Interim report
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Stock Code:6285 WNC Corporation and Subsidiaries Consolidated Financial Statements With Independent Auditors’ Review Report For the Six Months Ended June 30, 2025 and 2024 Address: 20 Park Avenue II, Hsinchu Science Park, Hsinchu 308, Taiwan, R.O.C. Telephone: (03)666-7799 The independent auditors’ review report and the accompanying consolidated financial statements are the English translation of t he Chinese version prepared and used in the Republic of China. If there is any conflict between, or any difference in the interpre tation of the English and Chinese language independent auditors’ review report and consolidated financial statements, the Chinese version sha ll prevail. ～～1～
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Table of contents Contents Page 1. Cover Page 1 2. Table of Contents 2 3. Independent Auditors’ Review Report 3 4. Consolidated Balance Sheets 4 5. Consolidated Statements of Comprehensive Income 5 6. Consolidated Statements of Changes in Equity 6 7. Consolidated Statements of Cash Flows 7 8. Notes to the Consolidated Financial Statements (1) Company history 8 (2) Approval date and procedures of the consolidated financial statements 8 (3) New standards, amendments and interpretations adopted 8 ～10 (4) Summary of material accounting policies 10 ～13 (5) Material accounting assumptions and judgments, and major sources of estimation uncertainty 14 (6) Explanation of significant accounts 14 ～37 (7) Related-party transactions 37 ～42 (8) Pledged assets 43 (9) Significant contingent liabilities and unrecognized commitments 43 (10) Losses due to major disasters 43 (11) Subsequent events 43 (12) Other 43 ～44 (13) Additional disclosures (a) Information on significant transactions 44 46～51 (b) Information on investees 44 52 (c) Information on investment in Mainland China 44 ～4553～54 (14) Segment information 45 ～ ～2～
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Independent Auditors’ Review Report To the Board of Directors WNC Corporation: Introduction We have reviewed the accompanying consolidated balance sheets of the WNC Corporation (the “Company”) and its subsidiaries (together referred as the “Group”) as of June 30, 2025 and 2024, the related consolidated statements of comprehensive income for the three and six months ended June 30, 2025 and 2024, as well as the consolidated statements of changes in equity, and cash flows for the six months ended June 30, 2025 and 2024, and notes to the consolidated financial statements, including a summary of significant accounting policies. The management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and International Accounting Standards (“IASs”) 34, Interim Financial Reporting endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China. Our responsibility is to express a conclusion on the consolidated financial statements based on our reviews. Scope of Review Except as explained in the Basis for Qualified Conclusion paragraph, we conducted our reviews in accordance with the Standard on Review Engagements 2410, Review of Interim Financial Information Performed by the Independent Auditor of the Entity of the Republic of China. A review of the consolidated financial statements consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with the Standards on Auditing of the Republic of China and consequently does not enable us to obtain assurance that we would become aware of all si gnificant matters that might be identified in an audit. Accordingly, we do not express an audit opinion. Basis for Qualified Conclusion As stated in Note 4(2), the consolidated financial statements included the financial statements of certain non- significant subsidiaries, which were not reviewed by independent auditors. These financial statements reflect the total assets amounting to $8,790,345 thousand and $15,562,446 thousand, constituting 12.1% and 20.3% of the consolidated total assets; as well as the total liabilities amounting to $4,228,740 thousand and $8,800,906 thousand, constituting 10.2% and 19.0% of the consolidated total liabilities, as of June 30, 2025 and 2024, respectively; and also the total comprehensive in come amounting to $(93,591) thousand, $(55,018) thousand, $(113,900) thousand and $(36,591) thousand, constituting 28.2% , 7.8%, 9.9% and 1.5% of absolute value of the total consolidated comprehensive income for the t hree and six months ended June 30, 2025 and 2024, respectively. ～～3～
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Qualified Conclusion Except for the adjustments, if any, as might have been determined to be necessary had the financial statements of certain consolidated subsidiaries described in the Basis for Qualified Conclusion paragraph above been reviewed by independent auditors, based on our reviews, nothing has come to our attention that causes us to believe that the accompanying consolidated financial statements do not present fairly, in all material respects, the consolidated financial position of the Group as of June 30, 2025 and 2024, and of its consolidated financial performance for the three and six months ended June 30, 2025 and 2024, as well as its consolidated cash flows for the six months ended June 30, 2025 and 2024 in accordance with the Regulations Governing the Preparation of Financial Reports by Secur ities Issuers and IASs 34, Interim Financial Reporting endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China. The engagement partners on the review resulting in th is independent auditors’ review report are Chun-Yuan Wu and Chien-Hui Lu. KPMG Taipei, Taiwan (Republic of China) August 6, 2025 Notes to Readers The accompanying consolidated financial statemen ts are intended only to present the consolidated financial position, financial performance and cash flows in accordance with the accounting pr inciples and practices generally accepted in the Republic of Chi na and not those of any other jurisdictions. The standards, procedures a nd practices to audit such cons olidated financial statements a re those generally accepted and applied in the Republic of China. The independent auditors’ review report and the accompanying consolidated financial statements are the English translation of t he Chinese version prepared and used in the Republic of China. If there is any conflict between, or any difference in the interpre tation of the English and Chinese language independent auditors’ report and consolidated financial statements, the Chinese version shall prevail. ～～3-1～
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(English Translation of Consolidated Financial Statements Originally Issued in Chinese) WNC Corporation and Subsidiaries Consolidated Balance Sheets June 30, 2025, and December 31, 2024 and June 30, 2024 (Expressed in Thousands of New Taiwan Dollars) June 30, 2025 December 31, 2024 June 30, 2024 Assets Amount % Amount % Amount % Current assets: Cash and cash equivalents (notes 6(1), (4) and (23)) $ 15,650,178 22 13,127,054 18 11,661,616 15 Financial assets at fair value through profit or loss－current (notes 6(2) and (23)) - - 151,203 - 150,067 - Financial assets at fair value through other comprehensive income－current (notes 6(2) and (23)) 3,573,661 5 3,059,431 4 3,127,523 4 Notes receivable (note 6(2)) 15,459 - 61,004 - 427,678 1 Accounts receivable, net (note 6(2)) 18,497,025 26 23,254,428 31 23,426,253 30 Receivables from related parties (notes 6(2) and 7) 142,552 - 140,838 - 123,823 - Inventories, net (note 3) 17,763,050 24 18,389,641 24 21,081,193 28 Other financial assets－current (notes 6(4) and 8) 196,377 - 51,199 - 130,734 - Other current assets (notes 6(4) and 7) 670,914 1 584,788 1 446,343 1 Total current assets 56,509,216 78 58,819,586 78 60,575,230 79 Non-current assets: Financial assets at fair value through other comprehensive income－non-current (notes 6(2) and (23)) 282,214 - 286,268 - 60,542 - Property, plant and equipment (notes 6(4), (5) and 7) 11,769,381 16 12,357,198 17 11,792,339 16 Right-of-use assets (notes 6(4) and (6)) 1,135,806 2 1,528,218 2 1,562,140 2 Investment property, net (notes 6(7) and (14)) 859,151 1 868,115 1 877,980 1 Intangible assets (notes 6(8) and 7) 532,241 1 580,186 1 601,126 1 Deferred tax assets (note 6(4)) 1,126,357 2 870,611 1 1,027,633 1 Refundable deposits (note 7) 40,785 - 17,903 - 28,964 - Other non-current assets 238,329 - 32,388 - 132,165 - Total non-current assets 15,984,264 22 16,540,887 22 16,082,889 21 Total assets $ 72,493,480 100 75,360,473 100 76,658,119 100 June 30, 2025 December 31, 2024 June 30, 2024 Liabilities and Equity Amount % Amount % Amount % Current liabilities: Short-term loans (notes 6(9), (23) and (26)) $ 9,255,339 13 11,863,766 16 9,547,758 13 Contract liabilities－current (note 6(20)) 1,874,408 3 2,107,955 3 1,785,769 2 Notes and accounts payable (note 6(4)) 17,626,055 24 17,664,898 23 20,149,459 26 Payables to related parties (note 7) 126,171 - 148,679 - 183,075 - Salary and bonus payable 2,713,874 4 3,513,304 5 3,183,677 4 Other accrued expenses 2,547,764 4 2,963,465 4 2,402,975 3 Dividends payable 2,323,945 3 - - 2,909,663 4 Provision－current (note 6(11)) 103,651 - 100,975 - 108,008 - Lease liabilities－current (notes 6(13), (23) and (26)) 49,984 - 65,093 - 65,436 - Long-term loans, current portion (notes 6(9), (23) and (26)) 318,207 - 399,288 1 658,570 1 Other current liabilities (notes 6(10), (23) and 7) 1,148,900 2 1,008,582 1 1,601,907 2 Total current liabilities 38,088,298 53 39,836,005 53 42,596,297 55 Non-current liabilities: Long-term loans (notes 6(9), (23) and (26)) 1,646,723 2 1,657,770 2 1,836,059 2 Deferred tax liabilities 576,597 1 362,959 1 348,100 1 Lease liabilities－non-current (notes 6(13), (23) and (26)) 1,026,897 1 1,373,031 2 1,404,064 2 Net defined benefit liabilities－non-current 91,563 - 94,859 - 126,955 - Other non-current liabilities (notes 6(10), (23), (26) and 7) 59,323 - 51,825 - 38,333 - Total non-current liabilities 3,401,103 4 3,540,444 5 3,753,511 5 Total liabilities 41,489,401 57 43,376,449 58 46,349,808 60 Equity (notes 6(17) and (18)): Ordinary share capital 4,841,553 7 4,851,994 6 4,852,534 6 Share capital awaiting retirement (523) - (10,441) - - - Capital surplus 11,864,794 16 11,864,271 16 11,943,269 16 Retained earnings 12,865,739 18 13,772,643 18 12,212,446 16 Other equity 1,432,516 2 1,505,557 2 1,300,062 2 Total equity 31,004,079 43 31,984,024 42 30,308,311 40 Total liabilities and equity $ 72,493,480 100 75,360,473 100 76,658,119 100 See accompanying notes to consolidated financial statements. ～4～
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(English Translation of Consolidated Financial Statements Originally Issued in Chinese) WNC Corporation and Subsidiaries Consolidated Statements of Comprehensive Income For the Three and Six Months Ended June 30, 2025 and 2024 (Expressed in Thousands of New Taiwan Dollars) For the three months ended June 30, For the six months ended June 30, 2025 2024 2025 2024 Amount % Amount % Amount % Amount % Net operating revenue (notes 6(20) and 7) $ 27,491,058 100 30,712,634 100 55,857,526 100 56,297,213 100 Operating costs (notes 6(3), (13), (15), (21) and 7) 24,315,091 88 26,841,461 87 49,219,729 88 49,463,591 88 Gross profit 3,175,967 12 3,871,173 13 6,637,797 12 6,833,622 12 Operating expenses (notes 6(2), (13), (15), (21) and 7): Selling 730,377 3 868,479 3 1,488,075 3 1,607,611 3 General and administrative 539,505 2 593,360 2 1,115,484 2 1,101,129 2 Research and development 1,026,971 4 1,167,449 4 2,110,560 4 2,220,467 4 Expected credit impairment loss (gain) - - - - - - (90,008) - Total operating expenses 2,296,853 9 2,629,288 9 4,714,119 9 4,839,199 9 Net operating income 879,114 3 1,241,885 4 1,923,678 3 1,994,423 3 Non-operating income and expenses: Interest income (note 6(22)) 41,141 - 33,248 - 74,617 - 48,340 - Other income (notes 6(14), (22) and 7) 219,381 1 101,028 - 310,654 - 188,530 - Other gains and losses (notes 6(22) and 7) (370,747) (1) 149,706 - (287,666) - 390,848 1 Finance costs (notes 6(12), (13) and (22)) (142,674) (1) (156,742) - (295,789) - (312,548) - Total non-operating income and expenses (252,899) (1) 127,240 - (198,184) - 315,170 1 Income before income tax 626,215 2 1,369,125 4 1,725,494 3 2,309,593 4 Income tax expense (note 6(16)) 133,050 - 204,557 - 314,718 - 394,935 1 Net income 493,165 2 1,164,568 4 1,410,776 3 1,914,658 3 Other comprehensive income: Items that will not be reclassified subsequently to profit or loss Unrealized gains or losses from investments in equity instruments measured at fair value through other comprehensive income 770,705 3 (543,867) (2) 510,176 1 223,410 - Less: Income tax related to items that will not be reclassified subsequently (note 6(16)) (886) - (473) - (811) - (4,898) - Total items that will not be reclassified subsequently to profit or loss 771,591 3 (543,394) (2) 510,987 1 228,308 - Items that may be reclassified subsequently to profit or loss Exchange differences on translation of foreign financial statements (1,166,315) (4) 102,353 - (969,024) (2) 419,458 1 Less: Income tax related to items that may be reclassified subsequently (note 6(16)) (233,263) - 20,471 - (193,805) - 83,892 - Total items that may be reclassified subsequently to profit or loss (933,052) (4) 81,882 - (775,219) (2) 335,566 1 Other comprehensive income (161,461) (1) (461,512) (2) (264,232) (1) 563,874 1 Total comprehensive income $ 331,704 1 703,056 2 1,146,544 2 2,478,532 4 Earnings per share (New Taiwan Dollars) (note 6(19)) Basic earnings per share $ 1.03 2.45 2.95 4.03 Diluted earnings per share $ 1.02 2.42 2.91 3.97 See accompanying notes to consolidated financial statements. ～5～
