Stock code: 1413

Hung Chou Fiber Industrial Co., Ltd.

2025 Annual Report

Published April 29, 2026

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 27
Disclosure of CPAs' remuneration 124
Change of CPA 124
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. 124
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 124
Disclosure of relationships, as defined under Statement of Financial Accounting Standard No.6 - Related parties, among the top ten shareholders 126
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. 127

Four. Capital and shares 128
Eight. Operational overview 132

Business activities: 132
Market, production, and sales overview 137
Employee count in the last 2 years 144
Contribution to environmental protection 144
Labor-management relations 145
Cybersecurity management 147
Major contracts 148

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

2025 Business Report of Hung Chou Fiber Industrial Co., Ltd.

I. 2025 Business Results:

In 2025, Taiwan's chemical fiber industry faced dual challenges from global geopolitics—such as U.S. tariff policies—and overcapacity in China. Consequently, industry performance showed a significant divergence: profits for traditional bulk products remained under pressure, while green sustainability and high-end materials (such as carbon fiber) demonstrated robust growth.

According to the Manufacturing Sector Climate Survey by the Taiwan Institute of Economic Research (TIER), the mid-to-upstream textile segments continued to struggle with China's persistent oversupply, which is unlikely to ease in the short term. This led to widening year-on-year declines in export and production indices, weighing down both raw material input and demand-side performance. Nevertheless, through the Group's vertical integration and stringent cost control, the Company maintained a relatively stable performance in 2025, successfully turning a profit (shifting from loss to gain) in our comprehensive income.

Strategic Realignment and Product Innovation

In response to current industry trends and to strengthen our competitive advantage, the Company has undertaken a comprehensive review and restructuring of existing product lines. Our goal is to develop a "small-volume, large-variety" production model while investing in the development of differentiated new products to enhance gross margins.

Furthermore, to ensure long-term sustainable development, we have procured eco-friendly rPET chips for the production of recycled yarn, and polyester masterbatches for the R&D of dope-dyed yarns. These initiatives increase yarn diversity and color richness, better meeting environmental standards and customer demands while enriching our overall product portfolio. By gradually increasing the proportion of niche products, we aim to broaden product applications, expand our customer base, and mitigate seasonal fluctuations, thereby further improving profitability.

Green Supply Chain and Asset Optimization

Global apparel brands have identified "Sustainability and Functionality" as the core criteria for textile supply chain selection and new consumer trends. Consequently, energy saving and carbon reduction have become top priorities within the textile industry. Both suppliers and brand owners are actively establishing green supply chains that integrate eco-friendliness with functional performance.

To meet customer needs and secure orders, the Company has been dedicated in recent years to strengthening highly differentiated niche products to maintain a competitive position in the international supply chain. Additionally, we continue to optimize asset utilization by leasing out idle factory space and land to generate a steady and consistent stream of income.

(1) Results of Business Plan Implementation

In 2024, the Company recorded operating revenue of NT$2,118,976 thousand, operating costs of NT$2,007,039 thousand, gross profit of NT$111,937 thousand, operating expenses of NT$46,927 thousand, and a net operating income of NT$65,010 thousand. The total comprehensive income for the year was NT$59,925 thousand.

(2) Budget Execution Status

In 2025, the Company set internal budget targets but did not publicly disclose financial forecasts.

(3) Financial Performance and Profitability Analysis

thousand

Item2025 2024

Financial Performance

Operating Revenue NT$2,118,976 NT$2,342,732

Operating Costs NT$2,007,039 NT$2,298,594

Net Profit (Loss) Before Tax NT$71,368 (NT$22,645)

Comprehensive Income (Loss) NT$59,925 (NT$22,788)

Profitability

Return on Assets (%) 2.86-0.33

Return on Equity (%) 5.44-2.10

Pre-Tax Profit to Paid-In Capital Ratio (%) 5.40-1.98

Net Profit Margin (%) 2.83-0.99

Earnings Per Share (NT$) 0.45-0.17

(4) Research and Development Status

Yarn Type Composition Applications Characteristics

37.5 Technology Fiber Volcanic rock (activated carbon) Professional sportswear and athleisure Utilizing the natural porosity of volcanic rock, the fiber absorbs moisture continuously evaporated from the skin. Simultaneously, it captures the body's natural infrared energy to heat the particles and accelerate evaporation. This process ensures the skin remains dry more quickly while helping to store energy and maintain a constant body temperature.

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 Antistatic: 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 2026 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 2026 is approximately 15,600 tons of polyester pellets and 43,360 tons of polyester yarn.

(3) Key Production and Sales Policies

Close collaboration among marketing, production, R&D, and after-sales service.
Responding to the strengthening of global environmental awareness and the trends of renewable energy and net-zero emissions.
Enhancing product diversity and quality while strengthening process improvements and machinery upgrades to accommodate structural adjustments and the need for flexible production.
Maintaining quality stability and continuous improvement through daily management of anomaly handling and performance tracking, while reinforcing complaint analysis and the effectiveness of corrective measures to establish management accountability across all levels.
Adjusting production schedules based on market conditions, managing raw yarn (POY/FDY) capacity, and controlling production costs.

Actively utilizing idle funds to invest in real estate with stable returns (rental income) to enhance 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: Shang Yu Hsiao

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

April 1, 2026

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	Share	Shareholding percentage	Shares	Shareholding percentage			Position	Name	Relationship
Director	The Republic of China	Yi Jinn Industrial Co., Ltd.		May 28, 2025	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	May 28, 2025	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	May 28, 2025	3 years	June 22, 2016	-	-	-	-	-	-	-	-	Graduated from University of Illinois					None
Independent director	The Republic of China	Wei-Chi Huang	Male 60-69	May 28, 2025	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	May 28, 2025	3 years	June 29, 2022									Doctoral Degree					None
Independent director	The Republic of China	Chen,Yi-Min	Male 60-69	May 28, 2025	3 years	May 30, 2023	-	-	-	-	-	-	-	-	Master's Degree					None
*Director	The Republic of China	Yu-Ching Cheng	Female 60-69	May 28, 2025	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)	Spouse or relatives of second degree or closer acting as manager, director, or supervisor			Remarks (Note 5)
							Shares	Shareholding percentage	Shares	Shareholding percentage	Share %	Shareholding percentage	Shares	Shareholding percentage		Position	Name	Relationship
*Director	The Republic of China	Shang Yu Hsiao	Male 50-59	May 28, 2025	3 years	May 28, 2025	60,000	0.04%	60,000	0.04%	-	-	-	-	Graduated from University			r	None
Director	The Republic of China	Lin-Te Chen	Male 30-39	May 28, 2025	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	May 28, 2025	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

April 1, 2026

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.	19.21	Sheng-Min Wang	2.00
	Cheng-Tien Chan	7.96	Chuang-Yen Wang	1.71
	Shin Mao Investment Co., Ltd.	6.83	Sheng-Hung Wang	1.65
	I Jinn Industrial Co., Ltd.	6.11	Min-Gji Zhang	1.58
	Zig Sheng Industrial Co., Ltd.	2.29	Cheng-Fu Wang	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
April 1, 2026

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:

Name	Professional qualification and experience (Note 1)	Independence criteria (Note 2)
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 and its parent company. and is the largest individual shareholder of the Company. and Yi-Ching Chan as a spouse. Chairman of Yixin Industrial Co., Ltd.	0
Yi-Ching Chan	Graduated from University Director of Yi Jinn Industrial Co., Ltd.
Supervisor of Kwang Ming Silk Mill Co., Ltd.	She is a spouse with Cheng-Tien Chan and also serves as a director of the parent company。	None
Shang Yu Hsiao	Master's Degree
General Manager, HUNG CHOU FIBER INDUSTRIAL CO., LTD.
Plant Manager, YI JIN INDUSTRIAL CO., LTD.	General Manager of the 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	In accordance with the provisions of the Company's Articles of Incorporation and the "Code of Practice on Corporate Governance", directors are elected through a nomination system, and the Company has obtained a written statement, work history, proof of current employment, and kinship form provided by each director at the time of nomination and	None
Wei-Chi Huang (Independent Director)	Graduated from University
General Secretary of Taiwan Textile Federation		None

Criteria	Professional qualification and experience (Note 1)	Independence criteria (Note 2)	Number of concurrent positions as independent director in other public companies
Hsieh-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.	selection of board members to verify and confirm the independence of themselves, their spouses, and their relatives within the third degree of kinship relative to the company. The Company has also verified that the three independent directors listed below have met the qualifications set forth in the "Regulations Governing the Establishment and Compliance of Independent Directors of Public Companies" promulgated by the Financial Supervisory Commission and Article 14-2 of the Securities and Exchange Act for the two years prior to their election and during their term of office, and that the independent directors have been granted the authority to fully participate in decision-making and express opinions in accordance with Article 14-3 of the Securities and Exchange Act, and have independently performed their relevant duties accordingly. (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		None
Lin-Te Chen	Graduated with Master's Degree Director of Fu Hsun Fiber Industries Co., Ltd.
Director of Hung Chou Fiber Industrial	He does not hold any position in the Company, and neither his spouse nor second-degree relatives work in the Company. (Note 2)	None

Name	Professional qualification and experience (Note 1)
	Professional qualification and experience (Note 1)	Independence criteria (Note 2)	Number of concurrent positions as independent director in other public companies
Kuan-Ru Chen	Graduated with Master’s Degree
Chairman of Thunder Tiger Corporation
Chairman of TTBIO Corp.
Vice Chairman of Central Insurance Co., Ltd.	He does not hold any position in the Company, and neither his spouse nor second-degree relatives work in the Company. (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:

The 20th Board of Directors of the Company is composed of 9 directors, including 4 Independent Directors and 5 General Directors. Among the General Directors, one director concurrently serves as a company executive; overall, more than half of the board seats are held by directors who do not hold executive positions within the company. The Board currently includes one female director.

