AI assistant
KMC — Audit Report / Information 2025
May 11, 2026
52474_rns_2026-05-11_e965d52b-de66-4a48-aa2b-e519dfb1a621.pdf
Audit Report / Information
Open in viewerOpens in your device viewer
KMC (KUEI MENG) INTERNATIONAL INC.
Parent Company Only Financial Statements for the Years Ended December 31, 2025 and 2024 and Independent Auditors' Report
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 parent company only financial statements of KMC (KUEI MENG) International Inc. (the “Company”), which comprise the parent company only balance sheets as of December 31, 2025 and 2024, and the parent company only statements of comprehensive income, changes in equity and cash flows for the years then ended, and the notes to the parent company only financial statements, including material accounting policies information.
In our opinion, the accompanying parent company only financial statements present fairly, in all material respects, the parent company only financial position of the Company as of December 31, 2025 and 2024, and its parent company only financial performance and its parent company only cash flows for the years then ended in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers.
Basis for Opinion
We conducted our audits in accordance with the Regulations Governing 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 Parent company only Financial Statements section of our report. We are independent of the Company 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 parent company only financial statements for the year ended December 31, 2024. These matters were addressed in the context of our audit of the parent company only financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
The description of the key audit matter of the Company’s parent company only financial statements for the year ended December 31, 2025 is as follows:
Revenue recognition
The Company sells its products in Asia, Americas and Europe. Sales revenue is significant to the parent company only 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 operational 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 test the occurrence of the sales.
Responsibilities of Management and Those Charged with Governance for the Parent Company Only Financial Statements
Management is responsible for the preparation and fair presentation of the parent company only financial statements in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and for such internal control as management determines is necessary to enable the preparation of parent company only financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the parent company only financial statements, management is responsible for assessing the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.
Those charged with governance, including the audit committee, are responsible for overseeing the Company's financial reporting process.
Auditors' Responsibilities for the Audit of the Parent Company Only Financial Statements
Our objectives are to obtain reasonable assurance about whether the parent company only 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 parent company only financial statements.
As part of an audit in accordance with the Standards on 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 parent company only 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 Company's internal control.
-
Evaluate the appropriateness of accounting policies used and the reasonableness of
-
2 -
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 Company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors' report to the related disclosures in the parent company only financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors' report. However, future events or conditions may cause the Company to cease to continue as a going concern.
-
Evaluate the overall presentation, structure and content of the parent company only financial statements, including the disclosures, and whether the parent company only financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
-
Obtain sufficient and appropriate audit evidence regarding the financial information of the entities or business activities within the Company to express an opinion on the parent company only financial statements. We are responsible for the direction, supervision, and performance of the 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 parent company only 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.
- 3 -
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 parent company only financial statements are intended only to present the 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 parent company only financial statements are those generally accepted and applied in the Republic of China.
For the convenience of readers, the independent auditors’ report and the accompanying parent company only 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 parent company only financial statements shall prevail.
- 4 -
KMC (KUEI MENG) INTERNATIONAL INC.
PARENT COMPANY ONLY 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) | $ 320,711 | 3 | $ 405,280 | 3 |
| Financial Assets at fair value through profit or loss-current (Notes 4, 7 and 16) | - | - | 100 | - |
| Financial assets at amortized cost - current (Notes 4 and 8) | 232,242 | 2 | 10,747 | - |
| Notes receivable (Notes 4, 9 and 22) | 2,472 | - | 2,026 | - |
| Accounts receivable (Notes 4, 9 and 22) | 90,356 | 1 | 94,659 | 1 |
| Accounts receivable from related parties (Notes 4, 9, 22 and 28) | 262,225 | 2 | 523,682 | 5 |
| Other receivables (Note 4) | 1,380 | - | 700 | - |
| Other receivables from related parties (Notes 4 and 28) | 6,600 | - | 6,885 | - |
| Inventories (Notes 4 and 10) | 38,403 | - | 33,755 | - |
| Other current assets (Note 15) | 4,994 | - | 6,647 | - |
| Total current assets | 959,383 | 8 | 1,084,481 | 9 |
| NON-CURRENT ASSETS | ||||
| Investments accounted for using equity method (Notes 4 and 11) | 10,998,421 | 91 | 10,472,150 | 90 |
| Property, plant and equipment (Notes 4 and 12) | 3,874 | - | 647 | - |
| Right-of-use assets (Notes 4 and 13) | 3,526 | - | 5,026 | - |
| Other intangible assets (Notes 4 and 14) | 3,213 | - | 9,871 | - |
| Deferred tax assets (Notes 4 and 24) | 53,965 | 1 | 66,809 | 1 |
| Other non-current assets (Note 4) | 6,231 | - | 3,848 | - |
| Total non-current assets | 11,069,230 | 92 | 10,558,351 | 91 |
| TOTAL | $ 12,028,613 | 100 | $ 11,642,832 | 100 |
| LIABILITIES AND EQUITY | ||||
| CURRENT LIABILITIES | ||||
| Short-term borrowings (Notes 4 and 17) | $ 294,028 | 3 | $ 1,100,000 | 10 |
| Short-term bills payable (Notes 4 and 17) | - | - | 99,875 | 1 |
| Accounts payable (Note 18) | 4,826 | - | 7,241 | - |
| Accounts payable to related parties (Notes 18 and 28) | 336,341 | 3 | 344,983 | 3 |
| Other payables (Note 19) | 29,452 | - | 33,674 | - |
| Dividends payable (Note 21) | 238,888 | 2 | 349,359 | 3 |
| Other payable to related parties (Note 28) | 10,716 | - | 2,074 | - |
| Current tax liabilities (Notes 4 and 24) | 212,676 | 2 | 84,033 | 1 |
| Lease liabilities - current (Notes 4, 13 and 28) | 1,935 | - | 1,826 | - |
| Current portion of puttable bonds (Notes 4 and 16) | 985,628 | 8 | - | - |
| Other current liabilities (Notes 19 and 22) | 11,680 | - | 25,389 | - |
| Total current liabilities | 2,126,170 | 18 | 2,048,454 | 18 |
| NON-CURRENT LIABILITIES | ||||
| Bonds payable (Notes 4 and 16) | - | - | 969,153 | 8 |
| Long-term borrowings (Notes 4 and 17) | 1,013,000 | 8 | 300,000 | 3 |
| Deferred tax liabilities-non-current (Notes 4 and 24) | 1,283 | - | - | - |
| Lease liabilities - non-current (Notes 4, 13 and 28) | 1,628 | - | 3,213 | - |
| Total non-current liabilities | 1,015,911 | 8 | 1,272,366 | 11 |
| Total liabilities | 3,142,081 | 26 | 3,320,820 | 29 |
| EQUITY ATTRIBUTABLE TO OWNERS OF THE COMPANY (Note 21) | ||||
| Capital stock - common stock | 1,260,008 | 10 | 1,260,008 | 11 |
| Capital surplus | 1,760,303 | 15 | 1,760,303 | 15 |
| Retained earnings | ||||
| Legal reserve | 1,339,645 | 11 | 1,242,489 | 10 |
| Special reserve | 859,445 | 7 | 361,280 | 3 |
| Unappropriated earnings | 4,051,059 | 34 | 4,156,854 | 36 |
| Total retained earnings | 6,250,149 | 52 | 5,760,623 | 49 |
| Other equity | (383,928) | (3) | (458,922) | (4) |
| Total equity attributable to owners of the Company | 8,886,532 | 74 | 8,322,012 | 71 |
| TOTAL | $ 12,028,613 | 100 | $ 11,642,832 | 100 |
The accompanying notes are an integral part of the parent company only financial statements.
KMC (KUEI MENG) INTERNATIONAL INC.
