Interim report
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Merida Industry Co., Ltd. and Subsidiaries Consolidated Financial Statements for the Nine Months Ended September 30, 2025 and 2024 and Independent Auditors’ Review Report
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- 3 - MERIDA INDUSTRY CO., LTD. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In Thousands of New Taiwan Dollars) September 30, 2025 December 31, 2024 September 30, 2024 ASSETS Amount % Amount % Amount % CURRENT ASSETS Cash and cash equivalents (Note 6) $ 3,741,111 10 $ 3,640,467 10 $ 3,572,111 8 Financial assets at fair value through profit or loss - current (Note 7) 44,363 - 57,764 - 61,163 - Financial assets at amortized cost - current (Note 8) 343,724 1 264,238 1 1,594,897 4 Notes receivable (Note 20) 2,284 - 3,593 - 1,219 - Trade receivables (Notes 9, 20 and 28) 894,252 2 664,139 2 821,255 2 Trade receivables from related parties (Notes 9, 20 and 27) 3,167,446 9 1,992,473 5 2,503,518 6 Other receivables (Note 27) 74,310 - 153,211 - 162,677 - Inventories (Notes 10 and 28) 8,166,909 23 10,720,853 28 9,930,295 24 Other current assets 282,532 1 253,219 1 306,284 1 Total current assets 16,716,931 46 17,749,957 47 18,953,419 45 NON-CURRENT ASSETS Financial assets at fair value through other comprehensive income - non-current (Note 11) 3,400 - 3,400 - 3,400 - Financial assets at amortized cost - non-current (Note 8) 311,721 1 447,860 1 452,453 1 Investments accounted for using the equity method (Note 13) 16,133,760 45 16,023,996 43 19,414,490 46 Property, plant and equipment (Notes 14 and 28) 2,140,505 6 2,198,395 6 2,264,425 6 Right-of-use assets (Note 15) 286,933 1 297,545 1 318,300 1 Intangible assets 37,350 - 51,164 - 54,909 - Deferred tax assets (Note 4) 369,637 1 323,957 1 317,685 1 Prepayments for equipment 3,929 - 45,366 - 37,865 - Prepaid investments (Note 12) - - 315,721 1 - - Net defined benefit asset - non-current (Notes 4 and 18) 95,794 - 90,774 - 20,685 - Other non-current assets 25,153 - 33,697 - 24,470 - Total non-current assets 19,408,182 54 19,831,875 53 22,908,682 55 TOTAL $ 36,125,113 100 $ 37,581,832 100 $ 41,862,101 100 LIABILITIES AND EQUITY CURRENT LIABILITIES Short-term bank loans (Notes 16 and 28) $ 5,570,828 16 $ 6,710,250 18 $ 6,725,115 16 Contract liabilities - current (Notes 20 and 27) 68,045 - 172,832 - 190,412 1 Notes and trade payables 4,114,632 11 4,105,755 11 5,211,557 12 Trade payables to related parties (Note 27) 34,047 - 43,424 - 92,426 - Other payables (Notes 17 and 27) 1,420,352 4 928,940 3 804,333 2 Current tax liabilities (Note 4) 340,741 1 295,937 1 228,120 1 Lease liabilities - current (Note 15) 52,081 - 39,862 - 47,730 - Current portion of long-term bank loans (Notes 16 and 28) 389,607 1 337,167 1 318,052 1 Other current liabilities 35,541 - 42,819 - 55,442 - Total current liabilities 12,025,874 33 12,676,986 34 13,673,187 33 NON-CURRENT LIABILITIES Long-term bank loans (Notes 16 and 28) 809,900 2 911,829 2 1,006,219 2 Deferred tax liabilities (Note 4) 3,731,640 11 3,629,971 10 4,452,498 11 Lease liabilities - non-current (Note 15) 48,364 - 53,422 - 67,096 - Guarantee deposits received 37,158 - 27,626 - 28,467 - Total non-current liabilities 4,627,062 13 4,622,848 12 5,554,280 13 Total liabilities 16,652,936 46 17,299,834 46 19,227,467 46 EQUITY ATTRIBUTABLE TO OWNERS OF THE CORPORATION Ordinary shares 2,989,838 8 2,989,838 8 2,989,838 7 Capital surplus 1,151,634 3 940,458 2 905,663 2 Retained earnings Legal reserve 4,116,578 12 4,116,578 11 4,116,578 10 Special reserve - - 638,687 2 638,687 2 Unappropriated earnings 11,198,163 31 10,323,780 27 12,750,577 30 Other equity (455,798) (1) 286,112 1 75,446 - Total equity attributable to owners of the Corporation 19,000,415 53 19,295,453 51 21,476,789 51 NON-CONTROLLING INTERESTS 471,762 1 986,545 3 1,157,845 3 Total equity 19,472,177 54 20,281,998 54 22,634,634 54 TOTAL $ 36,125,113 100 $ 37,581,832 100 $ 41,862,101 100 The accompanying notes are an integral part of the consolidated financial statements. (With Deloitte & Touche review report dated November 13, 2025)
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- 4 - MERIDA INDUSTRY CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (In Thousands of New Taiwan Dollars, Except Earnings Per Share) For the Three Months Ended September 30 For the Nine Months Ended September 30 2025 2024 2025 2024 Amount % Amount % Amount % Amount % SALES (Notes 20 and 27) $ 7,223,388 100 $ 8,664,287 100 $ 21,795,570 100 $ 23,832,491 100 COST OF GOODS SOLD (Notes 10, 21 and 27) 6,240,774 86 7,084,185 82 18,520,222 85 19,234,931 81 GROSS PROFIT 982,614 14 1,580,102 18 3,275,348 15 4,597,560 19 REALIZED (UNREALIZED) GAIN ON TRANSACTIONS WITH ASSOCIATES 7,351 - 74,447 1 218,605 1 (22,357) - REALIZED GROSS PROFIT 989,965 14 1,654,549 19 3,493,953 16 4,575,203 19 OPERATING EXPENSES (Note 21) Selling and marketing expenses 283,596 4 203,782 2 847,415 4 860,255 3 General and administrative expenses 281,034 4 313,509 4 912,275 4 914,265 4 Total operating expenses 564,630 8 517,291 6 1,759,690 8 1,774,520 7 PROFIT FROM OPERATIONS 425,335 6 1,137,258 13 1,734,263 8 2,800,683 12 NON-OPERATING INCOME AND EXPENSES Interest income (Note 27) 25,704 - 29,576 - 78,447 - 78,073 - Dividend income 2,860 - 2,622 - 2,860 - 2,622 - Other income (Note 27) 30,396 1 21,110 - 79,065 1 62,720 - Share of profit (loss) of associates (Note 13) 179,079 3 (87,962) (1) 511,199 2 (336,440) (1) Interest expense (43,349) (1) (56,182) (1) (164,352) (1) (176,409) (1) Other expenses (12,839) - (31,060) - (48,277) - (70,769) - Net foreign exchange gain (loss) (Note 32) 166,684 2 (112,589) (1) (265,610) (1) 160,480 1 Gain (loss) on fair value changes of financial assets at fair value through profit or loss (3,075) - 2,780 - (12,702) - 9,361 - Total non-operating income and expenses 345,460 5 (231,705) (3) 180,630 1 (270,362) (1) PROFIT BEFORE INCOME TAX 770,795 11 905,553 10 1,914,893 9 2,530,321 11 INCOME TAX EXPENSE (Notes 4 and 22) 171,390 3 214,581 2 412,767 2 701,257 3 NET PROFIT FOR THE PERIOD 599,405 8 690,972 8 1,502,126 7 1,829,064 8 (Continued)
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- 5 - MERIDA INDUSTRY CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (In Thousands of New Taiwan Dollars, Except Earnings Per Share) For the Three Months Ended September 30 For the Nine Months Ended September 30 2025 2024 2025 2024 Amount % Amount % Amount % Amount % OTHER COMPREHENSIVE INCOME (LOSS) Items that may be reclassified subsequently to profit or loss: Exchange differences on translation of the financial statements of foreign operations $ 807,660 11 $ (384,856) (4) $ (1,199,282) (5) $ 786,430 3 Share of the other comprehensive income (loss) of associates accounted for using the equity method (Note 13) (36,812) - 125,096 1 300,237 1 (41,568) - Income tax related to items that may be reclassified subsequently to profit or loss (145,868) (2) 8,764 - 185,478 1 8,764 - Other comprehensive income (loss) for the period, net of income tax 624,980 9 (250,996) (3) (713,567) (3) 753,626 3 TOTAL COMPREHENSIVE INCOME FOR THE PERIOD $ 1,224,385 17 $ 439,976 5 $ 788,559 4 $ 2,582,690 11 NET PROFIT ATTRIBUTABLE TO: Owners of the Corporation $ 624,864 9 $ 690,182 8 $ 1,437,404 7 $ 1,761,499 8 Non-controlling interests (25,459) (1) 790 - 64,722 - 67,565 - $ 599,405 8 $ 690,972 8 $ 1,502,126 7 $ 1,829,064 8 TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE TO: Owners of the Corporation $ 1,208,336 17 $ 421,628 5 $ 695,494 3 $ 2,475,632 10 Non-controlling interests 16,049 - 18,348 - 93,065 1 107,058 1 $ 1,224,385 1 7 $ 439,976 5 $ 788,559 4 $ 2,582,690 1 1 EARNINGS PER SHARE (Note 23) Basic $ 2.09 $ 2.31 $ 4.81 $ 5.89 Diluted $ 2.08 $ 2.30 $ 4.79 $ 5.88 The accompanying notes are an integral part of the consolidated financial statements. (With Deloitte & Touche auditors’ report dated November 13, 2025) (Concluded)
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- 6 - MERIDA INDUSTRY CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (In Thousands of New Taiwan Dollars) Equity Attributable to Owners of the Corporation Other Equity Exchange Differences on Translation of the Financial Retained Earnings (Note 19) Statements of Non-controlling Ordinary Shares (Note 19) Capital Surplus (Note 19) Legal Reserve Special Reserve Unappropriated Earnings Foreign Operations Total Interests (Notes 12 and 24) Total Equity BALANCE ON JANUARY 1, 2024 $ 2,989,838 $ 630,152 $ 3,937,840 $ 666,194 $ 12,934,212 $ (638,687) $ 20,519,549 $ 1,050,787 $ 21,570,336 Appropriation of 2023 earnings Legal reserve - - 178,738 - (178,738) - - - - Reversal of special reserve - - - (27,507) 27,507 - - - - Cash dividends distributed by the Corporation - - - - (1,793,903) - (1,793,903) - (1,793,903) Changes in capital surplus from investments in associates accounted for using the equity method - 275,511 - - - - 275,511 - 275,511 Net profit for the nine months ended September 30, 2024 - - - - 1,761,499 - 1,761,499 67,565 1,829,064 Other comprehensive income (loss) for the nine months ended September 30, 2024, net of income tax - - - - - 714,133 714,133 39,493 753,626 Total comprehensive income (loss) for the nine months ended September 30, 2024 - - - - 1,761,499 714,133 2,475,632 107,058 2,582,690 BALANCE ON SEPTEMBER 30, 2024 $ 2,989,838 $ 905,663 $ 4,116,578 $ 638,687 $ 12,750,577 $ 75,446 $ 21,476,789 $ 1,157,845 $ 22,634,634 BALANCE ON JANUARY 1, 2025 $ 2,989,838 $ 940,458 $ 4,116,578 $ 638,687 $ 10,323,780 $ 286,112 $ 19,295,453 $ 986,545 $ 20,281,998 Appropriation of 2024 earnings Reversal of special reserve - - - (638,687) 638,687 - - - - Cash dividends distributed by the Corporation - - - - (1,195,935) - (1,195,935) - (1,195,935) Changes in capital surplus from investments in associates accounted for using the equity method - 211,176 - - - - 211,176 - 211,176 Difference between consideration received or paid and the carrying amount of the subsidiaries' net assets during actual disposal or acquisition (Note 25) - - - - (4,623) - (4,623) (608,998) (613,621) Changes in ownership interests in subsidiaries - - - - (1,150) - (1,150) 1,150 - Net profit for the nine months ended September 30, 2025 - - - - 1,437,404 - 1,437,404 64,722 1,502,126 Other comprehensive income (loss) for the nine months ended September 30, 2025, net of income tax - - - - - (741,910) (741,910) 28,343 (713,567) Total comprehensive income (loss) for the nine months ended September 30, 2025 - - - - 1,437,404 (741,910) 695,494 93,065 788,559 BALANCE ON SEPTEMBER 30, 2025 $ 2,989,838 $ 1,151,634 $ 4,116,578 $ - $ 11,198,163 $ (455,798) $ 19,000,415 $ 471,762 $ 19,472,177 The accompanying notes are an integral part of the consolidated financial statements. (With Deloitte & Touche review report dated November 13, 2025)
