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EPi Interim / Quarterly Report 2024

Dec 10, 2024

52250_rns_2024-12-10_34894ec6-ffca-4d83-afc8-915b117479fc.pdf

Interim / Quarterly Report

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EPISIL-PRECISION INC. AND SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS WITH REPORT OF

INDEPENDENT AUDITORS

FOR THE NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2024 AND 2023

For the convenience of readers and for information purpose only, the auditors’ report and the accompanying financial statements have been translated into English from the original Chinese version prepared and used in the Republic of China. In the event of any discrepancy between the English version and the original Chinese version or any differences in the interpretation of the two versions, the Chineselanguage auditors’ report and financial statements shall prevail.

~1~

INDEPENDENT AUDITORS’ REPORT TRANSLATED FROM CHINESE

To the Board of Directors and Shareholders of Episil-Precision Inc.

Preface

We have reviewed the accompanying consolidated balance sheets of Episil-Precision Inc. and its subsidiary (the “Group”) as of September 30, 2024 and 2023, and the related consolidated statements of comprehensive income, consolidated statements of changes in equity, consolidated statements of cash flows for the nine-month periods ended September 30, 2024 and 2023, and notes to the consolidated financial statements (including a summary of significant accounting policies). It is the management’s responsibility to prepare fairly presented consolidated financial statements in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and IAS 34 ‘Interim Financial Reporting’ endorsed by the FSC, and the accountant’s responsibility is to draw conclusions on the consolidated financial statements based on the review results.

Scope

Except as stated in the section of basis for qualified conclusion, we conducted our reviews in accordance with the Standard on Review Engagements 2410, “Review of Financial Information Performed by the Independent Auditor of the Entity” of the Republic of China. The procedures performed in the review of consolidated financial statements include inquiries (primarily inquiring those responsible for financial and accounting matters), analytical procedures and other review procedures. The scope of the review work is significantly smaller than the scope of the audit work, so the accountant may not be able to identify all the material matters that can be identified by the audit work, and therefore cannot present the audit opinion.

Basis for qualified conclusion

As mentioned in Notes 4(3) to the consolidated financial statements, the financial statements of some unimportant subsidiaries included in the above consolidated financial statements not reviewed by the accountant. As of September 30, 2024 and 2023, the total assets of such subsidiaries were NT$66,227 thousand and NT$172,778 thousand respectively, accounting for 0.85% and 2.47% of the consolidated total assets respectively; the total liabilities were NT$16,485 thousand and NT$3,736 thousand respectively, accounting for 0.59% and 0.17% of the total consolidated liabilities respectively; the total

~2~

comprehensive profit and loss for the three-month and nine-month periods ended September 30, 2024 、 、 and 2023 were NT$1,333 thousand (NT$60) thousand NT$298 thousand and (NT$1) thousand 、 、 respectively, which represented 2.86% (0.14%) 0.126%) and (0.001%) of the total consolidated comprehensive profit and loss respectively.

Qualified conclusion

According to the review results of the accountants, except for some unimportant subsidiaries included in the consolidated financial statements, which may be adjusted appropriately and the impacts may be disclosed, we did not find any circumstance where the consolidated financial statements referred to in paragraph 1 were not prepared in any material respect in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and IAS 34 ‘Interim Financial Reporting’ endorsed by the FSC, making it impossible to fairly present the consolidated financial position of Episil –Precision Inc. and its subsidiaries as of September 30, 2024 and 2023, and the consolidated financial performance and consolidated cash flow for the nine-month periods ended September 30, 2024 and 2023.

Li, Tien-Yi Hsieh, Chih-Cheng For and on behalf of PricewaterhouseCoopers, Taiwan October 31, 2024

The accompanying consolidated financial statements are not intended to present the financial position and results of operations and cash flows in accordance with accounting principles generally accepted in countries and jurisdictions other than the Republic of China. The standards, procedures and practices in the Republic of China governing the audit of such financial statements may differ from those generally accepted in countries and jurisdictions other than the Republic of China. Accordingly, the accompanying consolidated financial statements and independent auditors’’ report are not intended for use by those who are not informed about the accounting principles or auditing standards generally accepted in the Republic of China, and their applications in practice.

~3~

EPISIL-PRECISION INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS

SEPTEMBER 30, 2024, DECEMBER 31, 2023 and SEPTEMBER 30, 2023 (SEPTEMBER 30, 2024 and 2023 are unaudited)

(Expressed in thousands of New Taiwan dollars)

Assets
Notes
Current assets
1100
Cash and cash equivalents
6(1)
1136
Current financial assets at amortised
cost
6(2)
1170
Accounts receivable, net
6(3)
1180
Accounts receivable - related parties 6(3)and7
1200
Other receivables
1210
Other receivables due from related
parties
7
130X
Inventories
6(4)
1410
Prepayments
1470
Other current assets
11XX
Current assets
Non-current assets
1517
Non-current financial assets at fair
value through other comprehensive
income
1535
Non-current financial assets at
amortised cost
6(2) and
8
1600
Property, plant and equipment
6(5)
1755
Right-of-use assets
6(6)
1760
Investment property - net
6(8)
1780
Intangible assets
6(9)
1840
Deferred income tax assets
1920
Refundable guarantee deposits
15XX
Non-current assets
1XXX
Total assets		 September30,2024
AMOUNT
%
$ 3,023,325
39
-
-
624,971
8
235,946
3
52,856
1
9,216
-
800,300
10
66,904
1
5,815
-
4,819,333
62
17
-
19,470
-
2,366,900
30
362,941
5
151,705
2
54,294
1
38,067
-
1,306
-
2,994,700
38
$ 7,814,033
100		 December31,2023
AMOUNT
%
$ 2,284,089
34
-
-
880,646
13
102,958
2
27,516
-
10,452
-
919,718
13
76,673
1
4,381
-
4,306,433
63
17
-
13,583
-
2,020,775
30
220,993
3
155,397
2
55,648
1
38,067
1
1,073
-
2,505,553
37
$ 6,811,986
100		 September30,2023
AMOUNT
$ 3,023,325
-
624,971
235,946
52,856
9,216
800,300
66,904
5,815
4,819,333
17
19,470
2,366,900
362,941
151,705
54,294
38,067
1,306
2,994,700
$ 7,814,033		 AMOUNT
%
$ 2,432,929
35
2,622
-
983,467
14
115,626
2
39,060
-
10,826
-
899,129
13
53,355
1
8,795
-
4,545,809
65
17
-
13,565
-
1,979,398
28
223,816
3
156,627
1
55,332
1
32,095
-
1,070
-
2,461,920
35
$ 7,007,729
100

(Continued)

~4~

EPISIL-PRECISION INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS

SEPTEMBER 30, 2024, DECEMBER 31, 2023 and SEPTEMBER 30, 2023 (SEPTEMBER 30, 2024 and 2023 are unaudited)

(Expressed in thousands of New Taiwan dollars)

Liabilities and Equity
Notes
Current liabilities
2100
Short-term borrowings
6(10)
2170
Accounts payable
6(11)
2180
Accounts payable - related parties 7
2200
Other payables
6(12)
2220
Other payables - related parties
7
2230
Current income tax liabilities
2280
Current lease liabilities
2320
Long-term borrowings, current
portion
6(13)
2399
Other current liabilities, others

21XX
Current liabilities

Non-current liabilities
2530
Corporate bonds payable
6(13)
2570
Deferred income tax liabilities
2580
Non-current lease liabilities
2640
Accrued pension liabilities
2645
Guarantee deposits received
2670
Other liabilities, others

25XX
Non-current liabilities

2XXX
Total liabilities

Equity
Equity attributable to owners of the
parent
Share capital
6(15)
3110
Share capital - common stock
Capital surplus
6(16)
3200
Capital surplus
Retained earnings
6(17)
3310
Legal reserve
3320
Special reserve
3350
Unappropriated retained earnings
Other equity interest
6(18)
3400
Other equity interest
(
3XXX
Total equity

Significant commitments and
contingencies
9
Significaut events after the reporting
11
period
3X2X
Total liabilities and equity		 September30,2024
December31,2023
September30,2023
AMOUNT
%
AMOUNT
%
AMOUNT
%
$ 108,250
1
$ 266,950
4 $ 486,583
7
269,263
4
257,005
4
348,846
5
18,433
-
5,975
-
2,604
-
352,371
5
362,648
5
299,719
4
469,067
6
32,581
-
31,193
-
40,596
1
58,279
1
43,324
1
12,509
-
6,907
-
7,586
-
496,140
6
-
-
-
-
94,118
1
53,628
1
62,713
1
1,860,747
24
1,043,973
15
1,282,568
18


465,960
6
491,143
7
489,390
7
34,868
-
34,868
1
36,148
1
364,000
5
225,938
3
227,619
3
552,021
1
57,962
1
65,786
1
8,095
-
8,095
-
8,095
-
-
-
52,762
1
52,762
1
927,944
12
870,768
13
879,800
13
2,788,691
36
1,914,741
28
2,162,368
31
2,885,418
37
2,885,394
42
2,885,394
41
1,650,774
21
1,614,778
24
1,614,778
23
187,721
2
170,583
3
170,583
2
1,898
-
1,155
-
1,155
-
301,146
4
227,233
3
175,440
3

1,615
)
-
(
1,898)
- (
1,989)
-
5,025,342
64
4,897,245
72
4,845,361
69




$ 7,814,033
100
$ 6,811,986
100 $ 7,009,729
100
AMOUNT
$ 108,250
269,263
18,433
352,371
469,067
40,596
12,509
496,140
94,118
1,860,747
465,960
34,868
364,000
552,021
8,095
-
927,944
2,788,691
2,885,418
1,650,774
187,721
1,898
301,146

1,615
)
5,025,342
$ 7,814,033

The accompanying notes are an integral part of these consolidated financial statements.

~5~

EPISIL-PRECISION INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

FOR THE NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2024 AND 2023 are unaudited

(Expressed in thousands of New Taiwan dollars, except as otherwise indicated)

Items
For the three-monthperiods ended September 30,

2024
2023
Notes
AMOUNT
%
AMOUNT
%
6(19) and 7$ 1,054,584 100 $ 1,034,387
100
6(4) and 7
(
947,398 ) ( 90 ) (
924,808 ) ( 89 )

107,186
10
109,579
11
6(24)(25)
and 7

(
11,930 ) (
1 ) (
11,388 ) (
1 )
(
47,611 ) (
4 ) (
44,050 ) (
4 )
(
17,934 ) (
2 ) (
20,345 ) (
2 )
(
77,475 ) (
7 ) (
75,783 ) (
7 )

29,711
3
33,796
3

6(20)

9,198
1
6,206
1
6(21)

10,317
1
10,282
1
6(22)

13,951
1
12,133
1
6(23)
(
6,021 ) (
1 ) (
8,196 ) (
1 )

27,445
2
20,425
2

57,156
5
54,221
5
6(26)
(
11,656 ) (
1 ) (
11,242 ) (
1 )
$ 45,500
4 $ 42,979
4
(Continued)		 For the nine-m onthperiods ended September 30,
2023
%
AMOUNT
%
100
$ 3,210,234
100
( 90) (
2,867,575) ( 89)
10
342,659
11
(
1) (
36,925) (
1)
(
4) (
133,314) (
4)
(
2) (
57,070) (
2)
(
7) (
227,309) (
7)
3
115,350
4
1
22,499
1
1
35,508
1
6
(
823)
-
(
1) (
22,554) (
1)
7
34,630
1
10
149,980
5
(
2) (
30,394) (
1)
8
$ 119,586
4		 onthperiods ended September 30,
2023
%
AMOUNT
%
100
$ 3,210,234
100
( 90) (
2,867,575) ( 89)
10
342,659
11
(
1) (
36,925) (
1)
(
4) (
133,314) (
4)
(
2) (
57,070) (
2)
(
7) (
227,309) (
7)
3
115,350
4
1
22,499
1
1
35,508
1
6
(
823)
-
(
1) (
22,554) (
1)
7
34,630
1
10
149,980
5
(
2) (
30,394) (
1)
8
$ 119,586
4		 onthperiods ended September 30,
2023
%
AMOUNT
%
100
$ 3,210,234
100
( 90) (
2,867,575) ( 89)
10
342,659
11
(
1) (
36,925) (
1)
(
4) (
133,314) (
4)
(
2) (
57,070) (
2)
(
7) (
227,309) (
7)
3
115,350
4
1
22,499
1
1
35,508
1
6
(
823)
-
(
1) (
22,554) (
1)
7
34,630
1
10
149,980
5
(
2) (
30,394) (
1)
8
$ 119,586
4
2024 %
100
( 90)
10
(
1)
(
4)
(
2)
(
7)
3
1
1
6

(
1)
7
10
(
2)
8		 2023
AMOUNT

$ 3,132,603
(
2,823,317 )
309,286
(
36,157 )
(
143,601 )
(
57,904 )
(
237,662 )
71,624
26,009
30,931
184,238
(
17,441 )
223,737
295,361
(
59,297 )
$ 236,064
AMOUNT

$ 3,210,234
(
2,867,575)
342,659
(
36,925)
(
133,314)
(
57,070)
(
227,309)
115,350
22,499
35,508
(
823)
(
22,554)
34,630
149,980
(
30,394)
$ 119,586
4000
Operating revenue
5000
Operating costs
5900
Operating margin
Operating expenses
6100
Selling and marketing expenses
6200
General and administrative expenses
6300
Research and development expenses
6000
Total operating expenses
6900
Operating profit
Non-operating income and expenses
7100
Interest income
7010
Other income
7020
Other gains and losses
7050
Finance costs
7000
Total non-operating income and
expenses
7900
Profit before income tax
7950
Income tax expense
8200
Profit for the year
1
5
(
1)
4

~6~

EPISIL-PRECISION INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

FOR THE NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2024 AND 2023 are unaudited

(Expressed in thousands of New Taiwan dollars, except as otherwise indicated)

Items Notes
6(18)
6(27)
6(27)		 For the three-monthperiods ended September 30,
2024
2023
AMOUNT
%
AMOUNT
%
1,176
-
69
-
$ 1,176
-
$ 69
-
$ 46,676
4
$ 43,048
4
$ 45,500
4
$ 42,979
4
$ 46,676
4
$ 43,048
4
$ 0.16
$ 0.15
$ 0.16
$ 0.15		 For the nine-monthperiods ended September 30,
2024
2023
AMOUNT % AMOUNT %
283
- (
834 )
-
$ 283
- ($ 834 )
-
$ 236,347
8 $ 118,752
4
$ 236,064
8 $ 119,586
4
$ 236,347
8$ 118,752
4
$ 0.82$ 0.41
$ 0.82 $ 0.41
2024
AMOUNT
%
1,176
-
$ 1,176
-
$ 46,676
4
$ 45,500
4
$ 46,676
4
$ 0.16
$ 0.16
Other comprehensive income (loss),
net
Components of other comprehensive
income that may be subsequently
reclassified to profit or loss
8361
Exchange differences on translation
of foreign operations
8300
Other comprehensive (loss) income,
net
8500
Total other comprehensive income for
the year
Profit, attributable to:
8610
Owners of the parent
Comprehensive income attributable to:
8710
Owners of the parent
Basic earnings per share
9750
Basic earnings per share (in dollars)
Diluted earnings per share
9850
Diluted earnings per share (in dollars)

The accompanying notes are an integral part of these consolidated financial statements.

