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7 Current assets CHIPBOND TECHNOLOGY CORPORATION PARENT COMPANY ONLY BALANCE SHEETS (EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS) December 31, 2017 December 31, 2016 Assets Notes AMOUNT % AMOUNT % 1100 Cash and cash equivalents 6(1) $ 3,768, $ 3,433, Notes receivable, net 3,489-4, Accounts receivable, net 6(3) and 7 4,033, ,882, Other receivables 1,036-2, Other receivables - related parties 7 512, , X Inventory 6(4) 800, , Prepayments 39,172-34, Other current assets 8 53,100-55,529-11XX Total current assets 9,212, ,740, Non-current assets 1543 Financial assets carried at cost - 6(2) non-current - - 1, Investments accounted for under 6(5) equity method 6,515, ,266, Property, plant and equipment 6(6) and 8 11,792, ,842, Intangible assets 6(7)(8) 5,569, ,581, Deferred income tax assets 6(23) 149, , Other non-current assets 6(25) and 8 189, , XX Total non-current assets 24,215, ,978, XXX Total assets $ 33,427, $ 32,719, (Continued) ~6~

8 CHIPBOND TECHNOLOGY CORPORATION PARENT COMPANY ONLY BALANCE SHEETS (EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS) December 31, 2017 December 31, 2016 Liabilities and Equity Notes AMOUNT % AMOUNT % Current liabilities 2100 Short-term borrowings 6(9) $ 1,700,000 5 $ 1,250, Financial liabilities at fair value 6(10) through profit or loss - current 79-2, Notes payable Accounts payable 608, , Other payables 6(11) 3,093, ,733, Current income tax liabilities 277, , Other current liabilities 6(12) and 8 200, , XX Total current liabilities 5,880, ,312, Non-current liabilities 2540 Long-term borrowings 6(12) and 8 2,200, ,717, Deferred income tax liabilities 6(23) 357, , Other non-current liabilities 6(5)(13) 500, , XX Total non-current liabilities 3,058, ,740, XXX Total liabilities 8,938, ,052, Equity Share capital 6(15) 3110 Ordinary share 6,542, ,492, Capital surplus 6(16) 3200 Capital surplus 6,738, ,551, Retained earnings 6(17) 3310 Legal reserve 2,016, ,817, Special reserve 142, Unappropriated retained earnings 9,464, ,948, Other equity interest 6(18) 3400 Other equity interest ( 415,880) ( 2) ( 142,693) - 3XXX Total equity 24,489, ,667, Significant events after the 11 balance sheet date 3X2X Total liabilities and equity $ 33,427, $ 32,719, The accompanying notes are an integral part of these parent company only financial statements. ~7~

9 CHIPBOND TECHNOLOGY CORPORATION PARENT COMPANY ONLY STATEMENTS OF COMPREHENSIVE INCOME (EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS, EXCEPT EARNINGS PER SHARE) Years ended December Items Notes AMOUNT % AMOUNT % 4000 Operating revenue 7 $ 16,088, $ 14,759, Operating costs 6(4)(21)(22) ( 12,552,278) ( 78) ( 11,561,962) ( 78) 5900 Gross profit 3,536, ,197, Operating expenses 6(21)(22) 6100 Selling expenses ( 117,330) ( 1) ( 107,596) ( 1) 6200 General and administrative expenses ( 515,027) ( 3) ( 669,003) ( 5) 6300 Research and development expenses ( 196,925) ( 1) ( 160,289) ( 1) 6000 Total operating expenses ( 829,282) ( 5) ( 936,888) ( 7) 6900 Operating income 2,706, ,260, Non-operating income and expenses 7010 Other income 6(19) 21,856-24, Other gains and losses 6(20) ( 364,471) ( 2) ( 98,345) ( 1) 7050 Finance costs ( 52,655) ( 1) ( 86,091) Share of profit of subsidiaries, associates and joint ventures accounted for 6(5) using equity method 297, , Total non-operating income and expenses ( 97,272) ( 1) 199, Profit before income tax 2,609, ,460, Income tax expense 6(23) ( 355,561) ( 2) ( 468,700) ( 3) 8200 Profit for the year $ 2,253, $ 1,992, Other comprehensive income, net Items that will not be reclassified to profit or loss 8311 Remeasurements of defined benefit plans Items that may be subsequently reclassified to profit or loss 8380 Share of other comprehensive income of subsidiaries, associates and joint ventures accounted for using equity method 6(13) 6(5) ($ 32,328) - ($ 23,250) - ( 88,031) ( 1) ( 378,777) ( 3) 8300 Total other comprehensive loss, net ($ 120,359) ( 1) ($ 402,027) ( 3) 8500 Total comprehensive income for the year $ 2,133, $ 1,590, Earnings per share 9750 Basic earnings per share 6(24) $ 3.47 $ Diluted earnings per share 6(24) $ 3.43 $ 3.03 The accompanying notes are an integral part of these parent company only financial statements. ~8~

