KMC (KUEI MENG) International Inc. and Subsidiaries

Consolidated Financial Statements for the Years Ended December 31, 2025 and 2024 and Independent Auditors' Report

DECLARATION OF CONSOLIDATION OF FINANCIAL STATEMENTS OF AFFILIATES

The companies required to be included in the consolidated financial statements of affiliates in accordance with the "Criteria Governing Preparation of Affiliation Reports, Consolidated Business Reports and Consolidated Financial Statements of Affiliated Enterprises" for the year ended December 31, 2025 are all the same as the companies required to be included in the consolidated financial statements of parent and subsidiary companies as provided in International Financial Reporting Standard 10 "Consolidated Financial Statements". Relevant information that should be disclosed in the consolidated financial statements of affiliates has all been disclosed in the consolidated financial statements of parent and subsidiary companies. Hence, we do not prepare a separate set of consolidated financial statements of affiliates.

Very truly yours,

KMC (KUEI MENG) INTERNATIONAL INC.

YING-CHIN WU
Chairman
March 12, 2026

Deloitte.

勤業眾信

勤業眾信聯合會計師事務所

110421 台北市信義區松仁路100號20樓

Deloitte & Touche

20F, Taipei Nan Shan Plaza

No. 100, Songren Rd.,

Xinyi Dist., Taipei 110421, Taiwan

Tel: +886 (2) 2725-9988

Fax: +886 (2) 4051-6888

www.deloitte.com.tw

INDEPENDENT AUDITORS' REPORT

The Board of Directors and Shareholders
KMC (KUEI MENG) International Inc.

Opinion

We have audited the accompanying consolidated financial statements of KMC (KUEI MENG) International Inc. and its subsidiaries (collectively, the "Group"), which comprise the consolidated balance sheets as of December 31, 2025 and 2024, and the consolidated statements of comprehensive income, changes in equity and cash flows for the years then ended, and the notes to the consolidated financial statements, including material accounting policies information.

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, 2025 and 2024, 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 International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), IFRIC Interpretations (IFRIC), and SIC Interpretations (SIC) endorsed and issued into effect by the Financial Supervisory Commission (FSC) of the Republic of China.

Basis for Opinion

We conducted our audits in accordance with the Regulations Governing Financial Statement Audit and Attestation Engagements of Certified Public Accountants and the Standards on Auditing of the Republic of China. Our responsibilities under those standards are further described in the Auditors' Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Group in accordance with The Norm of Professional Ethics for Certified Public Accountant of the Republic of China, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements for the year ended December 31, 2025. 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.

The description of the key audit matter of the Group’s consolidated financial statements for the year ended December 31, 2025 is as follows:

Revenue recognition

The Group sells its products in Asia, the Americas and Europe. Sales revenue is significant to the consolidated financial statements and is a presumed risk account under the Regulations Governing Auditing and Attestation of Financial Statements; thus, we deemed the validity and occurrence of sales to specific customers whose operating revenue showed significant variance from last year to be a key audit matter.

The main audit procedures we performed in response to the key audit matter described above were as follows:

We understood and tested the operating effectiveness of internal controls and operation procedures in sales and payment collection cycle.
We selected a moderate number of samples from sales revenue and inspected the delivery documents or documents of customs, and relevant documents of collections to tested the occurrence of sales.

Other Matter

We have also audited the parent company only financial statements of KMC (KUEI MENG) International Inc. as of and for the years ended December 31, 2025 and 2024 on which we have issued an unmodified opinion.

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 IFRS, IAS, IFRIC, and SIC endorsed and issued into effect by the FSC 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 the audit committee, are responsible for overseeing the Group’s financial reporting process.

Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements

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

As part of an audit in accordance with the Standards of Auditing of the Republic of China, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group's internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors' report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors' report. However, future events or conditions may cause the Group to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
Obtain sufficient and appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision, and performance of the group audit. We remain solely responsible for our audit opinion.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

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

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements for the year ended December 31, 2025 and are therefore the key audit matters. We describe these matters in our auditors' report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

The engagement partners on the audits resulting in this independent auditors’ report are Hong-Ju Liao and Chi-Chen Lee.

Deloitte & Touche
Taipei, Taiwan
Republic of China

March 27, 2026

Notice to Readers

The accompanying consolidated financial statements are intended only to present the consolidated financial position, financial performance and cash flows in accordance with accounting principles and practices generally accepted in the Republic of China and not those of any other jurisdictions. The standards, procedures and practices to audit such consolidated financial statements are those generally accepted and applied in the Republic of China.

For the convenience of readers, the auditors’ report and the accompanying consolidated financial statements have been translated into English from the original Chinese version prepared and used in the Republic of China. If there is any conflict between the English version and the original Chinese version or any difference in the interpretation of the two versions, the Chinese-language independent auditors’ report and consolidated financial statements shall prevail.

KMC (KUEI MENG) INTERNATIONAL INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

DECEMBER 31, 2025 AND 2024

(In Thousands of New Taiwan Dollars)

	December 31, 2025		December 31, 2024
ASSETS	Amount	%	Amount	%
CURRENT ASSETS
Cash and cash equivalents (Notes 4 and 6)	$ 2,149,128	16	$ 2,253,257	17
Financial assets at fair value through profit or loss - current (Notes 4, 7 and 20)	-	-	100	-
Financial assets at amortized cost - current (Notes 4 and 8)	1,424,560	10	1,781,837	14
Notes receivable (Notes 4, 9 and 28)	40,660	-	65,214	1
Accounts receivable (Notes 4, 9 and 28)	676,508	5	768,589	6
Accounts receivable from related parties (Notes 4, 9, 28 and 34)	43,386	-	59,318	-
Other receivables (Note 4)	66,276	1	39,139	-
Other receivables of related parties (Note 34)	19,197	-	10,044	-
Current tax assets (Note 30)	1,867	-	1,197	-
Inventories (Notes 4 and 10)	1,249,066	9	1,108,632	8
Prepayments (Note 12)	115,785	1	116,578	1
Other current assets (Notes 4 and 12)	58,774	-	53,474	-
Total current assets	5,845,207	42	6,257,379	47
NON-CURRENT ASSETS
Financial assets at amortized cost - non-current (Notes 4 and 8)	1,798,400	13	761,260	6
Investments accounted for using equity method (Notes 4 and 13)	13,093	-	13,980	-
Property, plant and equipment (Notes 4, 14 and 34)	3,561,772	26	3,496,597	26
Right-of-use assets (Notes 4 and 15)	759,764	5	787,622	6
Investment properties (Notes 4 and 16)	86,818	1	191,803	2
Goodwill (Notes 4 and 18)	1,341,237	10	1,341,078	10
Other intangible assets (Notes 4 and 19)	116,244	1	132,977	1
Deferred tax assets (Notes 4 and 30)	209,763	1	148,584	1
Other financial assets - non-current (Notes 4 and 11)	1,869	-	1,869	-
Other non-current assets (Notes 4 and 12)	113,945	1	101,763	1
Total non-current assets	8,002,905	58	6,977,533	53
TOTAL	$ 13,848,112	100	$ 13,234,912	100
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Short-term borrowings (Notes 4 and 21)	$ 1,017,028	7	$ 1,405,000	10
Short-term bills payable (Notes 4 and 21)	-	-	99,875	1
Contract liabilities - current (Note 28)	21,908	-	36,685	-
Notes payable (Note 22)	944	-	944	-
Accounts payable (Note 22)	194,762	2	282,255	2
Accounts payable to related parties (Notes 22 and 34)	25,985	-	29,490	-
Dividends payable (Note 27)	238,888	2	349,359	3
Other payables (Note 23)	255,274	2	261,186	2
Current tax liabilities (Notes 4 and 30)	347,055	3	107,141	1
Lease liabilities - current (Notes 4, 15 and 34)	2,582	-	4,248	-
Corporate bonds which mature or for which reverse purchase is exercised within one year (Notes 4 and 20)	985,628	7	-	-
Long-term borrowings due within one year (Notes 4 and 21)	39,875	-	265,402	2
Other current liabilities (Note 23)	2,619	-	244,799	2
Total current liabilities	3,132,548	23	3,086,384	23
NON-CURRENT LIABILITIES
Bonds Payable (Notes 4 and 20)	-	-	969,153	7
Long-term borrowings (Notes 4 and 21)	1,031,171	8	361,249	3
Provisions - non-current (Note 24)	6,531	-	6,163	-
Deferred tax liabilities (Notes 4 and 30)	434,722	3	440,877	4
Lease liabilities - non-current (Notes 4, 15 and 34)	2,110	-	3,664	-
Deferred revenue - non-current (Notes 4, 21 and 25)	125	-	2,851	-
Net defined benefit liabilities - non-current (Notes 4 and 26)	37,122	-	37,959	-
Other non-current liabilities (Note 23)	317,281	2	4,554	-
Total non-current liabilities	1,829,062	13	1,826,470	14
Total liabilities	4,961,610	36	4,912,854	37
EQUITY ATTRIBUTABLE TO OWNERS OF THE COMPANY (Note 27)
Capital stock - common stock	1,260,008	9	1,260,008	9
Capital surplus	1,760,303	13	1,760,303	13
Retained earnings
Legal reserve	1,339,645	10	1,242,489	9
Special reserve	859,445	6	361,280	3
Unappropriated earnings	4,051,059	29	4,156,854	32
Total retained earnings	6,250,149	45	5,760,623	44
Other equity	(383,928)	(3)	(458,922)	(3)
Total equity attributable to owners of the Company	8,886,532	64	8,322,012	63
NON - CONTROLLING INTERESTS (Note 27)	(30)	-	46	-
Total equity	8,886,502	64	8,322,058	63
TOTAL	$ 13,848,112	100	$ 13,234,912	100

The accompanying notes are an integral part of the consolidated financial statements.

KMC (KUEI MENG) INTERNATIONAL INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024
(In Thousands of New Taiwan Dollars, Except Earnings Per Share)

	2025		2024
	Amount	%	Amount	%
OPERATING REVENUE (Notes 4, 28, 34 and 38)	$ 4,677,894	100	$ 4,959,816	100
OPERATING COSTS (Notes 10 and 29)	2,609,095	56	2,886,557	58
GROSS PROFIT	2,068,799	44	2,073,259	42
OPERATING EXPENSES (Notes 9, 29 and 34)
Selling and marketing expenses	473,644	10	427,376	9
General and administrative expenses	519,703	11	515,227	10
Research and development expenses	51,489	1	41,686	1
Expected credit loss (gain)	(6,077)	-	6,953	-
Total operating expenses	1,038,759	22	991,242	20
OTHER OPERATING INCOME AND EXPENSES
(Note 29)	(5,916)	-	(3,374)	-
PROFIT FROM OPERATIONS	1,024,124	22	1,078,643	22
NON-OPERATING INCOME AND EXPENSES
(Notes 4, 7, 13, 20, 23, 25, 29 and 34)
Interest income	101,519	2	93,576	2
Other income	49,738	1	80,133	1
Other gains and losses	179,208	4	(4,146)	-
Share of profit of associates	352	-	1,377	-
Finance cost	(60,215)	(1)	(53,574)	(1)
Total non-operating income and expenses	270,602	6	117,366	2
PROFIT BEFORE INCOME TAX	1,294,726	28	1,196,009	24
INCOME TAX EXPENSE (Notes 4 and 30)	329,776	7	279,501	6
NET PROFIT	964,950	21	916,508	18
OTHER COMPREHENSIVE INCOME (LOSS)
Items that will not be reclassified subsequently to profit or loss:
Remeasurement of defined benefit plans (Note 26)	929	-	(749)	-
Income tax expense relating to items that will not be reclassified subsequently to profit or loss (Note 30)	(186)	-	150	-
	743	-	(599)	-
			(Continued)

KMC (KUEI MENG) INTERNATIONAL INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024

(In Thousands of New Taiwan Dollars, Except Earnings Per Share)

	2025		2024
	Amount	%	Amount	%
Items that may be reclassified subsequently to profit or loss:
Exchange differences on translating foreign operations (Note 27)	$ 74,991	1	$ 280,195	6
Other comprehensive income (loss) for the year, net of income tax	75,734	1	279,596	6
TOTAL COMPREHENSIVE INCOME FOR THE YEAR	$ 1,040,684	22	$ 1,196,104	24
NET PROFIT (LOSS) ATTRIBUTABLE TO:
Owners of the Company	$ 965,023	21	$ 916,561	18
Non-controlling interests	(73)	-	(53)	-
	$ 964,950	21	$ 916,508	18
TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE TO:
Owners of the Company	$ 1,040,760	22	$ 1,196,156	24
Non-controlling interests	(76)	-	(52)	-
	$ 1,040,684	22	$ 1,196,104	24
EARNINGS PER SHARE (Note 31)
Basic	$ 7.66		$ 7.27
Diluted	$ 7.32		$ 6.97

The accompanying notes are an integral part of the consolidated financial statements.

(Concluded)

KMC (KUEI MENG) INTERNATIONAL INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024

(In Thousands of New Taiwan Dollars)

	Equity Attributable to Owners of the Company
	Retained Earnings					Other Equity		Non-controlling Interests	Total Equity
	Capital Stock	Capital Surplus	Legal Reserve	Special Reserve	Unappropriated Earnings	Exchange Differences on Translation of the Financial Statements of Foreign Operations	Total
BALANCE, JANUARY 1, 2024	$ 1,260,000	$ 1,760,215	$ 1,157,020	$ 596,364	$ 3,605,145	$ (739,116)	$ 7,639,628	$ 98	$ 7,639,726
Appropriation of earnings (Note 27)
Legal reserve	-	-	85,469	-	(85,469)	-	-	-	-
Special reserve	-	-	-	(235,084)	235,084	-	-	-	-
Cash dividends distributed by the Company	-	-	-	-	(513,868)	-	(513,868)	-	(513,868)
Net profit (loss) for the year ended December 31, 2024	-	-	-	-	916,561	-	916,561	(53)	916,508
Other comprehensive income for the year ended December 31, 2024, net of income tax	-	-	-	-	(599)	280,194	279,595	1	279,596
Total comprehensive income (loss) for the year ended December 31, 2024	-	-	-	-	915,962	280,194	1,196,156	(52)	1,196,104
Conversion of corporate bonds to common stock (Notes 20 and 27)	8	88	-	-	-	-	96	-	96
BALANCE, DECEMBER 31, 2024	1,260,008	1,760,303	1,242,489	361,280	4,156,854	(458,922)	8,322,012	46	8,322,058
Appropriation of earnings (Note 27)
Legal reserve	-	-	97,156	-	(97,156)	-	-	-	-
Special reserve	-	-	-	498,165	(498,165)	-	-	-	-
Cash dividends distributed by the Company	-	-	-	-	(476,240)	-	(476,240)	-	(476,240)
Net profit (loss) for the year ended December 31, 2025	-	-	-	-	965,023	-	965,023	(73)	964,950
Other comprehensive income (loss) for the year ended December 31, 2025, net of income tax	-	-	-	-	743	74,994	75,737	(3)	75,734
Total comprehensive income (loss) for the year ended December 31, 2025	-	-	-	-	965,766	74,994	1,040,760	(76)	1,040,684
BALANCE, DECEMBER 31, 2025	$ 1,260,008	$ 1,760,303	$ 1,339,645	$ 859,445	$ 4,051,059	$ (383,928)	$ 8,886,532	$ (30)	$ 8,886,502

The accompanying notes are an integral part of the consolidated financial statements.