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- 7 - MERIDA INDUSTRY CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (In Thousands of New Taiwan Dollars) For the Nine Months Ended September 30 2025 2024 CASH FLOWS FROM OPERATING ACTIVITIES Profit before income tax $ 1,914,893 $ 2,530,321 Adjustments for: Depreciation expense 194,898 221,863 Amortization expense 16,318 15,476 Expected credit loss recognized on trade receivables 10,588 40,580 Net loss (gain) on fair value changes of financial assets at fair value through profit or loss 12,702 (9,361) Interest expense 164,352 176,409 Interest income (78,447) (78,073) Dividend income (2,860) (2,622) Share of loss (profit) of associates (511,199) 336,440 Gain on disposal of property, plant and equipment (79) (491) Write-downs (reversed) of inventories (26,816) 41,431 Unrealized (realized) gain on transactions with associates (218,605) 22,357 Unrealized net loss (gain) on foreign currency exchange (9,260) 43,586 Loss (gain) on lease modification 60 (1,035) Changes in operating assets and liabilities Financial assets at fair value through profit or loss 699 153,149 Notes receivable 1,309 5,935 Trade receivables (1,367,614) (1,106,804) Other receivables 22,619 (78,517) Inventories 2,687,174 (203,751) Other current assets (33,328) (213,480) Net defined benefit assets (5,020) (1,556) Contract liabilities (102,067) 149,027 Notes payable and trade payables (5,484) 2,389,104 Other payables 177,981 (67,476) Other current liabilities (9,401) 9,915 Cash generated from operations 2,833,413 4,372,427 Interest received 70,524 46,040 Dividends received 2,860 2,622 Interest paid (162,051) (195,989) Income tax paid (124,140) (1,139,232) Net cash generated from operating activities 2,620,606 3,085,868 CASH FLOWS FROM INVESTING ACTIVITIES Acquisition of financial assets at amortized cost (219,588) (1,521,916) Proceeds from sale of financial assets at amortized cost 242,721 - Acquisition of property, plant and equipment (57,403) (50,282) Proceeds from disposal of property, plant and equipment 972 1,434 Increase in refundable deposits (580) (1,250) Acquisition of intangible assets (2,572) (186) (Continued)
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- 8 - MERIDA INDUSTRY CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (In Thousands of New Taiwan Dollars) For the Nine Months Ended September 30 2025 2024 Decrease in other non-current assets $ 10,595 $ 12,556 Increase in prepayments for equipment (3,678) (37,631) Net cash used in investing activities (29,533) (1,597,275) CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from (repayments of) short-term bank loans (1,172,081) 562,260 Proceeds from long-term bank loans 216,420 64,389 Repayments of long-term bank loans (252,236) (213,271) Proceeds from guarantee deposits received 10,409 2,612 Repayment of the principal portion of lease liabilities (36,555) (53,765) Dividends paid to owners of the Corporation (1,195,935) (1,793,903) Acquisition of additional interests of subsidiary (1,946) - Net cash used in financing activities (2,431,924) (1,431,678) EFFECTS OF EXCHANGE RATE CHANGES ON THE BALANCE OF CASH AND CASH EQUIVALENTS HELD IN FOREIGN CURRENCIES (58,505) 56,155 NET INCREASE IN CASH AND CASH EQUIVALENTS 100,644 113,070 CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE PERIOD 3,640,467 3,459,041 CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD $ 3,741,111 $ 3,572,111 The accompanying notes are an integral part of the consolidated financial statements. (With Deloitte & Touche auditors’ report dated November 13, 2025) (Concluded)
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- 9 - MERIDA INDUSTRY CO., LTD. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2025 AND 2024 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise) 1. GENERAL INFORMATION Merida Industry Co., Ltd. (the “Corporation”) was incorporated in September 1972 in the Republic of China (ROC). It manufactures and sells bicycles and related parts. Shares of the Corporation have been listed on the Taiwan Stock Exchange (TWSE) since September 1992. The consolidated financial statements of the Corporation and its subsidiaries (the “Group”) are presented in the Corporation’s functional currency, the New Taiwan dollar. 2. APPROVAL OF FINANCIAL STATEMENTS The consolidated financial statements were approved by the Corporation’s board of directors on November 13, 2025. 3. APPLICATION OF NEW, AMENDED AND REVISED STANDARDS AND INTERPRETATIONS a. Initial application of the amendments to the International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), IFRIC Interpretations (IFRIC), and SIC Interpretations (SIC) (collectively, the “IFRS Accounting Standards”) endorsed and issued into effect by the Financial Supervisory Commission (FSC) Amendments to IAS 21 “Lack of Exchangeability” The initial application of the Amendments to IAS 21 “Lack of Exchangeability” did not have a material impact on the Group’s accounting policies. b. The IFRS Accounting Standards endorsed by the FSC for application starting from 2026 New, Amended and Revised Standards and Interpretations Effective Date Announced by IASB Amendments to IFRS 9 and IFRS 7 “Amendments to the Classification and Measurement of Financial Instruments” January 1, 2026 Amendments to IFRS 9 and IFRS 7 “Contracts Referencing Nature-dependent Electricity” January 1, 2026 Annual Improvements to IFRS Accounting Standards - Volume 11 January 1, 2026 IFRS 17 “Insurance Contracts” (including the 2020 and 2021 amendments to IFRS 17) January 1, 2023
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- 10 - Amendments to IFRS 9 and IFRS 7 “Amendments to the Classification and Measurement of Financial Instruments” 1) The amendments to the application guidance of classification of financial assets The amendments mainly amend the requirements for the classification of financial assets, including: a) If a financial asset contains a contingent feature that could change the timing or amount of contractual cash flows and the contingent event itself does not relate directly to changes in basic lending risks and costs (e.g., whether the debtor achieves a contractually specified reduction in carbon emissions), the financial asset has contractual cash flows that are solely payments of principal and interest on the principal amount outstanding if, and only if, In all possible scenarios (before and after the occurrence of a contingent event), the contractual cash flows are solely payments of principal and interest on the principal amount outstanding; and In all possible scenarios, the contractual cash flows would not be significantly different from the contractual cash flows on a financial instrument with identical contractual terms, but without such a contingent feature. b) To clarify that a financial asset has non-recourse features if an entity’s ultimate right to receive cash flows is contractually limited to the cash flows generated by specified assets. c) To clarify that the characteristics of contractually linked instruments include a prioritization of payments to the holders of financial assets using multiple contractually linked instruments (tranches) established through a waterfall payment structure, resulting in concentrations of credit risk and a disproportionate allocation of cash shortfalls from the underlying pool between the tranches. 2) The amendments to the application guidance of derecognition of financial liabilities The amendments mainly stipulate that a financial liability is derecognized on the settlement date. However, when settling a financial liability in cash using an electronic payment system, the Group can choose to derecognize the financial liability before the settlement date if, and only if, the Group has initiated a payment instruction that resulted in: The Group having no practical ability to withdraw, stop or cancel the payment instruction; The Group having no practical ability to access the cash to be used for settlement as a result of the payment instruction; and The settlement risk associated with the electronic payment system being insignificant. An entity shall apply the amendments retrospectively but is not required to restate prior periods. The effect of initially applying the amendments shall be recognized as an adjustment to the opening balance at the date of initial application. An entity may restate prior periods if, and only if, it is possible to do so without the use of hindsight. As of the date the consolidated financial statements were authorized for issue, the Group is continuously assessing the possible impact of the application of the amendments on the Group’s financial position and financial performance and will disclose the relevant impact when the assessment is completed.
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- 11 - c. The IFRS Accounting Standards in issue but not yet endorsed and issued into effect by the FSC New, Amended and Revised Standards and Interpretations Effective Date Announced by IASB (Note 1) Amendments to IFRS 10 and IAS 28 “Sale or Contribution of Assets between an Investor and its Associate or Joint Venture” To be determined by IASB IFRS 18 “Presentation and Disclosure in Financial Statements” January 1, 2027 (Note 2) IFRS 19 “Subsidiaries without Public Accountability: Disclosures” (including the 2025 amendments to IFRS 19) January 1, 2027 Note 1: Unless stated otherwise, the above IFRS Accounting Standards are effective for annual reporting periods beginning on or after their respective effective dates. Note 2: On September 25, 2025, the FSC announced that IFRS 18 will take effect starting from January 1, 2028. Domestic entities could elect to apply IFRS 18 for an earlier period after the endorsement of IFRS 18 by the FSC. IFRS 18 “Presentation and Disclosure in Financial Statements” IFRS 18 will supersede IAS 1“ Presentation of Financial Statements”. The main changes comprise: Items of income and expenses included in the statement of profit or loss shall be classified into the operating, investing, financing, income taxes and discontinued operations categories. The statement of profit or loss shall present totals and subtotals for operating profit or loss, profit or loss before financing and income taxes and profit or loss. Provides guidance to enhance the requirements of aggregation and disaggregation: The Group shall identify the assets, liabilities, equity, income, expenses and cash flows that arise from individual transactions or other events and shall classify and aggregate them into groups based on shared characteristics, so as to result in the presentation in the primary financial statements of line items that have at least one similar characteristic. The Group shall disaggregate items with dissimilar characteristics in the primary financial statements and in the notes. The Group labels items as ‘other’ only if it cannot find a more informative label. Disclosures on Management-defined Performance Measures (MPMs): When in public communications outside financial statements and communicating to users of financial statements management’s view of an aspect of the financial performance of the Group as a whole, the Group shall disclose related information about its MPMs in a single note to the financial statements, including the description of such measures, calculations, reconciliations to the subtotal or total specified by IFRS Accounting Standards and the income tax and non-controlling interests effects of related reconciliation items. Except for the above impact, as of the date the consolidated financial statements were authorized for issue, the Group is continuously assessing the other impacts of the above amended standards and interpretations on the Group’s financial position and financial performance and will disclose the relevant impact when the assessment is completed.