Members of the 20th Board of Directors:

General Directors: * Mr. Chan Cheng-Tien, Ms. Cheng Yu-Ching, Mr. Hsiao Shang-Yu, Mr. Chen Kuan-Ju, and Mr. Chen Lin-Te, all of whom possess expertise in leadership, operational judgment, business management, crisis management, industrial knowledge, and international market perspectives.

Mr. Chen Lin-Te also specializes in financial and accounting affairs.

Independent Directors: * Mr. Chao Shou-Po, Mr. Huang Wei-Chi, Mr. Chen Yi-Min, and Mr. Kuo Hsien-Chang. Their collective strengths include industrial knowledge, business management, strategic decision-making, and financial/accounting affairs.

Concrete Management Objectives for Diversity Policy:

To strengthen the Board structure, the Company has set a target of at least one-third for Independent Directors and at least one seat for female directors. In 2025, the Board consists of 4 Independent Directors (representing 44%) and 1 female director.

Currently, the composition of the Board is as follows:

Directors with employee status: 11%

Independent Directors: 44% (Note: The text mentioned 44% for 2025 and 33% elsewhere; I have maintained 44% based on 4 out of 9 seats.)

Female Directors: 11%

Regarding tenure, one Independent Director has served for 3 years, and another has a tenure of less than 6 years.

Name	Nationality	Gender	Accounting and financial analysis	Industry knowledge	Operational decision making	Business administration	Business administration	Crisis management	International markets	Leadership and Decision making
Cheng-Tien Chan	The Republic of China	Male		V	V	V	V	V	V	V
Yi-Ching Chan	The Republic of China	Female			V	V	V	V	V
Shang Yu Hsiao	The Republic of China	Male		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	V

Shou-Po Chao	The Republic of China	Male			V	V	V	V	V
Wei-Chi Huang	The Republic of China	Male		V	V	V	V	V	V
Hsien-Chang Kuo	The Republic of China	Male	V		V	V	V	V
Chen,Yi-Min	The Republic of China	Male			V	V	V	V	V
Diversity policy and goals		1	3		9	9	9	9	8
Accomplishment of diversity policy		Complied		Complied	Complied	Complied	Complied	Complied	Complied

(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.

All independent directors comply with the regulations on independent directors set forth by the Financial Supervisory Commission, and the status of independence is as follows:

name	Whether the person, his/her spouse, or relatives within the second degree of kinship serve as directors, supervisors, or employees of the Company or its affiliates	The number and proportion of shares held by the company, his/her spouse, relatives within the second degree of kinship (or in the name of others).	whether they serve as directors, supervisors, or employees of companies with specific relationships with the Company	The amount of remuneration obtained for providing commercial, legal, financial, accounting, and other services to the Company or its affiliates in the past two years
Shou-Po Chao	Nope	There is no such situation	Nope	There is no such situation
Wei-Chi Huang	Nope	There is no such situation	Nope	There is no such situation
Hsien-Chang Kuo	Nope	There is no such situation	Nope	There is no such situation
Chen,Yi-Min	Nope	There is no such situation	Nope	There is no such situation

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

March 30, 2026

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	Shang Yu Hsiao	Male	January 1, 2024	60,000	0.04%	-	-	-	-	Master's Degree	-	-	-	-	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	-	-	-	-	-

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 Yi Jinn Industrial -Tse-Hua Lin	-	-	-	-	-
Director	Representative of Yi Jinn Industrial -Shang Yu Hsiao	-	-	-	-	-
Director	Lin-Te Chen
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

Compensation from parent company or business investments other than subsidiaries (Note 11)

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
Amount paid in cash	Amount paid in shares	Amount paid in cash	Amount paid in shares	Amount paid in shares

* 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.
3. Upon the re-election on May 28, 2025, the number of directors was reduced from 12 to 9 (including 4 independent directors).

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 | The Company | All companies included in the financial statements | The Company | All companies included in the financial statements | 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 | | | |
| Deputy General Manager | Shang Yu Hsiao | 2,145 | 2,145 | - | - | - | - | - | - | - | - | 2,145
3.58% | 2,145
3.58% | - |

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:

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	The Company	All companies included in the financial statements	The Company	All companies included in the financial statements	The Company		All companies included in the financial statements		The Company	All companies included in the financial statements
								Profit sharing in cash	Profit sharing in shares	Profit sharing in cash	Profit sharing in shares
Deputy General Manager	Shang Yu Hsiao	2,145	2,145	-	-	-	-	-	-	-	-	2,145 3.58%	2,145 3.58%	-
Manager of Finance and Accounting	Sheng-Chin Lin	1,494	1,494									1,494 2.49%	1,494 2.49%	-

| Assistant Vice President of Internal Audit | Lin Fangming | 1,308 | 1,308 | | | | | | | | 1,308
2.18% | 1,308
2.18% | - |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Assistant Vice President of Sales | Zhan Shunda | 1,359 | 1,359 | | | | | | | | 1,359
2.27% | 1,359
2.27% | - |

(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 (%)
	2025	2024
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 (2025); below are the directors' and supervisors' attendance records:

Position	Name (Note 1)	No. of in-person attendance (B)	Proxy attendances	Percentage of in-person attendance (%)(B/A)(Note 2)
Chairman	Cheng-Tien Chan	6	6	100.00%
Director	Yu-Ching Cheng	6	6	100.00%
Director	Shang Yu Hsiao	3	3	100.00%
Director	Lin-Te Chen	5	6	83.33%
Director	Kuan-Ru Chen	5	6	83.33%
Independent director	Shou-Po Chao	4	6	66.67%
Independent director	Wei-Chi Huang	5	6	83.33%
Independent director	Hsien-Chang Kuo	6	6	100.00%
Independent director	Chen,Yi-Min	4	6	66.67%

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
3/5/2025	19th Board, 15th Meeting	Discuss the amendment of the Company's "Articles of Incorporation - from employee remuneration to a certain proportion of remuneration to grassroots employees, and revision of the ratio of the number of independent directors to the number of directors".
		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 lifting of the non-compete restriction on new directors and their representatives of the Company (Directors Zhan Zhengtian, Cheng Yuqian, Zhang Hengjia)
Directors Zhan Zhengtian, Cheng Yuqian, and Zhang Hengjia are interested parties in this case, and when they intend to submit for discussion, they take the initiative to avoid discussion and resolution.
		Independent Directors' Opinions: No objections or reservations. Company's Handling of Independent Directors' Opinions: Not applicable. Resolution: Except for the recusal of directors who did not participate in the discussion and voting in accordance with the law and interests, after discussion and resolution, the motion was passed without discussion and submitted to the shareholders' meeting for discussion..
		Discuss the revision of the Company's internal control system "Chapter 4, Section 9, Salary Accounting and Payment Operations, 7, Employee Dividends and Clarifying the Definition of Grassroots Employees".
		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.

5/9/2025	19th Board, 16th Meeting	Discuss the addition of the Company's internal control system "Chapter 10 Computerized Information Management Operations Section 12 and its Internal Audit System - Cyber Security Control Operations".
		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
5/28/2025	20th Board, the first Meeting	Discuss the appointment of members of the 6th "Remuneration Committee" of the Company
Since the independent directors Mr. Zhao Shoubo, Mr. Huang Weiji and Mr. Chen Yimin are interested parties in this case, the three independent directors are requested to recuse themselves first.

Date of board meeting	Session	Motion details and resolution
		Opinions of independent directors: No objections or reservations
The Company's handling of opinions on independent directors: N/A
Resolution: Except for the directors who refrained from participating in the discussion and voting in accordance with the law and interests, the other directors present passed the motion without discussion.
8/6/2025	20th Board, the second Meeting	No matters listed under Article 14-3 of the Securities Exchange Act.
11/5/2024	20th Board, the third 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 first meeting of the 6th 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.
		Discuss the appointment of the general manager of the company (Shang Yu Hsiao).
Mr. Shang Yu Hsiao, the director, is a stakeholder in this case and recuses himself in accordance with the law.
		Opinions of independent directors: No objections or reservations
The Company's handling of opinions on independent directors: N/A
Resolution: Mr. Shang Yu Hsiao, a director who has an interest in this case, recused himself during the discussion, and the chairman consulted the other directors present to pass the motion without objection.
12/9/2024	20th Board, 4th Meeting	Discuss the Company's proposed increase in the amount of shares acquired and disposed of by listed companies. (It is proposed to acquire six stable or high-yield stocks, including 2330 TSMC, 2454 MediaTek, 2382 Guangqi, 6505 Gigabyte, 2357 ASUS, and 2603

Date of board meeting	Session	Motion details and resolution
		Evergreen, and it is proposed to request the board of directors to authorize the acquisition and disposal of the above-mentioned subject matter from NT$50 million to NT$200 million, and authorize the chairman to acquire or dispose of it in the centralized market within the limit of 200 million yuan.)
		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.