KMC (KUEI MENG) INTERNATIONAL INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024

(In Thousands of New Taiwan Dollars)

	2025	2024
CASH FLOWS FROM OPERATING ACTIVITIES
Income before income tax	$ 1,294,726	$ 1,196,009
Adjustments for:
Depreciation expenses	329,786	363,687
Amortization expenses	22,609	26,292
Expected credit (gain) loss recognized on accounts receivable	(6,077)	6,953
Finance costs	60,215	53,574
Interest income	(101,519)	(93,576)
Share of profit of associates	(352)	(1,377)
Loss on disposal of property, plant and equipment	5,916	3,374
Gain on disposal of investment property	(237,901)	-
Write-down of inventories	-	33,529
Unrealized (gain) loss on foreign currency exchange	(12,723)	267
Provision for liabilities	368	2,821
Changes in operating assets and liabilities
Financial assets mandatorily classified as at fair value through profit or loss	100	100
Notes receivable	24,554	32,144
Accounts receivable	101,947	(106,450)
Accounts receivable from related parties	23,959	(16,045)
Other receivables (including related parties)	2,314	(17,236)
Inventories	(140,331)	(132,430)
Prepayments	793	3,221
Other current assets	(5,300)	(18,067)
Other non-current assets	12,310	3,990
Contract liabilities	(14,777)	14,430
Accounts payable	(85,874)	64,441
Accounts payable to related parties	(16,948)	6,288
Other payables	(6,299)	46,006
Deferred revenue	(2,726)	(2,966)
Other current liabilities	(242,180)	240,585
Net defined benefit liability	92	489
Other non-current liabilities	314,645	-
Cash generated from operations	1,321,327	1,710,053
Income tax paid	(157,343)	(395,464)
Net cash generated from operating activities	1,163,984	1,314,589
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of financial assets at amortized cost	(679,863)	(1,821,789)
Acquisition of property, plant and equipment	(349,915)	(340,327)
Proceeds from disposal of property, plant and equipment	18,256	9,218
Proceeds from disposal of investment properties	337,589	-
Increase in refundable deposits	(989)	(1,545)
Decrease in refundable deposits	1,460	223
		(Continued)

10 -

KMC (KUEI MENG) INTERNATIONAL INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024

(In Thousands of New Taiwan Dollars)

	2025	2024
Acquisition of intangible assets	$ (4,651)	$ (2,089)
Increase in other non-current assets	(13,952)	(674)
Increase in prepayments for equipment	(10,966)	(24,070)
Interest received	64,099	78,791
Net cash used in investing activities	(638,932)	(2,102,262)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from short-term borrowings	10,289,600	9,697,000
Repayments of short-term borrowings	(10,680,847)	(9,473,771)
Proceeds from short-term bills payable	500,000	500,000
Repayments of short-term bills payable	(601,413)	(501,119)
Proceeds from long-term borrowings	2,213,912	1,187,916
Repayments of long-term borrowings	(1,770,516)	(1,348,848)
Proceeds from guarantee deposits received	903	-
Refund of guarantee deposits received	(2,730)	(20)
Repayment of the principal portion of lease liabilities	(4,554)	(10,023)
Cash dividends	(586,711)	(390,049)
Interest paid	(41,728)	(36,101)
Net cash used in financing activities	(684,084)	(375,015)
EFFECTS OF EXCHANGE RATE CHANGES ON THE BALANCE OF CASH AND CASH EQUIVALENTS HELD IN FOREIGN CURRENCIES	54,903	148,865
NET DECREASE IN CASH AND CASH EQUIVALENTS	(104,129)	(1,013,823)
CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR	2,253,257	3,267,080
CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR	$ 2,149,128	$ 2,253,257

The accompanying notes are an integral part of the consolidated financial statements. (Concluded)

KMC (KUEI MENG) INTERNATIONAL INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

1. GENERAL INFORMATION

KMC (KUEI MENG) International Inc. (the "Company") was incorporated in April 1989 under the laws of the Republic of China (ROC). The Company mainly manufactures and sells various types of chains, motorcycle components and vehicle components.

The Company's shares had been publicly offered since August 1993 and have been listed and traded on the Taipei Exchange (TPEx) since December 1995. On March 8, 2022, the Company's shares were listed on the Taiwan Stock Exchange.

The consolidated financial statements of the Company and its subsidiaries (referred to collectively as the "Group") are presented in the Company's functional currency, New Taiwan dollar.

2. APPROVAL OF FINANCIAL STATEMENTS

The Company's board of directors approved the consolidated financial statements for issue on March 12, 2026.

3. APPLICATION OF NEW, AMENDED AND REVISED STANDARDS AND INTERPRETATIONS

a. Initial application of the amendments to the International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), IFRIC Interpretations (IFRIC), and SIC Interpretations (SIC) (collectively, the "IFRS Accounting Standards") endorsed and issued into effect by the Financial Supervisory Commission (FSC)

The initial application of the amendments to the IFRS Accounting Standards endorsed and issued into effect by the FSC did not have any material impact on the Group's accounting policies.

b. The IFRS Accounting Standards endorsed by the FSC for application starting from 2026

New, Amended and Revised Standards and Interpretations	Effective Date Announced by IASB
Amendments to IFRS 9 and IFRS 7 “Amendments to the Classification and Measurement of Financial Instruments”	January 1, 2026
Amendments to IFRS 9 and IFRS 7 “Contracts Referencing Nature-dependent Electricity”	January 1, 2026
Annual Improvements to IFRS Accounting Standards - Volume 11	January 1, 2026
IFRS 17 “Insurance Contracts” (including the 2020 and 2021 amendments to IFRS 17)	January 1, 2023

As of the date the consolidated financial statements were authorized for issue, the Group has assessed that the application of the above standards and interpretations will not have a material impact on the Group's financial position and financial performance.

c. The IFRS Accounting Standards in issue but not yet endorsed and issued into effect by the FSC

New, Amended and Revised Standards and Interpretations	Effective Date Announced by IASB (Note 1)
Amendments to IFRS 10 and IAS 28 “Sale or Contribution of Assets between an Investor and its Associate or Joint Venture”	To be determined by IASB
IFRS 18 “Presentation and Disclosure in Financial Statements”	January 1, 2027 (Note 2)
IFRS 19 “Subsidiaries without Public Accountability: Disclosures” (including the 2025 amendments to IFRS 19)	January 1, 2027
Amendments to IAS 21 “Translation to a Hyperinflationary Presentation Currency”	January 1, 2027

Note 1: Unless stated otherwise, the above IFRS Accounting Standards are effective for annual reporting periods beginning on or after their respective effective dates.

Note 2: On September 25, 2025, the FSC announced that IFRS 18 will take effect starting from January 1, 2028. Domestic entities could elect to apply IFRS 18 for an earlier period after the endorsement of IFRS 18 by the FSC.

IFRS18 “Presentation and Disclosure of Financial Statements” and consequential amendments

IFRS 18 will supersede IAS 1 "Presentation of Financial Statements". The main changes comprise:

To classify items of income and expenses presented in the statement of profit or loss into the operating, investing, financing, income taxes and discontinued operations categories, the Group shall assess whether it has specified main business activities of investing in particular types of assets and providing financing to customers.
The statement of profit or loss shall present totals and subtotals for operating profit or loss, profit or loss before financing and income taxes and profit or loss.
Provides guidance to enhance the requirements of aggregation and disaggregation: The Group shall identify the assets, liabilities, equity, income, expenses and cash flows that arise from individual transactions or other events and shall classify and aggregate them into groups based on shared characteristics, so as to result in the presentation in the primary financial statements of line items that have at least one similar characteristic. The Group shall disaggregate items with dissimilar characteristics in the primary financial statements and in the notes. The Group labels items as “other” only if it cannot find a more informative label.
Disclosures on Management-defined Performance Measures (MPMs): When in public communications outside financial statements and communicating to users of financial statements management’s view of an aspect of the financial performance of the Group as a whole, the Group shall disclose related information about its MPMs in a single note to the financial statements, including the description of such measures, calculations, reconciliations to the subtotal or total specified by IFRS Accounting Standards and the income tax and non-controlling interests effects of related reconciliation items.

In addition, the following consequential amendments have been made to IAS 7 “Statement of Cash Flows”:

The Group shall use operating profit or loss as the starting point when presenting cash flows from operating activities under the indirect method.
Interest and dividends received by the Group shall be classified as investing activities, while interest and dividends paid shall be classified as financing activities. However, if, after assessment, the Group
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has a specific main operating activity, it shall determine how to classify dividends received, interest received and interest paid in the statement of cash flows by referring to how it classifies dividend income, interest income and interest expense in the statement of profit or loss. The total of each of these cash flows shall be classified in a single category in the statement of cash flows.

Except for the above impacts, as of the date the consolidated financial statements were authorized for issue, the Group is continuously assessing the other impacts of the above amended standards and interpretations on the Group's financial position and financial performance and will disclose the relevant impact when the assessment is completed.

4. SUMMARY OF MATERIAL ACCOUNTING POLICY INFORMATION

a. Statement of compliance

The consolidated financial statements have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and IFRS Accounting Standards as endorsed by the FSC.

b. Basis of preparation

The consolidated financial statements have been prepared on the historical cost basis except for financial instruments which are measured at fair value and net defined benefit liabilities which are measured at the present value of the defined benefit obligation less the fair value of plan assets.

The fair value measurements, which are grouped into Levels 1 to 3 based on the degree to which the fair value measurement inputs are observable and based on the significance of the inputs to the fair value measurement in its entirety, are described as follows:

1) Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities;
2) Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for an asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices); and
3) Level 3 inputs are unobservable inputs for an asset or liability.

c. Classification of current and non-current assets and liabilities

Current assets include:

1) Assets held primarily for the purpose of trading;
2) Assets expected to be realized within 12 months after the reporting period; and
3) Cash and cash equivalents unless the asset is restricted from being exchanged or used to settle a liability for at least 12 months after the reporting period.

Current liabilities include:

1) Liabilities held primarily for the purpose of trading;
2) Liabilities due to be settled within twelve months after the reporting period; and
3) Liabilities for which the Group does not have an unconditional right to defer settlement for at least 12 months after the reporting period.

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Assets and liabilities that are not classified as current are classified as non-current.

d. Basis of consolidation

The consolidated financial statements incorporate the financial statements of the Company and the entities controlled by the Company (i.e. its subsidiaries).

Income and expenses of subsidiaries acquired or disposed of during the period are included in the consolidated statement of profit or loss and other comprehensive income from the effective date of acquisition up to the effective date of disposal, as appropriate.

When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with those used by the Company.

All intra-group transactions, balances, income and expenses are eliminated in full upon consolidation. Total comprehensive income of subsidiaries is attributed to the owners of the Company and to the non-controlling interests even if this results in the non-controlling interests having a deficit balance.

Changes in the Group's ownership interests in subsidiaries that do not result in the Group losing control over the subsidiaries are accounted for as equity transactions. The carrying amounts of the Group's interests and the non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiaries. Any difference between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid or received is recognized directly in equity and attributed to the owners of the Company.

See Note 17, Tables 4 and 5 for the detailed information of subsidiaries (including the percentage of ownership and main business).

e. Business combinations

Acquisitions of businesses are accounted for using the acquisition method. Acquisition-related costs are generally recognized in profit or loss as they are incurred.

Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non-controlling interest in the acquire, and the fair value of the acquirer's previously held equity interests in the acquire over the net of the acquisition-date amounts of the identifiable assets acquired and the liabilities assumed.

f. Foreign currencies

In preparing the financial statements of each individual entity, transactions in currencies other than the entity's functional currency (foreign currencies) are recognized at the rates of exchange prevailing at the dates of the transactions.

At the end of each reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing at that date. Exchange differences on monetary items arising from settlement or translation are recognized in profit or loss in the period.

Non-monetary items denominated in foreign currencies that are measured at fair value are retranslated at the rates prevailing at the date when the fair value is determined. Exchange differences arising from the retranslation of non-monetary items are included in profit or loss for the period except for exchange differences arising from the retranslation of non-monetary items in respect of which gains and losses are recognized directly in other comprehensive income; in which cases, the exchange differences are also recognized directly in other comprehensive income.

Non-monetary item denominated in a foreign currency and measured at historical cost is stated at the

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reporting currency as originally translated from the foreign currency which are not retranslated.

For the purpose of presenting consolidated financial statements, the Group and the functional currencies of the Group entities (including subsidiaries in other countries that use currency different from the currency of the Company) are translated into the presentation currency - New Taiwan dollars as follows: Assets and liabilities are translated at the exchange rates prevailing at the end of the reporting period; income and expense items are translated at the average exchange rates for the period. The resulting currency translation differences are recognized in other comprehensive income attributed to the owners of the Company and non-controlling interests as appropriate.

On the disposal of a foreign operation (i.e. a disposal of the Company's entire interest in a foreign operation), all of the exchange differences accumulated in equity in respect of that operation are reclassified to profit or loss.

g. Inventories

Inventories consist of raw materials and supplies, finished goods, work-in-process and merchandise. Inventories are stated at the lower of cost or net realizable value. Inventory write-downs are made by item, except where it may be appropriate to group similar or related items. The net realizable value is the estimated selling price of inventories less all estimated costs of completion and costs necessary to make the sale. Inventories are recorded at the weighted-average cost.

h. Investment in associates

An associate is an entity over which the Group has significant influence and that is neither a subsidiary nor an interest in a joint venture.

The Group uses the equity method to account for its investments in associates.

Under the equity method, an investment in an associate is initially recognized at cost and adjusted thereafter to recognize the Group's share of the profit or loss and other comprehensive income of the associate. The Group also recognizes the changes in the Group's share of equity of associates.

i. Property, plant and equipment

Property, plant and equipment are stated at cost, less accumulated depreciation and accumulated impairment.

Property, plant and equipment in the course of construction are measured at cost, less any recognized impairment loss. Cost includes professional fees. Such properties are depreciated and classified to the appropriate categories of property, plant and equipment when completed and ready for intended use.

Except for freehold land which is not depreciated, the depreciation of property, plant and equipment is recognized using the straight-line method. Each significant part is depreciated separately. The estimated useful lives, residual values and depreciation method are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis.

On derecognition of an item of property, plant and equipment, the difference between the sales proceeds and the carrying amount of the asset is recognized in profit or loss.

j. Investment properties

Investment properties are properties held to earn rentals and/or for capital appreciation. Investment properties also include land held for a currently undetermined future use.

Investment properties are measured initially at cost, including transaction costs. Subsequent to initial

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recognition, investment properties are measured at cost less accumulated depreciation.

Depreciation is recognized using the straight-line method.

On derecognition of an investment property, the difference between the net disposal proceeds and the carrying amount of the asset is included in profit or loss.

k. Goodwill

Goodwill arising from the acquisition of a business is carried at cost as established at the date of acquisition of the business less accumulated impairment loss.

For the purposes of impairment testing, goodwill is allocated to each of the Group’s cash-generating units or groups of cash-generating units (referred to as cash-generating units) that are expected to benefit from the synergies of the combination.

A cash-generating unit to which goodwill has been allocated is tested for impairment annually, or more frequently when there is an indication that the unit may be impaired, by comparing its carrying amount, including the attributed goodwill, with its recoverable amount. However, if the goodwill allocated to a cash-generating unit was acquired in a business combination during the current annual period, that unit shall be tested for impairment before the end of the current annual period. If the recoverable amount of the cash-generating unit is less than its carrying amount, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then pro rata to the other assets of the unit based on the carrying amount of each asset in the unit. Any impairment loss is recognized directly in profit or loss. An impairment loss recognized on goodwill is not reversed in subsequent periods.

If goodwill has been allocated to a cash-generating unit and the entity disposes of an operation within that unit, the goodwill associated with the operation disposed of is included in the carrying amount of the operation when determining the gain or loss on disposal and is measured on the basis of the relative values of the operation disposed of and the portion of the cash-generating unit retained.

l. Intangible assets

1) Intangible assets acquired separately

Intangible assets with finite useful lives that are acquired separately are initially measured at cost and subsequently measured at cost less accumulated amortization. Amortization is recognized on a straight-line basis. The estimated useful life, residual value, and amortization method are reviewed at the end of each reporting period, with the effect of any changes in the estimate accounted for on a prospective basis.

2) Intangible assets acquired in a business combination

Intangible assets acquired in a business combination and recognized separately from goodwill are initially recognized at their fair value at the acquisition date. Subsequent to initial recognition, they are measured on the same basis as intangible assets that are acquired separately.

3) Derecognition of intangible assets

On derecognition of an intangible asset, the difference between the net disposal proceeds and the carrying amount of the asset is recognized in profit or loss.

m. Impairment of property, plant and equipment, right of use asset, investment properties and intangible assets (except goodwill)

At the end of each reporting period, the Group reviews the carrying amounts of its property, plant and

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equipment, right of use asset, investment properties and intangible assets (except goodwill), excluding goodwill, to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss. When it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs. Corporate assets are allocated to the individual cash-generating units on a reasonable and consistent basis of allocation.

The recoverable amount is the higher of fair value less costs to sell and value in use. If the recoverable amount of an asset or cash-generating unit is estimated to be less than its carrying amount, the carrying amount of the asset or cash-generating unit is reduced to its recoverable amount, with the resulting impairment loss recognized in profit or loss.

When an impairment loss is subsequently reversed, the carrying amount of the asset or cash-generating unit is increased to the revised estimate of its recoverable amount, but only to the extent of the carrying amount that would have been determined had no impairment loss been recognized on the asset or cash-generating unit in prior years. A reversal of an impairment loss is recognized in profit or loss.

n. Financial instruments

Financial assets and financial liabilities are recognized when the Group becomes a party to the contractual provisions of the instruments.

Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issuance of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss (FVTPL)) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at FVTPL are recognized immediately in profit or loss.

1) Financial assets

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

a) Measurement category

Financial assets are classified into the following categories: Financial assets at FVTPL and financial assets at amortized cost.

i. Financial assets at FVTPL

Financial assets are classified as at FVTPL when such financial assets are mandatorily classified or designated as at FVTPL. Financial assets mandatorily classified as at FVTPL include investments in equity instruments which are not designated as at FVTOCI and debt instruments that do not meet the amortized cost criteria or the FVTOCI criteria.

Financial assets at FVTPL are subsequently measured at fair value, and any dividends or interest earned on such financial assets are recognized in other income; any remeasurement gains or losses on such financial assets are recognized in other gains or losses. Fair value is determined in the manner described in Note 33.

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ii. Financial assets at amortized cost

Financial assets that meet the following conditions are subsequently measured at amortized cost:

i) The financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows; and
ii) The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

Subsequent to initial recognition, financial assets at amortized cost, including cash and cash equivalents, financial assets at amortized cost, accounts and notes receivable, other receivables, refundable deposits (classified under other non-current assets) and other non-current financial assets, are measured at amortized cost, which equals the gross carrying amount determined using the effective interest method less any impairment loss. Exchange differences are recognized in profit or loss.

Interest income is calculated by applying the effective interest rate to the gross carrying amount of such a financial asset.

