gigm-ex994

We are pleased to submit this annual report to the members of the Company together with the audited financial statements for the financial year ended 31 December 2020.

According to the register kept by the Company for the purposes of Section 164 of the Act, particulars of interests of directors who held office at the end of the financial year (including those held by their spouses and infant children) in shares, debentures, warrants and share options in the Company and in related corporations (other than wholly-owned subsidiaries) are as follows:


Name of director and corporation in which interests are held	Holdings at beginning of the financial year	Holdings at end of the financial year

Huang, Billy Bing-Yuan
-options to subscribe for ordinary shares	4,000	4,000

Liu, Nick Chia-En
-options to subscribe for ordinary shares	4,000	4,000

Tung, Casey Kuo Chong
-options to subscribe for ordinary shares	4,000	4,000

Hong, Chin Fock (Damian)
-options to subscribe for ordinary shares	4,000	4,000

Except as disclosed in this statement, no director who held office at the end of the financial year had interests in shares, debentures, warrants or share options of the Company or of related corporations either at the beginning of the financial year or at the end of the financial year.

Except as disclosed under the “Share options” section of this statement, neither at the end of, nor at any time during the financial year, was the Company a party to any arrangement whose objects are, or one of whose objects is, to enable the directors of the Company to acquire benefits by means of the acquisition of shares in or debentures of the Company or any other body corporate.

At the June 2004 annual general meeting of shareholders, the shareholders of our Company approved the GigaMedia Limited 2004 Employee Share Option Plan (the “2004 Plan”) under which up to 1.4 million common shares of our Company have been reserved for issuance. All employees, officers, directors, supervisors, advisors, and consultants of our Company are eligible to participate in the 2004 Plan. The 2004 Plan is administered by a committee designated by the board of directors. The committee as plan administrator has complete discretion to determine the exercise price for the option grants, the eligible individuals who are to receive option grants, the time or times when options grants are to be made, the number of shares subject to grant and the vesting schedule. The maximum contractual term for the options under the 2004 Plan is 10 years. The 2004 Plan has lapsed in June 2014.

At the June 2006 annual general meeting of shareholders, the shareholders of our Company approved the GigaMedia Limited 2006 Equity Incentive Plan (the “2006 Plan”) under which up to 200 thousand common shares of our Company have been reserved for issuance. The 2006 Plan is administered by a committee designated by the board of directors. The committee as plan administrator has complete discretion to determine the grant of awards under the 2006 Plan. The maximum contractual term for the options under the 2006 Plan is 10 years. The 2006 Plan has lapsed in June 2016.

At the June 2007 annual general meeting of shareholders, the shareholders of the Company approved the GigaMedia Limited 2007 Equity Incentive Plan (the “2007 Plan”) under which up to 400 thousand ordinary shares of the Company have been reserved for issuance. The 2007 Plan is administered by a committee designated by the board of directors. The committee as plan administrator has complete discretion to determine the grant of awards under the 2007 Plan. The maximum contractual term for the options under the 2007 Plan is 10 years. There were 4,000 shares granted in May 2017. The 2007 Plan has lapsed in June 2017.

At the June 2008 annual general meeting of shareholders, the shareholders of the Company approved the GigaMedia Limited 2008 Equity Incentive Plan (the “2008 Plan”) under which up to 200 thousand ordinary shares of the Company have been reserved for issuance. The 2008 Plan is administered by a committee designated by the board of directors. The committee as plan administrator has complete discretion to determine the grant of awards under the 2008 Plan. The maximum contractual term for the options under the 2008 Plan is 10 years. No shares have been issued under the 2008 Plan during the current financial year.

At the June 2008 annual general meeting of shareholders, the shareholders of the Company approved the GigaMedia Limited 2008 Employee Share Purchase Plan (the “2008 ESPP”) under which up to 40 thousand ordinary shares of the Company were reserved for issuance. Any person who is regularly employed by the Company or its designated subsidiaries shall be eligible to participate in the 2008 ESPP. Pursuant to the 2008 ESPP, the Company would offer the shares to qualified employees on favorable terms. Employees are also subject to certain restrictions on the amount that may be invested to purchase the shares and to other terms and conditions of the 2008 ESPP. The 2008 ESPP is administered by a committee designated by the board of directors. As of the date of this annual report, no shares have been granted or subscribed by qualified employees under the 2008 ESPP.

At the June 2009 annual general meeting of shareholders, the shareholders of the Company approved the GigaMedia Limited 2009 Equity Incentive Plan (the “2009 Plan”) under which up to 300 thousand ordinary shares of the Company have been reserved for issuance. The 2009 Plan is administered by a committee designated by the board of directors. The committee as plan administrator has complete discretion to determine the grant of awards under the 2009 Plan. The maximum contractual term for the options under the 2009 Plan is 10 years. The 2009 Plan has lapsed in June 2019.

At the June 2009 annual general meeting of shareholders, the shareholders of the Company approved the GigaMedia Limited 2009 Employee Share Purchase Plan (the “2009 ESPP”) under which up to 40 thousand ordinary shares of the Company have been reserved for issuance. To be eligible, employees must be regularly employed by the Company or its designated subsidiaries. Employees are also subject to certain restrictions on the amount that may be invested to purchase the shares and to other terms and conditions of the 2009 ESPP. The 2009 ESPP is administered by a committee designated by the board of directors. As of the date of this annual report, no shares have been granted or subscribed by qualified employees under the 2009 ESPP.

At the June 2010 annual general meeting of shareholders, the shareholders of the Company approved the GigaMedia Limited 2010 Equity Incentive Plan (the “2010 Plan”) under which up to 200 thousand ordinary shares of the Company have been reserved for issuance. The 2010 Plan is administered by a committee designated by the board of directors. The committee as plan administrator has complete discretion to determine the grant of awards under the 2010 Plan. The maximum contractual term for the options under the 2010 Plan is 10 years. No shares have been issued under the 2010 Plan during the current financial year. The 2010 Plan has lapsed during the current financial year.

At the June 2010 annual general meeting of shareholders, the shareholders of the Company approved the GigaMedia Limited 2010 Employee Share Purchase Plan (the “2010 ESPP”) under which up to 40 thousand ordinary shares of the Company have been reserved for issuance. To be eligible, employees must be regularly employed by the Company or its designated subsidiaries. Employees are also subject to certain restrictions on the amount that may be invested to purchase the shares and to other terms and conditions of the 2010 ESPP. The 2010 ESPP is administered by a committee designated by the board of directors. As of the date of this annual report, no shares have been granted or subscribed by qualified employees under the 2010 ESPP.

Summarised below are the general terms of its share-based compensation plans as of 31 December 2020.


Date granted	Balance at beginning of year	Granted during the year	Expired/ forfeited during the year	Balance at end of year	Options’ exercise price	Exercise period
	’000	’000	’000	’000	US$

13.05.2010	176	–	(176)	–	$12.35	13.05.2010 - 13.05.2020
20.05.2011	12	–	–	12	$6.25	20.05.2011 - 20.05.2021
05.01.2012	4	–	–	4	$4.05	05.01.2012 - 05.01.2022
28.10.2013	4	–	–	4	$5.05	28.10.2013 - 28.10.2023
28.03.2014	25	–	–	25	$7.15	28.03.2014 - 28.03.2024
05.05.2017	4	–	–	4	$2.90	05.05.2017 - 05.05.2027
	225	–	(176)	49

The auditors, Deloitte & Touche LLP, have indicated their willingness to accept re-appointment.

We have audited the financial statements of GigaMedia Limited (the “Company”) and its subsidiaries (the “Group”), which comprise the consolidated statement of financial position of the Group and the statement of financial position of the Company as at 31 December 2020, the consolidated statement of profit or loss and other comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows of the Group for the year then ended, and the notes to the financial statements, including a summary of significant accounting policies, as set out on pages 10 to 59.

In our opinion, the accompanying consolidated financial statements of the Group and the statement of financial position of the Company are properly drawn up in accordance with the provisions of the Companies Act, Chapter 50 (the “Act”) and Financial Reporting Standards in Singapore (“FRSs”) so as to give a true and fair view of the consolidated financial position of the Group and the financial position of the Company as at 31 December 2020, and of the consolidated financial performance, consolidated changes in equity and consolidated cash flows of the Group for the year ended on that date.

We conducted our audit in accordance with Singapore Standards on Auditing (“SSAs”). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Group in accordance with the Accounting and Corporate Regulatory Authority Code of Professional Conduct and Ethics for Public Accountants and Accounting Entities (“ACRA Code”) together with the ethical requirements that are relevant to our audit of the financial statements in Singapore, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the ACRA Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

The Company holds a financial asset at FVTPL amounted to $10,000,000, a convertible note with an option to convert it into equity securities issued by a private company. The fair value of this investment is based on complex valuation methods with unobservable inputs, therefore, classified as Level 3.

Unlike the valuation of assets with readily observable market prices, therefore, more easily independently corroborated, the valuation of the financial asset at FVTPL classified as Level 3 is inherently subjective, and often involves the use of complex proprietary methods and unobservable inputs.

