Neo Solar Power Corp. and Subsidiaries

Transcription

1 Neo Solar Power Corp. and Subsidiaries Consolidated Financial Statements for the Years Ended December 31, 2017 and 2016 and Independent Auditors Report

2 DECLARATION OF CONSOLIDATION OF FINANCIAL STATEMENTS OF AFFILIATES The companies required to be included in the consolidated financial statements of affiliates in accordance with the Criteria Governing Preparation of Affiliation Reports, Consolidated Business Reports and Consolidated Financial Statements of Affiliated Enterprises for the year ended December 31, 2017 are all the same as the companies required to be included in the consolidated financial statements of parent and subsidiary companies as provided in International Financial Reporting Standard 10 Consolidated and Separate Financial Statements. Relevant information that should be disclosed in the consolidated financial statements of affiliates has all been disclosed in the consolidated financial statements of parent and subsidiary companies. Hence, we have not prepared a separate set of consolidated financial statements of affiliates. Very truly yours, Neo Solar Power Corporation By: CHUM SAM HONG Chairman March 30,

3 INDEPENDENT AUDITORS REPORT The Board of Directors and Shareholders Neo Solar Power Corp. Opinion We have audited the accompanying financial statements of Neo Solar Power Corp. and its subsidiaries (collectively referred to as the Corporation), which comprise the consolidated balance sheets as of December 31, 2017 and 2016, and the consolidated statements of comprehensive income, changes in equity and cash flows for the years then ended, and the notes to the consolidated financial statements, including a summary of significant accounting policies. In our opinion, based on our audits and the report of other auditors (refer to the Other Matter section of this report), the accompanying consolidated financial statements present fairly, in all material respects, the financial position of the Corporation as of December 31, 2017 and 2016, and its consolidated financial performance and its consolidated cash flows for the years then ended in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers, and International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), IFRIC Interpretations (IFRIC), and SIC Interpretations (SIC) endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China. Basis for Opinion We conducted our audits in accordance with the Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants and auditing standards generally accepted in the Republic of China. Our responsibilities under those standards are further described in the Auditors Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Corporation in accordance with The Norm of Professional Ethics for Certified Public Accountant of the Republic of China, and we have fulfilled our other ethical responsibilities in accordance with these requirements. Based on our audits and the reports of other auditors, we believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Key Audit Matters Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements for the year ended December 31, These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. Key audit matters for the Corporation s consolidated financial statements for the year ended December 31, 2017 are stated as follows: Revenue recognition The Corporation s major income source is solar cell and module sales. In 2017, revenue from the sale of solar cells and modules decreased 42.86% observably compared with the last year s corresponding period (refer to Note 28 to the accompanying consolidated financial statements for details on revenue). Also, the customer - 2 -

4 base of the Corporation changed significantly this year. Thus, regarding revenue recognition, there may be a high risk that revenue did not occur. Our audit procedures performed in respect of the above key audit matter included the following: 1. Understood and tested the design and operating effectiveness of the internal controls over revenue recognition to assess whether revenue recognition had been approved appropriately and the rights and risks of ownership had already been transferred. 2. Confirmed the accuracy of the amounts and timing of revenue recognition by selecting samples and obtaining relevant evidence. 3. Confirmed the authenticity of the background information for the 10 largest new customers. Assessment of impairment losses on prepayments of long-term purchase contracts To stabilize the supply of raw materials in the manufacturing process, the Corporation signed several long-term materials supply agreements and made certain prepayments to deduct actual purchases. The assessment of impairment losses on prepayments may be influenced by any worsening of the supplier s financial position, negative variances in the solar energy industry, and declining prices of raw materials; any of these factors could result in a deceleration in the use of the prepayments. The assessment of impairment losses on prepayments by key management personnel is related to estimations of future cash flows and the identification of rates for recognizing impairment losses. Therefore, the assessment of impairment losses on prepayments is a key audit matter. The accounting policies on impairment losses on prepayments can be found in Notes 4-l and 5 to the accompanying consolidated financial statements. For the description of impairment losses on prepayments, refer to Notes 21 and 41 to the consolidated financial statements. Our audit procedures performed in respect of the above key audit matter included the following: 1. Assessed the reasonableness of the method used by key management personnel for recognizing impairment losses as well as the reasonableness of assumptions. 2. Tested the accuracy of relevant calculations of prepayment deductions and confirmed that the impairment loss was properly recognized when prepayments would not be fully applied. Other Matter Some subsidiaries included in the Corporation s consolidated financial statements were audited by other auditors. The amounts within the consolidated financial statements for those subsidiaries were based solely on the report from other auditors. As of December 31, 2017 and 2016, total assets of the aforementioned subsidiaries were 26.27% and 23.84% of the consolidated total assets, respectively. For the years ended December 31, 2017 and 2016, the operating revenue of these subsidiaries were 5.63% and 4.02% of the consolidated total operating revenue, respectively. The financial statements of some investee companies accounted for using the equity method were audited by other auditors. The amounts within the consolidated financial statements for those investee companies were based solely on the report from other auditors. As of December 31, 2017 and 2016, the aforementioned investments accounted for using the equity method were NT$32,650 thousand and NT$68,889 thousand, respectively. For the years ended December 31, 2017 and 2016, there was a loss of NT$(5,944) thousand and a gain of NT$11,363 thousand, respectively, from the aforesaid investments accounted for using the equity method