*CPA independence and suitability assessment:

The 15th meeting of the 19th board of directors of the company on March 5, 114: The board of directors discussed and reviewed the company's 113th annual financial statements and business report, Explanation 1. The audit and certification work committee was audited by Pan Junming and Zhang Shuying of Anhou Jianye United Accounting Firm, and issued a draft audit report. The company has obtained its 113th annual AQI (Audit Quality Indicator Description) information from the attesting accounting firm as the basis for the board of directors to review the quality of annual financial statements and business reports.

The 3rd meeting of the 20th board of directors of the company on November 5, 114: The independence and competency of the company's certified public accountants and the review of public funds, the evaluation unit is the board of directors affairs unit, the evaluation year is 114, and the evaluation and appointment firm and accountants are Anhou Jianye United Accounting Firm Pan Junming and Zhang Shuying accountants. The evaluation content refers to Article 47 of the CPA Act and the Official Gazette of the Professional Ethics of CPAs of the Republic of China No. 10 "Integrity, Fairness, Objectivity and Independence" to establish a total of 13 indicators of independence and a total of 4 indicators of competence. Evaluation results: After the evaluation, the attesting CPAs appointed by the Company meet the standards of independence and meet the evaluation criteria for competence, which can confirm the reliability of the financial reports issued.

(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: 3/5/2025 (19th Board, 15th Meeting)

Discuss the lifting of the non-compete restrictions on the company's new directors and their representatives (directors Zhan Zhengtian, Cheng Yuqian, and Zhang Hengjia).

Directors with Conflict of Interest: Directors Zhan Zhengtian, Cheng Yuqian, and Zhang Hengjia are interested parties in this case, and when they intend to submit for discussion, they take the initiative to avoid discussion and resolution.

Reason for Conflict of Interest and Voting Details: Except for the recusal of directors who did not participate in the discussion and voting in accordance with the law and interests, after discussion and resolution, the motion was passed without discussion and submitted to the shareholders' meeting for discussion..

(2). Agenda Content: 5/28/2025 (20th Board, first Meeting)

Discussion on The Company appointed members of the 6th "Remuneration Committee"

Directors with Conflict of Interest: Since the independent directors Mr. Zhao Shoubo, Mr. Huang Weiji and Mr. Chen Yimin are interested parties in this case, the three independent directors are requested to recuse themselves first.

Reason for Conflict of Interest and Voting Details: Except for the directors who recused themselves from the discussion and voting in accordance with the law and interests, the other directors present passed the motion without discussion.

(3). Agenda Content: 11/5/2025 (20th Board, third Meeting)

Discuss the appointment of the general manager of the company (Shang Yu Hsiao)

Directors with Conflict of Interest: Mr. Shang Yu Hsiao, the director, is a stakeholder in this case and recuses himself in accordance with the law.

Reason for Conflict of Interest and Voting Details: Mr. Shang Yu Hsiao, a director who has an interest in this case, recused himself during the discussion, and the chairman consulted the other directors present to approve the motion without objection.

(4). Agenda Content: 11/5/2025 (20th Board, third 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, Shang Yu Hsiao, 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 4.8; 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 (6th meeting of the 20th board dated March 2, 2026)

Assessment cycle (Note 1)	Assessment duration (Note 2)	Scope of assessment (Note 3)	Assessment method (Note 4)
conducted annually.	Start: January 1, 2025
End: December 31, 2025	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 annually.	Start: January 1, 2025
End: December 31, 2025	Individual director members	Director self-assessment	Director individual 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, 2025
End: December 31, 2025	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, 2025
End: December 31, 2025	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 6th Remuneration Committee were elected during the board of directors meeting held on May 28, 2025, and two out of the three newly elected Remuneration Committee members were independent directors. The committee held two meetings as required by policy in 2025 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 28, 2025, the shareholders' meeting elected one additional independent director, and four independent directors served as audit members, and the 2025 annual audit committee held a total of five 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 second Audit Committee was from 2025/5/28 to 2028/5/28. From January 1, 2025 to December 31, 2025, the Audit Committee held 4 meetings (A). The attendance of independent directors is as follows:

Title	Name	Attendance in Person (B)	Attendance Rate (%) (B/A) (Note)
Convener	Shou-Po Chao	4	80
Committee member	Wei-Chi Huang	5	100
Committee member	Hsien-Chang Kuo	5	100
Committee member	Chen,Yi-Min	3	60

The Company's Audit Committee is composed of the entire number of independent directors and meets at least quarterly to deliberate on matters including :

The adoption of or amendments to the internal control system pursuant to Article 14-1 of the Securities and Exchange Act.
Evaluation of the effectiveness of the internal control system.
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.
Matters in which a director is an interested party.
Asset transactions or derivatives trading of a material nature.
Loans of funds, endorsements, or provision of guarantees of a material nature.
The offering, issuance, or private placement of equity-type securities.
The hiring or dismissal of a certified public accountant, or their compensation.
The appointment or discharge of a financial, accounting, or internal audit officer.
Annual and semi-annual financial reports.
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 5, 2025 - 1st Term, 14th Audit Committee Meeting

(1) Agenda Content: 2025 Risk Report of the Company. (Includes the identification of ESG themes that stakeholders are concerned about in 113 years)

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: 2024 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 2024 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: The company's 113th annual profit and loss allocation supplement.

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.

(5) Agenda Content: Amendment to the Company's internal control system "Chapter 4, Section 9, Salary Accounting and Payment Operations" (Employee dividends and clarifying the definition of grassroots employees).

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, 2025 - 1st Term, 15th Audit Committee Meeting

(1) Agenda Content: First Quarter Financial Statements of 2025.

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.

(1) Agenda Content: The Company's internal control system "Chapter 10 Computerized Information Management Operations Section 12 and its Internal Audit System" (Cyber Security Control Operations) was added..

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 6, 2025 - second Term, first 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.

(2) Agenda Content: Discuss the company's 113th annual corporate sustainability report, stakeholder identification and issues of concern, and the implementation results of the 113th annual work of the corporate sustainable development promotion team and the 114th annual work plan.

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 5, 2025 - second Term, second 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 2025.

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: Appointment of the general manager 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 all attending directors with no objections
December 9, 2025 - second Term, third Audit Committee Meeting

(1) Agenda Content: The Company intends to increase the quota for the acquisition and disposal of shares of listed companies. (It is proposed to acquire six stable or high-yield stocks, including 2330 TSMC, 2454 MediaTek, 2382 Guangqi, 6505 Gigabyte, 2357 ASUS, and 2603 Evergreen, and it is proposed to request the board of directors to authorize the acquisition and disposal of the above-mentioned subject matter from NT$50 million to NT$200 million, and authorize the chairman to acquire or dispose of it in the centralized market within the limit of 200 million yuan.)

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 2024 financial statements, the business report, and the distribution of earnings and the quarterly financial statements for the year ended December 31, 2025, among which the 2025 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 2024 2025, 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 2026/3/2, 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 matters include: 1. Ethics and independence, 2. Firm quality management system, 3. Auditors' responsibilities in auditing financial statements, 4. Types of audit opinions issued, 5. Scope of audit, 6. Audit findings, 7. Company operations, 8. Important accounting standards or explanation letters, updates to securities management laws and tax laws, etc.
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
2025/3/5	Audit Committee members (Independent Director) : Shou-Po Chao, Wei-Chi Huang, Hsien-Chang Kuo Chen,Yi-Min	1. Implementation of the internal audit operation audit plan in the fourth quarter of 113. (Audit)
2. 113 Q4 greenhouse gas inventory plan implementation report. (Audit)
3. 113 annual performance evaluation results of the company's board of directors. (Audit)
4. The company's 114th annual insider trading and prevention promotion, 114th annual ethical management and ethical code of conduct and legal compliance promotion. (audit).
5. The company's 114th annual risk report (including the identification of ESG themes of concern to stakeholders in 113. (Audit)
6. The company's 113th annual business report and financial statements. (Accounting)
7. Amendment of the Company's "Articles of Association". (Accounting)
8. The company's 113th annual internal control statement. (Audit)
9. Revised the Company's internal control system "Chapter 4, Section 9, Salary Accounting and Payment Operations". (Audit)
10. Accountant Pan Junming had a discussion with 4 independent directors	The Audit Committee (independent director) has no dissenting opinion

	2025/5/09	Audit Committee members (Independent Director) : Shou-Po Chao, Wei-Chi Huang, Hsien-Chang Kuo Chen,Yi-Min	1.Implementation of the internal audit operation audit plan for the first quarter of 114. (Audit)2.114 report on the implementation of the greenhouse gas inventory plan in the first quarter. (Audit)3.The company has completed the renewal of liability insurance for directors, supervisors and managers for 114 years. (Audit)4.The company's 113th annual corporate governance evaluation results. (Audit)5.The company's financial results for the first quarter of 114. (Accounting)6.Section 12 of the Company's internal control system in Chapter 10 of the electronic information management system and its internal audit system are added. (Audit)	The Audit Committee (independent director) has no dissenting opinion
	2025/8/6	Audit Committee members (Independent Director) : Shou-Po Chao, Wei-Chi Huang, Hsien-Chang Kuo Chen,Yi-Min	1. Execution status of the 2025 Q2 internal audit plan. (Audit)2. Report on the execution of the 2025 Q2 greenhouse gas inventory plan. (Audit)3. 2024 achievements and 2024 work plan of the Company’s sustainability promotion team, including the 2024 Sustainability Report, stakeholder identification and key issues, and corporate governance execution report. (Audit)4. Financial report for the first half of 2025. (Accounting)	The Audit Committee (independent director) has no dissenting opinion
	2025/11/5	Audit Committee members (Independent Director) : Shou-Po Chao, Hsien-Chang Kuo Chen,Yi-Min	1. Execution status of the 2025 Q3 internal audit plan. (Audit)2. Report on the execution of the 2025 Q3 greenhouse gas inventory plan. (Audit)3. 2025 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. 2025 Q3 financial statements. (Accounting)	The Audit Committee (independent director) has no dissenting opinion
41