PARENT COMPANY ONLY 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, 22 and 28) | $ 1,726,309 | 100 | $ 1,738,529 | 100 |
| OPERATING COSTS (Notes 10 and 28) | 959,223 | 56 | 886,958 | 51 |
| GROSS PROFIT | 767,086 | 44 | 851,571 | 49 |
| Unrealized gain on transactions with subsidiaries (Note 4) | (312,127) | (18) | (374,591) | (21) |
| Realized gain on transactions with subsidiaries (Note 4) | 374,591 | 22 | 221,679 | 13 |
| REALIZED GROSS PROFIT | 829,550 | 48 | 698,659 | 41 |
| OPERATING EXPENSES (Notes 9, 23 and 28) | ||||
| Selling and marketing expenses | 64,168 | 4 | 48,264 | 3 |
| General and administrative expenses | 73,879 | 4 | 70,760 | 4 |
| Research and development expenses | 542 | - | 572 | - |
| Expected credit gain | (395) | - | (310) | - |
| Total operating expenses | 138,194 | 8 | 119,286 | 7 |
| PROFIT FROM OPERATIONS | 691,356 | 40 | 579,373 | 34 |
| NON-OPERATING INCOME AND EXPENSES | ||||
| (Notes 4, 7, 16, 23 and 28) | ||||
| Interest income | 11,873 | 1 | 12,864 | 1 |
| Other income | 2,422 | - | 2,018 | - |
| Other gains and losses | (25,994) | (2) | (9,308) | (1) |
| Share of profit of subsidiaries and associates | 494,203 | 29 | 490,705 | 28 |
| Finance cost | (45,748) | (3) | (42,870) | (2) |
| Total non-operating income and expenses | 436,756 | 25 | 453,409 | 26 |
| PROFIT BEFORE INCOME TAX | 1,128,112 | 65 | 1,032,782 | 60 |
| INCOME TAX EXPENSE (Notes 4 and 24) | 163,089 | 9 | 116,221 | 7 |
| NET PROFIT | 965,023 | 56 | 916,561 | 53 |
(Continued)
KMC (KUEI MENG) INTERNATIONAL INC.
PARENT COMPANY ONLY 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 | % | |
| OTHER COMPREHENSIVE INCOME (LOSS) | ||||
| Items that will not be reclassified subsequently to profit or loss: | ||||
| Share of the other comprehensive income (loss) of subsidiaries accounted for using the equity method | $ 743 | - | $ (599) | - |
| Items that may be reclassified subsequently to profit or loss: | ||||
| Exchange differences on translating foreign operations (Note 21) | 9,017 | - | 425 | - |
| Share of the other comprehensive income of subsidiaries accounted for using the equity method (Note 21) | 65,977 | 4 | 279,769 | 16 |
| 74,994 | 4 | 280,194 | 16 | |
| Other comprehensive income (loss) for the year, net of income tax | 75,737 | 4 | 279,595 | 16 |
| TOTAL COMPREHENSIVE INCOME FOR THE YEAR | $ 1,040,760 | 60 | $ 1,196,156 | 69 |
| EARNINGS PER SHARE (Note 25) | ||||
| Basic | $ 7.66 | $ 7.27 | ||
| Diluted | $ 7.32 | $ 6.97 |
The accompanying notes are an integral part of the parent company only financial statements. (Concluded)
- 7 -
KMC (KUEI MENG) INTERNATIONAL INC.
PARENT COMPANY ONLY 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 | Total Equity | |||||
| Capital Stock | Capital Surplus | Legal Reserve | Special Reserve | Unappropriated Earnings | Exchange Differences on Translation of the Financial Statements of Foreign Operations | ||
| BALANCE, JANUARY 1, 2024 | $ 1,260,000 | $ 1,760,215 | $ 1,157,020 | $ 596,364 | $ 3,605,145 | $ (739,116) | $ 7,639,628 |
| Appropriation of earnings (Note 21) | |||||||
| Legal reserve | - | - | 85,469 | - | (85,469) | - | - |
| Special reserve | - | - | - | (235,084) | 235,084 | - | - |
| Cash dividends distributed by the Company | - | - | - | - | (513,868) | - | (513,868) |
| Net profit for the year ended December 31, 2024 | - | - | - | - | 916,561 | - | 916,561 |
| Other comprehensive income (loss) for the year ended December 31, 2024, net of income tax | - | - | - | - | (599) | 280,194 | 279,595 |
| Total comprehensive income for the year ended December 31, 2024 | - | - | - | - | 915,962 | 280,194 | 1,196,156 |
| Conversion of corporate bonds to common stock (Notes 16 and 21) | 8 | 88 | - | - | - | - | 96 |
| BALANCE, DECEMBER 31, 2024 | 1,260,008 | 1,760,303 | 1,242,489 | 361,280 | 4,156,854 | (458,922) | 8,322,012 |
| Appropriation of earnings (Note 21) | |||||||
| Legal reserve | - | - | 97,156 | - | (97,156) | - | - |
| Special reserve | - | - | - | 498,165 | (498,165) | - | - |
| Cash dividends distributed by the Company | - | - | - | - | (476,240) | - | (476,240) |
| Net profit for the year ended December 31, 2025 | - | - | - | - | 965,023 | - | 965,023 |
| Other comprehensive income for the year ended December 31, 2025, net of income tax | - | - | - | - | 743 | 74,994 | 75,737 |
| Total comprehensive income for the year ended December 31, 2025 | - | - | - | - | 965,766 | 74,994 | 1,040,760 |
| BALANCE, DECEMBER 31, 2025 | $ 1,260,008 | $ 1,760,303 | $ 1,339,645 | $ 859,445 | $ 4,051,059 | $ (383,928) | $ 8,886,532 |
The accompanying notes are an integral part of the parent company only financial statements.
KMC (KUEI MENG) INTERNATIONAL INC.
PARENT COMPANY ONLY 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 | $ 1,128,112 | $ 1,032,782 |
| Adjustments for: | ||
| Depreciation expenses | 2,791 | 3,361 |
| Amortization expenses | 6,658 | 7,125 |
| Recognized on accounts receivable expected credit gain | (395) | (310) |
| Finance costs | 45,748 | 42,870 |
| Interest income | (11,873) | (12,864) |
| Share of profit of associates | (494,203) | (490,705) |
| Unrealized (realized) gain on the transactions with subsidiaries | (62,464) | 152,912 |
| Unrealized loss (gain) on foreign currency exchange | (6,414) | 1,754 |
| Changes in operating assets and liabilities | ||
| Financial assets mandatorily classified as at fair value through profit or loss | 100 | 100 |
| Notes receivable | (446) | 5,640 |
| Accounts receivable | 5,342 | (44,309) |
| Accounts receivable from related parties | 269,375 | (403,544) |
| Other receivables (including related parties) | 417 | 108 |
| Inventories | (4,648) | (18,581) |
| Other current assets | 1,653 | (2,715) |
| Accounts payable | (2,415) | 1,243 |
| Accounts payable to related parties | (19,392) | 156,834 |
| Other payables | (4,421) | (2,360) |
| Other payables to related parties | 8,286 | 402 |
| Other current liabilities | (13,709) | 13,475 |
| Cash generated from operations | 848,102 | 443,218 |
| Income tax paid | (20,319) | (224,439) |
| Net cash generated from operating activities | 827,783 | 218,779 |
| CASH FLOWS FROM INVESTING ACTIVITIES | ||
| Disposal (acquisition) of financial assets at amortized cost | (221,495) | 23,523 |
| Increase in prepayments for equipment | (6,469) | (3,156) |
| Interest received | 11,213 | 12,971 |
| Dividends received from subsidiaries and associates | 457,644 | 188,943 |
| Net cash generated from investing activities | 240,893 | 222,281 |
| CASH FLOWS FROM FINANCING ACTIVITIES | ||
| Proceeds from short-term borrowings | 6,181,600 | 8,584,000 |
| Repayments of short-term borrowings | (6,990,847) | (8,562,442) |
| Proceeds from short-term bills payable | 499,597 | 500,000 |
| Repayments of short-term bills payable | (600,916) | (501,119) |
| Proceeds from long-term borrowings | 2,206,000 | 1,832,000 |
| Repayments of long-term borrowings | (1,493,000) | (1,837,000) |
| (Continued) |
- 9 -
KMC (KUEI MENG) INTERNATIONAL INC.
PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024
(In Thousands of New Taiwan Dollars)
| 2025 | 2024 | |
|---|---|---|
| Repayment of the principal portion of lease liabilities | $ (1,984) | $ (1,975) |
| Cash dividends | (586,711) | (390,049) |
| Acquisition of additional interests in subsidiaries | (351,511) | (68,348) |
| Interest paid | (27,562) | (25,583) |
| Net cash used in financing activities | (1,165,334) | (470,516) |
| EFFECTS OF EXCHANGE RATE CHANGES ON THE BALANCE OF CASH AND CASH EQUIVALENTS HELD IN FOREIGN CURRENCIES | 12,089 | 4,358 |
| NET DECREASE IN CASH AND CASH EQUIVALENTS | (84,569) | (25,098) |
| CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR | 405,280 | 430,378 |
| CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR | $ 320,711 | $ 405,280 |
The accompanying notes are an integral part of the parent company only financial statements. (Concluded)
- 10 -
KMC (KUEI MENG) INTERNATIONAL INC.
NOTES TO PARENT COMPANY ONLY 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 parent company only financial statements of the Company are presented in the Company's functional currency, New Taiwan dollar.
