RH — Interim / Quarterly Report 2017

Nov 22, 2017

Stock Code:4807

(English Translation of Consolidated Interim Financial Statements and Report Originally Issued in Chinese) REGAL HOLDING CO., LTD. AND ITS SUBSIDIARIES

Consolidated Interim Financial Statements

June 30, 2017 and 2016 (With Independent Auditors' Review Report Thereon)

Address: The Grand Pavilion Commercial Centre, Oleander Way, 802 West Bay Road, P. O. Box 32052, Grand Cayman KY1-1208, Cayman Islands Telephone: 66-24-207440-1074

The auditors' review report and the accompanying consolidated financial statements are the English translation of the Chinese version prepared and used in the Republic of China. If there is any conflict between, or any difference in the interpretation of the English and Chinese language auditors' review report and consolidated financial statements, the Chinese version shall prevail.

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Table of contents

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Contents	Page
1. Cover Page	1
2. Table of Contents	$\overline{2}$
3. Independent Auditors' Review Report	3
4. Consolidated Balance Sheets	4
5. Consolidated Statements of Comprehensive Income	5
6. Consolidated Statements of Changes in Equity	6
7. Consolidated Statements of Cash Flows	7
8. Notes to the Consolidated Interim Financial Statements
(1) Company history	8
Approval date and procedures of the consolidated financial statements (2)	8
New standards, amendments and interpretations adopted (3)	$8 - 11$
(4) Summary of significant accounting policies	$11 - 13$
Significant accounting assumptions and judgments, and major sources (5) of estimation uncertainty	13
Explanation of significant accounts (6)	$14 - 30$
Related-party transactions (7)	$30 - 31$
(8) Pledged assets	31
(9) Significant commitments and contingencies	31
(10) Losses due to major disasters	31
(11) Subsequent events	31
$(12)$ Other	32
(13) Other disclosures
(a) Information on significant transactions	$33 - 34$
(b) Information on investees	34
(c) Information on investment in mainland China	34
(14) Segment information	$35 - 36$

$\sim$ $\sim$

要侯建業解合會計師事務府 KPMG

台北市11049信義路5段7號68樓(台北101大樓) 68F., TAIPEI 101 TOWER, No. 7, Sec. 5, Xinyi Road, Taipei City 11049, Taiwan (R.O.C.)

Telephone 電話 + 886 (2) 8101 6666 Fax 傳真 + 886 (2) 8101 6667 Internet 網址 kpmg.com/tw

Independent Auditors' Review Report

To the Board of Directors Regal Holding Co., Ltd.:

We have reviewed the accompanying consolidated balance sheets of Regal Holding Co., Ltd. (the "Company") and its subsidiaries as of June 30, 2017 and 2016, and the related consolidated statements of comprehensive income, changes in equity and cash flows for the three months ended June 30, 2017 and 2016 and the six months ended June 30, 2017 and 2016. These consolidated interim financial statements are the responsibility of the Company's management. Our responsibility is to issue a report on these consolidated interim financial statements based on our review.

We conducted our reviews in accordance with Statement on Auditing Standard 36, "Engagements to Review Financial Statements". A review consists principally of inquiries of the Company's personnel and analytical procedures applied to financial data. It is substantially less in scope than an audit in accordance with the generally accepted auditing standards, the objective of which is the expression of an opinion regarding the consolidated interim financial statements taken as a whole. Accordingly, we do not express such an opinion.

Based on our reviews, we are not aware of any material modifications that should be made to the consolidated interim financial statements referred to in the first paragraph in order for them to be in conformity with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and the International Accounting Standard 34 "Interim Financial Reporting" endorsed by the Financial Supervisory Commission of the Republic of China.

KPMG

Taipei, Taiwan (Republic of China) August 8, 2017

Notes to Readers

The accompanying consolidated financial statements are intended only to present the consolidated statement of financial position, financial performance and its cash flows in accordance with the accounting principles and practices generally accepted in the Republic of China and not those of any other jurisdictions. The standards, procedures and practices to review such consolidated financial statements are those generally accepted and applied in the Republic of China.

The auditors' review report and the accompanying consolidated financial statements are the English translation of the Chinese version prepared and used in the Republic of China. If there is any conflict between, or any difference in the interpretation of the English and Chinese language auditors' review report and consolidated financial statements, the Chinese version shall prevail.

KPMG, a Taiwan partnership and a member firm of the KPMG network of independent memt
firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity.

(English Translation of Consolidated Interim Financial Statements and Report Originally Issued in Chinese)
As of June 30, 2017 and 2016 reviewed only, not audited in accordance with the generally accepted auditing standar REGAL HOLDING CO., LTD. AND ITS SUBSIDIARIES

Consolidated Balance Sheets

June 30, 2017, December 31, 2016, and June 30, 2016

(Expressed in Thousands of New Taiwan Dollars)

	$\mathcal{S}$	28			r	ግ	s			51						ႜႜႜ			$\frac{26}{5}$	$\mathfrak{a}$				$\equiv$	ᅴ		වු	$\frac{38}{3}$	4	$\frac{1}{2}$	$\Xi$
June 30, 2016	Amount	341,362	13,035	40,169	83,038	159,324	64,684	4,288	4,995	710,895		321	18,091	2,422	20,834	711.729			320,000	30,000		18,576		136,084	154,660		(29, 256)	475,404	46,730	522.134	1,253,863
	$\mathbf{x}$	$\overline{5}$		S	۰		m			শ		Ν	Z		4	ျ			$\overline{5}$	$\overline{15}$		$\mathbf{\hat{c}}$		$\overline{1}$	$\frac{9}{2}$		මු	$\frac{1}{2}$	$\blacktriangledown$	୍ରା	$\frac{20}{20}$
December 31, 2016	Amount	135,750	$\overline{5}$	53,555	93,552		32,278	80	4.618	321,024		24,914	16,889	2,522	44.335	365,359			339,200	170,160		18,576		195,540	214,116		(40, 893)	682,583	60,584	743,167	1,108,526
	$\frac{5}{6}$	$\overline{a}$		U	७		m			$\ddot{\phantom{0}}$		N			m	$\Rightarrow$			$\approx$	শ		N	N	n	$\circ$		ල	치	ص	의	$\frac{10}{2}$
June 30, 2017	Amount	315,070	4,726	37,921	94,449	114,480	47,141	768	2,949	617.504		24,914	18,416	2.889	46,219	663.723			381,600	418,370		37,434	40,893	76.765	155,092		(43, 707)	911.355	100322	.011.677	1,675,400
	Liabilities and Equity Current liabilities:	sĄ, Short-term loans (notes 6(g), 7 and 8)	Notes payable	Trade payables	Other payables (note 6(o))	Dividends payable(note 6(k))	Current tax liabilities	Advance receipts	Other current liabilities	Total current liabilities	Non-Current liabilities:	Deferred tax liabilities	Net defined benefit plan liabilities - non-current	Refundable deposits	Total non-Current liabilities	Total liabilities	Equity (note 6(k)):	Equity attributable to owners of parent	Common stock	Capital surplus	Retained earnings:	Legal reserve	Special reserve	Unappropriated retained earnings		Exchange differences on translation of foreign	financial statements	Total cquity attributable to owners of parent:	Non-controlling interests (note 6(d))	Total equity	2-3xxx Total liabilities and equity
	21x	2100	2150	2170	2200	2216	2230	2310	2399		25x	2570	2640	2645		2x xx	$31\times$		3100	3200	33XX	3310	3320	3350		3410			36x	3xx
	℅	$\boldsymbol{\mathcal{Z}}$		$\overline{\mathbf{c}}$		ត		ጘ			27				F.																릨
June 30, 2016	Amount	322,299	2,617	264,379	5,780	266,539	19,492	881.106			337,049	12,759	15,789	7.160	372,757																1.25.863
	৯			$\approx$		$\boldsymbol{z}$		ବ			29		N		$\mathbb{R}$																톏
December 31, 2016	Amount	121,032	2,419	334,029	1,888	271,546	17,084	747,998			321,620	11,870	19,655	7,383	360,528																1,108,526
	اي ا	$\frac{8}{3}$		S,		ន		ମ୍ବ			ë				$\overline{a}$																$\frac{20}{2}$
June 30, 2017	Amount	633,018 Ø,		331,356	2,229	330,848	22,288	319,739			316,259	12,062	19,551	7,789	355,661																1,675,400
	Current assets: Assets	Cash and cash equivalents (note 6(a))	Notes receivable, net (note 6(b))	Trade receivables, net (note 6(b))	Other receivables (note 6(b))	Inventories (note 6(c))	Other current assets	Total current assets	Non-current assets:	Property, plant and equipment (notes 6(e), 6(g)	and S)	Intangible assets (note 6(f))	Deferred tax assets	Other financial assets - non-current (note 8)	Total non-current assets																Total assets
	$\frac{1}{2}$	$\frac{8}{1}$	150	1170	1200	130x	1470		15xx	1600		1780	1840	1984																	lxx

