CATHAY RED - Annual Report 2020 | FinancialReports.eu

Stock Code: 2501

The Annual Report is available at： https://mops.twse.com.tw https://www.cathay-red.com.tw

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2020 Annual Report

Printed on May 1, 2021

The reader is advised that this annual report has been prepared originally in Chinese. In the event of a conflict between this annual report and the original Chinese version or difference in interpretation between the two versions, the Chinese language annual report shall prevail.

I. Spokesperson Name: Chin-Liang Lin Title: Executive Vice President Tel: (02)2377-9968 E-mail: [email protected] II. Deputy Spokesperson Name: Yu-Chi Lo Title: Manager Tel: (02)2377-9968 E-mail: [email protected] III. Headquarters and Branches Taipei Headquarters Address: 2F, No. 218, Section 2, Dunhua South Road, Taipei Tel: (02) 2377-9968 Taichung Branch Address: 6F, No. 239, Minchuan Road, Taichung Tel: (04) 2301-2456 Tainan Branch Address: 3F, No. 147, Zhongshan Road, Tainan Tel: (06) 220-7869 Kaohsiung Branch Address: 6F, No. 2, Chung-cheng III Road, Kaohsiung Tel: (07)237-6699 IV. Stock Transfer Agent Finance Section, Operation Management Department, Cathay Real Estate Address: 2F, No. 218, Section 2, Dunhua South Road, Taipei Tel: (02) 2377-9968 Ext. 5311~5313 Website: http://www.cathay-red.com.tw V. Auditors Name: Jung-Huang Hsu, Chien-Che Huang Accounting Firm: Ernst & Young Taiwan Address: 9F, No. 333, Section 1, Keelung Road, Taipei Tel: (02) 2757-8888 Website: http://www.ey.com/tw VI. Overseas Securities Exchange: None VII. Corporate Website: http://www.cathay-red.com.tw

		Contents	Contents
Chapter	1	Letter to Shareholders
		I.	2020 Operating Results ………...……………………………………………...1
		II.	Outline of 2021 Business Plan …….....……………………………………..…2
		III.	Development Strategies ...………………………………………………….…..4
		IV.	The Impact of the External Competitive Environment, Regulatory Environment,
			and Macroeconomic Conditions ...……………………………………………..4
Chapter	2	Company Profile
		I.	Date of Incorporation ...………………………………………………………..7
		II.	Company History ……………………………………………………………...7
Chapter	3	Report on Corporate Governance
		I.	Organization………………………………………………………………..…..9
		II.	Information Regarding Directors, Supervisors, President, Executive Vice
			President, Senior Vice President and Heads of All Departments and
			Branches ……………………………………………………………………...16
		III.	Implementation of Corporate Governance……………………………………41
		IV.	Information of CPA Fees………….…………………………………………100
		V.	Information on the Changes in CPAs……...………………………………...100
		VI.	The Company’s Chairman, President and Managers in charge of Finance or
			Accounting Matters who has, in the Most Recent Year, held a Position in the
			Company’s Independent Auditing Firm or Its Affiliates…………………….100
		VII.	Conditions of Changes in Equity Transfer and Equity Pledge of the Chairman,
			Supervisors, Managers, and Shareholders who Hold More Than 10% of Shares
			in the Most Recent Year as of the Date of Publication of the Annual
			Report………………………………………………………………………..101
		VIII.	Relationship Among the Company’s Top Ten Shareholders………………...103
		IX.	Investment of the Company, the Company’s subsidiary, the Company’s
			Directors, Supervisors, Managers and Subsidiaries Directly or Indirectly
			Controlled by the Company on the Re-investment business, and Total
			Shareholding Ratio…………………………………………………………..105
Chapter	4	Funding Status
		I.	Capital and Shares…………………………………………………………...106
		II.	Issuance of Corporate Bonds.……………………………………………..…111
		III.	Issuance of Preferred Stocks……………………………………………...…112
		IV.	Issuance of Global Depository Receipts………………........................…….112
		V.	Issuance of Employee Stock Options ………...…………………………….112
		VI.	Issuance of New Restricted Employee Shares….…………………………...113
		VII.	New Shares Issuance in Connection with Mergers and Acquisitions……….113
		VIII.	Fund Utilization Plans and Implementation…………………………………113

Chapter	5	Operational Highlights	Operational Highlights
		I.	Business Activities…………………………………………………………...114
		II.	Market and Sales Overview………………………………………………….119
		III.	Information Regarding Employees in the Most Recent Two Years and as of the
			Date of Publication of Annual Report……………………………………….128
		IV.	Environmental Protection Expenditure……………………………………...129
		V.	Labor Relations……………………………………………………………...129
		VI.	Important Contracts………………………………………………………….135
Chapter	6	Financial Information
		I.	Five-Year Condensed Balance Sheet and Condensed Statement of
			Comprehensive Income……………………………………………………...136
		II.	Financial Analysis for The Last Five Years……………………,.…………...141
		III.	Audit Committee’s Audit Report in the Most Recent Year……...…………..146
		IV.	Parent Company only Financial Report Audited and Certified by CPAs in the
			Most Recent Year…………………………………………………………….147
		V.	Consolidated Financial Report Audited and Certified by CPAs in the Most
			Recent Year…………………………………………………………………..268
		VI.	Financial Difficulties Occurred to the Company and its Affiliated Enterprises in
			the Most Recent Years and as of the Date of Publication of Annual Report and
			the Impact on the Company’s Financial Status….…………………………..372
Chapter	7	Review of Financial Conditions, Operating Results, and Risk Evaluation
		I.	Comparison and Analysis of Financial Status……………………………….373
		II.	Comparison and Analysis of Operation Results……………………………..374
		III.	Analysis and Explanation of Changes in Cash Flow in the Most Recent
			Years………………………………………………………………………..375
		IV.	Impact of Major Capital Expenditures on Financial Business in the Most
			Recent Years………………………………………………………………....375
		V.	Investment Policy in the Most Recent Year, Main Causes for the Profits or
			Losses, Improvement Plans and Investment Plans for the Coming Year……376
		VI.	Assessment of Risk Items in the Most Recent Years and as of the Date of
			Publication of the Annual Report……………………………………………377
		VII.	Other Important Items……………………………………………………….380
Chapter	8	Special Disclosure
		I.	Information Regarding Affiliate Enterprises………………………………...381
		II.	Private Placement Securities in the Most Recent Years and as of the Date of
			Publication of the Annual Report……………………………………………397
		III.	Shares of the Company Held or Disposed of by Subsidiaries in the Most
			Recent Year and as of the Date of Publication of the Annual Report……….397
		IV.	Other Necessary Supplementary Explanations……………………………...397
		V.	Events That Have Significant Influence on Shareholders’ Equity or on the Price
			of Securities as Specified in Subparagraph 2, paragraph 2, Article 36 of
			Securities and Exchange Act in the Most Recent Year as of the Date of
			Publication of the Annual Report……………………………………………397

Chapter 1 Letter to Shareholders

I. 2020 Operating Results

(I) Results of the implementation of the business plan for 2020

Looking back on 2020, we can see that the global economy has been deeply affected by the COVID-19 pandemic, and the lockdown policies of governments in various countries have had a very severe impact. Pandemic control measures worked well domestically, and manufacturing capacity was transferred back to aid in domestic production. Taiwanese businessmen affected by the US-China trade war can now speed up their return to Taiwan, or increase their investments there, which will make the overall employment situation in Taiwan more stable. With the strong appreciation of the Taiwan Dollar, all of these factors will help boost domestic demand. The growth rate in 2020 is estimated to be 2.98%, compared with 2.71% in the previous year, which indicates "solid growth".

In the real estate sector, thanks to the above incentives, consumers have become more confident to buy property, showing an increasing trend for prices and transaction volumes. Returning capital of Taiwanese businessmen has continuously increased the demand for commercial and industrial land. It is expected that speculative buying in the property market will slow down after the government’s property measures come into effect and the Real Price Registration 2.0 Amendment Law is passed, while transactions in the property market will still be dominated by rigid demand.

In 2020, the Company completed two joint venture development projects with Japanese companies, and increased its development method. The new projects have achieved a solid sales performance, and inventory has hit a new historic low. In view of the projects, the Company has set a higher target sales rate, and increased its sales performance. In the middle of the year, the Company launched several new projects, such as "Cathay Chuan Ching" in Taoyuan and "Cathay Opulence" in Xindian. As the Company's products satisfy the needs of property purchasers, the Company has achieved a great sales performance, with an average sales rate of more than 80% by the end of the year, thus exceeding the set target. In terms of revenue, the projects accounted for on the books include four construction projects, namely the "Cathay Water Park One" in Taoyuan, "Cathay The Seeds Of Happiness" in Hsinchu, "Cathay PLUS+" in Taichung, and "Cathay One & Only Building" in Kaohsiung, as well as those completed and undelivered in the previous year. The total annual revenue reached TWD thirteen billion, three hundred and thirty-six million, two hundred and twenty thousand.

(II) Budget Implementation

There was no budget implementation in 2020 due to undisclosed financial forecasting.

(III) Please refer to pages 136–145 for the analysis of financial revenue and profitability in 2020.

(IV) Research and Development Status

At this stage, the housing market is showing a recovery trend with the increasing consumer awareness and transparency of product information. Under the premise of stabilizing the core business, the Company is actively integrating digital transformation, creating value for products and services, and further deepening the brand effect. In the future development strategy, the Company will continue to advance cost control and improve organizational efficiency, regularly review the standard construction costs, and enhance the detailed classification of building materials and equipment to strengthen competitiveness; faced with home purchasing by the new generation of young people, the Company will leverage the advantages of planning, design, and layout to ensure quality on a comprehensive basis, and adopt a three-level quality control model to maintain its reputation among customers. In response to changes in sales methods and media types, the Company will work to create values for its products and services, and will be more active in brand management. On the 55th anniversary, the Company produced a brand image micro-film to communicate with different customer groups, and promoted it through current online media to deepen the image of the brand while achieve the benefits of word-of-mouth marketing. The Company has been committed to real estate research for a long time as well, publishing the Cathay Real Estate Index with the academic units. The Company publishes research results at the end of each season and provides market information, which has become one of the real estate information references with high reliability at home.

II. Outline of 2021 Business Plan

Looking ahead to the year of 2021, and driven by abundant capital in the domestic housing market, although the COVID-19 pandemic has raged through many countries and regions across the world, Taiwanese businessmen returned their working capital to Taiwan to accelerate the rigid rate of domestic demand for properties, which has in turn helped bolster the domestic demand.

(I) Business Objectives, Expected Sales and the Reasons Thereof for 2020

This year, the Company's management policy will follow the concepts of "five years of deep cultivation, ten years of new environment" and "create value, deepen the brand". It will also strengthen its core business, actively integrate under a digital transformation, provide greater product service value, and create a more profound brand effect. The Company keeps striving to be a comprehensive developer as our future development strategy. In the core business, in addition to control of the basic scheme reserve, we will acquire lands in more diverse ways, including joint venture development and urban renewal for business use, etc. In the aspect of land development, the Company will continue to increase the development models. Looking ahead to the upcoming year, in addition to stabilizing the reserve of land inventory, the Company will continue to participate in public urban renewal program, expand the development areas. As for the launch of new projects, the Company will set a higher target sales rate and increase the sales performance.

In terms of reinvestment, the health management and hotel business are undergoing steady operations. New sites and clinics were added to the business travel and health management businesses last year. Following this, the Company will optimize its efficiency and continue to expand sites in parallel to enhance its service and expand its business territory. The Company's future development strategy will be developing towards a comprehensive developer with diversified development methods and diversified business operations. The Company will continue digital integration and transformation to improve work efficiency internally and improve service quality externally. Under the premise of enhancing the business, it will increase revenue-based assets and actively evaluate in investment in other new business activities to expand the development and business territory while creating higher profit margins.

The Company has achieved good sales in its new projects and construction sites under construction in 2020. The inventory has dropped to a historical low, so it has actively purchased land in the prime real estate to have more parcels of land in inventory. Therefore, it will actively launch new projects in 2021 while setting a higher sales target rate with the aim of increasing its sales performance. In the first half of this year, the Company plans to launch "Cathay XiJing" in Taoyuan, "Cathay Of Riverside" in Sanchong, an urban renewal project called "Cathay Relaxing Sunny Day" in Nangang, and "Dun Nan Lin Garden" in Taipei. The Company also plans to launch "Cathay The Park" in Taichung, and the Japanese Mitsui Real Estate Joint Venture project "UNI PARK" in Tainan in the southern central region. In the second half of the year, it is expected to launch nine projects, such as the "Renping Section" in Taichung, "Cathay Leisurely Place" in Nangang, and "Wenlin North Road" in Beitou. The Company will continue to deepen its reserves of land and transform to develop itself into an integrated developer.

(II) Important Production & Sales Policies for 2020

1. Five years of in-depth development

In the first five years, the Company will be dedicated to the optimization of the organization and operating process, continue to improve and systematize its core business, and strive to increase land inventory and revenue. In the following five years, the Company will expand the development areas, adopt more diversified development models, and actively participate in development of commercial and complex buildings, and increase development of income-based assets, while diversifying the reinvestment business, maintaining the brand image and engaging in innovative development, and actively introducing digital integration to create added value for products and services and to build up competitive momentum for the expansion of the business territory with five years of in-depth development in the future.