A financial asset is credit impaired when one or more of the following events have occurred:

i. Significant financial difficulty of the issuer or the borrower;
ii. Breach of contract, such as a default;
iii. It is becoming probable that the borrower will enter bankruptcy or undergo a financial reorganization; or
iv. The disappearance of an active market for that financial asset because of financial difficulties.

Cash equivalents include time deposits and repurchase agreement with original maturities within 3 months from the date of acquisition, which are highly liquid, readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value. These cash equivalents are held for the purpose of meeting short-term cash commitments.

b) Impairment of financial assets

The Group recognizes a loss allowance for expected credit losses on financial assets at amortized cost (including accounts receivable).

The Group always recognizes lifetime expected credit losses (ECLs) for accounts receivable. For all other financial instruments, the Group recognizes lifetime ECLs when there has been a significant increase in credit risk since initial recognition. If, on the other hand, the credit risk on a financial instrument has not increased significantly since initial recognition, the Group measures the loss allowance for that financial instrument at an amount equal to 12-month ECLs.

Expected credit losses reflect the weighted average of credit losses with the respective risks of default occurring as the weights. Lifetime ECLs represent the expected credit losses that will result from all possible default events over the expected life of a financial instrument. In contrast, 12-month ECLs represent the portion of lifetime ECLs that is expected to result from default events on a financial instrument that are possible within 12 months after the reporting date.

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For internal credit risk management purposes, the Group determines that the internal or external information show that the debtor is unlikely to pay its creditors indicate that a financial asset is in default (without taking into account any collateral held by the Group).

The Group recognizes an impairment gain or loss in profit or loss for all financial instruments with a corresponding adjustment to their carrying amount through a loss allowance account.

c) Derecognition of financial assets

The Group derecognizes a financial asset only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another party.

On derecognition of a financial asset at amortized cost in its entirety, the difference between the asset’s carrying amount and the sum of the consideration received and receivable is recognized in profit or loss.

2) Financial liabilities

a) Subsequent measurement

Except for financial liabilities at FVTPL, all financial liabilities are measured at amortized cost using the effective interest method. Financial liabilities are classified as at FVTPL including held for trading.

b) Derecognition of financial liabilities

The difference between the carrying amount of the financial liability derecognized and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognized in profit or loss.

3) Convertible bonds

The component parts of compound instruments (convertible bonds) issued by the Group are classified separately as financial liabilities and equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.

On initial recognition, the fair value of the liability component is estimated using the prevailing market interest rate for similar non-convertible instruments. This amount is recorded as a liability on an amortized cost basis using the effective interest method until extinguished upon conversion or upon the instrument’s maturity date. Any embedded derivative liability is measured at fair value.

The conversion option classified as equity is determined by deducting the amount of the liability component from the fair value of the compound instrument as a whole. This is recognized and included in equity, net of income tax effects, and is not subsequently remeasured. In addition, the conversion option classified as equity will remain in equity until the conversion option is exercised; in which case, the balance recognized in equity will be transferred to capital surplus - share premiums. When the conversion option remains unexercised at maturity, the balance recognized in equity will be transferred to capital surplus - share premiums.

Transaction costs that relate to the issuance of the convertible notes are allocated to the liability and equity components in proportion to the allocation of the gross proceeds. Transaction costs relating to the equity component are recognized directly in equity. Transaction costs relating to the liability component are included in the carrying amount of the liability component.

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4) Derivative financial instruments

The Group enters into derivative financial instruments to manage its exposure to foreign exchange rate risks, including foreign exchange forward contracts.

Derivatives are initially recognized at fair value at the date on which the derivative contracts are entered into and are subsequently remeasured to their fair value at the end of each reporting period. The resulting gain or loss is recognized in profit or loss immediately. When the fair value of a derivative financial instrument is positive, the derivative is recognized as a financial asset; when the fair value of a derivative financial instrument is negative, the derivative is recognized as a financial liability.

o. Revenue recognition

The Group identifies contracts with customers, allocates the transaction price to the performance obligations and recognizes revenue when performance obligations are satisfied.

Revenue from the sale of goods

Revenue from the sale of goods comes from sales of various types of chains, motorcycle components and vehicle components.

Revenue and accounts receivable are recognized when the transaction terms have been achieved or after accepting by the buyers, which means the Group has transferred to the buyer the significant risks and rewards of ownership of the goods to the buyers, and the Group retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold.

p. Leases

At the inception of a contract, the Group assesses whether the contract is, or contains, a lease.

1) The Group as lessor

Leases are classified as finance leases whenever the terms of a lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.

Lease payments from operating leases are recognized as income on a straight-line basis over the terms of the relevant leases.

2) The Group as lessee

The Group recognizes right-of-use assets and lease liabilities for all leases at the commencement date of a lease, except for short-term leases and low-value asset leases accounted for applying a recognition exemption where lease payments are recognized as expenses on a straight-line basis over the lease terms.

Right-of-use assets are initially measured at cost. Right-of-use assets are subsequently measured at cost less accumulated depreciation and adjusted for any remeasurement of the lease liabilities. Right-of-use assets are presented on a separate line in the consolidated balance sheets.

Right-of-use assets are depreciated using the straight-line method from the commencement dates to the earlier of the end of the useful lives of the right-of-use assets or the end of the lease terms.

Lease liabilities are initially measured at the present value of the lease payments. The lease payments are discounted using the interest rate implicit in a lease, if that rate can be readily determined. If that rate cannot be readily determined, the Group uses its incremental borrowing rate.

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Subsequently, lease liabilities are measured at amortized cost using the effective interest method, with interest expense recognized over the lease terms. When there is a change in a lease term, or a change in future lease payments resulting from a change in an index or a rate used to determine those payments, the Group remeasures the lease liabilities with a corresponding adjustment to the right-of-use-assets. However, if the carrying amount of the right-of-use assets is reduced to zero, any remaining amount of the remeasurement is recognized in profit or loss. Lease liabilities are presented on a separate line in the consolidated balance sheets.

q. Borrowing costs

All borrowing costs are recognized in profit or loss in the period in which they are incurred.

r. Government grants

Government grants are not recognized until there is reasonable assurance that the Group will comply with the conditions attached to them and that the grants will be received.

Government grants related to income are recognized in other income on a systematic basis over the periods in which the Group recognizes as expenses the related costs for which the grants are intended to compensate. Specifically, government grants whose primary condition is that the Group should purchase, construct or otherwise acquire non-current assets are recognized as deferred revenue and transferred to profit or loss on a systematic and rational basis over the useful lives of the related assets.

Government grants that are receivable as compensation for expenses or losses already incurred or for the purpose of giving immediate financial support to the Group with no future related costs are recognized in profit or loss in the period in which they are received.

s. Employee benefits

1) Short-term employee benefits

Liabilities recognized in respect of short-term employee benefits are measured at the undiscounted amount of the benefits expected to be paid in exchange for the related services.

2) Retirement benefits

Payments to defined contribution retirement benefit plans are recognized as an expense when employees have rendered service entitling them to the contributions.

Defined benefit costs (including service cost, net interest and remeasurement) under the defined benefit retirement benefit plans are determined using the projected unit credit method. Service costs (including current service cost) and net interest on the net defined benefit liability (asset) are recognized as employee benefits expense in the period they occur. Remeasurement, comprising actuarial gains and losses and the return on plan assets (excluding interest), is recognized in other comprehensive income in the period in which they occur. Remeasurement recognized in other comprehensive income is reflected immediately in retained earnings and will not be reclassified to profit or loss.

Net defined benefit liability represents the actual deficit in the Group’s defined benefit plan.

t. Taxation

Income tax expense represents the sum of the tax currently payable and deferred tax.

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1) Current tax

Income tax payable (recoverable) is based on taxable profit (loss) for the year determined according to the applicable tax laws of each tax jurisdiction.

According to the Income Tax Law in the ROC, an additional tax of unappropriated earnings is provided for in the year the shareholders approve to retain the earnings.

Adjustments of prior years’ tax liabilities are added to or deducted from the current year’s tax provision.

2) Deferred tax

Deferred tax is recognized on temporary differences between the carrying amounts of assets and liabilities and the corresponding tax bases used in the computation of taxable profit. If a temporary difference arises from the initial recognition (other than in a business combination) of assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit, the resulting deferred tax asset or liability is not recognized. In addition, a deferred tax liability is not recognized on taxable temporary differences arising from the initial recognition of goodwill.

Deferred tax liabilities are generally recognized for all taxable temporary differences. Deferred tax assets are generally recognized for all deductible temporary differences and unused loss carryforwards to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilized.

Deferred tax liabilities are recognized for taxable temporary differences associated with investments in subsidiaries, except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets arising from deductible temporary differences associated with such investments and interests are only recognized to the extent that it is probable that there will be sufficient taxable profits against which to utilize the benefits of the temporary differences and they are expected to reverse in the foreseeable future.

The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. A previously unrecognized deferred tax asset is also reviewed at the end of each reporting period and recognized to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered.

Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which the liabilities are settled or the assets are realized, based on tax rates and tax laws that have been enacted or substantively enacted by the end of the reporting period. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Group expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.

3) Current and deferred taxes for the year

Current and deferred taxes are recognized in profit or loss, except when they relate to items that are recognized in other comprehensive income or directly in equity, in which case, the current and deferred taxes are also recognized in other comprehensive income or directly in equity respectively.

Where current tax or deferred tax arises from the initial accounting for the acquisition of a subsidiary, the tax effect is included in the accounting for the investments in a subsidiary.

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5. MATERIAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

In the application of the Group's accounting policies, management is required to make judgments, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered relevant. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods.

The Group has no critical accounting judgements and key sources of estimation uncertainty.

6. CASH AND CASH EQUIVALENTS

	December 31
	2025	2024
Cash on hand	$ 2,803	$ 956
Checking accounts and demand deposits	874,235	1,055,337
Cash equivalent (investments with original maturities of 3 months or less)
Time deposits	1,210,463	1,012,202
Repurchase agreements collateralized by bonds	61,627	184,762
	$ 2,149,128	$ 2,253,257

The ranges of interest rates of time deposits and repurchase agreements were as follows:

	December 31
	2025	2024
Time deposits	0.65% - 5.4%	0.9% - 4.75%
Repurchase agreements collateralized by bonds	1.4% - 4.15%	1.3% - 4.9%

7. FINANCIAL INSTRUMENTS AT FVTPL

	December 31
	2025	2024
Financial assets at FVTPL - current
Financial assets mandatorily classified as at FVTPL
Derivative financial assets (not under hedge accounting)
Convertible options (Note 20)	$ -	$ 100

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8. FINANCIAL ASSETS AT AMORTIZED COST

	December 31
	2025	2024
Current
Time deposits with original maturities of more than 3 months	$ 1,424,560	$ 1,781,837
Non-current
Time deposits with original maturities of more than 3 months	$ 1,798,400	$ 761,260

The range of interest rates for time deposits with original maturities of more than 3 months were approximately 1% - 6.1% and 1.25% - 5.5% per annum as of December 31, 2025 and 2024, respectively.

9. NOTES RECEIVABLE, ACCOUNTS RECEIVABLE (INCLUDING RELATED PARTIES)

	December 31
	2025	2024
Notes receivable - operating
At amortized cost
Gross carrying amount	$ 40,660	$ 65,214
Accounts receivable
At amortized cost
Gross carrying amount	$ 686,614	$ 786,396
Less: Allowance for impairment loss	10,106	17,807
	$ 676,508	$ 768,589
Accounts receivable from related parties
At amortized cost
Gross carrying amount	$ 43,386	$ 59,318

The average credit period of sales of goods was 30 to 180 days. No interest was charged on accounts receivable. In order to minimize credit risk, the management of the Group has delegated a team responsible for determining credit limits, credit approvals and other monitoring procedures to ensure that follow-up action is taken to recover overdue debts. In addition, the Group reviews the recoverable amount of each individual trade debt at the end of the reporting period to ensure that adequate allowance is made for possible irrecoverable amounts. In this regard, the management believes the Group's credit risk was significantly reduced.

The Group measures the loss allowance for accounts receivable at an amount equal to lifetime ECLs. The expected credit losses on accounts receivable are estimated using a provision matrix by reference to past default experience of the debtor and an analysis of the debtor's current financial position, adjusted for general economic conditions of the industry in which the debtors operate and an assessment of both the current as well as the forecast direction of economic conditions at the reporting date. As the Group's historical credit loss experience does not show significantly different loss patterns for different customer segments, the provision for loss allowance based on past due status is not further distinguished according to the Group's different customer base.

The Group writes off an accounts receivable when there is information indicating that the debtor is in severe financial difficulty and there is no realistic prospect of recovery, e.g., when the debtor has been placed under liquidation. For accounts receivable that have been written off, the Group continues to engage in enforcement activity to attempt to recover the receivables due. Where recoveries are made, these are recognized in profit or loss.

The following table details the loss allowance of notes receivable and accounts receivable based on the Group's provision matrix.

a. Notes receivable

All of the Group's notes receivable were not past due as of December 31, 2025 and 2024 and no loss allowance were accrued.

b. Accounts receivable (including related parties)

December 31, 2025

	Not Past Due	Less than 60 Days	61 to 90 Days	91 to 120 Days	Over 120 Days	Total
Expected credit loss rate	0% - 2%	0% - 10%	0% - 25%	0% - 40%	100%
Gross carrying amount	$ 665,841	$ 54,261	$ 1,909	$ 655	$ 7,334	$ 730,000
Loss allowance (Lifetime ECLs)	(1,039)	(1,127)	(372)	(265)	(7,303)	(10,106)
Amortized cost	$ 664,802	$ 53,134	$ 1,537	$ 390	$ 31	$ 719,894

December 31, 2024

	Not Past Due	Less than 60 Days	61 to 90 Days	91 to 120 Days	Over 120 Days	Total
Expected credit loss rate	0% - 2%	0% - 10%	0% - 25%	0% - 40%	100%
Gross carrying amount	$ 792,115	$ 37,840	$ 2,215	$ 1,265	$ 12,279	$ 845,714
Loss allowance (Lifetime ECLs)	(3,752)	(930)	(436)	(595)	(12,094)	(17,807)
Amortized cost	$ 788,363	$ 36,910	$ 1,779	$ 670	$ 185	$ 827,907

The movements of the loss allowance of notes receivable and accounts receivable were as follows:

	For the Year Ended December 31
	2025	2024
Balance on January 1	$ 17,807	$ 19,601
Add (less): Net remeasurement of loss allowance	(6,077)	6,953
Less: Amounts written off	(906)	(9,527)
Foreign exchange gains and losses	(718)	780
Balance on December 31	$ 10,106	$ 17,807

27 -

10. INVENTORIES

	December 31
	2025	2024
Merchandise	$ 448,644	$ 324,676
Finished goods	198,305	184,023
Work in process	257,471	274,688
Raw materials and supplies	344,646	325,245
	$ 1,249,066	$ 1,108,632

The cost of inventories recognized as cost of goods sold for the years ended December 31, 2025 and 2024 was as follows:

	For the Year Ended December 31
	2025	2024
Cost of inventories sold	$ 2,679,220	$ 2,945,163
Write-down of inventories	-	33,529
Revenue from sale of scrap	(70,125)	(92,135)
	$ 2,609,095	$ 2,886,557

11. OTHER FINANCIAL ASSETS - NON-CURRENT

	December 31
	2025	2024
Cash surrender value of life insurance	$ 1,869	$ 1,869

12. PREPAYMENTS AND OTHER ASSETS

	December 31
	2025	2024
Prepayments
Prepayments for suppliers	$ 103,754	$ 103,897
Prepaid expense	12,031	12,681
	$ 115,785	$ 116,578
Current
Input tax	$ 23,691	$ 7,743
Excess VAT Paid	31,745	43,021
Others	3,338	2,710
	$ 58,774	$ 53,474
		(Continued)

28 -

	December 31
	2025	2024
Non-current
Prepaid equipment	$ 89,648	$ 78,682
Refundable deposits	7,922	8,348
Others	16,375	14,733
	$ 113,945	$ 101,763
		(Concluded)

13. INVESTMENTS ACCOUNTED FOR USING EQUITY METHOD

	December 31
	2025	2024
Associates that are not individually material
Pro (Taiwan) Procurement Co., Ltd.	$ 13,093	$ 13,890

In February 2016, the Group contributed to set up a company Pro (Taiwan) Procurement Co., Ltd. with non-related party. The proportion of the Group’s ownership was both 49% as of December 31, 2025 and 2024.

Refer to Table 4 “Information on Investees” for the nature of activities, principal places of business and countries of incorporation of the associates.

Aggregate information of associates that are not individually material.

	For the Year Ended December 31
	2025	2024
The Group’s share of:
Profit from continuing operations and total comprehensive income for the year	$ 352	$ 1,377

The investments accounted for using the equity method and the share of profit or loss and other comprehensive income of those investments for the years ended December 31, 2025 and 2024 were based on the associates’ financial statements which have been audited for the same years.

14. PROPERTY, PLANT AND EQUIPMENT

See Table 8 for the movements of property, plant and equipment.

No impairment assessment was performed for the years ended December 31, 2025 and 2024 as there was no indication of impairment.