5 Some subsidiaries included in the Corporation s consolidated financial statements, which we have not audited but were audited by other auditors in accordance with different auditing standards, are based on a different framework than the accompanying consolidated financial statements. We have performed compulsory audit procedures for transferring adjustments of the reports to be in accord with the Regulations Governing the Preparation of Financial Reports by Securities Issuers. The consolidated financial statement amounts for the aforementioned subsidiaries were based on the reports of other auditors and the results of additional audit procedures enacted in accordance with the Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants and auditing standards generally accepted in the Republic of China. As of December 31, 2017 and 2106, total assets of the aforementioned subsidiaries were 5.60% and 1.60% of the consolidated total assets, respectively. For the years ended December 31, 2017 and 2016, the operating revenue of these subsidiaries was 0.38% and 0.26% of the consolidated total operating revenue, respectively. The financial statements of some investee companies accounted for using the equity method, which we have not audited but were audited by other auditors in accordance with different auditing standards, are based on a different framework from the accompanying consolidated financial statements. We have performed compulsory audit procedures for transferring adjustments of the reports to be in accord with the Regulations Governing the Preparation of Financial Reports by Securities Issuers. The consolidated financial statement amounts for the aforementioned investee companies were based on the reports of other auditors and the results of additional audit procedures enacted in accordance with the Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants and auditing standards generally accepted in the Republic of China. As of December 31, 2017 and 2016, the aforesaid investments accounted for using the equity method were NT$3,590 thousand and NT$1,297,472 thousand, respectively. For the year ended December 31, 2017 and 2016, the Corporations share of the gains and losses of the aforesaid investments accounted for using the equity method were a loss of NT$(28,413) thousand and a gain of NT$33,184 thousand, respectively. The financial statements of some investee companies accounted for using the equity method as of and for the year ended December 31, 2017, which are based on a different framework from the accompanying consolidated financial statements and which we have not audited, were audited by other auditors. We have performed compulsory audit procedures for transferring adjustments of the reports to be in accord with the Regulations Governing the Preparation of Financial Reports by Securities Issuers. The consolidated financial statement amounts for the aforementioned investee companies were based on the reports of other auditors. As of December 31, 2017, the aforesaid investments accounted for using the equity method were NT$81,718 thousand. For the year ended December 31, 2017, the Corporation s share of the losses of the aforesaid investments accounted for using the equity method was NT$(18,562) thousand. We have also audited the parent company only financial statements of the Corporation as of and for the years ended December 31, 2017 and 2016 on which we have issued an unqualified opinion with Other Matters. Responsibilities of Management and Those Charged with Governance for the Consolidated Financial Statements Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers, and International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), IFRIC Interpretations (IFRIC), and SIC Interpretations (SIC) endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China, and for such internal control as management determines is necessary to enable the preparation of the consolidated financial statements that are free from material misstatement, whether due to fraud or error. In preparing the consolidated financial statements, management is responsible for assessing the Corporation s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Corporation or to cease operations, or has no realistic alternative but to do so

6 Those charged with governance, including the audit committee, are responsible for overseeing the Corporation s financial reporting process. Auditors Responsibilities for the Audit of the Consolidated Financial Statements Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the auditing standards generally accepted in the Republic of China will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements. As part of an audit in accordance with the auditing standards generally accepted in the Republic of China, we exercise professional judgment and maintain professional skepticism throughout the audit. We also: 1. Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. 2. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Corporation s internal control. 3. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. 4. Conclude on the appropriateness of management s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Corporation s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors report. However, future events or conditions may cause the Corporation to cease to continue as a going concern. 5. Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation. 6. Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Corporation to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the audit. We remain solely responsible for our audit opinion. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards

7 From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements for the year ended December 31, 2017 and are therefore the key audit matters. We describe these matters in our auditors report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. The engagement partners on the audit resulting in this independent auditors report are Cheng-Chih Lin and Shu-Chieh Huang. Deloitte & Touche Taipei, Taiwan Republic of China March 30, 2018 Notice to Readers The accompanying consolidated financial statements are intended only to present the consolidated financial position, financial performance and cash flows in accordance with accounting principles and practices generally accepted in the Republic of China and not those of any other jurisdiction. The standards, procedures and practices to audit such consolidated financial statements are those generally applied in the Republic of China. For the convenience of readers, the independent auditors report and the accompanying consolidated financial statements have been translated into English from the original Chinese version prepared and used in the Republic of China. If there is any conflict between the English version and the original Chinese version or any difference in the interpretation of the two versions, the Chinese-language independent auditors report and consolidated financial statements shall prevail