(English Translation of Consolidated Interim Financial Statements and Report Originally Issued in Chinese) Reviewed only, not audited in accordance with generally accepted auditing standards

REGAL HOLDING CO., LTD. AND ITS SUBSIDIARIES

Consolidated Statements of Comprehensive Income

For the three months and six months ended June 30, 2017 and 2016

(Expressed in Thousands of New Taiwan Dollars, Except for Earnings Per Common Share)

					For the three months ended June 30				For the six months ended June 30
			2017		2016		2017		2016
			Amount	℅	Amount	$\%$	Amount	%	Amount	%
4000	Operating revenues (note 6(n))	\$	498,803	100	597,587	100	994,094	100	1,281,634	100
5000	Operating costs (notes 6(c), 6(e), 6(h), 6(i) and 12)		336,515	67	394,164	66	673,044	68	885,564	69
5900	Gross profit		162,288	33	203,423	$\frac{34}{5}$	321,050	32	396,070	31
6000	Operating expenses (note 6(b), (e), (f), (h), (i), (o), 7 and 12):
6100	Selling expenses		13,149	3	13,400	2	28,248	3	29,248	$\overline{c}$
6200	Administrative expenses		53,314	11	41,695	7	100,110	10	86,460	7
6300	Research and development expenses		17.038	$\overline{4}$	22.142	4	35,211	$\overline{\mathbf{3}}$	51,321	4
	Total operating expenses		83,501	$\frac{18}{1}$	77,237	13	163,569	16	167,029	13
6900	Operating income		78.787	$\overline{15}$	126,186	21	157,481	16	229,041	18
7000	Non-operating income and expenses (note $6(p)$ ):
7010	Other income		2,183		773		3,074		1,560
7020	Other gains and losses		(741)		(185)		(7,699)	(1)	(2,703)
7050	Finance costs		(1,608)		(1, 943)		(2,618)	$\blacksquare$	(3,670)
	Total non-operating income and expenses		(166)	$\blacksquare$	(1, 355)	$\blacksquare$	(7, 243)	(1)	(4, 813)
7900	Profit before tax		78.621	15	124,831	21	150,238	15	224,228	18
7950	Less: Tax expense (note $6(j)$ )
			25,796	5	36,483	6	46,552	5	64,946	5
	Profit		52,825	10	88,348	$\overline{15}$	103,686	10	159,282	13
8300	Other comprehensive income:
8360 8361 8399	Other components of other comprehensive income that will be reclassified to profit or loss Exchange differences on translation of foreign financial statements Income tax related to components of other comprehensive income that will be reclassified		13,650	3	4,275	1	(2,624)		4,156
8300	to profit or loss Other comprehensive income		13,650	3	4,275	1	(2,624)		4,156
8500	Total comprehensive income		66,475	13	92,623	16	101,062	10	163,438	13
	Profit, attributable to:
8610	Profit, attributable to owners of parent	\$	19,395	3	69,407	12	55,456	5	128,221	11
8620	Profit, attributable to non-controlling interests		33,430	7	18,941	3	48,230	5	31,061	2
			52,825	10	88,348	15	103,686	10	159,282	13
	Comprehensive income attributable to:
8710	Comprehensive income, attributable to owners of parent	\$	31,510	6	73,627	13	52,642	5	132,863	11
8720	Comprehensive income, attributable to non- controlling interests		34.965	7	18,996	3	48,420	5	30,575	2
		s	66,475	$\overline{13}$	92,623	16	101,062	10	163,438	13
9750	Basic earnings per share (note 6(m)) Basic earnings per share			0.57		2.17		1.63		4.01
9850	Diluted earnings per share			0.57		2.15		1.63		3.96

See accompanying notes to consolidated interim financial statements.

(English Translation of Consolidated Interim Financial Statements and Report Originally Issued in Chinese)
Reviewed only, not audited in accordance with generally accepted auditing standards REGAL HOLDING CO., LTD. AND ITS SUBSIDIARIES

Consolidated Statements of Changes in Equity

For the six months ended June 30, 2017 and 2016

(Expressed in Thousands of New Taiwan Dollars)

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				Equity attributable to owners of parent
						differences on Exchange
				Retained earnings		translation of	Total equity
Common stock	surplus Capital	reserve Legal	reserve Special	retained earnings Unappropriated	Total retained earnings	foreign financial statements	attributable to owners of parent	Non-controlling interests	Total equity
320,000	274,336			185,763	185,763	(33,898)	746,201	34,030	780,231
		18,576		(18, 576)
				(159, 324)	(159,324)		(159, 324)	(17, 875)	177,199)
	336) 24,						(244,336)		(244, 336)
				128,221	128,221		128,221	31,061	159,282
						4.642	4,642	(486)	4,156
				128,22	128,22	4,642	132,863	30,575	163,438
	휇	18,576		136,084	154,660	(29, 256)	475,404	46,730	522,134
339,200	170,160	18,576		195,540	214,116	(40, 893)	682,583	60,584	743,167
		18,858		(18, 858)
			40,893	(40, 893)
					(086/111)		(114, 480)	(8,682)	(123, 162)
				$(114,480)$ $55,456$	55,456		55,456	48,230	103,686
						(2,814)	(2.814)	$\frac{8}{2}$	(2.624)
				55,456	55,456	(2, 814)	52,642	48,420	101,062
42,400	248,						290,610		290,610
381,600	្ក្យឡ	37,434	40,893	76,765	155,092	(43,707	911,355	100,322	11.67

Balance at January 1,2017
Appropriation and distribution of retained earnings:

Legal reserve
Special reserve
Cash dividends

Profit

Total comprehensive income
Issuance of shares for eash
Balance at June 30, 2017 Other comprehensive income

Other comprehensive income
Total comprehensive income
Balance at June 30, 2016

Profit

Balance at January 1, 2016
Appropriation and distribution of retained earnings:

Legal reserve
Cash dividends
Cash dividends from capital surplus

$\bullet$

(English Translation of Consolidated Interim Financial Statements and Report Originally Issued in Chinese) Reviewed only, not audited in accordance with generally accepted auditing standards

REGAL HOLDING CO., LTD. AND ITS SUBSIDIARIES

Consolidated Statements of Cash Flows

For the six months ended June 30, 2017 and 2016

(Expressed in Thousands of New Taiwan Dollars)

		For the six months ended June 30
		2017	2016
Cash flows from (used in) operating activities:
Profit before tax	\$	150,238	224,228
Adjustments:
Adjustments to reconcile profit:
Depreciation expense		22,318	23,396
Amortization expense		2,047	1,973
Provision (reversal of provision) for bad debt expense		(1, 870)	780
Interest expense		2,618	3,670
Interest income		(289)	(257)
Compesation cost of share-based payments		254
Loss on disposal of property, plant and equipment		1,488	276
Loss on disposal of intangible assets		294
Total adjustments to reconcile profit		26,860	29,838
Changes in operating assets and liabilities:
Changes in operating assets:
Notes receivable		2,419	303
Trade receivables		4,606	129,001
Other receivable		(341)	(1,265)
Inventories		(59, 302)	84,024
Other current assets		(5,204)	(5,577)
Total changes in operating assets		(57.822)	206.486
Changes in operating liabilities:
Notes payable		4,355	(11, 591)
Trade payable		(15, 634)	(24,920)
Other payables		291	(27, 237)
Advance receipts		(132)	(11, 893)
Other current liabilities		(1,669)	(6, 560)
Net defined benefit plan liabilities		1,527	1,621
Total changes in operating liabilities		(11.262)	(80.580)
Total changes in operating assets and liabilities		(69.084)	125,906
Total adjustments		(42, 224)	155,744
Cash inflow generated from operations		108,014	379,972
Interest received		289	257
Interest paid		(2,012)	(3,941)
Income taxes paid		(31,585)	(94, 336)
Net cash flows from operating activities		74,706	281,952
Cash flows from investing activities:			(19, 164)
Acquisition of property, plant and equipment		(20, 381) 179	303
Proceeds from disposal of property, plant and equipment Acquisition of intangible assets		(2, 591)	(706)
Increase in other financial assets - non-current		(406)	(162)
Net cash flows from investing activities		(23, 199)	(19.729)
Cash flows from financing activities:
Increase in short-term loans		179,320	85,274
Increase in guarantee deposits received		357	164
Cash dividends		(8,682)	(262,211)
Proceeds from issuance of shares		290,356
Net cash flows from financing activities		461.351	(176, 773)
Effect of exchange rate changes on cash and cash equivalents		(872)	1.033
Net increase in cash and cash equivalents		511,986	86,483
Cash and cash equivalents at beginning of period		121,032	235,816
Cash and cash equivalents at end of period	S.	633,018	322,299