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(English Translation of Consolidated Financial Statements Originally Issued in Chinese) WNC Corporation and Subsidiaries Consolidated Statements of Changes in Equity For the Six Months Ended June 30, 2025 and 2024 (Expressed in Thousands of New Taiwan Dollars) Other equity Capital Retained earnings Exchange differences on translation Unrealized gains or losses from investments in equity instruments measured at fair value Ordinary share capital Capital collected in advance Share capital awaiting retirement Capital surplus Legal reserve Special reserve Unappropriated retained earnings Total of foreign financial statements through other comprehensive income Deferred compensation cost Total Total equity Balance as of January 1, 2024 $ 4,824,441 21,323 - 11,905,097 2,920,185 165,443 10,121,823 13,207,451 (473,599) 2,164,652 (1,157,813) 533,240 30,491,552 Net income for the period - - - - - - 1,914,658 1,914,658 - - - - 1,914,658 Other comprehensive income for the period - - - - - - - - 335,566 228,308 - 563,874 563,874 Total comprehensive income for the period - - - - - - 1,914,658 1,914,658 335,566 228,308 - 563,874 2,478,532 Appropriation and distribution of retained earnings: Appropriation for legal reserve - - - - 381,161 - (381,161) - - - - - - Reversal of special reserve - - - - - (57,319) 57,319 - - - - - - Cash dividends distributed to shareholders - - - - - - (2,909,663) (2,909,663) - - - - (2,909,663) Conversion of convertible bonds 28,093 (21,323) - 38,172 - - - - - - - - 44,942 Share-based payment transactions - - - - - - - - - - 202,948 202,948 202,948 Balance as of June 30, 2024 $ 4,852,534 - - 11,943,269 3,301,346 108,124 8,802,976 12,212,446 (138,033) 2,392,960 (954,865) 1,300,062 30,308,311 Balance as of January 1, 2025 $ 4,851,994 - (10,441) 11,864,271 3,301,346 108,124 10,363,173 13,772,643 (76,018) 2,325,856 (744,281) 1,505,557 31,984,024 Net income for the period - - - - - - 1,410,776 1,410,776 - - - - 1,410,776 Other comprehensive income for the period - - - - - - - - (775,219) 510,987 - (264,232) (264,232) Total comprehensive income for the period - - - - - - 1,410,776 1,410,776 (775,219) 510,987 - (264,232) 1,146,544 Appropriation and distribution of retained earnings: Appropriation for legal reserve - - - - 347,486 - (347,486) - - - - - - Cash dividends distributed to shareholders - - - - - - (2,323,945) (2,323,945) - - - - (2,323,945) Share-based payments transactions (10,441) - 9,918 523 - - 6,265 6,265 - - 191,191 191,191 197,456 Balance as of June 30, 2025 $ 4,841,553 - (523) 11,864,794 3,648,832 108,124 9,108,783 12,865,739 (851,237) 2,836,843 (553,090) 1,432,516 31,004,079 See accompanying notes to consolidated financial statements. ～6～
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(English Translation of Consolidated Financial Statements Originally Issued in Chinese) WNC Corporation and Subsidiaries Consolidated Statements of Cash Flows For the Six Months Ended June 30, 2025 and 2024 (Expressed in Thousands of New Taiwan Dollars) For the six months ended June 30, 2025 2024 Cash flows from operating activities: Income before income tax $ 1,725,494 2,309,593 Adjustments: Adjustments to reconcile loss (profit) Depreciation 1,268,995 1,123,928 Amortization 173,685 127,848 Expected credit gain on reversal - (90,008) Net gain on financial assets and liabilities at fair value through profit or loss (686) (67) Interest expense 295,789 312,548 Interest income (74,617) (48,340) Dividend income (109,405) - Compensation cost arising from share-based payment transactions 197,456 202,948 Gain on disposal of property, plant and equipment (3,315) (14,960) Provision for inventory devaluation and obsolescence loss 114,865 203,502 Adjustment for other non-cash-related losses, net 728,084 15,476 Total adjustments to reconcile loss 2,590,851 1,832,875 Changes in operating assets and liabilities: Notes receivable 45,545 98,219 Accounts receivable 4,757,403 (1,023,872) Receivables from related parties (1,714) 22,390 Inventories 511,726 (1,760,240) Other operating assets (234,228) 200,868 Notes and accounts payable (38,843) 5,360,778 Payables to related parties (21,029) (37,811) Other operating liabilities (1,176,740) 409,206 Total changes in operating assets and liabilities 3,842,120 3,269,538 Total adjustments 6,432,971 5,102,413 Cash flows generated from operations 8,158,465 7,412,006 Interest received 77,527 43,769 Dividends received 109,405 - Interest paid (320,890) (296,739) Income taxes paid (37,036) (922,078) Net cash flows generated from operating activities 7,987,471 6,236,958 Cash flows from investing activities: Acquisition of financial assets at fair value through profit or loss - (150,000) Proceeds from disposal of financial assets at fair value through profit or loss 151,889 - Acquisition of property, plant and equipment (2,061,426) (1,645,036) Proceeds from disposal of property, plant and equipment 5,708 15,473 Increase in refundable deposits (22,882) (13,958) Acquisition of intangible assets (170,197) (302,755) Increase in other non-current assets (236,500) (69,555) Net cash inflows resulting from business combination - 188,397 Net cash flows used in investing activities (2,333,408) (1,977,434) Cash flows from financing activities: Proceeds from short-term loans 19,724,128 20,842,904 Repayments of short-term loans (21,780,049) (21,544,698) Proceeds from long-term loans 149,510 - Repayments of long-term loans (245,010) (399,311) Increase in guarantee deposits received 11,134 1,446 Repayment of the principal portion of lease liabilities (16,054) (25,506) Net cash flows used in financing activities (2,156,341) (1,125,165) Effect of exchange rate changes (974,598) 466,153 Net increase in cash and cash equivalents 2,523,124 3,600,512 Cash and cash equivalents at beginning of period 13,127,054 8,061,104 Cash and cash equivalents at end of period $ 15,650,178 11,661,616 See accompanying notes to consolidated financial statements. ～7～
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(English Translation of Consolidated Financial Statements Originally Issued in Chinese) WNC Corporation and Subsidiaries Notes to the Consolidated Financial Statements For the Six Months Ended June 30, 2025 and 2024 (amounts expressed in Thousands of New Taiwan Dollars, except for per share information and unless otherwise noted) 1. Company history WNC Corporation (the “Company”) was founded in Hsinchu, Republic of China (R.O.C.), on December 7, 1996. The registered address of the Company’s office is 20 Park Avenue II, Hsinchu Science Park, Hsinchu 308, Taiwan, R.O.C. The Company’s ordinary shares we re publicly listed on the Taiwan Stock Exchange on September 22, 2003. The consolidated financial statements comprises the Company and its subsidiaries (together referred to as the “ Group” ) and the Company’ s interest in associates . The Group is engaged mainly in the research, development, manufacturing and sales of the following products, including wired communication equipment, wireless communication networking equipment, electronic components, regulated telecommunication radio frequency equipment, medical devices, electric power generation, transmission and distribution machinery, s atellite commun ication systems, mobile and portable communication products, products, components, semi-finished produ cts and peripherals of medical testing equipment, medical diagnostic equipment, smart mobile aids, medical consumables, medical information transmission systems, Information and communications technology (ICT ) products, software and hardware integration solutions information software services, data processing services, and application services of electronic data supply. 2. Approval date and procedures of the consolidated financial statements The consolidated financial statements were authorized for issue by the Board of Directors on August 6, 2025. 3. New standards, amendments and interpretations adopted: (1) The impact of the International Financial Reporting Standards (“IFRSs”) endorsed by the Financial Supervisory Commission, R.O.C (“FSC”), which have already been adopted. The Group has initially adopted the following new amendments, which do not have a significant impact on its consolidated financial statements, from January 1, 2025: ● Amendments to IAS 21 “Lack of Exchangeability” ● Amendments to IFRS 9 and IFRS 7 “ Amend ments to the Classification and Measurement of Financial Instruments” regarding the application guidance requirements for Section 4.1 of IFRS 9 and the related disclosure requirements of IFRS 7 (2) The impact of IFRS Accounting Standards endorsed by the FSC but not yet effective The Group assesses that the adoption of the followi ng new amendments, effective for annual period beginning on January 1, 2026, would not have a significant impact on its consolidated financial statements: ● IFRS 17 “ Insurance Contracts” and amendments to IFRS 17 “ Insurance Contracts” ～～8～
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WNC Corporation and Subsidiaries Notes to the Consolidated Financial Statements ● Amendments to IFRS 9 and IFRS 7 “ Amend ments to the Classification and Measurement of Financial Instruments” ● Annual Improvements to IFRS Accounting Standards—Volume 11 ● Amendments to IFRS 9 and IFRS 7 “Contracts Referencing Nature-dependent Electricity” (3) The impact of IFRS Accounting Standards issued by IASB but not yet endorsed by the FSC The following new and amended standards, which may be relevant to the Group, have been issued by the International Accounting Standards Board (IASB), but have yet to be endorsed by the FSC: Standards or Interpretations Content of amendment Effective date per IASB IFRS 18 “Presentation and Disclosure in Financial Statements” The new standard introduces three categories of income and expenses, two income statement subtotals and one single note on management performance measures. The three amendments, combined with enhanced guidance on how to disaggregate information, set the stage for better and more consistent information for users, and will affect all the entities. ● A more structured income statement: under current standards, companies use different formats to present their results, making it difficult for investors to compare financial performance across companies. The new standard promotes a more structured income statement, introducing a newly defined ‘ operating profit’ subtotal and a requirement for all income and expenses to be allocated between three new distinct categories based on a company’ s main business activities. ● Management performance measures (MPMs): the new standard introduces a definition for management performance measures, and requires companies to explain in a single note to the financial statements why the measure provides useful information, how it is calculated and reconcile it to an amount determined under IFRS Accounting Standards. January 1, 2027 ～9～
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WNC Corporation and Subsidiaries Notes to the Consolidated Financial Statements Standards or Interpretations Content of amendment Effective date per IASB ● Greater disaggregation of information: the new standard includes enhanced guidance on how companies group information in the financial statements. This includes guidance on whether information is included in the primary financial statements or is further disaggregated in the notes. The Group is evaluating the impact on its consolidated financial position and consolidated financial performance upon the initial adoption of the abovementioned standards or interpretations. The results thereof will be disclosed when the Group completes its evaluation. The Group does not expect the following other new and amended standards, which have yet to be endorsed by the FSC, to have a significant impact on its consolidated financial statements: ● Amendments to IFRS 10 and IAS 28 “Sale or Contribution of Assets Between an Investor and Its Associate or Joint Venture” ● IFRS 19 “Subsidiaries without Public Accountability: Disclosures” 4. Summary of material accounting policies (1) Statement of compliance The consolidated financial statements have been prepared in accordance with the “ Regulations Governing the Preparation of Financial Reports by Securities Issuers” (hereinafter referred to as the Regulations) and the guidelines of IAS 34 Interim Financial Reporting (hereinafter referred to as “ IAS 34” ) which are endorsed by the FSC, and do not include all of the information required by the Regulations and by the IFRS endorsed by the FSC for a complete set of the annual consolidated financial statements. Except as described in the following paragraph, the Group’s material accounting policies are applied consistently for the consolidated financial statements for the year ended December 31, 2024. For related information, please refer to note 4 of the consolidated financial statements for the year ended December 31, 2024. (2) Basis of consolidation The principle of preparation of the consolidated financial statements is consistent with those of the consolidated financial statements for the year ended December 31, 2024. For related information, please refer to note 4(3) of the consolidated financial statements for the year ended December 31, 2024. ～10～