~7~

EPISIL-PRECISION INC. AND SUBSIDIARIES CONS ~~OLIDATED STATEMENTS OF CHANGES IN EQ~~ UITY FOR THE NINE ~~E-MONTH PERIODS ENDED SEPTEMBER 30, 2024 AND 20~~ 23 are unaudited ~~(Expressed in thousands of New Taiwan dollars)~~

Balance at January 1, 2023
Profit for the nine-month ended September 30,2023
Other comprehensive income (loss)
Total comprehensive income (loss)
Appropriation of 2022 earnings
Legal reserve
Special reserve reversed
Cash dividends
Balance at September 30, 2023
Balance at January 1, 2024
Profit for the six-month ended September 30,2024
Other comprehensive income (loss)
Total comprehensive income (loss)
Appropriation of 2023 earnings
Legal reserve
Special reserve reversed
Cash dividends
Conversion of convertible bonds
Issuance of corporate bonds
Balance at September 30, 2024		 Notes Equity attributable to
 Equity attributable to
 Equity attributable to
 Equity attributable to
 owners of the parent
 owners of the parent
 owners of the parent
 Financial
statements
translation
differences of
foreign
operations		 Total equity
Share capital -
common stock
C~~apital Reserves~~
~~Retained~~		 ~~Earnings~~
Additional paid-
in capital
Warrants
Restricted
stocks		 Others
Legal reserve

Special reserve		 Unappropriated
retained
earnings

6(18)
6(17)
6(18)
6(17)
6(13)(15)
6(13)		 $2,885,394
-
-
-
-
-
-
$2,885,394
$2,885,394
-
-
-
-
-
-
24
-
$2,885,418
$1,581,843
-
-
-
-
-
-
$1,581,843
$1,581,843
-
-
-
-
-
-
285 (
-
$1,582,128		 $ 21,757
-
-
-
-
-
-
$ 21,757
$ 21,757
-
-
-
-
-
-
13 )
35,724
$ 57,468		 $ 670
-
-
-
-
-
-
$ 670
$ 670
-
-
-
-
-
-
-
$ 670		 $ 10,508
-
-
-
-
-
-
$ 10,508
$ 10,508
-
-
-
-
-
-
-
$ 10,508


$ 101,319
-
-
-
69,264
-
-
170,583
$ 170,583
-
-
-
17,138
-
-
-
$ 187,721		 $ 702,441
119,586
-
119,586
69.264 )
245 )
577,078 )
$ 175,440
$ 227,233
236,064
-
236,064
17,138 )
743 )
144,270 )
-
$ 301,146










($ 1,155 )
-
(
834 )
(
834 )
-
-
-
($ 1,989 )
($ 1,898 )
-
283
283
-
-
-
-
($ 1,615 )
$5,303,687
119,586
(
834 )

118,752
-
-
(
577,078 )
$4,845,361
$4,897,245
236,064
283
236,347
-
-
(
144,270 )
296
35,724
$5,025,342

The accompanying notes are an integral part of these consolidated financial statements.

~8~

EPISIL-PRECISION INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2024 AND 2023 are unaudited (Expressed in thousands of New Taiwan dollars)

CASH FLOWS FROM OPERATING ACTIVITIES
Profit before tax $ 295,361 $ 149,980
Adjustments
Adjustments to reconcile (profit) loss
Depreciation expense 6(5)(6)(8)(24) 340,136 371,181
Amortisation expense 6(9)(24) 2,654 1,817
Finance costs 6(23) 17,441 22,554
Interest income 6(20) ( 26,009 ) ( 22,499)
Gain on disposal of property, plant and euipment 6(22) ( 183,291 ) ( 1,599)
Changes in operating assets and liabilities
Changes in operating assets
Accounts receivable 255,675 42,473
Accounts receivable - related parties ( 132,988 ) 92,173
Other receivables ( 24,974 ) ( 10,972)
Other receivables - related parties 1,236 ( 2,354)
Inventories 119,418 47,947
Prepayments 9,769 40,135
Other current assets ( 1,434 ) 971
Changes in operating liabilities
Accounts payable 12,258 ( 70,293)
Accounts payable - related parties 12,458 719
Other payables 20,714 ( 176,118)
Other payables - related parties ( 36,013 ) ( 4,890)
Other current liabilities ( 12,271 ) ( 26,594)
Accrued pension liabilities ( 2,941 ) ( 1,552)
Cash inflow generated from operations 667,199 453,079
Interest received 25,643 21,994
Interest paid ( 16,437) ( 16,378 )
Income taxes paid ( 76,980) ( 107,733 )
Net cash flows from operating activities 599,425 350,962

(Continued)

~9~

EPISIL-PRECISION INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2024 AND 2023 are unaudited

(Expressed in thousands of New Taiwan dollars)

CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of financial assets at amortised cost 6(2) ( $ 5,887 ) ( $ 2,622)
Acquisition of property, plant and equipment 6(28) ( 312,254 ) ( 477,444)
Proceeds from disposal of property, plant and
equipment 6(22) 270,222 2,460
Acquisition of intangible assets 6(9) ( 1,300 ) ( 4,629)
(Increase) Decrease in refundable deposits ( 233 ) 39
Net cash flows used in investing activities 49,452 ( 482,196)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from short-term borrowings 6(29) 895,691 1,110,530
Repayments of short-term borrowings 6(29) ( 1,054,391 ) ( 802,571)
Issuance of corporate bonds 6(29) 499,755 -
Payments of lease liabilities 6(29) ( 7,805 ) ( 7,295)
Cash dividends paid 6(17) ( 144,270 ) ( 577,078)
Net cash flows from financing activities 188,980 ( 276,414)
Effect of exchange rate changes 283 ( 834)
Net (decrease) increase in cash and cash equivalents 739,236 ( 408,482)
Cash and cash equivalents at beginning of year 6(1) 2,284,089 2,841,411
Cash and cash equivalents at end of year 6(1) $ 3,023,325$ 2,432,929

The accompanying notes are an integral part of these consolidated financial statements.

~10~

EPISIL-PRECISION INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2024 AND 2023 are unaudited

(Expressed in thousands of New Taiwan dollars)

EPISIL-PRECISION INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2024 AND 2023 (Expressed in thousands of New Taiwan dollars, except as otherwise indicated)

1. History and Organisation

Episil-Precision Inc. (the “Company”) was incorporated as a company limited by shares on October 15, 1998 and was approved by the regulatory authority on November 9, 1998. The primary business activities have been started since December 1999.

The Company merged with Episil Semiconductor Wafer, Inc. on January 11, 2016 in accordance with the Business Mergers and Acquisitions Act and other related regulations. The Company issued new shares to Episil Semiconductor Wafer, Inc. as consideration for assuming all rights and obligations of Episil Semiconductor Wafer, Inc. The conversion ratio for this merger was one common share of Episil Semiconductor Wafer, Inc. converting to 1.867876 common shares of the Company, totalling 149,523,473 shares, and the Company was the surviving company. This merger was a reverse takeover under comprehensive assessment. Therefore, the consolidated financial statements were issued under the name of the Company, which was an extension of the subject of Episil Semiconductor Wafer, Inc. The Company and its subsidiary (collectively referred herein as the “Group”) are primarily engaged in development, manufacture and sales of silicon epitaxy wafers and compound semiconductor epitaxial wafers.

Episil Technologies Inc. (former name: Episil Holding Inc.) holds 57.86% of the Company’s outstanding shares. Episil Technologies Inc. is the Company’s ultimate parent company.

  1. The Date of and Procedures for Authorisation for Issuance of the Financial Statements

These consolidated financial statements were authorised for issuance by the Board of Directors on October 31, 2024.

3. Application of New Standards, Amendments and Interpretations

(1) Effect of the adoption of new issuances of or amendments to International Financial Reporting Standards (“IFRS”) that came into effect as endorsed by the Financial Supervisory Commission (“FSC”)

New standards, interpretations and amendments endorsed by the FSC and became effective from 2024 are as follows:

~11~

EPISIL-PRECISION INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2024 AND 2023 are unaudited

(Expressed in thousands of New Taiwan dollars)

New Standards,InterpretationsandAmendments
Amendments to IFRS16 ‘Lease liability in a sales and leaseback’
Amendments to IAS 1 ‘Classification of liabilities as current or non-
current’
Amendments to IAS 1, ‘Non-current liabilities with covenants’
Amendments to IAS 7 and IFRS 7, ‘Supplier finance arrangements’		 Effective date by
International Accounting
Standards Board
("IASB")
January 1, 2024
January 1, 2024
January 1, 2024
January 1, 2024

The above standards and interpretations have no significant impact to the Group’s financial position and financial performance based on the Group’s assessment.

(2) Effect of new, revised or amended IFRSs endorsed by the FSC but not yet adopted by the Group

New standards, interpretations and amendments endorsed by the FSC effective from 2025 are as follows:

New Standards,Interpretations and Amendments
Amendments to IFRS21 ‘Lack of convertibility’		 Effective date by
International Accounting
Standards Board
("IASB")
January 1, 2025

(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:

endorsed by the FSC are as follows:
New Standards,InterpretationsandAmendments
BoardAmendments to IFRS 9 and IFRS 7, ‘Amendments to the
classificationand measurement of financial Instruments’January
Amendments to IFRS 10 and IAS 28, ‘Sale or contribution of assets
between an investor and its associate or joint venture’
IFRS 17, ‘Insurance contracts’
Amendments to IFRS 17, 'Insurance contracts'
Amendment to IFRS 17, 'Initial application of IFRS 17 and IFRS 9 –
comparative information'
Amendments to IAS 1, ‘Non-current liabilities with covenants’
2027IFRS 19, ‘Subsidiaries without public accountability: disclosures’
2025Annual Improvements to IFRS Accounting Standards-Volume 11		 Effective date by
IASB
January 1, 2026
To be determined by
IASB
January 1, 2023
January 1, 2023
January 1, 2023
January 1, 2027
January 1, 2027
January 1, 2026

Except for the following, the above standards and interpretations have no significant impact to the Group’s financial condition and financial performance based on the Group’s assessment.

IFRS 18, ‘Presentation and disclosure in financial statements’ replaces IAS 1. The standard introduces a defined structure of the statement of profit or loss, disclosure requirements related to management-defined performance measures, and enhanced principles on aggregation and disaggregation which apply to the primary financial statements and notes.

~12~

EPISIL-PRECISION INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2024 AND 2023 are unaudited (Expressed in thousands of New Taiwan dollars)

4. Summary of Significant Accounting Policies

The principal accounting policies adopted are consistent with Note 4 in the consolidated financial statements for the year ended December 31, 2023, except for the compliance statement, basis of preparations, basis of consolidation and additional policies as set out below. These policies have been consistently applied to all the periods presented, unless otherwise stated.

(1) Compliance statement

  • A. The consolidated financial statements of the Group have been prepared in accordance with the “Regulations Governing the Preparation of Financial Reports by Securities Issuers” and the International Accounting Standard 34, ‘Interim financial reporting’ that came into effect as endorsed by the FSC.

  • B. These consolidated financial statements are to be read in conjunction with the consolidated financial statements for the year ended December 31, 2023.

  • (2) Basis of preparation

  • A. Except for the following items, the consolidated financial statements have been prepared under the historical cost convention:

  • (a) Financial assets at fair value through other comprehensive income.

  • (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 IFRSs requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group’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) Basis of consolidation

  • A. The same principles of consolidation have been applied in the consolidated financial statements as those applied in the consolidated financial statements for the year ended December 31, 2022.

  • B. Subsidiaries included in the consolidated financial statements:

Name of
investor
Episil-Precision Inc.		 Name of

subsidiary
Precision SILICON
JAPAN Co., Ltd.		 Main business
activities		 Ownership (%)
September 30,
2023
100		 Note
September 30,
2024

100		 December 31,2023
100
Sales of
epitaxial and
silicon wafer		 1

Note: Because it does not meet the definition of an important subsidiary, its financial statements on September 30, 2024 and 2023 have not been reviewed by accountants.

  • C. Subsidiaries not included in the consolidated financial statements: None.

  • D. Adjustments for subsidiaries with different balance sheet dates: None.

  • E. Significant restrictions: None.

  • F. Subsidiaries that have non-controlling interests that are material to the Group: None.

~13~

EPISIL-PRECISION INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2024 AND 2023 are unaudited

(Expressed in thousands of New Taiwan dollars)

(4) Employee benefits

Pensions

Pension cost for the interim period is calculated on a year-to-date basis by using the pension cost rate derived from the actuarial valuation at the end of the prior financial year, adjusted for significant market fluctuations since that time and for significant curtailments, settlements, or other significant one-off events. Also, the related information is disclosed accordingly.

