SinoPac Financial Holdings Company Limited and Subsidiaries

SinoPac Financial Holdings Company Limited and Subsidiaries Consolidated Financial Statements for the Years Ended December 31, 2010 and 2009 and Independent Auditors Report

INDEPENDENT AUDITORS REPORT The Board of Directors and the Stockholders SinoPac Financial Holdings Company Limited We have audited the accompanying consolidated balance sheets of SinoPac Financial Holdings Company Limited and its subsidiaries as of December 31, 2010 and 2009, and the related consolidated statements of income, changes in stockholders equity and cash flows for the years then ended. These consolidated financial statements are the responsibility of the Company s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with the Rules Governing the Audit of Financial Statements by Certified Public Accountants, Rules Governing Auditing and Certification of Financial Statements of the Financial Industry by Certified Public Accountants and auditing standards generally accepted in the Republic of China. Those rules and standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatements. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the Company s management, as well as evaluating the overall consolidated financial statements presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of SinoPac Financial Holdings Company Limited and subsidiaries as of December 31, 2010 and 2009, and the results of its operations and its cash flows for the years then ended, in conformity with Criteria Governing the Preparation of Financial Reports by Financial Holding Companies, Guidelines Governing the Preparation of Financial Reports by Public Banks, Criteria Governing the Preparation of Financial Reports by Securities Issuers, Criteria Governing the Preparation of Financial Reports by Securities Firms, Criteria Governing the Preparation of Financial Reports by Futures Commission Merchants, the guidelines issued by the authority and accounting principles generally accepted in the Republic of China. March 14, 2011 Notice to Readers The accompanying consolidated financial statements are intended only to present the financial position, results of operations and cash flows in accordance with accounting principles and practices generally accepted in the Republic of China and not those of any other jurisdictions. The standards, procedures and practices to audit such consolidated financial statements are those generally accepted and applied in the Republic of China. For the convenience of readers, the auditors report and the accompanying consolidated financial statements have been translated into English from the original Chinese version prepared and used in the Republic of China. If there is any conflict between the English version and the original Chinese version or any difference in the interpretation of the two versions, the Chinese-language auditors report and consolidated financial statements shall prevail. - 1 -

SINOPAC FINANCIAL HOLDINGS COMPANY LIMITED AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2010 AND 2009 (In Thousands of New Taiwan Dollars, Except Par Value) % % Increase Increase ASSETS Amount Amount (Decrease) LIABILITIES AND STOCKHOLDERS EQUITY Amount Amount (Decrease) CASH AND CASH EQUIVALENTS (Note 3) $ 14,712,971 $ 22,273,131 (34 ) CALL LOANS AND DUE TO BANKS (Note 17) $ 64,798,201 $ 44,804,007 45 DUE FROM THE CENTRAL BANK AND OTHER BANKS (Note 4) 84,493,342 81,685,850 3 COMMERCIAL PAPER PAYABLE, NET (Notes 2 and 18) 18,562,392 10,187,306 82 FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS (Notes 2, 5, 6, FINANCIAL LIABILITIES AT FAIR VALUE THROUGH PROFIT OR LOSS (Notes 2 33 and 34) 49,767,925 38,879,551 28 and 5) 12,235,710 10,793,950 13 SECURITIES PURCHASED UNDER AGREEMENTS TO RESELL (Notes 2 and 6) 8,516,598 4,057,274 110 SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE (Notes 2, 6 and 33) 19,620,768 15,062,131 30 RECEIVABLES, NET (Notes 2, 7, 8, 32 and 33) 65,145,372 68,355,474 (5 ) PAYABLES (Notes 2, 19, 32 and 33) 21,243,443 33,419,838 (36 ) DISCOUNTS AND LOANS, NET (Notes 2, 9, 33 and 34) 717,565,949 693,657,033 3 BONDS PAYABLE (Note 20) - 1,150,000 (100 ) AVAILABLE-FOR-SALE FINANCIAL ASSETS, NET (Notes 2, 6, 10, 33 and 34) 38,517,567 38,971,128 (1 ) DEPOSITS AND REMITTANCES (Notes 23 and 33) 943,357,530 868,540,540 9 HELD-TO-MATURITY INVESTMENTS, NET (Notes 2, 11 and 34) 200,564,991 125,824,927 59 SHORT-TERM BORROWINGS (Note 22) 8,714,260 5,442,042 60 EQUITY INVESTMENTS - EQUITY METHOD (Notes 2 and 12) 60,226 56,445 7 BANK DEBENTURES (Notes 2 and 24) 30,121,486 27,129,563 11 OTHER FINANCIAL ASSETS, NET (Notes 2 and 13) LONG-TERM BORROWINGS (Note 25) 7,262,744 5,613,508 29 Unquoted equity instruments 4,492,859 4,333,024 4 Non-active market debt instruments 82,066 100,486 (18) LIABILITY COMPONENT OF PREFERRED STOCKS (Notes 2 and 28) 129,060 129,060 - Others 20,391,024 21,234,798 (4) OTHER FINANCIAL LIABILITIES (Notes 2 and 26) 14,655,525 17,595,047 (17) Other financial assets, net 24,965,949 25,668,308 (3) OTHER LIABILITIES (Notes 2, 27, 31, 32 and 33) 3,437,883 3,878,313 (11) PROPERTIES, NET (Notes 2, 14 and 34) Land plus appreciation 6,600,066 6,641,020 (1) Total liabilities 1,144,139,002 1,043,745,305 10 Buildings 5,480,894 5,466,823 - Computer equipment 7,278,294 7,528,195 (3) STOCKHOLDERS EQUITY OF PARENT COMPANY Transportation equipment 22,622 21,508 5 Capital stock 19,381,876 19,657,546 (1) Common shares NT$10 par value, authorized 12,000,000 thousand Less: Accumulated depreciation 8,095,612 8,020,433 1 shares; issued 7,009,817 thousand shares in 2010 and 6,996,505 Less: Accumulated impairment losses 4,395 4,395 - thousand shares in 2009 70,098,167 69,965,051-11,281,869 11,632,718 (3) Advance receipts for common stock - 17,467 (100) Prepayments for equipment and construction in progress 398,290 281,671 41 Capital surplus Additional paid-in capital 1,720,000 1,722,737 - Net properties 11,680,159 11,914,389 (2) Conversion rights 290,940 290,940 - Others 3,609 3,609 - INTANGIBLE ASSETS (Notes 2 and 15) 2,164,745 2,287,009 (5) Total capital surplus 2,014,549 2,017,286 - Retained earnings OTHER ASSETS (Notes 2, 16, 32, 33 and 34) 12,728,197 12,977,789 (2) Legal reserve 10,053,920 9,963,140 1 Special reserve 7,741 - - Unappropriated earnings 5,109,405 907,801 463 Total retained earnings 15,171,066 10,870,941 40 Other items on stockholders equity Revaluation increment on land 1,030,154 1,030,154 - Cumulative translation adjustment (719,352) (168,698) 326 Unrealized gains (losses) on financial instruments 122,392 (125,169) 198 Unrealized gains (losses) on cash flow hedge (26,185) 22,130 (218) Net loss not recognized as pension cost (945,802) (766,159) 23 Total other items on stockholders equity (538,793) (7,742) 6,859 Total stockholders equity of parent company 86,744,989 82,863,003 5 TOTAL $ 1,230,883,991 $ 1,126,608,308 9 TOTAL $ 1,230,883,991 $ 1,126,608,308 9 The accompanying notes are an integral part of the consolidated financial statements. - 2 -