2. Ten years of new horizons

Under the premise of a stable business, faced with the new generation of home buyers, the Company will not only improve construction technology and design strengths, implement overall quality, optimize customer services, develop the brand image to convey

the value but increase income-based assets, create stable revenue, and cultivate core talents. It will also attach importance to knowledge management and pass down its experience. With the continuous expansion of reinvestment in new bases, revenue and profits are gradually increasing. The entire group is working together to expand the comprehensive developer's business landscape.

III. Development Strategies

(I) Short-term Development Strategies
Strengthen brand value
Diversify land development strategies
Increase sales through planning practical products
Integrate marketing resources for digital transformation
Optimize customer services to maintain reputation
Expand diversified business deployment steadily
(II) Long-term Development Strategies
Pass down the Company's sustainable brand value
Diversify deployment to leverage comprehensive business opportunities
Plan sustainable, safe and energy-efficient buildings
Advance construction techniques and comprehensive quality
Improve community quality with sustainable sales services
Increase the growth of diversified business operations

IV. The Impact of the External Competition Environment, Regulatory Environment, and Macroeconomic Conditions

(I) External Competition Environment

In terms of market supply and demand, according to statistics from the Construction and Planning Agency, Ministry of the Interior, as of the third quarter of 2020, the total floor area of residential buildings nationwide with construction license obtained has increased by 8.8% compared with that in 2019, which has been growing for four consecutive years. In terms of land transaction volume, it has exceeded NT$300 billion for two consecutive years since 2019 with the highest and the second-highest performance in history, indicating that builders remain optimistic about the housing market, and the housing market is showing a pattern of recovery. The research in the quarterly report of Cathay Real Estate Index also shows that in 2020, the overall house price in the national pre-sale real estate market has increased with stable volume, number of projects and transactions was higher than 2019, and the housing market is recovering. On the whole, the current real estate market is gradually recovering and it is in the consolidation stage, and the overall trend is expected to continue. In the future, adjustment may be made based on factors, such as the development of the global COVID-19 pandemic, China-US trade war, market interest rates, capital levels, the government's housing market policies, market supply and demand, and the development of the cross-strait relations.

As for land supply, there is a narrow territory with a large population in the urban area of Taiwan, and the building land is sparse due to the limited land and decades of development of building industry, especially in the prosperous area, the land has almost been developed completely and the land price keeps rising; as citizens' awareness on property right are gradually increasing, the government tightens the policies of land redistribution and levy, it becomes more difficult to acquire lands.

(II) Regulatory Environment

1. Laws and regulations of urban planning

The Statute for Expediting Reconstruction of Urban Unsafe and Old Buildings has been amended and promulgated for implementation, including encouraging the expansion of the area in reconstruction plans, updating the application rewards, and protecting people's rights and interests. This has led to a significant increase in the number of dangerous old building reconstruction applications accepted by the county and city governments, which also accelerate up the reconstruction to improve the city landscape.

2. Other Laws and Regulations

In view of recent housing market price fluctuations and frequent resale of pre-sale orders, the Executive Yuan implemented the "Sound Real Estate Market Plan" in December 2020, in which the National Development Council joined hands with the Ministry of the Interior, the Ministry of Finance, the Central Bank, and the Financial Supervisory Commission to establish a unit across different ministries and departments to crack down on real estate speculation. The main direction is to amend the Equalization of Land Rights Act to accelerate the promotion of real price registration 2.0 to fully disclose the transaction information of the real estate market, manage pre-sale housing transactions, and restrict the transfer of pre-sale orders, so as to achieve the purpose of stabilizing the real estate market.

(III) Macroeconomic Conditions

In 2020, the number of buildings sold and transferred nationwide was 326,000, with an annual growth rate of 8.7%, a record high in the past seven years. The balance of building and residential loans also continued to rise. The overall transaction volume gradually has increased after it hit the bottom in 2016. The Central Bank’s interest rate has remained low since 2018, the consumers are also benefited by the low housing mortgage interest right, house buyers’ confidence has restored, and the overall real estate market has recovered and bounced back in 2020.

Looking ahead to 2021, in terms of the international situation, the current COVID-19 pandemic is still severe, but vaccine development has progressed, and many countries have implemented vaccine programs, which are expected to alleviate the pressure of the pandemic. However, the strength of the global economic recovery remains to be observed. As for the domestic situation, in addition to the need to be cautious to the development of the pandemic, the housing market policies implemented by the central government also need to be closely monitored. It is expected that the market will still be dominated by the rigid demand for

self-occupation in the following year with a stable trend in price and volume.

On the whole, the data in 2020 showed that the housing market were recovering, and the housing market performed better than in 2019, demonstrating an upward trend in prices with stable transaction volume. After the high price was adjusted in 2013 and hit the bottom in 2016, the current price is still showing a trend of consolidation at a high level while the demand side remains stable. The risk of price adjustment is already low, but whether the development of the pandemic will affect the housing market again will continue to be monitored subsequently.

Chairman: Ching-Kuei Chang

Chapter 2 Company Profile

I. Date of Incorporation

Founded on September 14, 1964; incorporated upon approval of Ministry of Economic Affairs on December 1, 1964.

II. Company History

In view of the social stability, spread of education, economic growth and increase in population, as well as the serious shortage of housing in the 1960s, the Company was prepared to set up for construction of national residences on June 1, 1964. On July 3, in the same year, the Company conducted the public offering upon the approval of the Order of Securities and Exchange Commission (SEC) (53) No. 520, and the capitalization was NT$100 Million, divided into 10 Million shares for public issue. The Company was ready to be listed with stock approved on March 5, 1965, and developed into a formal listed company upon approval with flourishing business and steady finance on October 28, 1967. Over the years, the Company has always been adhering to the concept of “ integrity, professionalism and prudent operation. "Although going through many fluctuations in the past, it can still develop and thrive in a fiercely competitive market. With the care and support of the majority of customers and the efforts of all employees, the Company has developed into a domestic large-scale construction company. Now the Company ＇ s business has covered all major metropolitan areas and built more than 50,000 houses in various types in Taiwan.

For the propose of improving the domestic real estate information, the “ Cathay Real Estate Index ＂ has been compiled by the Company with the Real Estate Research Center of the National Chengchi University since the end of 2002. It is released quarterly and has become one of the real estate information with the highest reference value in the society.

In terms of re-investment, the Company established the Cathay Real Estate Management Co., Ltd. in 2005, which merged into Shihua International Leasing Co., Ltd. with Lin Yuan Property Management Co. Ltd. and San Ching Engineering Co., Ltd. in July 2011, completing the layout of the upstream, middle and downstream industries of the real estate. In order to expand the brand value, it established real estate development companies Jinhua Realty Co., Ltd. and Bannan Realty Co., Ltd., through a joint venture with Mitsui Fudosan Taiwan Co., Ltd., an investee of the Japanese Mitsui Fudosan Co., Ltd. and merge Lin Yuan Property Management Co. Ltd. in 2020, to be committed to providing a full range of real estate services to enhance the group's synergy. In order to increase the stable long-term income, the Company has actively engaged in the development of new businesses, including Cathay Healthcare Management Co., Ltd., Cathay Hospitality Management Co., Ltd., Cathay Hospitality Consulting Co., Ltd., and Cymbal Medical Network Co., Ltd. At present, the re-investment has been stable and steady in

operation. In terms of health management business, the Company is actively pondering value-added services and products to expand capacities; in terms of hotel business, it will continue to integrate diversified marketing and deepen brand value to enhance customer loyalty; in terms of medical clinic business, it will continue to expand and develop complete health services. Looking ahead, the Company will actively keep abreast of the trends, move toward a comprehensive developer, focus on strengthening the core business, digital integration, value creation, and deepen the brand image. The Company aims to expand the development and business territory, and create a greater profit margin.

With several times of increase/decrease in value, the current total paid-up capital of the Company is NT$11,595,611,000.

Chapter 3 Report on Corporate Governance

I. Organization

(I) Organization Chart

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Shareholders’ Meeting
Audit Committee
Board of Directors
Remuneration Committee
Chairman
Vice Chairman
President
President Office
Senior Executive Vice President
Executive Vice President
Senior Manager
Audit Department Human Resources Section Technology Department Project Department III Project Department II Project Department I Development Department
Operation Management Department
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(II) Major Corporate Functions
Audit Department
(1) Provide recommendations for improvement of internal audit, internal control and assessment on operation efficiency.
(2) Audit items assigned by the Chairman, Vice Chairman, Directors and President and commissioned by all units.
(3) Inspection and reporting items of the Company's business, financial audit and various inventory products.
(4) Other related items.
President Office
(1) Supervising all business activities within the Company.
(2) Preparation, promotion and tracking analysis of the Company's annual business target, business plan and operation guidelines.
(3) Research, preparation, review, and analysis of the Company's medium and long-term business operation strategy and development direction.
(4) Establishment, review and effect tracking of operation models like internal working process and organization structure.
(5) Coordination and integration of various subsidiaries and inter-departmental resources.
(6) Preparation and promotion of the Company's important policies and strategic project plan.
(7) Promotion and integration of Corporate Social Responsibility (CSR), business integrity, and brand management.
(8) Other related items.
Development Department
(1) Survey statistics and research of real estate market.
(2) Research on economic and real estate situation.
(3) Collection, investigation and analysis of various environment dynamics and business management information and construction industry trend in Taiwan.
(4) Special research report project.
(5) Investigation, analysis and evaluation of land planning data.
(6) Review and amendment of the analysis calculation standard for gross profit of annual land planning.
(7) Collection and analysis of construction laws and regulations and urban planning data.
(8) Equity investigation and signing of transaction, purchase, exchange and joint construction of real estate.
(9) Land acquisition, resurvey, replanning and other items.
(10) Handover, re-measurement, transfer and management of real estate.
(11) Removal of above-ground buildings and registration of loss of buildings.
(12) Applications such as land subdivision, consolidation and land category change.
(13) Management, trading and exchange of scattered land.
(14) Purchase or lease of public real estate.

(15) Tax-related items before the land is transferred to the customer.

(16) Inventory and auditor of land rights before handover

(17) Urban renewal-related business promotion.

(18) Joint development with MRT and other project development and bidding.
(19) Assistance in subsidiaries' extension related business.
(20) Supplier management and system data maintenance.
(21) Other related items.

4. Project I and II

(1) Preparation, control and implementation of budget, gross profit and progress targets of the projects.
(2) Preparation and implementation of product positioning, sales strategy and marketing plan.
(3) Selection, appointment and contracting of dealers, architects, consultants and agents.
(4) Investigation and measurement of the foundation.
(5) Review of drawings for architectural design.
(6) Selection of building materials and equipment.
(7) Application and review of building license and related items.
(8) Control of design, production and construction of sales tools, reception centers and sample rooms and related items.
(9) Pricing of real estate.
(10) Sales, leasing, contracting and collection of real estate and related items.
(11) Preparation and verification of contracting and construction drawings.
(12) Control of contract related to the project business.
(13) Provision, contact, coordination and verification of information regarding changes in customers.
(14) Transfer of house and land ownership and establishment of mortgage.
(15) Control of building remeasurement, preservation registration and housing taxation.
(16) Recommendation of loan bank for customer and disposal of loan procedures.
(17) Notification of collection and urgency of customer's payment and additional/reduced payment.
(18) Verification of additional/reduced design of engineering change.
(19) Cooperating with the Company to provide financial statements related to the project business.
(20) Organization of the project result display (general inspection) and customer inspection.
(21) Item related to the delivery of housing.
(22) Acceptance and handover of public equipment.
(23) Assistance in the establishment of the Community Management Committee.
(24) Customer service within one year upon acquisition of housing license.
(25) Organization of project completion report and project handover document.

(26) Development of and amendment to standard operating procedures, including

drawing review, sales, customized change, inspection and delivery, and public facilities handover.

(27) Supplier management and system data maintenance.
(28) Other related items.
Project Department III
(1) Items related to investigation and research of real estate market.
(2) Investigation, analysis and evaluation of land planning data.
(3) Items related to land acquisition and management.
(4) Preparation, control and implementation of budget, gross profit and progress targets of the projects.
(5) Preparation and implementation of product positioning, sales strategy and marketing plan.
(6) Selection, appointment and contracting of dealers, architects, consultants and agents.
(7) Investigation and measurement of the foundation.
(8) Review of drawings for architectural design.
(9) Selection of building materials and equipment.
(10) Application and review of building license and related items.
(11) Control of design, production and construction of sales tools, reception centers and sample rooms and related items.
(12) Pricing of real estate.
(13) Sales, leasing, contracting and collection of real estate and related items.
(14) Preparation and verification of contracting and construction drawings.
(15) Control of contract related to the project business.
(16) Provision, contact, coordination and verification of information regarding changes in customers.
(17) Transfer of house and land ownership and establishment of mortgage.
(18) Control of building remeasurement, preservation registration and housing taxation.
(19) Recommendation of loan bank for customer and disposal of loan procedures.
(20) Notification of collection and urgency of customer's payment and additional/reduced payment.
(21) Verification of additional/reduced design of engineering change.
(22) Cooperating with the Company to provide financial statements related to the project business.
(23) Organization of the project result display (general inspection) and customer inspection.
(24) Item related to the delivery of housing.
(25) Acceptance and handover of public equipment.
(26) Assistance in the establishment of the Community Management Committee.
(27) Organization of project completion report and project handover document.
(28) Contact and reply, on-site investigation, tracing and treatment of customer service cases under authority.