(5) Income taxes

The interim period income tax expense is recognised based on the estimated average annual effective income tax rate expected for the full financial year applied to the pretax income of theinterim period, and the related information is disclosed accordingly.

5. Critical Accounting Judgements, Estimates and Key Sources of Assumption Uncertainty

There have been no significant changes as of September 30, 2024. Please refer to Note 5 in the consolidated financial statements for the year ended December 31, 2023.

6. Details of Significant Accounts

(1) Cash and cash equivalents

Cash on hand and revolving
funds
Checking accounts and demand
deposits
Time deposits

Cash equivalents
 September30,2024
$ 387
255,344

908,594

1,859,000
$ 3,023,325		 December31,2023
$ 379
243,655
1,292,555
747,500
$ 2,282,089		 September30,2023
$ 375
450,444
1,450,110
532,000
$ 2,432,929

  • A. The Group transacts with a variety of financial institutions all with high credit quality to disperse credit risk, so it expects that the probability of counterparty default is remote.

  • B. The Company’s cash and cash equivalents pledged to others as collateral for customs guarantee were classified as non-current financial assets at amortised cost. Refer to Note 8.

~14~

EPISIL-PRECISION INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2024 AND 2023 are unaudited

(Expressed in thousands of New Taiwan dollars)

(2) Financial assets at amortised cost

Items

Current items:
Other
Non-current items:
Pledged time deposits		 September30,2024
$ -
19,470
$ 19,470		 December31,2023

$ -

13,583
$ 13,583		 September30,2023

$ 2,622

13,565
$ 16,187

  • A. The Group has elected to classify equity investments that are considered to be strategic investments as financial assets at fair value through other comprehensive income. The fair value of such investments amounted to $19,470, $13,583 and $16,187 as at September 30, 2024, December 31, 2023 and September 30, 2023, respectively.

  • B. The counterparties of the Group’s investments have good credit risk.

(3) Notes and accounts receivable


Accounts receivable
Accounts receivable due from
related parties
Less: Loss allowance
 September30,2024
$ 625,123
235,946
(
152)
$ 860,917		 December31,2023
$ 880,798
102,958
(
152) (
$ 983,604		 September30,2023
$ 983,619
115,626

152)
$ 1,099,093
  • A. The ageing analysis of accounts receivable and notes receivable is as follows:
Not past due
Up to 30 days
31 to 90 days
91 to 180 days
over 180 days		 September 302024
Accounts
Receivable
(including related
parties)
$ 813,096
47,973
-
-
-
$ 861,069		 December31,2023
Accounts
Receivable
(including
related parties)

The above ageing analysis was based on past due date.

  • B. As of September 30, 2024, December 31, 2023 and September 30, 2023, notes and accounts receivable were all from contracts with customers. As of January 1, 2023, the balance of receivables from contracts with customers amounted to $1,233,891.

  • C. As of September 30, 2024, December 31, 2023 and September e 30, 2023, collaterals held by the ，

  • Group as security for accounts receivable was $1,000 $1,000 and $5,000, respectively.

~15~

EPISIL-PRECISION INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2024 AND 2023 are unaudited

(Expressed in thousands of New Taiwan dollars)

  • D. As of September 30, 2024, December 31, 2023 and September 30, 2023, without taking into account any collateral held or other credit enhancements, the maximum exposure to credit risk in 、

  • respect of the amount that best represents the Group’s notes and accounts receivable was $860,917 $983,604 and $1,099,093, respectively.

  • E. Information relating to credit risk of accounts receivable is provided in Note 12(2).

(4) Inventories

(4)Inventories
Raw materials
Supplies
Work in progress
Finished goods
Raw materials
Supplies
Work in progress
Finished goods
Raw materials
Supplies
Work in progress
Finished goods		 September30,2024
Bookvalue
$ 250,666
447,744

30,689

71,201
$ 800,300

Bookvalue
$ 352,711
425,227

63,940

77,840
$ 919,718

Bookvalue
$ 424,086
384,032

53,542

37,469
$ 899,129
Allowance for

Cost
valuation loss
$ 311,362 ( $ 60,696)
480,620 ( 32,876)
31,785 (
1,096)
72,139(
938)
$ 895,906( $ 95,606)
December31,2023
Allowance for

Cost
valuation loss
$ 413,705 ( $ 60,994)
467,932 ( 42,705)
66,614 (
2,674)
79,711 (
1,871)
$ 1,027,962( $ 108,244)
September30,2023
Allowance for

Cost
valuation loss
$ 463,372 ( $ 39,286)
424,321 ( 40,289)
55,301 (
1,759)
39,478(
2,009)
$ 982,472( $ 83,343)

~16~

EPISIL-PRECISION INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2024 AND 2023 are unaudited

(Expressed in thousands of New Taiwan dollars)

The cost of inventories recognised as expense for the year:

Cost of goods sold

Unamortised manufacturing expenses
Ggain from price recovery of inventory

Inventory scrapped

Cost of goods sold

Unamortised manufacturing expenses
(Recovery benefits ) Loss on the decline
in the value of inventories

Inventory scrapped
 For thethree-monthperiods ended September30, For thethree-monthperiods ended September30, For thethree-monthperiods ended September30,
2024
2023
$ 787,540 $ 761,017
164,581
166,682
(
4,831 ) (
3,139 )
108
248
$ 947,398 $ 924,808
For thenine-monthperiods ended September30,		 2023
2024
$ 2,333,207
501,219
(
12,638)
1,529
$ 2,823,3179		 2023
$ 2,474,652
367,283

24,365
1,275
$ 2,867,575

The Group was responsible for the period from July 1 to September 30, 2024 and from January 1 to September 30, 2024.The net realised value of inventories has recovered and been written off due to the removal of inventories that have been provided for depreciation and sluggish losses reduced cost of goods.

~17~

EPISIL-PRECISION INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2024 AND 2023 are unaudited (Expressed in thousands of New Taiwan dollars)

(5) Property, plant and equipment

At January 1
Cost
Accumulated
depreciation
and
impairment

At January 1
Additions
Reclassifications
Disposals
Depreciation
expenses

At September 30
At September 30
Cost
Accumulated
depreciation
and
impairment

At January 1
Cost
Accumulated
depreciation
and
impairment

At January 1
Additions
Reclassifications
Disposals
Depreciation
expenses

At September 30
At September 30
Cost
Accumulated
depreciation
and
impairment
 2024
Buildings and
structures
Machiney and
equipment

$ 2,428,011
$ 4,490,365
(
1,524,473 ) (
3,702,380 )
$ 903,538
$ 787,985
$ 903,538
$ 787,985
463,466
25,091
70,542
167,093
- (
86,931 )
(
95,868 ) (
224,385 )
$ 1,341,678
$ 668,853
$ 2,962,019
$ 4,151,522
(
1,620,341 ) (
3,482,669 )
$ 1,341,678
$ 668,853
Buildings and
structures
Machiney and
equipment

$ 2,301,420
$ 4,190,767
(
1,413,734 ) (
3,349,440 )
$ 887,686
$ 841,327
$ 887,686
$ 841,327
48,604
30,251
45,197
107,708
- (
861 )
(
85,505 ) (
269,118 )
$ 895,982
$ 709,307
$ 2,392,504
$ 4,318,733
(
1,496,522 ) (
3,609,426 )
$ 895,982
$ 709,307

~18~

EPISIL-PRECISION INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2024 AND 2023 are unaudited

(Expressed in thousands of New Taiwan dollars)

  • A. The Group has capitalization of interest attributable to the property, plant and equipment for the three- 、 、

  • month and nine-month periods ended September 30, 2024 and 2023 were $1,771 $0 $6,028 and $0, respectively. The capitalized interest rates ranged from 2.49%~5.74% 、 0% 、 2.49%~6.79% and 0% respectively.

  • B. As of September 30, 2024, December 31, 2023 and September 30, 2023, the Group has no property, plant and equipment pledged to others as collateral.

(6) Lease transaction – lessee

  • A. The Group leases various assets, including land, buildings and structures and machinery and equipment. Lease agreements are typically made for periods of 3 to 50 years. Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions. The lease agreements do not impose covenants, but leased assets may not be used as security for borrowing purposes.

  • B. Short-term leases with a lease term of 12 months or less comprise other equipment.

  • C. The carrying amount of right-of-use assets and the depreciation charge are as follows:


Land
Buildings and structures
Land
Buildings and structures		 September 30,2024 December31,2023 September 30,2023
Bookvalue
Bookvalue
Bookvalue
$ 346,218 $ 219,030 $ 220,975
16,723
1,963
2,841
$ 362,941 $220,993 $ 223,816
For thethree-monthperiods ended September 30,
2024
2023
Depreciationexpenses
Depreciationexpenses
$ 2,448 $ 1,974
1,083
878
$ 3,531$ 2,852
2024
Depreciationexpenses
$ 2,448
1,083
$ 3,531
Land
Buildings and structures
Machinery and equipment		 For thenine-monthperiods ended September 30,
2024
2023
Depreciationexpenses
Depreciationexpenses
$ 6,338 $ 6,035
3,182
2,632
-
149
$ 9,520 $ 8,816
2024
Depreciationexpenses
$ 6,338
3,182
-
$ 9,520

  • D. For the three-month and nine-month periods ended September 30, 2024 and 2023, the additions to 、 、

  • right-of-use assets were $133,525 $0 $151,468 and $1,140, respectively.

~19~

EPISIL-PRECISION INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2024 AND 2023 are unaudited

(Expressed in thousands of New Taiwan dollars)

E. Information on profit or loss in relation to lease agreements is as follows:

Items affecting profit or loss
Interest expense on lease liabilities
Expense on short-term lease
agreements
Items affecting profit or loss
Interest expense on lease liabilities
Expense on short-term lease
agreements		 For thethree-monthperiods ended September 30, For thethree-monthperiods ended September 30,
2024
2023
$ 1,873
$ 1,372
546
437
For thenine-monthperiods ended September 30,		 2023
2024
$ 4,683
1,605		 2023
$ 4,238
1,320

  • F. For the nine-month periods ended September 30, 2024 and 2023, the Group’s total cash outflow for leases were $14,093 and $12,853, respectively.

  • G. Extension and termination options

  • In determining the lease term, the Group takes into consideration all facts and circumstances that create an economic incentive to exercise an extension option or not to exercise a termination option. The assessment of lease period is reviewed if a significant event occurs which affects the assessment.

(7) Lease arrangements – lessor

  • A. The Group leases various assets, including buildings and structures. Lease agreements are typically made for periods of 1 and 20 years. Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions. To protect the lessor’s ownership rights on the leased assets, leased assets may not be used as security for borrowing purposes, or a residual value guarantee was required from leasees.

  • B. For the three-month and nine-month periods ended September 30, 2024 and 2023, the Group recognised rental revenue is as follows:

For the three-month periods ended September 30,

For thethree-monthperiods ended September 30, ods ended September 30,
Rental revenue
Rental revenue		 2024
2023
$ 10,279
$ 10,147
For thenine-monthperiods ended September 30,		 2023
$ 10,147
2024
$ 30,859		 2023
$ 30,314

~20~

EPISIL-PRECISION INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2024 AND 2023 are unaudited (Expressed in thousands of New Taiwan dollars)

C. The maturity analysis of the lease payments under the operating leases is as follows:

2023
2024
2025
2026
2027
2028
2029
Over 2030		 September 30,2024
$ -
10,104
39,870
30,472
7,260
7,260
7,115
49,059
$ 151,180		 December31,2023
$ -
39,134
38,811
29,797
7,008
7,008
7,008
49,059
$ 177,825		 September30,2023
$ 9,901
39,134
38,811
29,797
7,008
7,008
7,008
49,059
$ 187,726

(8) Investment property

At January 1
Cost

Accumulated depreciation and
impairment


At January 1

Depreciation expenses

AtSeptember30

AtSeptember30
Cost

Accumulated depreciation and
impairment

 2024
Buildingsand structures
$ 206,227
(
50,830) (
$ 155,397
$ 155,397
(
3,692) (
$ 151,705
$ 206,227
(
54,522) (
$ 151,705		 2023
Buildingsand structures
$ 206,227

45,907)
$ 160,320
$ 160,320

3,693)
$ 156,627
$ 206,227

49,600)
$ 156,627

~21~

EPISIL-PRECISION INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2024 AND 2023 are unaudited

(Expressed in thousands of New Taiwan dollars)

A. Rental revenue from investment property.

Rental revenue from investment property.


Rental revenue from investment property
Direct operating expenses arising from the
investment property that generated rental
revenue during the period		 For thethree-monthperiods ended September 30,

2024
$ 10,056
$ 2,470		 2023
$ 9,815
$ 2,330


Rental revenue from investment property
Direct operating expenses arising from the
investment property that generated rental
revenue during the period		 For thenine-monthperiods ended September 30, For thenine-monthperiods ended September 30,

2024
$ 30,159
$ 7,446		 2023
$ 29,445
$ 7,293

  • B. The fair value of the investment property held by the Group as of September 30, 2024, December 、

  • 31, 2023 and September 30, 2023, was $203,764 $197,614 and $198,469, respectively. Valuations were made using the income approach which is categorised within Level 3 in the fair value hierarchy. Key assumptions are as follows:


Discount rate
Annual rent (net income)
Duration		 September 30,2024
11.48%
$ 35,300
10 years		 December31,2023
11.65%
$ 34,475

10 years		 September 30,2023

11.55%
$ 34,475

10 years

  • C. The Group has no interest capitalisation for the three-month and nine-month periods ended September 30, 2024 and 2023.

  • D. The significant components of investment property include buildings and renovation, which are depreciated over 51 years and 46 years, respectively.

  • E. As of September 30, 2024, December 31, 2023 and September 30, 2023, the Group has no investment property pledged to others as collateral.