SINOPAC FINANCIAL HOLDINGS COMPANY LIMITED AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME YEARS ENDED DECEMBER 31, 2010 AND 2009 (In Thousands of New Taiwan Dollars, Except Earnings Per Share) % Increase Amount Amount (Decrease) INTEREST REVENUE (Notes 2 and 33) $ 21,932,606 $ 22,328,077 (2) INTEREST EXPENSE (Note 33) 7,278,072 9,936,136 (27) NET INTEREST 14,654,534 12,391,941 18 NET REVENUES OTHER THAN INTEREST (Note 2) Commissions and fee revenues, net (Notes 29 and 33) 8,766,492 8,432,215 4 Gains from financial assets and liabilities at fair value through profit or loss (Note 5) 408,102 2,506,368 (84) Realized gains from available-for-sale financial assets (Notes 28 and 33) 115,600 9,981 1,058 Income from equity investments - equity method (Note 12) 6,507 6,725 (3) Impairment losses on assets (505,426) (394,262) 28 Foreign exchange gains, net 652,440 726,026 (10) Gains from unquoted equity instruments 357,355 100,990 254 Gains from warrants issued 609,495 19,731 2,989 Recovery of bad debts 720,739 567,160 27 Rental revenues (Note 33) 324,029 424,468 (24) Gain from disposal of properties and idle assets, net (Note 16) 27,893 570,958 (95) Contingency losses - (2,189,651) 100 Other net losses (Note 33) (120,519) (268,445) (55) Total net revenues 26,017,241 22,904,205 14 PROVISION FOR BAD DEBTS (Notes 2, 7 and 9) 5,055,966 6,222,662 (19) OPERATING EXPENSES (Notes 2, 30, 31 and 33) Personnel expenses 9,894,817 9,973,395 (1) Depreciation and amortization 867,989 1,035,275 (16) Others 4,819,693 4,736,308 2 Total operating expenses 15,582,499 15,744,978 (1) INCOME BEFORE INCOME TAX 5,378,776 936,565 474 INCOME TAX EXPENSE (Notes 2 and 32) 269,440 33,124 713 CONSOLIDATED INCOME $ 5,109,336 $ 903,441 466 (Continued) - 3 -

SINOPAC FINANCIAL HOLDINGS COMPANY LIMITED AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME YEARS ENDED DECEMBER 31, 2010 AND 2009 (In Thousands of New Taiwan Dollars, Except Earnings Per Share) % Increase Amount Amount (Decrease) ATTRIBUTABLE TO Stockholders of the parent company $ 5,109,336 $ 907,801 463 Minority interests - (4,360) 100 $ 5,109,336 $ 903,441 466 Pretax After Tax Pretax After Tax EARNINGS PER SHARE (Note 28) Basic $ 0.77 $ 0.73 $ 0.13 $ 0.13 Diluted $ 0.76 $ 0.72 $ 0.13 $ 0.13 The accompanying notes are an integral part of the consolidated financial statements. (Concluded) - 4 -

