Sheng Yu Steel Co., Ltd.

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

Sheng Yu Steel Co., Ltd.

Opinion

We have audited the accompanying parent company only financial statements of Sheng Yu Steel Co., Ltd. (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 notes to the parent company only financial statements, including material accounting policy information (collectively referred to as the "parent company only financial statements").

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 Parent Company Only the 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, 2025. 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 key audit matter in the Company's parent company only financial statements for the year ended December 31, 2025 is as follows:

Recognition of Revenue

The main products of the Company are galvanized and prepainted steel coils; contribution of the sale of certain products to gross profit is significant. Management of the Company may manipulate revenue if it is under pressure to achieve its goal. We assessed that the main source of risk may arise from the occurrence of sales revenue. Therefore, we identified the recognition of revenue from products with unit selling prices that are significantly higher than average, the amounts of sales with significant changes and the recognition of revenue from particular customers with significant changes in sales as a key audit matter.

Refer to Note 4 to the financial statements for the related accounting policies and disclosures of revenue recognition. Our key audit procedures performed in respect of the abovementioned sales recognition of revenue

included the following:

We understood the design and implementation of the internal controls and tested the operating effectiveness of controls related to the sales cycle.
We confirmed that the control of products had been transferred and the performance obligation was satisfied by checking the related delivery documents; we inspected the collection receipts of goods to verify that the counterparties of collections were consistent with those of the transactions.
We confirmed the accuracy of sales revenue by sending confirmation requests of sales revenue of the year.

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 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
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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 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.

The engagement partners on the audits resulting in this independent auditors’ report are Xiu-Wen Chen and Lee-Yuan Kuo.

Deloitte & Touche
Taipei, Taiwan
Republic of China

March 6, 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 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.

SHENG YU STEEL CO., LTD.

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)	$ 2,809,614	26	$ 2,720,177	24
Notes receivable (Note 8)	196	-	33	-
Trade receivables (Note 8)	449,182	4	788,620	7
Trade receivables from related parties (Notes 8 and 25)	8,099	-	6,012	-
Other receivables (Note 8)	36,264	-	47,085	-
Other receivables from related parties (Notes 8 and 25)	50,208	-	77,376	1
Inventories (Notes 4, 5 and 9)	1,750,171	16	2,011,192	18
Prepayments for purchases	87,182	1	108,829	1
Non-current assets held for sale (Note 10)	233,700	2	-	-
Other financial assets - current (Note 7)	2,150,000	20	2,018,400	18
Other current assets	1,077	-	960	-
Total current assets	7,575,693	69	7,778,684	69
NON-CURRENT ASSETS
Investments accounted for using the equity method (Notes 4 and 11)	190,779	2	416,420	4
Property, plant and equipment (Notes 4, 12 and 25)	2,396,911	22	2,299,295	21
Right-of-use-assets (Notes 4 and 13)	12,214	-	8,266	-
Investment properties (Notes 4 and 14)	365,687	4	368,269	3
Computer software (Note 4)	15,694	-	15,633	-
Deferred tax assets (Notes 4 and 21)	89,078	1	81,304	1
Prepayments for equipment	108,323	1	119,426	1
Refundable deposits	5,106	-	2,649	-
Net defined benefit assets - non-current (Notes 4 and 17)	132,512	1	93,228	1
Other financial assets - non-current (Notes 7 and 26)	18,000	-	18,000	-
Other non-current assets	1,890	-	1,871	-
Total non-current assets	3,336,194	31	3,424,361	31
TOTAL	$ 10,911,887	100	$ 11,203,045	100
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Contract liabilities - current (Notes 4 and 19)	$ 17,158	-	$ 33,516	-
Trade payables (Note 15)	137,710	1	186,767	2
Trade payables to related parties (Notes 15 and 25)	89,166	1	122,707	1
Other payables (Note 16)	428,444	4	446,163	4
Current tax liabilities (Notes 4 and 21)	10,450	-	65,926	1
Lease liabilities - current (Notes 4 and 13)	3,734	-	4,206	-
Refund liabilities - current (Note 4)	59,082	1	54,217	-
Other current liabilities	4,375	-	3,926	-
Total current liabilities	750,119	7	917,428	8
NON-CURRENT LIABILITIES
Deferred tax liabilities (Notes 4 and 21)	78,015	1	69,922	1
Lease liabilities - non-current (Notes 4 and 13)	7,884	-	3,462	-
Guarantee deposits	515	-	515	-
Total non-current liabilities	86,414	1	73,899	1
Total liabilities	836,533	8	991,327	9
EQUITY (Note 18)
Capital stock	3,211,800	29	3,211,800	29
Capital surplus	1,557,969	14	1,557,364	14
Retained earnings
Legal reserve	1,967,195	18	1,902,403	17
Special reserve	-	-	7,023	-
Unappropriated earnings	3,331,285	31	3,527,632	31
Total retained earnings	5,298,480	49	5,437,058	48
Other equity	7,105	-	5,496	-
Total equity	10,075,354	92	10,211,718	91
TOTAL	$ 10,911,887	100	$ 11,203,045	100

The accompanying notes are an integral part of the parent company only financial statements.

SHENG YU STEEL CO., LTD.

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)

	For the Year Ended December 31
	2025		2024
	Amount	%	Amount	%
OPERATING REVENUES (Notes 4, 19 and 25)	$ 12,472,821	100	$ 13,045,267	100
OPERATING COSTS (Notes 9, 17, 20 and 25)	11,219,826	90	11,810,423	91
GROSS PROFIT	1,252,995	10	1,234,844	9
UNREALIZED GAIN ON TRANSACTIONS WITH SUBSIDIARIES	-	-	(7,704)	-
REALIZED GAIN ON TRANSACTIONS WITH SUBSIDIARY	6,385	-	-	-
REALIZED GROSS PROFIT	1,259,380	10	1,227,140	9
OPERATING EXPENSES (Notes 17, 20 and 25)
Selling and marketing expenses	712,736	6	342,150	2
General and administrative expenses	219,972	2	214,284	2
Research and development expenses	87,261	1	83,740	1
Total operating expenses	1,019,969	9	640,174	5
PROFIT FROM OPERATIONS	239,411	1	586,966	4
NON-OPERATING INCOME AND EXPENSES (Notes 20 and 25)
Interest income	75,288	1	78,104	1
Other income	1,195	-	1,170	-
Other gains and losses	(44,908)	-	61,607	-
Interest expense	(179)	-	(93)	-
Share of profit or loss of subsidiaries and associates accounted for using the equity method	25,553	-	(7,133)	-
Total non-operating income	56,949	1	133,655	1
PROFIT BEFORE INCOME TAX	296,360	2	720,621	5
INCOME TAX EXPENSE (Notes 4 and 21)	57,259	-	139,388	1
NET PROFIT FOR THE YEAR	239,101	2	581,233	4

(Continued)

SHENG YU STEEL CO., LTD.

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)

	For the Year Ended December 31
	2025		2024
	Amount	%	Amount	%
OTHER COMPREHENSIVE INCOME (Notes 17, 18 and 21)
Items that will not be reclassified subsequently to profit or loss
Remeasurement of defined benefit plans	$ 29,835	-	$ 83,181	1
Remeasurement of defined benefit plans of subsidiaries accounted for using the equity method	(90)	-	176	-
Income tax relating to items that will not be reclassified subsequently to profit or loss	(5,949)	-	(16,671)	-
Items that may be reclassified subsequently to profit or loss
Exchange differences on translating the financial statements of foreign operations	(703)	-	12,578	-
Exchange differences on translating foreign operations of subsidiaries accounted for using the equity method	2,312	-	168	-
Income tax relating to items that may be reclassified subsequently to profit or loss	-	-	(225)	-
Other comprehensive income for the year, net of income tax	25,405	-	79,207	1
TOTAL COMPREHENSIVE INCOME FOR THE YEAR	$ 264,506	2	$ 660,440	5
EARNINGS PER SHARE (Note 22)
Basic	$ 0.74		$ 1.81
Diluted	$ 0.74		$ 1.81

(Concluded)

The accompanying notes are an integral part of the parent company only financial statements.

SHENG YU STEEL CO., LTD.

STATEMENTS OF CHANGES IN EQUITY

FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024

(In Thousands of New Taiwan Dollars)

	Capital Stock	Capital Surplus	Retained Earnings				Other Equity			Total Equity
			Legal Reserve	Special Reserve	Unappropriated Earnings	Subtotal	Exchange Differences on Translating the Financial Statements of Foreign Operations	Equity Directly Associated with Non-current Assets Held for Sale	Subtotal
BALANCE, JANUARY 1, 2024	$ 3,211,800	$ 1,557,364	$ 1,846,723	$ 14,536	$ 3,329,355	$ 5,190,614	$ (7,025)	$ -	$ (7,025)	$ 9,952,753
Appropriation of 2023 earnings (Note 18)
Set aside as legal reserve	-	-	55,680	-	(55,680)	-	-	-	-	-
Reversal of special reserve	-	-	-	(7,513)	7,513	-	-	-	-	-
Cash dividends	-	-	-	-	(401,475)	(401,475)	-	-	-	(401,475)
	-	-	55,680	(7,513)	(449,642)	(401,475)	-	-	-	(401,475)
Net profit for the year ended December 31, 2024	-	-	-	-	581,233	581,233	-	-	-	581,233
Other comprehensive income for the year ended December 31, 2024, net of income tax	-	-	-	-	66,686	66,686	12,521	-	12,521	79,207
Total comprehensive income for the year ended December 31, 2024	-	-	-	-	647,919	647,919	12,521	-	12,521	660,440
BALANCE, DECEMBER 31, 2024	3,211,800	1,557,364	1,902,403	7,023	3,527,632	5,437,058	5,496	-	5,496	10,211,718
Appropriation of 2024 earnings (Note 18)
Set aside as legal reserve	-	-	64,792	-	(64,792)	-	-	-	-	-
Reversal of special reserve	-	-	-	(7,023)	7,023	-	-	-	-	-
Cash dividends	-	-	-	-	(401,475)	(401,475)	-	-	-	(401,475)
	-	-	64,792	(7,023)	(459,244)	(401,475)	-	-	-	(401,475)
Net profit for the year ended December 31, 2025	-	-	-	-	239,101	239,101	-	-	-	239,101
Other comprehensive income for the year ended December 31, 2025, net of income tax	-	-	-	-	23,796	23,796	521	1,088	1,609	25,405
Total comprehensive income for the year ended December 31, 2025	-	-	-	-	262,897	262,897	521	1,088	1,609	264,506
Actual disposal or acquisition of interests in subsidiaries	-	605	-	-	-	-	-	-	-	605
BALANCE, DECEMBER 31, 2025	$ 3,211,800	$ 1,557,969	$ 1,967,195	$ -	$ 3,331,285	$ 5,298,480	$ 6,017	$ 1,088	$ 7,105	$ 10,075,354

The accompanying notes are an integral part of the parent company only financial statements.

SHENG YU STEEL CO., LTD.