2. APPROVAL OF FINANCIAL STATEMENTS
The Company's board of directors approved the parent company only 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), IIFRIC 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 Company'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 parent company only financial statements were authorized for issue, the Company assessed that the amendments to said standard rules and interpretations were not likely to pose any significant impact to its financial position and results of operations.
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 New 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.
IFRS 18 “Presentation and Disclosure in 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 Company 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 Company 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 Company shall disaggregate items with dissimilar characteristics in the primary financial statements and in the notes. The Company 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 Company as a whole, the Company 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 Company 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 Company shall be classified as investing activities, while interest and dividends paid shall be classified as financing activities. However, if, after assessment,
the Company 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 impact, as of the date the parent company only financial statements were authorized for issue, the Company is continuously assessing the other impacts of the above amended standards and interpretations on the Company'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 parent company only financial statements have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers.
b. Basis of preparation
The parent company only 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 Company does not have an unconditional right to defer settlement for at least 12 months after the reporting period.
- 13 -
Assets and liabilities that are not classified as current are classified as non-current.
d. 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 reporting currency as originally translated from the foreign currency which are not retranslated.
For the purpose of presenting the parent company only financial statements, the functional currencies of the Company 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.
e. 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.
f. Investments accounted for using equity method
1) Investments in subsidiaries
A subsidiary is an entity (including a structured entity) over which the Company has control.
Under the equity method, investments in subsidiaries are originally recognized at cost; the book value after the acquisition date fluctuates along with the distribution of profit or loss from the subsidiaries and other comprehensive income by the Company. Additionally, the change in the interests the Company holds in subsidiaries is recognized pro rata to the shareholding percentages.
Unrealized gains or losses on downstream transactions with subsidiaries are eliminated in the parent company only financial statements. Gains or losses from upstream and side-stream transactions with subsidiaries are recognized in the parent company only financial statements only to the extent that they are not related to the Company's equity interest in the subsidiary.
- 14 -
2) Investments in associates
An associate is an entity over which the Company has significant influence and that is neither a subsidiary nor an interest in a joint venture.
Under the equity method, an investment in an associate is initially recognized at cost and adjusted thereafter to recognize the Company’s share of the profit or loss and other comprehensive income of the associate. The Company also recognizes the changes in the Company’s share of equity of associates.
g. Property, plant and equipment
Property, plant and equipment are stated at cost, less accumulated depreciation and accumulated impairment.
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.
h. 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.
i. Impairment of property, plant and equipment, right of use asset and intangible assets
At the end of each reporting period, the Company reviews the carrying amounts of its property, plant and equipment, right of use asset and intangible assets, 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 Company 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
- 15 -
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.
j. Financial instruments
Financial assets and financial liabilities are recognized when the Company 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 27.
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
- 16 -
receivables and refundable deposits (classified under other non-current 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 Company recognizes a loss allowance for expected credit losses on financial assets at amortized cost (including accounts receivable).
The Company always recognizes lifetime expected credit losses (ECLs) for accounts receivable. For all other financial instruments, the Company 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 Company 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.
For internal credit risk management purposes, the Company 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 Company).
The Company 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 Company 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.
- 17 -
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 Company 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.
4) Derivative financial instruments
The Company 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.
- 18 -
k. Revenue recognition
The Company 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 Company has transferred to the buyer the significant risks and rewards of ownership of the goods to the buyers, and the Company retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold.
l. Leases
At the inception of a contract, the Company assesses whether the contract is, or contains, a lease.
The Company as lessee
The Company 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 standalone 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 Company uses its incremental borrowing rate.
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 Company 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 standalone balance sheets.
m. Borrowing costs
All borrowing costs are recognized in profit or loss in the period in which they are incurred.
n. 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.
- 19 -
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.
o. Taxation
Income tax expense represents the sum of the tax currently payable and tax.
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 Company 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 Company expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.
- 20 -
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.
- MATERIAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY
In the application of the Company'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 Company has no critical accounting judgements and key sources of estimation uncertainty.
- CASH AND CASH EQUIVALENTS
| December 31 | ||
|---|---|---|
| 2025 | 2024 | |
| Cash on hand | $ 31 | $ - |
| Demand deposits | 210,675 | 197,893 |
| Cash equivalent (investments with original maturities of 3 months or less) | ||
| Time deposits | 62,860 | 99,475 |
| Repurchase agreements collateralized by bonds | 47,145 | 107,912 |
| $ 320,711 | $ 405,280 |
The ranges of interest rates of time deposits and repurchase agreements were as follows:
| December 31 | ||
|---|---|---|
| 2025 | 2024 | |
| Time deposits | 3.83% - 4.05% | 1.9% - 4.55% |
| Repurchase agreements collateralized by bonds | 4% | 1.3% - 4.9% |
- 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 16) | $ - | $ 100 |
- 22 -
8. FINANCIAL ASSETS AT AMORTIZED COST
| December 31 | ||
|---|---|---|
| 2025 | 2024 | |
| Current | ||
| Time deposits with original maturities of more than 3 months | $ 232,242 | $ 10,747 |
The range of interest rates for time deposits with original maturities of more than 3 months were approximately 1.2% - 4.1% and 1.3% - 1.75% 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 | $ 2,472 | $ 2,026 |
| Accounts receivable | ||
| At amortized cost | ||
| Gross carrying amount | $ 90,489 | $ 95,187 |
| Less: Allowance for impairment loss | 133 | 528 |
| $ 90,356 | $ 94,659 | |
| Accounts receivable from related parties | ||
| At amortized cost | ||
| Gross carrying amount | $ 262,225 | $ 523,682 |
The average credit period of sales of goods was 30 to 90 days. No interest was charged on accounts receivable. In order to minimize credit risk, the management of the Company 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 Company 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 Company's credit risk was significantly reduced.
The Company 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 Company'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 Company's different customer base.
The Company 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 Company 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 Company's provision matrix.
a. Notes receivable
All of the Company'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% | 0% - 10% | 0% - 25% | 0% - 40% | 100% | |
| Gross carrying amount | $ 349,989 | $ 2,578 | $ - | $ 147 | $ - | $ 352,714 |
| Loss allowance (Lifetime ECLs) | - | (60) | - | (73) | - | (133) |
| Amortized cost | $ 349,989 | $ 2,518 | $ - | $ 74 | $ - | $ 352,581 |
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% | 0% - 10% | 0% - 25% | 0% - 40% | 100% | |
| Gross carrying amount | $ 614,471 | $ 3,303 | $ - | $ 1,095 | $ - | $ 618,869 |
| Loss allowance (Lifetime ECLs) | - | - | - | (528) | - | (528) |
| Amortized cost | $ 614,471 | $ 3,303 | $ - | $ 567 | $ - | $ 618,341 |
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 | $ 528 | $ 838 |
| Less: Net remeasurement of loss allowance | (395) | (310) |
| Balance on December 31 | $ 133 | $ 528 |
- INVENTORIES
| December 31 | ||
|---|---|---|
| 2025 | 2024 | |
| Merchandise | $ 38,403 | $ 33,755 |
The cost of inventories recognized as cost of goods sold for the years ended December 31, 2025 and 2024
was $959,223 thousand and $886,958 thousand, respectively.
11. INVESTMENTS ACCOUNTED FOR USING EQUITY METHOD
| December 31 | ||
|---|---|---|
| 2025 | 2024 | |
| Investments in subsidiaries (a) | $ 10,985,328 | $ 10,458,170 |
| Investments in associates (b) | 13,093 | 13,980 |
| $ 10,998,421 | $ 10,472,150 |
a. Investments in subsidiaries
| December 31 | ||
|---|---|---|
| 2025 | 2024 | |
| KMC Chain Industrial Co., Ltd. | $ 10,112,465 | $ 9,617,402 |
| KMC Automobile Transmission Co., Ltd. | 660,572 | 681,398 |
| KMC Industries (Vietnam) Co., Ltd. | 25,979 | 24,203 |
| Kynamic Inc. | 41,620 | 47,082 |
| KMC Global GmbH | 144,692 | 88,085 |
| $ 10,985,328 | $ 10,458,170 | |
| Proportion of Ownership | ||
| --- | --- | --- |
| December 31 | ||
| Name of Subsidiary | 2025 | 2024 |
| KMC Chain Industrial Co., Ltd. | 100% | 100% |
| K.M.C. Automobile Transmission Co., Ltd. | 100% | 100% |
| KMC Industries (Vietnam) Co., Ltd. | 100% | 100% |
| Kynamic Inc. | 100% | 100% |
| KMC Global GmbH | 100% | 100% |
Please refer to Table 4 "Information on Investees" and Table 5 "Information on Investments in Mainland China" for the details of the subsidiaries held by the Company.
b. Investments in associates
| December 31 | ||
|---|---|---|
| 2025 | 2024 | |
| Associates that are not individually material | ||
| Pro (Taiwan) Procurement Co., Ltd. | $ 13,093 | $ 13,980 |
In February 2016, the Company contributed $12,250 thousand to set up a company Pro (Taiwan) Procurement Co., Ltd. with non-related party. The proportion of the Company'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 Company'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.