SINOPAC FINANCIAL HOLDINGS COMPANY LIMITED AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY YEARS ENDED DECEMBER 31, 2010 AND 2009 (In Thousands of New Taiwan Dollars, Except Cash Dividend Per Share) Other Items on Stockholders Equity Retained Earnings (Notes 2 and 28) Unrealized Unrealized Issued and Outstanding Unappropriated Cumulative Gains (Losses) Gains (Losses) Net Loss Not Capital Stock (Note 28) Advance Capital Surplus (Notes 2 and 28) Earnings Revaluation Translation on Financial on Cash Flow Recognized as Total Shares in Receipts for Additional Conversion (Accumulated Increment on Adjustment Instruments Hedge Pension Cost Minority Stockholders' Thousands Amount Common Stock Paid-in Capital Rights Others Total Legal Reserve Special Reserve Deficit) Total Land (Note 2) (Note 2) (Notes 2 and 28) (Notes 2 and 28) (Note 2) Interests Equity BALANCE, JANUARY 1, 2009 6,988,018 $ 69,880,178 $ - $ 1,724,374 $ - $ 3,609 $ 1,727,983 $ 12,991,972 $ 1,671,766 $ (4,700,598 ) $ 9,963,140 $ 1,030,154 $ (13,709 ) $ (229,628 ) $ (69,621 ) $ (642,321 ) $ 41,837 $ 81,688,013 Appropriation of 2008 earnings Special reserve transferred to unappropriated earnings - - - - - - - - (1,671,766) 1,671,766 - - - - - - - - Legal reserve to offset deficit - - - - - - - (3,028,832) - 3,028,832 - - - - - - - - Consolidated income for the year ended December 31, 2009 - - - - - - - - - 907,801 907,801 - - - - - (4,360 ) 903,441 Unrealized revaluation gains or losses on financial instruments recognized from subsidiaries - - - - - - - - - - - - - 104,459 - - - 104,459 Unrealized gains or losses on subsidiaries' cash flow hedge - - - - - - - - - - - - - - 91,751 - - 91,751 Change in cumulative translation adjustment on equity investments - equity method - - - - - - - - - - - - (154,989) - - - - (154,989) Employee stock option exercised 8,487 84,873 17,467 (1,637 ) - - (1,637 ) - - - - - - - - - - 100,703 Net loss not recognized as pension cost recognized from subsidiaries - - - - - - - - - - - - - - - (123,838 ) - (123,838 ) Equity component of preferred stock issuance - - - - 290,940-290,940 - - - - - - - - - - 290,940 Change in minority interest - - - - - - - - - - - - - - - - (37,477 ) (37,477 ) BALANCE, DECEMBER 31, 2009 6,996,505 69,965,051 17,467 1,722,737 290,940 3,609 2,017,286 9,963,140-907,801 10,870,941 1,030,154 (168,698 ) (125,169 ) 22,130 (766,159 ) - 82,863,003 Appropriation of 2009 earnings Legal reserve - - - - - - - 90,780 - (90,780) - - - - - - - - Special reserve - - - - - - - - 7,741 (7,741) - - - - - - - - Cash dividends - NT$0.1156 per share - - - - - - - - - (809,211) (809,211) - - - - - - (809,211) Consolidated income for the year ended December 31, 2010 - - - - - - - - - 5,109,336 5,109,336 - - - - - - 5,109,336 Unrealized revaluation gains or losses on financial instruments recognized from subsidiaries - - - - - - - - - - - - - 247,561 - - - 247,561 Unrealized gains or losses on subsidiaries' cash flow hedge - - - - - - - - - - - - - - (48,315 ) - - (48,315 ) Change in cumulative translation adjustment on equity investments - equity method - - - - - - - - - - - - (550,654) - - - - (550,654) Employee stock option exercised 13,312 133,116 (17,467 ) (2,737 ) - - (2,737 ) - - - - - - - - - - 112,912 Net loss not recognized as pension cost recognized from subsidiaries - - - - - - - - - - - - - - - (179,643 ) - (179,643 ) BALANCE, DECEMBER 31, 2010 7,009,817 $ 70,098,167 $ - $ 1,720,000 $ 290,940 $ 3,609 $ 2,014,549 $ 10,053,920 $ 7,741 $ 5,109,405 $ 15,171,066 $ 1,030,154 $ (719,352 ) $ 122,392 $ (26,185 ) $ (945,802 ) $ - $ 86,744,989 The accompanying notes are an integral part of the consolidated financial statements. - 5 -

SINOPAC FINANCIAL HOLDINGS COMPANY LIMITED AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS YEARS ENDED DECEMBER 31, 2010 AND 2009 (In Thousands of New Taiwan Dollars) CASH FLOWS FROM OPERATING ACTIVITIES Consolidated income $ 5,109,336 $ 903,441 Adjustments to reconcile consolidated income to net cash used in operating activities Depreciation and amortization 897,516 1,267,994 Amortization of premium or discount on financial assets 84,133 67,462 Amortization of premium or discount on bank debentures 1,452 (3,024) Impairment losses on assets 505,426 394,262 Unrealized losses on (gains from) financial assets designated at fair value through profit or loss 7,630 (549,152) Provision for credit, trading and other losses 5,113,593 6,259,040 Contingency losses - 2,189,651 Gains from convertible bonds repurchased - (12,534) Income from equity investments - equity method, net (6,507) (6,725) Gains from disposal and retirement of properties and leased assets (19,632) (532,721) Losses on disposal of collaterals assumed, net 30,105 183,310 Gains from warrants issued (609,495) (27,092) Deferred income taxes (793,309) (2,150,828) Accrued pension cost 119,749 55,795 (Gains from) losses on sale of unquoted equity instruments (249,148) 8,513 Gains from sale of available-for-sale financial assets (106,764) (5,149) Net change of operating assets and liabilities Held-for-trading financial assets (12,082,639) 9,978,727 Held-for-trading financial liabilities 1,994,043 (9,589,010) Securities brokerage accounts, net (11,228) 72,676 Customer margin account (1,348,930) 3,875,281 Future trader's equity 1,348,930 (3,874,839) Securitization of accounts receivable - 789,940 Receivables 3,732,380 (9,151,312) Payables (13,020,252) (340,426) Net cash used in operating activities (9,303,611) (196,720) CASH FLOWS FROM INVESTING ACTIVITIES (Increase) decrease in due from the Central Bank and other banks (2,807,492) 18,656,663 Decrease in financial assets designated at fair value through profit or loss 1,186,635 1,471,949 Increase in financial liabilities designated at fair value through profit or loss 57,212 - (Increase) decrease in securities purchased under agreements to resell (4,459,324) 291,327 Increase in discounts and loans (28,183,640) (21,332,898) Cash returned on liquidation of equity investments-equity method - 4,564 Increase in unquoted equity instruments (434,989) (399,332) (Continued) - 6 -

