Hiroca — Annual Report 2024

Nov 13, 2024

Stock Code ： 1338

Hiroca Holdings Limited and Subsidiaries Consolidated financial statements

For the years ended 31 December 2024 and 2023 with Report of independent auditors

Address ： Marquee Place, Suite 300, 430 West Bay Road, P.O. Box 32052, Grand Cayman KY1 1208, Cayman Islands. Office ： No. 6 Nanxing Rd., Houjie Town, Dongguan City,Guangdong Province, 523960, P R China Tel ： 86 769 8927 8888

The Independent auditors’ report and the accompanying consolidated financial statements are the English translation of the Chinese version prepared and used in the Republic of China. If there is any conflict between, or any difference in interpretation of English and Chinese Language Independent auditors’ report and consolidated financial statement, the Chinese version shall prevail.

Table of contents

Contents A. Cover Page B. Table of Contents C. Independent Auditors’ Report D. Consolidated Balance Sheets E. Consolidated Statements of Comprehensive Income F. Consolidated Statements of Changes in Equity G. Consolidated Statements of Cash Flows H. Notes to the Consolidated Financial Statements 1. Company history 2. Approval date and procedures of the consolidated financial statements 3. New standards, amendments and interpretations adopted 4. Summary of material accounting policies 5. Significant accounting assumptions and judgments, and major sources of estimation uncertainty 6. Explanation of significant accounts 7. Related-party transactions 8. Pledged assets 9. Significant contingent liabilities and unrecognized contractual commitments 10. Losses due to major disasters 11. Subsequent Events 12. Others 13. Other disclosures (1) Information on significant transactions (2) Information on investees (3) Information on investment in mainland China (4) Major shareholders 14. Segment information

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Independent Auditors’ Report

To the board of directors of Hiroca Holdings Ltd.

Opinion

We have audited the consolidated financial statements of Hiroca Holdings Ltd.(hereinafter referred to as the “Company”) and its subsidiaries (hereinafter referred to collectively as the “Group”), which comprise the consolidated balance sheets as of December 31, 2024 and 2023, the consolidated statement of comprehensive income, changes in equity and cash flows for the years then ended, as well as relevant notes, including a summary of significant accounting policies.

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as of December 31, 2024 and 2023, and its consolidated financial performance and its consolidated cash flows for the years then ended in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and with the International Financial Reporting Standards (“IFRSs”), International Accounting Standards (“IASs”), Interpretations developed by the International Financial Reporting Interpretations Committee (“IFRIC”) or the former Standing Interpretations Committee (“SIC”) endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China.

Basis for Opinion

We conducted our audits in accordance with the Regulations Governing the Auditing and Attestation of Financial Statements by Certified Public Accountants and auditing standards generally accepted in the Republic of China. Our responsibility under those standards are further described in the paragraph “Auditor's responsibilities for the audit of the consolidated financial statements”. We are independent of the Group in accordance with the Norm of Professional Ethics for Certified Public Accountants of the Republic of China, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We are convinced that we have acquired enough and appropriate audit evidence to serve as the basis of audit opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements of the current period. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

1. Revenue recognition

Please refer to Note 4(P) to the 2024 consolidated financial statements for the accounting policy on revenue recognition. Please refer to Note 6(S) to the consolidated financial statements for the disclosures of revenue.

Description of key audit matters:

Sales revenue is the main indicator for investors and management to evaluate the Group’s financial or business performance. As the accuracy of the time point at which revenue was recognized had a significant impact on the financial statements, it was an important matter when we audited the financial statements.

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Audit procedures:

Our main audit procedures for the above key audit matter included understanding and testing the effectiveness of the internal control over the sales and collection cycle; testing details; checking the Group’s accounting treatment of revenue recognition and evaluating if it was in compliance with relevant rules; randomly selecting sales transactions for a period of time before and after the balance sheet date to check the relevant documents and receipts to evaluate the correctness of the time point at which revenue was recognized. Furthermore, we checked if there were any major returns after the balance sheet date.

2. Inventory Valuation

Please refer to Note 4(H) to the 2024 consolidated financial statements for the accounting policy on inventory valuation. Please refer to Note 5 to the consolidated financial statements for the uncertainty of accounting estimates and assumptions for the inventory valuation. Please refer to Note 6(E) to the consolidated financial statements for disclosures of inventories.

Description of key audit matters:

In the Group's financial statements, inventories are measured at the lower of cost or the net realizable value. The Company manufactures and sells a variety of automotive trim parts and electronic plastic parts, mainly to the world major automakers. The sales of various car models may affect the sales of the inventories and the fluctuation of the selling prices, which may result in a risk of the net realizable value of the inventories being lower than the cost. Therefore, the inventory valuation testing was one of the important evaluation items for us when auditing the Group's financial statements.

Audit procedures:

Our main audit procedures for the above key audit matter included reviewing the inventory aging reports and analyzing the changes in the inventory age for each period; evaluating the reasonableness of the Group's accounting policies, such as a policy on an allowance for inventory valuation and obsolescence losses; evaluating if the inventories have been valuated as per the Group's established accounting policies; reviewing the reasonableness of the Group’s provision of an allowance for inventory losses in the past and comparing them with the allowance estimated in this current period to assess if the estimation method and assumptions in this period were appropriate; evaluating management’s disclosure of the allowance for inventories was appropriate.

Responsibilities of Management and Those Charged with Governance for the Consolidated Financial Statements

Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and with the IFRSs, IASs, IFRC, SIC endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, management is responsible for assessing the Group’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 Group or to cease operations, or has no realistic alternative but to do so.

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

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Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements

Our objectives are to obtain reasonable assurance on whether the consolidated financial statements as a whole are free from any material misstatements arising from fraud or error and to issue an independent auditors' report. Reasonable assurance is a high-level assurance but is not a guarantee that an audit conducted in accordance with the auditing standards generally accepted in the Republic of China will always detect a material misstatement when it exists. Misstatements may arise from frauds or errors. If the amounts of misstatements, either separately or in aggregate, could reasonably be expected to influence the economic decisions of the users of the consolidated financial statements, they are considered material.

We have utilized our professional judgment and maintained professional doubt when performing the audit work in accordance with the auditing standards generally accepted in the Republic of China. We also performed the following tasks:

1. Identified and assessed the risks of material misstatement arising from fraud or error within the consolidated financial statements; designed and executed countermeasures in response to said risks, and obtained sufficient and appropriate audit evidence to provide a basis for our opinion. Fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Therefore, the risk of not detecting a material misstatement resulting from fraud is higher than one resulting from error.

2. Understood the internal control related to the audit in order to design appropriate audit procedures under the circumstances, while not for the purpose of expressing an opinion on the effectiveness of the Group's internal control.

3. Evaluated the appropriateness of accounting policies adopted and the reasonableness of accounting estimates and relevant disclosures made by the management.

4. Concluded on the appropriateness of the management's adoption of the going concern basis of accounting based on the audit evidence obtained and whether a material uncertainty exists for events or conditions that may cast significant doubt over the Group's ability to continue as a going concern. If we are of the opinion that a material uncertainty exists, we shall remind users of the consolidated financial statements to pay attention to the relevant disclosures in said statements within our audit report. If such disclosures are inadequate, we need 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 Group to cease to continue as a going concern.

5. Evaluated the overall presentation, structure, and content of the consolidated financial statements (including relevant notes), and whether the consolidated financial statements adequately present the relevant transactions and events.

6. Obtained sufficient and appropriate audit evidence concerning the financial information of entities within the Group, to express an opinion on the consolidated financial statements. We were responsible for guiding, supervising, and performing the audit and forming an audit opinion about the Group.

7. The matters communicated between us and the governing bodies included the planned scope and times of the audit and material audit findings (including any material defects in internal control identified during the audit).

8. We also provided the governing bodies with a declaration that we have complied with the Norm of Professional Ethics for Certified Public Accountants of the Republic of China regarding independence and communicated with them all relations and other matters that may possibly be regarded as detrimental to our independence (including relevant protective measures).

9. From the matters communicated with the governing bodies, we determined the key audit matters for the audit of the Group's consolidated financial statements of the current period.

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We have clearly indicated such matters in the auditors' report. Unless legal regulations prohibit the public disclosure of specific matters, or in extremely rare cases, where we decided not to communicate specific items in the auditors' report, it could be reasonably anticipated that the negative effects of such disclosure would be greater than the public interest it brings forth.

The engagement partners on the audit resulting in this independent auditors’ report are Chen, Yi-Chun and Lien, Shu-Ling. KPMG

Taipei, Taiwan (Republic of China)

March 14, 2025

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(English Translation of Consolidated Financial Statements and Report Originally Issued in Chinese) Hiroca Holdings Limited and Subsidiaries Notes to the Consolidated Financial Statements For the years ended December 31, 2024 and 2023

(Expressed in Thousands of New Taiwan Dollars , Unless Otherwise Specified)

1. Company History

Hiroca Holdings Ltd. (hereinafter referred to as the “Company”) was incorporated in the British Cayman Islands on December 8, 2009 as an investment holding company. It was mainly established for the purpose of organizational restructuring to file an application for public offering to the FSC, Executive Yuan, Republic of China. It issued ordinary shares on December 15, 2009, at a share swap ratio of 5 to 1 to obtain 100% equity of Lofty Success Group Limited. After restructuring, the Company became the parent company of Lofty Success Group Limited. The Company’s consolidated financial statements on December 31, 2023 include the Company and its subsidiaries (hereinafter collectively referred to as "the Group") as well as the Group's equity in affiliates. The Group mainly engages in the production and sales of a variety of automotive trim parts, electronic plastic parts, plastic corrugated board, and molds. The Company's stock was approved for listing by Taiwan Stock Exchange Corporation on September 27, 2012 and was officially listed on Taiwan Stock Exchange for trading on December 19, 2012.

2. Date and Procedure for Approval of Financial Statements

The consolidated financial statements were approved by the Board of Directors for release on March 14, 2025

3. New standards, amendments and interpretations adopted

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

The details of impact on the Group’s adoption of the new amendments beginning January 1, 2024 are as follows：：

• (a) Amendments to IAS 1 “Classification of Liabilities as Current or Non-current” and “Non-current Liabilities with Covenants”

• Under existing IAS 1 requirements, an entity classifies a liability as current when it does not have an unconditional right to defer settlement for at least 12 months after the reporting date. The amendments has removed the requirement for a right to be unconditional and instead now require that a right to defer settlement must exist at the reporting date and have substance.

• According to the amendments, the classification of liabilities is unaffected by the management’s intentions or expectations about whether an entity will exercise its right to defer settlement or will choose to settle its liabilities in an earlier time. The entity will classify its liabilities as non-current if it has a right to defer settlement for at least 12 months after the reporting date. This right may be subject to the entity complying with the covenants specified in a loan agreement. The amendments specify only covenants with which the entity must comply on, or before, the reporting date affecting the classification of its liabilities as current or non-current. Covenants with which the entity must comply after the reporting date (i.e., future covenants) do not affect a liability’s classification at that

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date. However, when non-current liabilities are subject to future covenants, the entity will now need to disclose additional information to help users understand the risk those liabilities could become repayable within 12 months after the reporting date. The amendments also clarify how an entity classifies a liability that can be settled in its own shares – e.g. convertible debt. When a liability includes a counterparty conversion option that involves a transfer of the entity’s own equity instruments, the conversion option is separately recognized as either equity or a liability from the host liability under IAS 32 Financial Instruments: Presentation. The amendments have now clarified that when an entity classifies its host liabilities as current or non-current, it need not consider those conversion options that are recognized only as equity.

In 2023, the Group issued five-year foreign currency convertible bonds, which comprise the bonds payable (financial liability) and the conversion option that allows the holders to convert their bonds into a fixed number of the Group’s ordinary shares at any time before the maturity date. Since the bonds are denominated in foreign currency, the embedded conversion option does not only satisfy the “fixed for fixed” requirement, it also fails to meet the definition of equity, resulting in the conversion option to be classified as a liability. According to the above amendments, the bonds payable and conversion option should be reclassified from non-current liabilities to current liabilities as follows:

Consolidated balance sheets

Consolidated balance sheets
December 31, 2023 Current liabilities: Bonds payable -current Financial liabilities measured at fair value through profit or loss -current Non-current liabilities: Bonds payable -non-current Financial liabilities measured at fair value through profit or loss -non-current	As previously reported - - 468,923 126,240	Impact of changes in accounting policies 468,923 126,240 (468,923) (126,240)	As restated
			468,923 126,240 - -

There is no impact on the earnings per share and cash flows in the said period.

In addition, if the Group had applied its previous accounting policy, the bonds payable (current) and the bonds payable (non-current) would be decreased and increased by 493,525 thousand and 493,525 thousand, as well as the financial liabilities measured at fair value through profit or loss (current) and the financial liabilities measured at fair value through profit or loss (non-current) would be decreased

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and increased by 42,960 thousand and 42,960 thousand, on December 31, 2024. However, there is no impact on the earnings per share and cash flows in the said period.

• (b) Other amendments

The following amendments are not expected to have a significant impact on the Group’s consolidated financial statements.

  - Amendments to IAS 7 and IFRS 7 “Supplier Finance Arrangements”

  - Amendments to IFRS16 “Lease Liability in a Sale and Leaseback”

1. The impact of IFRS Accounting Standards endorsed by the FSC but not yet effective The Group assesses that the adoption of the (following) new amendments, effective for annual period beginning on January 1, 2025, would not have a significant impact on its consolidated financial statements:

2. Amendments to IAS21“Lack of Exchangeability”

3. The impact of IFRS Accounting Standards issued by IASB but not yet endorsed by the FSC The following new and amended standards, which may be relevant to the Group, have been issued by the International Accounting Standards Board (IASB), but have yet to be endorsed by the FSC:

Standards or Interpretations IFRS 18 “Presentation and Disclosure in Financial Statements”

Content of amendment Effective date per IASB

The new standard introduces three categories of income and expenses, two income statement subtotals and one single note on management performance measures. The three amendments, combined with enhanced guidance on how to disaggregate information, set the stage for better and more consistent information for users, and will affect all the entities.  A more structured income statement: under current standards, companies use different formats to present their results, making it difficult for investors to compare financial performance across companies. The new standard promotes a more structured income statement, introducing a newly defined ‘operating profit’ subtotal and a requirement for all income and expenses to be allocated between three new distinct categories based on a company’s main business activities.  Management performance measures (MPMs): the new standard introduces a definition for management performance measures, and requires companies to explain in a single note to the financial statements why the measure provides useful information, how it is calculated and reconcile it to an amount determined under IFRS Accounting Standards.  Greater disaggregation of information: the new standard includes enhanced guidance on how companies group information in the financial statements. This includes guidance on whether information is included in the primary financial statements or is further disaggregated in the notes. January 1, 2027

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The Group is evaluating the impact on its consolidated financial position and consolidated financial performance upon the initial adoption of the abovementioned standards or interpretations. The results thereof will be disclosed when the Group completes its evaluation.

The Group does not expect the (following) other new and amended standards, which have yet to be endorsed by the FSC, to have a significant impact on its consolidated financial statements:

• Amendments to IFRS 10 and IAS 28 “Sale or Contribution of Assets Between an Investor and Its Associate or Joint Venture”

• IFRS 17 “Insurance Contracts” and amendments to IFRS 17 “ Insurance Contracts”

• IFRS 19 “Subsidiaries without Public Accountability: Disclosures”

• Amendments to IFRS 9 and IFRS 7 “Amendments to the Classification and Measurement of Financial Instruments”

• Annual Improvements to IFRS Accounting Standards

• Amendments to IFRS 9 and IFRS 7 “Contracts Referencing Nature-dependent Electricity”

Summary of material accounting policies

4. Summary of material accounting policies The material accounting policies presented in the consolidated financial statements are summarized below. Except for those specifically indicated, the following accounting policies were applied consistently throughout the periods presented in the consolidated financial statements.

• (1) Statement of compliance

These consolidated financial statements have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers (hereinafter referred to as “the Regulations” ) and the International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations, and SIC Interpretations endorsed by the Financial Supervisory Commission, R.O.C.

• (2) Basis of preparation

• (a) Basis of measurement Except for the important items in the balance sheet below, the consolidated financial statements have been prepared at historical cost:

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  • (i) Financial assets at fair value through other comprehensive income.