12. PROPERTY, PLANT AND EQUIPMENT
| Office Equipment | |
|---|---|
| Cost | |
| Balance on January 1, 2024 | $ 18,332 |
| Additions | 226 |
| Balance on December 31, 2024 | $ 18,558 |
| Accumulated depreciation | |
| Balance on January 1, 2024 | $ 16,497 |
| Depreciation | 1,414 |
| Balance on December 31, 2024 | $ 17,911 |
| Carry amounts on December 31, 2024 | $ 647 |
| Cost | |
| Balance on January 1, 2025 | $ 18,558 |
| Additions | 4,086 |
| Balance on December 31, 2025 | $ 22,644 |
| Accumulated depreciation | |
| Balance on January 1, 2025 | $ 17,911 |
| Depreciation | 859 |
| Balance on December 31, 2025 | $ 18,770 |
| Carry amounts on December 31, 2025 | $ 3,874 |
No impairment assessment was performed for the years ended December 31, 2025 and 2024 as there was no indication of impairment.
The property, plant and equipment are depreciated by the straight-line method over 3-6 years of useful lives.
- 26 -
13. LEASE ARRANGEMENTS
a. Right-of-use assets
| Buildings | Transportation equipment | Total | |
|---|---|---|---|
| Cost | |||
| Balance on January 1, 2024 | $ 5,273 | $ 866 | $ 6,139 |
| Increase | 4,374 | 488 | 4,862 |
| Decrease | (4,451) | (412) | (4,863) |
| Balance on December 31, 2024 | $ 5,196 | $ 942 | $ 6,138 |
| Accumulated depreciation | |||
| Balance on January 1, 2024 | $ 3,434 | $ 594 | $ 4,028 |
| Depreciation | 1,644 | 303 | 1,947 |
| Decrease | (4,451) | (412) | (4,863) |
| Balance on December 31, 2024 | $ 627 | $ 485 | $ 1,112 |
| Carrying amounts on December 31, 2024 | $ 4,569 | $ 457 | $ 5,026 |
| Cost | |||
| Balance on January 1, 2025 | $ 5,196 | $ 942 | $ 6,138 |
| Increase | - | 432 | 432 |
| Decrease | - | (454) | (454) |
| Balance on December 31, 2025 | $ 5,196 | $ 920 | $ 6,116 |
| Accumulated depreciation | |||
| Balance on January 1, 2025 | $ 627 | $ 485 | $ 1,112 |
| Depreciation | 1,623 | 309 | 1,932 |
| Decrease | - | (454) | (454) |
| Balance on December 31, 2025 | $ 2,250 | $ 340 | $ 2,590 |
| Carrying amounts on December 31, 2025 | $ 2,946 | $ 580 | $ 3,526 |
b. Lease liabilities
| December 31 | ||
|---|---|---|
| 2025 | 2024 | |
| Carrying amounts | ||
| Current | $ 1,935 | $ 1,826 |
| Non-current | $ 1,628 | $ 3,213 |
Discount rate for lease liabilities was as follows:
| December 31 | ||
|---|---|---|
| 2025 | 2024 | |
| Buildings and transportation equipment | 0.4362% - 2% | 0.4362% - 1.85% |
c. Material leasing activities and terms
As lessee, the Company leases certain land, buildings and transportation equipment with lease terms of 3 years.
d. Other lease information
| For the Year Ended December 31 | ||
|---|---|---|
| 2025 | 2024 | |
| Expenses relating to short-term leases | $ 83 | $ 126 |
| Expenses relating to low-value asset leases | $ 100 | $ 331 |
| Total cash outflow for leases | $ 2,243 | $ 2,458 |
14. OTHER INTANGIBLE ASSETS
| Computer Software | |
|---|---|
| Cost | |
| Balance on January 1 and December 31, 2024 | $ 54,642 |
| Accumulated depreciation | |
| Balance on January 1, 2024 | $ 37,646 |
| Depreciation | 7,125 |
| Balance on December 31, 2024 | $ 44,771 |
| Carrying amounts on December 31, 2024 | $ 9,871 |
| Cost | |
| Balance on January 1 and December 31, 2025 | $ 54,642 |
| Accumulated depreciation | |
| Balance on January 1, 2025 | $ 44,771 |
| Depreciation | 6,658 |
| Balance on December 31, 2025 | $ 51,429 |
| Carrying amounts on December 31, 2025 | $ 3,213 |
| Intangible assets are amortized by the straight-line method over 8 years of useful lives. |
- 28 -
15. OTHER CURRENT ASSETS
| December 31 | ||
|---|---|---|
| 2025 | 2024 | |
| Prepayments | $ 1,906 | $ 3,193 |
| Tax overpaid retained | 3,085 | 3,451 |
| Others | 3 | 3 |
| $ 4,994 | $ 6,647 |
16. BONDS PAYABLE
| December 31 | ||
|---|---|---|
| 2025 | 2024 | |
| Fourth secured domestic convertible bonds | $ 985,628 | $ 969,153 |
| Less: Portion due within a year | 985,628 | - |
| $ - | $ 969,153 |
a. On November, 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.
b. 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.
- 29 -
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 |
| Conversion into ordinary shares | - | (96) |
| Balance on December 31 | $ 985,628 | $ 969,153 |
The movement of financial assets at FVTPL - 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 |
17. BORROWINGS
a. Short-term borrowings
| December 31 | ||
|---|---|---|
| 2025 | 2024 | |
| Unsecured borrowings | ||
| Line of credit borrowings | $ 294,028 | $ 1,100,000 |
The ranges of weighted average effective interest rates on bank loans were 1.56% - 1.88% and 1.85% - 1.92% per annum as of December 31, 2025 and 2024, respectively.
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 | $ 1,013,000 | $ 300,000 |
The ranges of weighted average effective interest rates on bank loans were 1.85% - 1.93% and 1.88% per annum as of December 31, 2025 and 2024, respectively.
18. ACCOUNTS PAYABLE (INCLUDING RELATED PARTIES)
Accounts payable resulted from operating activities. The average period of purchases is 30 to 150 days. The Company has financial risk management policies in place to ensure that all payables are paid within the pre-agreed credit terms.
19. OTHER PAYABLES AND OTHER LIABILITIES
| December 31 | ||
|---|---|---|
| 2025 | 2024 | |
| Other payables | ||
| Payable for remuneration to directors and supervisors | $ 8,400 | $ 8,400 |
| Payable for compensation of employees | 7,500 | 7,819 |
| Payable for salaries or bonus | 3,652 | 3,487 |
| Others | 9,900 | 13,968 |
| $ 29,452 | $ 33,674 | |
| Other liabilities | ||
| Contract liabilities (Note 22) | $ 11,375 | $ 24,781 |
| Others | 305 | 608 |
| $ 11,680 | $ 25,389 |
20. RETIREMENT BENEFIT PLANS
Defined contribution plans
The Company, KMC Chain Industrial 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.
- 31 -
21. 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 23(g).
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.