SINOPAC FINANCIAL HOLDINGS COMPANY LIMITED AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS YEARS ENDED DECEMBER 31, 2010 AND 2009 (In Thousands of New Taiwan Dollars) Decrease in unquoted equity instruments $ 419,968 $ 26,834 Acquisition of held-to-maturity investments (768,521,592) (615,618,334) Proceeds from matured held-to-maturity investments 693,743,975 606,782,853 Acquisition of available-for-sale financial assets (396,647,764) (169,633,446) Proceeds from sale of available-for-sale financial assets 397,338,239 163,306,036 Proceeds from sale of non-active market debt instruments 16,536 334,845 Acquisition of properties (492,812) (500,915) Proceeds from sale of properties 747 15,772 Proceeds from sale of collaterals assumed 143,749 361,879 Acquisition of leased assets (54,097) (230,966) Proceeds from sale of leased assets 120,056 346,232 Increase in long-term lease and installment receivables (147,004) (4,026,558) Increase in other financial assets (669,796) (3,376,406) (Increase) decrease in other assets (392,063) 708,301 Net cash used in investing activities (109,783,456) (22,811,600) CASH FLOWS FROM FINANCING ACTIVITIES Increase in short-term borrowings 912,743 73,055 Increase in commercial paper payable 8,375,086 3,476,285 Increase in securities sold under agreements to repurchase 4,558,637 608,844 Increase in call loans and due to banks 19,994,194 2,976,727 Increase in deposits and remittances 74,816,990 29,904,579 Increase (decrease) in long-term borrowings 4,008,711 (1,862,816) Repayment of bonds payable on maturity (1,150,000) - Repurchase of convertible bonds - (6,437,825) Bank debentures issued 6,000,000 10,000,000 Repayment of bank debentures on maturity (2,900,000) (11,400,000) Decrease in other financial liabilities (2,098,953) (833,434) (Decrease) increase in other liabilities (349,931) 26,214 Issuance of preferred stocks - 420,000 Cash dividends (809,211) - Cash received from employees by exercising stock options 112,912 100,703 Minority interests - (37,477) Net cash provided by financing activities 111,471,178 27,014,855 EFFECTS OF EXCHANGE RATE CHANGES 55,729 65,527 (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (7,560,160) 4,072,062 CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 22,273,131 18,201,069 CASH AND CASH EQUIVALENTS, END OF YEAR $ 14,712,971 $ 22,273,131 (Continued) - 7 -

SINOPAC FINANCIAL HOLDINGS COMPANY LIMITED AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS YEARS ENDED DECEMBER 31, 2010 AND 2009 (In Thousands of New Taiwan Dollars) SUPPLEMENTAL INFORMATION Interest paid $ 7,309,237 $ 11,889,421 Income tax paid $ 2,068,704 $ 1,730,279 NONCASH FINANCING ACTIVITIES Long-term borrowings due within one year $ 2,359,475 $ - The accompanying notes are an integral part of the consolidated financial statements. (Concluded) - 8 -

SINOPAC FINANCIAL HOLDINGS COMPANY LIMITED AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise) 1. ORGANIZATION AND OPERATIONS May 9, 2002 December 26, 2005 June 2006 Following the incorporation, SinoPac Financial Holdings Co., (the Company/SPH) issued stocks to swap for the shares of Bank SinoPac (BSP), National Securities (NSC), and SinoPac Securities (SPS), resulting in all three companies becoming wholly owned subsidiaries of SPH. IBT became a wholly owned subsidiary of SPH through share swap in accordance with Financial Holding Company Act. Through a swap at ratios of 1.3646 (with 1 representing the SPH s share). The shares of IBT ceased trading on the Taiwan Securities Exchange (TSE). SPH convened the shareholders meeting to reach the decision of renaming SPH s Chinese name, and completed the registration on July 2006. SPH engages in the business of investing and managing of the financial related institution. Please refer to Table 10 for related consolidated entities organization and operations. As of December 31, 2010 and 2009, SPH and its consolidated subsidiaries had 7,740 and 7,642 employees, respectively. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Consolidation All significant inter-company transactions and balances have been eliminated for consolidation purposes. Information about subsidiaries included in the consolidated financial statements refers to Table 10. To comply with the adjustment of the Company s investment framework, the board of directors of the Company resolved that Bank SinoPac merged SinoPac Card Services with cash, and the preliminary effective date of the merger will be March 27, 2009. The board of directors of the Company resolved that altered the preliminary effective date of the merger to June 1, 2009. Under this merger, Bank SinoPac will be the surviving entity and SinoPac Card Services will be the Company ceasing to exist. In accordance with Statement of Financial Accounting Standards Interpretation No. (91) 243, 244 and No. (95) 081 issued by the Accounting Research and Development Foundation of the Republic of China (ARDF of ROC), the transaction is treated as recognization and should be recorded at the book value of both entities assets and liabilities. - 9 -

The accompanying consolidated financial statements have been prepared in conformity with the Criteria Governing the Preparation of Financial Reports by Financial Holding Companies, Criteria Governing the Preparation of Financial Reports by Public Banks, Regulations Governing the Preparation of Financial Reports by Securities Issuers, Criteria Governing the Preparation of Financial Reports by Securities Firms, Criteria Governing the Preparation of Financial Reports by Futures Commission Merchants, the guidelines issued by the authority and accounting principles generally accepted in the Republic of China (ROC). In determining fair value of certain financial instruments, credit losses, depreciation for fixed assets, idle assets and assets held for leasing, impairments, pension, income taxes, amortization of deferred charges, contingency losses and provision for losses on guarantees, bonus to employees and remuneration to directors and supervisors, the Company and its subsidiaries need to make estimates based on judgment and available information. Actual results could differ from those estimates based on judgment at available information. The significant accounting policies of SPH and consolidated subsidiaries are summarized as follows: Current and Non-current Assets and Liabilities Since the operating cycle in the banking industry cannot be reasonably identified, accounts included in the consolidated financial statements of Bank SinoPac and FENB are not classified as current or non-current. Nevertheless, these accounts are properly categorized according to the nature of each account and sequenced by their liquidity. Please refer to Note 40 for maturity analysis of assets and liabilities. In addition to cash equivalents mentioned in the next section, assets to be converted or consumed within one year are classified as current. Obligations to be liquidated or settled within one year are classified as current. All other assets and liabilities are classified as non-current. Financial Value Determination Fair value are determined as follows: (a) listed stocks, GreTai Securities Market (the GTSM ) stocks, warrant liabilities and warrants repurchased - closing prices as of the balance sheet date; (b) beneficiary certificates (open-end fund) - net asset values as of the balance sheet date; (c) bonds - period-end reference prices published by the GTSM or Bloomberg; and (d) for the bank debentures issued overseas and the financial instruments without active markets, fair value is determined by the price provided by counterparty. Financial Instruments at Fair Value Through Profit or Loss Financial instruments at fair value through profit or loss consist of any financial asset and liability that is designated on initial recognition as one to be measured at fair value with fair value changes in profit or loss and financial assets and liabilities which should be classified as held for trading. The Company recognizes a financial asset or a financial liability on its balance sheet when the Company becomes a party to the contractual provisions of the financial instrument. A financial asset is derecognized when the Company has lost control of its contractual rights over the financial asset. A financial liability is derecognized when the obligation specified in the relevant contract is discharged, cancelled or expired. Financial instruments at FVTPL are initially measured at fair value. At each balance sheet date subsequent to initial recognition, financial assets or financial liabilities at FVTPL are remeasured at fair value, with changes in fair value recognized directly in profit or loss in the year in which they arise. On derecognition of a financial asset or a financial liability, the difference between its carrying amount and the sum of the consideration received and receivable or consideration paid and payable is recognized in profit or loss. The Company and its subsidiaries use trade date accounting when recording related transactions, except for bonds, for which settlement date accounting is used. A derivative that does not meet the criteria for hedge accounting is classified as a financial asset or a financial liability held for trading. If the fair value of the derivative is positive, the derivative is recognized as a financial asset; otherwise, the derivative is recognized as a financial liability. - 10 -