PARENT CONMPANY ONLY STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024

(In Thousands of New Taiwan Dollars)

	For the Year Ended December 31
	2025	2024
CASH FLOWS FROM OPERATING ACTIVITIES
Profit before income tax	$ 296,360	$ 720,621
Adjustments for:
Depreciation expense	237,170	270,214
Amortization expense	6,913	5,213
Interest expense	179	93
Interest income	(75,288)	(78,104)
Share of net (profit) loss of subsidiaries and associates accounted for using the equity method	(25,553)	7,133
Loss on disposal of property, plant and equipment	2,664	2,662
Impairment loss on non-current assets held for sale	28,801	-
Write-downs (reversal) of inventories	46,454	(3,207)
Unrealized gain on transactions with subsidiaries	-	7,704
Realized gain on transactions with subsidiary	(6,385)	-
Unrealized net gain on foreign currency exchange	(4,145)	-
Idle capacity losses	36,992	16,725
Others	51	(14)
Changes in operating assets and liabilities
Notes receivable	(92)	(33)
Trade receivables	339,440	(121,236)
Trade receivables from related parties	(2,087)	(5,704)
Other receivables	13,146	(15,020)
Inventories	177,575	(250,537)
Prepayments for purchase	21,647	(15,161)
Other current assets	(117)	1,088
Contract liabilities	(16,358)	3,359
Trade payables	(49,057)	12,332
Trade payables to related parties	(33,541)	11,396
Other payables	33,761	54,932
Other current liabilities	449	88
Net defined benefit liabilities	(9,449)	(16,767)
Refund liabilities	4,865	2,546
Cash generated from operations	1,024,395	610,323
Interest received	72,963	78,613
Dividends received	3,069	2,918
Interest paid	(179)	(93)
Income tax paid	(118,383)	(139,968)
Net cash generated from operating activities	981,865	551,793
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of investments accounted for using equity method	(5,849)	-
Payment of property, plant and equipment	(370,618)	(364,302)
		(Continued)

SHENG YU STEEL CO., LTD.

PARENT CONMPANY ONLY STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024

(In Thousands of New Taiwan Dollars)

	For the Year Ended December 31
	2025	2024
Proceeds from disposal of property, plant and equipment	$ 50	$ -
Increase in refundable deposits	(2,457)	(13)
Decrease (Increase) in other receivable from related parties	31,240	(25,262)
Acquisition of intangible assets	(6,974)	(5,535)
Acquisition of investment properties	-	(13,409)
Increase in other financial assets	(131,600)	(1,298,745)
Increase in non-current assets	(19)	(294)
Net cash used in investing activities	(486,227)	(1,707,560)
CASH USED IN FINANCING ACTIVITIES
Repayment of the principal portion of lease liabilities	(4,726)	(4,361)
Cash dividends distributed	(401,475)	(401,475)
Net cash used in financing activities	(406,201)	(405,836)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	89,437	(1,561,603)
CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR	2,720,177	4,281,780
CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR	$ 2,809,614	$ 2,720,177

(Concluded)

The accompanying notes are an integral part of the parent company only financial statements.

SHENG YU STEEL CO., LTD.

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

Sheng Yu Steel Co., Ltd. (the "Company") was incorporated in May 1973 and mainly engaged in the manufacturing, processing and selling of cold rolled, galvanized, and prepainted steel coils.

As of December 31, 2025, the Company's shareholders were YODOKO, Ltd. (formerly Yodogawa Steel Works Ltd.) - 63% (parent company); Fujiden International Corporation (an investee of YODOKO, Ltd.) - 1%; and other shareholders - 36%.

The Company's shares have been listed on the Taiwan Stock Exchange since January 1997.

The parent company only financial statements are presented in the Company's functional currency, the New Taiwan dollar.

2. APPROVAL OF FINANCIAL STATEMENTS

The parent company only financial statements were approved by the Company's board of directors and authorized for issue on March 6, 2026.

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

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

The initial application of IFRS Accounting Standards endorsed and issued into effect by the FSC did not have a 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 has assessed that the aforementioned amendments to the standards will not have a material impact on the Company's financial position and financial performance.

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

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

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

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

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.
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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 will have 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 that are measured at fair value and net defined benefit assets 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 the 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 the asset or liability.

When preparing the parent company only financial statements, the Company used the equity method to account for its investment in subsidiaries and associates. In order to agree with the amount of net income for the year, other comprehensive income for the year and total equity attributable to owner of the Company in the consolidated financial statements, the differences of the accounting treatment between the parent company only basis and the consolidated basis are adjusted under the heading of investments accounted for using the equity method, share of profit or loss of subsidiaries and associates accounted for using the equity method, share of other comprehensive income of subsidiaries and associates accounted for using the equity method and the related equity accounts, as appropriate, in the parent company only financial statements.

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

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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:

Current liabilities include:

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

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

d. Foreign currencies

In preparing the financial statements of the Company, transactions in currencies other than the Company's functional currency (i.e. 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 in which they arise.

Non-monetary items measured at fair value that are denominated in foreign currencies are retranslated at the rates prevailing at the date when the fair value was determined. Exchange differences arising on 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 items that are measured at historical cost in a foreign currency are not retranslated.

For the purpose of presenting the parent company only financial statements, the assets and liabilities of the Company's foreign operations (including subsidiaries and associates in other countries that use currencies different from the functional currency of the Company) are translated into the New Taiwan dollars using exchange rates prevailing at the end of each 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.

e. Inventories

Inventories consist of raw materials, supplies, finished goods, work-in-process, and 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. 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 weighted-average cost.

f. Investments accounted for using the equity method

Investments in subsidiaries and associates are accounted for using the equity method.

1) Investments in subsidiaries

Subsidiaries are entities that are controlled by the Company.

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Under the equity method, the investment in a subsidiary 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 subsidiaries. The Company also recognizes the Company’s share of the changes in other equity of the subsidiaries.

The Company assesses its investments for any impairment by comparing the carrying amount with the estimated recoverable amount based on the financial statements as a whole of the invested company. Impairment loss is recognized when the carrying amount exceeds the recoverable amount. If the recoverable amount of the investment subsequently increases, the Company recognizes reversal of the impairment loss; the adjusted post-reversal carrying amount should not exceed the carrying amount that would have been recognized (net of amortization or depreciation) had no impairment loss been recognized in prior years. An impairment loss recognized on goodwill cannot be reversed in a subsequent period.

Profits and losses resulting from downstream transactions with a subsidiary are eliminated in full in the parent company only financial statements. Profits and losses resulting from upstream transactions with a subsidiary and side stream transactions between subsidiaries are recognized in parent company only financial statements only to the extent of interests in the subsidiaries that are not related to the Company.

2) Investments in associates

An associate is an entity over which the Company has significant influence and that is not a subsidiary.

The Company uses the equity method to account for its investment in associate. Under the equity method, investments in an associate are 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 Company’s share of the changes in other equity of the associates.

When the Company subscribes for additional new shares of an associate at a percentage different from its existing ownership percentage, the resulting carrying amount of the investment will differ from the amount of the Company’s proportionate interest in the associate. The Company records such a difference as an adjustment to investments with the corresponding amount charged or credited to capital surplus - changes in the Company’s share of equity of the associate. If the Company’s ownership interest is reduced due to the additional subscription of the new shares of the associate, the proportionate amount of the gains or losses previously recognized in other comprehensive income in relation to that associate is reclassified to profit or loss on the same basis as would be required if the investee had directly disposed of the related assets or liabilities. When the adjustment should be debited to capital surplus, but if the capital surplus recognized from investments accounted for using the equity method is insufficient, the shortage is debited to retained earnings.

When the Company’s share of losses of an associate equal or exceed its interest in that associate, the Company discontinues recognizing its share of further losses. Additional losses and liabilities are recognized only to the extent that the Company has incurred legal obligations, or constructive obligations, or made payments on behalf of that associate.

The entire carrying amount of the investment (including goodwill) is tested for impairment as a single asset by comparing its recoverable amount with its carrying amount. Any impairment loss recognized is deducted from the carrying amount of the investment. Any reversal of that impairment loss is recognized to the extent that the recoverable amount of the investment subsequently increased.

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When the Company transacts with its associates, profits and losses resulting from the transactions are recognized in the parent company only financial statements only to the extent that interests in the associates are not related to the Company.

g. Property, plant, and equipment

Property, plant and equipment (“PPE”) are initially measured at cost, and subsequently measured at cost less recognized accumulated depreciation and accumulated impairment loss.

PPE in the course of construction are measured at cost. Before the asset reaches its intended use its measured at the lower of cost or net realizable value, and any proceeds from selling the asset and the cost of the asset are recognized in profit or loss. Such assets are depreciated and classified to the appropriate categories of PPE when completed and ready for their intended use.

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

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

h. Investment properties

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

Freehold IPs are measured initially at cost, including transaction costs. Subsequent to initial recognition, IPs are measured at cost less accumulated depreciation. Depreciation is recognized using the straight-line method.

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

i. Intangible assets

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

j. Impairment of property, plant and equipment, right-of-use asset, investment properties 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, investment properties and intangible assets, 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 smallest group of cash-generating units on a reasonable and consistent basis of allocation.

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

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amount of the asset or cash-generating unit is reduced to its recoverable amount, with the resulting impairment loss recognized in profit or loss.

Before the Company recognizes an impairment loss from assets related to contract costs, any impairment loss on inventories, property, plant and equipment and intangible shall be recognized in accordance with applicable standards. Then, impairment loss from the assets related to the contract costs is recognized to the extent that the carrying amount of the assets exceeds the remaining amount of consideration that the Company expects to receive in exchange for related goods or services less the costs which relate directly to providing those goods or services and which have not been recognized as expenses. The assets related to the contract costs are then included in the carrying amount of the cash-generating unit to which they belong for the purpose of evaluating impairment of that cash-generating unit.

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.

k. Non-current assets held for sale

Non-current assets are classified as held for sale if their carrying amounts will be recovered principally through a sale transaction rather than through continuing use. This condition is regarded as met only when the sale is highly probable and the non-current asset is available for immediate sale in its present condition. To meet the criteria for the sale being highly probable, the appropriate level of management must be committed to the sale, and the sale should be expected to qualify for recognition as a completed sale within 1 year from the date of classification.

When the Company is committed to a sale plan involving the disposal of an investment in an associate, only the investment that will be disposed of is classified as held for sale when the classification criteria are met, and the Company discontinues the use of the equity method in relation to the portion that is classified as held for sale.

Non-current assets classified as held for sale are measured at the lower of their previous carrying amount and fair value less costs to sell. Such assets classified as held for sale are not depreciated.

l. 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 issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) 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 fair value through profit or loss 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 as financial assets at amortized cost.

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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, notes and trade receivables (including related parties) at amortized cost, other receivables (including related parties), other financial assets and refundable deposits, 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, except for:

i Purchased or originated credit-impaired financial assets, for which interest income is calculated by applying the credit-adjusted effective interest rate to the amortized cost of such financial assets; and

ii Financial assets that are not credit-impaired on purchase or origination but have subsequently become credit-impaired, for which interest income is calculated by applying the effective interest rate to the amortized cost of such financial assets in subsequent reporting periods.

Credit-impaired financial assets mean that the issuer or counterparty has experienced significant financial difficulties, defaults, and the counterparty is likely to file for bankruptcy or undergo a financial re-organization, or the disappearance of an active market for that financial asset because of financial difficulties.

Cash equivalents include time deposits, repurchase agreements collateralized by bonds investments with original maturities within three months from the date of acquisition, highly liquid, readily convertible to a known amount of cash and 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 trade receivables).

The Company always recognizes lifetime expected credit losses (ECLs) for trade receivables. 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

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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 a financial asset is in default when internal or external information shows that the debtor is unlikely to pay its creditors (without taking into account any collateral held by the Company).

The impairment loss of all financial assets is recognized in profit or loss by a reduction in their carrying amounts through a loss allowance account, except for investments in debt instruments that are measured at FVTOCI, for which the loss allowance is recognized in other comprehensive income and the carrying amounts of such financial assets are not reduced.

c) Derecognition of financial assets

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

On derecognition of a financial asset at amortized cost in its entirety, the difference between the asset's carrying amount and the sum of the consideration received and receivable is recognized in profit or loss. On derecognition of an investment in an equity instrument at FVTOCI, the difference between the asset's carrying amount and the sum of the consideration received and receivable is recognized in profit or loss, and the cumulative gain or loss which had been recognized in other comprehensive income is transferred directly to retained earnings, without recycling through profit or loss.

