Stock code: 1413

Hung Chou Fiber Industrial Co., Ltd.

2024 Annual Report

Published May 28, 2025

Annual report available at: http://www.hungchou.com.tw/index

Spokesperson: Heng-Chia Chang
Title: Director
Acting Spokesperson: Sheng-Chin Lin
Title: Manager
TEL: (02)2657-5859
Email: [email protected]
Name, address, and contact number of stock transfer agency:
Share Administration Department of Grand Fortune Securities Co., Ltd.
6F, No. 6, Section 1, Zhongxiao West Road, Zhongzheng District, Taipei City 10041
Website: http://www.gfortune.com.tw/
TEL: (02) 2383-6888
Name of CPA and the name, address, and contact number of the accounting firm for the latest financial report:
Name of CPA: Jun-Ming Pan, Shu-Ying Chang
Name of firm: KPMG
Address: 68F, No. 7, Section 5, Xinyi Road (Taipei 101 Building), Taipei City
Website: http://www.kpmg.com/tw
TEL: (02)8101-6666
Address and contact number of the headquarter and plant sites:
Headquarters: 7F, No. 607 Ruiguang Road, Neihu District, Taipei City
TEL: (02)2657-5859
Factory: No. 29, Hongzhou Street, Guishan District, Taoyuan City
TEL: (03)329-4138
Overseas exchange where securities are listed: None
Method of inquiry for overseas securities: None
Company website: http://www.hungchou.com.tw/index.

One. Business Report to Shareholders 1

Three. Implementation of corporate governance 5

Organization 5
Background information of directors, supervisors, the President, vice presidents, assistant vice presidents, and heads of various departments and branches 6
Corporate governance 21
Disclosure of CPAs' remuneration 102
Change of CPA 102
Any of the Company's Chairman, President, or any manager involved in financial or accounting affairs being employed by the accounting firm or any of its affiliated company within the most recent year. 102
Details of shares transferred or pledged by directors, supervisors, managers, and shareholders with more than 10% ownership interest in the last year, up until the publication date of annual report 102
Disclosure of relationships, as defined under Statement of Financial Accounting Standard No.6 - Related parties, among the top ten shareholders 104
Investments jointly held by the Company, the Company's directors, supervisors, managers, and enterprises directly or indirectly controlled by the Company; disclose shareholding in aggregate of the above parties. 104

Four. Capital and shares 105

Eight. Operational overview 108

Business activities: 108
Market, production, and sales overview 112
Employee count in the last 2 years 119
Contribution to environmental protection 119
Labor-management relations 119
Cybersecurity management 121
Major contracts 123

Ten. Review and analysis of financial position and business performance, and risk management issues 124

Financial position 124
Financial performance 125
Cash flow 126
Major capital spendings in the last year and impact on business

performance 127

Investment policy in the most recent year, causes of profit or loss incurred, improvement plans, and investments planned for the next year.127
Analysis and assessment of risk issues 127
Other material issues 128

Eleven. Special remarks 128

Information of affiliated enterprises. 128
Private placement of securities in the last year up until the publication date of annual report. 128
Holding or disposal of the Company's shares by subsidiaries in the last financial year, up until the publication date of annual report 128
Other necessary supplemental information 129

Twelve. Occurrences significant to shareholders' equity or security price, as defined in Subparagraph 2, Paragraph 3, Article 36 of the Securities and Exchange Act, in the last year up until the publication date of annual report 129

One. Business Report to Shareholders

2024 Business Report of Hung Chou Fiber Industrial Co., Ltd.

Business performance for 2024:

In 2024, Taiwan's chemical fiber industry faced a year of transformation and challenges amid a slow global economic recovery, supply chain restructuring, and increasing pressure for environmental sustainability. As a critical upstream sector of the textile industry, the chemical fiber industry was impacted by fluctuations in international market demand, volatile raw material prices, and domestic and international policy initiatives. The industry exhibited a polarized performance: traditional chemical fiber products faced overcapacity and price competition, while demand for innovative functional and sustainable fibers injected new growth momentum.

According to the Taiwan Economic Research Institute and other institutions' manufacturing industry outlook reports, Taiwan's manufacturing sector, including the chemical fiber industry, experienced limited output growth in the first half of 2024 due to weak global demand. Traditional polyester and nylon products, in particular, saw declines in export volume and value to traditional markets (e.g., Southeast Asia and Europe/USA) due to overcapacity and price wars in China. However, in the second half of the year, rising demand for sustainable materials in Europe and the Americas led to moderate export growth for Taiwan's functional chemical fiber products (e.g., eco-friendly polyester fibers and high-performance fibers). As a result, the Company's product sales volume and revenue increased compared to 2023, with a significant reduction in comprehensive losses for the year.

To address current industry trends and strengthen its competitive edge, the Company has reviewed and restructured its existing product lines, shifting toward a low-volume, high-diversity production model and investing in the development of differentiated new products. By obtaining certification for 37.5 technology fiber production, the Company has leveraged this partnership to enter the supply chains of global branded apparel manufacturers, thereby improving product gross margins.

Additionally, to ensure sustainable operations, the Company has invested in eco-friendly polyester pellets for the production of sustainable yarns and polyester masterbatches for colored yarn production and R&D. These efforts enhance yarn diversity and color richness to better meet environmental and customer demands while enriching the product portfolio. By gradually increasing the proportion of niche products, the Company aims to broaden product applications, expand its customer base, reduce the impact of seasonal fluctuations, and enhance profitability.

Global branded apparel manufacturers have made "sustainability + functionality" a core criterion for selecting textile supply chain partners and a new consumer trend. Energy conservation and carbon reduction have thus gained significant attention in the textile industry, with suppliers and brands actively building green supply chains that integrate sustainability and functionality. To meet customer needs and secure orders, the Company has focused on developing highly differentiated niche products in recent years to gain a competitive edge and position in international supply chains. Additionally, the Company has revitalized its assets by leasing idle factories and land to generate stable, ongoing income.

(1) Results of Business Plan Implementation

In 2024, the Company recorded operating revenue of NT$2,305,985 thousand, operating costs of NT$2,282,725 thousand, gross profit of NT$23,260 thousand, operating expenses

of NT$49,379 thousand, and a net operating loss of NT$26,119 thousand. The total comprehensive loss for the year was NT$22,788 thousand.

(2) Budget Execution Status

In 2024, the Company set internal budget targets but did not publicly disclose financial forecasts.

(3) Financial Performance and Profitability Analysis

Item	2024	2023
Financial Performance
Operating Revenue	NT$2,305,985	NT$1,995,376
Operating Costs	NT$2,282,725	NT$2,074,211
Net Profit (Loss) Before Tax	(NT$22,645)	(NT$132,786)
Comprehensive Income (Loss)	(NT$22,788)	(NT$132,786)
Profitability
Return on Assets (%)	-0.33	-4.68
Return on Equity (%)	-2.10	-11.43
Pre-Tax Profit to Paid-In Capital Ratio (%)	-1.98	-10.31
Net Profit Margin (%)	-0.99	-6.65
Earnings Per Share (NT$)	-0.17	-1.01

(4) Research and Development Status

Yarn Type	Composition	Applications	Characteristics
37.5 Technology Fiber	Volcanic rock (activated carbon)	Professional sportswear and athleisure	Uses electrostatic attraction to absorb moisture evaporating from the body; leverages infrared energy emitted by the body to heat particles and accelerate moisture evaporation, keeping the skin dry faster and helping maintain a stable body temperature by storing energy.
Eco-Friendly Yarn	Recycled polyester chemical fiber products, reused in a circular process	Various apparel fabrics and industrial fabrics	Resource recycling
Graphene Fiber	Raw materials with uniformly dispersed graphene processed into fiber masterbatches and spun into yarn	Smart clothing and wearable device applications	Anti-static: Graphene's conductivity reduces fabric surface resistivity. Its lubricated surface lowers the friction coefficient, suppressing and reducing static electricity to prevent skin irritation.
Excellent thermal conductivity: Graphene textile materials act as a filter between the body, external environment, and clothing, ensuring the wearer maintains an ideal temperature.

II. Outline of the 2025 Business Plan

(1) Business Strategy

In recent years, Taiwan's textile industry has developed two key strengths—functional fashion and environmental sustainability—laying a foundation for growth and expanding into international markets. "Environmental sustainability" has become a critical niche for Taiwan's man-made fiber industry. In response to environmental protection and corporate social responsibility, the man-made fiber industry has pursued development in bio-based materials, recycling, low-carbon processes, eco-friendly practices, and biodegradable materials. The Company has spared no effort in developing "sustainable and eco-friendly" products.

To maintain stable profitability and seize opportunities for survival and growth in 2025, the Company will continue to develop differentiated products, focusing on the stable production of eco-friendly fibers, 37.5 technology fibers, and graphene fibers. Additionally, the Company will adjust its operational scale, revitalize assets, integrate production lines to reduce electricity costs, adopt low-carbon energy sources, and increase the use of renewable energy. These efforts aim to secure a competitive position in the restructuring of the global textile supply chain.

(2) Projected Sales Volume and Basis

Based on the Company's equipment capacity and market demand, the projected sales volume for 2025 is approximately 21,600 tons of polyester pellets and 37,800 tons of polyester yarn.

(3) Key Production and Sales Policies

Close coordination between marketing, production, R&D, and after-sales service.
Responding to the global trend of strengthened environmental awareness, renewable energy, and net-zero carbon emissions.
Enhancing product diversity and quality, improving manufacturing processes, and upgrading equipment to support structural adjustments and flexible production needs.
Expanding the scope of customer service and shortening response times.
Actively utilizing idle funds to invest in stable, profitable real estate (e.g., rental income) to boost non-operating income.

III. Future Development Strategy and Impact of External Competitive Environment, Regulatory Environment, and Overall Business Environment

Global Supply Chain Competition and Cost Pressure

The chemical fiber industry is highly competitive within traditional manufacturing. The Company faces low-cost competition from China and Southeast Asian countries (e.g., Vietnam, Indonesia), which benefit from lower labor and energy costs, creating price pressure for Taiwan's chemical fiber enterprises. Additionally, recent volatility in raw material prices (e.g., petrochemicals) poses significant cost control challenges for chemical fiber companies reliant on petroleum derivatives.

Environmental Regulations and Sustainability Requirements

Taiwan's government and international markets are imposing increasingly stringent environmental sustainability requirements, such as carbon reduction targets and green manufacturing standards. The chemical fiber industry, due to its reliance on petrochemical raw materials and energy-intensive processes, is often viewed as

high-pollution. The Company may need to invest in equipment upgrades, adopt low-carbon technologies, or develop eco-friendly fiber products to comply with regulations and meet customer demands for sustainable products, increasing capital expenditure pressure.

Demand Fluctuations and Downstream Industry Transformation
Chemical fiber products are primarily used in the textile and apparel industries, but rapid changes in the global fast fashion sector and shifting consumer trends (e.g., reduced consumption of disposable clothing) may lead to unstable demand. Additionally, some downstream customers are shifting to natural fibers or emerging alternative materials, posing a potential threat to traditional chemical fiber products. The Company must flexibly adjust its product structure to adapt to market changes.
Uncertainty in the International Trade Environment
Taiwan's chemical fiber industry is heavily export-dependent. However, U.S.-China trade tensions, tariff barriers, and geopolitical uncertainties may impact export orders. Additionally, regional trade agreements (e.g., RCEP) could place the Company at a competitive disadvantage.
Technological Upgrades and Innovation Pressure
As demand for functional fibers grows, the Company must continue investing in R&D to enhance product value. However, compared to international giants or emerging tech companies, the Company may face limitations in funding and technical resources, making it challenging to keep pace with rapid industry upgrades.

The Company faces multifaceted challenges in the chemical fiber industry, including cost competition, environmental regulations, demand fluctuations, trade risks, and technological innovation pressures. These challenges are not unique to the Company but reflect the broader context of Taiwan's chemical fiber industry amid globalization and the transition to sustainability. To maintain competitiveness, the Company is committed to addressing these challenges by enhancing product differentiation, optimizing production efficiency, and exploring new markets.

Chairman: Cheng-Tien Chan
General Manager: Cheng-Tien Chan

Three. Implementation of corporate governance

1. Organization

Responsibilities of main departments:

GM's Office: Planning and establishment of corporate policies; oversees matters concerning information, disbursement, treasury, personnel, general affairs, product development, after-sale service, and procurement.
Finance & Accounting Department: Responsible for financial, accounting, bookkeeping, and public disclosure of information.
Business Department: Sale and export of polyester fibers.
Synthetic Fiber Factory: Responsible for the production of polyester fibers, quality management, warehousing management, shipping management, general affairs, and maintenance of common equipment.

Background information of directors, supervisors, the President, vice presidents, assistant vice presidents, and heads of various departments and branches

(1) Background information of directors and supervisors

March 29, 2024

Position (Note 1)	Nationality or place of registration	Name	Gender/ age (Note 2)	Date elected/onboard	Term of service	Date first elected (Note 3)	Shareholding when elected		Current shareholding		Shareholding of spouse and underage children		Shares held by proxy		Major career (academic) achievements (Note 4)	Concurrent duties in the Company and in other companies	Spouse or relatives of second degree or closer acting as manager, director, or supervisor			Remarks (Note 5)
							Shares	Shareholding percentage	Shares	Shareholding percentage	Shares	Shareholding percentage	Shares	Shareholding percentage			Position	Name	Relationship
Director	The Republic of China	Yi Jinn Industrial Co., Ltd.		June 29, 2023	3 years	June 18, 2004	3,525,000	2.07%	36,601,000	27.70%	-	-	-	-	-	-				None
Chairman	The Republic of China	Cheng-Tien Chan	Male 70-79	June 29, 2023	3 years	June 18, 2004	-	-	5,532,037	4.19%	-	-	-	-	Graduated from senior high school	1. Chairman of Yi Jinn Industrial Co., Ltd.
2. Chairman of Kwang Ming Silk Mill Co., Ltd.
3. Chairman of Yi Tong Fiber Co., Ltd.
4. Independent Director of Oriental Union Chemical Corporation	Director Director	Yu-Ching Cheng
Yi-Ching Chan	Spouse Father and daughter	None
Independent director	The Republic of China	Shou-Po Chao	Male 80-89	June 29, 2023	3 years	June 22, 2016	-	-	-	-	-	-	-	-	Graduated from University of Illinois					None
Independent director	The Republic of China	Wei-Chi Huang	Male 60-69	June 29, 2023	3 years	June 22, 2016	-	-	-	-	20,000	0.02%	-	-	Graduated from University					None
Independent director	The Republic of China	Hsien-Chang Kuo	Male 60-69	June 29, 2022	3 years	June 29, 2022									Doctoral Degree					None
Independent director	The Republic of China	Chen,Yi-Min	Male 60-69	May 30, 2023	2 years	May 30, 2023	-	-	-	-	-	-	-	-	Master's Degree					None
*Director	The Republic of China	G.L. Lin	Male 60-69	June 29, 2023	3 years	May 22, 2015	-	-	449,000	0.34	-	-	-	-	Graduated from Senior High School	General Manager				None
*Director	The Republic of China	Yu-Ching Cheng	Female 60-69	June 29, 2023	3 years	May 22, 2015	-	-	-	-	5,532,037	4.19%	-	-	Graduated from University	Director of Yi Tong Fiber Co., Ltd.
Supervisor of Shin Mao Investment Co., Ltd.	Chairman Director	Cheng-Tien Chan
Yi-Ching Chan	Spouse Mother and daughter	None

Position (Note 1)	Nationality or place of registration	Name	Gender/ age (Note 2)	Date elected/onboard	Term of service	Date first elected	Shareholding when elected		Current shareholding		Shareholding of spouse and underage children		Shares held by proxy		Major career (academic) achievements (Note 4)	Concurrent duties in the Company and in other companies	Spouse or relatives of second degree or closer acting as manager, director, or supervisor			Remarks (Note 5)
							Shares	Shareholding percentage	Shares	Shareholding percentage	Shares	Shareholding percentage	Shares	Shareholding percentage			Position	Name	Relationship
*Director	The Republic of China	Yi-Ching Chan	Female 30-39	June 29, 2023	3 years	May 22, 2015	-	-	-	-	-	-	-	-	Graduated from University	Supervisor of Kwang Ming Silk Mill Co., Ltd. Chairman of Shin Mao Investment Co., Ltd.	Chairman Director	Cheng-Tien Chan Yu-Ching Cheng	Father and daughter Mother and daughter	None
*Director	The Republic of China	Heng-Chia Chang	Male 60-69	June 29, 2023	3 years	May 22, 2015	-	-	-	-	-	-	-	-	Graduated from college	Vice President of GM's Office Vice President of Yi Jinn Industrial Co., Ltd.				None
*Director	The Republic of China	Tse-Hua Lin	Male 50-59	June 29, 2023	3 years	June 4, 2019						-	-	-						None
Director	The Republic of China	Lin-Te Chen	Male 30-39	June 29, 2023	3 years	June 29, 2023	57,516	0.04%	857,516	0.65%					Master's Degree					None
Director	The Republic of China	Representative of Bowa International Leasing; Kuan-Ru Chen	Male 50-59	June 29, 2023	3 years	June 29, 2023	1,171,000	0.87%	1,171,000	0.87%	-	-	-	-						None
					3 years	June 29, 2023	96,000	0.09%	96,000	0.07%	-	-	-	-	Master's Degree					None

Note 1: For corporate shareholders, the names and representatives are stated individually (for representatives, the names of the respective corporate shareholders they represent are stated separately), and additional disclosures are made in Table 1.
Note 2: Age may be presented in ranges, such as 41-50 or 51-60.
Note 3: Any disruption of duty as a director or supervisor after the date first elected are addressed in a separate remark.
Note 4: The career background of anyone above relating to their current roles, e.g. previous employment in the CPA firm or employment in a related company, is disclosed with detailed job titles and responsibilities.
Note 5: In situations where the Company's President or manager of the highest equivalent grade is the same person as or a spouse or first-degree relative of the Chairman, please explain the reasons, rationality and necessity of such an arrangement and any response measures taken (such as introduction of independent directors). Furthermore, disclose whether more than half of directors are involved in concurrent duty as employees or managers.
*: The parties are representatives of corporate director (Yi Jinn Industrial Co., Ltd.)

Chart 1: Major shareholders of corporate shareholders

March 30, 2025

Name of corporate shareholder (Note 1)	Major shareholders of the corporate shareholder (Note 2)
Yi Jinn Industrial Co., Ltd.	Name of shareholder	Shareholding percentage %	Name of shareholder	Shareholding percentage %
	Yi Tong Fiber Co., Ltd.
Cheng-Tien Chan
Shin Mao Investment Co., Ltd.
I Jinn Industrial Co., Ltd.
Zig Sheng Industrial Co., Ltd.	19.21
7.96
6.83
6.11
2.29	Sheng-Min Wang
Chuang-Yen Wang
Sheng-Hung Wang
Min-Gji Zhang
Cheng-Fu Wang	2.00
1.71
1.65
1.58
1.03

Note 1: Where directors and supervisors are representatives of corporate shareholders, the names of corporate shareholders are displayed.
Note 2: The chart shows the names and shareholding percentages of major shareholders (top 10 shareholders) in each of the Company's corporate shareholders. Chart 2 below is used if the major shareholder is also a corporate entity.
Note 3: For corporate shareholders that are not corporate entities, the name of capital contributor or donor (after making inquiries with the Judicial Yuan) and percentage of capital contribution or donation are shown instead of shareholder name and shareholding percentage. Deceased donors are noted as "Deceased."

Chart 2: Major shareholders of major corporate shareholders listed in Chart 1
March 30, 2025

Name of corporate entity (Note 1)	Major shareholders of the corporate entity (Note 2)
Yi Tong Fiber Co., Ltd.	Yi Jinn Industrial Co., Ltd.	46.81%	Yuan Faun Ltd.	3.56%
	Cheng-Tien Chan	8.31%	Hsiou-Ching Huang	2.37%
	Yi-Ching Chan	7.58%	Jang Jang Co., Ltd.	1.52%
	Fu-Ming Transport Corporation	5.94%	Zig Sheng Industrial Co., Ltd.	1.52%
	Hsin Sin Textile Co., Ltd.	4.75%	Lan Fa Textile Co., Ltd.	1.52$

I Jinn Industrial Co., Ltd.	Nian Shing Investment Co., Ltd.	24.97%	Chun-Hsiang Chen	4.98%
	Kuang Shun Investment Co., Ltd.	18.07%	Chun-Chieh Chen	4.79%
	Chiu-Yuan Chan	8.54%	Hsin-Fu Huang	3.41%
	Bessky Investment Co., Ltd.	7.83%	Kuo-Lun Huang	3.41%
	Ji Yuan Investment Co., Ltd.	5.41%	Bright Sequence Enterprise Co., Ltd.	2.56%

Shin Mao Investment Co., Ltd.	Yi Jinn Industrial Co., Ltd.	35.33%
	Yi-Ching Chan	25.78%
	Cheng-Tien Chan	15.30%
	Yi Tong Fiber Co., Ltd.	12.15%
	I Jinn Industrial Co., Ltd.	11.44%
Zig Sheng Industrial Co., Ltd.	Yi Sheng Investment Co., Ltd.	8.63%	Shou-Chun Yeh	3.22%
	Pai-Huang Su	4.44%	Tsung-Hao Yeh	2.04%
	Ching-Yuan Su	4.40%	Shuo Chuan Co., Ltd.	2.94%
	Chiang Yo Sheng Co., Ltd.	3.27%	Ching-Lang Su	2.51%
	Treasury stock of Zig Sheng Industrial Co., Ltd.	3.52%	Ching-Fu Su	2.19%

Note 1: Where the major shareholders listed in Chart 1 are corporate entities, the names of the corporate entities are displayed.
Note 2: The chart shows the names and shareholding percentages of major shareholders (top 10 shareholders) in each of the Company's corporate shareholders.
Note 3: For corporate shareholders that are not corporate entities, the name of capital contributor or donor (after making inquiries with the Judicial Yuan) and percentage of capital contribution or donation are shown instead of shareholder name and shareholding percentage. Deceased donors are noted "Deceased."

Background of directors and supervisors (2)

Directors' supervisors' expertise and independent directors' independence:

| Criteria
Name | Professional qualification and experience (Note 1) | Independence criteria (Note 2) | Number of concurrent positions as independent director in other public companies |
| --- | --- | --- | --- |
| Cheng-Tien Chan | Graduated from senior high school Chairman of Yi Jinn Industrial Co., Ltd.
Chairman of Kwang Ming Silk Mill Co., Ltd.
Independent Director of Oriental Union Chemical Corporation
Chairman of Taiwan Textile Federation | Chairman of the Company | 0 |
| Yi-Ching Chan | Graduated from University Director of Yi Jinn Industrial Co., Ltd.
Supervisor of Kwang Ming Silk Mill Co., Ltd. | 2nd-degree relative of the Company's Chairman | None |
| Yu-Ching Cheng | Graduated from University Director of Yi Jinn Industrial Co., Ltd.
Director of Kwang Ming Silk Mill Co., Ltd. | Spouse of the Company's Chairman | None |
| G.L. Lin | Graduated from Senior High School Director of Hung Chou Fiber Industrial
General Manager of Hung Chou Fiber Industrial | General Manager of the Company | None |
| Heng-Chia Chang | Graduated from college Vice President of Yi Jinn Industrial
Director of Yi Tong Fiber Co., Ltd. | Vice President of the parent company | None |
| Tse-Hua Lin | Graduated with Master's Degree Assistant Vice President of Yi Jinn Industrial | Assistant Vice President of the parent company | None |
| Shou-Po Chao (Independent Director) | Graduated from University of Illinois
Former Chairperson of the Council of Labor, Executive Yuan
Adjunct Professor of National Changhua University of Education Department of Industrial Education and Technology | Does not exhibit any of the conditions listed in (Note 2) | None |

Criteria	Professional qualification and experience (Note 1)	Independence criteria (Note 2)	Number of concurrent positions as independent director in other public companies
Wei-Chi Huang (Independent Director)	Graduated from University General Secretary of Taiwan Textile Federation	Does not exhibit any of the conditions listed in (Note 2)	None
Hsien-Chang Kuo (Independent Director)	Ph.D. in Administration, National Chiao Tung University Independent Director of LEATEC Fine Ceramics Co., Ltd Director of First Financial Assets Management Co., Ltd.	Does not exhibit any of the conditions listed in (Note 2)	1
Chen, Yi-Min (Independent Director)	Master's degree Parliamentary Secretary of the Ministry of Labour Secretary-General of the All-Taiwan Federation of Industries	Does not exhibit any of the conditions listed in (Note 2)	None
Lin-Te Chen	Graduated with Master's Degree Director of Fu Hsun Fiber Industries Co., Ltd. Director of Hung Chou Fiber Industrial	Does not exhibit any of the conditions listed in (Note 2)	None
Kuan-Ru Chen	Graduated with Master's Degree Chairman of Thunder Tiger Corporation Chairman of TTBIO Corp. Vice Chairman of Central Insurance Co., Ltd.	Does not exhibit any of the conditions listed in (Note 2)	None

Note 1: Professional qualification and experience: Describe the professional qualification and experience of individual directors and supervisors; for Audit Committee members with accounting or financial expertise, describe their background and work experience in the field of accounting or finance. Also, explain whether any of the conditions mentioned in Article 30 of The Company Act applies.