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 is yet to be approved by the shareholders in their 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 | 9,017 | 425 |
| Share from subsidiaries accounted for using the equity method | 65,977 | 279,769 |
| Balance on December 31 | $ (383,928) | $ (458,922) |
- REVENUE
The Company which sell components of various chains, motorcycle and vehicle. Contract revenue is as follows:
| For the Year Ended December 31 | ||
|---|---|---|
| 2025 | 2024 | |
| Revenue from contracts with customers | ||
| Revenue from sale of goods | $ 1,726,309 | $ 1,738,529 |
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 Company has an unconditional right to receive the transaction price. Some of contract set that the Company receive part of transaction price before transferring the goods to the buyers. The Company 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) | $ 2,472 | $ 2,026 | $ 7,666 |
| Accounts receivable (Note 9) | 90,356 | 94,659 | 49,092 |
| Accounts receivable from related parties (Note 9) | 262,225 | 523,682 | 127,537 |
| $ 355,053 | $ 620,367 | $ 184,295 | |
| Contract liabilities (Note 19) | |||
| Sale of goods | $ 11,375 | $ 24,781 | $ 11,076 |
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 on 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 | $ 24,781 | $ 11,076 |
| 23. NET PROFIT | ||
| a. Interest income | ||
| For the Year Ended December 31 | ||
| 2025 | 2024 | |
| Bank deposits and financial assets at amortized cost | $ 11,873 | $ 12,864 |
| b. Other income | ||
| For the Year Ended December 31 | ||
| 2025 | 2024 | |
| Rental income | $ 12 | $ 12 |
| Others | 2,410 | 2,006 |
| $ 2,422 | $ 2,018 | |
| c. Other gains and losses | ||
| For the Year Ended December 31 | ||
| 2025 | 2024 | |
| Foreign exchange gains | $ 62,692 | $ 21,451 |
| Foreign exchange losses | (64,258) | (14,556) |
| Loss on financial products at fair value through loss | (100) | (100) |
| Others | (24,328) | (16,103) |
| $ (25,994) | $ (9,308) | |
| d. Finance cost | ||
| For the Year Ended December 31 | ||
| 2025 | 2024 | |
| Interest on bank loans | $ 27,753 | $ 25,488 |
| Interest on convertible bonds | 16,475 | 16,237 |
| Interest on bills payable | 1,444 | 1,119 |
| Interest on lease liabilities | 76 | 26 |
| $ 45,748 | $ 42,870 |
e. Depreciation and amortization
| For the Year Ended December 31 | ||
|---|---|---|
| 2025 | 2024 | |
| An analysis of depreciation by function | ||
| Operating expenses | $ 2,791 | $ 3,361 |
| An analysis of amortization by function | ||
| Operating expenses | $ 6,658 | $ 7,125 |
f. Employee benefits expense
| For the Year Ended December 31 | ||
|---|---|---|
| 2025 | 2024 | |
| Short-term employee benefits | ||
| Payroll expense | $ 68,395 | $ 52,080 |
| Labor and health insurance expense | 4,475 | 4,134 |
| Others | 1,283 | 1,340 |
| 74,153 | 57,554 | |
| Post-employment benefits | ||
| Defined contribution plans | 2,029 | 2,060 |
| $ 76,182 | $ 59,614 | |
| An analysis of employee benefits expense by function | ||
| Operating expenses | $ 76,182 | $ 59,614 |
g. 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 0.5%-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 annual general meeting. The amendments explicitly stipulate that in any fiscal year in which the Company realizes a profit, after offsetting accumulated losses, a sum of no less than 0.1% shall be allocated - beyond the provision for employee and directors' remuneration - for the purpose of adjusting the salaries or distributing 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 parent company only 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 parent company only 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.
24. INCOME TAXES
a. Income tax recognized in profit or loss
Major components of income tax expense are as follows:
| For the Year Ended December 31 | ||
|---|---|---|
| 2025 | 2024 | |
| Current tax | ||
| In respect of the current year | $ 119,231 | $ 140,650 |
| Income tax on unappropriated earnings | 27,731 | 6,292 |
| Adjustments for prior periods | 2,000 | (1,333) |
| 148,962 | 145,609 | |
| Deferred tax | ||
| In respect of the current year | 14,127 | (29,388) |
| Income tax expense recognized in profit | $ 163,089 | $ 116,221 |
A reconciliation of accounting profit and income tax expenses is as follows:
| For the Year Ended December 31 | ||
|---|---|---|
| 2025 | 2024 | |
| Profit before income tax | $ 1,128,112 | $ 1,032,782 |
| Income tax expense calculated at the statutory rate | $ 225,622 | $ 206,556 |
| Permanent differences | (92,264) | (95,294) |
| Income tax on unappropriated earnings | 27,731 | 6,292 |
| Adjustments for prior years’ tax | 2,000 | (1,333) |
| Income tax expense recognized in profit | $ 163,089 | $ 116,221 |
b. Current tax liabilities
| December 31 | ||
|---|---|---|
| 2025 | 2024 | |
| Current tax liabilities | ||
| Income tax payable | $ 212,676 | $ 84,033 |
c. 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 | Closing Balance | |
|---|---|---|---|
| Deferred Tax Assets | |||
| Temporary differences | |||
| Unrealized foreign exchange loss | $ 350 | $ (350) | $ - |
| Unrealized gross profit | 66,459 | (12,494) | 53,965 |
| $ 66,809 | $ (12,844) | $ 53,965 | |
| Deferred Tax Assets | |||
| Temporary differences | |||
| Unrealized foreign exchange loss | $ - | $ 1,283 | $ 1,283 |
| For the year ended December 31, 2024 | |||
| Opening Balance | Recognized in Profit or Loss | Closing Balance | |
| Deferred Tax Assets | |||
| Temporary differences | |||
| Unrealized foreign exchange loss | $ 1,545 | $ (1,195) | $ 350 |
| Unrealized gross profit | 35,876 | 30,583 | 66,459 |
| $ 37,421 | $ 29,388 | $ 66,809 |
d. The aggregate amount of temporary differences associated with investments for which deferred tax liabilities have not been recognized.
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.
e. Income tax assessments
The tax returns of the Company through 2023 have been assessed by the tax authorities.
- 38 -
25. 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 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.
26. CAPITAL MANAGEMENT
The capital structure of the Company consists of net debt (borrowings offset by cash and cash equivalents) and equity of the Company (comprising issued capital, retained earnings and other equity). Maximizing the return to stakeholders through the optimization of the debt and equity balance. The Company's capital management is to ensure that it has the necessary financial resources and operating plans to meet the needs of future working capital, debt repayment and dividend payments.
The Company is not subject to any externally imposed capital requirements.
27. FINANCIAL INSTRUMENTS
a. Fair value of financial instruments that are not measured at fair value
In the standalone 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, notes and accounts receivable (including
related parties), other receivables (including related parties), refundable deposits (classified under other non-current assets), bank loans, short-term bills payable, accounts payable (including related parties), other payables (including related parties), and dividends payable.
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) | 916,044 | 1,044,037 |
| Financial liabilities | ||
| Amortized cost (2) | 2,673,991 | 2,857,000 |
1) The balances include 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 refundable deposits (classified under other non-current assets).
2) The balances include financial liabilities measured at amortized cost, which comprise short-term borrowings, short-term bills payable, accounts payable (including related parties), other payables (including related parties), bonds payable (including current portion) and long-term borrowings.
d. Financial risk management objectives and policies
The Company’s major financial instruments include equity and debt investments, accounts receivable, accounts payable, borrowings and lease liabilities. The Company’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 Company 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 Company’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 Company’s exposure to market risks or the manner in which these risks were managed and measured.
a) Foreign currency risk
The Company has foreign currency denominated sales and purchases, which exposed the Company to foreign currency risk.
The carrying amounts of the Company’s foreign currency denominated monetary assets and monetary liabilities at the end of the reporting period are set out in Note 29.
Sensitivity analysis
The Company was mainly exposed to the currencies United States dollars (USD), Euro dollars (EUR) and Ren Min Bi (RMB).
The following table details the Company’s sensitivity to a 1% increase and decrease in New Taiwan dollars (NTD, the functional currency) against the relevant foreign currencies. The sensitivity rate used when reporting foreign currency risk internally to key management
- 40 -
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 NTD weakens by 1% against the relevant currency. For a 1% strengthening of NTD 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 | $ 3,947 | $ 3,382 |
| EUR impact | ||
| For the Year Ended December 31 | ||
| 2025 | 2024 | |
| Profit or loss | $ 493 | $ 4,848 |
| RMB impact | ||
| For the Year Ended December 31 | ||
| 2025 | 2024 | |
| Profit or loss | $ (73) | $ (1,287) |
b) Interest rate risk
The Company was exposed to interest rate risk because entities in the Company borrowed funds at both fixed and floating interest rates.
The carrying amounts of the Company'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 | $ 342,247 | $ 218,134 |
| Financial liabilities | 989,191 | 1,074,067 |
| Cash flow interest rate risk | ||
| Financial assets | 210,675 | 197,893 |
| Financial liabilities | 1,307,028 | 1,400,000 |
Sensitivity analysis
The sensitivity analysis below was determined based on the Company's exposure to interest rates for both derivative and non-derivative instruments at the end of the year. For floating rate liabilities, the analysis was prepared assuming the amount of each liability outstanding at the end of the year was outstanding for the whole year. 1% increase or decrease is used when reporting interest rate risk internally to key management personnel and represents management's assessment of the reasonably possible change in interest rates.
If interest rates had been 1% higher and all other variables were held constant, the Company's profit before tax for the year ended December 31, 2025 and 2024 would decrease by $10,964 thousand and $12,021 thousand, respectively; the change was mainly attributable to the Company's exposure to cash flow interest rate risk on its variable-rate bank borrowings and
deposits.