2) Equity instruments

Equity instruments issued by the Company are classified as equity in accordance with the definition of an equity instrument.

Equity instruments issued by the Company are recognized at the proceeds received, net of direct issue costs.

3) Financial liabilities

a) Subsequent measurement

Financial liabilities are measured at amortized cost using the effective interest method.

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.

m. Revenue Recognition

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

1) Revenue from the sale of goods

Revenue from the sale of goods is recognized when the committed goods are delivered to customers and satisfied performance obligations. Transaction price received is recognized as a contract

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liability until performance obligations are satisfied.

Revenue is measured at the fair value, which is the discounted present value of the price (net of commercial discounts and quantity discounts) agreed on by the Company with its customers. Estimated discounts or other allowances of the consideration received are recognized as refund liabilities. For a contract where the period between the date the Company transfers a promised good or service to a customer and the date the customer pays for that good or service is one year or less, the Company does not adjust the promised amount of consideration for any effect of a significant financing component.

Export sales are recognized when products are loaded onto shipping vessels in accordance with the sales terms, and domestic sales are recognized when products are delivered to and accepted by the customers.

The Company does not recognize sales revenue on materials delivered to subcontractors because this delivery does not involve a transfer of risks and rewards of materials ownership.

2) Revenue from the rendering of services

Revenue from process contracts and technical support service is recognized at the contractual rates as direct expenses and labor hours are incurred.

n. Lease

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

1) The Company as lessor

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

Lease payments (less any lease incentives payable) from operating leases are recognized as income on a straight-line basis over the terms of the relevant leases. Initial direct costs incurred in obtaining operating leases are added to the carrying amounts of the underlying assets and recognized as expenses on a straight-line basis over the lease terms.

2) 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, which comprise the initial measurement of lease liabilities, are initially measured at cost and subsequently measured at cost less accumulated depreciation and impairment losses and adjusted for any remeasurement of the lease liabilities. Right-of-use assets are presented on a separate line in the 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 the lessee's incremental borrowing rate.

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Subsequently, lease liabilities are measured at amortized cost using the effective interest method, with interest expense recognized over the lease terms. When there is a change in a lease term or a change in 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. For a lease modification that is not accounted for as a separate lease, the Company accounts for the remeasurement of the lease liability by (a) decreasing the carrying amount of the right-of-use asset of lease modifications that decreased the scope of the lease, and recognizing in profit or loss any gain or loss on the partial or full termination of the lease; (b) making a corresponding adjustment to the right-of-use asset of all other lease modifications. Lease liabilities are presented on a separate line in the balance sheets.

o. 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 service.

2) Retirement benefits

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

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

Net defined benefit assets represent the actual surplus in the Company's defined benefit plans. Any surplus resulting from this calculation is limited to the present value of any refunds from the plans or reductions in future contributions to the plans.

3) Termination benefits

A liability for a termination benefit is recognized at the earlier of when the Company can no longer withdraw the offer of the termination benefit and when the Company recognizes any related restructuring costs.

p. Carbon fee provision

In accordance with the Regulations Governing the Collection of Carbon Fees and related regulations of the ROC, the carbon fee provision is recognized and measured on the basis of the best estimate of the expenditure required to settle the obligation for the current year.

q. Taxation

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

1) Current tax

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

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According to the Income Tax Act in the ROC, an additional tax on unappropriated earnings is provided for in the year the shareholders approve to retain 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 in the parent company only financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognized for all taxable temporary differences. Deferred tax assets are generally recognized for all deductible temporary differences, 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 and associate, 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 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 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 liability is settled or the asset 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.

3) Current and deferred tax 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 JUDGMENTS 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 Company considers the possible impact of the recent economic environment implications when making its material accounting estimates. The estimates and underlying assumptions are reviewing on an ongoing basis.

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Key sources of estimation uncertainty - Write-down of inventories

The net realizable value of inventories is the estimated selling price in the ordinary course of business less the estimated costs of completion and disposal. The estimation of net realizable value is based on current market conditions and historical experience with product sales of a similar nature. Changes in market conditions may have a material impact on the estimation of net realizable value.

6. CASH AND CASH EQUIVALENTS

	December 31
	2025	2024
Cash on hand	$ 765	$ 775
Checking accounts and demand deposits	109,385	135,528
Cash equivalents (investments with original maturities of 3 months or less)
Time deposits	1,250,000	100,000
Repurchase agreements collateralized by bonds	1,449,464	2,483,874
	$ 2,809,614	$ 2,720,177

As of December 31, 2025 and 2024, the ranges of interest rate for repurchase agreements collateralized by bonds with original maturities of 3 months or less were 1.45%-3.9%, and 1.48%-4.65%, respectively.

7. OTHER FINANCIAL ASSETS

	December 31
	2025	2024
Current
Time deposits with original maturities of more than three months	$ 2,150,000	$ 2,018,400
Non-current
Pledged time deposits (Note 26)	$ 18,000	$ 18,000

As of December 31, 2025 and 2024, the ranges of interest rates for time deposits with original maturities of more than three months were 1.45%-1.75% and 0.80%-1.70%, respectively.

8. NOTES RECEIVABLE, TRADE RECEIVABLES AND OTHER RECEIVABLES (INCLUDING RELATED PARTIES)

	December 31
	2025	2024
Notes receivable
At amortized cost gross carrying amount	$ 196	$ 33
Trade receivables
At amortized cost gross carrying amount	$ 449,182	$ 788,620
Less: Allowance for impairment loss	-	-
	$ 449,182	$ 788,620
(Continued)

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	December 31
	2025	2024
Trade receivables from related parties (Note 25)
At amortized cost gross carrying amount	$ 8,099	$ 6,012
Less: Allowance for impairment loss	-	-
	$ 8,099	$ 6,012
Other receivables
Value-added tax refunds	$ 13,964	$ 23,086
Purchase commitment discounts	87	16,410
Interest income	9,506	7,181
Others	12,707	408
	$ 36,264	$ 47,085
Other receivables from related parties
Loans receivable (Note 25)	$ 50,208	$ 77,376
		(Concluded)

Receivables at amortized cost

Receivables are measured at amortized cost. Refer to Note 24 for the accounting policies related to credit limits and credit management.

The Company measures the loss allowance for trade receivables at an amount equal to lifetime ECLs. The expected credit losses on accounts receivable are estimated using a provision matrix by reference to the past default records of the debtor and an analysis of the debtor's current financial position. 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 following table details the loss allowance of trade receivables based on the provision matrix:

December 31, 2025

	Not Past Due	1 to 30 Days Overdue	31 to 90 Days Overdue	Over 90 Days Overdue	Total
Gross carrying amount	$ 457,477	$ -	$ -	$ -	$ 457,477
Loss allowance	-	-	-	-	-
Amortized cost	$ 457,477	$ -	$ -	$ -	$ 457,477
December 31, 2024
	Not Past Due	1 to 30 Days Overdue	31 to 90 Days Overdue	Over 90 Days Overdue	Total
Gross carrying amount	$ 721,973	$ 72,692	$ -	$ -	$ 794,665
Loss allowance	-	-	-	-	-
Amortized cost	$ 721,973	$ 72,692	$ -	$ -	$ 794,665

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9. INVENTORIES

	December 31
	2025	2024
Finished goods	$ 494,892	$ 749,831
Work in progress	195,735	283,517
Raw materials	1,023,480	923,244
Supplies	24,042	37,870
Others	12,022	16,730
	$ 1,750,171	$ 2,011,192

The cost of inventories recognized as operating cost were as follows:

	For the Year Ended December 31
	2025	2024
Write-downs (reversal) of inventories	$ 46,454	$ (3,207)
Idle capacity loss	$ 36,992	$ 16,725

Reversal of inventories was mainly due to destocking.

10. NON-CURRENT ASSETS HELD FOR SALE

	December 31, 2025
Non-current assets held for sale	$ 233,700

In January 2026, the board of directors resolved to dispose of the entire equity interest in Yodogawa-Shengyu (Hefei) High-Tech Steel Co., Ltd. The Company will enter into an equity transfer agreement with a non-related party and expects to complete the sale within 12 months. The investment accounted for under the equity method has been reclassified as non-current assets held for sale.

As the anticipated disposal proceeds are lower than the carrying amount of the investment, an impairment loss of NT$ 28,801 thousand has been recognized (recorded under other losses), and the remaining balance has been reclassified as non-current assets held for sale.

11. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD

	December 31
	2025	2024
Investments in subsidiaries	$ 190,779	$ 156,579
Investments in associates	-	259,841
	$ 190,779	$ 416,420

a. Investments in subsidiaries

	December 31
	2025	2024
Unlisted companies
Yodoko International Co., Ltd.	$ 133,516	$ 111,288
Sheng-Shing Worldwide Corp.	57,263	45,291
	$ 190,779	$ 156,579
	Proportion of Ownership and Voting Rights (%)
	December 31
Name of Subsidiaries	2025	2024
Yodoko International Co., Ltd.	82	78
Sheng-Shing Worldwide Corp.	54	54

For the information on investees which are held indirectly by the Company, refer to Table 3 and Table 4.

b. Investments in associates that are not individually material

On December 31, 2025, the Company reclassified its equity-method investment in Yodogawa-Shengyu (Hefei) High-Tech Steel Co., Ltd. as non-current assets held for sale, refer to Note 10.

	For the Year Ended December 31
	2025	2024
The Company’s share of Net loss for the year	$ -	$ (24,757)
Other comprehensive income (loss)	-	-
Total comprehensive loss for the year	$ -	$ (24,757)

12. PROPERTY, PLANT AND EQUIPMENT

For the year ended December 31, 2025

	Land	Buildings	Machinery and Equipment	Transportation Equipment	Other Equipment	Construction in Progress	Total
Cost
Balance on January 1, 2025	$ 441,614	$ 2,002,903	$ 9,734,924	$ 52,298	$ 399,985	$ 415,921	$ 13,047,645
Additions	-	70,291	184,348	810	23,451	51,341	330,241
Disposals	-	(8,587)	(156,676)	(520)	(14,386)	-	(180,169)
Balance on December 31, 2025	441,614	2,064,607	9,762,596	52,588	409,050	467,262	13,197,717
Accumulated depreciation
Balance on January 1, 2025	-	1,792,231	8,629,483	39,556	287,080	-	10,748,350
Depreciation expense	-	36,840	170,447	3,223	19,401	-	229,911
Disposals	-	(8,416)	(155,549)	(433)	(13,057)	-	(177,455)
Balance on December 31, 2025	-	1,820,655	8,644,381	42,346	293,424	-	10,800,806
Net balance on December 31, 2025	$ 441,614	$ 243,952	$ 1,118,215	$ 10,242	$ 115,626	$ 467,262	$ 2,396,911

For the year ended December 31, 2024

Cost	Land	Buildings	Machinery and Equipment	Transportation Equipment	Other Equipment	Construction in Progress	Total
Balance on January 1, 2024	$ 441,614	$ 1,999,022	$ 9,678,271	$ 50,610	$ 398,681	$ 126,367	$ 12,694,565
Additions	-	14,791	130,228	1,688	10,601	289,554	446,862
Disposals	-	(10,910)	(73,575)	-	(9,297)	-	(93,782)
Balance on December 31, 2024	441,614	2,002,903	9,734,924	52,298	399,985	415,921	13,047,645
Accumulated depreciation
Balance on January 1, 2024	-	1,767,361	8,494,193	36,254	278,124	-	10,575,932
Depreciation expense	-	35,470	207,157	3,302	17,609	-	263,538
Disposals	-	(10,600)	(71,867)	-	(8,653)	-	(91,120)
Balance on December 31, 2024	-	1,792,231	8,629,483	39,556	287,080	-	10,748,350
Net balance on December 31, 2024	$ 441,614	$ 210,672	$ 1,105,441	$ 12,742	$ 112,905	$ 415,921	$ 2,299,295

The property, plant and equipment held by the Company are depreciated on a straight-line basis over their estimated useful lives as follows:

Buildings
Office	20-60 years
Plant	5-60 years
Building improvements	5-60 years
Ancillary equipment	5-60 years
Machinery and equipment
Main equipment	10-37 years
Ancillary equipment	3-40 years
Transportation equipment	5-17 years
Other equipment
Main equipment	3-26 years

13. LEASE ARRANGEMENTS

a. Right-of-use assets

	December 31
	2025	2024
Carrying amounts
Land	$ 360	$ 423
Buildings	334	1,276
Transportation equipment	11,520	6,567
	$ 12,214	$ 8,266
	For the Year Ended December 31
	2025	2024
Additions to right-of-use assets	$ 9,571	$ 4,810
Depreciation charge for right-of-use assets
Land	$ 63	$ 64
Buildings	942	608
Transportation equipment	3,672	3,643
	$ 4,677	$ 4,315

b. Lease liabilities

	December 31
	2025	2024
Carrying amounts
Current	$ 3,734	$ 4,206
Non-current	$ 7,884	$ 3,462
Range of discount rate (%) for lease liabilities was as follows:
	December 31
	2025	2024
Land	-	-
Buildings	1.812	1.812
Transportation equipment	0.874-1.812	0.874-1.812

c. Other lease information

The Company as lessor

Refer to Note 14 for operating lease arrangement related to the investment properties owned by the Company.