We identified the valuation of the financial asset at FVTPL as a key audit matter because of the complex valuation methods and unobservable inputs such as the discount rate of lack of marketability and volatility management uses to estimate the fair value. This requires a high degree of auditor’s professional judgment and an increased extent of effort, including the involvement of our fair value specialists, when evaluating the methods and related inputs.

The financial asset at FVTPL is disclosed in Note 8 to the financial statements.

Our audit procedures focussed on evaluating and challenging the key assumptions used in the valuation of the financial asset at FVTPL.

Management is responsible for the other information. The other information comprises the directors’ statement.

Our opinion on the financial statements does not cover the other information and we do not and will not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated.

If, based on the work we have performed on the other information that we obtained prior to the date of this auditors’ report, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Management is responsible for the preparation of financial statements that give a true and fair view in accordance with the provisions of the Act and FRSs, and for devising and maintaining a system of internal accounting controls sufficient to provide a reasonable assurance that assets are safeguarded against loss from unauthorised use or disposition; and transactions are properly authorised and that they are recorded as necessary to permit the preparation of true and fair financial statements and to maintain accountability of assets.

In preparing the financial statements, management is responsible for assessing the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so.

The directors’ responsibilities include overseeing the Group’s financial reporting process.

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with SSAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

As part of an audit in accordance with SSAs, we exercise professional judgement and maintain professional scepticism throughout the audit. We also:

We communicate with the directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide the directors with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with the directors, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

In our opinion, the accounting and other records required by the Act to be kept by the Company have been properly kept in accordance with the provisions of the Act.

The engagement partner on the audit resulting in this independent auditor’s report is Lee Boon Teck.


Statements of financial position As at 31 December 2020
		Group		Company
	Note	2020	2019	2020	2019
		US$’000	US$’000	US$’000	US$’000
Assets
Property, plant and equipment	4	22	–	–	–
Right-of-use assets	5	–	–	–	–
Intangible assets	6	4	–	–	–
Subsidiaries	7	–	–	51,297	51,985
Other investment	8	10,000	–	10,000	–
Other assets (non-current)	9	342	285	67	–
Non-current assets		10,368	285	61,364	51,985

Trade and other receivables	10	523	619	1,674	1,703
Other assets (current)	9	130	44	–	–
Cash and cash equivalents	11	46,002	58,274	1,353	1,788
Current assets		46,655	58,937	3,027	3,491
Total assets		57,023	59,222	64,391	55,476

Equity attributable to owners of the Company
Share capital	12	213,238	213,238	213,238	213,238
Reserves	13	(6,508)	(6,758)	2,462	(89)
Accumulated losses		(152,871)	(151,174)	(161,841)	(157,843)
Total equity		53,859	55,306	53,859	55,306

Liability
Other payables	16	–	–	10,067	–
Lease liabilities	15	3	95	–	–
Non-current liabilities		3	95	10,067	–

Trade and other payables	16	1,878	1,720	465	170
Contract liabilities	17	1,188	1,603	–	–
Lease liabilities	15	95	498	–	–
Current liabilities		3,161	3,821	465	170
Total liabilities		3,164	3,916	465	170
Total equity and liabilities		57,023	59,222	64,391	55,476


Consolidated statement of profit or loss Year ended 31 December 2020
	Note	2020	2019
		US$’000	US$’000

Revenue	18	6,875	6,645
Cost of sales		(2,956)	(3,064)
Gross profit		3,919	3,581

Other income		55	-

Product development and engineering expenses		(1,327)	(1,315)
Selling and marketing expenses		(1,619)	(2,129)
General and administrative expenses		(3,120)	(3,364)
Other operating expenses	19	(154)	(918)
Results from operating activities		(2,246)	(4,145)

Finance income		613	1,483
Finance expenses		(6)	(15)
Net finance income	20	607	1,468

Loss before tax		(1,639)	(2,677)
Income tax	21	–	–
Loss for the year	22	(1,639)	(2,677)


Consolidated statement of comprehensive income Year ended 31 December 2020
	Note	2020	2019
		US$’000	US$’000

Loss for the year		(1,639)	(2,677)

Other comprehensive (loss) income:
Item that will not be reclassified to profit or loss:
Defined benefit plan remeasurements	14	(58)	(14)
		(58)	(14)

Item that may be reclassified subsequently to profit or loss:
Foreign currency translation differences – foreign operations		249	63
		249	63
Other comprehensive income for the year, net of tax		191	49
Total comprehensive loss for the year		(1,448)	(2,628)


Consolidated statement of changes in equity Year ended 31 December 2020

		Attributable to owners of the Company
	Note	Share capital	Share option reserve	Statutory reserve	Accumulated losses	Foreign currency translation reserve	Total
		US$’000	US$’000	US$’000	US$’000	US$’000	US$’000

At 1 January 2019		213,238	12,861	1,516	(148,483)	(21,199)	57,933

Total comprehensive income (loss) for the year
Loss for the year		–	–	–	(2,677)	–	(2,677)

Other comprehensive income (loss)
Foreign currency translation		–	–	–	–	63	63
Defined benefit plan remeasurements	14	–	–	–	(14)	–	(14)
Total other comprehensive income (loss), net of tax		–	–	–	(14)	63	49
Total comprehensive income (loss) for the year		–	–	–	(2,691)	63	(2,628)

Transactions with owners, recognised directly in equity
Contributions by and distributions to owners
Share-based payment transactions	13	–	1	–	–	–	1
Total transactions with owners		–	1	–	–	–	1

At 31 December 2019		213,238	12,862	1,516	(151,174)	(21,136)	55,306


Consolidated statement of changes in equity Year ended 31 December 2020


	Note	Share capital	Share option reserve	Statutory reserve	Accumulated losses	Foreign currency translation reserve	Total
		US$’000	US$’000	US$’000	US$’000	US$’000	US$’000

At 1 January 2020		213,238	12,862	1,516	(151,174)	(21,136)	55,306

Total comprehensive loss for the year
Loss for the year		–	–	–	(1,639)	–	(1,639)

Other comprehensive income
Foreign currency translation		–	–	–	–	249	249
Defined benefit plan remeasurements	14	–	–	–	(58)	–	(58)
Total other comprehensive income, net of tax		–	–	–	(58)	249	191
Total comprehensive loss for the year		–	–	–	(1,697)	249	(1,448)

Transactions with owners, recognised directly in equity
Contributions by and distributions to owners
Share-based payment transactions	13	–	1	–	–	–	1
Total transactions with owners		–	1	–	–	–	1

At 31 December 2020		213,238	12,863	1,516	(152,871)	(20,887)	53,859


Consolidated statement of cash flows Year ended 31 December 2020
		2020	2019
	Note	US$’000	US$’000
Cash flows from operating activities
Loss before tax		(1,639)	(2,677)
Adjustments for:
Loss allowances for trade receivables		5	24
Amortisation – intangible assets		5	37
Depreciation of property, plant and equipment		3	61
Depreciation of lease right-of-use assets		–	480
Impairment loss on property, plant and equipment		–	112
Impairment loss on intangible assets		–	16
Impairment loss on prepaid licensing fees and royalty fees		–	85
Impairment loss on lease right-of-use assets		–	576
Interest expense		6	15
Interest income		(613)	(1,483)
Share-based compensation		1	1
Unrealised foreign exchange loss		149	–
Operating loss before working capital changes		(2,083)	(2,753)

Changes in:
Trade and other receivables		91	126
Other assets		(153)	306
Trade and other payables		158	(184)
Contract liabilities		(415)	(5)
Prepaid pension plans		18	(29)
Cash used in operating activities, representing
net cash used in operating activities		(2,384)	(2,539)


Cash flows from financing activities
Deposits pledged		231	(14)
Repayment of lease liabilities		(495)	(474)
Interest paid		(6)	(15)
Net cash used in financing activities		(270)	(503)

Net decrease in cash and cash equivalents		(12,082)	(1,623)
Cash and cash equivalents at 1 January		57,743	59,308
Effect of exchange rate fluctuations on cash held in foreign currencies		41	58
Cash and cash equivalents at 31 December	11	45,702	57,743

GigaMedia Limited (the “Company”) is a limited liability company domiciled and incorporated in Singapore. The address of its registered office is at 80 Robinson Road, #02-00, Singapore 068898. Its principal place of business is at 8th Floor, No.22, Ln. 407, Sec. 2, Tiding Blvd., Taipei, Taiwan, 114 Republic of China.

The principal activity of the Company is that of investment holding. The principal activities of the subsidiaries are disclosed in Note 7 to the financial statements.

The financial statements have been prepared in accordance with the historical cost basis except as disclosed in the accounting polices below, and are drawn up in accordance with the provisions of the Singapore Companies Act and Financial Reporting Standards in Singapore (“FRSs”).