~22~

EPISIL-PRECISION INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2024 AND 2023 are unaudited

(Expressed in thousands of New Taiwan dollars)

(9) Intangible assets

At January 1
Cost
Accumulated
amortisation
(
At January 1
Additions
Amortisation
expenses
(
AtSeptember30
AtSeptember30
Cost
Accumulated
amortisation
(
At January 1
Cost
Accumulated
amortisation
(
At January 1
Additions
Amortisation
expenses
(
AtSeptember30
AtSeptember30
Cost
Accumulated
amortisation
(		 2024 2024 Total

$ 98,905

43,257)
$ 55,648
$ 55,648
1,300

2,654 )
$ 54,294
$ 100,205

45,911 )
$ 54,294


Total

$ 93,257

40,737
)
$ 52,520
$ 52,520
4,629

1,817
)
$ 55,332
$ 97,886

42,554
)
$ 55,332
Computer
software

$ 10,638

4,878)
$ 5,760
$ 5,760
1,300

2,285)
$ 4,775
$ 11,938

7,163)
$ 4,775		 Goodwill
Others


$ 48,369 $ 39,898

- (
38,379) (
$ 48,369 $ 1,519
$ 48,369 $ 1,519

-
-

- (
369) (
$ 48,369 $ 1,150
$ 48,369 $ 39,899

- (
38,748) (
$ 48,369 $ 1,150
2023
Computer
software
$ 5,618

3,001)
$ 2,617
$ 2,617
4,000

1,297)
$ 5,320
$ 9,618

4,298)
$ 5,320		 Goodwill
$ 48,369

-(
$ 48,369
$ 48,369
-

-(
$ 48,369
$ 48,369

-(
$ 48,369		 Others
$ 39,270

37,736)(
$ 1,534
$ 1,534

629

520)(
$ 1,643
$ 39,899

38,256)(
$ 1,643

~23~

EPISIL-PRECISION INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2024 AND 2023 are unaudited

(Expressed in thousands of New Taiwan dollars)

A. Details of amortisation on intangible assets are as follows:

For the three-month periods ended September 30,

For thethree-monthperiods ended September 30,
Operating costs
General and administrative
expenses
Operating costs
General and administrative
expenses		 2024
2023
$ 282 $ 294
615
422
$ 897 $ 716
For thenine-monthperiods ended September 30,
2024
2023
$ 845 $ 996
1,809
821
$ 2,654$ 1,817
2024
$ 845
1,809
$ 2,654

  • B. The Group has no interest capitalisation for the three-month and the nine-month September 30, 2024 and 2023.

  • C. As of September 30, 2024 , December 31, 2023 and September 30, 2023, the Group has no intangible assets pledged to others as collateral.

(10) Short-term borrowings

(10)Short-term borrowings
Type ofborrowings
Bank borrowings
Unscured borrowings
Type ofborrowings
Bank borrowings
Unscured borrowings
Type ofborrowings
Bank borrowings
Unscured borrowings		 September 30,2024

$ 108,250
December31,2023

$ 266,950
September 30,2023

$ 486,583		 Interest raterange
5.497%～5.830%
Interest raterange
6.120%～6.502%
Interest raterange
5.88%～6.40%		 Collateral
None
Collateral
None
Collateral
None

For the three-month and nine-month periods ended September 30, 2024 and 2023, interest expenses arising 、 、 from short-term borrowings that were recognised in profit or loss amounted to $2,107 $5,048 $11,236 and $12,855, respectively.

(11) Accounts payable

(11)Accounts payable

Accounts payable
Estimated accounts payable		 September 30,2024
$ 241,922
27,341
$ 269,263		 December31,2023
$ 218,597
38,408
$ 257,005		 September 30,2023
$ 297,442
51,404
$ 348,846

~24~

EPISIL-PRECISION INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2024 AND 2023 are unaudited

(Expressed in thousands of New Taiwan dollars)

(12) Other payable


Accrued expenses-
expendables
Payables for equipment
Accrued expenses-bonus
Employees' compensation
and directors’ remuneration
payable
Accrued expenses-others
(13)Bonds payable

The Croup’s fourth secured
convertible bonds
The Croup’s fifth secured
convertible bonds
Less: Bonds payable
converted
Less: Discount on bonds
payable
Less: Current portion		 September 30,2024
$ 109,648
56,289
506877
29,184
106,563
$ 352,371
September 30,2024
$ 500,000
500,000
(
300)
(
37,600)
962,100
(
494,160)
$ 465.960		 December31,2023
$ 122,036
87,091
61,071
20,279
72,171
$ 362,648
December31,2023
$ 500,000
-

-
(
8,857)
491,143

-
$ 491,143		 September 30,2023
$ 94,846

52,449

47,189
14,784

90,451
$ 299,719
September 30,2023
$ 500,000

-

-
(
10,610)

489,390

-
$ 489,390

  • A. The issuance terms of the Company’s fourth domestic unsecured convertible bonds are as follows:

  • (a) The regulatory authority has approved the fourth domestic unsecured convertible corporate bonds issued by the Company. The bonds are with a total issuance amount of $500,000 and a coupon rate of 0%, covering a 3-year period of issuance and a circulation period from March 29, 2022 to March 29, 2025, and will be redeemed in cash at face value at the maturity date. The bonds were listed on the Taipei Exchange on March 29, 2022.

  • (b) The bondholders have the right to ask for conversion of the bonds into common shares of the Company during the period from the date after three months of the bonds issue to the maturity date, except for the stop transfer period as specified in the terms of the bonds or the laws/regulations. The rights and obligations of the new shares converted from the bonds are the same as the issued and outstanding common shares.

  • (c) T he effective date for the conversion price of the convertible was set on March 21, 2022. The conversion price was set up based on multiplying a benchmark price which was the closing price of the Company’s common share calculated at simple arithmetic mean in 1, 3 or 5 business day(s) before the effective date (effective date is excluded) by convertible premium

~25~

EPISIL-PRECISION INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2024 AND 2023 are unaudited (Expressed in thousands of New Taiwan dollars)

rate of 109.22% (round to the nearest tenth). If there is an ex-right or ex-dividend before the pricing effective date, the closing price adopted to calculate conversion price shall be imputed with ex-right or ex-dividend; if there is an ex-right or ex-dividend during the period that the conversion price was set up but prior to share issuance, the conversion price shall be adjusted based on the conversion price adjustment formula. The conversion price was NT$128 (in dollars) per share based on the aforementioned method. Starting from July 12, 2024, the conversion price of the bonds was adjusted to NT$121.5 (in dollars) per share due to the Company’s cash dividend distribution.

  • (d) All convertible bonds repurchased, redeemed or converted by the Company from securities trading markets shall be retired, which are not allowed to resell or reissue, and conversion rights attached to the bonds are also extinguished.

  • (e) Regarding the issuance of convertible bonds, the equity conversion options were separated from the liability component and were recognised in “Capital surplus-warrants” in accordance with IAS 32. As of September 30, 2024,December 31, 2023 and September 30, 2023, the 、

  • carrying amounts were $21,744 $21,757 and $21,757, repectively.

  • (f) As of September 30, 2024, the bonds totaling $300 (face value) had been converted into 2 thousand shares of common stock.

  • B. The issuance terms of the Company’s fifth domestic unsecured convertible bonds are as follows:

  • (a) The regulatory authority has approved the fourth domestic unsecured convertible corporate bonds issued by the Company. The bonds are with a total issuance amount of $500,000 and a coupon rate of 0%, covering a 3-year period of issuance and a circulation period from July 26, 2024 to July 26, 2027, and will be redeemed in cash at face value at the maturity date. The bonds were listed on the Taipei Exchange on July 26, 2024.

  • (b) The bondholders have the right to ask for conversion of the bonds into common shares of the Company during the period from the date after three months of the bonds issue to the maturity date, except for the stop transfer period as specified in the terms of the bonds or the laws/regulations. The rights and obligations of the new shares converted from the bonds are the same as the issued and outstanding common shares.

  • (c) T he effective date for the conversion price of the convertible was set on July 18, 2024. The conversion price was set up based on multiplying a benchmark price which was the closing price of the Company’s common share calculated at simple arithmetic mean in 1, 3 or 5 business day(s) before the effective date (effective date is excluded) by convertible premium rate of 105.68% (round to the nearest tenth). If there is an ex-right or ex-dividend before the pricing effective date, the closing price adopted to calculate conversion price shall be imputed with ex-right or ex-dividend; if there is an ex-right or ex-dividend during the period that the conversion price was set up but prior to share issuance, the conversion price shall be adjusted based on the conversion price adjustment formula. The conversion price was NT$72.6 (in dollars) per share based on the aforementioned method.

  • (d) All convertible bonds repurchased, redeemed or converted by the Company from securities

~26~

EPISIL-PRECISION INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2024 AND 2023 are unaudited (Expressed in thousands of New Taiwan dollars)

trading markets shall be retired, which are not allowed to resell or reissue, and conversion rights attached to the bonds are also extinguished.

  • (e) Regarding the issuance of convertible bonds, the equity conversion options were separated from the liability component and were recognised in “Capital surplus-warrants” in accordance with IAS 32. As of September 30, 2024, the carrying amounts was $35,724.

(14) Pensions

  • A. (a) The Group (excluding overseas subsidiary) has a defined benefit pension plan in accordance with the Labor Standards Act, covering all regular employees’ service years prior to the enforcement of the Labor Pension Act on July 1, 2005 and service years thereafter of employees who chose to continue to be subject to the pension mechanism under the Labor Standards Act. Under the defined benefit pension plan, two units are accrued for each year of service for the first 15 years and one unit for each additional year thereafter, subject to a maximum of 45 units. Pension benefits are based on the number of units accrued and the average monthly salaries and wages of the last month prior to retirement. The Group contributes monthly an amount equal to 2% of the employees’ monthly salaries and wages to the pension fund deposited with Bank of Taiwan, the trustee, under the name of the independent pension fund committee. Also, the Group would assess the balance in the aforementioned labor pension reserve account by December 31, every year. If the account balance is insufficient to pay the pension calculated by the aforementioned method to the employees expected to qualify for retirement in the following year, the Group (excluding overseas subsidiary) will make contributions for the deficit by next March.

  • (b) The pension costs recognized by the Group according to the above pension regulations for 、

  • the three-month and nine-month periods ended September 30, 2024 and 2023 were $200 、

  • $258 $588 and $774, respectively.

  • (c) Expected contributions to the defined benefit pension plans of the Company for the year ending December 31, 2024 amount to $3,014.

  • B. (a) Effective July 1, 2005, the Group has established a defined contribution pension plan (the “New Plan”) under the Labor Pension Act (the “Act”), covering all regular employees with R.O.C. nationality. Under the New Plan, the Group contributes monthly an amount based on 6% of the employees’ monthly salaries and wages to the employees’ individual pension accounts at the Bureau of Labor Insurance. The benefits accrued are paid monthly or in lump sum upon termination of employment.

  • (b) The pension costs under the defined contribution pension plans of the Group for the threemonth and six-month periods ended September 30, 2024 and 2023 were $7,190, $7,186, $21,254 and $21,877, respectively.

~27~

EPISIL-PRECISION INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2024 AND 2023 are unaudited

(Expressed in thousands of New Taiwan dollars)

(15) Share capital

As of September 30, 2024, the Group’s authorised capital was $5,000,000, consisting of 500,000 thousand shares of ordinary stock, and the paid-in capital was $2,885,418 with a par value of $10 (in dollars) per share. All proceeds from shares issued have been collected.

Movements in the number of the Company’s ordinary shares outstanding are as follows: (Unit: thousand shares)

Unit: thousand shares
At Juanary 1
Conersion of convertible bonds
AtSeptember30		 2024
288,539
3
288,542		 2023
288,539
-
288,539

(16) Capital surplus

Pursuant to the R.O.C. Company Act, capital surplus arising from paid-in capital in excess of par value on issuance of common stocks and donations can be used to cover accumulated deficit or to issue new stocks or cash to shareholders in proportion to their share ownership, provided that the Company has no accumulated deficit. Further, the R.O.C. Securities and Exchange Act requires that the amount of capital surplus to be capitalised mentioned above should not exceed 10% of the paid-in capital each year. However, capital surplus should not be used to cover accumulated deficit unless the legal reserve is insufficient.

(17) Retained earnings

  • A. Under the Company’s Articles of Incorporation, the current year’s earnings, if any, shall first be used to pay all taxes and offset prior years’ operating losses and then 10% of the remaining amount shall be set aside as legal reserve, and setting aside or reversal for special reserve in accordance with related laws, if any. The Board of Directors should propose the distribution of the remaining earnings based on the Company’s dividend policy for the approval of the shareholders.

  • A company may, by a resolution adopted by a majority vote at a meeting of Board of Directors attended by two-thirds of the total number of directors, have the dividends and bonus all or partially distributed in the form of cash; and in addition thereto a report of such distribution shall be submitted to the shareholders during their meeting, which is not subject to the rules in relation to the resolution of shareholders’ meeting.

  • B. The Company’s dividend policy is summarised below: as the Company operates in high-tech industries and is in the stable growth stage, to take into consideration the business environment and growing stage of the Company and meet future capital requirements, long-term financial plan and fulfil shareholders’ requirement for cash flows. The current year's earnings, if any, shall be distributed in the form of cash dividends not lower than 10% of total cash and stock dividends and bonus to be distributed.

  • C. In accordance with the regulations, the Company shall set aside special reserve from the debit balance on other equity items at the balance sheet date before distributing earnings. When debit

~28~

EPISIL-PRECISION INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2024 AND 2023 are unaudited

(Expressed in thousands of New Taiwan dollars)

balance on other equity items is reversed subsequently, the reversed amount could be included in the distributable earnings.