The Company as lessee

	For the Year Ended December 31
	2025	2024
Expenses relating to short-term leases and low-value asset leases	$ 1,584	$ 1,116
Total cash outflow for leases	$ 6,478	$ 5,560

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

INVESTMENT PROPERTIES

The IPs located at the Xiaogang District in Kaohsiung City and the Fangliao Township and Jiadong Township in Pingtung County are either available-for-sale or for rent. Except for depreciation expense and additional renovation expenditures totaling $13,409 thousand in 2024, there was no significant change in 2025 and 2024.

The IPs held by the Company are depreciated on the straight-line basis over estimated useful lives as follows:

Buildings
Administration and engineering centers 32-47 years
Main plant 10-17 years
Electrical and power equipment 3-14 years

The fair value of the Company's IPs located at the Fangliao Township and Jiadong Township in Pingtung County as of December 31, 2025 and 2024 were NT$1,820,761 thousand and NT$1,584,362 thousand. The fair value had been arrived at based on a valuation carried out in December 2025 and 2023 by an independent qualified professional valuer not related to the Company. The valuation was arrived at by reference to market evidence of transaction prices for similar properties. The Company believes any change in the fair value of IPs within two years since the valuation date will not be material; thus, the appraisal of IPs is conducted biennially.

The fair value of IPs located at the Xiaogang District in Kaohsiung City as of December 31, 2025 and 2024 were NT$518,044 thousand. The Company's management evaluated the fair value based on the actual transaction price of properties in the same location.

The Company leases its own investment properties to Yodoko International Ltd. under an operating lease. The lease term is one year, and it can be extended upon maturity. The rent for the years ended December 31, 2025 and 2024 were NT$1,800 thousand and NT$1,760 thousand, respectively. The operating lease contracts include the terms of adjusting the rent according to the rent market when the lessee exercises the lease renewal right.

15. TRADE PAYABLES

Except for hot rolled steel and zinc and aluminum ingots which were paid by letter of credit and paid in advance, respectively, the average credit term of other raw materials and supplies was within three months. The Company has financial risk management policies in place to ensure the all payables are paid within the pre-agreed credit terms. Thus, no interest was charged on the trade payables.

16. OTHER PAYABLES

	December 31
	2025	2024
Purchase of equipment	$ 64,453	$ 115,933
Year-end bonus	107,964	114,531
Unused annual leave	45,158	43,514
Tariffs and dumping duties	74,931	32,782
Electric power	23,750	30,993
Equipment repair	20,738	26,478
Compensation of employees and remuneration of directors	8,690	20,620
Salaries	16,661	17,220
Others	66,099	44,092
	$ 428,444	$ 446,163

17. RETIREMENT BENEFIT PLANS

a. Defined contribution plans

The Company adopted a pension plan under the Labor Pension Act ("LPA"), which is a state-managed defined contribution plan. Under the LPA, the Company makes monthly contributions to employees' individual pension accounts at 6% of monthly salaries and wages.

b. Defined benefit plans

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

In addition, in order to improve the human resource structure and operating performance, the Company implemented an early retirement preferential plan in 2025. The preferential pension calculated based on this plan was NT$22,487 thousand, which was recognized as operating costs and operating expenses.

The amounts included in the balance sheets in respect of the Company’s defined benefit plans were as follows:

	December 31
	2025	2024
Present value of the defined benefit obligation	$ 606,824	$ 651,670
Fair value of plan assets	(739,336)	(744,898)
Net defined benefit assets	$ (132,512)	$ (93,228)

Movements in net defined benefit assets were as follows:

	Present Value of the Defined Benefit Obligation	Fair Value of the Plan Assets	Net Defined Benefit Assets
Balance on January 1, 2024	$ 687,633	$ (680,913)	$ 6,720
Service cost
Current service cost	1,469	-	1,469
Net interest expense (income)	7,548	(7,525)	23
Recognized in profit or loss	9,017	(7,525)	1,492
Remeasurement
Return on plan assets (excluding amounts included in net interest)	-	(67,142)	(67,142)
Actuarial gain - changes in financial assumptions	(10,548)	-	(10,548)
Actuarial gain - experience adjustments	(5,491)	-	(5,491)
Recognized in other comprehensive income	(16,039)	(67,142)	(83,181)
Contributions from the employer	-	(8,818)	(8,818)
			(Continued)

	Present Value of the Defined Benefit Obligation	Fair Value of the Plan Assets	Net Defined Benefit Assets
Benefits paid	$ (28,941)	$ 19,500	$ (9,441)
Balance on December 31, 2024	651,670	(744,898)	(93,228)
Service cost
Current service cost	1,232	-	1,232
Net interest expense (income)	9,686	(11,150)	(1,464)
Recognized in profit or loss	10,918	(11,150)	(232)
Remeasurement
Return on plan assets (excluding amounts included in net interest)	-	(52,530)	(52,530)
Actuarial loss - changes in financial assumptions	4,371	-	4,371
Actuarial loss - experience adjustments	18,324	-	18,324
Recognized in other comprehensive income	22,695	(52,530)	(29,835)
Contributions from the employer	-	(9,217)	(9,217)
Benefits paid	(78,459)	78,459	-
Balance on December 31, 2025	$ 606,824	$ (739,336)	$ (132,512) (Concluded)

Through the defined benefit plans under the LSA, the Company is exposed to the following risks:

1) Investment risk

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

2) Interest risk

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

3) Salary risk

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

The actuarial valuations of the present value of the defined benefit obligation were carried out by qualified actuaries.

The significant assumptions used for the purposes of the actuarial valuations were as follows:

	December 31
	2025	2024
Discount rate (%)	1.3	1.5
Expected rate of salary increase (%)	2.0	2.0
Turnover rate (%)	0.0-1.0	0.0-1.0
Expected rate of return on plan assets (%)	1.3	1.5
Mortality rate	Based the on Taiwan Standard Ordinary Experience Mortality Table	Based the on Taiwan Standard Ordinary Experience Mortality Table

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

	December 31
	2025	2024
Discount rate
Increase by 0.1%	$ (2,193)	$ (2,588)
Decrease by 0.1%	$ 2,208	$ 2,608
Expected rate of salary increase/decrease
Increase by 0.1%	$ 1,594	$ 1,952
Decrease by 0.1%	$ (1,587)	$ (1,941)

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

	December 31
	2025	2024
Expected contributions to the plan for the next year	$ 9,217	$ 8,818
Average duration of the defined benefit obligation	3.6 years	4.0 years

18. EQUITY

a. Capital stock

	December 31
	2025	2024
Shares authorized (in thousands of shares)	450,000	450,000
Shares authorized (in thousands of dollars)	$ 4,500,000	$ 4,500,000
(Continued)

32 -

	December 31
	2025	2024
Shares issued and fully paid (in thousands of shares)	321,180	321,180
Shares issued and fully paid (in thousands of dollars)	$ 3,211,800	$ 3,211,800
(Concluded)

b. Capital surplus

	December 31
	2025	2024
May be used to offset a deficit, distributed as cash dividends, or transferred to share capital (Note)
Arising from issuance of capital stock	$ 870,000	$ 870,000
Actual disposal or acquisition of interests in subsidiaries	605	-
May be used to offset a deficit only
Changes in capital surplus from investments in associate accounted for using the equity method	687,364	687,364
	$ 1,557,969	$ 1,557,364

Note: 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 stock but subject to a specific limit once a year.

c. Retained earnings and dividend policy

Under the dividends policy as set forth in the Articles, where the Company made a net profit after tax in a fiscal year, the profit shall first be used to offset accumulated losses, setting aside as legal reserve 10% of the remaining profit (an appropriation of earnings to the legal reserve shall be made until the legal reserve equals the Company's paid-in capital), setting aside or reversing special reserve in accordance with the laws or the requirements of the competent authority, and then any remaining profit together with any undistributed earnings at the beginning of the period (including the adjusted amount of undistributed earnings) shall be used by the Company's board of directors as the basis for proposing a distribution plan, which should be resolved in the shareholders' meeting for the distribution of dividends and bonuses to shareholders. For the distribution of dividends, bonuses, the whole or a part of capital reserve and legal reserve shall be paid in cash and are subject to approval by a board meeting attended by more than two-thirds of the directors and a majority of the attending directors, shall be submitted to the shareholders' meeting; it does not apply the above resolution adopted at the shareholders' meeting.

The Company's dividend policy is as follows:

1) The Company currently operates in an environment with growth potential and will take advantage of economic conditions to achieve sustainable operations. The Company's dividend policy is determined with reference to both its prospective outlook and actual operating performance, with a focus on the stability and growth of dividend distributions.

2) Shareholders' dividends shall be appropriated from accumulated distributable earnings, of which no less than 50% of the distributable earnings of the current year.

3) Shareholders' dividends may be distributed in the form of cash or stock, moreover, cash dividends shall constitute no less than 90% of the total dividends distribution.

The legal reserve may be used to offset deficit. 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 appropriations of earnings for 2024 and 2023, respectively, were as follows:

	For the Year Ended December 31
	2024	2023
Set aside as legal reserve	$ 64,792	$ 55,680
Reversal of special reserve	(7,023)	(7,513)
Cash dividends	401,475	401,475
Cash dividends per share (NT$)	1.25	1.25

The above appropriation for cash dividends had been resolved by the Company's board of directors held in March 2025 and 2024, respectively; the other proposed appropriations had been resolved by the shareholders in their meeting held in 2025 and 2024, respectively.