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WNC Corporation and Subsidiaries Notes to the Consolidated Financial Statements A. List of subsidiaries in the consolidated financial statements The list of subsidiaries is included in the consolidated financial statements: Percentage of Ownership Name of Investor Name of Subsidiary Business June 30, 2025 December 31, 2024 June 30, 2024 Note the Company NeWeb Holding Corporation (NEWH) Investment holding company %100 % 100 % 100 the Company WNC Holding Corporation (WNCH) Investment holding company %-% -% 100 Note 1 and Note 2 the Company W-NeWeb Corporation (NUSA) Sales of satellite communication and portable communication products %100 % 100 % 100 the Company WNC UK Limited (NUK) Services for wireless communication products %100 %100 % 100 Note 1 the Company WNC JAPAN Inc. (NJP) Services for wireless communication products %100 %100 % 100 Note 1 the Company NeWeb Vietnam Co., Ltd. (NVNM) Manufacturing and sales of satellite communication and portable communication products %100 % 100 % 100 Note 1 the Company NeWeb GmbH (NEU) Sales and services for wireless communication products %100 % 100 % 100 Note 1 the Company WNC USA Corporation (NUTX) Manufacturing and sales of satellite communication and portable communication products %100 % 100 % 100 Note 1 and Note 3 ～11～
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WNC Corporation and Subsidiaries Notes to the Consolidated Financial Statements Percentage of Ownership Name of Investor Name of Subsidiary Business June 30, 2025 December 31, 2024 June 30, 2024 Note the Company W-NeWeb Mexico, S. de R.L. de C.V.(NMX) Manufacturing of satellite communication and portable communication products %100 % 100 % 100 Note 1 and Note 4 the Company NeWeb Property Vietnam Co., Ltd. (NPVN) Real estate development, leasing, and related management services %100 % -% - Note 1 and Note 5 the Company WNC NeWeb India Private Limited (NIN) Manufacturing, sales and services of communication products %100 % -% - Note 1 and Note 6 NEWH WNC (Kunshan) Corporation (NQJ) Manufacturing and sales of satellite communication and portable communication products %100 % 100 % 100 Note 1 NEWH Webco m Communication (Kunshan) Corporation (NYC) Manufacturing and sales of satellite communication and portable communication products %100 % 100 % 100 Note 1 NEWH Wistron NeWeb (Kunshan) Corporation (NQX) Manufacturing and sales of satellite communication and portable communication products %100 % 100 % 100 NEWH NeWeb Service (Kunshan) Corporation (NQC) Repair and maintenance services for satellite communication and portable communication products %100 % 100 % 100 Note 1 ～12～
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WNC Corporation and Subsidiaries Notes to the Consolidated Financial Statements Note 1:The financial statements of non-significant subsidiaries have not been reviewed by independent auditors. However, the financial statements of NVNM form the first quarter of 2025 and those of NQJ for first half year of 2024 were reviewed by independent auditors. Note 2:The Company conducted the liquidation of WNCH in the fourth quarter of 2024 and the relevant registration procedures have been completed in the first quarter of 2025. Note 3:The Company injected capital to establish the NUTX in the first quarter of 2024. The investment has been included in the consolidated financial statements since then. Note 4:The Company acquired NMX in cash in the second quarter of 2024. The investment has been included in the consolidated financial statements since then. The name of NMX has been changed in the fourth quarter of 2024, changing from Resideo Manufacturas de Chihuahua, S.de R.L. de C.V. to W-NeWeb Mexico, S. de R.L. de C.V.. Note 5:The Company injected capital to establish the NPVN in the second quarter of 2025. The investment has been included in the consolidated financial statements since then. Note 6:The Company injected capital to establish the NIN in the second quarter of 2025. The investment has been included in the consolidated financial statements since then. B. List of subsidiaries which are not included in the consolidated financial statements: None. (3) Employee benefits Pension cost for an interim period is calculated on a year-to-date basis by using the actuarially determined pension cost rate at the reporting date of the prior fiscal year, adjusted for significant market fluctuations since that time and for significant curtailments, settlements, or other significant one-off events. (4) Income tax Income tax expense in the financial statements is measured and disclosed in according to paragraph B12 of IAS 34 endorsed by the FSC. Income tax expense for the period is best estimated by multiplying pretax income for the reporting period by the effective annual tax rate as forecasted by the management. This is recognized fully as income tax expense for the current period. Temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and their respective tax bases are measured based on the tax rates that have been enacted or substantively enacted at the time of the asset or liability is recovered or settled and recognized directly in equity or other comprehensive income as income tax expense. ～ ～13～
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WNC Corporation and Subsidiaries Notes to the Consolidated Financial Statements 5. Material accounting assumptions and judgments, and major sources of estimation uncertainty The preparation of the consolidated financial statements in conformity with the Regulations and IAS 34 “ Interim Financial Reporting” endorsed by the FSC requires management to make judgments, and estimates about the future, including climate-related risks and opportunities, that affect the application of the accounting policies and the reported amount of assets, liabilities, income and expenses. Actual results may differ from these estimates. The preparation of the consolidated financial statements, the major sources of accounting judgments, estimations and assumptions of uncertainty are applied consistently with note 5 to the consolidated financial statements for the year ended December 31, 2024. 6. Explanation of significant accounts Except as described below, there were no significant changes in the description of significant accounts mentioned in the consolidated financial statements for the year ended December 31, 2024. For other information about the description of significant accounts, please refer to note 6 of the consolidated financial statements for the year ended December 31, 2024. (1) Cash and cash equivalents June 30, 2025 December 31, 2024 June 30, 2024 Cash, cash in bank and checking deposits $ 7,580,336 4,001,771 5,271,618 Time deposits 8,069,842 9,125,283 6,389,998 $ 15,650,178 13,127,054 11,661,616 Please refer to note 6(23) for the disclosure of foreign currency risk of the financial assets and liabilities. (2) Financial assets A. Financial assets at fair value through profit or loss (FVTPL): June 30, 2025 December 31, 2024 June 30, 2024 Beneficiary certificates－mutual funds $- 151,203 150,067 B. Financial assets at fair value through other comprehensive income (FVOCI): Equity instruments at FVOCI June 30, 2025 December 31, 2024 June 30, 2024 Current: Domestic listed stocks $ 3,573,661 3,059,431 3,127,523 Non-current: Foreign unlisted stocks $ 282,214 286,268 60,542 ～14～
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WNC Corporation and Subsidiaries Notes to the Consolidated Financial Statements These investments in equity instruments not held for trading, and therefore, are accounted for as FVOCI. In December 2024, the Group invested 3,608 thousand shares of GeNopsys Technologies, Inc., with a total investment amount of $225,429. None of the aforementioned stock investments were disposed for the six months ended June 30, 2025 and 2024, therefore, there were no tran sfers of any cumulative gain or loss under equity relating to these investments. C. Notes receivable, accounts receivable (including related parties), net: June 30, 2025 December 31, 2024 June 30, 2024 January 1, 2024 Current: Notes receivable $ 15,459 61,004 427,678 525,897 Accounts receivable 18,497,025 23,255,977 23,652,226 22,628,665 Accounts receivable fro m related parties 142,552 140,838 123,823 146,213 18,655,036 23,457,819 24,203,727 23,300,775 Less: loss allowance - (1,549) (225,973) (316,292) $ 18,655,036 23,456,270 23,977,754 22,984,483 The Group adopts a simplified approach to estimate expected credit losses for all accounts receivable by applying the lifetime expected credit loss model. For this purpose, accounts receivable are grouped based on shared credit risk characteristics that reflect customers’ ability to pay all amounts due under the contractual terms. Forward-looking information, including macroeconomic conditions and relevant industry data, is incorporated into the assessment. The analysis of expected credit losses on the Group’s accounts receivable is as follows: Not past due Past due within 60 days Past due 61 to 90 days Past due 91 to 180 days Past due more than 181 days Total June 30, 2025 Group 1 Weighted-average expected credit loss rate % -% -% -% -% - Gross carrying amount $ 14,502,163 543,976 10,582 27,269 2 15,083,992 Expected credit loss allowance $- - - - - - Group 2 Weighted-average expected credit loss rate % -% -% -% -% - Gross carrying amount $ 3,138,456 430,264 2,324 - - 3,571,044 Expected credit loss allowance $- - - - - - Gross carrying amount $ 17,640,619 974,240 12,906 27,269 2 18,655,036 Expected credit loss allowance $- - - - - - ～15～
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WNC Corporation and Subsidiaries Notes to the Consolidated Financial Statements Not past due Past due within 60 days Past due 61 to 90 days Past due 91 to 180 days Past due more than 181 days Total December 31, 2024 Group 1 Weighted-average expected credit loss rate % -% -% -% -% - Gross carrying amount $ 16,568,759 873,730 6,805 23,223 - 17,472,517 Expected credit loss allowance $- - - - - - Group 2 Weighted-average expected credit loss rate % -% -% -% -% 93.77 Gross carrying amount $ 5,386,702 595,191 1,757 - 1,652 5,985,302 Expected credit loss allowance $- - - - 1,549 1,549 Gross carrying amount $ 21,955,461 1,468,921 8,562 23,223 1,652 23,457,819 Expected credit loss allowance $- - - - 1,549 1,549 June 30, 2024 Group 1 Weighted-average expected credit loss rate % -% -% -% -% - Gross carrying amount $ 15,943,029 799,690 8,304 11,387 - 16,762,410 Expected credit loss allowance $- - - - - - Group 2 Weighted-average expected credit loss rate % -% -% -% -% 96.82 Gross carrying amount $ 7,032,117 175,698 37 69 233,396 7,441,317 Expected credit loss allowance $- - - - 225,973 225,973 Gross carrying amount $ 22,975,146 975,388 8,341 11,456 233,396 24,203,727 Expected credit loss allowance $- - - - 225,973 225,973 Group 1: Customer of low risk. Group 2: Customer of generic risk. The movements in the allowance for doubtful acc ounts with respect to receivables were as follows: For the six months ended June 30, 2025 2024 Beginning balance $ 1,549 316,292 Impairment loss reversed - (90,008) Amounts written of f (1,549) (311) Ending balance $- 225,973 ～16～
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WNC Corporation and Subsidiaries Notes to the Consolidated Financial Statements (3) Inventories, net June 30, 2025 December 31, 2024 June 30, 2024 Raw materials $ 10,516,479 11,878,263 14,315,768 Work in process and semi-finished products 1,534,588 1,443,023 1,416,013 Finished goods 5,711,983 5,068,355 5,349,412 $ 17,763,050 18,389,641 21,081,193 The details of operating costs were as follows: For the three months ended June 30, For the six months ended June 30, 2025 2024 2025 2024 Cost of goods sold $ 24,263,888 26,664,195 49,110,312 49,271,131 Inventory devaluation and obsolescence loss 53,576 186,205 114,865 203,502 Revenue from sale of scrap (2,501) (8,938) (5,977) (11,041) Physical inventory loss (gain) 128 (1) 529 (1) $ 24,315,091 26,841,461 49,219,729 49,463,591 (4) Acquisition of subsidiary On April 4, 2024, the Group acquired 100% equity inter ests of NMX, thereby gaining control of the company. NMX is primarily engaged in the pro duction and manufacturing of home comfort control and home security products, with its manufacturing ba se located in Juarez, Mexico. This acquisition allows the Group to enhance the agility of its global supply chain management and expand its business in the North American market. The main categories of consideration transferred and the amounts recognized for the acquired assets and assumed liabilities on the acquisition date were as follows: A. The Group transferred $149,051 thousand in cash as consideration. B. The identifiable assets acquired and liabilities assumed. The fair value details of the identifiable assets acquired and liabilities assumed on the acquisition date were as follows: Cash and cash equivalents $ 309,556 Property, plant and equipment 110,585 Right-of-use assets 171,467 Deferred tax assets 77,000 Other financial assets and other current assets 47,307 Accounts payable and other liabilities (566,864) The fair value of identifiable net assets $ 149,051 ～17～