(English Translation of Consolidated Interim Financial Statements and Report Originally Issued in Chinese) As of June 30, 2017 and 2016 reviewed only, not audited in accordance with the generally accepted auditing standards

REGAL HOLDING CO., LTD. AND ITS SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

June 30, 2017 and 2016

(Expressed in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

(1) Company history

Regal Holding Co., Ltd. (the "Company") was established in the Cayman Islands in October 2014. The main purpose of the establishment, which resulted from organizational restructuring, was to apply to Taiwan Stock Exchange (TWSE) in the Republic of China. In December 2014, after the Company and Regal Jewelry Manufacture Co., Ltd. (RJM) swap its share to restructure the organization, the Company become the holding company of RJM. The Company's shares were listed on the Taiwan Stock Exchange (TWSE) on June 26, 2017. The principal activities of RJM are designing, manufacturing and selling jewelry and gem. Please refer to note 14.

(2) Approval date and procedures of the consolidated interim financial statements:

The Board of Directors authorized issuance of the consolidated interim financial statements on August 8, 2017.

(3) New standards, amendments and interpretations adopted:

$(a)$ The impact of the International Financial Reporting Standards ("IFRSs") endorsed by the Financial Supervisory Commission, R.O.C. ("FSC") which have already been adopted.

The following new standards, interpretations and amendments have been endorsed by the FSC and are effective for annual periods beginning on or after January 1, 2017:

New, Revised or Amended Standards and Interpretations	Effective date per IASB
Amendments to IFRS 10, IFRS 12 and IAS 28 "Investment Entities: Applying the Consolidation Exception"	January 1, 2016
Amendments to IFRS 11 "Accounting for Acquisitions of Interests in Joint Operations"	January 1, 2016
IFRS 14 "Regulatory Deferral Accounts"	January 1, 2016
Amendment to IAS 1 "Presentation of Financial Statements-Disclosure Initiative"	January 1, 2016
Amendments to IAS 16 and IAS 38 "Clarification of Acceptable Methods of Depreciation and Amortization"	January 1, 2016
Amendments to IAS 16 and IAS 41 "Agriculture: Bearer Plants"	January 1, 2016
Amendments to IAS 19 "Defined Benefit Plans: Employee Contributions"	July 1, 2014
Amendment to IAS 27 "Equity Method in Separate Financial Statements"	January 1, 2016
Amendments to IAS 36 " Impairment of Non-Financial assets- Recoverable Amount Disclosures for Non Financial Assets"	January 1, 2014

$\pm$ $\pm$

New, Revised or Amended Standards and Interpretations	Effective date per IASB
Amendments to IAS 39 " Financial Instruments-Novation of Derivatives and Continuation of Hedge Accounting"	January 1, 2014
Annual Improvements to IFRSs 2010 2012 Cycle and 2011 2013 Cycle	July 1, 2014
Annual Improvements to IFRSs 2012 2014 Cycle	January 1, 2016
IFRIC 21 "Levies"	January 1, 2014

The Consolidated Company believes that the adoption of the above IFRSs would not have any material impact on its consolidated interim financial statements.

$(b)$ The impact of IFRS endorsed by FSC but not yet effective

The following new standards, interpretations and amendments have been endorsed by the FSC and are effective for annual periods beginning on or after January 1, 2018 in accordance with Ruling No. 1060025773 issued by the FSC on July 14, 2017:

New, Revised or Amended Standards and Interpretations	Effective date per IASB
Amendment to IFRS 2 "Classification and Measurement of Share based Payment Transactions"	January 1, 2018
Amendments to IFRS 4 "Applying IFRS 9 Financial Instruments with IFRS 4 Insurance Contracts"	January 1, 2018
IFRS 9 "Financial Instruments"	January 1, 2018
IFRS 15 "Revenue from Contracts with Customers"	January 1, 2018
Amendment to IAS 7 "Statement of Cash Flows -Disclosure Initiative"	January 1, 2017
Amendment to LAS 12 "Income Taxes- Recognition of Deferred Tax Assets for Unrealized Losses"	January 1, 2017
Amendments to IAS 40 "Transfers of Investment Property"	January 1, 2018
Annual Improvements to IFRS Standards 2014–2016 Cycle:
Amendments to IFRS 12	January 1, 2017
Amendments to IFRS 1 and Amendments to IAS 28	January 1, 2018
IIFRIC 22 "Foreign Currency Transactions and Advance Consideration"	January 1, 2018

Except for the IFRS 15 "Revenue from Contracts with Customers", the Consolidated Company believes that the adoption of the above IFRSs would not have any material impact on its consolidated interim financial statements. The extent and impact of signification changes are as follows:

IFRS 15 establishes the five-step model framework for determining whether, how much and when revenue is recognized. It replaces existing revenue recognition guidance, including IAS 18 "Revenue" and IAS 11 "Construction Contracts".

For the sale of products, revenue is currently recognized when the goods are shipped, which is taken to be the point in time at which the customer accepts the goods and the related risks and rewards of ownership transfer. Revenue is recognized at this point provided that the revenue and costs can be measured reliably, the recovery of the consideration is probable and there is no continuing management involvement with the goods.

Under IFRS 15, revenue will be recognized when a customer obtains control of the goods. After preliminary evaluation, the Consolidated Company believes there will not be a significant impact of the adoption of IFRS 15 owing to negligible difference between the point in time the related risks and rewards of ownerships of the goods transfer and the one customer obtains control of the goods.

$(c)$ The impact of IFRS issued by IASB but not yet endorsed by the FSC

As of the date the following IFRSs that have been issued by the IASB, but not yet endorsed by the FSC:

New, Revised or Amended Standards and Interpretations	Effective date per LASB
Amendments to IFRS 10 and IAS 28 "Sale or Contribution of Assets Between an Investor and Its Associate or Joint Venture"	Effective date to be determined by IASB
IFRS 16 "Leases"	January 1, 2019
IFRS 17 "Insurance Contracts"	January 1, 2021
IFRIC 23 "Uncertainty over Income Tax Treatments"	January 1, 2019

Those which may be relevant to the Consolidated Company are set out below:

Issuance / Release Dates	Standards or Interpretations	Content of amendment
January 13, 2016	IFRS 16 "Leases"	The new standard of accounting for lease is amended as follows:
		• For a contract that is, or contains, a lease, the lessee shall recognize a right of use asset and a lease liability in the balance sheet. In the statement of profit or loss and other comprehensive income, a lessee shall present interest expense on the lease liability separately from the depreciation charge for the right of-use asset during the lease term.
		• A lessor classifies a lease as either a finance lease or an operating lease, and therefore, the accounting remains similar to IAS 17.

$\mathcal{L}^{\mathcal{L}}$

The Consolidated Company is evaluating the impact on its consolidated financial position and consolidated financial performance upon the initial adoption of the abovementioned standards or interpretations. The results thereof will be disclosed when the Consolidated Company completes its evaluation.

$(4)$ Summary of significant accounting policies:

Except the following accounting policies mentioned below, the significant accounting policies presented in the accompanying interim consolidated financial statements are consistent with those applied in the 2016 consolidated financial statements. Please refer to note 4 to the 2016 consolidated financial statements for related information.