Historical cost is generally based on the fair value of the consideration given in exchange for goods and services.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using another valuation technique. In estimating the fair value of an asset or a liability, the Group takes into account the characteristics of the asset or liability which market participants would take into account when pricing the asset or liability at the measurement date. Fair value for measurement and/or disclosure purposes in these consolidated financial statements is determined on such a basis, except for share-based payment transactions that are within the scope of FRS 102 Share-based Payment, leasing transactions that are within the scope of FRS 116 Leases, and measurements that have some similarities to fair value but are not fair value, such as net realisable value in FRS 2 Inventories or value in use in FRS 36 Impairment of Assets.

In addition, for financial reporting purposes, fair value measurements are categorised into Level 1, 2 or 3 based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety, which are described as follows:

In the current financial year, the Group has adopted all the new and revised FRSs and interpretations of FRS (“INT FRS”) that are relevant to its operations and effective for annual periods beginning on or after 1 January 2020. The adoption of these new/revised FRSs and INT FRSs does not result in changes to the Group’s and Company’s accounting policies in current and prior years.

At the date of authorisation of these financial statements, certain new/revised FRSs, INT FRSs and amendments to FRS were issued but not effective. Management is of the view that these are not expected to have an impact to the Group in the periods of their initial adoption.

The consolidated financial statements incorporate the financial statements of the Company and entities (including structured entities) controlled by the Company and its subsidiaries. Control is achieved when the Company:

The Company reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control listed above.

When the Company has less than a majority of the voting rights of an investee, it has power over the investee when the voting rights are sufficient to give it the practical ability to direct the relevant activities of the investee unilaterally. The Company considers all relevant facts and circumstances in assessing whether or not the Company's voting rights in an investee are sufficient to give it power, including:

Consolidation of a subsidiary begins when the Company obtains control over the subsidiary and ceases when the Company loses control of the subsidiary. Specifically, income and expenses of a subsidiary acquired or disposed of during the year are included in the consolidated statement of profit or loss and other comprehensive income from the date the Company gains control until the date when the Company ceases to control the subsidiary.

Profit or loss and each component of other comprehensive income are attributed to the owners of the Company and to the non-controlling interests. Total comprehensive income of subsidiaries is attributed to the owners of the Company and to the non-controlling interests even if this results in the non-controlling interests having a deficit balance.

When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies in line with the Group's accounting policies.

Changes in the Group's ownership interests in subsidiaries that do not result in the Group losing control over the subsidiaries are accounted for as equity transactions. The carrying amounts of the Group's interests and the non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiaries. Any difference between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid or received is recognised directly in equity and attributed to owners of the Company.

When the Group loses control of a subsidiary, a gain or loss is recognised in profit or loss and is calculated as the difference between (i) the aggregate of the fair value of the consideration received and the fair value of any retained interest and (ii) the previous carrying amount of the assets (including goodwill), and liabilities of the subsidiary and any non-controlling interests. All amounts previously recognised in other comprehensive income in relation to that subsidiary are accounted for as if the Group had directly disposed of the related assets or liabilities of the subsidiary (i.e. reclassified to profit or loss or transferred to another category of equity as specified/permitted by applicable FRSs). The fair value of any investment retained in the former subsidiary at the date when control is lost is regarded as the fair value on initial recognition for subsequent accounting under FRS 109, when applicable, the cost on initial recognition of an investment in an associate or a joint venture.

In the Company’s financial statements, investments in subsidiaries and associates are carried at cost less any impairment in net recoverable value that has been recognised in profit or loss.

Acquisitions of subsidiaries and businesses are accounted for using the acquisition method. The consideration for each acquisition is measured at the aggregate of the acquisition date fair values of assets given, liabilities incurred by the Group to the former owners of the acquiree, and equity interests issued by the Group in exchange for control of the acquiree. Acquisition-related costs are recognised in profit or loss as incurred.

Where applicable, the consideration for the acquisition includes any asset or liability resulting from a contingent consideration arrangement, measured at its acquisition-date fair value. Subsequent changes in such fair values are adjusted against the cost of acquisition where they qualify as measurement period adjustments (see below). The subsequent accounting for changes in the fair value of the contingent consideration that do not qualify as measurement period adjustments depends on how the contingent consideration is classified. Contingent consideration that is classified as equity is not remeasured at subsequent reporting dates and its subsequent settlement is accounted for within equity. Contingent consideration that is classified as an asset or a liability is remeasured at subsequent reporting dates at fair value, with the corresponding gain or loss being recognised in profit or loss.

Where a business combination is achieved in stages, the Group’s previously held interests in the acquired entity are remeasured to fair value at the acquisition date (i.e. the date the Group attains control) and the resulting gain or loss, if any, is recognised in profit or loss. Amounts arising from interests in the acquiree prior to the acquisition date that have previously been recognised in other comprehensive income are reclassified to profit or loss, where such treatment would be appropriate if that interest were disposed of.

The acquiree’s identifiable assets, liabilities and contingent liabilities that meet the conditions for recognition under the FRS are recognised at their fair value at the acquisition date, except that:

Non-controlling interests that are present ownership interests and entitle their holders to a proportionate share of the entity’s net assets in the event of liquidation may be initially measured either at fair value or at the non-controlling interests’ proportionate share of the recognised amounts of the acquiree’s identifiable net assets. The choice of measurement basis is made on a transaction-by-transaction basis. Other types of non-controlling interests are measured at fair value or, when applicable, on the basis specified in another FRS.

If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, the Group reports provisional amounts for the items for which the accounting is incomplete. Those provisional amounts are adjusted during the measurement period (see below), or additional assets or liabilities are recognised, to reflect new information obtained about facts and circumstances that existed as of the acquisition date that, if known, would have affected the amounts recognised as of that date.

The measurement period is the period from the date of acquisition to the date the Group obtains complete information about facts and circumstances that existed as of the acquisition date – and is subject to a maximum of one year from acquisition date.

If the Group’s interest in the fair value of the acquiree’s identifiable net assets exceeds the sum of the consideration transferred, the amount of any non-controlling interest in the acquiree and the fair value of the acquirer’s previously held equity interest in the acquire (if any), the excess is recognised immediately in profit or loss as a bargain purchase gain.

Transactions in foreign currencies are measured in the respective functional currencies of the Company and its subsidiaries and are recorded on initial recognition in the functional currencies at exchange rates approximating those prevailing at the transaction dates. Monetary assets and liabilities denominated in foreign currencies are translated at the closing rate of exchange prevailing at the reporting date. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when fair value was determined.

Exchange differences arising on the settlement of monetary items or on translating monetary items at the reporting date are recognised in profit or loss for the period except for exchange differences arising on monetary items that form part of the Group’s net investment in foreign operations, which are recognised initially in other comprehensive income and accumulated under translation reserve in equity. The translation reserve is reclassified from equity to the profit or loss of the Group on disposal of the foreign operation.

The assets and liabilities of foreign operations are translated into US dollars at the rate of exchange prevailing at the reporting date and income and expenses are translated at the average exchange rates for the year. The exchange differences arising on the translation are taken directly to other comprehensive income. On disposal of a foreign operation, the component of other comprehensive income relating to that particular foreign operation is recognised in profit or loss.

In the case of a partial disposal without loss of control of a subsidiary that includes a foreign operation, the proportionate share of the cumulative amount of the exchange differences are re-attributed to non-controlling interest and are not recognised in profit or loss. For partial disposals of associates that are foreign operations, the proportionate share of the accumulated exchange differences is reclassified to profit or loss.

Property, plant and equipment are stated in the consolidated statement of financial position at cost, less subsequent accumulated depreciation and accumulated impairment losses, if any.

Depreciation is charged so as to write off the cost of items of property, plant, and equipment less their residual values over their estimated useful lives, using the straight-line method, on the following bases:

The residual values, useful life and depreciation method are reviewed at end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis.

The gain or loss arising on disposal or retirement of an item of property, plant and equipment is determined as the difference between the sales proceeds and the carrying amounts of the asset and is recognised in profit or loss.

Intangible assets with finite useful lives that are acquired separately are carried at cost less accumulated amortisation and impairment losses. Amortisation for intangible assets with finite useful lives is recognised on a straight-line basis over their estimated useful lives. The estimated useful life and amortisation method are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis.

The Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any such indication exists, or when annual impairment testing for an asset is required, the Group makes an estimate of the asset’s recoverable amount.

An asset’s recoverable amount is the higher of an asset’s or cash-generating unit’s fair value less costs to sell and its value in use and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or group of assets. Where the carrying amount of an asset or cash-generating unit exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. In assessing value in use, the estimated future cash flows expected to be generated by the asset are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs to sell, an appropriate valuation model is used. These calculations are corroborated by valuation multiples or other available fair value indicators.

Impairment losses of continuing operations are recognised in profit or loss in those expense categories consistent with the function of the impaired asset, except for assets that are previously revalued where the revaluation was taken to other comprehensive income. In this case the impairment is also recognised in other comprehensive income up to the amount of any previous revaluation.