Any financial asset and any financial liability may be designated as financial instruments at fair value through profit or loss to eliminate measurement anomalies for items that provide a natural offset of each other. Applying the fair value option eliminates accounting measurement mismatch for items that naturally offset each other or eliminates the burden of separating embedded derivatives that are not considered to be closely related to the host contract pertaining to a hybrid instrument. If the Company does not adopt hedge accounting and the hedged items are not designated as financial assets or liabilities at fair value through profit or loss, accounting measurement mismatches on these items will occur as a result of differences in measurement attributes. Thus, the Company designated debt instruments and bank debentures issued as financial assets and liabilities at financial assets or liabilities at fair value through profit or loss. Moreover, the Company designated hybrid instruments as financial assets and liabilities at financial assets or liabilities at fair value through profit or loss because embedded derivatives are not separated from the host contract in a hybrid instrument. Besides, the set of financial assets, financial liabilities or the combination of both managed by the Company and its subsidiaries risk management policies and investment strategies will be designated as financial instruments at fair value through profit or loss. Repurchase and Reverse Repurchase Transactions Securities purchased under agreements to resell (reverse repurchase) agreements and securities sold under agreements to repurchase are generally treated as collateralized financing transactions. Interest earned on reverse repurchase agreements or interest incurred on repurchase agreements is recognized as interest income or interest expense over the life of each agreement. Margin Loans and Stock Loans Margin loans pertain to the provision of funds to customers for them to buy securities. Margin loans receivable represents the amount given to customers. The securities bought by customers are used to secure these loans and are recorded through memo entries as collateral securities. The collateral securities are returned when the loans are repaid. The refinancing of margin loans with securities finance companies is recorded as refinancing borrowings, which are collateralized by securities bought by customers. The collateral securities are disposed of by the SinoPac Securities when their market values fall below a pre-agreed level and the customer fails to maintain this level. If the proceeds of the disposal of collateral security cannot cover the balance of the loan and the customer cannot timely settle the deficiency, then the balance of the margin loan is reclassified under overdue receivables. If a collateral security cannot be sold in the open market, the balance of the loan is reclassified under other receivables or overdue receivables. Stock loans are securities lent to customers for short sales. The deposits received from customers on securities lent out are credited to deposits on short sale. The securities sold short are recorded as stock loans using memo entries. The proceeds of the sales of securities lent to customers less any dealer s commission, financing charges and securities exchange tax are recorded under short sales proceeds payable. When the customers return the stock certificates to the SinoPac Securities, the SinoPac Securities gives back to customers the deposits received and the proceeds of the sales of securities. The margins deposited by securities firms to securities finance companies are recorded as loan from refinanced margin. The refinancing securities delivered to the SinoPac Securities are recorded as refinancing stock collaterals using memo entries. A portion of the proceeds of the short-sale of securities borrowed from securities finance companies is retained by the securities finance companies as collateral and recorded as refinancing deposits receivable. - 11 -

Sales of Accounts Receivable SinoPac Card Services ( SinoPac Card ) transferred its credit card receivables under the following criteria, surrendered controls over the transferred assets and recorded the transfer as sales of accounts receivable. a. Transferred accounts receivable have been isolated from SinoPac Card. Along with its creditors, SinoPac Card can no longer control the future economic benefits on these receivables. b. The transferee has the right to pledge or transfer accounts receivable purchased. c. The transferee has no right to return the transferred accounts receivable purchased before their maturity. In addition, SinoPac Card is neither obligated nor entitled to repurchase or redeem these accounts receivable. But if a repurchase transaction is agreed upon, the repurchase price is the fair value of accounts receivable at the time. SinoPac Card derecognizes the credit card receivables sold at carrying value from its balance sheet on the transfer date. The difference between the proceeds net of the estimated bad-debt provision and the carrying value is recorded as income (loss) for the current period. Account Receivable Factoring Factoring receivables are account receivables purchased by Bank SinoPac and its subsidiaries. Service fees are recorded as revenue upon receipt and interest income is recognized during the factoring period. Non-performing Loans Under guidelines issued by the Banking Bureau of Financial Supervisory Commission, the balance of loans and other credits extended by Bank SinoPac and the related accrued interest thereon are classified as non-performing when the loan is overdue and shall be authorized by a resolution passed by the board of directors. Non-performing loans reclassified from loans are classified as discounts and loans; otherwise, they are classified as other financial assets. Allowance for Credit Losses and Provision for Losses on Guarantees In determining the allowance for credit losses and provision for losses on guarantees, Bank SinoPac and SinoPac Leasing and its subsidiaries assess the collectibility on the balances of discounts and loans, accounts receivables, interest receivables, other receivables, lease receivables, non-performing loans, and other financial assets as well as guarantees and acceptances as of the balance sheet date. Pursuant to Regulations Governing the Procedures for Banking Institutions to Evaluate Assets and Deal with Non-performing/Nonaccrual Loans (the Regulations ) issued by the Banking Bureau, Bank SinoPac evaluates credit losses on the basis of the estimated collectibility. In accordance with the Regulations stated above, the loan assets were divided into different classes subject to assets that require special mentioned, assets that are substandard, assets that are doubtful, and assets for which there is loss. The minimum allowance for credit losses and provision for losses on guarantees for the aforementioned classes should be 2%, 10%, 50% and 100% of outstanding credits, respectively. - 12 -