Note 2: For independent directors, describe compliance with the independence criteria, including but not limited to: whether they themselves or spouse or 2nd-degree relatives or closer serve as director, supervisor, or employee at the Company or any of its affiliated enterprises; the number and percentage of shareholding in the Company by self, spouse, 2nd-degree relative or closer (or proxy holder); whether they assume position as director, supervisor, or employee in any entity that the Company has special relationship with (see Subparagraphs 5-8, Paragraph 1, Article 3 of Regulations Governing Appointment of Independent Directors and Compliance Matters for Public Companies); and amount of compensation received from the Company or affiliated enterprises thereof in the last 2 years for commercial, legal, financial, or accounting services rendered.

Note 3: For method of disclosure, please refer to the best practice examples presented on the website of Taiwan Stock Exchange Corporate Governance Center.

Diversity and independence of the board of directors:

(1) Board diversity:

Board members should be diversified in a manner that supports the Company's operations, business activities, and growth requirements, provided that the number of directors who concurrently hold managerial positions do not exceed one-third of the board. The diversification policy should include, but is not limited to the following two principles:

Background and value: Gender, age, nationality, culture etc.
Knowledge and skills: Career background (e.g. law, accounting, industry, finance, marketing, or technology), professional skill, and industry experience. All board members shall possess the knowledge, skills, and characters needed to exercise their duties. For ideal corporate governance, the board of directors as a whole shall possess the following capacities:
Operational judgment. 2. Accounting and financial analysis. 3. Business administration. 4. Crisis management. 5. Industry knowledge. 6. Vision of the global market. 7. Leadership. 8. Decision making.

Name	Nationality	Gender	decision making	operational and financial analysis	Accounting and financial analysis	Business administration	Crisis management	Industry knowledge	International markets	Leadership	Decision making
Cheng-Tien Chan	The Republic of China	Male	V	V	V	V	V	V	V	V	V
Yi-Ching Chan	The Republic of China	Female	V		V	V		V		V	V
Yu-Ching Cheng	The Republic of China	Female	V		V	V		V	V	V	V
G.L. Lin	The Republic of China	Male	V		V	V	V	V	V	V	V
Heng-Chia Chang	The Republic of China	Male	V		V	V	V	V	V	V	V
Tse-Hua Lin	The Republic of China	Male	V		V	V	V	V	V	V	V
Kuan-Ru Chen	The Republic of China	Male	V		V	V		V	V	V	V
Lin-Te Chen	The Republic of China	Male	V	V	V			V	V	V	V
Shou-Po Chao	The Republic of China	Male	V		V	V		V	V	V	V
Wei-Chi Huang	The Republic of China	Male	V		V	V	V	V	V	V	V
Hsien-Chang Kuo	The Republic of China	Male	V	V	V	V	V	V	V	V	V
Chen, Yi-Min	The Republic of China	Male	V		V	V		V	V	V	V
Diversity policy and goals		2	12	2	8	8	6	6	6	6	6

Accomplishment of diversity policy	Complied	Complied	Complied	Complied	Complied	Complied	Complied	Complied	Complied

In an attempt to improve the diversity of directors' knowledge and skills, the Company would recommend or enroll the above courses for directors as a priority when planning their 6-hour ongoing education each year. All course fees are covered by the Company.

(2) Board independence:

The number of independent directors of the Company was eight and four were independent, and the number of independent directors accounted for 1/3 of the total number of directors. None of the independent directors exhibited any of the conditions described in Paragraphs 3 and 4, Article 26-3 of the Securities and Exchange Act with the Company or other board members. Although three of the directors (including Chairman) have relationships characterized as spouse or 2nd-degree relative and closer while three of the directors concurrently serve as managers of the Company or parent company, these directors would recuse from the discussion and voting of motions that concern their personal stakes during board meetings, and have these motions discussed and voted among independent directors and other directors that do not hold stake in the matters discussed. This arrangement helps ensure independence of the board of directors..

(2) Background information of the President, vice presidents, assistant vice presidents and heads of various departments and branches

March 30, 2025

Position (Note 1)	Nationality	Name	Gender	Date onboard	Shareholding		Shares held by spouse and underage children		Shares held by proxy		Major career (academic) achievements (Note 2)	Concurrent duties in other companies	Spouse or relatives of second degree or closer serving as managers			Remarks (Note 3)
					Shares	Shareholding percentage	Shares	Shareholding percentage	Shares	Shareholding percentage			Position	Name	Relationship
General Manager	The Republic of China	Cheng-Tien Chan	Male	April 13, 2023	5,532,037	4.19%	-	-	-	-	Graduated from Senior High School	Chairman of Yi Jinn Industrial Co., Ltd.
Chairman of Kwang Ming Silk Mill Co., Ltd.	-	-	-	None
Deputy General Manager	The Republic of China	Xiao Shangyu	Male	January 1, 2024	60,000	0.04%	-	-	-	-	University	-	-	-	-	None
Manager of Finance and Accounting	The Republic of China	Sheng-Chin Lin	Male	October 1, 1997	-	-	-	-	-	-	Master's Degree	-	-	-	-	None

Note 1: Includes background information of the President, vice presidents, assistant vice presidents, heads of various departments and branches, and anyone of equivalent authority to the above, regardless of their job titles.
Note 2: The career background of anyone above relating to their current roles, e.g. previous employment in the CPA firm or employment in a related company, is disclosed with detailed job titles and responsibilities.
Note 3: In situations where the Company's President or manager of the highest equivalent grade is the same person as or a spouse or first-degree relative of the Chairman, please explain the reasons, rationality, and necessity of such an arrangement and any response measures taken, such as introduction of independent directors. Furthermore, disclose whether more than half of directors are involved in concurrent duty as employees or managers.

(3) Compensation paid to non-independent directors, independent directors, supervisors, the President, and vice presidents
(1) Compensation to non-independent and independent directors
Unit: NTD thousands

Position	Name	Directors' compensation	Sum of A, B, C and D as a percentage of net income (Note 10)	Compensation received as employee	The sum of A, B, C, D, E, F and G as a percentage of net income (%) (Note 10)	Compensation from parent company or business investments other than subsidiaries (Note 11)
Benefits (A) (Note 2)	Severance pay and pension (B)	Director remuneration (C)(Note 3)	Fees for services rendered (D) (Note 4)	Salaries, bonuses, special allowances etc. (E) (Note 5)	Severance pay and pension (F)	Employee remuneration (G) (Note 6)
The Company	All companies included in the financial statements (Note 7)	The Company	All companies included in the financial statements (Note 7)	The Company	All companies included in the financial statements (Note 7)	The Company
Director	Cheng-Tien Chan	-	-	-	-	-
Director	Representative of Yi Jinn Industrial -Yu-Ching Cheng	-	-	-	-	-
Director	Representative of Yi Jinn Industrial -Yi-Ching Chan	-	-	-	-	-
Director	Representative of Yi Jinn Industrial -G.L. Lin	-	-	-	-	-
Director	Representative of Yi Jinn Industrial -Heng-Chia Chang	-	-	-	-	-
Director	Representative of Yi Jinn Industrial -Tse-Hua Lin	-	-	-	-	-
Director	Lin-Te Chen

Position	Name	Directors' compensation	Sum of A, B, C and D as a percentage of net income (Note 10)	Compensation received as employee	The sum of A, B, C, D, E, F and G as a percentage of net income (%) (Note 10)	Compensation from parent company or business investments other than subsidiaries (Note 11)
Benefits (A) (Note 2)	Severance pay and pension (B)	Director remuneration (C)(Note 3)	Fees for services rendered (D) (Note 4)	Salaries, bonuses, special allowances etc. (E) (Note 5)	Severance pay and pension (F)	Employee remuneration (G) (Note 6)
The Company	All companies included in the financial statements (Note 7)	The Company	All companies included in the financial statements (Note 7)	The Company	All companies included in the financial statements (Note 7)	The Company
Director	Representative of Bowa International Leasing - Kuan-Ru Chen
Independent director	Shou-Po Chao
Independent director	Wei-Chi Huang
Independent director	Hsien-Chang Kuo
Independent director	Chen,Yi-Min
* 1. Please explain the policy, system, standards, and structure by which independent director compensation is paid, and association between the amount paid and independent directors' responsibilities, risks and time committed:
2. Compensation received by director for providing service to any company included in the financial statements (e.g. consultancy service without the title of an employee) in the last year, except those disclosed in the above table: None.

Severance pay and pension for directors: 1. Amounts paid in the most recent year: NT$0
2. Severance pay and pension provided and expensed in the most recent year: NT$0

New restricted shares acquired as employee: None.

Note 1: Directors' names are presented separately (for corporate shareholders, the name of the corporate shareholder and its representative are presented separately) and distinguished between independent and non-independent directors, while the amounts are presented in aggregate sums. Any directors who co-headed the President or Vice President positions are disclosed in this chart and in Chart (3-1), or Charts (3-2-1) and (3-2-2).

Note 2: Refers to director's compensation in the last year (including salary, allowance, severance pay, various bonuses, incentives etc.).

Note 3: Represents the amount of director remuneration that the board has proposed as part of the latest earnings appropriation.

Note 4: Refers to compensation paid for services rendered (including travel, special allowances, subsidies, accommodation, corporate vehicle, and in-kind benefits). Where housing, cars, vehicles, or personal allowances were granted, the nature and cost of assets, the rental rates (calculated based on actual or fair value), cost of petrol, and other subsidies are also disclosed. Where personal drivers were assigned, a footnote disclosure explaining the amount of compensations made to drivers is provided; these compensations do not count toward compensations of the above beneficiaries.

Note 5: Refers to any salaries, allowances, severance pay, bonuses, incentives, travel allowances, special allowances, subsidies, accommodation, vehicles, in-kind benefits etc. that the director received in the last year for assuming the role of a company employee (such as General Manager, vice president, manager, or other employee). Where housing, cars, vehicles, or personal allowances were granted, the nature and cost of assets, the rental rates (calculated based on actual or fair value), cost of petrol, and other subsidies are also disclosed. Where personal drivers were assigned, a footnote disclosure explaining the amount of compensations made to drivers is provided; these compensations do not count toward compensations of the above beneficiaries. Part of the salary expense was recognized according to IFRS2 - "Share-based Payment." Amounts including employee warrants, restricted employee shares, and subscription to cash issues are also treated as compensation.

Note 6: Refers to any compensation that the director received (in cash or in shares) in the last year for assuming the role of an employee (such as General Manager, vice president, manager, or other employees). The amount of employee remuneration proposed by the board of directors in the last year has been disclosed (where the amount could not be estimated, the percentage of amount paid in the last year was used to calculate pro-forma amount for the current year). Chart 1-3 has also been completed for reference.

Note 7: The disclosure includes all companies covered by the consolidated financial statements (including the Company), and represents total amount of remuneration paid by all companies above to the Company's directors.

Note 8: The amount of compensation paid by the Company to each director has been disclosed in ranges.

Note 9: The details represent the range of compensation paid by the consolidated entity (including the Company) to each director.

Note 10: Net income refers to the amount reported in the most recent year. If IFRSs have been adopted, net income shall refer to the amount shown in the latest standalone or separate financial statements.

Note 11: a. This field represents all forms of compensation that the director received from the Company's parent company or business investments other than subsidiaries (or "None" if absent).

b. For directors who received compensation from parent company or business investments other than subsidiaries, amounts received from these business investments or parent company have been added to column I of the compensation brackets table. In which case, column I will be renamed "...parent company and all business investments..."

c. Compensation refers to any benefit, remuneration (including remuneration received as an employee, director, and supervisor), and professional service fee that the Company's director received for serving as director, supervisor, or manager in the parent company or business investments other than subsidiaries.

The basis of compensation disclosed above is different from the basis of the income tax law, hence the above table has been prepared solely for information disclosure, and not for tax purpose.

(2) Compensation to the President and vice presidents

Position	Name	Salary (A) (Note 2)		Severance pay and pension (B)		Bonus and special allowance (C) (Note 3)		Employee remuneration (D) (Note 4)				Sum of A, B, C and D as a percentage of net income (%) (Note 8)		Compensation from parent company or business investments other than subsidiaries (Note 9)
		The Company	All companies included in the financial statements (Note 5)	The Company	All companies included in the financial statements (Note 5)	The Company	All companies included in the financial statements (Note 5)	The Company		All companies included in the financial statements (Note 5)		The Company	All companies included in the financial statements (Note 5)
								Profit sharing in cash	Profit sharing in shares	Profit sharing in cash	Profit sharing in shares
General Manager	Cheng-Tien Chan	-	-	-	-	-	-	-	-	-	-	-	-	3,798
Deputy General Manager	Xiao Shangyu	1,607	1,607	-	-	-	-	-	-	-	-	-70.5%	-7.05%	-

Disclosure is mandatory for persons who hold positions equivalent to a President or vice president (e.g. group president, CEO, general manager etc.).
Note 1: The names of President and vice presidents are presented separately, whereas the amount of benefits and allowances is presented in aggregate sums. Any directors who co-headed the President or vice president positions are disclosed in this chart and in Chart (1-1), or Charts (1-2-1) and (1-2-2).
Note 2: Refers to salaries, allowances, and severance pay made to the President and vice presidents in the last year.
Note 3: Refers to other compensations such as bonus, incentive, travel allowance, special allowance, subsidy, accommodation, corporate vehicle, or other in-kind benefits made to the President and vice presidents. Where housing, cars, vehicles, or personal allowances were granted, the nature and cost of assets, the rental rates (calculated based on actual or fair value), cost of petrol, and other subsidies are also disclosed. Where personal drivers were assigned, a footnote disclosure explaining the amount of compensations made to drivers is provided; these compensations do not count toward compensations of the above beneficiaries. Part of the salary expense was recognized according to IFRS2 - "Share-based Payment." Amounts including employee warrants, restricted employee shares, and subscription to cash issues are also treated as compensation.
Note 4: Represents the amount of employee remuneration allocated to the President and vice presidents (in cash or in shares), which the board of directors has proposed as part of the most recent earnings distribution (where the amount could not be estimated, the percentage of amount paid in the last year was used to calculate pro-forma amount for the current year). Chart 1-3 has been prepared in addition to the above details. Net income refers to the amount reported in the most recent year. If IFRSs have been adopted, net income shall refer to the amount shown in the latest standalone or separate financial statements.
Note 5: Compensation is presented in aggregate of all amounts paid by all companies covered by the consolidated financial statements (including the Company) to the Company's President and vice presidents.
Note 6: The amount of compensation paid by the Company to its President and vice presidents are disclosed separately in ranges.
Note 7: The disclosure includes the sum of amounts paid by the consolidated entity (including the Company) to the Company's President and vice presidents. The names of President and vice presidents have been disclosed separately in ranges.
Note 8: Net income refers to the amount reported in the most recent year. If IFRSs have been adopted, net income shall refer to the amount shown in the latest standalone

or separate financial statements.

Note 9: a. This field represents all forms of compensation that the President and vice presidents received from the Company's parent company or business investments other than subsidiaries (or "None" if absent).
b. For President/vice presidents who receive compensation from parent company or business investments other than subsidiaries, the amount of compensation from parent company or business investments have been added to column E of the compensation brackets table. In which case, column E will be renamed "...parent company and all business investments..."
c. Compensation refers to any benefit, remuneration (including remuneration received as an employee, director, and supervisor), and professional service fee that the Company's President and vice presidents received for serving as director, supervisor, or manager in the parent company or business investments other than subsidiaries.
* The basis of compensation disclosed above is different from the basis of the income tax law, hence the above table has been prepared solely for information disclosure, and not for tax purpose.

(4) Compensation for top-5 paid managers: Not applicable

(5) Managers entitled to employee profit-sharing and details of payment received: None

(4) Amount of compensation paid in the last 2 years by the Company and all companies included in the consolidated financial statements to the Company's directors, supervisors, President, and vice presidents, and their respective proportions to standalone and consolidated net income, as well as the policies, standards, and packages by which they were paid, the procedures through which compensations were determined, and their association with business performance and future risks.

Directors', supervisors', President's, and vice presidents' compensations paid in the last two years as a percentage to net income

	Total compensation as a percentage of net income (%)
	2024	2023
Director
General Manager and vice presidents

The Company does not compensate directors and supervisors except for travel allowance.
The General Manager and vice presidents are compensated mainly in the forms of salary and bonus. The amount of compensation is determined based on the responsibilities borne, their contributions to the Company, and peer levels.
Compensations to directors, supervisors, the General Manager, and vice presidents have fully taken into account the Company's revenue and business performance.
The Company assembled a Remuneration Committee on December 27, 2011 that regularly reviews and adjusts directors', supervisors', and managers' compensation.

Corporate governance

(1) Functionality of board of directors:

A total of 6 meetings (A) were held in the last year (2023); below are the directors' and supervisors' attendance records:

Position	Name (Note 1)	No. of in-person attendance (B)	Percentage of in-person attendance (%)(B/A)(Note 2)
Chairman	Cheng-Tien Chan	4	100.00%
Director	Yi-Ching Chan	1	25.00%
Director	Yu-Ching Cheng	4	100.00%
Director	G.L. Lin	3	75.00%
Director	Heng-Chia Chang	4	100.00%
Director	Tse-Hua Lin	3	75.00%
Director	Lin-Te Chen	4	100.00%
Director	Kuan-Ru Chen	3	75.00%
Independent director	Shou-Po Chao	4	100.00%
Independent director	Wei-Chi Huang	4	100.00%
Independent director	Hsien-Chang Kuo	4	100.00%
Independent director	Chen,Yi-Min	4	100.00%

Other mandatory disclosures:

For board of directors meetings that meet any of the following descriptions, state the date, session, the discussed topics, independent directors' opinions and how the Company has responded to such opinions.

(1) Conditions described in Article 14-3 of the Securities and Exchange Act:

Date of board meeting	Session	Motion details and resolution
3/7/2024	19th Board, 11th Meeting	Discussion on revising the Company's "Rules of Procedure for Board Meetings."
		Independent Directors' Opinions: No objections or reservations. Company's Handling of Independent Directors' Opinions: Not applicable. Resolution: Passed as proposed after the Chairman consulted all attending directors with no objections.
		Discussion on revising Annex 1 of the Company's "Audit Committee Charter" regarding the "Measures for the Exercise of Powers by the Audit Committee."
		Independent Directors' Opinions: No objections or reservations. Company's Handling of Independent Directors' Opinions: Not applicable. Resolution: Passed as proposed after the Chairman consulted all attending directors with no objections.
		Discussion on the appointment of the Company's certified public accountant.
		Independent Directors' Opinions: No objections or reservations. Company's Handling of Independent Directors' Opinions: Not applicable. Resolution: Passed as proposed after the Chairman consulted all attending directors with no objections.
5/9/2024	19th Board, 12th Meeting	No matters listed under Article 14-3 of the Securities Exchange Act.
8/2/2024	19th Board, 13th Meeting	No matters listed under Article 14-3 of the Securities Exchange Act.
11/6/2024	19th Board, 14th Meeting	Review of the independence and suitability of the Company's certified public accountant and audit fees.
		Independent Directors' Opinions: No objections or reservations. Company's Handling of Independent Directors' Opinions: Not applicable. Resolution: Passed as proposed after the Chairman consulted all attending directors with unanimous agreement.
		Discussion on the compensation matters for directors and managers from the 5th meeting of the 5th term of the Company's Compensation Committee.
		Directors (including independent directors) with a conflict of interest recused themselves as required by law. Independent Directors' Opinions: No objections or reservations. Company's Handling of Independent Directors' Opinions: Not applicable. Resolution: Directors with a conflict of interest, namely Chan Cheng-Tien, Cheng Yu-Chi, Chan (Mi-Yu) Ching, Chang Heng-Chia, Lin Tse-Hua, Chen Kuan-Te, Chen Lin-Te, and independent directors Chao Shou-Po, Kuo Hsien-Chang, and Chen Yi-Min, recused themselves during discussion and voting. The proposal was passed as proposed after the Chairman consulted the remaining attending directors with no objections.

Date of board meeting	Session	Motion details and resolution
		Discussion on adding Sections 1 to 7 of Chapter 11 of the Company's "Internal Control System" regarding Corporate Sustainability (ESG) Cycle and related internal audit systems.
		Independent Directors' Opinions: No objections or reservations. Company's Handling of Independent Directors' Opinions: Not applicable.
		Resolution: Passed as proposed after the Chairman consulted all attending directors with no objections.

*CPA independence and suitability assessment:

Motion 3 in the list of “(4) Reports on other important issues”: Regular assessment of financial statement auditors’ independence. According to the “Corporate Governance Best-Practice Principles for TWSE/TPEX Listed Companies,” the Company is required to evaluate financial statement auditor’s independence on a regular basis (once a year). Based on internal self-assessment of financial statement auditor’s independence, the Company found no issue that would compromise the independence of its financial statement auditor.

The board meeting held on November 6, 2024 had conducted the assessment for 2024, and the subjects of assessment were CPA Shu-Ying Chang and CPA Shih-Chin Chi of KPMG Taiwan. As part of the assessment criteria, the Company evaluated whether the CPAs: “had any direct or indirect financial interest with the Company,” “had any financing or guarantee arrangement with the Company,” “had any close business dealings or potential employment relations with the Company,” “assumed the role of director, manager, or any position within the Company that had significant influence over audit tasks,” “offered any non-audit service that may directly impact audit tasks,” “served as intermediary for the shares or securities issued by the Company,” “served as the Company’s defense attorney or represented the Company in mediating conflict with a third party,” and “were related to directors, managers, or any personnel that had significant influence over audit tasks”. Outcome of assessment: None of the financial statement auditors exhibited any of the issues described in the independence criteria. The financial statement auditors were deemed to have met independence requirements, and the financial statements issued by them are considered reliable.

(2) Any other documented objections or reservations raised by independent director against board resolution in relation to matters other than those described above: None.

Disclosure regarding avoidance of interest-conflicting motions, including the names of directors concerned, the motions, the nature of conflicting interests, and the voting outcome:

(1). Agenda Content: 11/6/2024 (19th Board, 14th Meeting)

Discussion on the compensation matters for directors, supervisors, and managers from the 5th meeting of the 5th term of the Company's Compensation Committee.

Directors with Conflict of Interest: Directors (including independent directors) who are stakeholders in this matter recused themselves as required by law.

Reason for Conflict of Interest and Voting Details: Directors with a conflict of interest, namely Chan Cheng-Tien, Cheng Yu-Chi, Chan (Mi-Yu) Ching, Chang Heng-Chia, Lin Tse-Hua, Chen Kuan-Te, Chen Lin-Te, and independent directors Chao Shou-Po, Kuo Hsien-Chang, and Chen Yi-Min, recused themselves during discussion and voting. The proposal was passed as proposed after the Chairman consulted the remaining attending directors with no objections.

Enhancements to the functionality of the board of directors in the current and the most recent year (e.g. establishment of an Audit Committee, improvement of information transparency etc.), and progress of such enhancements:
"Board performance assessment" and "Board meeting organizer self-assessment" averaged a score of 4.8; overall performance was close to Exceptional. "Board member self assessments" averaged a score of 4.9; overall performance was close to Exceptional. "Functional Committee Performance Self-assessment" averaged a score of 4.8; overall performance was close to Exceptional. (Out of a total of 5)
Execution of Board Performance Evaluation (15th meeting of the 19th board dated March 5, 2025)

Assessment cycle (Note 1)	Assessment duration (Note 2)	Scope of assessment (Note 3)	Assessment method (Note 4)	Assessment details (Note 5)
conducted annually.	Start: January 1, 2024
End: December 31, 2024	Board of directors	Board of directors internal self-assessment	Board performance assessment: board's participation in the Company's operations, the quality of board's decisions, the board's composition, election and ongoing education of board members, and enforcement of internal control.
conducted	Start:	Individual	Director self-	Director individual

Assessment cycle (Note 1)	Assessment duration (Note 2)	Scope of assessment (Note 3)	Assessment method (Note 4)
annually.	January 1, 2024
End: December 31, 2024	director members	assessment	performance assessment: director’s awareness toward the Company’s goals and missions, awareness to duties, level of participation in the Company’s operations, maintenance of internal relations and communication, professionalism and ongoing education, and enforcement of internal control.
conducted annually.	Start: January 1, 2024
End: December 31, 2024	Functional committee (Remuneration Committee)	Peer assessment	Performance assessment for functional committees: participation in the Company’s operations, awareness to duties, quality of committee’s decisions, composition and member selection, and enforcement of internal control.
conducted annually.	Start: January 1, 2024
End: December 31, 2024	Functional committee (Audit Committee)	Peer assessment	Performance assessment for functional committees: participation in the Company’s operations, awareness to duties, quality of committee’s decisions, composition and member selection, and enforcement of internal control.

Note 1: This is the execution cycle for the board evaluation, for example: once a year.

Note 2: This is the coverage period for the board evaluation, for example: evaluating the performance of the board from January 1, 2019 to December 31, 2019.

Note 3: The evaluation scope includes the performance evaluation of the board, individual directors, and functional committees.

Note 4: The evaluation methods include internal self-evaluation of the board, self-evaluation of individual directors, peer evaluation, appointment of external professional organizations, experts, or other appropriate methods for performance evaluation.

Note 5: The evaluation content at least includes the following items according to the evaluation scope:

(1) Board performance evaluation: at least includes participation in company operations, board decision-making quality, board composition and structure, director selection and continuous education, internal control, etc.

(2) Individual director performance evaluation: at least includes the grasp of company goals and

tasks, director's understanding of responsibilities, participation in company operations, internal relationship management and communication, director's expertise and continuous education, internal control, etc.