  • (ii) Financial asset and liabilities at fair value through profit or loss.

• (b) Functional currency and presentation currency The Group adopts the currency used in the main economic environment in which each system under the Group operates as its functional currency. The Company’s functional currency is CNY, but to meet the needs for primary listing on TWSE or TPEx of Republic of China, the Group presented its operating performance and financial position in NT dollars (NTD) on the balance sheet date in accordance with IAS 21; translated the consolidated balance sheet at the spot exchange rate prevailing on the balance sheet date, the consolidated statements of comprehensive income at the average exchange rate during the year, and the capital transactions and other equity items attributable to owners in the consolidated financial statements at the exchange rate prevailing on the transaction dates; recognized the resulting exchange differences in other comprehensive income; all financial information presented in NTD is in thousands. The spot exchange rates of CNY to

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NTD prevailing on December 31, 2024 and 2023 were 1 CNY to 4.4780 and 4.3170 NTD, respectively. The average exchange rates of CNY to NTD for the year 2024 and 2023 were 1 CNY to 4.4543 and 4. 3970 NTD, respectively.

As of December 31, 2024 and 2023, the cumulative exchange losses amounted to NT$391,105 thousand and NT$618,720 thousand, respectively. Please refer to “Other equity items” for details.

• (3) Basis of consolidation

• (a) Principle of preparation of the consolidated financial statements The consolidated financial statements comprised of the Company and subsidiaries.

• Subsidiaries are entities controlled by the Group. The Group ‘controls’ an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. The financial statements of subsidiaries are included in the consolidated financial statements from the date on which control commences until the date on which the control ceases. Intra group balances and transactions, and any unrealized income and expenses arising from intra group transactions, are eliminated in preparing the consolidated financial statements. The Group attributes the profit or loss and each component of other comprehensive income to the owners of the parent and to the non-controlling interests, even if this results in the non-controlling interests having a deficit balance.

  • The Group prepares consolidated financial statements using uniform accounting policies for like transactions and other events in similar circumstances.

  • Changes in the Group’s ownership interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions. Any difference between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid or received will be recognized directly in equity, and the Group will attribute it to the owners of the parent.

(b) List of subsidiaries in the consolidated financial statements

Name of investor The Company 〞 Lofty Success Group Limited 〞 〞 〞 〞 〞 〞 〞 〞 Hiroyushi Investment Limited Dongguan Hirosawa Automotive Trim Co., Ltd. 〞	Name of subsidiary Lofty Success Group Limited Hiroca Automotive Trim Corporation (note 1) Dongguan Hirosawa Automotive Trim Co., Ltd. Dong Guan Hiroca Automotive Trim Technology Co., Ltd. Hiroca Investment Limited (note2) Hirogen International Limited Hiroyushi Investment Limited Yoshisawa Investment Limited Hiroyuki Investment Limited Hirotai Investment Limited Smart Scene Holding Limited Wuhan Hiroyushi Automotive Trim Co., Ltd. Guangneng Automotive Trim Co., Ltd. Hunan Hiroyushi Automotive Trim Co., Ltd.	Principal activity	Share holding 31-Dec-24 31-Dec-23 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 79% 79% 100% 100% 100% 100% 100% 100% 68.55% 68.55% 100% 100% 100% 100% 100% 100% 100% 100%	Share holding 31-Dec-24 31-Dec-23 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 79% 79% 100% 100% 100% 100% 100% 100% 68.55% 68.55% 100% 100% 100% 100% 100% 100% 100% 100%
		Holding and sales company(Samoa) R&D and sales company (Taiwan) Manufacturing and sales company (China) R&D and sales company (China) General investment business(Samoa) 〞 〞 〞 〞 〞 〞 〞 Manufacturing and sales company (China) 〞		100% 100% 100% 100% 100% 79% 100% 100% 100% 68.55% 100% 100% 100% 100%

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〞	Kaifeng Hiroyushi Automotive Trim Co., Ltd.	〞	100%	100%
〞	Xianyang Hiroyushi Automotive Trim Co., Ltd.	〞	100%	100%
Hirotai Investment Limited	Hirotai Automotive Trim SA DE CV	Manufacturing and sales company (Mexico)	100%	100%
Smart Scene Holding Limited	Hirosawa Automotive Trim USA CO.	Manufacturing and sales company (USA)	100%	100%

Note1: Hiroca Co., Ltd. participated in the cash capital increase of Hiroca Automotive Trim Corporation in October 2023, subscribing NT$120,000,000 in proportion to its shareholding.

Note2: Hiroca Investment Co., Ltd. completed the liquidation procedures in October 2024.

• (c) Subsidiaries excluded from the consolidation financial statements: None.

• (4) Foreign currency

• (a) 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, monetary items denominated in foreign currencies are translated into the 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 the 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 differences relating to the following, which are recognized in other comprehensive income:

• (i) an investment in equity securities designated as at fair value through other comprehensive income.

• (ii) a financial liability designated as a hedge of the net investment in a foreign operation to the extent that the hedge is effective; or

• (iii) qualifying cash flow hedges to the extent that the hedges are effective.

• (b) Foreign operations

• The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on acquisition, 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, significant influence or joint control 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 Group disposes of only part of its interest in a subsidiary that includes a foreign operation while retaining control, the relevant proportion of the cumulative amount is reattributed to non-controlling interest. When the Group disposes only part of its investment in an associate of joint venture that includes a foreign operation while retaining significant or joint control, the relevant proportion of the cumulative amount is reclassified to profit or loss.

• When the settlement of a monetary item receivable from or payable to a foreign operation is neither planned nor likely to occur in the foreseeable future. Exchange

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differences arising from such items are considered to form part of a net investment in the foreign operation and are recognized in other comprehensive income, and presented in the translation reserve in equity.

• (5) Classification of current and non-current assets and liabilities

• The Group classifies the asset as current under one of the following criteria, and all other assets are classified as noncurrent.

• (a) It is expected to be realized, or intended to be sold or consumed, in its normal operating cycle.

• (b) It is hold primarily for the purpose of trading.

• (c) It is expected to be realized within twelve months after the reporting period, or

• (d) 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.

The Group classifies the A liability as current under one of the following criteria, and all other liabilities are classified as non-current:

• (i) It is expected to settle in the normal operating cycle.

• (ii) It is held primarily for the purpose of trading.

• (iii) It is due to be settled within twelve months after the reporting period, or

• (iv) The Group does not have the right at the end of the reporting period to defer settlement of the liability for at least twelve months after the reporting period.

• (6) 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 which 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.

• (7) Financial instruments

Accounts receivable are initially recognized when they are originated. All other financial assets and financial liabilities are initially recognized when the Group becomes a party to the contractual provisions of the instrument. A financial asset (unless it is a trade 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 (FVTPL), transaction costs that are directly attributable to its acquisition or issue. A trade receivable without a significant financing component is initially measured at the transaction price.

• (a) Financial assets

• All regular way purchases or sales of financial assets are recognized and derecognized on a trade date basis.

Upon initial recognition, financial assets are classified as: financial assets at

amortized cost or financial assets at fair value through other comprehensive income. Financial assets are not reclassified subsequent to their initial recognition unless the Group 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.

• (i) 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 FVTPL:

• it is held within a business model whose objective is to hold financial assets to

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collect contractual cash flows

• it is contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest(SPPI) on the principal amount outstanding.

• These assets are subsequently measured at amortized cost, which is the amount at which the financial asset is measured at initial recognition, plus/minus, the cumulative amortization using the effective interest method, adjusted for any loss allowance. Interest income, foreign exchange gains and losses, as well as impairment, are recognized in profit or loss. Any gain or loss on derecognition is recognized in profit or loss.

• (ii) Fair value through other comprehensive income(FVOCI) A debt investment is measured at FVOCI if it meets both of the following

• conditions and is not designated as at FVTPL：

• ‧ It is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets; 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.

On initial recognition of an equity investment that is not held for trading, the Group may irrevocably elect to present subsequent changes in the investment’s fair value in other comprehensive income. This election is made on an instrument-by-instrument basis.

Debt investments at FVOCI are subsequently measured at fair value. Interest income calculated using the effective interest method, foreign exchange gains and losses and impairment are recognized in profit or loss. Other net gains and losses are recognized in other comprehensive income. On derecognition, gains and losses accumulated in other comprehensive income are reclassified to profit or loss.

Equity instrument investments are subsequently measured at fair value. Dividend income (unless it clearly represents a recovery of part of the investment) is recognized in profit or loss. The remaining net gain or loss is recognized in other comprehensive income and is not reclassified to profit or loss.

Dividend income from equity investments are recognized on the day the Group becomes entitled to the dividends (usually the ex-dividend date).

• (iii) Business model assessment

The Group makes an assessment of the objective of the business model in which a financial asset is held at portfolio level because this best reflects the way the business is managed and information is provided to management. The information considered includes:

• ‧ The stated policies and objectives for the portfolio and the operation of those policies in practice. These include whether management ’ s strategy focuses on earning contractual interest income, maintaining a particular interest rate profile, matching the duration of the financial assets to the duration of any related liabilities or expected cash outflows or realizing cash flows through the sale of the assets;

• ‧ ’ How the performance of the portfolio is evaluated and reported to the Group s management;

• ‧ The risks that affect the performance of the business model (and the financial assets held within that business model) and how those risks are managed;

• ‧ ─ How managers of the business are compensated e.g. whether compensation is based on the fair value of the assets managed or the contractual cash flows collected; and

• ‧ The frequency, amount, and timing of financial assets sold in prior periods, the reasons for those sales, and expectations about future sales activity.

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Transfers of financial assets to third parties in transactions that do not qualify for derecognition are not considered sales for this purpose, and are consistent with the Group’s continuing recognition of the assets.

• (iv) Assessment of whether contractual cash flows are solely payments of principal and interest on the outstanding principal

• According to the assessment purpose, the principal is the fair value of an

• financial asset at the time of initial recognition and the interest consists of the consideration of the following: the time value of money, the credit risk related to the outstanding principal during a specific period, as well as other basic lending risks, costs, and profit margin.

When assessing whether contractual cash flows are solely payments of principal and interest on the outstanding principal, the Group considers the terms of financial instrument contracts, including assessing whether a financial asset contains a contractual term that can change the timing or amount of the contractual cash flows, resulting in its nonconformance with meet this criterium. During the assessment, the Group considers:

• ‧ Any contingencies that will change the timing or amount of the contractual cash flows;

• ‧ Terms that may cause the coupon rate of a contract to be adjusted, including the characteristics of variable interest rates;

• ‧ Early prepayment and deferral features; and

• ‧ The Group’s right of claim is limited to the terms for the cash flows from specific assets (such as non-recourse features).

• (v) Impairment of financial assets The Group recognizes its loss allowances for expected credit losses (ECL) on financial assets measured at amortized cost (including cash and cash equivalents, financial assets measured at amortized cost, notes and accounts receivable, other receivables, guarantee deposit paid and other financial assets). The Group measures its 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 the credit risk (i.e. the risk of 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 Group 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 Group’s historical experience and informed credit assessment, as well as forward-looking information.

The Group considers a financial asset to be in default when the financial asset is more than 210 days past due.

Lifetime ECLs are the ECLs that result from all possible default events over the expected life of a financial instrument.

12-month ECLs are the portion of ECLs resulting from default events that are possible within the 12 months after the reporting date (or a shorter period if the

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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 Group is exposed to credit risk.

ECLs are a probability-weighted estimate of credit losses. Credit losses are measured as the present value of all cash shortfalls (i.e. the difference between the cash flows due to the Group in accordance with the contract and the cash flows that the Group expects to receive). ECLs are discounted at the effective interest rate of the financial asset.

At each reporting date, the Group assesses whether financial assets carried at amortized cost 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 210 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 a security because of financial difficulties.

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

An allowance for losses on investments in debt instruments at fair value through other comprehensive income is to have profit or loss adjusted and recognized in other comprehensive income (without the carrying amount of the asset reduced). The gross carrying amount of a financial asset is written off when the Group has no reasonable expectations of recovering a financial asset in its entirety or a portion thereof.

For corporate customers, the Group 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 Group 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 Group’s procedures for recovery of amounts due.

• (vi) Derecognition of financial assets

• the Group 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 substantially all of the risks and rewards of ownership and it does not retain control of the financial asset.

The Group enters into transactions whereby it transfers assets recognized in its statement of balance sheet, but retains either all or substantially all of the risks and rewards of the transferred assets. In these cases, the transferred assets are not derecognized.

• (b) Financial liabilities and equity instrument

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• (i) Classification of debt or equity Debt and equity instruments issued by the Group are classified as financial liabilities or equity in accordance with the substance of the contractual arrangements and the

  • definitions of a financial liability and an equity instrument.

• (ii) Equity instrument An equity instrument is any contract that evidences residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued are recognized as the amount of consideration received, less the direct cost of issuing.

• (iii) Financial liabilities Financial liabilities are classified as measured at amortized cost or FVTPL. A financial liability is classified as at FVTPL if it is classified as held-for-trading, it is a derivative or it is designated as such on initial recognition. Financial liabilities at FVTPL are measured at fair value and net gains and losses, including any interest expense, are recognized in 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.

• (iv) Derecognition of financial liabilities The Group derecognizes a financial liability when its contractual obligations are discharged or cancelled, or expire. The Group 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.

• (v) Offsetting of financial assets and liabilities Financial assets and financial liabilities are offset and the net amount presented in the statement of balance sheet when, and only when, the Group currently has a legally enforceable right to set off the amounts and it intends either to settle them on a net basis or to realize the asset and settle the liability simultaneously.

• (8) Inventories

• Inventories are measured at the lower of cost and net realizable value. The cost of inventories is 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 their present 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.

• Net realizable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses.

• (9) Investment in associates

An associate is an entity over which the Group has significant influence. Significant influence is the power to participate in its financial and operating policy decisions without the power to control or jointly control those policies.

The Group adopts the equity method to recognize its equity in an associate. Under the equity method, on initial recognition the investment in an associate is recognized at cost. The carrying amount of an investment in an associate includes the goodwill identified upon initial investment, less any cumulative impairment losses.

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The consolidated financial statements include the profit and loss and other comprehensive income of the investment in each associate recognized by the Group in proportion to its equity after their accounting policies are aligned with the Group’s from the date of gaining significant influence on them to the date of losing significant influence on them. When a change in equity other than profit and loss and other comprehensive income of an associate does not affect the Group’s shareholding, the Group will recognize the equity change under the share of the associate attributable to the Group as capital surplus in proportion to its shareholding.

Unrealized profits and losses arising from transactions between the company and affiliated companies are recognized in the corporate financial statements only to the extent that they are not related to investors' rights and interests in affiliated companies. When the group shall recognize the loss share of the affiliated enterprise proportionally equal to or exceeds its equity in the affiliated enterprise, it shall stop recognizing its losses, and only when a legal obligation, a constructive obligation, or a payment has been made on behalf of the invested company Within the scope, additional losses and related liabilities are recognized.

• (10)Joint arrangements

A joint arrangement is an arrangement of which two or more parties have joint control. A joint arrangement, either a joint operation or a joint venture, has the following characteristics: (a) The parties are bound by a contractual arrangement; (b) the contractual arrangement gives two or more of those parties joint control of the arrangement. As per IFRS 11 “Joint Arrangements”, joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities (i.e. activities that significantly affect the returns of the arrangement) require the unanimous consent of the parties sharing control.

A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the arrangement, rather than having rights to assets and obligations to liabilities. Those parties are called joint venturers. A joint venturer shall recognize its interest in a joint venture as an investment and shall account for that investment using the equity method in accordance with IAS 28 Investments in Associates and Joint Ventures unless the entity is exempted from applying the equity method as specified in that standard. Please refer to Note 4(9) for the accounting of the equity method.

The Group shall determine the type of joint arrangement in which it is involved by considering the structure and legal form of the arrangement, the terms agreed by the parties in the contractual arrangement, and other facts and circumstances. If facts and circumstances change, the Group shall reassess whether the type of joint arrangement in which it is involved has changed.

• (11)Property, plant and equipment

• (a) 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.

  • 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.

• (b) Subsequent cost

  • Subsequent expenditure is capitalized only when it is probable that future economic

～23～

benefits associated with the expenditure will flow to the Group.