(29) Data collection, statistical analysis and review of customer service cases under authority.
(30) Acceptance and disposal of customer complain, litigation, important case and letters from management committee under authority.
(31) Control of repair engineering contract under authority.
(32) Supplier management and system data maintenance.
(33) Other related items.
6.Technology Department
(1) Preparation and amendment of engineering-related systems, specifications and standard operating procedures.
(2) Recommended use of building materials, equipment and construction methods and collection and maintenance of relevant materials.
(3) Assistance in technical support for group relationship and enterprise development project.
(4) Calculation, budgeting and auditing of various work quantities.
(5) Contracting of various projects and conclusion of contract.
(6) Review and amendment of annual standard construction costs.
(7) Examination on qualification of manufacturer of mechatronic engineering and structure.
(8) Review of the structure, mechanical and electrical design and construction drawings of the project.
(9) Review of additional/reduced design of engineering change.
(10) Construction period calculation and schedule control.
(11) Preparation of supervision plan and review of construction plan and construction drawing.
(12) Inspection and quality supervision of building, structure, mechatronic engineering, civil engineering and equipment construction.
(13) Coordination and integration of construction management in the construction site.
(14) Disposal of assessment and valuation.
(15) Items related to project acceptance (including initial inspection and re-inspection).
(16) Preparation and amendment of customer service related systems, specifications and standard operating procedures.
(17) Contact and reply, on-site investigation, tracing and treatment of customer service cases after handover of Project Department I and II.
(18) Data collection, statistical analysis and review of customer service cases.
(19) Customer data collection, statistical analysis, updating and maintenance.
(20) Preparation and implementation of customer relationship business strategy and planning.
(21) Acceptance and disposal of customer complain, litigation, important case and letters from management committee after handover of Project Department I and II.
(22) Control of repair engineering contract after handover of Project Department I and II.

(23) Custody of project completion report and project completion data of Project Department I and II.
(24) Supplier management and system data maintenance.
(25) Other related items.
Operation Management Department
(1) Control of finance, tax and other accounting management items.
(2) Preparation of financial budget, budget estimate and final accounting.
(3) Final accounting for completed project.
(4) Coordination and contact with the accounting business of the Group.
(5) Financial analysis and feedback of the same industry.
(6) Post-investment operation overview and performance tracking, and proposal of strategies and recommendations.
(7) Planning and implementation of long-term and short-term capital.
(8) Custody of cash, bills and marketable securities and management of cashier accounting.
(9) Custody of various performance and guarantee bills during the execution of the Company.
(10) Operation Management of the safe deposit box of treasury.
(11) Holding roadshow for legal person.
(12) Comprehensive management of share business.
(13) Sending and receiving of codes and official documents with the Company's official seal and management of documents.
(14) The Company's business registration and trademark management.
(15) Control of the development trend of the Group and organization of the relevant historical materials.
(16) Management of occupational safety and health.
(17) Leasing, procurement, management and maintenance of the office and articles therein.
(18) Procurement and production of various printed products.
(19) Contracting and purchase of sales advertising projects and items related to delivery of housing.
(20) Leasing, taxation, insurance, management and maintenance of investment property.
(21) Purchase, leasing, sales, taxation, insurance, management and maintenance of passenger cars.
(22) Consultation of legal affairs and project support for various units.
(23) Countersign and review of contracts concerning foreign affairs and other legal documents.
(24) Co-organization and disposal of litigation cases and non-litigation affairs.
(25) Abidance management and assistance in enforcement of laws and regulations.
(26) Operations related to Corporate Governance Team of the Corporate Social Responsibility Committee and social welfare.

(27) Discussion proceedings of the Board of Shareholders, the Board of Directors and other functional committees.
(28) Planning, construction and management of the Company's information system architecture.
(29) Assistance in the development of information systems of subsidiaries and integration of the Group's information operation platform.
(30) Establishment and promotion of the Company's information security management mechanism.
(31) Planning, construction and management of the Company's database, network system and hardware/software equipment.
(32) Development, maintenance, improvement, and integration of various application systems.
(33) Planning of the education training of the Company's information system.
Human Resources Section
(1) Preparation, planning and implementation of the Company's human resources strategies, policies and plans.
(2) Planning and implementation of salary awards, year-end bonus system and issuance.
(3) Planning and implementation of personnel recruitment and appointment procedures, and personnel development and talent reserve planning.
(4) Planning of the performance management system, employee performance appraisal and promotion.
(5) Execution of compensation and performance appraisal on Directors and Managers.
(6) Preparation and maintenance of personnel-related rules and regulations, management of personnel information and systems, and analysis of the efficiency of human resources.
(7) Planning and implementation of personnel appointment and dismissal, transfer, attendance, reward and punishment, business trip and vacation, pension and insurance.
(8) Distribution of material information regarding human resources such as personnel changes.

II. Information Regarding Directors, Supervisors, President, Executive Vice President, Senior Vice President and Heads of All Departments and Branches

Departments and Branches	Departments and Branches	Departments and Branches	Departments and Branches	Departments and Branches	Departments and Branches	Departments and Branches
(I) Information on directors and supervisors (1)																	April 13, 2021
Title (Note 1)	Nationality / Place of Incorporation	Name	Gender	Date of Election (Accession)	Term	Date of First Elected (Note 2)	Shares held	When Elected	Current Shareholding		Spouse & Minor Shareholding		Shareholding by Nominee Arrangement		Major (Academic Degree) Experience (Note 3)	Other Positions in the Company and Other Companies (Note 4.5)	Executives, Directors or Supervisors Who are Spouses or within Two Degrees of Kinship
							Shares	Percentage	Shares	Percentage	Shares	Percentage	Shares	Percentage			Position	Name	Relationship
Chairman	The Republic of China	He Xin Industrial Co., Ltd. Representative: Ching-Kuei Chang	Male	2020.06.12	3 years	2017.06.16	22,000,000	1.90%	22,000,000	1.90%	0	0	0	0	Feng Chia University (Bachelor of Architecture)	Chairman of Cathay Real Estate Management Co., Ltd. Chairman of Cathay Healthcare Inc. Chairman of Cathay Real Estate Foundation Chairman of Cymbal Medical Network Co., Ltd. ~~C~~hairman of Xinde Co., Ltd. Chairman of Cymlin Co., Ltd. Director of Cathay Charitable Foundation Supervisor of Taiwan Real Estate Management Co., Ltd. Director of Cathay General Hospital	None
						2000.01.19	20,822	0	20,822	0
Director	The Republic of China	He Xin Industrial Co., Ltd. Representative: Chung-Yan Tsai	Male	2020.06.12	3 years	2017.06.16	22,000,000	1.90%	22,000,000	1.90%	0	0	0	0	San Francisco State University (Master of Public Administration, MPA)	Senior Executive Vice President of Cathay Real Estate Corporation Director of Cathay Life Insurance Corporation Vice Chairman of Cathay Healthcare Inc. Director of Cymbal Medical Network Co., Ltd. Director of Xinde Co., Ltd. Director of Cymlin Co., Ltd. Executive Vice President of LiangTingIndustrial Co.,Ltd.	None
						2009.03.11	0	0	0	0
Director	The Republic of China	He Xin Industrial Co., Ltd. Representative: Lee Hung Ming	Male	2020.06.12	3 years	2017.06.16	22,000,000	1.90%	22,000,000	1.90%	0	0	0	0	Chinese Culture University (Bachelor of law)	President of Cathay Real Estate Corporation Director & President of Cathay Real Estate Management Co., Ltd. Chairman of Cathay Hospitality Management Co., Ltd Chairman of Cathay Hotel Management Consultant Co., Ltd. Chairman of Nankang International No. 1 Corporation Chairman of Nankang International No. 2 Corporation Director of Cathay Real Estate Foundation	None
						2015.03.23	0	0	0	0

Title (Note 1)	Nationality / Place of Incorporation	Name	Gender	Date of Election (Accession)	Term	Date of First Elected (Note 2)	Shares held	When Elected	Current Shareholding	Current Shareholding	Spouse & Minor Shareholding	Spouse & Minor Shareholding	Shareholding by Nominee Arrangement	Shareholding by Nominee Arrangement	Major (Academic Degree) Experience (Note 3)	Other Positions in the Company and Other Companies (Note 4.5)	Executives, Directors or Supervisors Who are Spouses or within Two Degrees of Kinship	Executives, Directors or Supervisors Who are Spouses or within Two Degrees of Kinship	Executives, Directors or Supervisors Who are Spouses or within Two Degrees of Kinship
							Shares	Percentage	Shares	Percentage	Shares	Percentage	Shares	Percentage			Position	Name	Relationship
Director	The Republic of China	Employee Welfare Committee of Cathay Real Estate Corporation Representative: Chin-Liang Lin	Male	2020.06.12	3 years	2017.06.16	2,754,800	0.24%	2,754,800	0.24%	0	0	0	0	National Cheng Kung University (Bachelor of Architecture)	Cathay Real Estate Holding Corporation Executive Vice President Director of Cathay Real Estate Management Co., Ltd. Director of Cathay Hospitality Management Director of Cathay Hotel Management Consultant Co., Ltd. Director of Nankang International No. 1 Corporation Director of Nankang International No. 2 Corporation Supervisor of Symphox Information Co., Ltd. Chairman & President of Jinhua RealtyCo.,Ltd.	None
						100.06.10	0	0	0	0
Director	Republic of China	Cathay Charity Foundation Representative: Daniel Tung	Male	2020.06.12	3 years	2017.06.16	5,941,332	0.51%	5,941,332	0.51%	0	0	0	0	Indiana University (Master of Business Administration, MBA)	Cathay Real Estate Holding Corporation Senior Executive Vice President Director of Cathay Real Estate Foundation Director of Taiwan Star Telecom Co., Ltd. Chairman & President of Bannan Realty Co., Ltd.	None
						2015.07.01	0	0	0	0
Director	Canada	Cathay Real Estate Foundation Representative: Chung-Chang Chu	Male	2020.06.12	3 years	2017.06.16	2,353,690	0.20%	2,353,690	0.20%	0	0	0	0	York University (Master of Business Administration, MBA)	Chairman of Meifeng Textile & Dyeing Co., Ltd. Chairman of Meifeng Corporation Director of Cathay Life Insurance Corporation	None
						1999.05.19	11,719	0	11,719	0

Title (Note 1)	Nationality / Place of Incorporation	Name	Gender	Date of Election (Accession)	Term	Date of First Elected (Note 2)	Shares held When Elected	Shares held When Elected	Current Shareholding	Current Shareholding	Spouse & Minor Shareholding	Spouse & Minor Shareholding	Shareholding by Nominee Arrangement	Shareholding by Nominee Arrangement	Major (Academic Degree) Experience (Note 3)	Other Positions in the Company and Other Companies (Note 4.5)	Executives, Directors or Supervisors Who are Spouses or within Two Degrees of Kinship	Executives, Directors or Supervisors Who are Spouses or within Two Degrees of Kinship	Executives, Directors or Supervisors Who are Spouses or within Two Degrees of Kinship
							Shares	Percentage	Shares	Percentage	Shares	Percentage	Shares	Percentage			Position	Name	Relationship
Independent Director	The Republic of China	Shiou-Ling Lin	Female	2020.06.12	3 years	2014.06.06	0	0	0	0	0	0	0	0	National Taiwan University (Bachelor of law)	Chairman of Dasheng IV Venture Capital Co., Ltd. Chairman of Baku Investment Co., Ltd. Independent Director of Accton Technology Corporation Director of Dasheng II Venture Capital Co., Ltd. Director of Dasheng Financial Consultant Co., Ltd. Chairman of Dasheng Venture Capital Co., Ltd. Chairman of Dasheng I Venture Capital Co., Ltd. Director of Dasheng V Venture Capital Co., Ltd. Director of KHL Investment I Limited (BVI) Director of Scope Star International Limited (BVI) Director of Gloss Victory International Limited (BVI)	None
Independent Director	The Republic of China	Chih-Wei Wu	Male	2020.06.12	3 years	2014.06.06	0	0	0	0	0	0	0	0	California State University (Master of Business Administration, MBA)	Independent Director of Preferred Bank Chairman of Zhide Investment Co., Ltd. Director of Taiwan Farm Industry Co., Ltd. Director of Longchen Paper & Packaging Co., Ltd. Director of Hematech Biotherapeutics Inc. Independent Director of Les enphants Co.,Ltd.	None
Independent Director	The Republic of China	James Y. Chang	Male	2020.06.12	3 years	2017.06.16	0	0	0	0	0	0	0	0	Southern Methodist University (Doctor of Laws)	None	None

Note 1: The name and representative of the institutional shareholder shall be listed (for a representative of the institutional shareholder, the name of the institutional shareholder shall be indicated) and shall be filled in the following Table 1.
Note 2: The time of holding the position of a director or supervisor for the first time shall be filled out, and the interruption, if any, shall be noted.
Note 3: If there is any experience of holding the position related to the current position, such as taking office in the CPA firm or affiliate enterprises before the term abovementioned, the titles and duties shall be stated.
Note 4: Where the Chairman and the President or person of an equivalent post (the top-level manager) of the Company are the same person, spouses, or relatives within the first degree of kinship, an explanation shall be given of the reason for, reasonableness, necessity thereof, and the measures adopted in response thereto (for example, increase the number of independent directors, and there shall be more than half of the directors who do not concurrently serve as employees or managers).
Note 5: The directors' part-time job shall be subject to the information on April 14, 2021. Note 6: The Company has set up an Audit Committee replacing the supervisor since June 16, 2017 in accordance with the provisions of Article 14-4 of the Securities Exchange Act.

