HCG - Audit Report / Information 2024

Stock Code: 1810

Hocheng Corporation

Parent Company Only Financial Statements and Independent Auditors’ Report

For the Years Ended December 31, 2024 and 2023

Address: No. 398, Xingshan Road, Neihu District, Taipei City Telephone: (02)2792-5511

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Item
I. Cover page
II. Table of Contents
III. Independent Auditors’ Report
IV. Balance Sheet
V. Statement of Comprehensive income
VI. Statement of Changes in Equity
VII. Statement of Cash Flows
VIII. Notes to the Parent-Only Financial Statements
(I) Company History
(II) Date and Procedures of Authorization of Financial Statements for Issue
(III) Newly Issued or Revised Standards and Interpretations
(IV) Summary of Significant Accounting Policies
(V) Significant Accounting Judgments, Estimates and Assumptions
(VI) Contents of Significant Accounts
(VII) Related-Party Transactions
(VIII) Pledged Assets
(IX) Material Contingent Liabilities and Unrecognized Contractual
Commitments
(X) Losses due to Major Disasters
(XI) Significant Subsequent Events
(XII) Others
(XIII) Additional Disclosures
1. Significant transactions information
2. Information on investees
3. Information on investments in China
(XIV) Segment Information
IX. List of Major Accounting Items Page

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Item I. Cover page II. Table of Contents III. Independent Auditors’ Report IV. Balance Sheet V. Statement of Comprehensive income VI. Statement of Changes in Equity VII. Statement of Cash Flows VIII. Notes to the Parent-Only Financial Statements (I) Company History (II) Date and Procedures of Authorization of Financial Statements for Issue (III) Newly Issued or Revised Standards and Interpretations (IV) Summary of Significant Accounting Policies (V) Significant Accounting Judgments, Estimates and Assumptions (VI) Contents of Significant Accounts (VII) Related-Party Transactions (VIII) Pledged Assets (IX) Material Contingent Liabilities and Unrecognized Contractual Commitments (X) Losses due to Major Disasters (XI) Significant Subsequent Events (XII) Others (XIII) Additional Disclosures 1. Significant transactions information 2. Information on investees 3. Information on investments in China (XIV) Segment Information IX. List of Major Accounting Items	Page
	1 2 3 4 5 6 7 9 9 9`～`10 12`～`29 29`～`30 30`～`66 66`～`70 71 71 72 72 73 73`～`79 79`～`80 81 91 82`～`96

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Independent Auditor's Report

To the Board of Directors of Hocheng Corporation:

Audit opinion

We have audited the consolidated financial statements of Hocheng Corporation, which comprise the balance sheets as of December 31, 2024 and 2023, the statements of comprehensive income, changes in equity and cash flows for the years then ended, and notes to the financial statements, including a summary of significant accounting policies.

In our opinion, based on our audits and the report of another auditor (please refer to paragraph Other Matters), the accompanying parent company only financial statements present fairly, in all material respects, the consolidated financial position of Hocheng Corporation and its subsidiaries as of December 31, 2024 and 2023, and its financial performance and its cash flows for the years then ended in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers.

Basis for Opinion

We conducted our audits in accordance with the Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants and auditing standards. Our responsibilities under those standards are further described in the Auditors' Responsibilities for the Parent-Only Financial Statements section of our report. We are independent of the Company in accordance with the Certified Public Accountants Code of Professional Ethics in the Republic of China (“the Code”), and we have fulfilled our other ethical responsibilities in accordance with the Code. Based on our audits and the report of another auditor, we believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Based on our audits and the reports of other auditors, we believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of the most significance in our audit of the parent company only financial statements of the current period for the Company. These matters were addressed in the context of our audit of the parent company only financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these issues. We have determined the matters described below to be the key audit matters to be communicated in our report:

I. Valuation of inventories

Refer to Note 4(7) and Note 5 for the accounting policy of inventory valuation, as well as the estimation and assumption uncertainty of the valuation of inventory, respectively. Information on the estimation of the valuation of inventory is disclosed in Note 6(6) of the parent company only financial statements

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Description of key audit matters:

Inventories are measured at the lower of cost or net realizable value in the financial statements. The Company’s products are mainly sold to consumers through distributors and big box stores. The Company faces competition from its competitors with homogeneous products and low-price strategies. The risk of inventory costing might exceed its net realizable value due to obsolete products or inconsistency with consumers' preferences.

How the matter was addressed in our audit:

Our audit procedures for the above key audit matters included understanding the accounting policies of the Company for impairment loss provision, examining whether inventory write-down or obsolescence allowance had been provided for inventories according to the Company’s existing accounting policies (including implementing sampling procedures, verifying relevant forms and certificates to verify and accuracy of its calculation), and evaluating the adequacy of the Company’s disclosures related to inventory write-down or obsolescence allowance.

II. Investments accounted for using the equity method

Refer to Notes 4(8) and (9) for the accounting policy of investment accounted for using the equity method. Information on investment accounted for using the equity method and the share of gains from associates and joint ventures recognized by using the equity method is disclosed in Note 6(7) of the parent company only financial statements. Description of key audit matters:

The amount of investments accounted for using the equity method of Hocheng Corporation amounted to NT$1,668,964 thousand, accounting for 20% of the total assets of Hocheng Corporation; therefore, investments accounted for using the equity method are included as a matter that requires close attention.

How the matter was addressed in our audit:

The audit process we perform for the above key audit matter includes providing audit instructions to and communicating with the audit staff of other component entities, acquiring the financial statements of the component entities, performing a check calculation for the correctness of the recognized investment amount under the equity method and attributable period, and assessing whether the management has properly disclosed the investment under the equity method.

Other Matters

For investment accounted for by using the equity method included in the Company’s financial statements, we did not audit the financial statements of certain companies. Those financial statements were audited by other auditors. Therefore, our opinion expressed for the abovementioned financial statements, insofar as they relate to the financial statements of such companies, is based solely on the reports of other CPAs. Investment accounted for by using the equity method of the abovementioned investees accounted for 4% and 7% of total assets as of December 31, 2024 and 2023, respectively; the

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share of gains or losses from subsidiaries, associates, and joint ventures accounted for (91)% and (284)% of net profit before tax for the years ended December 31, 2024 and 2023, respectively. Responsibilities of Management and Those Charged with Governance for the Parent-Only Financial Statements

Management is responsible for the preparation and fair presentation of the parent company only financial statements in accordance with the Regulations Governing the Preparation of Financial Reports by the Securities Issuers and for such internal control as management determines is necessary to enable the preparation of parent company only financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the parent company only financial statements, management is responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations or has no realistic alternative but to do so.

Those charged with governance (including the Audit Committee) of the Company are responsible for overseeing the Group’s financial reporting process.

Auditors' Responsibilities for the Audit of the Parent-Only Financial Statements

Our objectives are to obtain reasonable assurance about whether or not the parent company only financial statements as a whole are free from material misstatements, whether due to fraud or error and to issue an auditors' report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with the auditing standards will always detect a material misstatement when it exists in the parent company only financial statements. Misstatements can arise from fraud or error. They are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these parent-only financial statements.

As part of an audit in accordance with auditing standards generally accepted in the Republic of China, we exercised professional judgment and professional skepticism throughout the audit. We also:

Identified and assessed the risks of material misstatement of the parent company only financial statements, whether due to fraud or error, designed and performed audit procedures responsive to those risks, and obtained audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management’s use of the going concern basis of accounting and,

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based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the parent company only financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Company to cease to continue as a going concern.

Evaluate the overall presentation, structure and content of the parent company only financial statements, including the disclosures, and whether the parent company only financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
Obtain sufficient and appropriate audit evidence regarding the financial information of investees accounted for using the equity method to express an opinion on the parent company only financial statements. We are responsible for the direction, supervision and performance of the Company’s audit. We remain solely responsible for our audit opinion of the Company.

The planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, where applicable, related safeguards.

From the matters communicated with those charged with governance, we determined those matters that were of most significance in the audit of the 2024 parent company only financial statements of the Group and are, therefore, key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

KPMG Taiwan

CPA Hsu, Shu-Min Wu Tsao-Jen

No. of approval and Jin-Guan-Zheng-Liu-Zi certification from the :No.0940100754 competent authority of Jin-Guan-Zheng-Shen-Zi No. securities 1070304941 March 11, 2025

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Hocheng Corporation

Balance Sheet

December 31, 2024 and 2023

`Unit: NT$ thousand`

2024.12.31 Amount % $ 376,360 4 129,998 2 306,385 4 495,993 6 34,989 - 36,260 - 1,135,376 13 61,675 1	2024.12.31	% 2 1 - 1 2 1 3 - - - - - 1	2023.12.31 Amount % 350,000 5 - - 12,180 - 38,283 - 165,204 2 79,080 1 218,446 3 5,309 - 45,015 - 7,135 - 19,566 - 440,000 5 62,391 1 1,442,609 17 - - 346,718 5 27,698 - 19,057 - 393,473 5 1,836,082 22 3,023,037 36 16,587 - 3,017,205 35 617,424 7 (4,781) - 6,669,472 78 8,505,554 100	2023.12.31 Amount % 350,000 5 - - 12,180 - 38,283 - 165,204 2 79,080 1 218,446 3 5,309 - 45,015 - 7,135 - 19,566 - 440,000 5 62,391 1 1,442,609 17 - - 346,718 5 27,698 - 19,057 - 393,473 5 1,836,082 22 3,023,037 36 16,587 - 3,017,205 35 617,424 7 (4,781) - 6,669,472 78 8,505,554 100
	Amount $ 168,615 100,000 11,214 36,544 194,322 76,118 213,829 5,957 12,191 4,703 13,930 25,000 52,683		Amount 350,000 - 12,180 38,283 165,204 79,080 218,446 5,309 45,015 7,135 19,566 440,000 62,391

2,577,036 30
694,706 8 1,668,964 20 2,822,702 33 34,224 1 443,276 5 12,921 - 40,362 1 21,516 - 168,762 2 2,358 - 32,577 -
	915,106	11	1,442,609	17
	375,000 349,123 21,269 19,404	5 4 - -	- 346,718 27,698 19,057	- 5 - -
	764,796	9	393,473	5
	1,679,902	20	1,836,082	22
	3,023,037 16,847 3,139,684 664,715 (4,781)	35 - 37 8 -	3,023,037 16,587 3,017,205 617,424 (4,781)	36 - 35 7 -
5,942,368 70
	6,839,502	80	6,669,472	78
	$ 8,519,404	100	8,505,554	100
$ 8,519,404 100

(Please refer to the accompanying notes to parent company only financial statements)

Managerial officer: Shih-Chieh Chen

Chairman: Li- Chien Chiu

Head-Finance & Accounting: Yueh-Ying Lo

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Hocheng Corporation

Statement of Comprehensive income January 1 to December 31, 2024 and 2023

Unit: NT$ thousand

2024	% 100 76	2023
Amount $ 3,132,034 2,387,917		Amount 3,255,265 2,411,916
744,117 3,145 8,632	24 - -	843,349 8,632 7,060
749,604	24	841,777
473,085 175,522 100,377 (1,920)	15 6 3 -	462,226 154,133 109,406 224
747,064	24	725,989
2,540	-	115,788
4,222 98,559 (5,988) (17,264) (15,663)	- 3 - (1) (1)	1,678 109,837 (7,117) (21,987) (141,745)
63,866	1	(59,334)
66,406 7,988	1 -	56,454 37,107
58,418	1	19,347
51,538 47,945 46,481 12,188	2 2 1 -	9,486 144,015 91,973 925
133,776	5	244,549
38,037 - -	1 - -	17,922 - -
38,037	1	17,922
171,813	6	262,471
$ 230,231	7	281,818
$	0.19
$	0.19

(Please refer to the accompanying notes to parent company only financial statements)

Chairman: Li-Chien Chiu Managerial officer: Shih-Chieh Chen Head-Finance & Accounting: Yueh-Ying Lo

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Hocheng Corporation

Statement of Changes in Equity January 1 to December 31, 2024 and 2023

Unit: NT$ thousand

Shares	Capital surplus 15,223		Retained earnings	Retained earnings	Retained earnings	Other Components of Equity Others Foreign operations Profit or loss measured at fair value Exchange differences on translation of foreign operations Unrealized (losses) gains of financial assets at fair value through other comprehensive income (1,184) 377,823 - - 17,922 240,007 17,922 240,007 - - - - - - - - - - - (17,144) 16,738 600,686 - - 38,037 85,688 38,037 85,688 - - - - - (76,437) - - - - - 3 54,775 609,940
						Others Profit or loss measured at fair value Unrealized (losses) gains of financial assets at fair value through other comprehensive income 377,823 - 240,007 240,007 - - - - - (17,144) 600,686 - 85,688 85,688 - - (76,437) - - 3 609,940
Common stock			Legal	Special reserve	Unappropriate d earnings 1,598,041
			reserve
			980,671	458,116
	- -		- -	- -	19,347 4,542
	-		-	-	23,889
	- - (3) 1,083 284 -		22,910 - - - - -	- - - - - -	(22,910) (60,656) - - - 17,144
	16,587 - -		1,003,581 - -	458,116 - -	1,555,508 58,418 48,088
	-		-	-	106,506
	- - - 171 89 -		4,103 - - - - -	- - - - - -	(4,103) (60,461) 76,437 - - (3)
	16,847	1,007,684		458,116	1,673,884

( Please refer to the accompanying notes to parent company only financial statements) Managerial officer: Shih-Chieh Chen

Chairman: Li-Chien Chiu

Head-Finance & Accounting: Yueh-Ying Lo

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Hocheng Corporation

Statement of Cash Flows

January 1 to December 31, 2024 and 2023

Unit: NT$ thousand

Cash flows from operating activities: Profit before tax from continuing operations Net income before tax Adjustments to reconcile profit (loss) Depreciation Amortization expense Expected credit impairment losses Net gains on financial assets at fair value through profit or loss Interest expenses Interest income Dividend income Share of losses (gains) of subsidiaries, associates, and joint ventures recognized by using the equity method Gains (losses) from disposal and scrapping of property, plant and equipment (gain) loss on lease modification Loss on disposal of intangible assets Unrealized (Realized) Sales (Gains) Losses Total items of income and expenses Changes in assets/liabilities related to operating activities: Net changes in assets related to operating activities: Notes receivable Accounts receivables Other receivables Inventory Other current assets Net defined benefit assets liabilities Total net changes in assets related to operating activities Net changes in liabilities related to operating activities Notes payable Accounts payable Other payables Debt allowance Other current liabilities Total net changes in liabilities related to operating activities Total net changes in assets and liabilities related to operating activities Total item of adjustments Cash inflows generated from operations Interest received Dividends received Interest paid Income tax paid Net cash inflows from operating activities	2024 $ 66,406 137,289 4,358 (1,920) (1,732) 17,264 (4,222) (29,169) 15,663 6 (146) - (5,487)	2023 56,454 149,793 4,853 224 (3,572) 21,987 (1,678) (28,658) 141,745 (886) 209 558 1,572 286,147 45,489 160,770 (8,052) 96,129 11,243 (35,786) 269,793 (64,110) (28,945) (106,929) (4,258) (8,482) (212,724) 57,069 343,216 399,670 1,678 61,965 (21,900) (15,803) 425,610
	131,904
	79,204 (2,646) (13,973) 11,255 5,222 (12,372)
	66,690
	(2,705) 26,156 (4,003) (2,432) (9,708)
	7,308
	73,998
	205,902
	272,308 4,222 51,732 (17,230) (37,784)
	273,248

(Please refer to the accompanying notes to parent company only financial statements) Chairman: Li-Chien Chiu Managerial officer: Shih-Chieh Chen Head-Finance & Accounting: Yueh-Ying Lo

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Hocheng Corporation

Statement of Cash Flows (cont’d)

January 1 to December 31, 2024 and 2023

Unit: NT$ thousand

Cash flows from investing activities: Acquisition of financial assets measured at fair value through other comprehensive income Disposal of financial assets measured at fair value through other comprehensive income Acquisition of financial assets at fair value through profit or loss Disposal of financial assets at fair value through profit or loss Acquisition of investments accounted for under the equity method Acquisition of property, plant and equipment Proceeds from disposal of property, plant and equipment Decrease in refundable deposits Acquisition of intangible assets Disposal of intangible assets Cash inflow from merger Other Financial assets Other non-current assets Net cash outflows (inflows) from investing activities Cash flows from financing activities: (Decrease) Increase in short-term borrowings Increase (Decrease) in short-term notes payable Increase in long-term loans Decrease in long-term loans Increase in guarantee deposits received Repayment of principal of lease liabilities Cash dividends paid Others Net cash outflows from financing activities Net increase in cash and cash equivalents during the period Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year	2024 (922) 2,924 (11,000) - - (44,586) 65 2,125 (1,590) - - (26) (11,552)	2023 (23,434) 47,330 (52,900) 24,259 (150,620) (51,543) 6,140 18,057 (1,863) 356 257,434 - (1,144) 72,072 20,000 (105,000) - (80,000) - (42,447) (60,461) - (267,908) 229,774 140,275 370,049
	(64,562)
	(181,385) 100,000 400,000 (440,000) 347 (21,047) (60,461) 171
	(202,375)
	6,311 370,049
	$ 376,360

(Please refer to the accompanying notes to parent company only financial statements) Managerial officer: Shih-Chieh Chen

Chairman: Li-Chien Chiu

Head-Finance & Accounting: Yueh-Ying Lo

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Hocheng Corporation Notes to the Parent-Only Financial Statements For the Years Ended December 31, 2024 and 2023

(Expressed in NT$ thousand, unless otherwise specified)

I. Company History

Hocheng Corporation (the “Company”) was incorporated in 1961 under the approval of the Ministry of Economic Affairs. The address of its registered office is 1F, No.398, Xingshan Rd., Neihu District, Taipei City 114, Taiwan. The Company primarily engages in the manufacturing and trading of residential equipment (i.e., bathtubs, toilets), kitchen equipment, copper pipe equipment and construction of national housing.

II. Approval date and procedures of the consolidated financial statements:

The accompanying parent-only financial statements were authorized for issue by the Board of Directors (the “Board") on March 11, 2025.

III. New standards, amendments and interpretations adopted:

(I) The impact of the International Financial Reporting Standards (“IFRSs”) endorsed by the Financial Supervisory Commission, which have already been adopted.

The Company has initially adopted the following new amendments, which do not have

a significant impact on its parent company only financial statements, from January 1, 2024.

‧Amendments to IAS1 “Classification of Liabilities as Current or Non-current”
‧Amendments to IAS1 “Non-current Liabilities with Contractual Terms”
‧Amendments to IAS 7 and IFRS 7 "Supplier Financing Arrangements"
‧Amendments to IFRS 16 "Lease Liability in a Sale and Leaseback"
(II) The impact of IFRS endorsed by the FSC but not adopted

The Company assesses that the adoption of the following new amendments, effective for the annual period beginning on January 1, 2025, would not have a significant impact on its parent company only financial statements.