  • D. On May 30, 2024 and May 31,2023 ， the Company’s shareholders resolved the distribution of 2023 and 2022 earnings as follows:
2023 and 2022 earnings as follows:
Legal reserve
Special reserve
Cash dividends
Legal reserve
Special reserve
Cash dividends		 YearendedDecember31,2023
Amount
Dividend pershare (indollars)
$ 17,138
743
144,270$ 0.5
$ 162,151
YearendedDecember31,2022		 Dividend pershare (indollars)
Amount

$ 69,264
245
577,058
$ 646,567		 Dividend pershare (indollars)


$ 2.0

(18) Other equity items

18)Other equity items
2024 2023
Financial statements Financial statements
translation difference of translation difference of
foreignoperations foreignoperations
At January 1 ( $ 1,898 ) ( $ 1,155)
–Group 283) ( 834)
AtSeptember30 ($ 1,615) ($ 1,989)

(19) Operating revenue

For the three-month periods ended September 30,

Revenue from contracts with customers

Revenue from contracts with customers

For thethree-monthperiods en ded September 30,
2024 2023
$ 1,054,584$ 1,034,387
For thenine-monthperiods ended September 30,
2024 2023
$ 3,132,603$ 3,210,234

~29~

EPISIL-PRECISION INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2024 AND 2023 are unaudited

(Expressed in thousands of New Taiwan dollars)

Disaggregation of revenue from contracts with customers

The Group derives revenue from the transfer of goods at a point in time in the following major product lines:

For the three-month periods Silicon epitaxy Silicon epitaxy
ended September 30,2024 wafers Others Total
Revenue from external
customer contracts $ 1,048,435 $ 6,149 $ 1,054,584
Timing of revenue recognition
At a point in time $ 1,048,435$ 6,149 $ 1,054,584
For the three-month periods Silicon epitaxy
ended September 30,2023 wafers Others Total
Revenue from external
customer contracts $ 1,029,713 $ 4,674 $ 1,034,387
Timing of revenue recognition
At a point in time $ 1,029,713 $ 4,674 $ 1,034,387
For the nine-month periods Silicon epitaxy
ended September 30,2024 wafers Others Total
Revenue from external
customer contracts $ 3,114,624 $ 17,979 $ 3,132,603
Timing of revenue
recognition
At a point in time $ 3,114,624 $ 17,979 $ 3,132,603
For the nine-month periods Silicon epitaxy
ended September 30,2023 wafers Others Total
Revenue from external
customer contracts $ 3,197,277 $ 12,957 $ 3,210,234
Timing of revenue
recognition
At a point in time $ 3,197,277 $ 12,957 $ 3,210,234

(20) Interest income

(20)Interest income
Interest income from bank deposits

Interest income from bank deposits
 For thethree-monthperiods ended September 30,
2024
2023
$ 9,198 $ 6,206
For thenine-monthperiods ended September 30,		 2023
$ 6,206
2024
$ 26,009		 2023
$ 22,499

~30~

EPISIL-PRECISION INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2024 AND 2023 are unaudited

(Expressed in thousands of New Taiwan dollars)

(21) Other income

(21)Other income
Rental revenue
Other income, others
Rental revenue
Other income, others		 For thethree-monthperiods ended September 30,
2024
2023
$ 10,279
$ 10,147
38
135
$ 10,317
$ 10,282
For thenine-monthperiods ended September 30,
2024
2023
$ 30,859
$ 30,314
72
5,194
$ 30,931
$ 35,508
2023
$ 30,314
5,194
$ 35,508

(22) Other gains and losses

Rental revenue
Other income, others
(22)Other gains and losses		 $ $ 2024
2023
30,859
$
72

30,931
$		 2024
2023
30,859
$
72

30,931
$		 30,314
5,194
35,508
For thethree-monthperiods ended September 30,
2024 2023
Gains on disposals of property, plant and
equipment $ 24,502 $ -
Net currency exchange (losses) gains ( 7,453 ) 15,028
Depreciation on investment property ( 1,230 ) ( 1,231)
Other losses ( 1,868)( 1,664)
$ 13,951$ 12,133
For thenine-monthperiods ended September 30,
2024 2023
Gains on disposals of property, plant and
equipment $ 183,291 $ 1,599
Net currency exchange gains 9,878 9,451
Depreciation on investment property ( 3,692 ) ( 3,693)
Other losses ( 5,239)( 8,180)
$ 184,238 ($ 823)
$ 184,238 ($ 823
(23)Finance costs
Interest expense:
Banking borrowings
Bonds payable
Lease liabilites
Other
Less: Assets that meet the requirements
Capitalized amount
Other finance expenses		 For thethree-monthperiods ended September 30,
2024
2023
$ 2,107 $ 5,048
3,699
1,746
1,873
1,372
33
36
(
1,771 )
-
80
-
$ 6,021$ 8,196
2024
$ 2,107
3,699
1,873
33
(
1,771 )
80
$ 6,021

~31~

EPISIL-PRECISION INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2024 AND 2023 are unaudited

(Expressed in thousands of New Taiwan dollars)

For the nine-month periods ended September 30,

For thenine-monthperiods ended September 30, For thenine-monthperiods ended September 30, For thenine-monthperiods ended September 30,
2024
2023
Interest expense:
Banking borrowings
$ 11,236 $ 12,855
Bonds payable
7,222
5,220
Lease liabilites
4,683
4,238
Other
98
91
Less: Assets that meet the requirements
Capitalized amount
(
6,028 )
-
Other finance expenses
230
150
$ 17,441$ 22,554
(24)Expenses by nature
For thethree-monthperiods ended September 30,
2024
2023
Employee benefit expense
$ 199,756 $ 181,441
Depreciation expenses
106,976
126,992
Amortisation expenses on intangible
assets
897
716
For thenine-monthperiods ended September 30,
2024
2023
Employee benefit expense
$ 603,761 $ 578,785
Depreciation expenses
340,136
371,181
Amortisation expenses on intangible
assets
2,654
1,817
(25)Employee benefit expense
For thethree-monthperiods ended September 30,
2024
2023
Wages and salaries
$ 164,574 $ 146,570
Labour and health insurance fees
14,541
15,761
Pension costs
7,391
7,444
Other personnel expenses
13,251
11,666
$ 199,756 $ 181,441
For thenine-monthperiods ended September 30,
2024
2023
Wages and salaries
$ 493,902 $ 470,314
Labour and health insurance fees
43,575
46,260
Pension costs
21,842
22,651
Other personnel expenses
44,442
39,560
$ 603,761 $ 578,785
2024
2023
$ 199,756 $ 181,441
106,976
126,992
897
716
For thenine-monthperiods ended September 30,		 2023
2024
2023
$ 603,761 $ 578,785
340,136
371,181
2,654
1,817
For thethree-monthperiods ended September 30,		 2023
2024
2023
$ 164,574 $ 146,570
14,541
15,761
7,391
7,444
13,251
11,666
$ 199,756 $ 181,441
For thenine-monthperiods ended September 30,		 2023
$ 146,570
15,761
7,444
11,666
$ 181,441
2024
$ 493,902
43,575
21,842
44,442
$ 603,761		 2023
$ 470,314
46,260
22,651
39,560
$ 578,785

~32~

EPISIL-PRECISION INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2024 AND 2023 are unaudited

(Expressed in thousands of New Taiwan dollars)

According to the Articles of Incorporation of the Company, employees’ compensation and directors’ remuneration shall be calculated based on current year’s earnings, which should first be used to cover accumulated deficits, if any, and then, not less than 5% for employees’ compensation and not more than 2% for directors’ remuneration.

Employees’ compensation can be distributed by stock or dividends, including distributions to certain qualifying employees within the Group.

  • B. For the three-month and nine-month periods ended September 30, 2024 and 2023, employees’ 、 、

  • compensation was accrued at $5,000 $4,723 $25,941 and $13,141, respectively; while 、 、

  • directors’ remuneration was accrued at $625 $591 $3,243 and $1,643, respectively. The aforementioned amounts were recognised in salary expenses and other expenses.

The employees’ compensation and directors’ remuneration were estimated and accrued based on 8%, 1%, 8% and 1% of earnings for the six-month periods ended September 30, 2024 and 2023, respectively.

Employees’ compensation of $18,026 and directors’ remuneration of $2,253 for the year ended December 31, 2023 as resolved by the Board of Directors were in agreement with those amounts recognised in the 2023 financial statements. Abovementioned employees’ compensation of 2023 will be distributed in the form of cash.

Information about employees’ compensation and directors’ remuneration of the Company as resolved at the meeting of Board of Directors and approved by the shareholders will be posted in the “Market Observation Post System”.

(26) Income tax

A. Income tax expense

  • (a) Components of income tax expense:
Income tax
ome tax expense
Components of income tax expense:
Current tax:
Current tax on profits for the year
Prior year income tax under
estimation
Total current tax
Deferred tax:
Origination and reversal of
temporary differences
Total deferred tax
Income tax expense		 For thethree-monthperiods ended September 30,
2024
2023
$ 11,656 $ 11,242
-
-
11,656
11,242
-
-
-
-
$ 11,656 $ 11,242
2024
$ 11,656
-
11,656
-
-
$ 11,656

~33~

EPISIL-PRECISION INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2024 AND 2023 are unaudited

(Expressed in thousands of New Taiwan dollars)

For the nine-month periods ended September 30,

Current tax:
Current tax on profits for the year
Prior year income tax under
estimation
Total current tax
Deferred tax:
Origination and reversal of
temporary differences
Total deferred tax
Income tax expense		 2024
$ 59,297
-
59,297
-
-
$ 59,297		 2023
$ 30,394
-
30,394
-
-
$ 30,394

  • (b) The income tax (charge)/credit relating to components of other comprehensive income: None.

  • B. The Company’s income tax returns through 2021 have been assessed and approved by the Tax Authority.

(27) Earning earnings per share

For the three-month periods ended September 30,2024


Basic loss per share
Profit attributable to ordinary
shareholders of the parent
Diluted earnings per share
Profit attributable to ordinary
shareholders of the parent
Employees’ compensation
Profit attributable to ordinary
shareholders of the parent plus
assumed conversion of all
dilutive potential ordinary shares
Amount after tax
$ 45,500
45,500
-
$ 45,500		 Weighted average
number of ordinary
shares outstanding
(sharein thousands)
288,542

288,542

429
$ 288,971		 Earnings per share

(indollars)
$ 0.16
$ 0.16

~34~

EPISIL-PRECISION INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2024 AND 2023 are unaudited

(Expressed in thousands of New Taiwan dollars)

For the three-month periods ended September 30,2023

For thethree-monthperiods ended September 30,2023 For thethree-monthperiods ended September 30,2023

Basic loss per share
Profit attributable to ordinary
shareholders of the parent
Diluted earnings per share
Profit attributable to ordinary
shareholders of the parent
Assumed conversion of all
dilutive potential ordinary shares
Employees’ compensation
Profit attributable to ordinary
shareholders of the parent plus
assumed conversion of all
dilutive potential ordinary shares

Basic loss per share
Profit attributable to ordinary
shareholders of the parent
Diluted earnings per share
Profit attributable to ordinary
shareholders of the parent
Assumed conversion of all
dilutive potential ordinary shares
Employees’ compensation
Profit attributable to ordinary
shareholders of the parent plus
assumed conversion of all
dilutive potential ordinary shares		 Weighted average
number of ordinary
shares outstanding
Earnings per share
Amount after tax(sharein thousands)
(indollars)
$ 42,979
288,539 $ 0.15
42,979
288,539
-
86
$ 42,979 $ 288,625 $ 0.15
For thenine-monthperiods ended September 30,2024
Weighted average
number of ordinary
shares outstanding
Earnings per share
Amount after tax(sharein thousands)
(indollars)
$ 236,064
288,541 $ 0.82
236,064
288,541
-
498
$ 236,064$ 289,039 $ 0.82

Amount after tax
$ 236,064
236,064
-
$ 236,064		 Weighted average
number of ordinary
shares outstanding
(sharein thousands)

288,541

288,541

498
$ 289,039

~35~

EPISIL-PRECISION INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2024 AND 2023 are unaudited

(Expressed in thousands of New Taiwan dollars)

For the nine-month periods ended September 30,2023

For thenine-monthperiods ended September 30,2023 ember 30,2023

Basic loss per share
Profit attributable to ordinary
shareholders of the parent
Diluted earnings per share
Profit attributable to ordinary
shareholders of the parent
Assumed conversion of all
dilutive potential ordinary shares
Employees’ compensation
Profit attributable to ordinary
shareholders of the parent plus
assumed conversion of all
dilutive potential ordinary shares
For the three-month periods ended
month periods endedSeptember
convertible bonds had anti-dilutive
earnings per share.		 Weighted average
number of ordinary
shares outstanding
Earnings per share
Amount after tax(sharein thousands)
(indollars)
$ 119,586
288,539 $ 0.41
$ 119,586
288,539
-
435
$ 119,586 $ 288,974 $ 0.41
September30, 2024 andSeptember30, 2023，and for the nine-
30, 2024, andSeptember30, 2023, the Company’s issued
effect, thus, they were not included in the calculation of diluted		 Earnings per share

(indollars)
$ 0.41
$ 0.41

(28) Supplemental cash flow information

A. Investing activities with partial cash payments

For thenine-monthperiods ended September 30, For thenine-monthperiods ended September 30,
2024 2023
Acquisition of property, plant and
equipment $ 759,980 $ 330,546
Add: Beginning balance of payables on
equipment 87,091 199,347
Less: Ending balance of payables on
equipment ( 528,789 )( 52,449)
Less: Interest capitalization ( 6,028) -
Cash paid during the year $ 321,254$ 477,444

B. Financing activities with no cash flow effects:

Convertible bonds being converted to
capital stocks		 For thenine-monthperiods ended September 30,
2024
2023
$ 300 $ -
2024
$ 300

~36~

EPISIL-PRECISION INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2024 AND 2023 are unaudited (Expressed in thousands of New Taiwan dollars)

(29) Changes in liabilities from financing activities

At January 1
Changes in cash
flow from
financing activities
Interest paid
Interest expense
Redemption of
corporate bonds
Conversion option
exercised
Changes in other
non-cash items
At September 30		 2024
Short-term
borrowings
Lease
liabilities
$ 266,950 $ 252,494
(
158,700 ) (
7,805 )
- (
4,683 )
-
4,683
-
151,468
$ 108,250 $ 376,509		 Guarantee
deposits-
received

$ 8,095

-

-
-

-
$ 8,095
At January 1
Changes in cash
flow from
financing activities
Interest paid
Interest expense
Changes in other
non-cash items
At September 30		 2023
Short-term
borrowings
Lease
liabilities
$ 178,624 $ 252,494
307,959 (
7,295 )
- (
4,238 )
-
4,238
- (
9,994 )
$ 486,583 $ 235,205		 Guarantee
deposits-
received

$ 8,095

-

-
-

-
$ 8,095

7. Related Party Transactions

(1) Parent and ultimate controlling party

The Company’s ultimate parent company is Episil Technologies Inc. (former name: Episil Holding Inc. ) holds 57.86% of the Company’s outstanding shares.