$(a)$ Statement of compliance

The consolidated interim financial statements are the English translation of the Chinese version prepared and used in the Republic of China. If there is any conflict between, or any difference in the interpretation of the English and Chinese language consolidated interim financial statements, the Chinese version shall prevail.

These interim consolidated financial statements have been prepared in accordance with the "Regulations Governing the Preparation of Financial Reports by Securities Issuers" (hereinafter referred to as the Regulations) and IAS 34 "Interim Financial Reporting" endorsed by the FSC, and do not present all the disclosures required for a complete set of annual consolidated financial statements prepared in accordance with the International Financial Reporting Standards, International Accounting Statements, IFRIC Interpretations, and SIC Interpretations endorsed by the FSC (hereinafter referred to as the IFRSs endorsed by the FSC).

$(b)$ Basis of consolidation

The principles of preparation of the consolidated financial statements are the same as those in note 4(3) to the 2016 consolidated financial statements. Please refer to the 2016 consolidated financial statements for related information.

				Percentage of ownership (%)
Name of investor	Name of subsidiary	Business activities	June 30. 2017	December 31, 2016	June 30. 2016
The Company	Regal Jewelry Manufacture Co., Ltd.(RJM)	Designing, manufacturing and selling jewelry and gems	99.99 %	99.99%	99.99 %
The Company	GIO VAN GOGH (International) Jewelry Ltd.(GVG Hong Kong)	Investment activities	100.00 %	100.00 %	100.00 %
RJM	Regal Plating Co., Ltd.(RGP)	Plating jewelry and gems	51.00 %	51.00 %	51.00 %
GVG Hong Kong	Gio Van Gogh Shen Zhen Ptd Ltd. (GVG Shen Zhen)	Selling jewelry and gems	100.00 %	100.00 %	100.00 %

A list of subsidiaries in the consolidated financial statements is as follows:

In January 2016, GVG Hong Kong made a capital injection amounting to HKD4,000 thousand, and it was invested fully by the Company.

In March 2016, GVG Shen Zhen made a capital injection amounting to RMB3,000 thousand, and it was invested fully by the GVG Hong Kong.

All subsidiaries of the Company are included in the consolidated financial statements.

$(c)$ Share-based payment

The grant-date fair value of share-based payment awards granted to employees is recognized as employee expenses, with a corresponding increase in equity, over the period that the employees become unconditionally entitled to the awards. The amount recognized as an expense is adjusted to reflect the number of awards whose related service and non-market performance conditions are expected to be met, such that the amount ultimately recognized as an expense is based on the number of awards that meet the related service and non-market performance conditions at the vesting date.

For share-based payment awards with non-vesting conditions, the grant-date fair value of the sharebased payment is measured to reflect such conditions, and there is no true-up for differences between expected and actual outcomes.

(d) Employee benefits

Pension cost for an interim period is calculated on a year-to-date basis by using the actuarially determined pension cost rate at the end of the prior fiscal year, adjusted for significant market fluctuations since that time and for significant curtailments, settlements, or other significant onetime events.

$(e)$ Income taxes

Tax expense in the interim financial statements is measured and disclosed according to paragraph B12 of IAS 34 "Interim Financial Reporting".

Income tax expense for the period is best estimated by multiplying pretax income for the interim reporting period by the effective annual tax rate as forecasted by management. This should be recognized as current tax expense.

Temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and their respective tax bases shall be measured based on the effective tax rate at the time of realization or liquidation and recognized directly in equity or other comprehensive income as tax expense.

(5) Significant accounting assumptions and judgments, and major sources of estimation uncertainty:

The preparation of the consolidated interim financial statements in conformity with IAS 34 "Interim Financial Reporting" endorsed by FSC requires management to make judgments, estimates, and assumptions that affect the application of the accounting policies and the reported amounts of assets, liabilities, income, and expenses. Actual results may differ from these estimates.

For the preparation of the consolidated interim financial statements, estimates and underlying assumptions are reviewed on an ongoing basis in conformity with the IFRSs endorsed by the FSC and are consistent with those disclosed in note 5 to the 2016 consolidated financial statements.

(6) Explanation of significant accounts:

Except for the following disclosures, therer is no significant difference as compared with those disclosed in the consolidated financial statements for the year ended December 31, 2016. Please refer to Note 6 of the 2016 annual consolidated financial statements.

Cash and cash equivalents $(a)$

			December 31,
		June 30, 2017	2016	June 30, 2016
Cash	S	1,897	1,829	1,587
Demand deposits		631,073	118,445	320,662
Checking deposits		48	758	50
Cash and cash equivalents in consolidated statement of cash flows		633,018	121,032	322,299

Trade receivables and other receivables $(b)$

		June 30, 2017	December 31, 2016	June 30, 2016
Notes receivables	S		2,419	2,617
Trade receivables		336,443	341,049	270,914
Other receivables		2,229	1,888	5,780
Less: allowance for doubtful debts $-$ trade receivables		(5,087)	(7,020)	(6, 535)
	S	333,585	338,336	272,776

The aging analysis of trade receivables and other receivables that were past due but not impaired of the Consolidated Company were as follows:

		December 31,
	June 30, 2017	2016	June 30, 2016
Past due 1~90 days	64.889	136,932	33,568
Past due 91~180 days	754	783	6,153
	65,643	137,715	39,721

The changes in the aforementioned allowance for doubtful accounts were as follows:

	Individually assessed impairment	Collectively assessed impairment	Total
January 1, 2017	\$ 6,100	920	7,020
Reversal of impairment loss recognized	(980)	(890)	(1, 870)
Foreign exchange loss	(46)	(17)	(63)
June 30, 2017	5,074	13	5,087
January 1, 2016	\$ 5,364	346	5,710
Impairment loss recognized	646	134	780
Foreign exchange gain	43		45
June 30, 2016	6,053	482	6,535

The average credit terms of sales for the Consolidated Company is 30 days to 60 days. When assessing the collectability of trade receivables, the Consolidated Company will consider any changes of trade receivables from the date the original credit term was issued to the reporting date. The impairment of trade receivables is based on individual customer's credit term, payment history and current financial position. The Consolidated Company believes that there was no objective evidence of significant loss occurred in trade receivables and other receivables that were past due but not impaired.

(c) Inventories

	June 30, 2017
		Cost	Allowance for loss	Net realizable value
Raw materials	\$	189.426	52,965	136,461
Work in process		176,622	7,275	169,347
Finished goods		8,951	1,155	7.796
Supplies and spare parts		20,510	3,266	17,244
	S	395,509	64,661	330,848

	December 31, 2016
		Cost	Allowance for loss	Net realizable value
Raw materials	S	186,798	51,732	135,066
Work in process		124,581	18.160	106,421
Finished goods		11,619	1,741	9,878
Supplies and spare parts		23,503	3,322	20,181
		346,501	74,955	271,546
			June 30, 2016
		Cost	Allowance for loss	Net realizable value
Raw materials	\$	181,833	42,545	139,288
Work in process		124,563	22,545	102,018
Finished goods		5,195	2.086	3,109
Supplies and spare parts		27,803	5,679	22,124
		339,394	72,855	266,539

The changes in the aforementioned allowance for loss were as follows:

	For the six months ended June 30
		2017	2016
Beginning balances	S	74,955	70,725
Provision for (reversal of) devaluation and obsolescence of inventory		(9,765)	1,522
Foreign currency translation effects		(529)	608
Ending balances		64,661	72,855

In addition to the normal cost of goods sold, the following loss and revenue were other items which included in the Consolidated Company's operating costs:

		For the three months ended June 30		For the six months ended June 30
		2017	2016	2017	2016
Loss (reversal gain) on physical inventory devaluation and obsolescence		5.649	(13,707)	(9,765)	1,522
Revenue from sale of scrap		(111)	(11.300)	(259)	(11, 887)
	æ	5.538	(25,007)	(10, 024)	(10, 365)

As of June 30, 2017, December 31, 2016, and June 30, 2016, the Consolidated Company did not pledge its inventory as collateral.

$(d)$ Material non-controlling interests of subsidiaries

The material non-controlling interests of subsidiaries were as follows:

		Percentage of non-controlling
	Main operation place/ Country of	interests
		June 30,	December	June 30,
Subsidiary	incorporation	2017	31, 2016	2016
Regal Plating Co., Ltd.	Thailand	49 %	49%	49 %

The following information of the aforementioned subsidiaries have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers. Included in these information are the fair value adjustment made during the acquisition and relevant difference in accounting principles between the Consolidated Company as at the acquisition date. Intra-group transactions were not eliminated in this information.