‧Amendments to IAS1 “Disclosure of Accounting Policies”
(III) The impact of IFRS issued by IASB but not yet endorsed by the FSC

The IASB has issued and amended the following standards and interpretations that are not yet approved by the FSC:

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New standards amendments and interpretations adopted Main amendments IFRS18"Expression and The new standards introduce three Disclosure of Financial types of income and expenses, two Statements small sums of gains and losses, and one single note about the performance measurement of the management. These three amendments and enhancements provide a guide for how to divide information in financial statements, and provide users with better and more consistent information to lay the foundation. This will affect all companies.

Effective date announced by the Board of Directors January 1, 2027

‧The more structured income statement: According to the existing standards, the Company uses different formats to express its operating results, so that investors can easily compare the financial performance of different companies. The new standard uses a more structured income statement, and introduces the new definition of "operating profits" as a sum. All income and expenses are classified into three new types based on the Company's main business activities.

‧Management Performance Measurement (MPM): The new standard introduces the definition of management performance measurement, and requires the Company to provide the information on each measurement indicator in a single note to the financial statements, and to explain the calculation and how to adjust the measured indicator and the amount recognized in the IFRS accounting standards.

‧More detailed information: The new standards include how companies can strengthen the guidance on information classification in financial statements. This includes whether the information should be included in the main financial statements or further divided in the notes.

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The Company is currently evaluating the impact of the above-mentioned standards and interpretations on the Company's financial position and business results. The relevant impact will be disclosed when the evaluation is completed.

The Company assesses that the following IFRS issued by IASB but not yet endorsed by the FSC will not have significant effects on the consolidated financial statements.

‧Amendments to IFRS10 and IAS 28 “Sale or Contribution of Assets between An Investor and Its Associate or Joint Venture”
‧Amendment to IFRS 17 “Insurance Contracts” and IFRS 17
‧IFRS 19 "Disclosure of Subsidiaries not Responsible for Public Expenditure”
‧Amendments to IFRS 9 and IFRS 7 "Classification and Measurement of Financial Instruments
‧Annual improvements to IFRS Accounting Standards
‧Amendment to IFRS 9 and IFRS 7 "Contracts for Renewable Electricity from Nature”

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Hocheng Corporation Parent Company Only Financial Statements (cont’d)

IV. Summary of significant accounting policies

The significant accounting policies presented in the parent company only financial statements are summarized below. Except for the explanation of Note 3, the following accounting policies were applied consistently throughout the periods presented in the parent company only financial statements.

(I) Statement of compliance

These parent company only financial statements have been prepared in accordance with the "Regulations Governing the Preparation of Financial Reports by Securities Issuers."

(II) Basis of preparation

1. Basis of measurement

The parent company only financial statements have been prepared on the historical cost basis, except for the following material items in the balance sheet:

(1) Financial assets at fair value through profit or loss are measured at fair value;
(2) Financial assets at fair value through other comprehensive income are measured at fair value;
(3) The net defined benefit liabilities (assets) are recognized as the fair value of the plan assets less the present value of the defined obligation, which is limited, as explained in Note 4(17).

2. Functional and presentation currency

The Company has its functional currency as the currency of the primary economic environment in which it operates. The parent-only financial statements are presented in New Taiwan dollars, which is the Company's functional currency. All financial information presented in NTD has been rounded to the nearest thousand.

(III) Foreign currency

1. Foreign currency transaction

Transactions in foreign currencies are translated into the respective functional currencies of Group entities at the exchange rates at the dates of the transactions. At the end of each subsequent reporting period (“the reporting date”), monetary items denominated in foreign currencies are translated into functional currencies using the exchange rate at that date. Non-monetary items denominated in foreign currencies that are measured at fair value are translated into functional currencies using the exchange rate at the date that the fair value was determined. Non-monetary items denominated in foreign currencies that are measured based on historical cost are translated using the exchange rate at the date of the transaction.

Exchange differences are generally recognized in profit or loss, except for those

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Hocheng Corporation Parent Company Only Financial Statements (cont’d)

differences relating to the following, which are recognized in other comprehensive income:

(1) an investment in equity securities designated as at fair value through other comprehensive income;
(2) a financial liability designated as a hedge of the net investment in a foreign operation to the extent that the hedge is effective; or
(3) qualifying cash flow hedges to the extent the hedge are effective.
Foreign operations

The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising from acquisitions, are translated into the presentation currency at the exchange rates at the reporting date. The income and expenses of foreign operations are translated into the presentation currency at the average exchange rate. Exchange differences are recognized in other comprehensive income.

When a foreign operation is disposed of such that control, joint control, or significant influence is lost, the cumulative amount in the translation reserve related to that foreign operation is reclassified to profit or loss as part of the gain or loss on disposal. When the Company disposes of any part of its interest in a subsidiary that includes a foreign operation while retaining control, the relevant proportion of the cumulative amount is re-attributed to non-controlling interests. When the Company disposes of only part of its investment in an associate or joint venture that includes a foreign operation while retaining significant influence or joint control, the relevant proportion of the cumulative amount is reclassified to profit or loss.

When the settlement of a monetary receivable from or payable to a foreign operation is neither planned nor likely to occur in the foreseeable future, exchange differences arising from such a monetary item that is considered part of the net investment in the foreign operation are recognized in other comprehensive income.

(IV) Classification of current and non-current assets and liabilities

An asset is classified as current under one of the following criteria, and all other assets are classified as non-current.

It is expected to be realized, or intended to be sold or consumed, in the normal operating cycle;
It is held primarily for the purpose of trading;
It is expected to be realized within twelve months after the reporting period; or
The asset is cash or a cash equivalent (as defined in IAS 7) unless the asset is restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.

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Hocheng Corporation Parent Company Only Financial Statements (cont’d)

A liability is classified as current under one of the following criteria, and all other liabilities are classified as non-current.

It is expected to be settled in its normal operating cycle;
It is held primarily for the purpose of trading;
It is due to be settled within twelve months after the reporting date; or
4.The liability is not settled at the end of the reporting period and has the right to defer the settlement for at least 12 months after the reporting period.
(V) Cash and cash equivalents

Cash comprises cash on hand and demand deposits. Cash equivalents are short-term, highly liquid investments that are readily convertible to known amounts of cash and are subject to an insignificant risk of changes in value. Time deposits that meet the above definition and are held for the purpose of meeting short-term cash commitments rather than for investment or other purposes should be recognized as cash equivalents. Time deposits with maturities within a year or less that meet the above definition and are held for the purpose of meeting short-term cash commitments rather than for investment or other purposes should be recognized as cash equivalents.

(VI) Financial assets

Trade receivables are initially recognized when they originated. All other financial assets and financial liabilities are initially recognized when the Company becomes a party to the contractual provisions of the instrument. A financial asset (excluding accounts receivable without a significant financing component) or financial liability is initially measured at fair value plus, for an item not at fair value through profit or loss, transaction costs that are directly attributable to its acquisition or issue. An accounts receivable without a significant financing component is initially measured at the transaction price.

Financial assets

All regular way purchases or sales of financial assets classified in the same category are recognized and derecognized on a trade date basis.

On initial recognition, financial assets are classified as financial assets at amortized cost, financial assets at fair value through other comprehensive income, and financial assets at fair value through profit or loss.

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Hocheng Corporation Parent Company Only Financial Statements (cont’d)

Financial assets are not reclassified subsequently to their initial recognition unless the Company changes its business model for managing financial assets, in which case all affected financial assets are reclassified on the first day of the first reporting period following the change in the business model.

(1) Financial assets measured at amortized cost

A financial asset is measured at amortized cost if it meets both of the following conditions and is not designated as at fair value through profit or loss:

‧it is held within a business model whose objective is to hold assets to collect contractual cash flows; and
‧its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

These assets are subsequently measured at amortized costs add/less cumulative amortization using the effective interest method and adjusted for any loss allowance. Interest income, foreign exchange gains and losses, and impairment loss, are recognized in profit or loss. Any gain or loss on derecognition is recognized in profit or loss.

(2) Financial assets at fair value through other comprehensive income

On initial recognition, the Company is able to make an irrevocable election to present subsequent changes in the fair value of investments in equity instruments that are not held for trading in other comprehensive income. This election is made on an instrument-by-instrument basis.

Equity investments at fair value through other comprehensive income are subsequently measured at fair value. Dividends are recognized as income in profit or loss (unless the dividend clearly represents a recovery of part of the cost of the investment). Other net gains and losses are recognized in other comprehensive income and are never reclassified to profit or loss.

Dividend income is recognized in profit or loss on the date on which the Company’s right to receive payment is established (generally, ex-dividend date).

(3) Financial assets at fair value through profit or loss

All financial assets not classified as measured at amortized cost or at fair value through other comprehensive income described above (such as those held for trading or managed and evaluated on a fair value basis) are measured at fair value through profit or loss, including derivative financial assets. On initial recognition, the Company may irrevocably designate a financial asset that meets the requirements to be measured at amortized cost or at fair value through other comprehensive income, as at fair value through profit or loss if doing so eliminates or significantly reduces an accounting mismatch that would otherwise arise.

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Hocheng Corporation Parent Company Only Financial Statements (cont’d)

These assets are subsequently measured at fair value. Net gains and losses (including any interest or dividend income) are recognized in profit or loss.

(4) Impairment of financial assets

The Company recognizes loss allowances for expected credit losses (ECL) on financial assets measured at amortized cost (including cash and cash equivalents, notes and accounts receivable, other receivables, guarantee deposits paid and other financial assets).

The Group measures loss allowances at an amount equal to lifetime ECL, except for the following, which are measured as 12-month ECL:

‧debt securities that are determined to have low credit risk at the reporting date; and
‧other debt securities and bank balances for which credit risk (i.e., the risk of a default occurring over the expected life of the financial instrument) has not increased significantly since initial recognition.

Loss allowance for accounts receivable and contract assets are always measured at an amount equal to lifetime ECL.

When determining whether the credit risk of a financial asset has increased significantly since initial recognition and when estimating ECL, the Company considers reasonable and supportable information that is relevant and available without undue cost or effort. This includes both quantitative and qualitative information and analysis based on the Company’s historical experience and informed credit assessment, as well as forward-looking information.

Lifetime ECL is the ECL that results from all possible default events over the expected life of a financial instrument.

12-month ECLs are the portion of ECLs that result from default events that are possible within the 12 months after the reporting date (or a shorter period if the expected life of the instrument is less than 12 months).

The maximum period considered when estimating ECLs is the maximum contractual period over which the Company is exposed to credit risk.

The Company assumes that the credit risk on a financial asset has increased significantly if it is more than 365 days past due.

ECLs are probability-weighted estimates of credit losses over the expected life of financial assets. Credit losses are measured as the present value of all cash shortfalls (i.e., the difference between the cash flows due to the Company in accordance with the contract and the cash flows that the Company expects to receive). ECL is discounted at the effective interest rate of the financial asset.

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Hocheng Corporation Parent Company Only Financial Statements (cont’d)

At each reporting date, the Company assesses whether financial assets carried at amortized cost and debt securities at fair value through other comprehensive income are credit impaired. A financial asset is “credit impaired” when one or more events that have a detrimental impact on the estimated future cash flows of the financial asset have occurred. Evidence that a financial asset is credit-impaired includes the following observable data:

‧significant financial difficulty of the borrower or issuer;
‧a breach of contract such as a default or being more than 365 days past due;
‧The lender of the borrower, for economic or contractual reasons relating to the borrower's financial difficulty, having granted to the borrower a concession that the lender would not otherwise consider;
‧it is probable that the borrower will enter bankruptcy or other financial reorganization; or
‧the disappearance of an active market for security because of financial difficulties.

Loss allowances for financial assets measured at amortized cost are deducted from the gross carrying amount of assets.

The gross carrying amount of a financial asset is written off when the Company has no reasonable expectations of recovering a financial asset in its entirety or a portion thereof. For corporate accounts, the Company individually makes an assessment with respect to the timing and amount of write-off based on whether there is a reasonable expectation of recovery. The Company expects no significant recovery from the amount written off. However, financial assets that are written off could still be subject to enforcement activities in order to comply with the Company’s procedures for recovery of the amount due.

(5) Derecognition of financial assets

The Company derecognizes a financial asset when the contractual rights to the cash flows from the financial asset expire, or it transfers the rights to receive the contractual cash flows in a transaction in which substantially all of the risks and rewards of ownership of the financial asset are transferred or in which the Group neither transfers nor retains all of the risks and rewards of ownership substantially, and it does not retain control of the financial asset.

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Hocheng Corporation Parent Company Only Financial Statements (cont’d)

2. Financial liabilities and equity instruments

(1) Classification of debt or equity instruments

Debt and equity instruments issued by the Company are classified as financial liabilities or equity in accordance with the substance of the contractual agreements and the definitions of a financial liability and an equity instrument.

(2) Equity instruments

An equity instrument is any contract that evidences a residual interest in the assets of the Company after deducting all of its liabilities. Equity instruments issued by the Company are recognized at the amount after deducting direct issuance costs from the obtained proceeds.

(3) Treasury shares

When shares recognized as equity are repurchased, the amount of the consideration paid, including directly attributable costs, is recognized as a deduction from equity. Repurchased shares are classified as treasury stock. When treasury shares are sold or reissued subsequently, the amount received is recognized as an increase in equity, and the resulting surplus or deficit on the transaction is recognized in capital reserve or retained earnings (if the capital reserve is not sufficient to be written down).

(4) Financial liabilities

Financial liabilities are classified as measured at amortized cost or at fair value through profit or loss.

Other financial liabilities are subsequently measured at amortized cost using the effective interest method. Interest expense and foreign exchange gains and losses are recognized in profit or loss. Any gain or loss on derecognition is also recognized in profit or loss.

(5) Derecognition of financial liabilities

The Company derecognizes a financial liability when its contractual obligations are discharged or canceled, or expire. The Company also derecognizes a financial liability when its terms are modified and the cash flows of the modified liability are substantially different, in which case a new financial liability based on the modified terms is recognized at fair value.

On derecognition of a financial liability, the difference between the carrying amount of a financial liability extinguished and the consideration paid (including any non-cash assets transferred or liabilities assumed) is recognized in profit or loss.

(6) Offsetting of financial assets and liabilities

Financial assets and financial liabilities are offset and the net amount presented in

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Hocheng Corporation Parent Company Only Financial Statements (cont’d)

the balance sheet when, and only when, the Company currently has a legally enforceable right to offset the amounts and it intends either to settle them on a net basis or to realize the asset and settle the liability simultaneously.

(VII) Inventory

Inventories are measured at the lower of cost or net realizable value. The cost of inventories is calculated based on the weighted average method and includes expenditure incurred in acquiring the inventories, production or conversion costs, and other costs incurred in bringing them to the location and condition. In the case of manufactured inventories and work in progress, cost includes an appropriate share of production overheads based on normal operating capacity.

The net realizable value represents the estimated selling price in the ordinary course of business, less all estimated costs of completion and necessary selling expenses. (VIII) Investment in associates

Associates are those entities in which the Company has significant influence over their financial and operating policies but not control or joint control.

Investments in the equity of associates are accounted for using the equity method. Under the equity method, the costs were recognized upon initial acquisition. The cost of the investment includes transaction costs. The carrying amount of the investment in associates includes goodwill identified on the acquisition, net of any accumulated impairment losses.

The parent company only financial statements include the Company’s share of the profit or loss and other comprehensive income of those associates, after adjustments to align the accounting policies with those of the Company, from the date on which significant influence commences until the date on which significant influence ceases. When an associate’s equity changes due to reasons other than profit and loss or comprehensive income, which did not result in changes in the Company’s shareholding percentage in the associate, the Company recognizes equity changes attributable to the Company by its shareholding percentage as capital reserve.

Gains and losses resulting from transactions between the Company and an associate are recognized in the financial statements only to the extent of a non-related investor’s equity in the associate.

When the Company’s share of losses exceeds its interests in an associate, the carrying amount of the investment, including any long-term interests that form a part thereof, is reduced to zero, and the recognition of further losses is discontinued except to the extent the Company has an obligation or has made payments on behalf of its associates.

(IX) Investments in subsidiaries

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Hocheng Corporation Parent Company Only Financial Statements (cont’d)

When preparing the parent company only financial statements, the Company assesses investees under its control by using the equity method. Under the equity method, the profit or loss during the period and other comprehensive income presented in the parent company only financial statements shall be the same as the allocations of profit or loss during the period and of other comprehensive income attributable to the owners of the parent company presented in the financial statements prepared on a consolidated basis and the owners' equity presented in the parent company only financial reports shall be the same as the equity attributable to owners of the parent presented in the financial reports prepared on a consolidated basis.

Changes in the Company's ownership interest in a subsidiary that do not result in loss of control are treated as equity transactions with owners.

(X) Investment property

Investment property is property held either to earn rental income or for capital appreciation, or for both, but not for sale in the ordinary course of business, use in the production or supply of goods or services, or for administrative purposes. Investment property is measured at cost on initial recognition and subsequently at cost, less accumulated depreciation and accumulated impairment losses. Depreciation expense is calculated based on the depreciation method, useful life, and residual value, which are the same as those adopted for property, plant and equipment.

Any gain or loss on disposal of an investment property (calculated as the difference between the net proceeds from disposal and the carrying amount) is recognized in profit or loss.

Rental income from investment property is recognized as other revenue on a straight-line basis over the term of the lease. Lease incentives granted are recognized as an integral part of the total rental income over the term of the lease.

(XI) Property, Plant and Equipment
Recognition and measurement

Items of property, plant and equipment are measured at cost, which includes capitalized borrowing costs, less accumulated depreciation and any accumulated impairment losses.

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Hocheng Corporation Parent Company Only Financial Statements (cont’d)

If significant parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment.

Any gain or loss on disposal of an item of property, plant and equipment is recognized in profit or loss.

2. Subsequent expenditure

Subsequent expenditure is capitalized only if it is probable that the future economic benefits associated with the expenditure will flow to the Company.

Depreciation

Depreciation is calculated on the cost of an asset, less its residual value, and is recognized as profit or loss on a straight-line basis over the estimated useful lives of each component of an item of property, plant and equipment.

Lands are not depreciated.

The estimated useful lives of property, plant and equipment for the current and comparative years are as follows:

(1) Houses and buildings 2~60 years (2) Machinery and equipment 2~20 years (3) Transportation equipment 2~8 years (4) Office equipment 2~15 years (5) Other equipment 2~35 years

Depreciation methods, useful lives, and residual values are reviewed at the reporting date each year and adjusted if appropriate.

4. Reclassification to investment property

A property is reclassified to investment property at its carrying amount when the use of the property changes from owner-occupied to investment property.