• (c) Depreciation Depreciation is calculated on the cost of an asset, less its residual value and is recognized in profit or loss on a straight-line basis over the estimated useful lives of each component of an item of property, plant and equipment. Land is not depreciated.

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

～24～

• (i) Buildings and structures

• (ii) Machinery and equipment

• (iii) Mold equipment

• (iv) Other equipment

20 years

• 3 ～13 years

• 5 years

• 2 ～ 20 years

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

(12)Leases

At inception of a contract, the Group 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.

• (a) As a lessee

• The Group recognizes a right-of-use asset and a lease liability at the lease commencemnt 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 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 Group’s incremental borrowing rate. Generally, the Group uses its incremental borrowing rate as the discount rate.

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

• (i) fixed payments, including in-substance fixed payments;；

• (ii) variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the commencement date；

• (iii) amounts expected to be paid under a residual value guarantee; and

• (iv) payments for purchase or termination options that are reasonably certain to be exercised.

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

• (i) there is a change in future lease payments arising from the change in an index or rate.

• (ii) there is a change in the Group’s estimate of the amount expected to be paid under a residual value guarantee.

• (iii) there is a change of its assessment on whether it will exercise an option to purchase the underlying asset.

• (iv) there is a change in the lease term resulting from a change of its assessment on whether it will exercise an extension or termination option.

• (v) there are any lease modifications.

• When the lease liability is remeasured, other than lease modifications, 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

～25～

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

Short-term leasing and leasing of low-value underlying assets for the leasing of some machinery and equipment and staff dormitories, the Group presents right-of-use that do not meet the definition of investment and lease liabilities as a separate line item respectively in the statement of financial position.

• (b) As a lessor When the Group acts as a lessor, it determines at lease commencement whether each lease is a finance lease or an operating lease. To classify each lease, the Group makes an overall assessment of whether the lease transfers to the lessee substantially all of the risks and rewards of ownership incidental to the underlying asset. If this is the case, then the lease is a finance lease; if not, then the lease is an operating lease. As part of this assessment, the Group considers certain indicators such as whether the lease is for the major part of the economic life of the asset. If the Group is a sublessor, it accounts for headlease and sublease transactions separately and classifies sublease transactions based on the right-of-use assets derived from a headlease. If a headlease is a short-term lease to which recognition exemption applies, the sublease transaction derived therefrom should be classified as an operating lease.

If an agreement contains lease and non-lease components, the Company allocates the consideration in the agreement as per IFRS 15.

• (13)Intangible assets

• (a) Recognition and measurement Intangible assets are acquired by the Group and have finite useful lives are measured at cost less accumulated amortization and any accumulated impairment losses.

• (b) 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 expenditure, including expenditure on internally generated goodwill and brands, is recognized in profit or loss as incurred.

• (c) Amortization 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 intangible assets of the company are mainly the cost of acquiring computer software, etc., which are amortized using the straight-line method over an estimated useful life of three to ten years from the time they are ready for use, and the amortized amount is recognized in profit or loss.

  • Amortization methods, useful lives and residual values are reviewed at each annual reporting date and adjusted if appropriate.

• (14)Impairment of non-financial assets

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

～26～

recoverable amount is estimated. Goodwill is tested annually for impairment. 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 of other assets or CGUs. Goodwill arising from a business combination is allocated to CGUs or groups of CGUs that are expected to benefit from the synergies of the combination.

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. An impairment loss in respect of goodwill is not reversed. 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.

(15)Provisions

The recognition of provision is a present obligation due to past events, which makes it probable that the economic resources may flow out from the Company to settle the obligation in the future and the amount of the obligation can be estimated reliably. A provision is discounted at a pre-tax discount rate that reflects market assessments of the time value of money and the risks specific to the liability, and the amortization of the discount is recognized in interest expense.

A provision for warranty liability is recognized when goods or services are sold and is measured based on historical warranty information and all probable outcomes weighted by respective probabilities.

(16)Revenue recognition

1. Revenue from customer contracts

Revenue is measured as the consideration to which the transfer of goods or services is expected to be entitled. The Group recognizes revenue when the control over goods or services is transferred to customers and its performance obligations are fulfilled. The main sources of the Group’s revenue are as follows:

• (1) Sales of goods - automobile trims

The Group manufactures car trims and sells them to automakers. The Company recognizes revenue when control over products is transferred. The transfer of the control over the goods means that the goods have been delivered to clients, who can then fully determine the sales channels and prices of the goods, without any outstanding obligations that will affect clients’ acceptance of the goods. Delivery occurs when the goods have been shipped to a specific location with its risk of obsolescence losses passed to the clients, and the clients have accepted the goods in accordance with the sales contracts; the acceptance clause has become invalid, or the Group has objective evidence that all acceptance criteria have been met.

Due to the characteristics of the industry or based on the terms of agreements, after products are sold, the sales that are likely to be discounted due to product defects or practices in the market are first recognized with the total amount, and the sales revenue is written down or recognized as sales discounts and allowances when the discounts are estimated on the date of the event or the balance sheet date and will

～27～

only recognized as revenue when it is highly probable that no significant reversal will occur. As of the reporting date, the amount expected to be paid to customers due to relevant sales discounts is recognized as a refund liability. The credit period for the sales of car trims is net 30 to 120 days after the end of each month, which is consistent with the practice adopted in the industry, so it does not include any financing elements.

The Group provides a standard warranty for some products and is obliged to refund due to defects and has recognized the obligation in provisions for warranty liabilities. Please refer to Note 4(15) for details.

The Group recognizes accounts receivable when the goods are delivered, at which it has an unconditional right to receive the consideration.

• (17)Government grants

When the Group can receive government grants to subsidize the property, plant and equipment, the Group recognizes the unconditional grants as other income. Government grants to compensate for the Group’s expenses or losses and relevant expenses in the same period are recognized in profit or loss on a systematic basis.

• (18)Employee benefits

• Defined contribution plan

Contribution obligations to the defined contribution plan are recognized as expenses in the period during which an employee provides services. Prepaid contribution are recognized as an asset to the extent that it will result in a return of cash or a decrease in future payments.

1. Short-term employee benefits

Short-term employee benefits are recognized as expenses when the relevant services are provided. If the Group has a present legal or constructive payment obligation due to an employee's past services and the obligation can be estimated reliably, the amount of benefits is recognized as liabilities.

• (19)Income taxes

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

The Group judges that the interest or penalty related to income taxes (including uncertain

tax treatment) does not meet the definition of income taxes, so the accounting under IAS 37 applies.

The Group has determined that the global minimum top-up tax – which it is required to pay under Pillar Two legislation – is an income tax in the scope of IAS 12. The Group has applied a temporary mandatory relief from deferred tax accounting for the impacts of the top-up tax and accounts for it as a current tax when it is incurred.

Current taxes comprise the expected tax payables or receivables on the taxable profits (losses) for the year, and any adjustment to the tax payable or receivable in respect of previous years. The amount of current tax payables or receivables is the best estimate of the tax amount expected to be paid or received that it is measured using tax rates enacted or substantively enacted at the reporting date.

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

• (a) temporary differences on 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;

～28～

• (b) temporary differences related to investments in subsidiaries, associates and joint arrangements to the extent that the Group 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

• (c) taxable temporary differences arising on the initial recognition of goodwill. Deferred tax assets are 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 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 probability of future taxable profits improves.

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

• (a) the Group has a legally enforceable right to set off current tax assets against current tax liabilities; and

• (b) the deferred tax assets and the deferred tax liabilities relate to income taxes levied by the same taxation authority on either:

  • (i) the same taxable entity; or

  • (ii) different taxable entities which intends 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 tax liabilities or assets are expected to be settled or recovered.

• (20)Earnings per share

• The Group discloses the Company’s basic and diluted earnings per share attributable to ordinary shareholders of the Company. Basic earnings per share are calculated as the profit attributable to ordinary shareholders of the Company, divided by the weighted-average number of ordinary shares outstanding. Diluted earnings per share are calculated as 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 potentially dilutive ordinary shares. Potential dilutive common stock of the company including stock options on convertible corporate bonds

• (21)Operating segments

• An operating segment is a component of the Group that engages in business activities from which it may incur revenues and incur expenses (including revenues and expenses relating to transactions with other components of the Group). Operating results of the operating segment are regularly reviewed by the Group’s chief operating decision maker to make decisions about resources to be allocated to the segment and to assess its performance. Each operating segment consists of standalone financial information.

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

When management prepares the consolidated financial statements in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers, it shall make judgments, estimates, and assumptions, which will affect the accounting policies adopted and the amounts of assets, liabilities, income, and expenses presented. Actual results may differ from 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

～29～

of those changes in accounting estimates in the following period.

The accounting policies involve significant judgement, and the information with no material impact on the amounts recognized in the consolidated financial statements.

Information about assumptions and estimation uncertainties that have a significant risk of resulting in a material adjustment to the carrying amounts of assets and liabilities within the next financial year is as follows:

• 1) Valuation of inventories

As inventories are stated at the lower of cost or net realizable value, the Group 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 rapid industrial transformation, there may be significant changes in the net realizable value of inventories. Please refer to note 6(5) for further description of the valuation of inventories.

6. Explanation of significant accounts (1) Cash and cash equivalents

Petty cash and cash on hand Demand deposits Time deposits Cash and cash equivalents in the consolidated statement of cash flows	December 31, 2024 $ 1,986 1,221,144 1,313,279	December 31, 2023 1,904 1,861,469 1,222,680
	$ 2,536,409	2,986,053

None of the Group’s above financial assets was pledged for collateral or restricted. Please refer to Note 6(21) for the disclosure of interest rate risk and sensitivity analysis of the Group’s financial assets.

• (2) Financial liabilities at fair value through profit or loss

Financial liabilities at fair value through profit or loss Corporate bond option-current	December 31, 2024 $ 42,960	December 31, 2023 (Restatement) 156,405

Financial liabilities at fair value through profit or loss please refer to Note 6 (20) Please refer to Note 6 (21) for the determination of the fair value of the Group’s financial instrument and the credit and exchange rate risks to which financial instruments were exposed.

The Group issued domestic unsecured convertible corporate bonds. As per the domestic unsecured convertible corporate bond issuance rules, the Company and creditors have the option of redemption as per the agreement. Please refer to Note 6(12) for details.

• (3) Financial assets at fair value through other comprehensive income

Equity instruments at fair value through other comprehensive income: Unlisted company	December 31, 2024 $ 113,599	December 31, 2023 102,945

～30～

These equity instrument investments held by the Group are long-term strategic investments and are not held for trading purposes, so they have been designated to be measured at fair value through other comprehensive income.

After the Group acquired 1.15% equity of Chongqing Ruibo Optoelectronics Co., Ltd. at the consideration of the original equity held by Chongqing Zhengze Auto Parts Company, it classified as financial assets at fair value through other comprehensive income. Please refer to Note 6(6) for relevant explanations.

The Group did not dispose of strategic investments during 2024 and 2023, and the cumulative profits and losses during this period were not reclassified in equity. Please refer to Note 6(21) for the information on the credit and the market risks. None of the above financial assets was pledged for collateral or restricted.

(4) Notes and accounts receivable

Notes receivable from operating activities Accounts receivable -Measured as amortized cost Less: Loss allowance	December 31, 2024 $ 371,335 1,561,873 (59,355)	December 31, 2023 299,281 1,723,377 (51,536)
	$ 1,873,853	1,971,122

The Group adopts a simplified approach to estimating the expected credit losses for all notes and accounts receivables, which are measured at lifetime expected credit losses. To this end, such notes and accounts receivables are grouped by common credit risk characteristics that represent a customer's ability to pay all amounts due as per the contract terms with forward-looking information incorporated, including the information on the macro economy and relevant industries. The Group’s expected credit loss on the Group’s notes and accounts receivable is as follows:

Current 1 to 30 days past due 31 to 90 days past due 91 to 150 days past due 151 to 210 days past due More than 211 days past due	December 31, 2024	December 31, 2024	December 31, 2024	Loss allowance provision 6,713 1,962 2,371 6,644 1,244 40,421
	Gross carrying amount $ 1,733,896 89,918 62,732 15,780 1,461 40,412 $ 1,933,208	Weighted-avera ge loss rate
		0.39% 2.18% 3.78% 42.10% 85.15% 100%
				59,355

Current 1 to 30 days past due 31 to 90 days past due 91 to 150 days past due 151 to 210 days past due More than 211 days past due	December 31, 2023	December 31, 2023	December 31, 2023	Loss allowance provision 15,293 1,692 3,027 1,884 3,367 26,273
	Gross carrying amount $ 1,853,835 112,697 19,712 6,335 3,667 26,412 $ 2,022,658	Weighted-avera ge loss rate
		0.82% 1.50% 15.36% 29.74% 91.82% 99.47%
				51,536

The movement in the allowances for losses on the Group’s notes and accounts receivable are as follows:

～31～

Balance at January 1 Impairment loss (gain on reversed) Amount written off due to irrecoverability in the current year Effect of movements in exchange rates Balance at December 31	2024 $ 51,536 6,421 - 1,398	2023 55,906 (2,061) (1,718) (591)
	$ 59,355	51,536

None of the Group’s notes and accounts receivable was pledged for collateral or restricted.

(5) Inventories

Raw materials Work in progress Finished goods Stock in transit	December 31, 2024 $ 274,378 29,146 429,234 -	December 31, 2023 286,274 10,686 451,466 42,205
	$ 732,758	790,631

The details of the Group’s costs of sales are as follows:：

Sales costs Unallocated Manufacturing Overhead Loss on disposal of inventory Inventory valuation and obsolescence loss Gain on disposal of leftover bits and pieces Inventory shortage Others Total	2024 $ 3,810,520 36,880 56,166 54,208 (4,406) 937 2,443 $ 3,956,748	2023 4,409,536 2,528 58,938 20,525 (5,672) 1,174 (254)
		4,486,785

None of the Group’s inventories was pledged for collateral or restricted.

(6) Investments using the equity method

The Group's investments using the equity method at the balance sheet date are shown below:

Affiliates Joint ventures	December 31, 2024 $ 139,842 201,576 $ 341,418		December 31, 2023 164,683 199,531
			364,214

(a) Affiliates The Group's board of directors resolved on November 28, 2023 to purchase 30% equity of Hsin Shi Technology Co., Ltd. at the transaction price of NT$104,000 thousand. The registration was completed in January 2024.

The Group acquired a 1.15% stake in Chongqing Ruibo Optoelectronics Co., Ltd in October 2023 with the 40% equity of Chongqing Zhengze Automobile Parts Co., Ltd. that it originally held at a value of NT$79,105 thousand as the consideration for the acquisition. It is recognized under Non-Current Financial Assets at Fair Value Through Other Comprehensive Income, please refer to Note 6(3).

After evaluation, the Group recognized an impairment loss of NT$5,226 thousand on Dongguan Taica Hirosawa Technologies Co., Ltd in 2023. The company completed liquidation in September 2024 and remitted the remaining share capital

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of US$313 thousand.

The Group’s affiliates using the equity method are not material individually, and their aggregate financial information is as follows, which are the amounts included in the Group’s consolidated financial statements:

End-of-period consolidated book value of interests in individual insignificant affiliates Attributable to the company: Profit (loss) from continuing operations Total comprehensive income	December 31, 2024 $ 139,842		December 31, 2023 164,683
	2024 $ (17,051) $ (17,051)		2023 (32,648)
			(32,648)

(b) Joint ventures

• In 2024, the company signed a joint venture agreement with SKC Co., Ltd. of South Korea, a non-related party, to jointly invest in a new joint venture company, HS Automotive Trim Co., Ltd. (hereinafter referred to as HS Automotive Trim), to develop Korean automotive-related businesses. The company invested 153,000 thousand KRW (equivalent to approximately NT$3,518 thousand) and acquired 51% of the shares. Pursuant to the Joint Venture Agreement, HS Automotive Trim was structured as a separate vehicle and the Company had a residual interest in the net assets of HS Automotive Trim. Therefore, the Company classified the Joint Venture Agreement as a joint venture and accounted for it using the equity method. The Group participated in Suzhou Hiroyuki Automotive Trim Co., Ltd.’s capital increase in 2023 with an investment of 15,300 thousand CNY. The Group liquidated Guangdong Kawasawa Automative Trim Parts Co., Ltd in November 2023, and repatriated the share capital of 7,606 thousand CNY.