Table 1: Substantial shareholders of institutional shareholders

As of April 13, 2021

	As of April 13,2021
Name of institutional shareholder(Note 1)	Substantial shareholders of institutional shareholders (Note 2)
He Xin Industrial Co., Ltd.	Tsai, Cheng-Ta 45%, Tsai, Hung-Tu 45%, Tsai, Cheng-Chiu 10%
Cathay Charity Foundation	Not applicable (Cathay Life Insurance Co. Ltd. (50%) (the founder); Cathay Real Estate Development Co., Ltd. (50%) (the founder))
Employee Welfare Committee of Cathay Real Estate Corporation	Not applicable (Not a corporate entity, contributions to employee’ welfare are made monthly by Cathay Real Estate Development Co. through monthlyrevenue.)
Cathay Real Estate Foundation	Not applicable (Cathay Life Insurance Co. Ltd. (97.5%) (the founder); Cathay Real Estate Development Co., Ltd. (2.5%) (the founder))

Note 1: If the directors and supervisors are representatives of institutional shareholders, the name of the institutional shareholder shall be filled out. Note 2: The name of the substantial shareholder of the institutional shareholder (who holds the top ten shareholdings) and its shareholding ratio shall be filled out. If the substantial shareholder is a legal person, the Table 2 below shall be filled out.

Note 3: For corporate shareholders that are not entities, the name of capital contributor or donor and percentage of capital contribution or donation are shown instead of shareholder name and shareholding percentage.

Table 2: Substantial shareholder of substantial shareholders as legal person in Table 1

Table 2: Substantial shareholder	of substantial shareholders as legal person in Table 1
	As of April 13,2021
Name of legal person (note 1)	Substantial shareholder of legal person (note 2)
None	None

Note 1: If a substantial shareholder in the above table is a legal person, the name of the legal person shall be filled out.

Note 2: The name of the substantial shareholder of the legal person (who holds the top ten shareholdings) and its shareholding ratio shall be filled out.

(I) Information on Directors and Supervisors (2)

	As April 13,2021	As April 13,2021	As April 13,2021	As April 13,2021	As April 13,2021	As April 13,2021	As April 13,2021	As April 13,2021	As April 13,2021	As April 13,2021	As April 13,2021	As April 13,2021	As April 13,2021	As April 13,2021	As April 13,2021	As April 13,2021
Criteria Name	Meets One of the Following Professional Qualification Requirements, Together with at Least Five Years’ Work Experience			Independence Criteria (Note1)												Number of Other Public Companies in Which the Individual is Concurrently Serving as an Remuneration Committee Member
	An Instructor or Higher Position in a Departme nt of Commerc e, Law, Finance, Accountin g, or Other Academic Departme nt Related to the Business Needs of the Company in a Public or Private Junior College, College or University	A Judge, Public Prosecutor, Attorney, Certified Public Accountant, or Other Professional or Technical Specialist Who has Passed a National Examination and been Awarded a Certificate in a Profession Necessary for the Business of the Company	Have Work Experienc e in the Areas of Commerc e, Law, Finance, or Accountin g, or Otherwise Necessary for the Business of the Company	1	2	3	4	5	6	7	8	9	10	11	12
Ching- Kuei Chang																None
Chung- Yan Tsai																None
Lee Hung Ming																None
Chin-Li angLin																None
Daniel Tung																None
Chung- Chang Chu																None

Shiou- Ling Lin																1
Chih-W eiWu																1
James Y. Chang																None

Note 1: Please tick the corresponding boxes that apply to the Directors or Supervisors during the two years prior to being elected or during the term of office. 
(1) Not an employee of the Company or any of its affiliates.
(2) Not a director or supervisor of the Company or any of its affiliates. Not applicable in cases where the person is an Independent Director of the Company, its parent company, any subsidiary or any subsidiaries of the same parent company as appointed in accordance with the Act or with the laws of the country of the parent or subsidiary.
(3) Not a natural-person shareholder who holds shares, together with those held by the person’s spouse, minor children, or held by the person under others’ names, in an aggregate amount of 1% or more of the total number of outstanding shares of the Company or ranking in the top 10 in holdings.
(4) Not a spouse, relative within the second degree of kinship, or lineal relative within the third degree of kinship, of the manager listed in (1) or any person listed in (2) and (3).
(5) Not a Director, Supervisor, or employee of a corporate shareholder who directly holds 5% or more of the total number of outstanding shares of the Company or who holds shares ranking in the top five holdings or who appointed representative to be company Director or Supervisor in accordance with Article 27 paragraph 1 or 2, Company Act. Not applicable in cases where the person is an Independent Director of the Company, its parent company, any subsidiary or any subsidiaries of the same parent company as appointed in accordance with the Act or with the laws of the country of the parent or subsidiary.
(6) Not a Director, Supervisor, or employee who controlled another company’s majority of the Company's Director seats or voting shares. Not applicable in cases where the person is an Independent Director of the Company, its parent company, any subsidiary or any subsidiaries of the same parent company as appointed in accordance with the Act or with the laws of the country of the parent or subsidiary.
(7) Not a chairperson, general manager, or person holding an equivalent position of the Company and a person in any of those positions at another company or institution are the same person or are spouses. Not applicable in cases where the person is an Independent Director of the Company, its parent company, any subsidiary or any subsidiaries of the same parent company as appointed in accordance with the Act or with the laws of the country of the parent or subsidiary.
(8) Not a director, supervisor, officer, or shareholder holding five percent or more of the shares, of a specified company or institution that has a financial or business relationship with the Company. Not applicable in cases where the specific company or institution hold more than twenty percent and not more than fifty percent of the company’s issued shares, and where the person is an Independent Director of the Company, its parent company, any subsidiary or any subsidiaries of the same parent company as appointed in accordance with the Act or local laws.
(9) Not a professional individual who, or an owner, partner, director, supervisor, or officer of a sole proprietorship, partnership, company, or institution that, provides auditing services to the Company or any affiliate of the Company, or that provides commercial, legal, financial, accounting or related services to the Company or any affiliate of the Company for which the provider in the past 2 years has received cumulative compensation exceeding NT$500,000, or a spouse thereof. This restriction does not apply to a member of the remuneration committee, public tender offer review committee, or special committee for merger/consolidation and acquisition, who exercises powers pursuant to the Stock Exchange Act or to the Business Mergers and Acquisitions Act or related laws or regulations.
(10) Not having a marital relationship, or a relative within the second degree of kinship to any other director of the Company.
(11) Not related to any circumstances in Article 30 of the Company Act.
(10) Not a governmental, juridical person or its representative as defined in Article 27 of the Company Act.

(II) Information on the President, Senior Executive Vice Presidents, Executive Vice Presidents, Senior Vice Presidents, and Heads of Departments and Branches

Branches	Branches	Branches	Branches	Branches
													As of April 13,2021
Position (Note 1)	Nationality	Name	Gender	Date of Election					Shareholding by		Major Experience (Education) (Note 2)	Concurrent Position at Other Companies	Managers who are Spouses or Relatives Within Second Degrees of Kinship
							Spouse’s/Minor’s
					Shareholding				Nominee
							Shareholding
									Arrangement

				(Accession)	Shares	Percentage	Shares	Percentage	Shares	Percentage			Position	Name	Relationship
President	The Republic of China	Lee Hung Ming	Male	2015.03.01	0	0	0	0	0	0	Chinese Culture University (Bachelor of law)	Director & President of Cathay Real Estate Management Co., Ltd. Chairman of Cathay Hospitality Management Co., Ltd Chairman of Cathay Hotel Management Consultant Co., Ltd. Chairman of Nankang International No. 1	None

Position (Note 1)	Nationality	Name	Gender	Date of Election (Accession)					Shareholding by	Shareholding by	Major Experience (Education) (Note 2)	Concurrent Position at Other Companies	Managers who are Spouses or Relatives Within Second Degrees of Kinship	Managers who are Spouses or Relatives Within Second Degrees of Kinship	Managers who are Spouses or Relatives Within Second Degrees of Kinship
							Spouse’s/Minor’s
					Shareholding				Nominee
							Shareholding
									Arrangement

					Shares	Percentage	Shares	Percentage	Shares	Percentage			Position	Name	Relationship
Senior Executive Vice President	The Republic of China	Chung-Yan Tsai	Male	2020.01.01							San Francisco State University (Master of Public Administration, MPA)	Corporation Chairman of Nankang International No. 2 Corporation Director of Cathay Real Estate Foundation Director of Cathay Life Insurance Corporation Vice Chairman of Cathay Healthcare Management Corporation Limited Executive Vice President of Liang Ting	None
					0	0	0	0	0	0

Position (Note 1)	Nationality	Name	Gender	Date of Election (Accession)					Shareholding by	Shareholding by	Major Experience (Education) (Note 2)	Concurrent Position at Other Companies	Managers who are Spouses or Relatives Within Second Degrees of Kinship	Managers who are Spouses or Relatives Within Second Degrees of Kinship	Managers who are Spouses or Relatives Within Second Degrees of Kinship
							Spouse’s/Minor’s
					Shareholding				Nominee
							Shareholding
									Arrangement

					Shares	Percentage	Shares	Percentage	Shares	Percentage			Position	Name	Relationship
Senior Executive Vice President	The Republic of China	Daniel Tung	Male	2020.01.01							Indiana University (Master of Business Administration, MBA)	Industrial Co., Ltd. Director of Cymbal Medical Network Co., Ltd. Director of Xinde Co., Ltd. Director of Cymlin Co., Ltd. Director of Cathay Real Estate Foundation Director of Taiwan Star Telecom Co., Ltd. Chairman and President of Bannan	None
					0	0	0	0	0	0

Position (Note 1)	Nationality	Name	Gender	Date of Election (Accession)					Shareholding by	Shareholding by	Major Experience (Education) (Note 2)	Concurrent Position at Other Companies	Managers who are Spouses or Relatives Within Second Degrees of Kinship	Managers who are Spouses or Relatives Within Second Degrees of Kinship	Managers who are Spouses or Relatives Within Second Degrees of Kinship
							Spouse’s/Minor’s
					Shareholding				Nominee
							Shareholding
									Arrangement

					Shares	Percentage	Shares	Percentage	Shares	Percentage			Position	Name	Relationship
Executive Vice President	The Republic of China	Chin-Liang Lin	Male	2020.01.01							National Cheng Kung University (Bachelor of Architecture)	Realty Co., Ltd. Director of Cathay Real Estate Management Co., Ltd. Director of Cathay Hospitality Management Director of Cathay Hotel Management Consultant Co., Ltd. Director of Nankang International No. 1 Corporation Director of Nankang International No. 2	None
					0	0	0	0	0	0

Position (Note 1)	Nationality	Name	Gender	Date of Election (Accession)					Shareholding by	Shareholding by	Major Experience (Education) (Note 2)	Concurrent Position at Other Companies	Managers who are Spouses or Relatives Within Second Degrees of Kinship	Managers who are Spouses or Relatives Within Second Degrees of Kinship	Managers who are Spouses or Relatives Within Second Degrees of Kinship
							Spouse’s/Minor’s
					Shareholding				Nominee
							Shareholding
									Arrangement

					Shares	Percentage	Shares	Percentage	Shares	Percentage			Position	Name	Relationship
Senior Vice President Senior Vice President	The Republic of China The Republic of China	Shang-Chieh Ku Kuo, Chun-He/Ho	Male Male	2020.01.01 2020.01.01							Department of Architecture, Tamkang University Master of Architectural Engineering, National Taiwan University of Science and Technology	Corporation Supervisor of Symphox Information Co., Ltd. Chairman and President of Jinhua Realty Co., Ltd. Director and Chief Executive Officer of Bannan Realty Co., Ltd. Director of Bannan Realty Co., Ltd. Director of Jinhua Realty Co., Ltd.	None None
					0	0	0	0	0	0

					0	0	0	0	0	0

Position (Note 1)	Nationality	Name	Gender	Date of Election (Accession)					Shareholding by	Shareholding by	Major Experience (Education) (Note 2)	Concurrent Position at Other Companies	Managers who are Spouses or Relatives Within Second Degrees of Kinship	Managers who are Spouses or Relatives Within Second Degrees of Kinship	Managers who are Spouses or Relatives Within Second Degrees of Kinship
							Spouse’s/Minor’s
					Shareholding				Nominee
							Shareholding
									Arrangement

					Shares	Percentage	Shares	Percentage	Shares	Percentage			Position	Name	Relationship
Senior Vice President Manager of Development Department Manager of Development Department Manager of Project	The Republic of China The Republic of China The Republic of China The Republic	Chun-An Lin Kuo-Chiang Cheng Pang-He Liu Chia-Ming Hsiao	Male Male Male Female	2020.01.01 2011.04.01 (Retired on July 1, 2020) 2020.07.02 2015.07.01	0	0	0	0	0	0	National Taiwan University Master of Finance Department of Land Economics, National Chengchi University Master's in Business Administration, National Central University Master of Architecture,	Cathay Real Estate Management Co., Ltd. Supervisor of Bannan Realty Co., Ltd. Supervisor of Jinhua Realty Co., Ltd. None None None	None None None None