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WNC Corporation and Subsidiaries Notes to the Consolidated Financial Statements (5) Property, plant and equipment Buildings Machinery and equipment Research and development equipment Other equipment Rental assets Construction in progress and equipment awaiting inspection Total Cost: Balance as of January 1, 2025 $ 9,777,859 12,602,407 1,513,302 2,090,225 124,097 1,261,077 27,368,967 Additions 119,434 481,014 32,605 160,382 - 1,125,356 1,918,791 Disposals and obsolescence - (147,744) (3,381) (60,626) - - (211,751) Reclassification to other 550,198 217,902 675 103,214 - (1,591,059) (719,070) Effect of exchange rate changes (344,768) (494,326) (10,084) (124,795) - (61,610) (1,035,583) Balance as of June 30, 2025 $ 10,102,723 12,659,253 1,533,117 2,168,400 124,097 733,764 27,321,354 Balance as of January 1, 2024 $ 8,605,555 11,254,688 1,397,322 1,821,516 - 1,111,408 24,190,489 Additions 103,180 730,253 64,181 159,543 - 565,074 1,622,231 Disposals and obsolescence (3,605) (328,009) (21,559) (68,127) - - (421,300) Reclassification to other 231,387 173,268 17,050 (27,404) - (399,908) (5,607) Acquired in business combination 81,341 9,48 0 - 15,359 - 5,952 112,132 Effect of exchange rate changes 103,984 178,828 3,794 36,689 - 53,477 376,772 Balance as of June 30, 2024 $ 9,121,842 12,018,508 1,460,788 1,937,576 - 1,336,003 25,874,717 Accumulated depreciation: Balance as of January 1, 2025 $ 3,950,523 8,450,539 1,184,698 1,422,283 3,726 - 15,011,769 Depreciation for the period 327,641 714,875 67,790 134,724 1,241 - 1,246,271 Disposals and obsolescence - (144,777) (3,381) (61,200) - - (209,358) Reclassification (109) - - - - - (109) Effect of exchange rate changes (134,309) (280,131) (7,260) (74,900) - - (496,600) Balance as of June 30, 2025 $ 4,143,746 8,740,506 1,241,847 1,420,907 4,967 - 15,551,973 Balance as of January 1, 2024 $ 3,377,216 7,487,781 1,094,421 1,288,770 - - 13,248,188 Depreciation for the period 251,747 670,875 59,458 102,532 - - 1,084,612 Disposals and obsolescence (3,605) (327,967) (21,559) (67,656) - - (420,787) Effect of exchange rate changes 44,978 98,882 2,626 23,879 - - 170,365 Balance as of June 30, 2024 $ 3,670,336 7,929,571 1,134,946 1,347,525 - - 14,082,378 Carrying amounts: Balance as of January 1, 2025 $ 5,827,336 4,151,868 328,604 667,942 120,371 1,261,077 12,357,198 Balance as of June 30, 2025 $ 5,958,977 3,918,747 291,270 747,493 119,130 733,764 11,769,381 Balance as of January 1, 2024 $ 5,228,339 3,766,907 302,901 532,746 - 1,111,408 10,942,301 Balance as of June 30, 2024 $ 5,451,506 4,088,937 325,842 590,051 - 1,336,003 11,792,339 Please refer to note 6(7) for the disclosure of propert y, plant and equipment reclassify to investment property. ～18～
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WNC Corporation and Subsidiaries Notes to the Consolidated Financial Statements (6) Right-of-use assets Land Buildings Other equipment Total Cost: Balance as of January 1, 2025 $ 1,580,943 238,183 15,517 1,834,643 Additions - 13,302 139 13,441 Lease modification (356,750) - - (356,750) Write-off - (48,750) (2,354) (51,104) Reclassification to investment property (145) - - (145) Effect of exchange rate changes (24,979) (2,792) - (27,771) Balance as of June 30, 2025 $ 1,199,069 199,943 13,302 1,412,314 Balance as of January 1, 2024 $ 1,737,937 94,522 15,517 1,847,976 Decrease (173,890) (2,869) - (176,759) Acquired in business combination - 171,467 - 171,467 Effect of exchange rate changes 14,136 (13,410) - 726 Balance as of June 30, 2024 $ 1,578,183 249,710 15,517 1,843,410 Accumulated depreciation: Balance as of January 1, 2025 $ 202,858 88,303 15,264 306,425 Depreciation for the period 12,402 10,057 265 22,724 Write-off - (47,408) (2,354) (49,762) Effect of exchange rate changes (2,194) (685) - (2,879) Balance as of June 30, 2025 $ 213,066 50,267 13,175 276,508 Balance as of January 1, 2024 $ 167,744 58,221 14,342 240,307 Depreciation for the period 17,017 21,838 461 39,316 Decrease - (693) - (693) Effect of exchange rate changes 819 1,521 - 2,340 Balance as of June 30, 2024 $ 185,580 80,887 14,803 281,270 Carrying amounts: Balance as of January 1, 2025 $ 1,378,085 149,880 253 1,528,218 Balance as of June 30, 2025 $ 986,003 149,676 127 1,135,806 Balance as of January 1, 2024 $ 1,570,193 36,301 1,175 1,607,669 Balance as of June 30, 2024 $ 1,392,603 168,823 714 1,562,140 ～19～
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WNC Corporation and Subsidiaries Notes to the Consolidated Financial Statements (7) Investment property, net Owned property Right-of-use assets Buildings Land Total Carrying amount: Balance as of January 1, 2025 $ 751,890 116,225 868,115 Balance as of June 30, 2025 $ 744,102 115,049 859,151 Balance as of January 1, 2024 $ 768,978 197,498 966,476 Balance as of June 30, 2024 $ 760,434 117,546 877,980 There were no significant additions, disposal and recognition or reversal of impairment losses of investment property for the six months ended June 30, 2025. Relative information for the period (including rental revenue and direct operating expense incurred) is discussed in note 6(14). Please refer to note 6(8) to the 2024 annual consolidated financial statements for other related information. The fair value of investment property was not signi ficantly different from those disclosed in note 6(8) to the annual consolidated financial statements for the year ended December 31, 2024. As of June 30, 2025, December 31 and June 30, 2024, the Company’s investment properties were not pledged as collateral. (8) Intangible assets Software Other intangible assets Total Carrying amounts: Balance as of January 1, 2025 $ 53,855 526,331 580,186 Balance as of June 30, 2025 $ 55,487 476,754 532,241 Balance as of January 1, 2024 $ 50,034 288,342 338,376 Balance as of June 30, 2024 $ 47,118 554,008 601,126 (9) Bank loans A. Short-term loans June 30, 2025 December 31, 2024 June 30, 2024 Unsecured bank loans $ 9,255,339 11,863,766 9,547,758 Unused credit lines $ 22,150,463 21,454,169 21,714,511 Range of interest rates 2.79%~5.41% 3.71%~6.00% 4.45%~6.44% Please refer to note 6(23) for the disclosure of interest risk, foreign currency risk and liquidity risk. ～20～
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WNC Corporation and Subsidiaries Notes to the Consolidated Financial Statements B. Long-term loans (including current portion) June 30, 2025 December 31, 2024 June 30, 2024 Unsecured bank loans $ 1,964,930 2,057,058 2,494,629 Unused credit lines $ 448,530 1,455,620 1,620,000 Range of interest rates 1.33%~5.76% 1.33%~1.92% 1.33%~1.92% Maturity date Due by May, 2031 Due by May, 2031 Due by May, 2031 Please refer to note 6(23) for the disclosure of interest risk and liquidity risk. C. Government low interest loans The Company obtained government low-interes t loans under the "Action Plan for Welcoming Overseas Taiwanese Businesses to Return to Invest in Taiwan." The difference between the loan amount recognized using the market interes t rate and the actual repayment amount based on the preferential interest rate was accounted for as a government grant and recognized as deferred income. Please refer to note 6(10) for details on the recognition of deferred income. If the Company fails to meet the conditions of the above project during the loan period and the National Development Fund terminates the grant, the Company will be required to repay the loan at the original interest rate plus the applicable annual interest rate. (10) Deferred income June 30, 2025 December 31, 2024 June 30, 2024 Current $ 4,289 5,004 7,369 Non-current 16,902 19,013 21,366 Deferred income - government grants $ 21,191 24,017 28,735 (11) Provisions – current Warranties Balance as of January 1, 2025 $ 100,975 Balance as of June 30, 2025 $ 103,651 Balance as of January 1, 2024 $ 120,086 Balance as of June 30, 2024 $ 108,008 There were no significant changes in provisions for the six months ended June 30, 2025 and 2024. Please refer to note 6(12) of the consolidated financial statements for the year ended December 31, 2024 for other related information. (12) Bonds payable For the three months ended June 30, For the six months ended June 30, 2025 2024 2025 2024 Interest expense $- - - 73 ～21～
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WNC Corporation and Subsidiaries Notes to the Consolidated Financial Statements The Company issued 28,000 shares of three-year unsecured convertible bonds with 0% interest rate in Taiwan on June 27, 2022, each with a face value of $100,000 and an effective interest rate of 0.93% on the original debt component. The conversion price was $74.5 per share at the time of issuance. The conversion price would be adjusted according to the formula stated in provisions of issuance if the conversion price of the Company' s ordinary shares is adjusted in accordance with the terms of issuance. The convertible bond was issued without replace clause. As the distribution of cash dividends and the capital increase by cash, the above conversion price was adjusted down to $67.2 per share since November 30, 2023. From the day following the 3rd month after the issuance date (September 28, 2022) to the 40th day before the maturity date (May 18, 2025), if the outstanding balance of the convertible bonds is less than 10% of the total face value of the bonds, the Company may redeem the outstanding bonds within 5 business days after the call date of the bonds by cash at the face value of the bonds. Except for the conversion of the convertible bonds into the Company’ s ordinary shares by the holders of the bond, or the early redemption of the bonds by the Company in accordance with this regulation, or the cancellation of the bonds by the Company through purchase from the securities company, the Company will repay 100% of the face value of the bonds in cash at maturity. As of March 26, 2024, all of the unsecured convertible bonds have been converted into ordinary share capital. (13) Lease liabilities The carrying amounts of lease liabilities were as follows: June 30, 2025 December 31, 2024 June 30, 2024 Current $ 49,984 65,093 65,436 Non-current $ 1,026,897 1,373,031 1,404,064 For the maturity analysis, please refer to note 6(23). The amounts recognized in profit or loss were as follows: For the three months ended June 30, For the six months ended June 30, 2025 2024 2025 2024 Interest on lease liabilities $ 9,623 6,590 19,194 13,222 Expenses relating to short-term leases $ 20,087 8,340 39,400 23,172 Expenses relating to leases of low- value assets, excluding short- term leases of low-value assets $ 2,031 8,084 3,197 9,098 Total cash outflow for leases $ 76,885 71,007 ～22～
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WNC Corporation and Subsidiaries Notes to the Consolidated Financial Statements A. Real estate leases The Group leases land and buildings for its business premises and staff dormitory. The leases of land typically run for 20 to 50 years, and the business premises and staff dormitory for 2 to 5 years. Some leases include an option to renew the lease for an additional period of the same duration after the end of the contract term. The Group sub-leases some of its right-of-use assets under operating leases. Please refer to note 6(14). Some leases of land and office spaces contain extension options exercisable. These leases are negotiated and monitored by local management, and accordingly, contain a wide range of different terms and conditions. The extension options held are exercisable only by the Group and not by the lessors. In which the lessee is not reasonably certain exercise the optional extended lease term, payments associated with the optional period are not included in the lease liabilities. Lease payments under the land contract are determined based on the locally published land valuation, adjusted to include allocated public infrastructure construction fees. Such fees are typically incurred on an annual basis. B. Other leases The Group leases other equipment, with lease terms of 3 to 4 years. In some cases, the Group has options to purchase the assets at the end of the contract term. In addition, the Group has elected not to recognize the right-of-use assets and lease liabilities for its office spaces and other equipment, which qualifies as short-term leases and low-value asset leases. (14) Operating lease The investment property leased out by the Compa ny has been classified as operating leases, because it does not transfer substantially all the risks and rewards incidental to the ownership of the assets. Please refer to note 6(7) that sets out information about the operating leases of investment property. A maturity analysis of lease payments, showing the undiscounted lease payments to be received after the reporting date, is as follows: June 30, 2025 June 30, 2024 Less than one year $ 130,347 58,716 One to two years 130,347 - Total undiscounted lease payments $ 260,694 58,716 For the six months ended June 30, 2025, the rental income generated from investment properties and leased assets amounted to $54,596 and $10,558, respectively. For the six months ended June 30, 2024, the rental income generated from investment properties amounted to $53,535. The repair and maintenance expenses related to investment properties were $1,779 and $1,091, respectively. ～23～
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WNC Corporation and Subsidiaries Notes to the Consolidated Financial Statements (15) Employee benefits Given that there have been no significant market fluctuations, material curtailments, settlements, or other significant one-off events since the prior fiscal year, pension costs in the financial statements are measured and disclosed based on the actuarial valuations as of December 31, 2024, and December 31, 2023. For information related to the Group’s pension costs for the six months ended June 30, 2025 and 2024, please refer to note 12. (16) Income tax A. Income tax expense: The amounts of income tax expense (benefit) were as follows: For the three months ended June 30, For the six months ended June 30, 2025 2024 2025 2024 Current income tax expense (benefit) Current period $ 139,883 314,822 377,409 504,449 Adjustment for prior period (6,833) (110,265) (62,691) (109,514) Income tax expense $ 133,050 204,557 314,718 394,935 B. The amounts of income tax expense (benefit) r ecognized in other comprehensive income were as follows: For the three months ended June 30, For the six months ended June 30, 2025 2024 2025 2024 Items that will not be reclassified subsequently to profit or loss: Unrealized gains or losses from investments in equity instruments measured at FVOCI $ (886) (473) (811) (4,898) Items that may be reclassified subsequently to profit or loss: Exchange differences on translation of foreign financial statements $ (233,263) 20,471 (193,805) 83,892 C. The Company’s tax returns have been examined by the tax authorities through 2022. ～24～