The appropriations of earnings for 2025 had been proposed by the Company's board of directors in March 2026. The appropriations of earnings was as follows:

	For the Year Ended December 31, 2025
Set aside as legal reserve	$ 26,290
Cash dividends	192,708
	$ 218,998
Cash dividends per share (NT$)	$ 0.6

The above appropriation for cash dividends had been resolved by the Company's board of directors; the other proposed appropriations will be resolved by the shareholders in their meeting to be held in June 2026.

d. Other equity items

1) Exchange differences on translating the financial statements of foreign operations

	For the Year Ended December 31
	2025	2024
Balance on January 1	$ 5,496	$ (7,025)
Recognized for the year
Exchange differences arising on translating the financial statements of foreign operations	(703)	12,578
		(Continued)

34 -

	For the Year Ended December 31
	2025	2024
Share of exchange difference of subsidiaries accounted for using the equity method	$ 2,312	$ 168
Related income tax	-	(225)
Reclassification adjustments
Equity directly associated with non-current assets classified as held for sale	(1,088)	-
Balance on December 31	$ 6,017	$ 5,496
		(Concluded)

2) Equity directly associated with non-current assets classified as held for sale

	For the Year Ended December 31
	2025	2024
Balance on January 1	$ -	$ -
Reclassification of exchange differences on the translation of financial statements of foreign operations	1,088	-
Balance on December 31	$ 1,088	$ -

19. OPERATING REVENUE

	For the Year Ended December 31
	2025	2024
Revenue from contracts
Revenue from the sale of goods	$ 12,191,919	$ 12,721,366
Revenue from rendering of services	120,569	127,067
Other revenues	160,333	196,834
	$ 12,472,821	$ 13,045,267

Contract balances

	December 31, 2025	December 31, 2024	January 1, 2024
Notes receivable and trade receivables (including related parties)	$ 457,477	$ 794,665	$ 667,692
Contract liabilities
Sale of goods	$ 17,158	$ 33,516	$ 30,157

The changes in the contract liability balances primarily originated from the timing difference between the fulfilment of the Company's performance obligations and the customer's payment.

The satisfaction of performance obligations from the contract liability balance at the beginning of the year and from the previous periods was fully recognized as revenue in the current year in 2025 and 2024.

35 -

20. PROFIT BEFORE INCOME TAX

a. Other gains and losses

	For the Year Ended December 31
	2025	2024
Net foreign exchange (loss) gain	$ (33,367)	$ 46,482
Net loss on disposal of property, plant and equipment	(2,664)	(2,662)
Impairment losses (Note 10)	(28,801)	-
Others	19,924	17,787
	$ (44,908)	$ 61,607

The above net foreign exchange (losses) gains were as follows:

	For the Year Ended December 31
	2025	2024
Foreign exchange gains	$ 75,591	$ 77,930
Foreign exchange losses	(108,958)	(31,448)
Net (losses) gains	$ (33,367)	$ 46,482

b. Depreciation and amortization

	For the Year Ended December 31
	2025	2024
Property, plant and equipment	$ 229,911	$ 263,538
Investment property	2,582	2,361
Right-of-use-assets	4,677	4,315
Intangible assets	6,913	5,213
	$ 244,083	$ 275,427
An analysis of depreciation by function
Operating costs	$ 206,737	$ 243,736
Operating expenses	29,828	25,888
Deduction of other income	605	590
	$ 237,170	$ 270,214
An analysis of amortization by function
Operating costs	$ 1,694	$ 1,136
Operating expenses	5,219	4,077
	$ 6,913	$ 5,213

c. Operating expenses directly related to IPs

	For the Year Ended December 31
	2025	2024
Direct operating expenses of investment properties that generated rental income	$ 929	$ 917
Direct operating expenses of investment properties that did not generate rental income	4,135	3,936
	$ 5,064	$ 4,853

d. Interest expense

	For the Year Ended December 31
	2025	2024
Interest on bank loans	$ 11	$ 10
Interest on lease liabilities	168	83
	$ 179	$ 93

e. Employee benefits expense

	For the Year Ended December 31
	2025	2024
Short-term employee benefits
Salary	$ 545,435	$ 550,176
Insurance	49,221	48,205
Others	41,861	45,772
	636,517	644,153
Post-employment benefits
Defined contribution plans	19,839	19,305
Defined benefit plans (Note 17)	(232)	1,492
Termination benefits (Note 17)	22,487	-
	42,094	20,797
	$ 678,611	$ 664,950
An analysis of employee benefits expense by function
Operating costs	$ 402,957	$ 391,225
Operating expenses	275,654	273,725
	$ 678,611	$ 664,950

f. Compensation of employees and remuneration of directors

According to the Company's Articles of Incorporation, the Company should distribute the compensation of employees and remuneration of directors at the rates of no less than 0.1% and no higher than 3%, respectively, of net profit before income tax, compensation of employees, and remuneration of directors.

In accordance with the amendments to the Securities and Exchange Act in August 2024, the shareholders of the Company resolved the amendments to the Company's Articles at their 2025 regular meeting. The amendments explicitly stipulate that no less than 2% of the pre-tax profit before accrual of

36 -

employee and director compensation shall be allocated as employee compensation and no more than 3% as director compensation. Among the allocated employee compensation amount, no less than 40% shall be distributed to non-executive (basic-level) employees.

The compensation estimated of employees (including non-executive employees) and remuneration of directors for the years ended December 31, 2025 and 2024 were as follows:

	For the Year Ended December 31
	2025	2024
Compensation of employees	$ 6,850	$ 17,420
Remuneration of directors	1,840	3,200

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 accounting estimate.

The compensation of employees and remuneration of directors paid (all in cash) statements for the years ended December 31, 2024 and 2023 which had been approved by the Company's board of directors in March 2025 and 2024, respectively were as follows:

	2024		2023
	Employee Compensation	Director Compensation	Employee Compensation	Director Compensation
Amount resolved by the Board of Directors	$ 17,420	$ 3,200	$ 10,000	$ 3,250
Amount recognized in annual financial statement	17,420	3,200	10,400	3,400

The difference between the actual amounts of the compensation of employees and remuneration of directors paid for 2023 and the amounts recognized in the 2023 parent company only financial statements is adjusted to the profit and loss of 2024. There was no difference between the actual distribution amounts for employee and director compensation for 2024 and the amounts recognized in parent company only financial statements for 2024.

Information on 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.

21. INCOME TAX

a. The major components of income tax recognized in profit or loss

	For the Year Ended December 31
	2025	2024
Current tax
In respect of the current year	$ 68,448	$ 149,310
Adjustments for prior years	(5,541)	(7,888)
Deferred tax
In respect of the current year	(5,648)	(2,034)
	$ 57,259	$ 139,388

A reconciliation of accounting profit and current income tax expense were as follows:

	For the Year Ended December 31
	2025	2024
Profit before income tax	$ 296,360	$ 720,621
Income tax expense calculated at the statutory rate	$ 59,272	$ 144,124
Nondeductible expenses in determining taxable income	3,528	3,152
Adjustments for prior years	(5,541)	(7,888)
	$ 57,259	$ 139,388

b. Income tax expense recognized in other comprehensive income

	For the Year Ended December 31
	2025	2024
Deferred tax
Remeasurement of defined benefit plan	$ (5,967)	$ (16,636)
Share of other comprehensive gain (loss) of subsidiaries accounted for using the equity method	18	(260)
	$ (5,949)	$ (16,896)

c. Current tax liabilities

	December 31
	2025	2024
Current tax liabilities
Income tax payable	$ 10,450	$ 65,926

d. Deferred tax assets and liabilities

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

For the year ended December 31, 2025

	Opening Balance	Recognized in Profit or Loss	Recognized in Other Comprehensive Income	Closing Balance
Deferred Tax Assets
Temporary differences
Allowance for write-down of inventories	$ 1,047	$ 5,430	$ -	$ 6,477
Depreciation expense	58,310	1,457	-	59,767
Others	21,947	887	-	22,834
	$ 81,304	$ 7,774	$ -	$ 89,078
				(Continued)

	Opening Balance	Recognized in Profit or Loss	Recognized in Other Comprehensive Income	Closing Balance
Deferred Tax Liabilities
Temporary differences
Land value increment tax	$ (48,432)	$ -	$ -	$ (48,432)
Net defined benefit assets	(18,396)	(1,890)	(5,967)	(26,253)
Exchange differences on translating foreign operations	(2,501)	-	-	(2,501)
Others	(593)	(236)	-	(829)
	$ (69,922)	$ (2,126)	$ (5,967)	$ (78,015) (Concluded)

For the year ended December 31, 2024

	Opening Balance	Recognized in Profit or Loss	Recognized in Other Comprehensive Income	Closing Balance
Deferred Tax Assets
Temporary differences
Allowance for write-down of inventories	$ 2,118	$ (1,071)	$ -	$ 1,047
Net defined benefit liabilities	1,594	(1,594)	-	-
Depreciation expense	54,971	3,339	-	58,310
Others	18,322	3,625	-	21,947
	$ 77,005	$ 4,299	$ -	$ 81,304
Deferred Tax Liabilities
Temporary differences
Land value increment tax	$ (48,432)	$ -	$ -	$ (48,432)
Net defined benefit assets	-	(1,760)	(16,636)	(18,396)
Exchange differences on translating foreign operations	(2,501)	-	-	(2,501)
Others	(88)	(505)	-	(593)
	$ (51,021)	$ (2,265)	$ (16,636)	$ (69,922)

e. Deductible temporary differences for which no deferred tax assets have been recognized in the balance sheets

	December 31
	2025	2024
Deductible temporary differences
Loss on investments in subsidiaries and associate accounted for using the equity method	$ 1,815,869	$ 1,858,387
Impairment loss	28,801	-
	$ 1,844,670	$ 1,858,387

f. Income tax assessments

The income tax returns through 2023 of the Company have been assessed by the tax authorities.

22. EARNINGS PER SHARE

The net profit and weighted average number of ordinary shares outstanding used 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	$ 239,101	$ 581,233
In Thousands of Shares
	For the Year Ended December 31
	2025	2024
Weighted average number of ordinary shares used in the computation of basic earnings per share	321,180	321,180
Effect of potentially dilutive ordinary shares: Employees’ compensation	437	795
Weighted average number of ordinary shares used in the computation of diluted earnings per share	321,617	321,975

Since the Company offered to settle compensation paid to employees in cash or shares, the Company assumed that the entire amount of compensation or bonus would be settled in shares and the resulting potential shares were included in the weighted average number of shares outstanding used in the computation of diluted earnings per share, as the shares have a dilutive effect. Such dilutive effect of the potential shares is included in the computation of diluted earnings per share until the shareholders resolve the number of shares to be distributed to employees at their meeting in the following year.

23. CAPITAL MANAGEMENT

The Company manages its capital to ensure that it will be able to continue as a going concern while maximizing the return to shareholders through the optimization of the debt and equity balance. The Company’s overall strategies are unchanged in the recent 2 years.

The Company’s capital structure comprised capital stock, capital surplus, retained earnings, and other equity items.

The Company is not subject to any externally imposed capital requirements.

24. FINANCIAL INSTRUMENTS

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

The Company’s management considers that the carrying amounts of financial assets and financial liabilities recognized in the parent company only financial statements approximate their fair values.

b. Categories of financial instruments

	December 31
	2025	2024
Financial assets
Measured at amortized cost (Note 1)	$ 5,526,669	$ 5,678,352
Financial liabilities
Measured at amortized cost (Note 2)	655,835	756,152

Note 1: The balances included financial assets at amortized cost, which comprise cash and cash equivalents, note receivables, trade receivables (including related parties), other receivables (including related parties), other financial assets (including current and non-current), and refundable deposits.

Note 2: The balances included financial liabilities at amortized cost, which comprise trade payables (including related parties), other payables and guarantee deposits.

c. Financial risk management objectives and policies

The Company’s major financial instruments included repurchase agreements collateralized by bonds, equity investments, trade receivables, trade payables and lease liabilities. The Company’s corporate treasury function provides business services, manages the Company’s capital and foreign exchange risk and financial risk. These risks include market risk (including foreign 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 was 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 had foreign currency 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 are set out in Note 28.

Sensitivity analysis

The Company was mainly exposed to the foreign currency fluctuations of the USD.

