements, including the “Factory Lease Agreement,” “Information Maintenance Agreement,” “Building Joint Management Agreement,” and “Property Lease Agreement,” and other related matters.
6. Case of renewing the company’s financing line with Shanghai Commercial & Savings Bank upon expiration | |
| --- | --- | --- |
| | Audit Committee’s resolution: Agreed and passed by all committee members. | |
| | The Company’s response to the Audit Committees’ opinions: Passed by all attending directors. | |

② Other than those described above, any resolution not passed by the Audit Committee but approved by more than two-thirds of the directors: None.

(2) Independent directors’ avoidance of motions with personal interests involved: state the name of the independent director, the content of the resolution, the reason for avoidance due to personal interests, and the voting result: None.

(3) Communication between the Audit Committee members (independent directors) and the internal audit director and the CPAs:

① The Company's independent directors regularly hold meetings with accountants and corporate governance units during the annual report and third quarter report audits. Review and discuss the findings of the CPA audit and supervise the implementation of the following matters.

A. Appropriate presentation of Company financial statements
B. Effective implementation of internal control in the Company
C. Company complies with relevant laws and regulations
D. Control of existing or potential risks of the company.

② Method of communication between the Audit Committee members and the head of internal audit and the CPAs:

A. The head of internal audit meets with the Audit Committee regularly every quarter for reporting and communication with each other on the implementation status of the Company’s internal audit and the operation of the internal control system, and submits the audit report to the Audit Committee for review every month.
B. The appointed CPAs review the financial statements of the Company and issue an audit opinion for the Audit Committee to review.
C. In addition to regularly reporting the implementation status of internal audit to the Audit Committee as a non-voting delegate, the head of internal audit communicates and discusses with independent directors either in person or by telephone, fax or email as required.

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(III) Deviation and reasons for deviation from the Corporate Governance Best-Practice Principles for TWSE/TPEX Listed Companies

Assess criteria	Actual governance			Deviation and causes of deviation from Corporate Governance Best-Practice Principles for TWSE/TPEX Listed Companies
	Yes	No	Summary
I. Has the Company established and disclosed its corporate governance best-practice principles based on the “Corporate Governance Best-Practice Principles for TWSE/TPEX Listed Companies”?	☑		1. The Company has formulated its “Corporate Governance Best Practice Principles”
2. Disclosed it on the MOPS and the Company website.	No material deviation.
II. Shareholding structure and shareholders’ equity
(I) Has the Company created a set of internal procedures to handle shareholders’ suggestions, queries, disputes, and litigations and enforced them accordingly?
(II) Does the company have a list of the major shareholders who control the company and the final controllers of such major shareholders?
(III) Has the Company established and implemented risk management practices and firewalls for its affiliated companies?	☑
☑
☑		In addition to the “Rules of Procedure for Shareholders’ Meetings”, the Company holds shareholders’ meetings every year as a channel for regular communication with shareholders; to establish a good and timely communication mechanism with investors, the positions of a spokesperson and an acting spokesperson are set up to deal with shareholders’ suggestions, doubts and other related matters.
The Company holds a list of shareholders based on the register of shareholders provided by the stock affairs agent, and has a list of final controllers through interaction with the major shareholders.
The business and financial dealings between the Company and its affiliated enterprises have been executed and controlled in accordance with the relevant regulations of the competent authority.	No material deviation.
No material deviation.
No material deviation.
(IV) Has the Company established internal policies that prevent insiders from trading securities against non-public information?	☑		In addition to Article 15 of the “Ethical Corporate Management Best Practice Principles” which expressly stipulates that the personnel of the Company shall not engage in insider trading by making use of the unpublished information they have, the Company also established an operating procedure for the prevention of insider trading which specifies the matters to be followed by insiders of the Company.
The Company irregularly forwards the information publicized by the competent authority to insiders, and irregularly publicizes the relevant regulations and	No material deviation.

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Assess criteria	Actual governance			Deviation and causes of deviation from Corporate Governance Best-Practice Principles for TWSE/TPEX Listed Companies
	Yes	No	Summary
			other information to all employees in the monthly meeting.
III. Composition and responsibilities of the board of directors
(I) Does the board of directors formulate diversified policies, and specific management objectives and implementation?

(II) Does the Company voluntarily | ☑ | | The Corporate Governance Best Practice Principles of the Company clearly stipulates that in the election of directors; consideration shall be given to their diversification and the overall configuration of the board of directors. The members of the board of directors shall generally have the knowledge, skills and accomplishments necessary to perform their duties. The Company also pays attention to gender equality in the composition of the board of directors. The goal is female directors of more than one-third.

The diversity of the members of the board of directors of the Company is described as follows:
1. Among the 5 directors, one has the employee status.
2. The Company also pays attention to gender equality in the composition of the board of directors. At present, there are 5 directors, including 3 female directors, accounting for 60%.
3. The members of the current board of directors have rich experience and expertise in commerce, legal affairs, management and other professional fields, and meet the principle of mutual complementarity, to improve the Company’s operation and achieve the goal of corporate governance.
4. Among the 5 directors, 1 director is over 50 years old, 3 directors are over 70 years old and the other 1 director is over 80 years old.
5. The terms of service of the three independent directors are 3 years. | No material deviation. |

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Assess criteria	Actual governance			Deviation and causes of deviation from Corporate Governance Best-Practice Principles for TWSE/TPEX Listed Companies
	Yes	No	Summary
establish functional committees other than the Remuneration Committee and the Audit Committee?	☑		The Company has established a Remuneration Committee and an Audit Committee, and the Board of Directors approved the establishment of the Sustainability and Ethical Management Committee on May 5, 2022.	Same as in the summary
(III) Has the Company established measures for evaluating the performance of the board of directors and the evaluation method? Does the Company conduct performance evaluation annually and regularly, and submit the results to the board of directors for reference on individual director’s salary, remuneration, and nomination for reappointment?	☑		On November 5, 2019, the company's board of directors approved the "Board of Directors Performance Evaluation Method", which clearly defines the evaluation period, evaluation scope and other matters to be followed. Thereafter, regular performance evaluation of the board of directors and submission of reports to the board of directors will be conducted every year. For the indicators with low scores or the suggestions of directors, special reports will be made to the directors for their information, to serve as a reference for future adjustments or improvements to the operation of the board of directors' meetings.	No material deviation.
(IV) Does the Company regularly evaluate the independence of the attesting CPAs?	☑		In addition to requiring attesting CPAs to provide a "Declaration of Independence" and "Audit Quality Indicators (AQIs)", evaluations are also conducted in accordance with the standards outlined in Notes 1 and 13 of the AQIs indicators. It has been confirmed that there is no other financial interest or business relationship with the Company, except for certification and taxation case fees. Accountant members also do not breach independence requirements. The latest evaluation results have been discussed and approved by the Audit Committee on 2026/3/12, and submitted to the Board of Directors f for	No material deviation.

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Assess criteria	Actual governance			Deviation and causes of deviation from Corporate Governance Best-Practice Principles for TWSE/TPEX Listed Companies
	Yes	No	Summary
			resolution on 2026/3/12, to assess the assessment of the independence and competency of attesting CPAs.
IV. Has the TWSE/TPEX listed company allocated an adequate number of competent corporate governance staff and appointed a head of corporate governance to oversee corporate governance affairs (including but not limited to providing directors with the information needed to perform their duties, assisting directors with legal compliance issues, handling board meeting and shareholders’ meeting related affairs, and preparing minutes of the board meeting and shareholders’ meeting)?	☑		The company's board of directors approved on March 8, 2023 that the president shall also serve as the director of corporate governance. The president has been a practicing CPA for 35 years and has been a supervisor of listed companies for many years. He has experience in managing financial and stock affairs of publicly listed companies. The main scope of responsibilities should at least include:
1. Handling matters related to the board meeting and the shareholders’ meeting in accordance with the law.
2. Preparing minutes of the board meeting and the shareholders’ meeting.
3. Assisting directors in taking office and continuing their studies.
4. Providing information required by the directors for conducting business.
5. Assisting directors in legal compliance.
6. Other matters stipulated in the Articles of Association or contracts of the Company.	No material deviation.
V. Has the Company provided proper communication channels and created a dedicated section on its website to address corporate social responsibility issues that are of significant concern to stakeholders (including but not limited to shareholders, employees, customers and suppliers)?	☑		The Company has dedicated personnel for its website handling the communicate with stakeholders.
To understand the expectations of stakeholders on the economic, environmental and social aspects of the Company, we collect opinions from different internal and external channels through questionnaires, the customer service online mailbox, the shareholders’ meeting, etc. as references for the Company to develop management policies in the future.	No material deviation.
VI. Does the Company engage a share transfer agency to handle	☑		The Company has appointed Mega Securities Co., Ltd. as the professional	No material deviation.

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Assess criteria	Actual governance			Deviation and causes of deviation from Corporate Governance Best-Practice Principles for TWSE/TPEX Listed Companies
	Yes	No	Summary
shareholder meeting affairs?			shareholder services agent for handling shareholders’ meeting affairs.
VII. Information disclosure
(I) Has the Company established a website that discloses financial, business, and corporate governance-related information?
(II) Has the Company adopted other means of information disclosure (such as setting up an English website, appointing dedicated personnel responsible for the collection and disclosure of Company information, implementing a spokesperson system, posting the Company’s earnings calls on its website, etc.)?
(III) Does the Company announce and file the annual financial report within two months after the end of each accounting period, and announce and file Q1, Q2 and, Q3 financial reports along with monthly business performance before the specified deadlines?	☑		The Company has dedicated personnel to disclose such information according to regulations, and the version will be updated in due course.

The Company has set up a website, and has dedicated personnel responsible for updating relevant information. The spokesperson will speak on the Company’s material issues; the corporate investor briefing files are placed on the Company’s website for the convenience of inquiry, and relevant information is announced on the MOPS.

Due to the schedule of preparation and audit of financial statements, the Company has not yet been able to announce and file its annual financial report within two months after the end of the fiscal year. However, based on the principle of information transparency, the Company has made a public announcement and filed its quarterly financial report and monthly business performance as early as possible before the specified deadline. | No material deviation.

No material deviation.

Same as in the summary. |
| VIII. Does the Company have other information that enables a better understanding of the Company’s corporate governance practices (including but not limited to employee rights, employee care, investor relations, supplier relations, | ☑ | | (I) Employee rights and employee care
In order to seek sustainable operation and growth, the Company has adopted humanistic management since its inception to give full respect and care to its employees. In addition to handling employee welfare in accordance with the Labor Standards Act and relevant measures, the | No material deviation. |

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Assess criteria	Actual governance			Deviation and causes of deviation from Corporate Governance Best-Practice Principles for TWSE/TPEX Listed Companies
	Yes	No	Summary
stakeholders’ interests, continuing education of directors, implementation of risk management policies and risk measurements, implementation of customer policy, and liability insurance for directors and supervisors)?			Company has set up an employee welfare committee to plan and organize various employee welfare matters and strengthen the all-around care for employees.

(II) Investor relationship
1. The Company convenes shareholders’ meetings every year in accordance with the Company Act and relevant laws and regulations, and gives shareholders ample opportunities to ask questions or make proposals in accordance with the Rules of Procedure for Shareholders’ Meetings.
2. In addition, the Company has a spokesperson and an acting spokesperson to properly handle shareholders’ suggestions, doubts and disputes.

(III) Supplier relationship: The Company has maintained a good relationship with its suppliers.

(IV) Stakeholders’ rights and interests: The interested parties of the Company can learn about relevant information of the Company through the MOPS or contact the Company directly at any time.

(V) “Directors’ further study”: The information can be learned via MOPS.

(VI) Implementation of risk management policies and risk measurement standards: The Company has formulated various internal regulations according to law to conducted risk management and assessment.

(VII) Implementation of customer policies: The Company has maintained a good relationship with customers.

(VIII) The Company’s purchase of liability insurance for its directors: The Company completed the relevant | |

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Assess criteria	Actual governance			Deviation and causes of deviation from Corporate Governance Best-Practice Principles for TWSE/TPEX Listed Companies
	Yes	No	Summary
			insurance purchase in May 2025, and the insurance information can be found on the MOPS.
IX. Please describe the improvements made based on the most recent Corporate Governance Evaluation results published by the Corporate Governance Center of Taiwan Stock Exchange Corporation, and for items not yet improved, specify the priority enhancement areas and corresponding measures:
The Company will continue to evaluate and consider possible improvement plans for items that have not yet received scores.