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WNC Corporation and Subsidiaries Notes to the Consolidated Financial Statements (17) Capital and other equity interest Except as described in the following paragraph, there were no significant changes in the Group’s capital and other equity interest for the six months ended June 30, 2025 and 2024. For related information about the shareholders’ equity, please refer to note 6(18) of the consolidated financial statements for the year ended December 31, 2024. A. Issuance and cancellation of ordinary shares Due to the failure to meet the vesting cond itions for the restricted employee stock awards issued in 2023, a total of 52 thousand shares were cancelled as of June 30, 2025. These shares were recorded as share capital awaiting retirement, and the relevant registration procedures had not yet been completed as of June 30, 2025. For the six months ended June 30, 2024, the company issued 677 thousand new shares due to the exercise of conversion rights under the convertible bonds issued at par value. The related registration procedures have been completed. B. Capital surplus The Company’s capital surplus was as follows: June 30, 2025 December 31, 2024 June 30, 2024 Capital surplus－premium $ 7,161,112 7,150,671 6,857,951 Convertible bonds payable－ premium 3,854,385 3,854,385 3,854,385 Treasury stock sold to employees 100,454 100,454 100,454 Due to donated assets received 170 170 150 Capital surplus from merger 36,653 36,653 36,653 Restricted stock awards 706,445 716,363 1,088,101 Employee share options 5,575 5,575 5,575 $ 11,864,794 11,864,271 11,943,269 C. Retained earnings According to the Company’ s Articles of Incorporation, if the Company shows a year-end earnings, it shall first make tax payment and offs et any accumulated losses. Thereafter, a 10% appropriation of the remaining amount shall be set aside for legal reserve, unless the amount in the legal reserve is already equal to or greater than the total paid-in capital. Thereafter, an amount shall be set aside or reversed as a special reserve in accordance with relevant laws, regulations, or provisions of the competent authorities. Distribution of the remaining profit after setting aside the abovementioned amounts, together with the balance of the unappropriated retained earnings of the previous year, with no less than 10% as dividends to shareholders, shall be proposed by the Board of Directors to be approved at the shareholders’ meeting. ～25～
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WNC Corporation and Subsidiaries Notes to the Consolidated Financial Statements The following are the appropriation of earnings in 2024 and 2023 which were approved by the shareholders' meeting held on May 16, 2025 and May 31, 2024, respectively: 2024 2023 Amount per share (TWD) Total amount Amount per share (TWD) Total amount Appropriation of earnings: Legal reserve $ 347,486 381,161 Special reserve - (57,319) Cash dividends $ 4.8005 2,323,945 5.9962 2,909,663 $ 2,671,431 3,233,505 The appropriation of retained earnings is consistent with the resolutions approved by the Board of Directors. The related information is available on the Market Observation Post System website. (18) Share-based payment Except as described in the following paragraph, there were no significant changes in the Group’s share-based payment for the six months ended June 30, 2025 and 2024. For related information about the share-based payment, please refer to note 6(19) of the consolidated financial statements for the year ended December 31, 2024. As of June 30, 2025 and 2024, the Company has deferre d the compensation cost arising from the issuance of restricted stock awards amounting to $553,090 and $954,865, respectively. Such deferred amounts were recorded as deduction of other equity. (19) Earnings per share For the three months ended June 30, For the six months ended June 30, 2025 2024 2025 2024 Basic earnings per share: Net income attributable to ordinary shareholders of the Company $ 493,165 1,164,568 1,410,776 1,914,658 Weighted-average number of ordinary shares (in thousands) 477,602 475,271 477,602 475,095 Basic earnings per share (in dollars) $ 1.03 2.45 2.95 4.03 ～26～
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WNC Corporation and Subsidiaries Notes to the Consolidated Financial Statements For the three months ended June 30, For the six months ended June 30, 2025 2024 2025 2024 Diluted earnings per share: Net income attributable to ordinary shareholders of the Company $ 493,165 1,164,568 1,410,776 1,914,658 Interest expense on convertible bonds, net of tax - - - 59 Net income attributable to ordinary shareholders of the Company (plus the effect of potentially dilutive ordinary shares) $ 493,165 1,164,568 1,410,776 1,914,717 Weighted-average number of ordinary shares (in thousands) (basic) 477,602 475,271 477,602 475,095 Effect of potentially dilutive ordinary shares (in thousands): Effect of employee stock remuneration 1,730 1,027 2,832 3,089 Effect of unvested restricted stock awards 3,939 4,144 4,137 4,053 Effect of conversion of convertible bonds - - - 176 Weighted-average number of ordinary shares (in thousands) (plus the effect of potentially dilutive ordinary shares) $ 483,271 480,442 484,571 482,413 Diluted earnings per share (in dollars) $ 1.02 2.42 2.91 3.97 ～27～
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WNC Corporation and Subsidiaries Notes to the Consolidated Financial Statements (20) Revenue from contracts with customers A. Disaggregation of revenue For the three months ended June 30, For the six months ended June 30, 2025 2024 2025 2024 Primary geographical markets: Americas $ 19,614,859 22,492,089 39,834,448 41,113,271 Asia 4,613,923 5,065,711 9,189,690 9,038,222 Europe 3,259,866 3,154,834 6,830,961 6,145,720 Others 2,410 - 2,427 - $ 27,491,058 30,712,634 55,857,526 56,297,213 Major products: Wireless communication products $ 26,815,370 29,895,356 54,567,582 54,825,930 Others 675,688 817,278 1,289,944 1,471,283 $ 27,491,058 30,712,634 55,857,526 56,297,213 B. Contract balances June 30, 2025 December 31, 2024 June 30, 2024 January 1, 2024 Contract liabilities－current $ 1,874,408 2,107,955 1,785,769 1,213,080 For details on notes and accounts receivable and loss allowance, please refer to note 6(2). The change in the balance of contract liabilities is the difference between the time frame in the performance obligation to be satisfied and the payment to be received. The amounts of revenue recognized for the six months ended June 30, 2025 and 2024, that were included in the contract liability balance at the beginning of the period were $566,578 and $461,740, respectively. (21) Remuneration to employees and directors The Company resolved to amend its Articles of Incorporation at the shareholders' meeting held on May 16, 2025. The amended Articles of Incorporation require that profits (income before tax, excluding remuneration to employees and directors ) shall be distributed in accordance with the following regulations; however, if the Company has cumulative losses, the Company shall reserve the amount to make up for such losses in advance: A. No less than 5%, either by shares or in cash, shall be allocated as employee remuneration. Of this allocation, a minimum of 5% shall be specif ically reserved for non-executive employees. Employees of controlled companies who meet specific requirements set by the Board of Directors may also be included. B. No more than 1% as director’s remuneration in cash to directors. ～28～
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WNC Corporation and Subsidiaries Notes to the Consolidated Financial Statements The remunerations to employees (including non-executive employees) amounted to $72,882, $165,313, $210,235 and $280,499, as well as the remunerations to directors amounted to $6,626, $15,028, $19,113 and $25,499 for the three and six months ended June 30, 2025 and 2024, respectively. These amounts were calculated using the Company’s net income before tax without the remunerations to employees and directors for each period, multiplied by the percentage which is stated under the Company’ s Article of Incorporation. These remunerations were expensed under operating costs or expenses for each period. If there are any subsequent adjustments to the actual remuneration amounts after the Board of Directors, the adjustment will be regarded as changes in accounting estimates and will be reflected in profit or loss in the following year. Shares distributed to employees as employees’ remuneration are calculated based on the closing price of the Company’s shares on the day before the approval by the Board of Directors. For the years ended December 31, 2024 and 2023, the remunerations to employees amounted to $503,874 and $583,259, and the remunerations to directors amounted to $45,807 and $53,024, respectively, which were both paid in cash. The appropriation of remunerations is consistent with the resolutions approved by the Board of Directors. The related information is available on the Market Observation Post System website. (22) Non-operating income and expenses A. Interest income For the three months ended June 30, For the six months ended June 30, 2025 2024 2025 2024 Interest income from bank deposits $ 41,135 33,247 74,603 48,336 Others interest income 6 1 14 4 $ 41,141 33,248 74,617 48,340 B. Other income For the three months ended June 30, For the six months ended June 30, 2025 2024 2025 2024 Rental income, net $ 28,718 23,455 61,137 47,174 Dividend income 109,405 - 109,405 - Mold income 14,500 18,065 19,333 39,452 Scrap income 10,167 11,996 16,949 20,683 Government grants 1,127 2,250 2,848 4,506 Others 55,464 45,262 100,982 76,715 $ 219,381 101,028 310,654 188,530 ～29～
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WNC Corporation and Subsidiaries Notes to the Consolidated Financial Statements C. Other gains and losses For the three months ended June 30, For the six months ended June 30, 2025 2024 2025 2024 Net gains on disposal of property, plant and equipment $ 2,634 2,936 3,315 14,960 Foreign exchange (losses) gains, net (373,610) 146,587 (291,783) 375,593 Net gains arising from financial assets and liabilities at FVTPL 113 67 686 67 Others 116 116 116 228 $ (370,747) 149,706 (287,666) 390,848 D. Finance costs For the three months ended June 30, For the six months ended June 30, 2025 2024 2025 2024 Interest expense－bank loans $ 133,051 150,152 276,595 299,253 Interest expense－bonds payable - - - 73 Interest expense－lease liabilities 9,623 6,590 19,194 13,222 $ 142,674 156,742 295,789 312,548 (23) Financial instruments Except as described in the following paragraph, there were no significant changes in the Group’s fair value of financial instruments exposed to credit risk and market risk. For related information about the fair value of financial instruments, please refer to note 6(24) of the consolidated financial statements for the year ended December 31, 2024. A. Credit risk (a) Credit risk exposure The carrying amounts of financial assets represent the maximum amounts exposed to credit risk. ～30～
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WNC Corporation and Subsidiaries Notes to the Consolidated Financial Statements (b) Credit risk concentration The major customers of the Group are centralized in the network communications industry. To minimize credit risk, the Group continuously evaluates the customer’ s financial positions, purchases a trade credit insurance and asks the counterpart to provide the guarantee or assurance, if necessary. Besides, the Group monitors and reviews the recoverable amount of the trade receivables periodically to ensure the uncollectible amount are recognized appropriately as impairment loss. As of June 30, 2025 and 2024, 35.87% and 49.71%, respectively, of trade receivables were concentrated on five major customers. Thus, credit risk is significantly centralized. (c) Credit risk of receivables For credit risk exposure of receivables, please refer to note 6(2). No loss allowances were recognized under other financial assets at amortized cost. B. Liquidity risk The followings are the contractual maturities of financial liabilities, including estimated interest payments but excluding the impact of netting agreements, except for notes and accounts payable (including related parties), salary and bonus payable and other accrued expenses: Carrying amount Contractual cash flows Within 1 year 1~5 years More than 5 years June 30, 2025 Non-derivative financial liabilities Unsecured short-term loans $ 9,255,339 9,367,816 9,367,816 - - Lease liabilities (current and non-current) 1,076,881 2,040,076 87,914 427,302 1,524,860 Guarantee deposits received (recorded in other current and non-current liabilities) 26,142 26,142 4,367 21,775 - Unsecured long-term loans (including current portion) 1,964,930 2,090,237 357,742 1,556,862 175,633 $ 12,323,292 13,524,271 9,817,839 2,005,939 1,700,493 December 31, 2024 Non-derivative financial liabilities Unsecured short-term loans $ 11,863,766 12,047,324 12,047,324 - - Lease liabilities (current and non-current) 1,438,124 2,104,666 86,536 434,822 1,583,308 Guarantee deposits received (recorded in other current and non-current liabilities) 15,008 15,008 4,829 10,179 - Unsecured long-term loans (including current portion) 2,057,058 2,167,885 433,319 1,408,770 325,796 $ 15,373,956 16,334,883 12,572,008 1,853,771 1,909,104 ～31～