The following items of property, plant and equipment are depreciated on a straight-line basis over the estimated useful lives as follows:

Building
Main building	25 - 40 years
Outside building construction	3 - 25 years
Machinery and equipment	2 - 10 years
Transportation equipment	3 - 10 years
Leasehold improvements	5 - 15 years
Furniture and fixtures	3 - 6 years
Miscellaneous equipment	2 - 15 years

15. LEASE ARRANGEMENTS

a. Right-of-use assets

	December 31
	2025	2024
Carrying amounts
Land	$ 755,118	$ 778,798
Buildings	3,222	7,106
Transportation equipment	1,424	1,718
	$ 759,764	$ 787,622
	For the Year Ended December 31
	2025	2024
Additions to right-of-use assets	$ 1,317	$ 9,371
Depreciation charge for right-of-use assets
Land	$ 24,840	$ 25,399
Buildings	3,722	4,251
Transportation equipment	1,617	4,689
	$ 30,179	$ 34,339

Except for recognition for depreciation expenses, the Group did not have significant sublease or impairment of right-of-use assets during the years ended December 31, 2025 and 2024.

b. Lease liabilities

	December 31
	2025	2024
Carrying amounts
Current	$ 2,582	$ 4,248
Non-current	$ 2,110	$ 3,664

Discount rate for lease liabilities was as follows:

	December 31
	2025	2024
Land, buildings and transportation equipment	0.4362% - 2.3250%	0.4362% - 1.9783%

c. Material leasing activities and terms

As lessee, the Group leases certain land, buildings and transportation equipment with lease terms of 3 to 50 years.

d. Other lease information

	For the Year Ended December 31
	2025	2024
Expenses relating to short-term leases	$ 8,831	$ 5,307
Expenses relating to low-value asset leases	$ 2,214	$ 3,336
Total cash outflow for leases	$ 15,699	$ 18,793

As lessee, the Group's leases of certain assets qualify as short-term leases and leases of certain assets qualify as low-value asset leases. The Group has elected to apply the recognition exemption and thus, did not recognize right-of-use assets and lease liabilities for these leases.

16. INVESTMENT PROPERTIES

	Right-of-use assets	Buildings	Total
Cost
Balance on January 1, 2024	$ 31,214	$ 298,566	$ 329,780
Reclassification	61	5,265	5,326
Effect of foreign currency exchange differences	1,090	10,447	11,537
Balance on December 31, 2024	$ 32,365	$ 314,278	$ 346,643
Accumulated depreciation
Balance on January 1, 2024	$ 6,875	$ 126,590	$ 133,465
Depreciation	653	13,108	13,761
Reclassification	-	2,866	2,866
Effect of foreign currency exchange differences	243	4,505	4,748
Balance on December 31, 2024	$ 7,771	$ 147,069	$ 154,840
Carrying amounts on December 31, 2024	$ 24,594	$ 167,209	$ 191,803
			(Continued)

	Right-of-use assets	Buildings	Total
Cost
Balance on January 1, 2025	$ 32,365	$ 314,278	$ 346,643
Disposals	(19,194)	(185,382)	(204,576)
Effect of foreign currency exchange differences	198	1,921	2,119
Balance on December 31, 2025	$ 13,369	$ 130,817	$ 144,186
Accumulated depreciation
Balance on January 1, 2025	$ 7,771	$ 147,069	$ 154,840
Disposals	(5,438)	(99,450)	(104,888)
Depreciation	258	5,932	6,190
Effect of foreign currency exchange differences	60	1,166	1,226
Balance on December 31, 2025	$ 2,651	$ 54,717	$ 57,368
Carrying amounts on December 31, 2025	$ 10,718	$ 76,100	$ 86,818
			(Concluded)

Right-of-use assets included in investment properties were leasehold land located in China and were subleased under operating leases to non-related parties.

The abovementioned investment properties were leased out for 1 to 3 years, with an option to extend for additional lease terms. The lease contracts contain market review clauses in the event that the lessees exercise their options to extend. The lessees do not have bargain purchase options to acquire the investment properties at the expiry of the lease.

The maturity analysis of lease payments receivable under operating leases of investment properties was as follows:

	December 31
	2025	2024
Year 1	$ 2,496	$ 6,173
Year 2	1,576	2,566
Year 3	-	1,620
	$ 4,072	$ 10,359

The investment properties are depreciated by the straight-line method over 10-20 years of useful lives.

Management was unable to reliably measure the fair value of investment property. The market for comparable properties is inactive and alternative reliable measurements of fair value are not available; therefore, the Group determined that the fair value of the investment property is not reliably measurable.

17. SUBSIDIARIES

Subsidiaries included in the consolidated financial statements were as follows:

Investor	Investee	Nature of Activities	Proportion of Ownership (%)
December 31	2025	2024
KMC (KUEI MENG)
International Inc.	KMC Chain Industrial Co., Ltd.	Manufacturing, selling various chains and components of motorcycle and vehicle	100
K.M.C. Automobile Transmission Co., Ltd.	Selling equipment and materials for chains and designing products	100	100
KMC Industries (Vietnam) Co., Ltd.	Selling various chains and components	100	100
Kynamic Inc.	After-sales service treatment of electric bicycles	100	100
KMC Global GmbH	Selling of parts and accessories other than bicycle chains	100	100
KMC Chain Industrial Co., Ltd.	KMC (BVI) Holding Co., Ltd. (KMC BVI)	Investing activities	100
KMC Chain Europe N.V. (KMC Europe)	Selling various bicycle chains and components	100	100
KMC Chain American Corporation (KMC America)	Selling various bicycle chains and components	100	100
P. T. Kuei Meng Chain Indonesia (KMC Indonesia)	Selling various motorcycle chains and components	99	99
KMC Investment (China) Co., Ltd. (KMC China)	Investing activities and selling various bicycle chains and components	100	100
Kynamic Inc.	Kynamic Europe B.V.	After-sales service treatment of electric bicycles	100
KMC BVI	KMC Chain (Vietnam) Co., Ltd. (KMC Vietnam)	Manufacturing and selling various chains and components	100
KMC Chain Europe N.V.	KME B.V.	Leasing owned properties and plant	100
KMC Investment (China) Co., Ltd.	KMC Transmission (Tianjin) Co., Ltd. (KMC Tianjin)	Manufacturing and selling various bicycle chains and components	100
Taicang Tec Industry and Trade Co., Ltd. (Taicang Tec)	Selling various bicycle chains and components	100	100
Suzhou KMC Industry and Trade Co., Ltd. (Suzhou KMC)	Selling various bicycle chains and components	100	100
KMC Chain (Shenzhen) Co., Ltd. (KMC Shenzhen)	Manufacturing and selling various chains and components	100	100
KMC Chain (Suzhou) Co., Ltd. (KMC Suzhou)	Manufacturing and selling various chains and components	100	100
KMC Transton Company Limited (KMC Transton)	Manufacturing and selling Garage Door Opener (GDO)	100	100
KMC Automotive Transmission Co., Ltd. (KMC Automotive Shenzhen)	Manufacturing and selling Automotive Timing System (ATS)	100	100
Suzhou Maya Trading Co., Ltd. (Maya Trading)	Selling various bicycle chains and components	100	100
KMC International Trading (Taicang) Co., Ltd. (KMC Taicang)	Selling various bicycle chains and components	100	100
KMC (Suzhou) Automotive Transmission Co., Ltd.	Manufacturing and selling Automotive Timing System (ATS)	100	100
KMC CHAIN (SINGAPORE) PTE. LTD.	Investing activities	100	-
KMC Transton Company Limited	Shenzhen KMC Industrial Co., Ltd. (Shenzhen KMC)	Selling of components of garage door	100

Note: As of December 31, 2025, KMC CHAIN (SINGAPORE) PTE. LTD. has not invested any capital in it.

18. GOODWILL

	For the Year Ended December 31
	2025	2024
Balance on January 1	$ 1,341,078	$ 1,339,745
Effect of foreign currency exchange differences	159	1,333
Balance on December 31	$ 1,341,237	$ 1,341,078

At the end of each year, the Group performs impairment assessment by reviewing the recoverable amounts based on value in use calculation which incorporates cash flow projections covering a five-year period. The cash flows beyond that five-year period have been extrapolated using a steady 9.21% and 7.56% per annum discount rate as of December 31, 2025 and 2024 to reflect the specific risk of related cash-generating units.

For the years ended December 31, 2025 and 2024, the Group did not recognize impairment loss on goodwill.

19. OTHER INTANGIBLE ASSETS

	Customer Relationships	Computer Software	Patents	Skills	Total
Cost
Balance on January 1, 2024	$ 369,321	$ 96,313	$ 120,099	$ 67,916	$ 653,649
Additions	-	2,089	-	-	2,089
Reclassifications	-	19,778	-	-	19,778
Effect of foreign currency exchange differences	7,643	213	3,283	2,370	13,509
Balance on December 31, 2024	$ 376,964	$ 118,393	$ 123,382	$ 70,286	$ 689,025
Accumulated amortization
Balance on January 1, 2024	$ 360,684	$ 71,374	$ 49,726	$ 37,732	$ 519,516
Amortization expense	1,778	11,821	4,925	7,768	26,292
Reclassifications	-	220	-	-	220
Effect of foreign currency exchange differences	7,351	456	853	1,360	10,020
Balance on December 31, 2024	$ 369,813	$ 83,871	$ 55,504	$ 46,860	$ 556,048
Carrying amounts on December 31, 2024	$ 7,151	$ 34,522	$ 67,878	$ 23,426	$ 132,977
Cost
Balance on January 1, 2025	$ 376,964	$ 118,393	$ 123,382	$ 70,286	$ 689,025
Additions	-	4,392	259	-	4,651
Effect of foreign currency exchange differences	911	1,455	401	283	3,050
Balance on December 31, 2025	$ 377,875	$ 124,240	$ 124,042	$ 70,569	$ 696,726
					(Continued)

	Customer Relationships	Computer Software	Patents	Skills	Total
Accumulated amortization
Balance on January 1, 2025	$ 369,813	$ 83,871	$ 55,504	$ 46,860	$ 556,048
Amortization expense	1,730	8,521	4,801	7,557	22,609
Effect of foreign currency exchange differences	947	108	300	470	1,825
Balance on December 31, 2025	$ 372,490	$ 92,500	$ 60,605	$ 54,887	$ 580,482
Carrying amounts on December 31, 2025	$ 5,385	$ 31,740	$ 63,437	$ 15,682	$ 116,244

Except for recognition for amortization expenses, the Group did not have significant addition, disposal or impairment of other intangible assets during the years ended December 31, 2025 and 2024.

Intangible assets are amortized on a straight-line basis over the estimated useful life as follows:

Customer Relationships 4.5 - 10 years
Computer Software 2 - 8 years
Patents 5 - 20 years
Skills 9 years

20. BONDS PAYABLE

a. Third secured domestic convertible bonds

	December 31
	2025	2024
Fourth secured domestic convertible bonds	$ 985,628	$ 969,153
Less: Current portion	985,628	-
	$ -	$ 969,153

1) On November 8, 2023, the Company issued the fourth secured domestic convertible bonds with a term of 3 years. Each of the convertible bonds has a par value of $100 thousand; the total number of convertible bonds is 10 thousand; the aggregate principal amount is $1 billion; the bonds are issued at 108.44% of the par value. The coupon rate of the convertible bonds is 0%.

The conversion price of the convertible bonds is NT$130.5 per share. Afterwards, the price will be adjusted according to the conversion price adjustment formula from February 9, 2024 to November 8, 2026. As of December 31, 2025 the conversion price has been adjusted to $121.3 per share due to each cash dividends issued.

If the closing price of ordinary shares exceeds the conversion price by 30% (inclusive) in 30 continuous business days, from three months after the issuance date to 40 days before the date of expiration, or if the balance of the outstanding bonds is less than 10% of the original total issuance amount, the Company may redeem the outstanding bonds in cash in accordance with the conditions of the bond issuance.

As of December 31, 2025, the total amount of the bonds converted by the bondholders was 100 thousand.

2) The convertible bonds contain both liability and equity components. The equity component was presented in equity under the heading of capital surplus - options; the effective interest rate of the liability component was 1.466% per annum on initial recognition.

Liability component

The movement of liability component as follows:

	For the Year Ended December 31
	2025	2024
Balance on January 1	$ 969,153	$ 953,012
Interest charged at an effective interest rate	16,475	16,237
Converted into ordinary shares	-	(96)
Balance on December 31	$ 985,628	$ 969,153

The movement of financial assets at fair value through profit or loss - current as follows:

	For the Year Ended December 31
	2025	2024
Balance on January 1	$ 100	200
Adjustment for valuation	(100)	(100)
Balance on December 31	$ -	$ 100

21. BORROWINGS

a. Short-term borrowings

	December 31
	2025	2024
Unsecured borrowings
Line of credit borrowings	$ 1,017,028	$ 1,405,000

The ranges of weighted average effective interest rates on bank loans were 1.56%-2.1% and 1.85%-2.1% per annum as of December 31, 2025 and 2024, respectively.

The loan was used for working capital that the Company received subsidies for interest expenses from "Post-epidemic Revitalization Loan Project" by the government. The loan was fully repaid in 2024, and the related deferred income was reclassified to other income.

35 -

b. Short-term bills payable

Outstanding short-term bills payable as follows:

December 31, 2024

Promissory Institutions	Nominal Amount	Discount Amount	Carrying Amount	Interest Rate	Collateral	Carrying Amount of collateral
Commercial Paper
International Bills Finance Corporation	$100,000	$(125)	$99,875	1.988%	None	$-

c. Long-term borrowings

	December 31
	2025	2024
Unsecured borrowings
Line of credit borrowings
Amount	$ 1,071,171	$ 629,502
Less: Unamortized discounts on government grants (Note 25)	(125)	(2,851)
Less: Current portion	(39,875)	(265,402)
	$ 1,031,171	$ 361,249

The ranges of weighted average effective interest rates on bank loans were 0.1%-5.6% and 0.83%-5.6% per annum as of December 31, 2025 and 2024, respectively.

The Group borrowings under the "Action Plan for Welcoming Overseas Taiwanese Businesses to Return to Invest in Taiwan" have interest at prime rate and are used for capital expenditures and operating turnovers. The details of the relevant loan contract are as follows:

1) Credit period: The credit is $636,000 thousand, which is a revolving loan allowing separate drawdowns, and Credits will expire in December 2025 and April 2026.

2) Borrowing interest rate: Since the initial drawdown date, after the Group has applied a variable interest rate reduction of 0.895% and 0.745% based on the two-year fixed deposit interest rate if Chunghwa Post Co., Ltd. The Group calculates its fair value with an annual interest rate on general condition. As of December 31, 2025 and 2024, the rate was 2.325% for both years.

3) Repayment method: Monthly installments start on January 2024.

4) Each annual repayment plan drawdown is as follows:

Repayment year	Amounts of Repayment
2025	$ 265,402
2026 (January-April)	40,000
	$ 305,402

37 -

22. NOTES PAYABLE AND ACCOUNTS PAYABLE (INCLUDING RELATED PARTIES)

Both notes payable and accounts payable resulted from operating activities. The average period of purchases is 30 to 90 days. The Group has financial risk management policies in place to ensure that all payables are paid within the pre-agreed credit terms.

23. OTHER LIABILITIES

	December 31
	2025	2024
Other payables
Payable for salaries and bonus	$ 110,031	$ 108,137
Payable for compensation of employees	19,875	20,345
Payable for marketing expenses	18,327	13,081
Payable for taxes	15,173	18,215
Payable for water and electricity bill	13,873	10,939
Payable for remuneration to directors and supervisors	8,400	8,400
Payable for freight	7,128	11,427
Payable for annual leave	5,811	5,299
Others	56,656	65,343
	$ 255,274	$ 261,186
Other current liabilities
Unearned receipts for relocation	$ -	$ 242,430
Others	2,619	2,369
	$ 2,619	$ 244,799
Other non-current liabilities
Unearned receipts for relocation	$ 314,720	$ -
Others	2,561	4,554
	$ 317,281	$ 4,554

The subsidiaries of the Group, KMC Chain (Suzhou) Co., Ltd. (KMC Suzhou), signed a relocation compensation agreement with the Urban Renewal Center of Taicang New Area, Taicang City, People's Republic of China, in December, 2024. The agreement is divided into relocation compensation for the southern and northern sections.

The Group has duly fulfilled the obligations under the Southern Side Compensation Agreement by the end of March 2025 and, in accordance with the agreement, collected the full compensation amount of $411,570 thousand (RMB 90,000 thousand). Accordingly, the related assets were derecognized, and after deducting related expenses, a disposal gain of $237,901 thousand was recognized (included under other net gains and losses).

As of December 31, 2025, KMC Chain (Suzhou) Co., Ltd. has received in advance compensation for the northern side amounting to $314,720 thousand (RMB 70,000 thousand), which is recorded under other non-current liabilities. Subsequent sales and compensation gains will be recognized upon completion of the obligations at each stage of the contract.

38 -

24. PROVISIONS

	December 31
	2025	2024
Non-current
Warranties	$ 1,526	$ 1,193
Special reserves	5,005	4,970
	$ 6,531	$ 6,163

The provision for warranty of after-sales claims represents the present value of the Group’s best estimate of the future outflow of economic benefits that will be required under the Group’s obligation for warranties in sales agreements. The estimate has been made on the basis of historical warranty trends.