8 NEO SOLAR POWER CORP. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2017 AND 2016 (In Thousands of New Taiwan Dollars) 2017 Amount ASSETS CURRENT ASSETS Cash and cash equivalents (Notes 4,6, 33, 34, 35 and 38) Financial assets at fair value through profit or loss - current (Notes 4, 7 and 38) Debt investments with no active market - current (Notes 4, 10 and 38) Notes and accounts receivable, net (Notes 4, 5, 11 and 38) Accounts receivable from related parties (Notes 4, 5, 11, 38 and 39) Finance lease receivables (Notes 4, 5, 12, 18, 38 and 40) Amount due from customers for construction contracts (Notes 4, 13, 38 and 39) Other receivables (Notes 4, 11 and 38) Other receivables from related parties (Notes 4, 11, 38 and 39) Current tax assets (Notes 4 and 30) Inventories (Notes 4, 14 and 40) Prepayments (Notes 4, 5, 20, 21, 39 and 41) Non-current assets held for sale (Notes 4, 15, 18 and 40) Other current assets (Notes 21, 38 and 40) $ Total current assets 2016 Amount % 4,430, ,300, , ,295 $ % 2017 Amount LIABILITIES AND EQUITY 8,007, , ,256 2,581, ,322 98, ,295 99,626 1,765,926 8,557 2,972, , ,778 1,079, , ,012 8,031 4,883, ,262 39, , ,573, ,648, CURRENT LIABILITIES Short-term bank loans (Notes 22, 38 and 40) Short-term bills payable (Notes 22 and 38) Financial liabilities at fair value through profit or loss - current (Notes 4, 7 and 38) Notes and accounts payable (Note 38) Accounts payable to related parties (Notes 38 and 39) Amount due to customers for construction contracts (Notes 4, 13, 38 and 39) Bonuses payable to employees and directors (Note 29) Payables to contractors and equipment suppliers (Notes 38 and 39) Accrued expenses (Notes 4, 24, 38 and 39) Current tax liabilities (Notes 4 and 30) Provisions - current (Notes 4 and 25) Receipts in advance (Note 39) Current portion of long-term bank loans and preference share liabilities (Notes 22, 23, 38 and 40) Other current liabilities (Note 24) $ Total current liabilities NON-CURRENT ASSETS Financial assets at fair value through profit or loss - non-current (Notes 4, 7 and 38) Available-for-sale financial assets - non-current (Notes 4, 8 and 38) Financial assets carried at cost - non-current (Notes 4, 9 and 38) Debt investments with no active market - non-current (Notes 4, 10 and 38) Investments accounted for using the equity method (Notes 4 and 17) Property, plant and equipment (Notes 4, 5, 15, 18, 39 and 40) Intangible assets (Notes 4, 19 and 33) Deferred tax assets (Notes 4 and 30) Finance lease receivables - non-current (Notes 4, 5, 12, 18, 38 and 40) Prepayments - non-current (Notes 4, 5, 20, 21 and 41) Refundable deposits (Notes 4, 39 and 40) Other receivables from related parties - non-current (Notes 4, 11, 38 and 39) Prepayments for leases (Notes 4 and 20) Other non-current assets (Notes 21 and 40) Total non-current assets 141, ,065 54, ,240 1,887,773 11,162, ,350 90,529 3,798,494 1,010, , ,688 54, ,395 2,029,759 12,097, ,879 45,430 1,640,449 1,383, , ,664 19,700 1,940, ,798 22, , ,672, ,206, NON-CURRENT LIABILITIES Financial liabilities at fair value through profit or loss - non-current (Notes 4, 7 and 38) Bonds payable (Notes 4, 23, 38 and 40) Long-term bank loans (Notes 22, 38 and 40) Provisions - non-current (Notes 4 and 25) Deferred tax liabilities (Notes 4 and 30) Guarantee deposits Preference share liabilities (Notes 4, 22 and 38) Other non-current liabilities (Note 24) Total non-current liabilities Total liabilities EQUITY ATTRIBUTABLE TO SHAREHOLDERS OF THE PARENT (Notes 27, 32 and 35) Common shares Capital surplus Retained earnings Accumulated deficit Other equity Total equity attributable to shareholders of the parent NON-CONTROLLING INTERESTS (Notes 16 and 35) Total equity TOTAL $ 34,245, $ 36,854, TOTAL The accompanying notes are an integral part of the consolidated financial statements. (With Deloitte & Touche auditors report dated March 30, 2018) -7- $ 2016 Amount % 8,229, , ,742 1,104,640 12,820 $ % 7,541, , ,912 1,178, , ,963 8, ,879 2,536,941 19,462 1, , , ,513 1,640,534 3,943 4,890 90, ,101,105 98, ,430,815 93, ,679, ,833, ,014 3,425,011 2,158, ,033 53,125 36,595 26, , ,616,038 3,214, ,018 42,085 39, , ,228, ,342, ,908, ,175, ,192,564 6,028, ,176,152 12,345, (4,611,501) (529,826) (14) (2 ) (6,309,786) (148,761) (17) (1 ) 11,079, ,062, , , ,337, ,679, ,245, ,854, $