The Group’s joint ventures using the equity method are not individually material, and their aggregate financial information is as follows, which are the amounts included in the Group’s consolidated financial statements:

End-of-period consolidated book value of interests in individual insignificant joint ventures Attributable to the company: Profit (loss) from continuing operations Total comprehensive income	December 31, 2024 $ 201,576 2024 $ (8,736) $ (8,736)		December 31, 2023 199,531
			2023 (9,334)
			(9,334)

(c) Collateral

None of the Group’s investments using the equity method was pledged for collateral or restricted.

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(7) Property, plant and equipment

The details of the movements in the costs and depreciation of the Group’s property, plant and equipment are as follows:

Cost or deemed cost: Balance on January 1, 2024 Additions Reclassification Disposal Effect of movements in exchange rates Balance on December 31, 2024 Balance on January 1, 2023 Additions Reclassification Disposal Effect of movements in exchange rates Balance on December 31, 2023 Depreciation and impairment loss Balance on January 1, 2024 Depreciation for the year Disposal Effect of movements in exchange rates Balance on December 31, 2024 Balance on January 1, 2023 Depreciation for the year Disposal Effect of movements in exchange rates Balance on December 31, 2023 Carrying amounts: Balance on December 31, 2024 Balance on January 1, 2023 Balance on December 31,2023	Land $ 32,870 71,849 - - (9,999)	2,260,351 2,627,030 1,372,802 1,867 41,749 59,953 35,454 3,882 25,567 - (250,447) (119,790) 35,935 21,530 50,988 Building and construction Machinery and equipment Mold equipment	Other facilities Total 1,497,617 181,705 7,972,375 75,226 72,379 323,023 9,184 (78,858) (4,771) (99,351) - (469,588) 31,821 3,993 134,268 Unfinished construction and equipment under acceptance
	$ 94,720	2,333,607 2,443,744 1,389,520	1,514,497 179,219 7,955,307
	$ 28,773 - - - 4,097	2,007,061 2,543,270 1,322,860 192,135 38,268 72,817 63,934 58,146 48,707 - (25,998) (42,556) (2,779) 13,344 (29,026)	1,424,798 394,166 7,720,928 120,628 34,438 458,286 90,806 (237,611) 23,982 (128,386) (5,596) (202,536) (10,229) (3,692) (28,285)
	$ 32,870	2,260,351 2,627,030 1,372,802	1,497,617 181,705 7,972,375
	$ - - - -	511,020 1,600,480 908,585 113,802 149,974 117,525 - (201,308) (82,901) 4,451 25,015 34,051	1,066,353 - 4,086,438 95,705 - 477,006 (69,958) - (354,167) 26,136 - 89,653
	$ -	629,273 1,574,161 977,260	1,118,236 - 4,298,930
	$ - - - -	406,126 1,471,754 833,705 104,075 158,886 118,386 - (21,783) (24,410) 819 (8,377) (19,096)	1,062,389 - 3,773,974 94,933 - 476,280 (78,167) - (124,360) (12,802) - (39,456)
	$ -	511,020 1,600,480 908,585	1,066,353 - 4,086,438
	$ 94,720	1,704,334 869,583 412,260	396,261 179,219 3,656,377
	$ 28,773	1,600,935 1,071,516 489,155	362,409 394,166 3,946,954
	$ 32,870	1,749,331 1,026,550 464,217	431,264 181,705 3,885,937

• (a) The Group built facilities on the leased land. As the law stipulates that the owner of the property and the party with the land use right shall be the same party, we obtained the property cert=ificate owned by the land use right holder, Qiaotou Tangmian Economic Cooperative in Houjie Town, Dongguan City (hereinafter referred to as "Qiaotou Tangmian Cooperative"), and it agreed that the Group, during the 46-year lease term from April 1, 2009 through March 31, 2055, does not need to pay any rent and should return the ownership to the Qiaotou Tangmian Cooperative at the end of the agreement for free. The details are as follows:

Building and construction Less：Accumulated depreciation Total	December 31, 2024 $ 78,813 (58,518)	December 31, 2023 75,979 (52,995)
	$ 20,295	22,984

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• (b) The Group has built new factories and expanded production lines in various operating entities. As of 2024, the relevant construction and installation projects were still in progress and accounted for as unfinished projects and equipment to be accepted. Please refer to Note 9(1) for details of significant unrecognized contractual commitments associated with the acquisition of property, plant and equipment.

• (c) Collateral

  • Please refer to Note 8 for details of long-term borrowings and financing lines guaranteed.

• (8) Right-of-use assets

The Group leases many assets including land, buildings and Machinery and equipment. Information about leases for which the Group as a lessee was presented below:

Cost Balance on January 1, 2024 Additions Decrease Effect of movements in exchange rates Balance on December 31, 2024 Balance on January 1, 2023 Additions Effect of movements in exchange rates Balance on December 31, 2023 Accumulated depreciation losses: Balance on January 1, 2024 Depreciation for the year Decrease Effect of movements in exchange rates Balance on December 31, 2024 Balance on January 1, 2023 Depreciation for the year Effect of movements in exchange rates Balance on December 31, 2023 Carrying amount: Balance at December 31, 2024 Balance at January 1, 2023 Balance at December 31, 2023	Land $ 451,940 - - 16,854	Buildings 811,983 116,106 - 30,901	Machinery and equipment 39,852 596 (1,881) 1,479	Total 1,303,775 116,702 (1,881) 49,234
	$ 468,794	958,990	40,046	1,467,830
	$ 461,571 - (9,631)	766,103 61,970 (16,090)	30,399 10,274 (821)	1,258,073 72,244 (26,542)
	$ 451,940	811,983	39,852	1,303,775
	$ 50,774 9,358 - 1,943	577,956 104,534 - 22,492	25,545 4,994 (1,881) 970	654,275 118,886 (1,881) 25,405
	$ 62,075	704,982	29,628	796,685
	$ 42,593 9,238 (1,057)	480,059 109,541 (11,644)	20,095 5,978 (528)	542,747 124,757 (13,229)
	$ 50,774	577,956	25,545	654,275
	$ 406,719	254,008	10,418	671,145
	$ 418,978	286,044	10,304	715,326
	$ 401,166	234,027	14,307	649,500

Please refer to Note 8 for details of long-term borrowings and financing lines guaranteed.

(9) Short-term borrowings

Short-term borrowings
Unsecured bank loans Unused credit Lines Range of interest rates	December 31, 2024 $ 1,136,421		December 31, 2023 1,202,921
	$ 989,987		607,699
		3.10%~6.30%	3.45%~7.11%

The Group's short-term borrowings were not pledged as collateral.

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(10) Other current liabilities

The other current liability were summarized as follows:

Tax payable Current refund liabilities Current provisions Others Total	December 31, 2024 $ 62,901 7,956 5,286 1,384 $ 77,527		December 31, 2023 47,210 9,912 2,728 3,120
			62,970

The refund liabilities mainly came from the amounts estimated to pay to clients for the return or discounts on automotive trim parts due to defective products or a fall in prices.

(11) Long-term borrowings

The details were as follows:

Secured bank loans Unsecured bank loans Less: Current portion Total Unused long-term credit lines Interest rate range Secured bank loans Less: Current portion Total Unused long-term credit lines Interest rate range		December 31, 2024	December 31, 2024	Amount $ 660,411 257,517 (160,434) $ 757,494 $ - 3.95%~7.08%
			Maturity Day
				Amount $ 664,347 (27,681) $ 636,666 $ - 3.95%~5.46%
			Maturity Day
			2030/12

Please refer to Note 8 for the details of the collateral as which the Group pledged assets for bank borrowings.

(12) Corporate bonds payable

The details were as follows:

Total amount of convertible corporate bonds issued(First) Total amount of convertible corporate bonds issued(Second) Unamortized balance of discounted corporate bonds payable Cumulative sold-back amount Cumulative redemption amount Ending balance of corporate bonds payable	December 31, 2024 $ 600,000 $ 600,000 (106,475) (598,200) (1,800)	December 31, 2024 $ 600,000 $ 600,000 (106,475) (598,200) (1,800)	December 31, 2023 600,000 600,000 (177,261) (19,900) -
	$ 493,525
			1,002,839

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Embedded derivatives - options (recognized in financial liabilities at fair value through profit or loss) Embedded derivatives – gain or loss on options re-measured at fair value (recognized in other gains and losses) Interest expense	$ 42,960	156,405
	2024 $ 60,404	2023 (7,233)
	$ 25,986	24,885

In December 2023 and January 2024, the company exercised the bond put right in accordance with the first convertible bond regulations at the request of investors, and sold back a total of 5,982 bonds for a total amount of NT$598,200 thousand. In addition, the merged company exercised its bond redemption right in accordance with the first convertible bond regulations between February 23 and March 23, 2024, and redeemed all of its bonds in cash at par value, totaling NT$1,800 thousand.

The company issued its second convertible bonds on December 1, 2023, totaling 6,000 five-year convertible corporate bonds denominated in New Taiwan dollars. The holders of the corporate bonds may exercise the conversion right at any time between the day following the expiration of three months after the issuance date and the maturity date to convert them into 15,228,426 common shares. Any accrued but unpaid interest as of the exercise date must be paid in cash, otherwise the outstanding principal and interest must be repaid in cash upon maturity. The principal liability (corporate bonds payable) was classified as current liabilities in 2024.

1. The first domestic unsecured convertible corporate bonds

2. The major rights and obligations attached to the first domestic unsecured convertible corporate bonds issued by the Group on January 19, 2021 are as follows:

3. 1) Bond: The first domestic unsecured convertible corporate bonds.

4. 2) Date of issuance: January 19, 2021.

5. 3) Amount issued: The total amount issued was NT$600,000 thousand.

6. 4) Issuance period: Five years, from January 19, 2021 through January 19, 2026.

7. 5) Coupon rate: 0% per annum.

8. 6) Date and method of principal repayment:

9. Except for those that are converted into the Company’s ordinary shares early, redeemed in advance by the Company, or repurchased and canceled by the Company’s securities firm, the bonds will be repaid in cash in a lump sum at the face value on the maturity date.

10. 7) Conversion period:

11. Creditors may, from the day following the three full months from the date of issuance to the maturity date, request the Company to convert the bonds into the Company’s ordinary shares at any time, except during the book closure period as required by law.

12. 8) Conversion price and adjustment:

13. The conversion price upon issuance was set at NT$68.8 per share and will be adjusted when the total monetary amount of the Company’s ordinary shares has changed or when the conversion price is lower than the real-time price per share and securities with conversion rights are issued.

14. 9) The Company's right to redeem the convertible corporate bonds:

15. (1) From the day following the three full months from the date of issuance to the 40th day before the end of the issuance period, the convertible corporate bonds shall be redeemed when:

    • A. When the closing price of the Company’s common stock exceeds the then conversion price by 30% or more for 30 consecutive business days;

    • B. When the balance of the outstanding convertible corporate bonds is less than

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     - 10% of the initial total amount of bonds issued;

  - C. If a bondholder fails to reply in writing to the Company's shareholder service agency before the bond redemption record date stated in the Bond Redemption Notice.

• 10) Creditor's right to reverse repurchase:

• Creditors, after the bonds have been issued for three years, may request the Company to redeem the convertible corporate bonds they hold in cash at the face value of the bonds, plus interest compensation. After accepting the request for redemption, the Company shall make the payment to each creditor by remittance to redeem the convertible bonds within five business days after the reverse repurchase record date.

• The second domestic unsecured convertible corporate bonds

• 1) Bond: The second domestic unsecured convertible corporate bonds.

• 2) Date of issuance: December 1, 2023.

• 3) Amount issued: The total amount issued was NT$600,000 thousand.

• 4) Issuance period: Five years, from December 1, 2023 through December 1, 2028.

• 5) Coupon rate: 0% per annum.

• 6) Date and method of principal repayment:

• Except for those that are converted into the Company’s ordinary shares early, redeemed in advance by the Company, or repurchased and canceled by the Company’s securities firm, the bonds will be repaid in cash in a lump sum at the face value on the maturity date.

• 7) Conversion period:

• Creditors may, from the day following the three full months from the date of issuance to the maturity date, request the Company to convert the bonds into the Company’s ordinary shares at any time, except during the book closure period as required by law.

• 8) Conversion price and adjustment:

• The conversion price upon issuance was set at NT$39.4 per share and will be adjusted when the total monetary amount of the Company’s ordinary shares has changed or when the conversion price is laower than the real-time price per share and securities with conversion rights are issued.

• 9) The Company's right to redeem the convertible corporate bonds: From the day following the three full months from the date of issuance to the 40th day before the end of the issuance period, the convertible corporate bonds shall be redeemed when:

  • A. When the closing price of the Company’s common stock exceeds the then conversion price by 30% or more for 30 consecutive business days;

  • B. When the balance of the outstanding convertible corporate bonds is less than 10% of the initial total amount of bonds issued;

  • C. If a bondholder fails to reply in writing to the Company's shareholder service agency before the bond redemption record date stated in the Bond Redemption Notice.

• 10) Creditor's right to reverse repurchase:

• Creditors, after the bonds have been issued for three years, may request the Company to redeem the convertible corporate bonds they hold in cash at the face value of the bonds, plus 106.1208% of the bond face value’s interest compensation. After accepting the request for redemption, the Company shall make the payment to each creditor by remittance to redeem the convertible bonds within five business days after the reverse repurchase record date.

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(13) Lease liabilities

The carrying amounts of the Group’s lease liabilities are as follows:

Current Non-current	December 31, 2024 $ 99,999	December 31, 2023 104,313
	$ 182,210	162,795

For the maturity analysis, please refer to note 6(21).

The amounts recognized in profit or loss are as follows:

e amounts recognized in profit or loss are as follows:
2024 Interest on lease liabilities $ 10,089 Expenses relating to short-term leases $ 2,764 The amounts recognized in the statement of cash flows are as follows: 2024 Total cash outflow for leases $ 124,441	2024 $ 10,089	2023 8,249
	$ 2,764	3,743
		2023 130,565

• (a) Lease-in of land and buildings

The Group has leased in land and buildings as office premises and factories, with a lease term of four to 50 years.

Some equipment lease agreements contain an option to extend the leases. Such agreements are managed separately by entities in each region, so the individual terms and conditions agreed may differ from those of the agreements managed by the Group. Such options can only be exercised by the Group rather than the lessors. Where it is not reasonably certain that an option to extend the lease term will be exercised, payments related to the term covered by the option are not included in the lease liabilities.

• (b) Other leases

The lease term for the machinery and equipment leased by the Group ranges from two to four years.

Also, the lease term for partial machinery and equipment and staff dormitories leased by the Group only lasts for one year. As such leases are short-term leases, the Group elects to apply for the exemption from recognition and does not recognize the relevant right-of-use assets and lease liabilities thereof.

(14) Employee benefits

The subsidiaries in China and America contribute a certain percentage of total salaries to the pension funds on a monthly basis as per local laws and regulations, and the contributions are recognized as current expenses. The Company and other overseas subsidiaries have not stipulated any employee pension regulations as the local laws and regulations do not mandatorily require the formulation of pension regulations.

The defined contribution plan of the Group’s subsidiaries in Taiwan is as per the Labor Pension Act, and the Company makes a contribution equal to 6% of each employee’s monthly salary to employees’ individual pension accounts under the Bureau of Labor Insurance. Under this plan, after the Group’s subsidiaries in Taiwan have contributed a fixed amount to the Bureau of Labor Insurance, they have no legal or constructive obligation to pay additional amounts.