10 CHIPBOND TECHNOLOGY CORPORATION PARENT COMPANY ONLY STATEMENTS OF CHANGES IN EQUITY (EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS) Notes Ordinary share Capital surplus Legal reserve Retained Earnings Other equity interest Financial statements translation Unappropriated differences of Special retained foreign Other equity reserve earnings operations - others Total equity Year ended December 31, 2016 Balance at January 1, 2016 $ 6,491,870 $ 6,551,372 $ 1,610,768 $ - $ 8,549,408 $ 236,084 $ - $ 23,439,502 Distribution of earnings of 2015: 6(17) Legal reserve appropriated ,396 - ( 206,396 ) Cash dividends ( 1,363,450 ) - - ( 1,363,450 ) Exercise of employee restricted options 6(14)(15)(16) ,012 Profit for the year ,992, ,992,138 Other comprehensive loss for the year 6(13)(18) ( 23,250 ) ( 378,777 ) - ( 402,027 ) Balance at December 31, 2016 $ 6,492,620 $ 6,551,634 $ 1,817,164 $ - $ 8,948,450 ($ 142,693 ) $ - $ 23,667,175 Year ended December 31, 2017 Balance at January 1, 2017 $ 6,492,620 $ 6,551,634 $ 1,817,164 $ - $ 8,948,450 ($ 142,693 ) $ - $ 23,667,175 Distribution of earnings of 2016: 6(17) Legal reserve appropriated ,214 - ( 199,214 ) Special reserve appropriated ,693 ( 142,693 ) Cash dividends ( 1,363,450 ) - - ( 1,363,450 ) Issuance of employee restricted shares 6(14)(15)(16)(1 8) 50, , ( 237,000 ) - Compensation cost of employee restricted shares 6(14)(18)(22) ,844 51,844 Profit for the year ,253, ,253,947 Other comprehensive loss for the year 6(13)(18) ( 32,328 ) ( 88,031 ) - ( 120,359 ) Balance at December 31, 2017 $ 6,542,620 $ 6,738,634 $ 2,016,378 $ 142,693 $ 9,464,712 ($ 230,724 ) ($ 185,156 ) $ 24,489,157 The accompanying notes are an integral part of these parent company only financial statements. ~9~

11 CHIPBOND TECHNOLOGY CORPORATION PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS (EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS) Years ended December 31, Notes CASH FLOWS FROM OPERATING ACTIVITIES Profit before tax $ 2,609,508 $ 2,460,838 Adjustments Adjustments to reconcile profit (loss) Provision for bad debts expense 6(3) 1,076 - Depreciation 6(6)(21) 2,327,132 2,286,313 Amortisation of intangible assets 6(7)(21) 27,670 18,361 Net loss on financial assets at fair value through profit 6(10)(20) or loss 2 2,788 Compensation cost of share-based payments 6(14)(22) 51,844 - Impairment loss 6(2)(20) 1,160 5,700 Interest income 6(19) ( 12,036 ) ( 11,242 ) Interest expense 52,655 86,091 Share of profit of subsidiaries and associates accounted for using equity method ( 297,998 ) ( 360,099 ) Gain on disposals of property, plant and equipment 6(20) ( 31,135 ) ( 6,953 ) Changes in operating assets and liabilities Changes in operating assets Financial assets held for trading - 20 Notes receivable 1,380 ( 2,749 ) Accounts receivable ( 152,438 ) ( 653,974 ) Other receivables ( 3,954 ) ( 929 ) Inventories ( 23,045 ) ( 58,504 ) Prepayments ( 4,263 ) 22,315 Other current assets 149 5,314 Changes in operating liabilities Financial liabilities held for trading ( 2,905 ) ( 5,544 ) Notes payable ( 262 ) 209 Accounts payable ( 55,387 ) 21,581 Other payables 229, ,130 Other current liabilities 52 ( 2,580 ) Other non-current liabilities ( 21,299 ) ( 19,563 ) Cash inflow generated from operations 4,697,462 3,955,523 Interest received 12,039 11,306 Interest paid ( 53,508 ) ( 86,316 ) Income tax paid ( 414,117 ) ( 488,541 ) Net cash flows from operating activities 4,241,876 3,391,972 (Continued) ~10~

12 CHIPBOND TECHNOLOGY CORPORATION PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS (EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS) Years ended December 31, Notes CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from capital reduction of financial assets at cost $ 690 $ - Acquisition of property, plant and equipment 6(25) ( 1,485,935 ) ( 1,744,487 ) Proceeds from disposal of property, plant and equipment 49,613 42,340 Acquisition of intangible assets 6(7) ( 15,615 ) ( 42,770 ) Increase in other receivables ( 505,920 ) ( 548,250 ) Recovered amount of loans to subsidiaries 548, ,553 Decrease in restricted assets 8 17, (Increase) decrease in refundable deposits ( 423 ) 18,803 Net cash flows used in investing activities ( 1,392,064 ) ( 1,814,400 ) CASH FLOWS FROM FINANCING ACTIVITIES Increase (decrease) in short-term borrowings 450,000 ( 1,100,000 ) Increase in long-term borrowings 2,350,000 2,800,000 Repayment of long-term borrowings ( 3,950,000 ) ( 2,475,000 ) (Decrease) increase in guarantee deposits received ( 1,775 ) 178 Exercise of employee share options - 1,012 Cash dividends paid 6(17) ( 1,363,450 ) ( 1,363,450 ) Net cash flows used in financing activities ( 2,515,225 ) ( 2,137,260 ) Net increase (decrease) in cash and cash equivalents 334,587 ( 559,688 ) Cash and cash equivalents at beginning of year 3,433,691 3,993,379 Cash and cash equivalents at end of year 6(1) $ 3,768,278 $ 3,433,691 The accompanying notes are an integral part of these parent company only financial statements. ~11~