An assessment is made at each reporting date as to whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. If such indication exists, the Group estimates the asset’s or cash-generating unit’s recoverable amount. A previously recognised impairment loss is reversed only if there has been a change in the estimates used to determine the asset’s recoverable amount since the last impairment loss was recognised. If that is the case, the carrying amount of the asset is increased to its recoverable amount. That increased amount cannot exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised previously. Reversal is recognised in the profit or loss unless the asset is measured at revalued amount, in which case the reversal in excess of impairment loss previously recognised through the profit or loss is treated as a revaluation increase.

These mainly comprise cash and cash equivalents and trade and other receivables.

Financial assets that meet the following conditions are subsequently measured at amortised cost:

The effective interest method is a method of calculating the amortised cost of a debt instrument and of allocating interest income over the relevant period.

The amortised cost of a financial asset is the amount at which the financial asset is measured at initial recognition minus the principal repayments, plus the cumulative amortisation using the effective interest method of any difference between that initial amount and the maturity amount, adjusted for any loss allowance.

Interest income is recognised using the effective interest method for debt instruments measured subsequently at amortised cost. Interest income is recognised in profit or loss.

Financial assets at FVTPL are measured at fair value at the end of each reporting period, with any fair value gains or losses recognised in profit or loss.

The Group recognises a loss allowance for expected credit loss (“ECL”) on financial assets at amortised costs. The amount of expected credit losses is updated at each reporting date to reflect changes in credit risk since initial recognition of the respective financial instrument.

The Group measures the loss allowance based on lifetime ECL when there has been a significant increase in credit risk since initial recognition. If, on the other hand, the credit risk on the financial instrument has not increased significantly since initial recognition, the Group measures the loss allowance for that financial instrument at an amount equal to 12-months ECL (“12m ECL”). The assessment of whether lifetime ECL should be recognised is based on significant increases in the likelihood or risk of a default occurring since initial recognition instead of on evidence of a financial asset being credit-impaired at the reporting date or an actual default occurring.

In assessing whether the credit risk on a financial instrument has increased significantly since initial recognition, the Group compares the risk of a default (more than 90 days past due) occurring on the financial instrument as at the reporting date with the risk of a default occurring on the financial instrument as at the date of initial recognition. In making this assessment, the Group considers both quantitative and qualitative information that is reasonable and supportable, including historical experience and forward-looking information that is available without undue cost or effort. Forward-looking information considered includes the future prospects of the industries in which the Group’s debtors operate.

The Group assumes that the credit risk on a financial instrument has not increased significantly since initial recognition if the financial instrument is determined to have low credit risk at the reporting date. A financial instrument is determined to have low credit risk if i) the financial instrument has a low risk of default, ii) the borrower has a strong capacity to meet its contractual cash flow obligations in the near term and iii) adverse changes in economic and business conditions in the longer term may, but will not necessarily, reduce the ability of the borrower to fulfil its contractual cash flow obligations.

The Group regularly monitors the effectiveness of the criteria used to identify whether there has been a significant increase in credit risk and revises them as appropriate to ensure that the criteria are capable of identifying significant increase in credit risk before the amount becomes past due.

The Group derecognises a financial asset when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another party.

On derecognition of a financial asset measured at amortised cost, the difference between the asset's carrying amount and the sum of the consideration received and receivable is recognised in profit or loss.

Financial liabilities include trade and other payables and interest bearing loans and borrowings.

Financial liabilities are recognised on the statement of financial position when, and only when, the Group becomes a party to the contractual provisions of the financial instrument. The Group determines the classification of its financial liabilities at initial recognition.

All financial liabilities are recognised initially at fair value plus directly attributable transaction costs.

After initial recognition, financial liabilities are subsequently measured at amortised cost using the effective interest method, with interest expense recognised on an effective yield basis.

The Group derecognises financial liabilities when, and only when, the Group’s obligations are discharged, cancelled or they expire.

Provisions are recognised when the Group has a present obligation (legal or constructive) where, as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate can be made on the amount of the obligation.

The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. Where a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows.

The Group participates in the national pension schemes as defined by the laws of the countries in which it has operations. In particular, the Company makes contributions to the Central Provident Fund (CPF) scheme in Singapore, a defined contribution pension scheme. Contributions to defined contribution pension schemes are recognised as an expense in the period in which the related service is performed.

Employee entitlements to annual leave are recognised as a liability when they accrue to the employees. The estimated liability for leave is recognised for services rendered by employees up to reporting date.

A defined benefit plan is a post-employment benefit plan other than a defined contribution plan. The Group’s net obligation in respect of defined benefit plans is calculated separately for each plan by estimating the amount of future benefit that employees have earned in return for their service in the current and prior periods; that benefit is discounted to determine its present value. The fair value of any plan assets is deducted. The Group determines the net interest expense (income) on the net defined benefit liability (asset) for the period by applying the discount rate used to measure the defined benefit obligation at the beginning of the annual period to the net defined benefit liability (asset).

The calculation is performed annually by a qualified actuary using the projected unit credit method. When the calculation results in a benefit to the Group, the recognised asset is limited to the present value of economic benefits available in the form of any future refunds from the plan or reductions in future contributions to the plan. In order to calculate the present value of economic benefits, consideration is given to any minimum funding requirements that apply to any plan in the Group. An economic benefit is available to the Group if it is realisable during the life of the plan, or on settlement of the plan liabilities.

Remeasurements from defined benefit plans comprise actuarial gains and losses, the return on plan assets (excluding interest) and the effect of the asset ceiling (if any, excluding interest). The Group recognises them immediately in other comprehensive income and all expenses related to defined benefit plans in employee benefits expense in profit or loss.

When the benefits of a plan are changed, or when a plan is curtailed, the portion of the changed benefit related to past service by employees, or the gain or loss on curtailment, is recognised immediately in profit or loss when the plan amendment or curtailment occurs.

The Group recognises gains and losses on the settlement of a defined benefit plan when the settlement occurs. The gain or loss on settlement is the difference between the present value of the defined benefit obligation being settled as determined on the date of settlement and the settlement price, including any plan assets transferred and any payments made directly by the Group in connection with the settlement.

The grant date fair value of share-based payment awards granted to employees is recognised as an employee expense, with a corresponding increase in equity, over the period that the employees unconditionally become entitled to the awards. The amount recognised as an expense is adjusted to reflect the number of awards for which the related service and non-market performance conditions are expected to be met, such that the amount ultimately recognised as an expense is based on the number of awards that meet the related service and non-market performance conditions at vesting date. For share-based payment awards with non-vesting conditions, the grant date fair value of the share-based payment is measured to reflect such conditions and there is no true-up for differences between expected and actual outcomes.

The fair value of the amount payable to employees in respect of share appreciation rights, which are settled in cash, is recognised as an expense with a corresponding increase in liabilities, over the period that the employees become unconditionally entitled to payment. The liability is remeasured at each reporting date and at settlement date based on the fair value of the share appreciation rights. Any changes in the fair value of the liability are recognised as employee benefits expense in profit or loss.

Current income tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted by the end of the reporting period, in the countries where the Group operates and generates taxable income.

Current income taxes are recognised in the profit or loss except to the extent that the tax relates to items recognised outside the profit or loss, either in other comprehensive income or directly in equity. Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.

Deferred income tax is provided using the liability method on temporary differences at the reporting period between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.

Deferred tax liabilities are recognised for all taxable temporary differences, except:

Deferred income tax assets are recognised for all deductible temporary differences, carry-forward of unused tax credits and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry-forward of unused tax credits and unused tax losses can be utilised, except:

The carrying amount of deferred income tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised. Unrecognised deferred income tax assets are reassessed at each reporting date and are recognised to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be utilised.

Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the end of the reporting period. Except for investment properties measured using the fair value model, the measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Group expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.

Deferred income tax relating to items recognised outside profit or loss is recognised outside profit or loss. Deferred tax items are recognised in correlation to the underlying transaction either in other comprehensive income or directly in equity and deferred tax arising from a business combination is adjusted against goodwill on acquisition.

Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.

The Group assesses whether a contract is or contains a lease, at inception of the contract. The Group recognises a right-of-use asset and a corresponding lease liability with respect to all lease arrangements in which it is the lessee, except for short-term leases (defined as leases with a lease term of 12 months or less) and leases of low value assets. For these leases, the Group recognises the lease payments as an operating expense on a straight-line basis over the term of the lease unless another systematic basis is more representative of the time pattern in which economic benefits from the leased assets are consumed.

The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted by using the rate implicit in the lease. If this rate cannot be readily determined, the Group uses the incremental borrowing rate specific to the lessee.

The lease liability is presented as a separate line in the statement of financial position.

The lease liability is subsequently measured by increasing the carrying amount to reflect interest on the lease liability (using the effective interest method) and by reducing the carrying amount to reflect the lease payments made.

The Group remeasures the lease liability (and makes a corresponding adjustment to the related right-of-use asset) whenever:

The right-of-use assets comprise the initial measurement of the corresponding lease liability, lease payments made at or before the commencement day and any initial direct costs. They are subsequently measured at cost less accumulated depreciation and impairment losses.