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Note 1: Evaluation report on the independence of the CPAs

Evaluation Item	Whether it is independent and competent
1.The accountants or audit team members themselves as well as their families (including spouses, cohabitants and minor children) have no direct or significant indirect financial interest with the Company.	YES
2.The accounting firm and its related entities have no direct or significant indirect financial interest relationship with the Company.	YES
3.The accountants and their affiliated firms, as well as firm-related companies have not provided the Company with non-audit services that may compromise its detachment and independence.	YES
4.The accountants or audit team members have not served as a director or manager of the Company or held a position that has a significant impact on the audit process currently or within the last two years.	YES
5. The accountants or audit team members do not promote stocks or other securities issued by the Company, nor do they serve as intermediaries.	YES
6.Except for the business permitted by law, accountants or audit team members do not defend the Company in legal cases or other disputes.	YES
7.The accountants or audit team members doesn’t have a spouse, direct blood relative, direct marriage relative, or second-degree blood relative, or any other indirect blood relative who is affiliated with the Company's directors, managers, or individuals holding positions that significantly impact on the audit process.	YES
8.Co-practising accountants who have resigned within one year do not hold the positions as director or manager of the Company or ay positions with a significant influence on the audit process.	YES
9.The accountants or members of the audit team have not received gifts or special offers of significant value from the Company or its directors, managers or major shareholders.	YES
10.TWSE or TPEx listed company: The accountants have not provided audit services to the Company for seven consecutive years.	YES
11.Do accountants maintain substantial independence when they provide audit, review, appeal review or examination of the financial report and prepares an opinion letter?	YES
12.Do audit team members , other jointly practicing accountants or CPA firm shareholder, CPA firm, firm affiliated companies and alliance firms maintain substantial independence?	YES
13.Do the accountants maintain a fair and objective stance when performing professional services to avoid bias, conflict of interest, or interest relationships that could influence professional judgment?	YES
14.Does the CPA firm have clear quality control procedures? Does it include the key points of the audit procedures, the way to deal with audit issues and judgments, independent quality control and risk management?	YES
15.Does the accounting firm have sufficient scale and resources to provide audit services for the company?	YES
16.Can the CPA firm promptly notify the board of directors (Audit Committee) of significant deficiencies in the company's risk management, corporate governance, and financial accounting related systems?	YES
17.Do the accountants understand the industry and related risks of the Company?	YES
18.Have the accountants or audit team members had previously audited companies in similar industries, size, and risk profile?	YES

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(IV) If the company has a remuneration committee, disclose its composition, duties and operation:

(1) Information of Remuneration Committee members

| Identity | Criteria
Name | Professional qualifications and experience (Note 2) | Independence status (Note 3) | Number of positions as Remuneration Committee member in other public companies |
| --- | --- | --- | --- | --- |
| Independent Director (Convener) | Chi-Ying Tseng | See page 6 Schedule (I -2) Director Information | See page 6 Schedule (I -2) Director Information | None |
| Independent Director | Lien-Chu Yeh | | | None |
| Independent Director | Wen-Kuei Chi | | | None |

Note 1: Please state in the form the relevant seniority, professional qualifications, experience and independence of each Remuneration Committee members. If an independent director, indicate to refer to the relevant content of Schedule (I -2) Director Information on page 6. In the identity field, please fill in whether the person is an independent director or others (if the person is the convener, please note).
Note 2: Professional qualifications and experience: Describe the professional qualifications and experience of individual members of the Remuneration Committee.
Note 3: Compliance with independence requirements: State whether the members of the Remuneration Committee are independent, including but not limited to whether they themselves, their spouses or relatives within the second degree of kinship are directors, supervisors, or employees of the company or its affiliated enterprises, the number and proportion of shares held by themselves, their spouses or relatives within the second degree of kinship (or in the names of others), whether they are directors, supervisors or employees of any company with a specific relationship with the company (refer to subparagraphs 5 to 8, paragraph 1, Article 6 of the Regulations Governing the Appointment and Exercise of Powers by the Remuneration Committee of a Company Whose Stock is Listed on the Taiwan Stock Exchange or the Taipei Exchange), and the amount of remuneration obtained from providing business, legal, financial, accounting or other services to the company or its affiliated enterprises in the last two years.
Note 4: For the disclosure method, please refer to the best practice reference example on the website of the Governance Center of the Taiwan Stock Exchange Corporation.

(2) Information on the operations of the Remuneration Committee

I. There are three members on the Remuneration Committee of the Company.
II. Term of office of the current members: From June 21, 2023 to June 24, 2026. The Remuneration Committee held 2 meetings (A), and the names of members and their attendance are as follows:

Position	Name	Number of attendances in person (B)	Number of attendances by proxy	Attendance in person (%) [B/A]	Remarks
Convener	Chi-Ying Tseng	2	0	100%
Member	Lien-Chu Yeh	2	0	100%
Member	Wen-Kuei Chi	2	0	100%

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Other mandatory disclosures:

• In the event where the Remuneration Committee’s proposal is rejected or amended in a board meeting, state the date and session of the meeting, the contents of the motion, the board meeting’s resolution, and how the Company handled the Remuneration Committee’s opinions (including the differences and reasons if the board meeting’s resolution is more favorable than the proposal by the Remuneration Committee): None.
• Should any committee member objects to or expresses any reservation on the resolution of the Remuneration Committee and there are records or statements in writing, state the date and session of the meeting, the contents of the motion, all the opinions of the members, and how their opinions are handled: None.

III. The reasons for discussion and resolution of the Remuneration Committee meeting, as well as the Company’s handling of members’ opinions in the most recent year and up to the publication date of the annual report are as follows:

Date of meeting	Motion	Resolution	The Company’s handling of the Audit Committee members’ opinions
March 14, 2025
5th session of the 4nd term	1. The Company’s 2024 remuneration to directors and managers.
2. Method for the Company’s 2024 remuneration to directors and managers.	1. This case was passed without objection by the members present after the chairperson’s inquiry. Submitted to the board meeting for discussion according to law.
2. After review, their salaries are reasonable and within the range of the Company’s [Salary Management Rules], and all members present unanimously passed the proposal without objection. Submitted to the board meeting for discussion according to law.	Submitted to the board meeting and passed unanimously by all attending directors.
November 11, 2025
5th session of the 5th term	1. Review the formulation standards and structure of various remuneration items for employees of the Company.
2. 2025 year-end bonus for directors and managers of the Company.
3. Salary adjustment for directors and managers.	1. This case was passed without objection by the members present after the chairperson’s inquiry. Submitted to the board meeting for discussion according to law.
2. This case was passed without objection by the members present after the chairperson’s inquiry. Submitted to the board meeting for discussion according to law.
3. After review, their salaries are reasonable and within the range of the Company’s [Salary Management Rules], and all members present unanimously passed the proposal without objection. Submitted to the board meeting for discussion according to law.	Submitted to the board meeting and passed unanimously by all attending directors.

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(3) The Sustainability and Ethical Management Committee discloses its composition, responsibilities and operations:

Committee Responsibilities
●Develop corporate sustainability policies.
●Plan, implement and review related to sustainability, Ethical management and social responsibility, and report regularly to the board of directors.
●Review the goals, strategies and action plans of corporate sustainability policies, and track the progress of each plan.
●Discuss issues of concerns to various stakeholders, including shareholders, customers, suppliers, employees, government, non-profit organizations, communities and media, and oversee the communication plan
●Review the effectiveness of sustainability report preparation
Unit	Responsible Departments	Responsible Statement
Sustainability Information Management Group	Composed of personnel appointed by the General Manager	1. Assist with administrative matters of committee meetings, including meeting notices, attendance books and minutes, etc.
2. Supervise and integrate the work of each working group, and organize and execute the collection, recording, processing, compilation, approval and disclosure of sustainability information, confirm whether the information is handled in accordance with the company's "Sustainable Information Management Operating Procedures".
3. Strengthen the implementation of sustainability reports, information disclosure and provide it to stakeholders.
4. Promote and advocate the spirit of sustainability, integrity management and social responsibility into the company's business strategy and culture
Environment Sustainability Promotion Group	Led by the vice director of Pingnan Factory	1. Integrate environmental protection measures within the company and regularly track relevant implementation results.
2. Promote green production, and in the process of design construction, or purchase materials and equipment selection, adopt economically feasible methods to reduce pollution, environmental damage and risks to human health.
		1. For employees, in addition to providing a safe and harmonious working environment and protecting employees' rights and interests, we also provide professional skills training, and planning for future

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| Social Engagement Promotion Group | Led by the director of Pingnan Factory | career development to maintain good labor-management relations so that employees can contribute to the company's sustainable operations.
2. Regarding corporate sustainability issues arising from cooperation with the company’s customers, contractors and suppliers in work content. Such as customer relations, labor safety, human rights protection, etc., we hope to use the company's influence to promote the industry to pay attention to supply chain issues.
3. Actively cooperate with relevant educational or social groups, and combine professional knowledge to propose methods that are helpful to society, to fulfill the company’s responsibilities as a social citizen. |
| --- | --- | --- |
| Corporate Governance Promotion Group | Led by the Management Manager | 1. Company sustainable development and strengthening operating system
2. Business strategy, performance, risk management and corporate governance.
3. Maintain a trusting relationship between the company and its stakeholders.
4. Meet the expectations of shareholders and the government for the company’s honest operations, sustained profits and steady growth. |
| Ethical Management Promotion Group | Led by the vice president of Pingnan Factory | 1. Assist in integrating integrity and ethical values into company business strategies, and cooperate with the legal system to formulate relevant anti-fraud measures to ensure Ethical management.
2. Assess the risks of dishonest behavior within the business scope and formulate plans to prevent dishonest behavior accordingly.
3. Plan internal organization, staffing and responsibilities. For business activities with higher risks of dishonest conduct within the business scope, a mutual supervision and checks and balances mechanism should be installed.
4. Promotion and coordination of integrity policy publicity and training, and plan the reporting system to ensure its effectiveness.
5. Plan a reporting system to ensure effectiveness of implementation.
6. Assist the board of directors and management with review and evaluation. Whether the preventive measures established to implement honest management are operating effectively. |

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Operation status of the 2025 Sustainability and Ethical Management Committee:

(1) Company established the Sustainability and Ethical Management Committee in the 2024, with 5 members appointed by the board of directors, the term of office shall be the same as the term of the appointed board of directors. It includes four working groups: Environmental Sustainability (E), Social Participation (S), Corporate Governance (G) and Ethical Management. To strengthen the operating system, committed to environmental protection and social responsibility, and comply with the regulations that should be followed. Conduct ESG-related implementation performance reports to the board of directors at least once a year.

(2) The operation of the committee in the most recent year is as follows:

Meeting Date	Conference content
1st 2025.03.03	Company's 2024 sustainability report implementation progress and planning report.
2nd 2025.06.30	Approved the editing progress and implementation status of Company's 2024 sustainability report
Approved schedule planning through our Company’s greenhouse gas inventory coaching

(V) Performance of sustainable development, deviations from, and causes of deviation from the Sustainable Development Best Practice Principles for TWSE/TPEx Listed Companies.

Item	Actual governance			Deviation and causes of deviation from Sustainable Development Best Practice Principles for TWSE/TPEx Listed Companies
	Yes	No	Summary
— Has the Company established a governance structure to promote sustainable development, and set up a full-time (part-time) unit to promote sustainable development, which is supervised by the senior management under the authorization of the board meeting? What is the status of supervision of the board meeting?	☑		In 2015, the Company established a CSR implementation team led by senior executives to integrate the Company’s resources, determine the development direction, and promote specific work and other related matters. In order to further strengthen the sustainable development of ESG, the Company will establish the Sustainability and Ethical Corporate Management Committee in 2022 to plan the sustainable development blueprint, development direction and various indicators, and	The Company established the Sustainability and Ethical Corporate Management Committee in 2022.
It is in accordance with “Sustainable Development Best Practice Principles” for TWSE/TPEX Listed Companies and no material deviation.