					0	0	0	0	0	0

					0	0	0	0	0	0
					0	0	0	0	0	0

Position (Note 1)	Nationality	Name	Gender	Date of Election (Accession)					Shareholding by	Shareholding by	Major Experience (Education) (Note 2)	Concurrent Position at Other Companies	Managers who are Spouses or Relatives Within Second Degrees of Kinship	Managers who are Spouses or Relatives Within Second Degrees of Kinship	Managers who are Spouses or Relatives Within Second Degrees of Kinship
							Spouse’s/Minor’s
					Shareholding				Nominee
							Shareholding
									Arrangement

					Shares	Percentage	Shares	Percentage	Shares	Percentage			Position	Name	Relationship
Department I Manager of Project Department II Manager of Project Department III Chief Auditor of Audit Department Manager of Operation Management Department	of China The Republic of China The Republic of China The Republic of China The Republic of China	Fei-Yi Peng Ding-Qian Huang Chang-Yao Huang Yu-Chi Lo	Female Male Male Female	2020.01.01 2020.01.01 2015.11.05 2018.03.16							National Cheng Kung University China University of Technology Department of Architecture Chaoyang University of Technology (Master of Architecture & Urban Design) Department of Statistics, National Chung Hsing University Master of Accounting, National Chengchi University	None Director and Chief Executive Officer of Jinhua Realty Co., Ltd. None None	None None None None
					0	0	0	0	0	0

					14,000	0	100,000	0	0	0

					30	0	0	0	0	0

					0	0	0	0	0	0

Position (Note 1)	Nationality	Name	Gender	Date of Election (Accession)					Shareholding by	Shareholding by	Major Experience (Education) (Note 2)	Concurrent Position at Other Companies	Managers who are Spouses or Relatives Within Second Degrees of Kinship	Managers who are Spouses or Relatives Within Second Degrees of Kinship	Managers who are Spouses or Relatives Within Second Degrees of Kinship
							Spouse’s/Minor’s
					Shareholding				Nominee
							Shareholding
									Arrangement

					Shares	Percentage	Shares	Percentage	Shares	Percentage			Position	Name	Relationship
Corporate Governance Executive	The Republic of China	Miao-Ju Yen	Female	2019.04.25	0	0	0	0	0	0	Soochow University Department of Law	None	None

Note 1: This should include all President, Vice Presidents, Senior Vice Presidents, and those who hold the equivalent positions(regardless the job titles), as well as, key managers from each department and branch entity, must be disclosed.
Note 2: Experiences related with current position. Detailed job title and the working responsibilities should be described if previously worked for the auditing accounting firm or its affiliated company.
Note 3: In situations where the Company's President or manager of the highest equivalent grade is the same person as or a spouse or first-degree relative of the Chairman, please explain the reasons, rationality and necessity of such an arrangement and any response measures taken, such as introduction of independent directors. Furthermore, disclose whether more than half of directors are involved in concurrent duty as employees or managers.

(III) Remuneration of Directors (including Independent Directors), Supervisors, President, Senior Executive Vice Presidents, and Executive Vice Presidents

Remuneration to non-independent and independent directors (Range of Remuneration Disclosed in an Aggregate Manner)

Unit: NT$ thousands

Position	Name (Note 1)	Remuneration of Directors	Remuneration of Directors	Remuneration of Directors	Remuneration of Directors	Remuneration of Directors	Remuneration of Directors	Remuneration of Directors	Remuneration of Directors	Ratio of Total Remuneration (A+B+C+D) to Net Income (%) (Note 10)	Ratio of Total Remuneration (A+B+C+D) to Net Income (%) (Note 10)	Relevant Remuneration Received by Directors Who are Also Employees	Relevant Remuneration Received by Directors Who are Also Employees	Relevant Remuneration Received by Directors Who are Also Employees	Relevant Remuneration Received by Directors Who are Also Employees	Relevant Remuneration Received by Directors Who are Also Employees	Relevant Remuneration Received by Directors Who are Also Employees	Relevant Remuneration Received by Directors Who are Also Employees	Relevant Remuneration Received by Directors Who are Also Employees	Ratio of Sum of (A+B+C+D+E +F+G) to Net Income After Tax (Note 10)	Ratio of Sum of (A+B+C+D+E +F+G) to Net Income After Tax (Note 10)	Compen sation Paid to Director s from an Investee Other than the Compan y’s Subsidia ry (Note 11)
		Remuneration (A) (Note 2)		Severance Pay (B)		Remuneration of Directors (C) (Note 3)		Fees for Professional Services (D) (Note 4)				Salaries, Bonus, and Special Allowances (E) (Note5)		Severance Pay and Pension (F)		Employee Compensation (G) (Note 6)
		The Comp any	All compani es in the consolid ated financial statemen ts (Note 7)	The Comp any	All compani es in the consolid ated financial statemen ts (Note 7)	The Comp any	All compani es in the consolid ated financial statemen ts (Note 7)	The ~~C~~omp any	All compani es in the consolid ~~a~~ted financial statemen ts (Note 7)	The Comp any	All companie s in the consolida ted financial statement s (Note 7)	The Comp any	All compani es in the consolid ~~a~~ted financial statemen ts (Note 7)	The Comp any	All compani es in the consolida ~~t~~ed financial statement s (Note 7)	The Company		All companies in the consolidated financial statements (Note 7)		The Comp any	All compan ies in the consoli dated financia l stateme nts (Note 7)
																Amou nt of Cash	Amou nt of Stock	Amou nt of Cash	Amount of Stock
Chairma n	He Xin Industrial Co.,Ltd.	13,304	13,304	0	0	2,400	2,400	1,169	1,169	1.14%	1.14%	24,051	24,051	0	0	45	0	45	0	2.76%	2.76%	30
	Representative: Ching-Kuei Chang
Director	He Xin Industrial Co.,Ltd.
	Representative: Chung-Yan Tsai
Director	He Xin Industrial Co.,Ltd.
	Representative: Lee HungMing
Director	Employee Welfare Committee of Cathay Real Estate Corporation
	Representative: Chin-LiangLin

Position	Name (Note 1)	Remuneration of Directors	Remuneration of Directors	Remuneration of Directors	Remuneration of Directors	Remuneration of Directors	Remuneration of Directors	Remuneration of Directors	Remuneration of Directors	Ratio of Total Remuneration (A+B+C+D) to Net Income (%) (Note 10)	Ratio of Total Remuneration (A+B+C+D) to Net Income (%) (Note 10)	Relevant Remuneration Received by Directors Who are Also Employees	Relevant Remuneration Received by Directors Who are Also Employees	Relevant Remuneration Received by Directors Who are Also Employees	Relevant Remuneration Received by Directors Who are Also Employees	Relevant Remuneration Received by Directors Who are Also Employees	Relevant Remuneration Received by Directors Who are Also Employees	Relevant Remuneration Received by Directors Who are Also Employees	Relevant Remuneration Received by Directors Who are Also Employees	Ratio of Sum of (A+B+C+D+E +F+G) to Net Income After Tax (Note 10)	Ratio of Sum of (A+B+C+D+E +F+G) to Net Income After Tax (Note 10)
		Remuneration (A) (Note 2)		Severance Pay (B)		Remuneration of Directors (C) (Note 3)		Fees for Professional Services (D) (Note 4)				Salaries, Bonus, and Special Allowances (E) (Note 5)		Severance Pay and Pension (F)		Employee Compensation (G) (Note 6)
		The Comp any	All compani es in the consolid ated financial statemen ts (Note 7)	The Comp any	All compani es in the consolid ated financial statemen ts (Note 7)	The Comp any	All compani es in the consolid ated financial statemen ts (Note 7)	The ~~C~~omp any	All compani es in the consolid ~~a~~ted financial statemen ts (Note 7)	The Comp any	All companie s in the consolida ted financial statement s (Note 7)	The Comp any	All compani es in the consolid ~~a~~ted financial statemen ts (Note 7)	The Comp any	All compani es in the consolida ~~t~~ed financial statement s (Note 7)	The Company		All companies in the consolidated financial statements (Note 7)		The Comp any	All compan ies in the consoli dated financia l stateme nts (Note 7)
																Amou nt of Cash	Amou nt of Stock	Amou nt of Cash	Amount of Stock
Director	Cathay Real Estate Foundation
	Representative: Chung-ChangChu
Director	Cathay Charity Foundation
	Representative: Daniel Tung
Independ ent Director	Shiou-Ling Lin
Independ ent Director	Chih-Wei Wu
Independ ent Director	James Y. Chang

Position	Remuneration of Directors	Remuneration of Directors	Remuneration of Directors	Remuneration of Directors	Remuneration of Directors	Remuneration of Directors	Remuneration of Directors	Remuneration of Directors	Ratio of Total Remuneration (A+B+C+D) to Net Income (%) (Note 10)	Ratio of Total Remuneration (A+B+C+D) to Net Income (%) (Note 10)	Relevant Remuneration Received by Directors Who are Also Employees	Relevant Remuneration Received by Directors Who are Also Employees	Relevant Remuneration Received by Directors Who are Also Employees	Relevant Remuneration Received by Directors Who are Also Employees	Relevant Remuneration Received by Directors Who are Also Employees	Relevant Remuneration Received by Directors Who are Also Employees	Relevant Remuneration Received by Directors Who are Also Employees	Relevant Remuneration Received by Directors Who are Also Employees	Ratio of Sum of (A+B+C+D+E +F+G) to Net Income After Tax (Note 10)	Ratio of Sum of (A+B+C+D+E +F+G) to Net Income After Tax (Note 10)
	Remuneration (A) (Note 2)		Severance Pay (B)		Remuneration of Directors (C) (Note 3)		Fees for Professional Services (D) (Note 4)				Salaries, Bonus, and Special Allowances (E) (Note 5)		Severance Pay and Pension (F)		Employee Compensation (G) (Note 6)
	The Comp any	All compani es in the consolid ated financial statemen ts (Note 7)	The Comp any	All compani es in the consolid ated financial statemen ts (Note 7)	The Comp any	All compani es in the consolid ated financial statemen ts (Note 7)	The ~~C~~omp any	All compani es in the consolid ~~a~~ted financial statemen ts (Note 7)	The Comp any	All companie s in the consolida ted financial statement s (Note 7)	The Comp any	All compani es in the consolid ~~a~~ted financial statemen ts (Note 7)	The Comp any	All compani es in the consolida ~~t~~ed financial statement s (Note 7)	The Company		All companies in the consolidated financial statements (Note 7)		The Comp any	All compan ies in the consoli dated financia l stateme nts (Note 7)
															Amou nt of Cash	Amou nt of Stock	Amou nt of Cash	Amount of Stock
1. Please state the policy, system, standards and structure of Independent Directors’ remuneration payment, and describe the relevance to the amount of remuneration according to the responsibilities, risks, time devoted and other factors: The Company has clearly defined the Independent Directors’ remuneration policy, scope, type and periodic review mechanism in the remuneration payment standard. The remuneration payment for Independent Director would factor in the level of involvement into company operation, the contribution, and the usual industrial standard, and the amount would be reviewed by Remuneration Committee and reported to the Board of Directors for approval to issue the total amount. The Company regularly evaluates the remuneration of Independent Directors every three years. 2. In addition to the above remuneration, Director remuneration shall be disclosed as follows when received from companies included in the consolidated financial statements in the most recentyear to compensate Directors for their services,such as beingindependent contractors: 15.

Table of Range of Remuneration

Range of Remuneration Paid to Each Director	Name of Directors	Name of Directors	Name of Directors	Name of Directors
	Sum of (A+B+C+D)		Sum of (A+B+C+D+E+F+G)
	The Company (Note 8)	All companies in the consolidated financial statements (Note 9)	The Company (Note 8)	All companies in the consolidated financial statements (Note 9)
Under NT$ 1,000,000	Chung-Yan Tsai, Hung-Ming Lee, Chin-Liang Lin, Daniel Tung, Chung-Chang Chu, Cathay Charity Foundation, Cathay Real Estate Foundation, Employee Welfare Committee of Cathay Real Estate Corporation	Chung-Yan Tsai, Hung-Ming Lee, Chin-Liang Lin, Daniel Tung, Chung-Chang Chu, Cathay Charity Foundation, Cathay Real Estate Foundation, Employee Welfare Committee of Cathay Real Estate Corporation	Chung-Cha ng Chu, Cathay Charity Foundation, Cathay Real Estate Foundation, Employee Welfare Committee of Cathay Real Estate Corporation	Chung-Chang Chu, Cathay Charity Foundation, Cathay Real Estate Foundation, Employee Welfare Committee of Cathay Real Estate Corporation
NT$1,000,000 (inclusive) ~ NT$ 2,000,000 (exclusive)	Shiou-Ling Lin, Chih-Wei Wu, James Y. Chang, He Xin Industrial Co., Ltd.	Shiou-Ling Lin, Chih-Wei Wu, James Y. Chang, He Xin Industrial Co., Ltd.	Shiou-Ling Lin, Chih-Wei Wu, James Y. Chang, He Xin Industrial Co., Ltd.	Shiou-Ling Lin, Chih-Wei Wu, James Y. Chang, He Xin Industrial Co., Ltd.
NT$2,000,000 (inclusive) ~ NT$ 3,500,000 (exclusive)	0	0	0	0
NT$ 3,500,000 (inclusive) ~ NT$ 5,000,000 (exclusive)	0	0	Chin-Liang Lin	Chin-Liang Lin
NT$5,000,000 (inclusive) ~ NT$10,000,000 (no inclusive)	t Ching-Kuei Chang	Ching-Kuei Chang	Chung-Yan Tsai, Daniel Tung, Lee Hung Ming, Ching-Kuei Chang	Chung-Yan Tsai, Daniel Tung, Lee Hung Ming, Ching-Kuei Chang
NT$10,000,000 (inclusive) ~ NT$15,000,000 (n inclusive)	o 0	0	0	0
NT$15,000,000 (inclusive) ~ NT$30,000,000 (n inclusive)	o 0	0	0	0
NT$30,000,000 (inclusive) ~ NT$50,000,000 (n inclusive)	o 0	0	0	0
T$50,000,000 (inclusive) ~ NT$100,000,000 (n inclusive)	o 0	0	0	0
Over NT$100,000,000	0	0	0	0
Total	13	13	13	13

Note 1: The names of Directors shall be listed separately (names of institutional shareholders and representatives shall be listed separately), and the payment amounts shall be disclosed collectively. If the Director is also the President or Executive Vice President, both this table and the following table (3-2) shall be filled out.