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WNC Corporation and Subsidiaries Notes to the Consolidated Financial Statements Carrying amount Contractual cash flows Within 1 year 1~5 years More than 5 years June 30, 2024 Non-derivative financial liabilities Unsecured short-term loans $ 9,547,758 9,706,309 9,706,309 - - Lease liabilities (current and non-current) 1,469,500 2,147,474 91,354 449,373 1,606,747 Guarantee deposits received (recorded in other current and non-current liabilities) 13,637 13,637 6,969 6,668 - Unsecured long-term loans (including current portion) 2,494,629 2,628,600 698,275 1,445,525 484,800 $ 13,525,524 14,496,020 10,502,907 1,901,566 2,091,547 The Group does not expect that the cash flows included in the maturity analysis could occur significantly earlier or at significantly different amounts. C. Foreign currency risk (a) Exposure to foreign currency risk The Group’ s financial assets and liabilities exposed to foreign currency risk were as follows: June 30, 2025 Foreign currency Exchange rate TWD Financial assets Monetary items USD $ 540,810 29.902 16,171,304 Financial liabilities Monetary items USD 618,195 29.902 18,485,280 December 31, 2024 Foreign currency Exchange rate TWD Financial assets Monetary items USD $ 552,418 32.781 18,108,798 Financial liabilities Monetary items USD 629,459 32.781 20,634,299 ～32～
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WNC Corporation and Subsidiaries Notes to the Consolidated Financial Statements June 30, 2024 Foreign currency Exchange rate TWD Financial assets Monetary items USD $ 563,890 32.450 18,298,216 Financial liabilities Monetary items USD 661,867 32.450 21,477,585 (b) Sensitivity analysis The Group’s exposure to foreign currency risk arises from the translation of the foreign currency exchange gains and losses on cash and cash equivalents, receivables, short-term loans, notes and accounts payable (including related parties), and other accrued expenses that are denominated in foreign currency. A fluctuation in the TWD/USD exchange rate on June 30, 2025 and 2024, with other factors remaining constant, would have infl uenced the comprehensive income for the six months ended June 30, 2025 and 2024 as illustrated below: Range of the For the six months ended June 30, fluctuations 2025 2024 TWD exchange rate Depreciation of TWD 1 against the USD $ (61,908) (78,382) Appreciation of TWD 1 against the USD $ 61,908 78,382 Due to the variety of the functional currencies of the Group’ s entities, the Group’ s foreign exchange (losses) gains (including realized and unrealized) on monetary items amounted to $(373,610), $146,587, $(291,783) and $375,593, for the three and six months ended June 30, 2025 and 2024, respectively. (c) Interest rate analysis The Group’s interest rate exposure regarding its financial assets and liabilities has been disclosed in the note of financial risk man agement. The following sensitivity analysis is based on the exposure to interest rate risk of the derivative and non-derivative instruments on the reporting date. For floating-rate instruments, the sensitivity analysis assumes the floating-rate liabilities are outsta nding for the whole year on the reporting date. The exposure to changes in interest rates (assuming all other variables are constant) would have influenced the comprehensiv e income for the six months ended June 30, 2025 and 2024, as illustrated below: Range of the For the six months ended June 30, fluctuations 2025 2024 Annual interest rate Increase of 1% $ (15,680) (29,092) Decrease of 1% $ 15,680 29,092 ～33～
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WNC Corporation and Subsidiaries Notes to the Consolidated Financial Statements D. Fair value of financial instruments (a) Categories of financial instruments and fair value The fair value of financial assets at FVTPL and FVOCI is measured on a recurring basis. The Group’ s carrying amounts and the fair value of financial assets and liabilities (including information for fair value hierarchy, but excluding financial instruments whose fair values approximate the carry ing amounts, and lease liabilities, since the disclosures of fair value are not required), were as follows: June 30, 2025 Carrying Fair value amount Level 1 Level 2 Level 3 Total Financial assets at FVOCI Domestic listed stocks $ 3,573,661 3,573,661 - - 3,573,661 Foreign unlisted stocks 282,214 - - 282,214 282,214 $ 3,855,875 3,573,661 - 282,214 3,855,875 December 31, 2024 Carrying Fair value amount Level 1 Level 2 Level 3 Total Financial assets at FVTPL Beneficiary certificates – mutual funds $ 151,203 151,203 - - 151,203 Financial assets at FVOCI Domestic listed stocks $ 3,059,431 3,059,431 - - 3,059,431 Foreign unlisted stocks 286,268 - - 286,268 286,268 $ 3,345,699 3,059,431 - 286,268 3,345,699 June 30, 2024 Carrying Fair value amount Level 1 Level 2 Level 3 Total Financial assets at FVTPL Beneficiary certificates – mutual funds $ 150,067 150,067 - - 150,067 Financial assets at FVOCI Domestic listed stocks $ 3,127,523 3,127,523 - - 3,127,523 Foreign unlisted stocks 60,542 - - 60,542 60,542 $ 3,188,065 3,127,523 - 60,542 3,188,065 ～34～
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WNC Corporation and Subsidiaries Notes to the Consolidated Financial Statements (b) Valuation techniques for financial instruments not measured at fair value The Group estimates its financial instruments not measured at fair value using the following methods and assumptions: Fair value measurement for financial ass ets and financial liabilities measured at amortized cost will be based on the latest quoted price and agreed-upon price if these prices are available in active markets. When market value is unavailable, the fair value of financial assets and financial liabilities is evaluated based on the discounted cash flow of the financial assets and financial liabilities. (c) Valuation techniques for financial instruments that are measured at fair value The Group held its financial instruments presented as beneficiary certificates-mutual funds and domestic listed stocks, which are measured at fair value according to standard provisions and conditions; the fair value is measured using the quoted prices in an active market. Except for the above financial instruments with an active market, the Group estimated the fair value of the remaining financial instruments by using the valuation techniques or quoted price from a competitor. The valuation technique is used to arrive at their fair value, for which the market transaction prices of the similar companies and market conditions are considered. (d) Transfer between level 1 and level 2: None. (e) Reconciliation of level 3 fair values: Financial assets at FVOCI－ equity investments without an active market Balance as of January 1, 2025 $ 286,268 Total gains and losses recognized in other comprehensive income (4,054) Balance as of June 30, 2025 $ 282,214 Balance as of January 1, 2024 $ 56,724 Total gains and losses recognized in other comprehensive income 3,818 Balance as of June 30, 2024 $ 60,542 The total gains and losses mentioned above were recognized in “ Unrealized gains or losses from investments in equity instruments measured at FVOCI”. ～35～
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WNC Corporation and Subsidiaries Notes to the Consolidated Financial Statements (f) Quantified information on significant unobservable inputs (Level 3) used in fair value measurement The Group’s financial instruments that use Level 3 inputs to measure fair value include financial assets at FVOCI – equity investments. The Group classified the equity investments without an active market as recurring level 3 fair values in the fair value hierarchy due to the use of significant unobservable inputs. The significant unobservable inputs of the equity investments without an active market are independent, therefore, there is no correlation between them. Quantified information of significant unobservable inputs was as follows: Item Valuation technique Significant unobservable inputs Inter-relationship between significant unobservable inputs and fair value measurement Financial assets at FVOCI－equity investments without an active market Market approach ‧ Price-to-sales ratios (as of June 30, 2025, December 31, 2024 and June 30, 2024 ranged from 0.01 ~ 7.47, 0.01~20.69, and 0.01~17.19, respectively.) ‧ Price-equity ratios (as of June 30, 2025, December 31, 2024 and June 30, 2024 ranged from 1.21 ~ 5.73, 1.45~6.15 and 1.53~6.87, respectively.) ‧ Discount for lack of marketability (as of June 30, 2025, December 31, 2024 and June 30, 2024 were 0%~80%.) The higher the price-to-sales ratio, the higher the fair value. The higher the price-equity ratio, the higher the fair value. The higher the discount for lack of marketability, the lower the fair value. (24) Financial risk management There were no significant changes in the Group’s objectives and policies applied in the financial risk management from those in the consolidated fi nancial statement for the year ended December 31, 2024. For related information about the financial risk management, please refer to note 6(25) of the consolidated financial statements for the year ended December 31, 2024. (25) Capital management The Group’ s objectives, policies and processes for capital management were consistent with the consolidated financial statements for the year ended December 31, 2024. There were no significant changes in quantified factors of capital managemen t from those in the consolidated financial statement for the year ended December 31, 2024. For related information about the capital management, please refer to note 6(26) of the cons olidated financial statements for the year ended December 31, 2024. ～36～
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WNC Corporation and Subsidiaries Notes to the Consolidated Financial Statements (26) Financing activities of non-cash transactions The Group’s investing and financing activities which did not affect the current cash flow for the six months ended June 30, 2025 and 2024, were as follows: A. For information on right-of-use assets under leases, please refer to note 6(6). B. For the conversion of convertible bonds into ordinary shares, please refer to note 6(17). C. Reconciliations of liabilities arising from financing activities were as follows: Non-cash changes January 1, 2025 Cash flow Foreign exchange movement Other changes June 30, 2025 Short-term loans $ 11,863,766 (2,055,921) (552,506) - 9,255,339 Lease liabilities (current and non－current) 1,438,124 (16,054) 11,943 (357,132) 1,076,881 Guarantee deposits received (recorded in other current and non－current liabilities) 15,008 11,134 - - 26,142 Long-term loans (including current portion) 2,057,058 (95,500) - 3,372 1,964,930 $ 15,373,956 (2,156,341) (540,563) (353,760) 12,323,292 Non-cash changes January 1, 2024 Cash flow Foreign exchange movement Other changes June 30, 2024 Short-term loans $ 9,996,646 (701,794) 252,906 - 9,547,758 Lease liabilities (current and non－current) 1,575,334 (25,506) 2,911 (83,239) 1,469,500 Guarantee deposits received (recorded in other current and non－current liabilities) 12,191 1,446 - - 13,637 Long-term loans (including current portion) 2,888,301 (399,311) - 5,639 2,494,629 Bonds payable 44,869 - - (44,869) - $ 14,517,341 (1,125,165) 255,817 (122,469) 13,525,524 7. Related-party transactions (1) Names and relationship with related parties The followings are entities that have had transactions with the Group during the periods covered in the consolidated financial statements: Name of related parties Relationship with the Group Wistron Corporation (Wistron) The entity with significant influence over the Group Wistron InfoComm (CHONGQING) Co., Ltd. (WCQ) The subsidiary of the entity with significant influence over the Group ～37～
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WNC Corporation and Subsidiaries Notes to the Consolidated Financial Statements Name of related parties Relationship with the Group Wistron InfoComm (Chengdu) Co., Ltd. (WCD) The subsidiary of the entity with significant influence over the Group Wiwynn Corporation (WYHQ) The subsidiary of the entity with significant influence over the Group Wiwynn Smart Manufacturing Corporation (WYMTN) The subsidiary of the entity with significant influence over the Group Wistron InfoComm (Kunshan) Co., Ltd. (WAKS) The subsidiary of the entity with significant influence over the Group Wistron InfoComm (Zhongshan) Corporation (WZS) The subsidiary of the entity with significant influence over the Group Wistron Service (Kunshan) Corporation (WSKS) The subsidiary of the entity with significant influence over the Group International Standards Labs. (ISL) The subsidiary of the entity with significant influence over the Group WiAdvance Technology Corporation (AGI) The subsidiary of the entity with significant influence over the Group SMS InfoComm Global Service (CQ) (WSCQ) The subsidiary of the entity with significant influence over the Group SMS InfoComm Corporation (WTX) The subsidiary of th e entity with significant influence over the Group SMS InfoComm (Czech) s.r.o. (WSCZ) The subsidiary of the entity with significant influence over the Group Wistron Technology (Malaysia) Sdn. Bhd. (WMMY) The subsidiary of the entity with significant influence over the Group Wistron Mexico, S.A. de C.V. (WMX) The subsidiary of the entity with significant influence over the Group Wiwynn Technology Service Malaysia SDN. BHD. (WYMY) The subsidiary of the entity with significant influence over the Group Wistron InfoComm (Vietnam) Co., Ltd. (WVN) The subsidiary of the entity with significant influence over the Group Tai-Saw Technology Co., Ltd. The Company is the corporate director of Tai-Saw Technology (2) Significant related-party transactions A. Operating revenue For the three months ended June 30, For the six months ended June 30, Related Party Categories 2025 2024 2025 2024 Entity with significant influence over the Group $ 1,631 - 1,671 1,040 Other related parties 110,404 84,696 208,519 171,233 $ 112,035 84,696 210,190 172,273 ～38～