(3) Functional committee performance evaluation: participation in company operations, functional committee's understanding of responsibilities, functional committee decision-making quality, functional committee composition and member selection, internal control, etc.

Enhancements to the functionality of the board of directors in the current and the most recent year (e.g. establishment of an Audit Committee, improvement of information transparency etc.), and progress of such enhancements:

(1) The board of directors functions and exercises its authority in accordance with laws, the Articles of Incorporation, and shareholders' resolutions. All directors possess the professional knowledge, skills, and characters needed to perform their duties, and serve in the best interest of shareholders by upholding integrity principles and duty of care.

(2) The Company has elected independent directors while the board of directors is committed to enforcing sound corporate governance, rigorous monitoring, and best management practices. The Company has complied with instructions of the authority and established Board of Directors Conference Rules that outline details concerning key motions, procedures, minutes, announcements, and other compliance matters related to board meetings. All board meetings are organized according to rules.

(3) The Company organizes annual board performance evaluations and makes arrangements to enhance functionality of the board of directors. The internal audit unit makes annual audit plans, executes accordingly, and prepares audit reports. Audit report for a given month is presented to independent directors and supervisors for review at the end of each month, and presented to the board of directors every quarter.

(4) The Company assembled its first Remuneration Committee with board of directors' resolution sought during the meeting held on December 27, 2011. Members for the 5th Remuneration Committee were elected during the board of directors meeting held on August 3, 2022, and two out of the three newly elected Remuneration Committee members were independent directors. The committee held two meetings as required by policy in 2023 to review directors' and managers' compensation policy, and contributed to the enforcement of corporate governance.

(5) On June 29, 2022, the Company elected three independent directors, established an audit committee to replace the supervisor, and on May 30, 2023, the shareholders' meeting elected one additional independent director, and four independent directors served as audit members, and the 2024 annual

audit committee held a total of four meetings, and submitted the resolved matters to the board of directors for resolution to implement corporate governance.

(2) Involvement of Audit Committee members or supervisors in board of directors meetings:

The operation of the audit committee in the operation of the board of directors :
Operation of the Audit Committee:

The company set up an audit committee to replace the supervisor on June 29, 2022. The four audit committee members are all independent directors., The term of office of the first Audit Committee was from 2022/6/29 to 2025/6/28. From January 1, 2024 to December 31, 2024, the Audit Committee held 4 meetings (A). The attendance of independent directors is as follows:

Title	Name	Attendance in Person (B)	By Proxy	Attendance Rate (%) (B/A) (Note)
Convener	Shou-Po Chao	4	0	100
Committee member	Wei-Chi Huang	4	0	100
Committee member	Hsien-Chang Kuo	4	0	100
Committee member	Chen,Yi-Min	4	0	100
The Company's Audit Committee is composed of the entire number of independent directors and meets at least quarterly to deliberate on matters including : 1. The adoption of or amendments to the internal control system pursuant to Article 14-1 of the Securities and Exchange Act. 2. Evaluation of the effectiveness of the internal control system. 3. The adoption or amendment, pursuant to Article 36-1 of the Securities and Exchange Act, of the procedures for handling financial or business activities of a material nature, such as acquisition or disposal of assets, derivatives trading, loaning of funds to others, and endorsements or guarantees for others. 4. Matters in which a director is an interested party. 5. Asset transactions or derivatives trading of a material nature. 6. Loans of funds, endorsements, or provision of guarantees of a material nature. 7. The offering, issuance, or private placement of equity-type securities. 8. The hiring or dismissal of a certified public accountant, or their compensation. 9. The appointment or discharge of a financial, accounting, or internal audit officer. 10. Annual and semi-annual financial reports. 11. Other material matters as may be required by the Company or by the Taiwan competent authority. Other matters required to be recorded : A. Operation of the Audit Committee shall, if any of the following, specify date of meeting, period, contents of motions, resolution of Audit Committee and handling against opinions of Audit Committee.

(a) The matters listed in Article 14-5 of the Securities Exchange Act.

March 7, 2024 - 1st Term, 10th Audit Committee Meeting

(1) Agenda Content: 2024 Risk Report of the Company.
- Independent Directors' Objections, Reservations, or Major Suggestions: None.
- Audit Committee Resolution: Passed as proposed after the Chairman consulted all attending members with no objections, and submitted to the Board for resolution.
- Company's Handling of Audit Committee Opinions: Submitted to the Board for discussion, passed as proposed after the Chairman consulted attending directors with no objections.

(2) Agenda Content: 2023 Internal Control System Statement of the Company.
- Independent Directors' Objections, Reservations, or Major Suggestions: None.
- Audit Committee Resolution: Passed as proposed after the Chairman consulted all attending members with no objections, and submitted to the Board for resolution.
- Company's Handling of Audit Committee Opinions: Submitted to the Board for discussion, passed as proposed after the Chairman consulted attending directors with no objections.

(3) Agenda Content: Discussion on the Company's 2023 Business Report and Financial Statements.
- Independent Directors' Objections, Reservations, or Major Suggestions: None.
- Audit Committee Resolution: Passed as proposed after the Chairman consulted all attending members with no objections, and submitted to the Board for resolution.
- Company's Handling of Audit Committee Opinions: Submitted to the Board for discussion, passed as proposed after the Chairman consulted attending directors with no objections.

(4) Agenda Content: Appointment of the Company's Certified Public Accountant.
- Independent Directors' Objections, Reservations, or Major Suggestions: None.
- Audit Committee Resolution: Passed as proposed after the Chairman consulted all attending members with no objections, and submitted to the Board for resolution.
- Company's Handling of Audit Committee Opinions: Submitted to the Board for discussion, passed as proposed after the Chairman consulted attending directors with no objections.

May 9, 2024 - 1st Term, 11th Audit Committee Meeting

(1) Agenda Content: First Quarter Financial Statements of 2024.
- Independent Directors' Objections, Reservations, or Major Suggestions: None.
- Audit Committee Resolution: Passed as proposed after the Chairman consulted all attending members with no objections, and submitted to the Board for resolution.
- Company's Handling of Audit Committee Opinions: Submitted to the Board for discussion, passed as proposed after the Chairman consulted attending directors with no objections.

August 2, 2024 - 1st Term, 12th Audit Committee Meeting

(1) Agenda Content: Discussion on the Company's Financial Report for the First Half of 2024.
- Independent Directors' Objections, Reservations, or Major Suggestions: None.
- Audit Committee Resolution: Passed as proposed after the Chairman consulted all attending members with no objections, and submitted to the Board for resolution.
- Company's Handling of Audit Committee Opinions: Submitted to the Board for discussion, passed as proposed after the Chairman consulted attending directors with no objections.

November 6, 2024 - 1st Term, 13th Audit Committee Meeting

(1) Agenda Content: Review of the Independence, Suitability, and Audit Fees of the Company's Certified Public Accountant.

Independent Directors' Objections, Reservations, or Major Suggestions: None.
Audit Committee Resolution: Passed as proposed after the Chairman consulted all attending members with no objections, and submitted to the Board for resolution.
Company's Handling of Audit Committee Opinions: Submitted to the Board for discussion, passed as proposed after the Chairman consulted all attending directors with no objections.

(2) Agenda Content: Third Quarter Financial Statements of 2024.
- Independent Directors' Objections, Reservations, or Major Suggestions: None.
- Audit Committee Resolution: Passed as proposed after the Chairman consulted all attending members with no objections, and submitted to the Board for resolution.
- Company's Handling of Audit Committee Opinions: Submitted to the Board for discussion, passed as proposed after the Chairman consulted all attending directors with no objections.

(3) Agenda Content: Addition of Sections 1 to 7 of Chapter 11 of the Company's "Internal Control System" regarding Corporate Sustainability (ESG) Cycle and Related Internal Audit Systems.
- Independent Directors' Objections, Reservations, or Major Suggestions: None.
- Audit Committee Resolution: Passed as proposed after the Chairman consulted all attending members with no objections, and submitted to the Board for resolution.
- Company's Handling of Audit Committee Opinions: Submitted to the Board for discussion, passed as proposed after the Chairman consulted all attending directors with no objections

(b) Except for the preceding matters, other matters not approved by the Audit Committee and approved by two-thirds or more of all directors: None.

※ Review of financial report
The Company's 2023 financial statements, the business report, and the distribution of earnings and the quarterly financial statements for the year ended December 31, 2024, among which the 2023 quarterly financial statements have been audited by Pan Jun-Ming, Chang Shu-Ying of KPMG Taiwan, and a written auditor's report was issued. The aforementioned business report, financial statements and profit distribution were approved after the chairman consulted all the members present and raised no objection, and the proposal will submit to the board of directors for resolution. (In 2023 2024, the CPAs were Chang Shu-Ying and Chih Shih-Chin).

B. If there is Independent Directors' avoidance of motions in conflict of interest, the Independent Directors' names, contents of motions, causes for avoidance and voting should be specified: None.

C. Communications between the independent directors, the Company's Chief Internal Auditor and CPAs (including the items, methods and results of audits of corporate finance or operations, etc.): The Company's independent directors are the Audit Committee members, The Company's CPAs shall meet with the Audit Committee at least once a year for face-to-face communication. The Company's Chief Internal Auditor and Accounting Officer communicate with the Audit Committee members (independent directors) mainly after the Board Meeting or Audit Committee Meeting.

Communications between the Audit Committee members (independent directors) and CPAs: On 2024/3/5, the four independent directors, Shou-Po Chao, Wei-Chi Huang, Hsien-Chang Kuo, Chen,Yi-Min had a face-to-face meeting with Pan Jun-Ming, Chang Shu-Ying of KPMG Taiwan.
Communication between the audit committee (independent director) and the internal audit supervisor and accounting supervisor

The audit unit shall send a monthly internal audit report to the independent director for review.
Report the implementation of the quarterly internal audit plan to the board of directors. In the meeting, the directors (including independent directors) shall give full explanation immediately if they have any problems.
Each quarter / year, the CPA shall issue the written document of the financial statements review/audit report, and communicate with the Audit Committee (independent director) on the overall audit status, internal control audit status and recent amendments of relevant laws and regulations of the parent company and its subsidiaries.
The CPA will issue an annual statement of independence and competence, and communicate with the Audit Committee (independent director) in accordance with relevant regulations.
At the end of each Board meeting or Audit Committee meeting, the Chief Auditor communicates with Audit Committee members (Independent Director) the findings of the internal audit and the follow-up after the period, and listens to the opinions and instructions of the Audit Committee members (Independent Director).

Date	Object	Issues to Communicate
2024/3/7	Audit Committee members (Independent Director) : Shou-Po Chao, Wei-Chi Huang, Hsien-Chang Kuo Chen,Yi-Min	1. 1. Execution status of the 2023 Q4 internal audit plan. (Audit)
2. Report on the execution of the 2023 Q4 greenhouse gas inventory plan. (Audit)
3. 2023 Board performance evaluation results. (Audit)
4. 2024 insider trading prevention advocacy, 2024 integrity and ethical conduct guidelines, and legal compliance advocacy. (Audit)
5. 2024 Company Risk Report. (Audit)
6. 2023 Internal Control System Statement. (Audit)
7. Revision of the Rules of Procedure for Board Meetings and decision-making processes. (Audit)
8. Revision of Annex 1 of the Audit Committee Charter: "Measures for the Exercise of Powers by the Audit Committee." (Audit)
9. 2023 Business Report and Financial Statements. (Accounting)
10. Appointment of the Company's certified public accountant. (Accounting)	The Audit Committee (independent director) has no dissenting opinion
2024/5/09	Audit Committee members (Independent Director) : Shou-Po Chao, Wei-	1. Execution status of the 2024 Q1 internal audit plan. (Audit)
2. Report on the execution of the 2024 Q1 greenhouse gas inventory plan. (Audit)	The Audit Committee (independent director) has no dissenting opinion

		Chi Huang, Hsien-Chang Kuo Chen,Yi-Min	3. Completion of the 2024 renewal of directors’ and managers’ liability insurance. (Audit)4. 2023 Corporate Governance Evaluation results. (Audit)5. 2024 Q1 financial statements. (Accounting)
	2024/8/2	Audit Committee members (Independent Director) : Shou-Po Chao, Wei-Chi Huang, Hsien-Chang Kuo Chen,Yi-Min	1. Execution status of the 2024 Q2 internal audit plan. (Audit)2. Report on the execution of the 2024 Q2 greenhouse gas inventory plan. (Audit)3. 2023 achievements and 2024 work plan of the Company’s sustainability promotion team, including the 2023 Sustainability Report, stakeholder identification and key issues, and corporate governance execution report. (Audit)4. Financial report for the first half of 2024. (Accounting)	The Audit Committee (independent director) has no dissenting opinion
	2024/11/6	Audit Committee members (Independent Director) : Shou-Po Chao, Hsien-Chang Kuo Chen,Yi-Min	1. Execution status of the 2024 Q3 internal audit plan. (Audit)2. Report on the execution of the 2024 Q3 greenhouse gas inventory plan. (Audit)3. 2024 corporate governance education and advocacy materials. (Audit)4. Review of the independence, suitability, and audit fees of the Company’s certified public accountant. (Accounting)5. 2024 Q3 financial statements. (Accounting)6. 2025 internal audit plan. (Audit)7. Addition of Sections 1 to 7 of Chapter 11 of the Company’s "Internal Control System" regarding Corporate Sustainability (ESG) Cycle and related internal audit systems. (Audit)	The Audit Committee (independent director) has no dissenting opinion

Note 1: If an independent director resigns before the end of the year, the date of his resignation shall be indicated in the remarks column. The actual attendance rate $(\%)$ shall be calculated based on the number of meetings of the audit committee and his actual attendance during his / her tenure.
Note 2: Before the end of the year, if there is re-election of an independent director, the new and former independent directors shall be filled in, and the date of former, new or re-election of the independent director shall be indicated in the remarks column. The actual attendance rate $(\%)$ is calculated based on the number of meetings and actual attendance of the Audit Committee during his / her tenure.

Supervisors' involvements in board of directors meetings: not applicable

(3) Deviation and causes of deviation from Corporate Governance Best-Practice Principles for TWSE/TPEX Listed Companies

Assess criteria	Actual governance (Note 1)
	Yes	No	Summary
1. Has the Company established and disclosed its corporate governance principles based on “Corporate Governance Best-Practice Principles for TWSE/TPEX Listed Companies”?	v		The Company passed a set of “Corporate Governance Code of Conduct” on December 7, 2015 and disclosed details on its website.
The Company has amended its “Corporate Governance Code of Conduct” based on the newly revised Corporate Governance Best-Practice Principles for TWSE/TPEX Listed Companies, and sought board of directors’ approval on March 4, 2021. The details of which have been disclosed on the corporate website.	Complied with Articles 1 and 2 of Corporate Governance Best-Practice Principles for TWSE/TPEX Listed Companies.
Slight amendments were made to conform with actual practices.
2. Shareholding structure and shareholders’ interests
(1) Has the Company implemented a set of internal procedures to handle shareholders’ suggestions, queries, disputes, and litigations?
(2) Is the Company constantly informed of the identities of its major shareholders and the ultimate controller?	V		1. The GM’s Office has dedicated personnel including the spokesperson and acting spokesperson available to handle shareholders’ suggestions, queries, and disputes. Phone number, address, and email of various contact channels have been disclosed on the corporate website, the corporate responsibilities report, and the annual report.
Internal procedures for handling shareholders’ suggestions, queries, disputes, and litigations have been addressed in Articles 4 to 13, Chapter 2 - “Protection of shareholders’ interests” in the “Corporate Governance Code of Conduct.” The spokesperson or acting spokesperson will respond to all of the above matters either verbally or in writing.
2. The Company engages a professional stock transfer agent to handle shareholder service, and is constantly informed of any change or pledge of shareholding by directors, supervisors, managers, or shareholders with more than 5% ownership interest. The Company inputs its list of directors, supervisors, managers, and shareholders with more than 10% ownership interest into the website designated by the authority on a monthly basis. This information has also been made available	Complied with Article 13 of Corporate Governance Best-Practice Principles for TWSE/TPEX Listed Companies.
Complied with Article 19 of Corporate Governance Best-Practice Principles for TWSE/TPEX Listed Companies

Assess criteria	Actual governance (Note 1)
	Yes	No	Summary
(3) Has the Company established and implemented risk management practices and firewalls for companies it is affiliated with?	V		on the annual report and corporate website.
3. The Company and affiliated enterprises operate as separate entities and manage asset-related, financial, and accounting affairs independently from each other. Each entity manages its own profitability and risks.
Financial dealings between the Company and affiliated enterprises accrue interests at the market rate. The amount and necessity of financing arrangements are re-evaluated each year based on capital requirements. The Company also has systems in place to evaluate endorsements and guarantees to external parties.
Transaction, endorsement, guarantee, and lending with related parties are controlled according to the rules outlined in the Securities and Exchange Act. “Subsidiary supervision and management” policies have been implemented to facilitate risk management over subsidiaries. For details, please see Articles 14 to 19 in Section 3 - “Governance of dealings with affiliated enterprises,” Chapter 2 of the “Corporate Governance Code of Conduct.”	Complied with Articles 4 to 19 of Corporate Governance Best-Practice Principles for TWSE/TPEX Listed Companies
(4) Has the Company established internal policies that prevent insiders from trading securities against non-public information?	V		4. The Company has “Material Insider Information Handling Procedures” in place to regulate and prohibit insiders from trading securities against non-public information.
On March 7, 2024, during the Board meeting, a report was presented on the 2024 insider trading prevention advocacy, 2024 integrity and ethical conduct guidelines, and legal compliance advocacy. On November 6, 2024, during the Board meeting, a report was presented and materials were circulated regarding the 2024 corporate governance education and advocacy.
Annual or quarterly financial reports are submitted to the Board of Directors for discussion or reporting II of them advocate	Complied with Paragraph 2, Article 10 of Corporate Governance Best-Practice Principles for TWSE/TPEX Listed Companies

Assess criteria	Actual governance (Note 1)			Deviation and causes of deviation from Corporate Governance Best-Practice Principles for TWSE/TPEX Listed Companies
	Yes	No	Summary
			to the directors that 'directors and insiders shall not trade their shares during the closed period 30 days before the announcement of the annual financial report and 15 days before the announcement of the quarterly financial report.'
3. Composition and responsibilities of the board of directors
(1) Does the board of directors have a diversity policy and management goals that are duly enforced?	V		1. Article 20 of the Company’s Corporate Governance Code of Conduct requires board members to be diversified. A “Board Diversity Policy” has been created with diversity goals set to support implementation. Accomplishment of diversity goals is evaluated by the corporate governance promotion team on a yearly basis. To improve the diversity of directors’ knowledge and skills, the Company would recommend or enroll relevant courses for directors when planning their 6-hour ongoing education each year. All course fees are covered by the Company. The Company elected two independent directors and two female directors during the 2022 shareholder meeting. The current board as a whole offers diverse professional background and extensive experience in terms of business administration, leadership, decision making, industry knowledge, global perspective, accounting, and financial analysis. Directors’ education, career background, gender, professional qualification, and work experience are explained in details in section - “Board Diversity Policy” of this annual report.	Complied with Article 20 of Corporate Governance Best-Practice Principles for TWSE/TPEX Listed Companies
(2) Apart from the Remuneration Committee and Audit Committee, has the Company assembled other functional committees at its own discretion?	V		2. The Company assembled its first Remuneration Committee with board of directors’ resolution sought during the meeting held on December 27, 2011. Members for the 5th Remuneration Committee, including Independent Director Shou-Po Chao, Independent Director Wei-Chi Huang, and Mr. Chung-Lung Chen, were elected during the board of directors meeting held on August 3, 2022.(11/6/2023 Mr. Chan Chung Lung resigned as a member of the remuneration committee of the Company	Complied with Articles 28 and 28-1 of Corporate Governance Best-Practice Principles for TWSE/TPEX Listed Companies

Assess criteria	Actual governance (Note 1)			Deviation and causes of deviation from Corporate Governance Best-Practice Principles for TWSE/TPEX Listed Companies
	Yes	No	Summary
(3) Has the Company established a set of policies and assessment tools for evaluating board performance, and conducted performance evaluation on a yearly basis? Are performance evaluation results reported to the board of directors and used as reference for compensation, remuneration, and nomination decisions?	V		due to his busy schedule. On December 27, the Board of Directors elected independent director Chen,Yi-Min as a member of the remuneration committee) The Company were elected three independent directors and assemble an Audit Committee at the annual general meeting on June 29, 2022.. On 30 May 2023, the Shareholders will re-elect one independent director to be elected by Mr. Chan Yimin for a term commencing on 30 May 2023 and ending on 28 June 2026 (the same term as the current term of office)The Company has no plan to assemble other functional committees at the moment(The Company acts as the Audit Committee and substitutes the Risk Management Committee), but will evaluate the need to do so depending on changes in future regulations and corporate governance practices. The keeping of related records has complied with Articles 27 to 30 in Section 3 - Functional committees, Chapter 3 of Corporate Governance Best-Practice Principles for TWSE/TPEX Listed Companies.	Complied with Paragraphs 3 and 4, Article 37 of Corporate Governance Best-Practice Principles for TWSE/TPEX Listed Companies
			3. The Company has implemented a board performance assessment policy. “Board performance self-assessment,” “Board member self-assessment,” and “Functional committee performance self-assessment” are conducted once a year by members of the board. Self-assessment reports are expected to be presented in the next board meeting (the 15th meeting of the 19th board scheduled to be held on March 5, 2025). “Board performance assessment” and “Board meeting organizer self-assessment” averaged a score of 4.8; overall performance was close to Exceptional. “Board member self assessments” averaged a score of 4.7; overall performance was close to Exceptional. “Functional Committee Performance Self-assessment” (Remuneration Committee) averaged a score of	Complied with Article 29 of Corporate

Assess criteria	Actual governance (Note 1)	Deviation and causes of deviation from Corporate Governance Best-Practice Principles for TWSE/TPEX Listed Companies
Yes	No	Summary
(4) Are external auditors' independence assessed on a regular basis?
The board of directors has taken the evaluation outcome into consideration when determining directors' compensations and when nominating director candidates.	Governance Best-Practice Principles for TWSE/TPEX Listed Companies
4. The board meeting organizer evaluates financial statement auditors' independence once a year and presents outcomes for discussion among the board of directors. Independence assessment of financial statement auditors for 2024 was discussed and passed during the fourth meeting of the 19th board held on November 6, 2024. The financial statement auditors hold no stake in the Company and are not related to key personnel of the Company. They are able to provide services in a professional, fair, and objective manner and are deemed to have met the independence and suitability requirements.
Assess criteria	Assessment outcome	Whether compliant with the independence criteria
1. Whether the CPAs have direct or material indirect financial interest with the Company.	No	Yes
2. Are the CPAs involved in any financing or guarantee	No	Yes

Actual governance (Note 1)
Yes	No	Summary
		arrangement with the Company or its directors
		3. Whether CPAs have extensive commercial relationship and potential employment relationship with the Company.	No	Yes
		4. Whether the CPAs and audit team members currently or previously assumed role as the Company's director, manager, or any position that may significantly affect the audit in the last two years	No	Yes
		5. Whether the CPAs provide any non-audit service to the Company that may directly affect the outcome of the audit task.	No	Yes
		6. Whether the CPAs serve as any form of intermediary to the shares or securities issued by the Company.	No	Yes
		7. Whether the CPAs serve as defense attorney for the Company, or represent the Company in mediating any conflict with a third party.	No	Yes

Assess criteria	Actual governance (Note 1)					Deviation and causes of deviation from Corporate Governance Best-Practice Principles for TWSE/TPEX Listed Companies
	Yes	No	Summary
			8. Whether the CPAs are related to the Company's directors, managers or any person that is significant to the audit task	No	Yes
			On March 7, 2024, the Company passed the evaluation of the Audit Quality Indicators (AQIs) by the Audit Committee and the Board of Directors, and confirmed the independence and suitability of the signing certified public accountant.
4. Where the Company is a TWSE/TPEX listed company, has the Company designated a department or personnel that specializes (or is involved) in corporate governance affairs (including but not limited to providing directors/supervisors with the information needed to perform their duties, convention of board meetings and shareholder meetings, company registration and changes, preparation of board meeting and shareholder meeting minutes etc)?	V		The GM's Office has dedicated personnel available to gather, consolidate, and handle corporate governance affairs. The GM's Office is also responsible for organizing shareholder meetings, board meetings, and Remuneration Committee meetings including but not limited to: providing directors and Remuneration Committee members with the information needed to perform duties, issuance of board/committee/shareholder meeting advices, consolidation of meeting information, and preparation and distribution of minutes. Company registration and change of registration are collectively handled by the Finance Department. Disclosures relating to internal audit, financial data, material information, and corporate governance are made over the corporate website by the unit responsible. Shareholder services such as change of holding position, ownership transfer etc. are handled by the Share Administration Department of Grand Fortune Securities Co., Ltd. During the 10th meeting of the 18th board, a resolution was passed to appoint Yu-Min Lai, Vice President of Finance of the parent company, as the Company's corporate governance officer. Routine corporate governance tasks completed in 2024: ① Handling of board meeting and Remuneration Committee			Complied with Article 3-1 of Corporate Governance Best-Practice Principles for TWSE/TPEX Listed Companies