9 NEO SOLAR POWER CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2017 AND 2016 (In Thousands of New Taiwan Dollars, Except Loss Per Share) Amount % Amount % NET SALES (Notes 4, 28, 39 and 41) $ 10,247, $ 16,537, COST OF SALES (Notes 4, 14, 29, 39 and 41) 12,204, ,451, GROSS LOSS (1,956,717) (19) (1,914,803) (12) (UNREALIZED) REALIZED GAINS FROM SALES (26,678) - 2,430 - REALIZED GROSS LOSS (1,983,395) (19) (1,912,373) (12) OPERATING EXPENSES (Notes 29 and 39) Selling 761, ,759 6 General and administrative 723, ,980 5 Research and development 266, ,283 2 Total operating expenses 1,751, ,065, OTHER INCOME AND EXPENSES (Notes 15, 18 and 29) (158,372) (2) (2,373,564) (14) LOSS FROM OPERATIONS (3,892,948) (38) (6,350,959) (39) NON-OPERATING INCOME AND EXPENSES Gain on disposal of investments 344, ,240 - Interest income (Notes 29 and 39) 162, ,757 1 Other income (Notes 29 and 39) 85, ,750 - Foreign exchange gain (loss), net (Notes 29 and 39) 73,979 1 (13,536) - Dividends income 4, Share of profit of associates and joint ventures (Notes 4 and 17) 1,488-10,754 - Gain on disposal of power facilities business (Note 12) ,830 - Other gains and losses (4,123) - (19,864) - (Loss) gain on financial instruments at fair value through profit or loss (Notes 4 and 7) (179,008) (2) 191,484 1 Finance costs (Notes 22 and 29) (726,152) (7) (431,063) (2) Total non-operating income and expenses (237,778) (3) (64,648) - (Continued) - 8 -

10 NEO SOLAR POWER CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2017 AND 2016 (In Thousands of New Taiwan Dollars, Except Loss Per Share) Amount % Amount % LOSS BEFORE INCOME TAX $ (4,130,726) (41) $ (6,415,607) (39) INCOME TAX (EXPENSE) BENEFIT (Notes 4 and 30) (29,263) - 6,733 - NET LOSS FOR THE YEAR (4,159,989) (41) (6,408,874) (39) OTHER COMPREHENSIVE (LOSS) INCOME (Note 29) Items that may be reclassified subsequently to profit or loss: Exchange differences on translating foreign operations (344,571) (3) (364,154) (2) Unrealized (losses) gains on available-for-sale financial assets (18,623) - 17,815 - Total other comprehensive loss (363,194) (3) (346,339) (2) TOTAL COMPREHENSIVE LOSS FOR THE YEAR $ (4,523,183) (44) $ (6,755,213) (41) NET LOSS ATTRIBUTABLE TO: Shareholders of the parent $ (4,154,163) (41) $ (6,309,786) (38) Non-controlling interests (5,826) - (99,088) (1) $ (4,159,989) (41) $ (6,408,874) (39) TOTAL COMPREHENSIVE LOSS ATTRIBUTABLE TO: Shareholders of the parent $ (4,479,244) (44) $ (6,622,416) (40) Non-controlling interests (43,939) - (132,797) (1) $ (4,523,183) (44) $ (6,755,213) (41) LOSS PER SHARE (Note 31) Basic loss per share $ (4.08) $ (6.53) Diluted loss per share $ (4.08) $ (6.53) The accompanying notes are an integral part of the consolidated financial statements. (With Deloitte & Touche auditors report dated March 30, 2018) (Concluded) - 9 -

