1.

Corporate Governance Implementation

(1)

Does the company declare its corporate social responsibility policy and examine the results of the implementation?

V

(1)

Not yet established.

The Company will plan the same, if necessary.

(2)

Does the company provide educational training on corporate social responsibility on a regular basis?

V

(2)

The Company establishes the “Work Rules” to regulate employees’ conduct and compliance, and strengthens the business ethics and corporate social responsibility through educational training each year. The internal/external educational training was attended by a total of 82 persons for 41 working hours in 2017. Since 2018, all employees are required to attend the training courses each year.

None

(3)

Does the company establish exclusively (or concurrently) dedicated first-line managers authorized by the board to be in charge of proposing the corporate social responsibility policies and reporting to the board?

V

(3)

Not yet established.

The Company will plan the same, if necessary.

(4)

Does the company declare a reasonable salary remuneration policy, and integrate the employee performance appraisal system with its corporate social responsibility policy, as well as establish an effective reward and disciplinary system?

V

(4)

1.

According to Paragraph 3 of Article 27 of the Company’s Articles of Incorporation, the remuneration to employees shall be no less than 1% of the profit sought by the Company in then year. Furthermore, the motion for allocation of remuneration to employees and managerial officers was resolved and passed by the directors’ meeting on January 19, 2018.

2.

The Company authorizes the salary level based on the employees’ educational background/working experience, expertise, seniority and personal performance. The employees’ basic pay will not vary based on their gender, race, religion, political affiliation, marital status and labor union/society.

3.

The employees’ performance appraisal system and reward & punishment policy shall be subject to the Company’s personnel management regulations.

None

2.

Sustainable Environment Development

(1)

Does the company endeavor to utilize all resources more efficiently and use renewable materials which have low impact on the environment?

V

(1)

For water resource, the Company installed the equipment engaged in recycling water.  Treated wastewater would be used to water plants and flush in the toilet to diversify the purpose of water and make use of resources smartly. The scraps generated in the process of production were recycled or reused in various manners by attributes to raise the life cycle of resources.

None

(2)

Does the company establish proper environmental management systems based on the characteristics of their industries?

V

(2)

All of the Company’s factory premises have passed the ISO-14001 certification.

None

(3)

Does the company monitor the impact of climate change on its operations and conduct greenhouse gas inspections, as well as establish company strategies for energy conservation and carbon reduction?

V

(3)

1.

The Company set the objectives for “recycling of resources and unlimited carbon reduction” to guide the following promotion of carbon reduction plans, including optimization of energy utilization efficiency and installation of solar panels inside the factory premises.

2.

To save energy and reduce carbon, the Company was guided by ITRI to provide the energy saving technology service, technology consultation, propagation & training, and exchange observation to a total of four factory premises from 2014 to 2016.  The Company provided various factory premises with the suggestion about improvement on energy saving policy, and helped each factory premises set the energy saving target and corrective action plan.  As a result, the Company has saved the power of about 1,797 thousand kWh for three years, and was honored the Excellence Award by Ministry of Economic Affairs in 2017.

3.

Aimed to reduce the waste by 5% in 2017; recycled or reused waste or generated recycled resources to reduce output of waste; achievement rate 27.03% attained.The CO2 emissions of water, power, LPG and fuel of the Company in the most recent two (2) years:

Statistic Unit:  /Year (Ton)

None

3.

Preserving Public Welfare

(1)

Does the company formulate appropriate management policies and procedures according to relevant regulations and the International Bill of Human Rights?

V

(1)

The Company complies with the local laws and regulations applicable in the jurisdictions where the Company’s operating bases are located, and also follows the internationally accepted human rights standards, such as “International Bill of Human Rights”, “Core Labor Standards of ILO Basic Convention”, and “Ten Principles Under The United Nations Global Compact”, treats current workers, workers by contract and temporary employees and interns with respect and dignity, and establishes various regulations and systems under these laws.

None

(2)

Has the company set up an employee hotline or grievance mechanism to handle complaints with appropriate solutions?

V

(2)

The Company has set up such email box or tangible mailbox as the “Bulletin”, “Internal Communication Mailbox”, “Sexual Harassment Complaining Mailbox” and “Welfare Committee Mailbox”.  The related applications have been completed in a timely manner.

None

(3)

Does the company provide a healthy and safe working environment and organize training on health and safety for its employees on a regular basis?

V

(3)

The Company has organized the health examination for employees periodically, and established the “Code of Safety and Health” at the factory premises and organized the educational training periodically to prevent any labor safety incident.