(XII) Leasing

At the inception of a contract, the Company assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.

1. As a lease

The Company recognizes a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on

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Hocheng Corporation Parent Company Only Financial Statements (cont’d)

which it is located, less any lease incentives received.

The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. In addition, the right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability.

The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be reliably determined, the Company’s incremental borrowing rate. Generally, the Company uses its incremental borrowing rate as the discount rate.

Lease payments included in the measurement of the lease liability comprise the following:

(1) fixed payments, including in substance fixed payments;
(2) variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the commencement date;
(3) amounts expected to be payable under a residual value guarantee; and
(4) payments for purchase or termination options that are reasonably certain to be exercised.

The lease liability is subsequently measured at amortized cost using the effective interest method. It is remeasured when:

(1) there is a change in future lease payments arising from the change in c;
(2) there is a change in the Group’s estimate of the amount expected to be payable under a residual value guarantee;
(3) there is a change in the lease term resulting from a change of its assessment on whether it will exercise an option to purchase the underlying asset;
(4) there is a change in its assessment of the lease period on whether it will exercise an extension or termination option;

(5) there is a lease modification

When the lease liability is remeasured, when are changes in an index or rate to determine lease payments, changes in the amount of residual value guarantee, or changes in the assessment of purchase, extension, or termination options above, a corresponding adjustment is made to the carrying amount of the right-of-use asset, or in profit and loss if the carrying amount of the right-of-use asset has been reduced to zero.

When the lease liability is remeasured to reflect the partial or full termination of the lease for lease modifications that decrease the scope of the lease, the Group accounts for the remeasurement of the lease liability by decreasing the carrying amount of the

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Hocheng Corporation Parent Company Only Financial Statements (cont’d)

right-of-use asset to reflect the partial or full termination of the lease, and recognize the difference in profit or loss for any gain or loss relating to the partial or full termination of the lease.

The Company presents right-of-use assets that do not meet the definition of investment and lease liabilities as separate line items, respectively, in the balance sheets.

The Company has elected not to recognize the right-of-use assets and lease liabilities for short-term leases of computer equipment and other equipment and asset lease of low-value assets. The Company recognizes relevant lease payments as expenses on a straight-line basis over the lease term.

As a practical expedient, the Company elects not to assess whether all rent concessions that meet all the following conditions are lease modifications or not:

(1) the rent concessions occurring as a direct consequence of the COVID-19 pandemic;
(2) the change in lease payments that resulted in revised consideration for the lease that is substantially the same as, or less than, the consideration for the lease immediately preceding the change;
(3) any reduction in lease payments that affects only those payments originally due on or before June 30, 2022; and
(4) there is no substantive change in other terms and conditions of the lease.

In accordance with the practical expedient, the effect of the change in the lease liability is reflected in profit or loss in the period in which the event or condition that triggers the rent concession occurs.

As a lessor

When the Company is the lessor in the transactions, it classifies lease contracts based on whether substantially all risks and compensations from the ownership of target assets are transferred; if yes, the contracts are classified as financing leases, and if no, operating leases. As part of this assessment, the Company considers certain indicators, such as whether the lease is for the major part of the economic life of the asset.

When the Company is an intermediate lessor, it accounts for its interests in the head lease and the sublease separately. It assesses the lease classification of a sublease with reference to the right-of-use asset arising from the head lease. If a head lease is a short-term lease to which the Group applies the exemption described above, then it classifies the sublease as an operating lease.

If an arrangement contains lease and non-lease components, the Company applies IFRS15 to allocate the consideration in the contract.

(XIII) Intangible assets

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Hocheng Corporation Parent Company Only Financial Statements (cont’d)

1. Recognition and measurement

Goodwill arising on the acquisition of subsidiaries is measured at cost, less accumulated impairment losses.

Expenditure on research activities is recognized in profit or loss as incurred.

Development expenditure is capitalized only if the expenditure can be measured reliably, the product or process is technically and commercially feasible, future economic benefits are probable, and the Company intends to, and has sufficient resources to, complete the development and to use or sell the asset. Otherwise, it is recognized in profit or loss as incurred. Subsequent to initial recognition, development expenditure is measured at cost, less accumulated amortization and any accumulated impairment losses.

Other intangible assets that are acquired by the Company and have useful lives that are measured at cost less accumulated amortization and any accumulated impairment losses.

2. Subsequent expenditure

Subsequent expenditure is capitalized only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditures, including expenditures on internally generated goodwill and brands, are recognized in profit or loss as incurred.

3. Amortization

Apart from goodwill, amortization is calculated over the cost of the asset, less its residual value, and is recognized in profit or loss on a straight-line basis over the estimated useful lives of intangible assets from the date that they are available for use.

The estimated useful lives of property, plant and equipment for the current and comparative years are as follows: Computer software cost 2~15 years

Amortization methods, useful lives, and residual values of intangible assets are reviewed at each reporting date and adjusted if appropriate.

(XIV) Impairment of non-derivative financial assets

At each reporting date, the Company reviews the carrying amounts of its non-financial assets (other than inventories, deferred income tax assets, and non-financial assets other than assets arising from employee benefits) to determine whether there is any indication of impairment. If any such indication exists, then the asset's recoverable amount is estimated.

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Hocheng Corporation Parent Company Only Financial Statements (cont’d)

For impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows from other assets or cash-generating units (CGUs).

The recoverable amount of an asset or CGU is the greater of its value in use and its fair value less costs to sell. Value in use is based on the estimated future cash flows, discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or CGU.

An impairment loss is recognized if the carrying amount of an asset or CGU exceeds its recoverable amount.

Impairment losses are recognized in profit or loss. They are allocated first to reduce the carrying amount of any goodwill allocated to the CGU and then to reduce the carrying amounts of the other assets in the CGU on a pro-rata basis.

For other assets, an impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, if no impairment loss had been recognized.

(XV) Debt allowance

A debt allowance is recognized if, as a result of a past event, the Company has a present obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Debt allowances are determined by discounting the expected future cash flows at a pretax rate that reflects the current market assessments of the time value of money and the risks specific to the liability. The amortization of the discount is recognized as interest expenses.

A provision of debt allowance for sales is recognized when the underlying products or services are sold based on historical allowance data and measurement of all possible outcomes against their associated probabilities.

(XVI) Revenue recognition

1. Revenue from contracts with customers

Revenue is measured based on the consideration to which the Company expects to be entitled in exchange for transferring goods or services to a customer. The Company recognizes revenue when it satisfies a performance obligation by transferring control of goods or services to a customer. Descriptions based on the major revenue items of the Company are as follows:

(1) Sale of goods

The Company recognizes revenue when the control over products is transferred. The transfer of control over products refers to the delivery of products to customers, and

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Hocheng Corporation Parent Company Only Financial Statements (cont’d)

customers may fully determine the sales channels and prices, and there is no unfulfilled obligation that may affect the acceptance of products by customers. Delivery occurs when products are delivered to a specified venue, the risks of obsolescence and losses are transferred to the customers, and customers have accepted products according to sales contracts, the acceptance terms have become invalid, or the Company has objective evident recognizing that all acceptance conditions have been fulfilled.

The Company is obliged to refund due to defects for the standard warranty it provides and has recognized warranty liability provision for such obligations.

The Company recognizes accounts receivable when delivering products as the Company gains the rights to unconditionally receive considerations.

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Hocheng Corporation Parent Company Only Financial Statements (cont’d)

(2) Rental income

The rental income arising from investment property is recognized in accordance with the straight-line method over the lease period; also, the given lease incentives are deemed as part of the overall rent income, and it is credited to the rental income in accordance with the straight-line method over the lease period. The revenues generated from the sub-lease of the property are recognized as non-operating income and expenses under “lease rental income.”

(3) Financing components

The Company does not expect to have any contracts where the period between the transfer of the promised goods or services to the customer and payment by the customer exceeds one year. As a consequence, the Company does not adjust any of the transaction prices for the time value of money.

(XVII) Employee benefits

1. Defined contribution plans

Obligations for contributions to the defined contribution plans are expensed as related services are provided.

2. Defined benefit plans

The Company’s net obligation in respect of the defined benefit plans is calculated separately for each of the plans by estimating the amount of future benefit that employees have earned in the current and prior periods, discounting that amount and deducting the fair value of any plan assets.

The calculation of defined benefit obligations is performed annually by a qualified actuary using the projected unit credit method. When the calculation results in a potential asset for the Company, the recognized asset is limited to the present value of economic benefits available in the form of any future refunds from the plan or reductions in future contributions to the plan. To calculate the present value of economic benefits, consideration is given to any applicable minimum funding requirements.

Remeasurements of the net defined benefit liability, which comprises actuarial gains and losses, the return on plan assets (excluding interest) and the effect of the asset ceiling (if any, excluding interest), are recognized immediately in other comprehensive income, and accumulated in retained earnings within equity. The Company determines the net interest expense (income) on the net defined benefit liability (asset) for the period by applying the discount rate used to measure the defined benefit obligation at the beginning of the annual period to the then net defined benefit liability (asset). Net interest expense and other expenses related to defined benefit plans are recognized in profit or loss.

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Hocheng Corporation Parent Company Only Financial Statements (cont’d)

When the benefits of a plan are changed or when a plan is curtailed, the resulting change in benefit that relates to prior service costs or the gain or loss on curtailment is recognized immediately in profit or loss. The Company recognizes gains and losses on the settlement of a defined benefit plan when the settlement occurs.

Short-term employee benefits

Short-term employee benefit obligations are expensed as the related service is provided. A liability is recognized for the amount expected to be paid if the Company has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee, and the obligation can be estimated reliably.

(XVIII) Income taxes

Income taxes comprise both current taxes and deferred income taxes. Except for expenses related to business combinations or recognized directly in equity or other comprehensive income, all current and deferred income taxes shall be recognized in profit or loss.

Current income tax includes estimated income tax payable or tax refund receivable calculated based on the taxable income (losses) of the year and any adjustment made to the income tax payable or tax refund receivable in prior years. The amount is the best estimate of estimated amounts payable or receivable measured based on the tax rates enacted or substantively enacted on the reporting date.

Deferred income taxes arise due to temporary differences between the carrying amounts of assets and liabilities on the financial reporting date and their respective tax bases. Deferred income taxes are recognized except for the following:

temporary differences in the initial recognition of assets and liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profits (losses) at the time of the transaction;
temporary differences related to investments in subsidiaries, associates and joint arrangements to the extent that the Company is able to control the timing of the reversal of the temporary differences and it is probable that they will not reverse in the foreseeable future; and
taxable temporary differences arising on the initial recognition of goodwill.

Deferred income tax asset is recognized for the carry forward of unused tax losses, unused tax credits, and deductible temporary differences to the extent that it is probable that future taxable profits will be available against which they can be utilized. Deferred income tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefits will be realized; such reductions are reversed when the

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Hocheng Corporation Parent Company Only Financial Statements (cont’d)

probability of future taxable profits improves.

Deferred income taxes are measured at tax rates that are expected to be applied to temporary differences when they reserve, using tax rates enacted or substantively enacted at the reporting date.

Deferred income tax assets and liabilities are offset if the following criteria are met:

the Group has a legally enforceable right to set off current tax assets against current tax liabilities; and
the deferred income tax assets and the deferred income tax liabilities relate to income taxes levied by the same taxation authority on either:
(1) The same taxable entity; or
(2) Different taxable entities which intend to settle current tax assets and liabilities on a net basis or to realize the assets and liabilities simultaneously in each future period in which significant amounts of deferred income tax liabilities or assets are expected to be settled or recovered.

(XIX) Earnings per share

The Company discloses the Company’s basic and diluted earnings per share attributable to ordinary equity holders of the Company. Basic earnings per share are calculated as the profit attributable to the ordinary shareholders of the Company divided by the weighted average number of ordinary shares outstanding. The calculation of diluted earnings per share is based on the profit attributable to ordinary shareholders of the Company, divided by the weighted average number of ordinary shares outstanding after adjustment for the effects of all dilutive potential ordinary shares. Potential ordinary shares of the Company include the remuneration of employees.

(XX) Operating segments

The Company has disclosed the segment information in the consolidated financial statements; therefore, the parent company only financial statements will not disclose segment information.

V. Significant accounting assumptions and judgments, and major sources of estimation uncertainty:

In preparing the separate financial statements, management is required to make judgments and estimates regarding the future (including climate-related risks and opportunities), which affect the application of accounting policies and the reported amounts of assets, liabilities, income, and expenses. Actual results may differ from these estimates.

The management continues to monitor the accounting estimates and assumptions. The management recognizes any changes in accounting estimates during the period and the impact of

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Hocheng Corporation Parent Company Only Financial Statements (cont’d)

those changes in accounting estimates in the following period.

Information about judgments made in applying accounting policies that have the most significant effects on the amounts recognized in the parent company only financial statements causes no significant effects.

Information about assumptions or estimation uncertainties that have a significant risk of resulting in a material adjustment within the next financial year is as follows: Inventory valuation

As inventories are stated at the lower of cost or net realizable value, the Company estimates the net realizable value of inventories for obsolescence and unmarketable items at the end of the reporting period and then writes down the cost of inventories to net realizable value. The net realizable value of the inventory is mainly determined based on assumptions as to future demand within a specific time horizon. Due to the effects of consumers’ preferences and technological changes, there may be significant changes in the net realizable value of inventories. Please refer to Note 6(6) for further description of the valuation of inventories.

VI. Explanation of significant accounting items

(I) Cash

Cash and petty cash Checking account deposits Demand deposit Cash and cash equivalents presented in the statement of cash flows	2024.12.31 $ 3,022 2,117 371,221	2023.12.31 3,328 2,392 364,329 370,049
	$ 376,360

Please refer to Note 6(25) for the exchange rate risk, interest rate risk, and sensitivity analysis of the financial assets and liabilities of the Company.

(II) Financial assets and liabilities at fair value through profit or loss

The breakdown of financial assets is as follows:

The breakdown of financial assets is as follows:
		2024.12.31	2023.12.31
Financial assets mandatorily measured at fair value
through profit or loss:
Beneficiary certificates - open-end fund	$	129,998	117,266
1. For details of the remeasurement of fair values recognized in profit or loss,			please refer to
Note 6(24).

The financial assets above had not been pledged as collateral.
(III) Financial assets at fair value through other comprehensive income

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Hocheng Corporation Parent Company Only Financial Statements (cont’d)

Equity investments at fair value through other comprehensive income: Domestic and foreign listed stocks Domestic non-listed stocks Total	2024.12.31 $ 692,837 1,869	2023.12.31 646,585 2,178 648,763
	$ 694,706

Equity investments at fair value through other comprehensive income

The Company holds such equity instruments as long-term strategic investments, not for transaction purposes; therefore, they are designated as measured at fair value through other comprehensive income.

In 2024 and 2023, the Company recognized a dividend income of NT$29,169 thousand and NT$28,658 thousand, respectively, for the investments in equity instruments designated as measured at fair value through other comprehensive income.

Due to changes in investment strategy in 2024 and 2023, the Company has disposed of its financial assets designated at fair value through other comprehensive income. The fair value upon the disposals was NT$2,924 thousand and NT$47,330 thousand, and the Company recorded cumulative disposal (losses) gains of NT$(3) thousand and NT$2,684 thousand, respectively. The cumulative disposal gains have been transferred to retained earnings.

For credit risk (including the impairment of debt investments) and market risk, please refer to Note 6(25).
The financial assets above had not been pledged as collateral.
(IV) Notes and accounts receivables

Notes receivable Accounts receivables Less: loss allowance	2024.12.31 $ 306,385 496,775 (782)	2023.12.31 385,589 494,129 (2,702) 877,016
	$ 802,378

The Company applies the simplified approach to provide for its ECL for all notes and accounts receivable (i.e., the use of lifetime ECL provision for all receivables). Notes and accounts receivables have been grouped based on shared credit risk characteristics of customers’ capacity in settling the amount past due according to the contractual terms, with the inclusion of forward-looking information, macroeconomic, and relevant industry information. The expected credit loss analysis of the Company's notes receivable and accounts receivable is as follows:

～ 31 ～

Hocheng Corporation Parent Company Only Financial Statements (cont’d)

Current 1 to 30 days past due 31 to 120 days past due More than one year past due Current 1 to 30 days past due 31 to 120 days past due 121 to 365 days past due More than one year past due		2024.12.31		Loss allowance for lifetime ECL 292 140 350 - 782 Loss allowance for lifetime ECL 491 309 1,901 1 - 2,702
	Book value of notes and accounts receivable $ 796,457 2,133 4,570 -	Weighted average ECL rate
		0% - 0.04% 0% - 6.56% 0% - 7.66% 0% - 100% 2023.12.31
	$ 803,160

	Book value of notes and accounts receivable $ 863,116 2,716 13,883 3 -	Weighted average ECL rate
		0% - 0.06% 0% - 11.39% 0% - 13.69% 0% - 50.44% 0% - 100%
	$ 879,718

～ 32 ～

Hocheng Corporation Parent Company Only Financial Statements (cont’d)

The movements in the loss allowance for notes and accounts receivables of the Company are set out in the following table:

Beginning balance Impairment losses recognized Transferred in from consolidated financial statements Ending balance ther receivables Others Less: loss allowance Inventory Raw material Supplies Work in progress Finished goods Merchandise Raw materials in transit	2024 $ 2,702 (1,920) -	2023 2,299 224 179 2,702 2023.12.31 64,363 (7,087) 57,276 2023.12.31 201,828 8,238 155,176 523,881 251,741 5,767 1,146,631
	$ 782
	2024.12.31 $ 71,249 -
	$ 71,249
	2024.12.31 $ 214,979 8,635 170,968 489,383 219,928 31,483
	$ 1,135,376

(V) Other receivables
(VI) Inventory

For the years ended December 31, 2024 and 2023, the cost of goods sold and expenses amounted to NT$2,387,917 thousand and NT$2,411,916 thousand, respectively. It includes an inventory valuation loss of NT$4,831 thousand recognized in 2024 due to the write-down of inventory to net realizable value, which has been accounted for as part of operating costs. In 2023, as the factors that had previously caused the net realizable value of inventory to fall below cost had ceased to exist, an inventory recovery gain of NT$5,689 thousand was recognized and accounted for as a deduction from operating costs. Additionally, inventory scrap losses of NT$5,904 thousand and NT$8,343 thousand were recognized in 2024 and 2023, respectively.

As of December 31, 2024 and 2023, none of the Company’s inventories was pledged as collateral.

(VII) Investments accounted for using the equity method

The investments accounted for using the equity method at the end of the reporting period are set out as follows:

～ 33 ～

Hocheng Corporation Parent Company Only Financial Statements (cont’d)

Subsidiary

2024.12.31 2023.12.31 $ 1,668,964 1,618,976

Please refer to the 2024 consolidated financial statements.