2) Credit risk
Credit risk refers to the risk that counterparty will default on its contractual obligations resulting in financial loss to the Company. As of the balance sheet date, the Company's maximum exposure to credit risk which will cause a financial loss to the Company due to failure of counterparties to discharge an obligation and financial guarantees provided by the Company 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 Company.
The Company's customers are creditworthy counterparties; the customers were no significant credit risk exposure. The Company continuously review the customer's credit status.
The Company's concentration of credit risk was attributable to the Company's main customer, accounting for 74% and 85% of the total accounts receivable as of December 31, 2025 and 2024, respectively.
| December 31 | ||
|---|---|---|
| 2025 | 2024 | |
| Wincorp Enterprises Limited | $ 43,142 | $ 58,974 |
| KMC Chain Europe N.V. | 205,537 | 446,105 |
| KMC Chain American Corporation | 13,144 | 18,601 |
| $ 261,823 | $ 523,680 |
3) Liquidity risk
The Company manages liquidity risk by monitoring and maintaining a level of cash and cash equivalents deemed adequate to finance the Company'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.
The Company relies on bank borrowings as a significant source of liquidity. As of December 31, 2025 and, 2024, the Company had available unutilized short-term and long-term bank loan facilities set out in (c) below.
a) Liquidity and interest risk rate table for non-derivative financial liabilities
The following table details the Company'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 Company 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 | $ 620,223 | $ - |
| Lease liabilities | 1,982 | 1,642 |
| Variable interest rate liabilities | 294,028 | 1,015,918 |
| Fixed interest rate liabilities | 1,012,251 | - |
| $ 1,928,484 | $ 1,017,560 |
Additional information about the maturity analysis for lease liabilities:
| Less than 1 Year | 1-5 Years | |
|---|---|---|
| Lease liabilities | $ 1,982 | $ 1,642 |
| December 31, 2024 | ||
| Less than 1 Year | 1-5 Years | |
| Non-derivative financial liabilities | ||
| Non-interest bearing liabilities | $ 737,331 | $ - |
| Lease liabilities | 1,897 | 3,265 |
| Variable interest rate liabilities | 1,104,680 | 300,000 |
| Fixed interest rate liabilities | 83,465 | 1,012,044 |
| $ 1,927,373 | $ 1,315,309 |
Additional information about the maturity analysis for lease liabilities:
| Less than 1 Year | 1-5 Years | |
|---|---|---|
| Lease liabilities | $ 1,897 | $ 3,265 |
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 | $ 1,307,028 | $ 1,400,000 |
| Amount unused | 5,480,972 | 3,868,000 |
| $ 6,788,000 | $ 5,268,000 |
- 44 -
28. 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.
Besides as disclosed elsewhere in the other notes, details of transaction between the Company and other related parties are disclosed as follows:
a. Related party name and category
| Name of Related Party | Relationship with the Company |
|---|---|
| KMC Transton Industries Limited | Ultimate parent company |
| KMC Chain Industrial Co., Ltd. | Subsidiary |
| K.M.C. Automobile Transmission Co., Ltd. | Subsidiary |
| Kynamic Inc. | Subsidiary |
| KMC Chain (Vietnam) Co., Ltd. | Subsidiary |
| KMC Industries (Vietnam) Co., Ltd. | Subsidiary |
| KMC Chain (Shenzhen) Co., Ltd. | Subsidiary |
| KMC Chain (Suzhou) Co., Ltd | Subsidiary |
| KMC International Trading (Taicang) Co., Ltd. | Subsidiary |
| KMC Chain Europe N.V. | Subsidiary |
| KMC Chain American Corporation | Subsidiary |
| P.T. Kuei Meng Chain Indonesia | Subsidiary |
| Wincorp Enterprises Limited | Same members of the key management personnel |
b. Sales of goods
| Related Party Type / Name | For the Year Ended December 31 | |
|---|---|---|
| 2025 | 2024 | |
| Subsidiary | ||
| KMC Chain Europe N.V. | $ 767,449 | $ 899,569 |
| KMC Chain American Corporation | 68,779 | 62,941 |
| KMC Chain Industrial Co., Ltd. | 674 | 1,062 |
| Same members of the key management personnel | ||
| Wincorp Enterprises Limited | 166,885 | $ 156,762 |
| $ 1,003,787 | $ 1,120,334 |
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 90 days and for non-related parties were 30 to 90 days.
c. Purchases of goods
| Related Party Type / Name | For the Year Ended December 31 | |
|---|---|---|
| 2025 | 2024 | |
| Subsidiary | ||
| KMC Chain Industrial Co., Ltd. | $ 386,986 | $ 344,683 |
| KMC Chain (Shenzhen) Co., Ltd. | 473,394 | 477,259 |
| KMC Chain (Vietnam) Co., Ltd. | 46,365 | 36,558 |
| KMC Chain (Suzhou) Co., Ltd | 18,784 | 19,457 |
| $ 925,529 | $ 877,957 |
The purchase prices and terms were negotiated with related parties and cannot be compared with the price and terms with third parties. The credit terms of related parties were 45 to 150 days.
d. Receivables from related parties
| Account Item | Related Party Type / Name | December 31 | |
|---|---|---|---|
| 2025 | 2024 | ||
| Accounts receivable from related parties | Subsidiary | ||
| KMC Chain Europe N.V. | $ 205,537 | $ 446,105 | |
| KMC Chain American Corporation | 13,144 | 18,601 | |
| KMC Chain Industrial Co., Ltd. | 402 | 2 | |
| Same members of the key management personnel | |||
| Wincorp Enterprises Limited | 43,142 | 58,974 | |
| $ 262,225 | $ 523,682 | ||
| Other receivables from related parties | Subsidiary | ||
| KMC Chain American Corporation | $ 6,600 | $ 6,885 |
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.
e. Payables to related parties
| Account Item | Related Party Type / Name | December 31 | |
|---|---|---|---|
| 2025 | 2024 | ||
| Accounts payable from related parties | Subsidiary | ||
| KMC Chain Industrial Co., Ltd. | $ 84,199 | $ 82,055 | |
| KMC Chain (Shenzhen) Co., Ltd. | 215,321 | 246,443 | |
| KMC Chain Europe N.V. | 28,446 | 9,996 | |
| Others | 8,375 | 6,489 | |
| $ 336,341 | $ 344,983 | ||
| Other payables from related parties | Subsidiary | ||
| KMC Chain Europe N.V. | $ 10,716 | $ 2,074 |
The outstanding payables to related parties are unsecured and would be paid in cash.
f. Lease arrangements - Company as lessee
Acquisition of right-of-use assets
The Company leases offices 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 | |
| g. Others | |||
| Account Item | Related Party Type | For the Year Ended December 31 | |
| 2025 | 2024 | ||
| Other income | Subsidiary | $ 580 | $ 651 |
h. Compensation of key management personnel
| For the Year Ended December 31 | ||
|---|---|---|
| 2025 | 2024 | |
| Short-term employee benefits | $ 12,117 | $ 12,008 |
The remuneration of directors and key executives, as determined by the remuneration committee, is based on the performance of individuals and market trends.