Whenever the Group incurs an obligation for costs to dismantle and remove a leased asset, restore the site on which it is located or restore the underlying asset to the condition required by the terms and conditions of the lease, a provision is recognised and measured under FRS 37. The costs are included in the related right-of-use asset.

Right-of-use assets are depreciated over the shorter period of lease term and useful life of the underlying asset. The depreciation starts at the commencement date of the lease.

The right-of-use assets are presented as a separate line in the statement of financial position.

The Group applies FRS 36 to determine whether a right-of-use asset is impaired and accounts for any identified impairment loss as described above.

As a practical expedient, FRS 116 permits a lessee not to separate non-lease components, and instead account for any lease and associated non-lease components as a single arrangement. The Group has not used this practical expedient. For a contracts that contain a lease component and one or more additional lease or non-lease components, the Group allocates the consideration in the contract to each lease component on the basis of the relative stand-alone price of the lease component and the aggregate stand-alone price of the non-lease components.

Revenue is measured based on the consideration specified in a contract with a customer and excludes amounts collected on behalf of third parties. The Group recognises revenue when it transfers control of a product or service to a customer.

Digital entertainment product and service revenues are generated through the sale of virtual points, prepaid cards and game packs. Virtual points are sold to distributors or end-users who can make the payments through credit cards, internet banking or telecommunication service operators. Physical prepaid cards and game packs are sold through distributors and convenience stores. Proceeds from sales of prepaid cards and game packs, net of sales discounts, and virtual points are deferred when received, and revenue is recognised over time upon the actual usage of the playing time or in-game virtual items by the end-users based on the estimated service period of virtual items determined with reference to expiry period of the sold points in accordance with the Group’s published points expiration policy and the estimated useful life of virtual items.

The Group reports sales of virtual points on a gross basis. In the sales of virtual points, the Group acts as a principal and the Group has latitude in establishing price. Fixed percentage fees retained by convenient stores and service providers for payment processing related to the Group’s digital entertainment services are recognised as cost of digital entertainment revenues.

An operating segment is a component of the Group that engages in business activities from which it may earn revenue and incur expenses, including revenue and expenses that relate to transactions with any of the Group’s other components. All operating segments’ operating results are reviewed regularly by the Board of Directors (the chief operating decision maker) to make decisions about resources to be allocated to the segment and to assess its performance, and for which discrete financial information is available.

Segment results that are reported to the Board of Directors include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. Unallocated items comprise mainly corporate assets (primarily the Company’s headquarters), head office expenses and tax assets and liabilities.

Segment capital expenditure is the total cost incurred during the year to acquire property, plant and equipment and intangible assets.

The key assumptions concerning the future, and other key sources of estimation uncertainty at the end of the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are discussed below:

Digital entertainment service revenue is earned via the sale of virtual points, prepaid cards and game packs. Proceeds from the sale of virtual points are deferred when received and revenue is recorded over time when the virtual points are consumed based on estimated life of virtual points. Management determines the estimated useful life of the virtual points based on the weighted average number of days of a user’s payment interval, the average turnover rate of the circulation of virtual point in the Group’s online games and the historical period based on the Group’s previously released online games.

The carrying amount of the Group’s contract liabilities and digital entertainment service revenue are disclosed in Notes 17 and 18 to the financial statements.

The Group regularly reviews whether there are any indications of impairment and recognises an impairment loss if the carrying amount of the property, plant and equipment, right-of-use assets, intangible assets and prepaid licensing and royalty fees is lower than its recoverable amount. The determination of recoverable amount is subject to management’s estimation based on the life cycle and forecasted sales generated from the online games.

The carrying amount of the Group’s property, plant and equipment, right-of-use assets, intangible assets and prepaid licensing and royalty fees are disclosed in Notes 4, 5, 6 and 9 to the financial statements.

In estimating the fair value of the financial asset at FVTPL, the Group engages third party qualified valuer to perform the valuation. Management works closely with the qualified external valuers to establish the appropriate valuation techniques and inputs to the model. Key significant observable inputs include discount for lack of marketability and volatility rate as disclosed in Note 24(c) to the financial statements.

The carrying amount of the Group’s financial asset at FVTPL is disclosed in Note 8 to the financial statements.


	Leasehold improvements	Information and communication equipment	Office furniture and equipment	Total
Group	US$’000	US$’000	US$’000	US$’000
Cost
At 1 January 2019	139	91	32	262
Additions	–	44	4	48
Effect of movements in exchange rates	2	4	1	7
At 31 December 2019	141	139	37	317
Additions	–	9	15	24
Disposals/Write offs	(141)	(139)	(37)	(317)
Effect of movements in exchange rates	–	–	1	1
At 31 December 2020	–	9	16	25

Accumulated depreciation
At 1 January 2019	107	20	14	141
Depreciation charge to profit or loss	27	25	9	61
Effect of movements in exchange rates	1	2	–	3
At 31 December 2019	135	47	23	205
Depreciation charge to profit or loss	–	2	1	3
Disposals/Write offs	(135)	(47)	(23)	(205)
At 31 December 2020	–	2	1	3

Accumulated impairment loss
At 1 January 2019	–	–	–	–
Charge to profit or loss	6	92	14	112
At 31 December 2019	6	92	14	112
Disposals/Write offs	(6)	(92)	(14)	(112)
At 31 December 2020	–	–	–	–

Carrying amounts
At 31 December 2019	–	–	–	–

At 31 December 2020	–	7	15	22

As at 31 December 2019, the carrying amount of the property, plant and equipment were determined not to be recoverable based on the forecasted sales of the Group. Accordingly, an impairment loss of US$112,000 was recorded in profit or loss.


	Office space	Motor vehicles	Office equipment	Total
Group	US$’000	US$’000	US$’000	US$’000
Cost
At 1 January 2019	879	47	6	932
Additions	124	–	–	124
Effect of movements in exchange rates	22	–	–	22
At 31 December 2019 and 2020	1,025	47	6	1,078

Accumulated depreciation
At 1 January 2019	–	–	–	–
Depreciation charge to profit or loss	456	23	1	480
Effect of movements in exchange rates	13	–	–	13
At 31 December 2019 and 2020	469	23	1	493

Accumulated impairment loss
At 1 January 2019	–	–	–	–
Charge to profit or loss	547	24	5	576
Effect of movements in exchange rates	9	–	–	9
At 31 December 2019 and 2020	556	24	5	585

Carrying amounts
At 31 December 2019 and 2020	–	–	–	–

The Group leases several assets including office space, motor vehicles and IT equipment. The average lease term is between 2 to 5 years and rentals are generally fixed during the lease term.

During the financial year ended 31 December 2019, the lease for an office space expired. The expired contract was replaced by a new lease and this resulted in additions to right-of-use assets of US$124,000 in 2019.

As at 31 December 2019, the carrying amount of the right-of-use assets were determined not to be recoverable based on the forecasted sales of the Group. Accordingly, an impairment loss of US$576,000 was recorded in profit or loss.


			Purchased software development costs
			US$’000
Group
Cost
At 1 January 2019			64
Additions			14
Disposals/Write offs			(9)
Effect of movements in exchange rates			1
At 31 December 2019			70
Additions			8
Disposals/Write offs			(70)
Effect of movements in exchange rates			1
At 31 December 2020			9

Accumulated amortisation
At 1 January 2019			26
Amortisation for the year			37
Disposals/Write offs			(9)
At 31 December 2019			54
Amortisation for the year			5
Disposals/Write offs			(54)
At 31 December 2020			5

Accumulated impairment loss
At 1 January 2019			-
Charge to profit or loss			16
At 31 December 2019			16
Disposals/Write offs			(16)
At 31 December 2020			-

Carrying amounts
At 31 December 2019			-
At 31 December 2020			4

As at 31 December 2019, the carrying amount of the intangible assets were determined not to be recoverable based on the forecasted sales of the Group. Accordingly, an impairment loss of US$16,000 was recorded in profit or loss.

During the year ended 31 December 2020, allowance for impairment loss amounting to US$3,427,000 (2019: US$12,190,000) was made in respect of the Company’s investments in certain subsidiaries to reduce the carrying value of the investments to recoverable amounts based on the net asset value of respective subsidiaries, which approximate their fair value less costs to sell.


Name of subsidiaries	Principal activities	Country of incorporation	Percentage ownership interest
			2020	2019
			%	%
Held by the Company

GigaMedia International Holdings Limited	Holding company	British Virgin Islands	100	100

Held by GigaMedia International Holdings Limited

Cambridge Entertainment Software Limited	Holding company	British Virgin Islands	100	100

GigaMedia (HK) Limited	Holding company	Hong Kong	100	100

GigaMedia Online Entertainment Corp.	Holding company	Cayman Islands	100	100
GigaMedia (Cayman) Limited.	Holding company	Cayman Islands	100	100


Held by GigaMedia Online Entertainment Corp.