For the purpose of integrating the utilization of resources, the Company's Board of Directors resolved to carry out a short-form merger with the subsidiary, Haussi Co., Ltd. on June 27, 2023. The record date of the merger was July 28, 2023, and the Company was the surviving company after the merger.

As of December 31, 2024 and 2023, none of the Company’s investments accounted for using the equity method was pledged as collateral.

(VIII) Property, Plant and Equipment

The breakdown of changes in the cost and depreciation of property, plant and equipment of the Company is as follows:

Land $ 2,256,359 - - (5,517)	Houses and buildings 622,255 8,389 - (12,593)	Machinery and equipment 1,591,787 11,740 (27,110) -	Transport ation equipment 66,914 2,861 - -	Office equipment 151,852 6,792 (260) -	Other equipment 659,241 14,804 (2,518) -	Total 5,348,408 44,586 (29,888) (18,110)
$ 2,250,842	618,051	1,576,417	69,775	158,384	671,527	5,344,996
$ 682,549 - 1,573,963 (153) -	302,660 2,074 192,392 (138) 125,267	1,598,451 16,077 - (22,741) -	67,577 3,162 - (3,825) -	155,948 3,005 236 (7,346) 9	769,358 25,147 3,489 (13,477) (125,276)	3,576,543 49,465 1,770,080 (47,680) -
$ 2,256,359	622,255	1,591,787	66,914	151,852	659,241	5,348,408
$ - - - -	259,287 38,589 - (12,041)	1,450,621 33,771 (27,110) -	53,094 4,253 - -	135,692 6,028 (260) -	554,901 27,916 (2,447) -	2,453,595 110,557 (29,817) (12,041)
$ -	285,835	1,457,282	57,347	141,460	580,370	2,522,294
$ - - - -	166,119 22,639 (128) 70,657	1,434,626 34,559 (18,564) -	51,801 4,837 (3,544) -	136,149 6,655 (7,121) 9	605,079 33,557 (13,069) (70,666)	2,393,774 102,247 (42,426) -
$ -	259,287	1,450,621	53,094	135,692	554,901	2,453,595
$ 2,250,842	332,216	119,135	12,428	16,924	91,157	2,822,702
$ 682,549	136,541	163,825	15,776	19,799	164,279	1,182,769
$ 2,256,359	362,968	141,166	13,820	16,160	104,340	2,894,813

～ 34 ～

Hocheng Corporation Parent Company Only Financial Statements (cont’d)

Since the land of the Yingge factory and business premises of the Company is agricultural land, it is not yet possible to transfer it to the name of the Company. As of December 31, 2024 and 2023 the key management personnel are registered in the name of the trust registrant. Please refer to Note 7 for relevant information.

As of December 31, 2024 and 2023, regarding the execution of the deed of real estate trust for the property, plant and equipment of the Company and the breakdown of those that have been pledged as collateral for long-term and short-term borrowings and financing limits, please refer to note 8.

(IX) Right-of-use assets

The breakdown of changes in costs and depreciation of lands, houses and buildings, machinery equipment, and transportation equipment leased by the Company are as follows:

Land $ 1,499 - -	Houses and buildings 114,440 2,077 (2,912)	Transport ation equipmen t 9,037 7,978 (7,087)	Others 4,977 - -	Total 129,953 10,055 (9,999)
$ 1,499	113,605	9,928	4,977	130,009
$ 1,011 488 -	372,539 2,242 (260,341)	6,488 2,549 -	4,873 104 -	384,911 5,383 (260,341)
$ 1,499	114,440	9,037	4,977	129,953
$ 1,022 246 -	74,168 17,732 (2,912)	6,424 2,011 (6,160)	2,745 509 -	84,359 20,498 (9,072)
$ 1,268	88,988	2,275	3,254	95,785
$ 674 147 201 -	203,951 810 39,210 (169,803)	2,782 2,159 1,483 -	2,166 43 536 -	209,573 3,159 41,430 (169,803)
$ 1,022	74,168	6,424	2,745	84,359
$ 231	24,617	7,653	1,723	34,224
$ 477	40,272	2,613	2,232	45,594
$ 337	168,588	3,706	2,707	175,338

～ 35 ～

Hocheng Corporation Parent Company Only Financial Statements (cont’d)

(X) Investment property

The breakdown of The Company’s investment properties is as follows:

Costs: Balance on January 1, 2024 Transferred from property, plant and equipment Balance on December 31, 2024 Balance at January 1, 2023 Acquired through business combination Balance on December 31, 2023 Depreciation and impairment losses: Balance on January 1, 2024 Depreciation during the year Transferred from property, plant and equipment Balance on December 31, 2024 Balance at January 1, 2023 Depreciation during the year Acquired through business combination Balance on December 31, 2023 Carrying amount: December 31, 2024 January 1, 2023 December 31, 2023 Fair value: December 31, 2024 December 31, 2023	Land $ 435,671 5,517	Buildings 258,712 12,593
	$ 441,188	271,305
	$ 408,284 27,387	258,712 -
	$ 435,671	258,712
	$ 5,285 - -	245,657 6,234 12,041
	$ 5,285	263,932
	$ - - 5,285	239,541 6,116 -
	$ 5,285	245,657
	$ 435,903	7,373
	$ 408,284	19,171
	$ 430,386	13,055

The fair value of investment property is based on the valuation of the market value.

Investment properties include multiple commercial properties leased to others. For details of relevant information (including rental income and direct operating expenses occurred), please refer to Note 6(17).

As of December 31, 2024 and 2023, for the breakdown of investment properties of the Group that had been pledged as collateral for long-term and short-term borrowings and financing limits, please refer to Note 8.

(XI) Intangible assets

The breakdown of costs and amortization of intangible assets of the Company in 2024 and 2023 is as follows:

～ 36 ～

Hocheng Corporation Parent Company Only Financial Statements (cont’d)

Cost:
Balance on January 1, 2024
Increase
Balance on December 31, 2024
Balance at January 1, 2023
Increase
Less
Balance on December 31, 2023
Amortization:
Balance on January 1, 2024
Amortization during the period
Balance on December 31, 2024
Balance at January 1, 2023
Amortization during the period
Decrease this period
Balance on December 31, 2023
Carrying amount:
Balance on December 31, 2024
Balance at January 1, 2023
Balance on December 31, 2023

Computer
software cost
$ 70,339
1,590
$
71,929
$ 71,354
1,863
(2,878)
$
70,339
$ 54,650
4,358
$
59,008
$ 51,760
4,853
(1,963)
$
54,650
$
12,921
$
19,594
$
15,689

1. Amortization expenses

Amortization expenses of intangible assets were presented in the following items of the statement of comprehensive income in 2024 and 2023:

Operating cost Operating expenses	2024 $ 117	2023 106 4,747
	$ 4,241

～ 37 ～

Hocheng Corporation Parent Company Only Financial Statements (cont’d)

(XII) Short-term borrowings

The breakdown of the Company’s short-term borrowings is as follows:

Borrowings on unsecured letters of credit Unsecured bank borrowings Secured bank borrowings Total Outstanding limits Interest rates	2024.12.31	2023.12.31 250,000 - 100,000 350,000 1,650,000 1.72% - 1.88%
	$ 18,615 150,000 - $ 168,615 $ 1,641,385 1.95% - 6.65%

For details of collateral for short-term borrowings on the pledge of assets as collateral, please refer to note 8.

(XIII) Short-term notes and bills payable

The breakdown of short-term notes and bills payable by the Company is as follows:

	2024.12.31	Amount $ 100,000
Guarantee or acceptance institution	Interest rates
	1.98% - 2.18% 2023.12.31
Bills finance company
		$ 330,000
		Amount $ -
Guarantee or acceptance institution	Interest rates
	-
Bills finance company
		$ 430,000

(XIV) Long-term borrowings

The breakdown, conditions, and terms of the Company’s long-term borrowings are as follows:

2024.12.31	2024.12.31	Amount $ 400,000 (25,000)
Currency Interest rates	Maturity date
	2029.10.19
		$ 375,000
		$ -

～ 38 ～

Hocheng Corporation Parent Company Only Financial Statements (cont’d)

2023.12.31 Currency Interest rates Maturity date Secured bank borrowings TWD 2.37% 2024.10.19 Less: Portion due within one year Total Outstanding limits	2023.12.31	2023.12.31	Amount $ 440,000 (440,000) $ - $ -
	Currency Interest rates	Maturity date
		2024.10.19

For information on the Company’s interest risk, currency risk and liquidity risk, please refer to Note 6(24).

For details of collateral for short-term borrowings on the pledge of assets as collateral, please refer to note 8.

(XV) Lease liabilities

The carrying amount of lease liabilities of the Company is as follows:

Current Non-current	2024.12.31 $ 13,930	2023.12.31 19,566 27,698
	$ 21,269

For details of the maturity analysis, please refer to Note 6(25) financial instruments. The amount recognized in profit or loss is as follows:

Interest expenses on lease liabilities Expenses relating to short-term leases Expenses relating to leases of low-value assets (excluding short-term leases of low-value assets)	2024 $ 659	2023 1,706 185 822
	$ 233
	$ 982

The amount recognized in the statements of cash flows is as follows:

[Total cash used in leases ]

2024 $ 22,921	2023 45,160

1. Land, house and building leases

As of December 31, 2024 and 2023, the Company leases land and houses and buildings for its office space and factories. The leases of office space typically run for one to five years.

2. Other leases

In addition, the period of lease for leasing machinery equipment and other equipment is two to five years; such leases are short-term and low-value target leases; the Company opts to apply the recognition exemption requirements to no recognize the relevant right-of-use assets and lease liabilities.

～ 39 ～

Hocheng Corporation Parent Company Only Financial Statements (cont’d)

(XVI) Debt allowance

Balance on January 1, 2024 Debt allowance increased during the period Debt allowance used during the period Debt allowance reversed during the period Balance on December 31, 2024 Balance at January 1, 2023 Debt allowance increased during the period Debt allowance used during the period Debt allowance reversed during the period Balance on December 31, 2023	Debt allowance for discount $ 7,136 4,316 (6,749) - $ 4,703 $ 10,033 4,868 (7,765) - $ 7,136

For debt allowance for discounts, the Company assesses potential product discounts based on historical experience, the management’s judgment and other known reasons. Such allowances are recognized as a deduction item for the operating revenue of the year in which relevant products are sold.

(XVII) Operating lease

The Company leases out investment properties. The Company has classified these leases as operating leases because it does not substantially transfer all of the risks and rewards incidental to the ownership of the assets. Please refer to Note 6(10) for details of investment properties.

The maturity analysis of the lease payment based on the total undiscounted lease payment to be collected after the reporting date is set out in the following table:

Less than 1 year 1 to 5 years > 5 years Total undiscounted lease payment	2024.12.31 $ 21,775 43,389 1,418	2023.12.31 19,517 35,804 4,784 60,105
	$ 66,582

For the years ended December 31, 2024 and 2023, the rental revenue from investment properties amounted to NT$15,961 thousand and NT$10,812 thousand, respectively.

(XVIII) Employee benefits

1. Defined benefit plans

The reconciliation of the present value of defined benefit obligations and the fair

～ 40 ～

Hocheng Corporation Parent Company Only Financial Statements (cont’d)

value of plan assets is as follows:

value of plan assets is as follows:
Defined benefit obligation Fair value of plan assets Net defined benefit assets liabilities	2024.12.31 $ 546,821 (715,583)	2023.12.31 583,655 (688,507) (104,852)
	$ (168,762)

The Company makes contributions to the labor pension fund account with the Bank of Taiwan that is under the defined benefit plan. If the Labor Standard Act applies to an employee, the retirement payment shall be calculated based on the base points obtained in accordance with the seniority and the average salaries six months before retirement.

(1) Composition of plan

The Company sets aside pension funds in accordance with the “Regulations for Revenues, Expenditures, Safeguard, and Utilization of the Labor Retirement Fund,” and such funds are managed by the Bureau of Labor Funds, Ministry of Labor. Under these regulations, the minimum earnings from these pension funds shall be no less than the earnings from two-year time deposits with the interest rates offered by local banks.

As of the reporting date, the Company’s labor pension reserve account balance with the Bank of Taiwan amounted to NT$715,583 thousand. The information for the utilization of the labor pension fund assets included the asset allocation and yield of the fund. For details, please refer to the information announced on the website of the Bureau of Labor Funds, Ministry of Labor.

(2) Movements in the present value of the defined benefit obligations

For the years ended December 31, 2024 and 2023, the movements in the present value of the defined benefit obligations of the Company are as follows:

Defined benefit obligations as at January 1 Current service costs and interest Remeasurements of net defined benefit liability - Adjustments based on experiences - Actuarial gains or losses arising from financial assumptions Prior service costs Benefits paid under the plan Defined benefit obligations as at December 31	2024 $ 583,655 7,920 16,350 (3,928) 681 (57,857)	2023 630,887 9,776 (8,360) 4,528 2,765 (55,941) 583,655
	$ 546,821

(3) Movements in the fair value of plan assets

The movements in the fair value of the defined benefit plan assets for the years

～ 41 ～

Hocheng Corporation Parent Company Only Financial Statements (cont’d)

ended December 31, 2024 and 2023 are as follows:

ended December 31, 2024 and 2023 are as follows:
Fair value of plan assets as at January 1 Interest income Net defined benefit (liabilities) assets remeasurement - Return on plan assets (excluding interest income of the current period) Contributions appropriated to the plan Benefits paid under the plan Assets merged from business combination Fair value of plan assets as at December 31	2024 $ 688,507 8,518 63,960 12,455 (57,857) -	2023 690,467 9,274 5,654 22,523 (55,941) 16,530 688,507
	$ 715,583

～ 42 ～

Hocheng Corporation Parent Company Only Financial Statements (cont’d)

(4) Expenses recognized as profit or loss

The breakdown of expenses recognized by the Company as of December 31, 2024 and 2023 is as follows:

Current period service costs Prior service costs Net interest of net defined benefit liabilities (assets) Interest income from planned assets The amount of the discontinued company transferred to the net effect Operating cost Sales and marketing expenses General and administrative expenses Research and development expenses	2024 $ 828 681 7,092 (8,518) -	2023 1,335 2,765 8,441 (9,274) (16,530) (13,263) (5,863) (4,354) (1,576) (1,470) (13,263)
	$ 83
	$ 37 26 11 9
	$ 83

(5) Actuarial assumptions

The principal actuarial assumptions used by the Company to determine the present

value of defined benefit obligations on the reporting date are as follows:

Discount rate Future salary increase	2024.12.31 1.375% 1.250%	2023.12.31 1.250% 1.250%

The expected allocation payment to be made by the Company to the defined benefit plan within one year after the reporting date of 2024 is NT$0.

The weighted average lifetime of the defined benefits plans is 5.7 years.

(6) Sensitivity analysis

If the actuarial assumptions had changed, the impact on the present value of the

defined benefit obligation as of December 31, 2024 and 2023 shall be as follows:

Influences on defined benefit

obligations

December 31, 2024 Discount rate (changes of 0.25%) Future salary increase (changes of 0.25%)	Increased by 0.25% (7,727) 7,766	Decreased by 0.25%
		7,901 (7,632)

～ 43 ～

Hocheng Corporation Parent Company Only Financial Statements (cont’d)

December 31, 2023 Discount rate (changes of 0.25%) Future salary increase (changes of 0.25%)	Influences on defined benefit obligations	Influences on defined benefit obligations
	Increased by 0.25% (9,001) 9,051	Decreased by 0.25%
		9,219 (8,881)

The sensitivity analysis above analyzed the effects of changes in a single assumption, and other assumptions remained unchanged. In practice, multiple assumptions may be correlated. The method used in the sensitivity analysis is consistent with the calculation of the net defined benefit liabilities on the balance sheets.

There is no change in the method and assumptions used in the preparation of the sensitivity analysis for 2022 and 2021.

2. Defined contribution plans

The Company allocates 6% of each employee’s monthly wages to the labor pension personal account at the Bureau of Labor Insurance in accordance with the provisions of the Labor Pension Act under the defined contribution plan. Under the plan, the Company is exempted from the legal or constructive obligations for additional payments after appropriating a fixed amount to the Bureau of Labor Insurance.

The Company confirmed that the pension expenses to the Bureau of Labor Insurance under the defined pension contribution plan for the years ended December 31, 2024 and 2023 amounted to NT$17,839 thousand and NT$18,284 thousand, respectively, have been appropriated to the Bureau of Labor Insurance.

(XIX) Income taxes

1. Income tax expenses

The breakdown of income tax expenses of the Company as of December 31, 2024 and 2023 is as follows:

Current income tax expense Arising during the period Current income tax with adjustments to the prior period Deferred income tax expense Occurrence and reversal of temporary differences Income tax expenses for continuing operations	2024 $ 8,178 (3,218)	2023 27,061 (2,723) 24,338 12,769 37,107
	4,960
	3,028
	$ 7,988

～ 44 ～

Hocheng Corporation Parent Company Only Financial Statements (cont’d)

The breakdown of income tax expenses (gains) recognized in other comprehensive income by the Company for the years ended December 31, 2024 and 2023 is as follows:

Not to be reclassified to profit or loss in subsequent periods: Remeasurements of defined benefit plans	2024 $ 12,188	2023 925

The reconciliation of income tax and profit before tax of the Company for 2024 and 2023 is as follows:

Net profits before tax Income tax calculated at the domestic tax rate at the place where the Company locates Additional tax on undistributed earnings Effect of tax rate differences in foreign jurisdictions Adjustments to non-temporary differences Tax incentives Changes in unrecognized temporary differences Prior over (under) estimation Others Income tax expense	2024 $ 66,406	2023 56,454 11,291 7,277 53 (3,147) (7,674) 31,842 (2,723) 188 37,107
	$ 13,281 - - (5,267) (3,505) 7,643 (3,218) (946)
	$ 7,988

2. Deferred income tax assets and liabilities

(1) Unrecognized deferred income tax assets

Items of deferred income tax assets not recognized by the Company are as follows:

Deductible temporary differences Aggregate amount of temporary differences related to investments in subsidiaries	2024.12.31 $ 12,158 363,128	2023.12.31 12,321 355,322 367,643
	$ 375,286

(2) Recognized deferred income tax assets and liabilities

Changes in deferred income tax assets and liabilities are as follows:

～ 45 ～

Hocheng Corporation Parent Company Only Financial Statements (cont’d)

Unrealized revaluation appreciation	Provision for land value increment tax	Defined benefit plans	Others	Others
$ 13,868 - $ 13,868 $ 13,868 - - ………	274,420 - 274,420 448 - 273,972 ……….	58,129 2,474 60,603 - 58,129 - ………	301 (69)
			232
			- 228 ………	73
$ 13,868	274,420	58,129		301	346,718

～ 46 ～

Hocheng Corporation Parent Company Only Financial Statements (cont’d)

Defined benefit plans	Others	Total 51,293 (623) (10,308) 40,362 6,061 45,360 (1,897) 3,009 (1,240) ……..
$ 32,615 - (10,308)	18,678 (623) -
$ 22,307	18,055
$ (11,913) 47,665 (1,897) - (1,240) …….	17,974 (2,305) - 3,009 - …….
$ 32,615	18,678	51,293

3. Assessment of tax

The Company’s income tax returns for the years through 2022 were assessed by the taxation agency.