Assess criteria	Actual governance (Note 1)
	Yes	No	Summary
			meeting affairs and preparation of minutes: A total of 10 meetings (4 board meetings, 4 meetings of the Audit Committee and 2 Remuneration Committee meetings) were convened.
② Handling of shareholder meeting affairs and preparation of minutes: Once.
③ Assistance with directors’ education: 12 subjects, 72 hours.
④ Provided directors with the information needed to perform duties, including preparation of meeting materials 7 days before a board meeting or Remuneration Committee meeting.
⑤ Helped directors comply with various regulations when performing duties or forming resolutions.
⑥ Arrangements were made to have the corporate governance officer undergo at least 18 hours of training within one year from the duty commencement date, and at least 12 hours of training each year.
5. Has the Company provided proper communication channels and created dedicated sections 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)?	V		The GM’s Office has dedicated personnel (the spokesperson) available to handle responses from stakeholders such as investors, shareholders, banks, employees, customers, and suppliers, and to serve as open communication channels. Stakeholder, Governance, and CSR sections have been created on the corporate website, whereas the name, contact number, and email of the contact person (the spokesperson) have also been disclosed on the website. All issues reflected are replied personally by the contact person (the spokesperson).
The Company also responds to issues that are of concern to stakeholders using the following channels:
1. Shareholders: Shareholder meetings are held on a yearly basis, and shareholders are given the option to exercise voting rights through electronic means. The Company publishes annual reports and CSR reports on a yearly basis and makes	Complied with Article 47 of Corporate Governance Best-Practice Principles for TWSE/TPEX Listed Companies

Assess criteria	Actual governance (Note 1)			Deviation and causes of deviation from Corporate Governance Best-Practice Principles for TWSE/TPEX Listed Companies
	Yes	No	Summary
			monthly disclosures of revenue performance as well as quarterly announcements of unaudited financial information to keep shareholders up-to-date on the Company’s operations.
2. Employees: Issues concerning employee benefit, occupational safety and health, gender equality, prevention of sexual harassment, and labor-management relations are communicated through various methods such as meetings at each plant, emails, document sharing, and bulletin boards.
3. Suppliers: The Company upholds business integrity and is committed to ensuring the continuity of its growth. The Company observes fair trading principles and requires all business partners to devote attention to environmental protection, work safety, and protection of workers’ interests. Annual supplier evaluations and regular supplier visits are organized to enhance communication between two parties.
4. Customers: The Company addresses customers’ demand for quality and after-sale service by paying visits, participating in exhibitions, and conducting and analyzing satisfaction surveys. Customer-exclusive contact channels including the use of telephone and email have been made available on the corporate website. These channels are used for gathering opinions from customers.
5. Other stakeholders and the general public: The Company prepares annual CSR reports and publishes them over the corporate website, where stakeholders and the general public may download at their own convenience.
6. Does the Company engage a stock transfer agent to handle shareholder meeting affairs?	V		The Company commissions the Share Administration Department of Grand Fortune Securities Co., Ltd. to handle shareholder meeting affairs.	Complied with Paragraph 1, Article 7 of Corporate Governance Best-Practice Principles for

Assess criteria	Actual governance (Note 1)			Deviation and causes of deviation from Corporate Governance Best-Practice Principles for TWSE/TPEX Listed Companies
	Yes	No	Summary
				TWSE/TPEX Listed Companies
7. Information disclosure
(1) Has the Company established a website that discloses financial, business, and corporate governance-related information?	V		1. The Company has created its own website (www.hungchou.com.tw) to disclose financial, business, and corporate governance information. The above information is also published over the website designated by the authority (i.e. Market Observation Post System).	Complied with Paragraph 1, Article 57 of Corporate Governance Best-Practice Principles for TWSE/TPEX Listed Companies
(2) Has the Company adopted other means to disclose information (e.g. English website, assignment of dedicated personnel to collect and disclose corporate information, implementation of a spokesperson system, and broadcasting of investor conferences via the company website)?	V		2. The GM's Office and Finance Department both have dedicated personnel available to gather and disclose information relating to the Company. This information is uniformly released to the public through the spokesperson. Investors are able to participate in the seminars organized by Grand Fortune Securities Co., Ltd. (most recently held on December 13, 2024). All briefing materials and a video recording of the entire proceeding are made available over the corporate website after each session, which investors may view at their own convenience.	Complied with Articles 55 to 58 of Corporate Governance Best-Practice Principles for TWSE/TPEX Listed Companies
(3) Does the Company publish and make official filing of annual financial report within two months after the end of an accounting period, and publish/file Q1, Q2 and Q3 financial reports along with monthly business performance before the required due dates?			3. The Company makes official reports to the authority in compliance with Article 36 of the Securities and Exchange Act. Financial statements are published/filed within 3 months after the end of a financial year, or within 45 days after the end of Q1, Q2, and Q3. Furthermore, business performance of the previous month is published/filed within the first 10 days of the current month.	The Company is required to prepare financial statements that consolidate subsidiaries, and is currently unable to publish/file financial statements at an earlier time.
8. Does the Company have other information that	V		On the Corporate Governance section of the Market	Complied with Article

Assess criteria	Actual governance (Note 1)
	Yes	No	Summary
enables a better understanding of the Company’s corporate governance practices (including but not limited to employee rights, employee care, investor relations, supplier relations, stakeholders’ interests, continuing education of directors/supervisors, implementation of risk management policies and risk measurements, implementation of customer policy, and liability insurance for directors and supervisors)?			Observation Post System (http://mops.twse.com.tw/), users may input stock code 1413 to learn details about the Company’s corporate governance practices. Alternatively, investors may inquire corporate governance information through the spokesperson. Below is a list of supplementary information that is useful to understanding corporate governance:
1. Employees’ interests: The Company has always valued the harmony of employment relations, and has set up physical opinion boxes and grievance hotlines in factories as well as dedicated email address over the Intranet as an encouragement for employees to speak their minds. Dedicated personnel have been assigned to investigate and respond to the matters collected through opinion box and hotlines, thereby ensuring open communication with the employees. Furthermore, the Company convenes quarterly labor-management meetings where key management personnel are present to communicate with worker representatives for the harmony of employment relations and continuity of business growth.
2. Investor relations: Queries and suggestions from shareholders, potential investors, stakeholders, and the general public are collectively addressed and explained by the spokesperson (or acting spokesperson). An “Investors” section has been created on the corporate website to provide investors with relevant information and to maintain relationships with investors.
3. Supplier relations: The Company chooses suppliers based primarily on their ability to deliver goods of adequate quality and quantity in time and at competitive prices. As a response to stakeholders’ expectations regarding corporate social responsibilities, the Company also requires suppliers to pay extra attention on issues such as occupational safety, work	28-2 and Articles 51 to 54 of “Corporate Governance Best-Practice Principles for TWSE/TPEX Listed Companies”

Assess criteria	Actual governance (Note 1)
	Yes	No	Summary
			environment, supply chain management, and hardware/equipment safety. In addition to annual supplier evaluation, the Company organizes training courses on business integrity principle and contractor work safety to communicate on related issues.
4. Stakeholders’ interests: The means by which the Company responds to stakeholders’ interests include:
Nearby communities: The Company sponsors community events and subsidizes local activities in the forms of budget, gift, and supplies.
Non-government and private organizations: The Company interacts with private organizations from time to time as a way to maintain public image and to share the burden of sustainability.
Peers: As a member of the industry association, the Company exchanges industry information with peers.
Government institutions: The Company complies with regulations and fulfills its duties as a corporate citizen by supporting the government’s policies and initiatives.
5. Purchase of liability insurance for directors and supervisors: The Company has arranged liability insurance for directors, supervisors, and key staff with Tokio Marine Newa Insurance Co., Ltd. The total sum assured is set at US$3 million and the duration of coverage will begin April 1, 2024 and end April 1, 2025. The purpose of the liability insurance is to reduce legal risk and financial burden for directors, and to protect them from losses that may arise as a result of the services rendered. (Reported during the board of directors meeting held on May 9, 2024)
6. Directors’ ongoing education: (complied with Articles 40 and 50 of Corporate Governance Best-Practice Principles for	Complied with Articles 40 and 50 of “Corporate Governance Best-Practice Principles for TWSE/TPEX Listed Companies”

Assess criteria	Actual governance (Note 1)	Deviation and causes of deviation from Corporate Governance Best-Practice Principles for TWSE/TPEX Listed Companies
Yes	No	Summary

Position	Name	Date of training
Chairman	Cheng-Tien Chan	July 26, 2023
August 16, 2023	3.0
Director	Heng-Chia Chang	July 26, 2023
October 24, 2023	3.0
Director	Yi-Ching Chan	July 28, 2023
September 15, 2023	3.0
Director	Heng-Chia Chang	June 9, 2023
July 28, 2023	3.0
Director	G.L. Lin	June 9, 2023
July 4, 2023	3.0
Director	Tse-Hua Lin	September 15, 2023
November 22, 2023	3.0
Independent director	Shou-Po Chao	March 29, 2023
April 19, 2023	3.0

Actual governance (Note 1)
Yes	No	Summary
		Independent director	Wei-Chi Huang	March 29, 2023	3.0
				April 19, 2023	3.0
		Independent director	Hsien-Chang Kuo	April 26, 2023	3.0
				May 17, 2023	3.0
		Independent director	Chen,Yi-Min	July 28, 2023	3.0
				August 16, 2023	3.0
				September 28, 2023	3.0
		Director	Lin-Te Chen	July 28, 2023	3.0
				November 22, 2023	3.0
		Director	Kuan-Ru Chen	April 26, 2023	3.0
				May 17, 2023	3.0
		7. Our company annually submits a risk report for discussion at the board meeting (for the year 2024, on March 7, 2024). Additionally, the board meeting (on August 2, 2024) submits for discussion the identification of stakeholders and key issues for the year 2023.

Assess criteria	Actual governance (Note 1)
	Yes	No	Summary
9. Please explain the improvements made, based on the latest Corporate Governance Evaluation results published by TWSE Corporate Governance Center, and propose enhancement measures for any issues that are yet to be rectified.	V		1. The Company scored 69.84 and ranked in the 51%-65% tier of TWSE's 10th (2023) Corporate Governance Evaluation.
2. Improvements to areas that failed to score in the current evaluation:
(1) Enhancements have been made to the disclosure of corporate governance information to score in the following area: 1.7、1.9、2.19、2.24、3.2、3.13、3.21、4.1、4.2
(2) Improvements to be made during re-election in the next board meeting: none
(3) Improvements of low urgency: 1.2、1.17、1.19、2.3、2.4、2.14、2.21、2.23、2.27、3.4、3.6、3.14、3.18、3.20、4.5、4.7、4.19、4.22	Complied with Article 59 of Corporate Governance Best-Practice Principles for TWSE/TPEX Listed Companies

Note: Always provide explanation in the summary description column, regardless of whether there are any deviations from the best practice principles.

(4) Disclose the composition, responsibilities, and functionality of the remuneration committee, if available:

Information of Remuneration Committee members

December 31, 2024

Role (Note 1)	Criteria	Professional qualification and experience (Note 2)	Independence criteria (Note 3)	Number of concurrent positions as Remuneration Committee member in other public companies
	Name
Independent director (Convener)	Shou-Po Chao	Graduated from University of Illinois
Former Chairperson of the Council of Labor, Executive Yuan
Adjunct Professor of National Changhua University of Education
Department of Industrial Education and Technology	Does not exhibit any of the conditions listed in (Note 3)	0
Independent director	Wei-Chi Huang	Graduated from University General Secretary of Taiwan Textile Federation	Does not exhibit any of the conditions listed in (Note 3)	0
Independent director	Chen,Yi-Min
(Newly appointed on 12/27/2023)	Master's degree
Parliamentary Secretary of the Ministry of Labour
Secretary-General of the All-Taiwan Federation of Industries	Does not exhibit any of the conditions listed in (Note 3)	0

Note 1: Years of work experience, professional qualification, and independence of each Remuneration Committee member are explained in the chart. For members who are also independent directors, references have been made to Attachment 1 - Background information of directors and supervisors (1) on page _. In the Role field, each member is specified either as independent director or other (with additional remark for the role of convener).

Note 2: Professional qualification and experience: Professional qualification and experience for each member of the Remuneration Committee is explained.

Note 3: Compliance of independence: Independence of Remuneration Committee members is evaluated using several criteria including but not limited to: whether they or their spouse or 2nd-degree relatives or closer serve as director, supervisor, or employee in the Company or any of its related businesses; the number and percentage of Company shares held in their own names or names of spouse, 2nd-

degree relative or closer (or proxy shareholder); whether they serve as director, supervisor, or employee in any entity that has certain relationship with the Company (refer to Subparagraphs 5-8, Paragraph 1, Article 6 of 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 compensation received in the last two years for providing commercial, legal, financial, accounting or other professional services to the Company and its related businesses.

Note 4: For method of disclosure, please refer to the best practice examples presented on the website of Taiwan Stock Exchange Corporate Governance Center.

2. Functionality of the Remuneration Committee

(1) The Company's Remuneration Committee consists of 3 members
(2) Duration of service of the current committee: from June 29, 2022 to June 28, 2025.

The Remuneration Committee held 2 meetings (A) in 2024; details of members' eligibility and attendance are as follows:

Position	Name	No. of in-person attendance (B)	No. of proxy attendance	In-person attendance rate (%)(B/A)(Note)	Remarks
Convener	Shou-Po Chao	2	0	100	Renewed on August 3, 2022
Committee member	Wei-Chi Huang	2	0	100	Renewed on August 3, 2022
Committee member	Chen,Yi-Min	2	0	100	Newly appointed on 12/27/2023
Other mandatory disclosures:
1. In the event where the Remuneration Committee’s proposal is rejected or amended in a board of directors meeting, an explanation shall be made on the date and session of the meeting, details of the motion, the board’s resolution, and how the Company had handled the Remuneration Committee’s proposals (including differences and reasons, if any, should the board of directors approve a solution that was more favorable than the one proposed by the Remuneration Committee): None
2. Should any committee member object or express reservations to the resolution made by the Remuneration Committee, whether on-record or in writing, please state the date and session of the meeting, details of the motion, the entire members’ opinions, and how their opinions were addressed: None

Note: *Date of resignation is shown for members of the Remuneration Committee who had resigned prior to the close of the financial year. The percentage of in-person attendance (%) is calculated based on the number of Remuneration Committee meetings held and the number of meetings attended in-person during active duty.

*If a re-election of Remuneration Committee members had taken place prior to the close of the financial year, members of both the previous and the current Remuneration Committee are listed; in which case, the remarks column will specify whether the committee member was elected in the previous board, the new board, or both. In-person attendance rate (%) is calculated based on the number of Remuneration Committee meetings held and the number of meetings attended in-person during active duty.

Remuneration Committee

| Composition | The Company has assembled a Remuneration Committee with board of directors' approval. The Remuneration Committee has a total of three members; all of whom are professionally qualified and possess extensive work experience. The committee members serve identical terms as do members of the board. The Company re-elected its directors during the shareholder meeting held on June 29, 2022. The new board members passed a resolution on August 3, 2022 to appoint Independent Director Shou-Po Chao, Independent Director Wei-Chi Huang, and Mr. Chung-Lung Chen as members of the Remuneration Committee (with Independent Director Shou-Po Chao serving as the convener). All members of the committee have met the eligibility requirements stated in the Securities and Exchange Act and "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."
Mr. Chan Chung Lung, a member of the remuneration committee, resigned as a member of the remuneration committee of the Company on 6/11/2023 due to his busy schedule. On December 27, 2023, the Board of Directors elected independent director Chen Yimin as a member of the remuneration committee for a term of office from December 27, 2023 to June 28, 2025 (the same as the current Board of Directors). |
| --- | --- |
| Responsibilities | 1. The Remuneration Committee performs its duties in accordance with the Company's Remuneration Committee Charter.
2. Establishment and regular review of directors', supervisors', and managers' compensation policies, systems, standards and structures, and performance evaluation.
3. Regularly review and adjust directors', supervisors', and managers' compensation.
4. The Remuneration Committee makes regular suggestions and proposals to the board of directors on various issues resolved. |
| Progress | 1. The Remuneration Committee held 2 meetings in 2024.
2. The 4th meeting of the 5th Remuneration Committee was held on March 7, 2024 (attending members: Shou-Po Chao, Wei-Chi Huang, Chen,Yi-Min).
Discussion on "allocation of employee remuneration and director/supervisor remuneration for 2023."
Resolution: The Company still had cumulative losses pending reimbursement in 2023, therefore a proposal was raised to withhold remuneration for employees, directors, and supervisors. The motion was passed as proposed without objection from attending members when inquired by the chair.
3. The 5th meeting of the 5th Remuneration Committee was held on November 6, 2024 (attending members: Shou-Po Chao, Wei-Chi Huang, Chen,Yi-Min) |

| | Discussion on “directors’, supervisors’, and managers’ compensation.”
Resolution: The proposal was deemed fair and reasonable, and was passed as proposed without objection from attending members when inquired by the chair. To be presented to the board of directors for reference. |
| --- | --- |

(5) Sustainable development practices; deviation and causes of deviation from Sustainable Development Best Practice Principles for TWSE/TPEx Listed Companies:

Assess criteria	Actual governance (Note 1)
	Yes	No	Summary
1. Has the Company implemented a governance framework that supports sustainable development, and designated a unit that specializes (or is involved) in the promotion of sustainable development? Is the unit empowered by the board of directors and run by senior management, and how does the board supervise progress?	V		1. The Company's sustainable development framework is primarily spearheaded by the “Corporate Governance (Corporate Social Responsibility) Promotion Team” that operates directly under the Chairman. The role of corporate governance officer is currently undertaken by Yu-Min Lai, Vice President of Finance of the parent company.
2. Execution of the “Corporate Governance (Corporate Social Responsibility) Promotion Team”:
(1) The “Corporate Governance (Corporate Social Responsibility) Promotion Team” executes sustainable development tasks within the Company. On July 13, 2021, the board of directors passed the decision to appoint Yu-Min Lai, the head of accounting of the parent company, as the Company's corporate governance officer.
(2) The “Corporate Governance (Corporate Social Responsibility) Promotion Team” comprises level 1 managers, whose main responsibilities are to execute corporate governance tasks, evaluate and	Complied with Sustainable Development Best Practice Principles for TWSE/TPEx Listed Companies.
			compliant the strategic plan and the strategic plan for the TWSE/TPEx.
3. The TWSE/TPEx is a multi-calculated, multi-calculated, multi-calculated, multi-calculated, multi-calculated, multi-calculated, multi-calculated, multi-calculated, multi-calculated, multi-calculated, multi-calculated, multi-calculated, multi-calculated, multi-calculated, multi-calculated, multi-calculated, multi-calculated, multi-calculated

Assess criteria	Actual governance (Note 1)			Deviation and causes of deviation from Sustainable Development Best Practice Principles for TWSE/TPEx Listed Companies
	Yes	No	Summary
			select suitable donees, gather relevant information, and prepare CSR reports.
(3) The “Corporate Governance (Corporate Social Responsibility) Promotion Team” prepares yearly CSR reports to disclose the Company’s sustainable development progress in the previous year, and presents them to the board of directors. The 2023 “ESG Report” was presented to the board of directors on August 2, 2024.
3. The board of directors would discuss with the corporate governance officer about adjustments to the Company’s management approach, strategies, and goals based on the “CSR Report” prepared by the “Corporate Governance (Corporate Social Responsibility) Promotion Team.”
4. On November 6, 2024, the board meeting approved the addition of "Chapter 11, Sections 1 to 7 of the Corporate Sustainability (ESG) Cycle and related internal audit system" to the company's internal control system, formally incorporating the promotion of corporate sustainability into the internal control framework.
2. Has the Company conducted risk assessment on environmental, social, and corporate governance issues that are	V		1. The Company has implemented a “risk management policy.” Each year, factory managers and the management of subsidiaries would join and evaluate the probability and impact of environmental, social, and	Complied with Sustainable Development Best Practice

Assess criteria	Actual governance (Note 1)			Deviation and causes of deviation from Sustainable Development Best Practice Principles for TWSE/TPEx Listed Companies
	Yes	No	Summary
relevant to its operations, and implemented risk management policies or strategies based on principles of materiality? (Note 2)			governance issues (including natural disaster, the economic environment, employees' conducts, business, legal affairs, management actions and control, and infrastructure) that are relevant to the Company based on principles of materiality, and determine the type of risk management policy or strategy to adopt in response. The Company presents risk reports to the board of directors once a year; the 2024 risk report was presented during the board of directors meeting held on May 7, 2024.
2. When evaluating risks, factory managers and the management of subsidiaries would pay particular attention to non-financial ESG information and use them to identify environmental, social, and governance issues that are material to the Company. These issues, along with the risk report, are presented to the board of directors each years. (Please see the Governance section on the Company's website.)
3 The company's 19th Board of Directors meeting (dated 3rd November 2022) has passed the "Guidelines for Risk Management Practices" and "Operational Procedures for Business Continuity Plans."	Principles for TWSE/TPEx Listed Companies.
3. Environmental issues
(1) Has the Company developed an appropriate environmental management system, given its distinctive characteristics?	V		1.1 Our company reviews the efficiency of various energy uses monthly in accordance with the Greenhouse Gas Reduction Act, Energy Management Act, and Renewable Energy Development Ordinance. The company has obtained ISO 14001:2015 Environmental Management System certification.	Complied with Sustainable Development Best Practice Principles for TWSE/TPEx Listed

Assess criteria	Actual governance (Note 1)			Deviation and causes of deviation from Sustainable Development Best Practice Principles for TWSE/TPEx Listed Companies
	Yes	No	Summary
(2) Is the Company committed to achieving efficient use of resources, and using renewable materials that produce less impact on the environment?	V		2.1 The Company first obtained Global Recycle Standard (GRS) certification for polyester filaments in May 2017 and has maintained certification to date. GRS is a global and voluntary standard designed for complete products; it regulates the chain of custody that supply chain partners are required to maintain with respect to product recycling and component reuse, as well as the social responsibilities, environmental rules, and chemical restrictions they must observe. Certification of GRS is validated by a third-party institution. In 2021, the Company made significant efforts to construct natural gas pipelines into the Company’s factory and modified boilers to run on natural gas instead of heavy oil. Both measures were intended to increase fuel efficiency and reduce impact on the environment.	Companies.
(3) Is the Company aware of how climate changes affect its business activities? Are there any actions taken to measure and reduce greenhouse gas emission and energy use?	V		3.1 The company adheres to the "Corporate Governance 3.0 - Sustainable Development Blueprint" published by the Financial Supervisory Commission and refers to the "Task Force on Climate-related Financial Disclosures" (TCFD) standards and framework published by the Financial Stability Board (FSB) to take stock of the risks, opportunities, and response measures brought about by climate change to our company. We also quantitatively evaluate the impact of major climate risks on our company and take relevant response measures. For more information, please refer to page 73 of this year's annual report on "Climate-related information for

Assess criteria	Actual governance (Note 1)
	Yes	No	Summary
(4) Does the Company maintain statistics on greenhouse gas emission, water usage, and total waste volume in the last two years, and implement policies aimed at reducing energy, carbon, greenhouse gas, water and waste?	V		listed and OTC companies."
4.1 Our company's main products are polyester filament and polyester pellets. We manage greenhouse gas emissions, water usage, and waste based on the location of our facility at No. 29, Hongzhou Street, Guishan District, Taoyuan City..
1. Greenhouse Gas: Our company conducts a greenhouse gas inventory in accordance with the ISO-14064 standard. The inventory includes gases such as carbon dioxide, methane, nitrous oxide, hydrofluorocarbons, perfluorocarbons, sulfur hexafluoride, and nitrogen trifluoride, and is expressed in terms of carbon dioxide equivalent (CO2e). Emissions sources are classified as direct emissions (Category 1, i.e., emissions directly from sources owned or controlled by the company), energy indirect emissions (Category 2, i.e., indirect greenhouse gas emissions from the consumption of purchased electricity, heat, or steam), and other indirect emissions (Category 3, i.e., emissions from sources not owned or controlled by the company but associated with its activities). For more information, please refer to page 73 of this year's annual report on "Climate-related information for listed and OTC companies."
2. Water usage analysis
			2022	2023	2024

Assess criteria	Actual governance (Note 1)	Deviation and causes of deviation from Sustainable Development Best Practice Principles for TWSE/TPEx Listed Companies
Yes	No	Summary
	V
Surface Water - Rainwater Collection1000M3	190.943	219.462
	350.918	296.537
3. waste
	2022	2023
Hongzhou	155.08	143.18
Non-hazardous	48.61	26.83
	203.69	170.01
Non-hazardous waste is classified as general household waste. Hazardous waste at Hongzhou includes toxic waste liquids, textile sludge, waste engine oil, waste coal, and waste wooden pallets.
4.Wastewater discharge
Year	Water discharged (tonnes)	Water recycled (tonnes)
2022	325,167	0
2023	294,279	0
2024	190,809	0

Assess criteria	Actual governance (Note 1)
	Yes	No	Summary
			The company's greenhouse gas reduction policy is based on the year 2022, with a target to reduce greenhouse gas emissions by 30% by 2030 and reach net zero emissions by 2050.
1. Continue enforcement of greenhouse gas survey, and keep departments informed on the progress of energy and carbon reduction efforts.
2. Continue discussing with equipment suppliers on the possibility of introducing energy-efficient equipment, and conduct yield assessments.
3. Continue promoting energy and carbon reduction awareness to all employees and enforce energy conservation measures.
4. Take initiative in working with green energy (solar power) equipment suppliers to acquire carbon credits for the use of green energy.
5. Observe environmental protection laws, customers’ requirements, and relevant rules.
4.3 The water conservation and waste reduction targets of the Hongzhou factory (No. 29, Hongzhou Street, Guishan District, Taoyuan City) are 5%. The water conservation measures mainly include increasing rainwater storage facilities, recycling treated wastewater for cleaning purposes, adjusting water valve flow rates, and installing faucet aerators. Waste management includes "sorting and recycling - paper, plastic bottles, metal cans", "waste reduction - reusing single-sided blank paper for second-time copying", and

Assess criteria	Actual governance (Note 1)			Deviation and causes of deviation from Sustainable Development Best Practice Principles for TWSE/TPEx Listed Companies
	Yes	No	Summary
			"reuse - sorting and reusing customer packaging materials".