The special reserve is the present value of the Group’s best estimate of future economic outflows resulting from the obligations of the PRC subsidiaries to strengthen the management of production safety and improve labor conditions in accordance with local laws and regulations. The estimate is based on the historical experience of the safe production utilization plan.

25. Government Grants

The Group obtained government loans under the “Action Plan for Welcoming Overseas Taiwanese Businesses to Return to Invest in Taiwan”. Which have interest at prime rate. The group calculated its fair value with annual interest rate based on general condition. The difference between the acquisition amount borrowed and the fair value was classified as government’s low interest grants and recognized as deferred revenue. The revenue was transferred to other income when training expenses were incurred.

26. RETIREMENT BENEFIT PLANS

a. Defined contribution plans

The Company, KMC Chain Industrial Co., Ltd. and K.M.C Automobile Transmission Co., Ltd. adopted a pension plan under the Labor Pension Act (the LPA), which is a state-managed defined contribution plan. Under the LPA, an entity makes monthly contributions to employees’ individual pension accounts at 6% of monthly salaries and wages.

Starting from 2009, the employees of the Group’s subsidiary, KMC Vietnam, are members of a state-managed retirement benefit plan operated by the government of Vietnam. The subsidiary is required to contribute a specified percentage of payroll costs to the retirement benefit scheme to fund the benefits. The only obligation of the Group with respect to the retirement benefit plan is to make the specified contributions.

The employees of the Group’s subsidiary in China are members of a state-managed retirement benefit plan operated by the government of mainland China. The subsidiary is required to contribute a specified percentage of payroll costs to the retirement benefit scheme to fund the benefits. The only obligation of the Group with respect to the retirement benefit plan is to make the specified contributions.

b. Defined benefit plans

The defined benefit plan adopted by KMC Chain Industrial Co., Ltd. of the Group in accordance with

the Labor Standards Law is operated by the government. Pension benefits are calculated on the basis of the length of service and average monthly salaries of the six months before retirement. The Group contributes amounts equal to 2% of total monthly salaries and wages to a pension fund administered by the pension fund monitoring committee. Pension contributions are deposited in the Bank of Taiwan in the committee's name. Before the end of each year, the Group assesses the balance in the pension fund. If the amount of the balance in the pension fund is inadequate to pay retirement benefits for employees who conform to retirement requirements in the next year, the Group is required to fund the difference in one appropriation that should be made before the end of March of the next year. The pension fund is managed by the Bureau of Labor Funds, Ministry of Labor (the Bureau); the Group has no right to influence the investment policy and strategy.

The amounts included in the consolidated balance sheets in respect of KMC Chain Industrial Co., Ltd. and KMC Vietnam's defined benefit plans were as follows:

	December 31
	2025	2024
KMC Chain Industrial Co., Ltd.
Present value of defined benefit obligation	$ 37,309	$ 39,513
Fair value of plan assets	(4,225)	(5,903)
Net defined benefit liabilities	33,084	33,610
KMC Vietnam
Net defined benefit liabilities	4,038	4,349
	$ 37,122	$ 37,959

Movements in net defined benefit liability of KMC Chain Industrial Co., Ltd. were as follows:

	Present Value of the Defined Benefit Obligation	Fair Value of the Plan Assets	Net Defined Benefit Liabilities
Balance on January 1, 2024	$ 49,379	$ (16,931)	$ 32,448
Service cost
Current service cost	310	-	310
Loss on settlements	48	-	48
Net interest expense (income)	617	(214)	403
Recognized in profit or loss	975	(214)	761
Remeasurement
Return on plan assets (excluding amounts included in net interest)	-	(1,625)	(1,625)
Actuarial gain - changes in financial assumptions	(321)	-	(321)
Actuarial loss - experience adjustments	2,695	-	2,695
Recognized in other comprehensive income	2,374	(1,625)	749
Contributions from the employer	-	(348)	(348)
Settlement of obligations	(2,189)	2,189	-
			(Continued)

40 -

	Present Value of the Defined Benefit Obligation	Fair Value of the Plan Assets	Net Defined Benefit Liabilities
Benefits paid	$ (11,026)	$ 11,026	$ -
Balance on December 31, 2024	39,513	(5,903)	33,610
Service cost
Current service cost	310	-	310
Net interest expense (income)	543	(81)	462
Recognized in profit or loss	853	(81)	772
Remeasurement
Return on plan assets (excluding amounts included in net interest)	-	(1,221)	(1,221)
Actuarial loss - changes in financial assumptions	267	-	267
Actuarial loss - experience adjustments	25	-	25
Recognized in other comprehensive income	292	(1,221)	(929)
Contributions from the employer	-	(369)	(369)
Benefits paid	(3,349)	3,349	-
Balance on December 31, 2025	$ 37,309	$ (4,225)	$ 33,084

(Concluded)

Through the defined benefit plans under the Labor Standards Law, the Group is exposed to the following risks:

1) Investment risk: The plan assets are invested in domestic and foreign equity and debt securities, bank deposits, etc. The investment is conducted at the discretion of the Bureau or under the mandated management. However, in accordance with relevant regulations, the return generated by plan assets should not be below the interest rate for a 2-year time deposit with local banks.

2) Interest risk: A decrease in the government bond interest rate will increase the present value of the defined benefit obligation; however, this will be partially offset by an increase in the return on the plan's debt investments.

3) Salary risk: The present value of the defined benefit obligation is calculated by reference to the future salaries of plan participants. As such, an increase in the salary of the plan participants will increase the present value of the defined benefit obligation.

The actuarial valuations of the present value of the defined benefit obligation were carried out by qualified actuaries. The significant assumptions used for the purposes of the actuarial valuations were as follows:

	December 31
	2025	2024
Discount rate	1.25%	1.38%
Expected rate of salary increase	2.25%	2.25%

If possible reasonable changes in each of the significant actuarial assumptions occur and all other assumptions remain constant, the present value of the defined benefit obligation would increase (decrease) as follows:

	December 31
	2025	2024
Discount rate
0.25% increase	$ (531)	$ (572)
0.25% decrease	$ 542	$ 584
Expected rate of salary increase
0.25% increase	$ 528	$ 569
0.25% decrease	$ (519)	$ (560)

The sensitivity analysis presented above may not be representative of the actual change in the present value of the defined benefit obligation as it is unlikely that the change in assumptions would occur in isolation of one another as some of the assumptions may be correlated.

	December 31
	2025	2024
Expected contributions to the plan for the next year	$ 80	$ 44
Average duration of the defined benefit obligation	5.8 years	5.9 years

Before 2008, the employees' retirement benefit plan of the subsidiary in Vietnam was a defined benefit plan. The amount of retirement benefit was calculated by service years and the average salary of the six months before retirement. The balance of net defined benefit liabilities amounted to $4,038 thousand and $4,349 thousand as of December 31, 2025 and 2024.

27. EQUITY

a. Share capital

	December 31
	2025	2024
Number of authorized shares (in thousands)	200,000	200,000
Amount of authorized shares	$ 2,000,000	$ 2,000,000
Number of issued and fully paid shares (in thousands)	126,001	126,001
Amount of issued and fully paid shares	$ 1,260,008	$ 1,260,008

A total of 16,000 thousand shares of the Company's authorized shares were reserved for the issuance of employee share options.

Fully paid ordinary shares, which have a par value of $10, carry one vote per share and carry a right to dividends.

The change in the Corporation's ordinary shares is due to the conversion of the 4th domestic secured convertible bonds exercised their conversion of 1,000 shares, and the change registration procedure had been completed.

b. Capital surplus

	December 31
	2025	2024
May be used to offset a deficit, distributed as cash dividends, or transferred to share capital (1)
Recognized from issuance of ordinary shares	$ 1,536,528	$ 1,536,528
Recognized from share-based payment	4,594	4,594
May only be used to offset a deficit
Cancelled options	92,517	92,517
May not be used for any purpose (2)
Share option from convertible bonds	126,664	126,664
	$ 1,760,303	$ 1,760,303

1) Such capital surplus may be used to offset a deficit; in addition, when the Company has no deficit, such capital surplus may be distributed as cash dividends or transferred to share capital (limited to a certain percentage of the Company's paid-in capital and once a year).

2) Such capital surplus arises from convertible bonds, and will be adjusted when converted or expired.

c. Retained earnings and dividend policy

In accordance with regulations and surplus earnings distribution policy of the Company, the surplus earnings distribution proposal or loss make-up proposal shall be made at the end of every quarter. The earnings distribution in cash required authorization from at least two-thirds of the board of directors present, the consent of a majority of the directors present, and will be reported in the shareholders' meeting. Dividends and bonuses shall not be distributed when the Company has deficit. The Company should estimate and reserve earnings for tax payable, capital reserve, and 10% of earnings for legal reserve until the accumulated legal reserve equals the paid-in capital of the Company. Distribution of special reserve may be made according to regulations and competent authority. For the policies on the distribution of compensation of employees and remuneration of directors after the amendment, refer to "Compensation of employees and remuneration of directors" in Note 29(h).

Appropriations of earnings to legal reserve shall be made until the legal reserve equals the Company's paid-in capital. The legal reserve may be used to offset deficits. If the Company has no deficit and the legal reserve has exceeded 25% of the Company's paid-in capital, the excess may be transferred to capital or distributed in cash.

42 -

The quarterly appropriation of earnings and cash dividends per share for 2024 had been proposed by the Company’s board of directors. The appropriations and dividends per share were as follows:

	The fourth quarter of 2024	The third quarter of 2024	The second quarter of 2024	The first quarter of 2024
Date of board resolution	2025.03.12	2024.11.08	2024.08.09	2024.05.03
Legal reserve	$ 18,186	$ 32,028	$ 26,198	$ 15,184
Special reserve	$ 97,642	$ (147,190)	$ (64,997)	$ (165,649)
Cash dividends	$ 109,475	$ 192,172	$ 157,187	$ 91,103
Cash dividends per share (NT$)	$ 0.8688	$ 1.5252	$ 1.2475	$ 0.72

The above cash dividends were distributed in accordance with the resolution of the board. The remaining items for distribution of earnings were approved by the shareholders' meeting on May 29, 2025.

The quarterly appropriation of earnings and cash dividends per share for 2025 had been proposed by the Company’s board of directors. The appropriations and dividends per share were as follows:

	The fourth quarter of 2025	The third quarter of 2025	The second quarter of 2025	The first quarter of 2025
Date of board resolution	2026.03.12	2025.11.12	2025.08.12	2025.05.12
Legal reserve	$ 17,532	$ 21,716	$ 18,098	$ 39,156
Special reserve	$ (475,516)	$ (397,034)	$ 1,021,639	$ (224,082)
Cash dividends	$ 105,193	$ 130,298	$ 108,590	$ 127,877
Cash dividends per share (NT$)	$0.83485996	$1.03410477	$0.86182011	$ 1.0148906

The above cash dividends were distributed in accordance with the resolution of the board. The rest yet to be approved by the shareholders' meeting.

d. Other equity items

Exchange differences on translation of the financial statements of foreign operations

	For the Year Ended December 31
	2025	2024
Balance on January 1	$ (458,922)	$ (739,116)
Recognized for the year
Exchange differences on translation of the financial statements of foreign operations	74,994	280,194
Balance on December 31	$ (383,928)	$ (458,922)

e. Non-controlling interests

	For the Year Ended December 31
	2025	2024
Balance on January 1	$ 46	$ 98
Attributable to non-controlling interests:
Share of loss for the year	(73)	(53)
Exchange difference on translation of the financial statements of foreign entities	(3)	1
Balance on December 31	$ (30)	$ 46

28. REVENUE

The Company and its subsidiaries which sell components of various chains, motorcycle and vehicle and garage door have been aggregated into a single operating segment. Contract revenue is as follows:

	For the Year Ended December 31
	2025	2024
Revenue from contracts with customers
Revenue from sale of goods	$ 4,677,894	$ 4,959,816

a. Contract information

Revenue from sale of goods

Transmission goods are sold at respective fixed amounts as agreed in the contracts. Accounts receivable, which usually have short term of payment and without significant financing component, are recognized in most of contract when the goods are transferred, and the Group has an unconditional right to receive the transaction price. Some of contract set that the Group receive part of transaction price before transferring the goods to the buyers. The Group has the obligation to undertake the transfer, which contract liabilities are recognized.

b. Contract balances

	December 31, 2025	December 31, 2024	January 1, 2024
Notes receivable (Note 9)	$ 40,660	$ 65,214	$ 97,358
Accounts receivable (Note 9)	676,508	768,589	671,840
Accounts receivable from related parties (Note 9)	43,386	59,318	36,021
	$ 760,554	$ 893,121	$ 805,219
Contract liabilities
Sale of goods	$ 21,908	$ 36,685	$ 22,255

The changes in the balance of contract liabilities primarily result from the timing of the performance obligations which were satisfied.

Revenue recognized in the current year that was included in the contract liability balance at the beginning of the year and from the performance obligations satisfied in the previous periods is as

follows:

	For the Year Ended December 31
	2025	2024
From contract liabilities at the start of the year
Sale of goods	$ 32,699	$ 20,887

29. NET PROFIT

a. Other operating income and expenses

	For the Year Ended December 31
	2025	2024
Loss on disposal of property, plant and equipment	$ (5,916)	$ (3,374)

b. Interest income

	For the Year Ended December 31
	2025	2024
Bank deposits	$ 101,519	$ 93,576

c. Other income

	For the Year Ended December 31
	2025	2024
Government grant income	$ 8,072	$ 52,158
Rental income	24,176	21,554
Others	17,490	6,421
	$ 49,738	$ 80,133

d. Other gains and losses

	For the Year Ended December 31
	2025	2024
Disposal of investment properties	$ 237,901	$ -
Foreign exchange gains	83,193	$ 43,891
Foreign exchange losses	(95,009)	(21,886)
Losses on financial instruments at FVTPL	(100)	(100)
Depreciation expense on investment properties	(6,190)	(13,761)
Others	(40,587)	(12,290)
	$ 179,208	$ (4,146)

e. Finance cost

	For the Year Ended December 31
	2025	2024
Interest on bank loans	$ 42,102	$ 36,091
Interest on convertible bonds	16,475	16,237
Interest on bills payable	1,538	1,119
Interest on lease liabilities	100	127
	$ 60,215	$ 53,574

f. Depreciation and amortization

	For the Year Ended December 31
	2025	2024
An analysis of depreciation by function
Operating costs	$ 190,243	$ 192,784
Operating expenses	133,353	157,142
Other losses	6,190	13,761
	$ 329,786	$ 363,687
An analysis of amortization by function
Operating costs	$ 260	$ 152
Operating expenses	22,349	26,140
	$ 22,609	$ 26,292

g. Employee benefits expense

	For the Year Ended December 31
	2025	2024
Short-term employee benefits	$ 810,452	$ 760,886
Post-employment benefits
Defined contribution plans	59,269	51,974
Defined benefit plans (Note 26)	772	761
	60,041	52,735
	$ 870,493	$ 813,621
An analysis of employee benefits expense by function
Operating costs	$ 414,468	$ 423,866
Operating expenses	456,025	389,755
	$ 870,493	$ 813,621

h. Compensation of employees and remuneration of directors

According to the Company's Articles, the Company accrued compensation of employees and remuneration of directors at the rates of 0.4%-5% and no higher than 3%, respectively, of net profit before income tax, compensation of employees, and remuneration of directors. In accordance with the amendments to the Securities and Exchange Act in August 2024, the shareholders of the Company resolved the amendments to the Company's Articles at their 2025 regular meeting. The amendments

explicitly stipulate that where annual profits are realized after offsetting accumulated losses, the Group shall, in addition to appropriations for employees' and directors' remuneration, allocate no less than 0.1% for salary adjustments or the distribution of compensation to grassroots employees.

The compensation of employees and remuneration of directors and supervisors for the year ended December 31, 2025 and 2024 which were approved by the Company's board of directors on March 12, 2026 and March 12, 2025, respectively are as follows:

Accrual rate

	For the Year Ended December 31
	2025	2024
Compensation of employees	0.66%	0.75%
Remuneration of directors	0.73%	0.80%
Amount
	For the Year Ended December 31
	2025	2024
	Cash	Cash
Compensation of employees	$ 7,500	$ 7,819
Remuneration of directors	8,400	8,400

If there is a change in the amounts after the annual consolidated financial statements are authorized for issue, the differences are recorded as a change in the accounting estimate.

There was no difference between the actual amounts of compensation of employees and remuneration of directors paid and the amounts recognized in the consolidated financial statements for the years ended December 31, 2024 and 2023.

Information on the compensation of employees and remuneration of directors resolved by the Company's board of directors is available at the Market Observation Post System website of the Taiwan Stock Exchange.