			6. 2026 internal audit plan. (Audit)
	2025/12/9	Audit Committee members (Independent Director) : Shou-Po Chao, Hsien-Chang Kuo Chen,Yi-Min	The Company intends to increase the quota for the acquisition and disposal of shares of listed companies (it intends to acquire six stable and high-yield stocks, including 2330 TSMC, 2454 MediaTek, 2382 Guangqi, 6505 Gigabyte, 2357 ASUS, and 2603 Evergreen, and intends to request the board of directors to authorize the acquisition and disposal of the above-listed subjects from NT$50 million to NT$200 million, and authorize the chairman to acquire and dispose of them in the centralized market within the limit of 200 million yuan. (Accounting, Auditing)	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	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

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		interest into the website designated by the authority on a monthly basis. This information has also been made available 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.”	TWSE/TPEX Listed Companies
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 5, 2025, during the Board meeting, a report was presented on the 2025 insider trading prevention advocacy, 2024 integrity and ethical conduct guidelines, and legal compliance advocacy. On November 5, 2025, during the Board

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
			meeting, a report was presented and materials were circulated regarding the 2025 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 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.' | Complied with Paragraph 2, Article 10 of Corporate Governance Best-Practice Principles for TWSE/TPEX Listed Companies |
| 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 20th Board of Directors of the Company has a total of 4 independent directors and 1 female director, and the current directors have diverse professional backgrounds and rich business experience such as business management, leadership decision-making, industry knowledge, international outlook, accounting analysis, etc., and each director's education, experience, gender, professional qualifications and work experience, etc., please refer to the description of the "Diversity Policy on Board Members" in this annual report.. | Complied with Article 20 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
(2) Apart from the Remuneration Committee and Audit Committee, has the Company assembled other functional committees at its own discretion?	V		2. On December 27, 100, the board of directors resolved to establish a remuneration committee (the first term), and on May 28, 114, the board of directors resolved to appoint independent director Mr. Zhao Shoubo, independent director Mr. Huang Weiji and independent director Mr. Chen Yimin to serve as the sixth remuneration committee. On June 29, 111, the shareholders' meeting elected 3 independent directors, and an audit committee was established to replace the supervisors, and on May 28, 114, the shareholders' meeting elected four independent directors, elected by Mr. Zhao Shoubo, Mr. Huang Weiji, Mr. Guo Xianzhang and Mr. Chen Yimin, with a term from May 28, 114 to May 28, 117(same term as the current director). The Company has not yet considered establishing other functional committees (the Company will use the Audit Committee to replace the functions of the Risk Management Committee and the Sustainable Development Committee), and will evaluate the company's needs based on government regulations and corporate governance trends in the future. The relevant regulations are set out in the Company's compliance with Article 27~30 of the Functional Committee of Chapter 3, Section 3 of the Code of Practice for Corporate Governance of Listed and OTC Listed Companies *	Complied with Articles 28 and 28-1 of Corporate Governance Best-Practice Principles for TWSE/TPEX Listed Companies
(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	V		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	Complied with Paragraphs 3 and 4, Article 37 of Corporate Governance Best-

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
compensation, remuneration, and nomination decisions?			be presented in the next board meeting (the 5th meeting of the 20th board scheduled to be held on March 2, 2026). “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 4.8; overall performance was close to Exceptional. “Functional Committee Performance Self-assessment” (Remuneration Committee) averaged a score of 4.8; overall performance was close to Exceptional. (Out of a total of 5)

The board of directors has taken the evaluation outcome into consideration when determining directors’ compensations and when nominating director candidates. | Practice Principles for TWSE/TPEX Listed Companies |
| (4) Are external auditors’ independence assessed on a regular basis? | | | 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 2025 was discussed and passed during the foruth meeting of the 19th board held on November5, 2025. 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. | Complied with Article 29 of Corporate Governance Best-Practice Principles for TWSE/TPEX Listed Companies |

Actual governance (Note 1)
Yes	No	Summary
		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 arrangement with the Company or its directors	No	Yes
		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	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
			that may directly affect the outcome of the audit task.
			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
			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	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			Complied with Article 3-1 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
to perform their duties, convention of board meetings and shareholder meetings, company registration and changes, preparation of board meeting and shareholder meeting minutes etc)?			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 2025:

① Handling of board meeting and Remuneration Committee meeting affairs and preparation of minutes: A total of 13 meetings (6 board meetings, 5 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: 13 subjects, 84 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. | TWSE/TPEX Listed Companies |

Assess criteria	Actual governance (Note 1)
	Yes	No	Summary
			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).

Contact Window:Zhang Hengjia Deputy General Manager (Spokesperson)
Company address: 7th floor, No. 607, Ruiguang Road, Neihu District, Taipei City
Phone: (02)26575859 #530
Email : [email protected]

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 monthly disclosures of revenue performance as well as | 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
			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

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
				Governance Best-Practice Principles for TWSE/TPEX Listed Companies
7. Information disclosure
(1) Has the Company established a website that discloses financial, business, and corporate governance-related information?

(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)?

(3) Does the Company publish and make official filing of annual financial report within two months after the end of an accounting period, and | 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).

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 12, 2025). 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.
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 | Complied with Paragraph 1, Article 57 of Corporate Governance Best-Practice Principles for TWSE/TPEX Listed Companies

Complied with Articles 55 to 58 of Corporate Governance Best-Practice Principles for TWSE/TPEX Listed Companies

The Company is required to prepare financial statements that consolidate |

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
publish/file Q1, Q2 and Q3 financial reports along with monthly business performance before the required due dates?			month is published/filed within the first 10 days of the current month.	subsidiaries, and is currently unable to publish/file financial statements at an earlier time.
8. Does the Company have other information that enables a better understanding of the Company’s corporate governance practices (including but not limited to employee rights, employee care, investor relations, supplier relations, 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)?	V		On the Corporate Governance section of the Market 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. In 2025, the company conducted an employee satisfaction survey on the company's website (a total of 21 indicators in seven categories), and employees filled out the questionnaire by scanning the QR code on the company's website or mobile phone , and the average score of the survey	Complied with Article 28-2 and Articles 51 to 54 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
			was 3.6 points (out of 5), which was close to agreement. The results of the 114th employee satisfaction survey on the company have been submitted to the board of directors report on March 2,2026.

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.
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 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.
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 | |

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

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, 2025 and end April 1, 2026. 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, 2025)
6. Directors' ongoing education: (complied with Articles 40 and 50 of Corporate Governance Best-Practice Principles for TWSE/TPEX Listed Companies) Directors take part in all of the courses organized by Securities & Futures Institute	Complied with Articles 40 and 50 of "Corporate Governance Best-Practice Principles for TWSE/TPEX Listed Companies"
Position	Name	Date of training
Chairman	Cheng-Tien Chan	September 3, 2025
October 23, 2025	3.0

Actual governance (Note 1)						Deviation and causes of deviation from Corporate Governance Best-Practice Principles for TWSE/TPEX Listed Companies
Yes	No	Summary
		Director	Heng-Chia Chang	July 30, 2025	3.0	Complied with Articles 39 and 49 of “Corporate Governance Best-Practice Principles for TWSE/TPEX Listed Companies”
				August 20, 2025	3.0
		Director	Yi-Ching Chan	September 25, 2025	3.0
				October 15,, 2025	3.0
		Director	Heng-Chia Chang	February 21, 2025	3.0
		Director	G.L. Lin	December 27, 2025	3.0
				November 3, 2025	3.0
		Director	Tse-Hua Lin	October 31,, 2025	3.0
				December 3, 2025	3.0
		Independent director	Shou-Po Chao	March 27, 2025	3.0
				April 10, 2025	3.0
		Independent director	Wei-Chi Huang	May 15, 2025	3.0
				June 12, 2025	3.0
		Independent director	Hsien-Chang Kuo	June 19, 2025	3.0
				July 30, 2025	3.0

Actual governance (Note 1)
Yes	No	Summary
		Independent director	Chen,Yi-Min	June 19, 2025	3.0
				July 30, 2025	3.0
		Director	Lin-Te Chen	November 15, 2025	3.0
				November 23, 2025	3.0
		Director	Kuan-Ru Chen	September 3, 2025	3.0
				September 17, 2025	3.0
		Director	Shang Yu Hsiao	June 12, 2025	3.0
				June 19, 2025	3.0
				July 10, 2025	3.0
				August 20, 2025	3.0
		7. Our company annually submits a risk report for discussion at the board meeting (for the year 2025, on March 5, 2025). Additionally, the board meeting (on August 6, 2025) submits for discussion the identification of stakeholders and key issues for the year 2025.

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 67.58 and ranked in the 66%-80% tier of TWSE's 11th (2024) 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: 1.4、1.7、1.8、2.24、2.25、3.5、3.17、3.21、4.1、4.15、4.23
(2) Improvements to be made during re-election in the next board meeting: none
(3) Improvements of low urgency: 1.2、1.17、2.3、2.4、2.14、2.23、2.27、3.4、3.6、3.13、3.14、3.20、4.5、4.7、4.19、4.02	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, 2025

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 May 28, 2025
Committee member	Wei-Chi Huang	2	0	100	Renewed on May 28, 2025
Committee member	Chen,Yi-Min	2	0	100	Renewed on May 28, 2025
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).