(XX) Capital and other equity

As of December 31, 2024 and 2023, the total authorized capital of the Company was NT$5,700,000 thousand, divided into 570,000 thousand shares with a par value of NT$10 per share. The total authorized capital above comprises ordinary shares, and the issued shares were both 302,304 thousand shares. All issued shares were paid up upon issuance.

The reconciliation of the Company’s outstanding shares for the years ended December 31, 2024 and 2023 is set out in the following table:

(presented in thousand shares)

Opening balance on January 1 Retirement of treasury stock Closing balance on December 31	Common Stock 2024 2023 302,304 303,280 - (976) 302,304 302,304
	302,304

1.Shares

For the purpose of integrating the effectiveness of resource utilization, the Company's Board of Directors resolved to carry out a short-form merger with the subsidiary, Hauchi Co., Ltd. on June 27, 2023. The record date of the merger was July 28, 2023. After the merger, the Company was the surviving company and Hauchi Co., Ltd. was discontinued. The Company did not issue any shares for the merger and at the same time, the Company

～ 47 ～

Hocheng Corporation Parent Company Only Financial Statements (cont’d)

eliminated976thousand common shares of the subsidiary, Hauchi Co., Ltd. held by the Company.

2. Capital reserve

The content of the capital reserve balance of the Company is as follows:

Treasury share transactions Changes in net equity of subsidiaries recognized by using the equity method Consolidation premium Others	2024.12.31 $ 12,951 1,919 1,275 702	2023.12.31 12,862 1,919 1,275 531 16,587
	$ 16,847

According to the Company Act, the capital reserve shall be used to offset deficits first, and the realized capital reserve may be used to distribute new shares or cash based on the initial shareholding of shareholders. The aforementioned realized capital reserve includes the premium on the issuance of shares above par and income received. According to the Regulations Governing the Offering and Issuance of Securities by Securities Issuers, capital reserve that may be appropriate to the capital shall not exceed 10% of the paid-in capital in aggregate each year.

3. Retained earnings

The Company is in the traditional industry. The life cycle of the Company is in the growing stage. To consider the need of the Company for future capital, long-term financial planning, and the need for cash inflows for shareholders, the distribution of the Company’s earnings shall consider the net earnings of the current year as the priority. If the Company records earnings after the final account, apart from paying profit-seeking business income tax and compensating losses from prior years according to the law, it shall appropriate a 10% legal reserve and appropriate special reserve based on the actual requirements of the Company. If there are remaining earnings, such earnings shall be combined with the undistributed earnings at the beginning of the period, and the Board shall prepare a proposal for earning distribution and submit it to the shareholders’ meeting for the resolution of distribution.

The distribution of shareholders’ dividends may be distributed after the Board has formulated the proposal and submitted it to the shareholders’ meeting for approval based on the Company’s operating status and capital requirements. The distribution of cash dividends shall be prioritized. When cash dividends and share dividends are distributed at the same time, the ratio of cash dividends therein shall not be less than 10% of total

～ 48 ～

Hocheng Corporation Parent Company Only Financial Statements (cont’d)

dividends.

When the amount of legal reserve has reached the total capital, the shareholders’ meeting may resolve to cease the appropriation.

For the distribution of dividends and bonuses from legal reserve and capital reserve, the distribution shall be made after the Board has formulated the proposal and submitted it to the shareholders’ meeting for approval according to the requirements of relevant laws and regulations.

(1) Legal reserve

When the Company has no losses, it may, based on the resolution of the shareholders’ meeting, distribute new shares or cash from the legal reserve; however, the portion distributable shall be the portion of the reserve that exceeds 25% of the paid-in capital.

(2) Special reserve

For the initial application of IFRS that is approved by the FSC, the Company chose to adopt the exemptions in IFRS1 “First-time Adoption of International Financial Reporting Standards.” Therefore, for the unrealized revaluation increment under the shareholder’s equity, retained earnings increased by NT$658,175 thousand according to the requirements. Pursuant to the Order Jin-Guan-Zheng-Fa-Zi No.1010012865 of the FSC dated April 6, 2012, the same amount of special reserves should be appropriated, and when relevant assets are used, disposed of, or reclassified, the special reserve appropriated initially shall be reversed as distributable earnings proportionately. As of December 31, 2024 and 2023, the carrying amount of the special reserve amounted to NT$458,116 thousand.

(3) Earnings distribution

The proposal for earning distribution for 2023 and 2022 was approved as a resolution at the shareholders’ meeting on June 26, 2024 and July 21, 2023. The amount of dividends distributed to the owners is as follows:

NT$458,116 thousand. Earnings distribution The proposal for earning distribution for 2023 and resolution at the shareholders’ meeting on June 26, 2024 and of dividends distributed to the owners is as follows:	2022 was approved as a July 21, 2023. The amount	2022 was approved as a July 21, 2023. The amount
2023 Payout ratio(NTD) Amount Dividends distributed to owners of ordinary shares: Cash $ 0.20 60,461	2022 Payout ratio(NTD) Amount 0.20 60,656
	Payout ratio(NTD)
	0.20

4. Treasury shares

The breakdown of shares of the Company held by the Company’s subsidiaries as of December 31, 2024 and 2023 is as follows:

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Hocheng Corporation Parent Company Only Financial Statements (cont’d)

Holding 2024.12.31 2023.12.31 company Accounting item Number of shares (thousand shares) Costs Market price Number of shares (thousand shares) Costs Market price Hohong Co., Ltd. Financial assets at fair value through other comprehensive income - Non-current 445 4,781 7,707 445 4,781 8,086 5. Other equity (net of tax) Exchange differences on translation of foreign operations Unrealized (losses) gains of financial assets at fair value through other comprehensive income Balance on January 1, 2024 $ 16,738 600,686 Exchange differences arising from the translation of net assets of foreign operations 38,037 - Unrealized (losses) gains of financial assets at fair value through other comprehensive income - 47,945 Disposal of equity instruments measured at fair value through other comprehensive income - 3 Share of unrealized gains or losses of financial assets at fair value through other comprehensive income of subsidiaries accounted for using the equity method - 37,743 Disposal of equity instruments measured at fair value through other comprehensive income - (76,437) Balance on December 31, 2024 $ 54,775 609,940	Accounting item	2024.12.31	2024.12.31		2023.12.31
		Number of shares (thousand shares)	Costs		Number of shares (thousand shares)
					shares)

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Hocheng Corporation Parent Company Only Financial Statements (cont’d)

Exchange differences on translation of foreign operations Balance at January 1, 2023 $ (1,184) Exchange differences arising from the translation of net assets of foreign operations 17,922 Unrealized (losses) gains of financial assets at fair value through other comprehensive income - Disposal of equity instruments measured at fair value through other comprehensive income - Share of unrealized gains or losses of financial assets at fair value through other comprehensive income of subsidiaries accounted for using the equity method - Balance on December 31, 2023 $ 16,738 (XXI) Earnings per share 1. Basic earnings per share (1) Net profit attributable to ordinary shareholders of the Company 2024 Net profit attributable to ordinary shareholders of the Company $ 58,418 (2) Weighted average number of issued ordinary shares (thousand shares) 2024 Ordinary shares issued as of January 1 302,304 Effect of treasury shares (445) Weighted average number of issued ordinary shares as at December 31 301,859	Exchange differences on translation of foreign operations		Unrealized (losses) gains of financial assets at fair value through other comprehensive income 377,823 - 144,015 (17,144) 95,992 600,686 2023 19,347 2023 303,280 (1,001) 302,279

	(thousand shares) 2024 302,304 (445)

	301,859

Diluted earnings per share

(1) Net profit attributable to ordinary shareholders of the Company (diluted)

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Hocheng Corporation Parent Company Only Financial Statements (cont’d)

Net profit attributable to ordinary shareholders of the Company (diluted) (2) Weighted average number of issued ordinary shares Weighted average number of issued ordinary shares (basic) Effect of employees’ compensation on shares Weighted average number of issued ordinary shares (diluted) as of December 31 3. Earnings per share are as follows: Basic earnings per share Diluted earnings per share	2024 $ 58,418
	$ 0.19

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Hocheng Corporation Parent Company Only Financial Statements (cont’d)

(XXII) Revenue from contracts with customers

Breakdown of revenue

rom contracts with customers kdown of revenue
Primary geographical markets: Taiwan China Philippines Other countries Major products/service lines: Porcelain Copper Toilet seat cover Fine pottery Others	2024 $ 3,127,674 1,143 2,585 632	2023 3,250,321 571 4,373 - 3,255,265 1,236,924 711,066 534,048 117,994 655,233 3,255,265
	$ 3,132,034
	$ 1,213,274 697,668 548,077 73,725 599,290
	$ 3,132,034

(XXIII) Remuneration of employees and remuneration of Directors and supervisors

According to the requirements of the Articles of Incorporation, if the Company records any profits, it shall appropriate 5%~8% of the annual profits. The appropriation ratio for the remuneration of employees and remuneration of Directors and supervisors shall be up to 3% of the annual profits. However, if the Company still has accumulated losses, an amount shall be reserved in advance to make up for the losses.

For years ended December 31, 2024 and 2023, the estimated remuneration of employees was NT$4,378 thousand and NT$3,722 thousand, and the remuneration of Directors was NT$2,189 thousand and NT$1,861 thousand, respectively. The estimation basis is the net profit of the Company in the respective period before the remuneration of employees and remuneration of Directors and supervisors multiplied by the distribution ratio of the remuneration of employees and remuneration of Directors and supervisors as stated in the Articles of Incorporation, and the amounts were presented as operating costs or operating expenses of the period. If there are differences between the actual distribution amount and the estimated amount, they are treated as changes in accounting estimates, and such differences are recognized as profit or loss in the following year. For the remuneration of employees and remuneration of Directors and supervisors of the Company, the actual distribution amount and the estimated amount in 2023 were equivalent; for relevant information, please visit MOPS for inquiries.

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Hocheng Corporation Parent Company Only Financial Statements (cont’d)

(XXIV) Non-operating income and expenses

1. Interest income

The breakdown of the interest income of the Company in 2024 and 2023 is as follows:

2024 2023 Interest from cash in the bank $ 4,222 1,678 Other income The breakdown of other income of the Company in 2024 and 2023 is as follows: 2024 2023 Rental income $ 21,184 17,177 Dividend income 29,169 28,658 Royalties and others 48,206 64,002 $ 98,559 109,837	2024 $ 4,222	2023 1,678
	$ 98,559	109,837

2. Other income

3. Other gains and losses

The breakdown of other gains and losses of the Company in 2024 and 2023 is as follows:

Foreign exchange gains Net gains from disposal and scrapping of property, plant and equipment Depreciation of investment properties Net gains on financial assets at fair value through profit or loss Others	2024 $ 952 (6) (6,234) 1,732 (2,432)	2023 (1,857) 328 (6,116) 3,572 (3,044)
	$ (5,988)	(7,117)

4. Finance costs

The breakdown of finance costs of the Company in 2024 and 2023 is as follows:

Interest expenses	2024 $ 17,264	2023 21,987

(XXV) Financial instruments

1. Credit risks

(1) Credit risk exposure

The carrying amount of financial assets and contract assets represents the maximum amount exposed to credit risk.

(2) Concentration of credit risk

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Hocheng Corporation Parent Company Only Financial Statements (cont’d)

The major customers of the Company are centralized in several distributors. In order to reduce the credit risk, the Company continues to evaluate the financial status of these customers and request collateral or guarantee when necessary. The Company regularly assesses the likelihood of collectability of accounts receivable and sets aside an allowance for bad debts, and the impairment losses generally fall within the expectations of the management. As of December 31, 2024 and 2023, 50% and 46% of notes receivable balance and 26% and 19% of accounts receivable balance were concentrated on three customers. Thus, the credit risk of the Company is significantly centralized.

(3) Credit risk of amounts receivable

For information on the exposure to credit risks of notes and accounts receivable, please refer to Note 6(4).

2. Liquidity risks

The following table shows the contractual maturities of financial liabilities, including estimated interest payments and excluding the impact of netting agreements.

Carrying amount:	Cash flows of contract	Within 6 months	612 months	12 years	25 years	Over 5 years
	436,618 169,478 100,059 47,758 270,440 219,786 36,042	4,980 169,478 100,059 47,758 270,440 219,786 8,214	29,856 - - - - - 6,172	58,776 - - - - - 10,352	343,006 - - - - - 11,304	- - - - - - -
$ 1,241,798	1,280,181	820,715	36,028	69,128	354,310	-
$ 540,000 250,000	548,348 250,924	145,484 250,924	402,864 -	- -	- -	- -

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Hocheng Corporation Parent Company Only Financial Statements (cont’d)

borrowings Notes payable Accounts payable Other payables Lease liabilities	50,463 50,463 50,463 - - - - 244,284 244,284 244,284 - - - - 223,755 223,755 223,755 - - - - 47,264 48,435 10,494 9,620 10,840 17,481 -
	$ 1,355,766 1,366,209 925,404 412,484 10,840 17,481 -

The Company does not expect that the cash flows included in the maturity analysis would occur significantly earlier or at significantly different amounts.

Currency risks
(1) Exposure to foreign currency risk

Financial assets and liabilities of the Company that are exposed to significant currency risk are as follows:

Financial assets Monetary items USD RMB Financial liabilities Monetary items USD		2024.12.31			2023.12.31
	Foreign currency	Exchange rate	NTD	Foreign currency	Exchange rate
			6,295 61,219 53,636
	$ 192 13,671 1,636	32.79 4.478 32.79		133 13,057 165	30.71 4.327 30.71

USD

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Hocheng Corporation Parent Company Only Financial Statements (cont’d)

(2) Sensitivity analysis

The exposure of the Company’s monetary items to currency risk arises from the exchange gains or losses arising from the translation of cash and cash equivalents, accounts receivable, other receivables, borrowings, accounts payable, and other payables that are denominated in foreign currencies. As of December 31, 2024 and 2023, if an appreciation or depreciation of 1% of the NTD against the USD occurs, the net profit after tax of 2024 and 2023 would have increased or decreased by NT$122 thousand and NT$444 thousand, respectively.

(3) Exchange gains or losses of monetary items

Exchange gains or losses of monetary items of the Company (including those realized and unrealized) in 2024 and 2023 were gains of NT$952 thousand and losses of NT$1,857 thousand.

4. Interest rate analysis

The exposure of the Company’s financial assets and financial liabilities are described in the liquidity risk management of the note.

The following sensitivity analysis is based on the risk exposure to the interest rates risk of derivative and non-derivative instruments on the reporting date. Regarding liabilities with variable interest rates, the analysis is based on the assumption that the amount of liabilities outstanding on the reporting date was outstanding throughout the year. The rate of change is expressed as the interest rate increases or decreases by 1% when reporting to the key management internally, which also represents the management's assessment of the reasonable and possible scope of change in interest rates.

The Company’s interest rate risk arises from borrowings bearing floating interest rates. If the interest rate increases or decreases by 1%, the Company’s net profit before tax will decrease or increase by NT$4,100 thousand and NT$4,800 thousand for the years ended December 31, 2024 and 2023, respectively, and all other variables remained constant.

5. Information on fair value

(1) Types and fair value of financial instruments

Regarding the financial assets and liabilities at fair value through profit or loss, financial assets and liabilities for hedging, and financial assets at fair value through other comprehensive income (financial assets available for sales) of the Company, the carrying amount and fair value of various financial assets and financial liabilities measured at fair value on a repetitive basis (including the information on the level of fair value; however, for financial instruments not measured at fair value with their carrying amount being reasonable approximates and investments in equity instruments

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Hocheng Corporation Parent Company Only Financial Statements (cont’d)

with no active quote in an active market and the fair value cannot reliably measures, the information on fair value is not required to be disclosed according to the requirements) are set out as follows:

are set out as follows:
Financial asset measured at fair value through profit or loss Financial assets mandatorily measured at fair value through profit or loss Financial assets measured at fair value through other comprehensive income Domestic and foreign listed stocks Domestic non-listed stocks Subtotal			2024.12.31		Total 129,998
	Carrying amount: $ 129,998		Fair value:
		Level 1 129,998	Level 2 -	Level 3 -
	692,837 1,869	692,837 -	- -	- 1,869	692,837 1,869
	694,706	692,837	-	1,869	694,706

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Hocheng Corporation Parent Company Only Financial Statements (cont’d)

		2024.12.31	2024.12.31	Total - - - - - -
Carrying amount: 376,360 802,378 71,249 9,565 2,358 21,516		Fair value:
	Level 1 - - - - - -	Level 2 - - - - - -	Level 3 - - - - - -
1,283,426	-	-	-	-
$ 2,108,130	822,835	-	1,869	824,704
	- - - - - -	- - - - - -	- - - - - -	- - - - - -
$ 1,261,202	-	-	-	-

		2023.12.31	2023.12.31	Total 117,266
Carrying amount: $ 117,266		Fair value:
	Level 1 117,266	Level 2 -	Level 3 -
646,585 2,178	646,585 -	- -	- 2,178	646,585 2,178
648,763	646,585	-	2,178	648,763
370,049 877,016 57,276 2,332 23,641	- - - - -	- - - - -	- - - - -	- - - - -
1,330,314	-	-	-	-
$ 2,096,343	763,851	-	2,178	766,029

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Hocheng Corporation Parent Company Only Financial Statements (cont’d)

		2023.12.31	2023.12.31
		Fair value:		Total - - - - -
	Level 1 - - - - -	Level 2 - - - - -	Level 3 - - - - -
$ 1,374,823	-	-	-	-

(2) Fair value valuation techniques for financial instruments measured at fair value Non-derivative financial instruments

If a financial instrument has a quoted price in an active market, the quoted price is used as fair value. The quotation, which is published by the main exchange or that which was deemed to be a public bond by the Treasury Bureau of Central Bank, is included in the fair value of the listed securities instruments and the debt instruments in active markets with an open bid.

If quoted prices of financial instruments can be obtained in time and often from exchanges, brokers, underwriters, industrial unions, pricing institutes, or authorities, and such prices can reflect those actual trading and frequently happen in the market, the financial instruments are considered to have quoted prices in an active market. The market shall be deemed inactive when not fulfilling the abovementioned conditions. In general, significant gaps in trading prices, significant increases in gaps in trading prices, or minor trading volume are deemed as indicators of an inactive market.