4.4 The company comprehensively considers its environmental impact and selects external institutions for verification. As of the annual report publication date, the following certifications remain valid: ISO 14001:2015 Environmental Management System certification, GRS Global Recycled Standard certification, and Oeko-Tex Standard 100 eco-textile certification. Additionally, for organizational greenhouse gas verification, the 2023 greenhouse gas emissions have been verified by the Measurement Technology Development Center of the Industrial Technology Research Institute in accordance with the Environmental Protection Administration’s guidelines for greenhouse gas emissions inventory, and a greenhouse gas verification statement has been issued. For 2024, verification is currently being conducted by the Taiwan Commodity Inspection and Verification Center. | |
| 4. Social issues
(1) Has the Company developed its policies and procedures in accordance with laws and International Bill of Human Rights? | V | | 1.1 The Company implements and amends personnel management policies to conform with the government’s latest labor regulations and rules. The | Complied with Corporate Social Responsibility Code of |

Assess criteria	Actual governance (Note 1)
	Yes	No	Summary
(2) Has the Company developed and implemented reasonable employee welfare measures (including compensation, leave of absence, and other benefits), and appropriately	V		Company not only provides employees with stable salary in addition to proper meal, accommodation, and training, but is also dedicated to creating a safe and healthy work environment where employees are protected and have the opportunity to develop professional skills over their careers.
1.2 The Company hires appropriate number of foreign workers in a manner that is legal and compliant with the United Nation’s sustainable development goals and international work rights and human rights conventions. Through the translation service of foreign worker agencies, the Company exchanges opinions regularly with foreign workers and communicates with them on issues concerning lifestyle as well as recreational activities.
1.3 The Company recognizes and complies with the human rights protection principles conveyed in international human rights conventions including “The Universal Declaration of Human Rights,” “The Global Compact,” “The UN Guiding Principles on Business and Human Rights,” and “ILO Declaration on Fundamental Principles and Rights at Work.” We prohibit any act of human rights violation and vouch to treat all employees fairly with respect.
2.1 Our company’s employee attendance and vacation days are all handled in accordance with the Labor Standards Act and the annual calendar of government agencies issued by the Administration Yuan,	Conduct.

Assess criteria	Actual governance (Note 1)	Deviation and causes of deviation from Sustainable Development Best Practice Principles for TWSE/TPEx Listed Companies
Yes	No	Summary
reflected business performance or outcome in employees' compensations?	V
	2022	2023
The number of female staff	56	51
Female staff proportional	25%	23%
The number of employees	230	218
Number of female supervisors	9	5
The proportion of female supervisors	23%	12%
The number of supervisors	40	41
V	2.2 If the company generates profits in its annual financial statements, according to the company's bylaws, employee bonuses will be distributed to share the company's performance or results with its employees. The company also adjusts employee salaries in a timely manner by referring to industry salary standards and adjustment rates to retain outstanding talents.

Assess criteria	Actual governance (Note 1)					Deviation and causes of deviation from Sustainable Development Best Practice Principles for TWSE/TPEx Listed Companies
		Yes	No	Summary
(3)	Does the Company provide employees with a safe and healthy work environment? Are employees trained regularly on safety and health issues?	V		3. Employees work mostly in an office environment, and the Company is dedicated to providing employees with a safe and comfortable workplace featuring high-quality facilities. Maintenance of the work environment: The Company imposes rigorous safety and health requirements starting from the procurement of equipment. The office is thoroughly cleaned every weekend; any malfunction of office equipment and any potential hazard in the workplace is repaired, rectified, eliminated, and protected with appropriate gear immediately upon discovery. Care for employees' health: The Company organizes regular health checkups for employees, and requires new recruits to undergo 2 hours of workplace introduction and safety and health training.
3.2 The Company has not obtained relevant verification.
3.3 Statistics of occupational accidents for our company's employees in the past three years
				2022	2023	2024
				The number of events	1	0	0
				Number	1	0	0
				3.4 In 2024, there were no fires and no employee casualties. In order to prevent fires and reduce the loss of personnel and property in the event of fires, the factory has formulated a fire prevention guidance program and fire protection plan, and the fire manager implements

Assess criteria	Actual governance (Note 1)			Deviation and causes of deviation from Sustainable Development Best Practice Principles for TWSE/TPEx Listed Companies
	Yes	No	Summary
(4) Has the Company implemented an effective training program that helps employees develop skills over their career?	V		independent spot checks every month in accordance with the self-inspection list of dangerous goods security supervision, handles fire inspections every year, and fills in the fire safety equipment inspection declaration form for fire safety equipment inspection and inspection of missing fire safety equipment, improvement plans and improvement situations to declare to the fire department, handles two self-defense fire marshalling drills and verification and fire training every year, and submits the results of the drill to the fire department.

The company has established an education and training policy, providing internal training and external training programs based on the skills and professional knowledge required for employees' roles to support their career development and training. Managers at all levels also intentionally rotate employees for training based on their expertise to ensure optimal role alignment, maximize their strengths, and assist with career planning. From January to December 2024, factory education and training included: General occupational safety and health training (internal) with 104 hours and 524 participants, and specialized operation personnel external training with 155 hours and 29 participants. | |
| (5) Has the Company complied with laws and international standards with respect to customers' health, safety, and privacy, marketing and labeling in all products | | | 5.1 The Company produces synthetic fibers and serves business customers only. To ensure that end consumers have access to environmentally friendly | |

Assess criteria	Actual governance (Note 1)
	Yes	No	Summary
and services offered, and implemented consumer/customer protection policies and complaint procedures?			and toxicity-free products, the Company obtained environmental label for POY and FDY (glossy) products in April 2010.
In February 2011, Oeko-Tex certification was obtained for polyester chips.
In February 2011, Oeko-Tex certification was obtained for polyester filaments and yarns, and has since been maintained to date.
In September 2016, Oeko-Tex certification was obtained for black yarn, and has since been maintained to date.
5.2 The Company has disclosed contact email and phone number on the website that customers may use to claim consumer protection and raise complaints.
(6) Has the Company implemented a supplier management policy that regulates suppliers’ conducts with respect to environmental protection, occupational safety and health, or work rights/human rights issues, and tracked suppliers’ performance on a regular basis?			6.1 The Company has established a "Supplier Sustainable Development Management Policy," "Supplier Social Responsibility Commitment," and "Supplier Integrity and Anti-Corruption Pledge." that requires suppliers to pay attention to issues concerning environmental protection, occupational safety and health, and workers’ rights, and to comply with relevant regulations. Suppliers are awarded points for passing relevant certifications in the supplier evaluation. All existing suppliers are subjected to supplier evaluation once a year; any environmental incident or adverse news coverage would be reflected in supplier’s evaluation.
6.2 Suppliers that are more friendly to the environment and workers are placed on the priority procurement list,
65

Assess criteria	Actual governance (Note 1)	Deviation and causes of deviation from Sustainable Development Best Practice Principles for TWSE/TPEx Listed Companies
Yes	No	Summary

6.3 The company conducts an annual evaluation of supplier performance in fulfilling social responsibilities through a "Supplier Social Responsibility Assessment." Those that violate the CSR policy and have the potential to pose significant impact on the environment or the society will be disqualified and discontinued from trading.
		Number of samples
Supplier Social Responsibility Commitment	2022	21
2023	25	25
2024	27	27
Supplier Integrity and Anti-Corruption Pledge.	2022	21
2023	25	25
2024	27	27
Supplier Social Responsibility Assessment.	2022	21
2023	25	25
2024	27	27
6.4 Sustainable supplier evaluation levels and corresponding measures

Assess criteria	Actual governance (Note 1)				Deviation and causes of deviation from Sustainable Development Best Practice Principles for TWSE/TPEx Listed Companies
	Yes	No	Summary
			evaluation levels	corresponding measures
			Excellent (90-100 points)	It is recommended to increase the purchase volume
			Good (80-89 points)	Maintain current procurement volume
			(70-79 points ),	It is possible to maintain the current procurement volume, but it is required to improve the social responsibility score.
			Poor (70-60 points)	discusses reducing the number of purchases and asks for improved social responsibility scores. Failure to score 70 points for two consecutive years will result in suspension or disqualification of qualified suppliers.
			Inferior (60 points or less)	immediately cease or disqualify qualified suppliers.
5. Does the Company prepare sustainability report or any report of non-financial information based on international reporting standards or guidelines? Are the above mentioned reports supported by assurance	V		The company completed the compilation of the "2023 Corporate Sustainability Report" on May 10, 2024, marking our eighth sustainability report. The report was prepared in accordance with the objectives and specific measures of "Corporate Governance 3.0 - Sustainable Development Blueprint" and the amended regulations of the Taiwan Stock		Complied with Corporate Social Responsibility Code of Conduct.

Assess criteria	Actual governance (Note 1)
	Yes	No	Summary
or opinion of a third-party certifier?			Exchange’s "Guidelines for the Preparation and Filing of Sustainability Reports by Listed Companies." The content structure follows the Global Reporting Initiative (GRI) Sustainability Reporting Standards 2021 edition. Additionally, a dedicated chapter discloses our climate-related financial disclosures (Task Force on Climate-related Financial Disclosures, TCFD) and references the Sustainability Accounting Standards Board (SASB) standards (version 2022-05), taking into account industry characteristics to establish sustainability-related indicators that are material to the industry and of concern to investors. The 2023 Corporate Sustainability Report (approved by the board of directors on August 2, 2024) was independently compiled by our company and has not been certified by a third party or reviewed by an accountant, as hereby declared.
6. If the Company has established sustainability policies in accordance with “Sustainable Development Best Practice Principles for TWSE/TPEx Listed Companies,” please describe its current practices and any deviations from the Best Practice Principles:
Explanation: The Company established its own Corporate Social Responsibility Code of Conduct on November 14, 2016; later on March 4, 2021, the board of directors passed a decision to amend the Corporate Social Responsibility Code of Conduct and assemble a Corporate Governance (Corporate Social Responsibility) Promotion Team in line with the authority’s instructions. Each year, the vice president of GM’s Office would gather environmental safety personnel from various factories to consolidate and examine the data they have gathered on issues concerning “environment and occupational health,” “quality and environmental safety/health management,” “environmental and occupational health and safety performance,” “sustainable development,” “social responsibilities” etc., for the preparation of ESG Report (the 2023 issue was released on May 10, 2024). This report, along with yearly ESG updates, are subsequently presented to the board of directors (last presented on August 2, 2024). The Company plans to rename its “Corporate Social Responsibility Code of Conduct” to “Sustainable Development Best Practice Principles for TWSE/TPEx Listed Companies” and rename the “ESG Report” to “Sustainable Development Report”

Assess criteria	Actual governance (Note 1)
	Yes	No	Summary
in 2022. For details on the Company's corporate social responsibility practices, please refer to the annual CSR reports made available on the corporate website.
7. Other information useful to the understanding of sustainable practice:
Explanation:
1. The Company and its parent company make yearly donations to charity organizations out of care for the local community. Through these charity organizations, the Company provides aid to low income households and caters for the wellbeing of the underprivileged. Please refer to the “2023 ESG Report” (the 2023 issue was released on May 10, 2024) available on the corporate website for more details on the Company’s corporate social responsibility actions. The Company takes passion in charity activities, and is highly committed to giving back to the local community.

Note 1: If Actual Governance is specified "Yes," please explain the key policies, strategies, and measures taken and the execution progress; if Actual Governance is specified "No," please provide reasons and explain any policy, strategy and measure planned for the future.
Note 2: If the Company has prepared a CSR report, Actual Governance may be completed by providing page references to the CSR report instead.
Note 3: Materiality principle refers to environmental, social, and corporate governance issues that are of material impact to the Company's investors and stakeholders.

Climate-Related Information of TWSE/TPEx Listed Company

Implementation of Climate-Related Information

Item	Implementation status
1. Describe the board of directors' and management's oversight and governance of climate-related risks and opportunities.	The Company (including its subsidiaries) follows the "Corporate Governance 3.0 - Sustainable Development Roadmap" issued by the competent authority, the FSC, to disclose the assessment and management of the Company's climate-related risks based on the international guidelines and framework of Task Force on Climate-related Financial Disclosures (TCFD) since 2022.
	1. Climate-related Risk Assessment Framework (TCFD)
	Management policy		Implementation status
	Governance	☺ Regularly report to the Board of Directors on the Company's assessment and management of climate-related risks and opportunities. ☺ To be promoted by the Corporate Governance Promotion Team.	The Corporate Governance Promotion Team will assess and manage the implementation of climate-related risks and opportunities and report to the Board of Directors on an annual basis.
	Strategy	☺ To identify the short-, medium- and long-term climate-related risks and opportunities for the Company through communication and discussion among heads of each department. ☺ Assess the impact of climate-related issues on the Company's businesses, strategies and financial planning. ☺ Scenario analysis and scientifically based reduction targets are used as the Company's strategy to respond to climate change.	Identifying risks and opportunities based on the TCFD, a total of 11 risk and 3 opportunity was identified. The identified risks and opportunities were used to assess the probability and materiality of the risk impact. Using a 2°C global warming scenario proposed by the UN Intergovernmental Panel on Climate Change (IPCC), we simulate the risks and opportunities of company operations and formulate response actions to climate change.
Risk Management	☺ Regularly review and assess the processes of climate-related risks with the framework of TCFD.	To quantify and rank the probability and materiality of the identified risks and opportunities in order to assess the impact

| | ◎ Based on the results of climate change risk identification and ranking, to formulate an action plan.
◎ Integrate with the Company's risk management system and conduct regular assessments on an annual basis. | on the Company's operations and finances.
To formulate the Company's response actions and priorities.
For details, please refer to the "Risk Management Policy" of the Company. |
| --- | --- | --- |
| | Metrics and Targets
◎ Establishing climate-related risk and opportunity management indicators.
◎ Conduct annual GHG inventories in accordance with the ISO 14064-1 standard.
◎ Set climate change management targets and regularly review the achievement of the targets. | Conduct annual GHG inventories.
Reduce GHG emissions per unit of product and use solar power green electricity.
Use natural gas instead of heavy fuel oil.
Continuously implement carbon reduction measures. |

Describe how the identified climate risks and opportunities affect the business, strategy, and finances of the business (short, medium, and long term).
Describe the financial impact of extreme weather events and transformative actions.
Identification of Climate-related Risks and Opportunities

Opportunity	Description
Resource efficiency	Increase the use of variable frequency drive for energy-consuming equipment such as air compressor, cooling tower, freezing machine, dryer, etc. and use LED energy saving tubes, so as to save electric energy consumption.
Energy Source	Increase the use of low-carbon green energy or renewable energy. Switch to natural gas instead of heavy fuel oil to reduce air pollution.
Products and Services	Tailings recycling and reuse.
recycle PET bottles and reuse products.
Markets	Not applicable.
Resilience	Not applicable.

Climate-related Risks Matrix

| 4. Describe how climate risk identification, assessment, and management processes are integrated into the overall risk management system. | High Medium Low Risk probability | ● Increased requirement and regulation of sustainability | ● Increased cost of GHG emission
● Environmental policies have become increasingly stringent | ● Changes in Customer Behavior |
| --- | --- | --- | --- | --- |
| | | | ● Customer Preference Transfer | ● Increased costs of transition to low carbon technologies |
| | | ● Average temperature rise | ● Increasing frequency and severity of typhoons/floods
● Increasing frequency and severity of rainstorms | ● New Technology Investment Fails
● Changing Rainfall Patterns and Dramatic Weather Changes |
| | | Short term (<3 years) | Medium term (3-5 years)
Period | Long term (>5 years) |

The scenarios, parameters, assumptions, analysis factors of climate=change risks and major financial impacts

Climate-related Risk	Climate Change	Financial Impact	Responses and Actions
Increased requirement and regulation of sustainability	2°C Scenario	Production factories may need to amend the direction in response to the Renewable Energy Development Act to increase the cost of renewable energy installed capacity construction and purchase of Renewable Energy Certificates.	Invested NT$40,000,000 to build solar energy equipment of 1,300KW to meet the requirements of the large electricity customers to install 10% of the contract capacity of renewable energy equipment.

5. If scenario analysis is used to assess resilience to climate change risks, the scenarios, parameters, assumptions, analysis factors and major financial impacts used should be described.	Increased cost of GHG emission	2°C Scenario	In response to the regulation of Taiwan's GHG Reduction and Management Act, the Company has to improve the energy efficiency of its production equipment and office premises, and may be affected by the potential carbon tax and carbon trading system, resulting in increased operating costs.	Conducted GHG inventory in accordance with ISO 14064-1 standard. Net-zero emissions as the goal, apply for the carbon offset program, and continue to implement energy saving programs.
	Environmental policies have become increasingly stringent	NDC Scenario	Due to the increasing stringency of air pollution emission standards, the original oil-fired boilers need to be replaced with other equipment.	Switching from oil-fired boilers to natural gas burning.
	Changes in Customer Behavior	Well-below 2°C Scenario	As end-users and brands become more aware of sustainability and environmental protection, they are more willing to increase the price and quantity of low-carbon products and eco-friendly products they purchase, which affects the revenue of other products.	Increase the production of recycled yarn for PET bottles and biodegradable yarn to respond to the change of customers' consumption behavior and enhance the added value of our products.
6. If there is a transition plan for managing climate-related risks, describe the content of the plan, and the indicators and targets used to	Risk Category	Risk Profile	Climate-Related Risk	Potential Financial Impact
	Transition Risks	Policy and Legal	Increased requirements and regulations related to sustainability	Production factories may need to amend the direction in response to

		the Renewable Energy Development Act to increase the cost of renewable energy installed capacity construction and purchase of Renewable Energy Certificates (RECs).
	Increased cost of GHG emissions	In response to the regulation of Taiwan's GHG Reduction and Management Act, the Company has to improve the energy efficiency of its production equipment and office premises, and may be affected by the potential carbon tax and carbon trading system, resulting in increased operating costs.
	Environmental policies have become increasingly stringent	Due to the increasing stringency of air pollution emission standards, the original oil-fired boilers need to be replaced with other equipment.
Technology	Increased costs of transition to low carbon technologies	The progress of the technology of global low-carbon transition will cause the Company to accelerate the replacement of plant/equipment/vehicles


New Technology Investment Fails	The Company invests in new technologies in a phased manner and in small quantities to ensure the effectiveness of the investment. There is no possibility of failure of investment resulting in non-recovery of large investment costs, and the financial impact is relatively insignificant.
Market	Changes in Customer Behavior	As end-users and brands become more aware of sustainability and environmental protection, they are more willing to increase the price and quantity of low-carbon products and eco-friendly products they purchase, which affects the revenue of other products.
Reputation	Customer Preference Transfer	High carbon emissions and low climate resilience may affect customers' trust in the Company, which may damage the Company's goodwill and further affect the Company's revenue.

	Acute Risk	Increasing frequency and severity of typhoons/floods	Extreme physical risks may cause damage to factories and warehouses, resulting in damage to production equipment or products, causing customer complaints and affecting brand image.
		Increasing frequency and severity of rainstorms
	Chronic Risk	Changing Rainfall Patterns and Dramatic Weather Changes	Prolonged droughts caused by changes in rainfall patterns will affect the stability of production water and cause production disruptions. Dramatic changes in temperature, such as an increase in the number of days with extreme high temperatures, will also change customers' consumption patterns, making it more difficult to forecast sales and production, and creating an imbalance between production and sales.
		Average temperature rise	The rise in average temperature will cause a large increase in electricity consumption and shortage of electricity supply, resulting in a higher chance of power outage.
6. The Company is currently in the process of understanding and evaluating the content of an internal

7. If internal carbon pricing is used as. a planning tool, the basis for setting the price should be stated.	carbon pricing system, and we may use it as a planning tool in the future.
8. If climate-related targets have been set, the activities covered, the scope of greenhouse gas emissions, the planning horizon, and the progress achieved each year should be specified. If carbon credits or renewable energy certificates (RECs) are used to achieve relevant targets, the source and quantity of carbon credits or RECs to be offset should be specified.	6. The Company and its subsidiaries' GHG reduction policy takes 2022 as the base year and aims to reduce GHG emissions by 30% by 2030 and to reach net zero emissions by 2050. The activities covered include:
1. The Company will continue to conduct greenhouse gas inventories in accordance with the Environmental Protection Administration’s Guidelines for Greenhouse Gas Emissions Inventory, enabling all departments to understand the results of energy-saving and carbon-reduction efforts. With the goal of net-zero emissions, we will apply for carbon offset projects and consistently implement energy-saving plans.
2. Continuing to negotiate the introduction of energy-saving equipment in the head office and conduct efficiency assessment.
3. Continuing to promote the participation of all employees in energy saving and carbon reduction activities and promote energy saving measures.
4. Actively cooperate with green energy (solar energy) equipment manufacturers to obtain the carbon rights of renewable energy.
5. Comply with environmental protection laws and regulations, customer requirements and related regulations.
7. Separately fill out in point 1-1 1-2below.
9. Greenhouse gas inventory and assurance status (separately fill out in point 1-1 below).

1-1-1 Greenhouse Gas Inventory Information Describe the greenhouse gas emissions (tonnes CO2e), intensity (tonnes CO2e/million) and the scope of information in the most recent biennium.
	year	Total emissions (Metric tons CO2e)	Turnover -individual (million dollar)	Intensity (Metric tons CO2e / NT$ 1 million)
Scope 1	2023	9,046,852	1,995	4,535
	2024	12,219,787	2,306	5,299
Scope 2	2023	17,539,899	1,995	8,792
	2024	22,966,169	2,306	9,959
Scope 3	2023	Not checked	not applicable	not applicable
	2024	Not checked	not applicable	not applicable

Note 1: Direct emissions (Scope 1, i.e. emissions directly from sources owned or controlled by the Company), indirect energy emissions (Scope 2, indirect greenhouse gas emissions from the input of electricity, heat or steam) and other indirect emissions (Scope 3, i.e. emissions from the Company's activities, not indirect emissions from energy sources, but from sources owned or controlled by other companies).
Note 2: The scope of direct emissions and indirect energy emissions data shall be handled in accordance with the schedule specified in Paragraph 2 of Article 10 of this Code, and other indirect emission information may be voluntarily disclosed.
Note 4::Greenhouse Gas Inventory Standard: ISO 14064-1 issued by the Greenhouse Gas Protocol (GHG Protocol) or the International Organization for Standard-ization (ISO).
Note 4: The intensity of GHG emissions can be calculated per unit of product/service or turnover, provided that at least the data calculated in turnover (NT$ million) should be stated.

1-1-2 Greenhouse Gas Assurance Information A statement of the confidence situation for the most recent biennium as of the date of publication of the annual report, including the scope of the confidence, the confidence organization, the confidence criterion and the confidence op
2023 Greenhouse Gas Inventory Verification Report Verification Scope: Hungchou Fiber Industry Co., Ltd., Taoyuan Plant Address: No. 29, Hungchou Street, Dishu Li, Guishan District, Taoyuan City Inventory Period: January 1, 2023, to December 31, 2023 Verification Body: Industrial Technology Research Institute (ITRI)

Verification Standards:

Guidelines for Greenhouse Gas Verification issued by the Ministry of Environment
Regulations on Greenhouse Gas Inventory Registration and Verification
Guidelines for Greenhouse Gas Emissions Inventory
Relevant regulations of the Greenhouse Gas Emissions Information Platform for Enterprises
CNS 14064-1: Greenhouse Gases — Part 1: Specification with Guidance at the Organization Level for Quantification and Reporting of Greenhouse Gas Emissions and Removals

Verification Opinion: The Industrial Technology Research Institute conducted an independent verification of the greenhouse gas assertion reported by Hungchou Fiber Industry Co., Ltd., Taoyuan Plant. The verification complies with the current regulations of the Ministry of Environment, and no material discrepancies were found, meeting the reasonable assurance level recognized by the Ministry of Environment.

Scope 1: Direct Greenhouse Gas Emissions: 9,046.8522 metric tons of CO2 equivalent
Scope 2: Energy Indirect Greenhouse Gas Emissions: 17,539.899 metric tons of CO2 equivalent
Total Greenhouse Gas Emissions: 26,586.751 metric tons of CO2 equivalent

2024 Greenhouse Gas Inventory Verification (January 1, 2024 - December 31, 2024)

Our company has completed the organizational greenhouse gas inventory for 2024 and has engaged a third-party verification body for verification or assurance, which is currently in progress. As of the annual report publication date, the verification statement from the verification body has not yet been obtained.