For FENB, the allowance for loan losses is maintained at a level considered adequate to provide for losses that are inherent in the loan portfolio at the balance sheet date. The adequacy of the allowance is determined by management based upon a periodic audit of the loan portfolio, consideration of historical loan loss experience, current economic conditions, changes in the composition of the loan portfolio, analysis of collateral values and other pertinent factors. Although management believes the level of the allowance is adequate to absorb losses inherent in the loan portfolio, additional declines in the local economy or rising interest rates may result in increasing losses that cannot reasonably be predicted at this time. For Bank SinoPac and SinoPac Leasing and its subsidiaries, write-offs of loans falling under the Banking Bureau guidelines, upon approval by the board of directors, are offset against the recorded allowance for credit losses. Recovery of loans written off on the current year is recorded as reverse of allowance whereas recovery of loans written off on the previous years is recorded as other revenue. For SinoPac Securities and SinoPac Futures, allowance for bad debts is provided on the basis of reviewing the collectibility of notes and accounts receivables, other receivables and non-performing loans. After providing this allowance, set aside an additional amount as bad-debt reserve and allowance for bad debts, to save 3% on the value-added tax before July 1, 2003. According to a directive of the authority, SinoPac Securities and SinoPac Futures stop providing the aforesaid reserve since July 1, 2003. Those reserves can only be used to write off non-performing loans. Available-for-sale Financial Assets Available-for-sale financial assets are initially measured at fair value plus transactions that are directly attributed to the acquisition. Unrealized gains or losses on available-for-sale financial assets are reported in equity attributed to the stockholders. On disposal of an available-for-sale financial asset, the accumulated, unrealized gain or loss in equity attributable to the stockholders is transferred to net profit and loss for the period. The Company and its subsidiaries use trade date accounting when recording related transactions, except for bonds, for which settlement date accounting is used. Cash dividends are recognized on the ex-dividend date. Cash dividends received a year after investment acquisitions are recognized as income, otherwise as a reduction of the carrying value of the investments. The effective interest rate method of amortization and accretion is used; the straight line method is used if there is no significant difference. If an available-for-sale financial asset is determined to be impaired, the accumulative unrealized loss previously recognized in equity attributable to the shareholders is recognized as impairment loss and reported in income statement. For equity investments, loss reversal is adjusted to the equity attributable to the stockholders. For debt investments, loss reversal is credited to current income. Held-to-maturity Investments Held-to-maturity investments are carried at amortized cost, using the effective interest method; otherwise the straight line method can be used if there is no significant difference. At initial recognition, the costs of the financial assets are measured at fair value plus transactions that are directly attributable to acquisition. The net profits and losses of the held-to-maturity investments for the period are reported in income statement when the financial assets are derecognized, impaired or amortized. The Company and its subsidiaries use trade date accounting when recording related transactions, except for bonds, for which settlement date accounting is used. If a held-to-maturity financial asset is determined to be impaired, the impairment loss is recognized and reported in income statement. Loss reversal is credited to current income and should not be more than the carrying amount had the impairment not been recognized. - 13 -

Equity Investments - Equity Method Equity investments are accounted for by the equity method if the Company and its subsidiaries have significant influence over the investees. Under this method, investments are stated at cost plus (or minus) a proportionate share in net earnings (losses) or changes in net worth of the investees. Cash dividends received are accounted for as reduction in the carrying value of the investments. Stock dividends only result in an increase in number of shares and are not recognized as investment income. Until December 31, 2005, any difference between the acquisition cost and the equity in the investee is amortized over 5 to 15 years. Such goodwill is not amortized but is tested annually for impairment since January 1, 2006. In accordance with Statement of Financial Accounting Standards Interpretation No. (91) 33 issued by the ARDF of ROC, the SPH commence reorganization and the Bank transferred the investment at book value. Other Financial Assets a. Non-active market debt instruments Non-active market debt instruments are those which do not have quoted prices in an active market, and whose fair value cannot be reliably measured. Non-active market debt instruments are carried at amortized cost. The accounting treatment for such debt instruments is similar to held-to-maturity investments except for the absence of restriction or the timing of their disposal. b. Unquoted equity instruments Investments in equity instruments without quoted prices in an active market, whose fair value cannot be reliably measured, are measured at their original cost. If there is objective evidence that the asset is impaired, an impairment loss is recognized and a reversal of the impairment loss is prohibited. c. Clearing and settlement fund According to the Regulations Governing Securities Firms, Regulations Governing Futures Firms and overseas clearing regulation, SinoPac Securities and its domestic subsidiaries, as well as overseas subsidiaries, accepting consignment for trading on the centralized securities exchange market shall deposit a settlement/clearing fund (included in other assets) to the Stock Exchange, GTSM, Taiwan Futures Exchange and overseas stock and futures exchange before or after commencement of business operation. d. Securities brokerage accounts These accounts pertain to open brokerage transactions. Under the Criteria Governing the Preparation of Financial Reports by Securities Firms, the following unsettled brokerage transactions are recorded as: (i) debit accounts (such as cash in bank - settlement, accounts receivable - customers purchases, net exchange clearing receivable, margin transaction, and accounts receivable - settlement) and (ii) credit accounts (such as accounts payable - customers sales, net exchange clearing payable, margin transaction, and accounts payable - settlement). These accounts are presented in the financial statements at net amounts. - 14 -