(2) Names of related parties and relationship

Names of related parties Relationship with the Company

Episil Technologies Inc. Episil Technologies Inc.(Shanghai) Hermes-Epitek Corp.

The parent company

The parent company’s indirect wholly-owned sbusidiary

The parent company’s director is Hermes-Epitek Corp.’s director

Investee of the parent company accounted for Taiwan Hi-Tech Corp. using equity method Vanguard International Semiconductor Individuals with significant influence on the Corporation Group

~37~

EPISIL-PRECISION INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2024 AND 2023 are unaudited

(Expressed in thousands of New Taiwan dollars)

(3) Significant related party transactions

A. Operating revenue

Sales of goods:
-The parent company
- Individuals with significant influence
on the Group
-Affiliate company
Sales of goods:
-The parent company
- Individuals with significant influence
on the Group
-Affiliate company		 For thethree-monthperiods ended September 30,
2024
2023
$ 76,107 $ 66,546
61,190
-
2,976
1,188
$ 140,273 $ 67,734
For thenine-monthperiods ended September 30,
2024
2023
$ 228,090 $ 245,697
61,190
-
6,862
2,858
$ 296,142 $ 248,555

The price and terms on sales are available to third parties and the credit term is 30 to 90 days after monthly billings.

  • B. Purchases
monthly billings.
Purchases
Purchases of goods:
-The parent company
- Individuals with significant influence
on the Group
-Affiliate company
Purchases of services:
-The parent company
Purchases of goods:
-The parent company
- Individuals with significant influence
on the Group
-Affiliate company		 For thethree-monthperiods ended September 30,
2024
2023
$ 17,991 $ 3,002
146
-
349
2,102
$ 18,486 $ 5,104
$ 2,971 $ 3,195
For thenine-monthperiods ended September 30,		 2023
$ 3,002
-
2,102
$ 5,104
$ 3,195
2024
$ 64,333
146
5,779
$ 70,258		 2023
$ 4,103
-
3,765
$ 7,868

~38~

EPISIL-PRECISION INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2024 AND 2023 are unaudited

-The parent company

(Expressed in thousands of New Taiwan dollars)

==> picture [279 x 12] intentionally omitted <==

The price and terms on purchase are available to third parties and the payment term is 30 to 90 days after monthly billings.

C. Receivables from related parties

September 30, 2024 December 31, 2023 September 30, 2023

Accounts receivable:
-The parent company $ 101,919 $ 99,352 $ 114,788
- Individuals with
significant influence
on the Group -
Vanguard
International
Semiconductor
Corporation 133,250 - -
-Affiliate company 777 3,606 838
$ 235,946 $ 102,958 $ 115,626
Other receivables:
- Affiliate company $ 9,216 $ $ 10,452 $ 10,826
The receivables from related parties arise mainly from sales of goods and service provision
transactions. The receivables are due to 60 to 90 days after the date of sale.
Payables to related parties
September 30,2024 December31,2023 September 30,2023
Accounts payable:
-The parent company $ 17,892 $ 4,169 $ 336
- Individuals with
significant influence
on the Group 182 - -
- Affiliate company 359 1,806 2,268
$ 18,433 $ 5,975 $ 2,604
Other payable:
-The parent company $ 4,112 $ 4,004 $ 4481
-Affiliate company-
Taiwan Hi-Tech Corp. 464,955 28,577 26,712
$ 469,067 $ 32,581 $ 31,193

D. Payables to related parties

、 Other payables mainly refer to payables for equipment service fees and processing fees.

~39~

EPISIL-PRECISION INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2024 AND 2023 are unaudited

(Expressed in thousands of New Taiwan dollars)

E. Property transactions

  • (a) Acquisition of property, plant and equipment:

For the three-month periods ended September 30, 2024 2023

-Affiliate company Taiwan Hi-Tech Corp $ 451,440 $ -

For the nine-month periods ended September 30, 2024 2023 -Affiliate company Taiwan Hi-Tech Corp $ 451,440 $ -

  • (b)Disposal of property, plant and equipment:
-The parent
company
-The parent
company		 For the three-month periods ended
September 30,2024
Disposal
proceeds
Gain (loss)
on disposal
$26,568
$-
For the nine-month periods ended
September 30,2024
Disposal
proceeds
Gain (loss)
ondisposal
$26,568
$-		 For the three-month periods ended
September 30,2023		 For the three-month periods ended
September 30,2023		 For the three-month periods ended
September 30,2023
Disposal
proceeds
Gain (loss) on
disposal
$-
$-
For the nine-month periods ended
September 30,2023		 Gain (loss) on
disposal
$-
Disposal
proceeds
$26,568		 Disposal
proceeds
$-		 Gain (loss) on
disposal
$-

  • F. Lease transactions

  • (a) For the three-month periods and nine-month periods ended September 30, 2024 and 2023, rental revenue arising from leasing certain buildings and structures to affiliate companies amounted 、 、

  • to $1,872 $1,846 $5,608 and $5,537, respectively, which is collected monthly.

  • (b) For the three-month periods and six-month periods end September 30, 2024 and 2023, rental expense due to leasing certain buildings and structures from affiliate companies amounted to 、 、

  • $26 $31 $176 and $92, respectively, which is paid monthly.

  • G. Others (Shown as “Operating costs” and “Operating expenses”)

For the three-month periods ended March 31,

  • Testing fee: -Associates

  • Other fee: -Associates

2024 2023 $ 224 $ 42,646 $ 7,514 $ -

~40~

EPISIL-PRECISION INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2024 AND 2023 are unaudited

(Expressed in thousands of New Taiwan dollars)

For the nine-month periods ended March 31,

Testing fee:
-Associates
Other fee:
-Associates		 2024
$ 61,608

$ 7,514		 2023
$ 120,489
$ -

(4) Key management personnel compensation

Salaries and other short-term employee
benefits
Post-employment benefits		 For thethree-monthperiods ended September 30, For thethree-monthperiods ended September 30,
2024
$ 9,051
179
$ 9,230		 2023
$ 14,421
143
$ 14,564
Salaries and other short-term employee
benefits
Post-employment benefits		 For thenine-monthperiods ended September 30, For thenine-monthperiods ended September 30,
2024
$ 27,574
522
$ 28,096		 2023
$ 28,648
427
$ 29,075

8. Pledged Assets

The Group’s assets pledged as collateral are as follows:

Pledged asset

Restricted assets (shown as
“Current financial assets at
amortised cost”)
Pledged time deposits (shown as
“Non-Current financial assets at
amortised cost”)		 Book value
September 30,2024 December 31,2023
$ -

13,583
$ 13,583
$ -
19,470
$ 19,470

9. Significant Contingent Liabilities and Unrecognised Contract Commitments

(1) Contingencies

None.

(2) Commitments

Capital expenditures contracted for at the balance sheet date but not yet incurred are as follows:

September 30, 2024 December 31, 2023 September 30, 2023 Property, plant and equipment $ 377,670 $ 393,906 $ 438,113

~41~

EPISIL-PRECISION INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2024 AND 2023 are unaudited

(Expressed in thousands of New Taiwan dollars)

10. Significant Disaster Loss

None.

11. Significant Events after the Reporting Period

None.

12. Others

(1) Capital management

Th ere are no material changes in the current period. Please refer to Note 12 to the 2023 year end Consolidated Financial Statements of the Republic of China.

(2) Financial instruments

A. Financial instruments by category

September 30, 2024 December 31, 2023 September 30, 2023

Financial assets

Financial assets at fair value through other
comprehensive income
Financial assets at amortised cost
Financial assets at amortised cost
Cash and cash equivalents
Accounts receivable
Accounts receivable due from related
parties
Other receivables
Other receivables due from related
parties
Refundable guarantee deposits

Financial liabilities
Financial liabilities at amortised cost
Short-term borrowings
Accounts payable
Accounts payable to related parties
Other payables
Other payables to related parties
Bonds payable (including current
portion)
Guarantee deposits received
Lease liabilities		 Financial assets at fair value through other
comprehensive income
Financial assets at amortised cost
Financial assets at amortised cost
Cash and cash equivalents
Accounts receivable
Accounts receivable due from related
parties
Other receivables
Other receivables due from related
parties
Refundable guarantee deposits

Financial liabilities
Financial liabilities at amortised cost
Short-term borrowings
Accounts payable
Accounts payable to related parties
Other payables
Other payables to related parties
Bonds payable (including current
portion)
Guarantee deposits received
Lease liabilities		 $ 17
19,470
3,023,325
624,971
235,946
52,856
9,216
1,306
$ 3,967,090
September 30,2024
$ 108,250
269,263
18,433
352,371
469,067
962,100
8,095
$ 2,187,579
$ 376,509		 $ 17
13,583
2,284,089
880,646
102,958
27,516
10,452
1,073
$ 3,320,317
December 31,2023
$ 266,950
257,005
5,975
362,648
32,581
491,143
8,095
$ 1,424,397
$ 232,845		 $ 17

16,187

2,432,929

983,467

115,626

39,060

10,826

1,070
$ 3,599,165
September 30,2023
$ 486,583

348,846

2,604

299,719

31,193

489,390

8,095
$ 1,666,430
$ 235,205

~42~

EPISIL-PRECISION INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2024 AND 2023 are unaudited (Expressed in thousands of New Taiwan dollars)

B. Policy of risk management

  • There are no material changes in the current period. Please refer to Note 12 to the 2023 year end Consolidated Financial Statements of the Republic of China.

  • C. Significant financial risks and degrees of financial risks

  • (a) Market risk

Exchange rate risk

  • i. The Group operates internationally and is exposed to exchange rate risk arising from the transactions of the Company and its subsidiary using various functional currencies, primarily with respect to the USD and RMB. Foreign exchange rate risk arises from future commercial transactions and recognised assets and liabilities.

  • ii. Management has set up policies to require group companies to manage their foreign exchange risk against their functional currencies. The companies are required to hedge their entire foreign exchange risk exposure through coordination with the Group treasury. Exchange rate risk is measured through a forecast of highly probable USD and JPY expenditures. Borrowing liabilities denominated in foreign currencies that are adopted to minimise the volatility of the foreign exchange.

  • iii. The Group’s businesses involve some non-functional currency operations (the Company’s functional currency: NTD and the subsidiary’s functional currency: JPY). The information on assets and liabilities denominated in foreign currencies whose values would be materially affected by the exchange rate fluctuations is as follows:

September 30, 2024

(Foreign currency: functional
currency)
Financial assets
Monetary items
USD:NTD
JPY:NTD
RMB:NTD
USD: JPY
Non-monetary items: None.
Financial liabilities
Monetary items
USD:NTD
JPY:NTD
RMB:NTD
USD:JPY		 Foreign currency
amount
(in thousands)
$ 15,811
55,727
4,451
1,140
$ 6,914
53,605
11,838
509		 Exchangerate

31.658

0.223

4.523

142.092

31.658

0.223

4.523

142.092		 Book value
(NTD)
$ 500,545

12,427

20,132

36,090
$ 218,883

11,954

53,543

16,114




~43~

EPISIL-PRECISION INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2024 AND 2023 are unaudited

(Expressed in thousands of New Taiwan dollars)

(Foreign currency: functional currency)
Financial assets
Monetary items
USD:NTD
JPY:NTD
RMB:NTD
USD: JPY
Non-monetary items: None.
Financial liabilities
Monetary items
USD:NTD
JPY:NTD
RMB:NTD
USD: JPY
(Foreign currency: functional
currency)
Financial assets
Monetary items
USD:NTD
JPY:NTD
RMB:NTD
USD: JPY
Non-monetary items: None.
Financial liabilities
Monetary items
USD:NTD
JPY:NTD
RMB:NTD
Non-monetary items: None.		 (Foreign currency: functional currency)
Financial assets
Monetary items
USD:NTD
JPY:NTD
RMB:NTD
USD: JPY
Non-monetary items: None.
Financial liabilities
Monetary items
USD:NTD
JPY:NTD
RMB:NTD
USD: JPY
(Foreign currency: functional
currency)
Financial assets
Monetary items
USD:NTD
JPY:NTD
RMB:NTD
USD: JPY
Non-monetary items: None.
Financial liabilities
Monetary items
USD:NTD
JPY:NTD
RMB:NTD
Non-monetary items: None.		 (Foreign currency: functional currency)
Financial assets
Monetary items
USD:NTD
JPY:NTD
RMB:NTD
USD: JPY
Non-monetary items: None.
Financial liabilities
Monetary items
USD:NTD
JPY:NTD
RMB:NTD
USD: JPY
(Foreign currency: functional
currency)
Financial assets
Monetary items
USD:NTD
JPY:NTD
RMB:NTD
USD: JPY
Non-monetary items: None.
Financial liabilities
Monetary items
USD:NTD
JPY:NTD
RMB:NTD
Non-monetary items: None.		 December31,2023 December31,2023
Foreign currency
amount
Book value
(in thousands)Exchangerate
(NTD)
$ 19,809
30.708 $ 608,295
9,015
0.218
1,962
21,520
4.325
93,074
4,632
141.121
142,239
$ 12,957
30.708 $ 397,884
73,106
0.218
15,908
7,718
4.325
33,380
126
141.121
3,869
September30,2023		 Book value
(NTD)








Foreign currency
amount
(in thousands)
$ 21,479
16,468
35,164
4,539
$ 20,908
28,536
9,956		 Exchangerate

32.277

0.216

4.415

149.154

32.277

0.216

4.415		 Book value
(NTD)
$ 693,278

3,557

155,249

146,505
$ 674,848

6,164

43,956




iv. The total exchange (loss) gain, including realised and unrealised, arising from significant

foreign exchange variations on the monetary items held by the Group for the three-month 、 and nine-month periods ended September 30, 2024 and 2023, amounted to ($7,453)

、 $15,028 $9,878 and $9,451, respectively.