Regal Plating Co Ltd's collective financial information

		June 30, 2017	December 31, 2016	June 30, 2016
Current assets	\$	249,554	150,492	132,588
Non-current assets		12.720	9,327	9,955
Current liabilities		(57, 104)	(35, 795)	(46, 850)
Non-current liabilities		(430)	(383)	(325)
Net assets	S	204,740	123,641	95,368
Non-controlling interests	S	100,322	60,584	46,730

	For the three months ended June 30		For the six months ended June 30
	2017	2016	2017	2016
Sales revenue	223,112	112,409	324,716	186,920
Net income	68,224	38,655	98,429	63,390
Other comprehensive income	3,133	112	388	(992)
Comprehensive income	71,357	38,767	98,817	62,398
Profit, attributable to non-controlling interests	33,430	18,941	48,230	31,061
Comprehensive income, attributable to non-controlling interests	34,965	18,996	48,420	30,575

	For the three months ended June 30			For the six months ended June 30
	2017	2016		2017	2016
Net cash flows from operating activities			\$	5,181	23,240
Net cash flows from investing activities
Net cash flows from financing activities				(17,718)	(36,479)
Net increase (decrease) in cash and cash equivalents			S	(12, 537)	(13,239)
Dividends to NCI			S	(8,682)	(17, 875)

(e) Property, plant and equipment

$\mathbb{R}^2$

The cost, depreciation, and impairment losses of the property, plant and equipment of the Consolidated Company in the six months ended June 30, 2017 and 2016, were as follows:

		Land	Buildings	Machinery and cquinment	Transportation equipment	Office equipment	Land improvement	Equipment to be inspected	Total
Cost or deemed cost:
Balance at January 1, 2017	\$	158,111	197.794	270,288	15,329	100.596	9.323		751,441
Addition			792	7,997	1.014	3,558	48	6,972	20,381
Disposals			(44)	(8, 440)	(19)	(952)			(9, 455)
Foreign currency translation effect		(839)	(1.039)	(1.439)	(66)	(504)	(49)	94	(3, 842)
Balance at June 30, 2017	s	157,272	197,503	268,406	16,2.8	102,698	9,322	7,066	758, 25
Balance at January 1, 2016	s	159,788	197, 154	261,174	13,644	93,205	9,363	1,476	735,804
Addition			451	9,115	1,898	3,457	23	4.200	19,164
Disposals			(152)	(5,090)		(1, 214)			(6, 456)
Reclassification			1,257	314		151		(1, 722)
Foreign currency translation effect		1.398	1.714	2.255	106	792	82	(4)	6.343
Balance at June 30, 2016		161,186	200,424	267,788	15,648	96,391	9,468	3,950	754,855
Accumulated depreciation and impairment losses:
Balance at January 1, 2017	s		117,964	211,273	11,074	80.304	9.206		429,821
Depreciation			5,204	11,718	823	4.540	33		22,318
Disposals			(5)	(6, 836)	(19)	(878)			(7,788)
Foreign currency translation effect			(555)	(1,055)	(48)	(378)	(19)		(2.085)
Balance at June 30, 2017	s		122,608	215,050	11,830	83,588	9,190		442.266
Balance at January 1, 2016	2		108,666	194,319	9,744	74,972	9,236		396,937
Depreciation			5,398	12,739	661	4,563	35		23,396
Disposals			(107)	(4, 582)		(1,188)			(5, 877)
Foreign currency translation effect			914	1,644	80	631	81		3,350
Balance at June 30, 2016			114,871	204,120	10,485	78,978	9,352		417,806

Carrying amount:	Land	Buildings	Machinery and coulpment	Transportation cauipment	Office equipment	Land improvement	Equipment to be inspected	Total
Balance at January 1, 2017	158,111	75,830	55,015	4.255	20.292	117		321,620
Balance at June 30, 2017	157.272	74.895	53,356	4,428	19.110	132	7,066	316.259
Balance at January 1, 2016	159,788	88.488	66.855	3,900	18.233	127	1.476	338.867
Balance at June 30, 2016	161,186	85,553	63.668	5,163	17.413	116	3,950	337,049

Please refer to note 8 for the disclosure of assets pledged as collateral for short-term loans.

Intangible assets $(f)$

The cost, amortization, and impairment losses of the intangible assets of the Consolidated Company in the six months ended June 30, 2017 and 2016, were as follows:

		Computer software
Costs:
Balance at January 1, 2017	\$	41,541
Additions		2,591
Disposals		(458)
Foreign currency translation effect		(190)
Balance at June 30, 2017		43.484
Balance at January 1, 2016	\$	39,927
Additions		706
Foreign currency translation effect		344
Balance at June 30, 2016		40,977
Amortization and impairment loss:
Balance at January 1, 2017	S	29,671
Amortization		2,047
Disposals		(164)
Foreign currency translation effect		(132)
Balance at June 30, 2017		31,422
Balance at January 1, 2016	$\mathbf S$	26,031
Amortization		1,973
Foreign currency translation effect		214
Balance at June 30, 2016		28,218

	Computer software
Carrying amount:
Balance at January 1, 2017	11,870
Balance at June 30, 2017	12,062
Balance at January 1, 2016	13,896
Balance at June 30, 2016	12,759

$(g)$ Short-term loans

	December 31,
	June 30, 2017	2016	June 30, 2016
Secured loans	315,070 ιO	135,750	341,362
Unused credit lines	1.266.581 ٠n	1,454,335	1,187,386
Interest rate (%)	$2.50 - 2.8$	$2.45 - 2.50$	$2.50 - 2.97$

Please refer to note 8 for the information of the collateral for loans.

$(h)$ Operating leases

$\mathcal{A}$

There were not any non-cancellable operating lease agreements at June 30, 2017, December 31, 2016, and June 30, 2016.

Operating lease expenses were as follows:

		For the three months ended June 30		For the six months ended June 30
		2017	2016	2017	2016
Operating costs	S	32	38		76
Operating expenses		544	406	1,000	789
Total	J	576	444	1.067	865

$(i)$ Employee benefits - defined benefit plans

Given there was no significant volatility of the market or any significant curtailments, settlements, or other one-time events after the end of the prior fiscal year, pension cost in the interim financial statements is measured and disclosed in accordance with the pension cost determined by the actuarial report issued for the years ended December 31, 2016 and 2015.

$\bar{z}$

The Consolidated Company's pension expenses recognized in profit or loss, were as follows:

		For the three months ended June 30		For the six months ended June 30
		2017	2016	2017	2016
Operating costs	S	518	485	1,038	974
Operating expenses		350	255	708	514
	S	868	740	1,746	1.488

Income taxes $(i)$

The Company was incorporated in the Cayman Islands, where income tax is not required to be $(i)$ paid. RJM & RGP's statutory income tax rate is 20%. GVG Hong Kong 's statutory income tax rate is 16.5%. GVG Shenzhen's statutory income tax rate is 25%.

The amounts of income tax were as follows: $(ii)$

	For the three months ended June 30		For the six months ended June 30
	2017	2016	2017	2016
Current period	25,796	36,483	46,552	64.946

(iii) Examination and approval

In Thailand, where RJM and RGP operates, income taxes do not require approval by the tax authority. Income taxes paid in prior years have received income tax receipts up to 2016. For GVG Hong Kong and GVG Shen Zhen had been approved by the revenue department through 2016.

$(k)$ Share capital and other equity

As of June 30, 2017, December 31, 2016 and June 30, 2016, the total value of authorized ordinary shares amounted to \$600,000. Par value of each share is \$10. There were 38,160 thousand, 33,920 thousand and 32,000 thousand ordinary shares issued at June 30, 2017, December 31, 2016 and June 30, 2016, respectively.