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Item	Actual governance			Deviation and causes of deviation from Sustainable Development Best Practice Principles for TWSE/TPEx Listed Companies
	Yes	No	Summary
			regularly review and track the implementation progress of various indicators, and report to the board meeting to pursue better environmental, social and corporate governance performance.
II. Has the Company conducted a risk assessment on environmental, social, and corporate governance issues that are relevant to its operations and implemented risk management policies or strategies based on principles of materiality?	☑		The Company’s overall operating conditions are included in the scope of risk management. With the goal of maximizing the interests of investors, the Company tries to prevent possible potential risks, and seeks to improve the overall value of the Company under the balance of risk control and return target. In the environmental aspect: Continuously improve and innovate in the production process and sales activities. Set prevention and control standards, surpass the requirements of environmental protection laws	Same as above.

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Item	Actual governance			Deviation and causes of deviation from Sustainable Development Best Practice Principles for TWSE/TPEx Listed Companies
	Yes	No	Summary
			and regulations, and carry out pollution prevention and environmental improvement from a sustainability perspective. In the social aspect: Strengthen publicity and guidance, and require the compliance with ethical conducts by all employees of the Company through the regulations of the “Ethical Corporate Management Best Practice Principles” and the “Employee Work Rules”. In the corporate governance aspect: Continue implementing the supervision and checks and balances of the board of directors, strictly abide by the laws and regulations, and operate steadily to achieve the goal of sustainable development of the enterprise.
III. Environmental issues
(I) Has the Company set up an appropriate environmental management system based on the characteristics of its industry?

(II) Is the Company committed | ☑ | | In the environmental aspect: External system: 1Waste Disposal Act. 2Air Pollution Control Act. 3Water Pollution Control Act. 4Government-related environmental laws 5Standards for the Control of Wastewater Treatment Plants in Industrial Areas 6Renewable Energy Development Act 7Greenhouse Gas Inventory Internal system: 1ISO 9001 Quality Management System. 2The Sustainability and Integrity Management Committee held a meeting to discuss and manage. | Same as above. |

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Item	Actual governance			Deviation and causes of deviation from Sustainable Development Best Practice Principles for TWSE/TPEx Listed Companies
	Yes	No	Summary
to achieving the efficient use of resources and using renewable supplies that produce less impact on the environment?	☑		The main raw materials used are sulfur, liquid caustic soda, soda ash, and Fumeilin. Due to the industrial nature, 100% of the raw materials used by the Company are non-renewable.
(III) Does the Company evaluate the potential risks and opportunities of climate change to the Company now and in the future, and take countermeasures to respond to climate related issues?	☑		If there is a short-term water restriction/water outage in the factory, the impact on the company's overall operations and finances will be relatively low. Company can also adjust the annual holiday time to cope with the impact on production capacity caused by water restrictions/outages. If water outage lasts for more than one-month, operating income may decrease. (reduced production capacity may result in inability to ship) and production capacity interruption (shutdown, discontinue). The financial impact on the company is significant. Discussions were held at the Climate Change-Related Financial Disclosure Discussion Meeting by the Sustainability and Integrity Committee. Through this meeting, relevant group members will be convened to discuss and identify the risks and opportunities of climate change. In 2023, in order to cope with future policy and regulatory risks, the company plans to introduce ISO 14064-1 greenhouse gas management, not only to comply with future regulations and policies, but also to understand the company's

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Item	Actual governance			Deviation and causes of deviation from Sustainable Development Best Practice Principles for TWSE/TPEx Listed Companies
	Yes	No	Summary
(IV) Has the Company prepared statistics on greenhouse gas emissions, water consumption and the total weight of waste for the past two years, and formulated policies for energy conservation and carbon reduction, greenhouse gas reduction, water consumption reduction or other waste management?	✓		energy consumption and improve it.

The Company’s greenhouse gas emissions mainly come from direct emissions from burning heavy oil and purchased electricity. The greenhouse gas emissions in 2023 and 2022 were 4818.5047kgCO2e and 5811.194kgCO2e, respectively. In coordination with the electricity saving policy of the Bureau of Energy, Ministry of Economic Affairs, the electricity saving rate in the 2023 electricity saving plan was 2.58%.

The average daily water intake of the Company in 2023 and 2022 was about 182 and 200 metric tons, the daily process water recovery was 7.14 and 7 metric tons, the evaporation splash loss was about 49.11 and 66.72 metric tons, and the water consumption was 66.51 and 72.865 million liters, respectively. In 2023, the total wastewater discharged into the sewage treatment plant was 38,350tons. The chemical oxygen demand of the discharged water was 96.61mg/L, and the suspended solids was 3.41mg/L, which is far superior to the control standards of sewage treatment plants in industrial areas.

All production activities at the factory area were in accordance with environmental law regulations.
The waste produced in 2023 can be divided into non-manufacturing process output and manufacturing process output. Waste disposal is in compliance with relevant government regulations and is entrusted to legal removal companies for transportation and treatment at treatment plants, | |

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Item	Actual governance			Deviation and causes of deviation from Sustainable Development Best Practice Principles for TWSE/TPEx Listed Companies
	Yes	No	Summary
			with none being shipped abroad. Pollution prevention and control equipment are maintained and upkept every year, and tested regularly. In order to fulfill its social responsibility to the environment, the Company has invested funds in related environmental protection work.
IV. Social issues
(I)Has the Company formulated relevant management policies and procedures according to relevant laws and regulations and the International Bill of Human Rights?

(II) Has the Company developed and implemented reasonable employee welfare measures (including compensation, leave of absence and other benefits), and appropriately reflected business performance or outcome in employees’ salaries?

(III)Has the Company provided employees with a safe and healthy work environment and regularly held education and training sessions for safety and health? | ☑ | | The Company complies with relevant labor laws and regulations, and the appointment, dismissal and remuneration of employees are in compliance with the Company’s internal control system management measures to protect the basic rights and interests of employees.

The Company knows that employees are the most important assets, so we attach importance to employee welfare. In addition to monthly salary. In principle the Company pays a two-month year-end bonus every year, and sets aside a certain ratio of earnings as employee remuneration according to the financial situation. The Company also pays welfare benefits for the three festivals and children’s subsidies and scholarships every year, and adjusts salaries from time to time according to the earnings conditions and commodity price level. In addition, the Company grants special leaves to employees in accordance with the Labor Standards Act and the Gender Equality Act, and provides pensions and has a retirement system in accordance with the law.

The Company implements industrial safety in accordance with the relevant laws and regulations on safety and health, provides operation instructions, safety and health training for new employees, and conducts regular health checks for employees. | Same as above. |

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Item	Actual governance			Deviation and causes of deviation from Sustainable Development Best Practice Principles for TWSE/TPEx Listed Companies
	Yes	No	Summary
(IV) Has the Company implemented an effective training program that helps employees develop skills over the career?	☑		There were no major occupational accidents or deaths in the line of duty in 2024.
Each department of the Company participates in internal and external training based on the work content to improve professional capabilities.
(V) For product and service issues related to customer health and safety, customer privacy, marketing and labelling, has the company complied with relevant laws and international standards, and formulated relevant right and interest protection policies and grievance procedures for customers?	☑		The products of the Company are special industrial chemicals. In order to prevent unscrupulous operators from using the Company’s products for food addition, labels are affixed on the product packaging to clearly inform the customers of the product name, hazard sign, hazard warning message and hazard prevention measures, and the food prohibition signs are clearly indicated.
In addition to marketing products to other countries in accordance with relevant domestic laws and regulations, the Company also follows the instructions of local customers.
The Company has formulated the “Supplier Selection and Management Procedure” to ensure that the third-party suppliers meet the requirements of relevant laws and regulations, and in 2019 the Company will add the queries of whether they employ child labor, whether there have been public security incidents, and whether they have been fined for environmental pollution to serve as the basis for the selection and management of new suppliers.
(VI) Has the Company implemented a supplier management policy that regulates suppliers’ conduct with respect to environmental protection, occupational safety and health, or work rights/human rights issues, and tracked suppliers’ performance on a regular basis?	☑
V. Does the Company prepare a sustainability report or any report of non-financial information	☑		The Company discloses in its annual report and publishes on the MOPS its information related to the sustainability report. The	Same as above.

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Item	Actual governance			Deviation and causes of deviation from Sustainable Development Best Practice Principles for TWSE/TPEx Listed Companies
	Yes	No	Summary
based on international reporting standards or guidelines? Are the abovementioned reports supported by the assurance or opinion of a third-party certifier?			report has also been verified by a third-party impartial unit.
VI. If the company has the sustainable development best practice principles formulated in accordance with the “Sustainable Development Best Practice Principles for TWSE/TPEx Listed Companies,” please describe the differences between its operation and the principles: The Company established the Sustainability and Ethical Corporate Management Committee in 2022. It is in accordance with “Sustainable Development Best Practice Principles” for TWSE/TPEX Listed Companies and no material deviation.
VII. Other information useful to the understanding of the implementation of sustainable development: The systems and measures adopted by the Company for environmental protection, safety and health, community participation, social contribution, and other social activities and their performance are implemented in accordance with the content of the Enterprise Waste Disposal Plan, and relevant disposal matters are reported online in accordance with the law.
VIII. Climate-related implementation
Item	Execution situation
1	Describe the boards and management’s oversight and governance of climate-related risks and opportunities.
In response to the high uncertainty of global climate and the rapid changes in policies and markets, Cathay Chemical Works regularly convenes senior executives from various departments to identify major climate risks in order to timely grasp and estimate the possible impacts of climate change. Further assess the risks that relevant risks such as floods, droughts, typhoons, high temperatures and extreme climates may bring to each operating location, hoping to grasp the climate changes and market dynamics of the external environment, and then consider the company's overall operating strategy planning. In 2022, the Company established a "Sustainability and Integrity Management Committee" under the Board of Directors, with a total of 5 members. Appointed by resolution of the Board of Directors, the term of office shall be the same as that of the appointing Board of Directors. In 2022, the Company established a "Sustainability and Integrity Management Committee" under the Board of Directors, with a total of 5 members. Appointed by resolution of the Board of Directors, the term of office shall be the same as that of the appointing Board of Directors The Board of Directors is the highest governance unit of the Company, and the Sustainability and Integrity Management Committee regularly reports relevant risks

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Item	Actual governance			Deviation and causes of deviation from Sustainable Development Best Practice Principles for TWSE/TPEx Listed Companies
	Yes	No	Summary
			and policies to the Board of Directors. The Board of Directors is responsible for making the final evaluation and recommendations.
2	Describe how the identified climate risks and opportunities will affect the company's business, strategy and finances (short-term, medium-term and long-term).		Transition risks (policy/regulatory risks):
Carbon tax systems in various countries
Responding to policies and regulations, moving towards a low-carbon, energy-efficient economic model
Physical risks (increase in extreme weather events)
Increased probability of drought events.
Temporary power outage.
Opportunity (product or service)
Innovative technologies and solutions are needed to address climate change.
3	Describe the financial impacts of extreme climate events and transformational actions.		Transition risks (policy/regulatory risks):
As for indoor gas inspection regulations, the company has not yet been forced to disclose. After evaluation, the relevant environmental policies and regulations have a relatively low impact on the company's overall operations and finances.
Physical risks (increase in extreme weather events):
If there is a short-term water restriction/water outage in the factory, the impact on the company's overall operations and finances will be relatively low. Company can also adjust the annual holiday time to cope with the impact on production capacity caused by water restrictions/outages. If water outage lasts for more than one-month, operating income may decrease. (reduced production capacity may result in inability to ship) and production capacity interruption (shutdown, discontinue).
The financial impact on the company is significant.
Physical risks (increase in extreme weather events):
Company's current product inventory maintains a supply of about one month. Power outages may have an adverse impact on the stability of the company's production lines, leading to reduced production and insufficient supply.
Opportunity (product or service):
The introduction of new products and technologies will help the company move towards new growth and increase its revenue.
4	Describe how the climate risk identification, assessment and management process is integrated into the overall risk management system		Company's overall operating conditions are included in the scope of risk management, and with the goal of maximizing investor interests, we strive to prevent potential risks and seek to enhance the company's overall value under the balance between risk control and target returns. In terms of environment: Continuously improve and innovate in production and sales activities. Set prevention and control standards, stay ahead of