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- 12 - 4. SUMMARY OF MATERIAL ACCOUNTING POLICY INFORMATION a. Statement of compliance These interim consolidated financial statements have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and IAS 34 “Interim Financial Reporting” as endorsed and issued into effect by the FSC. Disclosure information included in these interim consolidated financial statements is less than the disclosure information required in a complete set of annual consolidated financial statements. b. Basis of preparation The consolidated financial statements have been prepared on the historical cost basis except for financial instruments that are measured at fair value, and net defined benefit assets that are measured at the present value of the defined benefit obligation less the fair value of plan assets. The fair value measurements are grouped into Levels 1 to 3 based on the degree to which the fair value measurement inputs are observable and based on the significance of the inputs to the fair value measurement in its entirety, which are described as follows: 1) Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities; 2) Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for an asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices); and 3) Level 3 inputs are unobservable inputs for an asset or liability. c. Basis of consolidation The consolidated financial statements incorporate the financial statements of the Corporation and the entities controlled by the Corporation (i.e., its subsidiaries). Income and expenses of subsidiaries acquired or disposed of during the period are included in the consolidated statement of profit or loss and other comprehensive income from the effective dates of acquisitions up to the effective dates of disposal, as appropriate. When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with those used by the Corporation. All intra-group transactions, balances, income and expenses are eliminated in full upon consolidation. Total comprehensive income of subsidiaries is attributed to the owners of the Corporation and to the non-controlling interests even if this results in the non-controlling interests having a deficit balance. Changes in the Group’s ownership interests in subsidiaries that do not result in the Group losing control over the subsidiaries are accounted for as equity transactions. The carrying amounts of the Group interests and the non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiaries. Any difference between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid or received is recognized directly in equity and attributed to the owners of the Corporation. See Note 12, and Tables 7 and 8 following the Notes to Consolidated Financial Statements for detailed information on subsidiaries (including percentages of ownership and main businesses).
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- 13 - d. Other material accounting policies Except for the following, refer to the consolidated financial statements for the year ended December 31, 2024. 1) Retirement 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 end of the prior financial year, adjusted for significant market fluctuations since that time and for significant plan amendments, settlements, or other significant one-off events. 2) Income tax expense Income tax expense represents the sum of the tax currently payable and deferred tax. Interim period income taxes are assessed on an annual basis and calculated by applying to an interim period's pre-tax income the tax rate that would be applicable to expected total annual earnings. 5. MATERIAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY In the application of the Group’s accounting policies, management is required to make judgments, estimations and assumptions on the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered relevant. Actual results may differ from these estimates. When the Group develops material accounting estimates, the Group considers the possible impact of US reciprocal tariffs. The estimates and underlying assumptions are reviewed on an ongoing basis. Based on the assessment of the Group’s management, the accounting policies, estimates, and assumptions adopted by the Group have not been subject to material accounting judgements, estimates and assumptions uncertainty. 6. CASH AND CASH EQUIVALENTS September 30, December 31, September 30, 2025 2024 2024 Cash on hand $ 2,450 $ 3,219 $ 3,640 Checking accounts and demand deposits 3,396,544 3,489,767 3,364,557 Cash equivalents Time deposits with original maturities of 3 months or less 342,117 147,481 203,914 $ 3,741,111 $ 3,640,467 $ 3,572,111 Time deposit interest rate per annum (%) 0.65-4.10 1.50-4.10 1.55-4.70
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- 14 - 7. FINANCIAL INSTRUMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS September 30, December 31, September 30, 2025 2024 2024 Financial assets Non-derivative financial assets Domestic listed shares $ 44,363 $ 57,764 $ 61,163 8. FINANCIAL ASSETS AT AMORTIZED COST September 30, December 31, September 30, 2025 2024 2024 Current Time deposits with original maturities of more than 3 months $ 343,724 $ 264,238 $ 1,594,897 Non-Current Time deposits with original maturities of more than 3 months $ 311,721 $ 447,860 $ 452,453 9. TRADE RECEIVABLES September 30, December 31, September 30, 2025 2024 2024 Trade receivables $ 4,093,536 $ 2,714,206 $ 3,373,191 Less: Allowance for impairment loss (31,838) (57,594) (48,418) $ 4,061,698 $ 2,656,612 $ 3,324,773 In principle, the payment term granted to customers is 90 days from the invoice date and D/A or O/A of 60 to 180 days. The Group adopted a policy of only dealing with creditworthy counterparties and obtaining sufficient collateral, where appropriate, as a means of mitigating the risk of financial loss from defaults. The Group uses other publicly available financial information or its own trading records to rate its major customers. The Group’s exposure and the credit ratings of its counterparties are continuously monitored. In order to minimize credit risk, the management of the Group has delegated a team responsible for determining credit limits, credit approvals and other monitoring procedures to ensure that follow-up action is taken to recover overdue debts. In addition, the Group reviews the recoverable amount of each individual trade debt at the end of the reporting period to ensure that adequate allowance is made for possible irrecoverable amounts. In this regard, the management believes the Group’s credit risk was significantly reduced. The Group measures the loss allowance for trade receivables at an amount equal to lifetime ECLs. The expected credit losses on trade receivables are estimated using a provision matrix prepared by reference to the past default experience of the customer, the customer’s current financial position, economic condition of the industry in which the customer operates, as well as the GDP forecasts and industry outlook. The Group determines the expected credit loss rate by reference to the past due days of trade receivables.
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- 15 - The Group writes off a trade receivable when there is information indicating that the debtor is in severe financial difficulty and there is no realistic prospect of recovery. For trade receivables that have been written off, the Group continues to engage in enforcement activity to attempt to recover the receivables due. Where recoveries are made, these are recognized in profit or loss. The following table details the loss allowance of trade receivables of the Group: Not Past Due Past Due Within 3 Months Total September 30, 2025 Expected credit loss rate 0%-1% 3% Gross carrying amount $ 3,952,706 $ 140,830 $ 4,093,536 Loss allowance (Lifetime ECLs) (29,055) (2,783) (31,838) Amortized cost $ 3,923,651 $ 138,047 $ 4,061,698 December 31, 2024 Expected credit loss rate 0%-1% 3% Gross carrying amount $ 2,673,256 $ 40,950 $ 2,714,206 Loss allowance (Lifetime ECLs) (56,373) (1,221) (57,594) Amortized cost $ 2,616,883 $ 39,729 $ 2,656,612 September 30, 2024 Expected credit loss rate 0%-1% 3% Gross carrying amount $ 3,322,280 $ 50,911 $ 3,373,191 Loss allowance (Lifetime ECLs) (46,891) (1,527) (48,418) Amortized cost $ 3,275,389 $ 49,384 $ 3,324,773 The movements of the loss allowance of trade receivables were as follows: For the Nine Months Ended September 30 2025 2024 Balance on January 1 $ 57,594 $ 34,411 Net remeasurement of loss allowance 10,588 40,580 Amounts written off (39,491) (27,898) Foreign exchange differences 3,147 1,325 Balance on September 30 $ 31,838 $ 48,418
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- 16 - 10. INVENTORIES September 30, December 31, September 30, 2025 2024 2024 Finished goods $ 5,525,372 $ 6,909,152 $ 6,219,462 Work in progress 457,603 484,564 574,296 Raw materials and supplies 1,915,107 3,180,579 2,958,743 Inventory in transit 268,827 146,558 177,794 $ 8,166,909 $ 10,720,853 $ 9,930,295 For the three months ended September 30, 2025 and 2024 and nine months ended September 30, 2025 and 2024, the cost of inventories recognized as cost of goods sold was $6,240,774 thousand, $7,084,185 thousand, $18,520,222 thousand and $19,234,931 thousand, respectively, and the cost of goods sold included inventory write-downs (reversed) of ($63,556) thousand, ($130,250) thousand, ($26,816) thousand and $41,431 thousand, respectively. Inventory write-downs were reversed as a result of elimination of inventories, and the relevant amount was also reflected in cost of goods sold. Inventories pledged as collateral for bank borrowings are set out in Note 28. 11. FINANCIAL INSTRUMENTS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME September 30, December 31, September 30, 2025 2024 2024 Financial assets - non-current Domestic unlisted ordinary shares $ 3,400 $ 3,400 $ 3,400 These investments in equity instruments are not held for trading. Instead, they are held for medium- to long-term strategic purposes. Accordingly, the management elected to designate these investments in equity instruments as at FVTOCI as they believe that recognizing short-term fluctuations in these investments’ fair value in profit or loss would not be consistent with the Group’s strategy of holding these investments for long-term purposes. 12. SUBSIDIARIES a. Subsidiaries included in the consolidated financial statements Proportion of Ownership (%) Investor Investee September 30, 2025 December 31, 2024 September 30, 2024 The Corporation Merida International (B.V.I.) Ltd. (“Merida B.V.I.”) 100 100 100 Merida & Centurion Germany GmbH (Merida & Centurion) (Note 24) 90 51 51 Merida Benelux B.V. (“Merida Benelux”) 60 60 60 Merida Polska Sp.z.o.o (“Merida Polska”) 74 74 74 Merida Bicycles Ltd. (“Merida U.K.”) 81 81 81 Merida Japan Co., Ltd. (“Merida Japan”) (Note 24) 98 90 90 Merida Norge As. (“Merida Norge”) (Note 24) 80 80 75 (Continued)