e. Customer margin account and futures traders equity SinoPac Futures engages in futures brokerage business and received margin deposits from customers as required under existing regulations. The proceeds are deposited in a bank and presented as customer margin account and futures traders equity. Gains or losses from daily marking to market of the carrying amounts of the contracts and related commission are charged to customer margin account and futures traders equity. Futures traders equity accounts cannot offset each other except when the kind of equity accounts are the same and belong to someone. The debit balance of futures traders equity, which results from losses on futures transactions in excess of the margin deposited, is recorded as accounts receivable - futures margin deposits. f. Securities business money lending and securities lending Securities lending business pertain to the provision of funds will be recognized as securities lending receivable after two business days on the amount given to customers and estimate bad debt on the basis of the collectibility in the end of the period. The collateral obtained from securities lending business and recorded through memo entries as collateral securities. The collateral securities are returned when the loans are repaid. Revenue from customers paid for securities lending business is recognized as securities lending commissions and fees. The collateral securities obtained from securities lending recorded through memo entries as collateral securities. The collateral cash recorded as securities lending refundable deposits. Deposit for the SinoPac Securities lending securities from TSE recorded as securities borrowing margin. Securities lending refundable deposits (or securities borrowing margin) will be repaid (or collected) when returning borrowed securities. Revenues from customers paid for securities lending is recognized as securities lending commissions and fees. Properties and Nonoperating Assets Properties and nonoperating assets are stated at cost plus appreciation and less accumulated depreciation and accumulated impairment losses. Cost of major addition, renovation and improvements are capitalized, while cost of repairs and maintenance are expensed when incurred. Upon sale or disposal of properties and nonoperating assets, their cost, revaluation increment and related accumulated depreciation and accumulated impairment losses are removed from the accounts. Any resulting gain or loss is credited or charged to current income. Except for the transportation equipment of SPL for which fixed-percentage-on-declining-base method used since January 1, 2007, depreciation computed using the straight-line method over service lives estimated as follows: buildings, 5 to 60 years; computer equipment, 3 to 15 years; transportation equipment, 5 years. Depreciation on revalued property is computed on the basis of their remaining useful lives at the time of the revaluation. For assets still in use beyond their original service lives, depreciation is calculated over newly estimated useful lives. Intangible Assets a. Computer software and premium The Company and its subsidiaries computer software and premium are amortized on the straight-line basis over 2 to 15 years. b. Core deposit intangible Core deposit intangible is amortized on the straight-line basis over 15 years. - 15 -

c. Goodwill Effective on January 1, 2006, goodwill is not amortized and test annually for impairment. Beginning with January 1, 2006, premium between the acquisition cost and the equity in the investee is not amortized but test for impairment annually. d. Customer relationship Customer relationship is amortized on the average basis over 4 years. e. Brand Brand is amortized on the average basis over 4 years. Collateral Assumed Collateral assumed are recorded at cost and revalued at the lower of cost or net fair value as of the balance sheet date, and the resulting loss is charged to current income. Accounting for Leasing Business For capital leases, the costs of equipment leased and the interests imputed thereon are accounted for as lease receivable. The imputed interest is correspondingly treated as unearned interest income, and is periodically recognized as interest income when earned using the interest rate method. For operating leases, the contracted rentals are recognized as income when earned. Properties held for lease are stated at cost less accumulated depreciation. Depreciation is calculated by the straight-line method, except for the transportation equipment of SinoPac Leasing for which fixed-percentage-on-declining-base method is used, since January 1, 2007, on the basis of service lives estimated as follows: superficies, 44 years; buildings, 33 to 55 years; transportation equipment, 2 to 6 years. When properties held for lease are sold at the end of leasing period, any resulting gain (loss) from the differences between proceeds and book value of properties held for lease is credited (charged) to current income. Guarantee deposits received are the amounts retained under lease agreements. Interest expenses are computed during the lease terms. At the end of the lease terms, guarantee deposits received will be returned to the debtors. Asset Impairment SFAS No. 35 requires the impairment review on equity investments - equity method and properties to be made on each balance sheet date. If assets or the relevant cash-generating units (CGUs) are deemed impaired, then the Company and its subsidiaries must calculate their recoverable amounts. An impairment loss should be recognized whenever the recoverable amount of the assets or the CGUs is below the carrying amount, and this impairment loss either is charged to accumulated impairment or reduces the carrying amount of the assets or CGUs directly. After the recognition of an impairment loss, the depreciation (amortization) should be adjusted in future periods by the revised asset/cgus carrying amount (net of accumulated impairment), less its salvage value, on a systematic basis over its remaining service life. If the recoverable amounts of the assets (excluding goodwill) are lower than its carrying amount, the carrying amount of the assets will be reduced to its recoverable amount. That reduction is an impairment loss. If the recoverable amount increases, the amount recovery is recognized as income. However, the increased carrying amount of the assets due to a reversal of an impairment loss should not exceed the carrying amount that would have been determined (net depreciation) had no impairment loss been recognized for the asset in - 16 -

prior years. An impairment loss on a revalued asset is recognized directly against capital surplus from revaluation for the asset to the same asset. A reversal of an impairment loss on a revalued asset is credited directly to capital surplus from revaluation under the heading capital surplus from revaluation. However, to the extent that an impairment loss on the same revalued asset was previously recognized as profit or loss, a reversal of that impairment loss is also recognized as profit or loss. Goodwill is tested for impairment annually or more frequently if events or changes in circumstance indicate goodwill impairment. Impairment is recorded if the book value exceeds value in use. The increase in the recoverable amount of goodwill in the period following the recognition of an impairment loss is likely to be an increase in internally generated goodwill rather than the reversal of the impairment loss recognized for the acquired goodwill. Thus, a reversal of an impairment loss on goodwill is prohibited. Liability Component of Preferred Stocks For the issuance of convertible preferred stocks, the Company first determines the carrying amount of the liability component by measuring the fair value of a similar liability that does not have an associated equity component, then determines the carrying amount of the equity component, representing the equity conversion option, by deducting the fair value of the liability component from the fair value of the convertible preferred stocks as a whole. The liability component excluding the embedded derivatives is measured at amortized cost using the effective interest method. Upon conversion, the Company uses the aggregate carrying amount of the liability and equity components of the convertible preferred stocks at the time of conversion as a basis to record the common shares issued. Reserve for Default Accounts As required by the Rules Governing Securities Firms, for securities traded for customers accounts, SinoPac Securities should allocate 0.0028% of the transaction price of the traded securities as a reserve for default accounts every month. When the accumulated reserve for default accounts reaches $200,000, allocation will be suspended. This reserve should be used only for covering losses caused by breach of contracts for trading on customers account or for other purposes as approved by the SFB. As required by the Rules Governing Futures Commission Merchants, for futures traded for customers accounts, SinoPac Futures should allocate 2% of commission revenues from futures transactions as the reserve for default accounts. When the accumulated reserve for default accounts reaches the minimum paid-in capital of SinoPac Futures, allocation will be suspended. This reserve should only be used for covering the losses caused by breach of contracts for trading on customers accounts or for other purposes approved by the SFB. Reserve for Trading Losses An amount equal to 10% of the net gain from sale of Bank SinoPac, SinoPac Securities and SinoPac Futures is recognized monthly as reserve for trading losses under the Rules Governing Securities Firms and Rules Governing Future Commission Merchants. This reserve is recognized until its accumulated balance reaches (a) $200,000 for the trading department, (b) the minimum paid-in capital of the SinoPac Securities futures department and SinoPac Futures, respectively. This reserve can be used only to offset actual losses from securities and futures dealings. Revenue Recognition Loans and discounts are recognized according to outstanding principal which excludes revenue unearned. Interest income is recorded on accrual basis. However, no interest revenue is recognized in the accompanying financial statements on loans and other credits extended by Bank SinoPac that are classified as non-performing loans. The interest income on those loans/credits is recognized upon collection. Under the regulations of the MOF, interest revenue on credits which agreements have been reached to extend their maturities is recognized upon collection. - 17 -