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Item	Actual governance			Deviation and causes of deviation from Sustainable Development Best Practice Principles for TWSE/TPEx Listed Companies
	Yes	No	Summary
			environmental laws and regulations, and implement pollution prevention and environmental improvement from a sustainable perspective. In terms of society: through the "Integrity Management Code" and "Employee Work Rules" to regulate the internal personnel of the company, strengthen the promotion and regulation of all employees of the company to abide by the integrity of behavior. In terms of corporate governance: continue to implement the supervision and checks and balances of the board of directors, strictly abide by laws and regulations, and operate solidly to achieve the goal of sustainable development of the enterprise.
Discussions were held at the Climate Change-Related Financial Disclosure Discussion Meeting by the Sustainability and Integrity Committee. Through this meeting, relevant group members will be convened to discuss and identify the risks and opportunities of climate change. In 2023, in order to cope with future policy and regulatory risks, the company plans to introduce ISO 14064-1 greenhouse gas management. Not only to comply with future regulations and policies, but also to understand the company's energy consumption and improve it.
5	If scenario analysis is used to assess resilience to climate change risks, the scenarios, parameters, assumptions, analysis factors and main financial impacts used should be explained.	Company does not currently use scenario analysis
6	If there is a transformation plan to manage climate-related risks, describe the content of the plan and the indicators and targets used to identify and manage physical and transformation risks.	Company currently has no transformation plans for climate-related risks
7	If internal carbon pricing is used as a planning tool, the basis for setting the price should be explained.	Company has not yet developed an internal carbon pricing policy. We will continue to pay close attention to the carbon fee standards approved by relevant policies and regulations. And pay attention to the trends in international, government and market carbon emission regulation. To adjust our business strategy to cope with possible changes in the future.

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Note 1-1 Company’s greenhouse gas inventory and confirmation in the last two years

1-1-1 Greenhouse gas inventory information

Describe the greenhouse gas reduction base year and its data, reduction targets, strategies and specific action plans, and the status of achievement of reduction targets
Company has planned to start collecting annual greenhouse gas inventory data in 2024 to carry out greenhouse gas inventory operations in accordance with the ISO 14064-1 standard. Establish a greenhouse gas inventory mechanism in accordance with the ISO14064-1 greenhouse gas inventory standard issued by the International Organization for Standardization (ISO).
The following table shows the voluntary greenhouse gas inventory data for the past two years. The data has not yet been verified by a third-party verification agency. The company will continue to prepare for the introduction of ISO 14064-1 greenhouse gas inventory in 2024. The greenhouse gas emissions of Pingnan Factory are as follows:
Total greenhouse gas emissions in 2023 (reporting period: January	Scope 1
	Pingnan

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1, 2023 to December 31, 2023)	Factory
	Scope 2	Total Emissions (metric tons CO₂e)	Operating Income (million dollars)	Density (metric tons CO₂e /million dollars)
	Pingnan Factory	2,108.1944	476	4.43
Total greenhouse gas emissions in 2024 (reporting period: January 1, 2024 to December 31, 2024)	Scope 1	Total Emissions (metric tons CO₂e)	Operating Income (million dollars)	Density (metric tons CO₂e /million dollars)
	Pingnan Factory	3,854.94	528	7.30
	Scope 2	Total Emissions (metric tons CO₂e)	Operating Income (million dollars)	Density (metric tons CO₂e /million dollars)
	Pingnan Factory	2,322.18	528	4.40

Note 1 Direct emissions (Scope 1, i.e. emissions directly from sources owned or controlled by the company), Energy indirect emissions (Scope 2, i.e. indirect greenhouse gas emissions from imported electricity, heat or steam) and other indirect emissions (Scope 3, emissions from company activities that are not indirect emissions from energy but come from emission sources owned or controlled by other companies)

Note 2 The scope of direct emissions and energy indirect emissions data shall be handled in accordance with the schedule specified in the order stipulated in Article 10, Paragraph 2 of these Regulations. Other indirect emissions information may be disclosed on a voluntary basis.

Note 3 Greenhouse Gas Inventory Standard: Greenhouse Gas Protocol, GHG Protocol or ISO 14064-1 issue from International Organization for Standard-ization, ISO

Note 4 The intensity of greenhouse gas emissions can be calculated per unit of product/service or turnover, but at least the data calculated based on turnover (NT$ million) should be stated.

1-1-2 Greenhouse Gas Confirmation Information

A statement of the assurance status for the most recent two years ending on the date of publication of the annual report, including the assurance scope, assurance organization, assurance criteria and assurance opinions
According to the sustainable development roadmap for listed companies, at least the scope of implementation and confirmation should be:
The parent company entities should implement the confirmation from 2028 and disclose the investigation results of the parent company entities in 2027.
The implementation status of greenhouse gas inventory of the Company and some subsidiaries (including Subsidiary A and Subsidiary B) in the consolidated financial statements in the past two years is as follows:
In accordance with the "Sustainable Development Roadmap for Listed Companies" formulated by the Financial Supervisory Commission, Cathay Chemicals should complete the 2025 greenhouse gas inventory in 2026 and complete the confirmation in 2028. This company has completed its 2024 greenhouse gas inventory report and is expected to complete the verification process by 2028.

1. Company shall follow the schedule specified in the order of Article 10, Paragraph 2 of these Regulations. If the company does not obtain a complete greenhouse gas assurance

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opinion by the publication date of the annual report, it shall indicate "Complete assurance information will be disclosed in the sustainability report", if the company does not prepare a sustainability report, it should indicate that "complete and reliable information will be disclosed on the public information observation station" and disclose the complete and reliable information in the annual report of the following year.

1. The confirmation institution shall comply with the relevant provisions of the perpetual report confirmation institution stipulated by the Taiwan Stock Exchange Corporation and the Taiwan Stock Exchange.

2. For disclosure details, please refer to the best practice reference examples on the Taiwan Stock Exchange Corporate Governance Center website.

Note 1-2 Greenhouse gas reduction targets, strategies and specific action plans

Describe the greenhouse gas reduction base year and its data, reduction targets, strategies and specific action plans, and the status of achievement of reduction targets
Greenhouse gas reduction strategies and targets
●Short term goals (2~3 years): (1).Continue to pay attention to the problem of water shortage in the future and strive to reduce the company's water consumption or improve water recycling efficiency (2).Achieve the annual electricity saving target of 1% and reduce greenhouse gas emission intensity ●Medium- to long-term goals (3 to 5 years or more): According to the Financial Supervisory Commission’s announcement in March 2022, the “Sustainable Development Roadmap for Listed Companies” will be planned. Our company is in the third stage and needs to complete the disclosure of greenhouse gas inventory and verification. · Complete the 2025 inventory information in 2026, Completion of 2027 verification in 2028. Company plans to begin collecting annual greenhouse gas inventory data in 2024, and complete verification in 2028.
Reduction Achievements in 2024
Energy and greenhouse gas emissions reduction	●Cathay Chemical Works cooperates with the government's Ministry of Economic Affairs, Bureau of Energy's power saving policy. In the 2024 power saving plan, the fan motor power of the original 1,000RT water tower is 75HP. After changing to a 700RT water tower, the fan motor power will be 30HP. The annual electricity saving is about 44,480 kWh, with a saving rate of 0.96%. ●Pingnan Plant's 2024 self-inspection data are as follows: Scope1: 3,854.94 MT CO2e Scope2: 2,322.18 MT CO2e Scope3: 1,538.70 MT CO2e Total Emissions = Scope1+ Scope2+ Scope3 : 7,715.82 MT CO2e

1. The application shall be processed according to the schedule specified in the order pursuant to Article 10, Paragraph 2 of these Regulations.

2. The reference year shall be the year in which the inventory is completed based on the consolidated financial statements. For example, according to the schedule set forth in the order of Article 10, Paragraph 2 of this Code, companies with a capital of more than NT$10 billion should complete the review of their 2024 consolidated financial statements in 2025, Therefore, the base year is 2024, If the company has completed the review of consolidated financial statements in advance, the earlier year can be used as the base year. The data of the base year can be calculated by a single year or the average of several years.

3. For disclosure details, please refer to the best practice reference examples on the Taiwan

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Stock Exchange Corporate Governance Center website.

(VI) Performance of ethical corporate management, and deviation and causes of deviation from the

Ethical Corporate Management Best Practice Principles for TWSE/TPEX Listed Companies:

Item	Actual Governance			Deviation and causes of deviation from Ethical Corporate Management Best Practice Principles for TWSE/TPEX Listed Companies
	Yes	No	Summary
I. Establishment of ethical corporate management policy and proposal
(I) Has the Company formulated an ethical corporate management policy approved by the Board of Directors, and are the policy and practice of ethical corporate management stated in the Company’s regulations and external documents, as well as the commitment of the Board of Directors and the senior management to actively implement the policy?
(II) Whether the Company has established a mechanism for evaluating the risk of unethical conduct, regularly analyzes and evaluates the activities in the scope of business with a higher risk of unethical conduct, and on the basis of this, has formulated a plan to prevent unethical conduct, which covers at least the preventive measures for the conduct set out in Paragraph 2 of Article 7 of the “Ethical Corporate Management Best Practice Principles for TWSE/GTSM Listed Companies”?
(III) Has the Company formulated in the plan for preventing unethical conducts the operating procedures, conduct	✓		The Company has formulated the “Ethical Corporate Management Best Practice Principles” in the hope that the Company’s personnel implement the policy of ethical corporate management.
More details, please browse to the Company website: www.ccwi.com.tw
(Investors→Operation Governance)

The Company has formulated relevant management measures, which clearly stipulate that the Company’s personnel shall abide by them when engaging in any operating activities.

Other than the “Ethical Corporate Management Best Practice Principles”, the Company has other relevant procedures and measures to | The Company has formulated the “Ethical Corporate Management Best Practice Principles” and is implementing related regulations. |

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Item	Actual Governance			Deviation and causes of deviation from Ethical Corporate Management Best Practice Principles for TWSE/TPEX Listed Companies
	Yes	No	Summary
guidelines, and disciplinary and complaint systems for violations, and implemented the plan as well as regularly reviewed and amended it?			prevent unethical conducts.
II. Enforcement of business integrity
(I) Does the Company evaluate the ethical records of its counterparties and specify the ethical conduct clauses in the contracts signed with the counterparties?
(II) Does the Company have a dedicated unit directly under the board of directors to enforce ethical corporate management? Does this unit report its progress regarding the implementation of the ethical corporate management policy and prevention against unethical conduct to the board meeting on a regular basis (at least once a year)?
(III) Does the Company have the policy to prevent conflict of interest, provide appropriate channels for an explanation, and implement it?
(IV) Has the company implemented effective accounting and internal control systems to enforce ethical corporate management? Has the internal audit unit been assigned to devise audit plans based on the assessment results of	☑		In case of any unethical conduct of suppliers or customers, the Company will suspend all transactions with them.

The Company officially established the Sustainability and Ethical Corporate Management Committee in 2022, which takes charge of related matters and reports to the board meetings annually. The latest report date is August 9, 2024.

The Company’s website and mailbox have appropriate channels for statements, and special personnel are assigned to handle them to prevent conflicts of interest.

The accounting system and internal control system of the Company comply with the relevant laws and regulations of public companies and operate effectively; reports are also submitted to the board meeting on a regular basis. | Same as above. |

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Item	Actual Governance			Deviation and causes of deviation from Ethical Corporate Management Best Practice Principles for TWSE/TPEX Listed Companies
	Yes	No	Summary
unethical conduct risks, and to audit employees’ compliance? Or is a CPA appointed to conduct the audit?
(V) Does the company regularly hold internal and external training on ethical corporate management?	☑		The Company continues promoting the corporate ethical corporate management culture through various meetings.
III. Whistleblowing system
(I) Has the Company set up a specific whistleblower reporting and reward system and a convenient reporting channel, and designated appropriate personnel to deal with the reported matters?
(II) Has the Company formulated standard operating procedures for the investigation of the accused matters, follow-up measures to be taken after the completion of the investigation, and the relevant confidentiality mechanisms?
(III) Whether the Company takes measures to protect whistleblowers from being improperly handled due to reporting?	☑
☑
☑
☑		The Company’s “Employee Work Rules” have provisions on rewards and punishments. For violations of rules and regulations and infringements of the Company’s interests, different punishments will be given according to the circumstances.