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WNC Corporation and Subsidiaries Notes to the Consolidated Financial Statements The selling prices for sales to related parties were determined by the products’ fair market value, with collection terms were mainly net 90 days after delivery and net 90 days from the end of the month of when invoice is issued, which were similar to those for unrelated customers. B. Purchases For the three months ended June 30, For the six months ended June 30, Related Party Categories 2025 2024 2025 2024 Entity with significant influence over the Group $ - (356) 3,541 27,490 Other related parties 23,872 45,249 53,276 86,568 $ 23,872 44,893 56,817 114,058 The purchasing prices for purchases from related parties were similar to those for unrelated vendors, with payment terms were mainly net 90 days after delivery, which were similar to those offered to unrelated vendors. C. Accounts receivable from related parties Related Party Categories June 30, 2025 December 31, 2024 June 30, 2024 Entity with significant influence over the Group $ 1,712 1,819 357 Other related parties 140,840 138,359 121,759 $ 142,552 140,178 122,116 D. Accounts payable to related parties Related Party Categories June 30, 2025 December 31, 2024 June 30, 2024 Other related parties $ 31,932 48,024 59,643 E. Property Transactions (a) Acquisition of property, plant and equipment The amounts of acquisition of property, plant and equipment from related parties were as follows, the payables resulting from the above transactions had been settled. For the three months ended June 30, For the six months ended June 30, Related Party Categories 2025 2024 2025 2024 Entity with significant influence over the Group $ 756 - 756 - Other related parties - 470 - 891 $ 756 470 756 891 ～39～
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WNC Corporation and Subsidiaries Notes to the Consolidated Financial Statements (b) Disposal of property, plant and equipment The Group sold its property, plant and equipment to its related party. The amounts of disposal price, gains and losses, as well as the uncollected balances, resulting from the above transactions were as follows: Disposal price Related Party For the three months ended June 30, For the six months ended June 30, Categories 2025 2024 2025 2024 Entity with significant influence over the Group $- 1,626 - 1,626 Gain on disposal Related Party For the three months ended June 30, For the six months ended June 30, Categories 2025 2024 2025 2024 Entity with significant influence over the Group $- 1,385 - 1,385 Uncollected balances Related Party Categories June 30, 2025 December 31, 2024 June 30, 2024 Entity with significant influence over the Group $- - 1,707 (c) Acquisition of intangible assets The amounts of acquisition of intangible assets from related parties and the related unpaid balances were as follows: For the three months ended June 30, For the six months ended June 30, Related Party Categories 2025 2024 2025 2024 Other related parties $- 29,982 - 29,982 Related Party Categories June 30, 2025 December 31, 2024 June 30, 2024 Other related parties $ 79,151 80,630 89,961 ～40～
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WNC Corporation and Subsidiaries Notes to the Consolidated Financial Statements F. Other transactions (a) The amounts paid by the Group to its related parties for manufacturing overhead, administrative and repair expenses, and the related unpaid balances were as follows: Related Party For the three months ended June 30, For the six months ended June 30, Categories 2025 2024 2025 2024 Entity with significant influence over the Group $ 1,900 1,843 3,878 9,131 Other related parties 10,062 35,289 29,179 67,878 $ 11,962 37,132 33,057 77,009 Related Party Categories June 30, 2025 December 31, 2024 June 30, 2024 Entity with significant influence over the Group $ 1,851 4,369 1,929 Other related parties 13,047 15,436 31,285 $ 14,898 19,805 33,214 (b) The amounts paid by the Group to its related parties for rental expenses incurred under the dormitory lease agreement, and the related unpaid balances were as follows: For the three months ended June 30, For the six months ended June 30, Related Party Categories 2025 2024 2025 2024 Entity with significant influence over the Group $ 372 185 678 344 Other related parties 318 643 703 1,383 $ 690 828 1,381 1,727 Related Party Categories June 30, 2025 December 31, 2024 June 30, 2024 Entity with significant influence over the Group $ 107 100 80 Other related parties 83 120 177 $ 190 220 257 As of June 30, 2025, December 31 and June 30, 2024, the Group paid the refundable deposits (derived from the operating leases) to its related parties amounted to $96. ～41～
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WNC Corporation and Subsidiaries Notes to the Consolidated Financial Statements (c) The Group leased the factory to its related parties, with lease terms based on their mutual agreements, and the related rental and service income were as follows: For the three months ended June 30, For the six months ended June 30, Related Party Categories 2025 2024 2025 2024 Other related parties $ 48,566 32,591 90,470 65,117 As of June 30, 2025, December 31 and June 30, 2024, the receivables resulting from the above transactions had been settled. As of June 30, 2025, December 31 and June 30, 2024, the Group received the lease deposits from its other related parties amounted to $21,725, $10,129 and $6,618, respectively, which were recorded in other non-current liabilities. (d) The related parties entrusted the Group to e ngage in other service to generate revenue, which was accounted for as other income, and the related uncollected balances were as follows: Related Party For the three months ended June 30, For the six months ended June 30, Categories 2025 2024 2025 2024 Entity with significant influence over the Group $- 11,500 - 17,892 Related Party Categories June 30, 2025 December 31, 2024 June 30, 2024 Other related parties $- 660 - (e) For the six months ended June 30, 2025 and 2024, the Group had received the cash dividends from its related parties amounting to $109,405 and $0, respectively, wherein, the receivables resulting from the above transaction have been settled. (3) Transactions with key management personnel Key management personnel compensation comprised: For the three months ended June 30, For the six months ended June 30, 2025 2024 2025 2024 Short-term employee benefits $ 18,508 57,113 60,771 105,817 Post-employment benefits 316 314 630 626 Share-based payment 21,273 21,215 42,313 42,430 $ 40,097 78,642 103,714 148,873 Please refer to note 6(18) for further information on share-based payment. ～42～
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WNC Corporation and Subsidiaries Notes to the Consolidated Financial Statements 8. Pledged assets The carrying amounts of the Group’s pledged assets were as follows: Assets Purpose of Pledged June 30, 2025 December 31, 2024 June 30, 2024 Time deposits (recorded in other financial assets－ current) Guarantees for land lease agreements $ 65,000 65,000 65,000 Time deposits (recorded in other financial assets－ current) Guarantees for dormitory lease agreements 2,900 2,900 2,900 $ 67,900 67,900 67,900 9. Significant contingent liabilities and unrecognized commitments: The Group has signed contracts for the material constructi on of its plants and equipment, amounted to $0, $128,704 and $194,785, respectively, which have yet to be recognized as of June 30, 2025, December 31 and June 30, 2024. 10. Losses due to major disasters: None. 11. Subsequent events: None. 12. Other The following is the summary statement of curre nt-period employee benefits, depreciation, and amortization expenses by function: By function For the three months ended June 30, 2025 For the three months ended June 30, 2024 By item Classified as Operating Costs Classified as Operating Expenses Total Classified as Operating Costs Classified as Operating Expenses Total Employee benefits Salary 1,247,698 1,304,545 2,552,243 1,410,505 1,603,066 3,013,571 Labor and health insurance 96,586 82,912 179,498 113,637 78,893 192,530 Pension 38,427 50,713 89,140 39,305 49,092 88,397 Remuneration of directors - 6,725 6,725 - 15,119 15,119 Others 122,760 39,035 161,795 126,697 45,142 171,839 Depreciation 501,021 122,535 623,556 473,297 121,308 594,605 Amortization 10,645 78,800 89,445 3,498 62,667 66,165 ～43～
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WNC Corporation and Subsidiaries Notes to the Consolidated Financial Statements By function For the six months ended June 30, 2025 For the six months ended June 30, 2024 By item Classified as Operating Costs Classified as Operating Expenses Total Classified as Operating Costs Classified as Operating Expenses Total Employee benefits Salary 2,656,783 2,785,083 5,441,866 2,730,515 3,028,796 5,759,311 Labor and health insurance 199,222 186,952 386,174 216,533 174,137 390,670 Pension 77,797 103,176 180,973 81,397 98,488 179,885 Remuneration of directors - 19,292 19,292 - 25,670 25,670 Others 255,432 84,947 340,379 251,712 85,548 337,260 Depreciation 1,017,761 251,234 1,268,995 890,913 233,015 1,123,928 Amortization 21,097 152,588 173,685 9,132 118,716 127,848 13. Additional disclosures : (1) Information on significant transactions: The following is the information on significant transactions required by the “Regulations Governing the Preparation of Financial Reports by Securities Issuers” for the Group: A. Financings provided: None. B. Endorsement/guarantee provided: Please refer to Table 1. C. Marketable significant securities held (excluding investment in subsidiaries, associates and joint ventures): Please refer to Table 2. D. Total purchases from or sales to related parties of at least NT$100 million or 20% of the paid- in capital: Please refer to Table 3. E. Receivables from related parties amounting to at least NT$100 million or 20% of the paid-in capital: Please refer to Table 4. F. The business relationship between the parent and the subsidiaries and significant transactions between them: Please refer to Table 5. (2) Information on investees (excluding Information on Inve stees in Mainland China): Please refer to Table 6. (3) Information on investment in Mainland China: A. The names of investees in Mainland China, the main businesses and products, and other information: Please refer to Table 7(1). B. Limitation on investment in Mainland China: Please refer to Table 7(2). ～44～
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WNC Corporation and Subsidiaries Notes to the Consolidated Financial Statements C. Significant transactions: For the period from January 1 to June 30, 2025, please refer to the 'Information on Significant Transactions' for details regarding major transactions conducted, either directly or indirectly, between the Group and its investee entities in Mainland China. 14. Segment information : The Group operates predominantly in one industry seg ment which includes the research and development, manufacture, and sale of satellite co mmunication systems and of mobile and portable communication equipment. Segment information is presented on a basis consis tent with the consolidated financial statements. For sales to entities other than consolidated subsidiaries and for income before income tax, please refer to the consolidated statements of comprehensive income. F or asset information, please refer to the consolidated balance sheets. ～ ～45～
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WNC Corporation and Subsidiaries Endorsement/Guarantee Provided For the six months ended June 30, 2025 Table 1 (Amounts in Thousands) Guaranteed Party Limits on Endorsement/ Guarantee Amount Provided to Maximum Balance for the Period Amount of Endorsement/ Ratio of Accumulated Endorsement/ Guarantee to Maximum Endorsement/ Guarantee No. Endorsement/ Guarantee Provider Name Nature of Relationship (Note 1) Each Guaranteed Party (Note 2) (Foreign Currencies in Thousands) Ending Balance Amount Actually Drawn Guarantee Collateralized by Properties Net Equity per Latest Financial Statements Guarantee Amount Allowable (Note 3) Guarantee Provided by Parent Company Guarantee Provided by A Subsidiary Provided to Subsidiaries in Mainland China 0 The Company NVNM 2 9,301,224 331,820 (USD10,000) 299,020 (USD10,000) 119,608 (USD4,000) - %0.96 31,004,079 Y N N 0 The Company NUTX 2 9,301,224 2,322,740 (USD70,000) 2,093,140 (USD70,000) 837,256 (USD28,000) - %6.75 31,004,079 Y N N Note 1: The relation between guarantor and guarantee and their endorsement should be disclosed as one of the following: (1) An entity that is with business relationship. (2) Subsidiary which owned more than 50 percent by the guarantor. (3) An investee owned more than 50 percent in total by both the guarantor and its subsidiary. (4) An investee owned more than 90 percent by the guarantor or its subsidiary. (5) Fulfillment of contractual obligations by providing mutual endorsements and guarantor for peer or joint builders in order t o undertake a construction project. (6) An entity that is guaranteed and endorsed by all capital contributing shareholders in proportion to their shareholding perc entages. (7) The companies in the same industry provide among themselves joint and several s ecurities for a performance guarantee of a s ales contract for per-construction homes pursuant to the Consumer Protection Act for each other. Note 2: The total amount of the endorsement/guarantee provided by the Company for any single who has, directly or indirectly, 10 0% voting shares of the Company shall not exceed 30% of the Company’s net worth. Note 3: The total amount of the endorsement/guarantee provided by the Company shall not exceed the financial statements of the Company’s net worth. ～46～