  • v. Analysis of foreign currency market risk arising from significant foreign exchange variations:

~44~

EPISIL-PRECISION INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2024 AND 2023 are unaudited

(Expressed in thousands of New Taiwan dollars)

Year ended September 30, 2024

Yearended September30, 2024
(Foreign currency: functional
currency)
Financial assets
Monetary items
USD:NTD
JPY:NTD
RMB:NTD
USD: JPY
Financial liabilities
Monetary items
USD:NTD
JPY:NTD
RMB:NTD
USD: JPY
(Foreign currency: functional
currency)
Financial assets
Monetary items
USD:NTD
JPY:NTD
RMB:NTD
USD: JPY
Financial liabilities
Monetary items
USD:NTD
JPY:NTD
RMB:NTD
USD: JPY		 Change in
Effect on
exchangerate
profit(loss)
1%
$ 5,005
1%
124
1%
201
1%
361
1%
( $ 2,189)
1%
(
120)
1%
(
535)
1%
(
161)
Yearended September30,		 Effect on other
comprehensive
income
$ -
-
-
-
$ -

-

-
-
2023
Effect on other
comprehensive
income
$ -
-
-
-
$ -

-

-
-
Change in
Effect on
exchangerate
profit(loss)
1%
$ 6,933
1%
36
1%
1,552
1%
1,465
1%
( $ 6,748)
1%
(
62)
1%
(
440)
1%
-

Price risk

  • i. The Group’s investments in equity securities, which are exposed to price risk, are the held financial assets at fair value through other comprehensive income.

  • ii. The The Group’s investments in equity securities comprise shares issued by a domestic company. The prices of equity securities would change due to the change of the future value of investee company. If the prices of these equity securities had increased /decreased by

~45~

EPISIL-PRECISION INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2024 AND 2023 are unaudited

(Expressed in thousands of New Taiwan dollars)

  • 10% with all other variables held constant, fair value adjustment would have increased/decreased both by $2, as a result of the price change on equity investment at fair value through other comprehensive income.

Cash flow and fair value interest rate risk

  • i. The Group’s main interest rate risk arises from short-term borrowings with floating rates, which expose the Group to cash flow interest rate risk. For the nine-month periods ended September 30, 2024 and 2023, the Group’s borrowings at floating rates were mainly denominated in New Taiwan dollars, US dollars and Japanese yen.

  • ii. If the borrowing interest rate of New Taiwan dollars and US dollars had increased/decreased by 0.25% with all other variables held constant, loss after tax For the nine-month periods ended September 30, 2024 and 2023, would have increased/decreased by $162 and $730, respectively. Changes in interest expense mainly due from floating-rate borrowings.

(b) Credit risk

  • i. Credit risk refers to the risk of financial loss to the Group arising from default by the clients or counterparties of financial instruments on the contract obligations. The main factor is that counterparties could not repay in full the accounts receivable based on the agreed terms, and the contract cash flows of debt instruments stated at amortised cost.

  • ii. The Group manages their credit risk taking into consideration the entire group’s perspective. Only rated banks with an optimal rating and financial institutes with investment grade are accepted. According to the Group’s credit policy, each entity in the Group is responsible for managing and analysing the credit risk for each of their new clients before standard payment and delivery terms and conditions are offered. Internal risk control assesses the credit quality of the customers, taking into account their financial position, past experience and other factors. Individual credit limits are set based on internal or external ratings in accordance with limits set by the Board of Directors. The utilisation of credit limits is regularly monitored.

  • iii. The Group adopts the assumptions under IFRS 9, and the default occurs when the contract payments are past due over 90 days.

  • iv. The Group adopts following assumptions under IFRS 9 to assess whether there has been a significant increase in credit risk on that instrument since initial recognition:

  • (i) If the contract payments were past due over 30 days based on the terms, there has been a significant increase in credit risk on that instrument since initial recognition.

  • (ii) For investments in bonds that are traded over the counter, if any external credit rating agency rates these bonds as investment grade, the credit risk of these financial assets is treated low.

  • v. The following indicators are used to determine whether the credit impairment of debt instruments has occurred:

  • (i) It becomes probable that the issuer will enter into bankruptcy or other financial

~46~

EPISIL-PRECISION INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2024 AND 2023 are unaudited

(Expressed in thousands of New Taiwan dollars)

reorganisation due to financial difficulties;

  • (ii) The disappearance of an active market for that financial asset because of financial difficulties of the issuer;

  • (iii) Default or delinquency in interest or principal repayments;

  • (iv) Adverse changes in national or regional economic conditions that are expected to cause a default.

  • vi. The Group categorised accounts receivable in accordance with credit risk and applied the modified approach using a provision matrix to estimate the expected credit loss.

  • vii. The Group wrote-off the financial assets, which cannot be reasonably expected to be recovered, after initiating recourse procedures. However, the Group will continue executing the recourse procedures to secure their rights.

  • viii. The Group used the forecastability to adjust historical and timely information to assess the default possibility of accounts receivable. As of September 30, 2024, December 31,

2023, September 30 2023, the provision matrix is as follows:

At September 30,2024 Notpast due Up to 30 days
past due		 31~90 days
past due		 91~180 days
past due		 over 180 days
past due
Individual		 Total
0.01%
$ 810,379
$ -
0.01%
$ 906,411
$ -
0.01%
$ 908,959
$ -		 0.01%
$ 46,580
$ -
0.01%
$ 45,006
$ -
0.01%
$ 125,537
$ -		 0.11%
$ -
$ -
0.12%
$ 2,919
$ -
0.12%
$ -
$ -		 0.65%
$ -
$ -
0.69%
$ -
$ -
0.71%
$ -
$ -		 0.12%
$ -
$ -
0.12%
$ -
$ -
0.12%
$ 11,763
$ -		 0.12%~4.41%
$ 4,110

( 152)
0.12%~4.72%
$ 29,420

( 152)
0.12%~4.84%
$ 52,986

( 152)

861,069
( 152)


983,756
( 152)


1,099,245
( 152)
Expected loss rate
Total book value
Loss allowance
At December 31,2023
Expected loss rate
Total book value
Loss allowance
At September 30,2023
Expected loss rate
Total book value
Loss allowance
  • ix. Movements in relation to the Group applying the modified approach to provide loss allowance for accounts receivable are as follows:
At January 1 / September 30,
At January 1 / September 30,		 2024
Accountsreceivable
$ 152
2023
Accountsreceivable
$ 152

(c) Liquidity risk

  • i. Cash flow forecasting is performed in the operating entities of the Group and aggregated by Group treasury. Group treasury monitors rolling forecasts of the Group’s liquidity requirements to ensure it has sufficient cash to meet operational needs while maintaining sufficient headroom on its undrawn borrowing facilities at all times so that the Group does

~47~

EPISIL-PRECISION INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2024 AND 2023 are unaudited (Expressed in thousands of New Taiwan dollars)

  • not breach borrowing limits or covenants (where applicable) on any of its borrowing facilities. Such forecasting takes into consideration the Group’s debt financing plans, covenant compliance, compliance with internal balance sheet ratio targets and, if applicable, external regulatory or legal requirements, for example, currency restrictions.

  • ii. Surplus cash held by the operating entities over and above balance required for working capital management will be appropriately used and invested. The chosen instruments with appropriate maturities or sufficient liquidity to provide sufficient headroom as determined ，

  • by the above-mentioned forecasts. As at September 30, 2024 December 31,2023 and ，

  • September 30,2023, the Group held money market position of $3,022,938 $2,283,710 and $2,432,554, respectively, that are expected to readily generate cash inflows for managing liquidity risk.

iii. The Group has the following undrawn borrowing facilities:

Floating rate:
Expiring within one year
Fixed rate:
Expiring within one year		 September30,2024
$ 36,990
1,414,760
$ 1,451,750		 December31,2023
$ -
1,447,376
$ 1,447,376		 September30,2023
$ -
1,148,025
$ 1,148,025
  • iv. The table below analyses the Group’s non-derivative financial liabilities into relevant maturity groupings based on the remaining period at the balance sheet date to the contractual maturity date.
contractual maturity date.
Non-derivative financial liabilities
September 30, 2024
Short-term borrowings
Accounts payable (including related parties)
Other payables (including related parties)
Lease liabilities
Bonds payable
Guarantee deposits received
Non-derivative financial liabilities
December 31, 2023
Short-term borrowings
Accounts payable (including related parties)
Other payables (including related parties)
Lease liabilities
Bonds payable
Guarantee deposits received		 Less than
1year

$ 108,250
287,696
821,438
21,517
496,140
-
Less than
1year

$ 266,950
262,980
395,229
12,158
-
-		 Between
1 and 2years
$ -
-
-
21,067
-
-
Between
1 and 2years
$ -
-
-
11,693
500,000
-		 Between
2 and 5years
$ -

-

-

60,245

500,000

8,095
Between
2 and 5years
$ -

-

-

33,894

-

8,095		 Over

5years
$ -

-

-

427,736

-

-
Over

5years
$ -

-

-

260,464

-

-

~48~

EPISIL-PRECISION INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2024 AND 2023 are unaudited

(Expressed in thousands of New Taiwan dollars)

Non-derivative financial liabilities
September 30, 2023
Short-term borrowings
Accounts payable (including related parties)
Other payables (including related parties)
Lease liabilities
Bonds payable
Guarantee deposits received		 Less than
1year

$ 486,583
351,450
330,912
12,877
-
-		 Between
1 and 2years
$ -
-
-
11,828
500,000
-		 Between
2 and 5years
$ -

-

-

33,954

-

8,095		 Over

5years
$ -

-

-

263,248

-

-

(3) Fair value information

  • A. The different levels that the inputs to valuation techniques are used to measure fair value of financial and non-financial instruments have been defined as follows:

  • Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date. A market is regarded as active where a market in which transactions for the asset or liability take place with sufficient frequency and volume to provide pricing information on an ongoing basis. The fair value of the Group’s investment in beneficiary certificates is included in Level 1.

  • Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.

  • Level 3: Unobservable inputs for the asset or liability. The fair value of the Group’s investment in unlisted stocks is included in Level 3.

  • B. Fair value information of investment property at cost is provided in Note 6(8).

  • C. Financial instruments not measured at fair value

  • (a) Except for those listed in the table below, the carrying amounts of cash and cash equivalents, notes receivable, accounts receivable, other receivables, short-term borrowings, notes payable, accounts payable and other payables are approximate to their fair values.

September 30, 2024

Financial liabilities:
Bonds payable
Financial liabilities:
Bonds payable		 Bookvalue
$ 962,100		 Fairvalue Level3
$ -
Level3
$ -
Level 1
Level 2
$ -$ 968,402
December31,2023
Bookvalue
$ 491,143		 Fairvalue
Level 1
$ -		 Level 2
$ 491,800

~49~

EPISIL-PRECISION INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2024 AND 2023 are unaudited

(Expressed in thousands of New Taiwan dollars)

September 30, 2023

Fair value Book value Level 1 Level 2 Level 3 Financial liabilities: Bonds payable $ 489,390 $ - $ 490,750 $ -

  • (b) The methods and assumptions of fair value estimate are as follows:

Bonds payable: The fair value of the convertible bonds issued by the Group was estimated by the Binomial-Tree approach to convertible bonds.

D. The related information of financial and non-financial instruments measured at fair value by level

on the basis of the nature, characteristics and risks of the assets and liabilities are as follows:

  • (a) The related information of natures of the assets and liabilities is as follows:

September 30, 2024 Level 1 Level 2 Level 3 Total Assets Recurring fair value measurements Financial assets at fair value through other comprehensive income Unlisted stocks $ - $ - $ 17 $ 17 December 31, 2023 Level 1 Level 2 Level 3 Total Assets Recurring fair value measurements Financial assets at fair value through other comprehensive income Unlisted stocks $ - $ - $ 17 $ 17 September 30, 2023 Level 1 Level 2 Level 3 Total Assets Recurring fair value measurements Financial assets at fair value through other comprehensive income Unlisted stocks $ - $ - $ 17 $ 17

  • (b)The methods and assumptions the Group used to measure fair value are as follows:

  • i. The instruments the Group used market quoted prices as their fair values (that is, Level 1) are listed below by characteristics:

==> picture [412 x 27] intentionally omitted <==

~50~

EPISIL-PRECISION INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2024 AND 2023 are unaudited (Expressed in thousands of New Taiwan dollars)

  • ii. Except for financial instruments with active markets, the fair value of other financial instruments is measured by using valuation techniques or by reference to counterparty quotes. The fair value of financial instruments measured by using valuation techniques can be referred to current fair value of instruments with similar terms and characteristics in substance, discounted cash flow method or other valuation methods, including calculated by applying model using market information available at the consolidated balance sheet date (i.e. yield curves on the Taipei Exchange, average commercial paper interest rates quoted from Reuters).

  • iii. When assessing non-standard and low-complexity financial instruments, for example, debt instruments without active market, interest rate swap contracts, foreign exchange swap contracts and options, the Group adopts valuation technique that is widely used by market participants. The inputs used in the valuation method to measure these financial instruments are normally observable in the market.

  • iv. The valuation of derivative financial instruments is based on valuation model widely accepted by market participants, such as present value techniques and option pricing models. Foreign exchange forward contracts are usually valued based on the current forward exchange rate.