Note 2: Base Compensation of Directors in the most recent year, including salaries, job remuneration, severance, bonuses and performance bonus.

Note 3: Directors Compensation distributed upon the approval of the Board meeting in the most recent year.
Note 4: Allowances paid out to Directors in the most recent year, including travel allowance, special allowance, various allowances, accommodation, vehicles and provision of physical goods. In the case of providing housing, automobile and other means of transport or exclusive individual expenditures, the nature and cost of the assets provided, as well as the actual rent, oil cost and other payments or that calculated at a fair market price shall be disclosed. Where there is a driver, the remuneration of whom paid by the Company shall be noted but not included into the remuneration. The total remuneration paid by all companies in the Company’s consolidated statement to the driver is NT$663,000.
Note 5: Salary, job remuneration severance pay, various bonuses, performance bonus, transportation allowance, special allowance, various allowances, and provision of such tangible objects as dormitory and car received by the directors who acted as employees concurrently (including President, Senior Executive Vice Presidents, Executive Vice Presidents, other managers, and employees) in the most recent year. In the case of providing housing, automobile and other means of transport or exclusive individual expenditures, the nature and cost of the assets provided, as well as the actual rent, oil cost and other payments or that calculated at a fair market price shall be disclosed. Where there is a driver, the remuneration of whom paid by the Company shall be noted but not included into the remuneration. Any salary listed under IFRS 2 Share-Based Payment, including certificates of employee stock options, new restricted employee shares and subscription of shares for increment of cash, shall also be included in remuneration. The total remuneration paid by all companies in the Company’s consolidated statement to the driver is NT$2,868,000.
Note 6: If the directors who acted as employees concurrently (including President, Senior Executive Vice Presidents, Executive Vice Presidents, other managers, and employees) received employee bonus (including stock dividend and cash dividend) in the most recent year, please disclose the employee bonus approved by the Board of Directors prior to the motion for allocation of earnings submitted to the shareholders' meeting in the most recent year. If it is impossible to impute the same, the amount to be allocated this year shall be based on that allocated actually last year, and please also fill out table 1-3.
Note 7: The total remuneration in various items paid to the Company's Directors by all companies (including the Company) listed in the consolidated report shall be disclosed.
Note 8: The name of each director shall be disclosed in the range corresponding to the total amount of various remuneration paid to each director by the Company.
Note 9: The total remuneration in various items paid to the Company’s Directors by all companies (including the Company) listed in the consolidated report shall be disclosed, and the name of Directors shall be disclosed in the corresponding range.
Note 10: Net Income in the most recent year. Where the International Financial Reporting Standards prevail, it refers to net income in the parent company only reports or individual financial reports in the most recent year.
Note 11: a. The amount of compensation paid to Directors from invested companies other than the Company’s subsidiaries shall be stated clearly in this column.
b. The amount of compensation received by Directors from invested companies other than the Company’s subsidiaries shall be included into Column I of the Table of Ranges of Remuneration, and the column shall be renamed as All Invested Companies.
c. Compensation refers to rewards, remuneration (including employee bonus, remuneration of Directors and Supervisors), allowances and other related payments received by the Company’s Directors as the Directors, Supervisors or managers of invested companies other than subsidiaries.
Note 12: The 2020 earnings distribution proposal has been resolved by the Board of Directors on April 28, 2021, but has not been ractified by the shareholders' meeting.
＊ The remuneration disclosed in this table is different from the concept of income in the Income Tax Act. Therefore, this table is for the purpose of information disclosure, but not levy.

Remuneration of the President, Senior Executive Vice Presidents, and Executive Vice Presidents (with the Range of Remuneration Disclosed in an Aggregate Manner)

Unit: NT$ thousands

Position	Name (Note 1)	Salary (A) (Note 2)	Salary (A) (Note 2)	Severance Pay (B)	Severance Pay (B)	Bonuses and Special Allowances (C) (Note 3)	Bonuses and Special Allowances (C) (Note 3)	Employee Compensation (D) (Note 4)	Employee Compensation (D) (Note 4)	Employee Compensation (D) (Note 4)	Employee Compensation (D) (Note 4)	Ratio of Sum of (A+B+C+D) to Net Income (%) (Note 8)	Ratio of Sum of (A+B+C+D) to Net Income (%) (Note 8)	Compensa tion Paid to the President and Executive Vice Presidents from an Invested Company Other than the Company ＇s Subsidiary (Note 9)
		The Compan y	All compan ies in the consolid ated financia l stateme nts (Note 5)	The Compan y	All compan ies in the consolid ated financia l stateme nts (Note 5	) The Compan y	All compan ies in the consolid ated financia l stateme nts (Note 5)	The Company		All companies in the consolidated financial statements (Note 5)		The Compan y	All compani es in the consolid ated financial statemen ts (Note 5)
								Amou nt of Cash	Amou nt of Stock	Amou nt of Cash	Amou nt of Stock
President	Lee Hung Ming	12,264	12,264	0	0	11,787	11,787	45	0	45	0	1.62%	1.62%	30
Senior Executive Vice President	Chung-Yan Tsai
Senior Executive Vice President	Daniel Tung
Executive Vice President	Chin-Liang Lin

Table of Range of Remuneration

Table of	Range of Remuneration	Range of Remuneration
Range of Remuneration Range of Remuneration Paid to the President and Senior Executive Vice President, and Executive Vice Presidents	Name of the President and Senior Executive Vice President, and Executive Vice Presidents
	The Company (note 7)	All companies in the consolidated statements (E) (Note 8)
Under NT$ 1,000,000	0	0
Under NT$2,000,000	0	0
NT$20,000,000 (inclusive) ~ NT$35,000,000 (exclusive)	0	0
NT$35,000,000 (inclusive) ~ NT$50,000,000 (exclusive)	Chin-Liang Lin	Chin-Liang Lin
NT$5,000,000 (inclusive) ~ NT$10,000,000 (not inclusive)	Chung-Yan Tsai, Daniel Tung, and Lee Hung Ming	Chung-Yan Tsai, Daniel Tung, and Lee Hung Ming
NT$10,000,000 (inclusive) ~ NT$15,000,000 (not inclusive)	0	0
NT$15,000,000 (inclusive) ~ NT$30,000,000 (not inclusive)	0	0
NT$30,000,000 (inclusive) ~ NT$50,000,000 (not inclusive)	0	0
NT$50,000,000 (inclusive) ~ NT$100,000,000 (not inclusive)	0	0
Over NT$100,000,000	0	0
Total	4	4

Note 1: The name of the President, Senior Executive Vice Presidents, and Executive Vice Presidents shall be identified specifically, and the various payments shall be aggregated and then disclosed. If a Director is also the President, Senior Executive Vice President, or Executive Vice President, this table and the table above (1-2) shall be filled out.
Note 2: Please specify the salary, job allowance, and severance paid to the President, Senior Executive Vice Presidents, and Executive Vice Presidents in the most recent year.
Note 3: Please specify the bonus, performance bonus, transportation allowance, special allowance, various allowances, and provision of such tangible objects as dormitory and car, as well as other remunerations, received by the President, Senior Executive Vice Presidents, and Executive Vice Presidents in the most recent year. In the case of providing housing, automobile and other means of transport or exclusive individual expenditures, the nature and cost of the assets provided, as well as the actual rent, oil cost and other payments or that calculated at a fair market price shall be disclosed. Where there is a driver, the remuneration of whom paid by the Company shall be noted but not included into the remuneration. Any salary listed under IFRS 2 Share-Based Payment, including certificates of employee stock options, new restricted employee shares and subscription of shares for increment of cash, shall also be included in remuneration. The total remuneration paid by all companies in the Company’s consolidated statement to the driver is NT$2,868,000.
Note 4: Please specify the employee compensation (including stock and cash) to be allocated to the the President, Senior Executive Vice Presidents, and Executive Vice Presidents as approved by the Board of Directors for the most recent year. If it is impossible to impute the same, the amount to be allocated this year shall be based on that allocated actually last year, and please also fill out table 1-3. Net Income in the most recent year. Where the International Financial Reporting Standards prevail, it refers to net income in the parent company only reports or individual financial reports in the most recent year.
Note 5: Please disclose the aggregate of the remuneration paid to the Company's President, Senior Executive Vice Presidents, and Executive Vice Presidents by all companies included into the consolidated financial reports (including the Company).
Note 6: The aggregate of the remuneration to the Company's President, Senior Executive Vice Presidents shall include the names of the Company's President, Senior Executive Vice Presidents, and Executive Vice Presidents disclosed in the corresponding ranges.
Note 7: The aggregate of the remuneration paid to each of the the Company's President, Senior Executive Vice Presidents, and Executive Vice Presidents by the companies included in the consolidated financial reports (including the Company) shall be disclosed with the names of the Company's President, Senior Executive Vice Presidents, and Executive Vice Presidents disclosed in the corresponding ranges.
Note 8: Net Income in the most recent year. Where the International Financial Reporting Standards prevail, it refers to net income in the parent company only reports or individual financial reports in the most recent year.
Note 9: a. Remuneration received by the Company's President, Senior Executive Vice Presidents, and Executive Vice Presidents from investees other than subsidiaries shall be specified in this column.
b. If the Company's President, Senior Executive Vice Presidents, and Executive Vice Presidents receive remuneration from investees other than subsidiaries, the remuneration received by the Company's President, Senior Executive Vice Presidents, and Executive Vice Presidents from investees other than subsidiaries shall be included in Column E in the Remuneration Range Table, and the column heading shall be changed to "All Investees".
c. The remuneration shall refer to the remuneration, compensation, employee bonus and professional service fees received by the Company's President, Senior Executive Vice Presidents, and Executive Vice Presidents who acted as the directors, supervisors, or managers of investees other than subsidiaries.
Note 10: The 2020 earnings distribution proposal has been resolved by the Board of Directors on April 28, 2021, but has not been ratified by the shareholders' meeting.
＊ The remuneration disclosed in this table is different from the concept of income in the Income Tax Act. Therefore, this table is for the purpose of information disclosure, but not levy.

Name of the managers who receive employee compensation and the distribution situation

				May1,2021 Unit: NT$ thousands	May1,2021 Unit: NT$ thousands	May1,2021 Unit: NT$ thousands
Manager	Title (Note 1)	Name (Note 1)	Amount of Stock	Amount of Cash (Note 5)	Total	Ratio of Total Amount to Net Income (%)
	President	Lee Hung Ming	0	167	167	0.0113%
	Senior Executive Vice President	Chung-Yan Tsai
	Senior Executive Vice President	Daniel Tung
	Executive Vice President	Chin-Liang Lin
	Senior Vice President	Shang-Chie h Ku
	Senior Vice President	Chun- Ho, Kuo
	Senior Vice President	Chun-An Lin
	Manager of Development Department (promoted on July 2, 2020)	Pang-He Liu
	Manager of Development Department (Retired on July1,2020)	Kuo-Chian g Cheng
	Manager of Project Department I	Chia-Ming Hsiao
	Manager of Project Department II	Fei-Yi Peng
	Manager of Project Department III	Ding-Qian Huang
	Chief Auditor of Audit Department	Chang-Yao Huang
	Manager of Operation Management Department	Yu-Chi Lo
	Corporate Governance Executive	Miao-Ju Yen

Note 1: Individual names and titles shall be disclosed, but the profit distribution shall be disclosed collectively.

Note 2: The amount of employee compensation (including stock and cash) distributed to managers upon the approval of the Board meeting in the most recent year. If unpredictable, the amount to be distributed this year shall be calculated according to the proportion of the actual distribution

amount last year. Net Income in the most recent year. Where the International Financial Reporting Standards prevail, it refers to net income in the parent company only reports or individual financial reports in the most recent year.