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WNC Corporation and Subsidiaries Marketable Significant Securities Held (excluding Investment in Subsidiaries, Associates and Joint Ventures) June 30, 2025 Table 2 (Shares in Thousands /Amounts in Thousands) Ending Balance Held Company Name Marketable Securities Type and Name Relationship with the Company Financial Statement Account Shares/Units Carrying Amount Percentage of Ownership Fair Value The Company Wistron Corporation Stock The entity with significant influence over the Company Financial assets at FVOCI－current 28,796 3,527,536 %0.92 3,527,536 ～47～
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WNC Corporation 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 six months ended June 30, 2025 Table 3 (Amounts in Thousands) Transaction Details Transactions with Terms Different from Others Notes/Accounts Receivable (Payable) Company Name Related Party Nature of Relationship Purchase/ Sales Amount Percentage of Total Purchases/ Sales Payment Terms Unit Price Payment Terms Ending Balance Percentage of Total Notes/Accounts Receivable (Payable) Note The Company NUSA Subsidiary Sales 10,199,703 %19 Net 90 days after delivery Note 1 Note 1 3,338,644 %12 Note 3 The Company NQJ Subsidiary of NEWH Sales 335,172 %1 Net 90 days after delivery Note 1 Note 1 10,326 %- Note 3 The Company WCD The subsidiary of parent company which invest the Company in equity method Sales 118,622 %- Net 90 days from the end of the month of when invoice is issued Note 1 Note 1 72,222 %- Note 3 The Company NYC Subsidiary of NEWH Purchase 1,210,880 %2 Net 90 days after delivery Note 2 Note 2 (399,204) %2 Note 3 The Company NQJ Subsidiary of NEWH Purchase 1,638,476 %3 Net 90 days after delivery Note 2 Note 2 (723,427) %3 Note 3 The Company NQX Subsidiary of NEWH Purchase 5,384,760 %8 Net 90 days after delivery Note 2 Note 2 (2,163,969) %10 Note 3 The Company NVNM Subsidiary Purchase 23,902,243 %37 Net 90 days after delivery Note 2 Note 2 (6,883,221) %30 Note 3 Note 1: The selling prices to related parties were determined by the products' fair market price, with collection terms of mainly net 90 days after delivery and net 90 days from the end of the month of when invoice is issued, which were similar to those offered to unrelated customers. Note 2: Since the purchasing of the products from subsidiaries we re different from the unrelated vendors, the pricing and terms cannot be compared. The payment terms were mainly net 90 days after delivery, which were similar to those of unrelated vendors. Note 3: The intercompany transactions and balances had been eliminated in the consolidated financial statements. ～48～
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WNC Corporation and Subsidiaries Receivables from Related Parties Amounting to at least NT$100 Million or 20% of the Paid-in Capital June 30, 2025 Table 4 (Amounts in Thousands) Nature of Ending Turnover Overdue Amounts Received in Allowance Company Name Related Party Relationship Balance Rate Amount Action Taken Subsequent Period (Note 1) for Bad Debts Note The Company NUSA Subsidiary 3,338,644 6.02 43,987 Collected in subsequent period 444,634 - Note 3 The Company NVNM Subsidiary 8,634,503 - 1,359 Collected in subsequent period 1,794,641 - Notes 2 and 3 NYC The Company Parent 399,204 5.08 84,122 Collected in subsequent period 87,664 - Note 3 NQJ The Company Parent 723,427 5.14 - - 155,491 - Note 3 NQX The Company Parent 2,163,969 4.40 - - 161,472 - Note 3 NVNM The Company Parent 6,883,221 7.06 218 Collected in subsequent period 2,093,136 - Note 3 Note 1: As of July 15, 2025, the amount had been fully received. Note 2: Accounts receivable from related parties caused by buying on behalf of related parties. Note 3: The intercompany transactions and balances had been eliminated in the consolidated financial statements. ～49～
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WNC Corporation and Subsidiaries The Business Relationship between the Parent and the Subsidiaries and Significant Transactions Between Them For the six months ended June 30, 2025 Table 5 (Amounts in Thousands) Nature of Intercompany Transactions No. (Note 1) Company Name Counterparty Relationship (Note 2) Financial Statements item Amount Trading Terms Percentage of the Consolidated Net Revenue or Total Assets 0 The Company NUSA 1 Sales 10,199,703 Net 90 days after delivery 18% 0 The Company NUSA 1 Accounts Receivable 3,338,644 Net 90 days after delivery 5% 0 The Company NQJ 1 Sales 335,172 Net 90 days after delivery 1% 0 The Company NQJ 1 Accounts Receivable 10,326 Net 90 days after delivery -% 0 The Company NYC 1 Purchase 1,210,880 Net 90 days after delivery 2% 0 The Company NYC 1 Accounts Payable 399,204 Net 90 days after delivery 1% 0 The Company NQJ 1 Purchase 1,638,476 Net 90 days after delivery 3% 0 The Company NQJ 1 Accounts Payable 723,427 Net 90 days after delivery 1% 0 The Company NQX 1 Purchase 5,384,760 Net 90 days after delivery 10% 0 The Company NQX 1 Accounts Payable 2,163,969 Net 90 days after delivery 3% 0 The Company NVNM 1 Purchase 23,902,243 Net 90 days after delivery 43% 0 The Company NVNM 1 Accounts Payable 6,883,221 Net 90 days after delivery 9% 0 The Company NVNM 1 Accounts Receivable 8,634,503 Net 90 days after delivery 12% ～50～
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Nature of Intercompany Transactions No. (Note 1) Company Name Counterparty Relationship (Note 2) Financial Statements item Amount Trading Terms Percentage of the Consolidated Net Revenue or Total Assets 1 NMX NUTX 3 Processing Revenue 586,059 Net 30 days when invoice is issued 1% 1 NMX NUTX 3 Accounts Receivable 93,352 Net 30 days when invoice is issued -% Note 1: The characters of business transactions between the parent company and its subsidiaries were coded as follows: 1. The parent company is coded "0". 2. The subsidiaries are coded consecutively beginning from "1" in the order presented in the table above. Note 2: The relationships with transactions were as follows (If it is the same transaction between parent and subsidiary company or between subsidiaries, there is no need to repeat disclosure. For example, if the parent co mpany has disclosed the transaction between the parent company and the subsidiaries, t he subsidiary part does not need to be disclosed repeatedly; if the transaction between the subsidiaries and the transaction has been disclosed by one subsidiary, ano ther subsidiary does not need to disclose it repeatedly.): 1. Parent company to its subsidiaries. 2. Subsidiaries to the parent company. 3. Transactions between subsidiaries. Note 3: The ratio of the transaction amount of the consolidated total sales revenue and consolidated total assets are calculated as follows: 1. For transaction amount accounted for as asset or liability, the ratio is calculated based on the closing balance amount of th e consolidated total assets. 2. For transaction amount accounted for as profit or loss, the ratio is calculated ba sed on the accumulated amount at the end of the financial period of the consolidated total sales revenue. Note 4: The characters of business transactions between the parent company and its subsidiaries only disclose the sales and acco unts receivable data, and the relative purchases as well as the accounts payable will not be included. Note 5: The amount of significant transaction should exceed 1 percent of the consolidated operating revenue or total assets. Note 6: The intercompany transactions and balances had been eliminated in the consolidated financial statements. ～51～
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WNC Corporation and Subsidiaries Information on Investees (excluding Information on Investees in Mainland China) For the six months ended June 30, 2025 Table 6 (Shares in Thousands /Amount in Thousands) Original Investment Amount Balance as of June 30, 2025 Net Income Share of Investor Company Investee Company Location Main Businesses and Products June 30, 2025 December 31, 2024 Shares Percentage of Ownership Carrying Amount (Losses) of Investee Profits (Losses) of Investee Note The Company NEWH Samoa Investment holding company 2,974,220 2,974,220 93,300 %100.00 7,191,433 50,624 50,624 Note The Company NUSA USA Sales of satellite communication and portable communication products 6,944 6,944 200 %100.00 1,073,332 66,832 66,832 Note The Company NUTX USA Manufacturing and sales of satellite communication and portable communication products 783,340 783,340 2,500 %100.00 411,850 (193,357) (193,357) Note The Company NMX Mexico Manufacturing of satellite communication and portable communication products 149,051 149,051 - %100.00 247,508 49,749 49,749 Note The Company NUK United Kingdom Services for wireless communication products 3,049 3,049 60 %100.00 35,127 909 909 Note The Company NJP Japan Services for wireless communication products 5,272 5,272 1 %100.00 8,346 346 346 Note The Company NEU Germany Sales and services for wireless communication products 5,119 5,119 150 %100.00 10,898 1,232 1,232 Note The Company NIN India Manufacturing, sales and services of communication products 17,384 - - %100.00 17,455 (5) (5) Note The Company NPVN Vietnam Real estate development, leasing, and related management services 259,347 - - %100.00 227,128 (610) (610) Note The Company NVNM Vietnam Manufacturing and sales of satellite communication and portable communication products 2,008,258 2,008,258 - %100.00 2,209,317 9,925 9,925 Note Note: The intercompany transactions and balances had been eliminated in the consolidated financial statements. ～52～
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WNC Corporation and Subsidiaries Information on Investment in Mainland China For the six months ended June 30, 2025 Table 7 (Amounts in Thousands) (1) The names of investees in Mainland China, the main businesses and products, and other information Accumulated Outflow of Investment Flows Accumulated Outflow of Net Accumulated Investee Company Main Businesses and Products Total Amount of Paid-in Capital Method of Investment Investment from Taiwan as of January 1, 2025 Outflow Inflow Investment from Taiwan as of June 30, 2025 Income (Losses) of the Investee Percentage of Ownership Investment Income (Losses) (Note 2) Carrying Amount Inward Remittance of Earnings as of June 30, 2025 Note NYC Manufacturing and sales of satellite communication and portable communication products 559,570 (USD17,000) Note 1 559,570 - - 559,570 10,096 100.00% 10,096 1,541,682 - Note 2 NQJ Manufacturing and sales of satellite communication and portable communication products 1,206,552 (USD38,000) Note 1 1,206,552 - - 1,206,552 17,610 100.00% 17,610 3,094,502 - Note 2 NQX Manufacturing and sales of satellite communication and portable communication products 1,180,074 (USD38,000) Note 1 1,180,074 - - 1,180,074 22,788 100.00% 22,788 2,500,870 - Note 2 NQC Repair and maintenance service for satellite communication and portable communication products 9,825 (USD300) Note 1 9,825 - - 9,825 130 100.00% 130 54,375 - Note 2 Note 1: Indirect investment in Mainland China through a foreign company. Note 2: The intercompany transactions and balance had been eliminated in the consolidated financial statement. ～53～
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(2) Limitation on investment in Mainland China Accumulated Investment in Mainland China as of June 30, 2025 (Notes 1 and 2) Investment Amounts Authorized by Investment Commission, MOEA (Notes 3 and 4) Upper Limit on Investment 2,997,589 2,976,569 (Note 4) Note 1: Neweb Communication Corporation, an indirectly invested subsidiary by the Company has completed its liquidation of vari ous rights and obligations and cancelled its registration in 2004. The Company deducted $6 of dividends received from its accumulated investment of $10,347. The net investm ent amounted to $10,341 still needs to be included in the cumulative amount of investments from Taiwan to China according to the regulations of the Investment Commission, MOEA. Note 2: Shenzhen Putian Technology Co., LTD., an indirectly invest ed subsidiary by the Company, has completed its liquidation o f various rights and obligations; thus, cancelled its registration in 2008. The Company’s cumulative investment of $31,227, including the amount of $18,897 that had been remitted to WNCH, still needs to be included in the cumulative amount of investments from Taiwan to China according to the regulations of the Investment Commission, MOEA. Note 3: WNCH invested the capital of US$578 in WQN acc ording to letter No.09800115610, approved by the Investment Commission, M OEA on April 15, 2009. As of December 31, 2023, the Group disposed its entire equity interests in WQN, with the total amount having been repatriated to Taiw an. Afterwards, the cancellation of the Group's indirect investment in WQN according to letter No.11256110780, was approved the Investment Commission, MOEA on November 7, 2023. Note 4: The Company obtained the Certificate of Operating Headquar ters issued by Industrial Development Bureau, MOEA; the Compa ny has no upper limit on investment in Mainland China. ～54～