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- 17 - Proportion of Ownership (%) Investor Investee September 30, 2025 December 31, 2024 September 30, 2024 Merida B.V.I. Merida Industry (Hong Kong) Co., Ltd. (“Merida Hong Kong”) 100 100 100 Merida International (SAMOA) Ltd. (“Merida SAMOA”) 70 70 70 Merida Hong Kong Merida Bicycle (China) Co., Ltd. (“Merida China”) 100 100 100 Merida Bicycle (Shandong) Co., Ltd. (“Merida Shandong”) 100 100 100 Merida SAMOA Merida Bicycle (Jiangsu) Ltd. (“Merida Jiangsu”) 100 100 100 Merida Norge Merida Sverige AB (“Sverige”) 100 100 100 Merida Japan Miyata Cycle Co., Ltd. (“Miyata”) 100 100 100 Merida & Centurion Merida Europe GmbH 100 100 100 Merida R&D Center GmbH 100 100 100 (Concluded) Refer to Tables 7 and 8 for the nature of activities, principal places of business and countries of incorporation of the subsidiaries. On August 12, 2024, the Corporation’s board of directors resolved to purchase 39% of the shares of Merida & Centurion from the shareholder and managing director of Wolfgang Renner for EUR17,273,800. The parties signed the contract on October 16, 2024. In November 2024, the Corporation made a prepayment of EUR 9,000,000 for the investment, however and the transfer of equity was completed in September, 2025. Except for Merida Benelux, Merida & Centurion, Merida Polska, Merida U.K., Merida Japan and Merida Norge, the financial statements of the remaining subsidiaries have been reviewed by the accountants. b. Details of subsidiaries that have material non-controlling interests Proportion of Ownership and Voting Rights Held by Non-controlling Interests (%) September 30, December 31, September 30, Name of Subsidiary 2025 2024 2024 Merida SAMOA 30 30 30 Summarized financial information in respect of Merida SAMOA and subsidiaries that have material non-controlling interests is set out below. The summarized financial information below represents amounts before intragroup eliminations. September 30, December 31, September 30, 2025 2024 2024 Current assets $ 1,145,790 $ 1,456,894 $ 1,547,549 Non-current assets 551,836 614,603 625,157 Current liabilities (753,182) (926,829) (1,000,127) Non-current liabilities (206,128) (349,576) (383,757) Equity $ 738,316 $ 795,092 $ 788,822 (Continued)
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- 18 - September 30, December 31, September 30, 2025 2024 2024 Equity attributable to: Owners of Merida SAMOA $ 516,821 $ 556,564 $ 552,175 Non-controlling interests of Merida SAMOA 221,495 238,528 236,647 $ 738,316 $ 795,092 $ 788,822 (Concluded) For the Three Months Ended September 30 For the Nine Months Ended September 30 2025 2024 2025 2024 Revenue $ 589,496 $1,121,104 $1,436,012 $3,136,601 Net profit (loss) for the period $ 12,833 $ 108,457 $ (8,115) $ 233,002 Other comprehensive income (loss) for the period 5,044 12,275 8,088 8,700 Total comprehensive income (loss) for the period $ 17,877 $ 120,732 $ (27) $ 241,702 Profit (loss) attributable to: Owners of Merida SAMOA $ 8,983 $ 75,919 $ (5,681) $ 163,101 Non-controlling interests of Merida SAMOA 3,850 32,538 (2,434) 69,901 $ 12,833 $ 108,457 $ (8,115) $ 233,002 Total comprehensive income (loss) attributable to: Owners of Merida SAMOA $ 12,514 $ 84,512 $ (19) $ 169,191 Non-controlling interests of Merida SAMOA 5,363 36,220 (8) 72,511 $ 17,877 $ 120,732 $ (27) $ 241,702 Net cash inflow (outflow) from: Operating activities $ 251,871 $ 689,756 Investing activities (65,094) (1,408) Financing activities (71,496) (206,348) Net cash inflow $ 115,281 $ 482,000
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- 19 - 13. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD September 30, December 31, September 30, 2025 2024 2024 Unlisted shares Specialized Bicycle Components Holding Company, Inc. (“SBC”) $ 15,825,615 $ 15,770,662 $ 19,122,720 SAIL & SURF Produktion-und Handelsgesellschaft m.b.H. (“SAIL & SURF”) 136,045 121,889 127,183 Merida Bikes SWE, S.A (“Merida Bikes SWE”) 57,977 50,857 57,162 Merida Czech s.r.o (“Merida Czech”) 61,909 42,818 53,024 Merida Slovakia s.r.o (“Merida Slovakia”) 30,147 26,963 29,777 Merida Italy S.r.l (“Merida Italy”) 11,787 7,220 10,894 Merida Korea Inc. (“Merida Korea”) 10,280 3,587 13,730 $ 16,133,760 $ 16,023,996 $ 19,414,490 The proportion of ownership and voting rights of investments in associates for the Group was as follows: September 30, December 31, September 30, 2025 2024 2024 SBC 35% 35% 35% SAIL & SURF 40% 40% 40% Merida Bikes SWE 36% 36% 36% Merida Czech 45% 45% 45% Merida Slovakia 30% 30% 30% Merida Italy 28% 27% 27% Merida Korea 40% 40% 40% Merida Italy underwent a restructuring of its corporate organization in September 2025 and transferred treasury shares to its shareholders, resulting in the corporation’s ownership stake increasing from 27% to 28%. Refer to Table 7 “Information on Investees” following the Notes to Consolidated Financial Statements for the nature of activities, principal place of business and country of incorporation of the Group’s associates. Investments were accounted for using the equity method, and the share of profit or loss and other comprehensive income of those investments were calculated based on financial statements, which have not been reviewed by the accountants. 14. PROPERTY, PLANT AND EQUIPMENT For the Nine Months Ended September 30, 2025 Land Buildings Machinery and Equipment Transportation Equipment Miscellaneous Equipment Construction in Progress Total Cost Balance on January 1 $ 479,469 $ 2,906,907 $ 1,292,102 $ 36,002 $ 272,252 $ - $ 4,986,732 Additions - 26,532 - 2,242 28,629 - 57,403 Disposals - (709) (17,940) (1,675) (18,217) - (38,541) Reclassifications - 36 - - 45,000 - 45,036 Effects of foreign currency exchange differences 102 (30,969) (46,132) 2,052 (3,362) - (78,309) Balance on September 30 $ 479,571 $ 2,901,797 $ 1,228,030 $ 38,621 $ 324,302 $ - $ 4,972,321 (Continued)
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- 20 - For the Nine Months Ended September 30, 2025 Land Buildings Machinery and Equipment Transportation Equipment Miscellaneous Equipment Construction in Progress Total Accumulated depreciation Balance on January 1 $ - $ 1,495,446 $ 1,070,568 $ 25,531 $ 196,792 $ - $ 2,788,337 Additions - 81,263 43,902 2,048 28,705 - 155,918 Disposals - (708) (17,817) (1,135) (17,988) - (37,648) Effects of foreign currency exchange differences - (32,823) (40,009) 1,319 (3,278) - (74,791) Balance on September 30 $ - $ 1,543,178 $ 1,056,644 $ 27,763 $ 204,231 $ - $ 2,831,816 Carrying amount on September 30 $ 479,571 $ 1,358,619 $ 171,386 $ 10,858 $ 120,071 $ - $ 2,140,505 (Concluded) For the Nine Months Ended September 30, 2024 Land Buildings Machinery and Equipment Transportation Equipment Miscellaneous Equipment Construction in Progress Total Cost Balance on January 1 $ 479,527 $ 2,836,751 $ 1,279,894 $ 38,528 $ 290,040 $ - $ 4,924,740 Additions - 19,029 6,808 1,044 22,518 883 50,282 Disposals - (14) (6,191) (744) (27,712) - (34,661) Reclassifications - 4,674 16,644 - - - 21,318 Effects of foreign currency exchange differences (1) 92,397 39,689 206 6,587 31 138,909 Balance on September 30 $ 479,526 $ 2,952,837 $ 1,336,844 $ 39,034 $ 291,433 $ 914 $ 5,100,588 Accumulated depreciation Balance on January 1 $ - $ 1,368,597 $ 1,018,867 $ 27,144 $ 205,828 $ - $ 2,620,436 Additions - 84,053 51,911 1,657 29,246 - 166,867 Disposals - (14) (5,495) (744) (27,465) - (33,718) Effects of foreign currency exchange differences - 43,825 33,093 14 5,646 - 82,578 Balance on September 30 $ - $ 1,496,461 $ 1,098,376 $ 28,071 $ 213,255 $ - $ 2,836,163 Carrying amount on September 30 $ 479,526 $ 1,456,376 $ 238,468 $ 10,963 $ 78,178 $ 914 $ 2,264,425 The above items of property, plant and equipment are depreciated on a straight-line basis over their estimated useful lives as follows: Buildings Main buildings 25-60 years Ancillary work 4-55 years Machinery and equipment 8-15 years Transportation equipment 5 years Miscellaneous equipment 3-15 years Property, plant and equipment pledged as collateral for bank borrowings are set out in Note 28.
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- 21 - 15. LEASE ARRANGEMENTS a. Right-of-use assets September 30, December 31, September 30, 2025 2024 2024 Carrying amounts Land $ 191,616 $ 206,162 $ 206,944 Buildings 84,721 76,125 94,079 Transportation equipment 10,086 14,227 15,938 Miscellaneous equipment 510 1,031 1,339 $ 286,933 $ 297,545 $ 318,300 For the Three Months Ended September 30 For the Nine Months Ended September 30 2025 2024 2025 2024 Additions to right-of-use assets $ 25,522 $ 1,395 $ 32,492 $ 79,848 Depreciation charge for right-of-use assets Land $ 1,653 $ 2,098 $ 5,412 $ 6,469 Buildings 9,017 12,749 24,898 39,463 Transportation equipment 2,307 2,845 8,041 8,389 Miscellaneous equipment 219 229 629 675 $ 13,196 $ 17,921 $ 38,980 $ 54,996 Except for the aforementioned additions and recognized depreciation, the Group did not have significant sublease or impairment of right-of-use assets for the nine months ended September 30, 2025 and 2024. b. Lease liabilities September 30, December 31, September 30, 2025 2024 2024 Carrying amounts Current $ 52,081 $ 39,862 $ 47,730 Non-current $ 48,364 $ 53,422 $ 67,096 Range of discount rates for lease liabilities was as follows: September 30, December 31, September 30, 2025 2024 2024 Land 1.73% 1.73%-6.86% 1.15%-6.86% Buildings 1.53%-6.35% 1.66%-6.35% 1.15%-6.86% Transportation equipment 0.80%-6.93% 0.80%-6.93% 0.80%-6.93% Miscellaneous equipment 6.86% 0.80%-6.86% 0.80%-6.86%
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- 22 - c. Material lease-activities and terms The Group leases certain, land, buildings, transportation equipment, machinery, and miscellaneous equipment for product manufacturing and operational uses with lease terms of 2 to 7 years. According to the lease contract, the Group does not have bargain purchase options to acquire the leasehold land and buildings at the end of the lease terms. Merida China acquired the right to use land in the Bao An District of Shenzhen City, mainland China for 50 years; Merida Shandong acquired the right to use land from the Dezhou Economic Development Zone in Shandong province for 50 years; Merida Jiangsu acquired the right to use land from the Nantong Economic and Technological Development Zone in Jiangsu province for 50 years. During the period of land use, the lessee enjoys land use rights, income rights, transfer and leasing rights and is responsible for the various taxes and fees payable for the use of the land. The land is used for the construction of production plants, office buildings and staff dormitories. d. Other lease information For the Three Months Ended September 30 For the Nine Months Ended September 30 2025 2024 2025 2024 Expenses relating to short-term leases $ 10,010 $ 9,070 $ 37,547 $ 25,860 Expenses relating to low-value asset leases $ 458 $ 479 $ 1,307 $ 1,384 Total cash outflow for leases $ (22,906) $ (26,848) $ (75,409) $ (81,009) 16. BORROWINGS a. Short-term bank borrowings September 30, December 31, September 30, 2025 2024 2024 Unsecured borrowings $ 5,397,978 $ 6,326,837 $ 6,380,603 Letters of credit - due after 180 days of acceptance - 109,144 101,328 Secured borrowings (Note 28) 172,850 274,269 243,184 $ 5,570,828 $ 6,710,250 $ 6,725,115 Rate of interest per annum (%) Unsecured borrowings 0.73-8.85 0.50-9.13 0.50-9.13 Letters of credit - No higher than 1.39 No higher than 1.65 Secured borrowings 4.50-8.25 5.00-7.67 5.00-7.67 The secured borrowings were secured by the Group’s freehold land, buildings, inventories and trade receivables (refer to Note 28).
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- 23 - b. Long-term bank borrowings September 30, December 31, September 30, 2025 2024 2024 Unsecured loans Bank loans (1) $ 1,199,507 $ 1,248,996 $ 1,319,066 Secured loans (Note 28) Bank loans (2) - - 5,205 1,199,507 1,248,996 1,324,271 Less: Current portion (389,607) (337,167) (318,052) Long-term borrowings $ 809,900 $ 911,829 $ 1,006,219 1) The bank loans will be due from March 2026 to December 2036. As of September 30, 2025, December 31, 2024 and September 30, 2024, the effective interest rate range of the bank loans was 0.12%-3.50%, 0.12%-3.80% and 0.12%-4.35%, respectively. 2) The secured loans were secured by the Group’s freehold land, buildings, inventories and trade receivables (refer to Note 28), As of September 30, 2024, the effective annual interest rate was 7.35%. 17. OTHER PAYABLES September 30, December 31, September 30, 2025 2024 2024 Payables for salaries and bonuses $ 172,146 $ 224,504 $ 117,858 Payables for compensation of employees 116,646 - 141,561 Payables for remuneration of directors 50,547 - 61,343 Others (Note 27) 1,081,013 704,436 483,571 $ 1,420,352 $ 928,940 $ 804,333 18. RETIREMENT BENEFIT PLANS For the three months ended September 30, 2025 and 2024 and nine months ended September 30, 2025 and 2024, the pension expenses of defined benefit plans were $28 thousand, $535 thousand, $84 thousand and $1,607 thousand, respectively, and these were calculated based on the pension cost rate determined by the actuarial calculation on December 31, 2024 and 2023, respectively.