Note 3: The scope of application for the term "managerial officer" shall follow the approved document with Reference No. Tai Tsai Cheng San Tzu 0920001301 dated March 27, 2003. Its scope of application shall be as follows:
(1) President and its equivalent
(2) Executive Vice President and its equivalent
(3) Senior Vice President and its equivalent
(4) Executive of Finance Department
(5) Executive of Accounting Department
(6) Other people entitled to manage the corporate affairs and conduct signature
Note 4: If any director, President, Senior Executive Vice President, or Executive Vice President has received employee compensation (including stock and cash), please complete table 1-2 and also this table.
Note 5: The 2020 earnings distribution proposal has been resolved by the Board of Directors on April 28, 2021, but has not been ratified by the shareholders' meeting.
The Remuneration of the Top Five Top Executives of the Public Company (Names and

Remuneration Disclosed Individually)	Remuneration Disclosed Individually)	Remuneration Disclosed Individually)	Remuneration Disclosed Individually)	Remuneration Disclosed Individually)	Remuneration Disclosed Individually)	Remuneration Disclosed Individually)	Remuneration Disclosed Individually)
Position	Name (Note 1)	Salary (A) (Note 2)		Severance Pay (B)		Bonuses and Special Allowances (C) (Note 3)		Employee Compensation (D) (Note 4)				Ratio of Sum of (A+B+C+D) to Net Income (%) (Note 8)		Compensat ion Paid to the President and Executive Vice Presidents from an Invested Company Other than the Company’s Subsidiary (Note 9)
		The Company	All companie s in the consolidat ed financial statements (Note 5)	The Company	All companie s in the consolidat ed financial statements (Note 5)	The Company	All companie s in the consolidat ed financial statements (Note 5)	The Company		All companies in the consolidated financial statements (Note 5)		The Company	All companies in the consolidat ed financial statements (Note 5)
								Amount of Cash	Amount of Stock	Amount of Cash	Amount of Stock
Not Applicable

Specify and compare the salary to directors, supervisors, President, Senior Executive Vice Presidents, or Executive Vice Presidents of the Company in proportion to net income after tax from the Company and companies included in the consolidated financial statements in the most recent 2 years, and specify the policies, standards, combinations, and procedure for determining remunerations and their relation to business performance and future risk:
(1) Proportion of total remuneration of the President, Senior Executive Vice Presidents, or Executive Vice Presidents of the Company to net income after tax
The total remuneration paid to directors, supervisors, President, Senior Executive Vice Presidents, or Executive Vice Presidents was NT$40,969,000 and NT$39,510,000 for 2020 and 2019, accounting for 2.76% and 2.88% of the net income after tax, respectively.

(2) Policies, standards, combinations, and procedure for determining remunerations and their relation to business performance and future risk: The Company shall make the payment according to the Director’s Remuneration Payment Standards, Directors Performance Appraisal Standards, Manager’s Remuneration Payment Standards and Manager’s Performance Appraisal Standards upon the deliberation of the Remuneration Committee and the approval of the Board meeting.

III. Implementation of Corporate Governance

(I) Operation of the Board of Directors

The 18th term of Directors (Statistical period: January 1, 2020 to June 11, 2020)

A total of three (3) meetings [A] of the Board of Directors were held in the most recent

year (2020). The attendance of Directors and Supervisors was as follows:

Position	Name (Note 1)	Attendance in person (B)	Attendance rate (%)[B/A] (Note 2)
Chairman	He Xin Industrial Co., Ltd. Representative: Ching-Kuei Chang	3	100
Director	He Xin Industrial Co., Ltd. Representative: Chung-Yan Tsai	3	100
Director	He Xin Industrial Co., Ltd. Representative: Lee HungMing	3	100
Director	Representative of Cathay Real Estate Foundation: Chung-ChangChu	3	100
Director	Employee Benefit Committee of Cathay Real Estate Representative: Chin-LiangLin	3	100
Director	Representative of Cathay Charity Foundation: Daniel Tung	3	100
Independent Director	Shiou-Ling Lin	3	100
Independent Director	Chih-Wei Wu	3	100
Independent Director	James Y. Chang	3	100

The 19th term of Directors (Statistical period: June 12, 2020 to December 31, 2020)

A total of five (5) meetings [A] of the Board of Directors were held in the most recent year

(2020). The attendance of Directors and Supervisors was as follows:

Position	Name (Note 1) A	ttendance in person (	B Attendance by proxy	Attendance rate (%)[B/A] (Note 2)
Chairman	He Xin Industrial Co., Ltd. Representative: Ching-Kuei Chang	5	0	100
Director	He Xin Industrial Co., Ltd. Representative: Chung-Yan Tsai	5	0	100
Director	He Xin Industrial Co., Ltd. Representative: Lee HungMing	5	0	100
Director	Representative of Cathay Real Estate Foundation: Chung-ChangChu	5	0	100
Director	Employee Benefit Committee of Cathay Real Estate Representative: Chin-LiangLin	5	0	100
Director	Representative of Cathay Charity Foundation: Daniel Tung	5	0	100
Independent Director	Shiou-Ling Lin	5	0	100
Independent Director	Chih-Wei Wu	4	1	80
Independent Director	James Y. Chang	4	1	80

Note 1:Where directors and supervisors are corporate entities, the names of corporate shareholders and their representatives are stated.

Note 2:

(1)The date of resignation is specified for directors or supervisors who had resigned prior to the close of the financial year. The percentage of actual attendance (%) is calculated based on the number of board of directors meetings held and the number of actual attendance during active duty.
(2)If a re-election of directors or supervisors had taken place prior to the close of the financial year, directors/supervisors of both the previous and the current term are listed; in which case, the remarks column would specify the re-election date and whether the director/supervisor was elected in the previous term, the new term, or both. Actual attendance rate (%) was calculated on the basis of the number of board meetings held during each director's term and the number of meetings actually attended by that director.

Other required disclosure:

I.If any of the following circumstances occur, the dates of the meetings, sessions, content of proposal, all Independent Directors’ opinions, and the Company’ s response to such opinions should be specified:
(I) Matters referred to in Article 14-3 of the Securities and Exchange Act.
(II) Other matters involving objections or expressed reservations by independent directors that were recorded or stated in writing that require a resolution by the Board of Directors.
II.If there are Directors’ avoidance of motions in conflict of interest, the Directors’ names, contents of motion, causes for avoidance and voting should be specified:

Name of Directors	Proposal contents	Reasons for recusal due to conflicts of interest	Voting outcomes
Ching-Kuei Chang, Chung-Yan Tsai, Lee Hung Ming, Daniel Tung, Chin-LiangLin	Proposal for paying year-end bonus and special incentives to Directors and managers participating in businesses in 2019	Directors stated were involved in the contents of motion.	Not participated in the discussion and voting
Ching-Kuei Chang, Shiou-Ling Lin, Chih-Wei Wu, James Y. Chang	Assessment of remuneration of Independent Directors and Executive Directors participating in businesses in 2019	Directors stated were involved in the contents of motion.	Not participated in the discussion and voting
Chung-Yan Tsai, Lee Hung Ming, Daniel Tung, Chin-LiangLin	Assessment of remuneration of managers in 2019	Directors stated were involved in the contents of motion.	Not participated in the discussion and voting
Ching-Kuei Chang, Chung-Yan Tsai, Lee Hung Ming, Daniel Tung, Chin-Liang Lin, Chung-ChangChu	Deliberation of distribution of remuneration to employees and Directors for 2019	Directors stated were involved in the contents of motion.	Not participated in the discussion and voting
Ching-Kuei Chang, Chung-Yan Tsai, Lee Hung Ming, Daniel Tung, Chin-Liang Lin, Chung-Chang Chu, Shiou-Ling Lin, Chih-Wei Wu, James Y. Chang	Review of candidate qualifications for the Company's 19th term of Directors (including Independent Directors)	Directors stated were involved in the contents of motion.	Not participated in the discussion and voting

Name of Directors	Proposal contents	Reasons for recusal due to conflicts of interest	Voting outcomes
Ching-Kuei Chang, Chung-Yan Tsai, Lee Hung Ming, Daniel Tung, Chin-Liang Lin, Chung-Chang Chu, Shiou-Ling Lin, Chih-Wei Wu	Removal of the non-compete clause for the Company’s members of the 19th Board of Directors (including Independent Directors).	Directors stated were involved in the contents of motion.	Not participated in the discussion and voting
Shiou-Ling Lin, Chih-Wei Wu, James Y. Chang	Appointment of members of the 4th Remuneration Committee of the Company	Directors stated were involved in the contents of motion.	Not participated in the discussion and voting
Ching-Kuei Chang, Shiou-Ling Lin, Chih-Wei Wu, James Y. Chang	Assessment and determination of remuneration of Independent Directors and Executive Directors participating in businesses in 2020	Directors stated were involved in the contents of motion.	Not participated in the discussion and voting
Chung-Yan Tsai, Chung-Chang Chu	Proposal for joint venture with Cathay Life Insurance Co.,Ltd. to establish a solar energycompany	Directors stated were involved in the contents of motion.	Not participated in the discussion and voting
Lee Hung Ming	Proposal for sales of properties, lands and parking lots of Company's pre-sale projects to relatedparties	Directors stated were involved in the contents of motion.	Not participated in the discussion and voting
Chin-Liang Lin	Proposal for disposal of the land at Land No. 132, Jinhua Section, Anping District, Tainan City, to its related party, Jinhua RealtyCo.,Ltd.	Directors stated were involved in the contents of motion.	Not participated in the discussion and voting
Daniel Tung, Chin-Liang Lin	Removal of the non-compete clause for managers of the Company	Directors stated were involved in the contents of motion.	Not participated in the discussion and voting

III.TWSE/TEPx listed company should disclose the information regarding Board of Directors’ evaluation cycle, evaluation period, scope, and method of self (or peer) – evaluation and list out the execution of Board of Directors evaluation:

Evaluation cycle (Note 1)	Period of Evaluation (Note 2)	Scope (Note 3)	Evaluation Method (Note 4)	Evaluation Content (Note 5)
Annually	From January 1, 2020 to December 31, 2020.	Including the overall Board of Directors and functional committees .	Evaluation of execution unit, self-evaluation of performance of the Directors and self-evaluation of performance of the functional committees.	The criteria for evaluating the performance of the Company’s Board of Directors should separate into “qualitative measurement indicators” and “quantitative measurement indicators”, and each should cover the following five aspects: 1. The degree of participation in the Company's operation 2. Improvement of the quality of the Board of Directors' (functional committees’) decision making 3. Composition and structure of the Board of Directors (functional committees) 4. Election and continuing education of the directors (members of functional committees) 5. Internal control.

The performance evaluation of the Company’s directors covers the main indicators, including supervision of the “Company’s business execution”, “financial operation status”, “internal audit and internal control”, “risk management, and "compliance with laws and regulations”, as well as minor indicators, including “the Company’s fulfillment of corporate social responsibility” and “attendance at the Board of Directors meetings”. The entire evaluation process consists of self-evaluation, re-evaluation, and verification.

Note1: Represents the frequency of board performance evaluation, e.g.: once a year.
Note2: Represents the duration covered by performance evaluation, e.g.: performance of the board of directors between January 1 and December 31, 2020, was assessed.
Note3:The scope of assessment covers performance of the board as a whole, the individual directors and functional committees.
Note4:Assessment methods include: board internal self-assessment, director self-assessment, peer assessment, assessment by external institution or expert, and other methods as deemed appropriate.
Note5: Assessment details, by scope of assessment, include at least the following: (1) Board performance assessment: board's participation in the Company's operations, the quality of board's decisions, the board's composition, election and ongoing education of board members, and enforcement of internal control.
(2) Director individual performance assessment: director's awareness toward the Company's goals and missions, awareness to duties, level of participation in the Company's operations, maintenance of internal relations and communication, professionalism and ongoing education, and enforcement of internal control.
(3) Performance assessment for functional committees: participation in the Company's operations, awareness to duties, quality of committee's decisions, composition and member selection, and enforcement of internal control.
IV. The Board of Directors Performance Linkage and Evaluation Result:
The Board of Directors performance evaluation results:

The Company assesses the performance of the Board in December of each year in accordance with the Methods for Performance Evaluation of Board of Directors passed and revised by the Board.

The assessment targets include the overall operation of the Board of Directors and the performance of individual directors and the members of the functional committees. The measurement indicators of the performance evaluation of the Board of Directors of the Company are divided into two parts, including quantitative measurement indicators and qualitative measurement indicators, and each of them includes the following five aspects:

(1) Degree of participation in the Company's operations.
(2) Improvement in the Board of Directors' (functional committees') decision-making capability.
(3) The composition and structure of the Board of Directors (functional committees).
(4) The election and appointment as well as continuing education of Directors (functional committees).
(5) Internal control.

The assessment results are divided into three levels: beyond the standard, meeting

the standard and to be strengthened, i.e. when the achieving rate of the quantitative measurement indicators and qualitative measurement indicators is 90% or more, the performance of the Board is beyond the standard; when it is more than 80% and less than 90%, the performance of the Board is meeting the standard; when it is less than 80%, the performance of the Board is to be strengthened.

The results of the performance evaluation of the Board of Directors in 2020 surpassed the standards and was reported to the Company’s Board of Directors on March 18, 2021, which is sufficient to demonstrate the Company’s achievement in strengthening the effectiveness of the Board of Directors and functional committees. The Company has disclosed the Methods for Performance Evaluation of Board of Directors on the MOPS and the Company’s website, as well as the results of said evaluation in the annual report and the Company’s website for inquiry.

The Linkage between Remuneration and Performance Evaluation of Directors and Managers

According to the Company’s Director Performance Evaluation Criteria, the evaluation results are divided into "qualified" and "unqualified" as to whether the Directors have actually fulfilled the duties as directors. All directors in the 2020 performance evaluation results were all "qualified".