～39～

(15) Income tax

• (a) Tax expenses

The components of income tax in the years 2024 and 2023 were as follows:

Current tax expense: Current period Adjust the current income tax of the previous period Deferred tax expense： Origination and reversal of temporary differences Income tax expenses for continuing operations	2024 $ 44,289 3,666	2023 46,363 (1,758)
	47,955	44,605
	11,264	6,348
	$ 59,219	50,953

Reconciliation of income tax and profit before tax 2024 and 2023 is as follows:

2024 Profit before income tax $ 13,390 Income tax using the Company's domestic tax rate $ 2,757 Non-deductible expenses 3,195 Recognition of tax losses not recognized in previous periods (57,400) Current tax losses for unrecognized deferred tax assets 71,367 Changes in income tax in prior periods 3,666 Others 35,634 Total $ 59,219	2024 $ 13,390	2023 (119,371)
		(26,264) 2,500 (8,174) 43,325 (1,758) 41,324
	$ 59,219	50,953

The Group did not recognize income tax directly in equity in 2024 and 2023

(b) Deferred tax assets and liabilities

(i) Unrecognized deferred tax liabilities

The Group is able to control the timing of the reversal of the temporary differences associated with investments in subsidiaries as of December 31, 2024 and 2023. Also, management considers it probable that the temporary differences will not reverse in the foreseeable future. Hence, such temporary differences are not recognized under deferred tax liabilities. Details are as follows:

Amount not recognized as deferred income tax liabilities (ii) Unrecognized deferred tax assets Tax loss carry forward	December 31, 2024 $ 390,640	December 31, 2023 443,597
	December 31, 2024 $ 142,471	December 31, 2023 140,497

The above is not recognized in deferred tax assets because it is not highly probable that the Group will have sufficient taxable income in the future for the tax loss. As of December 31, 2024, the deadlines for using tax losses on deferred tax assets not yet recognized by the Group are as follows:

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Loss year 2018 2020 2021 2022 2023 2024 Total	Amount of loss not yet deducted 74,073 6,921 25,071 47,609 139,719 292,313 $ 585,706	Year of final deduction
		2028 2025~2030 2026~2031 2027~2032 2028~2033 2029~2034

(iii) Recognized deferred tax assets and liabilities

Changes in the amount of deferred tax assets and liabilities for 2024 and 2023 were as follows:

Recognized deferred tax assets Balance at January 1, 2024 Recognized profit or loss Exchange rate impact Balance at December 31, 2024 Balance at January 1, 2023 Recognized profit or loss Exchange rate impact Balance at December 31, 2023 Recognized deferred tax liabilities Balance at January 1, 2024 Recognized profit or loss Exchange rate impact Balance at December 31, 2024 Balance at January 1, 2023 Recognized profit or loss Exchange rate impact Balance at December 31, 2023	Unrealized investment benefits $ 29,780 5,345 1,139	Unrealized investment benefits $ 29,780 5,345 1,139	Lease 53,856 (22,791) 1,887	Others 24 (8) 1	Total 83,660 (17,454) 3,027
	$ 36,264		32,952	17	69,233
	$ 14,550 15,822 (592)		64,523 (9,494) (1,173)	24 - -	79,097 6,328 (1,765)
	$ 29,780		53,856	24	83,660
		Lease $ 53,856 (22,807) 1,887		Others 46,152 (5,911) 1,681	Total 100,008 (28,718) 3,568
		32,936		41,922	74,858
		$ 64,523 (9,494) (1,173)		37,635 9,474 (957)	102,158 (20) (2,130)
		53,856		46,152	100,008

(16) Capital and other equity

As of December 31, 2024 and 2023, the total number of authorized ordinary shares were NTD1,500,000 thousand dollars, with a par value of NTD10 per share, 83,840 thousand shares were issued. All issued shares were paid up upon issuance.

～41～

(a) Capital surplus

The balance of the Company's capital surplus is as follows:

Stock premium Lapsed subscription rights	December 31, 2024 $ 2,786,955 135	December 31, 2023 2,786,955 135
	$ 2,787,090	2,787,090

It is mainly caused by taking over the capital reserve and retained earnings of the pre-conversion subsidiary after the establishment of the share conversion and issuing new shares at a premium.

• (b) Retaining earnings

• As per the Articles of Incorporation, where the Company makes a profit for a fiscal year, the profit shall be first used for paying taxes, offsetting a cumulative deficit, setting aside 10% of the remaining profit as a legal reserve unless it has reached the total amount of the Company’s paid-in capital, setting aside an amount for a special reserve as per the Company’s business needs and laws and regulations, and then any remaining profit, together with any undistributed retained earnings from the beginning of the period, shall be adopted by the Company’s Board of Directors as the basis for making a distribution proposal, which shall then be submitted to the shareholders’ meeting for a resolution before distribution.

• (i) Special reserve

• When the Company distributes the distributable earnings, a special reserve shall be set aside from the current profit or loss and the undistributed earnings for the prior period to make up for the difference between the net deduction of other shareholders’ equity recognized for the year and the balance of the special reserve set aside as mentioned in the preceding paragraph. If it belongs to the deduction of other shareholders' equity accumulated from the prior period, a special reserve shall be set aside from the undistributed earnings from the prior period and shall not be distributed. If there is a subsequent reversal of the amount of the deduction of other shareholders' equity, the earnings may be distributed from the reversed portion.

• (ii) Earnings distribution

The general shareholders' meeting resolved a decision to distribute 2023 and 2022 earnings on May 30, 2024 and May 29, 2023. The amounts of dividends to be distributed to owners are as follows:

Dividends distributed to ordinary shareholders: Cash	2023 Amount per share (Dollars) Total amount $ 0.50 41,920	2022 Amount per share(Dollars) Total amount 2.00 167,800
		Amount per share(Dollars) 2.00

～42～

On March 14, 2025, the company's board of directors proposed a dividends distribution plan for the year 2024. The amount of dividends to be distributed to shareholders is as follows:

Dividends distributed to ordinary shareholders: Cash	2024 Amount per share (Dollars) Total amount $ 0.75 62,880
	Amount per share (Dollars)
	$ 0.75

(i) Other equity interests (net of tax)

Balance as of January 1, 2024 Exchange differences on foreign operations Unrealized gains or losses on financial assets at fair value through other comprehensive income Others Non-controlling interest Balance as of December 31, 2024 Balance as of January 1, 2023 Exchange differences on foreign operations Unrealized gains or losses on financial assets at fair value through other comprehensive income Others Non-controlling interest Balance as of December 31, 2023	Exchange differences on translation of foreign financial statements $ 116,466 (132,467) - - -	Unrealized gains or losses on financial assets at fair value through other comprehensive income Others Non-controllin g interest (130,361) (618,720) 327,084 - - (58,770) 6,779 - - - 227,615 12,460 - - 49,220	Total
			(305,531) (191,237) 6,779 240,075 49,220
	$ (16,001)	(123,582) (391,105) 329,994	(200,694)
	$ 5,376 111,090 - - -	(130,966) (491,059) 290,244 - - 48,940 605 - (149) - (127,661) (5,943) - - (6,008)	(326,405) 160,030 456 (133,604) (6,008)
	$ 116,466	(130,361) (618,720) 327,084	(305,531)

(17) Earnings per share The Group’s basic earnings per share and diluted earnings per share are as follows:

Basic earnings per share Profit belonging to common shareholders Weighted average number of outstanding shares of common stock (in thousand shares) Basic earnings per share (in NTD) Diluted earnings per share Profit belonging to common shareholders Impact of convertible corporate bonds(Note) Profit belonging to common shareholders	2024 $ (95,049)	2023 (164,316)
	83,435	83,840
	$ (1.14)	(1.96)
	$ (95,049) (53,678)	(164,316) -
	$ (148,727)	(164,316)

～43～

Weighted average number of outstanding shares of common stock Impact of convertible corporate bonds(Note) Weighted average number of common stock (diluted) (in thousand shares) Diluted earnings per share (in NTD)(Note)	83,835 83,840 15,228 -
	98,663 83,840
	$ (1,51) (1.96)

Note: In 2023, the effect of convertible corporate bonds and employee stock remuneration

was anti-dilution, so it was ignored in the calculation of diluted earnings per share.

(18) Employee remuneration and directors’ remuneration

As per the Company's Articles of Incorporation, where the Company makes a profit for a year, it shall set aside no higher than 7% and no lower than 3% for employee remuneration and no higher than 3% for directors’ remuneration. However, if the Company still has a cumulative deficit, it shall reserve an amount to make up for it in advance. The recipients of the employee remuneration in stock or cash in the preceding paragraph include employees at affiliates who meet certain criteria.

The company suffered a loss in 2024 and 2023, so employee remuneration and director remuneration were not estimated. Based on the Company’s net income before tax for the period before the employee remuneration and the directors’ remuneration were deducted, multiplied by the percentages for the distribution of employee remuneration and directors' remuneration as specified in the Articles of Incorporation. These remunerations and bonuses were expensed under operating expenses for each period. Related information would be available at the Market Observation Post System website. The amounts stated in the parent company only financial statements are identical to those of the actual distributions for 2024 and 2023.

• (19) Revenue from customer contracts

(a) Details of revenue

venue from customer contracts ) Details of revenue
Major regional markets: Mainland China America Others Main products: Automotive spare parts Others	2024 $ 3,540,084 877,186 670,355	2023 4,037,676 1,096,473 627,139
	$ 5,087,625	5,761,288
	$ 4,852,980 234,645	5,634,695 126,593
	$ 5,087,625	5,761,288

(b) Contract balance

Notes and accounts receivable Less: Allowance Total Contract balance	December 31, 2024 $ 1,933,208 (59,355)	December 31, 2023 2,022,658 (51,536)	December 31, 2022 2,361,587 (55,906)
	$ 1,873,853	1,971,122	2,305,681
	$ 98,829	80,040	103,248

Please refer to Note 6(4) for the disclosure of notes and accounts receivable and the

～44～

impairment thereof.

The opening balances of contract liabilities as at January 1, 2024 and 2023 recognized as revenue for the year 2024 and 2023 amounted to NT$59,205 thousand and NT$72,755 thousand, respectively.

• (20) Non-operating income and expenses

(a) Interest income

The details of the Group’s interest income are as follows:

Non-operating income and expenses (a) Interest income The details of the Group’s interest income are as follows:	ollows:
2024 Interest income $ 58,462 (b) Other gains and losses The details of the Group’s other gains and losses are as follows: 2024 Foreign exchange gains (losses) $ 102,705 losses on disposals of property, plant and equipment (7,946) Gains (losses) on financial liabilities at fair value through profit or loss 60,404 Impairment losses - Government subsidy income 4,950 Rental income 48,115 Others 10,641 $ 218,869	2024 $ 58,462	2023 40,056
		2023 (69,367) (7,522) (7,233) (5,226) 13,655 40,150 22,031
	$ 218,869	(13,512)

(a) Financial costs

The details of the Group’s financial costs are as follows:

Interest expense	2024 $ 147,975	2023 148,345

(21) Financial instruments

(a) Credit risk

(i) Credit risk of receivables

Please refer to Note 6(4) for the information on the exposure of notes and accounts receivable to the credit risk.

Other financial assets at amortized cost include other receivables and certificates of deposit.

Interest receivable and certificates of deposit from those who are not related parties are other financial assets with low credit risk, so an allowance for losses for the period is measured at 12-month expected credit losses.

Other financial assets belonging to related parties mainly include loans, rent receivables and advances on behalf of others. The Group has been assessed to have no significant impairment.

• (b) Liquidity risk

The table below indicates the contractual maturity dates for financial liabilities, including estimated interest but excluding the effect of netting agreements.

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Carrying amount December 31, 2024 Non-derivative financial liabilities Secured bank loans $ 660,411 Unsecured bank loans 1,393,938 Bonds payable 493,525 Accounts payable 812,375 Payable on equipment and other payables 377,450 Lease liability 282,209 Non-current financial liabilities at fair value through profit or loss 42,960 $ 4,062,868 December 31, 2023 Non-derivative financial liabilities Secured bank loans $ 664,347 Unsecured bank loans 1,202,921 Bonds payable 1,002,839 Accounts payable 895,863 Payable on equipment and other payables 417,101 Lease liability 267,108 Non-current financial liabilities at fair value through profit or loss 156,405 $ 4,606,584	Carrying amount December 31, 2024 Non-derivative financial liabilities Secured bank loans $ 660,411 Unsecured bank loans 1,393,938 Bonds payable 493,525 Accounts payable 812,375 Payable on equipment and other payables 377,450 Lease liability 282,209 Non-current financial liabilities at fair value through profit or loss 42,960 $ 4,062,868 December 31, 2023 Non-derivative financial liabilities Secured bank loans $ 664,347 Unsecured bank loans 1,202,921 Bonds payable 1,002,839 Accounts payable 895,863 Payable on equipment and other payables 417,101 Lease liability 267,108 Non-current financial liabilities at fair value through profit or loss 156,405 $ 4,606,584	Contract ualcash flows 788,420 1,437,906 600,000 812,375 377,450 363,537 -	Within 6 month 42,991 1,173,928 600,000 812,375 377,450 62,533 -	6-12 month 1-2year 2-5 year Over 5 years 42,597 112,429 440,936 149,467 96,591 113,127 54,260 - - - - - - - - - - - - - 46,982 32,355 64,530 157,137 - - - -
	$ 4,062,868	4,379,688	3,069,277	186,170 257,911 559,726 306,604
	$ 664,347 1,202,921 1,002,839 895,863 417,101 267,108 156,405	813,127 1,220,836 1,180,100 895,863 417,101 311,413 -	27,611 1,186,858 1,180,100 895,863 417,101 54,364 -	27,472 81,828 377,053 299,163 33,978 - - - - - - - - - - - - - - - 53,632 90,123 27,417 85,877 - - - -
	$ 4,606,584	4,838,440	3,761,897	115,082 171,951 404,470 385,040

The Group does not expect that the timing of the cash flows for the maturity analysis will occur significantly earlier or that the actual amounts will be significantly different.

(c) Market risk

(i) Exposure to exchange rate risk The Group’s financial assets and liabilities exposed to significant foreign-currency exchange rate risk are as follows:

					December 31, 2024	December 31, 2024	December 31, 2024	December 31, 2024	December 31, 2024
			Foreign currency		Exchange rate		CNY (Functional currency)	Exchange rate	NTD (Express currency)
	Financial assets
		Monetary items
		USD	$ 30,980		USD:RMB 7.1884		222,697	4.4780	997,237
			16,181		USD:MXN 20.2684		327,963	1.5882	520,871
		NTD	4,172		NTD:RMB 0.2233		932	4.4780	4,172
	Financial liabilities
	USD		40,001		USD:RMB 7.1884		287,543	4.4780	1,287,618
	NTD		493,525		NTD:RMB 0.2233		110,211	4.4780	493,525
					December 31, 2023
			Foreign currency		Exchange rate		CNY (Functional currency)	Exchange rate	NTD (Express currency)
	Financial assets
		Monetary items

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	USD	$ 28,626	USD:RMB 7.0827	202,749	4.3170	875,267
		14,203	USD:MXN 16.9220	240,343	1.8069	434,279
	NTD	617,829	NTD:RMB 0.2316	143,089	4.3170	617,829
	Financial liabilities
	USD	37,501	USD:RMB 7.0827	265,608	4.3170	1,146,630
	NTD	1,002,839	NTD:RMB 0.2316	232,300	4.3170	1,002,839

(ii) Sensitivity analysis

The exchange rate risk of the Group’s currency items mainly comes from cash and cash equivalents denominated in foreign currencies, accounts receivable and other receivables, borrowings, as well as accounts payable and other payables, from which foreign currency exchange gains and losses arise during translation. On December 31, 2024 and 2023, when the CNY depreciated or appreciated by 5% against the USD and the NTD, with all other factors held constant, the effect on the net income (loss) after tax for the years ended December 31, 2024 and 2023 is as follows:

USD(against CNY and MXN) Appreciated 5% Depreciated 5% NTD(against CNY) Appreciated 5% Depreciated 5%	2024 $ 8,643 (8,643) (18,351) 18,351	2023 6,109 (6,109) (14,438) 14,438

• (iii) Exchange gains or losses on monetary items Since the Group has many kinds of functional currencies, the information on foreign exchange gains or losses on monetary items is disclosed by total amount. For the years ended December 31, 2024 and 2023, foreign exchange gain or (losses) (including realized and unrealized portions) amounted to $102,705 thousand and $(69,367) thousand, respectively.

• (iv) Interest rate risk

• The exposure of the Group’s financial assets and financial liabilities to interest rate risk is described in liquidity risk management in this note.

• The sensitivity analysis below is based on the exposure of derivative and non-derivative instruments to interest rate risk at the balance sheet date. For floating-rate liabilities, the analysis is based on an assumption that the amount of a liability outstanding at the balance sheet date is outstanding throughout the year. The sensitivity to a 1% (100 basis points) change in the interest rate is used when reporting the interest rate risk internally to the key management personnel and also represents management’s assessment of the reasonably possible change in interest rates.