The communication channel of internal staff’s opinions is smooth; For complaints and accusations of violations of ethical corporate management regulations, the accepting unit has the obligation to keep confidential the information of the whistleblower and shall not disclose it.

The Company has taken measures to protect whistleblowers from being improperly treated. | Same as above. |
| IV. Enhanced information disclosure
Has the Company disclosed its integrity principles and progress onto its website and MOPS? | ☑ | | The Company has set up a website and discloses relevant information for investors’ reference. In addition to the establishment of | Same as above. |

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(VIII) Other important information which may enhance the understanding of the Company’s corporate governance:

1. The Company timely discloses its material information.
2. The Company’s 3rd board meeting of the 22nd term approved the “Corporate Governance Best-Practice Principles” and the “Ethical Corporate Management Best Practice Principles”. 3. Further study and training related to corporate governance participated by managers. The further study and training in 2025 related to corporate governance which the Company participated in are as follows:

Position	Name	Course name	Date	Organizer	Training hours
President	C.C. Hung	2025 Cathay Sustainable Finance and Climate Change Summit Forum
Practical operation and compliance of the Board of Directors
Essential Guide: Key Points and Impacts of IFRS S1/S2 on Internal Controls and Internal Audits	2025.07.09
2025.08.11
2025.09.01	Taiwan Stock Exchange
Chinese Corporate Governance Association
The Institute of Internal Auditors-Chinese Taiwan	6 hours
3 hours
6 hours
Head of Audit	Shu-Chen Tsai	How to Leverage Artificial Intelligence in Internal Auditing
Auditing Practices of Enterprise Costs and Value Creation	2025.07.02
2025.07.30	The Institute of Internal Auditors, R.O.C.	6 hours 6 hours
Head of Accounting	Jin-Hua Hsu	Continuing Education for Accounting Supervisors at Issuer Securities Firms and Stock Exchanges	2025.10.30
2025.10.31	Accounting Research and Development Foundation	12 hours

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(VIII) Implementation of the internal control system:
1. Declaration of Internal Control System

Cathay Chemical Works Inc.
Declaration of Internal Control System

Date: March 12, 2026

The following declaration is made based on the 2025 self-assessment of the Company’s internal control system:

1. The Company is aware that establishing, implementing and maintaining an internal control system is the responsibility of the Company’s board of directors and managers, and the Company has already established this system. The purpose is to provide reasonable assurance of the achievement of objectives such as the effectiveness and efficiency of operations (including profitability, performance and asset security, etc.), as well as the reliability, timeliness, and transparency of reporting and compliance with relevant laws and regulations.

2. An Internal control system has its inherent limitations. No matter how perfect the design is, an effective internal control system can only provide a reasonable assurance of the achievement of the three objectives above; moreover, the effectiveness of the internal control system may change in accordance with changes in the environment and circumstances. However, the internal control system of the Company features a self-monitoring mechanism that enables immediate rectification of deficiencies upon discovery.

3. The Company judges the effectiveness of the design and implementation of its internal control system in accordance with the criteria of the effectiveness of the internal control system stipulated in the “Regulations Governing Establishment of Internal Control Systems by Public Companies” (hereinafter referred to as the “Regulations”). The criteria of the internal control system adopted in the “Regulations” are based on the process of managerial control, and the internal control system is divided into five components: 1. control environment, 2. risk evaluation, 3. control operations, 4. information and communication, and 5. supervision operations. Each element further encompasses several sub-elements. Please refer to “The Governing Principles” for details.

4. The Company has adopted the aforementioned criteria of the internal control system to evaluate the effectiveness of the design and implementation of its internal control system.

5. Based on the assessments described above, the Company considers its internal control system’s design and execution to be effective as of December 31, 2025. This system (including supervision and management of subsidiaries) has assured the achievement of the Company’s goals, including the understanding of the operation effect and the degree to which the efficiency goal is achieved, and the report’s reliability, timeliness and transparency, and the design and implementation of the internal control system in compliance with the relevant norms and relevant laws and regulations are effective.

6. This declaration constitutes part of the Company’s annual report and prospectus and shall be disclosed to the public. Any illegal misrepresentation or omission in the public statement above is subject to the legal consequences described in Articles 20, 32, 171, and 174 of the Securities and Exchange Act.

7. This declaration was approved by the board meeting held on March 12, 2026; all of the five attending directors agreed to the contents of this declaration.

Cathay Chemical Works Inc.
Jou-Er, Ing, Chairperson
C.C. Hung, President

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1. If a CPA is entrusted to review the internal control system, disclose the result of the review: None.

(IX) Penalties imposed on the company and its insiders in accordance with the law, or penalties by the Company on its insiders for violations of the internal control system in accordance with the law in the most recent year up to the publication date of the annual report; describe the major deficiencies and improvement status: None.

(X) Major resolutions passed in shareholder meetings and board of directors' meetings held in the last year up until the publication date of the annual report

Date of meeting	Important resolutions of the board meeting	Execution
2025.6.23	1. Recognition of the 2024 business report and financial statements.
2. Recognition of the 2024 earnings distribution scheme.
3. Draft not only by the open tendering method to sell the Land located at old Kaohsiung Factory site, and transact in accordance with the procedures for acquiring or disposing assets by the Company.	The dividend base date is set at 2025.08.13 and the dividend payment date is set at 2025.08.29. (Cash dividend NT$7.5per share)
Date of meeting	Important resolutions of board meetings
---	---
2025.03.14	1. Approved the change of the accountant who certified the company's financial statements and the independent competency evaluation of the CPA Association and the accounting firm in 2025.
2. Approval of the Company's 2024 directors' and employees' remuneration distribution plan and the distribution method of directors' and managers' remuneration.
3. Approval of the 2024 business report and financial statements.
4. Approval of the 2024 earnings distribution scheme
5. Approval of the 2024 “Declaration of Internal Control System”
6. Approval of the 2025 business plan overview
7. Approved the partial amendments to the Company's Articles of Incorporation.
8. Approved the planning proposal for the preparation of the 2024 Sustainability Report.
9. Approved matters related to the convening of the Company's 2025 Annual Shareholders' Meeting, including the meeting date, venue, agenda items, and shareholder proposal submission procedures.
10. Approved the proposal for the Company to apply for a short-term credit facility from Mega International Commercial Bank due to operational working capital requirements.
Implementation Status: All of the above discussion matters have been completed in accordance with the resolutions passed.
2025.05.07	1. Approval of the business report and financial statements for the 2025 first quarter.
2. Approved the proposal for obtaining liability insurance coverage for directors and key officers.
3. By lifting the non-compete restriction on the company's general manager

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• 51 -

	Implementation Status: All of the above discussion matters have been completed in accordance with the resolutions passed.
2025.08.13	1. Approved the Company's business report and financial statements for the first half of 2025.
2. Approved the Company's 2024 Sustainability Report.
Implementation Status: All of the above discussion matters have been completed in accordance with the resolutions passed.
2025.11.11	Approved matters related to the policies, systems, standards, and structure of various compensation items for the Company's employees, as well as the proposed distribution of year-end bonuses for 2025.
1. Approved the proposed salary adjustments for the Chairman and managers for 2026.
2. Approved the scope of the Company's entry-level employees.
3. Approved the Company's business report and financial statements for the first three quarters of 2025.
4. Approved and confirmed the list of non-assurance services expected to be provided in 2026 by Ernst & Young and its affiliates.
5. Approved the Company's 2026 audit plan.
6. Approved partial amendments to the Company's "Internal Control System" and "Internal Audit System and Implementation Rules."
7. Approved the Company's "Sustainability Information Management Procedures."
8. Approved matters related to the Company's execution of agreements with related parties, including the "Factory Lease Agreement," "Information Maintenance Agreement," "Building Joint Management Agreement," and "Property Lease Agreement."
9. Approved the renewal of the Company's financing credit facility with Shanghai Commercial & Savings Bank upon expiration.
Implementation Status: All of the above discussion matters have been completed in accordance with the resolutions passed.

IV. CPA Fees:

Information on CPA Professional Fees

Unit: NT$ thousand

Name of accounting firm	Name of CPA	Period of audit service	Audit fees	Non-audit fees	Total	Remarks
Ernst & Young Taiwan	Hsuan-Hsuan Wang	2025/01/01~2025/12/31	1,551	364	1,915
	Hui-Yuan Liu

(I) Disclosure of audit fees, non-audit fees, and details of non-audit services, if the sum of non-audit fees paid to the CPA, accounting firm, and affiliated companies amount to more than one-quarter of total CPA remuneration:

Unit: NT$ thousand

CPA firm	Name of CPA	Audit fees	Non-audit fees					Period of audit service	Remarks
			System design	Business registration	Human resources	Others	Subtotal
Ernst & Young Taiwan	Hsuan-Hsuan Wang	1,551				364	364	2025	Non-audit fee - CSR Report
	Hui-Yuan Liu

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(II) For any change of accounting firm that resulted in a reduction of the audit fee from the previous year, disclose the audit fees before and after the change and the cause of such change: Not applicable.
(III) For any reduction in audit fee by more than $15\%$ compared to the previous year, state the amount, percentage and reason of such variation: Not applicable.

V. Information on Change of Certified Public Accountant: None.
VI. If any of the company's chairperson, president, or financial or accounting managers was employed by the CPA firm or any of its affiliated company within the most recent year; disclose the name, job title, and the period of employment at the CPA firm or any of its affiliated company: None.
VII. Details of shares transferred or pledged by directors, supervisors, managers, and shareholders with more than $10\%$ shareholding in the last year up to the publication date of the annual report: None.

(I) Changes in shareholdings of directors, managers and major shareholders:

Position	Name	2025		As of April 26, 2026
		Increase (decrease) in shareholding	Increase (decrease) in shares pledged	Increase (decrease) in shareholding	Increase (decrease) in shares pledged
Directors	Hengchang Investment Corp.	15,000	0	0	0
Major shareholders	Zhong Cheng Investment Co., Ltd.	0	0	1,027,000	0
Directors	Litai Investment Co., Ltd.	0	0	0	0
Chairperson	Jou-Er, Ing	0	0	0	0
President	C.C. Hung	(81,000)	0	0	0
Vice President	Geng-Sheng Jin	0	0	0	0

(II) Equity transfer and pledge:
1. Directors Hengchang Investment Corp. increase 15,000 shares, President C.C. Hung decrease 81,000 shares in 2025
2. 2025 Zhong Cheng Investment Co., Ltd. increase 1,027,000 shares

VIII. Information on the top ten shareholders who are related persons, spouses or relatives within the second degree.

Information on the top ten shareholders who are related persons
April 26, 2025

Name	Shareholdings of the Principal		Shareholding of spouse and underage children		Shares held in the name of others		The title or names and relationships of the top-ten shareholders who are related parties, spouse, and relatives within the second degree of kinship as defined in the R.O.C. Financial Accounting Standards No. 6 should be disclosed		Remarks
	Shares	Shareholding percentage %	Shares	Shareholding percentage %	Shares	Shareholding percentage %	Name	Relation
Jou-Er, Ing	1,027,000	0	0	0	0	0	1,027,000	0
Directors	1,027,000	0	0	0	0	0	1,027,000	0
Chairperson	1,027,000	0	0	0	0	0	1,027,000	0
President	1,027,000	0	0	0	0	0	1,027,000	0
Vice President	1,027,000	0	0	0	0	0	1,027,000	0

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• 53 -

Zhong Cheng Investment Co., Ltd.	23,160,942	15.34	-	-	-	-	Jou-Er, Ing, Chairperson of the Company
Hengchang Investment Corp. Representative: Jou-Er, Ing,	19,571,906	12.97	-	-	-	-	Jou-Er, Ing, Chairperson of the Company
	-	-	-	-	-	-
Litai Investment Co., Ltd. Representative: C.C. Hung	16,212,550	10.74	-	-	-	-	Jou-Er, Ing, Chairperson of the Company
	1,398,000	0.93			40,000	0.02
Jun-cheng Su	14,687,000	9.73	-	-	-	-	A relative within the second degree of Shu-Yi Su
Reward Wool Industry Corporation	14,357,428	9.51	-	-	-	-	Jou-Er, Ing, Chairperson of the Company
Shu-Yi Su	5,209,000	3.45	-	-	-	-	A relative within the second degree of Jun-cheng Su
Jing-San Tsai	1,727,000	1.14	-	-	-	-	-
Chin-Lung Huang	1,707,000	1.13	-	-	-	-	-
C.C. Hung	1,398,000	0.93	-	-	40,000	0.02	-
Zong-Ming Yan	1,225,000	0.81	-	-			-

IX. Shares in the same reinvested company jointly held by the Company, the Company’s directors, managers and enterprises directly or indirectly controlled by the Company, and the aggregate shareholding ratio of these parties.