Reconciliation of share outstanding for the six months ended June 30, 2017 and 2016, was as follows (Expressed in Thousand shares):

	Common Stocks
	For the six months ended June 30
	2017	2016
Beginning balances	33,920	32,000
Issued for cash	4.240	$\overline{\phantom{0}}$
Ending balances	38,160	32,000

(Continued)

$(i)$ Issuance of common stock

Following the resolution of the Board of Directors' meeting held on March 9, 2017, the Company decided to issue new stock comprising 4,240 thousand of common shares to apply to TWSE. According to the Company's Articles, 10% of total issued shares, which is 424 thousand shares, are reserved for employees to subscribe. The shares that are not subscribed by employees would be subscribed by given people contacted by the Chairman of the Company. This cash injection was approved on April 11, 2017, with June 22, 2017 as the record date of capital increase. The cash proceeds from the issuance of new shares were \$297,356 thousand in total and the Company collected \$290,356 thousand after deducting issuance cost of \$7,000 thousand. The cash was fully received and the registration was completed and the premium was \$247,956 thousand, recorded under capital surplus.

(ii) Capital surplus

The balance of capital surplus was as follows:

	December 31.
	June 30, 2017	2016	June 30, 2016
Additional paid-in capital	418,370	170,160	30,000

(iii) Retained earnings

Based on the Company's Articles, for so long as the shares are traded on the Emerging Stock Market (ESM) or listed on the Taipei Exchange (TPEx) or TWSE, if there are profits, in making the profits distribution recommendation, the Board shall set aside out of the profits of the Company for each financial year: (i) a reserve for payment of tax for the relevant financial year; (ii) an amount to offset losses incurred in previous years; (iii) ten percent (10%) as reserve; and (iv) a special surplus reserve as required by the applicable securities authority of the ROC under the Applicable Public Comany Rules. If there should be any remaining profits, subject to the discretion of the Directors, after combining all or part of the accumulated undistributed profits in the prveious years and the reversed special surplus reserve, the combined amount shall be allocated as dividends to the Members in proportion to their shareholdings. Subject to the Law in Cayman Islands and the Applicable Public Company Rules and unless otherwise resolved by the Board and the Members, and after having considered the financial, business and operational factors of the Company, the dividends shall not be less than fifty percent (50%) of profit after tax of the relevant year. The distribution may be made by way of cash dividends or by way of stock dividends or a combination thereof, provided that, the cash dividends shall not be less than thirty percent (30%) of the total amount of dividends payable.

$1)$ Special reserve

In accordance with Chin Kuan Cheng Fa No. 1010012865 issued on April 6, 2012, the Company shall set aside a special reserve before earnings distribution, and equal to the net balance of other dedutions in shareholders' equity in the current period from net income in the current period and prior unappropriated retained earnings. The special reserve set aside based on the deductions in shareholders' equity that resulted from prior periods cannot be distributed to shareholders. The Company can distribute the special reserve only up to the amount of the reversal of such deductions.

The Company decided to provide a special reserve of \$40,893 thousand based on the resolution of the shareholders' meeting held on June 22, 2017.

$2)$ Earnings distribution

Earnings distributions for 2016 and 2015 were decided in resolutions made by shareholders on June 22, 2017 and May 20, 2016, respectively. The dividends distributed to shareholders were as follows:

	2016		2015
	Amount per share	Total Amount	Amount per share	Total Amount
Dividends distributed to shareholders:
Cash	\$ 3.375	114.480	4.98	159.324

For capital increase in cash to apply for initial public offering, the Company newly issued 4,240 thousand shares at June 22, 2017. Total shares issued were 38,160 thousand shares, after capital increase. The dividend per share was adjusted from \$3.375 to \$3, accordingly.

For year 2015, cash dividends of \$244,336 thousand, with \$7.64 per share that resolved in resolution was partly distributed from capital reserve. The earnings distribution information resolved at the meeting of the Board of Directors and shareholders would be available on the Market Observation Post System Website after the shareholder's meeting.

• $(1)$ Share-based payment
• $(i)$ For the six months ended June 30, 2017, the Consolidated Company's share-based payment arrangement were as follows:

	Cash-settled share- based payment plan (reserved for employees to subscribe)
Grant date	June 12, 2017
Number of shares granted	424,000
Contract term (Year)	0.04
Recipients	All employees
Vesting conditions	Immediately vested

Determing the fair value of equity instruments granted $1)$

The Consolidated Company used Black-Scholes Option Pricing Model in measuring the fair value of the share-based payment at the grant date.

The measurement inputs of the model were as follows:

	Capital increase in cash (reserved for employees to subscribe)
Fair value at grant date	66.60
Exercise price	66.00
Expected volatility (%)	7.92
Expected life (years)	0.04
Expected dividend (%)	4.50
Risk-free interest rate (%)	0.60

$\mathcal{L}_{\mathcal{A}}$

Details of the employee stock options as follows: $2)$

	For the six months ended June 30
	2017
	Weighted average exercise price	Number of options
Outstanding at January 1
Granted during the year (number)	66.00	424,000
Exercised during the year (number)	66.00	(424,000)
Outstanding at June 30
Exercisable at June 30

$3)$ Expense recognized in profit or loss

The Consolidated Company accrued \$254 thousand for expense resulting from cash injection for share based payment to employees for the six months ended June 30, 2017.

(ii) During the shareholders' meeting on June 22, 2017, the shareholders approved a resolution to issue 340 thousand restricted employee shares, amounting to \$3,400 thousand, with par value \$10 per share. Only full-time employees that meet certain conditions are eligible to obtain the restricted employee shares. The application of restricted employee shares have not been registered with the authority yet.

(m) Earnings per share

The calculation of basic and diluted earnings per share (EPS) was as follows:

	For the three months ended June 30		For the six months ended June 30
	2017	2016	2017	2016
Basic EPS:
Net income attributable to common shares	19,395	69,407	55,456	128,221
Weighted-average number of common shares outstanding (thousands shares)	34,293	32,000	34,107	32,000
Basic EPS (New Taiwan dollars)	0.57	2.17	1.63	4.01

	For the three months ended June 30		For the six months ended June 30
	2017	2016	2017	2016
Diluted EPS:
Net income attributable to common shares shareholders of the Company	s 19,395	69,407	55,456	128,221
Weighted-average number of common shares outstanding (thousands shares)	34,293	32,000	34,107	32,000
Potential dilutive effect on common stock (thousand shares)
Influence of employee stock remuneration	9	264	17	397
Weighted- average number of common shares outstanding-diluted(thousand shares)	34,302	32.264	34,124	32,397
Diluted EPS (New Taiwan dollars)	Я 0.57	2.15	1.63	3.96
Revenue
The details of revenue were as follows:

	For the three months		For the six months
	ended June 30		ended June 30
	2017	2016	2017	2016
Sales of goods	498,803	597.587	994.094	1,281,634

Employee compensation and directors' remuneration $(0)$

$(n)$

According to the amendment of the Company's articles of incorporation which was approved by the shareholders' meeting at May 20, 2016, no less than 1% of current-year profit income before tax excluding employee's compensation remuneration of directors shall be distributed as employee compensation and no more than 3% of it as remuneration of directors. However, if the Company has an accumulated deficit, the profit should be used to offset the deficit. Compensation and remuneration shall be made by way of cash but may also be made by stock or a combination thereof. The recipients of stock and cash may include the employees of the Company's affiliated companies who meet certain conditions decided by the Board of Directors of the Company.

The Company accrued \$224 thousand, \$0 thousand, \$640 thousand and \$3,030 thousand for employees' remuneration for the three months ended June 30, 2017 and 2016 and the six months ended June 30, 2017 and 2016, respectively. The remunerations to directors amounted to \$0 for the six months ended June 30, 2017 and 2016. These amounts were calculated using the Company's net income before tax without the remuneration to employees and directors for each period, multiplied by the proposed percentage which is stated under the Company's proposed Article of Incorporation. These remuneration were expensed under operating costs or expenses for each period. If there are any subsequent adjustments to the actual remuneration amounts after the annual shareholder' meeting, the adjustment will be regarded as changes in accounting estimates and will be reflected in profit or loss in the following year.

For the years ended December 31, 2016 and 2015, the remuneration to employees amounted to \$2,153 thousands and \$40,984 thousands, respectively, the remuneration to directors amounted to \$0. There was no difference from the resolution of the Board of Directors' meeting, the information is available on the Market Observation Post System website.