13 CHIPBOND TECHNOLOGY CORPORATION NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2017 AND 2016 (EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS, EXCEPT AS OTHERWISE INDICATED) 1. HISTORY AND ORGANISATION Chipbond Technology Corporation (the Company ) was incorporated in the Republic of China (R.O.C.). The Company is primarily engaged in research, development, manufacturing and sale of metal bump, gold bump, solder bump, flip chip, tape automated bonding, tape carrier package and others. The Company has merged with Aptos (Taiwan) Corporation, WSE Corp., International Semiconductor Ltd. and SIMPAL Electronics Corporation Limited on September 1, 2005, September 1, 2006, April 1, 2010 and August 1, 2014, respectively. The Company has retained its name as Chipbond Technology Corporation after the mergers. 2. THE DATE OF AUTHORISATION FOR ISSUANCE OF THE FINANCIAL STATEMENTS AND PROCEDURES FOR AUTHORISATION These financial statements were authorised for issuance by the Board of Directors on February 27, APPLICATION OF NEW STANDARDS, AMENDMENTS AND INTERPRETATIONS (1) Effect of the adoption of new issuances of or amendments to International Financial Reporting Standards ( IFRS ) as endorsed by the Financial Supervisory Commission ( FSC ). New standards, interpretations and amendments endorsed by the FSC effective from 2017 are as follows: Effective date by International Accounting New Standards, Interpretations and Amendments Standards Board Amendments to IFRS 10, IFRS 12 and IAS 28, Investment entities: January 1, 2016 applying the consolidation exception Amendments to IFRS 11, Accounting for acquisition of interests in January 1, 2016 joint operations IFRS 14, Regulatory deferral accounts January 1, 2016 Amendments to IAS 1, Disclosure initiative January 1, 2016 Amendments to IAS 16 and IAS 38, Clarification of acceptable January 1, 2016 methods of depreciation and amortisation ~12~

14 Effective date by International Accounting New Standards, Interpretations and Amendments Standards Board Amendments to IAS 16 and IAS 41, Agriculture: bearer plants January 1, 2016 Amendments to IAS 19, Defined benefit plans: employee contributions July 1, 2014 Amendments to IAS 27, Equity method in separate financial January 1, 2016 Amendments to IAS 36, Recoverable amount disclosures for nonfinancial January 1, 2014 assets Amendments to IAS 39, Novation of derivatives and continuation of January 1, 2014 hedge accounting IFRIC 21, Levies January 1, 2014 Annual improvements to IFRSs cycle July 1, 2014 Annual improvements to IFRSs cycle July 1, 2014 Annual improvements to IFRSs cycle January 1, 2016 The above standards and interpretations have no significant impact to the Company s financial condition and financial performance based on the Company s assessment. (2) Effect of new issuances of or amendments to IFRSs as endorsed by the FSC but not yet adopted by the Company New standards, interpretations and amendments endorsed by the FSC effective from 2018 are as follows: Effective date by International Accounting New Standards, Interpretations and Amendments Standards Board Amendments to IFRS 2, Classification and measurement of sharebased January 1, 2018 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 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 Amendments to IAS 7, Disclosure initiative January 1, 2017 Amendments to IAS 12, Recognition of deferred tax assets for unrealise January 1, 2017 Amendments to IAS 40, Transfers of investment property January 1, 2018 IFRIC 22, Foreign currency transactions and advance consideration January 1, 2018 Annual improvements to IFRSs cycle-amendments to IFRS January 1, , First-time adoption of International Financial Reporting Standards Annual improvements to IFRSs cycle-amendments to IFRS January 1, , First-time adoption of international financial reporting standards Annual improvements to IFRSs cycle-amendments to IAS January 1, , Investments in associates and joint ventures ~13~

15 The above standards and interpretations have no significant impact to the Company s financial condition and financial performance based on the Company s assessment. (3) IFRSs issued by IASB but not yet endorsed by the FSC New standards, interpretations and amendments issued by IASB but not yet included in the IFRSs as endorsed by the FSC are as follows: New Standards, Interpretations and Amendments Amendments to IFRS 9, Prepayment features with negative compensation Amendments to IFRS 10 and IAS 28, Sale or contribution of assets between an investor and its associate or joint venture Except for the following, the above standards and interpretations have no significant impact to the Company s financial condition and financial performance based on the Company s assessment. The quantitative impact will be disclosed when the assessment is complete. IFRS 16, Leases IFRS 16, Leases, replaces IAS 17, Leases and related interpretations and SICs. The standard requires lessees to recognise a 'right-of-use asset' and a lease liability (except for those leases with terms of 12 months or less and leases of low-value assets). The accounting stays the same for lessors, which is to classify their leases as either finance leases or operating leases and account for those two types of leases differently. IFRS 16 only requires enhanced disclosures to be provided by lessors. 4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The principal accounting policies, applied in the preparation of these financial statements are set out below. These policies have been consistently applied to all the periods presented, unless otherwise stated. (1) Compliance statement The financial statements of the Company have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers. Effective date by International Accounting Standards Board January 1, 2019 To be determined by International Accounting Standards Board IFRS 16, Leases January 1, 2019 IFRS 17, Insurance contracts January 1, 2021 Amendments to IAS 19, Plan amendment, curtailment or settlement January 1, 2019 Amendments to IAS 28, Long-term interests in associates and joint January 1, 2019 ventures IFRIC 23, Uncertainty over income tax treatments January 1, 2019 Annual improvements to IFRSs cycle January 1, 2019 ~14~