  • v. The output of valuation model is an estimated value and the valuation technique may not be able to capture all relevant factors of the Group’s financial and non-financial instruments. As a result, the estimate generated by valuation model will be slightly adjusted based on additional inputs, such as model risk and liquidity risk. In accordance with the Group’s management policies and relevant control procedures relating to the valuation models used for fair value measurement, management believes adjustment to valuation is necessary in order to reasonably represent the fair value of financial and nonfinancial instruments at the consolidated balance sheet. The inputs and pricing information used during valuation are carefully assessed and adjusted based on current market conditions.

  • vi. The Group takes into account adjustments for credit risks to measure the fair value of financial and non-financial instruments to reflect credit risk of the counterparty and the Group’s credit quality.

  • E. For the nine-month periods ended September 30, 2024 and 2023, there was no transfer between Level 1 and Level 2.

  • F. The following chart is the movement of Level 3 For the nine-month periods ended September 30, 2024 and 2023:

2024 2023 Equity instruments Equity instruments At January1/ September 30 $ 17 $

17

~51~

EPISIL-PRECISION INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2024 AND 2023 are unaudited (Expressed in thousands of New Taiwan dollars)

  • G. For the nine-month periods ended September 30, 2024 and 2023, there was no transfer into or out from Level 3.

  • H. Group treasury is in charge of valuation procedures for fair value measurements being categorised within Level 3, which is to verify independent fair value of financial instruments. Such assessment is to ensure the valuation results are reasonable by applying independent information to make results close to current market conditions, confirming the resource of information is independent, reliable and in line with other resources and represented as the exercisable price, and frequently calibrating valuation model, performing back-testing, updating inputs used to the valuation model and making any other necessary adjustments to the fair value.

  • I. The following is the qualitative information of significant unobservable inputs and sensitivity analysis of changes in significant unobservable inputs to valuation model used in Level 3 fair value measurement:

Non-derivative equity
instrument:
Unlisted shares
Non-derivative equity
instrument:
Unlisted shares
Non-derivative equity
instrument:
Unlisted shares		 Fair value at
September 30,2024
$ 17
Fair value at
December 31,2023
$ 17
Fair value at
September 30,2023
$ 17
Valuation
technique
Market
comparable
companies

Valuation
technique
Market
comparable
companies

Valuation
technique
Market
comparable
companies		 Significant
unobservable input
Price to book ratio
multiple;
Significant
unobservable input
Price to book ratio
multiple;
Significant
unobservable input
Price to book ratio
multiple;
Range
(weighted average)
1.

Range
(weighted average)
1.

Range
(weighted average)
1.		 Relationship of inputs to
fair value
The higher the multiple,
the higher the fair value.
Relationship of inputs to
fair value
The higher the multiple,
the higher the fair value.
Relationship of inputs to
fair value
The higher the multiple,
the higher the fair value.
  • J. The Group has assessed the valuation models and assumptions carefully used to measure fair value. However, use of different valuation models or assumptions may result in different measurement. The following is the effect of profit or loss or of other comprehensive income from financial assets and liabilities categorised within Level 3 if the inputs used to valuation models have changed:
have changed:
Financial assets
Equity instrument		 Input

Price to book ratio multiple
Change
±1%
 September 30,2024
inprofit or loss
Recognised in other
comprehensive income
Unfavourable Favourable Unfavourable
change
change
change
$ - $ 2
( $ 2 )
Recognised inprofit or loss
Unfavourable
change
$ -
Favourable

change
$ -

~52~

EPISIL-PRECISION INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2024 AND 2023 are unaudited

(Expressed in thousands of New Taiwan dollars)

December 31, 2023 Recognised in other Recognised in profit or loss comprehensive income Favourable Unfavourable Favourable Unfavourable Input Change change change change change Financial assets Equity instrument Price to book ratio multiple ±1% $ - $ - $ 2 ($ 2 ) September 30, 2023 Recognised in other Recognised in profit or loss comprehensive income Favourable Unfavourable Favourable Unfavourable Input Change change change change change Financial assets Equity instrument Price to book ratio multiple ±1% $ - $ - $ 2 ( $ 2 )

13. Supplementary Disclosures

(1) Significant transactions information

  • A. Loans to others: None.

  • B. Provision of endorsements and guarantees to others: None.

  • C. Holding of marketable securities at the end of the period (not including subsidiaries, associates and joint ventures): Please refer to table 1.

  • D. Acquisition or sale of the same security with the accumulated cost exceeding $300 million or 20% of the Company's paid-in capital: None.

  • E. Acquisition of real estate reaching NT$300 million or 20% of paid-in capital or more: None.

  • F. Disposal of real estate reaching NT$300 million or 20% of paid-in capital or more: None.

  • G. Purchases or sales of goods from or to related parties reaching $100 million or 20% of paid-in capital or more: Please refer to table 2.

  • H. Receivables from related parties reaching NT$100 million or 20% of paid-in capital or more: Please refer to table 3.

  • I. Trading in derivative instruments undertaken during the reporting period: None.

  • J. Significant inter-company transactions during the reporting period: Please refer to table 4.

(2) Information on investees

Names, locations and other information of investee companies (not including investees in Mainland China) ： Please refer to table 5.

(3) Information on investments in Mainland China: None.

(4) Major shareholders information

Major shareholders information: Please refer to Note 6.

~53~

EPISIL-PRECISION INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2024 AND 2023 are unaudited

(Expressed in thousands of New Taiwan dollars)

14. Segment Information

(1) General information

The Group operates business only in a single industry. The chief operating decision-maker, who assesses performance and allocates resources of the Group as a whole, has identified that the Group has only one reportable operating segment.

(2) Segment Information

The segment information provided to the chief operating decision-maker for the reportable segments is as follows:

is as follows:
Revenue from external customers
Inter-company revenue
Segment (loss) income
Segment assets
Segment liabilities		 For thenine-monthperiods ended September 30,
2024
2023
$ 3,132,603 $ 3,210,234
$ 154,977 $ 294,139
$ 295,361$ 149,980
$ 7,814,033 $ 7,007,729
$ 2,788,691$ 2,162,368
2024
$ 3,132,603
$ 154,977
$ 295,361
$ 7,814,033
$ 2,788,691

(3) Reconciliation for segment income (loss)

None.

~54~

Episil-Precision Inc. and Subsidiaries

Holding of marketable securities at the end of the period (not including subsidiaries, associates and joint ventures)

September 30, 2024

Table 1

Expressed in thousands of NTD

(Except as otherwise indicated)

Securities held by Marketable securities
（Note 1）		 Relationship with the
securities issuer（Note 2）		 General
ledger account		 As of September 30,2024 As of September 30,2024 Footnote
（Note 4)
Number of shares
(in thousands)		 Book value（Note Ownership (%) Fair value
Episil-Precision Inc. Dah Chung Bills Fiance Corp.-common
shares		 None Financial assets at fair value
through other comprehensive
income-non-current		 1,164 17
$		 0 17
$

Note 1: Marketable securities in the table refer to stocks, bonds, beneficiary certificates and other related derivative securities within the scope of IFRS9. "Financial instruments". Note 2: Leave the column blank if the issuer of marketable securities is non-related party. Note 3: Fill in the amount after adjusted at fair value and deducted by accumulated impairment for the marketable securities measured at fair value; fill in the

acquisition cost or amortised cost deducted by accumulated impairment for the marketable securities not measured at fair value. Note 4: The number of shares of securities and their amounts pledged as security or pledged for loans and their restrictions on use under some agreements should be stated in the footnote if the securities presented herein have such conditions. 

Table 1,Page1

Episil-Precision Inc. (Formerly Episil Holding Inc.) and Subsidiaries

Purchases or sales of goods from or to related parties reaching $100 million or 20% of paid-in capital or more

For the nine-month period ended September 30, 2024

Table 2 Expressed in thousands of NTD Expressed in thousands of NTD Expressed in thousands of NTD
(Except as otherwise indicated)
Differences in transaction terms
compared to third party
Transaction transactions(Note 1) Notes/accounts receivable(payable)
Relationship Percentage of Percentage of
with the Purchases total purchases notes/accounts
Purchaser/seller Counterparty counterparty (sales) Amount (sales) Credit term Unitprice Credit term Balance receivable(payable Footnote
Episil-Precision Inc. Episil Technologies Inc Parent company (Sales) 288,090 7.28% 30-90 days after
 - Gerneral terms 101,919 11.84%
monthly billings
Episil-Precision Inc. Precision Silicon Japan Co., Ltd. Subsidiary (Sales) 154,057 4.92% 90-180 days after
 - Gerneral terms 36,398 4.23%
monthly billings

Note : Processing and returning materials provided by customers (related parties) were excluded from purchase/sales. 

Table 2,Page2

Episil-Precision Inc. and Subsidiaries

Receivables from related parties reaching NT$100 million or 20% of paid-in capital or more September 30, 2024

September 30, 2024
Table 3
Creditor		 Counterparty Relationship Balance of
accounts receivables of
relatedparties（Note1）		 Turnover
rate		 Overdue receivables Amount collected
subsequent to the
Allowance for
balance sheet date
doubtful accounts
Expressed in thousands of NTD
(Except as otherwise indicated)
Amount Action taken
Episil-Precision Inc.
Episil-Precision Inc.		 Episil Technologies Inc.
Vanguard International Semiconductor
Corporation		 Parent company
Individuals with
significant
influence on the
Group		 101,919
$ 133,250		 3.02
5.33		 21,920
$ -		 Amountcollected
subsequent to the
balance sheet
date
Amountcollected
subsequent to the
balance sheet
date		 21,920
$ -		 -
$ -

Note 1: Please rely on the accounts receivable, bills, other receivables... etc. 

Table 3,Page3

Episil-Precision Inc. and Subsidiaries

Significant inter-company transactions during the reporting period

For the nine-month period ended September 30, 2024

Table 4

Expressed in thousands of NTD

(Except as otherwise indicated)

Transaction

Transaction
Number
(Note 1)		 Companyname Counterparty Relationship General ledger account Amount(Note 3) Transaction terms consolidated
total operating
revenues or total assets
(Note 4)
1
1		 Episil-Precision Inc.
Episil-Precision Inc.		 Precision Silicon Japan Co., Ltd.
Precision Silicon Japan Co., Ltd.		 1
1		 Operating revenue
Accounts receivable		 154,057
36,398		 Gerneral terms
90~180 days after monthly billings		 4.92%
0.47%

Note 1: The numbers filled in for the transaction company in respect of inter-company transactions are as follows:

(1) Parent company is ‘0’.

(2) The subsidiaries are numbered in order starting from ‘1’.

Note 2: Relationship between transaction company and counterparty is classified into the following three categories; fill in the number of category each case belongs to (If transactions between parent company and subsidiaries or between subsidiaries refer to the same transaction, it is not required to disclose twice. For example, if the parent company has already disclosed its transaction with a subsidiary, then the subsidiary is not required to disclose the transaction; for transactions between two subsidiaries, if one of the subsidiaries has disclosed the transaction, then the other is not required to disclose the transaction.): (1) Parent company to subsidiary.

(2) Subsidiary to parent company.

(3) Subsidiary to subsidiary.

Note 3: Percentage of total consolidated revenues or total assets is calculated using the total consolidated assets at the end of the year when the subject of transaction is an asset/liability, and is calculated by total consolidated revenues during the year when the subject of transaction is a revenue/expense.

Note 4: Only transaction amount that exceeds $1 million will be disclosed, otherwise will not be disclosed. 

Table 4,Page4

Episil-Precision Inc. and Subsidiaries

Information on investees

For nine-month period ended September 30, 2024

Table 5

Investor
Table 5		 Investee
(Note 1 and 2)		 Location Main business
activities		 Balance as of
Balance as of
September 30,
December 31,
2024
2023
2,740
2,740
Initial investment amount		 Shares held a Ownership
(%)
Book value
100.00%
$13,344
s at September 30,2024		 Investment income
Net profit (loss)
(loss) recognized by
for
the Company for
the nine-month
the nine-month
period ended
period ended
30-Sep-24
September 30, 2024
(Note 2(2))
(Note 2(3))
Footnote
$298
$298
(Except as otherwise indicated)
Expressed in thousands of NTD
Balance as of
September 30,
2024
2,740		 Number of shares
200		 Ownership
(%)
100.00%
Episil-Precision Inc. Precision Silicon Japan Co., Ltd. Japan Sales of epitaxy
and silicon wafers		 $298

Note 1: If a public company is equipped with an overseas holding company and takes consolidated financial report as the main financial report according to the local law rules, it can only disclose the information of the overseas holding company about the disclosure of related overseas investee information.

Note 2: If situation does not belong to Note 1, fill in the columns according to the following regulations:

  • (1) The columns of ‘Investee’, ‘Location’, ‘Main business activities’, Initial investment amount’ and ‘Shares held as at December 31, 2022’ should fill orderly in the Company’s (public company’s) information on investees and every directly or indirectly controlled investee’s investment information, and note the relationship between the Company (public company) and its investee each (ex. direct subsidiary or indirect subsidiary) in the ‘footnote’ column. (2) The ‘Net profit (loss) of the investee for the three-month period ended March 31, 2024’ column should fill in amount of net profit (loss) of the investee for this period.

  • (3) The ‘Investment income (loss) recognised by the Company for the year ended December 31, 2023’ column should fill in the Company (public company) recognised investment income (loss) of its direct subsidiary and recognised investment income (loss) of its investee accounted for under the equity method for this period. When filling in recognised investment income (loss) of its direct subsidiary, the Company (public company) should confirm that direct subsidiary’s net profit (loss) for this period has included its investment income (loss) which shall be recognised by regulations. 

Table 5,Page5

Episil-Precision Inc. and Subsidiaries

Major shareholders information

September 30, 2024

Table 6

Name of major shareholders Shares Shares
Number of shares held Ownership (%)
Episil Technologies Inc. 166,961,680 57.86% 
Table 6,Page6

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