FunTown World Limited	Holding company	British Virgin Islands	100	100

GigaMedia Freestyle Holdings Limited	Holding company	British Virgin Islands	100	100

Megabiz Limited	Holding company	British Virgin Islands	100	100

Held by GigaMedia (Cayman) Limited.

Hoshin GigaMedia Center Inc.	Online games	Taiwan	100	100

Giga Development Corporation	Holding company	Taiwan	100	100

GigaMedia Cloud Services Co., Ltd.	Cloud computing services	Taiwan	100	100
Held by Giga Development Corporation

Wen He Investment Ltd.	Holding company	Taiwan	100	100
Held by Hoshin GigaMedia Center IncPlay2gether Digital Technology Co., Ltd.Online gamesTaiwan100100Gaminfinity Publishing Co., Ltd.Online gamesTaiwan100100Held by GigaMedia (HK) LimitedShanghai Pontoon Networking Technology Co., Ltd.Online gamesChina100100

On August 31, 2020, the Company entered into a convertible note purchase agreement to purchase a US$10 million (NTD295 million) principal amount of convertible promissory note (the “Note”) issued by the investee, a global company primarily engaged in designing, manufacturing, processing and sales of intellectual robotics. The Note bears interest rate of 2% per annum and shall be due on August 30, 2022 but is extendable to August 30, 2023 at the investee’s option. The Note is convertible into common shares at a price of US$3.00 per share, subject to certain adjustments, and shall be automatically converted upon certain conditions outlined in the purchase agreement.


		Group		Company
	Note	2020	2019	2020	2019
		US$’000	US$’000	US$’000	US$’000

Refundable deposits		208	199	–	–
Prepaid licensing and royalty fees		155	69	–	–
Prepaid pension assets	14	67	85	–	–
Others		67	1	67	–
		497	354	67	–
Less: Impairment loss on prepaid licensing and royalty fees		(25)	(25)	–	–
		472	329	67	–

Non-current assets		342	285	67	–
Current assets		130	44	–	–
		472	329	67	–

The Group recorded prepaid licensing and royalty fees of US$155,000 (2019: US$69,000) arising from the purchase of licences for its online games for subsequent financial periods.

At the reporting date, the impairment charge for prepaid licensing and royalty fees relates to certain licensed online games, which the carrying amounts of the related assets were determined not to be recoverable based on their expected life cycle and the forecasted sales. As at 31 December 2019, an impairment loss of US$85,000 was recorded in profit or loss based on management’s assessment. Movements in allowance for impairment losses on prepaid licensing and royalty fees during the year were as follows:


	Group		Company
	2020	2019	2020	2019
	US$’000	US$’000	US$’000	US$’000
Trade receivables
-third parties	276	371	–	–
Less: Allowance for doubtful receivables	(1)	(3)	–	–
	275	368	–	–
Other receivables
due from subsidiaries	–	–	1,674	1,703
Prepayments	88	112	–	–
Others	160	139	–	–
	523	619	1,674	1,703

The trade amounts are unsecured, interest-free and with an average credit period of
30 days (2019: 30 days).

Loss allowance for trade receivables has been measured at an amount equal to lifetime ECL. The ECL on trade receivables are estimated by reference to past default experience of the debtor and an analysis of the debtor’s current financial position, adjusted for factors that are specific to the debtors, general economic conditions of the industry in which the debtors operate.

A trade receivable is written off when there is information indicating that the debtor is in severe financial difficulty and there is no realistic prospect of recovery, e.g. when the debtor has been placed under liquidation or has entered into bankruptcy proceedings. None of the trade receivables that have been written off is subject to enforcement activities.

The following is an aged analysis of trade receivables at the end of the reporting period, net of loss allowance for trade receivables:

For the financial year ended 31 December 2020, the trade receivables have been assessed based on lifetime ECL individually and are not credit impaired.

The non-trade amounts due from subsidiaries are unsecured, interest-free and repayable on demand.

For purpose of impairment assessment, other receivables and amounts due from subsidiaries are considered to have low credit risk as they are not due for payment at the end of the reporting period and there has been no significant increase in the risk of default on the receivables since initial recognition.

Management estimates the loss allowance on other receivables at an amount equal to 12-month ECL, taking into account the historical default experience, current financial conditions of the counterparties and subsidiaries and the future prospects of the industry of each counterparty and subsidiary.

Based on the assessment, management is of the view that the ECL is insignificant as the credit risk of the counterparties and subsidiaries are low.


	Group		Company
	2020	2019	2020	2019
	US$’000	US$’000	US$’000	US$’000

Bank balances	45,696	57,736	1,353	1,788
Short-term deposits	306	538	–	–
	46,002	58,274	1,353	1,788

Less: Restricted cash	(300)	(531)
Cash and cash equivalents in the statement of cash flows	45,702	57,743

The weighted average effective interest rate per annum relating to the fixed deposits at the reporting date for the Group is 0.25% (2019: 2.03%). Depending on the terms of the deposit, interest rates reprice every half-yearly and yearly.

In 2020, restricted cash amounting to US$300,000 (2019: US$531,000) relates to deposits pledged for unutilised game point cards.

The Group’s primary objective when managing capital is to safeguard the Group’s ability to continue as a going concern while looking for appropriate opportunities to expand its business. In order to do so, the Group may obtain new borrowings or issue new shares.

The Group actively and regularly reviews and manages its capital structure to ensure optimal capital structure and shareholder returns, taking into consideration the future capital requirements of the Group and capital efficiency, prevailing and projected profitability, projected operating cash flows, projected capital expenditures and projected strategic investment opportunities. The Group currently does not adopt any formal dividend policy.

There were no changes in the Group’s approach to capital management during the year.


	Group		Company
	2020	2019	2020	2019
	US$’000	US$’000	US$’000	US$’000

Share option reserve	12,863	12,862	12,863	12,862
Statutory reserve	1,516	1,516	–	–
Foreign currency translation reserve	(20,887)	(21,136)	(10,401)	(12,951)
	(6,508)	(6,758)	2,462	(89)

Employee share options represent the equity-settled share option granted to employees and executive director of the Group. The reserve is made up of the cumulative value of services received from employee and executive directors recorded over the vesting period commencing from the grant date of share options, and is reduced by the expiry or exercise of the share options. The details of the share options are disclosed as follows:

At the June 2008 annual general meeting of shareholders, the shareholders of the Company approved the GigaMedia Limited 2008 Equity Incentive Plan (the “2008 Plan”) under which up to 200 thousand

ordinary shares of the Company have been reserved for issuance. The 2008 Plan is administered by a committee designated by the board of directors. The committee as plan administrator has complete discretion to determine the grant of awards under the 2008 Plan. The maximum contractual term for the options under the 2008 Plan is 10 years. No shares have been issued under the 2008 Plan during the current financial year.

Summarised below are the general terms of its share-based compensation plans as of 31 December 2020.


Date granted	Balance at beginning of year	Granted during the year	Expired/ forfeited during the year	Balance at end of year	Options’ exercise price	Exercise period
	’000	’000	’000	’000	US$

13.05.2010	176	–	(176)	–	$12.35	13.05.2010 - 13.05.2020
20.05.2011	12	–	–	12	$6.25	20.05.2011 - 20.05.2021
05.01.2012	4	–	–	4	$4.05	05.01.2012 - 05.01.2022
28.10.2013	4	–	–	4	$5.05	28.10.2013 - 28.10.2023
28.03.2014	25	–	–	25	$7.15	28.03.2014 - 28.03.2024
05.05.2017	4	–	–	4	$2.90	05.05.2017 - 05.05.2027
	225	–	(176)	49

All options are expected to be settled by issuing new shares. At the end of the financial year, details of the options granted are as follow:


	Number of outstanding share options
Range of exercise price	At beginning of the year	Granted during the year	Expired/ forfeited during the year	Exercised during the year	At end of the year	Weighted average remaining exercise period
	’000	’000	’000	’000	’000	Weighted average remaining exercise period
2020
Under US$5	8	–	–	–	8	3.68 years
US$5–US$50	217	–	(176)	–	41	2.36 years
	225	–	(176)	–	49
2019
Under US$5	12	–	(4)	–	8	4.68 years
US$5–US$50	217	–	–	–	217	0.93 years
	229	–	(4)	–	225

49,000 options (2019 : 224,000) out of options 49,000 (2019 : 225,000) are exercisable at the end of the year.

The Company has used the Black-Scholes option-pricing model to derive the fair value of share options granted to employees on the grant date. There was no share option granted in 2019 and 2020.

In accordance with R.O.C. law, an appropriation for legal reserve amounting to 10% of a company’s net profit is required until the reserve equals the aggregate par value of such Taiwan company’s issued capital stock. As of 31 December 2020 and 2019, the legal reserves of Hoshin GigaMedia Center Inc. (“Hoshin GigaMedia”), were US$1.5 million and US$1.5 million respectively. The reserve can only be used to offset a deficit or be distributed as a stock dividend of up to 50% of the reserve balance when the reserve balance has reached 50% of the aggregate paid-in capital of Hoshin GigaMedia.