29. SIGNIFICANT ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES
The Company’s significant financial assets and liabilities denominated in foreign currencies aggregated by the foreign currencies other than functional currencies of the entities in the Company 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 | $ 12,706 | 31.43 | $ 399,337 |
| (USD : NTD) | |||
| EUR | 5,753 | 36.9 | 212,297 |
| (EUR : NTD) | |||
| RMB | 47,179 | 4.496 | 212,115 |
| (RMB : NTD) | |||
| Non-monetary items | |||
| Investments accounted for using the equity method | |||
| USD | 827 | 31.43 | 25,979 |
| (USD : NTD) | |||
| EUR | 3,921 | 36.9 | 144,692 |
| (EUR : NTD) | |||
| Financial liabilities | |||
| Monetary items | |||
| USD | 148 | 31.43 | 4,659 |
| (USD : NTD) | |||
| EUR | 4,416 | 36.9 | 162,947 |
| (EUR : NTD) | |||
| RMB | 48,811 | 4.496 | 219,456 |
| (RMB : NTD) |
December 31, 2024
| Foreign Currency (In Thousands) | Exchange Rate | Carrying Amount (In Thousands) | |
|---|---|---|---|
| Financial assets | |||
| Monetary items | |||
| USD | $ 10,357 | 32.785 | $ 339,544 |
| (USD : NTD) | |||
| EUR | 14,262 | 34.140 | 486,906 |
| (EUR : NTD) | |||
| RMB | 27,493 | 4.478 | 123,114 |
| (RMB : NTD) | |||
| Non-monetary items | |||
| Investments accounted for using the equity method | |||
| USD | 738 | 32.785 | 24,203 |
| (USD : NTD) | |||
| EUR | 2,580 | 34.140 | 88,085 |
| (EUR : NTD) | |||
| Financial liabilities | |||
| Monetary items | |||
| USD | 42 | 32.785 | 1,369 |
| (USD : NTD) | |||
| EUR | 63 | 34.140 | 2,153 |
| (EUR : NTD) | |||
| RMB | 56,240 | 4.478 | 251,845 |
| (RMB : NTD) |
The significant realized and unrealized foreign exchange gains (losses) were as follows:
| For the Year Ended December 31 | ||||
|---|---|---|---|---|
| 2025 | 2024 | |||
| Foreign Currency | Exchange Rate | Net Foreign Exchange Gains (Losses) | Exchange Rate | Net Foreign Exchange Gains (Losses) |
| USD | 31.43 (USD:NTD) | $ 3,635 | 32.785 (USD:NTD) | $ 14,697 |
| EUR | 36.9 (EUR:NTD) | 6,695 | 34.14 (EUR:NTD) | (6,164) |
| RMB | 4.496 (RMB:NTD) | (11,896) | 4.478 (RMB:NTD) | (1,638) |
| $ (1,566) | $ 6,895 |
30. 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) Trading in derivative instruments. (Note 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)
- 49 -
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) | Note | |||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| 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) | Note | |||
|---|---|---|---|---|---|---|---|---|---|---|---|
| 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) | - |
- 56 -
THE CONTENTS OF STATEMENTS OF MAJOR ACCOUNTING ITEMS
| ITEM | STATEMENT INDEX |
|---|---|
| MAJOR ACCOUNTING ITEMS IN ASSETS, LIABILITIES AND EQUITY | |
| STATEMENT OF CASH AND CASH EQUIVALENTS | 1 |
| STATEMENT OF FINANCIAL ASSETS AT FVTPL | Note 7 |
| STATEMENT OF FINANCIAL ASSETS AT AMORTIZED COST | Note 8 |
| STATEMENT OF NOTES RECEIVABLE | 2 |
| STATEMENT OF ACCOUNTS RECEIVABLE (INCLUDING RELATED PARTIES) | 3 |
| STATEMENT OF OTHER RECEIVABLES FROM RELATED PARTIES | Note 28 |
| STATEMENT OF INVENTORIES | 4 |
| STATEMENT OF OTHER CURRENT ASSETS | Note 15 |
| STATEMENT OF CHANGES IN INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD | 5 |
| STATEMENT OF CHANGES IN PROPERTY, PLANT AND EQUIPMENT | Note 12 |
| STATEMENT OF CHANGES IN ACCUMULATED DEPRECIATION OF PROPERTY, PLANT AND EQUIPMENT | Note 12 |
| STATEMENT OF CHANGES IN RIGHT-OF-USE ASSETS | Note 13 |
| STATEMENT OF CHANGES IN ACCUMULATED DEPRECIATION FOR RIGHT-OF-USE ASSETS | Note 13 |
| STATEMENT OF CHANGES IN INTANGIBLE ASSETS | Note 14 |
| STATEMENT OF DEFERRED TAX ASSETS | Note 24 |
| STATEMENT OF SHORT-TERM BORROWINGS | 6 |
| STATEMENT OF SHORT-TERM BILLS PAYABLE | Note 17 |
| STATEMENT OF ACCOUNTS PAYABLE FROM RELATED PARTIES | 7 |
| STATEMENT OF OTHER PAYABLES (INCLUDING RELATED PARTIES) | Notes 19 and 28 |
| STATEMENT OF OTHER CURRENT LIABILITIES | Note 19 |
| STATEMENT OF BONDS PAYABLE | Note 16 |
| STATEMENT OF LONG-TERM BORROWINGS | 8 |
| STATEMENT OF LEASE LIABILITIES | Note 13 |
| MAJOR ACCOUNTING ITEMS IN PROFIT OR LOSS | |
| STATEMENT OF OPERATING REVENUES | 9 |
| STATEMENT OF OPERATING COSTS | 10 |
| STATEMENT OF OPERATING EXPENSES | 11 |
| STATEMENT OF OTHER GAINS AND LOSSES | Note 23 |
| STATEMENT OF FINANCE COSTS | Note 23 |
| STATEMENT OF EMPLOYEE BENEFITS, DEPRECIATION AND AMORTIZATION | 12 |
STATEMENT 1
KMC (KUEI MENG) INTERNATIONAL INC.
STATEMENT OF CASH AND CASH EQUIVALENTS
DECEMBER 31, 2025
(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)
| Item | Maturities | Rate (%) | Amount |
|---|---|---|---|
| Cash in hand and revolving | |||
| Funds | $ 31 | ||
| Deposits | |||
| Foreign currency deposits (Note 1) | 152,648 | ||
| Demand deposits | 58,027 | ||
| 210,675 | |||
| Cash equivalents | |||
| Time deposits (Note 2) | 2026.03 | 3.83 - 4.05 | 62,860 |
| Repurchase agreements | 2026.01 | 4 | 47,145 |
| collateralized by bonds (Note 3) | 110,005 | ||
| $ 320,711 |
Note 1: Including USD $4,106,695, EUR $96,335 and CNY $4,452,725 (USD $1=NT $31.43, EUR $1=NT $36.9 and CNY $1=NT $4.496)
Note 2: USD $2,000,000 (US $1=NT $31.43)
Note 3: Including USD $1,500,000 (US $1=NT $31.43)
- 57 -
STATEMENT 2
KMC (KUEI MENG) INTERNATIONAL INC.
STATEMENT OF NOTES RECEIVABLE
DECEMBER 31, 2025
(In Thousands of New Taiwan Dollars)
| Customer Name | Amount |
|---|---|
| Company A | $ 1,236 |
| Company B | 561 |
| Company C | 190 |
| Company D | 182 |
| Company E | 171 |
| Other (Note) | 132 |
| $ 2,472 |
Note: The amount of individual customer included in others does not exceed 5% of the account balance.
- 58 -
STATEMENT 3
KMC (KUEI MENG) INTERNATIONAL INC.
STATEMENT OF ACCOUNTS RECEIVABLE (INCLUDING RELATED PARTIES)
DECEMBER 31, 2025
(In Thousands of New Taiwan Dollars)
| Customer Name | Amount |
|---|---|
| Non-related Parties | |
| Company F | $ 21,977 |
| Company G | 6,000 |
| Company H | 5,304 |
| Company I | 5,279 |
| Others (Note) | 51,796 |
| $ 90,356 | |
| Less: Allowance for impairment loss | |
| Related parties | |
| K.M.C Chain Europe N.V. | $ 205,537 |
| Wincorp Enterprises Limited | 43,142 |
| KMC Chain American Corporation | 13,144 |
| KMC Chain Industrial Co., LTD | 402 |
| $ 262,225 |
Note: The amount of individual customer included in others does not exceed 5% of the account balance.
- 59 -
STATEMENT 4
KMC (KUEI MENG) INTERNATIONAL INC.
STATEMENT OF INVENTORIES
DECEMBER 31, 2025
(In Thousands of New Taiwan Dollars)
| Item | Description | Amount | |
|---|---|---|---|
| Cost | Net Realizable Value | ||
| Merchandise | Mainly for chains | $ 38,403 | $ 62,374 |
Note: The net realizable value of inventory is the latest selling price less the estimated costs of completion and disposal.
- 60 -
STATEMENT 5
KMC (KUEI MENG) INTERNATIONAL INC.
STATEMENT OF CHANGES IN INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD
FOR THE YEAR ENDED DECEMBER 31, 2025
(In Thousands of New Taiwan Dollars)
| Investee Company | Balance, January 1, 2025 | Additions | Exchange Differences on Translation of Financial Statements of Foreign Operations | Balance, December 31, 2025 | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Shares | Amount | Shares | Amount | Gain (loss) on Investments | Allotted Cash Dividends | Share | Proportion of Ownership (%) | Amount | Fair Value | Collateral | |||
| Investment accounted for using the equity method | |||||||||||||
| KMC Chain Industrial Co., Ltd. | 91,400,000 | $ 9,617,402 | 600,000 | $ 362,464 | $ 479,261 | $(412,040) | $ 64,635 | $ 743 | 92,000,000 | 100 | $ 10,112,465 | $ 9,644,255 | None |
| K.M.C Automobile Transmission Co., Ltd. | 3,253,812 | 681,398 | - | - | 23,539 | (44,365) | - | - | 3,253,812 | 100 | 660,572 | 80,260 | None |
| Kynamic Inc. | 1,500,000 | 47,082 | - | - | (6,804) | - | 1,342 | - | 1,500,000 | 100 | 41,620 | 41,620 | None |
| KMC Industries (Vietnam) Co., Ltd. | - | 24,203 | - | - | 3,445 | - | (1,669) | - | - | 100 | 25,979 | 25,979 | None |
| KMC Global GmbH | - | 88,085 | - | 51,511 | (5,590) | - | 10,686 | - | - | 100 | 144,692 | 144,692 | None |
| 10,458,170 | 413,975 | 493,851 | (456,405) | 74,994 | 743 | 10,985,328 | 9,936,806 | ||||||
| Investment accounted for associate | |||||||||||||
| Pro (Taiwan) Procurement Co., Ltd. | 1,225,000 | 13,980 | - | - | 352 | (1,239) | - | - | 1,225,000 | 49 | 13,093 | 13,093 | None |
| Total | $ 10,472,150 | $ 413,975 | $ 494,203 | $(457,644) | $ 74,994 | $ 743 | $ 10,998,421 | $ 9,949,899 |
Note: The increase was realized gain of NT$62,464 thousand and additional investment of NT$300,000.