2025/5/28 The shareholders' meeting re-elected a total of 5 ordinary directors and 4 independent directors for the 20th session, and the first board committee of the 20th session resolved to appoint independent director Zhao Shoubo, independent director Huang Weiji and independent director Mr. Chen Yimin as remuneration committee members (with independent director Zhao Shoubo as the convener) |
| --- | --- |
| 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 2025.
2. The 6th meeting of the 5th Remuneration Committee was held on March 5, 2025 (attending members: Shou-Po Chao, Wei-Chi Huang, Chen,Yi-Min).
Discussion on “allocation of employee remuneration and director/supervisor remuneration for 2024.”
Resolution: The Company still had cumulative losses pending reimbursement in 2024, 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 first meeting of the 6th Remuneration Committee was held on November 5, 2025 (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.
The company's handling of the opinions of the remuneration committee: The above two cases are submitted to the board of directors for inclusion in the report or discussion in accordance with the resolution of the remuneration committee.
Resolution of the board of directors included in the discussion proposal: Directors Zhan Zhengtian, Cheng Yuxian, Xiao Shangyou, Chen Guanru, Chen Linde, and independent directors Zhao Shoubo, Huang Weiji, Guo Xianzhang, and Chen Yimin recused themselves during the discussion and voting. |
| --- | --- |

(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	Complied with Sustainable Development Best Practice Principles for TWSE/TPEx Listed Companies.

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
			managers, whose main responsibilities are to execute corporate governance tasks, evaluate and 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 2024 “ESG Report” was presented to the board of directors on August 6, 2025.

On August 6, 2025, the "Sustainable Development Promotion Team" submitted to the board of directors the "113th Annual Work Implementation Results and 114th Annual Work Plan Report, the Company's 2024 Corporate Sustainability Report, Stakeholder Identification and Response to Concerns, and Corporate Governance Status Report", and the board of directors and the corporate governance executive discussed the adjustment of sustainable development management policies, strategies, and goals. 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 | |

Assess criteria	Actual governance (Note 1)
	Yes	No	Summary
			internal audit system" to the company's internal control system, formally incorporating the promotion of corporate sustainability into the internal control framework.
4. The Company's Sustainable Development Committee is concurrently served by the Audit Committee, and the sustainability report, annual implementation status, and annual work plan prepared by the Sustainable Development Promotion Team will be submitted to the Audit Committee for discussion and then submitted to the Board of Directors for discussion and approval.
2. Has the Company conducted risk assessment on environmental, social, and corporate governance issues that are relevant to its operations, and implemented risk management policies or strategies based on principles of materiality? (Note 2)	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 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 2025 risk report was presented during the board of directors meeting held on May 5, 2025.
2. When evaluating risks, factory managers and the management of subsidiaries would pay particular attention to non-financial ESG information and use them	Complied with Sustainable Development Best Practice Principles for TWSE/TPEx Listed Companies.

Assess criteria	Actual governance (Note 1)
	Yes	No	Summary
			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."
3. Environmental issues
(1) Has the Company developed an appropriate environmental management system, given its distinctive characteristics?
(2) Is the Company committed to achieving efficient use of resources, and using renewable materials that produce less impact on the environment?	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.
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	Complied with Sustainable Development Best Practice Principles for TWSE/TPEx Listed Companies.

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) 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		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.

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 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 | |

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) 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		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
			2023	2024	2025
			Public water supply 1000M3	77.075	68.384	63.614

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
	296.537	212.570
3. waste
	2023	2024
Hongzhou	143.18	125.55
Non-hazardous	26.83	22.6
	170.01	148.15
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)
2023	294,279	0
2024	190,809	0

Assess criteria	Actual governance (Note 1)
	Yes	No	Summary
			2025	179.426	0	28.05	6.05
			4.2
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

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
			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 "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. In addition, for organizational greenhouse gas verification, the Taiwan Commodity Testing and Certification Center was entrusted in 2024 to complete the verification in accordance with the requirements of the Environmental Protection Agency's Greenhouse Gas Emission Inventory Operation Guidelines, and issued a greenhouse gas verification statement. In | |

Assess criteria	Actual governance (Note 1)
	Yes	No	Summary
			2025, the Taiwan Commodity Testing and Verification Center was commissioned to conduct verification..
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 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	Complied with Corporate Social Responsibility Code of 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
(2) Has the Company developed and implemented reasonable employee welfare measures (including compensation, leave of absence, and other benefits), and appropriately reflected business performance or outcome in employees' compensations?	V
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, Executive Yuan. The company has established a "Employee Benefits Policy" to regulate various allowances, bonuses, subsidies, and implement employee welfare measures. In addition, the company has established a "Prevention and Handling Measures for Workplace Sexual Harassment Complaints and Disciplinary Actions" and a "Written Declaration Prohibiting Workplace Sexual Harassment" to safeguard the diversity and equality of employees in the workplace.
	2023	2024
The number of female staff	51	46
Female staff proportional	23%	22%
The number of employees	218	208

Actual governance (Note 1)
Yes	No	Summary
		Number of female supervisors	5	4	4
		The proportion of female supervisors	12%	11%	10%
		The number of supervisors	41	36	39
		2.2 If the company makes a profit in the annual settlement, it will give priority to making up for the loss, and will pay employee dividends in accordance with the company's articles of association to allow employees to share the performance or results of the company's operations. The company also adjusts employee salaries in a timely manner with reference to the industry's salary level and salary adjustment range to retain outstanding talents. (As of December 31, 2025, the company still has losses to be made up, so no employee dividends have been paid). On March 5, 2025, the board of directors of the company approved the amendment to Article 27 of the company's articles of association, "If the company has a profit in the year (the so-called profit refers to the profit before the distribution of employee remuneration and director remuneration), 2% shall be allocated for employee remuneration and not more than 2% for director's remuneration. However, if the company still has accumulated losses (including adjustment of

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
			undistributed earnings), it should reserve the amount to make up in advance. The employee remuneration referred to in the preceding paragraph may be made in stock or cash, and not less than 40% of the amount shall be allocated as remuneration for basic employees, and the recipients of the payment may include employees of subordinate companies who meet the conditions set by the board of directors. The remuneration of the directors referred to in the preceding paragraph may only be made in cash. and approved the revision of the Company's internal control system salary accounting and payment operations. 4. 5. Employee Dividends (1). The Company's articles of incorporation stipulate that the annual earnings shall be allocated at a certain rate as employee remuneration, and a certain percentage shall be allocated from the employee remuneration to grassroots employees, and the rest shall be distributed by managers and employees who do not meet the definition of grassroots employees in the preceding paragraph. The ratio in the preceding paragraph shall be in accordance with the Articles of Incorporation of the Company. (2). The definition of the company's grassroots employees refers to full-time employees who are not managers and whose monthly salary is less than NT$6.5. The salary standard for grassroots employees referred to in the preceding paragraph shall be evaluated and adjusted by the

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		company every five years, taking into account its own operating conditions and industry characteristics, and with reference to the salary level of grassroots employees that shall not be lower than the "Regulations Governing Salary Increases and Deductions for Small and Medium-sized Enterprises Employees". Employee dividends shall be distributed in accordance with the company's regulations and the employee roster. The employee dividend roster (grassroots employees, managers and employees who do not meet the definition of grassroots employees) is proposed by the personnel department every year.

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,

3.2 Taoyuan plant has established a labor safety and health committee in accordance with the Occupational Safety Management Act, and if dangerous factors are found in | |

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
			the workplace, immediately eliminate or install appropriate protective equipment. Employee health maintenance: Regularly arrange health check-ups for employees, and conduct 2-hour environmental introduction and safety and health education for new employees; Signed an on-site service contract with the Taipei Occupational Medical Clinic to regularly provide labor health guidance and psychological counseling to employees to improve their health..
3.3 The company has introduced the ISO-45001 occupational safety and health management system in the second half of 2025 and obtained the external certification certificate on February 12, 2026
3.4 Statistics of occupational accidents for our company's employees in the past three years
			2023	2024	2025
			The number of events	0	0	0
			Number	0	0	0
			3.4 In 2025, 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 independent spot checks every month in accordance with the self-inspection list of dangerous goods security

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		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 2025, factory education and training included: General occupational safety and health training (internal) with 792 hours and 500 participants, and specialized operation personnel external training with 186 hours and 25 participants. The number of hours of the Taipei company's 2025 annual external training course is 84 hours, with a total of 4 people participating. | |

Assess criteria	Actual governance (Note 1)
	Yes	No	Summary
(5) Has the Company complied with laws and international standards with respect to customers’ health, safety, and privacy, marketing and labeling in all products and services offered, and implemented consumer/customer protection policies and complaint procedures?	V		5.1 The Company produces synthetic fibers and serves business customers only. To ensure that end consumers have access to environmentally friendly 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			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

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
suppliers' performance on a regular basis?	V
6.2 Suppliers that are more friendly to the environment and workers are placed on the priority procurement list, whereas suppliers that exhibit history of undesirable conduct will have transactions suspended to prevent negative feedback from the general public.
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	2023	25
2024	27	27
2025	31	31
Supplier Integrity and Anti-Corruption	2023	25
2024	27	27

Actual governance (Note 1)
Yes	No	Summary
		Pledge.	2025	31	31	100%
		Supplier Social Responsibility Assessment.	2023	25	25	100%
			2024	27	27	100%
			2025	31	31	100%
		6.4 Sustainable supplier evaluation levels and corresponding measures
		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

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
				for two consecutive years will result in suspension or disqualification of qualified suppliers.
			Inferior (60 points or less)	immediately cease or disqualify qualified suppliers.
			6.5 The company's supplier, 60 Chemical, was found to have illegally landfilled waste on May 23, 2025, and was rated as "poor" by the company's "Supplier Social Responsibility Assessment" evaluation results, and has suspended procurement from the company since June 2025, and requires suppliers to improve their social responsibility.
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 or opinion of a third-party certifier?	V		The company completed the compilation of the "2024 Corporate Sustainability Report" on May 31, 2025, 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 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.		Complied with Corporate Social Responsibility Code of Conduct.