The translation reserve comprises all foreign currency differences arising from the translation of the financial statements of foreign operations.

The Group has defined benefit and defined contribution pension plans that covered substantially all of the Group’s employees.

In accordance with the Labor Standards Law of the Republic of China, the Group has a defined benefit pension plan for its employees in Taiwan. The pension plan covers substantially all full-time employees for services provided prior to 1 July 2005, and employees who have elected to remain in the defined benefit pension plan subsequent to the enactment of the Labor Pension Act on 1 July 2005. Under the defined benefit pension plan, employees are entitled to twice the monthly salary for each year of service for the first 15 years, and an additional one month for every additional year of service, up to a maximum of 45 months. The pension payment to employees is computed based on the average monthly salary for the six months prior to approved retirement.

The Group has contributed an amount equal to 2 percent of the salaries and wages paid to all qualified employees located in Taiwan to a pension fund (the “Fund”). The Fund is administered by a pension fund monitoring committee (the “Committee”) and deposited in the Committee’s name in the Bank of Taiwan. The Group makes pension payments from its account in the Fund unless the Fund is insufficient, in which case the Group makes payments from internal funds as payments become due. The Group seeks to maintain a normal, highly liquid working capital balance to ensure payments are made timely.

The following provides fund status of the plan and a reconciliation of employee benefits.


Expense recognised in profit or loss
	Group
	2020	2019
	US$’000	US$’000
Curtailment gain	-	(33)
Net interest on net defined benefit liability	(1)	(1)
Employee benefits	(1)	(34)

Movement in the present value of the defined benefit obligations

Projected benefit obligation at 1 January	326	320
Interest cost	4	4
Actuarial loss	37	27
Curtailment gain	-	(33)
Effect of movement in exchange rate	18	8
Defined benefit obligation at 31 December	385	326

Movement in the fair value of plan assets

Fair value of plan assets at 1 January	411	376
Expected return on plan assets	5	5
Actuarial gains	12	12
Contributions by employer	2	8
Currency translation difference	22	10
Fair value of plan assets at 31 December	452	411

Return on plan assets

Expected return on plan assets	5	5
Actuarial gains	12	12
Actual return on plan assets	17	17

Assets Categories
Cash	100%	100%

Weighted-average assumptions used to determine defined benefit obligations as at 31 December 2020 and 2019 were as follows:

The Group does not expect to make any contribution to the Fund in 2021. The Group expects to make benefit payments of US$1,000 from 2021 to 2025 and US$23,000 from 2026 to 2030.

The Group has provided defined contribution plans for employees located in Taiwan and Hong Kong. Contributions to the plans are expensed as incurred.

Pursuant to the new “Labor Pension Act” enacted on 1 July 2005, the Group set up a defined contribution pension plan for its employees located in Taiwan. For eligible employees who elect to participate in the defined contribution pension plan, the Group contribute no less than 6% of the employees’ salaries and wages paid each month, up to the maximum amount of NT$9,000 (approximately US$316 per individual), to the employees’ individual pension accounts at the Bureau of Labor Insurance. Pension payments to employees are made either by monthly installments or in a lump sum from the accumulated contributions and earnings in employees’ individual accounts.

According to the relevant Hong Kong regulations, the Group provides a contribution plan for the eligible employees in Hong Kong. The Group must contribute at least 5 percent of their total salaries, up to the maximum amount of HK$1,500 (approximately US$193 per individual), to their individual contribution accounts of the authorities monthly. After the termination of employment, the benefits still belong to the employees in any circumstances.

The total amount of defined contribution pension expenses pursuant to
defined contribution plans for the years ended 31 December 2020 was US$187,000 (2019 : US$187,000).


	Group
	2020	2019
	US$’000	US$’000

Maturity analysis:
Year 1	95	504
Year 2 to 5	3	95
	98	599
Less: Future finance charges	-	(6)
	98	593

Lease liabilities were measured at the present value of the remaining lease payments, discounted using lessee’s incremental borrowing rate. As at 31 December 2020, the weighted average incremental borrowing rate applied to the lease liabilities ranged between 1.7% to 2.8% (2019: 1.7% to 2.8%). The fair value of the Group’s lease obligations approximates their carrying amount.


	Group		Company
	2020	2019	2020	2019
	US$’000	US$’000	US$’000	US$’000

Trade payables	70	64	–	–
Accrued expenses	1,516	1,280	200	170
Other payables	292	376	–	–
Amount due to subsidiaries	–	–	10,332	–
Trade and other payables	1,878	1,720	10,532	170

Analysed as:
Current	1,878	1,720	465	170
Non-current	–	–	10,067	–
	1,878	1,720	10,532	170

The amounts due to subsidiaries are unsecured, interest-free and repayable on demand except for advances made to subsidiaries amounting to US$10,000,000 (2019: Nil) which are unsecured, bear interest at 2% (2019: Nil) per annum and both principal and interest are repayable in full in August 2022.

Contract liabilities represent proceeds received from the sale of virtual points and in-game virtual items which have not been consumed by the users or expired. Contract liabilities are credited to profit or loss and recognised as revenue when the virtual points and virtual in-game items are consumed or expired.

* Included in the digital entertainment service revenue is revenue from sale of virtual points amounted to US$3.9 million (2019 : US$5.3 million). The digital entertainment service revenue is recognised over time.

As at 31 December 2020, there are unsatisfied performance obligations amounting to US$1,365,000 (2019 : US$950,000).


	Group
	2020	2019
	US$’000	US$’000

Impairment loss on property, plant and equipment	–	112
Impairment loss on intangible assets	–	16
Impairment loss on right-of-use assets	–	576
Impairment loss on prepaid licensing and royalty fees	–	85
Net exchange loss	149	68
Allowance for doubtful receivables	5	24
Fair value loss on financial asset at FVTPL	–	–
Others	–	37
	154	918

The income tax credit varied from the amount of income tax credit determined by applying the Singapore income tax rate of 17% to loss before income tax as a result of the following differences:

As at 31 December 2020, the Group has tax losses carried forward, available to offset against future taxable income, the natures and jurisdictions of which were summarised as follows:

Deferred tax assets relating to unutilised tax losses has not been recognised due to the unpredictability of future profit streams. Consequently, the Group did not recognise deferred tax assets of US$13,046,000 (2019 : US$12,732,000).

Other than those disclosed elsewhere in the financial statements, the following items have been included in arriving at loss for the year:


	Group
	2020	2019
	US$’000	US$’000

Employee benefits expense (see below)	3,991	4,112
Amortisation charge on intangible assets	5	37
Depreciation of property, plant and equipment	3	61

Employee benefits expense
Wages and salaries	3,795	3,854
Employee equity-settled share-based payment	1	1
Employee expense relating to defined benefit and contribution pension plans	187	187
Termination benefits	8	70
	3,991	4,112

Except for the following transactions, the Group was not a party to any transaction with any related party that did not arise in the ordinary course of business or that was material to it.

As at the end of the financial year, the total outstanding number of share options granted to key management of the Group was 24,000 (2019: 24,000).

Key management personnel of the Group are those persons having the authority and responsibility for planning, directing and controlling the activities of the entity. The directors are considered as key management personnel of the Group.


	Group		Company
	2020	2019	2020	2019
	US$’000	US$’000	US$’000	US$’000


Financial asset at FVTPL	10,000	-	10,000	-
Financial assets at amortised cost	46,712	58,981	3,027	3,491

Financial liabilities at amortised cost	1,878	1,720	10,532	170
Lease liabilities	98	593	-	-

The Group has exposure to the following risks from its use of financial instruments:

This note presents information about the Group’s exposure to each of the above risks, the Group’s objectives, policies and processes for measuring and managing risk, and the Group’s management of capital.

The Board of Directors has overall responsibility for the establishment and oversight of the Group’s risk management framework. The Board has established the Audit Committee, which is responsible for overseeing the Group’s risk management policies. The Audit Committee reports regularly to the Board of Directors on its activities.

The Group’s risk management policies are established to identify and analyse the risks faced by the Group, to set appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Group’s activities. The Group, through its training and management standards and procedures, aims to develop a disciplined and constructive control environment in which all employees understand their roles and obligations.

The Audit Committee oversees how management monitors compliance with the Group’s risk management policies and procedures, and reviews the adequacy of the risk management framework in relation to the risks faced by the Group. The Audit Committee is assisted in its oversight role by Internal Audit. Internal Audit undertakes both regular and ad hoc reviews of risk management controls and procedures, the results of which are reported to the Audit Committee.

The customers of the Group settle the payments in accordance with one of the following ways:

(1) by bank transfer or credit card and (2) by advanced payment. The Group is subject to credit risk only for those receivables with credits granted.

None of the Group’s customers accounted for over 10 percent of the Group’s revenue in 2020 and 2019 or of the balance of trade receivables as of 31 December 2020 and 2019.