16 (2) Basis of preparation A. Except for the following items, the financial statements have been prepared under the historical cost convention: (a) Financial assets and financial liabilities (including derivative instruments) at fair value through profit or loss. (b)defined benefit liabilities recognised based on the net amount of pension fund assets less present value of defined benefit obligation. B. The preparation of financial statements in conformity with International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations, and SIC Interpretations as endorsed by the FSC (collectively referred herein as the IFRSs ) requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Company s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in Note 5. (3) Foreign currency translation Items included in the financial statements of the Company are measured using the currency of the primary economic environment in which the Company operates (the functional currency ). The financial statements are presented in New Taiwan dollars, which is the Company s functional and presentation currency. A. Foreign currency transactions and balances (a) Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions or valuation where items are remeasured. Foreign exchange gains and losses resulting from the settlement of such transactions are recognised in profit or loss in the period in which they arise. (b) Monetary assets and liabilities denominated in foreign currencies at the period end are retranslated at the exchange rates prevailing at the balance sheet date. Exchange differences arising upon re-translation at the balance sheet date are recognised in profit or loss. (c) Non-monetary assets and liabilities denominated in foreign currencies held at fair value through profit or loss are re-translated at the exchange rates prevailing at the balance sheet date; their translation differences are recognised in profit or loss. Non-monetary assets and liabilities denominated in foreign currencies held at fair value through other comprehensive income are re-translated at the exchange rates prevailing at the balance sheet date; their translation differences are recognised in other comprehensive income. However, nonmonetary assets and liabilities denominated in foreign currencies that are not measured at fair ~15~

17 value are translated using the historical exchange rates at the dates of the initial transactions. (d) All other foreign exchange gains and losses based on the nature of those transactions are presented in the statement of comprehensive income within other gains or losses. B. Translation of foreign operations (a) The operating results and financial position of all the group entities associates and joint arrangements that have a functional currency different from the presentation currency are translated into the presentation currency as follows: i. Assets and liabilities for each balance sheet presented are translated at the closing exchange rate at the date of that balance sheet; ii. Income and expenses for each statement of comprehensive income are translated at average exchange rates of that period; and iii. All resulting exchange differences are recognised in other comprehensive income. (b) Translation differences arising from net investments of foreign operations, borrowings for long-term investment purpose and other currency instruments designated as hedges are recognised in other comprehensive income. (c) Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing exchange rates at the balance sheet date. (4) Classification of current and non-current items A. Assets that meet one of the following criteria are classified as current assets; otherwise they are classified as non-current assets: (a) Assets arising from operating activities that are expected to be realised, or are intended to be sold or consumed within the normal operating cycle; (b) Assets held mainly for trading purposes; (c) Assets that are expected to be realised within twelve months from the balance sheet date; (d) Cash and cash equivalents, excluding restricted cash and cash equivalents and those that are to be exchanged or used to settle liabilities more than twelve months after the balance sheet date. B. Liabilities that meet one of the following criteria are classified as current liabilities; otherwise they are classified as non-current liabilities: (a) Liabilities that are to be settled within the normal operating cycle; (b) Liabilities arising mainly from trading activities; (c) Liabilities that are to be settled within twelve months from the balance sheet date; (d) Liabilities for which the repayment date cannot be extended unconditionally to more than twelve months after the balance sheet date. Terms of a liability that could, at the option of the ~16~

18 counterparty, result in its settlement by the issue of equity instruments do not affect its classification. (5) Cash equivalents Cash equivalents refer to short-term, highly liquid investments that are readily convertible to known amount of cash and which are subject to an insignificant risk of changes in value. Time deposits that meet the definition above and are held for the purpose of meeting short-term cash commitment in operations are classified as cash equivalents. (6) Financial assets at fair value through profit or loss A. Financial assets at fair value through profit or loss are financial assets held for trading. Financial assets are classified in this category of held for trading if acquired principally for the purpose of selling in the short-term. Derivatives are also categorized as financial assets held for trading unless they are designated as hedges. B. On a regular way purchase or sale basis, financial assets at fair value through profit or loss are recognised and derecognised using settlement date accounting. C. Financial assets at fair value through profit or loss are initially recognised at fair value. Related transaction costs are expensed in profit or loss. These financial assets are subsequently remeasured and stated at fair value, and any changes in the fair value of these financial assets are recognised in profit or loss. (7) Financial assets measured at cost Investments in equity instruments that do not have a quoted market price in an active market and whose fair value cannot be reliably measured or derivatives that are linked to and must be settled by delivery of such unquoted equity instruments are presented in financial assets measured at cost. (8) Accounts receivable Accounts receivable are created by the entity by providing services to customers in the ordinary course of business. Accounts receivable are initially recognised at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment. However, short-term accounts receivable without bearing interest are subsequently measured at initial invoice amount as the effect of discounting is immaterial. (9) Impairment of financial assets A. The Company assesses at each balance sheet date whether there is objective evidence that a financial asset or a group of financial assets is impaired as a result of one or more events that occurred after the initial recognition of the asset (a loss event ) and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated. B. The criteria that the Company uses to determine whether there is objective evidence of an ~17~