Assess criteria	Actual governance (Note 1)
	Yes	No	Summary
			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 6, 2025) 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 2024 issue was released on May 31, 2024). This report, along with yearly ESG updates, are subsequently presented to the board of directors (last presented on August 6, 2025). 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” 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.

Assess criteria	Actual governance (Note 1)
	Yes	No	Summary
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 “2024 ESG Report” (the 2024 issue was released on May 31, 2025 and send the report to the board of directors on August 6,2025) 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. (Most recently on August 6 2025)
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.

| 2. Describe how the identified climate risks and opportunities affect the business, strategy, and finances of the business (short, medium, and long term). | Risk Management | ☺ Regularly review and assess the processes of climate-related risks with the framework of TCFD.
☺ 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. | To quantify and rank the probability and materiality of the identified risks and opportunities in order to assess the impact 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 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.

Climate-related Risks Matrix

● 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

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 requirement and regulation of sustainability	Climate-related Risk	Climate Change	Financial Impact	Responses and Actions
		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.	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.	In August 2025, the company purchased 1,367.82 KW of solar power generation equipment (electricity number 04-12-5045-55-8) for NT$4,300, and applied to Taiwan Electric Power Company for approval of the power supply plant from December 1, 114 as the official conversion date of power supply, in order to meet the requirements of large electricity users to install renewable energy equipment with 10% of the contracted capacity. In December 2025, solar equipment generated a total of 90445KW/H (kWh), a decrease of about 42.8 metric tons CO2e.
		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	Conducted GHG inventory in accordance with ISO 14064-1 standard. Net-zero emissions as the goal, apply for the

		affected by the potential carbon tax and carbon trading system, resulting in increased operating costs.	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.	Oil-fired boilers have been changed to burn natural gas, significantly reducing air pollution.
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.
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


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 to improve energy


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.

9. Greenhouse gas inventory and assurance status (separately fill out in point 1-1 below).	6. The Company is currently in the process of understanding and evaluating the content of an internal carbon pricing system, and we may use it as a planning tool in the future.
	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.

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	2024	12,219.787	2,306	5.299
	2025	11,011.083	2.119	5.196
Scope 2	2024	22,966.169	2,306	9.959
	2025	22,257.753	2.119	10.504
Scope 3	2023	Not checked	not applicable	not applicable
	2025	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
2024 Assurance Scope: Covers the Taoyuan Plant of Hung Chou Fibre Industrial Co., Ltd. Address: No. 29, Hongzhou St., Dashu Vil., Guishan Dist., Taoyuan City, Taiwan (R.O.C.). Inventory Period: January 1, 2024, to December 31, 2024. Assurance Body:

Taiwan Testing and Certification Center (ETC).

Assurance Criteria:
Conducted in accordance with the Greenhouse Gas Verification Guidelines (June 2024), Regulations Governing Greenhouse Gas Emission Inventory Registration and Verification, Greenhouse Gas Emission Inventory Operation Guidelines (2024), and relevant regulations issued by the Ministry of Environment (MOE). Any matters not specified shall be handled according to the relevant norms of the MOE and accreditation bodies.

Assurance Opinion:
The Center has verified the greenhouse gas (GHG) emissions from man-made fiber manufacturing activities for the period from January 1, 2024, to December 31, 2024, in accordance with the ISO 14064-3:2019 standard. With no outstanding findings, the verification opinion is provided as follows:

Reasonable Assurance Level:
- Direct Emissions: 12,365.7963 $tCO_2e
(Includes stationary combustion, mobile combustion, process, and fugitive emission sources)
- Energy Indirect Emissions: 22,966.1692 $tCO_2e
(From purchased electricity or steam)
- Total Greenhouse Gas Emissions: 35,331.966 $tCO_2e

2023

Assurance Scope:
Covers the Taoyuan Plant of Hung Chou Fibre Industrial Co., Ltd. (No. 29, Hongzhou St., Guishan Dist., Taoyuan City 33372, Taiwan).

Assurance Body:
Taiwan Testing and Certification Center (ETC).

Assurance Criteria:
Conducted in accordance with the Greenhouse Gas Verification Guidelines (June 2024), the Regulations Governing Greenhouse Gas Emission Inventory Registration and Verification, the Greenhouse Gas Emission Inventory Operation Guidelines (2024), and relevant regulations issued by the Ministry of Environment (MOE). Any matters not specified herein shall be handled according to the relevant norms of the MOE and accreditation bodies.

Assurance 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: 1. 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 (公响)	Scope 2 (公响)	Scope 3 (公响)
base year (2022)	14,591,3131	25,703,7759	not applicable
2025	11,011,0830	22,257,7526	not applicable
Comparison with the base year	-3,580,2301	-3,446,0233	not applicable
ratio	75.46%	86.59%	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)			Deviation and causes of deviation from Ethical Corporate Management Best Practice Principles for TWSE/TPEX Listed Companies
		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 committed to fulfilling this commitment?	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 instructions of the authority.
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.	Complied with Articles 4 and 5 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	V		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.	Complied with Articles 2, 6, and 10 to 14 of “Ethical Corporate Management

Assess criteria	Actual governance (Note)
	Yes	No	Summary
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”?			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.
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	Best Practice Principles for TWSE/TPEX- listed Companies”

100

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, penalties, and grievance systems as part of its preventive measures against dishonest conducts? Are the above measures reviewed and revised on a regular basis?	V		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 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 | Complied with Article 7 of “Ethical Corporate |

Assess criteria	Actual governance (Note)
	Yes	No	Summary
			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)	Management Best Practice Principles for TWSE/TPEX-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?
(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	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.
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	Complied with Article 9 of “Ethical Corporate Management Best Practice Principles for TWSE/TPEX-listed Companies”
Complied with Article 17 of “Ethical Corporate Management Best Practice Principles for TWSE/TPEX-listed Companies”

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Assess criteria	Actual governance (Note)
	Yes	No	Summary
policy and prevention against dishonest conducts) to the board of directors on a regular basis (at least once a year)?	V		integrity actions, along with the “ESG Report,” are reported to the board of directors on a yearly basis (last reported on August 6, 2025).
(3) Does the Company have any policy that prevents conflict of interest, and channels that facilitate the report of conflicting interests?			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.
3.3 The Company has specified in its “Personnel Management Policy” and “Material Insider Information Handling and Insider Transaction Prevention Procedures” the recusal principles	Complied with Article 19 of “Ethical Corporate Management Best Practice Principles for TWSE/TPEX-listed Companies”

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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		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 accounting unit; level 3 involves annual routine audits and special audits by the internal audit	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

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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		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. | Principles for TWSE/TPEX-listed Companies |
| | | | | Complied with Paragraph 2, Article 22 of “Ethical |

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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
				Corporate Management Best Practice Principles for TWSE/TPEX- listed Companies”
3. Whistleblowing system
(1) Does the Company provide incentives and means for employees to report misconducts?
Does the Company assign dedicated personnel to investigate the reported misconducts?	V		1.1 The GM’s Office is responsible for accepting misconduct reports and grievances relating to integrity violation. No report of misconduct or violation was received in 2025
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])	Complied with Article 23 of “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.

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Assess criteria	Actual governance (Note)
	Yes	No	Summary
(3) Has the Company provided proper whistleblower protection?	V		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. Spokesperson Heng-Chia Chang serves as the contact window for misconduct reports, whereas the internal audit audit is responsible for carrying 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.

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Assess criteria	Actual governance (Note)
	Yes	No	Summary
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 by domestic investors, investment trust enterprises, and individuals. | Complied with Article 25 of “Ethical Corporate Management Best Practice Principles for TWSE/TPEX-listed Companies” |
| 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) | | | | |

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Assess criteria	Actual governance (Note)
	Yes	No	Summary
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 2025:
1. Legal compliance as the fundamental prerequisite for implementing integrity management: Conducted the "2025 Insider Trading Prevention Seminar" and the "2025 Integrity Management, Code of Ethical Conduct, and Legal Compliance Seminar." A total of 13 participants (10 directors and 3 senior executives) completed 1 hour of training.
2. Company-wide circulation of 2025 "Corporate Governance Codes and Operating Procedures": Disseminated educational materials covering legal compliance, integrity management, codes of ethical conduct, human rights, gender equality in the workplace, and sexual harassment prevention. Training statistics are as follows: Directors and Executives: 12 participants completed 1 hour of reading. Department and Section Heads: 34 participants completed 1 hour of reading. General Staff (including security personnel): 67 participants completed 0.5 hours of reading.
3. Violations against business integrity: 0

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
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 (4 recusal from director)

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

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(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:

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.
Accounting and financial analysis.
Business administration.
Crisis management.
Industry knowledge.
Vision of the global market.
Leadership.
Decision making.