Aggregate shareholding percentage

December.31.2025

Business investments	Held by the Company		Investment of directors, managers and enterprises directly or indirectly controlled by the company		Aggregate ownership
	Shares	Shareholding percentage	Shares	Shareholding percentage	Shares	Shareholding percentage
Taiwan Puritic Corp.	23,717 thousand shares	27.73%	-	-	23,717 thousand shares	27.73%

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Three. Capital Overview

I. Capital and outstanding shares

1. Sources of share capital

Unit: share/NT$

Year/Month (Note 12)	Issued price	Authorized capital		Paid-up capital		Remarks
		Shares	Amount	Shares	Amount	Sources of share capital	Paid in properties other than cash	Others
1962.12	10	700,000	7,000,000	700,000	7,000,000	Share capital at establishment	None
1965.04	10	1,000,000	10,000,000	1,000,000	10,000,000	Capital increase in cash	None
1967.05	10	1,400,000	14 000,000	1,400,000	14 000,000	Capital increase in cash	None
1970.06	10	2,800,000	28,000,000	2,800,000	28,000,000	Capital increase in cash	None
1976.12	10	4,200,000	42,000,000	4,200,000	42,000,000	Capital increase in cash and capital increase from earnings	None
1978.09	10	8,400,000	84,000,000	8,400,000	84,000,000	Capital increase in cash	None
1980.08	10	21,000,000	210,000,000	21,000,000	210,000,000	Capital increase in cash	(Note 11)
1986.03	10	31,000,907	310,009,070	31,000,907	310,009,070	Capital increase in cash	None
1989.01	10	42,161,233	421,612,330	42,161,233	421,612,330	Capital increase from earnings	None	Note 1
1990.12	10	63,632,400	636,324,000	63,632,400	636,324,000	Capital increase from earnings	None	Note 2
1992.01	10	82,500,000	825,000,000	82,500,000	825,000,000	Capital increase in cash and capital increase from earnings	None	Note 3
1994.08	10	91,150,000	911,500,000	91,150,000	911,500,000	Capital increase from earnings	None	Note 4
1995.08	10	100,410,000	1,004,100,000	100,410,000	1,004,100,000	Capital increase from earnings	None	Note 5
1996.08	10	110,611,000	1,106,110,000	110,611,000	1,106,110,000	Capital increase from earnings	None	Note 6
1997.08	10	122,099,100	1,220,991,000	122,099,100	1,220,991,000	Capital increase from earnings	None	Note 7
1998.07	10	134,886,200	1,348,862,000	134,886,200	1,348,862,000	Capital increase from earnings	None	Note 8
1999.07	10	140,622,900	1,406,229,000	140,622,900	1,406,229,000	Capital increase from earnings	None	Note 9
2000.07	10	150,951,700	1,509,517,000	150,951,700	1,509,517,000	Capital increase from earnings	None	Note 10

Note 1: (77) Tai-Tsai-Cheng (I) No. 09631
Note 2: (79) Tai-Tsai-Cheng (I) No. 03292
Note 3: (80) Tai-Tsai-Cheng (I) No. 02815
Note 4: (83) Tai-Tsai-Cheng (I) No. 27234
Note 5: (84) Tai-Tsai-Cheng (I) No. 32754
Note 6: (85) Tai-Tsai-Cheng (I) No. 35068
Note 7: (86) Tai-Tsai-Cheng (I) No. 43811
Note 8: (87) Tai-Tsai-Cheng (I) No. 49256
Note 9: (88) Tai-Tsai-Cheng (I) No. 50968
Note 10: (89) Tai-Tsai-Cheng (I) No. 50666
Note 11: Advance receipts transferred to capital increase of NT$116,872,000
Note 12: Date of approval of change registration due to capital increase

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Shareholding Type	Authorized Capital			Note
	Outstanding Shares	Unissued Shares	Total
Registered Common Shares	150,951,700	-	150,951,700

Note: The above registered common shares are shares of a listed company.
Information related to the shelf registration system: Not applicable.

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1. List of major shareholders (top ten shareholders in terms of equity ratio)

April 26, 2026

| Shares
Name of major shareholder | No. of shares held | Shareholding percentage % |
| --- | --- | --- |
| Zhong Cheng Investment Co., Ltd. | 23,160,942 | 15.34 |
| Hengchang Investment Corp. | 19,571,906 | 12.97 |
| Litai Investment Co., Ltd. | 16,212,550 | 10.74 |
| Jun-cheng Su | 14,687,000 | 9.73 |
| Reward Wool Industry Corporation | 14,357,428 | 9.51 |
| Shu-Yi Su | 5,209,000 | 3.45 |
| Jing-San Tsai | 1,727,000 | 1.14 |
| Chih-Lung Huang | 1,707,000 | 1.13 |
| C.C. Hung | 1,398,000 | 0.93 |
| Tsung-Ming Yen | 1,225,000 | 0.81 |

1. Dividend policy and execution status

(1) Dividend policy

It is long-term financial planning in line with future development plans, with the goal of sustainable operation, and taking care of the interests of shareholders, while considering the investment environment and working capital needs. The total amount of dividends and bonuses distributed to shareholders each year shall not be less than 40% of the balance of the current year's earnings after paying taxes, making up the cumulative loss, and setting aside reserves. However, when the accumulated distributable earnings are less than 5% of the paid in capital, distribution may not be carried out. Dividends and bonuses to shareholders may be distributed in cash or stock, of which the cash dividend shall not be less than 50% of the total dividends.

(2) Execution status

The general shareholders' meeting (scheduled to be held on June 24, 2026) will discuss the 2024 earnings distribution plan of the Company proposed by the board of directors: cash dividends of NT $3.1 per share. After the resolution of the shareholders' meeting, the Chairperson is authorized to set a distribution base date, distribution date and other related matters.

(3) Expected significant changes in dividend policy: None.

1. The impact of the proposed stock dividend at the shareholders' meeting on the Company's operating results and earnings per share: None.

2. Employees' and directors' remuneration

(1) If the Company makes a profit in the year, it shall set aside not less than 5% as employees' remuneration and not more than 1% as directors' remuneration. The so-called profit refers to the profit before tax after deducting the distribution of employees' remuneration and directors' remuneration. However, profits must first be taken to offset cumulative losses, if any.

The employees' remuneration referred to in the preceding paragraph may be in stock or cash, but the directors' remuneration may only be in cash.

(2) Basis for estimating the employees' remuneration and directors'

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remuneration and for calculating the number of shares allocated as stock dividends, and the accounting treatments for any discrepancies between the amounts estimated and the amounts actually paid:

For estimating employee profit sharing, directors' remuneration, and stock dividends, when accounting treatments for any discrepancies between the amounts estimated and the amounts paid, the discrepancies will become a change in accounting estimates listed as profit and loss for the year of shareholder meeting resolution.

(3) Remuneration approved by the board meeting:

1. Employees' and directors' remuneration paid in cash or stock. If the amount differs from the amount estimated in the year in which the expense is recognized, disclose the difference, the reason, and the treatment: None.

2. The amount of employee remuneration distributed in stock and its proportion to the total after-tax net income and total employee remuneration in the current individual or respective financial report: None.
   (4) Actual payment of employees' and directors' remuneration in the previous year; if there are differences from the amounts estimated, state the amounts, the reasons and the treatment: None.

3. Buyback of company shares: None.

II. Corporate bonds, preferred shares, overseas depositary receipts, employee stock option certificates and new shares with restricted employee rights: None.
III. New shares issued for merger or acquisition or share swaps with other companies: None.
IV. Execution of fund utilization plan: None.

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Four. Operational Overview

I. Business activities

I. Business activities

(I) Scope of business:

1. The main businesses of the Company are as follows:
2. C801010 Basic Industrial Chemical Manufacturing
3. F107200 Wholesale of Chemistry Raw Material
4. F207200 Retail sale of Chemistry Raw Material
5. CB01010 Machinery and Equipment Manufacturing
6. C802100 Cosmetics Manufacturing
7. F108040 Wholesale of Cosmetics
8. F208040 Retail Sale of Cosmetics
9. F401010 International Trade
10. C201010 Prepared Animal Feeds Manufacturing
11. F103010 Wholesale of Animal Feeds
12. F202010 Retail sale of Animal Feeds

13. ZZ99999 Businesses that are not prohibited or restricted by law, except those that are subject to special approval.

14. Business proportions (%)

The business proportions of the Company’s products in 2024 are as follows:

Product	Business profit	Ratio
Sodium Hydrosulfite	NT$42,815 thousand	9.31 %
Zinc oxide	NT$190,958 thousand	41.51 %
Sodium formaldehyde sulfurylase	NT$132,835 thousand	28.87 %
Sodium bisulfite	NT$90,561 thousand	19.69 %
Others	NT$2,873 thousand	0.62 %

1. The Company's current products:

Product	Explanation
Sodium Hydrosulfite	This product can be used as a dyeing agent for textiles and bleach for pulp.
Zinc Oxide	This product can be used as a toughening accelerator for rubber, ceramic and other products, as well as booster flux in the electronics industry.
Sodium Formaldehyde Sulfurylase	This product can be used as a polymerize for synthetic rubber and ABS plastics, as well as a stable reductant for high temperature printing and dyeing.
Sodium Metabisulfite	This product is for industrial use, and is widely used as a dichlorination agent in the textile industry, as well as an industrial wastewater treatment agent and a tanning chemical agent.
Zinc Dust	This product can be used as a rust inhibitor and chemical reductant in the paint industry.

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• 59 -

(II) Industry overview

1. Current and future industry prospects:

As the international prospect is still unclear, in addition to the continuous R&D and improvement of the existing production process, the Company continues improving its production efficiency for break-throughs and improvement, so as to reduce the production cost and produce more affordable and high-quality products to enhance the Company’s competitiveness.

1. Relationships between upstream, midstream, and downstream industry participants:

The raw materials supplied by upstream manufacturers are processed by the Company into finished products for sale to the downstream industry. The special chemicals of the Company have a wide range of industrial applications, and the main items are as follows:

Name	Applications
Sodium hydrosulfite (Na₂S₂O₄)	A strong bleaching and dyeing auxiliary for pulp bleaching and textile dyeing and finishing.
Calcined zinc oxide (ZnO)	A flux for making enamel and glass. A trace element used in electronic products and animal feed additives to promote growth.
Zinc oxide (ZnO)	A rubber sulfur accelerator. A cosmetic sunscreen and whitening agent. A photoelectric conductivity enhancer for electronic industry.
Sodium formaldehyde sulfurylase (NaHSO₂ CH₂O 2H₂O)	A polymeric agent of synthetic rubber and ABS plastics. A stable qualitative reductant for high temperature printing and dyeing. An oxygen inhibitor for oil drilling.
Sodium Meta bisulfite (Na₂S₂O₅)	An industrial wastewater treatment agent and tanning chemical agent.
Zinc powder (Zinc dust)	A rust inhibitor and chemical reducing agent for the paint industry.

1. Product development trends and competition:

Since the downstream manufacturers are subject to environmental protection, labor and low-price dumping in the mainland and Southeast Asian countries and other factors, the industry of sodium hydroxide is not making any progress. Due to the high international zinc ingot price, the cost fluctuation has a great impact and the sales growth of zinc oxide is slowing down.