30. INCOME TAXES

a. Income tax recognized in profit or loss

Major components of income tax expense as follows:

	For the Year Ended December 31
	2025	2024
Current tax
In respect of the current year	$ 371,063	$ 313,638
Income tax on unappropriated earnings	27,731	6,292
Adjustments for prior periods	(1,137)	2,711
	397,657	322,641
Deferred tax
In respect of the current year	(67,881)	(43,140)
Income tax expense recognized in profit	$ 329,776	$ 279,501

A reconciliation of accounting profit and income tax expenses is as follows:

	For the Year Ended December 31
	2025	2024
Profit before income tax	$ 1,294,726	$ 1,196,009
Income tax expense calculated at the statutory rate	$ 299,091	$ 267,653
Deductible income in determining taxable expense	4,091	2,845
Income tax on unappropriated earnings	27,731	6,292
Adjustments for prior years’ tax	(1,137)	2,711
Income tax expense recognized in profit	$ 329,776	$ 279,501

b. Income tax recognized in other comprehensive income

	For the Year Ended December 31
	2025	2024
Deferred tax
In respect of the current year
Remeasurement on defined benefit plans	$ (186)	$ 150

c. Current tax assets and liabilities

	December 31
	2025	2024
Current tax assets
Prepaid income tax	$ 1,867	$ 1,197
Current tax liabilities
Income tax payable	$ 347,055	$ 107,141

d. Deferred tax assets and liabilities

The movements of deferred tax assets and deferred tax liabilities were as follows:

For the year ended December 31, 2025

	Opening Balance	Recognized in Profit or Loss	Recognized in Other Comprehensive Income	Exchange Differences	Closing Balance
Deferred Tax Assets
Temporary differences
Provision for loss on inventories	$ 3,193	$ (663)	$ -	$ 5	$ 2,535
Allowance for impair receivables	59	180	-	2	241
Unrealized foreign exchange loss	453	(438)	-	-	15
Defined benefit obligation	6,641	163	(186)	-	6,618
Unrealized gross profit	98,492	(16,584)	-	-	81,908
Unearned receipts for relocation	-	77,998	-	683	78,681
					(Continued)

49 -

	Opening Balance	Recognized in Profit or Loss	Recognized in Other Comprehensive Income	Exchange Differences	Closing Balance
Exchange difference on translation of the financial statements of foreign operations	$ 36,257	$ -	$ -	$ -	$ 36,257
Unrealized impairment loss	1,216	-	-	-	1,216
Others	141	-	-	10	151
	146,452	60,656	(186)	700	207,622
Tax losses	2,132	-	-	9	2,141
	$ 148,584	$ 60,656	($ 186)	$ 709	$ 209,763
Deferred Tax Liabilities
Cash surrender value of life insurance	$ 374	$ -	$ -	$ -	$ 374
Unrealized exchange gains	390	1,514	-	-	1,904
Unappropriated earnings of subsidiaries	30,492	-	-	-	30,492
Reserve for land value increment tax	124,388	-	-	-	124,388
Deferred revenue	285,233	(8,739)	-	1,070	277,564
	$ 440,877	$ (7,225)	$ -	$ 1,070	$ 434,722

For the year ended December 31, 2024

	Opening Balance	Recognized in Profit or Loss	Recognized in Other Comprehensive Income	Exchange Differences	Closing Balance
Deferred Tax Assets
Temporary differences
Provision for loss on inventories	$ 5,618	$ (2,531)	$ -	$ 106	$ 3,193
Allowance for impair receivables	23	35	-	1	59
Unrealized foreign exchange loss	2,440	(1,987)	-	-	453
Defined benefit obligation	6,491	-	150	-	6,641
Unrealized gross profit	59,412	39,080	-	-	98,492
Exchange difference on translation of the financial statements of foreign operations	36,257	-	-	-	36,257
Unrealized impairment loss	1,216	-	-	-	1,216
Others	140	-	-	1	141
	111,597	34,597	150	108	146,452
Tax losses	2,060	-	-	72	2,132
	$ 113,657	$ 34,597	$ 150	$ 180	$ 148,584
Deferred Tax Liabilities
Cash surrender value of life insurance	$ 374	$ -	$ -	$ -	$ 374
Unrealized exchange gains	-	390	-	-	390
Unappropriated earnings of subsidiaries	30,492	-	-	-	30,492
Reserve for land value increment tax	124,388	-	-	-	124,388
Deferred revenue	284,267	(8,933)	-	9,899	285,233
	$ 439,521	$ (8,543)	$ -	$ 9,899	$ 440,877

e. As of December 31, 2025 and 2024, the taxable temporary differences associated with investments in subsidiaries and branches for which no deferred tax liabilities have been recognized were $4,641,290 thousand and $4,123,745 thousand, respectively.

f. Income tax assessments

The tax returns of the Company, K.M.C Automobile Transmission Co., Ltd. and Kynamic Inc. through 2023 have been assessed by the tax authorities. The tax returns of KMC Chain Industrial Co., Ltd. through 2022 have been assessed by the tax authorities.

50 -

31. EARNINGS PER SHARE

The earnings and weighted average number of ordinary shares outstanding in the computation of earnings per share were as follows:

Net profit for the year

	For the Year Ended December 31
	2025	2024
Profit for the year attributable to owners of the Company	$ 965,023	$ 916,561
Effect of potentially dilutive ordinary shares
Convertible bonds	16,208	16,130
Earnings used in the computation of diluted earnings per share	$ 981,231	$ 932,691
Number of ordinary shares outstanding (in thousand shares)
	For the Year Ended December 31
---	---	---
	2025	2024
Weighted average number of ordinary shares used in the computation of basic earnings per share	126,001	126,001
Effect of potentially dilutive ordinary shares:
Convertible bonds	7,911	7,727
Compensation of employees	98	77
Weighted average number of ordinary shares used in the computation of diluted earnings per share	134,010	133,805

The Company may to settle the compensation of employees in cash or shares, the Company assume that the entire amount of the compensation will be settled in shares, and any resulting potential shares are included in the weighted average number of shares outstanding used in the computation of diluted earnings per share, as the effect is dilutive. Such dilutive effect of the potential shares is included in the computation of diluted earnings per share until the number of shares to be distributed to employees is resolved in the following year.

32. CAPITAL MANAGEMENT

The Group requires significant amount of capital to build and expand its production facilities and equipment. The Group manages its capital in a manner to ensure that it has sufficient and necessary financial resources to fund its working capital needs, capital asset purchases, research and development activities, debt service payments and dividend payments requirements.

33. FINANCIAL INSTRUMENTS

a. Fair value of financial instruments that are not measured at fair value

In the consolidated financial statements, for financial instruments that are not measured at fair value, the carrying amounts recognized approximate the fair value; these financial instruments include cash and cash equivalents, financial assets at amortized cost - current and non-current, notes and accounts receivable (including related parties), other receivables (including related parties), refundable deposits

(classified under other non-current assets), other financial assets - non-current, bank loans, notes and accounts payable (including related parties), other payables, dividends payable and guarantee deposits received (classified under other non-current liabilities).

December 31, 2025

	Carrying Amount	Fair Value
		Level 1	Level 2	Level 3	Total
Financial liabilities
Convertible bonds	$ 985,628	$ -	$ -	$ 987,301	$ 987,301
December 31, 2024
	Carrying Amount	Fair Value
		Level 1	Level 2	Level 3	Total
Financial liabilities
Convertible bonds	$ 969,153	$ -	$ -	$ 969,403	$ 969,403

b. Fair value of financial instruments measured at fair value on a recurring basis

1) Reconciliation of Level 3 fair value measurements of financial instruments

For the year ended December 31, 2025

Financial Assets at FVTPL	Convertible Bonds
Balance on January 1, 2025	$ 100
Recognized in profit or loss (included in other gains and losses)	(100)
Balance on December 31, 2025	$ -
For the year ended December 31, 2024
Financial Assets at FVTPL	Convertible Bonds
Balance on January 1, 2024	$ 200
Recognized in profit or loss (included in other gains and losses)	(100)
Balance on December 31, 2024	$ 100

2) Evaluation technique and inputs applied for Level 3 fair value measurement

Derivatives-convertible bond redemption rights are estimated by using a binary tree transferable evaluation model to estimate the fair value, and the significant unobservable input used is the stock price volatility. When the volatility of stock prices increases, the fair value of the derivatives will increase.

c. Categories of financial instruments

	December 31
	2025	2024
Financial assets
Mandatorily classified as at FVTPL	$ -	$ 100
Financial assets at amortized cost (1)	6,227,906	5,748,875
Financial liabilities
Financial liabilities at amortized cost (2)	3,551,637	3,677,442

1) The balances included financial assets at amortized cost, which comprise cash and cash equivalents, notes and accounts receivable (including related parties), other receivables (including related parties), financial assets at amortized cost - current and non-current, other financial assets non-current and refundable deposits (classified under other non-current assets).

2) The balances included financial liabilities measured at amortized cost, which comprise short-term borrowings, short-term bills payable, notes and accounts payable (including related parties), other payables, guarantee deposits received (classified under other non-current liabilities), bonds payable (including current portion) and long-term borrowings (including current portion).

d. Financial risk management objectives and policies

The Group’s major financial instruments include equity and debt investments, accounts receivable, accounts payable, borrowings and lease liabilities. The Group’s Corporate Treasury function provides services to the business departments, coordinates access to domestic and international financial markets, monitors and manages the financial risks relating to the operations of the Group through internal risk reports which analyze exposures by degree and magnitude of risks. These risks include market risk (including currency risk and interest rate risk), credit risk and liquidity risk.

1) Market risk

The Group’s activities exposed it primarily to the financial risks of changes in foreign currency exchange rates (see (a) below) and interest rates (see (b) below).

There had been no change to the Group’s exposure to market risks or the manner in which these risks were managed and measured.

a) Foreign currency risk

The Group has foreign currency denominated sales and purchases, which exposed the Group to foreign currency risk.

The carrying amounts of the Group’s foreign currency denominated monetary assets and monetary liabilities (including those eliminated on consolidation) at the end of the reporting period are set out in Note 36.

Sensitivity analysis

The Group was mainly exposed to the currencies United States dollars (USD), Euro dollars (EUR) and Ren Min Bi (RMB).

The following table details the Group’s sensitivity to a 1% increase and decrease in New

52 -

Taiwan dollars (NTD, the functional currency) against the relevant foreign currencies. The sensitivity rate used when reporting foreign currency risk internally to key management personnel and representing management's assessment of the reasonably possible change in foreign exchange rates is 1%. The sensitivity analysis included only outstanding foreign currency denominated monetary items. A positive number below indicates an increase in profit before income tax that would result when the functional currency weakens by 1% against the relevant currency. For a 1% strengthening of the functional currency against the relevant currency, there would be an equal and opposite impact on the profit before income tax and the balances below would be negative.

	USD impact
	For the Year Ended December 31
	2025	2024
Profit or loss	$ 7,732	$ 6,713
	EUR impact
	For the Year Ended December 31
	2025	2024
Profit or loss	$ 636	$ 4,959
	RMB impact
	For the Year Ended December 31
	2025	2024
Profit or loss	$ (23)	$ (1,874)

b) Interest rate risk

The Group was exposed to interest rate risk because entities in the Group borrowed funds at both fixed and floating interest rates.

The carrying amounts of the Group's financial assets and financial liabilities with exposure to interest rates at the end of the reporting period were as follows:

	December 31
	2025	2024
Fair value interest rate risk
Financial assets	$ 4,496,919	$ 3,742,030
Financial liabilities	990,320	1,076,940
Cash flow interest rate risk
Financial assets	874,235	1,055,343
Financial liabilities	2,088,074	2,031,651

Sensitivity analysis

If interest rates had been 1% higher and all other variables were held constant, the Group's profit before tax for the year ended December 31, 2025 and 2024 would decrease by $12,138 thousand and increase by $9,763 thousand, respectively; the change was mainly attributable to the Group's exposure to cash flow interest rate risk on its variable-rate bank borrowings and deposits.

53 -

54 -

2) Credit risk

Credit risk refers to the risk that counterparty will default on its contractual obligations resulting in financial loss to the Group. As of the balance sheet date, the Group’s maximum exposure to credit risk which will cause a financial loss to the Group due to failure of counterparties to discharge an obligation and financial guarantees provided by the Group could arise from:

a) The carrying amount of the respective recognized financial assets as stated in the balance sheets; and
b) The amount of contingent liabilities in relation to financial guarantees provided by the Group.

The Group’s customers are creditworthy counterparties; the customers were no significant credit risk exposure. The Group continuously review the customer’s credit status.

3) Liquidity risk

The Group manages liquidity risk by monitoring and maintaining a level of cash and cash equivalents deemed adequate to finance the Group’s operations and mitigate the effects of fluctuations in cash flows. In addition, management monitors the utilization of bank borrowings and ensures compliance with loan covenants.

a) Liquidity and interest risk rate table for non-derivative financial liabilities

The following table details the Group’s remaining contractual maturity for its non-derivative financial liabilities with agreed repayment periods. The table has been drawn up based on the undiscounted cash flows of financial liabilities from the earliest date on which the Group can be required to pay. The table included both interest and principal cash flows. Specifically, bank loans with a repayment on demand clause were included in the earliest time band regardless of the probability of the banks choosing to exercise their rights. The maturity dates for other non-derivative financial liabilities were based on the agreed repayment dates.

To the extent that interest flows are at floating rates, the undiscounted amount was derived from the yield curves at the end of the reporting period.

December 31, 2025

	Less than 1 Year	1-5 Years
Non-derivative financial liabilities
Non-interest bearing liabilities	$ 715,853	$ -
Lease liabilities	2,635	2,125
Variable interest rate liabilities	1,063,627	1,031,171
Fixed interest rate liabilities	1,012,251	-
	$ 2,794,366	$ 1,033,296

Additional information about the maturity analysis for lease liabilities:

	Less than 1 Year	1-5 Years
Lease liabilities	$ 2,635	$ 2,125

December 31, 2024

	Less than 1 Year	1-5 Years
Non-derivative financial liabilities
Non-interest bearing liabilities	$ 923,234	$ -
Lease liabilities	3,180	3,822
Variable interest rate liabilities	1,678,684	365,035
Fixed interest rate liabilities	114,213	1,012,044
	$ 2,719,311	$ 1,380,901

Additional information about the maturity analysis for lease liabilities:

	Less than 1 Year	1-5 Years
Lease liabilities	$ 3,180	$ 3,822

The amount included above for variable interest rate instruments for non-derivative financial liabilities is subject to change if changes in variable interest rates differ from those estimates of interest rates determined at the end of the reporting period.

b) Financing facilities

	December 31
	2025	2024
Unsecured bank overdraft facilities, reviewed annually and payable on demand:
Amount used	$ 2,091,232	$ 2,057,097
Amount unused	6,308,317	5,163,357
	$ 8,399,549	$ 7,220,454

34. TRANSACTIONS WITH RELATED PARTIES

The Company's parent, ultimate parent, and ultimate controlling party is KMC Transton Industries Limited, which held $37.99\%$ and $37.63\%$ of the Company's ordinary shares as of December 31, 2025 and 2024, respectively. Persons representing the ultimate controlling party constitute the key management personnel of the Company.

Balances and transactions between the Company and its subsidiaries, which are related parties of the Company, have been eliminated on consolidation and are not disclosed in this note. Besides information disclosed elsewhere in the other notes, details of transactions between the Group and other related parties are disclosed as follows.

56 -

Name of Related Party

KMC Transton Industries Limited
Wincorp Enterprises Limited
Surmount Technology Shenzhen Co., Ltd.
Smout Optical Film (Taicang) Co., Ltd
President Industry Development (Shenzhen) Co., Ltd.
Suzhou Tongmeng Machinery Equipment Co., Ltd
KMC Transmission (Tianjin) Co., Ltd.
Luo Qi Ni Investment Co., Ltd.

Relationship with the Group

Ultimate parent company
Same members of the key management personnel
Same members of the key management personnel
Same members of the key management personnel
Same members of the key management personnel
Same members of the key management personnel
Same members of the key management personnel
Same members of the key management personnel

a. Sales of goods

Related Party Type	For the Year Ended December 31
	2025	2024
Same members of the key management personnel	$ 169,998	$ 159,285

The prices and terms to related parties were negotiated by considering the location of sales, product type and sales amount and not significantly different from transaction with third parties. The credit terms for related parties were 60 to 180 days and for non-related parties were 30 to 90 days.

b. Receivables from related parties (Not including loans to related parties)

Account Item	Related Party Type	December 31
		2025	2024
Accounts receivable from related parties	Same members of the key management personnel	$ 43,386	$ 59,318
Other receivables from related parties	Same members of the key management personnel	$ 19,197	$ 10,044

The outstanding receivables from related parties are unsecured. For the year ended December 31, 2025 and 2024, no impairment loss was recognized for receivables from related parties.

c. Payables to related parties

Account Item	Related Party Type	December 31
		2025	2024
Accounts payable to related parties	Same members of the key management personnel	$ 25,985	$ 29,490

The outstanding payables to related parties are unsecured and would be paid in cash.

d. Acquisitions of property, plant and equipment

Related Party Type	Purchase Price
	For the Year Ended December 31
	2025	2024
Same members of the key management personnel	$ 5,386	$ 2,418

e. Lease arrangements - Group as lessee

Acquisition of right-of-use assets

The Group leases offices and plants from the parent company. The lease terms are from November 2024 to October 2027, and the rentals are paid quarterly.