11 NEO SOLAR POWER CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY YEARS ENDED DECEMBER 31, 2017 AND 2016 (In Thousands of New Taiwan Dollars) Equity Attributable to Shareholders of the Parent Capital Surplus Difference between Consideration and Carrying Amounts Adjusted Arising from Retained Earnings Other Equity Conversion Conversion Changes in Unappropriated Foreign Unrealized Common Shares Premium of Option of Percentage of Earnings Currency (Losses) Gains on Unearned Shares Convertible Convertible Ownership in Employee Share Restricted Shares (Accumulated Translation Available-for-sale Employees Non-controlling (In Thousands) Common Shares Share Premium Bonds Bonds Subsidiaries Options for Employees Legal Reserve Deficits) Reserve Financial Assets Benefits Total Interests Total Equity BALANCE AT JANUARY 1, ,161 $ 8,581,617 $ 11,404,787 $ 507,846 $ 156,427 $ 13,731 $ 3,022 $ 125,661 $ 69,422 $ (1,238,096 ) $ 239,609 $ (71,074 ) $ (36,658 ) $ 19,756,294 $ 599,556 $ 20,355,850 Offset of deficit against legal reserve (69,422 ) 69, Offset of deficit against capital surplus - - (1,168,674 ) ,168, Issuance of common shares for cash 160,000 1,600,000 1,270, ,870,218-2,870,218 Reclassification of conversion option expired for convertible bonds ,273 (507,846 ) (156,427 ) Cancellation of restricted shares for employees (546 ) (5,465 ) (7,012 ) , Compensation costs of restricted shares for employees ,515 19,515-19,515 Compensation costs of employee share options , , ,442 Actual disposals or acquisitions of interests in subsidiaries ,575 36,867 Non-controlling interests , ,903 Net loss for the year ended December 31, (6,309,786 ) (6,309,786 ) (99,088 ) (6,408,874 ) Other comprehensive (loss) income for the year ended December 31, 2016, net of income tax (330,445 ) 17,815 - (312,630 ) (33,709 ) (346,339 ) Total comprehensive (loss) income for the year ended December 31, (6,309,786 ) (330,445 ) 17,815 - (6,622,416 ) (132,797 ) (6,755,213 ) BALANCE AT DECEMBER 31, ,017,615 10,176,152 12,209, ,023 3, ,649 - (6,309,786 ) (90,836 ) (53,259 ) (4,666 ) 16,062, ,631 16,679,582 Offset of deficit against capital surplus - - (6,309,786 ) ,309, Reclassification of issuance of share premium , (3,022 ) (117,440 ) Cancellation of restricted shares for employees (214 ) (2,138 ) (1,627 ) , Issued restricted shares for employees 1,855 18, , (26,805 ) Compensation cost of restricted shares for employees ,668 7,668-7,668 Compensation costs of employee share options Disposal of subsidiaries (33,019 ) (33,019 ) Actual disposals or acquisitions of interests in subsidiaries (14,023 ) (445,947 ) (40,612 ) - - (500,582 ) (454,228 ) (954,810 ) Effect of reorganization (11,391 ) (11,391 ) 11,391 - Acquired non-controlling interest fair value adjustments (14,267 ) (14,267 ) Non-controlling interests , ,793 Net loss for the year ended December 31, (4,154,163 ) (4,154,163 ) (5,826 ) (4,159,989 ) Other comprehensive loss for the year ended December 31, 2017, net of income tax (306,458 ) (18,623 ) - (325,081 ) (38,113 ) (363,194 ) Total comprehensive loss for the year ended December 31, (4,154,163 ) (306,458 ) (18,623 ) - (4,479,244 ) (43,939 ) (4,523,183 ) BALANCE AT DECEMBER 31, ,019,256 $ 10,192,564 $ 6,020,328 $ - $ - $ - $ - $ 7,837 $ - $ (4,611,501 ) $ (437,906 ) $ (71,882 ) $ (20,038 ) $ 11,079,402 $ 258,408 $ 11,337,810 The accompanying notes are an integral part of the consolidated financial statements. (With Deloitte & Touche auditors report dated March 30, 2018)

12 NEO SOLAR POWER CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2017 AND 2016 (In Thousands of New Taiwan Dollars) CASH FLOWS FROM OPERATING ACTIVITIES Loss before income tax $ (4,130,726) $ (6,415,607) Adjustments for: Depreciation 1,722,433 1,970,421 Impairment loss recognized on accounts receivable 78, ,479 Amortization 15,958 3,918 Net loss (gain) on financial assets and liabilities at fair value through profit or loss 11,530 (190,786) Gain on disposal of investments (326,766) (40,240) Gain on disposal of power facilities business - (19,830) (Reversal of) write-downs of inventories (272,126) 252,198 Share of loss of associates and joint ventures (1,488) (10,754) Impairment loss on financial assets - 1,022,882 Unrealized (realized) gain from associates 26,678 (2,430) Reclassifications from property, plant and equipment to expenses 7,313 7,928 Loss on disposal of property, plant and equipment 116, ,984 Impairment loss on property, plant and equipment 43, ,235 Impairment loss on intangible assets - 512,440 (Gain) loss on disposal of non-current assets held for sale (1,383) 8,023 Impairment loss on prepayments 487, ,114 Compensation costs of restricted shares for employees 7,668 19,515 Compensation costs of employee share options 46 39,442 Interest income (401,454) (190,405) Dividends income (4,415) - Finance costs 726, ,063 Reversal of provisions (4,249) (126,632) Net gain on foreign exchange (241,620) (3,024) 1,989,932 5,350,541 Changes in operating assets and liabilities Notes and accounts receivable 1,096,040 1,644,100 Accounts receivable from related parties (79,326) 215,595 Other receivables 1,364,171 (50,850) Other receivables from related parties (407,038) (253,845) Amount due from customers for construction contracts (64,295) - Inventory 253,424 (898,773) Prepayments (including non-current) 162,216 (282,468) Other current assets (88,016) (92,961) Notes and accounts payable (1,217) (792,385) Accounts payable to related parties (11,489) 184,769 Amount due to customers for construction contracts 71,963 - Bonuses payable to employees and directors 5,593 - Accrued expenses 16,095 (12,619) Deferred revenue (33,613) (24,412) Receipts in advance 285,835 (43,531) Other current liabilities 5,335 41,614 Provisions 40,062 47,248 Income taxes paid (41,021) (37,531) Net cash (used in) generated from operating activities 433,925 (1,421,115) CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from sale of power facilities business - 494,000 Proceeds of debt investments with no active market 146,453 - Net cash inflow on disposal of associates and joint ventures 40,682 - Acquisition of associates and joint ventures (15,800) (1,922,515) Decrease in prepayments for investments - 3,632 Net cash (outflow) inflow on acquisition of subsidiaries (143,481) 18 Net cash inflow on disposal of subsidiaries 432,697 21,050 (Continued)

