Champion Building Materials Receives Qualified Opinion from Auditor for 115 Q2 Financial Report

1. Date of Event: 115/08/14

2. Full Auditor Review Opinion:

Auditor's Review Report

To the Board of Directors of Champion Building Materials Co., Ltd.:

Introduction

The consolidated balance sheets of Champion Building Materials Co., Ltd. and its subsidiaries as of June 30, 115 and 114 (restated), and the consolidated statements of comprehensive income for the periods from April 1 to June 30, 115 and 114 (restated), and from January 1 to June 30, 115 and 114 (restated), as well as the consolidated statements of changes in equity and consolidated cash flow statements for the period from January 1 to June 30, 115 and 114 (restated), together with the notes to the consolidated financial statements (including summary of significant accounting policies), have been reviewed by this auditor. Preparing consolidated financial statements that fairly present the financial position in accordance with the Securities Issuers Financial Reporting Standards and the International Accounting Standard No. 34 'Interim Financial Reporting' recognized and enforced by the Financial Supervisory Commission is the responsibility of management; the auditor’s responsibility is to form a conclusion on the consolidated financial statements based on the review results.

Scope

Except as described in the Basis for Qualified Conclusion section, the auditor conducted the review in accordance with Review Standard No. 2410, 'Review of Financial Statements.' Procedures performed during the review of the consolidated financial statements include inquiries (primarily with personnel responsible for financial and accounting matters), analytical procedures, and other review procedures. The scope of a review is substantially less than that of an audit, and consequently, the auditor may not become aware of all significant matters that might be detected in an audit; therefore, no audit opinion is expressed.

Basis for Qualified Conclusion

As disclosed in Note 4(2) to the consolidated financial statements, certain non-material subsidiaries included in the consolidated financial statements were consolidated based on financial reports not reviewed by auditors for the same periods. As of June 30, 115 and 114, their total assets were NT$500,333 thousand and NT$327,499 thousand, representing 6% and 4% of consolidated total assets, respectively; total liabilities were NT$130,788 thousand and NT$67,998 thousand, representing 5% and 2% of consolidated total liabilities, respectively. Comprehensive income for the periods from April 1 to June 30, 115 and 114, and from January 1 to June 30, 115 and 114 (restated), were NT$604 thousand, NT$7,244 thousand, (NT$7,550) thousand, and NT$12,278 thousand, representing 5%, (9)%, 243%, and 5% of consolidated comprehensive income, respectively.

As stated in Note 6(7) to the consolidated financial statements, Champion Building Materials Co., Ltd. and its subsidiaries did not obtain the latest financial statements of Haio Champion Limited, an associate accounted for using the equity method under IAS 28, and therefore could not properly recognize and measure the equity-method investment or the share of profits/losses of the associate and joint ventures for the period from April 1 to June 30, 115. The carrying amount of equity-method investments as of June 30, 115, was NT$364,721 thousand.

In addition, as disclosed in Note 6(7), equity-method investments as of June 30, 115 and 114 (restated) were NT$67,865 thousand and NT$400,948 thousand, respectively, and the shares of profits/losses of equity-method associates and joint ventures for the periods from April 1 to June 30, 115 and 114 (restated), and from January 1 to June 30, 115 and 114 (restated), were NT$0 thousand, NT$3,766 thousand, (NT$2,749) thousand, and NT$818 thousand, respectively, all based on financial reports of the investees not reviewed by auditors.

Qualified Conclusion

Based on the auditor’s review, except for the potential adjustments that might arise if the latest financial statements of the aforementioned investees were obtained or reviewed by auditors, no material misstatements were found in the consolidated financial statements in all significant respects regarding compliance with the Securities Issuers Financial Reporting Standards and IAS 34 'Interim Financial Reporting,' such that they fail to fairly present the consolidated financial position as of June 30, 115 and 114 (restated), the consolidated financial performance for the periods from April 1 to June 30, 115 and 114 (restated), and from January 1 to June 30, 115 and 114 (restated), and the consolidated cash flows for the period from January 1 to June 30, 115 and 114 (restated).

Emphasis of Matter

As disclosed in Note 6(7), the investment in Haio Champion Limited was previously classified as a non-current asset held for sale under IFRS 5. However, as it no longer meets the criteria for held-for-sale classification, the company has reclassified it to equity-method accounting from the original classification date, and retrospectively adjusted the consolidated balance sheets as of June 30, 114 and December 31, 114, and the consolidated statements of comprehensive income, changes in equity, and cash flows for the period from January 1 to June 30, 114. The auditor did not modify the review conclusion due to this matter.

3. Auditor Firm Name: KPMG Taiwan

4. Signing Auditor and Approval Number 1: Chen, Tsung-Che, FSC Audit No. 1000011652

5. Signing Auditor and Approval Number 2: Chi, Shih-Chin, FSC Audit No. 1020000737

6. Auditor Review Report Date: 115/08/14

7. Response Measures: Due to the delayed receipt of financial data from the investee company Haio Champion Limited, the consolidated financial statements could not fully comply with IAS 28 regarding the recognition and measurement of equity-method investments and related profit/loss shares, resulting in a qualified opinion from the auditor not approved by the FSC. The company has formally requested and received confirmation on August 6, 115, that Haio Champion Limited will provide its Q2 115 operational and financial data by August 26, 115. Upon receipt, the data will be immediately submitted to the auditor for review, enabling an updated review opinion on the company’s Q2 115 financial report.

8. Other Matters to be Disclosed: None.