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.

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

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

(the 2026 risk report was presented during the board of directors meeting held on March 2, 2026)

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3. Cybersecurity risk evaluation

The little industry has undergone multiple transformations and outgrown a multitude of crises over the past few years. This transformation is the industry not only improves the terms of management, but also brings new players along with more comprehensive and expanded change in the competitive focus of the market from a blue to blue. "Assess the risk grade for the future functionality and added value." As the industry transits into the digital era characterized by advanced technologies such as Industry 4.0, AI, and AI 2.0, the Company faces yet another threat of elimination, as the process of the company's "functionality" and "data" is yet another threat of elimination, as the process of the company's "functive" and "data" is not be relevant in the future; instead, the ability to integrate information technology is now very close to the end. However, large-scale adoption of information technology gives rise to concerns for the stability and security of the IT environment, and is one area of business that pursues innovation, and is not be neglected for any business that pursues innovation, which is a major part of product or service delivery as the main competitive advantage.

The Company makes relevant, timely, and adequate investments into improving its IT environment and production equipment, and adopts cybersecurity risk management practices that are constantly revised in line with changes in internal control, industry norms, and service provider's recommendations. The

Company assesses cybersecurity risks using a total of 209 criteria across 10 categories as listed below (the criteria is amended according to the "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.

Item No.	Assessment category	Risk rating (%)			Key control measures
		Low	Medium	High
					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 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.

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Item No.	Assessment category	Risk rating (%)			Key control measures
		Low	Medium	High
					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.
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.

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Item No.	Assessment category	Risk rating (%)			Key control measures
		Low	Medium	High
					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.

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(10) Execution of internal control system:
Declaration of Internal Control System:
Hung Chou Fiber Industrial Co., Ltd.
Declaration of Internal Control System
Date: March 2, 2026

The following declaration was made based on the 2025 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 9 directors present at the board meeting dated March 2, 2026

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

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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

(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 28, 2025	1. Acknowledgment of the 2024 business report and financial statements.	1. Acknowledged by shareholders during shareholder meeting
Voting results: Total voting rights of shareholders present at the meeting were 79,460,947 (including 8,587,987 via electronic voting), with 79,424,206 in favor (including 8,551,246 via electronic voting), 14,991 against (including 14,991 via electronic voting), and 21,750 abstained/did not vote (including 21,750 via electronic voting). The number of votes in favor exceeded the statutory amount. The proposal was approved as isand passed..
	2. Acknowledgment of the 2024 deficit compensation proposal.	2. Acknowledged by shareholders during shareholder meeting
Voting results: Total voting rights of shareholders present at the meeting were 79,460,947 (including 8,587,987 via electronic voting), with 79,424,147 in favor (including 8,551,187 via electronic voting), 15,050 against (including 15,050 via electronic voting), and 21,750 abstained/did not vote (including 21,750 via electronic voting). The number of votes in favor exceeded the statutory amount. The proposal was approved as isand passed..
	3 Discussion on the proposal to amend the Company's 'Articles of Association'	3. Approved by the Shareholders' Meeting
Voting results: Total voting rights of shareholders present at the meeting were 79,460,947 (including 8,587,805 via electronic voting), with 79,425,302 in favor (including 8,552,342 via electronic voting), 14,999 against (including 14,999 via electronic voting), and 20,646 abstained/did not vote (including 20,646 via electronic voting). The number of votes in favor exceeded the statutory amount. The proposal was approved as isand passed.

Date	Major resolutions	Execution progress
	4. Complete re-election of the Company's Directors	4 Election Results:Hong Zhou Fiber Industrial Co., Ltd.—At the annual shareholders' meeting, Directors were re-elected. The list of elected individuals is as follows:
Category of Election	Name	Number of Votes Elected
Director Nominee	Chan Cheng-tien	112,047,814
	Yee Jin Industrial Co., Ltd.
Director Nominee	Representative: Cheng Yu-ching	76,514,911
	Yee Jin Industrial Co., Ltd.
Director Nominee	Representative: Chang Heng-chia	75,103,559
	OULIAN International Leasing Co., Ltd.Representative: Chen Kuan-ju	75,103,082
Director Nominee	Chen Lin-te	75,103,021
Independent Director Nominee	Chao Shou-po	75,119,035
Independent Director Nominee	Huang Wei-chi	75,106,223
Independent Director Nominee	Kuo Hsien-chang	75,110,722
Independent Director Nominee	Chen Yi-min	75,106,223

Date	Major resolutions	Execution progress
	5. Proposal to lift the non-competition restrictions for the Company's new Directors and their representatives	5. Approved by the Shareholders' Meeting
Voting results: Total voting rights of shareholders present at the meeting were 79,460,947 (including 8,587,987 via electronic voting), with 79,399,615 in favor (including electronic voting8,526,655 votes), 24,140 against (including 24,140 via electronic voting), and 37,192 abstained/did not vote (including 37,192 via electronic voting). The number of votes in favor exceeded the statutory amount.The proposal was approved as isand passed.
Board of directors
May 9, 2025	1 Report on the actual implementation status of the Company's internal audit for the first quarter of 2025.
2 Report on the implementation status of the Company's greenhouse gas inventory plan for the first quarter of 2025.
3 Report that the Company has completed114the renewal of Directors' and Supervisors' Liability Insurance for the year.
4 Report on the Company's113annual corporate governance evaluation results.
5 Discussion on the Company's financial statements for the first quarter of 2025 and the accountant's reviewreport draft. °
6 Discussion on the amendment of Chapter 10, Section 12 of the Company's Internal Control System, the Computerized Information Management System, and its Internal Audit System.
August 6, 2025	1 Report on the actual implementation status of the Company's internal audit for the second quarter of 2025.
2 Report on the implementation status of the Company's greenhouse gas inventory plan for the second quarter of 2025.
3 Discussion on the Company's Corporate Sustainability Promotion Team's113annual work execution results and114annual work plan.
4 Discussion on the Company's financial statements for the first half of 2025 and the accountant's reviewreport draft. °
5 Discussion on the renewal of credit lines with various banks.
November 5, 2025	1 Report on the actual implementation status of the Company's internal audit for the third quarter of 2025.
2 Report on the implementation status of the Company's greenhouse gas inventory plan for the third quarter of 2025.

Date	Major resolutions	Execution progress
	3 114Circulation of ESG corporate sustainability education and promotion materials for the year.4 Discussion on the independence and suitability of the Company's certified public accountant and the review of audit fees.5 Discussion on the Company's114third quarter financial statements for the year and the accountant's reviewreport draft.6 Discussion on the appointment of the Company's General Manager.7 Review of remuneration for Directors, Supervisors, and Managers as deliberated by the Sixth Session of the Remuneration Committee.8 Discussion on the Company's115annual internal audit work plan.9 Discussion on the renewal of credit lines with various banks.
March 2, 2026	1 Report on the actual implementation status of the Company's internal audit for the fourth quarter of 2025.2 Report on the implementation status of the Company's greenhouse gas inventory plan for the fourth quarter of 2025.3 Report on114the Company's Board of Directors' performance evaluation results for the year, for record.4 Presentation of the minutes of the Second Meeting of the Sixth Session of the Remuneration Committee, for record.5Report on the Company's115annual insider trading and prevention promotion, and115annual integrity management and code of ethical conduct and legal compliance promotion.6Discussion on the Company's115annual risk report.7 Discussion on the Company's114annual business report, financial statements, and accountant's auditreport draft.8 Discussion on the change of the Company's financial report certifying accountant (firm's internal rotation).9 Discussion on the appointment of the Company's certified public accountant.10 Discussion on the Company's114annual profit and loss appropriation proposal.11 Discussion on the amendment of the Company's 'Procedures for the Acquisition or Disposal of Assets' proposal.12 Discussion on convening the Company's 2026 Annual Shareholders' Meeting.13 Discussion on establishing matters related to shareholder proposals.14 Discussion and approval of the content of the Company's114annual internal control statement.

(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	1,100	300	1,400	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 2025		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

Position	Name	Change of shareholding in 2025		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
Independent director	Hsien-Chang Kuo
*Director	Yi-Ching Chan	0	0	0	0
*Director	Shang Yu Hsiao	0	0	0	0
Director	Lin-Te Chen	0	0	0	0
Director	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.)

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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.	36,601,000	27.7%	-	-	-	-	Yi Tong Fiber Co., Ltd.
Kwang Ming Silk Mill Co., Ltd.	Common Chairman
Common Chairman
Representative: Cheng-Tien Chan	5,532,037	4.19%	-	-	-	-
Yi Tong Fiber Co., Ltd.	10,000,000	7.57%	-	-	-	-	Yi Jinn Industrial Co., Ltd.
Kwang Ming Silk Mill Co., Ltd.	Common Chairman
Common Chairman
Representative: Cheng-Tien Chan
Kwang Ming Silk Mill Co., Ltd.	7,000,000	5.30%	-	-	-	-	Yi Jinn Industrial Co., Ltd.
Yi Tong Fiber Co., Ltd.	Common Chairman
Common Chairman
Representative: Cheng-Tien Chan
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
Huang Jianzhang	5,482,000	4.15%
CHOU WEI FIBER CO., LTD	3,693,000	2.80%	-	-	-	-	-	-
Yu-Chin Chen	2,612,724	1.98%	-	-	-	-	Shu-Yun Chen	Sibling
Hsiang-Chun Chen	2,500,000	1.89%					-	-
Fu Hsun Fiber Industries Co., Ltd.	2,000,000	1,51%	-	-	-	-	-	-
Representative: Yu-Chin Chen							Shu-Yun Chen	Sibling
Chen, Jui-Liang	1,719,000	1.30%	-	-	-	-	-	-

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.