19 impairment loss is as follows: (a) Significant financial difficulty of the issuer or debtor; (b) A breach of contract, such as a default or delinquency in interest or principal payments; (c) The Company, for economic or legal reasons relating to the borrower s financial difficulty, granted the borrower a concession that a lender would not otherwise consider; (d) It becomes probable that the borrower will enter bankruptcy or other financial reorganisation; (e) The disappearance of an active market for that financial asset because of financial difficulties; (f) Information about significant changes with an adverse effect that have taken place in the technology, market, economic or legal environment in which the issuer operates, and indicates that the cost of the investment in the equity instrument may not be recovered; (g) A significant or prolonged decline in the fair value of an investment in an equity instrument below its cost. C. When the Company assesses that there has been objective evidence of impairment and an impairment loss has occurred, accounting for impairment is made as follows according to the category of financial assets: (a) Financial assets measured at amortised cost The amount of the impairment loss is measured as the difference between the asset s carrying amount and the present value of estimated future cash flows discounted at the financial asset s original effective interest rate, and is recognised in profit or loss. If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment loss was recognised, the previously recognised impairment loss is reversed through profit or loss to the extent that the carrying amount of the asset does not exceed its amortised cost that would have been at the date of reversal had the impairment loss not been recognised previously. Impairment loss is recognised and reversed by adjusting the carrying amount of the asset directly. (b) Financial assets measured at cost The amount of the impairment loss is measured as the difference between the asset s carrying amount and the present value of estimated future cash flows discounted at current market return rate of similar financial asset, and is recognised in profit or loss. Impairment loss recognised for this category shall not be reversed subsequently. Impairment loss is recognised by adjusting the carrying amount of the asset through the use of an impairment allowance account. ~18~

20 (10) Derecognition of financial assets The Company derecognises a financial asset when one of the following conditions is met: A. The contractual rights to receive the cash flows from the financial asset expire. B. The contractual rights to receive cash flows of the financial asset have been transferred and the Company has transferred substantially all risks and rewards of ownership of the financial asset. (11) Leases (lessor) Lease income from an operating lease (net of any incentives given to the lessee) is recognised in profit or loss on a straight-line basis over the lease term. (12) Inventories The perpetual inventory system is adopted for inventory recognition. Inventories are initially recorded at cost. The cost is determined using the weighted-average method. Ending inventories are stated at the lower of cost and net realisable value. The item by item approach is used in applying the lower of cost and net realisable value. The net realisable value of raw materials is replacement cost. (13) Investments accounted for using equity method / Subsidiaries, associates and joint ventures A. Subsidiaries are all entities (including structured entities) controlled by the Company. The Company controls an entity when the Company is exposed, or has rights, to variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. B. Unrealised gains or losses arising from transactions between the Company and subsidiaries are eliminated. Accounting policies of the subsidiaries have been adjusted where necessary to ensure consistency with the policies adopted by the Company. C. The Company s share of its subsidiaries post-acquisition profits or losses is recognised in profit or loss, and its share of post-acquisition movements in other comprehensive income is recognised in other comprehensive income. When the Company s share of losses in a subsidiary equals or exceeds its interest in the subsidiary, the Company continues to recognise losses proportionate to its ownership. D. Pursuant to the Regulations Governing the Preparation of Financial Reports by Securities Issuers, profit (loss) of the current period and other comprehensive income in the financial statements shall be equal to the amount attributable to owners of the parent in the financial statements prepared on a consolidation basis. Owners equity in the financial statements shall be equal to equity attributable to owners of the parent in the financial statements prepared on a consolidation basis. (14) Property, plant and equipment A. Property, plant and equipment are initially recorded at cost. Borrowing costs incurred during the ~19~