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- 24 - 19. EQUITY a. Ordinary shares September 30, December 31, September 30, 2025 2024 2024 Number of shares authorized (in thousands) 350,000 350,000 350,000 Shares authorized $ 3,500,000 $ 3,500,000 $ 3,500,000 Number of shares issued and fully paid (in thousands) 298,984 298,984 298,984 Shares issued $ 2,989,838 $ 2,989,838 $ 2,989,838 Fully paid ordinary shares, which have a par value of $10, carry one vote per share and carry a right to dividends. b. Capital surplus September 30, December 31, September 30, 2025 2024 2024 May be used to offset a deficit, distributed as cash dividends, or transferred to share capital (Note) Issuance of ordinary shares $ 416,290 $ 416,290 $ 416,290 May only be used to offset a deficit Changes in capital surplus from investments in associates accounted for using the equity method 735,344 524,168 489,373 $ 1,151,634 $ 940,458 $ 905,663 Note: Such capital surplus may be used to offset a deficit; in addition, when the Corporation has no deficit, such capital surplus may be distributed as cash dividends or transferred to share capital (limited to a certain percentage of the Corporation’s capital surplus and to once a year). c. Retained earnings and dividends policy Under the dividends policy as set forth in the amended Articles, where the Corporation made a profit in a fiscal year, the profit shall be first utilized for paying taxes, offsetting losses of previous years, setting aside as a legal reserve 10% of the remaining profit, setting aside or reversing a special reserve in accordance with the laws and regulations, and then any remaining profit together with any undistributed retained earnings shall be used by the Corporation’s board of directors as the basis for proposing a distribution plan, which should be resolved in the shareholders’ meeting for the distribution of dividends and bonuses to shareholders. For the policies on the distribution of employees’ compensation and remuneration of directors after the amendment, refer to Note 21(b) employees’ compensation and remuneration of directors. According to the dividends policy of the Corporation, the total dividends distributed shall be 10% to 80% of the distributable retained earnings of the current year. In addition, cash dividends distributed should be at least 10% of the total dividends distributed.
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- 25 - The legal reserve may be used to offset deficits. If the Corporation has no deficit and the legal reserve has exceeded 25% of the Corporation’s paid-in capital, the excess may be transferred to capital or distributed in cash. The appropriations of earnings and earnings per share approved in the shareholders’ meetings in June 2025 and 2024, respectively, were as follows: Appropriation of Earnings Dividends Per Share (NT$) For the Year Ended December 31 For the Year Ended December 31 2024 2023 2024 2023 Legal reserve $ - $ 178,738 Reversal of special reserve (638,687) (27,507) Cash dividends 1,195,935 1,793,903 $ 4.0 $ 6.0 20. REVENUE For the Three Months Ended September 30 For the Nine Months Ended September 30 2025 2024 2025 2024 Revenue from contracts with customers Revenue from sale of goods $ 7,223,388 $ 8,664,287 $ 21,795,570 $ 23,832,491 a. Contract balances September 30, December 31, September 30, January 1, 2025 2024 2024 2024 Notes and trade receivables $ 4,063,982 $ 2,660,205 $ 3,325,992 $ 2,304,977 Contract liabilities - current $ 68,045 $ 172,832 $ 190,412 $ 39,391 b. Disaggregation of revenue Refer to Note 34 for information about the disaggregation of revenue. 21. NET PROFIT FROM CONTINUING OPERATIONS a. Employee benefits expense, depreciation and amortization expenses Operating Costs Operating Expenses Total For the three months ended September 30, 2025 Short-term employee benefits $ 301,697 $ 212,948 $ 514,645 Post-employment benefits Defined contribution plans 12,711 10,814 23,525 Defined benefit plans 16 12 28 Other employee benefits 9,320 29,900 39,220 Depreciation expense 30,556 31,925 62,481 Amortization expense 151 5,088 5,239
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- 26 - Operating Costs Operating Expenses Total For the three months ended September 30, 2024 Short-term employee benefits $ 297,376 $ 223,162 $ 520,538 Post-employment benefits Defined contribution plans 13,940 11,114 25,054 Defined benefit plans 204 331 535 Other employee benefits 12,009 35,218 47,227 Depreciation expense 39,276 33,576 72,852 Amortization expense 151 5,177 5,328 For the nine months ended September 30, 2025 Short-term employee benefits 781,710 643,054 1,424,764 Post-employment benefits Defined contribution plans 38,691 34,357 73,048 Defined benefit plans 50 34 84 Other employee benefits 24,431 78,284 102,715 Depreciation expense 98,322 96,576 194,898 Amortization expense 452 15,866 16,318 For the nine months ended September 30, 2024 Short-term employee benefits 842,562 685,574 1,528,136 Post-employment benefits Defined contribution plans 39,277 33,120 72,397 Defined benefit plans 647 960 1,607 Other employee benefits 28,581 93,428 122,009 Depreciation expense 119,540 102,323 221,863 Amortization expense 302 15,174 15,476 b. Employees’ compensation and remuneration of directors According to the Corporation’s Articles of Incorporation, the Corporation accrued employees’ compensation and remuneration of directors at rates of no less than 5% and no higher than 5%, respectively, of net profit before income tax, employees’ compensation, and remuneration of directors. In accordance with the amendments to the Securities and Exchange Act in August 2024, the shareholders of the Corporation resolved the amendments to the Corporation’s Articles at their 2025 regular meeting. The amendments explicitly stipulate the allocation of 30% of the compensation of employees as compensation distributions for non-executive employees. The employees’ compensation and remuneration of directors for the three months ended September 30, 2025 and 2024 and nine months ended September 30, 2025 and 2024 are as follows: For the Three Months Ended September 30 2025 2024 Cash Accrual Rate Amount Accrual Rate Amount Employees’ compensation 6% $ 50,142 6% $ 53,457 Remuneration of directors 2.6% 21,728 2.6% 23,165
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- 27 - For the Nine Months Ended September 30 2025 2024 Cash Accrual Rate Amount Accrual Rate Amount Employees’ compensation 6% $ 116,646 6% $ 141,561 Remuneration of directors 2.6% 50,547 2.6% 61,343 If there is a change in the amounts after the annual consolidated financial statements are authorized for issue, the differences are recorded as a change in the accounting estimate. The compensation of employees and remuneration of directors were not accrued because of the pre-tax net loss of the years ended December 31, 2024. The compensation of employees and remuneration of directors for the years ended December 31, 2023, which were approved by the Corporation’s board of directors on March 14, 2024, are as follows: For the Year Ended December 31, 2023 Employees’ compensation $ 154,377 Remuneration of directors 66,897 There was no difference between the actual amounts of compensation of employees and remuneration of directors paid and the amounts recognized in the consolidated financial statements for the years ended December 31, 2023. Information on the compensation of employees and remuneration of directors resolved by the Corporation’s board of directors is available at the Market Observation Post System website of the TWSE. 22. TAXES a. Major components of tax expense recognized in profit or loss For the Three Months Ended September 30 For the Nine Months Ended September 30 2025 2024 2025 2024 Current tax In respect of the current year $ 76,772 $ 222,315 $ 186,295 $ 630,708 Adjustments for prior years (13,160) (37,607) (17,862) (33,929) 63,612 184,708 168,433 596,779 Deferred tax In respect of the current year 107,778 29,873 244,334 104,478 Income tax expense recognized in profit or loss $ 171,390 $ 214,581 $ 412,767 $ 701,257 b. Income tax assessments The income tax returns of the Corporation through 2023 have been assessed by the tax authorities.
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- 28 - 23. EARNINGS PER SHARE Net Profit Attributable to Earnings Per Owners of the Number of Share Corporation Shares (NT$) For the three months ended September 30, 2025 Basic earnings per share Profit for the period attributable to owners of the Corporation $ 624,864 298,983,800 $ 2.09 Effect of potentially dilutive ordinary shares: Employees’ compensation - 1,149,224 Diluted earnings per share Profit for the period attributable to owners of the Corporation plus effect of potentially dilutive ordinary shares $ 624,864 300,133,024 $ 2.08 For the three months ended September 30, 2024 Basic earnings per share Profit for the period attributable to owners of the Corporation $ 690,182 298,983,800 $ 2.31 Effect of potentially dilutive ordinary shares: Employees’ compensation - 615,484 Diluted earnings per share Profit for the period attributable to owners of the Corporation plus effect of potentially dilutive ordinary shares $ 690,182 299,599,284 $ 2.30 For the nine months ended September 30, 2025 Basic earnings per share Profit for the period attributable to owners of the Corporation $ 1,437,404 298,983,800 $ 4.81 Effect of potentially dilutive ordinary shares: Employees’ compensation - 1,149,224 Diluted earnings per share Profit for the period attributable to owners of the Corporation plus effect of potentially dilutive ordinary shares $ 1,437,404 300,133,024 $ 4.79 For the nine months ended September 30, 2024 Basic earnings per share Profit for the period attributable to owners of the Corporation $ 1,761,499 298,983,800 $ 5.89 Effect of potentially dilutive ordinary shares: Employees’ compensation - 812,277 Diluted earnings per share Profit for the period attributable to owners of the Corporation plus effect of potentially dilutive ordinary shares $ 1,761,499 299,796,077 $ 5.88
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- 29 - The Group may settle compensation paid to employees in cash or shares; therefore, the Group assumes that the entire amount of the compensation will be settled in shares, and the resulting potential shares will be included in the weighted average number of shares outstanding used in the computation of diluted earnings per share, as the effect is dilutive. Such dilutive effect of the potential shares is included in the computation of diluted earnings per share until the number of shares to be distributed to employees is resolved in the following year. 24. EQUITY TRANSACTIONS WITH NON-CONTROLLING INTERESTS In February 2025, the Corporation participated in the cash capital increase of Merida Japan. As the Corporation subscribed more than its original ownership percentage, its equity interest increased from 90% to 98%. The transaction resulted in a decrease in retained earnings of $1,150 thousand. In September 2025, the Corporation completed the acquisition of a 39% equity stake of Merida & Centurion from Wolfgang Renner (Other Related Party), increasing its shareholding from 51% to 90%. The transaction resulted in a decrease in retained earnings of $4,623 thousand. In December 2024, the Corporation acquired a 5% equity stake of Merida Norge from Bike Holding AS (Other Related Party) for $17,313 thousand, increasing its shareholding from 75% to 80%. The above transactions were accounted as equity transactions since the Corporation did not cease to have control over these subsidiaries. 25. CAPITAL MANAGEMENT The Group manages its capital to ensure that entities in the Group will be able to continue as going concerns while maximizing the return to shareholders through the optimization of the debt and equity balance. The capital structure of the Group consists of net debt (borrowings offset by cash and cash equivalents) and equity attributable to owners of the Corporation (comprising issued capital, reserves, retained earnings and other equity). Key management personnel of the Group reviews the capital structure on an annual basis. As part of this review, the key management personnel considers the cost of capital and the risks associated with each class of capital. Based on recommendations of the key management personnel, in order to balance the overall capital structure, the Group may adjust the number of dividends paid to shareholders, the number of new shares issued or repurchased, and the amount of new debt issued or existing debt redeemed. 26. FINANCIAL INSTRUMENTS a. Fair value of financial instruments not measured at fair value The carrying amounts of the Group’s financial assets and liabilities that are not measured at fair value approximated their fair values. b. Fair value of financial instruments measured at fair value on a recurring basis The Group’s financial assets at FVTPL and financial assets at FVTOCI are measured at fair value using Level 1 inputs. There were no transfers between Levels 1 and 2 in the current and prior years.
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- 30 - c. Categories of financial instruments September 30, December 31, September 30, 2025 2024 2024 Financial assets Financial assets at FVTPL $ 44,363 $ 57,764 $ 61,163 Financial assets at amortized cost 8,548,632 7,157,199 9,103,429 Financial assets at FVTOCI - equity instruments 3,400 3,400 3,400 Financial liabilities Financial liabilities at amortized cost 12,080,570 13,064,991 14,186,169 The balances include financial assets at amortized cost, which comprise cash and cash equivalents, notes and trade receivables, other receivables and refundable deposits. The balances of financial liabilities above include financial liabilities measured at amortized cost, which comprise short-term and long-term bank borrowings, notes and trade payables, other payables, current portion of long-term borrowings and guarantee deposits received. d. Financial risk management objectives and policies The Group’s major financial instruments include equity investments, trade receivables, trade payables, borrowings, and lease liabilities. The Group’s corporate treasury function provides services to the business, coordinates access to financial markets, and monitors and manages the financial risks relating to the operations of the Group through internal risk reports that analyze exposures by degree and magnitude of risks. These risks include market risk (including foreign currency risk and interest rate risk), credit risk and liquidity risk. The Group sought to minimize the effects of these risks by using derivative financial instruments to hedge risk exposures. The use of financial derivatives was governed by the Group’s policies approved by the board of directors and compliance with policies and exposure limits was reviewed according to the internal control policies on a continuous basis. a) Market risk The Group’s activities exposed it primarily to the financial risks of changes in foreign currency exchange rates and interest rates. The Group entered into forward foreign exchange forward contracts to hedge the exchange rate risk arising on imports and exports. i. Foreign currency risk The Group has foreign currency denominated sales and purchases, which expose the group to foreign currency risk. Exchange rate exposures were managed within approved policy parameters utilizing foreign exchange forward contracts. The carrying amounts of the Group’s foreign currency denominated monetary assets and monetary liabilities at the end of the reporting period are set out in Note 32.