If the interest rate increases (decreases) by 1% (100 basis points), the Group's net profit after tax would have decreased (increased) by $6,249 thousand and $43 thousand for the years ended December 31, 2024 and 2023, respectively, all other variable factors that remain constant. This is mainly due to the Group's demand deposit and loan in floating rates.

• (v) Fair value of financial instruments

• (i) Categories and fair value of financial instruments

  • The Group’s financial liabilities at fair value through profit or loss and financial assets at fair value through other comprehensive income are measured at fair value on a recurring basis. The carrying amounts and fair values of various types of financial assets and financial liabilities (including fair value level information,

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but the information on the financial instruments not at fair value with their carrying amounts being the reasonable approximations of their fair values and the fair values of lease liabilities is not required to be disclosed as per regulations) are listed below:

Financial assets at fair value through other comprehensive income Financial assets at amortised cost Cash and cash equivalents Notes and accounts receivable Other financial assets Subtotal Total Financial liabilities at fair value through other comprehensive income Financial assets at amortised cost Bonds payable Bank loan Accounts payable Payable on equipment and other payable Lease liabilities Subtotal Total		December 31, 2024	December 31, 2024	December 31, 2024	Total 113,599
	Book Value $ 113,599		Fair Value
		Level 1 -	Level 2 -	Level 3 113,599
	2,536,409 1,873,853 335,734	- - -	- - -	- - -	- - -
	4,745,996	-	-	-	-
	$ 4,859,595	-	-	113,599	113,599
	$ 42,960	-	42,960	-	42,960
	493,525 2,054,349 812,375 377,450 282,209	- - - - -	- - - - -	- - - - -	- - - - -
	4,019,908	-	-	-	-
	$ 4,062,868	-	42,960	-	42,960

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December 31, 2023

Financial assets at fair value through other comprehensive income Financial assets at amortised cost Cash and cash equivalents Notes and accounts receivable Other financial assets Subtotal Total Financial liabilities at fair value through other comprehensive incomed Financial assets at amortised cost Bonds payable Bank loan Accounts payable Payable on equipment and other payable Lease liabilities Subtotal Total	Book Value $ 102,945		Fair Value	Fair Value	Total 102,945
		Level 1 -	Level 2 -	Level 3 102,945
	2,986,053 1,971,122 214,746	- - -	- - -	- - -	- - -
	5,171,921	-	-	-	-
	$ 5,274,866	-	-	102,945	102,945
	$ 156,405	-	156,405	-	156,405
	1,002,839 1,867,268 895,863 417,101 267,108	- - - - -	- - - - -	- - - - -	- - - - -
	4,450,179	-	-	-	-
	$ 4,606,584	-	156,405	-	156,405

• (ii) Fair value valuation techniques for financial instruments at fair value (2.1) Non-derivative financial instruments

• When a financial instrument is quoted in an active market, the quoted price in the active market is the fair value. The market prices announced by major exchanges and Taipei Exchange that sells popular bonds are the basis for the fair values of listed equity instruments and debt instruments with quoted prices in the active markets.

A financial instrument is deemed to be with quoted prices in the active markets if its quoted prices can be obtained from exchanges, brokers, underwriters, industry associations, pricing services institutions, or competent authorities in a timely and regular manner, and the prices represent the prices in actual fair market transactions that occur frequently. If the above criteria are not met, the market is deemed inactive. Generally speaking, a large bid-ask spread, a significant increase in the bid-ask spread, or a low trading volume are all indicators of an inactive market.

Except for the above financial instruments with active markets, the fair values of other financial instruments are obtained through valuation techniques or with reference to the quoted prices by counterparties. The fair value obtained through valuation techniques may be calculated and obtained with reference to the present fair value of other financial instruments with substantively similar criteria and characteristics, discounted cash flow method, or other valuation techniques, including the use of models based on market information available at the consolidated balance sheet date.

If there is no active market for a financial instrument held by the Group and

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its fair value is listed by category and attribute below:

Equity instruments without quoted prices: Their fair values were estimated using the comparable company method, and the main assumptions were made based on each investee’s book value per share, multiplied by a percentage of the earnings deduced from the market quotes of comparable publicly listed companies at home and abroad. Such an estimate has been adjusted for the effect of discounts on equity securities without adequate liquidity in the market.

• (2.2) Derivative financial instruments

It is valuated with the valuation model widely accepted by users in the market. Derivative financial instruments are valuated with appropriate option pricing models.

• (iii)Transfer between Level 1 and Level 2 fair values There was no transfer between Level 1 and Level 2 fair values in 2024 and 2023.

Movement in Level 3 fair value

Balance as of January 1, 2024 Total gains and losses recognized: In other comprehensive income Exchange rate impact Balance as of December 31, 2024 Balance as of January 1, 2023 Total gains and losses recognized: In other comprehensive income Reclassification (Note) Purchase Balance as of December 31, 2023	Fair value through other comprehensive income Unquoted equity instrument $ 102,945 679 3,875
	$ 113,599
	$ 23,891 456 79,105 (507)
	$ 102,945

Note: Please refer to Note 6(6) for details.

The above total gains or losses are recognized in "Other gains or losses" and "Unrealized gains (losses) on financial assets at fair value through other comprehensive income". Among them, those related to the assets still owned in 2024 and 2023 are as follows:

Total gains and losses recognized Recognized in other comprehensive gains(losses) List in “Unrealised gains (losses) on financial assets measured at fair value through other comprehensive income」and others	2024 $ 6,779	2023 456

• (iv) Quantitative information on the measurement of significant unobservable fair value inputs

The Group's Level 3 fair value mainly includes financial assets at fair value

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through other comprehensive income.

Most of the Group’s fair values are classified as Level 3 with only a single significant unobservable input, and only equity instrument investments without an active market bear multiple significant unobservable inputs. Significant unobservable inputs for investments in equity instruments with no active market are independent of each other and therefore do not correlate. Quantitative information on significant unobservable fair value inputs is as follows:

Item Valuation technique Significant unobservable inputs Financial assets at fair value through other comprehensive income equity investments without an active market Comparable listed companies approach ‧Price-to-book ratio (1.71 as of 2024.12.31) ‧EV/SALES (1.76 and 2.59 as of 2024.12.31 and 2023.12.31, respectively) ‧Discount for lack of marketability (20%–25% as of both 2024.12.31 and 2023.12.31) Financial liabilities at fair value through profit or loss - embedded derivative - put option Binomial tree model for valuation of convertible bonds ‧Volatility (21.26% and 24.12% as of 2024.12.31 and 2023.12.31, respectively)

Inter-relationship between significant unobservable inputs and fair value measurement

‧The higher the ratio, the higher the fair value ‧The higher the discount for lack of marketability, the lower the fair value ‧The higher the volatility, the higher the fair value

• (v) Sensitivity analysis of reasonably possible alternative assumptions for fair value measurements in Level 3 of the fair value hierarchy

• The fair value measurements of the Group's financial instruments are reasonable. However, changes in the use of valuation models or valuation variables may affect the estimations. For fair value measurements in Level 3, changing one or more of the assumptions would have the following effect on other comprehensive income:

December 31, 2024 Financial assets at fair value through other comprehensive income Investments in equity instruments without an active market Investments in equity instruments without an active market December 31, 2023 Financial assets at fair value through other comprehensive income Investments in equity instruments without an active market Investments in equity instruments without an active market	Increase or decrease Input Price-to-book ratio& EV/SALES 3% Discount for lack of marketability 3% Price-to-book ratio& EV/SALES 3% Discount for lack of marketability 3%	Changes in fair value reflected in other comprehensive income Favorable change Unfavorab le change $ 1,100 (1,100) 1,801 (1,801)	Changes in fair value reflected in other comprehensive income Favorable change Unfavorab le change $ 1,100 (1,100) 1,801 (1,801)
		Favorable change $ 1,100 1,801
		$ 2,901	(2,901)
		$ 604 604	(604) (604)
		$ 1,208	(1,208)

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The favorable and unfavorable effects represent the changes in fair value, and fair value is based on a variety of unobservable inputs calculated using a valuation technique. The analysis above only reflects the effects of changes in a single input, and it does not include the inter relationships with another input.

• (22) Financial risk management

• (a) Overview

The Group have exposures to the following risks from its financial instruments:

• (1) credit risk

• (2) liquidity risk

• (3) market risk

The following likewise discusses the Group's objectives, policies and processes for measuring and managing the above-mentioned risks. For more disclosures about the quantitative effects of these risk exposures, please refer to the respective notes in the accompanying consolidated financial statements.

• (b) Structure of risk management The Group’s Finance Department provides services for each business, coordinates operations in domestic and international financial markets, and monitors and manages the financial risks related to the Group’s operations as per the internal risk report on the analysis of internal risk exposures based on risk levels and breadth. The use of derivative financial instruments is regulated by the policies approved by the Board of Directors, including the written principles of exchange rate risk, interest rate risk, credit risk, use of derivative financial instruments and non-derivative financial instruments, and investment with remaining liquidity. Internal auditors continue to verify the compliance with policies and the maximum exposures. The Group does not trade financial instruments (including derivative financial instruments) for speculative purposes.

• (c) Credit risk Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Group's receivables from customers and investments.

• (1) Accounts receivable and other receivables

  • The Group’s exposure to credit risk mainly arises from each client’s situation. However, management also considers the data on its client base, including the risk of default in each client’s industry and country, as such factors may affect credit risk. About 36% and 35% of the Group’s 2024 and 2023 revenue came from sales to two groups.

  • The Group has established a credit policy, as per which the Group analyzes each new client’s credit rating before setting standard payment and delivery terms and conditions for them. The Group's review covers external ratings, if available, and, in some cases, notes sent by banks. Each procurement limit is set for each client and regularly reviewed.

When the Group monitors the credit risk from clients, it is grouped according to the clients’ credit characteristics. The main clients of the Group’s accounts receivable and other receivables are international joint venture automakers in mainland China (established jointly by foreign and China’s investors) and local independent car brands in mainland China. To reduce credit risk, the Group continues to regularly evaluate the clients’ financial position but usually does not require them to provide collateral.

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The Group has provided an allowance for bad debts to reflect its estimate of incurred losses on accounts receivable, other receivables, and investments. The main components of the allowance for losses account include specific losses related to each significant exposure and combined losses established for incurred but unidentified losses from a group of similar assets. The allowance for combined losses account is determined based on the data on historical payments for similar financial assets.

• (2) Investments

  • The exposure to credit risk for the bank deposits and other financial instruments is measured and monitored by the Group's finance department. The Group only deals with banks, other external parties, corporate organizations, government agencies and financial institutions, with good credit rating. The Group expects the counterparties above to meet their obligations; hence, there is no significant credit risk arising from these counterparties.

• (d) Liquidity risk Liquidity risk is the risk that the Group will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or other financial assets. The Group'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 Group's reputation.

• The Group monitors cash flow needs and optimal return on investment in cash. Generally speaking, the Group ensures that there is sufficient cash to cover expected operating expenditure for 60 days, including the fulfillment of financial obligations and excluding potential impacts that cannot be reasonably expected under extreme circumstances, such as natural disasters. Moreover, the Group’s undrawn borrowing facilities as of December 31, 2024 and 2023 amounted to NT$987,987 thousand and NT$607,699 thousand, respectively.

• (e) Market risk Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates, and equity prices, that will affect the Group's income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimizing the return.

Exchange rate risk

The Group is exposed to exchange rate risk arising from sales, procurement, and borrowings that are not denominated in its functional currencies. The Group’s functional currency is CNY. The main currencies, in which such transactions are denominated, are USD and JPY.

Interest on borrowings is denominated in the loan principal currency. Generally speaking, the borrowings are denominated in the same currency as the cash flows arising from the Group’s operations, primarily USD. As such, it provides financial hedging without a need to trade derivatives, so hedge accounting is not adopted.

As for monetary assets and liabilities denominated in other foreign currencies, when a short-term imbalance occurs, the Group will buy or sell foreign currencies at the spot exchange rate to ensure that the net exposure remains at an acceptable level. (23) Capital management

The Group has drawn up a capital management plan based on the industry characteristics and future business development, as well as factors of changes in the external environment, to ensure that it has the necessary financial resources and a complete business plan to provide future working capital, capital expenditure, and research and

～53～

development expenses, repay debts, and pay out dividends. Competent authorities adopt an appropriate debt-to-equity ratio or other financial ratios to determine the Group’s optimum capital. While maintaining a solid foundation for capital, the Group will optimize the debt and equity balances to increase return on equity.

The Group's debt-to-equity ratio at the end of the reporting period was as follows:

Total liabilities Less: cash and cash equivalents Net debt Total equity Debt-to-equity ratio	December 31, 2024 $ 4,317,283 (2,536,409)	December 31, 2024 $ 4,317,283 (2,536,409)	December 31, 2023 4,845,355 (2,986,053)
	$ 1,780,874		1,859,302
	$ 6,349,242		6,430,889
		28.05%	28.91%

As of December 31, 2024, the Group’s capital management method did not change.

(24) Financing activities not affecting current cash flow

Reconciliations of liabilities arising from financing activities for the years ended December 31, 2024 and 2023 were as follows:

Non-cash changes

Long-term borrowings Short-term borrowing Lease liabilities Bonds payable Total liabilities from financing activities Long-term borrowings Short-term borrowing Lease liabilities Bonds payable Total liabilities from	January 1, 2024 $ 644,347 1,202,921 267,108 1,002,839	Cash flows 227,592 (110,772) (111,588) (600,000)	Changes in lease - - 116,702 -	Foreign exchange movement and others 25,989 44,272 9,987 90,686	Changes in fair value December 31, 2024 - 917,928 - 1,136,421 - 282,209 - 493,525
	$ 3,137,215	(594,768)	116,702	170,934	- 2,830,083
	January 1, 2023 $ 1,009,286 774,291 319,255 529,373	Cash flows (329,880) 453,029 (118,573) 595,000	Non-cash changes Changes in lease Foreign exchange movement and others Changes in fair value December 31, 2023 - (15,059) - 664,347 - (24,399) - 1,202,921 72,244 (5,818) - 267,108 - (121,534) - 1,002,839
			Changes in lease - - 72,244 -	Foreign exchange movement and others (15,059) (24,399) (5,818) (121,534)
	$ 2,632,205	599,576	72,244	(166,810)	- 3,137,215

financing activities

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7. Related-party transactions: A. Names and relationship with related parties

the consolidated financial statements, the related parties with transactions with the Group are as follows:

Name of related party(simple name) Relationship with the Group Dongguan Karyu Automative Trim Co., Ltd An affiliate of the Group ( “Dongguan Karyu”) Suzhou Hiroyuki Automotive Trim Co., Ltd. An affiliate of the Group ( “Suzhou Hiroyuki”) Dongguan Fongyi Precision Mold Co., Ltd. Its Chairman and the Chairman of the (“Dongguan Fongyi”) Company are relatives within the second degree of kinship. Dongguan Conserve & Associates, Inc. Its director is one of the Company’s key (“Dongguan Conserve & Associates”) management personnel. Jinya Dian Technology Co., Ltd Its parent company’s Chairman and the (“Jinya Dian”) Chairman of the Company are the same person. Jiangmen Tsukada Riken Automotive Trim Co., Ltd. Its Vice Chairman is one of the Company’s (Jiangmen Tsukada Riken) key management personnel. Dongguan Jing Wang Electronic Co.,Ltd. Its director and the Chairman of the (“Dongguan Jing Wang”) Company are the same person. Chongqing Zhengze Automotive Componet Co., Ltd An affiliate of the Group (Note1) (“Chongqing Zhengze”) Dongguan Taica Hirosawa Technologies Co., Ltd An affiliate of the Group (Note2) (“Taica Hirosawa”) Losang-Hirosawa mold Co.Ltd An affiliate of the Group (“Losang-Hirosawa”) Dongguan Mono Automotive Trim Co. An affiliate of the Group (“Dongguan Mono”) (“Originally called Changshu Mono”) WIN INC(“WIN”) An affiliate of the Group Shin Shi Technology Co., Ltd An affiliate of the Group Yu, Che-ming Chairman of the Group

Note1:It has been a non-related person since October 2023, please refer to Note 6(6) for details. Note2:Liquidation was completed in September 2024. Please refer to Note 6 (6) for details.