The sensitivity rate of 1% is used when reporting foreign currency risk internally to key management personnel and represents management’s assessment of the reasonably possible change in foreign exchange rates. The sensitivity analysis included only outstanding foreign currency denominated monetary items and adjusts their translation at the end of the reporting period for a 1% change in foreign currency rates. A positive number in the table below indicates an increase in pre-tax profit if the New Taiwan dollar weakened by 1% against USD. If the New

41 -

Taiwan dollar strengthened by 1% of against USD, there would be an equal and opposite impact on pre-tax profit and the balances in the table below would be negative.

	Amount
	For the Year Ended December 31
	2025	2024
Impact of USD
Profit or loss	$ 1,044	$ 3,675

b) Interest rate risk

The following table shows the carrying amounts of the Company’s financial assets exposed to interest rate risk at the end of the reporting period:

	December 31
	2025	2024
Fair value interest rate risk
Financial assets	$ 1,449,464	$ 2,483,874
Financial liabilities	11,618	7,668
Cash flow interest rate risk
Financial assets	3,497,225	2,248,583

Sensitivity analysis

The sensitivity analysis below was determined based on the Company’s exposure to interest rates for financial assets at the end of the reporting period. The analysis was prepared assuming the amount of the assets and liabilities outstanding at the end of the reporting period was outstanding for the whole year. A 1% increase or decrease was 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 of financial asset had been 1% higher/lower and all other variables were held constant, the Company’s pre-tax profit for the years ended December 31, 2025 and 2024 would increase/decrease by NT$34,972 thousand and NT$22,486 thousand, respectively.

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 at the end of the reporting period, 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 could arise from the carrying amount of the respective recognized financial assets as stated in the balance sheets.

The Company adopted a policy of only dealing with creditworthy counterparties and obtaining sufficient collateral, where appropriate, as a means of mitigating the risk of financial loss from defaults. The Company uses publicly available financial information and its own trading records to rate its major customers. The Company’s exposure and the credit ratings of its counterparties are continuously monitored and the aggregate value of transactions concluded is spread amongst approved counterparties. Credit exposure is controlled by counterparty limits that are reviewed and approved by the risk management committee periodically.

Both the counterparties of cash and cash equivalent and other financial assets are creditworthy financial institutions; as a result, the significant credit risk is unexpected.

The Company's concentration of credit risk of 51% and 47% of total trade receivables as of December 31, 2025 and 2024, respectively was attributable to the Company's the five largest customers in sales.

3) Liquidity risk

The Company manages liquidity risk by maintaining a sufficient level of cash and cash equivalents to meet the Company's operational demand and mitigate the effects of fluctuations in cash flows.

Liquidity risk tables

The following tables detail the Company's remaining contractual maturities of its non-derivative liabilities with agreed repayment periods. The tables had been drawn up based on the undiscounted cash flow of financial liabilities from the earliest date on which the Company can be required to pay.

	Less Than 3 Months	3 Months to 1 Year	1 Year to 5 Years	Total
December 31, 2025
Non-derivative financial liability
Non-interest bearing	$ 655,320	$ -	$ 515	$ 655,835
Lease liabilities	$ 1,207	$ 2,723	$ 8,561	$ 12,491
December 31, 2024
Non-derivative financial liability
Non-interest bearing	$ 755,637	$ -	$ 515	$ 756,152
Lease liabilities	$ 1,207	$ 3,103	$ 4,020	$ 8,330

TRANSACTIONS WITH RELATED PARTIES

Besides as disclosed elsewhere in the other notes, details of transactions between the Company and other related parties are disclosed below.

a. Name and category of related parties

Name of Related Party	Relationship with the Company
YODOKO, Ltd. (Formerly Yodogawa Steel Works Ltd.)	Parent entity
Toyota Tsusho Corporation	Institutional director (Termination effective in March 2025)
Yung Chi Paint & Varnish Mfg Co., Ltd. (YCP)	Institutional director
Fujiden International Corporation	Institutional director
Yodogawa-Shengyu (Hefei) High-Tech Steel Co., Ltd. (YSS)	Associate
PCM Processing Ltd.	Fellow subsidiary
Yodoko International Ltd. (YI)	Subsidiary
Sheng-Shing Worldwide Corp. (Sheng-Shing)	Subsidiary

b. Trading transactions

Line Item	Related Party Category	For the Year Ended December 31
		2025	2024
Sales Revenue	Subsidiaries	$ 186,441	$ 173,155
Service revenue	Subsidiaries	$ 2,239	$ 797
Purchases of goods	Institutional director	$ 453,884	$ 621,475

The Company entered into a technical support service agreement with the subsidiaries, and the service fees are determined and collected based on the level of supporters and supported days and recognized as service revenue.

Sales and purchases of goods to related parties were made at arm's length except for some purchases of goods from the Company's institutional director-YCP, which were not comparable to those of third parties. There was no difference in the collection and payment terms between related and unrelated parties, which were about 10 days to 3 months.

Trade receivables from related parties at the balance sheet date were as follows:

	December 31
	2025	2024
Related Party Category
Subsidiaries	$ 8,099	$ 6,012

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

Trade payables to related parties at the balance sheet date were as follows:

	December 31
	2025	2024
Related Party Categories/Name
Institutional director - YCP	$ 89,166	$ 122,707

The outstanding trade payable to related parties are unsecured and will be paid off by cash.

c. Loans and interest revenue to related parties

	December 31
	2025	2024
Related Party Categories/Name
Other receivables
Subsidiaries
Sheng-Shing	$ 50,208	$ 52,376
YI	-	25,000
	$ 50,208	$ 77,376

For the Year Ended December 31
2025 2024

Related Party Categories/Name

Interest Revenue
Subsidiaries
Sheng-Shing
YI
$ 2,272 $ 3,031
162 65
$ 2,434 $ 3,096

The loan interest rates of loans to subsidiaries were determined monthly based on the Company’s financing cost and the market conditions. The ranges of interest rates of loans were as follows:

For the Year Ended December 31
2025 2024

Interest rates of loans
4.07-4.775 1.657-5.722

d. PPE acquired

Price
For the Year Ended December 31
2025 2024

Related Party Categories/name

Subsidiaries - YI
$ 5,950 $ 6,900

e. Other transactions with related parties

Under the terms of the technical service agreement entered into by the Company and YSW for providing technical assistance, the Company should calculate and pay semi-annually technical service fees to YSW for providing technical assistance.

Information about service fees were as follows:

For the Year Ended December 31
2025 2024

Manufacturing expenses
$ 4,756 $ 4,759

f. Remuneration of key management personnel

For the Year Ended December 31
2025 2024

Short-term employee benefits
$ 16,071 $ 13,847

Post-employment benefits
109 120

$ 16,180 $ 13,967

45 -

46 -

26. ASSETS PLEDGED AS COLLATERAL OR FOR SECURITY

The amounts of time deposits that were provided by the Company as collaterals for purchase contracts of natural gas were as follows:

	December 31
	2025	2024
Other financial assets - non-current	$ 18,000	$ 18,000

27. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNIZED COMMITMENTS

On December 31, 2025, the following commitments and contingencies of the Company were as follows:

a. Unused letters of credit for purchases of raw materials amounted to approximately NT$304,198 thousand.

b. The unpaid contract price for the acquisition of property, plant and equipment undertaken by the Company amounted to NT$118,826 thousand.

28. SIGNIFICANT ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES

The following information is a disclosure of the significant assets and liabilities denominated in foreign currencies other than the functional currency of the Company and the exchange rates between the foreign currencies and the Company's functional currency.

	Foreign Currency (In Thousands)	Exchange Rate		Carrying Amount (In Thousands)
December 31, 2025
Asset
Monetary items
USD	$ 5,746	31.38	(USD:NTD)	$ 180,313
Non-monetary items
Investments accounted for using the equity method
USD	1,825	31.38	(USD:NTD)	57,263
Non-current assets held for sale
RMB	58,712	4.471	(RMB:NTD)	262,501
Liabilities
Monetary items
USD	2,418	31.38	(USD:NTD)	75,879
				(Continued)

	Foreign Currency (In Thousands)	Exchange Rate		Carrying Amount (In Thousands)
December 31, 2024
Asset
Monetary items
USD	$ 12,247	32.735	(USD:NTD)	$ 400,907
Non-monetary items
Investments accounted for using the equity method
RMB	58,352	4.453	(RMB:NTD)	259,841
USD	1,384	32.735	(USD:NTD)	45,291
Liabilities
Monetary items
USD	1,022	32.735	(USD:NTD)	33,452
				(Concluded)

The total net foreign exchange gains and losses were loss of NT$33,367 thousand and gain of NT$46,482 thousand for the years ended December 31, 2025 and 2024, respectively. It is impractical to disclose net foreign exchange gains and losses by each significant foreign currency due to the variety of the foreign currency transactions and functional currencies of each entity.

29. SEPARATELY DISCLOSED ITEMS

a. Information about significant transactions

1) Financing provided to others. (Table 1)
2) Endorsements/guarantees provided. (None)
3) Significant marketable securities held. (excluding investments in subsidiaries and associates) (None)
4) Total purchases from or sales to related parties of at least NT$100 million or 20% of the paid-in capital. (Table 2)
5) Trade receivables from related parties of at least NT$100 million or 20% of the paid-in capital. (None)

b. Information on investees. (Table 3)
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, investment gain or loss, carrying amount of the investment at the end of the period, repatriated investment gain or loss, and limit on the amount of investment in the mainland China area (Table 4).

2) Any of the following significant transactions with investee companies in mainland China, either directly or indirectly through a third area, 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 year. (None)

b) The amount and percentage of sales and the balance and percentage of the related receivables at the end of the year: (Not material)

c) The amount of property transactions and the amount of the resultant gains or losses. (None)

d) The balance of negotiable instrument endorsements or guarantees or pledges of collateral at the end of the year and the purposes. (None)

e) The highest balance, the end of year balance, the interest rate range, and total current period interest with respect to financing of funds. (None)

f) Other transactions that have a material effect on the profit or loss for the year or on the financial position, such as the rendering or receiving of services. (None)

48 -

TABLE 1

SHENG YU STEEL CO., LTD. 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 Parties	Highest Balance for the Year (Note 1)	Ending Balance (Note 1)	Actual Borrowed Amount	Interest Rate (%)	Nature of Financing (Note 2)	Business Transaction Amounts	Reason for Short-term Financing	Allowance for Bad Debt	Collateral		Financing Limits for Each Borrower (Note 3)	Aggregate Financing Limits (Note 4)
													Item	Value
0	The Company	Yodoko International Ltd.	Other receivables	Y	$ 150,000	$ 30,000	$ -	1.7-1.854	2	$ -	Operating capital	$ -	Promissory notes	$ 30,000	$ 1,007,535	$ 2,015,071
0	The Company	Sheng-Shing Worldwide Corp.	Other receivables	Y	219,660	109,830	50,208	4.07-4.775	2	-	Operating capital	-	Promissory notes	109,830	1,007,535	2,015,071

Note 1: Sheng-Shing Worldwide Corp. the highest balance for the year was US$7,000 thousand; the ending balance amount and the actual borrowing amount were all US$3,500 thousand, and collateral value was US$1,600 thousand; calculated the exchange rate of USD1: NTD31.38 at the balance sheet date in December 2025.
Note 2: The number "1" represents for those who have business transactions; the number "2" represents for those in need of short-term financing.
Note 3: 10% of the net equity of the Company.
Note 4: 20% of the net equity of the Company.