The credit risk of the Group’s and the Company’s financial assets, which comprise bank deposits and trade and other receivables, represents the maximum exposure to credit risk is the carrying amounts of these instruments.

For trade related balances, the Group has applied the simplified approach in FRS 109 to measure the loss allowance at lifetime ECL. The Group determines the expected credit losses on these items based on historical credit loss experience based on the past due status of the debtors, adjusted as appropriate to reflect current conditions and estimates of future economic conditions. Note 10 includes further details on the loss allowance for the trade receivables.

For non-trade related balances, the Group has established a policy to perform an assessment as at 31 December 2020 and 2019, of whether a financial instrument’s credit risk has increased significantly since initial recognition, by considering the change in the risk of default occurring over the remaining life of the financial instrument. The Group groups its other receivables into Stage 1, Stage 2 and Stage 3, as described below:

Stage 1 When other receivables are first recognised, the Group recognised an allowance based on 12 months’ ECL.

Stage 2 When other receivables have shown a significant increase in credit risk since origination, the Group records an allowance for the lifetime ECLs.

Stage 3 Other receivables considered credit-impaired. The Group records an allowance for the lifetime ECLs.

Management also makes periodic collective assessments for other receivables (including amounts due from subsidiaries) as well as individual assessment on the recoverability of other receivables based on historical settlement records, past experience and other factors. The Group classified other receivables in stage 1 and continuously monitored their credit risk.

Liquidity risk is the risk that the Group will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Group’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group’s reputation.

Except for the lease liabilities, amounts due to subsidiaries and financial assets at FVTPL, the Group’s and Company’s financial assets and liabilities are due on demand or within one year from the end of the reporting period.

Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices will affect the Group’s income of the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising returns.

The Group holds some assets or liabilities in foreign currency other than functional currency and the value of these assets and liabilities are mainly subject to foreign currency risks resulting from fluctuations in exchange rates between the US dollar (USD) and the functional currency.

The Group’s and Company’s exposures to foreign currencies in US dollar equivalent are as follows:

The following table details the Group’s and Company’s sensitivity to a 10% increase and decrease in the USD against the relevant functional currencies. 10% is the sensitivity rate used when reporting foreign currency risk internally to key management personnel and represents management’s assessment of the reasonably possible change in foreign exchange rates. The sensitivity analysis includes only outstanding foreign currency denominated monetary items and adjusts their translation at the period end for a 10% change in foreign currency rates.

If the USD weakens by 10% against the functional currency of each group entity, profit before tax will increase (decrease by):

If the USD strengthens by 10% against the functional currency of each group entity, profit before tax will decrease (increase) by the same amount above.

Interest rate risk is the risk that the fair value or future cash flows of the Group’s and Company’s financial instruments will fluctuate because of changes in market interest rates. The Group and Company are not exposed to significant interest rate risk.

The fair values of current financial assets and liabilities approximate the carrying amounts of those assets and liabilities reported in the statement of financial position due to the relatively short-term maturity of these financial instruments, except for financial asset at FVTPL and lease liabilities as disclosed in Notes 8 and 15 to the financial statements respectively.

The table below analyses financial instrument carried at fair value by valuation method.

The backsolve method was employed for inferring the equity value implied by a recent financing transaction involves selecting the future outcomes available to the enterprise and then calibrating the future exit values, the probabilities for each scenario and the discount rates for the various equity securities framework and making assumptions for the expected time to liquidity, volatility and risk-free rate and then solving for the value of equity, such that value for the most recent financing equals the amount paid. Market and the issuer’s company operating conditions are then considered between the initial transaction date and subsequent measurement dates.

For the reportable segment, the Group’s chief operating decision maker reviews internal management reports on at least a quarterly basis. Management assesses the performance of the Group’s operations based on the profit before income tax, total assets and total liabilities which are measured in a manner consistent with that of the consolidated financial statements. The following summary describes the operations in the Group’s reportable segments:

No single customer represented 10 percent or more of the Group’s total revenue in 2020 and 2019.

In presenting information on the basis of geographical segments, segment revenue is based on the geographical location of revenue sources. Segment assets are based on the geographical location of the assets.


Revenue	2020	2019
	US$’000	US$’000

Taiwan	3,743	3,074
Hong Kong	3,132	3,571
Total	6,875	6,645

Non-current assets

Taiwan	10,220	213
Hong Kong	148	72
	10,368	285

On 15 January 2018, Ennoconn Corporation (“Ennoconn”) filed a complaint against one of the Company’s subsidiaries, GigaMedia Cloud Services Co., Ltd. (“GigaMedia Cloud”) in the Taiwan Taipei District Court. The complaint alleged that GigaMedia Cloud is obligated to pay Ennoconn the amount totally NTD 79,477,000 (around US$2,697,000) to compensate their loss pursuant to certain documents in connection with purchasing taximeters signed in 2015. GigaMedia Cloud filed an answer to the complaint denying all their allegations in the lack of factual and legal basis on 1 March 2018. On 15 November 2018, the Taiwan Taipei District Court announced all the Ennoconn’s claims without merit and made a judgment denying the complaint by Ennoconn.

During the current financial year, Ennoconn filed an appeal demanded the judgment which was entered in the District Court should be reversed and amended. The civil court of the second instance, the Taiwan High Court, has conducted the session of the preparatory proceedings for several times during 2019. As a result, the Taiwan High Court has ruled on 8 January 2020, that the decision of the Taiwan Taipei District Court should be partially modified and Ennoconn is entitled to the compensation of the amount of NTD 27,084,000 (around US$892,000). On 4 February 2020, GigaMedia Cloud filed its appeal to the Taiwan Supreme Court. As at the date of authorisation of these financial statements, the Taiwan Supreme Court has yet to issue its ruling.

As the litigation process is still on-going, GigaMedia Cloud is unable to assess the likelihood of the claim and the amount of potential damages. However, as the Group does not have legal or constructive obligations to absorb any losses of GigaMedia Cloud in excess of its net worth of approximately US$100,000, the impact to the Group will be capped at approximately US$100,000 accrued by the Group which will not have a material adverse effect on the Group’s financial condition, results of operations or cash flows. GigaMedia Cloud is dormant as at 31 December 2020.


Cash flows from investing activities
Interest received	613	1,483
Purchase of property, plant and equipment	(24)	(48)
Purchase of intangible assets	(8)	(14)
Purchase of financial asset at FVTPL	(10,000)	–
Refundable deposit	(9)	(2)
Net cash (used in) from investing activities	(9,428)	1,419


	2020	2019

Discount rate	0.75%	1.125%
Rate of compensation increase	2.00%	2.00%


Reconciliation of effective tax rate

Loss before tax	(1,639)	(2,677)

Tax calculated at 17% (2019: 17%)	279	455
Effect of tax rates in foreign jurisdictions	84	345
Non-deductible expenses	(111)	(80)
Current year losses for which no deferred tax asset was recognised	(276)	(723)
Recognition of tax effects of previously unrecognised tax losses	–	18
Others	24	(15)
	–	–


	2020		2019
Jurisdiction	Amount (US$’000)	Expiring year	Amount (US$’000)	Expiring year

Hong Kong	15,759	Indefinite	15,759	Indefinite
Taiwan	41,329	2021-2030	39,189	2020-2029


	PAGE
Directors’ statement	1 - 5
Independent auditor’s report	6 – 9
Statements of financial position	10
Consolidated statement of profit or loss	11
Consolidated statement of comprehensive income	12
Consolidated statement of changes in equity	13 - 14
Consolidated statement of cash flows	15
Notes to the consolidated financial statements	16 - 59


Huang, James Cheng-Ming
Hong, Chin Fock (Damian)
Huang, John Ping Chang
Huang, Billy Bing-Yuan
Liu, Nick Chia-En
Tung, Casey Kuo Chong


Held by FunTown World Limited

FunTown Hong Kong Limited	Online games	Hong Kong	100	100


	Group and Company
	2020	2019
	US$’000	US$’000
Non-current investment
Financial asset at FVTPL – Debt instrument (unquoted)	10,000	-


	2020	2019
	No. of shares	No. of shares
	’000	’000
Group and Company
In issue at 1 January and 31 December	11,052	11,052


	Total	Level 1	Level 2	Level 3
	US$’000	US$’000	US$’000	US$’000
Group and Company
2020
Financial asset at FVTPL	10,000	-	-	10,000
The following table gives information about how the fair value of the financial asset at FVTPL is determined:


Valuation technique and key input	Significant unobservable input	Rate	Sensitivity of the Input to Fair Value
Backsolve method was used to establish the equity value, and the option pricing method was used to allocate the portion of the security value	Discount for lack of marketability (“DLOM”)	From 13.5% to 26.0% for different scenarios	If the DLOM was 1% higher/lower, the carrying amount would decrease/increase by US$120,000.
	Volatility rate	41.0%	If the volatility was 1% higher/lower, the carrying amount would decrease/increase by US$30,000.



Digital entertainment service:	The development and licensure of digital entertainment products and services and other investments