13 NEO SOLAR POWER CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2017 AND 2016 (In Thousands of New Taiwan Dollars) Proceeds from sale of non-current assets held for sale $ 1,209,182 $ 2,889 Acquisition of property, plant and equipment (4,162,284) (3,375,000) Proceeds from disposal of property, plant and equipment 1,741 9,177 (Increase) decrease in restricted assets (1,528,825) 409,223 (Increase) decrease in pledged time deposits (166,856) 170,585 Decrease in pledged bank acceptances - 50,744 Decrease in finance lease receivables 91,296 76,980 (Increase) decrease in other receivables from related parties - non-current (80,826) 4,306 Financing provided to related parties (1,282,890) (140,454) Repayments by related parties 916,350 13,734 Interest received 298, ,020 Dividends received 4,415 - Increase in refundable deposits (645,599) (178,997) Decrease in refundable deposits 222,418 71,970 Increase in other non-current assets (22,125) - Decrease in other non-current assets 3,343 14,617 Net cash used in investing activities (4,681,595) (4,141,021) CASH FLOWS FROM FINANCING ACTIVITIES Increase in short-term bank loans 28,161,918 25,425,431 Decrease in short-term bank loans (27,300,484) (24,134,102) Increase in short-term bills payable 705, ,000 Decrease in short-term bills payable (348,300) (100,000) Proceeds from issue of bonds - 3,693,667 Repayments of bonds payable - (3,805,600) Proceeds from long-term bank loans 4,625,026 3,969,618 Repayments of long-term bank loans (3,510,782) (2,934,458) Proceeds from issue of preference share liabilities 34,948 - Repayments of preference share liabilities (470,000) - Increase in guarantee deposits 73 40,413 Decrease in guarantee deposits (91) (1,206) Proceeds from issuance of common shares for cash - 2,870,218 Interest paid (360,764) (234,471) (Decrease) increase in non-controlling interests (779,017) 36,867 Net cash generated from financing activities 757,927 5,126,377 EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS (86,766) (55,857) NET DECREASE IN CASH AND CASH EQUIVALENTS (3,576,509) (491,616) CASH AND CASH EQUIVALENTS, BEGINNING OF THE YEAR 8,007,136 8,498,752 CASH AND CASH EQUIVALENTS, END OF THE YEAR $ 4,430,627 $ 8,007,136 The accompanying notes are an integral part of the consolidated financial statements. (With Deloitte & Touche auditors report dated March 30, 2018) (Concluded)

14 NEO SOLAR POWER CORP. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2017 AND 2016 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise) 1. ORGANIZATION AND OPERATION Neo Solar Power Corp. (NSP) was incorporated in the Republic of China (the ROC) on August 26, NSP specializes in manufacturing high-quality solar cells, solar cell modules and wafers. NSP s main business activities include researching, developing, designing, manufacturing and selling solar cells as well as participating in other solar-related businesses. Its common shares have been listed on the Taiwan Stock Exchange (TWSE) since January For the main business activities of NSP and its subsidiaries (collectively referred to as the Corporation ), refer to Notes 16 and 43. The consolidated financial statements are presented in NSP s functional currency, the New Taiwan dollar. 2. APPROVAL OF FINANCIAL STATEMENTS The consolidated financial statements were approved by NSP s board of directors on March 20, APPLICATION OF NEW, AMENDED AND REVISED STANDARDS AND INTERPRETATIONS a. Initial application of the amendments to the Regulations Governing the Preparation of Financial Reports by Securities Issuers and the International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), Interpretations of IFRS (IFRIC), and Interpretations of IAS (SIC) (collectively, the IFRSs ) endorsed and issued into effect by the FSC Except for the following, the initial application of the amendments to the Regulations Governing the Preparation of Financial Reports by Securities Issuers and the IFRSs endorsed and issued into effect by the FSC did not have any material impact on the Corporation s accounting policies: 1) Amendment to IAS 36 Recoverable Amount Disclosures for Non-financial Assets The amendment clarifies that the recoverable amount of an asset or a cash-generating unit is disclosed only when an impairment loss on the asset has been recognized or reversed during the period. Furthermore, if the recoverable amount of an item of property, plant and equipment for which an impairment loss has been recognized or reversed is the fair value less costs of disposal, the Corporation is required to disclose the fair value hierarchy. If the fair value measurements are categorized within Level 2 or Level 3, the valuation technique and key assumptions used to measure the fair value are disclosed. The discount rate used is disclosed if such fair value less costs of disposal is measured by using the present value technique. The amendment is applied retrospectively. Refer to Notes 15, 18 and 19 for related disclosures. 2) Amendments to the Regulations Governing the Preparation of Financial Reports by Securities Issuers The amendments include additions of several accounting items and requirements for disclosures of the impairment of non-financial assets as a consequence of the IFRSs endorsed by the FSC. In addition, as a result of the post implementation review of IFRSs in Taiwan, the amendments also include an emphasis on certain recognition and measurement considerations and add requirements for disclosures of related party transactions and goodwill