Commission revenue is recognized upon receiving cash or the earning process almost completed. Interest income on revolving credit card receivables and cash advance is recognized on an accrual basis. Service fee income is recognized when service is rendered. Annual fee income is the member fee received from card members and is recognized when card members fail to meet the criteria for annual fee exemption; provision for allowance is estimated using past experience and is recognized as a deduction from annual fee income within the year the annual fee income is recognized. For SinoPac Securities and its subsidiaries, revenue from rendering services - brokerage and underwriting commissions and fees, stock affairs agent fees, futures commissions and fees, and futures advisory fees, etc., is recognized according to the stage of completion as of the balance sheet date. Interest income is accrued on an accrual basis by referring to the principal outstanding and the effective interest rate. Dividend income on equity securities is recognized on ex-dividend dates or on the dates when the stockholders declare dividends. Pension Pension expense (including retirement and severance benefits cost, the pension expense thereon) is determined based on actuarial calculations except for that FENB, SinoPac Capital Limited and its subsidiaries, SinoPac Securities (Asia), SinoPac Securities (Europe) and SinoPac Assets Management (Asia) recognize their pension expense and make contributions to funds based on the specified ratio of employee salaries, according to their defined benefit pension plans. The Company and its subsidiaries under defined benefit pension plan are determined on the basis of actuarial calculations. Pension under defined contribution pension plan is expensed during the period the employees rendered their services. Income Tax Inter-period income tax allocation is applied, whereby tax effects of deductible temporary differences, unused investment tax credits and unused loss carry forward are recognized as deferred income tax assets, and those of taxable temporary differences are recognized as deferred income tax liabilities. Valuation allowances are provided to the extent, if any, that it is more likely than not that deferred income tax assets will not be realized. Except for Bank SinoPac and FENB, deferred income tax assets and liabilities are classified as current or non-current on the basis of the classification of the related assets or liabilities for financial reporting. A deferred income tax asset or liability that cannot be related to an asset or liability for financial reporting should be classified according to the expected realization date of the temporary difference. Tax credits for acquisitions of equipment or technology, research and development expenditures and personnel training expenditures are recognized as reduction of current income tax. The adjustment of prior years income tax was included in the current income tax. Income tax (10%) on inappropriate earnings after January 1, 1998 is recorded as income tax in the year when the stockholders resolve the appropriation of the earnings. The Company and its subsidiaries adopted the linked-tax system. The accounting treatment applied by the Group to the income tax is to adjust in the Company s book the difference between the combined current/deferred taxes and the total of each Group member s current/deferred. Related payables and receivables were recorded in each of the Group members books. - 18 -

Foreign-currency Translations The translations of the foreign operation institute s financial statement are as follows: The assets or liabilities accounts are translated at the spot rate as of the balance sheet date; the stockholders equity accounts except the beginning balance of retained earnings are translated at the historical rate. The beginning balance of the retained earnings is translated equally as the ending balance of the aforementioned year. Dividends are translated at the spot rate as of the declaration date; the revenue on expense accounts is translated at the weighted average rate. Unrealized exchange differences on non-monetary financial assets (investments in equity instruments) are a component of the change in their entire fair value. For a non-monetary financial asset classified as held for trading, unrealized exchange differences are recognized in the income statement. For non-monetary financial investments, which are classified as fair value, unrealized exchange differences are recorded directly in equity until the asset is sold or becomes impaired. Gains or losses resulting from restatement at period-end of foreign-currency denominated long-term equity investments accounted for by the equity method are credited or charged to cumulative translation adjustment under stockholders equity. Contingencies A loss is recognized when it is probable that an asset has been impaired or a liability has been incurred, and the amount of loss can be reasonably estimated. If the amount of the loss cannot be reasonably estimated or the loss is possible, the related information is disclosed in the financial statements. Hedge Accounting In order to qualify as a hedge, a derivative must effectively reduce any risk inherent in the hedged item from potential movements in interest rates, exchange rates and market values. Changes in the fair value or cash flow of the derivative must be highly correlated with changes in the fair value of the underlying hedged item over the life of the hedged contract. At the inception of the hedge, there must be formal designation and documentation of the hedging relationship, Bank SinoPac s risk management objective and strategy for undertaking the hedge, the hedging instrument, the hedged items, overall risk management objectives and strategies and how the entity will assess the hedging instrument s effectiveness. A fair value hedge that meets the entire hedge accounting criteria is accounted for as follows: a. The gain or loss from re-measuring the hedging instrument at fair value (for a derivative hedging instrument) or the foreign currency component of its carrying amount (for a non-derivative hedging instrument) is recognized immediately in profit or loss, and b. The carrying amount of the hedged item is adjusted through profit or loss for the corresponding gain or loss attributable to the hedged risk. A cash flow hedge that meets the entire hedge accounting criteria is accounted for as follows: a. The portion of the gain or loss on the hedging instrument that is determined to be an effective hedge is recognized in stockholders equity. The amount recognized in stockholders equity is recognized in profit or loss in the same year or years during which the hedged forecast transaction or an asset or liability arising from the hedged forecast transaction affects profit or loss. b. If all or a portion of a loss recognized in stockholders equity is not expected to be recovered in the future, the amount that is not expected to be recovered is reclassified into profit or loss. - 19 -