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- 31 - Sensitivity analysis The Group was mainly exposed to the USD. Assuming a 1% increase in the NTD against the USD, the pre-tax profit for the nine months ended September 30, 2025 and 2024 would have decreased by $42,101 thousand and $39,356 thousand, respectively. The sensitivity rate used when reporting foreign currency risk internally to key management personnel and representing management’s assessment of the reasonably possible change in foreign exchange rates. ii. Interest rate risk The Group is exposed to interest rate risk because entities in the Group borrowed funds at both fixed and floating interest rates. The carrying amounts of the Group’s financial assets and financial liabilities with exposure to interest rates were as follows. September 30, December 31, September 30, 2025 2024 2024 Fair value interest rate risk Financial assets $ 997,562 $ 859,579 $ 2,251,264 Financial liabilities 2,157,508 2,145,238 2,470,652 Cash flow interest rate risk Financial assets 3,349,985 3,470,279 3,334,091 Financial liabilities 4,713,272 5,907,292 5,693,560 Sensitivity analysis The sensitivity analysis was determined based on the Group’s exposure to interest rates at the end of the reporting period. For floating rate assets and liabilities, the analysis was prepared assuming the amount of each liability outstanding at the end of the reporting period was outstanding for the whole year. A 0.25% increase or decrease was used when reporting interest rate risk internally to key management personnel and represents management’s assessment of the reasonably possible change in interest rates. If interest rates had been 0.25% higher and all other variables were held constant, the Group’s pre-tax profit for the nine months ended September 30, 2025 and 2024 would have decreased by $2,556 thousand and $4,424 thousand, respectively. b) Credit risk Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in a financial loss to the Group. As at the end of the reporting period, the Group’s maximum exposure to credit risk which would cause a financial loss to the Group due to the failure of counterparties to discharge an obligation and financial guarantees provided by the Group could arise from: i. The carrying amount of the respective recognized financial assets as stated in the balance sheets. ii. The maximum amount the entity would have to pay if the financial guarantee is called upon, irrespective of the likelihood of the guarantee being exercised. The Group’s concentration of credit risk was mainly from customer A, which accounted for 66%, 50% and 56% of the total trade receivables as of September 30, 2025, December 31, 2024 and September 30, 2024, respectively.
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- 32 - c) Liquidity risk The Group manages liquidity risk by monitoring and maintaining a level of cash and cash equivalents deemed adequate to finance the Group’s operations and mitigate the effects of fluctuations in cash flows. In addition, management monitors the utilization of bank borrowings and ensures compliance with loan covenants. The Group relies on bank borrowings as a significant source of liquidity. As of September 30, 2025, December 31, 2024 and September 30, 2024, the Group had available unutilized bank loan facilities of $15,870,765 thousand $15,129,670 thousand and $15,953,884 thousand, respectively. Liquidity and interest rate risk table for non-derivative financial liabilities The following table details the Group’s remaining contractual maturities for its non-derivative financial liabilities with agreed upon repayment periods. The table has been drawn up based on the undiscounted cash flows of financial liabilities from the earliest date on which the Group can be required to pay. Specifically, bank loans with a repayment on demand clause were included in the earliest time band regardless of the probability of the banks choosing to exercise their rights. The maturity dates for other non-derivative financial liabilities were based on the agreed upon repayment dates. On Demand or Less than 1 Year 1-2 Years More than 2 Years September 30, 2025 Non-interest bearing liabilities $ 5,569,031 $ - $ - Lease liabilities 54,845 29,336 20,434 Variable interest rate liabilities 3,932,061 314,806 466,405 Fixed interest rate liabilities 2,028,374 16,020 12,669 $ 11,584,311 $ 360,162 $ 499,508 December 31, 2024 Non-interest bearing liabilities $ 5,078,119 $ - $ - Lease liabilities 43,437 35,880 20,046 Variable interest rate liabilities 5,071,463 308,658 527,171 Fixed interest rate liabilities 1,975,954 21,858 54,142 $ 12,168,973 $ 366,396 $ 601,359 September 30, 2024 Non-interest bearing liabilities $ 6,108,316 $ - $ - Lease liabilities 52,162 41,899 28,465 Variable interest rate liabilities 4,752,281 314,302 626,977 Fixed interest rate liabilities 2,290,886 24,932 40,008 $ 13,203,645 $ 381,133 $ 695,450
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- 33 - Further information on the maturity analysis of the above financial liabilities was as follows: Less than 1 Year 1-5 Years 5-10 Years September 30, 2025 Lease liabilities $ 54,845 $ 49,770 $ - Variable interest rate liabilities 3,932,061 562,107 219,104 Fixed interest rate liabilities 2,028,374 28,689 - $ 6,015,280 $ 640,566 $ 219,104 December 31, 2024 Lease liabilities $ 43,437 $ 55,926 $ - Variable interest rate liabilities 5,071,463 589,515 246,314 Fixed interest rate liabilities 1,975,954 76,000 - $ 7,090,854 $ 721,441 $ 246,314 September 30, 2024 Lease liabilities $ 52,162 $ 70,364 $ - Variable interest rate liabilities 4,752,281 659,006 282,273 Fixed interest rate liabilities 2,290,886 64,940 - $ 7,095,329 $ 794,310 $ 282,273 27. TRANSACTIONS WITH RELATED PARTIES Balances and transactions between the Corporation and its subsidiaries have been eliminated on consolidation and are not disclosed in this note. Besides information disclosed elsewhere in the other notes, details of transactions between the Group and other related parties are disclosed below. a. Related Party Categories/Names Related Party Relationship with the Group SBC Group Associate SAIL & SURF Associate Merida Bikes SWE Associate Merida Czech Associate Merida Slovakia Associate Merida Korea Associate Merida Italy Associate Cheng Shin Rubber Industry Co., Ltd. (“Cheng Shin”) Other Cheng Shin Rubber (Xiamen) Ind., Ltd. (“Cheng Shin (Xiamen)”) Other Tianjin Tafeng Rubber Industry Co., Ltd. (“Tianjin Tafeng”) Other Cheng Shin Rubber (Vietnam) Ind., Ltd. (“Cheng Shin (Vietnam)”) Other Bike Holding AS Other Bike fixx AS Other Wolfgang Renner Other
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- 34 - b. Sales of goods For the Three Months Ended September 30 For the Nine Months Ended September 30 Related Party Category/Name 2025 2024 2025 2024 Associates SBC Group $ 3,896,109 $ 3,665,672 $ 11,431,134 $ 8,968,820 Others 231,092 185,922 737,913 895,922 4,127,201 3,851,594 12,169,047 9,864,742 Other related parties 5,388 - 15,419 - $ 4,132,589 $ 3,851,594 $ 12,184,466 $ 9,864,742 The selling price and gross profit of the products that the Group sells to related parties are quoted based on the differences in the products and the acceptance of the market. c. Purchase of goods For the Three Months Ended September 30 For the Nine Months Ended September 30 Related Party Category 2025 2024 2025 2024 Other related parties $ 44,979 $ 83,625 $ 120,236 $ 231,798 Associates 75 42,019 48,441 80,165 $ 45,054 $ 125,644 $ 168,677 $ 311,963 The purchase price is quoted based on market prices. d. Contract liabilities - advance receipts Related Party Category/Name September 30, 2025 December 31, 2024 September 30, 2024 Associates SBC Group $ - $ 110,839 $ 110,870 e. Receivables from related parties Related Party Category/Name September 30, 2025 December 31, 2024 September 30, 2024 Trade receivables Associates SBC Group $ 2,719,836 $ 1,355,386 $ 1,891,351 Others 445,097 637,087 612,167 3,164,933 1,992,473 2,503,518 Other related parties 2,513 - - $ 3,167,446 $ 1,992,473 $ 2,503,518
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- 35 - Related Party Category/Name September 30, 2025 December 31, 2024 September 30, 2024 Other receivables Associates SBC Group $ 10,667 $ 5,355 $ 8,155 Others 2,551 4,487 2,821 13,218 9,842 10,976 Other related parties 12,155 - - $ 25,373 $ 9,842 $ 10,976 f. Payables to related parties Related Party Category September 30, 2025 December 31, 2024 September 30, 2024 Trade payables Other related parties $ 33,874 $ 39,828 $ 61,683 Associates 173 3,596 30,743 $ 34,047 $ 43,424 $ 92,426 Other payables - investments Other related parties Wolfgang Renner $ 295,954 $ - $ - g. Loans from related parties Related Party Category/Name September 30, 2025 December 31, 2024 September 30, 2024 Other payables Other related parties Wolfgang Renner $ 361,277 $ 293,604 $ 109,678 h. Other transactions with related parties 1) Interest income Related Party For the Three Months Ended September 30 For the Nine Months Ended September 30 Category/Name 2025 2024 2025 2024 Associates SBC Group $ 8,580 $ 6,640 $ 21,534 $ 13,319 Others 4,399 1,806 16,770 7,806 $ 12,979 $ 8,446 $ 38,304 $ 21,125
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- 36 - The Corporation receives interest from overdue trade receivables at an interest rate agreed upon in the terms of the transactions. 2) Other income Related Party For the Three Months Ended September 30 For the Nine Months Ended September 30 Category/Name 2025 2024 2025 2024 Associates SBC Group $ 3,734 $ 6,738 $ 11,222 $ 7,818 Other related parties - 8 - 8 $ 3,734 $ 6,746 $ 11,222 $ 7,826 i. Remuneration of key management personnel For the Three Months Ended September 30 For the Nine Months Ended September 30 2025 2024 2025 2024 Short-term employee benefits $ 31,210 $ 31,941 $ 74,593 $ 86,932 Post-employment benefits 118 141 371 435 $ 31,328 $ 32,082 $ 74,964 $ 87,367 The remuneration of directors and key executives, as determined by the remuneration committee, is based on the performance of individuals and market trends. 28. ASSETS PLEDGED AS COLLATERAL OR FOR SECURITY The following assets were provided as collateral for bank borrowings: September 30, 2025 December 31, 2024 September 30, 2024 Inventories $ 378,613 $ 405,884 $ 401,775 Trade receivables 97,003 47,883 97,595 Property, plant and equipment 26,093 26,771 16,163 $ 501,709 $ 480,538 $ 515,533 29. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNIZED COMMITMENTS In addition to those disclosed in other notes, significant commitments and contingencies of the Group as of September 30, 2025, December 31, 2024 and September 30, 2024 were as follows: a. As of September 30, 2025, December 31, 2024 and September 30, 2024, unused letters of credit for purchases of raw materials amounted to approximately $127,739 thousand, $232,359 thousand and $370,424 thousand, respectively.