Account Item	Related Party Category	December 31
		2025	2024
Lease liabilities	Parent company	$ 2,702	$ 4,137
Related Party Category	For the Year Ended December 31
		2025	2024
Interest expense
Parent company		$ 64	$ 17
Depreciation Expenses
Parent company		$ 1,458	$ 1,479

f. Lease arrangements

Lease arrangements - Group as lessor under operating leases

The Group leases out lands and buildings to key management personnel under operating leases with lease term of 1 year. The contract is re-signed every year. The lease prices are determined in accordance with mutual agreements. The rental income is received monthly.

Future lease payment receivable are as follows:

	December 31
Related Party Category	2025	2024
Same members of the key management personnel	$ 4,822	$ 4,802
	For the Year Ended December 31
Related Parties Types	2025	2024
Same members of the key management personnel	$ 4,373	$ 4,495

g. Compensation of key management personnel

	For the Year Ended December 31
	2025	2024
Short-term employee benefits	$ 15,878	$ 15,638
Post-employment benefits	54	54
	$ 15,932	$ 15,692

The remuneration of directors and key executives, as determined by the remuneration committee, is based on the performance of individuals and market trends.

58 -

35. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNIZED COMMITMENTS

In addition to those disclosed in other notes, unrecognized commitments of the Group were as follows:

	December 31
	2025	2024
Acquisition of property, plant and equipment	$ 149,610	$ 98,987

36. SIGNIFICANT ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES

The Group’s significant financial assets and liabilities denominated in foreign currencies aggregated by the foreign currencies other than functional currencies of the entities in the Group and the related exchange rates between foreign currencies and respective functional currencies were as follows:

December 31, 2025

	Foreign Currency (In Thousands)	Exchange Rate	Carrying Amount (In Thousands)
Financial assets
Monetary items
USD	$ 17,436	31.43	$ 548,008
		(USD : NTD)
USD	1,096	26,097	34,450
		(USD : VND)
USD	8,374	7.03	263,206
		(USD : RMB)
EUR	5,833	36.90	215,230
		(EUR : NTD)
EUR	310	4.368	11,452
		(EUR : RMB)
RMB	58,618	4.496	263,548
		(RMB : NTD)
Financial liabilities
Monetary items
USD	838	31.43	26,351
		(USD : NTD)
USD	235	26,377	7,423
		(USD : VND)
USD	967	16,718	30,401
		(USD : IDR)
USD	265	7.03	8,330
		(USD : RMB)
EUR	4,418	36.90	163,034
		(EUR : NTD)
RMB	59,124	4.496	265,820
		(RMB : NTD)

December 31, 2024

| | Foreign Currency
(In Thousands) | Exchange Rate | Carrying Amount
(In Thousands) |
| --- | --- | --- | --- |
| Financial assets | | | |
| Monetary items | | | |
| USD | $ 15,111 | 32.785 | $ 495,406 |
| | | (USD : NTD) | |
| USD | 794 | 25,271 | 26,030 |
| | | (USD : VND) | |
| USD | 5,931 | 7.19 | 194,462 |
| | | (USD : RMB) | |
| EUR | 14,365 | 34.140 | 490,422 |
| | | (EUR : NTD) | |
| EUR | 227 | 7.526 | 7,763 |
| | | (EUR : RMB) | |
| RMB | 28,984 | 4.478 | 129,792 |
| | | (RMB : NTD) | |
| Financial liabilities | | | |
| Monetary items | | | |
| USD | 491 | 32.785 | 16,112 |
| | | (USD : NTD) | |
| USD | 6 | 25,551 | 184 |
| | | (USD : VND) | |
| USD | 335 | 16,150 | 10,766 |
| | | (USD : IDR) | |
| USD | 534 | 7.188 | 17,511 |
| | | (USD : RMB) | |
| EUR | 67 | 34.140 | 2,286 |
| | | (EUR : NTD) | |
| RMB | 70,841 | 4.478 | 317,225 |
| | | (RMB : NTD) | |

The Group is mainly exposed to USD, EUR and RMB. The following information is an aggregation of the functional currencies of the Group entities, and disclosure of the exchange rates between the respective functional currencies and the presentation currency. The significant realized and unrealized foreign exchange gains (losses) were as follows:

Foreign Currency	For the Year Ended December 31
	2025		2024
	Exchange Rate	Net Foreign Exchange Gains (Losses)	Exchange Rate	Net Foreign Exchange Gains (Losses)
NTD	1 (NTD:NTD)	$ (9,580)	1 (NTD:NTD)	$ 13,690
VND	0.0012 (VND:NTD)	586	0.0013 (VND:NTD)	568
IDR	0.00188 (IDR:NTD)	(298)	0.00203 (IDR:NTD)	(236)
RMB	4.496 (RMB:NTD)	(2,525)	4.478 (RMB:NTD)	7,983
EUR	36.9 (EUR:NTD)	1	34.14 (EUR:NTD)	-
		$ (11,816)		$ 22,005

37. SEPARATELY DISCLOSED ITEMS

a. Information about significant transactions and investees:

1) Financing provided to others. (Table 1)
2) Endorsements/guarantees provided. (N/A)
3) Marketable securities held (excluding investment in subsidiaries and associates). (N/A)
4) Total purchases from or sales to related parties amounting to at least NT$100 million or 20% of the paid-in capital. (Table 2)
5) Receivables from related parties amounting to at least NT$100 million or 20% of the paid-in capital. (Table 3)
6) Intercompany relationships and significant intercompany transactions. (Table 7)

b. Information on investees. (Table 4)

c. Information on investments in mainland China:

1) Information on any investee company in mainland China, showing the name, principal business activities, paid-in capital, method of investment, inward and outward remittance of funds, ownership percentage, net income or loss of investee, investment income or loss, carrying amount of the investment at the end of the period, repatriations of investment income or loss, and the limit on amount of investment in the mainland China area. (Table 5)
2) Any of the following significant transactions with investee companies in mainland China, either directly or indirectly through a third party, and their prices, payment terms, and unrealized gains or losses

a) The amount and percentage of purchases and the balance and percentage of the related payables at the end of the period. (Table 6)
b) The amount and percentage of sales and the balance and percentage of the related receivables at

the end of the period. (Table 6)

c) The amount of property transactions and the amount of the resultant gains or losses. (N/A)
d) The balance of negotiable instrument endorsements or guarantees or pledges of collateral at the end of the period and the purposes. (N/A)
e) The highest balance, the end of period balance, the interest rate range, and total current period interest with respect to financing of funds. (N/A)
f) Other transactions that have a material effect on the profit or loss for the period or on the financial position, such as the rendering or receiving of services. (N/A)

38. SEGMENT INFORMATION

The main business of the Group is manufacturing and selling the transmission goods, and the Group's operating segments are aggregated into a single reportable segment. The Group's chief operating decision maker reviews segment information measured on the same basis as the financial statements. Information about reportable segment sales and profit or loss is referred to the consolidated statements of comprehensive income for the years ended December 31, 2025 and 2024, and information on assets is referred to the consolidated balance sheets as of December 31, 2025 and 2024.

a. Geographical information

The Group operates in three principal geographical areas - Asia, Europe and America.

The Group's revenue from continuing operations from external customers by location of operations and information about its non-current assets by location of assets are detailed below:

	Revenue from External Customers
	For the Year Ended December 31
	2025	2024
Asia	$ 2,235,070	$ 2,530,614
Europe	1,285,129	1,195,059
America	1,157,695	1,234,413
	$ 4,677,894	$ 4,960,086
	Non-current Assets
	December 31
	2025	2024
Asia	$ 5,645,012	$ 5,775,989
Europe	280,183	218,065
America	46,663	49,438
	$ 5,971,858	$ 6,043,492

Non-current assets excluded those classified as financial instruments, refundable deposits, deferred tax assets and investments accounted for using equity method.

b. Information about major customers

There are no single customers who contributed 10% or more to the Group’s revenue for the years ended December 31, 2025 and 2024.

62 -

TABLE 1

KMC (KUEI MENG) INTERNATIONAL INC. AND SUBSIDIARIES

FINANCING PROVIDED TO OTHERS

FOR THE YEAR ENDED DECEMBER 31, 2025

(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

No.	Lender	Borrower	Financial Statement Account	Related Party	Highest Balance for the Period	Ending Balance	Actual Borrowing Amount	Interest Rate (%)	Nature of Financing (Note 2)	Business Transaction Amount (Note 3)	Reasons for Short-term Financing	Allowance for Impairment Loss	Collateral		Financing Limit for Each Borrower (Note 1)	Aggregate Financing Limit (Note 1)	Note
													Item	Value
1	KMC Chain (Vietnam) Co., Ltd.	KMC Industries (Vietnam) Co., Ltd.	Other receivable	Y	$ 31,430 (USD 1,000 thousand or its equivalent in other currencies)	$ 31,430 (USD 1,000 thousand or its equivalent in other currencies)	$ 31,313 (VND 26,000,000 thousand)	4.6%-5.9%	2	$ -	Operating capital	$ -	-	-	$ 2,287,379	$ 17,773,065

Note 1: The upper limit is equivalent to 500% of the net asset value of financier. But the total upper limit is equivalent to 200% of the net asset value of the Company.

Note 2: Nature of financing:

1) For business transaction is 1.
2) For short-term financing is 2.

Note 3: The needed amount for operation in the latest year.

Note 4: The rate of exchange was NT$31.43 to one USD.

Note 5: The rate of exchange was NT$0.00120435 to one VND.

TABLE 2

KMC (KUEI MENG) INTERNATIONAL INC. AND SUBSIDIARIES

TOTAL PURCHASES FROM OR SALES TO RELATED PARTIES AMOUNTING TO AT LEAST $100 MILLION OR 20% OF THE PAID-IN CAPITAL

FOR THE YEAR ENDED DECEMBER 31, 2025

(In Thousands of New Taiwan Dollars)

Buyer	Related Party	Relationship	Transaction Details				Abnormal Transaction		Notes/Accounts Receivable (Payable)
			Purchase/Sale	Amount	% to Total	Payment Terms	Unit Price	Payment Terms	Ending Balance	% to Total
KMC (KUEI MENG) International Inc.	KMC Chain Europe N.V.	Subsidiary	Sales	$ (767,499)	(44)	Net 90 days after month end close	Negotiation method	No comparable payment terms for general customers	$ 205,537	58
	Wincorp Enterprise Limited	Same members of the key management personnel	Sales	(166,885)	(10)	Net 120 days after month end close	No comparable sales prices for general customers	No comparable payment terms for general customers	43,142	12
	KMC Chain Industrial Co., Ltd.	Subsidiary	Purchases	386,986	40	Net 60 days after month end close	No comparable sales prices for general customers	No comparable payment terms for general customers	(84,199)	(25)
	KMC Chain (Shenzhen) Co., Ltd.	Subsidiary	Purchases	473,394	49	Net 150 days after month end close	No comparable sales prices for general customers	No comparable payment terms for general customers	(215,321)	(63)
K.M.C Automobile Transmission Co., Ltd.	KMC Automobile Transmission Co., Ltd.	Fellow subsidiary	Purchases	169,271	62	Net 60 days after month end close	No comparable sales prices for general customers	No comparable payment terms for general customers	(31,273)	(56)
	KMC (Suzhou) Automobile Transmission Co., Ltd.	Fellow subsidiary	Purchases	198,812	73	Net 60 days after month end close	No comparable sales prices for general customers	No comparable sales prices for general customers	(20,470)	(37)
KMC Transmission (Tianjin) Co., Ltd.	Suzhou KMC Industry and Trade Co., Ltd.	Fellow subsidiary	Sales	(188,489)	(37)	Net 90 days after month end close	No comparable sales prices for general customers	No comparable payment terms for general customers	62,290	44
	Suzhou Maya Trading Co., Ltd.	Fellow subsidiary	Sales	(188,160)	(37)	Net 120 days after month end close	No comparable sales prices for general customers	No comparable payment terms for general customers	47,051	33
KMC Chain (Shenzhen) Co., Ltd.	Suzhou KMC Industry and Trade Co., Ltd.	Fellow subsidiary	Sales	(110,277)	(14)	Net 60 days after month end close	No comparable sales prices for general customers	No comparable payment terms for general customers	14,158	5
KMC Chain (Suzhou) Co., Ltd.	Taicang Tec Industry and Trade Co., Ltd.	Fellow subsidiary	Sales	(163,336)	(27)	Net 60 days after month end close	No comparable sales prices for general customers	No comparable payment terms for general customers	48,109	26
	Suzhou Maya Trading Co., Ltd.	Fellow subsidiary	Sales	(100,051)	(17)	Net 120 days after month end close	No comparable sales prices for general customers	No comparable payment terms for general customers	24,103	13
	Suzhou KMC Industry and Trade Co., Ltd.	Fellow subsidiary	Sales	(151,163)	(25)	Net 90 days after month end close	No comparable sales prices for general customers	No comparable payment terms for general customers	30,087	16

TABLE 3

KMC (KUEI MENG) INTERNATIONAL INC. AND SUBSIDIARIES

RECEIVABLES FROM RELATED PARTIES AMOUNTING TO AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL

DECEMBER 31, 2025

(In Thousands of New Taiwan Dollars)

Company Name	Related Party	Relationship	Ending Balance	Turnover Ratio	Overdue		Amounts Received in Subsequent Period	Allowance for Impairment Loss
					Amount	Actions Taken
KMC (KUEI MENG) International Inc.	KMC Chain Europe N.V.	Subsidiary	$ 205,537	2.36	$ -	-	$ 84,344	$ -
KMC Chain (Shenzhen) Co., Ltd.	KMC (KUEI MENG) International Inc.	Parent company	215,321	2.05	-	-	80,204	-

TABLE 4

KMC (KUEI MENG) INTERNATIONAL INC. AND SUBSIDIARIES

INFORMATION ON INVESTEES

FOR THE YEAR ENDED DECEMBER 31, 2025

(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Investor Company	Investee Company	Location	Main Businesses and Products	Original Investment Amount		As of December 31, 2025			Net Income (Loss) of the Investee	Share of Profits (Loss)
				December 31, 2025	December 31, 2024	Shares	%	Carrying Amount
KMC (KUEI MENG) International Inc.	KMC Chain Industrial Co., Ltd.	Taiwan	Manufacturing, selling various chains and components of motorcycle and vehicle	$ 8,961,427	$ 8,661,427	92,000,000	100	$ 10,112,465	$ 488,500	$ 479,261
	Pro (Taiwan) Procurement Co., Ltd.	Taiwan	Selling various bicycle components	12,250	12,250	1,225,000	49	13,093	719	352
	K.M.C. Automobile Transmission Co., Ltd.	Taiwan	Selling equipment and materials for chains and designing products	597,520	597,520	3,253,812	100	660,572	23,539	23,539
	Kynamic Inc.	Taiwan	After-sales service treatment of electric bicycles	80,000	80,000	1,500,000	100	41,620	(6,804)	(6,804)
	KMC Industries (Vietnam) Co., Ltd.	Vietnam	Selling various chains and components	31,430 (USD 1,000 thousand)	32,785 (USD 1,000 thousand)	-	100	25,979	3,445	3,445
	KMC Global GmbH	Germany	Selling parts and accessories other than bicycle chains	110,700 (EUR 3,000 thousand)	102,420 (EUR 3,000 thousand)	-	100	144,692	(5,590)	(5,590)
KMC Chain Industrial Co., Ltd.	KMC (BVI) Holding Co., Ltd.	British Virgin IS	Investing activities	16,344 (USD 520 thousand)	17,048 (USD 520 thousand)	520,000	100	461,589	4,322
	KMC Chain Europe N.V.	Netherlands	Selling various bicycle chains and components	320,919	320,919	100	100	902,175	28,106
	KMC Chain American Corporation	United States	Selling various bicycle chains and components	130,845	130,845	10,000	100	287,271	21,068
	P.T. Kuei Meng Chain Indonesia	Indonesia	Selling various motorcycle chains and components	24,750	24,750	-	99	(2,997)	(7,237)
KMC (BVI) Holding Co., Ltd.	KMC Chain (Vietnam) Co., Ltd.	Vietnam	Manufacturing and selling various chains and components	94,290 (USD 3,000 thousand)	98,355 (USD 3,000 thousand)	-	100	461,337	4,643
KMC Chain Europe N.V.	KME B.V.	Netherlands	Leasing owned properties and plant	152,987 (EUR 4,146 thousand)	141,544 (EUR 4,146 thousand)	120	100	161,713	4,627
Kynamic Inc.	Kynamic Europe B.V.	Netherlands	After-sales service treatment of electric bicycles	22,140 (EUR 600 thousand)	20,518 (EUR 600 thousand)	-	100	17,800	(365)

Note: Please refer to Table 5 for the information on investments in mainland China.