Non-operating income and expenses $(p)$

Other income $(i)$

The details of other income are as follows:

		For the three months ended June 30			For the six months ended June 30
		2017	2016	2017	2016
Interest Income		280	248	289	257
Others		L.903	525	2.785	.303
	S	2.183	773	3.074	1,560

(ii) Other gains and losses

The details of other gains and losses are as follows:

	For the three months ended June 30			For the six months ended June 30
		2017	2016	2017	2016
Loss on disposal of property, plant and equipment		(40)	(192)	(1,488)	(276)
Loss on disposal of intangible assets		(294)		(294)
Foreign exchange loss, net		(410)	7	(5,637)	(2, 427)
Others		3		(280)
	\$	(741)	(185)	(7,699)	(2,703)

(Continued)

(iii) Finance cost

The details of finance cost are as follows:

	For the three months ended June 30		For the six months ended June 30
	2017	2016	2017	2016
Interest expense on loans from banks	(1,608)	(1.943)	(2.618)	(3,670)

$\sim$ $\sim$

Financial instruments $(q)$

Except for the following, there was no significant change in the fair value of the financial instruments of the Consolidated Company and its exposure to credit risk, liquidity risk and market risk due from the financial instruments. Please refer to the 2016 consolidated financial statements for related information.

Credit risk $(i)$

The Consolidated Company's trade receivable are obviously concentrated on the main customers, which amounted to \$264,560 thousand, \$203,708 thousand, \$169,263 thousand respectively, accounted for 80%, 61% and 64% of the total amount of accounts receivable as of June 30, 2017, December 31, 2016, and June 30, 2016, respectively.

(ii) Liquidity Risk

The following table shows the contractual maturity of the financial liabilities excluding the impact of estimated interest.

		Carrying amount	Contractual cash flows	Less than 1 vear	1-2 years	More than 2 years
June 30, 2017
Non-derivative financial liabilities
Short-term bank loans	\$	315,070	315,070	315,070	٠
Accruals payable		215,301	215,301	215,301
Refundable deposits		2,889	2,889			2,889
	S	533,260	533,260	530,371		2,889
December 31, 2016
Non-derivative financial liabilities
Short-term bank loans	\$	135,750	135,750	135,750
Accruals payable		108,815	108,815	108,815
Refundable deposits		2,532	2.532			2,532
	S	247,097	247,097	244.565		2,532

	Carrying amount	Contractual cash flows	Less than 1 vear	1-2 years	More than 2 years
June 30, 2016
Non-derivative financial liabilities
Short-term bank loans	341,362	341,362	341,362	-	-
Accruals payable	259,957	259,957	259,957	-
Refundable deposits	2.422	2,422			2,422
	603,741	603,741	601,319		2,422

The Consoldiated Company does not expect the cash flows included in the maturity analysis to occur significantly earlier or at significantly different amounts.

(iii) Market risk- Currency risk

Currency risk exposure $1)$

The Consolidated Company's significant exposure to foreign currency risk was as follows:

	June 30, 2017			December 31, 2016			June 30, 2016
Financial assets		Foreign currency (in thousands)	Exchange rate	Amount	Foreign currency (in thousands)	Exchange rate	Amount	Foreign currency (in thousands)	Exchange rate	Amount
Monetary items
USD		11.647	30,42	354,298	5,992	32.25	193.247	4,427	32.28	142,884

Sensitivity analysis $2)$

The Consolidated Company's exposure to foreign currency risk mainly arises from the translation of the foreign currency exchange gains and losses on cash and cash equivalents, trade and other receivables, that are denominated in foreign currency.

A 1% strengthening (weakening) of the NTD against the USD as at June 30, 2017 and 2016, would have decreased (increased) net profit before tax for the six months ended June 30, 2017 and 2016, by \$3,543 thousand and \$1,429 thousand, respectively.

Exchange gains and losses of monetary items $3)$

Due to the different types of functional currency of the Consolidated Company, the Consolidated Company disclose its exchange gains and losses of monetary items aggregately. The Company's exchange loss, including realized and unrealized, were $$(410)$ thousand, \$7 thousand, $$(5,637)$ thousand and $$(2,427)$ thousand for the three months ended June 30, 2017 and 2016 and the six months ended June 30, 2017 and 2016, respectively.

(iv) Interest rate analysis

Please refer to the notes on liquidity risk management and interest rate exposure of the Consolidated Company's financial assets and liabilities.

If the interest rate had increased / decreased by 1%, the Consolidated Company's net income before taxation would have decreased / increased by 3,151 thousand and 3,414 thousand for the six months ended June 30, 2017 and 2016 with all other variable factors remaining constant. This was mainly due to the Consolidated Company's borrowing at flexible.

• (v) Fair Value Information
• Categories and fair value of financial instruments $\left| \right|$

The financial assets of the Consolidated Company include cash and cash equivalents, notes receivables, trade receivables, other receivables, other financial assets - noncurrent. Financial liabilities measured at amortization cost include short-term loans, notes payable, trade payables, other payables, and refundable deposits - non-current. Since the book value of the aforementioned financial assets and liabilities is a reasonable approximation of fair value, disclosures of fair value is not required.

$(r)$ Financial Risk Management

There were no significant changes in the objectives and policies concerning the financial risks the Consolidated Company was exposed to. Please refer to the 2016 consolidated financial statements for related information.

$(s)$ Capital management

The purpose, policy, procedures, and summarized quantitative data of the Consolidated Company's capital management were the same as those disclosed in the 2016 consolidated financial statements. Please refer to the 2016 consolidated financial statements for related information.

(7) Related-party transactions:

Name and relationship with related parties $(a)$

The followings are natural people or entities that have had transactions with related party during the periods covered in the consolidated interim financial statements.

Name of related party	Relationship with the Consolidated Company
PHACHARAPON	The Chairman of the Company
PHAIBOONS UNTORN
Ru-Yin, Lin	Key management personnel
SARAYUTH	Legal representative of the Board of Directors
MUNG CHITVITSAVAKORN

Significant transactions with related parties - Guarantee $(b)$

The Consolidated Company's Chairman, key management personnel and legal representative of the Board of Directors provided personal guarantee for bank loans of consolidated company without any guarantee fees.

(c) Key management personnel compensation

Key management personnel compensation comprised:

	For the three months ended June 30		For the six months ended June 30
	2017	2016	2017	2016
Short-term employee benefits	2.243	4.378	8.936	11.538
Post-employment benefits	1.097	326	2.156	595
	3.340	4.704	11.092	12,133

(8) Pledged assets:

The carrying amounts of pledged assets were as follows:

Pledged assets	Object		June 30, 2017	December 31, 2016	June 30, 2016
Land	Short-term loans	\$	148,934	149,728	152,640
Buildings	Short-term loans		42,323	45,705	49,812
Other financial assets (non-current)	Guarantee for electricity supply		4,068	4,080	4,113
		S	195,325	199,513	206,565

(9) Significant commitments and contingencies:

The credit line of guarantee provided by bank was as follows:

		December 31,
	June 30, 2017	2016	June 30, 2016
Electricity guarantee	3.835	3,846	3.878

$\mathbf{D}$ and $\mathbf{L}$ and $\mathbf{A}$

(10) Losses due to major disasters: None

$\bar{z}$

(11) Subsequent events: None

$(12)$ Other:

A summary of personnel costs, depreciation, depletion and amortization is as follows:

$\overline{a}$

		For the three months ended June 30
Function		2017			2016
	Operating Operating			Operating	Operating
Account	cost	expenses	Total	cost	expenses	Total
Personnel costs
Salaries	114,700	48,703	163,403	133,087	45,407	178,494
Health insurance		135	135		161	161
Pension	518	350	868	485	255	740
Other personnel expense	3,700	6,847	10,547	3,334	4,204	7,538
Depreciation	8,418	2,657	11,075	8,549	3,087	11,636
Amortization		1,022	1,022		958	958

				For the six months ended June 30
Function		2017			2016
	Operating Operating				Operating Operating
Account	cost	expenses	Total	cost	expenses	Total
Personnel costs
Salaries	228,209	91,912	320,121	279,460	100,111	379,571
Health insurance		291	291		193	193
Pension	1,038	708	1,746	974	514	1,488
Other personnel expense	6,873	11,870	18,743	6,649	9,588	16,237
Depreciation	15,584	6,734	22,318	16,232	7,164	23,396
Amortization		2,047	2,047		1,973	1,973

(13) Other disclosures:

Information on significant transactions: $(a)$

The following were the information on significant transactions required by the "Regulations Governing the Preparation of Financial Reports by Securities Issuers" for the Consolidate Company for the six-months ended June 30, 2017:

• Lending to other parties: None $(i)$
• (ii) Guarantees and endorsements for other parties: None
• (iii) Information regarding securities held at the reporting date (subsidiary, associates and joint ventures not included):None
• (iv) Information regarding purchase or sale of securities for the period exceeding 300 million or 20% of the Company's paid-in capital:None
• Information on acquisition of real estate with purchase amount exceeding 300 million or 20% of the Company's paid-in $(v)$ capital:None
• (vi) Information regarding receivables from disposal of real estate exceeding 300 million or 20% of the Company's paid-in capital:None
• (vii) Information regarding related-parties purchases and/or sales exceeding 100 million or 20% of the Company's paid-in capital:

								Transactions in terms other	Note and accounts receivable
					Transaction details		than the regular terms			(pavable)
									Ending balance
									of notes and	Percentage of total
					Percentage of				accounts	inotes and accounts
Name of		Nature of			Itotal porchases Credit terms				receivable	receivable
company	Counterparty!	relationshin	Purchasc/Sale	Amount	(sales)(%)	(days)	Unit price	Payment terms	(payable)	(pavable)	Note
RGP	RJM	RJM's subsidiary	Sales	(324,111)		(99.81) within 45 days Note 1			217,204	100.00 Note 2

Note 1: The price was calculated by the mutual negotiable prices.

Note 2: Related-party transactions have been eliminated in the preparation of the consolidated financial statements.

(viii) Information regarding receivables from related-parties exceeding 100 million or 20% of the Company's paid-in capital::

							Amounts received
Name of		Nature of	Ending	urnover		Overdue	m subsequent	Allowance
сошрану	Counter-party	relationship	balance (Note 2)	rate	Amount	Action taken	neriod (Note 1)	for bad debts
RGP	RJM	RJM' subsidiary	217.204	3.86			87.916
		company

Note 1: For period ended 24 July 2017.

Note 2: Related-party transactions have been eliminated in the preparation of the consolidated financial statements.

• (ix) Information regarding trading in derivative financial instruments: None
• Significant transactions and business relationship between the parent company and its subsidiaries for the three months $(x)$ ended March 31, 2017.

			Nature of	Intercompany transactions
No.		[Name of company] Name of counter-party	relationship	Account name	Amount	Trading terms	Percentage of the consolidated net revenue or total assets
	RGP	RIM		Sales		324,111 The price calculation	32.60%
						is made by the consentl
						of the both parties.
	RGP	IRJM		Trade receivables		217,204 Within 45 days	12.96%

Note 1: Company numbering as follow:

1.represent RGP ·

Note 2: The numbering of the relationship between transaction parties as follows:

1. Subsidiary to parent company,

2. Note 3: The account should be disclosed if the amount is over 1% of the total assets from the statement of financial position and total operating revenue from the statement of comprehensive income.

3. Related information on investee companies: $(b)$

The following is the information on investees for the six months ended June 30, 2017 (excluding information on investees in Mainland China):

										(In Thousands of New Taiwan Dollars)
			Main		Original investment amount		Balance as of June 30, 2017		Net income	Share of
								Carrying	(losses)	profits/losses of
Name of	Name of					Shares	Percentage of	value	of investee	investee
investor	investee	Location	businesses and products	June 30, 2017	December 31, 2016	(thousands)	wnership	(note 1)	(note 1)	(note 1)	Note
The Company	RJM	Hhailand	Designing, Manufacturing and Selling	300,000	300,000	4,549,998	99.99%	755,049	83.471		83.471 Eliminate in the
			liewelry and nem-								consolidated
											financial statements
The Company	GVG Hong Hong Kong		Investment Activities	22.050	22,050	5,000,000	100.00%	7,643	(2,905)	(2,905)
	Kong
RM	RGP	Thailand	Plating jewelry and gem	11.647	11,647	127,500	51.00%	72.498	98,429	27,335
										(note 2)

Note I: Investment gains (losses) have been recognized by the equity method based on the financial statements of the investee companies reviewed by auditors.

Note 2: The investment cains excluded \$22,864 thousand of unrealized gross profit

• (c) Information on investment in mainland China:
• The names of investees in Mainland China, the main businesses and products, and other information: $(i)$

												(In Thousands of New Taiwan Dollars)
						lavestment amount	Cumulated	Current	Shareholding
				Accumulated outflow of		remitted or recovered	investment amount		profit of Iratio of directl		Book value of
	Major		Investment	Cumulated investment amount			remitted from	investee	er indirect	Investment	' investment at	Accumulated
Name of	business	Paid in	Method	remitted from Taiwan at			Taiwan at end of	сотналу		linvestment of leains or losses	end of year	investment
investee	project	Capital	(note 1)	beginning of period	Remittance	Recovery	period	(note 3)				the company $ $ (note 2 and 3) $ $ (note 2 and 3) $ $ income remitted
	GVG (ShenSelling jewelry	IRMB 4.000		(note 4)	(nol:4)	(note 4)	(note 4)	(2, 846)	100.00 %	(2, 846)	6.366
IZhen	knd een

Notel: Investment methods are divided into the following three kinds:

(1)Invest in Mainland China directly

(2) Invest in GVG Hong Kong, and then invest in Mainland China

(3)Other methods -

Note 2: Long-term investment at end of period and investment gains or losses have been eliminated in the preparation of the consolidated financial statements -

Note 3: Quarter financial statement of the investee company were examined by the auditors of parent company. Those investment gains or losses end of the investment at end of period have been recognized by the equity method

Note 4 :The Company is not a Taiwan local company, so no investment amount is shown

• (ii) Limitation on investment in Mainland China:None
• (iii) Significant inter-company transactions with the Mainland China investee company: None

(14) Segment information:

			2017	For the three months ended June 30
Revenue:		Manufacturing and selling gems and jewelry department	Electro- plating department	Adjustments and eliminations	Total
Revenue from external customers	\$	498,351	452		498,803
Revenue from transactions with other operating segments			222,660	(222, 660)
Total revenue	S	498,351	223,112	(222.660)	498,803
Reportable segment profit or loss		10,397	68,224		78,621
			2016	For the six months ended June 30
		Manufacturing and selling gems and jewelry department	Electro- plating department	Adjustments and eliminations	Total
Revenue:
Revenue from external customers Revenue from transactions with other operating segments	\$	597,587 77	112,409	(112, 486)	597,587
Total revenue	s	597,664	112,409	(112, 486)	597,587
Reportable segment profit or loss	\$	86,175	38,656		124,831
			2017	For the three months ended June 30
Revenue:		Manufacturing and selling gems and jewelry department	Electro- plating department	Adjustments and eliminations	Total
Revenue from external customers	\$	993,489	605		994,094
Revenue from transactions with other operating segments			324,111	(324, 111)
Total revenue		993,489	324,716	(324, 111)	994,094
Reportable segment profit or loss	S	51,809	98,429		150,238

35

(Continued)

l.

$\ddot{\phantom{a}}$

$\bar{\mathcal{A}}$

$\sim 10^7$

	For the six months ended June 30
		Manufacturing and selling gems and jewelry department	Electro- plating department	Adjustments and eliminations	Total
Revenue:
Revenue from external customers	S	1,281,634	$\blacksquare$	٠	1,281,634
Revenue from transactions with other operating segments		155	186,920	(187,075)
Total revenue		1,281,789	186,920	(187, 075)	1,281,634
Reportable segment profit or loss		160,837	63,391		224,228

$\label{eq:2.1} \frac{1}{2} \int_{\mathbb{R}^3} \left| \frac{d\mathbf{x}}{d\mathbf{x}} \right|^2 \, d\mathbf{x} \, d\mathbf{x} \, d\mathbf{x} \, d\mathbf{x} \, d\mathbf{x} \, d\mathbf{x} \, d\mathbf{x} \, d\mathbf{x} \, d\mathbf{x} \, d\mathbf{x} \, d\mathbf{x} \, d\mathbf{x} \, d\mathbf{x} \, d\mathbf{x} \, d\mathbf{x} \, d\mathbf{x} \, d\mathbf{x} \, d\mathbf{x} \, d\mathbf{x} \, d\mathbf{x} \, d\mathbf{x} \$

$\sim 10^7$

$\mathcal{A}$