Verification Scope: Hungchou Fiber Industry Co., Ltd., Taoyuan Plant

Address: No. 29, Hungchou Street, Guishan District, Taoyuan City, 33372

Verification Body: Taiwan Commodity Inspection and Verification Center

Verification Standards:

Guidelines for Greenhouse Gas Verification issued by the Environmental Protection Administration
Principles for Greenhouse Gas Inventory and Registration Management
Relevant regulations for registration on the Greenhouse Gas Emissions Information Platform for Enterprises
Specification with Guidance at the Organization Level for Quantification and Reporting of Greenhouse Gas Emissions and Removals

Verification Opinion: Not applicable.

Note 1: It should be handled in accordance with the schedule specified in Paragraph 2 of Article 10 of this standard, if the company does not obtain a complete greenhouse gas assurance

opinion on the date of printing of the annual report, it should indicate that "complete and confident information will be disclosed in the sustainability report", and if the company does not prepare a sustainability report, it should indicate "complete and confident information will be disclosed in the public information observatory", and disclose the complete and reliable information in the next annual report.

Note 2: Assurance institutions should comply with the relevant regulations of the Assurance Institution for Perpetual Reports set forth by the Taiwan Stock Exchange Corporation and the Republic of China Securities OTC Trading Center.

Note 3: The disclosure can be found in the Best Practice Reference Example on the website of the Center for Corporate Governance of the Taiwan Stock Exchange.

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

Describe the base year of greenhouse gas reduction and its data, reduction targets, strategies, specific action plans and the achievement of reduction targets.

Base year: The Company uses the greenhouse gas emissions from the 2022 greenhouse gas inventory (verified by the China Productivity Center) as the base year.

Reduction target: Take 2022 as the base year, reduce greenhouse gas emissions by 30% by 2030, and reach net zero emissions by 2050.

Strategies and specific action plans:

In order to comply with the greenhouse gas reduction policy, the production plants of the Company and its subsidiaries should replace energy-consuming equipment, build and use green power such as solar power generation year by year, and adopt measures such as inverters to improve energy use efficiency to achieve the goal of carbon reduction. If the reduction of greenhouse gas emissions in the target year still cannot meet the target, the difference will be achieved by carbon neutrality. The greenhouse gas carbon neutrality adopted by our company is carried out in accordance with the PAS 2060/Carbon Neutrality Implementation Standard.

	Scope 1 (公噸)	Scope 2 (公噸)	Scope 3 (公噸)
base year (2022)	14,591.3131	25,703.7759	not applicable
2024	12,219.7870	22,966.1692	not applicable
Comparison with the base year	-2,371.5261	-2,737.6067	not applicable

ratio
-16.25%
-10.65%
not applicable

Note 1: It shall be handled in accordance with the schedule set forth in Paragraph 2 of Article 10 of these Guidelines.
Note 2: The base year should be the year in which the inventory is completed at the boundary of the consolidated financial report, for example, according to the order stipulated in Paragraph 2 of Article 10 of this standard, a company with a capital of more than 10 billion yuan shall complete the inventory of the consolidated financial report for 2024 in 2025, so the base year is 2024.
Note 3: The disclosure can be found in the Best Practice Reference Example on the website of the Center for Corporate Governance of the Taiwan Stock Exchange.

(6) Enforcement of business integrity, deviation and causes of deviation from Ethical Corporate Management Best Practice Principles for TWSE/TPEX-Listed Companies

Assess criteria	Actual governance (Note)
	Yes	No	Summary
1. Establishment of integrity policies and solutions
(1) Has the Company established a set of board-approved business integrity policy, and stated in its Memorandum or external correspondence about the policies and practices it implements to maintain business integrity? Are the board of directors and the senior management	V		1.1 The Company established its own “Integrity Code of Conduct” based on Ethical Corporate Management Best Practice Principles for TWSE/TPEX- listed Companies, which was approved by the board of directors on November 13, 2014.
1.2 On March 4, 2021, the board of directors passed a new version of the “Integrity Code of Conduct” that was amended according to the	Complied with Articles 4 and 5 of “Ethical Corporate Management Best Practice Principles for TWSE/TPEX- listed Companies”

Assess criteria	Actual governance (Note)			Deviation and causes of deviation from Ethical Corporate Management Best Practice Principles for TWSE/TPEX Listed Companies
	Yes	No	Summary
committed to fulfilling this commitment?	V		1.3 The Company upholds all contracts signed and the commitments made, including the terms of trade, terms of payment, and method of interest accrual. All products sold are accurately labeled with item name, specification, and quantity, and all notes issued are honored in a timely manner.

2.1 The Company has implemented an Integrity Code of Conduct that outlines the following for the prevention of dishonest conduct:
① Definitions on the offering/acceptance of improper gains.
② Procedures for offering legitimate political donations.
③ Procedures for offering legitimate donations or sponsorships, and limits.
④ Rules against conflict of interest, including reporting and handling procedures.
⑤ Confidentiality rules for secrets and sensitive information obtained through business activity
⑥ Rules and procedures for suppliers, customers, and business counterparties involved in dishonest conduct.
⑦ Procedures for handling violation against the Business Integrity Code of Conduct.
⑧ Disciplinary actions against violators. | Complied with Articles 2, 6, and 10 to 14 of “Ethical Corporate Management Best Practice Principles for TWSE/TPEX- listed Companies” |
| (2) Has the Company developed systematic practices for assessing integrity risks? Does the Company perform regular analyses and assessments on business activities that are prone to higher risk of dishonesty, and implement preventions against dishonest conducts that include at least the measures mentioned in Paragraph 2, Article 7 of “Ethical Corporate Management Best Practice Principles for TWSE/TPEX Listed Companies”? | | | | |

Assess criteria	Actual governance (Note)			Deviation and causes of deviation from Ethical Corporate Management Best Practice Principles for TWSE/TPEX Listed Companies
	Yes	No	Summary
(3) Has the Company defined and enforced operating procedures, behavioral guidelines,	V		2.2 The Company has established a set of “Ethical Behavior Guidelines” to regulate the conducts of its directors, Audit Committee members, and managers. The “Ethical Behavior Guidelines” was subsequently amended during the board of directors meeting dated March 4, 2021; both the board of directors and the management are committed to enforcing and supervising execution of the business integrity policy. Please visit the Company’s website at http://www.hungchou.com.tw	Complied with Article 7 of “Ethical Corporate Management Best Practice Principles for TWSE/TPEX-
			2.3 The Company has stated in its personnel management policy that all managers, employees, and personnel vested with internal control authority are prohibited from accepting any inappropriate gains, whether directly or indirectly. They shall also refrain from committing any action that would be construed as dishonest, illegal, or in breach of trust, such as fraud, embezzlement, acceptance of bribe, breach of confidentiality, profiteering, and misrepresentation. These conducts are taken into account as part of employees’ performance evaluation.
			3.1 The Company explicitly prohibits employees involved in operational, procurement, outsourcing, work supervision, or budgeting duties and any other role that is prone to conflict of interest with suppliers from offering

Assess criteria	Actual governance (Note)			Deviation and causes of deviation from Ethical Corporate Management Best Practice Principles for TWSE/TPEX Listed Companies
	Yes	No	Summary
penalties, and grievance systems as part of its preventive measures against dishonest conducts? Are the above measures reviewed and revised on a regular basis?			and accepting bribes, making illegal political donations, offering inappropriate charity donations/sponsorships, and offering or accepting gifts, treatments, or gains of inappropriate nature. Violators will be subject to escalated level of discipline to prevent recurrence.
3.2 During the board of directors meeting held on March 4, 2021, a decision was passed to establish “Business Integrity Procedures and Behavioral Guidelines.”
3.3 The Company promotes integrity awareness among employees and insiders once a year as a way to create a culture of integrity and prevent dishonest conducts. Through these awareness campaigns, the Company hopes to remind stakeholders to abide by and respect the Company’s ethical and integrity standards. All relevant procedures, behavioral guidelines, disciplinary actions, and grievance systems have been disclosed on the corporate website (http://www.hungchou.com.tw)	listed Companies”
2. Business integrity
(1) Does the Company evaluate the integrity of all counterparties it has business relationships with? Are there any integrity clauses in the agreements it signs with business partners?	V		1. The Company would avoid dealing with suppliers or customers that have known history of dishonesty in order to avoid occurrence of dishonest conduct that may compromise the Company’s interests.	Complied with Article 9 of “Ethical Corporate Management Best Practice Principles for TWSE/TPEX-listed Companies”

Assess criteria	Actual governance (Note)			Deviation and causes of deviation from Ethical Corporate Management Best Practice Principles for TWSE/TPEX Listed Companies
	Yes	No	Summary
(2) Does the Company have a unit that enforces business integrity directly under the board of directors? Does this unit report its progress (regarding implementation of business integrity policy and prevention against dishonest conducts) to the board of directors on a regular basis (at least once a year)?	V		2. The Company has “Ethical Behavior Guidelines,” “Integrity Code of Conduct,” and personnel management policy in place, and assigns the GM’s Office to enforce business integrity throughout the organization. Business integrity actions, along with the “ESG Report,” are reported to the board of directors on a yearly basis (last reported on August 2, 2024).	Complied with Article 17 of “Ethical Corporate Management Best Practice Principles for TWSE/TPEX-listed Companies”
(3) Does the Company have any policy that prevents conflict of interest, and channels that facilitate the report of conflicting interests?	V		3.1 The GM’s Office is the unit responsible for accepting reports of dishonest conduct and conflict of interest. Channels for making such reports have been created on the corporate website.
3.2 Directors of the Company observe the “Board of Directors Conference Rules” (visit the corporate website at http://www.hungchou.com.tw for details) and are highly disciplined. Not only are directors required to provide detailed explanations on any stakes held by them or the corporate entities they represent in the motions discussed during board meeting, they are also required to disassociate from discussion and voting if their interests are in conflict to those of the Company. In which case, the recused directors may not delegate other directors to vote on their behalf.	Complied with Article 19 of “Ethical Corporate Management Best Practice Principles for TWSE/TPEX-listed Companies”

Assess criteria	Actual governance (Note)
	Yes	No	Summary
(4) Has the Company implemented effective accounting policy and internal control system to maintain business integrity? Has an internal or external audit unit been assigned to devise audit plans based on the outcome of integrity risk assessment, and to audit employees’ compliance with various preventions against dishonest conduct?	V		3.3 The Company has specified in its “Personnel Management Policy” and “Material Insider Information Handling and Insider Transaction Prevention Procedures” the recusal principles that employees are bound to obey, as well as the need to report any potential conflict of interest. Non-compete clauses have also been implemented to prevent conflict of interest.
3.4 The Company has a “Stakeholder Grievance Handling System” in place that provides employees and internal/external stakeholders with the means to raise grievance and report illegal or inappropriate conducts.
4.1 The Company’s accounting, internal control, and internal audit systems are effective at monitoring business integrity within the organization.
4.2 The Company has created a complete accounting system supported by robust internal control and internal audit practices. Business operations are divided into separate cycles, such as sales, procurement, production, financing, property, plant and equipment, investment, R&D, and IT; and each cycle encompasses four levels of check and balance: level 1 involves routine check and approval by department managers; level 2 involves bookkeeping certificate review by the	Complied with Article 23 of “Ethical Corporate Management Best Practice Principles for TWSE/TPEX-listed Companies”
Complied with Article 20 of “Ethical Corporate Management Best Practice Principles for TWSE/TPEX-listed Companies”

Assess criteria	Actual governance (Note)			Deviation and causes of deviation from Ethical Corporate Management Best Practice Principles for TWSE/TPEX Listed Companies
	Yes	No	Summary
(5) Does the Company organize internal or external training on a regular basis to maintain business integrity?	V		accounting unit; level 3 involves annual routine audits and special audits by the internal audit unit; and level 4 involves annual internal control self-assessments by the respective departments. These practices help enforce internal control from the department level down to individual employees. External CPAs, too, take part in the internal control system by making random checks and reconciliations of original documents on a yearly basis. The CPAs then issue an internal control system review report to the Company based on their findings.

5.1 The Company educates employees and insiders on related issues once a year, and shares integrity case studies with employees via internal email from time to time.
5.2 The Chairman reiterates the Company’s “integrity” philosophy in meetings as well as public occasions. Meanwhile, the Company encourages and makes arrangements for directors and supervisors to participate in training courses organized by external institutions. | Complied with Paragraph 2, Article 22 of “Ethical Corporate Management Best Practice Principles for TWSE/TPEX- listed Companies” |
| 3. Whistleblowing system
(1) Does the Company provide incentives and | V | | 1.1 The GM’s Office is responsible for accepting | Complied with Article 23 of |

Assess criteria	Actual governance (Note)
	Yes	No	Summary
means for employees to report misconducts?
Does the Company assign dedicated personnel to investigate the reported misconducts?	V		misconduct reports and grievances relating to integrity violation. No report of misconduct or violation was received in 2024.
1.2 The Company has implemented a “Stakeholder Grievance Handling System” and assigned Spokesperson Heng-Chia Chang to serve as the contact person (TEL: 26575859 ext: 530; Email: [email protected])	“Ethical Corporate Management Best Practice Principles for TWSE/TPEX-listed Companies”
(2) Has the Company implemented any standard procedures for handling reported misconducts, and subsequent actions and confidentiality measures to be undertaken upon completion of an investigation?	V		2.1. The Company has implemented a “Stakeholder Grievance Handling System” along with standard procedures and confidentiality measures for handling misconduct reports. All misconduct reports are forwarded to the internal audit unit, which investigates the nature of misconduct report or grievance in detail and decides on the appropriate actions.
2.2. The Company has outlined in its Personnel Management Policy the proper procedures for handling and investigating grievances and misconduct reports. Handlers are required to maintain confidentiality over case details unless approved otherwise by the accountable manager.
(3) Has the Company provided proper whistleblower protection?	V		3. Spokesperson Heng-Chia Chang serves as the contact window for misconduct reports, whereas the internal audit audit is responsible for carrying

Assess criteria	Actual governance (Note)
	Yes	No	Summary
			out investigations. All employees are required to maintain confidentiality over case details such as the nature of grievance, the identify of the party involved, and personal particulars, which can not be disclosed or made known to any third party unless required by laws or deemed necessary for investigation, resolution, or contact. Whistleblowers, plaintiffs, and all personnel taking part in the investigation are given protection against unfair treatment and retaliation.
4. Enhanced information disclosure
Has the Company disclosed its integrity principles and progress onto its website and MOPS?	V		The Company has created its own website and disclosed details of its Integrity Code of Conduct on the website and over the Market Observation Post System. Information relating to business integrity is also disclosed in annual reports.
Employees from relevant departments have been assigned to gather and maintain website information. The Treasury Department has dedicated personnel available to disclose financial data and material information over Market Observation Post System. This information is presented simultaneously to the Company’s spokesperson.
The Company prepares annual general meeting handbooks in Chinese and eng;ish for view	Complied with Article 25 of “Ethical Corporate Management Best Practice Principles for TWSE/TPEX-listed Companies”

Assess criteria	Actual governance (Note)
	Yes	No	Summary
			by domestic investors, investment trust enterprises, and individuals.
5. If the Company has established business integrity policies in accordance with “Ethical Corporate Management Best Practice Principles for TWSE/TPEX-Listed Companies,” please describe its current practices and any deviations from the Best Practice Principles: The board of directors passed amendments to the “Integrity Code of Conduct” and establishment of the “Business Integrity Procedures and Behavioral Guidelines” during the meeting held on March 4, 2021. Actual governance is as described above, and there was no deviation from the Company’s codes.
6. Other information relevant to understanding the Company’s business integrity: (e.g. review of business integrity principles) The Company encourages and makes arrangements for directors and managers to undergo corporate governance training each year as a way to enhance governance and supervisory skills. The Company also places hope in the board’s ability to contribute to corporate governance and business integrity. Suppliers are notified of the Company’s integrity policy from time to time through official correspondence. The “Business Integrity Procedures and Behavioral Guidelines” was passed during the 8th meeting of the 18th board (held on March 4, 2022) Enforcement of business integrity in 2024: 1. Compliance as the foundation for integrity: The company conducted a one-hour internal training session on "Prevention and Education of Insider Trading and Code of Conduct and Legal Compliance for 2024" for directors and supervisors, with 13 attendees in total. 2. The 2024 "Corporate Governance-related Codes and Operating Procedures" (including legal compliance education and advocacy,

Assess criteria	Actual governance (Note)
	Yes	No	Summary
integrity management and ethical code of conduct, human rights education, gender equality at work, and prevention and control of sexual harassment in the workplace, etc.) were circulated to all employees of the company, which were read by 12 times for directors and managers in 1 hour, 32 times for department and section supervisors in 1 hour, and 106 times for employees below class level supervisors (including guards) in 0.5 hours
3. Violations against business integrity: 0
4. Stakeholder assurance and avoidance of conflicting interest: employee communication (4 labor-management meetings were held), shareholder/investor communication (1 investor seminar was held), avoidance of conflicting interest (1 recusal from director)

Note: Always provide explanation in the summary description column, regardless of whether there are any deviations from the best practice principles.

(7) Other information material to the understanding of corporate governance within the Company

Method of inquiry for corporate governance principles and related policies, if any:
Visit the Company's website at www.hungchou.com.tw
Succession plan for members of the board and key management personnel
To ensure proper succession of directors and key management personnel, the successors must possess characters that align with the Company's philosophy of "innovation, integrity, growth, and harmony" and a work attitude that is driven by "passion and pragmatism."

Director succession plan and execution
The Company acknowledges that directors are elected by shareholders, and that whether a candidate is elected for the director role depends solely on the number of votes received. Nevertheless, the Company tries to follow its "Corporate Governance Code of Conduct" as closely as possible when reviewing and recommending director candidates:

Background and value: Gender, age, nationality, culture etc.
Knowledge and skills: Career background (e.g. law, accounting, industry, finance, marketing, or technology), professional skill, and industry experience. All board members shall possess the knowledge, skills, and characters needed to exercise their duties. For ideal corporate governance, the board of directors as a whole shall possess the following capacities:
Operational judgment.
Accounting and financial analysis.
Business administration.
Crisis management.
Industry knowledge.
Vision of the global market.
Leadership.
Decision making.

The Company has implemented a "Board of Directors and Functional Committee Performance Evaluation Policy" and adopted the practice of evaluating board of directors and functional committee performance at the end of each year. Outcome of the performance evaluation will be taken into consideration when selecting or nominating directors in the future.

Key management succession plan and execution
The Company convenes quarterly management meetings that are hosted personally by the Chairman. All participants of the management meeting are key managers, and the Company uses the meeting as an opportunity to train future successors:

The Chairman shares business philosophy, personal experience, and ideas

with participating managers.

The participating managers would set annual (quarterly) performance targets and report on the attainment of annual (quarterly) targets.
Participating managers would share work experiences and ideas and learn from each other.
By presenting business performance during the meeting, management successors can better appreciate and adopt the Company's business philosophy.

In addition to making management succession plan ahead of time, the Company also requires all key managers to develop one or two successors of their own and contribute to the continuity of human resources.

Risk management framework:

The 19th 3rd Board of Directors Meeting of our company (November 3, 2022) passed the "Risk Management Best Practice Guidelines." The Company has implemented a "risk management policy." Each year, factory department heads and managers would join and evaluate the probability and impact of environmental, social, and governance issues (including natural disaster, the economic environment, employees' conducts, business, legal affairs, management actions and control, and infrastructure) that are relevant to the Company based on principles of materiality, and determine the type of risk management policy or strategy to adopt in response. The Company presents risk reports to the board of directors once a year; the 2024 risk report was presented during the board of directors meeting held on March 7, 2024

(the 2025 risk report was presented during the board of directors meeting held on March 5, 2025)

3. Cybersecurity risk evaluation

The participle industry is a key source of data for the various types of cybersecurity risks. The industry is responsible for the various types of cybersecurity risks. The industry is responsible for the various types of cybersecurity risks. The industry is responsible for the various types of cybersecurity risks. The industry is responsible for the various types of cybersecurity risks. The industry is responsible for the various types of cybersecurity risks. The industry is responsible for the various types of cybersecurity risks. The industry is responsible for the various types of cybersecurity risks. The industry is responsible for the various types of cybersecurity risks. The industry is responsible for the various types of cybersecurity risks. The company has a high level of knowledge and skills in the field of cybersecurity. The company has a high level of knowledge and skills in the field of cybersecurity. The company has a high level of knowledge and skills in the field of cybersecurity. The company has a high level of knowledge and skills in the field of cybersecurity.

Checklist" published by ISACA Taiwan Branch). Self-assessments and analyses are conducted regularly from December to January the next year. Each criteria is given a rating (high/medium/low) along with quantitative measurement depending on the level of attainment, and those that exhibit higher risks are reviewed for potential improvements. The most recent reviews were made on October 16, 2024 by IT personnel, and the outcomes were presented to the General Manager as well as internal and external auditors.

All production equipment of the Company operate independently and are not connected to any information system (e.g.: manufacturing execution system; MES) or network for data gathering. Furthermore, the Company's information management system functions only within the local network and is not connected to the Internet. The previous self-assessment identified weakness and potential risk with regards to the protection and handling of sensitive data; as an improvement measure, the Company plans to replace outdated computer terminals and upgrade the operating system to Windows 10, and will engage a cybersecurity service provider to conduct external tests and audits, thereby enhancing the robustness of cybersecurity protection and reliability of risk assessment outcomes. Overall, the level of cybersecurity risk is rated "low to medium" and does not pose major concern to business operations.

Item No.	Assessment category	Risk rating (%)			Key control measures
		Low	Medium	High
1	Cybersecurity policy	70	30	0	1. The cybersecurity policy is reviewed and amended on a regular basis. 2. The internal audit unit performs annual audits of existing control measures.
2	Establishment of cybersecurity organization	64	36	0	1. A cybersecurity management team and a personal data protection team have been created. 2. Emergency response and reporting procedures for cybersecurity incidents have been established.
3	Personnel safety and management	30	70	0	1. Access rights of IT personnel and users have been defined as part of the internal control system; operational guidelines have been implemented to cater for the transfer and resignation of employees. 2. Access rights are reviewed on a yearly basis. 3. All PC terminals are inspected on a yearly basis to prevent them from being used for private purposes.
4	Asset classification and control	33	67	0	1. All software and hardware are registered for management purpose. 2. All PC terminals are inspected on a yearly basis to ensure proper
					and software and hardware are registered for management purposes.

Item No.	Assessment category	Risk rating (%)			Key control measures
		Low	Medium	High	maintenance of software and hardware.
5	Physical and environment security management	79	21	0	1. Server rooms are equipped with dedicated, automated temperature and power controls.
2. Servers and PC terminals of important nature are equipped with antivirus software and have data backed up daily. At least two backup versions are maintained at all times.
3. Data of the operating database is compressed and stored on magnetic tape everyday. The Company organizes yearly drills to simulate an occurrence of incident where data is restored at the backup server room.
6	Communication and operational management	64	36	0	1. The email server features self-protection and the ability to maintain audit trail.
2. Firewall logs are analyzed daily and an Internet activity recorder is used to block abnormal access both within and outside the firewall.
3. Cybersecurity incidents, notifications, and cases are communicated instantly to raise protection awareness.
4. The Company adopts the protection solution offered by Hinet’s cybersecurity team for more comprehensive coverage.
7	Access control	71	29	0	1. All electronic data is configured with department and personal access rights.
2. External connections are subject to the consent of the department head and the General Manager.
3. The email system is divided between internal and external partitions; employees that do not have the need to communicate outside the organization can only send mails to internal recipients.
4. The human resources system keeps record trail automatically whenever it detects an attempt to access personal data.

Item No.	Assessment category	Risk rating (%)			Key control measures
		Low	Medium	High
8	System development and maintenance	76	24	0	Application systems are self-developed and self-maintained. The Company takes security requirements into consideration when planning a new system, and implements measures to prevent intrusion and alteration by external parties.
9	Management of business continuity plan	60	40	0	1. Security drills and tests are performed on the operating database on a yearly basis.
2. Emergency response plans are devised for all important equipment, which are to be followed in the event of a major cybersecurity incident.
10	Internal audit and others	55	45	0	1. As part of the annual PC inspection, the Company checks the scope of license for all installed software and requires employees to remove software or provide proof of license for any software installation in excess of the prescribed limit. The scope of software/hardware inspection is constantly updated to reflect asset changes.
2. The IT unit conducts annual self-assessments on the security of IT operations and the IT environment.
3. Internal auditors perform annual audits on IT controls.
Overall rating (%)		65	35	0	1. PCs that run outdated Windows should be replaced.
2. Enhanced protection should be adopted for sensitive data.

(9) Penalties imposed against the Company for regulatory violation, or penalties against insiders for violation of internal control system; describe areas of weakness and any corrective actions taken (in the most recent year up until the publication date of annual report): None.