21 construction period are capitalised. B. Subsequent costs are included in the asset s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are charged to profit or loss during the financial period in which they are incurred. C. Property, plant and equipment apply cost model and are depreciated using the straight-line method to allocate their cost over their estimated useful lives. D. The assets residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each financial year-end. If expectations for the assets residual values and useful lives differ from previous estimates or the patterns of consumption of the assets future economic benefits embodied in the assets have changed significantly, any change is accounted for as a change in estimate under IAS 8, Accounting Policies, Changes in Accounting Estimates and Errors, from the date of the change. The estimated useful lives of property, plant and equipment are as follows: Buildings and structures (including accessory equipment) 3 ~ 50 years Machinery and equipment 5 ~ 7 years Office equipment 3 ~ 5 years Vehicles 3 ~ 5 years Other equipment 3 ~ 5 years (15) Operating leases/ (lessee) Payments made under an operating lease (net of any incentives received from the lessor) are recognised in profit or loss on a straight-line basis over the lease term. (16) Intangible assets A. Computer software Computer software is stated at cost and amortised on a straight-line basis over its estimated useful life of 1 to 3 years. B. Goodwill Goodwill arises in a business combination accounted for by applying the acquisition method and the recoverable amounts are evaluated periodically. An impairment loss is recognised for the amount by which the asset s carrying amount exceeds its recoverable amount. Impairment loss of goodwill previously recognised in profit or loss shall not be reversed in the following years. For the purpose of impairment testing, goodwill acquired in a business combination is allocated to each of the cash-generating units, or groups of cash-generating units, that is/are expected to benefit from the synergies of the business combination. ~20~

22 (17) Impairment of non-financial assets The Company assesses at each balance sheet date the recoverable amounts of those assets where there is an indication that they are impaired. An impairment loss is recognised for the amount by which the asset s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset s fair value less costs to sell or value in use. Except for goodwill, when the circumstances or reasons for recognising impairment loss for an asset in prior years no longer exist or diminish, the impairment loss is reversed. The increased carrying amount due to reversal should not be more than what the depreciated or amortised historical cost would have been if the impairment had not been recognised. (18) Borrowings A. Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognised in profit or loss over the period of the borrowings using the effective interest method. B. Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw-down occurs. To the extent there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalised as a pre-payment for liquidity services and amortised over the period of the facility to which it relates. (19) Notes and accounts payable Notes and accounts payable are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. They are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method. However, short-term accounts payable without bearing interest are subsequently measured at initial invoice amount as the effect of discounting is immaterial. (20) Financial liabilities at fair value through profit or loss A. Financial liabilities at fair value through profit or loss are financial liabilities held for trading. Financial liabilities are classified in this category of held for trading if acquired principally for the purpose of repurchasing in the short-term. Derivatives are also categorized as financial liabilities held for trading unless they are designated as hedges. B. Financial liabilities at fair value through profit or loss are initially recognised at fair value. Related transaction costs are expensed in profit or loss. These financial liabilities are subsequently remeasured and stated at fair value, and any changes in the fair value of these financial liabilities are recognised in profit or loss. ~21~

23 (21) Derecognition of financial liabilities A financial liability is derecognised when the obligation under the liability specified in the contract is discharged or cancelled or expires. (22) Employee benefits A. Short-term employee benefits Short-term employee benefits are measured at the undiscounted amount of the benefits expected to be paid in respect of service rendered by employees in a period and should be recognised as expenses in that period when the employees render service. B. Pensions (a) Defined contribution plans For defined contribution plans, the Company has no legal or constructive obligation to make additional contributions after a fixed amount is contributed to a public or privately managed and independent pension fund. The contributions are recognised as pension expenses when they are due on an accrual basis. Prepaid contributions are recognised as an asset to the extent of a cash refund or a reduction in the future payments. (b) Defined benefit plans i. Defined benefit plans are different from defined contribution plans. The amount of pension benefits for employees at retirement is often dependent upon one or more factors, such as age, length of service and salary amount. Net obligation under a defined benefit plan is defined as the present value of an amount of pension benefits that employees will receive on retirement for their services with the Company in current period or prior periods. The liability recognised in the balance sheet in respect of defined benefit pension plans is the present value of the defined benefit obligation at the balance sheet date less the fair value of plan assets. The net defined benefit obligation is calculated annually by independent actuaries using the projected unit credit method. The rate used to discount is determined by using interest rates of high-quality corporate bonds that are denominated in the currency in which the benefits will be paid, and that have terms to maturity approximating to the terms of the related pension liability; when there is no deep market in high-quality corporate bonds, the Company uses interest rates of government bonds (at the balance sheet date) instead. ii. Remeasurements arising on defined benefit plans are recognised in other comprehensive income in the period in which they arise and are recorded as retained earnings. ~22~