(III) Technology and R&D overview

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1. The Company continues to research and improve the production technology of the existing products, with a view to saving energy, reducing waste and increasing the production rate, in response to the fluctuations in international prices of zinc ingots, caustic soda and other major raw materials, hoping to better reduce production costs and facilitate operation.

2. The existing products of the Company are mostly additives for reducing purposes. Recently, the Company has begun to develop additives for oxidative purposes in plasticizing. At present, the laboratory has completed the development, and trial produced small samples in the experimental workshop to send to downstream manufacturers for trial use, so as to fine tune the quality to meet customer requirements. The series of products will be used as initiators, catalysts, cross-linking agents and bleaching agents for the polymerization of plastic products. Three types of products have been trial produced, and the factory construction and production evaluation was carried out. After the evaluation, it is considered that the raw materials are not easy to obtain and the price fluctuates too much, so the development has been postponed.

(IV) Long and short-term business development plans:

1. Short-term business development plan
2. Improve product quality and efficiency, so as to reduce costs and enable customers to obtain cheap but high-quality products.

3. Produce exquisite and high-quality products, and occupy a market place by virtue of excellent technical support, accurate delivery date, reasonable price, satisfactory after-sales service and low-price products.

4. Long-term business development plan

5. Improve the customer's perfect after-sales service, establish a full sense of trust, and then facilitate the sales of related products.
6. Actively develop the sales of products for industrial demand in dyeing and finishing, electronics, steel, plastics, food, etc.
7. Have customers deeply agree with our product concepts of "quality first" and "service first".
8. Make "customer satisfaction is our responsibility" as the working principle of all employees.

II. Market and sales overview

(I) Market analysis

1. Sales areas of major products
   In addition to meeting the needs of the domestic market, the Company in recent years has been actively expanding export markets for its main products, which are sodium hydrosulfite, sodium formaldehyde sulfurylase and zinc oxide dust. The export markets are throughout Southeast Asia, Japan, the United States, South Korea, Australia and Europe.

2. Market share, future supply and demand, and growth
   The Company's main products are of good quality and a reputation has long been established; they have long-term domestic users, and the foundation is stable. In

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terms of export, the brand Cathay created by the Company has been recognized internationally, and its quality as well as cost are internationally competitive.

1. Competitive niche and favorable and unfavorable factors for future development, and countermeasures

(1) Competitive niche
- Self-transcendence - continuous improvement and innovation in the process, products and service activities.
- Satisfy customers - meet customer needs, attach importance to customer satisfaction, and establish good communication channels.
- Maintain reputation - uphold integrity and maintain goodwill with a strict quality assurance system (ISO9001:2008).
- Be responsible for the environment - prevent pollution and improve the environment in a sustainable way, and obtain QC080000 certification on hazardous substance management.
- Surpass the requirements of laws and regulations - always set prevention and control standards above the central and local environmental protection laws and regulations.

(2) Favorable factors
The Company has successfully tapped into the export market of exquisite products with high added value, and has high hopes for the development prospect.

(3) Unfavorable factors
After both Taiwan and China entered the WTO, the full opening of the domestic market has made the market competition increasingly fierce.
The impact of COVID-19 and the continuous erosion by low price goods from China have made the domestic market shrink.
The raw material supply chain is facing a crisis due to wars and cargo congestion at ports.

(4) Countermeasures
Strengthen marketing strategies and efforts to meet more and greater challenges.
Continue strengthening the research and development of production technology, and improve the technical level, so as to improve the quality and production efficiency; continue researching the technical efficiency, so as to truly achieve technological leadership and strengthen the competitive advantage.

(II) Main product applications and production processes:

1. Sodium hydrosulfite:
   It is used as a dyeing agent for textiles and bleach for pulp. Zinc dust is used as the main raw material, and white crystal is formed through reaction, evaporation, drying and other processes.

2. Zinc oxide:
   It is used as a toughening accelerator for rubber, electronic and ceramic products. Zinc is used as the main raw material, and it is formed into powder after high-temperature distillation, oxidation or chemical treatment.

3. Sodium formaldehyde sulfurylase:
   A polymeric agent of synthetic rubber and ABS plastics. Zinc dust is used as the main raw material, and a white block is formed through reaction, filtration, concentration and solidification.

4. Sodium bisulfite

5. 61 -

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It is used as a dichlorination agent for wastewater treatment, the leather industry and the textile industry.

(III) Supply of main materials

• Sources of main materials are as follows:
• Zinc ingots - imported mainly from Australia, South Korea, and etc.
• Liquid caustic soda - supplied by domestic manufacturers.
• Sulfur- purchased domestically.
• The imported Zinc ingots belong to bulk goods which purchased through trading agents from the daily auction trading price of the London Metal Exchange, and shipped to the port according to the shipping schedule. Generally speaking, they can be fully supplied without a fear of shortage; However, the purchase and transportation cost is greatly affected by the fluctuation of international market.
• For the sulfur and liquid caustic soda purchased domestically, the Company has long-term supply contracts for an unlimited supply.

(IV) Customers who accounted for more than 10% of total purchase (sales) in the last two years

1. Customers who accounted for more than 10% of the total sales in the last two years:

Item	2024				2025
	Name	Amount	As a percentage of total purchase for the year	Relationship with the issuer	Name	Amount	As a percentage of total purchase for the year	Relationship with the issuer
1	**DEST	65,691	12.44	None	**DEST	68,402	14.87	None
2	Others	462,282	87.56	-	Others	391,640	85.13	-
	Net sales	527,973	100	-	Net sales	460,042	100	-

Reason for increase/decrease: Due to the stable quality of the Company's products, the customer increased its purchases accordingly.

1. Customers who accounted for more than 10% of the total purchase in the last two years are as follows:

Unit: NT$ thousand

Item	2024				2025
	Name	Amount	As a percentage of total purchase for the year	Relationship with the issuer	Name	Amount	As a percentage of total purchase for the year	Relationship with the issuer
1	AKKORA	184,278	51.71	None	AKKORA	159,335	50.96	None
2	Others	172,066	48.29	-	Others	153,309	49.04	-
	Net sales	356,344	100	-	Net sales	312,644	100	-

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Reason of increase/ decrease: Mainly due to trading terms.

III. Information on employees for the last two years and up to the publication date of the annual report

March 31, 2025.

Year		2024	2025	Current year up to March 31, 2026
Employee count	Staff	29	28	28
	Technician	4	3	3
	Operator	55	54	53
	Total	88	85	84
Average age		42.71	43.17	42.83
Average years of service		12.48	12.55	12.60
Academic background	Doctoral Degree	-	-	-
	Master’s Degree	3	3	3
	Bachelor’s Degree	34	33	33
	Senior high school	34	36	35
	Below senior high school	17	13	13

IV. Contribution to environmental protection

(I) Total amount of losses and penalties due to environmental pollution in the most recent year and up to the date of publication of the annual report

Item	2025	Until March 31, 2026
Pollution status (Type)	None	None
Unit penalized	N/A	N/A
Penalty imposed	N/A	N/A
Other loss	N/A	N/A

(II) Countermeasure: Not applicable.

V. Labor-management relations

Contents and Implementation Status of Various Measures

Item	Key content	Implementation status
Employee welfare measures	1. Insurance: labor insurance and national health insurance.
2. Employee welfare: An employee welfare committee is in place.
(1)Meal allowance for three festivals, bonuses and birthday gift certificates.
(2)Employee dividends.
(3)Subsidies for weddings, funerals and hospitalization.
(4)Employee and children’s	Normally executed.

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| Employee training and development | 1. Training on industrial safety and environmental protection.
2. Pre-service training.
3. On the job training.
4. Other expertise training. | The Company has a “Training Procedure” to provide employees with training opportunities and funds. |
| --- | --- | --- |
| Retirement system | 1. There is a “Labor Pension Scheme” under the Labor Standards Act.
2. The Company has a Labor Pension Reserve Supervision Committee in place.
3. The pension reserve is allocated to the special pension account at the Bank of Taiwan or the personal retirement account at the Labor Insurance Bureau according to the new or old retirement system respectively. | The details are as follows. |

Overall remuneration policy of the Company:

The Company’s monthly salary standard, employee promotion and salary adjustment are handled in accordance with the Company’s “Salary Management Rules”, and there are three-festival and year-end bonuses. Under the normal operation, the Company will regularly pay employees a bonus equivalent to a two-month base salary at the end of the year, regardless of the Company’s profit or loss. In addition, employees’ remuneration may be allocated and paid according to the Articles of Association.

Retirement system:

1. Defined contribution plan

The Company’s Labor Pension Scheme under the “Labor Pension Act” is a defined contribution plan. In accordance with the Act, the monthly contribution rate of the Company’s labor pension shall not be less than 6% of the employee’s monthly salary. The Company has been allocating 6% of the employee’s monthly salary to the personal pension account at the Labor Insurance Bureau every month in accordance with the employee retirement measures set forth in the Act.

1. Defined benefit plan:

The employee pension measures formulated by the Company in accordance with the Labor Standards Act is a defined benefit plan, and the payment of employee pension is calculated based on the number of years of service and the average monthly salary at the time of retirement. Two points will be given at the end of one year of service for those with less than 15 years (inclusive) of service, and one point will be given at the end of each year of service for those with more than 15 years of service, but the maximum cumulative number of points is 45. The Company allocated a pension fund of 6% of the total salary on a monthly basis in accordance with the Labor Standards Act, and has been allocating 3% since February 2021. The fund is deposited in the special account at the Bank of Taiwan in the name of the Labor Pension Reserve Supervision Committee. The Company also estimates the balance of the labor pension fund account before the end of each year. In the event that the account balance is not sufficient to pay the estimated pension amount to workers who are expected to meet the retirement criteria in the following year, the Company will make up the shortfall in one allocation before March the following year.

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The asset allocation of the labor pension fund is managed by the Ministry of Labor in accordance with the Regulations for Revenues, Expenditures, Safeguard and Utilization of the Labor Retirement Fund. The fund adopts both self-managed and outsourced investment approaches, together with active and passive management strategies, for medium- and long-term investments. Considering risks such as market, credit, and liquidity risks, the Ministry of Labor establishes risk limits and control plans for the fund to ensure sufficient flexibility in achieving target returns without assuming excessive risks. The minimum annual return distributed from the utilization of the fund shall not be lower than the return calculated based on a two-year fixed deposit rate offered by local banks. Any shortfall, upon approval by the competent authority, shall be covered by the national treasury. As the Company has no right to participate in the operation and management of the fund, it is unable to disclose the classification of the fair value of plan assets in accordance with Paragraph 142 of International Accounting Standard No. 19.

In the fourth quarter of 2025, the Company settled employees' pension benefits under the old pension scheme. In November 2025, the Company obtained approval from the Taipei City Government to suspend contributions to the labor retirement reserve fund effective from November 2025. The related deferred income tax assets/liabilities amounting to NT$3,154 thousand were reclassified to retained earnings. As of December 31, 2025, the balance in the pension account with the Bank of Taiwan had not yet been settled.

The amounts recognized by the Company as expenses under the defined benefit plan for 2025 and 2024 were NT$471 thousand and NT$796 thousand, respectively.

(II) Labor-management agreements

All regulations of the Company are in accordance with the Labor Standards Act, and regular labor-management meetings are held. Up to the moment, the labor-management relation has been harmonious.

(III) The protection measure and implementation status of employees' personal safety and work environment:

The Company knows the importance of health and is very careful of employees' health. Thus, self-promotes the health check and care for employees.

●Safety and health policy

Safety discipline	Follow the Safety and Health act and Company Policy
Work safety training	Continuing training promotion and communicating to deeper the safety and health consciousness
Work safety culture	Disseminate the correct performance and form a habit for safety and health.
Continuous improvement	Continue improving for safety and health. Step towards sustainable development.

●Work environment detection

The Factory has environmental detections in June and December per year, which are entrusted to the aggregate corporation Industrial Safety and Health Association of the R.O.C. The purpose is to understand and assess the status of

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the personnel working environment when producing at each workshop and around storage tanks. In addition to distributing the personal protective equipment to each operational personnel on the spot, to take the responsibility of caring for the employees' health, it provides a place where employees can feel at ease.

(IV) Did have any loss due to labor disputes in the most recent year and up to the date of publication of the annual report? Please reveal the estimated cost so far or in the future and the countermeasures: No.