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- 37 - b. Unrecognized commitments were as follows: September 30, 2025 December 31, 2024 September 30, 2024 Acquisition of property, plant and equipment $ 9,169 $ 5,000 $ 16,595 c. Product liability insurance The Corporation purchased product liability insurance over the products manufactured by the Corporation and its subsidiaries. The insured amount of the sales in USA and Canada is USD$4,000 thousand and it covers accidents happening after September 18, 2000. The maximum indemnity claims for the single original cause of a liability is USD$3,000 thousand. The insured amount for sales, other than those within the USA and Canada, is USD$1,000 thousand, and covers accidents happening after January 7, 1999. The maximum indemnity claims for the single original cause of a liability is USD$1,000 thousand. 30. SIGNIFICANT LOSSES FROM DISASTERS No such incident. 31. SIGNIFICANT EVENTS AFTER THE REPORTING PERIOD No such incident. 32. SIGNIFICANT ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES The group entities’ significant financial assets and liabilities denominated in foreign currencies aggregated by the foreign currencies other than functional currencies and the related exchange rates between foreign currencies and respective functional currencies were as follows: September 30, 2025 December 31, 2024 Foreign Currency Exchange Rate Carrying Amount Foreign Currency Exchange Rate Carrying Amount Financial assets Monetary items USD $ 167,384 30.445 $ 5,096,006 $ 145,359 32.785 $ 4,765,595 JPY 1,148,216 0.2058 236,303 621,374 0.2099 130,426 Non-monetary items Investments accounted for using the equity method USD 513,980 30.445 15,648,121 481,639 32.785 15,790,535 EUR 7,090 35.77 253,609 7,069 34.14 241,336 Financial liabilities Monetary items USD 29,098 30.445 885,889 29,115 32.785 954,535 JPY 1,282,267 0.2058 263,891 1,921,237 0.2099 403,268
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- 38 - September 30, 2024 Foreign Currency Exchange Rate Carrying Amount Financial assets Monetary items USD $ 158,987 31.650 $ 5,031,939 JPY 565,238 0.2223 125,652 Non-monetary items Investments accounted for using the equity method USD 604,583 31.650 19,135,052 EUR 6,681 35.38 236,374 Financial liabilities Monetary items USD 34,641 31.650 1,096,388 JPY 2,499,064 0.2223 555,542 The Group is mainly exposed to the USD. The following information was aggregated by functional currencies of group entities, and the exchange rates between respective functional currencies and the presentation currency are disclosed. The significant (realized and unrealized) foreign exchange gains (losses) were as follows: For the Three Months Ended September 30 2025 2024 Foreign Currency Exchange Rate Net Foreign Exchange Gains (Losses) Exchange Rate Net Foreign Exchange Gains (Losses) NTD 1(NTD:NTD) $ 171,023 1(NTD:NTD) $ (100,123) RMB 4.184(RMB:NTD) (2,071) 4.504(RMB:NTD) (22,086) EUR 34.997(EUR:NTD) 103 35.487(EUR:NTD) 9,961 $ 169,055 $ (112,248) For the Nine Months Ended September 30 2025 2024 Foreign Currency Exchange Rate Net Foreign Exchange Gains (Losses) Exchange Rate Net Foreign Exchange Gains (Losses) NTD 1(NTD:NTD) $ (358,881) 1(NTD:NTD) $ 182,034 RMB 4.318(RMB:NTD) (13,167) 4.443(RMB:NTD) (36,844) EUR 34.85(EUR:NTD) 57,536 34.82(EUR:NTD) 15,694 $ (314,512) $ 160,884
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- 39 - 33. SEPARATELY DISCLOSED ITEMS a. Information about significant transactions and investees: 1) Financing provided to others. (Table1) 2) Endorsements/guarantees provided. (Table 2) 3) Significant marketable securities held (excluding investments in subsidiaries and associates). (Table 3) 4) Total purchases from or sales to related parties amounting to at least NT$100 million or 20% of the paid-in capital. (Table 4) 5) Receivables from related parties amounting to at least NT$100 million or 20% of the paid-in capital. (Table 5) 6) Intercompany relationships and significant intercompany transactions. (Table 6) 7) Information on investees. (Table 7) b. Information on investments in mainland China: 1) Information on any investee company in mainland China, showing the name, principal business activities, paid-in capital, method of investment, inward and outward remittance of funds, ownership percentage, net income of investees, investment income or loss, carrying amount of the investment at the end of the period, repatriations of investment income, and limit on the amount of investment in the mainland China area. (Table 8) 2) Any of the following significant transactions with investee companies in mainland China, either directly or indirectly through a third party, and their prices, payment terms, and unrealized gains or losses: a) The amount and percentage of purchases and the balance and percentage of the related payables at the end of the period. (Table 4) b) The amount and percentage of sales and the balance and percentage of the related receivables at the end of the period. (Table 4) c) The amount of property transactions and the amount of the resultant gains or losses. (None) d) The balance of negotiable instrument endorsements, guarantees or pledges of collateral at the end of the year and their purposes. (Table 2) e) The highest balance, the end of year balance, the interest rate range, and total current period interest with respect to financing of funds. (Table 1) f) Other transactions that have a material effect on the profit or loss for the period or on the financial position, such as the rendering or receipt of services. (None)
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- 40 - 34. SEGMENT INFORMATION Information reported to the chief operating decision maker for the purpose of resource allocation and assessment of segment performance focuses on the location of operations. The Group focuses on the manufacture and sale of bicycles and bicycle components. The Group’s reportable segments are determined by products manufactured and the location of sales as follows: 1. Domestic operations - products manufactured and sold in Taiwan 2. Asia operations - products manufactured and sold in China, Hong Kong and Japan 3. Europe operations - products sold in Europe For the Nine Months Ended September 30, 2025 Domestic Operations Asia Operations Europe Operations Reconciliation and Elimination Total Revenue Revenue from external customers $13,069,480 $ 4,113,648 $ 4,612,442 $ - $21,795,570 Inter-segment revenue 1,851,610 276,712 171,595 (2,299,917) - Interest income 76,508 22,518 3,030 (23,609) 78,447 Share of profit (loss) of associates accounted for using the equity method 727,764 - - (216,565) 511,199 Total revenue $15,725,362 $ 4,412,878 $ 4,787,067 $ (2,540,091) $22,385,216 Interest expense $ 64,737 $ 21,151 $ 93,558 $ (15,094) $ 164,352 Depreciation and amortization 75,019 70,938 65,259 - 211,216 Income tax expense 339,508 70,725 2,534 - 412,767 Segment profit and loss 1,437,404 122,808 158,479 (216,565) 1,502,126 Assets Investments accounted for using the equity method 20,854,795 - - (4,721,035) 16,133,760 Segment assets 31,587,729 5,534,896 5,458,294 (6,455,806) 36,125,113 Segment liabilities 12,587,314 2,182,150 3,364,812 (1,481,340) 16,652,936 For the Nine Months Ended September 30, 2024 Domestic Operations Asia Operations Europe Operations Reconciliation and Elimination Total Revenue Revenue from external customers $10,658,019 $ 8,813,549 $ 4,360,923 $ - $23,832,491 Inter-segment revenue 2,544,866 461,300 164,420 (3,170,586) - Interest income 56,941 36,133 7,124 (22,125) 78,073 Share of profit (loss) of associates accounted for using the equity method 647,003 - - (983,443) (336,440) Total revenue $13,906,829 $ 9,310,982 $ 4,532,467 $ (4,176,154) $23,574,124 (Continued)
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- 41 - For the Nine Months Ended September 30, 2024 Domestic Operations Asia Operations Europe Operations Reconciliation and Elimination Total Interest expense $ 58,686 $ 24,626 $ 109,375 $ (16,278) $ 176,409 Depreciation and amortization 87,226 78,604 71,509 - 237,339 Income tax expense 394,950 294,216 12,091 - 701,257 Segment profit and loss 1,761,498 1,063,433 (12,425) (983,442) 1,829,064 Assets Investments accounted for using the equity method 23,766,149 - - (4,351,659) 19,414,490 Segment assets 35,701,566 7,054,114 6,051,284 (6,944,863) 41,862,101 Segment liabilities 14,224,777 3,267,185 3,845,955 (2,110,450) 19,227,467 (Concluded)
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- 42 - TABLE 1 MERIDA INDUSTRY CO., LTD. AND SUBSIDIARIES FINANCING PROVIDED TO OTHERS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2025 (In Thousands of New Taiwan Dollars and Foreign Currencies) No. Lender Borrower (Note 4) Financial Statement Account Related Party Highest Balance for the Period Ending Balance Actual Amount Borrowed Interest Rate (%) Nature of Financing Business Transaction Amounts Reasons for Short-term Financing Allowance for Impairment Loss Collateral Financing Limit for Each Borrower Aggregate Financing LimitItem Value 0 The Corporation Merida Benelux Other receivables from related parties Yes $ 32,685 $ - $ - 5.6-6.3 For short-term financing needs $ - Operating capital $ - - $ - $ 7,600,166 (Note 1) $ 9,500,207 (Note 2) 1 Merida Shandong Merida Jiangsu Other receivables from related parties Yes RMB 80,000 RMB 80,000 RMB 30,000 2.325 For short-term financing needs - Operating capital - - - RMB 203,190 (Note 3) RMB 203,190 (Note 3) Note 1: 40% of the net assets of the Group in their latest financial statements. Note 2: 50% of the net assets of the Group in their latest financial statements. Note 3: 40% of the net assets of Merida Shandong in their latest financial statements. Note 4: Significant intercompany accounts and transactions have been eliminated.
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- 43 - TABLE 2 MERIDA INDUSTRY CO., LTD. AND SUBSIDIARIES ENDORSEMENTS/GUARANTEES PROVIDED FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2025 (In Thousands of New Taiwan Dollars and Foreign Currencies) No. Endorser/Guarantor Endorsee/Guaranteed Party Limits on Endorsement/ Guarantee Given on Behalf of Each Party (Note 1) Maximum Amount Endorsed/ Guaranteed During the Period Outstanding Endorsement/ Guarantee at the End of the Period Actual Borrowing Amount Amount Endorsed/ Guaranteed by Collateral Ratio of Accumulated Endorsement/ Guarantee to Net Equity in Latest Financial Statements (%) Aggregate Endorsement/ Guarantee Limit (Note 2) Endorsement/ Guarantee Given by Parent on Behalf of Subsidiaries Endorsement/ Guarantee Given by Subsidiaries on Behalf of Parent Endorsement/ Guarantee Given on Behalf of Companies in Mainland China Name Relationship 0 The Corporation Merida U.K. Subsidiary $ 5,700,124 GBP 6,000 GBP 6,000 GBP 5,978 $ - 1.29 $ 9,500,207 Yes - - Merida & Centurion Subsidiary 5,700,124 EUR 32,300 EUR 31,700 EUR 20,150 - 5.97 9,500,207 Yes - - Merida Norge Subsidiary 5,700,124 USD 1,500 USD 1,500 USD 1,500 - 0.24 9,500,207 Yes - - Merida Benelux Subsidiary 5,700,124 USD 1,000 USD 1,000 USD 1,000 - 0.16 9,500,207 Yes - - Merida Bikes SWE Associate 5,700,124 USD 3,000 USD 3,000 USD 3,000 - 0.48 9,500,207 - - - Merida Jiangsu Third-tier subsidiary 5,700,124 RMB270,000 RMB270,000 RMB100,917 - 6.07 9,500,207 Yes - Yes Merida China Third-tier subsidiary 5,700,124 RMB100,000 RMB100,000 RMB 42,500 - 2.25 9,500,207 Yes - Yes Note 1: 30% of the net assets of the Corporation in their previous year’s financial statements. Note 2: 50% of the net assets of the Corporation in their previous year’s financial statements.
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- 44 - TABLE 3 MERIDA INDUSTRY CO., LTD. AND SUBSIDIARIES SIGNIFICANT MARKETABLE SECURITIES HELD SEPTEMBER 30, 2025 (In Thousands of New Taiwan Dollars) Holding Company Name Type and Name of Marketable Securities Relationship with the Holding Company Financial Statement Account September 30, 2025 Number of Shares (In Thousands) Carrying Amount Percentage of Ownership (%) Fair Value (Note 2) The Corporation Share capital Cheng Shin The Corporation’s chairman is their director Financial assets at FVTPL - current 1,146 $ 43,140 - $ 43,140 Merida Benelux (Note 1) - Financial assets at FVTOCI - non-current 2,749 89,220 - 89,220 Note 1: The preference shares investments have been eliminated. Note 2: Refer to Note 26 for information on the fair values.