15 The amendments stipulate that other companies or institutions of which the chairman of the board of directors or president serves as the chairman of the board of directors or the president, or is the spouse or second immediate family of the chairman of the board of directors or president of the Corporation are deemed to have a substantive related party relationship, unless it can be demonstrated that no control, joint control, or significant influence exists. Furthermore, the amendments require the disclosure of the names of the related parties and the relationship with whom the Corporation has significant transactions. If the transactions or balance with a specific related party is 10% or more of the Corporation s respective total transactions or balance, such transactions should be separately disclosed by the name of each related party. The amendments also require additional disclosure if there is a significant difference between the actual operation after a business combination and the expected benefit on the acquisition date. When the amendments are applied retrospectively from January 1, 2017, the disclosures of related party transactions are enhanced. Refer to Note 39 for the related disclosures. b. The Regulations Governing the Preparation of Financial Reports by Securities Issuers and the IFRSs endorsed by FSC for application starting from 2018 New IFRSs Effective Date Announced by IASB (Note 1) Annual Improvements to IFRSs Cycle Note 2 Amendments to IFRS 2 Classification and Measurement of January 1, 2018 Share-based Payment Transactions Amendments to IFRS 4 Applying IFRS 9 Financial Instruments with January 1, 2018 IFRS 4 Insurance Contracts IFRS 9 Financial Instruments January 1, 2018 (Note 3) Amendments to IFRS 9 and IFRS 7 Mandatory Effective Date of January 1, 2018 IFRS 9 and Transition Disclosures IFRS 15 Revenue from Contracts with Customers January 1, 2018 Amendments to IFRS 15 Clarifications to IFRS 15 Revenue from January 1, 2018 Contracts with Customers Amendment to IAS 7 Disclosure Initiative January 1, 2017 Amendments to IAS 12 Recognition of Deferred Tax Assets for January 1, 2017 Unrealized Losses Amendments to IAS 40 Transfers of Investment Property January 1, 2018 IFRIC 22 Foreign Currency Transactions and Advance January 1, 2018 Consideration Note 1: Unless stated otherwise, the above New IFRSs are effective for annual periods beginning on or after their respective effective dates. Note 2: The amendment to IFRS 12 is retrospectively applied for annual periods beginning on or after January 1, 2017; the amendments to IAS 28 are retrospectively applied for annual periods beginning on or after January 1, ) IFRS 9 Financial Instruments and related amendments Classification, measurement and impairment of financial assets With regard to financial assets, all recognized financial assets that are within the scope of IAS 39 Financial Instruments: Recognition and Measurement are subsequently measured at amortized cost or fair value. Under IFRS 9, the requirement for the classification of financial assets is stated below

16 For the Corporation s debt instruments that have contractual cash flows that are solely payments of principal and interest on the principal amount outstanding, their classification and measurement are as follows: a) For debt instruments, if they are held within a business model whose objective is to collect the contractual cash flows, the financial assets are measured at amortized cost and are assessed for impairment continuously with impairment loss recognized in profit or loss. Interest revenue is recognized in profit or loss by using the effective interest method; b) For debt instruments, if they are held within a business model whose objective is achieved by both the collecting of contractual cash flows and the selling of financial assets, the financial assets are measured at fair value through other comprehensive income (FVTOCI) and are assessed for impairment. Interest revenue is recognized in profit or loss by using the effective interest method, and other gains or losses are recognized in other comprehensive income, except for impairment gains or losses and foreign exchange gains and losses. When the debt instruments are derecognized or reclassified, the cumulative gain or loss previously recognized in other comprehensive income is reclassified from equity to profit or loss. Except for the above, all other financial assets are measured at fair value through profit or loss. However, the Corporation may make an irrevocable election to present subsequent changes in the fair value of an equity investment (that is not held for trading) in other comprehensive income, with only dividend income generally recognized in profit or loss. No subsequent impairment assessment is required, and the cumulative gain or loss previously recognized in other comprehensive income cannot be reclassified from equity to profit or loss. The Corporation analyzed the facts and circumstances of its financial assets that exist at December 31, 2017 and performed a preliminary assessment of the impact of IFRS 9 on the classification and measurement of financial assets. Under IFRS 9: a) Listed shares and unlisted shares classified as available-for-sale will be classified as designated as at fair value through other comprehensive income and the fair value gains or losses accumulated in other equity will be transferred directly to retained earnings instead of being reclassified to profit or loss on disposal. Besides, unlisted shares measured at cost will be measured at fair value instead; b) Debt investments classified as debt investments with no active market and measured at amortized cost will be classified as measured at amortized cost under IFRS 9 because on initial recognition, the contractual cash flows that are solely payments of principal and interest on the principal outstanding and these investments are held within a business model whose objective is to collect the contractual cash flows. IFRS 9 requires impairment loss on financial assets to be recognized by using the Expected Credit Loss Model. A credit loss allowance is required for financial assets measured at amortized cost, financial lease receivables and certain written loan commitments, IFRS 15 Revenue from Contracts with Customers and financial guarantee contracts. A loss allowance for the 12-month expected losses is required for a financial asset if its credit risk has not increased significantly since initial recognition. A loss allowance for full lifetime expected credit losses is required for a financial asset if its credit risk has increased significantly since initial recognition and is not low. However, a loss allowance for full lifetime expected credit losses is required for trade receivables that do not constitute a financing transaction. For purchased or originated credit-impaired financial assets, the Corporation takes into account the expected credit losses on initial recognition in calculating the credit-adjusted effective interest rate. Subsequently, any changes in expected losses are recognized as a loss allowance with a corresponding gain or loss recognized in profit or loss