24 iii. Past service costs are recognised immediately in profit or loss. C. Termination benefits Termination benefits are employee benefits provided in exchange for the termination of employment as a result from either the Company s decision to terminate an employee s employment before the normal retirement date, or an employee s decision to accept an offer of redundancy benefits in exchange for the termination of employment. The Company recognises expense when it can no longer withdraw an offer of termination benefits or it recognises relating restructuring costs, whichever is earlier. Benefits that are expected to be due more than 12 months after balance sheet date shall be discounted to their present value. D. Employees compensation, and directors remuneration Employees compensation and directors remuneration are recognised as expenses and liabilities, provided that such recognition is required under legal or constructive obligation and those amounts can be reliably estimated. Any difference between the resolved amounts and the subsequently actual distributed amounts is accounted for as changes in estimates. (23) Employee share-based payment A. For the equity-settled share-based payment arrangements, the employee services received are measured at the fair value of the equity instruments granted at the grant date, and are recognised as compensation cost over the vesting period, with a corresponding adjustment to equity. The fair value of the equity instruments granted shall reflect the impact of market vesting conditions and non-market vesting conditions. Compensation cost is subject to adjustment based on the service conditions that are expected to be satisfied and the estimates of the number of equity instruments that are expected to vest under the non-market vesting conditions at each balance sheet date. And ultimately, the amount of compensation cost recognised is based on the number of equity instruments that eventually vest. B. Restricted stocks: (a) Restricted stocks issued to employees are measured at the fair value of the equity instruments granted at the grant date, and are recognised as compensation cost over the vesting period. (b) For restricted stocks where those stocks do not restrict distribution of dividends to employees and employees are not required to return the dividends received if they resign during the vesting period, the Company recognises the fair value of the dividends received by the employees who are expected to resign during the vesting period as compensation cost at the date of dividends declared. (c) For restricted stocks where employees do not need to pay to acquire those stocks, if employees resign during the vesting period, the Company will redeem at no consideration and retire those ~23~

25 stocks. (24) Income tax A. The tax expense for the period comprises current and deferred tax. Tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income or items recognised directly in equity, in which cases the tax is recognised in other comprehensive income or equity. B. The current income tax expense is calculated on the basis of the tax laws enacted or substantively enacted at the balance sheet date in the countries where the Company and its subsidiaries operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in accordance with applicable tax regulations. It establishes provisions where appropriate based on the amounts expected to be paid to the tax authorities. An additional 10% income tax is levied on the unappropriated retained earnings and is recorded as income tax expense in the year the stockholders resolve to retain the earnings. C. Deferred tax is recognised, using the balance sheet liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the balance sheet. However, the deferred tax is not accounted for if it arises from initial recognition of goodwill or of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred tax is provided on temporary differences arising on investments in subsidiaries and associates, except where the timing of the reversal of the temporary difference is controlled by the Company and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the related deferred tax asset is realised or the deferred tax liability is settled. D. Deferred tax assets are recognised only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised. At each balance sheet date, unrecognised and recognised deferred tax assets are reassessed. E. Current income tax assets and liabilities are offset and the net amount reported in the balance sheet when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously. Deferred tax assets and liabilities are offset on the balance sheet when the entity has the legally enforceable right to offset current tax assets against current tax liabilities and they are levied by the same taxation authority on either the same entity or different entities that intend to settle on a net basis or realise the asset and settle the liability simultaneously. ~24~

26 (25) Share capital Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or stock options are shown in equity as a deduction, net of tax, from the proceeds. (26) Dividends Dividends are recorded in the Company s financial statements in the period in which they are approved by the Company s shareholders. Cash dividends are recorded as liabilities; stock dividends are recorded as stock dividends to be distributed and are reclassified to ordinary shares on the effective date of new shares issuance. (27) Revenue recognition Sales of services The Company provides semi-conductors packaging services. Revenue from delivering services is recognised under the percentage-of-completion method when the outcome of services provided can be estimated reliably. The stage of completion of a service contract is measured by the percentage of the actual services performed as of the financial reporting date to the total services to be performed. If the outcome of a service contract cannot be estimated reliably, contract revenue should be recognised only to the extent that contract costs incurred are likely to be recoverable. 5. CRITICAL ACCOUNTING JUDGEMENTS, ESTIMATES AND KEY SOURCES OF ASSUMPTION UNCERTAINTY The preparation of these financial statements requires management to make critical judgements in applying the Company accounting policies and make critical assumptions and estimates concerning future events. Assumptions and estimates may differ from the actual results and are continually evaluated and adjusted based on historical experience and other factors. Such assumptions and estimates have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year; and the related information is addressed below: Impairment assessment of goodwill The impairment assessment of goodwill relies on the Company s subjective judgement, including identifying cash-generating units, allocating assets and liabilities as well as goodwill to related cashgenerating units, and estimating the recoverable amounts of related cash-generating units. Please refer to Note 6(8) for the information of goodwill impairment. As of December 31, 2017, the Company recognised goodwill amounting to $5,537,278. ~25~

27 6. DETAILS OF SIGNIFICANT ACCOUNTS (1) Cash and cash equivalents December 31, 2017 December 31, 2016 Cash on hand and petty cash (revolving $ 325 $ 318 Checking accounts and demand deposits 3,767,953 3,433,373 $ 3,768,278 $ 3,433,691 The Company has no cash and cash equivalents pledged to others. (2) Financial assets measured at cost - non-current December 31, 2017 December 31, 2016 Unlisted stocks $ 63,044 $ 63,734 Accumulated impairment-financial assets measured at cost ( 63,044) ( 61,884) $ - $ 1,850 A. Based on the Company s intention, its investment in unlisted stocks should be classified as available-for-sale financial assets. However, as unlisted stocks are not traded in active market, and no sufficient industry information of companies similar to the unlisted stocks financial information can be obtained, the fair value of the investment in unlisted stocks cannot be measured reliably. The Company classified those stocks as financial assets measured at cost. B. As the unlisted companies whose stocks are held by the Company continue to incur losses, the Company has assessed and recognised impairment loss of $1,160 and $5,700 for the years ended December 31, 2017 and 2016, respectively. C. As of December 31, 2017 and 2016, no financial assets measured at cost held by the Company were pledged to others. (3) Accounts receivable A. Movements on the Company s provision for impairment of accounts receivable that were impaired are as follows: December 31, 2017 December 31, 2016 Accounts receivable $ 4,037,518 $ 3,885,080 Less: Allowance for bad debts ( 4,025) ( 2,949) $ 4,033,493 $ 3,882,131 ~26~