STATEMENT 6
KMC (KUEI MENG) INTERNATIONAL INC.
STATEMENT OF SHORT-TERM BORROWINGS
DECEMBER 31, 2025
(In Thousands of New Taiwan Dollars)
| Promissory Institution | Balance | Maturity Date | Interest Rates (%) | Credit Line | Collateral |
|---|---|---|---|---|---|
| Export-Import Bank of the Republic of China | $ 100,000 | 2025.02 - 2026.02 | 1.82 | $ 200,000 | None |
| Mega International Commercial Bank | 42,000 | 2025.09 - 2026.08 | 1.88 | 150,000 | None |
| Cathay Bank | 152,028 | 2025.09 - 2026.09 | 1.56 | 200,000 | None |
| $ 294,028 |
- 62 -
STATEMENT 7
KMC (KUEI MENG) INTERNATIONAL INC.
STATEMENT OF ACCOUNTS PAYABLE FROM RELATED PARTIES
DECEMBER 31, 2025
(In Thousands of New Taiwan Dollars)
| Vendor Name | Amount |
|---|---|
| KMC Chain (Shenzhen) Co., Ltd. | $ 215,321 |
| KMC Chain Industrial Co., Ltd. | 84,199 |
| KMC Chain Europe N.V. | 28,446 |
| KMC Chain (Suzhou) Co., Ltd. | 4,136 |
| KMC Chain (Vietnam) Co., Ltd. | 4,239 |
| $ 336,341 |
- 63 -
STATEMENT 8
KMC (KUEI MENG) INTERNATIONAL INC.
STATEMENT OF LONG-TERM BORROWINGS
DECEMBER 31, 2025
(In Thousands of New Taiwan Dollars)
| Bank Name (Note) | Description | Interest Rates (%) | Current portion | Non-current portion | Balance | Loan Period | Collateral | Repayment terms |
|---|---|---|---|---|---|---|---|---|
| Mizuho Bank, Ltd. | Medium-term borrowings | 1.85 | $ - | $ 570,000 | $ 570,000 | 2025.12.31-2027.12.31 | None | A lump sum payment made for the entirety of an outstanding loan amount at maturity |
| E.SUN Bank | Medium-term borrowings | 1.85 | - | 343,000 | 343,000 | 2025.11.03-2027.11.03 | None | A lump sum payment made for the entirety of an outstanding loan amount at maturity |
| Taipei Fubon Bank | Medium-term borrowings | 1.93 | - | 100,000 | 100,000 | 2025.09.21-2027.09.20 | None | A lump sum payment made for the entirety of an outstanding loan amount at maturity |
| $ - | $ 1,013,000 | $ 1,013,000 |
- 64 -
STATEMENT 9
KMC (KUEI MENG) INTERNATIONAL INC.
STATEMENT OF OPERATING REVENUES
FOR THE YEAR ENDED DECEMBER 31, 2025
(In Thousands of New Taiwan Dollars)
| Item | Quantities (In Thousands, unit) | Amount |
|---|---|---|
| Transmission goods - BC | 15,877 | $ 1,720,413 |
| Transmission goods - MT | 98 | 5,972 |
| 1,726,385 | ||
| Less: Sales discounts | 76 | |
| Net operating revenue | $ 1,726,309 |
- 65 -
STATEMENT 10
KMC (KUEI MENG) INTERNATIONAL INC.
STATEMENT OF OPERATINGS COSTS
FOR THE YEAR ENDED DECEMBER 31, 2025
(In Thousands of New Taiwan Dollars)
| Item | Amount |
|---|---|
| Inventories, beginning of year | $ 33,755 |
| Add: Purchase | 963,978 |
| Others | (107) |
| Less: Inventories, end of year | (38,403) |
| Total operating costs | $ 959,223 |
- 66 -
STATEMENT 11
KMC (KUEI MENG) INTERNATIONAL INC.
STATEMENT OF OPERATING EXPENSES
FOR THE YEAR ENDED DECEMBER 31, 2025
(In Thousands of New Taiwan Dollars)
| Item | Selling Expenses | General and Administrative Expenses | Research and Development Expenses | Expected Credit Loss | Total |
|---|---|---|---|---|---|
| Payroll expense | $ 26,714 | $ 41,681 | $ - | $ - | $ 68,395 |
| Advertisement expense | 8,610 | 60 | 13 | - | 8,683 |
| Software expense | 1,225 | 8,692 | 148 | - | 10,065 |
| Professional service fee | 297 | 6,762 | - | - | 7,059 |
| Amortization expense | 1,346 | 5,136 | 176 | - | 6,658 |
| Gains from reversed expected credit impairment | - | - | - | (395) | (395) |
| Others (Note) | 25,976 | 11,548 | 205 | - | 37,729 |
| Total | $ 64,168 | $ 73,879 | $ 542 | $ (395) | $ 138,194 |
Note : The amount of each item included in others does not exceed 5% of the account balance.
- 67 -
STATEMENT 12
KMC (KUEI MENG) INTERNATIONAL INC.
STATEMENT OF EMPLOYEE BENEFITS, DEPRECIATION AND AMORTIZATION
FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024
(In Thousands of New Taiwan Dollars)
| | For the Year Ended December 31, 2025
Classified as Operating Expenses | For the Year Ended December 31, 2024
Classified as Operating Expenses |
| --- | --- | --- |
| Employee benefits | | |
| Salaries | $ 56,278 | $ 40,072 |
| Labor and health insurance | 4,475 | 4,134 |
| Pension | 2,029 | 2,060 |
| Remuneration of directors | 12,117 | 12,008 |
| Others | 1,283 | 1,340 |
| | $ 76,182 | $ 59,614 |
| Depreciation | $ 2,791 | $ 3,361 |
| Amortization | $ 6,658 | $ 7,125 |
Note 1: As of December 31, 2025 and 2024, the Company had 56 and 54 employees, respectively, which included 3 non-employee directors in both 2025 and 2024.
Note 2: Additional disclosures are as follows:
- Average employee benefits for the year ended December 31, 2025 was NT$1,209 thousand (amounts of employee benefits for the year ended December 31, 2025 less amounts of remuneration of directors for the year ended December 31, 2025/number of employees for the year ended December 31, 2025 less number of directors not serving concurrently as employees for the year ended December 31, 2025).
Average employee benefits for the year ended December 31, 2024 was NT$933 thousand (amounts of employee benefits for the year ended December 31, 2024 less amounts of remuneration of directors for the year ended December 31, 2024/number of employees for the year ended December 31, 2024 less number of directors not serving concurrently as employees for the year ended December 31, 2024).
- Average salaries for the year ended December 31, 2025 was NT$1,062 thousand (amounts of salaries for the year ended December 31, 2025/number of employees for the year ended December 31, 2025 less number of directors not serving concurrently as employees for the year ended December 31, 2025).
Average salaries for the year ended December 31, 2024 was NT$786 thousand (amounts of salaries for the year ended December 31, 2024/number of employees for the year ended December 31, 2024 less number of directors not serving concurrently as employees for the year ended December 31, 2024).
-
Changes of adjustments of average salaries was 35% (average salaries for the year ended December 31, 2025 less average salaries for the year ended December 31, 2024/average salaries for the year ended December 31, 2024).
-
The Company did not have supervisors for the years ended December 31, 2025 and 2024.
-
The Company's compensation policies:
a. The company's directors' remuneration is negotiated based on their participation in the company's operations and the value of their contributions. And Independent directors receive fixed remuneration.
b. The remuneration of managers is determined based on their job responsibilities, contribution to the Company as well as the Company's operating performance for the year.