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- 45 - TABLE 4 MERIDA INDUSTRY CO., LTD. AND SUBSIDIARIES TOTAL PURCHASES FROM OR SALES TO RELATED PARTIES AMOUNTING TO AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2025 (In Thousands of New Taiwan Dollars and Foreign Currencies) Company Name Related Party (Note) Relationship Transaction Details Abnormal Transaction Notes/Trade Receivables (Payables) Note Purchases/Sales Amount % of Total Payment Terms Unit Price Payment Terms Ending Balance % of Total The Corporation SBC Group Associate Sales $ (11,431,134) (77) O/A 60 days $ - - $ 2,719,836 58 Merida & Centurion Subsidiary Sales (629,085) (4) T/T 14 days or O/A 150 days - - 226,452 5 Merida U.K. Subsidiary Sales (430,949) (3) O/A 120 days - - 214,885 5 Merida Jiangsu Third-tier subsidiary Sales (246,443) (2) O/A 90 days - - 83,925 2 Merida Bikes SWE Associate Sales (221,628) (1) T/T 14 days or O/A 120 days - - 101,136 2 Merida Benelux Subsidiary Sales (183,177) (1) O/A 180 days - - 196,553 4 Merida Norge Subsidiary Sales (169,182) (1) T/T 14 days or O/A 120 days - - 71,260 2 Merida Korea Associate Sales (148,287) (1) T/T 14 days or O/A 120 days - - 62,693 1 SAIL & SURF Associate Sales (136,498) (1) T/T 14 days or O/A 180 days - - 32,365 1 Merida Italy Associate Sales (119,997) (1) O/A 120 days - - 204,582 4 Merida China Third-tier subsidiary Purchase 205,561 2 T/T 90 days - - (50,732) (2) Merida Jiangsu Merida Shandong Associate Sales RMB (294,100) (89) T/T 90 days - - RMB 7,854 93 Merida China Merida Shandong Associate Sales RMB (75,732) (60) T/T 90 days - - RMB 8,252 41 Note: Significant intercompany accounts and transactions have been eliminated.
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- 46 - TABLE 5 MERIDA INDUSTRY CO., LTD. AND SUBSIDIARIES RECEIVABLES FROM RELATED PARTIES AMOUNTING TO AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL SEPTEMBER 30, 2025 (In Thousands of New Taiwan Dollars and Foreign Currencies) Company Name Related Party (Note) Relationship Financial Statement Account Ending Balance Turnover Rate Overdue Amounts Received in Subsequent Period Allowance for Impairment LossAmount Actions Taken The Corporation SBC Group Associate Trade receivables from related parties $ 2,719,836 7.48 $ 48,042 Enhanced collection $ 1,561,891 $ - Other receivables from related parties 10,667 - - - 4,096 - Merida Polska Subsidiary Trade receivables from related parties 343,602 0.33 314,047 Enhanced collection - - Merida & Centurion Subsidiary Trade receivables from related parties 226,452 2.27 - - 18,530 - Other receivables from related parties 3,654 - - - 847 - Merida U.K. Subsidiary Trade receivables from related parties 214,885 3.08 - - 70,842 - Other receivables from related parties 310 - - - 310 - Merida Italy Associate Trade receivables from related parties 204,582 0.72 53,605 Enhanced collection - 2,375 Merida Benelux Subsidiary Trade receivables from related parties 196,553 1.19 - - 19,976 - Other receivables from related parties 3,944 - - - 400 - Merida Bikes SWE Associate Trade receivables from related parties 101,136 2.73 - - 36,032 508 Other receivables from related parties 1,525 - - - 540 - Merida Shandong Merida Jiangsu Associate Trade receivables from related parties RMB 227 0.45 - - RMB 133 - Other receivables from related parties RMB 30,019 - - - RMB 30,019 - Note: Significant intercompany accounts and transactions have been eliminated.
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- 47 - TABLE 6 MERIDA INDUSTRY CO., LTD. AND SUBSIDIARIES INTERCOMPANY RELATIONSHIPS AND SIGNIFICANT INTERCOMPANY TRANSACTIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2025 (In Thousands of New Taiwan Dollars and Foreign Currencies) No. Investee Company Counterparty Relationship (Note 1) Transaction Details Financial Statement Account Amount (Note 2) Payment Terms % of Total Sales or Assets 0 The Corporation Merida & Centurion 1 Sales $ 629,085 T/T 14 days or O/A 150 days 3 Merida U.K. 1 Sales 430,949 O/A 120 days 2 Merida Jiangsu 1 Sales 246,443 O/A 90 days 1 Merida Benelux 1 Sales 183,177 O/A 180 days 1 Merida Norge 1 Sales 169,182 T/T 14 days or O/A 120 days 1 Merida China 1 Cost of sales 205,561 T/T 90 days 1 1 Merida Jiangsu Merida Shandong 2 Sales RMB 294,100 T/T 90 days 6 2 Merida China Merida Shandong 2 Sales RMB 75,732 T/T 90 days 2 Note 1: Flow of transactions numbered as follows: (1) From parent company to subsidiary; (2) From subsidiary to subsidiary. Note 2: This transaction has been eliminated.
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- 48 - TABLE 7 MERIDA INDUSTRY CO., LTD. AND SUBSIDIARIES INFORMATION ON INVESTEES FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2025 (In Thousands of New Taiwan Dollars and Foreign Currencies) Investor Company Investee Company (Note 2) Location Main Businesses and Products Original Investment Amount As of September 30, 2025 Net Income (Loss) of the Investee Share of Profit (Loss) NoteSeptember 30, 2025 December 31, 2024 Number of Shares (In Thousands) % Carrying Amount The Corporation Share capital SBC State of Delaware, United States of America Design, development, manufacture and sale of bicycles $ 887,013 $ 887,013 3,410 35 $ 15,825,615 USD 45,107 $ 498,354 Merida B.V.I. British Virgin Islands International investment 1,362,597 1,362,597 42,500 100 3,118,529 USD 5,640 176,100 Subsidiary Merida & Centurion Stuttgart, Germany Sale of bicycles 717,346 103,725 - 90 1,350,013 EUR 3,464 61,570 Subsidiary Merida Polska Gliwice, Poland Sale of bicycles and bicycle components 113,170 113,170 - 74 84,166 PLN 661 4,050 Subsidiary Merida Norge Lysaker, Norway Sale of bicycles 168,772 168,772 211 80 101,482 NOK 5,564 13,325 Subsidiary SAIL & SURF Strobl, Austria Sale of bicycles 116,195 116,195 - 40 136,045 EUR (9) (128) Merida Czech Brno, Czech Republic Sale of bicycles 21,042 21,042 - 45 61,909 CZK 9,367 5,956 Merida Bikes SWE Madrid, Spain Sale of bicycles 18,646 18,646 1 36 57,977 EUR 109 1,381 Merida Slovakia Partizanska, Slovakia Sale of bicycles 40 40 - 30 30,147 EUR 144 1,509 Merida Japan Kanagawa, Japan Sale of bicycles 157,668 118,875 8 98 (26,241) JPY (241,261) (49,211) Subsidiary Merida Italy Reggio Emilia, Italy Sale of bicycles 19,011 19,011 566 28 11,787 EUR (215) (2,039) Merida Benelux Beekbergen, Netherlands Sale of bicycles 65,400 65,400 766 60 (37,231) EUR 266 5,571 Subsidiary Merida U.K. Nottingham, United Kingdom Sale of bicycles 40,309 40,309 482 81 66,845 GBP 155 5,160 Subsidiary Merida Korea Seoul, Republic of Korea Sale of bicycles 10,598 10,598 77 40 10,280 KRW691,219 6,166 Merida B.V.I. Share capital Merida Hong Kong Hong Kong International investment and trade USD 27,087 USD 27,087 202,800 100 USD 84,367 HKD 45,385 (Note 1) Indirectly owned subsidiary Merida SAMOA Samoa International investment USD 24,500 USD 24,500 24,500 70 USD 16,976 USD (260) (Note 1) Indirectly owned subsidiary Merida Norge Share capital Merida Sverige Gothenburg, Sweden Sale of bicycles NOK 814 NOK 814 - 100 NOK 3,761 SEK 1,142 (Note 1) Indirectly owned subsidiary Merida & Centurion Share capital Merida Europe GmbH Stuttgart, Germany Brand promotion and cycling team management EUR 25 EUR 25 - 100 EUR 2,409 EUR 506 (Note 1) Indirectly owned subsidiary Merida R&D Center GmbH Stuttgart, Germany Design and development of bicycles EUR 25 EUR 25 - 100 EUR 1,027 EUR 499 (Note 1) Indirectly owned subsidiary Merida Japan Share capital Miyata Kanagawa, Japan Sale of bicycles JPY 62,371 JPY 62,371 - 100 JPY (189,828) JPY (54,298) (Note 1) Indirectly owned subsidiary Note 1: Not applicable. Note 2: Significant intercompany accounts and transactions have been eliminated.
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- 49 - TABLE 8 MERIDA INDUSTRY CO., LTD. AND SUBSIDIARIES INFORMATION ON INVESTMENTS IN MAINLAND CHINA FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2025 (In Thousands of New Taiwan Dollars and Foreign Currencies) Investee Company Main Businesses and Products Paid-in Capital Method of Investment Accumulated Outward Remittance for Investment from Taiwan as of January 1, 2025 Remittance of Funds Accumulated Outward Remittance for Investment from Taiwan as of September 30, 2025 Net Income of the Investee % Ownership of Direct or Indirect Investment Investment Gain (Note 1) Carrying Amount as of September 30, 2025 (Note 1) Accumulated Repatriation of Investment Income as of September 30, 2025 Outward Inward Merida China Manufacture and sale of bicycles $ 373,865 (USD 12,280) The investment was made through a corporation established in a third country, which, in turn, invested in companies located in mainland China $ 337,544 (USD 11,087) $ - $ - $ 337,544 (USD 11,087) $ (24,144) 100 $ (24,144) $ 335,662 $ 1,904,852 (USD 62,567) Merida Shandong Manufacture and sale of e-bikes and bicycles 487,120 (USD 16,000) The investment was made through a corporation established in a third country, which, in turn, invested in companies located in mainland China 487,120 (USD 16,000) - - 487,120 (USD 16,000) 205,800 100 205,800 2,169,136 1,629,569 (USD 53,525) Merida Jiangsu Manufacture and sale of e-bikes and bicycles 1,065,575 (USD 35,000) The investment was made through a corporation established in a third country, which, in turn, invested in companies located in mainland China 502,343 (USD 16,500) - - 502,343 (USD 16,500) (8,211) 70 (5,748) 483,714 - Accumulated Outward Remittance for Investments in Mainland China as of September 30, 2025 Investment Amounts Authorized by the Investment Commission, MOEA Upper Limit on the Amount of Investment Stipulated by the Investment Commission, MOEA $ 1,327,006 ( USD 43,587 ) $ 1,391,793 ( USD 45,715 ) (Note 2 ) $ 11,683,306 (Note 3 ) Note 1: The investment gain and carrying amount as of September 30, 2025 are recognized according to the financial statements reviewed by the Corporation’s independent auditors. Note 2: The amount includes the upper limit of the investment amount for Merida China of USD13,215 thousand, USD 16,000 thousand for Merida Shandong and USD16,500 thousand for Merida Jiangsu. Note 3: Amounts are based on the upper limit of the investment amount regulated by the “Regulation for Screening of Application to Engage in Technical Cooperation in Mainland China”.