(10) Execution of internal control system:
Declaration of Internal Control System:
Hung Chou Fiber Industrial Co., Ltd.
Declaration of Internal Control System

Date: March 5, 2025

The following declaration was made based on the 2024 self-assessment of the Company's internal control system:

The Company acknowledges and understands that establishment, implementation, and maintenance of the internal control system are the responsibility of the board of directors and managers, and that such a system has been implemented within the Company. The purpose of this system is to provide reasonable assurance in terms of business performance and efficiency (including profitability, performance, asset security etc.), reliable, timely, and transparent financial reporting, and regulatory compliance.
There are inherent limitations to even the most well-designed internal control system. As such, an effective internal control system can only reasonably assure achievement of the three goals mentioned above. Furthermore, changes in the environment and circumstances may all affect the effectiveness of the internal control system. However, internal control system of the Company features a self-monitoring mechanism that rectifies any deficiencies immediately upon discovery.
The Company evaluates the design and execution of its internal control system based on the criteria specified in "Regulations Governing Establishment of Internal Control Systems by Public Companies" (hereinafter referred to as "The Governing Principles") to determine whether existing policies continue to be effective. Assessment criteria introduced by "The Governing Principles" consisted of five main elements, each representing a different stage of internal control: 1. Control environment; 2. Risk evaluation and response; 3. Procedural control; 4. Information and communication; and 5. Supervision. Each element further encompasses several sub-elements. Please refer to "The Governing Principles" for details.
The Company has adopted the abovementioned criteria to validate the effectiveness of its internal control system design and execution.
Based on the assessments described above, the Company considers the design and execution of its internal control system to be effective as at December 31, 2023. This system (including supervision and management of subsidiaries) has provided assurance with regards to the Company's business results and target accomplishment, reliability, timeliness and transparency of reported financial information, and its compliance with relevant laws.
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 are subject to the legal consequences described in Articles 20, 32, 171, and 174 of the Securities and Exchange Act.
This declaration was passed unanimously without objection by all 10 directors present at the board meeting dated March 5, 2025

Hung Chou Fiber Industrial Co., Ltd.
Chairman: Cheng-Tien Chan (signature/seal)
General Manager: Cheng-Tien Chan (signature/seal)

Where the FSC requires the Company's internal control policies to be reviewed by a CPA, the CPA review report must be disclosed:

Not applicable

(11) Penalties imposed against the Company for regulatory violation, or penalties against insiders for violation of internal control system in the most recent year up until the publication date of annual report; describe areas of weakness and any corrective actions taken: None.

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

Date	Major resolutions	Execution progress
Shareholder meeting
May 27, 2024	1. Acknowledgment of the 2023 business report and financial statements.	1. Acknowledged by shareholders during shareholder meeting
Vote outcome: The total number of votes of the shareholders present in this case was 83,024,233 (including 8,904,540 electronic votes), 82,259,710 in favor (including 8,807,017 in electronic voting forms), 50,187 against (including 50,187 electronic votes), and 714,336 abstentions/non-votes (including 47,336 electronic votes). The number of votes in favor exceeded the legal requirements, and the motion was passed as proposed.
	2. Acknowledgment of the 2023 deficit compensation proposal.	2. Acknowledged by shareholders during shareholder meeting
Vote outcome: The total number of voting rights of the shareholders present in this case was 83,024,233 (including 8,904,540 electronic votes), 82,264,429 votes in favor (including 8,811,736 votes in electronic voting tables), 47,188 votes against (including 47,188 electronic votes), and 712,616 abstention/non-voting rights (including 45,616 electronic votes). The number of votes in favor exceeded the legal requirements, and the motion was passed as proposed.
Board of directors
May 9, 2024	Report on the actual implementation of the company's internal audit for the first quarter of 2024.
Report on the implementation of the greenhouse gas inventory plan for the

Date	Major resolutions	Execution progress
	first quarter of 2024.
Report on the completion of the renewal of directors’ and officers’ liability insurance for 2024.
Report on the results of the 2023 corporate governance evaluation.
Discuss the financial statements and the draft of the accountant’s review report for the first quarter of 2024.
Discuss the renewal of financing limits with various banks.
August 2, 2024	Report on the actual implementation of the company’s internal audit for the second quarter of 2024.
Report on the implementation of the greenhouse gas inventory plan for the second quarter of 2024.
Report on the professional qualifications and independence of the current independent directors.
Discuss the 2023 work results and the 2024 work plan of the company’s sustainability promotion team.
Discuss the financial statements and the draft of the accountant’s review report for the first half of 2024.
Discuss the renewal of financing limits with various banks.
November 6, 2024	Report on the actual implementation of the company’s internal audit for the third quarter of 2024.
Report on the implementation of the greenhouse gas inventory plan for the third quarter of 2024.
Circulate the 2024 corporate governance education and advocacy materials.
Discuss the independence and suitability of the company’s certified public accountant and the review of audit fees.
Discuss the financial statements and the draft of the accountant’s review report for the third quarter of 2024.
Review the remuneration matters for directors, supervisors, and managers as deliberated in the fifth meeting of the fifth term of the Compensation Committee.
Discuss the addition of Sections 1 to 7 of Chapter 11, “Corporate Sustainability (ESG) Cycle,” and related internal audit systems to the company’s internal control system.
Discuss the company’s “2025 Internal Audit Plan.”
Discuss the renewal of financing limits with various banks.
March 5, 2025	Report on the actual implementation of the company’s internal audit for the fourth quarter of 2024.

Date	Major resolutions	Execution progress
	Report on the implementation of the greenhouse gas inventory plan for the fourth quarter of 2024.
Report on the results of the 2024 board performance evaluation for reference.
Present the minutes of the sixth meeting of the fifth term of the Compensation Committee for reference.
Discuss the company’s 2025 risk report.
Discuss the 2024 business report, financial statements, and the draft of the accountant’s audit report.
Discuss the 2024 profit and loss appropriation plan.
Discuss the amendment of the company’s “Articles of Incorporation.”
Discuss the re-election of the company’s directors.
Discuss the establishment of procedures for accepting shareholder proposals and nominations of director candidates.
Discuss the nomination and review of the list of director candidates.
Discuss the lifting of non-compete restrictions for newly appointed directors and their representatives.
Discuss the approval of the content of the company’s 2024 internal control statement.
Discuss matters related to convening the 2025 annual shareholders’ meeting.
Discuss the amendment of the company’s internal control system, “Chapter 4, Section 9, Payroll Calculation and Disbursement Operations.”
Discuss the renewal of financing limits with various banks.

(13) Documented opinions or declarations made by directors or supervisors against board resolutions in the most recent year, up until the publication date of annual report: None.

(14) Resignation or dismissal of personnel relevant to financial statement preparation (including the Chairman, President, head of accounting, head of finance, chief internal auditor, and head of R&D) in the most recent year up until the publication date of annual report: None

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4. Disclosure of CPAs' remuneration

Unit: NTD thousands

Name of accounting firm	Name of CPA	Audit period	Audit fee	Non-audit fee	Total	Remarks
KPMG	Shu-Ying Chang	January 1, 2019 - now	1,030	500	1,530	Non-audited public expenses are tax audit reports
	Chun-Ming Pan	March 1, 2022 - now

Scope of non-audit service: (such as tax certification, assurance, or other financial consultancy service)

Note: If there is any change of auditor or accounting firm during the year, please specify the duration of their services separately and state the reason for making the change in the remarks field. Any audit and non-audit fees paid to auditors should also be disclosed separately. Provide detailed explanations to non-audit service.

Any replacement of accounting firm and reduction in audit fee paid compared with the previous year: None.
Any reduction in audit fee by more than 15% compared to the previous year: None.

5. Change of CPA: Not applicable

Any of the Company's Chairman, President, or any manager involved in financial or accounting affairs being employed by the accounting firm or any of its affiliated company within the most recent year: None.
Details of shares transferred or pledged by directors, supervisors, managers, and shareholders with more than 10% ownership interest in the last year, up until the publication date of annual report: (unit: thousand shares)

Position	Name	Change of shareholding in 2024		Current year up until March 31
		Increase (decrease) in shares held	Increase (decrease) in shares pledged	Increase (decrease) in shares held	Increase (decrease) in shares pledged
Director	Yi Jinn Industrial Co., Ltd.	0	0	0	0
Director	Cheng-Tien Chan	0	0	0	0
Independent director	Shou-Po Chao	0	0	0	0
Independent director	Wei-Chi Huang	0	0	0	0
Independent director	Hsien-Chang Kuo
Director	Te-Feng Chan	0	0	0	0
*Director	Yu-Ching Cheng	0	0	0	0
*Director	Yi-Ching Chan	0	0	0	0

Position	Name	Change of shareholding in 2024		Current year up until March 31
		Increase (decrease) in shares held	Increase (decrease) in shares pledged	Increase (decrease) in shares held	Increase (decrease) in shares pledged
*Director	G.L. Lin	0	0	0	0
*Director	Heng-Chia Chang	0	0	0	0
*Director	Tse-Hua Lin	0	0	0	0
Supervisors	Lin-Te Chen	0	0	0	0
Supervisors	Bowa International Leasing Corporation	0	0	0	0
	Kuan-Ru Chen	0	0	0	0
General Manager	G.L. Lin	0	0	0	0
Manager of Finance and Accounting	Sheng-Chin Lin	0	0	0	0

Pledge of shareholding: Not applicable
*: The parties are representatives of corporate director (Yi Jinn Industrial Co., Ltd.)

103

Disclosure of relationships, as defined under Statement of Financial Accounting Standard No.6 - Related parties, among the top ten shareholders

Relationships among top-10 shareholders

Name (Note 1)	Self Shareholding		Shares held by spouse and underage children		Shares held in the names of others		Names and relationships of top-10 shareholders characterized as spouse or relative of second degree or closer (Note 3)
	Shares	Shareholding %	Shares	Shareholding %	Shares	Shareholding %	Name	Relationship
Yi Jinn Industrial Co., Ltd. Representative: Cheng-Tien Chan	36,601,000	27.7%	-	-	-	-	Yi Tong Fiber Co., Ltd. Kwang Ming Silk Mill Co., Ltd.	Common Chairman Common Chairman
	5,532,037	4.19%	-	-	-	-
Yi Tong Fiber Co., Ltd. Representative: Cheng-Tien Chan	10,000,000	7.57%	-	-	-	-	Yi Jinn Industrial Co., Ltd. Kwang Ming Silk Mill Co., Ltd.	Common Chairman Common Chairman
Kwang Ming Silk Mill Co., Ltd. Representative: Cheng-Tien Chan	7,000,000	5.30%	-	-	-	-	Yi Jinn Industrial Co., Ltd. Yi Tong Fiber Co., Ltd.	Common Chairman Common Chairman
Cheng-Tien Chan	5,532,037	4.19%	-	-	-	-	Yi Jinn Industrial Co., Ltd. Yi Tong Fiber Co., Ltd. Kwang Ming Silk Mill Co., Ltd.	The party serves as Chairman in the three companies above
CHOU WEI FIBER CO., LTD	5,458,000	4.13%	-	-	-	-	-	-
Huang Jianzhang	4,000,000	3.03%	-	-	-	-	-	-
Yu-Chin Chen	2,612,724	1.98%	-	-	-	-	Shu-Yun Chen	Sibling
Hsiang-Chun Chen	2,500,000	1.89%					Yan-Jun Chen	Sisters
Fu Hsun Fiber Industries Co., Ltd. Representative: Yu-Chin Chen	2,000,000	1,51%	-	-	-	-	-	-
Yan-Jun Chen	1,500,000	1.14%	-	-	-	-	Hsiang-Chun Chen	Sisters

Note 1: Shareholders' names are presented separately (for corporate shareholders, the name of the corporate shareholder and its representative are presented separately)
Note 2: Percentages of shares held under own name, spouse's name, underage children's names, or in the names of others are calculated separately.
Note 3: Relations among the above mentioned shareholders (including corporate and natural-person shareholders) have been disclosed in accordance with the relationships defined in Regulations Governing the Preparation of Financial Reports by Securities Issuers.

Investments jointly held by the Company, the Company's directors, supervisors, managers, and enterprises directly or indirectly controlled by the Company; disclose shareholding in aggregate of the above parties: Not applicable.

Four. Capital and shares

(1) Source of capital:

Year/month	Face value per share	Authorized capital		Paid-up capital		Remarks
		Shares	Amount	Shares	Amount	Source of capital	Other than the other than	Other
85	10	230,000,000	2,300,000,000	202,176,108	2,021,761,080	Note 1	None
06
85	10	230,000,000	2,300,000,000	229,176,108	2,291,761,080	Note 2	None
06
86	10	350,000,000	3,500,000,000	262,634,913	2,626,349,130	Note 3	None
07
87	10	350,000,000	3,500,000,000	283,645,706	2,836,457,060	Note 4	None
09
98	10	350,000,000	3,500,000,000	170,187,424	1,701,874,240	Note 5	None
09
103	10	350,000,000	3,500,000,000	102,112,454	1,021,124,540	Note 6	None
09
104	10	350,000,000	3,500,000,000	132,112,454	1,321,124,540	Note 7	None
06

Note 1: Capitalized NT$175,805,300 of unappropriated earnings and NT$87,902,660 of capital reserve under the approval of Correspondence No. (85)-Tai-Tsai-Cheng-(I)-37506 dated June 13, 1996.
Note 2: Made cash issue of NT$270,000,000 under the approval of Correspondence No. (85)-Tai-Tsai-Cheng-(I)-57173 dated October 1, 1996.
Note 3: Made cash issue of NT$220,000,000 and capitalized NT$114,588,050 of capital reserve under the approval of Correspondence No. (86)-Tai-Tsai-Cheng-(I)-51027 dated July 8, 1997.
Note 4: Capitalized NT$105,053,965 of unappropriated earnings and NT$105,053,965 of capital reserve under the approval of Correspondence No. (87)-Tai-Tsai-Cheng-(I)-79811 dated September 24, 1998.
Note 5: Reduced capital by NT$1,134,582,820 under the approval of Correspondence No. Jin-Guan-Zheng-Fa-0980044371 dated September 10, 2009.
Note 6: Reduced capital by NT$680,749,700 under the approval of Correspondence No. Jin-Guan-Zheng-Fa-1030034274 dated September 12, 2014.
Note 7: Completed a private cash issue of NT$300,000,000 on June 17, 2015

Share category	Authorized capital			Remarks
	Outstanding shares	Unissued shares	Total
Common share	132,112,454	0	132,112,454	Public-listed shares*

*Includes 30 million shares issued through private placement

Information relevant to the aggregate reporting policy: Not applicable

(4) List of major shareholders

March 30, 2025

Share	No. of shares held	Shareholding percentage (%)
Name of major shareholder
Yi Jinn Industrial Co., Ltd.	36,601,000	27.70
Yi Tong Fiber Co., Ltd.	10,000,000	7.57
Kwang Ming Silk Mill Co., Ltd.	7,000,000	5.30
Cheng-Tien Chan	5,532,037	4.19
CHOU WEI FIBER CO., LTD	5,458,000	4.13
Huang Jianzhang	4,000,000	3.03
Yu-Chin Chen	2,612,724	1.98
Hsiang-Chun Chen	2,500,000	1.89
Fu Hsun Fiber Industries Co., Ltd.	2,000,000	1.51
Yan-Jun Chen	1,500,000	1.14

(6) Dividend policy and execution

Dividend policy:

Any current net income concluded at year-end closing shall first be taken to offset cumulative losses (including adjustment of unappropriated earnings), followed by a 10% provision for legal reserve unless the legal reserve has accumulated to an amount equal to paid-up capital. The remaining balance of net income is then subject to provision or reversal of special reserve pursuant to laws or the authority's instructions. Part of the earnings may be retained, and the remaining balance can be added to cumulative unappropriated earnings carried from the previous year (including adjustment of unappropriated earnings), which the board of directors may propose to distribute in the form of dividends for shareholders' resolution.

Any cash distribution of the above dividend, profit, legal reserve, or capital reserve, whether in whole or in part, may be resolved in a board meeting with more than two-thirds of the board present, voted in favor by more than half of attending directors, and reported in the upcoming shareholder meeting.

The Company's dividend policy has been established to accommodate current and future development plans after taking into consideration the investment environment, capital requirement, domestic/foreign competition, and shareholders' interests. No less than 10% of distributable earnings from the above shall be paid as dividend each year. Dividends can be paid in cash or in shares, with cash dividends amounting to no less than 10% of total dividends.

(7) Impacts of proposed stock dividends on the Company's business performance and

earnings per share: Not applicable.

(8) Employee profit sharing and remuneration to directors and supervisors:

Percentage of employee profit sharing and director/supervisor remuneration stated in the Articles of Incorporation:
Profits concluded in a year (refers to profit before tax, employee remuneration, and director/supervisor remuneration) are subject to employee remuneration of 2% and director/supervisory remuneration of no more than 2%. However, profits must first be reserved to offset against cumulative losses (including adjustment of unappropriated earnings) if any.
Employee remuneration in the preceding paragraph can be paid in cash or in shares and no less than 40% of the allocated amount shall be designated as remuneration for frontline employees.. Payments may also be made to employees of subordinate companies that satisfy the eligibility criteria set forth by the board of directors. The director/supervisor remuneration mentioned in the preceding paragraph may be paid in cash only.
The two decisions above shall be resolved by the board of directors and reported during the next shareholder meeting.
Basis of calculation for employee/director/supervisor remuneration and share-based compensations; and accounting treatments for any discrepancies between the amounts estimated and the amounts paid:
The Company estimates the amounts of employee/director/supervisor remuneration according to Article 27 of the Articles of Incorporation. Due to presence of cumulative losses, no remuneration was allocated for 2024.
Employee profit sharing proposed and resolved by the board of directors: Not applicable.
Allocation of previous year's earnings for employee profit sharing and director/supervisor remuneration: Not applicable.

(9) Shares repurchased by the Company: Not applicable.

107

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Eight. Operational overview

1. Business activities:

(1) Business activities:

1. Principal business activities:

C801120 Manufacture of Man-made Fibers.
C805990 Other Plastic Products Manufacturing.
C802100 Cosmetics Manufacturing.
C802990 Other Chemical Products Manufacturing.
F401010 International Trade.
JE01010 Rental and Leasing.
F301010 Department Stores.
F301020 Supermarkets.
E801010 Indoor Decoration.
I503010 Landscape and Interior Designing.
C302010 Weaving of Textiles.
C301010 Spinning of Yarn.
C306010 Wearing Apparel.
C305010 Printing, Dyeing, and Finishing.
H701010 Housing and Building Development and Rental.
H701020 Industrial Factory Development and Rental.
H701040 Specific Area Development.
H701050 Investment, Development and Construction in Public Construction.
H703090 Real Estate Business.
H703100 Real Estate Leasing.
ZZ99999 All business items that are not prohibited or restricted by law, except those that are subject to special approval.
F108031 Wholesale of Medical Devices
F208031 Retail Sale of Medical Apparatus
C303010 Manufacture of Non-woven Fabrics

2. Principal business activities and weight

The Company engages in the manufacturing and sale of polyester chips and polyester filaments, which accounts for 100% of revenues.

3. Current products of the Company: polyester filaments and polyester chips.

4. New products planned for the future

Yarn category	Ingredient	Purpose	Characteristics
37.5 Technology fibers	Volcanic rock (activated carbon)	Professional sports garment and leisure garment	Absorbs moisture from the human body through electrostatics, and uses the infrared energy emitted from human body to heat up moisture for faster evaporation. The technology helps dry the body surface and stores energy in a manner that keeps the body warm.
Environment-friendly yarn	Made from recycled polyester fibers, the product sets good example of how synthetic fibers can be recycled and reused.	For various garments and used as industrial fabrics	Reused as resources
Graphene fiber	The Company will source polyester chips mixed with appropriate contents of graphene to produce yarns.	Smart garments and wearable devices	Anti-static: The conductivity of graphene helps lower surface resistivity in fabrics. The substance also lubricates surface and reduces coefficient of friction to inhibit and minimize electric currents that may cause itchiness of the skin. Good thermal conductivity: Graphene-based textile products serve as a regulator between the human body and the external environment, which helps keep the wearer at an ideal temperature.

(2) Industry overview

Current and future industry prospects:

In 2024, Taiwan's chemical fiber industry navigated a year of transformation and challenges amid a sluggish global economic recovery, supply chain restructuring, and increasing pressure for environmental sustainability. As a critical upstream sector of the textile industry, chemical fibers were impacted by fluctuations in international market demand, volatile raw material prices, and domestic and international policy initiatives, resulting

in a polarized performance. On one hand, traditional chemical fiber products faced overcapacity and price competition; on the other, growing demand for innovative functional and sustainable fibers injected new momentum into the industry.

After a series of difficult transformations, Taiwanese textile manufacturers have successfully transitioned into making better quality and highly differentiated products. Owing to the public's increasing awareness toward exercise, consumers now place more attention on the capabilities of functional fabrics than ever before. Today, Taiwanese manufacturers make up a significant part of the functional fabrics value chain for world-renowned garment brands, offering solutions with useful features from wind-breaking, breathability, water resistance, quick drying, anti-pilling to elastic fit. Taiwanese textile manufacturers also have the advantage to cooperate with local high-tech manufacturers for the introduction of wearable electronics and smart garments. Taiwan currently supplies 70% of the functional fabrics demanded by world-renowned brands. Many of the world's top outdoor and sports garment brands have long been targeted as potential customers for Taiwan's textile industry; reputable brands such as Nike, Under Armour, and Adidas all have their products made by Taiwanese manufacturers, thereby making Taiwan a major supplier of synthetic fibers in the world. Functional and high-quality fabrics is an area that Taiwan is especially competitive at. environmentally friendly fabrics is another new trend that is quickly gathering attention, as Europe's fashion industry now places great emphasis on environmental protection. In the future, manufacturers will be required to meet environmental protection standards from raw materials sourcing to the final production, and Taiwanese firms are actively seeking environmental certification from international institutions in an attempt to differentiate from Chinese counterparts.

Taiwan has made prominent progress in the development of functional fabric materials with a variety of features, such as: functional yarns with antibacterial, anti-odor, fire resistance, UV protection, environmental protection, elasticity, and thermal insulation features; 3D printed fabrics with quick drying, ductility, smudge free, and color retention features; bamboo charcoal fiber with anti-odor, moisture absorption, and anti-fungal features; and environmentally friendly yarn made from recycled PET bottles. These successes have made Taiwanese manufacturers the preferred partners for world's reputable sports brands.

[Source: https://ic.tpex.org.tw/]

110

Association between upstream, midstream, and downstream industry participants:

Taiwan's textile industry began with the processing and export of imported materials. As the local petrochemical industry emerged, textile manufacturers transitioned into the production of synthetic fibers, and with the addition of imported natural fibers such as cotton and wool, a comprehensive production system incorporating upstream, midstream, and downstream participants from synthetic fiber, yarn, weaving, dyeing, garment to accessories was eventually formed. Taiwan's textile industry started in the 1950s, and for more than 60 years, industry participants have consistently introduced new products and renewed equipment to meet increasing demands of the global market. Today, textile has the most comprehensive production system of all industries in Taiwan, and is one of the major sources of raw material to the world's functional fabrics market.

The COVID-19 pandemic has impacted global garment consumption in such a way that forced garment brands to adopt "centralized one-stop purchasing" at a faster rate. Domestic textile manufacturers are generally in favor of this trend, as the practice helps stabilize quality, facilitate faster response, and promote coordination between suppliers in the upstream and downstream.

Standardized textile products aimed at the mass market are no longer competitive in the global market. After the pandemic, garment brands have changed their procurement focus toward making customized, specialized, and integrated purchases. In response, medium and large textile manufacturers in Taiwan have been taking the initiative to transform and adjust to the new norm in recent years.

The Company currently produces polyester chips, polyester filaments, and yarns. For polyester chips, raw materials such as PTA and EG are sourced from Oriental Petrochemical and Oriental Union, and most of the polyester chips produced are supplied to the Company's own factories for the production of polyester filaments, except for the few that are sold externally. Most of the products sold externally are used by domestic false twisting plants.

Product trend and competition

USA, Japan, and more recently Korea and Taiwan, used to dominate in the production of polyester fibers, but have now been replaced by Mainland China. Today, the textile industry grows only in Mainland China, India, and a handful of Asian countries, and declines in the rest of the world. However, like

111

all other materials, synthetic fibers are progressing toward higher added value, and manufacturers are starting to compete in the ability to make more diverse range of functional products. One of the most distinctive advantages of synthetic fiber is its greater potential for new functions compared to natural fibers. The development of differentiated, multi-purpose, and highly functional fibers has opened up significantly broader opportunities for synthetic fibers.

Despite the rapid expansion of production capacity in Mainland China, demand for synthetic fibers still far exceeds supply. Coupled with the high cost of raw materials, downstream manufacturers generally find themselves losing profit margin. Given the current circumstances, synthetic fiber manufacturers should avoid competing in the low-price tier against counterparts from Mainland China, and should instead focus on exploring differentiation and technology in the products offered.

The COVID-19 pandemic will inevitably invoke introspection among consumers worldwide and change their lifestyles and purchasing behaviors, increasing demand for textile products that offer health, antibacterial, and protection features. Taiwanese textile manufacturers can make the best use of the idle capacity caused by the pandemic by investing into the development of textile products that offer health and protection features. In doing so, they not only produce supplies to support disease control efforts, but also prepare themselves for opportunities in the post-pandemic era.

(3) Technology and R&D overview:
1. Development of biodegradable, environmentally friendly fiber.
2. Development of graphene-based antibacterial fiber.

(4) Long and short-term business plans
1. Short-term plans
Increase product diversity and quality in line with consumers' demand; improve production procedures and modify machinery to avoid competition with low-price offerings from Mainland China while at the same time enhance competitiveness of the Company's products.
2. Long-term plans
In response to sustainable development, the Company is committed to promoting green production, energy conservation and emission reduction, increasing the proportion of green products, and developing a circular economy., the Company will redirect its R&D focus toward functional fibers with antibacterial properties.