TABLE 2

SHENG YU STEEL CO., LTD. AND SUBSIDIARIES

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

FOR THE YEAR ENDED DECEMBER 31, 2025

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

Company Name	Related Party	Relationship	Transaction Details				Abnormal Transaction		Notes/Accounts Payable or Receivable
			Purchase/Sale	Amount	% of Total	Payment Terms	Unit Price	Payment Terms	Ending Balance	% of Total
The Company	Yung Chi Paint & Varnish Mfg Co., Ltd.	Institutional director	Purchase	$ 453,504	5	3 months	Note 25	-	$ (89,166)	(39)
The Company	Yodoko International Ltd.	Company Subsidiaries	Sale	(167,170)	1	1 months	Note 25	-	7,996	2

TABLE 3

SHENG YU STEEL CO., LTD. AND SUBSIDIARIES

INFORMATION OF 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		Balance as of December 31, 2025			Net Income of the Investee	Share of Profit	Note
				December 31, 2025	December 31, 2024	Shares	%	Carrying Amount
The Company	Yodoko International Ltd.	Taiwan	Processing steel, engineering, procurement and construction	$ 25,456	$ 19,607	2,045,750	82	$ 133,516	$ 14,674	$ 11,908
The Company	Sheng-Shing Worldwide Corp.	Republic of Seychelles	Processing and selling galvanized steel coils	81,549	81,549	2,705,000	54	57,263	22,316	12,073
Yodoko International Ltd.	Yodoko International (HK) Ltd.	Hong Kong	General investment	-	9,702	-	-	-	1	1	Note

Note: The liquidation of Yodoko International (HK) Ltd. was completed in October 2025, and the liquidation proceeds were subsequently remitted to the Company.

TABLE 4

SHENG YU STEEL CO., LTD. AND SUBSIDIARIES

INFORMATION ON INVESTMENTS IN MAINLAND CHINA

FOR THE YEAR ENDED DECEMBER 31, 2025

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

Investee Company	Main Businesses and Products	Total Amount of Paid-in Capital	Method of Investment	Accumulated Outflow of Investment from Taiwan as of January 1, 2025	Investment Flows		Accumulated Outflow of Investment from Taiwan as of December 31, 2025	Net Income (Loss) of the Investor	Percentage of Ownership (%)	Share of Profit/Losses	Carrying Amount as of December 31, 2025	Accumulated Inward Remittance of Earnings as of December 31, 2025	Note
					Outflow	Inflow
Yodoko Building Material (Hangzhou) Co., Ltd.	Manufacturing and selling metal architectural materials	$ 41,998	Investments were made through Yodoko International (IIB) Ltd., a holding company registered in a third region	$ 9,514	$ -	$ 9,514	$ -	$ -	-	$ -	$ -	$ -
Sheng-Shing (Dongguan) Corp.	Processing and selling galvanized steel coils	98,658	Investments were made through Sheng-Shing Worldwide Corp, a holding company registered in a third region	50,752	-	-	50,752	-	-	-	-	-
Sheng-Yu Trading (Dongguan) Corp.	Selling hardware, steels and import and export trading	94,140	Investments were made through Sheng-Shing Worldwide Corp, a holding company registered in a third region	46,611	-	-	46,611	23,493	54	12,709	80,092	-
Yodogawa-Shengyu (Helsi) High-Tech Steel Co., Ltd.	Manufacturing, processing and selling galvanized steel coils and prepainted steel coils	6,304,803	The Company directly invested in company located in mainland China	1,388,640	-	-	1,388,640	7,520	21	1,572	262,501	-	Note 1
Investee Company	Accumulated Investment in Mainland China as of December 31, 2025	Investment Amounts Authorized by Investment Commission, MOEA	Upper Limit on Investment (Note 3)
---	---	---	---
The Company	$ 1,486,003	$ 1,517,825	$ 6,045,212

Note 1: The amount was recognized based on the financial statements audited by an international accounting firm that has a cooperation relationship with the accounting firm in the Republic of China. As of year-end, the balance was reclassified to Non-current assets held for sale. (Notes 10 and 11)
Note 2: The cumulative amount of investment remitted from Taiwan to Sheng-Yu Trading (Dongguan) Corp. at the end of the period was NT$46,611 thousand. Including Sheng-Shing Worldwide Corp.'s investment in Sheng-Yu Trading (Dongguan) through bank financing of US$1,532 thousand (US$1,000 thousand × 45% and US$2,000 thousand × 54.1%).
Note 3: The maximum amount that can be invested shall not exceed sixty percent (60%) of the net equity of the Company, in accordance with the "Principles Governing the Review of Investments or Technical Cooperation in Mainland China" issued by the investment commission.

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 ACCOUNTS RECEIVABLE	2
STATEMENT OF OTHER RECEIVABLES	NOTE 8
STATEMENT OF INVENTORIES	3
STATEMENT OF PREPAYMENTS FOR PURCHASE	4
STATEMENT OF OTHER FINANCIAL ASSETS	NOTE 7
STATEMENT OF CHANGES IN INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD	5
STATEMENT OF CHANGES IN PROPERTY, PLANT AND EQUIPMENT	NOTE 11
STATEMENT OF CHANGES IN ACCUMULATED DEPRECIATION OF PROPERTY, PLANT AND EQUIPMENT	NOTE 11
STATEMENT OF CHANGES IN RIGHT-OF-USE ASSETS	6
STATEMENT OF INVESTMENT PROPERTIES	NOTE 13
STATEMENT OF DEFERRED INCOME TAX ASSETS	NOTE 20
STATEMENT OF ACCOUNTS PAYABLE	7
STATEMENT OF OTHER PAYABLES	NOTE 15
STATEMENT OF LEASE LIABILITIES	8
STATEMENT OF DEFERRED INCOME TAX LIABILITIES	NOTE 20
MAJOR ACCOUNTING ITEMS IN PROFIT OR LOSS
STATEMENT OF OPERATING REVENUE	9
STATEMENT OF OPERATING COSTS	10
STATEMENT OF OPERATING EXPENSES	11
STATEMENT OF OTHER GAINS AND LOSSES	NOTE 19
STATEMENT OF EMPLOYEE BENEFITS, DEPRECIATION AND AMORTIZATION	12

53 -

STATEMENT 1

SHENG YU STEEL CO., LTD.

STATEMENT OF CASH AND CASH EQUIVALENTS

FOR THE YEAR ENDED DECEMBER 31, 2025

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

Name	Maturity Date	Annual Interest Rate (%)	Amount
Cash on hands			$ 765
Cash in bank
Demand deposits			50,216
Checking accounts			30,160
Foreign currency deposits			29,009
(US$924,432.84) (Note)			109,385
Cash equivalents
Time deposits with original maturities less than 3 months	115.01.02-115.03.17	1.28-1.75	1,250,000
Repurchase agreements collateralized by bills and bonds in NTD	115.01.02-115.03.17	1.45-1.48	1,370,991
Repurchase agreements collateralized by bills and bonds in foreign currency (US$2,500,740.34) (Note)	115.01.05-115.01.08	3.7-3.9	78,473
			2,699,464
			$ 2,809,614

Note: US$1: NT$31.38.

STATEMENT 2

SHENG YU STEEL CO., LTD.

STATEMENT OF ACCOUNTS RECEIVABLE

FOR THE YEAR ENDED DECEMBER 31, 2025

(In Thousands of New Taiwan Dollars)

Customer Name	Amount	Note
Non-Related Parties
Yah Chiao Enterprise Co., Ltd.	$ 85,251	Sales
Chia Teh Construction Material Co., Ltd.	63,678	Sales
Kai Ching Industry Co., Ltd.	59,931	Sales
Hua Ming Steel Company Limited.	53,925	Sales
Eternal Steel Co., Ltd.	24,134	Sales
Lonfon Enterprises Co., Ltd	23,563	Sales
Engtong Trading Co., Ltd.	23,433	Sales
Others (Note)	115,267	Sales
	$ 449,182
Related Parties
Shen-Shing Worldwide Corp.	$ 103	Sales
Yodoko International Ltd.	7,996	Sales
	$ 8,099

Note: The amount of individual customer included in others does not exceed 5% of the amount balance.

55 -

STATEMENT 3

SHENG YU STEEL CO., LTD.

STATEMENT OF INVENTORIES

FOR THE YEAR ENDED DECEMBER 31, 2025

(In Thousands of New Taiwan Dollars)

Item	Amount
	Cost (Note)	Net Realizable Value
Finished goods	$ 494,892	$ 559,492
Work in process	195,735	248,487
Raw materials	1,023,480	1,078,597
Supplies	24,042	24,042
Others	12,022	12,022
	$ 1,750,171	$ 1,922,640

Note: Net of provision for loss on inventories.

56 -

STATEMENT 4

SHENG YU STEEL CO., LTD.

STATEMENT OF PREPAYMENTS FOR PURCHASE

FOR THE YEAR ENDED DECEMBER 31, 2025

(In Thousands of New Taiwan Dollars)

Vendor Name	Amount
Non-related Parties
Young Poong Corporation	$ 42,055
Rio Tinto Plc	16,726
Interlong Pte Ltd	14,830
Glencore International AG	5,212
Others (Note)	8,359
	$ 87,182

Note: The amount of individual vendor in others does not exceed 5% of the account balance.

57 -

STATEMENT 5

SHENG YU STEEL CO., LTD.

STATEMENT OF CHANGES IN INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD

FOR THE YEAR ENDED DECEMBER 31, 2025

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

Investee Company	Balance, January 1, 2025		Additions		Decrease		% of Owner		Net Assets Value (Note 6)		Collateral	Note
	Shares	Amount	Shares	Amount	Shares	Amount	Shares	-ship	Amount
Yodoko International Ltd.	1,945,750	$ 111,288	100,000	$ 25,369 (Note 1)	-	$ 3,141 (Note 2)	2,045,750	82	$ 133,516	$ 138,838	None	Subsidiaries
Sheng-Shing Worldwide Corp.	2,705,000	45,291	-	12,073 (Note 3)	-	101 (Note 4)	2,705,000	54	57,263	57,263	None	Subsidiaries
Yodogawa-Shengyu (Hefei) High-Tech Steel Co., Ltd.	-	259,841	-	2,660 (Note 5)	-	262,501 (Note 7)	-	-	-	-	None	Associate
		$ 416,420		$ 40,102		$ 265,743			$ 190,779	$ 196,101

Note 1: Including the acquisition of 100,000 shares during the current year amounting to NT$5,849 thousand, together with the capital surplus of NT$605 thousand arising from such acquisition, share of profit of subsidiaries accounted for using the equity method of NT$11,908 thousand, exchange differences on translating foreign operations of NT$622 thousand and realized gain on transactions with subsidiaries of NT$6,385 thousand.
Note 2: Including cash dividends received of NT$3,069 thousand, and remeasurement of defined benefit plan of NT$72 thousand.
Note 3: Including share of profit of subsidiaries accounted for using the equity method of NT$12,073 thousand.
Note 4: Including exchange differences on translating foreign operations of NT$102 thousand.
Note 5: Including share of profit of associates accounted for using the equity method of NT$1,572 thousand and exchange differences on translating foreign operations of NT$1,088 thousand.
Note 6: Based on the investees' financial statements and the proportion of the Company's ownership.
Note 7: On December 31, 2025, the balance was reclassified to Non-current assets held for sale.

STATEMENT 6

SHENG YU STEEL CO., LTD.

STATEMENT OF RIGHT-OF-USE ASSETS

FOR THE YEAR ENDED DECEMBER 31, 2025

(In Thousands of New Taiwan Dollars)

Item	Balance, January 1, 2025	Additions	Decrease	Balance, December 31, 2025
Cost
Land	$ 508	$ -	$ -	$ 508
Buildings	1,884	-	-	1,884
Transportation equipment	18,434	9,571	9,547	18,458
Total	20,826	$ 9,571	$ 9,547	20,850
Accumulated depreciation
Land	85	$ 63	$ -	148
Buildings	608	942	-	1,550
Transportation equipment	11,867	3,672	8,601	6,938
Total	12,560	$ 4,677	$ 8,601	8,636
	$ 8,266			$ 12,214

STATEMENT 7

SHENG YU STEEL CO., LTD.