28 The Company takes into consideration the possibility of recovery of past due accounts receivable when accruing impairment loss. B. The Company s accounts receivable were neither past due nor impaired for the years ended December 31, 2017 and 2016, respectively. C. The Company does not hold any collateral as security. (4) Inventories The Company has recognised loss on decline in market value of $1,196 and $0 for inventory obsolescence and decline in net realisable value for the years ended December 31, 2017 and 2016, respectively. (5) Investments accounted for using equity method Year ended December 31, 2017 (Individual provision) A. Details of the Company s subsidiaries are provided in Note 4(3) of the Company s consolidated financial statements as of and for the year ended December 31, Year ended December 31, 2016 (Individual provision) At January 1 $ 2,949 $ 2,949 Provision 1,076 - At December 31 $ 4,025 $ 2,949 December 31, 2017 Cost Allowance for valuation loss Book value Raw materials $ 633,500 ($ 25,879) $ 607,621 Supplies 216,065 ( 22,998) 193,067 $ 849,565 ($ 48,877) $ 800,688 December 31, 2016 Cost Allowance for valuation loss Book value Raw materials $ 676,447 ($ 24,683) $ 651,764 Supplies 148,877 ( 22,998) 125,879 $ 825,324 ($ 47,681) $ 777,643 Years ended December 31, Subsidiaries Chipmore Holding Company Limited (CMHC) $ 6,515,884 $ 6,266,389 International Semiconductor Technology Holding Company Limited (IST) ( 379,563) ( 340,035) 6,136,321 5,926,354 Add: Reclassified credit balance of long-term investment to Other liabilities - others 379, ,035 $ 6,515,884 $ 6,266,389 ~27~

29 (6) Property, plant and equipment 2017 Cost Land Buildings Machinery and equipment Vehicles Office equipment Others Construction in progress and Equipment under installation Opening net book amount $ 886,890 $ 4,892,366 $ 22,615,666 $ 11,057 $ 282,053 $ 376,095 $ 1,094,512 $ 30,158,639 Additions ,327 38,716 2,236,945 2,295,110 Disposals or retirements - - ( 273,086) ( 3,093) ( 7,330) ( 10,367) - ( 293,876) Reclassifications - 222,072 1,196,751 - ( 46) 46 ( 1,418,823) - Closing net book amount $ 886,890 $ 5,114,438 $ 23,539,331 $ 8,086 $ 294,004 $ 404,490 $ 1,912,634 $ 32,159, Accumulated depreciation and impairment Opening net book amout $ - $ 2,179,620 $ 15,614,842 $ 9,173 $ 188,497 $ 323,762 $ - $ 18,315,894 Additions - 238,403 2,021, ,995 29,460-2,327,132 Disposals or retirements - - ( 254,815) ( 3,083) ( 7,186) ( 10,314) - ( 275,398) Closing net book amout $ - $ 2,418,023 $ 17,381,877 $ 6,514 $ 218,306 $ 342,908 $ - $ 20,367,628 Net ending balance $ 886,890 $ 2,696,415 $ 6,157,454 $ 1,572 $ 75,698 $ 61,582 $ 1,912,634 $ 11,792,245 Total ~28~

30 Land Buildings 2016 Cost Opening net book amount $ 886,890 4,589,909 Machinery and equipment Vehicles Office equipment Information about the property, plant and equipment that were pledged to others as collateral is provided in Note 8. Others Construction in progress and Equipment under installation $ $ 20,402,089 $ 17,191 $ 251,166 $ 360,237 $ 2,419,343 $ 28,926,825 Additions ,584 45,315 17,148 1,586,149 1,650,196 Disposals or retirements - - ( 394,946) ( 7,718) ( 14,428) ( 1,290) - ( 418,382) Reclassifications - 302,457 2,608, ( 2,910,980) - Closing net book amount $ 886,890 $ 4,892,366 $ 22,615,666 $ 11,057 $ 282,053 $ 376,095 $ 1,094,512 $ 30,158, Accumulated depreciation and impairment Opening net book amout $ - $ 1,955,360 $ 13,984,405 $ 14,577 $ 167,604 $ 290,630 $ - $ 16,412,576 Additions - 224,260 1,991, ,064 34,373-2,286,313 Disposals or retirements - - ( 361,353) ( 6,230) ( 14,171) ( 1,241) - ( 382,995) Closing net book amout $ - $ 2,179,620 $ 15,614,842 $ 9,173 $ 188,497 $ 323,762 $ - $ 18,315,894 Net ending balance $ 886,890 $ 2,712,746 $ 7,000,824 $ 1,884 $ 93,556 $ 52,333 $ 1,094,512 $ 11,842,745 Total ~29~