If the financial instruments held by the Company have an active market, the fair value, by category and attribute, is set out as follows:

Shares of companies listed on TWSE (TPEX) are financial assets and financial liabilities traded in active markets that fulfill the standard terms and conditions; their fair value shall be based on the market quotations.

Apart from the financial instruments with an active market above, the fair value of the remaining financial instruments is determined based on the general recognition pricing model that is used as the basis through cash flow discount analysis.

If the financial instruments held by the Company has no active market, the fair value, by category and attribute, is set out as follows:

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Hocheng Corporation Parent Company Only Financial Statements (cont’d)

Equity instruments with no open quote: The Company adopts the net asset value method, which primarily assumes that the measurement shall be made based on the net worth per share of the investee.

(3) Transfers between Level 1 and Level 2

There was no significant transfer of financial assets from Level 1 to Level 2 in 2024 and 2023.

(4) Statement of changes in Level 3

January 1, 2024 Total gains or losses Deferred tax income (expense) recognized in other comprehensive income December 31, 2024 January 1, 2023 Total gains or losses Deferred tax income (expense) recognized in other comprehensive income December 31, 2023	Measured at fair value through other comprehensive income Equity instruments with no open quotation $ 2,178 (309) $ 1,869 $ 2,350 (172) $ 2,178

The abovementioned total gains or losses are presented as “unrealized gains of losses from investments in equity instruments at fair value through other comprehensive

income.” Those related to assets held in 2024 and 2023 are as follows:

Total gains or losses Recognized in other comprehensive income (presented as “unrealized gains of losses from investments in equity instruments at fair value through other comprehensive income”)	2024 $ (309)	2023 (172)

(5) Quantified information for significant unobservable inputs (Level 3) used in fair value measurement

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Hocheng Corporation Parent Company Only Financial Statements (cont’d)

The Company’s financial instruments that are classified for fair value measurement by using Level 3 inputs include financial assets at fair value through other comprehensive income - securities investments.

Most of the Company’s financial assets in Level 3 have only single significant unobservable input, while investments in equity instruments without an active market have multiple significant unobservable inputs. The significant unobservable inputs of investments in equity instruments without an active market are individually independent, and there is no correlation between them.

The quantitative information of significant unobservable inputs is set out as follows:

Interrelationship between significant Significant unobservable Valuation unobservable inputs and fair Item technique inputs value measurement Net asset value ‧Net asset value Not applicable

Financial assets Net asset value measured at fair method value through other comprehensive income

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Hocheng Corporation Parent Company Only Financial Statements (cont’d)

(XXVI) Financial risk management

1.Overview and Summary

The Company is exposed to the following risks from its financial instruments:

(1) Credit risk

(2) Liquidity risk

(3) Market risk

The note presents the Company’s exposure information, objectives, policies and procedures for measuring and managing the abovementioned risks. For further quantitative disclosures, please refer to the respective notes in the parent company only financial statements.

2. Risk management framework

The Board has overall responsibility for the establishment and supervision of the risk management framework of the Company.

The Company’s risk management policies are established to identify and analyze the risks faced by the Company, set appropriate risk limits and controls, and monitor risks and compliance with limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Company’s activities. The Company, through training, management standards, and procedures, aims to develop a disciplined and constructive control environment in which all employees understand their roles and obligations.

The Company’s Board oversees how the management monitors compliance with risk management policies and procedures and reviews the adequacy of the risk management framework in relation to risks faced by the Company. Internal auditors assist the Board of the Company in supervising. Such personnel undertakes regular and ad hoc reviews of risk management control and procedures, and the results are reported to the Board.

3. Credit risk

Credit risk means the potential loss of the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations and arises principally from the Company’s accounts receivables from customers and investments in securities.

(1) Accounts and other receivables

The Company has the allowance account set up to reflect the estimated losses of the accounts and other receivables and investments. The allowance account mainly includes specific losses related to individually significant exposure and the combined losses of similar asset groups that have incurred but not been identified. The allowance account for combined losses is determined in accordance with the historical payment

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Hocheng Corporation Parent Company Only Financial Statements (cont’d)

statistics of similar financial assets.

(2)Investment

The credit risk exposure of bank deposits and other financial instruments is measured and monitored by the Company’s Finance Department. As the Company deals with banks and counterparties with good credit standing and financial institutions, corporate organizations and government agencies, which are graded above the investment level, there is no significant performance suspicion; therefore, there is no significant credit risk.

(3)Guarantee and certificate

The Company’s endorsement/guarantee policy is limited to subsidiaries or associates with business dealings. Please refer to Note 7 for details of endorsements and guarantees provided by the Company to subsidiaries as of December 31, 2024 and 2023.

4. Liquidity risk

Liquidity risk is the risk that the Company has difficulty fulfilling the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Company’s approach to managing liquidity is to ensure, as far as possible, that it always has sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company’s reputation.

In general, the Company ensures that it possesses sufficient cash to meet expected operating expenditure requirements, including the performance of financial obligations, but excluding potential effects that cannot be reasonably estimated under extreme circumstances (i.e., natural disasters).

5. Market risk

Market risk is the risk of changes in market prices, such as exchange rates, interest rates, and equity instrument prices, that will affect the Company’s revenue or the value of financial instruments we hold. The objective of market risk management is to control the market risk exposure within the tolerable range and to optimize the investment return.

(1) Currency risk

The Company is exposed to currency risk on sales and purchases that are not denominated in the functional currency. The major denomination currency of such transactions is USD.

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Hocheng Corporation Parent Company Only Financial Statements (cont’d)

(XXVII) Capital management

The objectives of the Board’s policy are to maintain an optimal capital structure to keep the faith of investors, creditors, and the market and support future operations. Capital consists of share capital, capital reserve, retained earnings, and non-controlling interests of the Company. The Board of Directors monitors the return on capital, as well as the level of dividends for ordinary shares.

The Company’s debt-to-equity ratio on the reporting date is as follows:

dividends for ordinary shares. The Company’s debt-to-equity ratio on the reporting	date is as follows:	date is as follows:
Total liabilities Less: Cash and cash equivalents Net liabilities Total equity Debt-to-equity ratio	2024.12.31 $ 1,679,902 (376,360)		2023.12.31 1,836,082 (370,049) 1,466,033 6,669,472 21.98%
	$ 1,303,542
	$ 6,839,502
		19.06%

As of December 31, 2024, the Company had not changed its capital management method.

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Hocheng Corporation Parent Company Only Financial Statements (cont’d)

(XXVIII) Investing and financing activities of non-cash transactions

Investing and financing activities of non-cash transactions performed by the Company in 2024 and 2023.

The reconciliation of liabilities from financing activities is set out in the following table:

Short-term borrowings Long-term borrowings Lease liabilities Short-term notes payable Guarantee deposits Total liabilities from financing activities Short-term borrowings Long-term borrowings Lease liabilities Short-term notes payable Guarantee deposits Total liabilities from financing activities	2024.1.1 Cash flow $ 350,000 (181,385) 440,000 (40,000) 47,264 (21,047) - 100,000 19,057 347	Non-cash change Increase Disposal 2024.12.31 - - 168,615 - - 400,000 10,055 (1,073) 35,199 - - 100,000 - - 19,404 10,055 (1,073) 723,218 Non-cash change Increase Disposal 2023.12.31 - - 350,000 - - 440,000 5,383 (96,465) 47,264 - - - 472 - 19,057 5,855 (96,465) 856,321
	$ 856,321 (142,085)
	2023.1.1 Cash flow $ 330,000 20,000 520,000 (80,000) 180,793 (42,447) 105,000 (105,000) 18,585 -
	$ 1,154,378 (207,447)

VII. Related party transactions

(I) Parent company and ultimate controlling party

The Company is the ultimate controlling party of the Company and the attributed Group.

(II) Names and relationships with related parties

Subsidiary – Hostan Corporation was merged into the Company on July 28, 2023, with the Company succeeding to all related rights and obligations. During the reporting period covered by these parent company only financial statements, the Company’s subsidiaries and other related parties with which the Company had transactions are as follows:

Name of the relatedparties Hohong Co., Ltd. SWATTON INTERNATIONAL CORP. Bao Long Interior Crafts Co., Ltd. Hoceng Service Co., Ltd. Ritiboon International Limited Hocheng Philippines Property Holding, Inc. HOCHENG GROUP HOLDING CORP. Hocheng (China) Corporation	Relationship with the Company
	Subsidiary `〞` `〞` `〞` `〞` `〞` `〞` `〞`

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Hocheng Corporation Parent Company Only Financial Statements (cont’d)

Name of the related parties Hocheng Philippines Corporation Hocheng TRADING (SHANGHAI) CO., LTD. Lazuli International Co., Ltd. Hocheng Jianlang (Shamghai) Kitchen and Bathroom Co., Ltd. Yuhuang Co., Ltd.	Relationship with the Company
	Subsidiary `〞` `〞` `〞` Substantial related party (other related parties)

(III) Significant transactions with related parties

1. Operating revenue

The amounts of significant sales by the Company to related parties are as follows:

Subsidiary Hoceng Service Co., Ltd. Bao Long Interior Crafts Co., Ltd. Other subsidiaries Other related parties	2024 $ 61,504 2,772 3,728 7	2023 63,732 38,735 4,952 29 107,448
	$ 68,011

The selling price of the Company to subsidiaries and other related parties are not significantly different from those for general sales, with payment terms being due three months after the end of the month.

2.Purchase of goods

The amounts of purchases by the Company from related parties are as follows:

Subsidiary Bao Long Interior Crafts Co., Ltd. Other subsidiaries Other related parties Yuhuang Co., Ltd.	2024 $ 262,755 36,921 139,052	2023 215,280 62,954 135,794 414,028
	$ 438,728

The purchase price of the Company to the subsidiaries and other related parties is not significantly different from the purchase price of the Company to the general manufacturers, and the payment terms are three months.

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Hocheng Corporation Parent Company Only Financial Statements (cont’d)

3. Amounts receivable from related parties

The breakdown of the Company’s amounts receivable from related parties is as follows:

Accounting item Type of related parties	Accounting item Type of related parties	2024.12.31 $ 8,369 4 8,529 385 1,135 - 23,064 2,939 3,162 55 7,040
		$ 54,682
Notes payable Accounts payable Other payables	Other related parties Yuhuang Co., Ltd. Subsidiary Bao Long Interior Crafts Co., Ltd. Other subsidiaries Other related parties Yuhuang Co., Ltd. Subsidiary Hoceng Service Co., Ltd. Bao Long Interior Crafts Co., Ltd. Other subsidiaries Other related parties
		$ 118,619

4. Amounts payable to related parties

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Hocheng Corporation Parent Company Only Financial Statements (cont’d)

5. Foreign currency transaction

(1) Acquisition of property, plant and equipment

The breakdown of changes in the cost and depreciation of property, plant and equipment of the Company is as follows:

Subsidiary

2024 $ 2,014	2023 -

6. Endorsement/guarantee

(1) Endorsement/guarantee provided by the Company to related parties

As of December 31, 2024 and 2023, the Company issued letters of credit for the guarantee of bank borrowings for subsidiaries in the amount of US$1,500 thousand, PHP285,000 thousand and US$2,000 thousand, and PHP285,000 thousand, respectively.

The Company's endorsement and guarantee amount for the subsidiary's bank loan on December 31, 2024 wasNT$150,000thousand.

(2) Endorsement/guarantee provided by related parties to the Company

The subsidiaries of the Company provided joint and several guarantees for the contracted projects of the Company in a total amount of NT$5,840 thousand as of December 31, 2024 and 2023, respectively.

7. Royalty income

Subsidiaries of the Company made use of the trademark rights of the Company. In 2024 and 2023, royalties collected from related parties amounted to NT$23,054 thousand and NT$21,353 thousand, respectively.

8. Rental income

Rent collected by the Company from other related parties is based on the price negotiation between both parties and is charged on a monthly basis. In 2024 and 2023, rental income collected from related parties amounted to NT$7,186 thousand and NT$5,762 thousand, respectively.

9. Rental expenses

The Company rented the office located in the southern area of Tainan City from other related parties in 2024 for an amount of 220 thousand and 222 thousand, respectively.

The Company rented the office located in the south district of Taichung City from other related parties in 2023 for an amount of57thousand and60thousand, respectively.

10. Others

(1) As of December 31, 2024 and 2023, the Company’s real estate of Yingge factory and office amounted to NT$94,173 thousand and NT$94,678 thousand, respectively. The real estate has not yet transferred the account in the name of the Company as it is a

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Hocheng Corporation Parent Company Only Financial Statements (cont’d)

piece of agricultural land. For the years ended December 31, 2024 and 2023, the real estate had temporarily registered under Li-Chien Chiu and Chiu Hong Yu with trust. The Company signed a deed of real estate trust with the registrants, setting out their rights obligations and having pledged their trust assets to the Company.

(2) In January 2023, the Company purchased the outstanding equity of He-Hong Co., Ltd.

from key management personnel, and the amount of transaction was NT$ 620 thousand.

(3) Other related parties

Accounting item Type of related parties	2024 2023 $ 110 107 5,065 2,558 663 1,624 51 36
Operating cost Subsidiary Operating expenses Subsidiary Other related parties Non-Operating revenue Subsidiary

11. Other expenses

The Company and its subsidiaries have entered into a repair contracting agreement; the repair expenses (accounted for as other expenses) were NT$46,920 thousand and NT$45,935 thousand in 2024 and 2023, respectively.

(IV) Key management transaction

The compensation of the key management includes:

NT$45,935 thousand in 2024 and 2023, respectively. Key management transaction The compensation of the key management includes:
Short-term employee benefits Post-employment benefits	2024	2023 13,577 222 13,799
	$ 13,053 258
	$ 13,311

The Company provided 4 company cars with a cost of NT$7,801 thousand for the key management’s use in 2024 and 2023.

VIII. Pledged assets

The breakdown of the carrying amount of assets provided by the Company for pledge and

security is as follows:

Asset Name	Target	2024.12.31 $ 1,774,468 396,542 2,358 21,516	2023.12.31 1,797,357 402,730 2,332 23,641 2,226,060
Property, plant and equipment - Land and houses Investment property - Land and houses Restricted assets (recognized as other non-current assets - other) Refundable deposits	Long-term and short-term borrowings Long-term and short-term borrowings Bid bond and performance bond for projects House lease and deposits for construction
		$ 2,194,884

～ 70 ～

Hocheng Corporation Parent Company Only Financial Statements (cont’d)

IX. Significant contingencies and unrecognized contractual commitments

(I) Material unrecognized contractual commitments:

cant contingencies and unrecognized contractual commitments aterial unrecognized contractual commitments:	cant contingencies and unrecognized contractual commitments aterial unrecognized contractual commitments:	cant contingencies and unrecognized contractual commitments aterial unrecognized contractual commitments:
1. Promissory notes issued by the Company for engineering and product			warranty and
subject guarantee:
		2024.12.31	2023.12.31
Promissory notes for engineering and product warranty	$	29,180	36,182
and subject guarantee

～ 71 ～

Hocheng Corporation Parent Company Only Financial Statements (cont’d)

X. Losses due to major disasters: None.

XI. Significant events after the period: None.

XII. Others

A summary of employee benefits, depreciation, and amortization, by function, is as follows:

By function By nature	2024	2024	2024	2023	2023	2023
	Operating costs	Operating expenses	Total	Operating costs	Operating expenses	Total
Employee benefits expense Salary expenses Labor and health insurance Pension costs Directors’ remuneration Other employee benefits expense Depreciation expenses (Note) Amortization expense	309,124 33,302 6,787 - 12,355 76,764 117	276,670 28,896 11,135 3,117 14,894 54,291 4,241	585,794 62,198 17,922 3,117 27,249 131,055 4,358	315,510 34,903 1,179 - 11,839 85,932 106	281,997 29,831 3,842 2,769 13,692 57,745 4,747	597,507 64,734 5,021 2,769 25,531 143,677 4,853

(Note): The abovementioned depreciation expenses exclude the depreciation expenses of investment properties; in 2024 and 2023, the expenses amounted to NT$6,234 thousand and NT$6,116 thousand (accounted for under other gains and losses).

Additional information on the number of employees and employee benefits of the Company in 2024 and 2023 is as follows:

2024 968	2024 968	2023 999
4		4
$ 719		696
$ 608		601
	1.16%	(3.84)%

Information on the Company’s remuneration policies (including Directors, managerial officerial officers, and employees) is as follows:

～ 72 ～

Hocheng Corporation Parent Company Only Financial Statements (cont’d)

The distribution of remuneration, salaries, incentives, and employee bonuses of the directors and managerial officers are subject to the dividend policy in the Company’s Articles of Incorporation, Remuneration Committee Charter, and other relevant requirements and are determined based on the industrial characteristics and business nature of the Company. Remuneration related to Directors and managerial officers is implemented after being reviewed by the Remuneration Committee and approved by the Board.

XIII. Other disclosures

(I) Information on significant transactions

Information on significant transactions required to be disclosed by the Regulations Governing the Preparation of Financial Reports by Securities Issuers for the Company for the year ended December 31, 2024 is as follows:

Loans to others: None.
Guarantees and endorsements for others:

==> picture [486 x 211] intentionally omitted <==

----- Start of picture text -----

Unit: NT$ thousand
Endorsemen Party being Single Maximum At the end Actual Property Accumulated Endorseme Belonging Belonging Belonging
t/Guarantee endorsed/guarantee enterprise balance of of the drawdown as endorsement/gua nt/Guarant to the to the to the
d the period period amount collateral rantee amount ee parent Subsidiar party in
company y China
No. Name of the Limit of Balance of Balance of Amount of Ratio of Highest Endorsem Endorse Endorse
certificate endorseme endorseme endorseme endorseme accumulated limit of ent/guara ment/gua ment and
Company Relation nts/guarant nt/guarante nt/guarant Amount nt/guarant amount of securities ntee rantee guarantee
name ship ees e ee ee with endorsement/gua Note 3 provided provided for
(Note 1) Note 2 properties as rantee to the net worth on the subsidiary to a parent to a regional
collateral latest financial company
statements
Note 4
0 Hocheng Hocheng 3 6,839,502 226,251 210,801 - - 3.08% 6,839,502 Y
Corporation Philippines
Corporation
〞
0 Bao Long 3 6,839,502 150,000 150,000 - 50,000 2.19% 6,839,502 Y
Interior
Crafts Co.,
Ltd.
1 Hoceng Hocheng 3 131,391 5,840 5,840 4,017 - 0.09% 131,391 Y
Service Co., Corporation
Ltd.
----- End of picture text -----

Note 1: The relationship between the endorser/guarantor and the counterparties is as follows:

A Company with business relationships.
A company in which the Company, directly and indirectly, holds over 50% of shares with voting rights.
A company, directly and indirectly, holds over 50% of shares with voting rights in the Company.
A company in which the Company, directly and indirectly, holds over 90% of shares with voting rights.
Companies within the industry provide mutual guarantees according to contracts due to the requirement of engineering contracting.
Note 2: The endorsement and guarantee limit made by the Company, Hostan Corporation, and Hoceng Service Co., Ltd. shall not exceed 100% of the net value of their financial statements.