TABLE 5

KMC (KUEI MENG) INTERNATIONAL INC. AND SUBSIDIARIES

INFORMATION ON INVESTMENTS IN MAINLAND CHINA

FOR THE YEAR ENDED DECEMBER 31, 2025

(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Investor Company	Main Businesses and Products	Paid-in Capital	Method of Investment (Note 1)	Accumulated Outward Remittance for Investment from Taiwan as of January 1, 2025	Remittance of Funds		Accumulated Outward Remittance for Investment from Taiwan as of December 31, 2025	Net Income (Loss) of the Investor	% Ownership of Direct or Indirect Investment	Investment Gain (Loss) (Note 2)	Carrying Amount as of December 31, 2025	Accumulated Repatriation of Investment Income as of December 31, 2025	Note
					Outward	Inward
KMC Investment (China) Co., Ltd.	Investing activities and selling of various bicycle chains and accessories.	$ 4,772,832 (RMB 1,061,573 thousand)	1.(1)	$ 5,036,936	$ -	$ -	$ 5,036,936	$ 464,513	100	$ 464,513	$ 8,400,239	$ -
KMC Transmission (Tianjin) Co., Ltd.	Manufacturing and selling of various bicycle chains and accessories.	399,200 (RMB 88,790 thousand)	1.(3)	1.(3)	-	-	1.(3)	31,750	100	25,922	677,060	-	Note 5
Taichang Tec Industry and Trade Co., Ltd	Selling of various bicycle chains and accessories.	8,992 (RMB 2,000 thousand)	1.(3)	1.(3)	-	-	1.(3)	(1,714)	100	(1,714)	41,330	-
Suzhou KMC Industry and Trade Co., Ltd	Selling of various bicycle chains and accessories.	8,992 (RMB 2,000 thousand)	1.(3)	1.(3)	-	-	1.(3)	152,510	100	152,510	172,036	-
KMC Chain (Shenzhen) Co., Ltd.	Manufacturing and selling various chains of bicycle.	781,441 (RMB 173,808 thousand)	1.(3)	1.(3)	-	-	1.(3)	37,186	100	6,790	2,183,068	-	Note 5
KMC Chain (Suzhou) Co., Ltd.	Manufacturing and selling various chains of bicycle.	362,836 (RMB 80,702 thousand)	1.(3)	1.(3)	-	-	1.(3)	215,161	100	204,118	1,086,097	-	Note 5
KMC Automotive Transmission Co., Ltd.	Manufacturing and selling ATS.	184,336 (RMB 41,000 thousand)	1.(3)	1.(3)	-	-	1.(3)	14,347	100	14,347	350,041	-
KMC Transton Company Limited.	Manufacturing and selling GDO.	40,464 (RMB 9,000 thousand)	1.(3)	1.(3)	-	-	1.(3)	32,481	100	32,481	352,900	-
Shenzhen KMC Industrial Co., Ltd.	Selling of GDO.	4,496 (RMB 1,000 thousand)	1.(3)	1.(3)	-	-	1.(3)	29,909	100	29,909	62,285	-
Suzhou Maya Trading Co., Ltd.	Selling of various bicycle chains and accessories.	49,456 (RMB 11,000 thousand)	1.(3)	1.(3)	-	-	1.(3)	2,169	100	(8,512)	228,975	-	Note 5
KMC International Trading (Taicang) Co., Ltd.	Selling of various bicycle chains and accessories.	8,992 (RMB 2,000 thousand)	1.(3)	1.(3)	-	-	1.(3)	(205)	100	(205)	22,498	-
KMC (Suzhou) Automotive Transmission Co., Ltd.	Manufacturing and selling ATS	143,872 (RMB 32,000 thousand)	1.(3)	1.(3)	-	-	1.(3)	13,331	100	13,331	178,140	-
Accumulated Outward Remittance for Investment in Mainland China as of December 31, 2025	Investment Amounts Authorized by Investment Commission, MOEA	Upper Limit on the Amount of Investment Stipulated by Investment Commission, MOEA
---	---	---
$ 4,769,424 (RMB 1,060,815 thousand)	$ 6,207,991 (USD 197,518 thousand)	$ - (Note 3)

Note 1: The investing methods are categorized as follows:

1) Direct investment in companies in mainland China.
2) Investment in companies in mainland China, which is made by a company incorporated via a third region.
3) Others (invested by KMC Investment (China) Co., Ltd.)

Note 2: The recognition of gains or losses on investment is based on the financial statements audited by the certified public accountant of the parent company in Taiwan.

Note 3: Pursuant to the No. 0970460680 of the Ministry of Economic Affairs, ROC which amended the Guidelines Governing the Review of Investment or Technical Cooperation in the Mainland Area' dated August 29, 2008, as KMC Chain Industrial Co., Ltd. has obtained the certificate of being qualified for operating headquarters issued by the Industrial Development Bureau, MOEA, the ceiling amount of the investment in Mainland China is not applicable to the Company.

Note 4: The rates of exchange were NT$4.496 to one RMB and NT$31.43 to one US dollar.

Note 5: The difference between share of profit and net income of the investee was due to the difference between the investment cost and fair value of identifiable net assets acquired.

TABLE 6

KMC (KUEI MENG) INTERNATIONAL INC. AND SUBSIDIARIES

SIGNIFICANT TRANSACTIONS WITH INVESTEE COMPANIES IN MAINLAND CHINA, EITHER DIRECTLY OR INDIRECTLY THROUGH A THIRD PARTY, AND THEIR PRICES, PAYMENT TERMS, AND UNREALIZED GAINS OR LOSSES FOR THE YEAR ENDED DECEMBER 31, 2025

(In Thousands of New Taiwan Dollars)

Buyer	Counterparty	Relationship	Transaction Details				Abnormal Transaction		Notes/Accounts Receivable (Payable)		Unrealized Gain
			Purchase/Sale	Amount	% to Total	Payment Terms	Unit Price	Payment Terms	Ending Balance	% to Total
KMC (KUEI MENG) International Inc.	KMC Chain (Shenzhen) Co., Ltd.	Subsidiary	Purchases	$ 473,394	18	Net 150 days after month end close	Bargain	Equivalent	$ (215,321)	(63)	$ (3,172)
K.M.C. Automobile Transmission Co., Ltd.	KMC Automotive Transmission Co., Ltd.	Fellow subsidiary	Purchases	169,271	6	Net 60 days after month end close	Bargain	Equivalent	(31,273)	(56)	-
	KMC (Suzhou) Automotive Transmission Co., Ltd.	Fellow subsidiary	Purchases	198,812	7	Net 60 days after month end close	Bargain	Equivalent	(20,470)	(37)	-

TABLE7

KMC (KUEI MENG) INTERNATIONAL INC. AND SUBSIDIARIES

SIGNIFICANT INTERCOMPANY TRANSACTIONS

FOR THE YEAR ENDED DECEMBER 31, 2025

(In Thousands of New Taiwan Dollars)

No. (Note 1)	Related Party	Counterparty	Relationship (Note 2)	Transaction Details
				Financial Statement Account	Amount	Payment Terms	% of Total Sales Or Assets (Note 3)
0	KMC (KUEI MENG) International Inc.	KMC Chain Europe N.V.	1.	Sales	$ 767,499	Negotiation method	16
		KMC Chain American Corporation	1.	Sales	68,779	Negotiation method	1
		KMC Chain (Vietnam) Co., Ltd.	1.	Purchases	46,365	Negotiation method	1
		KMC Chain Industrial Co., Ltd.	1.	Purchases	386,986	Negotiation method	8
		KMC Chain (Shenzhen) Co., Ltd.	1.	Purchases	473,394	Negotiation method	10
		KMC Chain Europe N.V.	1.	Accounts receivable	205,537	Net 90 days after month end close	1
		KMC Chain Industrial Co., Ltd.	1.	Accounts payable	84,199	Net 60 days after month end close	1
		KMC Chain (Shenzhen) Co., Ltd.	1.	Accounts payable	215,321	Net 150 days after month end close	2
1	K.M.C. Automobile Transmission Co., Ltd.	KMC (Suzhou) Automotive Transmission Co., Ltd.	3.	Purchases	198,812	Negotiation method	4
		KMC Automotive Transmission Co., Ltd.	3.	Purchases	169,271	Negotiation method	4
2	KMC Chain (Vietnam) Co., Ltd.	KMC Industries (Vietnam) Co., Ltd.	3.	Sales	68,319	Negotiation method	1
3	KMC Transmission (Tianjin) Co., Ltd.	Suzhou KMC Industry and Trade Co., Ltd.	3.	Sales	188,489	Negotiation method	4
		Shenzhen KMC Industrial Co., Ltd.	3.	Sales	93,938	Negotiation method	2
		Suzhou Maya Trading Co., Ltd.	3.	Sales	188,160	Negotiation method	4
		Suzhou KMC Industry and Trade Co., Ltd.	3.	Accounts receivable	62,290	Net 90 days after month end close	-
		Suzhou Maya Trading Co., Ltd.	3.	Accounts receivable	47,051	Net 120 days after month end close	-
4	KMC Chain (Shenzhen) Co., Ltd.	Suzhou KMC Industry and Trade Co., Ltd.	3.	Sales	110,277	Negotiation method	2
5	KMC Chain (Suzhou) Co., Ltd.	Suzhou KMC Industry and Trade Co., Ltd.	3.	Sales	151,163	Negotiation method	3
		Taichang Tec Industrial and Trades Co., Ltd.	3.	Sales	163,336	Negotiation method	3
		Suzhou Maya Trading Co., Ltd.	3.	Sales	100,051	Negotiation method	2
		Taichang Tec Industrial and Trades Co., Ltd.	3.	Accounts receivable	48,109	Net 60 days after month end close	-
6	Shenzhen KMC Industrial Co., Ltd.	KMC Chain (Vietnam) Co., Ltd.	3.	Sales	57,561	Negotiation method	-

Note 1: No. 0: Represents parent Company. No. 1-: Represents subsidiaries.
Note 2: The transaction relationships with the counterparties are as follows:

No. 1: Represents transactions from parent Company to subsidiary.
No. 2: Represents transactions from the subsidiary to the parent Company.
No. 3: Represents transactions among subsidiaries.

Note 3: Percentage of consolidated operating revenues or consolidated total assets: For balance sheet account, the percentage is computed by dividing the ending balance of the account by consolidated total assets; for income statement accounts, the percentage is computed by dividing the accumulated amount of the account by the consolidated operating revenues.

Note 4: All the transactions had been eliminated when preparing consolidated financial statement.

TABLE 8

KMC (KUEI MENG) INTERNATIONAL INC. AND SUBSIDIARIES

MOVEMENTS OF PROPERTY, PLANT AND EQUIPMENT

FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024

(In Thousands of New Taiwan Dollars)

	Land	Buildings	Machinery and equipment	Transportation equipment	Leasehold improvement	Furniture and fixtures	Miscellaneous equipment	Construction in progress	Total
Cost
Balance on January 1, 2024	$ 245,230	$ 3,044,258	$ 1,919,874	$ 64,942	$ 4,763	$ 103,115	$ 391,015	$ 18,475	$ 5,791,672
Additions	-	43,019	79,571	409	118	8,248	43,941	133,849	309,155
Disposals	-	-	(71,441)	(1,298)	-	(4,256)	(5,667)	(297)	(82,959)
Reclassification	-	(4,509)	14,177	(78)	-	(33,743)	47,382	(34,129)	(10,900)
Effect of foreign currency exchange differences	1,517	98,628	51,412	2,134	325	961	12,570	2,878	170,425
Balance on December 31, 2024	$ 246,747	$ 3,181,396	$ 1,993,593	$ 66,109	$ 5,206	$ 74,325	$ 489,241	$ 120,776	$ 6,177,393
Accumulated depreciation and impairment
Balance on January 1, 2024	$ -	$ 896,370	$ 1,108,028	$ 51,189	$ 2,519	$ 47,023	$ 271,901	$ -	$ 2,377,030
Disposals	-	-	(61,705)	(1,179)	-	(2,269)	(5,214)	-	(70,367)
Depreciation	-	107,796	139,518	3,867	-	7,406	57,000	-	315,587
Reclassification	-	(2,866)	(4,524)	(8)	-	(13,287)	12,873	-	(7,812)
Effect of foreign currency exchange differences	-	28,063	27,327	1,691	171	258	8,848	-	66,358
Balance on December 31, 2024	$ -	$ 1,029,363	$ 1,208,644	$ 55,560	$ 2,690	$ 39,131	$ 345,408	$ -	$ 2,680,796
Carrying amounts on December 31, 2024	$ 246,747	$ 2,152,033	$ 784,949	$ 10,549	$ 2,516	$ 35,194	$ 143,833	$ 120,776	$ 3,496,597
Cost
Balance on January 1, 2025	$ 246,747	$ 3,181,396	$ 1,993,593	$ 66,109	$ 5,206	$ 74,325	$ 489,241	$ 120,776	$ 6,177,393
Additions	-	137,801	154,160	2,918	-	4,744	34,088	101,444	435,155
Disposals	-	(1,625)	(104,855)	(1,730)	-	(4,753)	(11,495)	-	(124,458)
Reclassification	-	49,404	14,305	-	-	213	20,149	(191,490)	(107,419)
Effect of foreign currency exchange differences	(275)	26,664	(5,767)	(257)	(215)	4,875	10,024	(10,164)	24,885
Balance on December 31, 2025	$ 246,472	$ 3,393,640	$ 2,051,436	$ 67,040	$ 4,991	$ 79,404	$ 542,007	$ 20,566	$ 6,405,556
Accumulated depreciation and impairment
Balance on January 1, 2025	$ -	$ 1,029,363	$ 1,208,644	$ 55,560	$ 2,690	$ 39,131	$ 345,408	$ -	$ 2,680,796
Disposals	-	(902)	(83,075)	(1,601)	-	(4,623)	(10,085)	-	(100,286)
Depreciation	-	104,604	134,686	2,917	75	9,224	41,911	-	293,417
Reclassification	-	-	(19,517)	-	141	-	(2,460)	-	(21,836)
Effect of foreign currency exchange differences	-	5,679	(17,331)	(255)	(109)	2,357	1,352	-	(8,307)
Balance on December 31, 2025	$ -	$ 1,138,744	$ 1,223,407	$ 56,621	$ 2,797	$ 46,089	$ 376,126	$ -	$ 2,843,784
Carrying amounts on December 31, 2025	$ 246,472	$ 2,254,896	$ 828,029	$ 10,419	$ 2,194	$ 33,315	$ 165,881	$ 20,566	$ 3,561,772

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KMC — Audit Report / Information 2026

52474_rns_2026-05-11_0ae8e5da-6e7e-4f7e-9c21-89d3ee083f02.pdf

DECLARATION OF CONSOLIDATION OF FINANCIAL STATEMENTS OF AFFILIATES

INDEPENDENT AUDITORS' REPORT

Opinion

Basis for Opinion

Key Audit Matters

Revenue recognition

Other Matter

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

Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements

Notice to Readers

CONSOLIDATED BALANCE SHEETS

KMC (KUEI MENG) INTERNATIONAL INC. AND SUBSIDIARIES

KMC (KUEI MENG) INTERNATIONAL INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024

KMC (KUEI MENG) INTERNATIONAL INC. AND SUBSIDIARIES

KMC (KUEI MENG) INTERNATIONAL INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024

1. GENERAL INFORMATION

2. APPROVAL OF FINANCIAL STATEMENTS

3. APPLICATION OF NEW, AMENDED AND REVISED STANDARDS AND INTERPRETATIONS

4. SUMMARY OF MATERIAL ACCOUNTING POLICY INFORMATION

5. MATERIAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

6. CASH AND CASH EQUIVALENTS

7. FINANCIAL INSTRUMENTS AT FVTPL

8. FINANCIAL ASSETS AT AMORTIZED COST

9. NOTES RECEIVABLE, ACCOUNTS RECEIVABLE (INCLUDING RELATED PARTIES)

10. INVENTORIES

11. OTHER FINANCIAL ASSETS - NON-CURRENT

12. PREPAYMENTS AND OTHER ASSETS

13. INVESTMENTS ACCOUNTED FOR USING EQUITY METHOD

14. PROPERTY, PLANT AND EQUIPMENT

15. LEASE ARRANGEMENTS

16. INVESTMENT PROPERTIES

17. SUBSIDIARIES

18. GOODWILL

19. OTHER INTANGIBLE ASSETS

20. BONDS PAYABLE

Liability component

21. BORROWINGS

22. NOTES PAYABLE AND ACCOUNTS PAYABLE (INCLUDING RELATED PARTIES)

23. OTHER LIABILITIES

24. PROVISIONS

25. Government Grants

26. RETIREMENT BENEFIT PLANS

27. EQUITY

28. REVENUE

29. NET PROFIT

Accrual rate

30. INCOME TAXES

31. EARNINGS PER SHARE

32. CAPITAL MANAGEMENT

33. FINANCIAL INSTRUMENTS

34. TRANSACTIONS WITH RELATED PARTIES

Name of Related Party

Relationship with the Group

35. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNIZED COMMITMENTS

36. SIGNIFICANT ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES

37. SEPARATELY DISCLOSED ITEMS

38. SEGMENT INFORMATION

KMC (KUEI MENG) INTERNATIONAL INC. AND SUBSIDIARIES

KMC (KUEI MENG) INTERNATIONAL INC. AND SUBSIDIARIES

KMC (KUEI MENG) INTERNATIONAL INC. AND SUBSIDIARIES

KMC (KUEI MENG) INTERNATIONAL INC. AND SUBSIDIARIES

KMC (KUEI MENG) INTERNATIONAL INC. AND SUBSIDIARIES

KMC (KUEI MENG) INTERNATIONAL INC. AND SUBSIDIARIES

KMC (KUEI MENG) INTERNATIONAL INC. AND SUBSIDIARIES

KMC (KUEI MENG) INTERNATIONAL INC. AND SUBSIDIARIES

MOVEMENTS OF PROPERTY, PLANT AND EQUIPMENT

FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024

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