VI. Information security management

(I) Describe the information security risk management structure, information security policy, specific management plan, and resources invested in the information security management:

1. Information security risk management structure:

The Company's information system is leased from the related party "Reward Wool Industry Corporation". The Company has an assistant information manager supervising the implementation of internal information security. If there is any deficiency found in the audit, the audited unit will be required to propose relevant improvement plans and specific actions, and regularly and continuously track the improvement results to reduce internal information security risks.

1. Information security policy

(1) Both the Taipei Head Office and Pingnan Factory have established proper firewalls to prevent attacks by external hackers, and review relevant records from time to time.
(2) Anti-virus software is installed at the computer user end, and virus records and relevant corresponding processing are reviewed from time to time.
(3) Operations related to operating system updates are carried out irregularly to reduce system vulnerabilities and information security risks.
(4) A proper backup mechanism and method have been established.

1. Specific information security management plan and resources invested in information security management

(1) Network security management:

An enterprise level multi-function firewall is set for external connections to prevent hackers from illegal invasion.

(2) Server or computer user-end protection management:

① The server and computer user-end devices are installed with endpoint-protection multifunction software (anti-virus, anti-malware, anti-spyware, etc.). The virus signature is automatically updated to ensure that various viruses can be blocked and information security protection improved.
② E-mail is equipped with e-mail anti-virus, spam filtering mechanism and anti-blackmail fraud e-mail defense mechanism to prevent unexpected loss or harm caused by the above types of malicious e-mail received by computer users.

(3) Authority level management of application system user accounts:

① Account management: The system settings require users to change their passwords regularly.
② Authority level management: Authority levels are defined based on the users' job attributes.

(II) Losses, possible impacts arising from major information security incidents during the most recent fiscal year and up to the publication date of the annual report, and countermeasures:

The Company had no major information security incidents and no related losses and impacts in 2025 and up to the publication date of the annual report.

VII. Significant Contracts

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Nature of Contract	Contracting Parties	Contract Term (Commencement and Expiration Dates)	Principal Contents	Restrictive Clauses
Sales Contract	NITTO SANGYO	2026/4/1~2027/3/31	Sale of Zinc Oxide	Exclusive Sales Agent in Japan Region

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Five. Review and Analysis of Financial Status and Business Performance, and Risk Management Issues I. Financial status

Comparative analysis of the financial position
Unit: NT$ thousand

| Year
Item | 2025 | 2024 | Difference | |
| --- | --- | --- | --- | --- |
| | | | Amount | % |
| Current assets | 641,607 | 1,689,486 | (1,047,879) | (62.02) |
| Property, plant and equipment | 310,616 | 312,718 | (2,102) | (0.67) |
| Other assets | 3,022,124 | 2,567,140 | 454,984 | 17.72 |
| Total assets | 3,974,347 | 4,569,344 | (594,997) | (13.02) |
| Current liabilities | 81,575 | 137,562 | (55,987) | (40.70) |
| Non-current liabilities | 84,079 | 85,224 | (1,145) | (1.34) |
| Total liabilities | 165,654 | 222,786 | (57,132) | (25.64) |
| Share capital | 1,509,517 | 1,509,517 | - | - |
| Capital surplus | 92,930 | 92,958 | (28) | (0.03) |
| Retained earnings | 2,022,207 | 2,568,332 | (546,125) | (21.26) |
| Other equity | 184,039 | 175,751 | 8,288 | 4.72 |
| Total equity | 3,808,693 | 4,346,558 | (537,865) | (12.37) |

Note: Analysis may be omitted if the increase or decrease does not exceed 20%.
1. The decrease in current assets during the current period was mainly due to an increase in cash dividend distributions during the period.
2. The decrease in current liabilities and total liabilities during the current period was mainly due to reduced profitability, resulting in lower provisions for directors remuneration and employees bonus payable.
3. The decrease in retained earnings was mainly due to an increase in shareholder dividend distributions.

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II. Financial Performance:

(1) Comparative analysis of business results

Unit: NT$ thousand

Item	Year	2025	2024	Amount increase (decrease)	Percentage of change %
Net operating revenues		460,042	527,973	(67,931)	(12.87)
Operating costs		439,194	463,991	(24,797)	(5.34)
Gross profit		20,848	63,982	(43,134)	(67.42)
Operating expenses		100,092	163,140	(63,048)	(38.65)
Operating profit (loss)		(79,244)	(99,158)	(19,914)	(20.08)
Non-operating income and expenses		680,161	1,647,922	(967,761)	(58.73)
Profit before tax		600,917	1,548,764	(947,847)	(61.20)
Tax expense (income)		(17,078)	7,217	(24,295)	(336.64)
Current period net profit		583,839	1,555,981	(972,142)	(62.48)

Explanation of Changes in Increase/Decrease Ratios:

1. The decrease in gross operating profit was mainly due to weak market demand and dumping of foreign products
2. The decrease in expenses and losses was mainly due to reductions in accrued employees compensation and directors remuneration.
3. The decrease in non-operating income was mainly due to gains from the disposal of land in the previous period.
4. The increase in income tax expense was mainly due to an increase in tax on undistributed earnings.
5. The decrease in net profit for the current period was mainly due to gains from the disposal of idle assets in the previous period.

(2) Sales forecast and basis

The Company sets annual sales targets based on the sales plan, industrial planning and past business performance.

(3) Possible financial impact and countermeasure

In the future, the Company will actively expand its market share and increase its profit in response to the changes in market demand.

III. Cash flow:

(1) Liquidity analysis for the last two years

Item	Year	2025	2024	Percentage of increase/decrease
Cash flow ratio		147.01	114.34	32.67
Cash flow adequacy ratio		22.45	42.30	(19.85)
Cash reinvestment ratio		(23.41)	(1.11)	(22.30)

Analysis and description of change in the increase/decrease ratio:

1. The decrease in cash flow ratio compared to the previous period was due to the decrease in net cash outflow from operating activities.
2. The decrease in cash flow adequacy ratio compared to the previous period was due to the increase in cash dividends.

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(2)Liquidity analysis for the next year
Unit: NT$ thousand

Cash balance at the beginning of the period①	Estimated annual net cash flow from operating activities Estimated annual net cash flow from operating activities②	Estimated annual cash outflow Estimated annual cash outflow③	Expected cash surplus (deficit) ① + ② - ③	Financing of expected cash deficits
				Investment plans	Financing plans
102,085	305,737	535,460	(127,638)	-	V

IV. Material capital expenditures in the last year and impacts on the financial position and business performance: None.

V. Investment policy for the last year, the main reasons for profit or loss, and improvement plan and investment plan for the coming year:

The Company reinvestment in Taiwan Puritic Corp., which had issued NT200,681,360 as dividends in 2025. Also, Reward Wool Industry Corporation had issued NT$7,808,057 as dividends in 2025. The two companies have sound financial position, which are both a great target for long-term investment. The Company has not yet gross investment proposal in next year.

VI. Assessment of risk items in the last year up to the date of publication of the annual report

(I) Impact of interest rate, exchange rate, and inflation on the Company's income and countermeasures:

1. Impact of interest rate, exchange rate, and inflation on the Company's income

Item	2025 NT$ thousand
Interest income	14,812
Interest expenses	135
Foreign exchange gain	-
Foreign exchange loss	1,423

(1) Interest rate: The Company has a good financial structure and a high ratio of self-owned funds. Except for self-repaying loans for purchasing materials, there are no bank loans, so there is no interest expense. Short term idle funds are used to purchase commercial promissory notes for fund arrangement and interest income.

(2) Change in exchange rate: If there is any change in the exchange rate, the foreign currency deposit account and the foreign currency demand for purchasing materials are matched and adjusted in a timely manner, so there is no significant impact.

(3) Inflation: Except the major raw materials "Zinc ingot" influence by the market volatility prices, other items have no significant impact on the Company's operations.

1. Future response measures: The Company will continue to closely observe the trend of interest rates and exchange rates, and exercise strict control in due course to reduce the overall risk of the Company.

(II) Policies on high-risk and highly leveraged investments, loans to external parties, endorsements/guarantees, and trading of derivatives; describe the main causes of profit or loss incurred and future countermeasures:

1. The Company operates on a conservative and prudent financial basis, and does not

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engage in high-risk and highly leveraged investments.

1. The Company has no loan extension to others, and on April 10, 2006 the board meeting approved “no fund lending to others”.

2. The Company has not provided endorsements/guarantees for others, and on December 18, 2012 the board meeting approved “no endorsement/guarantee for others”.

3. The Company has no derivative product transactions in 2025 and up to the publication date of the annual report.

(III) The most recent annual R&D plan, the current progress of the unfinished R&D plan, the R&D expenses that should be reinvested, the estimated time to complete mass production, and the main factors affecting the success of future R&D:

In order to reduce wastage, improve manufacturing efficiency, reduce pollution and save labor, the Company is engaged in the research and development of substituting the granulation method for the crushing method in the production process of sodium formaldehyde sulfurylase, hoping to improve product refinement, reduce costs and increase competitiveness.

(IV) Financial impact due to changes in local and foreign regulations and countermeasures:

No such situation in 2025 and up to the publication date of the annual report.

(V) The impact of important changes in technology or industry on the Company’s finance and business and countermeasures:

With regard to the development and change of technology in the future, in terms of environmental protection and green energy, the Company considers environmental protection, energy conservation, green energy and low carbon, and focuses on high-tech chemicals to continuously improve ecological benefits.

(VI) The impact of corporate image change on corporate crisis management and countermeasures:

The Company has been adhering to the quality policy of customer first, integrity first, quality first, and seamless cooperation for many years, and is committed to maintaining the corporate image of decent operation, and complying with laws and regulations. So far, there has been no event that could affect the corporate image.

(VII) Expected benefits, possible risks, and countermeasures in relation to mergers and acquisitions:

No such situation in 2025 and up to the publication date of the annual report.

(VIII) Expected benefits and possible risks of plant expansion and countermeasures:

No such situation in 2025 and up to the publication date of the annual report.

(IX) Risks and countermeasures associated with concentration of sales or purchases:

1. The top three customers of the Company respectively account for 14.87%, 5.59% and 5% of the turnover, and there is not yet a concentration of sales.

2. In terms of purchase, the top three suppliers of the Company are AKKORA, AAYIHU and Chang Chun Plastic Co., Ltd., which respectively account for 50.96%, 6.01% and 6.01% of the total purchase amount. In addition, there are a few spot purchases, and the risk of concentrated purchase has been effectively reduced.

(X) Impact on the company if a major quantity of shares held by directors or shareholders holding more than 10% of shares in the company are transferred or change hands, the risk and countermeasures:

No such situation in 2025 and up to the publication date of the annual report.

(XI) Impact, risks, and countermeasures associated with any change of management: None.

(XII) Litigation and non-litigation cases: None.

(XIII) Other significant risks and countermeasures: None.

VII. Other important matters: None

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Six. Special Disclosure

I. Information of affiliated companies

(1) Overview of the relationship with the controlling companies

Name of controlling entity	Means of control	Shareholding and shares pledged			Holding positions as directors and managers
		Shares	Shareholding percentage	Shares pledged	Position	Name
Hengchang Investment Corp.	The appointed persons were elected as the Chairperson of the Company.	19,571,906	12.97%	0	Chairperson Director	Jou-Er, Ing
Litai Investment Co., Ltd	The appointed persons were elected as the Director of the Company	16,212,550	10.74%	0	Director& President	C.C. Hung

(II) Business dealing status
1. Purchase and sales transaction: None.
2. Property transaction: None.
3. Financing: None.
4. Lease of asset: None.
5. Other significant transactions: None.

(III) Endorsements/guarantees and other guarantees: None.
(IV) Other matters with significant financial and business impacts: None.

II. Private placement of marketable securities in the last year and up to the publication date of this annual report: None.

III. Holding or disposal of the Company's shares by subsidiaries in the last year, up until the publication date of the annual report: None.

Seven. Events with Significant Impacts to Shareholders' Equity or Securities Prices as Defined in Subparagraph 2, Paragraph 2, Article 36 of the Securities and Exchange Act in the Last Year Up to the Publication Date of This Annual Report: None.

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