Note 3: The cap of endorsements and guarantees is the net worth of the financial statements.

Note 4: For non-public companies, the ratio is calculated based on the net worth of the parent company.

Securities held at the end of the period (excluding investments in the equity of subsidiaries, associates, and joint ventures):

～ 73 ～

Hocheng Corporation Parent Company Only Financial Statements (cont’d)

Unit: NT$ thousand/share

Names of companies held	Securities Type and name	and securities Relationship with the issuer	Accounting item	Period: End	Period: End	Period: End	Period: End	Remarks
				Number of shares	Carrying amount:	Shareholding percentage	Fair value (Note 2)
The Company	Cathay Financial Holdings Limited KGI Financial Holding Co., Ltd. Taishin Financial Holding Co., Ltd. United Microelectronics Corporation Taiwan PCB Techvest Co., Ltd. Capital Securities Corporation Pegatron Corporation Mega Financial Holding Company Ltd. CTBC Financial Holding Co., Ltd. Core Pacific City Co.,Ltd.	- - - - - - - - - -	Financial assets at fair value through other comprehensive income -- Non-current `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃`	651,834 452,067 580,174 800,000 6,575,315 8,551,000 75,000 1,412,268 2,498,000 49,205	44,520 7,775 10,095 34,440 225,205 210,782 6,893 54,655 97,672 251	- % - % - % 0.01% 2.42% 0.39% - % 0.01% 0.01% 0.49%	44,520 7,775 10,095 34,440 225,205 210,782 6,893 54,655 97,672 251

～ 74 ～

Hocheng Corporation Parent Company Only Financial Statements (cont’d)

Names of companies held	Securities Type and name	and securities Relationship with the issuer	Accounting item	Period: End	Period: End	Period: End	Period: End	Remarks
				Number of shares	Carrying amount:	Shareholding percentage	Fair value (Note 2)
The Company Hohong Co., Ltd.	Union Securities Investment Trust Co., Ltd. Power Chip Technology Corporation Power Chip Semiconductor Manufacturing Corp. Taishin 1699 Money Market Fund Yuanta Wan Tai Money Market Fund Sinopac TWD Money Market Fund Capital Money Market Fund Hua Nan Phoenix Money Market Fund Hua Nan Kirin Money Market Fund GREAT WALL ENTERPRISE CO., LTD. Formosa Plastics Corporation CATHAY CONSOLIDATED INC. Zeng Hsing Industrial Co., Ltd. Standard Chemical & Pharmaceutical Co. Ltd. Hocheng Corporation Longchen Paper & Packaging Co., Ltd. Sheh Kai Precision Co., Ltd. Iron Force Industrial Co., Ltd. Turvo International Co.,Ltd. Compeq Manufacturing Co., Ltd. Hong Hai Precision Industrial Co., Ltd. Yageo Corporation Taiwan Semiconductor Manufacturing Company Limited Foxconn Technology Co., Ltd. Elite Material Co., Ltd. Walsin Technology Corporation Evergreen International Storage and Transport Corporation Aerospace Industrial Development Corp. Cathay Financial Holdings Limited	- - - - - - - - - - - - - - Is its subsidiary - - - - - - - - - - - - - -	Financial assets at fair value through other comprehensive income -- Non-current `〃` `〃` Financial assets at fair value through profit or loss -- Current `〃` `〃` `〃` `〃` `〃` Financial assets at fair value through other comprehensive income -- Non-current `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃`	98,869 27,816 50,336 1,890,737 1,299,788 2,027,912 1,821,545 1,088,967 338,550 40,000 30,000 1,099 10,743 20,000 445,484 268,152 75,000 39,410 50,000 40,000 58,480 4,754 31,365 10,000 20,000 10,000 160,000 100,000 151,426	1,344 274 800 26,748 20,502 29,418 30,639 18,470 4,221 2,060 1,065 110 1,191 1,238 7,707 3,110 2,565 3,893 14,125 2,804 10,760 2,572 33,717 744 12,360 925 5,000 4,485 10,342	0.32% - % - % - % - % - % - % - % - % - % - % - % 0.02% 0.01% 0.15% 0.02% 0.15% 0.05% 0.08% - % - % - % - % - % 0.01% - % 0.01% 0.01% - %	1,344 274 800 26,748 20,502 29,418 30,639 18,470 4,221 2,060 1,065 110 1,191 1,238 7,707 3,110 2,565 3,893 14,125 2,804 10,760 2,572 33,717 744 12,360 925 5,000 4,485 10,342	Note1

～ 75 ～

Hocheng Corporation Parent Company Only Financial Statements (cont’d)

Names of companies held	Securities Type and name	and securities Relationship with the issuer	Accounting item	Period: End	Period: End	Period: End	Period: End	Remarks
				Number of shares	Carrying amount:	Shareholding percentage	Fair value (Note 2)
Hohong Co., Ltd.	KGI Financial Holding Co., Ltd. Taishin Financial Holding Co., Ltd. National Aerospace Fasteners Corporation Getac Technology Corporation COMPUCASE ENTERPRISE CO., LTD. TXC Corporation Tripod Technology Corporation Ardentec Corporation Xintec Inc. Topco Technologies Corp. Foxsemicon Integrated Technology Inc. Avalue Technology Inc. Well Shin Technology Co., Ltd. FORMOSA SUMCO TECHNOLOGY CORPORATION Shih Her Technologies Inc. Materials Analysis Technology Inc. Arcadyan Technology Corporation TSC Auto ID Technology Co., Ltd. Alchip Technologies, Limited Bizlink Holding Inc. ASE Technology Holding Co., Ltd. WELLELL INC. Global Tek Fabrication Co., Ltd. Wistron Information Technology & Services Corporation Zhen Ding Technology Holding Limited KMC (Kuei Meng) International Inc. Sino American Silicon Products Inc. Chailease Holding Company Limited Simplo Co., Ltd. Chipbond Technology Corporation	- - - - - - - - - - - - - - - - - - - - - - - - - - - - - -	Financial assets at fair value through other comprehensive income -- Non-current `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃`	132,288 384,256 22,000 40,000 10,000 20,000 80,000 130,205 5,000 8,538 15,000 52,000 26,000 40,000 70,000 14,725 45,000 16,496 1,000 10,354 80,000 15,000 2,000 74,619 120,000 30,100 50,000 40,184 10,000 30,000	2,275 6,686 2,035 4,240 894 2,010 15,800 6,914 990 593 4,560 4,649 1,604 3,920 8,890 3,652 7,898 3,283 3,280 6,337 12,960 374 164 8,469 14,400 3,597 6,725 4,541 3,970 1,932	- % - % 0.04% 0.03% 0.01% 0.01% 0.02% 0.03% - % 0.01% 0.01% 0.07% 0.02% 0.01% 0.12% 0.02% 0.02% 0.03% - % 0.01% - % 0.01% - % 0.10% 0.01% 0.02% 0.01% - % 0.01% - %	2,275 6,686 2,035 4,240 894 2,010 15,800 6,914 990 593 4,560 4,649 1,604 3,920 8,890 3,652 7,898 3,283 3,280 6,337 12,960 374 164 8,469 14,400 3,597 6,725 4,541 3,970 1,932

～ 76 ～

Hocheng Corporation Parent Company Only Financial Statements (cont’d)

Names of companies held	Securities Type and name	and securities Relationship with the issuer	Accounting item	Period: End	Period: End	Period: End	Period: End	Remarks
				Number of shares	Carrying amount:	Shareholding percentage	Fair value (Note 2)
Hohong Co., Ltd.	Powertech Technology Inc. Lanner Electronics Inc. Tong Hsing Electronic, Ltd. GlobalWafers Co., Ltd GEM Services, Inc. Crystalvue Medical Corporation Nova Technology Corp. KEYSTONE MICROTECH CO. Acer Cyber Security Inc. Sensortek Technology Corp. Unictron Technologies Corporation Acer E-Enabling Service Business Inc. WONDER PETS ENTERPRISES CORPORATION Formosa Advanced Technologies Co., Ltd. Allied Circuit Co., Ltd. Chenbro Micom Co., Ltd. Taiwan PCB Techvest Co., Ltd. Actron Technology Corporation Cleanaway Company Limited Pou Chen Corporation Macauto Industrial Co., Ltd. Power Chip Technology Corporation Power Chip Semiconductor Manufacturing Corp. D NET International Corporation Syntronix Corporation CASA Cost (AbGenomics Holding Ltd. Formosa Pharmaceuticals, Inc.) UPAMC James Bond Money Market Fund Franklin Templeton Sinoam Money Market Fund Yunata De-Li Money Market Fund	- - - - - - - - - - - - - - - - - - - - - - - - - - - - -	Financial assets at fair value through other comprehensive income -- Non-current `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` Financial assets at fair value through profit or loss -- Current `〃` `〃` `〃` `〃` `〃`	65,000 80,700 20,000 10,000 60,450 6,300 26,000 5,000 9,893 10,000 10,000 7,000 10,000 75,000 30,000 10,000 1,602,000 5,000 10,000 140,000 40,000 66,404 50,000 10,025 1,150 20,000 1,229,315 756,571 122,436	7,930 7,602 2,780 3,815 3,978 535 4,680 2,138 2,043 2,500 640 2,013 603 2,115 3,600 2,665 54,869 833 1,800 5,166 2,140 657 795 - - - 21,381 8,158 2,082	0.01% 0.06% 0.01% - % 0.05% 0.02% 0.03% 0.02% 0.04% 0.02% 0.02% 0.02% 0.02% 0.02% 0.06% 0.01% 0.59% - % 0.01% - % 0.05% - % - % - % - % - % - % - % - %	7,930 7,602 2,780 3,815 3,978 535 4,680 2,138 2,043 2,500 640 2,013 603 2,115 3,600 2,665 54,869 833 1,800 5,166 2,140 657 795 - - - 21,381 8,158 2,082

～ 77 ～

Hocheng Corporation Parent Company Only Financial Statements (cont’d)

Names of companies held	Securities Type and name	and securities Relationship with the issuer	Accounting item	Period: End	Period: End	Period: End	Period: End	Remarks
				Number of shares	Carrying amount:	Shareholding percentage	Fair value (Note 2)
Hohong Co., Ltd. Ritiboon International Limited Bao Long Interior Crafts Co., Ltd. Swatton International Co., Ltd.	Capital Money Market Fund Hua Nan Phoenix Money Market Fund Taishin 1699 Money Market Fund JPMorgan Funds– China Fund–JPM Pyxis Asia Technology HOTA INDUSTRIAL MFG. CO., LTD. SOLAR APPLIED MATERIALS TECHNOLOGY CORP. United Microelectronics Corporation CO-TECH DEVELOPMENT CORP. TCI Co., Ltd. PFBC NEXTEER MOTOR CO.,LTD HKT Trust and HKT Ltd. CK HUTCHISON HOLDINGS LTD FOCONN INTERCONNECT TECHNOLOGY LTD. MINTH GROUP LTD Amazon TSMC GLOBAL LTD JPMorgan Chase Bank Black Rock	- - - - - - - - - - - - - - - - - - - - -	Financial assets at fair value through profit or loss -- Current `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` Financial assets at fair value through other comprehensive income -- Non-current `〃` `〃` `〃` `〃` `〃` `〃` `〃` Financial assets at fair value through profit or loss -- Current `〃`	1,149,229 241,557 217,086 5,626 65,000,000 1,400 1,000 5,000 7,000 5,000 50 30,000 50,000 100,000 20,000 95,000 60,000 1,000 3,000 20 3,000	19,330 4,097 3,071 11,286 - - 68 313 301 293 6 84,959 701 4,052 3,503 1,463 3,829 7,193 9,399 10,249 11,872	- % - % - % - % - % - % - % - % - % - % - % - % - % - % - % - % - % - % - % - % - %	19,330 4,097 3,071 11,286 - - 68 313 301 293 6 84,959 701 4,052 3,503 1,463 3,829 7,193 9,399 10,249 11,872

Note 1: The Company’s shares possessed by subsidiaries have been deducted from the carrying amount. The shares are treated as treasury shares.

Note 2: The securities quoted in an active market are presented at the closing price on the last day of the accounting period. The securities without public quotes used the net value per share of the investee.

Individual securities acquired or disposed of with accumulated amount exceeding NT$300 million or 20% of the paid-in capital: None.
Acquisition of a property with an amount exceeding NT$300 million or 20% of the paid-in capital: None.
Disposal of a property with an amount exceeding NT$300 million or 20% of the paid-in capital: None.

～ 78 ～

Hocheng Corporation Parent Company Only Financial Statements (cont’d)

Purchases or sales with a related party with an amount exceeding NT$100 million or 20% of the paid-in capital:

Unit: NT$ thousand

Company of purchase (sales)	Counterpart y Name	Relationshi p	Transaction status	Transaction status	Transaction status	Transaction status	Differences between transaction conditions and general transactions and the reason therefor	Differences between transaction conditions and general transactions and the reason therefor	Notes and accounts receivable (payable)	Notes and accounts receivable (payable)	Remar ks
			Purchases (sales)	Amount	Ratio to total purchase s (sales)	Credit period	Unit price	Credit period	Balance	Ratio to total notes and accounts receivable (payable)
Hocheng Corporation `〞`	Bao Long Interior Crafts Co., Ltd. Yuhuang Co., Ltd.	Subsidiary Substantive Related Party	Purchases Purchases	262,755 139,052	15.74% 8.33%	Three months Four months	- -	No general transaction is comparable `〞`	(54,933) (48,895)	(17.26)% (15.37)%

Amount receivable from related parties exceeding NT$100 million or 20% of the paid-in
capital: None.
Derivative transaction: None.
(II) Information on investees:

Information on the investees of the Company in 2024 is as follows:

Unit: NT$ thousand/share

Investors Name and title	Investees Name and title	Where the Company is located Region	Main business line Item	Original / investment amount	Original / investment amount	Held at the end of the period	Held at the end of the period	Held at the end of the period	Investees (losses) gains recognized during the period	Investment gains recognized during the period Investment (losses) gains recognized during the period	Remar ks
				Ending balance of the period	At the end of last year	Shares	Percentag e	Carrying amount:
Hocheng Corporation Ritiboon International Limited	Ritiboon International Limited Hohong Co., Ltd. Hoceng Service Co., Ltd. Bao Long Interior Crafts Co., Ltd. Philippines Property Hocheng Group Holding	British V Taiwan Taiwan Taiwan Philippines Cayman Islands	Holding Invested in production and trading business Interior design, trading, installment, and repair of bathroom and stove equipment and its components Manufacturing, processing, and trading of porcelain, ceramic boards, and tiles Land lease Holding	2,410,366 198,620 6,000 804,761 29,040 1,392,323	2,410,366 198,620 6,000 804,761 29,040 1,392,323	78,646,373 34,713,522 1,050,000 21,001,000 13,974,571 49,389,182	100.00% 99.60% 70.00% 100.00% 40.00% 100.00%	638,103 719,192 73,196 238,473 61,312 400,690	(39,838) 2,787 7,290 17,112 3,007 (46,469)	(39,035) 2,689 4,511 16,172 2,256 (46,469)	Note2 Note1 Note2 Note2

～ 79 ～

Hocheng Corporation Parent Company Only Financial Statements (cont’d)

Hohong Co., Ltd. Hocheng Group Holding Corp. Hoceng Philippines Corporation	Corp. HCG North American, LLC Swatton International Co., Ltd. Hoceng Philippines Corporation Triple S Holdings Corp. PT HCG Indonesia	USA British V Philippines Philippines Indonesia	Sale of bathroom equipment Holding Production and sale of plumbing products Holding Sale of bathroom equipment	14,230 41,590 395,155 46,086 12,400	14,230 41,590 395,155 46,086 12,400	- 13,004 507,843,879 8,040,000 420,000	49.00% 100.00% 100.00% 40.00% 35.00%	- 227,541 601,153 53,073 -	- 6,545 14,465 616 -	- 6,545 14,465 542 -	Note 3

Note 1: The Company's shares held by subsidiaries are deemed as treasury shares; therefore, gains or losses from investments in subsidiaries recognized by the Company exclude the gains or losses of subsidiaries generated from holding the shares of the Company.

Note 2: The difference between recognized gains or losses from investment and investee is unrealized gains or losses or difference of equity net worth. Note 3: The Company is entitled to 88% of the rights to allocation regarding the earnings of the company.

～ 80 ～

Hocheng Corporation Parent Company Only Financial Statements (cont’d)

(III) Information on investment in Mainland China:

1. Information on investment in businesses in Mainland China:

Unit: NT$ thousand

Investee in Mainland China Company name	Main business line Item	Paid-in capital Paid-in capital	(2) Invest ments Method (Note 1)	Accumulated investment amount of remittance from Taiwan at the beginning of the period Investment amount	Investment flows	Investment flows	Accumulated investment amount of remittance from Taiwan at the ending of the period Investment amount	Investees Total comprehensi ve income for the period	The Company’s direct or indirect investments Ownership	Investment (losses) gains recognized during the period Note 2	At the end of the period Carrying amount Price/Value	Accumula ted investmen t gains remitted back to Taiwan as of the end of the period Investmen t income
					Remitte d	Recover ed
Hocheng (China) Corporation Hocheng TRADING (SHANGHAI) CO., LTD. Hocheng (China)	Production and sale of plumbing products Sale of bathroom equipment Sale of bathroom equipment Sale of bathroom equipment Sale of bathroom equipment	953,760 29,805 4,581 - 4,300	(II) (II) (II) (II) (II)	894,627 5,961 - - -	- - - - -	- - - - -	894,627 5,961 - - -	(59,438) (3,765) (17,974) - (5,330)	100.00% 100.00% 100.00% - % 50.00%	(59,438) (3,765) (17,974) - (798)	(404,880) 12,019 (118,317) - -	- - - - -
Corporation Hocheng Shanghai Corporation Hocheng (Ningbo) Corporation (Note 8) Hocheng Jianlang (Shamghai) Kitchen and Bathroom Co., Ltd.

2. Limit on investment in Mainland China:

Accumulated investment amount of remittance from Taiwan to China at the end of the period	Investment amounts authorized by Investment Commission, MOEA	Ceiling on investments in China imposed by the Investment Commission of MOEA (Note 3)
900,588	928,336	4,103,701

Note 1: There are three types of investment methods; please mark the type:

(I) Direct investment in Mainland China.

(II) Investing in Mainland China through companies in a third-party region (the investing company in the third-party region is Ritiboon International Limited).

(III) Others methods.

Note 2: The investment gains (losses) recognized for the current period were based on the financial statements of investees audited by CPAs. Note 3: The limit is 60% of the net worth.