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Four. Capital and shares

(1) Source of capital:

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

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

	Authorized capital	Remarks

Share category	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

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(4) List of major shareholders

March 24, 2026

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
Huang Jianzhang	5,482,000	4.15
CHOU WEI FIBER CO., LTD	3,693,000	2.80
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
Chen, Jui-Liang	1,719,000	1.30

(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.

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Eight. Operational overview

Business activities:

(1) Business activities:

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
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.

Current products of the Company: polyester filaments and polyester chips.
New products planned for the future

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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 2025, 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;

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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/]

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.

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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 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:

Graphene Fiber Production and R&D:

Graphene fibers have reached mass production stage and are currently manufactured on a make-to-order (MTO) basis. The product line has been expanded to include a series of graphene-based products. Specifically, trials are being conducted on various cross-sectional profiles (e.g., square cross-sections). Beyond the existing far-infrared (FIR) functionality, these square cross-sections are designed to increase fabric density, thereby accelerating heat retention and thermal efficiency.

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37.5® Technology Fiber (Volcanic Ash Yarn):

Production of 37.5® technology fiber products reached 374 tons in 2025, generating NT$37.21 million in sales revenue. In response to customer demand, new specifications are being progressively introduced. Production capacity is expected to further expand, with continued growth projected for 2026. (4) Long and short-term business plans

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.

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:

(1) Market analysis:

Locations where products are mainly sold:

Unit: NTD thousands

	2024		2025
	Amount	Percentage	Amount	Percentage
Taiwan	2,275,920	98.70%	2,092,712	98.76%
Asia	30,065	1.30%	26,264	1.24%
Total	2,305,985	100.00%	2,118,976	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 2025, ranking 5th among peers. (Source: Taiwan Man-Made Fiber Industries Association)

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(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 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

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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 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.

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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)

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

	2024				2025				2026 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	1,425,552	69.41	None	Oriental Petrochemical	1,048,918	64.95	None	Oriental Petrochemical	188,572	66.26	None
2	Oriental Union	431,245	21.00	None	Oriental Union	328,311	20.33	None	Oriental Union	48,366	16.99	None
	Others	196,889	9.59		Others	237,729	14.72		Others	47,673	16.75
	Net purchase	2,053,686	100		Net purchase	1,614,958	100		Net purchase	284,611	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

	2024				2025				2026 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	606,314	26.29	None	Kwang Ming Silk Mill	729,056	34.41	None	Kwang Ming Silk Mill	160,251	36.59	None
2	Kwang Ming Silk Mill	589,129	25.55	Common Chairman	Lealea	400,955	18.92	Common Chairman	Lealea	138,815	31.70	Common Chairman
3	Yi Shin Textile	296,600	12.86	None	Yi Shin Textile	197,504	9.32	Common Chairman	Yi Shin Textile	40,291	9.20	Common Chairman
	Others	813,942	35.30		Others	791,461	37.35		Others	98,555	22.51
	Net sales	2,305,985	100		Net sales	2,118,976	100		Net sales	437,912	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.

Information on employees in the last two years and as of the date of publication of the annual report:

Year		2024	2025	Year-to-date of publication of the annual report
Employee count	Operators	81	81	81
	Staff	94	92	90
	Part-time workers	36	34	34
	Total	211	207	205
Average age		47	48	48
Average years of service		10 years	11 years	11 years
Academic background	Doctoral Degree	—	—
	Master's Degree	4	4	4
	Bachelor Degree	58	58	58
	Senior high school	70	70	70
	Below senior high school (including foreign workers)	79	75	73

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.

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5. Labor-management relations:

(1) 2025 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.
2025 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.
2025:
No feedback was received through the employee suggestion box or email.
Labor Disputes	2025:
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.

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| | 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.
2025 CSR Activities:
Completed the 2024 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.
2025:
Completed the 2024 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 Rights Compared to the Previous Year | 2024:
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.
2025 (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.

6. 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.

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.

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,

147

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.

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, 2025 | December 31, 2024 | Difference | |
| --- | --- | --- | --- | --- |
| | | | Amount | % |
| Current assets | $933,881 | $764,479 | $169,402 | 22.16 |
| Fixed assets | 1,045,235 | 1,038,197 | 7,038 | 0.68 |
| Other assets | 747,033 | 764,997 | (17,964) | (2.35) |
| Total assets | 2,726,149 | 2,567,673 | 158,476 | 6.17 |
| Current liabilities | 733,949 | 570,727 | 163,222 | 28.60 |
| Long-term liabilities | 859,890 | 924,561 | (64,671) | (6.99) |
| Total liabilities | 1,593,839 | 1,495,288 | 98,511 | 6.59 |
| Share capital | 1,321,124 | 1,321,124 | - | - |
| Retained earnings | (180,111) | (240,036) | 59,925 | 24.96 |
| Total shareholders’ equity | 1,132,310 | 1,072,385 | 59,925 | 5.59 |

(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 an increase in financial assets at fair value through profit or loss (FVTPL) during the current period.
Current liabilities increased compared to the previous period, mainly attributable to an increase in accounts payable resulting from increased raw material procurement in response to market conditions, as well as an increase in long-term liabilities due within one year.

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Financial performance

(1) Comparative analysis of financial performance

Year	2025	2024	Amount of variation	Variation %
Operating revenues
Sales revenues	$2,118,976	$2,342,732	$(223,756)	(9.55)
Operating costs
Cost of sale	(2,007,039)	(2,298,594)	(291,555)	(12.68)
Gross profit	111,937	44,138	67,799	153.61
Operating expenses	(46,927)	(49,379)	(2,452)	(4.97)
Operating profit/loss	65,010	(5,241)	70,251	134.04
Non-operating income and expenses	6,358	(17,404)	23,762	(136.53)
Pre-tax profit (loss)	71,368	(22,645)	94,013	415.16
Income tax benefits (expenses)	11,443	143	11,300	763.51
Current net income (loss) from continuing operations	59,925	(22,788)	82,713	362.97
Current net income (loss)	59,925	(22,788)	82,713	362.97
Other comprehensive income for the current year	-	-	-	-
Total comprehensive income for the current period	59,925	(22,788)	82,713	362.97

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

Gross Profit and Operating Income:

The gross profit and operating income for the current period increased compared to the previous year. This was primarily due to product pricing more accurately reflecting raw material costs, alongside the company's effective control over production costs.

Non-operating Income:

Non-operating income increased during the current period, mainly attributable to an increase in gains from short-term securities investments.

Net Income Before Tax:

Due to the aforementioned factors, net income before tax for the current period increased compared to the previous year. (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 2025 and takes into account variations in market demand factors from 2025 to set targets. The projected sales volume for 2026 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 2025.

Unit: tonnes

Main products	Unit	Estimated sales volume
Synthetic fibers	Tonnes	59,260 (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
$49,831	$(21,902)	$(46,531)	72,210	$53,608	-	-

(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$53,608,000
Projected net cash flow from operating activities for the year: NT$50,000,000
Projected net cash flow from investing activities for the year:NT$(10,000,000)
Projected net cash flow from financing activities for the year: NT$(50,000,000)
Projected cash balance: NT$43,608,000
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 2025, 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.

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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
R&D expenses: The Company expects to spend approximately NT$2 million into sample development and development-related activities in 2025

(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.

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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.
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.:

The Company's Audit Committee and Board of Directors evaluated the independence and competency of the certified public accountants (CPAs) on March 2, 2026, with reference to the Audit Quality Indicators (AQIs), and formally approved their appointment.
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 2025

51789_rns_2026-06-01_33e29447-a8bd-4007-95da-e267a0fcc00f.pdf

Hung Chou Fiber Industrial Co., Ltd.

2025 Annual Report

Table of Contents

One. Business Report to Shareholders

I. 2025 Business Results:

Strategic Realignment and Product Innovation

Green Supply Chain and Asset Optimization

II. Outline of the 2026 Business Plan

(1) Business Strategy

(2) Projected Sales Volume and Basis

(3) Key Production and Sales Policies

Three. Implementation of corporate governance

1. Organization

Chart 1: Major shareholders of corporate shareholders

Background of directors and supervisors (2)

(2) Board independence:

2. Severance pay and pension provided and expensed in the most recent year: NT$0

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

5. Labor-management relations:

6. Cybersecurity management

AI assistant

H.C. — Annual Report 2025

51789_rns_2026-06-01_33e29447-a8bd-4007-95da-e267a0fcc00f.pdf

Hung Chou Fiber Industrial Co., Ltd.

2025 Annual Report

Table of Contents

One. Business Report to Shareholders

I. 2025 Business Results:

Strategic Realignment and Product Innovation

Green Supply Chain and Asset Optimization

II. Outline of the 2026 Business Plan

(1) Business Strategy

(2) Projected Sales Volume and Basis

(3) Key Production and Sales Policies

Three. Implementation of corporate governance

1. Organization

Chart 1: Major shareholders of corporate shareholders

Background of directors and supervisors (2)

(2) Board independence:

2. Severance pay and pension provided and expensed in the most recent year: NT$0

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

5. Labor-management relations:

6. Cybersecurity management

More from H.C.

H.C. Annual Report 2025