None

(4)

Does the company setup a communication channel with employees on a regular basis, as well as reasonably inform employees of any significant changes in operations that may have an impact on them?

V

(4)

1.

Per the relevant laws and regulations, the Company calls the labor-management meeting on a quarterly basis.

2.

Call the worker welfare meeting per quarter to discuss and resolve the expenditure of welfare fund with the Worker Welfare Committee members.

None

(5)

Does the company provide its employees with career development and training sessions?

V

(5)

The Company has established the regulations governing subsidy for employees’ educational training and on-the-job training.

None

(6)

Does the company establish any consumer protection mechanisms and appealing procedures regarding research development, purchasing, producing, operating and service?

V

(6)

1.

The Company has established the “Regulations Governing Customer Service”, and set up the consumer service hotline at 0800-213168 via which dedicated personnel would be assigned to process customers’ complaints, and the QA Center would be required to verify the cause and feed back complete investigation report within ten (10) days at latest.  All of the products have been insured under product liability insurance.

2.

The Company established the standard operating procedures for marketing of products and recycling of waste to maintain the quality stability and consumers’ trust.

3.

The Company arranged the communication meetings with major customers each year.

None

(7)

Does the company advertise and label its goods and services according to relevant regulations and international standards?

V

(7)

1.

The Company has passed the ISO 9001 quality management system certification, ISO 13485 medical equipment quality management system certification, and ISO 22716 cosmetics safety management system certification.

2.

The Company marketed and labeled the products strictly in accordance with the international standards,and related laws and regulations prevailing in the sales market.

None

(8)

Does the company evaluate the records of suppliers’ impact on the environment and society before taking on business partnerships?

V

(8)

The Company performed evaluation on important suppliers and contractors to ensure their compliance with the local laws and regulations.

None

(9)

Do the contracts between the company and its major suppliers include termination clauses which come into force once the suppliers breach the corporate social responsibility policy and cause appreciable impact on the environment and society?

V

(9)

The Company asked the main suppliers and contractors to sign the “Code of Conduct for Suppliers” to undertake compliance with the local laws and regulations. If the suppliers or contractors caused significant effects to the society and environment, the Company would terminate or rescind the cooperation at any time.

None

4.

Enhancing Information Disclosure

Does the company disclose relevant and reliable information regarding its corporate social responsibility on its website and the Market Observation Post System (MOPS)?

V

The Company disclosed related information via website, annual report and MOPS.

None

5.

If the Company has established the corporate social responsibility principles based on “the Corporate Social Responsibility Best-Practice Principles for TWSE/TPEx Listed Companies”, please describe any discrepancy between the Principles and their implementation：

The Company has not yet established its own corporate social responsibility best-practice principles, but it upheld the “Corporate Social Responsibility Best-Practice Principles for TWSE/TPEx Listed Companies” to feed back to the society and strengthen its corporate social responsibility.  So far, no significant deviation of its policy from said Principles has existed.

6.

Other important information to facilitate better understanding of the company’s corporate social responsibility practices：

(1)

Awards for products:

With the strong sense of mission toward social responsibility, the Company oriented its production toward the products at fair price and with high quality, and R&D toward the products beneficial to the society.  For example, the Company’s “Carnation sanitary napkin pure cotton series” won Taiwan Excellence Award 2018.  The “KNH Trauma Dressing Bandage”  co-developed by the Company and National Defense Medical Center was honored the National Innovation Awards of 13th term.  Further, the Company was honored the excellence award by Ministry of Economic Affairs for “energy reduction service corps” from 2014 to 2016.

(2)

The Company has developed its business in the territories of Tainan for about five (5) decades, and spared no effort in giving back to local society or in providing care for disadvantaged groups.  For example, it worked with United Way of Taiwan, which collected the needs of various social welfare entities toward child, baby and maternity products and conveyed the same to the Company. Then, the Company would deliver the products as needed to such entities.  By doing so, the Company supported multiple social welfare entities.  Furthermore, in order to maintain local cultural assets, the Company donated fund to support the local belief to maintain the cultural assets, drive the local tourism and activate the local economy.  This year, the Company donated NT$2.9 million in total. Meanwhile, the Company established the tourism factory, “KNH Nonwoven World”, to respond to the idea of Tainan City Government about boosting of the local industry, culture and tourism education value.  The factory was also certified by Industrial Development Bureau, Ministry of Economic Affairs.  In general, the Company fulfilled its corporate social responsibility in said manners.

7.

A clear statement shall be made below if the corporate social responsibility reports were verified by external certification institutions: None.