17 For purchased or originated credit-impaired financial assets, the Corporation takes into account the expected credit losses on initial recognition in calculating the credit-adjusted effective interest rate. Subsequently, any changes in expected losses are recognized as a loss allowance with a corresponding gain or loss recognized in profit or loss. The Corporation has performed a preliminary assessment that the Corporation will apply the simplified approach to recognize lifetime expected credit losses for trade receivables, contract assets and lease receivables. In relation to the debt instrument investments and the financial guarantee contracts, the Corporation will assess whether there has been a significant increase in the credit risk to determine whether to recognize 12-month or lifetime expected credit losses. In general, the Corporation anticipates that the application of the expected credit loss model of IFRS 9 will result in earlier recognition of credit losses for financial assets. The Corporation elects not to restate prior reporting periods when applying the requirements for the classification, measurement and impairment of financial assets and financial liabilities under IFRS 9 with the cumulative effect of the initial application recognized at the date of initial application and will provide the disclosures related to the classification and the adjustment information upon initial application of IFRS 9. The anticipated impact on assets, liabilities and equity of retrospective application of the requirements for the classification, measurement and impairment of financial assets as of January 1, 2018 is set out below: Measurement Category IAS 39 IFRS 9 Carrying Amount IAS 39 IFRS 9 Note Financial asset classification Cash and cash equivalents, net accounts receivable (accounts receivable related parties), pledged tine deposits, restricted assets, refundable deposits and other receivables Equity securities Derivatives Debt investments Loans and receivables Amortized cost Available for sale Held for trading Amortized cost FVTOCI Mandatorily at FVTPL Amortized cost Amortized cost Amortized cost Held for trading Mandatorily at FVTPL $ 11,549,608 $ 11,549,608 (1) 163, , , , , ,240 (2) 20,581,872 20,581,872 99,756 99,756 Financial liabilities classification Short-term loans, short-term bills payable, notes and accounts payable, accounts payable to related parties, payables to contractors and equipment suppliers, accrued expenses, long-term loans and bonds payable Derivatives Financial Assets FVTOCI - Equity instruments Add: From available for sale Amortized cost Add: From loans and receivables Total Carrying Amount as of December 31, 2017 (IAS 39) $ $ - Reclassifications $ Remeasurements 163, ,611-11,549,608-11,549,608 $ 11,713,219 $ $ Retained Earnings Effect on January 1, 2018 Carrying Amount as of January 1, 2018 (IFRS 9) 39,817 39,817 $ 203, ,428-11,549, ,549,608 $ 11,753,036 $ Other Equity Effect on January 1, ,826 98,826 $ - $ 98,826 (59,009 ) (59,009 ) - $ (59,009 ) Note (2) (1)

18 (1) Cash and cash equivalents net accounts receivable (accounts receivable - related parties), pledged tine deposits, restricted assets, refundable deposits and other receivables were classified as loans and receivables under IAS 39 are now classified at amortized cost with assessment of future 12-month or lifetime expected credit loss under IFRS 9. (2) As equity investments that were previously classified as available-for-sale financial assets under IAS 39 are not held for trading, the Corporation elected to designate all of these investments as at FVTOCI under IFRS 9. As a result, the related other equity-unrealized gain/loss on available-for-sale financial assets of $71,882 thousand is reclassified to increase other equity - unrealized gain/loss on financial assets at FVTOCI. As equity investments previously measured at cost under IAS 39 are remeasured at fair value under IFRS 9, the adjustments would result in an increase in financial assets at FVTOCI of $39,817 thousand, an increase in other equity-unrealized gain/loss on financial assets at FVTOCI of $18,567 thousand and increase in retained earnings of $21,250 thousand on January 1, For those equity investments previously classified as available-for-sale financial assets (including measured at cost financial assets) under IAS 39, the impairment losses that the Corporation had recognized have been accumulated in retained earnings. Since these investments were designated as at FVTOCI under IFRS 9 and no impairment assessment is required, the adjustments would result in a decrease in other equity - unrealized gain/loss on financial assets at FVTOCI of $149,458 thousand and an increase in retained earnings of $77,576 thousand on January 1, ) IFRS 15 Revenue from Contracts with Customers and the related amendment IFRS 15 establishes principles for recognizing revenue that apply to all contracts with customers, and will supersede IAS 18 Revenue, IAS 11 Construction Contracts and a number of revenue-related interpretations. When applying IFRS 15, an entity shall recognize revenue by applying the following steps: a) Identify the contract with the customer; b) Identify the performance obligations in the contract; c) Determine the transaction price; d) Allocate the transaction price to the performance obligations in the contract; and e) Recognize revenue when the entity satisfies a performance obligation. Under IFRS 15, the net effect of revenue recognized and consideration received and receivable is recognized as a contract asset or a contract liability. Currently, the net effect of the progress billings, cost incurred and recognized profit (loss) of a construction contract is recognized as amounts due from (to) customers for construction contracts under IAS 11. The Corporation elects to retrospectively apply IFRS 15 to contracts that are not complete on January 1, 2018 and elects not to restate prior reporting periods with the cumulative effect of the initial application recognized at the date of initial application