• B. Significant transactions with related parties

• (a) Operating revenue

The Group’s significant sales to related parties are as follows:

Join Ventures Other related parties Affiliates	2024 $ 24,596 6,684 210	2023 2,400 12,695 8,017
	$ 31,490	23,112

The products sold by the Group to related parties are different from those to non-related parties, so there is no comparable transaction price available. The payment term for related parties ranges from 30 days to 120 days after the end of each month, while that for general clients ranges from 30 days to 120 days after the end of each month (for plastic parts) and that for molds is negotiated and agreed by both parties.

The Group did not receive collateral for receivables from related parties and determined that no allowance for bad debt was required.

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Purchases

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

Other related parties Join Ventures Affiliates	2024 $ 65,995 28,835 17,638	2023 77,802 74,025 22,099
	$ 112,468	173,926

There is not comparable transaction counterparty available for the Group’s purchases from related parties. The payment term for related parties ranges from 30 ~ 60 days or is negotiated and agreed upon by both parties, and the payment term for general suppliers is mainly 30–90 days after the end of each month.

To avoid the repeated calculation of the above purchase and sales, the Group presented the income and costs of the sales of raw materials and semi-finished goods to affiliates and other related parties in net amounts. When the affiliates completed the processing and manufacturing and sold them back to the Group for resale, the relevant operating revenue and costs were initially recognized, but the receivables and payables failed to meet the conditions for derecognition, so they were still listed in an aggregate manner.

(b) Others

The Group entrusted affiliates, joint ventures, and other related parties for in 2024 and 2023 payments for processing and purchases of miscellaneous items and paid them NT$1,649 thousand and NT$1,264 thousand, respectively.

The amounts of the purchases of raw materials made by the Group on behalf of affiliates and other related parties in 2023 are as follows:

Other related parties Join Ventures Affiliates	Procurement of raw materials
	2023 $ 3 2 2 $ 7

(c) Receivables from related parties

The details of the Group's receivables from related parties are as follows:

Account	Relationship	December 31 2024 $ 23,420 568 84 18,448 2,940 1,590	December 31 2023 1,189 3,772 7,493 18,303 4,626 1,533
Accounts receivable Accounts receivable Accounts receivable Other current financial assets Other current financial assets Other non-current financial assets	Join Ventures Other related parties Affiliates Affiliates Other related parties Join Ventures
		$ 47,050	36,916

Note: Other financial assets - current and non-current mainly refer to the sales of equipment, rental income, and others.

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(d) Payables to related parties

The details of the Group's payables to related parties are as follows:

Account	Relationship	December 31 2024 $ 20,006 14,875 9,213 2,167 2,163	December 31 2023 16,822 35,157 18,724 4,987 7,014
Accounts payable Accounts payable Accounts payable Other payables Other payables ) Other non-current assets Join Ventures Other related parties	Other related parties Join Ventures Affiliates Other related parties Affiliates
		$ 48,424	82,704
		December 31 2024 $ 789 423	December 31 2023 761 -
		$ 1,212	761

(e) Other non-current assets

(f) Prepayments

The details of the Group's prepayments to related parties are as follows:

Other related parties - Dongguan Jing Wang Other related parties Affiliates - Losang-Hirosawa	December 31 2024 $ 31,346 8,202 4,058	December 31 2023 6,306 11,809
	$ 43,606	17,395

(g) Lease

On June 20, 2024, the Company leased a factory building from its affiliated company, Shin shi Technology, and signed a lease agreement with reference to the rental prices of factories in nearby areas. The lease term is 5 years, and upon expiration of the aforementioned lease term, it has the priority right to renew the lease for another 5 years. The total contract price is NT$114,409 thousand, which is recorded as a right-of-use asset, and a lease deposit of NT$3,818 thousand is paid and recorded as other financial assets - non-current. As of December 31, 2024, the balance of lease liabilities was $109,405 thousand.

(h) Property transactions

1)Acquisition of property, plant and equipment

The aggregate information on the prices of property, plant and equipment acquired by the Group from related parties is as follows:

Affiliates Other related parties	2024 $ 7,797 5,397	2023 13,050 7,856
	$ 13,194	20,906

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• 2)Disposition of property, plant and equipment

• The summary of the Group’s sale of real estate, plant and equipment to related parties in a general manner is as follows:

Relationship Affiliates Relationship Join Ventures Rental income Affiliates Other related parties Join Ventures	2024 Disposition price Disposition gains(losses) $ 7,572 1,924	2024 Disposition price Disposition gains(losses) $ 7,572 1,924
	2023 Disposition price Disposition gains(losses) $ 1,382 93
	2024 $ 6,297 5,830 662	2023 7,518 11,165 618
	$ 12,789	19,301

(i) Rental income

The above income is from the offices and factories leased to affiliates, other related parties, and the Group’s joint ventures. The payment term is 30 days after the end of each month, and the transaction prices were not significantly different from those with non-related parties.

(j) Other income

Join Ventures	2023 $ 1,197

• (k) Loans to related parties (accounted for under other financial assets - current) The drawdown expenditures of the loans from the Group to related parties is as follows:

Other related parties - Dongguan Conserve & Associates Affiliates - Dongguan Mono	December 31, 2024 $ 43,687 23,133	December 31, 2023 37,920 22,302
	$ 66,820	60,222

The interest on the loans from the Group related parties was accrued at 3.45% to 3.70% per annum, and they were all unsecured. After the Group’s assessment, there was no need to set aside an allowance for bad debt.

• (l) The Group acquired a 30% stake in Hsin Shi Technology Co., Ltd., from the Chairman of the Company in 2023 please refer to Note 6(6). The Group participated in the capital increase in cash of Suzhou Hiroyuki Automotive Trim Co., Ltd. in 2023. Please refer to Note 6(6) for details.

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C. Transactions with key personnel

The remuneration to key management personnel includes:

Short-term employee benefits	2024 $ 31,668	2023
		32,388

8. Assets Pledged

The details of the book value of the assets pledged by the Group are as follows:

Pledged assets	Object	December 31, 2024 $ 1,009,526 99,230	December 31, 2023 1,018,037 95,122
Land（Right-of-use Asset）, Property, plant and equipment Guarantee deposits paid (Accounting for Other non-current financial assets)	Guarantees for bank Loan Lease Deposit
		$ 1,108,756	1,113,159

9. Material Contingent Liabilities and Unrecognized Contractual Commitments

• 1.The Group’s unrecognized contractual commitments are as follows:

Acquisition of property, plant and equipment	December 31, 2024 $ 229,813	December 31, 2023 128,524

1. The Group signed a factory lease contract with Xitou Joint Stock Economic Cooperative, Houjie Town, Dongguan City on August 18, 2023. As of December 31, 2024, the factory was still under construction, the contract period is twenty years from the date of delivery of the factory. The total rent in the twenty years is expected to be approximately RMB 387,700 thousand. The contract deposit is RMB 15,000 thousand accounting for non-current other financial assets.

10. Major Disaster Loss: None.

11. Material Events After the Balance Sheet Date: None.

12. Others

(a) Employee benefits and depreciation and amortization expenses are summarized by function as follows:

By function By item	2024	2024	2024	2023	2023	2023
	Operating cost	Operating Expense	Total	Operating cost	Operating Expense	Total
Employee benefits Salary Labor and health insurance Pension Remuneration of directors Others Depreciation Amortization	666,402 33,369 71,622 - 30,143 431,515 2,214	403,562 12,198 26,975 1,787 9,694 164,377 7,270	1,069,964 45,567 98,597 1,787 39,837 595,892 9,484	663,546 32,391 73,348 - 39,202 440,263 1,454	405,631 11,458 26,327 1,800 12,155 160,774 7,685	1,069,177 43,849 99,675 1,800 51,357 601,037 9,139

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13. Additional Disclosures

(1) Information on significant transactions

As per the Regulations Governing the Preparation of Financial Reports by Securities Issuers, the Group shall disclose the relevant information on significant transactions during 2024. The details are as follows:

(a) Loan to Others:

on significant transactions during 2024. The details are as follows: (a) Loan to Others:	on significant transactions during 2024. The details are as follows: (a) Loan to Others:	on significant transactions during 2024. The details are as follows: (a) Loan to Others:	on significant transactions during 2024. The details are as follows: (a) Loan to Others:	on significant transactions during 2024. The details are as follows: (a) Loan to Others:	on significant transactions during 2024. The details are as follows: (a) Loan to Others:	on significant transactions during 2024. The details are as follows: (a) Loan to Others:	on significant transactions during 2024. The details are as follows: (a) Loan to Others:	on significant transactions during 2024. The details are as follows: (a) Loan to Others:	on significant transactions during 2024. The details are as follows: (a) Loan to Others:	on significant transactions during 2024. The details are as follows: (a) Loan to Others:	on significant transactions during 2024. The details are as follows: (a) Loan to Others:	on significant transactions during 2024. The details are as follows: (a) Loan to Others:
													Unit: NT$ thousand
No. (Note 1)	Financing Company	Counterparty	Account	Related Party	Maximum Balance for the Period	Ending Balance	Amount Actually Drawn (Note 5)	Interest Rate (%)	Nature for Financing (Note 4)	Transactio n Amount	Reason for Financing	Allowance for Bad Debt	Collateral		Financing Limits for Each Borrowing Company	Financing Company’s Total Financing Amount Limit
													Item	Value
1 1 1 1 1 1	Dongguan Hirosawa Dongguan Hirosawa Dongguan Hirosawa Dongguan Hirosawa Lofty Group Lofty Group	Wuhan Hiroyoshi Dongguan Conserve & Associates Dongguan Mono Hunan Hiroyoshi Hirotai Investment Hiroca Automotive	Other receivables due from related parties Other receivables due from related parties Other receivables due from related parties Other receivables due from related parties Other receivables due from related parties Other receivables due from related parties	Yes Yes Yes Yes Yes Yes	313,460 44,780 53,736 22,390 44,780 193,138	156,730 44,780 53,736 22,390 44,780 193,138	67,170 43,687 23,133 23,390 44,078 128,759	3.25% 3.45% 3.45% 3.45% 3.45% 6.7%~7%	2 2 2 2 2 2	- - - - - -	Operating capital Operating capital Operating capital Operating capital Operating capital Operating capital	- - - - - -		- - - - - -	Not exceed 10% of the Corporation’s net worth 510,052 Not exceed 10% of the Corporation’s net worth 510,052 Not exceed 10% of the Corporation’s net worth 510,052 Not exceed 10% of the Corporation’s net worth 510,052 Not exceed 10% of the Corporation’s net worth 636,361 Not exceed 10% of the Corporation’s net worth 636,361	Not exceed 20% of the Corporation’s net worth 1,020,104 Not exceed 20% of the Corporation’s net worth 1,020,104 Not exceed 20% of the Corporation’s net worth 1,020,104 Not exceed 20% of the Corporation’s net worth 1,020,104 Not exceed 20% of the Corporation’s net worth 1,272,723 Not exceed 20% of the Corporation’s net worth 1,272,723

Note 1: The method of filling in the Code column is as follows:

1. The issuer is coded “0.”

2. The investees are coded sequentially beginning from “1” in the order presented in the table above.

Note 2: The method of filling in the nature of loans to others is as follows:

1. Business relationship.

2. The need for short-term financing.

Note 3: The transactions related to the consolidated entities listed above have been eliminated when the consolidated financial statements were prepared.

Note 4: If the relevant numbers in this table involve a foreign currency, it shall be converted into NTD at the exchange rate prevailing on the balance sheet date. If it is an item under the assets and liabilities account, it shall be converted at the spot exchange rate; if it is an item under the profit or loss account, it shall be converted at the average exchange rate.

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(b) Endorsements/Guarantees Provided to Others:

Unit: NT$ thousand

Nunber (Note 1)	Name of Guarantor	Counter-party of guarantee and endorsement	Counter-party of guarantee and endorsement	Limitation on amount of guarantees and endorsements (Note2)	Highest balance of guarantees and endorsements during the period	Balance of guarantees and endorsements as of reporting date	Actual usage amount	Property pledged for guarantees and endorsemen ts (Amount)	Ratio of accumulated amounts of guarantees and endorsements to net worth of the latest financial statements	Maximum amount for guarantees and endorsements (Note2)	Parent company endorsements/ guarantees to subsidiary	Subsidiary endorsements/ guarantees to parent company	Endorsements /guarantees to the companies in mainland China
		Name	Relationship with the Company (Note 3)
0	The Company	Lofty Group	4	1,203,849	257,517	257,517	257,517	-	4.28%	2,407,699	Y	N	N
1	Dongguan Hirosawa	Wuhan Hiroyushi	4	1,020,104	134,340	-	-	-	-%	2,040,208	N	N	Y

• Note 1: The method of filling in the Code column is as follows:

• The issuer is coded “0.”

• The investees are coded sequentially beginning from “1” in the order presented in the table above.

• Note 2: The upper limit of each endorsement/ guarantee provided to a single enterprise shall not exceed 20% of the then net worth of the enterprise, and the total amount shall not exceed 40% of the then net worth of the enterprise.

• Note 3: There are seven types of relations between the endorser/guarantor and the endorsed/guaranteed party as follows; just indicate the type:

• Companies with business dealings.

• A company in which the Company directly or indirectly holds more than 50% of the voting shares.

• A company directly or indirectly holds more than 50% of the voting shares in the Company.

• A company in which the Company directly or indirectly holds more than 90% of the voting shares.

• Companies that need to purchase insurance for each other in the same industry or as co-builders in accordance with contractual provisions based on the needs for contracting construction projects.

• A company that is endorsed and guaranteed by all shareholders of the Company based on their ownership percentage due to a joint investment relationship.

• The companies that are engaged in joint and several guarantees for the performance of a pre-sale property contract in accordance with the Consumer Protection Act.

Note 4: If the relevant numbers in this table involve a foreign currency, it shall be converted into NTD at the exchange rate prevailing on the balance sheet date. If it is an item under the assets and liabilities account, it shall be converted at the spot exchange rate; if it is an item under the profit or loss account, it shall be converted at the average exchange rate.

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(c) Securities held at the end of the period (excluding investment in subsidiaries, affiliates, and joint ventures):

Name of holder	Category and name of security	Relationship with the company	Account title	Ending balance	Ending balance	Ending balance	Ending balance	Remark
				Shares / Units	Carrying value	Percentage of ownership (%)	Fair value (Note2)
Lofty Group Yoshisawa Investment Hirogen Internationa Dongguan Hirosawa	Common stock Conserve & Associates, Inc. Jiangmen Tsukada Riken Automotive Trim Co., Ltd. Cubic (Tianjin) Printing Co., Ltd Chongqing Zhengze Automotive Componet Co., Ltd	Investee companies at fair value through other comprehensive income 〞 〞 〞	Non-current financial assets at fair value through other comprehensive income 〞 〞 〞	2,414,400 - - 1,886,637	11,543 7,799 - 94,257	7.27% 10.00% 10.00% 1.15%	11,543 7,799 - 94,257

Note 1: If the relevant numbers in this table involve a foreign currency, it shall be converted into NTD at the exchange rate prevailing on the balance sheet date. If it is an item under the assets and liabilities account, it shall be converted at the spot exchange rate; if it is an item under the profit or loss account, it shall be converted at the average exchange rate.

Note 2: The fair values of non-TWSE or TPEx listed companies were estimated with the comparable listed company method and the net asset value approach.

• (d) Marketable securities acquired or sold at costs or prices at least nt$300 million or 20% of the paid-in capital: None. (e) Acquisition of individual property at costs of at least NT$300 million or 20% of the paid-in capital: None. (f) Disposal of individual property at costs of at least NT$300 million or 20% of the paid-in capital: None.