Note 4: Relevant figures in the table are presented in NTD.

Note 5: The difference between the paid-in capital and the amount remitted from Taiwan is due to the capital increase from earnings in the amount of US$2,000 thousand performed by Hocheng (China) Corporation in 2009.

Note 6: The difference between the paid-in capital and the amount remitted from Taiwan is due to the direct investment and indirect investment of Ritiboon International Limited in Hocheng Group Holding Corp. and UPEX, respectively, in the amount of US$800 thousand.

Note 7: The difference between recognized gains or losses from investment and investee is unrealized gains or losses.

Note8: The business license was obtained on December 24, 2024, and as of December 31, 2024, no capital has been contributed.

3. Significant transactions:

For details of the significant transactions between the Company and investees in Mainland China in 2024, please refer to “Information on significant transactions.” (IV) Major shareholders: None.

XIV. Segment information

For details, please refer to the 2024 consolidated financial statements.

～ 81 ～

Hocheng Corporation

Breakdown of cash and cash equivalents

December 31, 2024

Unit: NT$ thousand

Item	Summary	Amount $ 260 2,762 3,022 2,117 364,992 6,229 373,338 $ 376,360
Cash Bank deposits	Cash in hand Working capital Subtotal Checking account deposits Demand deposit Deposits in foreign currency Subtotal

～ 82 ～

Hocheng Corporation

Breakdown of financial assets at fair value through profit or loss -

Current

December 31, 2024

Unit: NT$ thousand

Period: Beginning Number of shares Fair value 1,890,737 $ 26,362 981,110 15,259 1,612,066 23,054 1,821,545 30,214 1,088,967 18,213 338,550 4,164 $ 117,266	Increase this period Number of shares Amount - 387 318,678 5,243 415,846 6,364 - 425 - 257 - 56 12,732	Increase this period Number of shares Amount - 387 318,678 5,243 415,846 6,364 - 425 - 257 - 56 12,732	Decrease	this period Amount - - - - - -	Period: End Number of shares Fair value 1,890,737 26,749 1,299,788 20,502 2,027,912 29,418 1,821,545 30,639 1,088,967 18,470 338,550 4,220 129,998	Period: End Number of shares Fair value 1,890,737 26,749 1,299,788 20,502 2,027,912 29,418 1,821,545 30,639 1,088,967 18,470 338,550 4,220 129,998
	Number of shares - 318,678 415,846 - - -		Number of shares		Number of shares 1,890,737 1,299,788 2,027,912 1,821,545 1,088,967 338,550
			- - - - - -
$ 117,266		12,732		-		129,998

～ 83 ～

Hocheng Corporation

Breakdown of notes receivable

December 31, 2024

Unit: NT$ thousand

Client Name	Summary	Amount $ 8,369 4	Note
Related party: Hoceng Service Co., Ltd. Yuhuang Co., Ltd. Subtotal Non-related party: Company A Company B Others Subtotal Total	Due within one year `〞` Due within one year `〞` `〞`		The balance of a single customer has not exceeded 5%
		8,373
		114,264 31,362 152,386
		298,012
		$ 306,385

～ 84 ～

Hocheng Corporation

Breakdown of accounts receivable

	Breakdown of accounts receivable	Breakdown of accounts receivable
Client Name	December 31, 2024 Summary Amount $ 8,529 647 385 488 10,049 69,139 46,460 371,127 486,726 (782) 485,944 $ 495,993 Breakdown of other receivables Summary Amount Use of trademark rights $ 23,064 Rental income and rights to use trademarks 13,196 36,260 Trademark income 34,989 $ 71,249		Unit: NT$ thousand Note
Related party: Hoceng Service Co., Ltd. Hocheng (China) Corporation Bao Long Interior Crafts Co., Ltd. Hocheng Philippines Corporation Subtotal Non-related party: Company A Company C Others Subtotal Less: Impairment loss allowance Net amount Total Item			The balance of a single customer has not exceeded 5% Note
Related party: Hocheng (China) Corporation Others Subtotal Non-related party Total	Use of trademark rights Rental income and rights to use trademarks Trademark income
		36,260
		34,989
		$ 71,249

～ 85 ～

Hocheng Corporation

Breakdown of inventories

December 31, 2024

Unit: NT$ thousand

Item	Amount Amounts received Net realized value $ 220,853 216,588 8,974 8,759 181,109 560,870 503,333 793,603 244,430 337,889 31,483 31,483	Amount Amounts received Net realized value $ 220,853 216,588 8,974 8,759 181,109 560,870 503,333 793,603 244,430 337,889 31,483 31,483
	Amounts received
Raw materials Materials Work in process Finished goods Products In transit inventory Subtotal Less: loss allowance Total	$ 220,853 8,974 181,109 503,333 244,430 31,483
	1,190,182 (54,806)	1,949,192

	$ 1,135,376

Breakdown of other current assets

Item	Summary	Amount $ 22,276 10,760 22,909 5,730	Note
Paid temporarily Prepayments Prepayment for supplies purchases Total	Provisional rents and payment for natural gas Prepaid rent and advertisement fees Others Prepayment for raw material purchases
		$ 61,675

～ 86 ～

Hocheng Corporation

Breakdown of financial assets at fair value through other

comprehensive income - Non-current

For the year ended December 31, 2024

Unit: NT$ thousand

	Increase this period Number or amount of shares Amount - 14,699 - 2,101 22,314 - - - - - - 70,973 - 345 - - - - 69,108 2,003 - - - - - 26,854 - - - - - - - - 116,975	Increase this period Number or amount of shares Amount - 14,699 - 2,101 22,314 - - - - - - 70,973 - 345 - - - - 69,108 2,003 - - - - - 26,854 - - - - - - - - 116,975	Decrease this period Number or amount of shares Amount - - - - - 2 - 7,640 - 59,506 - - - - 16,280 832 14,808 883 - - 12,284 733 9,753 445 - - - 178 - 52 - 79 - 682 71,032	Decrease this period Number or amount of shares Amount - - - - - 2 - 7,640 - 59,506 - - - - 16,280 832 14,808 883 - - 12,284 733 9,753 445 - - - 178 - 52 - 79 - 682 71,032	Period: End Number of shares Fair value 651,834 44,520 452,067 7,775 580,174 10,095 800,000 34,440 6,575,315 225,205 8,551,000 210,782 75,000 6,893 - - - - 1,412,268 54,655 - - - - 2,498,000 97,672 49,205 251 98,869 1,344 27,816 274 50,336 800 694,706	Period: End Number of shares Fair value 651,834 44,520 452,067 7,775 580,174 10,095 800,000 34,440 6,575,315 225,205 8,551,000 210,782 75,000 6,893 - - - - 1,412,268 54,655 - - - - 2,498,000 97,672 49,205 251 98,869 1,344 27,816 274 50,336 800 694,706
	Number or amount of shares - - 22,314 - - - - - - 69,108 - - - - - - -		Number or amount of shares - - - - - - - 16,280 14,808 - 12,284 9,753 - - - - -		Number of shares 651,834 452,067 580,174 800,000 6,575,315 8,551,000 75,000 - - 1,412,268 - - 2,498,000 49,205 98,869 27,816 50,336
							Note
							Based on the closing price on December 31, 2024 `〞` `〞` `〞` `〞` `〞` `〞` `〞` `〞` `〞` `〞` `〞` `〞` `〞` `〞` `〞` `〞`
$ 648,763		116,975		71,032		694,706

～ 87 ～

Hocheng Corporation

Breakdown of changes in investments accounted for using

the equity method

For the year ended December 31, 2024

Unit: NT$ thousand

Beginning balance Number of shares Amount 78,646,373 $ 650,374 34,713,522 687,319 1,050,000 62,008 21,001,000 219,275 $ 1,618,976	Increase this period Number of shares Amount - - - 31,873 - 11,188 - 19,198 62,259	Increase this period Number of shares Amount - - - 31,873 - 11,188 - 19,198 62,259	Decrease this period Number of shares Amount - 12,271 - - - - - - 12,271	Decrease this period Number of shares Amount - 12,271 - - - - - - 12,271	Ending balance Number of shares Ownershi p Amount 78,646,373 100.00% 638,103 34,713,522 100.00% 719,192 1,050,000 70.00% 73,196 21,001,000 - % 238,473 1,668,964	Ending balance Number of shares Ownershi p Amount 78,646,373 100.00% 638,103 34,713,522 100.00% 719,192 1,050,000 70.00% 73,196 21,001,000 - % 238,473 1,668,964	Ending balance Number of shares Ownershi p Amount 78,646,373 100.00% 638,103 34,713,522 100.00% 719,192 1,050,000 70.00% 73,196 21,001,000 - % 238,473 1,668,964	Market value or equity net value Unit price Total price 8.12 638,980 21.07 731,325 87.59 91,973 11.53 242,224	Note
	Number of shares		Number of shares		Number of shares 78,646,373 34,713,522 1,050,000 21,001,000	Ownershi p 100.00% 100.00% 70.00% - %
								Unit price 8.12 21.07 87.59 11.53
									Note `〞` `〞` `〞`
	- - - -		- - - -
$ 1,618,976		62,259		12,271			1,668,964

Note: Differences between the balance at the end of the period and the net worth of equity are unrealized gains or losses.

～ 88 ～

Hocheng Corporation

Breakdown of other non-current assets

December 31, 2024

Unit: NT$ thousand

Item	Summary	Amount $ 20,966 11,611	Note
Prepayments for equipment Others Total
		$ 32,577

～ 89 ～

Hocheng Corporation

Breakdown of short-term borrowings

December 31, 2024

Unit: NT$ thousand

Types of borrowings	Description:	Ending balance $ 100,000 50,000 18,615	Interest rates		Note
	Borrowings from financial institutions `〞` `〞`		1.95% 1.95% 5.83%-6.65%		Note1 `〞` `〞`
Credit borrowings `〞` `〞`
		$ 168,615		$ 320,000

Note 1: A comprehensive limit is executed, which is included in the total limit of credit and secured borrowings.

～ 90 ～

Hocheng Corporation

Breakdown of notes payable

December 31, 2024

Unit: NT$ thousand

Client Name	Amount $ 36,544	Note
Related party: Yuhuang Co., Ltd. Non-related party: Company A Company B Others Subtotal Total Client Name		The balance of a single supplier has not exceeded 5% Note
	6,112 4,199 903
	11,214
	$ 47,758
Related party: Bao Long Interior Crafts Co., Ltd. Yuhuang Co., Ltd. Hocheng (China) Corporation Subtotal Non-related party: Company C Company D Others Subtotal Total		The balance of a single supplier has not exceeded 5%
	76,118
	53,680 22,241 118,401
	194,322
	$ 270,440

～ 91 ～

Hocheng Corporation

Breakdown of other payables

December 31, 2024

Unit: NT$ thousand

Item	Summary	Amount $ 131,325 11,762 3,465 67,277 $ 213,829	Note
Salary, annual bonus, and board wages payable Labor and health insurance payable Pension payable Others Total

Breakdown of other current liabilities

Item	Summary	Amount $ 28,062 8,952 15,669
Contract liabilities Tax payable Temporary credit Total	Advances for products Business tax Provisional advances for taxes, labor and health insurance premiums, and rent

		$ 52,683

～ 92 ～

Hocheng Corporation

Breakdown of long-term borrowings

December 31, 2024

Unit: NT$ thousand

Creditors Summary Borrowing Contract Duration Interest Pledge or Guarantee Note amount rate Mega International $ 400,000 2024.10.19-2029.10. 2.49% Land Every half-year is an installment Commercial Bank 19 starting from the day following the first anniversary from the initial drawdown date with repayment of a total of 9 installments; the repayment for the 1st to 8th installments shall be NT$25,000 thousand, and the repayment for the last installment shall be NT$200,000 thousand. Less: Portion due (25,000) within one year Total $ 375,000

～ 93 ～

Hocheng Corporation

Breakdown of operating costs

For the year ended December 31, 2024

Unit: NT$ thousand

Amount Sub-total Total $ 207,701 576,739 1,062 (4,465) (15,656) (1,631) (220,853) 542,897 8,577 66,013 (28) (123) (7) (10,772) (24,533) (8,974) 30,153 237,246 467,718 1,278,014 165,317 11,877 96 (1,135) (301) (236) (51) (181,109) (5,542) 1,272,472 537,831 155 8,710 (2,656) (970) (14,579) (8,760) (17,198) (503,333) 1,271,672 282,011 1,083,224 62 10,520 (275,913) (1,309) (12,989) (152) 1,085,454 1,135 15,656 123 2,374,040 956 2,710 5,904 4,831 (524) $ 2,387,917	Amount Sub-total Total $ 207,701 576,739 1,062 (4,465) (15,656) (1,631) (220,853) 542,897 8,577 66,013 (28) (123) (7) (10,772) (24,533) (8,974) 30,153 237,246 467,718 1,278,014 165,317 11,877 96 (1,135) (301) (236) (51) (181,109) (5,542) 1,272,472 537,831 155 8,710 (2,656) (970) (14,579) (8,760) (17,198) (503,333) 1,271,672 282,011 1,083,224 62 10,520 (275,913) (1,309) (12,989) (152) 1,085,454 1,135 15,656 123 2,374,040 956 2,710 5,904 4,831 (524) $ 2,387,917	Amount Sub-total Total $ 207,701 576,739 1,062 (4,465) (15,656) (1,631) (220,853) 542,897 8,577 66,013 (28) (123) (7) (10,772) (24,533) (8,974) 30,153 237,246 467,718 1,278,014 165,317 11,877 96 (1,135) (301) (236) (51) (181,109) (5,542) 1,272,472 537,831 155 8,710 (2,656) (970) (14,579) (8,760) (17,198) (503,333) 1,271,672 282,011 1,083,224 62 10,520 (275,913) (1,309) (12,989) (152) 1,085,454 1,135 15,656 123 2,374,040 956 2,710 5,904 4,831 (524) $ 2,387,917
Sub-total $ 207,701 576,739 1,062 (4,465) (15,656) (1,631) (220,853)
8,577 66,013 (28) (123) (7) (10,772) (24,533) (8,974)
165,317 11,877 96 (1,135) (301) (236) (51) (181,109)
		1,278,014 (5,542) 1,272,472 537,831 155 8,710 (2,656) (970) (14,579) (8,760) (17,198) (503,333)
282,011 1,083,224 62 10,520 (275,913) (1,309) (12,989) (152)
		1,271,672 1,085,454 1,135 15,656 123

		2,374,040 956 2,710 5,904 4,831 (524)
	$ 2,387,917

～ 94 ～

Hocheng Corporation

Breakdown of marketing expenses

For the year ended December 31, 2024

Unit: NT$ thousand

Item	Amount $ 141,097 77,371 34,398 26,322 26,205 167,692	Note
Salary expenses Advertising expenses Freight expenses Entertainment expenses Depreciation Other expenses Total Item		Any single amount has not exceeded 5% Note
	$ 473,085
Salary expenses Tax and levy Depreciation Entertainment expenses Other expenses Total		Any single amount has not exceeded 5%
	$ 175,522

～ 95 ～

Hocheng Corporation

Breakdown of R&D expenses

For the year ended December 31, 2024 Unit: NT$ thousand

Item	Summary	Amount $ 44,083 13,981 11,814 30,499	Note
Salary expenses Research and experiment expenses Depreciation Other expenses			Any single amount has not exceeded 5%
		$ 100,377

～ 96 ～

AI assistant

HCG — Audit Report / Information 2024

51929_rns_2024-11-13_f06d03e0-4ff2-4ce1-96c6-216f376849e6.pdf

Hocheng Corporation

Parent Company Only Financial Statements and Independent Auditors’ Report

Table of Contents

Independent Auditor's Report

Audit opinion

Basis for Opinion

Key Audit Matters

Other Matters

Auditors' Responsibilities for the Audit of the Parent-Only Financial Statements

KPMG Taiwan

Hocheng Corporation

Balance Sheet

December 31, 2024 and 2023

Unit: NT$ thousand

Hocheng Corporation

Statement of Comprehensive income January 1 to December 31, 2024 and 2023

Unit: NT$ thousand

Hocheng Corporation

Statement of Changes in Equity January 1 to December 31, 2024 and 2023

Unit: NT$ thousand

Hocheng Corporation

Statement of Cash Flows

January 1 to December 31, 2024 and 2023

Unit: NT$ thousand

Hocheng Corporation

Statement of Cash Flows (cont’d)

January 1 to December 31, 2024 and 2023

Unit: NT$ thousand

Hocheng Corporation Notes to the Parent-Only Financial Statements For the Years Ended December 31, 2024 and 2023

(Expressed in NT$ thousand, unless otherwise specified)

I. Company History

II. Approval date and procedures of the consolidated financial statements:

III. New standards, amendments and interpretations adopted:

Effective date announced by the Board of Directors January 1, 2027

Hocheng Corporation Parent Company Only Financial Statements (cont’d)

IV. Summary of significant accounting policies

1. Basis of measurement

2. Functional and presentation currency

1. Foreign currency transaction

Hocheng Corporation Parent Company Only Financial Statements (cont’d)

Hocheng Corporation Parent Company Only Financial Statements (cont’d)

Hocheng Corporation Parent Company Only Financial Statements (cont’d)

Hocheng Corporation Parent Company Only Financial Statements (cont’d)

Hocheng Corporation Parent Company Only Financial Statements (cont’d)

(5) Derecognition of financial assets

Hocheng Corporation Parent Company Only Financial Statements (cont’d)

2. Financial liabilities and equity instruments

(5) Derecognition of financial liabilities

(6) Offsetting of financial assets and liabilities

Hocheng Corporation Parent Company Only Financial Statements (cont’d)

(VII) Inventory

Hocheng Corporation Parent Company Only Financial Statements (cont’d)

Hocheng Corporation Parent Company Only Financial Statements (cont’d)

2. Subsequent expenditure

4. Reclassification to investment property

(XII) Leasing

1. As a lease

Hocheng Corporation Parent Company Only Financial Statements (cont’d)

Hocheng Corporation Parent Company Only Financial Statements (cont’d)

Hocheng Corporation Parent Company Only Financial Statements (cont’d)

1. Recognition and measurement

2. Subsequent expenditure

3. Amortization

(XIV) Impairment of non-derivative financial assets

Hocheng Corporation Parent Company Only Financial Statements (cont’d)

(XV) Debt allowance

(XVI) Revenue recognition

1. Revenue from contracts with customers

(1) Sale of goods

Hocheng Corporation Parent Company Only Financial Statements (cont’d)

Hocheng Corporation Parent Company Only Financial Statements (cont’d)

(2) Rental income

(3) Financing components

(XVII) Employee benefits

1. Defined contribution plans

2. Defined benefit plans

Hocheng Corporation Parent Company Only Financial Statements (cont’d)

HCG Audit Report / Information 2024

`Unit: NT$ thousand`