Market, production, and sales overview:

112

(1) Market analysis:

Locations where products are mainly sold:
Unit: NTD thousands

	2023		2024
	Amount	Percentage	Amount	Percentage
Taiwan	1,843,099	92.37%	2,275,920	98.70%
Asia	152,277	7.63%	30,065	1.30%
Total	1,995,376	100.00%	2,305,985	100.00%

Market share and future supply, demand, and growth:

(1). Market share:
Given the production capacity of the polyester filament factory, the Company occupied approximately 8% of the domestic market in 2024, ranking 5th among peers. (Source: Taiwan Man-Made Fiber Industries Association)

(2). Future market supply, demand, and growth
Taiwan is a major producer of man-made fibers in the world, and the output of polyester fibers ranks third in the world. It is worth noting that in recent years, international brands have begun to actively reduce the supply chain, and under the impact of the epidemic, the supply chain reshuffle has been accelerated.

The pandemic also presented businesses with the opportunity to make structural adjustments, and those that quickly transitioned into producing disease control supplies were able to make up for the lost sales at the height of the pandemic. After going through COVID-19, manufacturers will forgo production of low-margin products and take greater initiative at exploring new opportunities and new customers in high value-adding products.

Furthermore, garment brands have been increasing demanding about "corporate social responsibilities," and are starting to scrutinize suppliers for issues concerning human rights, safety, and sustainability. In addition to worker rights protection, sustainable technologies for biodegradability, ease of recycling, and biomass materials are areas that businesses must invest persistently in the future to support operating strategies and storytelling of their brand customers.

For this reason, the Company will continue building on top of its current foundation and distribution channels by making adjustments to the

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product portfolio, and shifting focus toward the development of functional yarns and products made with recycled materials to capitalize on potential opportunities.

Competitive advantages, opportunities, threats, and response strategies:

(1) Competitive advantage:

A. Taiwan has had extensive experience making synthetic fibers, and polyester fiber is the category that Taiwan produces in the largest quantity and the best quality. After meeting domestic demands, Taiwan began exporting synthetic fibers to areas including Mainland China, Southeast Asia, and The Middle East. The demand for high-quality and differentiated synthetic fibers in emerging nations has provided Taiwanese manufacturers with an early entry advantage.

B. There is high success rate associated with the research and development of polyester fibers, and the success of Taiwanese manufacturers in product differentiation over the last few years have given industry participants the confidence to invest into the research of high-tech textile. Today, Taiwanese manufacturers command excellent competitive advantage no only in terms of product and technology research, but also in their ability to materialize technical know-how into a diverse product range that can be produced in large quantities.

(2) Competitive disadvantage:

A. Taiwan has small domestic demand and most yarn manufacturers supply only to the domestic market, which limits long-term growth potentials.

B. Aside from Mainland China, Southeast Asian countries such as Vietnam, Indonesia, Thailand, and Malaysia have also emerged as prominent textile manufacturers with their abundant supply of low-cost labor, and the massive inflow of foreign capital has helped Southeast Asian countries develop the production capacity and technology needed to compete. The ongoing trade dispute between China and USA provides even more incentives for textile manufacturers to invest into Vietnam, thereby allowing the country to form its own industry chain that threatens synthetic fiber manufacturers in Taiwan.

(3) Response strategies:

A. The Company has obtained certification for Global Recycle Standard (GRS) in response to customers' demand for environmentally friendly textile. This certification serves as proof that the Company's production procedures conform with environmental, health, and safety requirements, and is capable of producing textile products with environmental protection claims. Furthermore, the Company will

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purchase dyed polyester chips for the production and development of color yarns, thereby bringing diversity and colors into the yarn lineup. More emphasis will be directed toward promoting products that offer distinctive advantages and diverse uses to appeal to a broader number of customers. This increased diversity will lessen the effect of seasonality and ultimately improve profitability.

B. Given the current trends of the industry, the Company will examine and adjust its existing product lines, and transition into a production model characterized by lower volume and broader diversity while at the same time invest into the development of differentiated products for improved competitive advantage. By obtaining certification for the production of synthetic fibers using 37.5 Technology, the Company aims to collaborate and be part of the supply chain for world's reputable garment brands as a way to increase product margin.

C. The Company aims to establish presence in locations where international FTAs have been signed, and will invest actively into the development of top R&D talents for improved product competitiveness.

(2) Main product applications and production processes:

Main product applications:

The polyester chips produced by the Company are semi-finished goods; most of which are supplied to the Company's own factories for the production of partially oriented yarn (POY) while a small portion is sold externally. Part of the POYs are sold to false twisting plants in the downstream whereas fully drawn yarns (FDYs), a newly developed product line, is entirely sold to external parties. Internal and external sales of all products are adjusted dynamically depending on the market price.

Polyester fibers produced by the Company can be made into plain weave fabrics for trousers, clothes, and industrial uses. The material can also be made into knitted fabrics for male/female garments, casual/sports outfit, and industrial supplies. Other potential uses include: antibacterial Cu ion fiber, dyeable graphene fiber, the BioPro series, 37.5 Technology fiber, environmentally friendly fiber, sports/outdoor garment, protective gear, medical consumables, personal hygiene supply, and filters.

Production process

A. Production procedures for polyester chips

B. Production procedures for POYs (Note)

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Polyester chips -Drying of polyester chip -Dissolve and stamping -Yarn spinning -Processing oil -Rolling -Testing -Packaging

Note: FDYs are produced simply by adding a heat extrusion step to the rolling process.

(3) Supply of main materials:
Pure terephthalic acid (PTA) and ethylene glycol (EG) are the main materials used for making the above products. The Company sources PTA from Oriental Petrochemical (Taiwan) Co., Ltd., and EG from Oriental Union Chemical Corporation.

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(4) Name of suppliers (customers) representing more than 10% of total purchases (sales) in any of the previous two years, and the amount and percentage of purchase (sale):

Main suppliers in the last two years
Unit: NTD thousands

	2023				2024				2025 up until the previous quarter (Note 2)
Item	Name	Amount	As a percentage of annual net purchases (%)	Relationship with the issuer	Name	Amount	As a percentage of annual net purchases (%)	Relationship with the issuer	Name	Amount	As a percentage of net purchases (%) in the previous quarter of the current year	Relationship with the issuer
1	Oriental Petrochemical	1,101,179	72.24	None	Oriental Petrochemical	1,425,552	69.41	None	Oriental Petrochemical	260,563	63.55	None
2	Oriental Union	272,066	17.85	None	Oriental Union	431,245	21.00	None	Oriental Union	83,118	20.27	None
	Others	151,036	9.91		Others	196,889	9.59		Others	66,348	16.18
	Net purchase	1,524,281	100		Net purchase	2,053,686	100		Net purchase	410,029	100

Note 1: The chart lists out suppliers that represent more than 10% of purchases made in the last two years, along with individual amounts and percentages; an alias is used if the underlying contract prohibits the Company from disclosing the name of the supplier, or if the counterparty is an unrelated natural person.
Note 2: TWSE/TPEX listed companies are required to disclose the most recent audited or auditor-reviewed financial information available before the publication date of annual report.

Main customers in the last two years
Unit: NTD thousands

	2023				2024				2025 up until the previous quarter (Note 2)
Item	Name	Amount	As a percentage of annual net sales (%)	Relationship with the issuer	Name	Amount	As a percentage of annual net sales (%)	Relationship with the issuer	Name	Amount	As a percentage of net sales (%) in the most recent quarter of the current year	Relationship with the issuer
1	Lealea	533,416	26.73	None	Lealea	606,314	26.29	None	Kwang Ming Silk Mill	173,716	28.95	Common Chairman
2	Kwang Ming Silk Mill	439,678	22.03	Common Chairman	Kwang Ming Silk Mill	589,129	25.55	Common Chairman	Lealea	124,823	20.81	None
3	Yi Shin Textile	321,824	16.13	None	Yi Shin Textile	296,600	12.86	Common Chairman	Yi Shin Textile	66,123	11.02	Common Chairman
	Others	700,458	35.11		Others	813,942	35.30		Others	235,300	39.22
	Net sales	1,995,376	100		Net sales	2,305,985	100		Net sales	599,962	100

Note 1: The chart lists out customers that represent more than 10% of sales made in the last two years, along with individual amounts and percentages; alias is used if the underlying contract prohibits the Company from disclosing the name of the counterparty, or if the counterparty is an unrelated natural person.
Note 2: TWSE/TPEX listed companies are required to disclose the most recent audited or auditor-reviewed financial information available before the publication date of annual report.

Employee count in the last 2 years:

Year		2023	2024	Year-to-date as at March 31
Employee count	Operators	84	81	81
	Staff	98	94	94
	Part-time workers	39	36	36
	Total	221	211	211
Average age		47	46	46
Average years of service		10 years	10 years	10 years
Academic background	Doctoral Degree	—	—
	Master's Degree	4	4	4
	Bachelor Degree	61	58	28
	Senior high school	80	70	70
	Below senior high school (including foreign workers)	76	79	79

Contribution to environmental protection:
Losses (including damage compensations) and fines incurred due to pollution of environment in the last year up until the publication date of annual report: None
Future response strategies, improvement measures, and possible expenses: The Company has applied for and obtained discharge permit according to government policies, and has established internal water pollution control measures to govern the discharge of wastewater. The Company also implements a wastewater reduction plan and ensures that all wastewater discharged conforms with effluent standards. Meanwhile, actions are being taken to reduce the amount of pollutants in wastewater.
Labor-management relations:

(1) 2024 Employee Welfare Policies and Rights Protection Measures:

Item	Content
Employee Welfare Policy	1. The company complies with relevant labor laws, and employee appointments, dismissals, and salaries are handled in accordance with the company's internal control system and related management regulations to protect employees' basic rights.

| | 2. The company has established an employee suggestion box to ensure open communication channels between labor and management.
3. The company regularly arranges employee health checkups. In terms of workplace safety, the company fosters employees' emergency response capabilities and safety awareness through continuous training and advocacy, enhancing their safety knowledge and reducing accidents caused by unsafe behavior.
4. The company holds regular factory meetings to promote workplace safety precautions and disaster response measures.
5. The company has established training regulations, conducting internal training and external training for employees based on the annual training plan to support career development and skill enhancement.
6. All employees are currently covered under the new pension system, with the company contributing at least 6% of each employee's monthly salary to their individual pension account. Employees may also voluntarily contribute 1-6% of their monthly salary to their pension. The company has settled all prior service years under the old pension system and disbursed the corresponding pension payments to employees.
2024 Employee Welfare Implementation:
Childbirth subsidy: NT$2,000/1 person; marriage/funeral subsidy: NT$20,000/8 persons; medical subsidy: NT$3,000/1 person; scholarships for employees' children: NT$41,000/18 persons; group insurance: NT$179,596/130 persons; recreational expenses: NT$1,401,334/133 persons; festival benefits: NT$394,000/136 persons. |
| --- | --- |
| Employee Rights Protection Measures | To promote harmonious labor-management relations and ensure open communication, factories hold regular meetings and maintain suggestion boxes to fully reflect employee opinions. All employee feedback is coordinated and handled by relevant departments through regular and ad-hoc communication to build consensus. Since its establishment, the company has maintained highly harmonious labor-management relations with no labor disputes. Moving forward, both labor and management will uphold the principle of unity and mutual respect, strengthening communication to prevent labor disputes.
2024:
No feedback was received through the employee suggestion box or email. |
| Labor Disputes | 2024:
No labor disputes occurred. |
| Corporate Social Responsibility (CSR) | 1. The company has established a CSR policy.
2. CSR initiatives are managed by the General Manager's Office, adhering to the concept of sustainable operations and implementing company management systems, personnel regulations, and energy-saving and carbon-reduction plans.
3. The company integrates employee performance evaluations with its reward and disciplinary system, periodically promoting work regulations through internal training to enhance employees' work attitudes and ethics. Departments responsible for CSR handle related matters according to their duties.
2024 CSR Activities:
Completed the 2023 Sustainability Report, focused on energy efficiency and carbon emission reduction, and donated NT$400,000 to support scholarships for the Fengfu and Fengshu communities near the Taoyuan factory.
2024:
Completed the 2023 greenhouse gas emissions inventory, with third-party verification conducted by the Measurement Technology Development Center of the Industrial Technology Research Institute. |
| Measures to Improve Employee Welfare or | 2024: |
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Rights Compared to the Previous Year	No significant reduction in employee welfare or rights compared to the previous year.
Employee Training and Development	The company has established training regulations, providing internal and external training based on employees' required skills and professional knowledge to support career development and skill enhancement. Managers also arrange job rotations based on employees' expertise to ensure optimal role fit, maximize their strengths, and assist with career planning.
2024 (January–December) Factory Training:
General occupational safety and health training (in-house): 104 hours, 524 participants; specialized operations training (external): 155 hours, 29 participants.

Retirement system:

The Company has established a retirement policy that applies to all permanent employees. According to the policy, employees' pension benefits are determined by basis points. Two basis points are awarded for every full year of service up to 15 years, whereas one basis point is awarded for every full year of service completed beyond 15 years, subject to a maximum of 45 basis points. Baseline salary is defined as the six-month average salary at the time employee's retirement is approved. Following the enactment of the Labor Pension Act (i.e. the "new scheme") in July 2005, all new employees that came onboard afterwards are subject to the new scheme, whereas existing employees were given the option to switch to the new scheme.

In 2017, the Company settled all years of service that existing employees had accumulated under the old scheme, and paid pension benefits calculated using the old scheme.

Material Insider Information Handling and Insider Transaction Prevention Procedures:

Implications of the above procedures have been communicated with all employees, managers, and directors; all personnel involved in the handling of material information are required to sign a confidentiality agreement.

(2) Losses as a result of employment dispute in the last year up until the publication date of annual report: None.
(3) Actual or potential losses and response measures: None.

Cybersecurity management

(I) Explain the cybersecurity risk management framework, cybersecurity policy, management practices, and resources committed.

Cybersecurity risk management framework:

Considering how cybersecurity is critical to the safety of various services, the Company has established a set of cybersecurity policy that aims to promote cybersecurity awareness and ensure proper functioning of the cybersecurity management system. The policy serves as the ultimate guiding principle for

the Company's cybersecurity management system; it defines the organization and duties of the cybersecurity team and outlines rules that support the execution of management and audit tasks.

2. Cybersecurity policy

The goal of the cybersecurity policy is to ensure the confidentiality, integrity, availability, and compliance of the Company's core systems. By defining job roles and using quantitative measurements of cybersecurity, the Company is able to monitor the state of the cybersecurity management system and evaluate attainment of cybersecurity goals.

(1) Confidentiality: the system should prevent leak of sensitive information onto the Internet.

(2) Integrity: the system should ensure the accuracy of sensitive information (e.g. financial, personnel, and system data) kept.

(3) Availability: the system should ensure that all important data kept on file is duly backed up.

(4) Compliance: the system should comply with local regulations (e.g. Personal Data Protection Act, Trade Secrets Act, and intellectual property rights laws) and prevent losses to the Company or any third party.

3. Management solutions and commitment of cybersecurity management resources:

The cybersecurity management system should be implemented using a Plan-Do-Check-Action cycle that is reiterated to ensure progressive improvement of cybersecurity practices:

(1) The Company shall conduct internal reviews at least once a year to ensure that cybersecurity practices remain effective given the prevailing laws, technological changes, expectations of the parties concerned, current business activities, internal management, and resources. Furthermore, the Company should arrange to have external institutions or service teams conduct assessments from time to time to ensure that the cybersecurity policy remains relevant.

(2) Changes shall be made based on the review outcomes, and effected once announced by the General Manager.

(3) Once established or amended, the Company shall notify stakeholders such as: employees, suppliers, customers, external auditors etc. of the latest cybersecurity policy using appropriate method (e.g.: email, website announcement, or hard copy).

(2) Losses and possible impacts as a result of major cybersecurity incident in the last year up until the publication date of annual report, and response measures.

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The Company suffered no loss from major cybersecurity incident in 2024 and up until the publication date of annual report.

Major contracts: None.

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Ten. Review and analysis of financial position and business performance, and risk management issues

Financial position

(1) Comparative analysis of financial position

| Year
Item | December 31, 2024 | December 31, 2023 | Difference | |
| --- | --- | --- | --- | --- |
| | | | Amount | % |
| Current assets | $764,479 | $503,620 | $260,859 | 51.80 |
| Fixed assets | 1,038,197 | 1,066,439 | (28,242) | (2.65) |
| Other assets | 764,997 | 774,158 | (12,161) | (1.57) |
| Total assets | 2,567,673 | 2,344,217 | 223,456 | 9.53 |
| Current liabilities | 570,727 | 446,348 | 124,379 | 27.87 |
| Long-term liabilities | 924,561 | 802,696 | 121,875 | 15.18 |
| Total liabilities | 1,495,288 | 1,249,044 | 246,244 | 19.71 |
| Share capital | 1,321,124 | 1,321,124 | - | - |
| Retained earnings | (240,036) | (217,248) | (22,788) | (10.49) |
| Total shareholders’ equity | 1,072,385 | 1,095,173 | (22,788) | (2.08) |

(2) Causes, impacts, and response plans for any material change in assets, liabilities, and shareholders' equity in the last two years (variations above 20% and amounting to at least NT$10 million).

Current assets increased compared to the previous period, primarily due to increased inventory reserves in response to market recovery this period
Current liabilities increased compared to the previous period, mainly due to increased accounts payable resulting from higher raw material procurement in response to market conditions this period.

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Financial performance

(1) Comparative analysis of financial performance

Year	2024	2023	Amount of variation	Variation %
Operating revenues
Sales revenues	$2,305,985	$1,955,376	$350,609	17.93
Operating costs
Cost of sale	(2,282,725)	(2,074,211)	208,514	10.05
Gross profit	23,260	(78,835)	101,195	128.36
Operating expenses	(49,379)	(57,362)	(7,983)	(13.92)
Operating profit/loss		(136,197)	110,078	80,82
Non-operating income and expenses	3,474	2,651	823	31.04
Pre-tax profit (loss)	(22,645)	(133,546)	110,901	83.04
Income tax benefits (expenses)	143	(760)	903	118.82
Current net income (loss) from continuing operations	(22,788)	(132,786)	109,998	82.84
Current net income (loss)	(22,788)	(132,786)	109,998	82.84
Other comprehensive income for the current year	-	-	-	-
Total comprehensive income for the current period	(22,788)	(132,786)	109,998	82.84

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(2) Explanation for variations in the last two years (variations above 20% and amounting to at least NT$10 million)

The company recorded no other income or expenses this period.
Operating revenue increased this period, mainly due to a recovery in demand for sustainable materials in the European and American markets in the second half of the year, leading to moderate growth in exports of Taiwan's functional chemical fiber products (such as eco-friendly polyester fibers and high-performance fibers). As a result, the company's product sales volume and revenue this year increased compared to 2023.
Gross profit, operating loss, and pre-tax net loss this period decreased compared to the previous year, primarily because product prices better reflected raw material costs this year and the company effectively controlled production costs.

(3) Cause of changes in main business activities: None

(4) Sales volume forecast for the next year, basis of estimation, and key factors to growth or decline:

The Company's sales forecast is determined based on the monthly sales volume changes throughout 2024 and takes into account variations in market demand factors from 2023 to set targets. The projected sales volume for 2025 remains uncertain due to ongoing international conflicts and global inflation, which may impact demand and the ordering momentum of branded apparel manufacturers, potentially affecting the company's operational performance. Therefore, sales volume and profit/loss are expected to remain flat compared to 2024.

Unit: tonnes

Main products	Unit	Estimated sales volume
Synthetic fibers	Tonnes	59,400 (total sales volume across all products)

Cash flow

Opening cash balance	Net cash flow from operating activities for the year	Net cash flow from investing activities	Net cash flow from financing activities	Cash surplus (deficit)	Financing of cash deficits
					Investment plans	Financing plans
$62,915	$(117,218)	$(28,525)	132,386	$49,831	-	-

(1) Analysis of cash flow changes for the year:

Operating Activities: The net cash outflow from operating activities is primarily due to increased product inventory resulting from a market recovery.
Investing Activities: The net cash outflow from investing activities is mainly due to the acquisition of additional real estate, plant, and equipment this year.
Financing Activities: The net cash inflow from financing activities is primarily due to the renewal of the company's long-term bank loans.

(2) Response measures and liquidity analysis for expected cash deficit:

Response measures and liquidity analysis for cash deficit: Not applicable

(3) Liquidity analysis for the next year

Opening cash balance: NT$49,831,000
Projected net cash flow from operating activities for the year: NT$120,000,000
Projected net cash flow from investing activities for the year: NT$(10,000,000)
Projected net cash flow from financing activities for the year: NT$(100,000,000)
Projected cash balance: NT$59,831,000
Major capital spendings in the last year and impact on business performance

(1) Major capital spendings and source of capital: None.

Note: The board of directors did not resolve any major capital spending in the last two years.

(2) Expected benefits: Not applicable.

Investment policy in the most recent year, causes of profit or loss incurred, improvement plans, and investments planned for the next year.

The Company had no business investment plan in the most recent year, hence not applicable.

Analysis and assessment of risk issues:

(1) Impact of interest rate, exchange rate, and inflation on the Company's earnings, and response measures.

In 2024, due to the increase in interest rates, the interest expenses generated by the company's borrowings accounted for about 1% of its revenue, therefore, the impact of interest rate fluctuations on the Company is not significant.
Given the negligible differences between the amount of goods exported and the amount of purchases paid in foreign currency, exchange rate variation should have insignificant impact on the Company's profitability.

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

The Company did not engage in any of the above activities or transactions, hence not applicable.

(3) R&D projects in the most recent year, current progress of incomplete projects, projected R&D expenses, estimated time to mass production, and key factors affecting project success.

Future R&D plans
Development of antibacterial Cu ion fiber
Modify existing machinery and equipment for increase in added value.
Develop new yarn products in line with customers' needs, and increase the weight of customized products

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R&D expenses: The Company expects to spend approximately NT$2 million into sample development and development-related activities in 2024

(4) Financial impacts and response measures due to change of local and foreign policies and regulations in recent years: None

(5) Financial impacts and response measures due to technological changes in the last year.

The Company produces conventional polyester fibers. The production technologies involved have matured to the point that no material change is expected to occur in the short term. For this reason, technological changes should have no material impact on the Company.

(6) Crisis management, impacts, and response measures due to change of corporate image in the last year.

There was no major change in the Company's image; furthermore, the Company has been committed to improving quality management and engaging local neighbors in recent years for the continuity of future business.

(7) Expected benefits and risks in relation to mergers and acquisitions. None.

(8) Expected benefits and risks associated with plant expansions. None.

(9) Risks associated with concentrated sales or purchases.

The Company maintains good relationship with key suppliers and customers, and signs long-term contracts for most of its purchases. Risks are considered to be within tolerance.

(10) Impacts and risks associated with a major transfer of shareholding by directors, supervisors, or shareholders with more than 10% ownership interest. No such occurrence

(11) Impacts and risks associated with a change of management. None.

(12) Litigation and non-contentious cases. None.

(13) Other major risks.

The Company conducts cybersecurity risk assessments on a yearly basis; please see pages 93-97 of this annual report for details relating to the assessment process.

Other material issues. None.

Eleven. Special remarks

Information of affiliated enterprises: Not applicable.
Private placement of securities in the last year up until the publication date of annual report: Not applicable.
Holding or disposal of the Company's shares by subsidiaries in the last financial year, up until the publication date of annual report: Not applicable.

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Other necessary supplemental information:

(1) Audit remuneration: Amount and nature of non-audit fees paid to financial statement auditors, accounting firm, and affiliated enterprises thereof: None.

(2) Organization of shareholder meetings: The Company commissions the Share Administration Department of Grand Fortune Securities Co., Ltd. for the organization of shareholder meetings.

(3) The Board of Directors regularly refers to Audit Quality Indicators (AQIs) to evaluate the independence and qualification of the auditors.:

On November 6, 2024, our company passed the evaluation of the Audit Quality Indicators (AQIs) by the Audit Committee and Board of Directors, and the independent auditors have been approved for their independence and qualification.
The Chairman, General Manager, Finance Manager, and Accounting Manager of our company have not served in the current auditors' firm or their related companies within the past year.
The evaluation process followed the auditor's 2024 audit quality indicators, assessing five major aspects:
Aspect 1: Professionalism/audit experience, training hours, turnover rate, professional support.
Aspect 2: Quality control/auditor workload, audit input, EQCR review, quality management support capability.
Aspect 3: Independence/fees for non-audit services, client familiarity.
Aspect 4: Supervision/lack of external inspection and disposition, improvement through regulatory authority correspondence.
Aspect 5: Innovation ability assessment/innovative planning or initiatives.

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Company seal: Hung Chou Fiber Industrial Co., Ltd.

Company person-in-charge: Cheng-Tien Chan

AI assistant

H.C. Annual Report 2024

51789_rns_2025-08-15_b10db41d-eef8-43d1-92e9-e6f5c8356638.pdf

Hung Chou Fiber Industrial Co., Ltd.

2024 Annual Report

Table of Contents

Three. Implementation of corporate governance

1. Organization

Responsibilities of main departments:

Chart 1: Major shareholders of corporate shareholders

Background of directors and supervisors (2)

2. Functionality of the Remuneration Committee

Remuneration Committee

Climate-Related Information of TWSE/TPEx Listed Company

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

3. Cybersecurity risk evaluation

4. Disclosure of CPAs' remuneration

5. Change of CPA: Not applicable

Four. Capital and shares

Eight. Operational overview