STATEMENT OF ACCOUNTS PAYABLE

FOR THE YEAR ENDED DECEMBER 31, 2025

(In Thousands of New Taiwan Dollars)

Vendor Name	Amount
Non-Related Parties
Taiwan Kansei Paint Co., Ltd.	$ 65,297
Nippon Paint Coatings (taiwan) Co., Ltd.	12,364
Others (Note)	60,049
	$ 137,710
Related Parties
Yung Chi Paint & Varnish Mfg Co., Ltd.	$ 89,166

Note: The amount of individual in others does not exceed 5% of the amount balance.

60 -

STATEMENT 8

SHENG YU STEEL CO., LTD.

STATEMENT OF LEASE LIABILITIES

DECEMBER 31, 2025

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

Item	Discount Rates (%)	Balance End of Year
Transportation equipment	0.874-1.812	$ 11,279
Buildings	1.812	339
		11,618
Less: Current portion of lease liabilities		3,734
Lease liabilities-non-current		$ 7,884

61 -

STATEMENT 9

SHENG YU STEEL CO., LTD.

STATEMENT OF OPERATING REVENUE

FOR THE YEAR ENDED DECEMBER 31, 2025

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

Item	Quantity (MT)	Amount
Galvanized steel coils	244,076	$ 6,024,267
Prepainted steel coils	146,173	6,746,849
Cold rolled steel coils	5	89
Resale of raw materials	191	3,373
		12,774,578
Rendering of services (Note 1)		120,569
Others (Note 2)		160,333
		13,055,480
Sales returns	(1,216)	(46,274)
Sales allowances		(536,385)
		$ 12,472,821

Note 1: Service revenue and processing revenue are included.
Note 2: Including sales of surplus plates and salvage. The amount of each item in others does not exceed $10\%$ of the amount balance.

STATEMENT 10

SHENG YU STEEL CO., LTD.

STATEMENT OF OPERATING COSTS

FOR THE YEAR ENDED DECEMBER 31, 2025

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

Item	Amount
Manufacturing cost
Raw material used
Raw materials, beginning of year (Note 3)	$ 928,461
Raw material purchased	9,273,216
Raw steel resale	(3,254)
Others (Note 1)	(5,333)
Raw materials, end of year (Note 3)	(1,035,189)
	9,157,901
Direct labor	188,154
Manufacturing expenses	1,540,901
	10,886,956
Work in process, beginning of year (Note 3)	283,972
Work in process, end of year (Note 3)	(210,728)
Others (Note 2)	(338,700)
Cost of finished goods	10,621,500
Finished goods, beginning of year (Note 3)	751,821
Finished goods, end of year (Note 3)	(522,315)
Costs of goods sold	10,851,006
Service cost (Note 4)	99,826
Others	162,266
Revenue from sale of scrap	(9,577)
Raw steel for sale	3,254
Idle capacity losses	36,992
Others (Note 5)	76,059
	$ 11,219,826

Note 1: Costs of the disposal.

Note 2: Transferred to packaging material, surplus plates and sub-quality products

Note 3: Provision for loss on inventories is not included.

Note 4: Service cost and process cost are included.

Note 5: Including compensation of employees, provision for loss on inventories and preferential pension.

STATEMENT 11

SHENG YU STEEL CO., LTD.

STATEMENT OF OPERATING EXPENSES

FOR THE YEAR ENDED DECEMBER 31, 2025

(In Thousands of New Taiwan Dollars)

Item	Selling Expenses	General Administrative Expenses	Research and Development Expenses	Total
Payroll expenses (including remuneration of directors)	$ 62,737	$ 102,318	$ 58,272	$ 223,327
Preferential pension (termination benefits)	2,879	6,431	1,098	10,408
Tariff duties and dumping duty	382,938	-	-	382,938
Freight	151,895	1,751	38	153,684
Depreciation expenses	7,081	19,173	3,574	29,828
Insurance expenses	6,168	11,700	5,330	23,198
Repair and maintenance expenses	14,654	17,731	5,121	37,506
Export expenses	17,137	-	-	17,137
Employee benefits	2,318	4,530	2,260	9,108
Traveling expenses	4,445	5,448	420	10,313
Others	60,484	50,890	11,148	122,522
	$ 712,736	$ 219,972	$ 87,261	$ 1,019,969

64 -

STATEMENT 12

SHENG YU STEEL CO., LTD.

STATEMENT OF EMPLOYEE BENEFITS, DEPRECIATION AND AMORTIZATION

FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024

(In Thousands of New Taiwan Dollars)

	Year Ended December 31, 2025				Year Ended December 31, 2024
	Classified as Operation Costs	Classified as Operating Expenses	Classified as Others	Total	Classified as Operation Costs	Classified as Operating Expenses	Classified as Others	Total
Employee benefits
Salaries	$ 322,108	$ 207,959	$ -	$ 530,067	$ 321,275	$ 212,192	$ -	$ 533,467
Termination benefits	12,079	10,408	-	22,487	-	-	-	-
Labor and health insurance	28,324	20,897	-	49,221	27,675	20,530	-	48,205
Pension	17,435	2,172	-	19,607	16,823	3,974	-	20,797
Remuneration of directors	-	15,368	-	15,368	-	16,709	-	16,709
Others	23,011	18,850	-	41,861	25,452	20,320	-	45,772
	$ 402,957	$ 275,654	$ -	$ 678,611	$ 391,225	$ 273,725	$ -	$ 664,950
Depreciation	$ 206,737	$ 29,828	$ 605	$ 237,170	$ 243,736	$ 25,888	$ 590	$ 270,214
Amortization	1,694	5,219	-	6,913	1,136	4,077	-	5,213

Note 1: For the years ended December 31, 2025 and 2024, the Company had 518 and 514 employees, respectively. Among them 7 and 8 directors did not serve concurrently as employees in 2025 and 2024. The basis of calculation is the same with employee benefits.
Note 2: Additional information is disclosed as follows:

1) Average employee benefit expense for the year ended December 31, 2025 was NT$1,298 thousand (calculated as total employee benefit expense net of total board compensation for 2025 divided by number of employees net of number of non-employee directors for 2025).
Average employee benefit expense for the year ended December 31, 2024 was NT$1,281 thousand (calculated as total employee benefit expense net of total board compensation for 2024 divided by number of employees net of number of non-employee directors for 2024).
2) Average salaries for the year ended December 31, 2025 was NT$1,037 thousand (calculated as total salaries for 2025 divided by number of employees net of number of non-employee directors for 2025).
Average salaries for the year ended December 31, 2024 was NT$1,054 thousand (calculated as total salaries for 2024 divided by number of employees net of number of non-employee directors for 2024).
3) Change in average salaries was $-2\%$ (calculated as average salaries for 2025 net of average salaries for 2024 divided by average salaries for 2024).
4) The Company did not have supervisors.

(Continued)

5) The Company’s compensation policies:

a. Ensuring that the Company’s compensation policies comply with relevant regulations and are sufficient to recruit outstanding talents.

b. Salary and remuneration should refer to industry practice, and consider the time spent, responsibilities, the extent of target achieved and other position’s performance by the individual, and the compensations for the same position in recent years. In addition, the achievement of the Company's short- to long-term business plans and the Company’s financial status should be considered in order to assess the reasonableness between personal performance and the Company’s operating performance and future operating risks.

c. Should not lead directors and management to engage in behaviors that exceed the Company’s risk appetite in pursuit of remuneration.

d. Compensation should be determined in consideration of characteristics of industry and nature of the Company’s business.

(Concluded)

66 -

AI assistant

SYSCO — Audit Report / Information 2025

51955_rns_2026-05-19_33fe3937-c471-4448-b351-4ee1d0a5b974.pdf

INDEPENDENT AUDITORS' REPORT

Opinion

Basis for Opinion

Key Audit Matters

Recognition of Revenue

Responsibilities of Management and Those Charged with Governance for the Parent Company Only Financial Statements

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

Notice to Readers

PARENT CONMPANY ONLY STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024

1. GENERAL INFORMATION

2. APPROVAL OF FINANCIAL STATEMENTS

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

4. SUMMARY OF MATERIAL ACCOUNTING POLICY INFORMATION

6. CASH AND CASH EQUIVALENTS

7. OTHER FINANCIAL ASSETS

8. NOTES RECEIVABLE, TRADE RECEIVABLES AND OTHER RECEIVABLES (INCLUDING RELATED PARTIES)

Receivables at amortized cost

9. INVENTORIES

10. NON-CURRENT ASSETS HELD FOR SALE

11. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD

12. PROPERTY, PLANT AND EQUIPMENT

13. LEASE ARRANGEMENTS

15. TRADE PAYABLES

16. OTHER PAYABLES

17. RETIREMENT BENEFIT PLANS

18. EQUITY

19. OPERATING REVENUE

20. PROFIT BEFORE INCOME TAX

21. INCOME TAX

22. EARNINGS PER SHARE

23. CAPITAL MANAGEMENT

24. FINANCIAL INSTRUMENTS

26. ASSETS PLEDGED AS COLLATERAL OR FOR SECURITY

27. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNIZED COMMITMENTS

28. SIGNIFICANT ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES

29. SEPARATELY DISCLOSED ITEMS

SHENG YU STEEL CO., LTD. AND SUBSIDIARIES

FINANCING PROVIDED TO OTHERS

SHENG YU STEEL CO., LTD. AND SUBSIDIARIES

SHENG YU STEEL CO., LTD. AND SUBSIDIARIES

SHENG YU STEEL CO., LTD. AND SUBSIDIARIES

INFORMATION ON INVESTMENTS IN MAINLAND CHINA

FOR THE YEAR ENDED DECEMBER 31, 2025

SHENG YU STEEL CO., LTD.

STATEMENT OF CASH AND CASH EQUIVALENTS

FOR THE YEAR ENDED DECEMBER 31, 2025

SHENG YU STEEL CO., LTD.

STATEMENT OF ACCOUNTS RECEIVABLE

FOR THE YEAR ENDED DECEMBER 31, 2025

(In Thousands of New Taiwan Dollars)

SHENG YU STEEL CO., LTD.

STATEMENT OF INVENTORIES

FOR THE YEAR ENDED DECEMBER 31, 2025

(In Thousands of New Taiwan Dollars)

SHENG YU STEEL CO., LTD.

STATEMENT OF PREPAYMENTS FOR PURCHASE

FOR THE YEAR ENDED DECEMBER 31, 2025

(In Thousands of New Taiwan Dollars)

SHENG YU STEEL CO., LTD.

STATEMENT OF CHANGES IN INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD

FOR THE YEAR ENDED DECEMBER 31, 2025

SHENG YU STEEL CO., LTD.

STATEMENT OF RIGHT-OF-USE ASSETS

FOR THE YEAR ENDED DECEMBER 31, 2025

SHENG YU STEEL CO., LTD.

STATEMENT OF ACCOUNTS PAYABLE

FOR THE YEAR ENDED DECEMBER 31, 2025

(In Thousands of New Taiwan Dollars)

SHENG YU STEEL CO., LTD.

STATEMENT OF LEASE LIABILITIES

DECEMBER 31, 2025

SHENG YU STEEL CO., LTD.

STATEMENT OF OPERATING REVENUE

FOR THE YEAR ENDED DECEMBER 31, 2025

SHENG YU STEEL CO., LTD.

STATEMENT OF OPERATING COSTS

SYSCO Audit Report / Information 2025