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(g) Total purchases from or sales to related parties amounting to at least NT$100 million or 20% of the paid-in capital:

Company Name	Related Party	Nature of Relationship	Transaction Details	Transaction Details	Transaction Details	Transaction Details	Abnormal Transaction	Abnormal Transaction	Notes/Accounts Payable or Receivable	Notes/Accounts Payable or Receivable	Note
			Purchase/ Sale	Amount	% to Total	Payment Terms	Unit Price (Note 2)	Payment Terms	Ending Balance	% to Total
Lofty Group 〃 Dongguang Hirosawa 〃 〃 〃 Wuhan Hiroyoshi Hunan Hiroyoshi Xianyang Hiroyoshi HIROSAWA USA	HIROSAWA USA Dongguang Hirosawa Lofty Group Xianyang Hiroyoshi Hunan Hiroyoshi Wuhan Hiroyoshi Dongguang Hirosawa Dongguang Hirosawa Dongguang Hirosawa Lofty Group	Parent and subsidiary company Parent and subsidiary company Parent and subsidiary company Parent and subsidiary company Parent and subsidiary company Parent and subsidiary company Parent and subsidiary company Parent and subsidiary company Parent and subsidiary company Parent and subsidiary company	Sales Purchases Sales Purchases Purchases Purchases Sales Sales Sales Purchases	(567,997) 485,959 (485,959) 115,427 124,515 347,101 (347,101) (124,515) (115,427) 567,997	68.19% 82.92% 15.54% 6.02% 6.79% 18.47% 45.56% 42.25% 40.94% 98.98%	O/A 120 days O/A 90 days O/A 90 days O/A 60 days O/A 60 days O/A 90days O/A 90 days O/A 90 days O/A 60 days O/A 120 days	- - - - - - - - - -	- - - - - -	117,075 (305,056) 305,056 (40,573) (71,385) (214,913) 214,913 71,385 40,573 (117,075)	53.22% 93.72% 27.99% 5.63% 9.83% 29.81% 57.58% 54.65% 53.10% 99.43%

Note1:The transactions related to the consolidated entities listed above have been eliminated when the consolidated financial statements were prepared. Note2:There is not comparable transaction counterparty available for the Group’s sales to and purchases from related parties. Note2:If the relevant numbers in this table involve a foreign currency, it shall be converted into NTD at the exchange rate prevailing on the balance sheet date. If it is an item under the assets and liabilities account, it shall be converted at the spot exchange rate; if it is an item under the profit or loss account, it shall be converted at the average exchange rate.

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• (h) Receivables from related parties amounting to at least NT$100 million or 20% of the paid-in capital:

					Unit: NT$ thousand	Unit: NT$ thousand	Unit: NT$ thousand	Unit: NT$ thousand
Company Name	Related Party	Relationship	Ending Balance	Turnover Rate (Note 3)	Overdue		Amount Received in Subsequent Period	Allowance for Impairment Loss
					Amount	Actions Taken
Lofty Group Dongguang Hirosawa Wuhan Hiroyoshi	HIROSAWA USA Lofty Group Dongguang Hirosawa	Parent and subsidiary company Parent and subsidiary company Parent and subsidiary company	117,075 305,056 214,913	3.97 1.25 2.09	- - -	Pay at sight Pay at sight Pay at sight	- 132,459 -	- - -

• Note 1: The transactions related to the consolidated entities listed above have been eliminated when the consolidated financial statements were prepared.

• Note 2: If the relevant numbers in this table involve a foreign currency, it shall be converted into NTD at the exchange rate prevailing on the balance sheet date. If it is an item under the assets and liabilities account, it shall be converted at the spot exchange rate; if it is an item under the profit or loss account, it shall be converted at the average exchange rate.

Note 3: Other receivables were not included in the calculation of the turnover.

(i) Derivatives Trading: None.

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(j) Business relations and important transactions between parent company and subsidiaries:

No.	Investee Company	Counterparty	Relationship	Transaction Details	Transaction Details	Transaction Details	Transaction Details
				Financial Statement Account	Amount	Payment Terms	% of Total Sales or Assets
1 1 1 1 1 1 2 2 2 2 2 2 3 3 3 3 5 5 6 6	Lofty Group 〞 〞 〞 〞 〞 Dongguan Hirosawa 〞 〞 〞 〞 〞 〞 〞 Wuhan Hiroyoshi 〞 〞 〞 Xianyang Hiroyoshi 〞 Hunan Hiroyoshi 〞	Dongguan Hirosawa Hirosawa USA 〞 Hirotai Mexico 〞 Hirotai Investment Hiroca Automotive Lofty Group 〞 Kaifeng Hiroyoshi Wuhan Hiroyoshi Xianyang Hiroyoshi 〞 〞 Hunan Hiroyoshi Dongguan Hirosawa 〞 Lofty Group 〞 Dongguan Hirosawa 〞 Dongguan Hirosawa 〞	3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3	Operating revenue, net Operating revenue, net Accounts receivable Operating revenue, net Accounts receivable Other current financial assets Other current financial assets Operating revenue, net Accounts receivable Operating revenue, net Other current financial assets Operating revenue, net Accounts receivable Other current financial assets Other current financial assets Operating revenue, net Accounts receivable Operating revenue, net Accounts receivable Operating revenue, net Accounts receivable Operating revenue, net Accounts receivable	13,603 567,997 117,075 27,729 24,182 60,598 133,326 485,959 305,056 14,355 67,170 15,618 19,227 10,154 43,139 347,101 214,913 68,987 16,221 115,427 40,573 124,515 71,385	No other transaction counterparts can be compared 〞 〞 〞 〞 〞 〞 〞 〞 〞 〞 〞 〞 〞 〞 〞 〞 〞 〞 〞 〞 〞 〞	0.27% 11.16% 1.10% 0.55% 0.23% 0.57% 1.25% 9.55% 2.86% 0.28% 0.63% 0.31% 0.18% 0.10% 0.40% 6.82% 2.02% 1.36% 0.15% 2.27% 0.38% 2.45% 0.67%

Note 1: The method of filling in the Code column is as follows:

1. The parent company is coded “0”.

2. The subsidiaries are coded sequentially beginning from “1” in the order presented in the table above. Note 2: The types of relations with the counterparty are indicated as follows:

3. Parent company to subsidiary

4. Subsidiary to parent company

5. Between subsidiaries

Note 3: If the transaction amount as a percentage of the consolidated total revenue or total assets was under the assets and liabilities account, it was calculated with the ending balance as a percentage of the total assets; if it was under the profit and loss account, it was calculated with the cumulative amount during the period as a percentage of the consolidated total revenue.

• Note 4: If a transaction amount does not reach NT$10,000 thousand, it will not be disclosed. Of the sales and purchases and accounts receivable and payables, only the amounts of sales and accounts receivable written off are disclosed.

• Note 5: If the relevant numbers in this table involve a foreign currency, it shall be converted into NTD at the exchange rate prevailing on the balance sheet date. If it is an item under the assets and liabilities account, it shall be converted at the spot exchange rate; if it is an item under the profit or loss account, it shall be converted at the average exchange rate.

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(2) Information on investees The information on the Group’s investees for the year ended December 31, 2023 is as follows (excluding investees in China):

Investor Company	Investee Company	Location	Main Businesses and Products	Original Investment Amount	Original Investment Amount	As of December 31, 2021	As of December 31, 2021	As of December 31, 2021	Net Income (Loss) of the Investee	Share of Profit (Loss)	Note
				December 31, 2024	December 31, 2023	Number of Stock (Shares)	%	Carrying Value
The Company 〃 Hiroca Taiwan 〃 Lofty Group 〃 〃 〃 〃 〃 〃 Hiroyuki Investment Hirotai Investment Smart Scene	Lofty Group Hiroca Taiwan Hsin Shi Technology Co., Ltd HS Automotive Trim Co., Ltd Hiroca Investment Hirogen International Hiroyoshi Investment Yoshisawa Investment Hiroyuki Investmen Hirotai Investment Smart Scene WIN INC. HIROTAI AUTOMOTI VE TRIM SA DE CV HIROSAWA AUTOMOTI VE TRIM USA CO.	Samoa Taiwan Taiwan Korea Samoa 〃 〃 〃 〃 〃 〃 Cayman Mexico USA	International trade business and general investment business R&D and sales of automotive trim parts; Production and sales of automotive trim parts General investment business 〃 〃 〃 〃 〃 〃 International trade business and general investment business Manufacturing and sales business Sales business	2,958,123 234,588 104,000 3,381 - 75,859 932,017 25,497 91,469 875,992 4,478 90,530 1,190,049 31	2,958,123 234,588 104,000 - 44,940 75,859 932,017 25,497 91,469 875,992 4,478 90,530 1,190,049 31	38,285,716 16,335,367 5,160,000 30,600 - 19,414,080 32,500,000 880,000 3,309,477 29,475,000 500,000 25,480 739,627,198 60,000	100.00% 100.00% 30.00% 51.00% - % 79.00% 100.00% 100.00% 100.00% 68.55% 100.00% 49.00% 100.00% 100.00%	6,363,619 74,711 103,802 3,318 - 1,126 759,805 7,643 34,476 718,504 59,667 33,912 1,109,035 74,802	(65,089) (73,217) 183 (132) (7,459) (10) 31,502 (33) (3,915) 156,493 (34,312) (7,941) 170,363 (34,280)	(65,089) (73,217) (198) (67) (7,459) (8) 31,502 (33) (3,915) 107,271 (34,312) (3,891) 170,363 (34,280)	Note1 〃 Note3 〃 Note4 Note1 〃 〃 〃 〃 〃 Note1 〃 〃

Note 1: The transactions related to the consolidated entities listed above have been eliminated when the consolidated financial statements were prepared.

Note 2: If the relevant numbers in this table involve a foreign currency, it shall be converted into NTD at the exchange rate prevailing on the balance sheet date. If it is an item under the assets and liabilities account, it shall be converted at the spot exchange rate; if it is an item under the profit or loss account, it shall be converted at the average exchange rate. Note 3: The difference is the amortization of the difference between investment cost and fair value of identifiable net assets Note 4: Hiroca Investment Co., Ltd. completed the liquidation process in October 2024.

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(3) Information on investments in mainland China:

(a) Information on investees in mainland China:

Investee Company	Main Businesses and Products	Paid-in Capital	Method of Investment (Note 1)	Accumulated Outward Remittance for Investment from Taiwan as of 2023.01.01	Remittance of Funds	Remittance of Funds	Accumulated Outward Remittance for Investment from Taiwan as of 2023.12.31	Net Income (Loss) of the Investee	% Ownership of Direct or Indirect Investmen	Investment Gain (Loss) (Note 2)	Carrying Amount as of 2023.12.31	Accumulated Repatriation of Investment Income as of 2023.12.31
					Outflow	Inflow
Dongguan Hirosawa	Production and sales of automotive trim parts, electronic plastic parts, and polypropylene corrugated boxes; road freight; wholesale and import and export of molds, jigs, fixtures, and inspection tools	698,661	2	0	0	0	0	(194,875)	100.00%	(189,617)	5,094,131	0
Dongguan Taica Hirosawa(Note6)	Production and sales of various types of automotive interiors and exterior trim parts, computer parts, small home appliance parts, buildingmaterialparts	-	2	0	0	0	0	(35,260)	35.00%	(7,381)	-	0
Wuhan Hiroyushi	Production and sales of automotive trim parts, electronic plastic parts, and polypropylene corrugated boxes; road freight; wholesale and import and export of molds, jigs, fixtures, and inspection tools	854,744	2	0	0	0	0	33,596	100.00%	33,596	750,179	0
Dongguan Mono(Note7)	Production and sales of automotive trim parts	94,972	2	0	0	0	0	2,928	49.00%	1,435	41,330	0
Kaifeng Hiroyushi	Production and sales of automotive trim parts	313,460	2	0	0	0	0	(19,129)	100.00%	(19,129)	487,123	0
Hunan Hiroyushi	Production and sales of automotive trim parts	335,850	2	0	0	0	0	20,137	100.00%	20,137	282,725	0
Dongguan Guangneng	Production and sales of automotive trim parts	22,390	2	0	0	0	0	(6,261)	100.00%	(6,261)	18,565	0
Xianyang Hiroyushi	Production and sales of automotive trim parts	223,900	2	0	0	0	0	9,501	100.00%	9,501	529,211	0
Dongguan Hiroca Technology	R&D and sales of automotive trim parts; auto parts design, development, technical consultation,and technical services	44,780	2	0	0	0	0	7,199	100.00%	7,199	73,708	0
Losang-Hirosawa	Production and sales of plastic and metal molds and provision of design and development and technical consultation services.	22,299	2	0	0	0	0	(18,529)	30.12%	(5,581)	2,128	0
Dongguan Karyu	Production and sales of automotive trim parts	55,975	2	0	0	0	0	(1,691)	51.00%	(862)	13,288	0
Suzhou Hiroyuki	Production and sales of automotive trim parts	427,883	2	0	0	0	0	(15,308)	51.00%	(7,807)	184,970	0

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(b) Limit of investment in investees in mainland China:

==> picture [423 x 89] intentionally omitted <==

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

Cumulative outward remittances Investment amount Limit of the investment
Name of
for investment from Taiwan to approved by the amount stipulated by
company mainland China as of the end of Investment Commission, Investment Commission,
this period (Note 4) MOEA (Note 4) MOEA (Note 4)
- - - -
----- End of picture text -----

Note 1:Investment methods are divided into the three types below, just indicate the type:

• (I) Direct investment in mainland China.

• (II) Indirect investment in mainland China through a third-region company

• (III)Other methods.

• Note 2:The investment profits or losses recognized for this period is based on:

• (I) If it is under preparation, there is no investment profit or loss.

• (II) The basis of recognizing investment profits or losses is divided into the three types below

  • (1) Financial statements audited by an international accounting firm with a partnership with an accounting firm in the Republic of China.

  • (2) Financial statements audited by a CPA appointed by the parent company in Taiwan.

  • (3) Others - financial statements reviewed by a CPA appointed by the parent company in Taiwan or prepared by the company itself.

• Note 3:The transactions related to the consolidated entities listed above have been eliminated when the consolidated financial statements were prepared.

• Note 4:The Company is an overseas company and therefore is not subject to the limit specified in the Principles for the Review of Investment or Technical Cooperation in Mainland China.

• Note 5:If the relevant numbers in this table involve a foreign currency, it shall be converted into NTD at the exchange rate prevailing on the balance sheet date. If it is an item under the assets and liabilities account, it shall be converted at the spot exchange rate; if it is an item under the profit or loss account, it shall be converted at the average exchange rate.

• Note 6: Liquidation during this period, please refer to Note 6 (6) for details.

Note 7: Formerly known as Changshu Mono Hirosawa Automotive Trim Co., Ltd.

(c) Information on significant transactions

Please refer to “Business relations and important transactions between parent company and subsidiaries for the direct or indirect significant transactions between the Group and the investees in China in 2024 which have been eliminated when the consolidated statements were prepared).

• (4) Information on major shareholders

Information on major shareholders
Shares Name of Major Shareholder	Number of Shares	Percentage of Ownership (%)
Yu,Che-Ming	14,066,847	16.77%

Note: The major shareholders in this table are shareholders each holding 5% or more of the Company’s ordinary and preference shares with registration of dematerialized securities completed (including treasury shares) on the last business day of each quarter calculated by the Taiwan Depository & Clearing Corporation. Share capital indicated in the Company's financial statements may differ from the actual number of shares that have been issued and delivered with registration of dematerialized securities completed as a result of different bases of preparation.

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14. Information on Segments

A. Product and service information

Revenue from external customers of the Group was as follows:

Product and service Automotive spare parts Others Total	2024 $ 4,852,980 234,645	2023 5,634,695 126,593
	$ 5,087,625	5,761,288

B. Geographic information

In presenting information on the basis of geography, segment revenue is based on the geographical location of customers and segment assets are based on the geographical location of the assets.

Geographical information Revenue from external customers was as follows: Mainland China American Others Total Geographical information Non-current assets: Mainland China Mexico Taiwan Others Total	2024 $ 3,540,084 877,186 670,355	2023 4,037,676 1,096,473 627,139
	$ 5,087,625	5,761,288
	December,31 2024	December,31 2023
	$ 3,700,611 560,947 178,216 23,749	3,935,570 612,392 16,392 30,896
	$ 4,463,523	4,595,840

Non-current assets include real property, plant and equipment, right-of-use assets, intangible assets and other assets, but exclude non-current assets of financial instruments and deferred tax assets.

C. Major customers (constituted 10% or more of revenue)

Major customers (constituted 10% or more of revenue)
A Group B Group	2024 $ 1,007,635 830,582	2023
		1,026,380 1,002,982

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