In accordance to the Company's Articles of Association, the remuneration of the Directors of the year shall be within 1% of the profit of the current year, and consider both the Company's operating results and the Director’s contribution of the Company's performance, in order to give a reasonable remuneration; The policy of remuneration of the managers is based on the Company's Manager Remuneration Standards, the industrial remuneration of the same position, the scope of the job within the Company, and the person's contribution to the Company's operational targets to give the remuneration. The procedures for determining the compensation is in accordance with Directors and Managers’ Performance Evaluation Standards. The reasonable compensation is determined according to the overall operational performance of the Company, the future business risks and development trends of the industry, as well as personal achievements and the contribution degree to the performance of the Company. The relevant performance and reasonable remuneration are reviewed by the Remuneration Committee and the Board of Directors, and the remuneration system is reviewed at any time according to the actual operating conditions and relevant laws and regulations to seek the balance between sustainable management and risk management of the Company.

V.Measures taken to strengthen the functions of the Board (for example, establishing an Audit Committee and enhancing information transparency) for the current year and the most recent year and the implementation:

Strengthen the functions of the Board of Directors

The Company’s Board of Directors is composed of nine directors. In order to strengthen the professional functions of the Board of Directors and to be in line with international standards, the Company has established a Remuneration Committee to formulate and assess the standards for performance evaluation and remuneration standards of the Company’s directors and managers in order to effectively establish the remuneration and performance evaluation system for the Company’s directors and managers while improving the Company’s operating performance. It has also set up an Audit Committee composed of all independent directors to assist the Board of Directors in improving corporate governance performance. The members of the Board of Directors of the Company have diversity, including different professional experience/work areas and backgrounds. In order to strengthen the corporate governance and promote the sound development of the composition and structure of the Board of Directors, the relevant contents and the implementation pursuant to Paragraph 2 of Article 22 of the Company's Code of Practice of Corporate Governance governing Policy of Diversity of Members of Board of Directors are as follows:

In order to improve the structure of the Board of Directors, its members shall be diversified, such as different professional experience, gender or work areas, and knowledge, skills and literacy necessary to perform their duties. In order to achieve the ideal goal of corporate governance, the abilities of the Board of Directors shall be as follows:

I. Operation judgment ability.

II. Accounting and financial analysis ability.

III. Operation management capabilities.

IV. Crisis management ability.

V. Industrial knowledge.

VI. International market view.

VII. Leadership. VIII. Decision-making ability.

The current Board of Directors of the Company consists of 9 Directors, including 3 Independent Directors with extensive experience and expertise in the fields of business, construction, and law. In addition, the Company also focuses on gender equality in the composition of the Board of Directors; the ratio of female Directors is at least 10%. Currently there are 9 Directors, including a female director and the ratio is 11%. The implementation is as follows:

Core projects of diversity Name of Directors	Basic Composition	Basic Composition	Basic Composition	Basic Composition	Basic Composition	Basic Composition			Experience/Field of Work	Experience/Field of Work	Experience/Field of Work	Experience/Field of Work	Experience/Field of Work	Experience/Field of Work	Backgrounds	Backgrounds	Backgrounds	Backgrounds	Backgrounds
	Nationality/Place of Incorporation (Note)	Gender	Also Serve as An Employee of the Company	Age			Term of Independent Director		Real Estate	Health Management\Medical Treatment	Hotel Tourism	Financing Control\Banking\Insurance	Information\Telecom\Media	Manufacturing\Investment\Others	Business	Building	Law	Public administration	Business management
				31 to 45	46 to 60	61 to 75	Less than three years	Three to nine years
Ching-Kuei Chang	1	Male		1 Person	3 Person	5 Person										
Lee Hung Ming	1	Male															
Chung-Yan Tsai	1	Male																
Daniel Tung	1	Male																	
Chin-Liang Lin	1	Male														
Chung-Chang Chu	2	Male																	
Shiou-Ling Lin	1	Female															
Chih-Wei Wu	1	Male																	
James Y. Chang	1	Male															

Note : Nationality/Place of Incorporation: 1. Republic of China, 2. Canada.

(II) Audit Committee activities

The Company's Audit Committee is solely composed of Independent Directors. The goal of the Audit Committee is to provide assistance to the Board of Directors in performing its duty of supervising the Company on accounting, auditing, financial reporting process and quality of financial control, and integrity related matters.

The tasks of the Audit Committee mainly include the following:

Adoption or amendment of internal control systems in accordance with Article 14-1 of the Securities and Exchange Act.
Assessment of the effectiveness of the internal control system
Adoption or amendment, pursuant to Article 36-1 of the Act, of handling procedures for financial or operational actions of material significance, such as acquisition or disposal of assets, derivatives trading, extension of monetary loans to others, and endorsements or guarantees for others.
Items that involve the director's own interests.
Major assets or derivatives transactions.
Significant loaning of funds, providing endorsements/guarantees.
Raising, issuing or privately placing equity-type securities.
Appointment, dismissal, and compensation of CPAs.
Appointment and dismissal of finance manager, accounting manager, and head of internal audit.
10.The annual financial statements signed or stamped by the Chairman, managers and accounting directors.
11.Business report.
12.Proposals of profit distribution or deficit compensation.
13.Other major items required by the Company or the competent authority.

Key auditing projects including:

Review financial statements

The Board of Directors prepared the Company’s annual Business Report, Financial Statements (including consolidated financial statements), and an earnings distribution proposal, among which the Financial Statements (including consolidated financial statements) have been audited by Jung-Huang Hsu and Chien-Tse Huang, CPAs at Ernst & Young, by whom an audit report has been issued. The above-mentioned reports presented by the Board of Directors have been verified by the Audit Committee, and it is considered that there is no inappropriate content.

Assessment of the effectiveness of the internal control system

The Audit Committee has assessed the effectiveness of the Company's internal control system policies and procedures (including control measures such as finance, operation, risk management, information security, outsourcing, regulatory

compliance, etc.) and audited The Company's audit department and CPAs, as well as management's periodic reports, including risk management and regulatory compliance. The committee also referred to the Internal Controal-Integrated Framework which is published by The Committee of Sponsoring Organizations of the Treadway Commission (COSO) in 2013, and concluded that the Company's risk management and internal control system is effective, the Company has also adopted required control mechanism to supervise and correct the violations.

3. Appointment of CPA

The Audit Committee is held responsible for supervising the independence of the CPA firm to ensure the integrity of financial statement. Generally speaking, except for tax-related services or specially authorized projects, certified accounting firm shall not provide other services for The Company.

The audit fees of the CPAs shall be approved by the Audit Committee. To ensure the independence of the certified accounting firm, the Audit Committee has prepared an independence assessment form based on the Article 47 in Certified Public Accountant Act and the Bulletin of Norm of Professional Ethics for Certified Public Accountant of the Republic of China No.10 “ Integrity, Objectivity and Independence ＂ , which evaluated whether the CPAs are related parties, have a mutual business or financial interest with the Company in accordance with their independence, professionalism, and suitability.

The 1st Audit Committee (Statistical period: January 1, 2020 to June 11, 2020)

The Audit Committee held four (4) meetings (A) in the most recent year; the attendance of members is summarized as follows:

Position	Name	Attendance in person (B)	Attendance Rate (%) [B/A] (Note)
Independent Director	Shiou-Ling Lin	4	100
Independent Director	Chih-Wei Wu	4	100
Independent Director	James Y. Chang	4	100

Note:

(1) Where a specific independent director may be relieved from duties before the end of the fiscal year, specify the date of discharge in the “Remark” section. Actual attendance rate (%) was calculated based on the number of board meetings held during each director’s term and the number of meetings actually attended by that director.
(2) Where a reelection may be held for filling the vacancies of independent directors before the end of the fiscal year, list out both the new and the discharged independent directors, and specify if they are the former independent directors, or newly elected, re-elected and the date of the reelection in the “Remark” section. Actual attendance rate (%) was calculated on the basis of the number of meetings held by the audit committee during each independent director’s term and the number of meetings actually attended by that independent director.

The 2nd Audit Committee (Statistical period: June 12, 2020 to December 31, 2020)

The Audit Committee held three (3) meetings (A) in the most recent year; the attendance of members is summarized as follows:

Position	Name	Attendance in person (B)	Attendance Rate (%) [B/A] (Note)
Independent Director	Shiou-Ling Lin	3	100
Independent Director	Chih-Wei Wu	3	100
Independent Director	James Y. Chang	3	100

Note:

(1) Where a specific independent director may be relieved from duties before the end of the fiscal year, specify the date of discharge in the “Remark” section. Actual attendance rate (%) was calculated based on the number of board meetings held during each director’s term and the number of meetings actually attended by that director.
(2) Where a reelection may be held for filling the vacancies of independent directors before the end of the fiscal year, list out both the new and the discharged independent directors, and specify if they are the former independent directors, or newly elected, re-elected and the date of the reelection in the “Remark” section. Actual attendance rate (%) was calculated on the basis of the number of meetings held by the audit committee during each independent director’s term and the number of meetings actually attended by that independent director.

Other required disclosure:

I.If any of the following circumstances occur, the dates of meetings, sessions, contents of motion, resolutions of the Audit Committee and the Company ＇ s response to the Audit Committee ＇ s opinion should be specified:
(I) Matters referred to in Article 14-5 of the Securities and Exchange Act.

Board of Directo rs	Contents Proposed by the Board of Directors	Matters referred to in Article 14-5 of the Securities and Exchange Act.	Any resolution not approved by the Audit Committee but approved by two thirds or more of all directors instead
The 18th meeting of the 18th term January 21, 2020	1. Proposal for signing of the urban renewal co-development agreement with the related party of the Lin Yuan Building Urban Renewal Project.		

Proposal for contracting the project Cathay Lagom of the Company in New Taipei City   Xindian to related party San-Ching Engineering Co., Ltd. Results of the Audit Committee Resolution (January 21, 2020): Proposals 1–2 were approved by all Independent Directors present. The Company's response to the comments of the Audit Committee: The proposals above were approved by all Directors present. Please refer to pages 42–43 for details on directors' recusal from proposals with their conflicts of interest involved. 1. Proposal for filing the Company's Internal Control System Statement of 2019 to   the Securities and Futures Bureau of the Financial Supervisory Commission The 19th 2. 2019 Individual financial meeting of report and consolidated   the 18th financial report. term Results of the Audit Committee Resolution (March 19, 2020): March 19, Proposals 1–2 were approved by all Independent Directors 2020 present. The Company's response to the comments of the Audit Committee: The proposals above were approved by all Directors present. Please refer to pages 42–43 for details on directors' recusal from proposals with their conflicts of interest involved.
Review of the candidate qualifications for the Company's 19th term of   The 20th Directors (including meeting of Independent Directors) the 18th 2. Removal of the non-compete term April 23, 2020 clause for the Company’s members of the 19th Board of   Directors (including Independent Directors).

	3 . Removal of the non-compete clause for the Company’s members of the 19th Board of Directors (including Independent Directors).		
	4. Amendments to the relevant provisions of the Company's Internal Control System and Internal Audit Implementation Rules governing the ability to self-prepare financial reports		
	5. Amendments to the Company's Audit Committee Charter		
	Results of the Audit Committee Resolution (April 23, 2020): Proposals 1–5 were approved by all Independent Directors present.
	The Company's response to the comments of the Audit Committee: The proposals above were approved by all Directors present. Please refer to pages 42–43 for details on directors' recusal from proposals with their conflicts of interest involved.
The 1st meeting of the 19th term June 24, 2020	1. Appointment of members of the 4th Remuneration Committee of the Company		
	2. Proposal for establishment of a new joint venture with Mitsui Fudosan Taiwan Co., Ltd.		
	3. Review the Company's Audit Committee Charter.		
	Results of the Audit Committee Resolution (June 24, 2020): Proposals 1 to 3 are approved by the all Independent Directors present.
	The Company's response to the comments of the Audit Committee: The proposals above were approved by all Directors present. Please refer to pages 42–43 for details on directors' recusal from proposals with their conflicts of interest involved.

==> picture [258 x 476] intentionally omitted <==

----- Start of picture text -----

1. Proposal for establishment of
Bannan Realty Co., Ltd. as a  
joint venture with Mitsui
Fudosan Taiwan Co., Ltd.
2. Proposal for joint venture
with Cathay Life Insurance  
Co.,Ltd. to establish a solar
energy company
The 3rd 3. Proposal for contracting the
Company's Cathay Chuan
meeting of
the 19th Ching project in Taoyuan  
term District, Taoyuan City, to
San-Ching Engineering Co.,
August 12,
Ltd.
2020
Results of the Audit Committee Resolution (August 12, 2020):
Proposals 1 to 3 are approved by the all Independent Directors
present.
The Company's response to the comments of the Audit
Committee:
The proposals above were approved by all Directors present.
Please refer to pages 42–43 for details on directors' recusal from
proposals with their conflicts of interest involved.
1. Deliberation of CPA
replacement and  
remuneration for 2021
2. Proposal for sales of
properties, lands and parking  
lots of Company's pre-sale
projects to related parties
3. Proposal for contracting the
The 4th old house demolition work of
meeting of the "Lin Yuan Building Urban
the 19th Renewal Project" in Daan  
term District, Taipei City, to
November San-Ching Engineering Co.,
12, 2020 Ltd.
4. Proposal for disposal of the
land at Land No. 132, Jinhua
Section, Anping District,  
Tainan City, to its related
party, Jinhua Realty Co., Ltd.
5. Removal of the non-compete
clause for managers of the  
Company
----- End of picture text -----

Results of the Audit Committee Resolution (November 12, 2020): Proposals 1–5 were approved by all Independent Directors present.

The Company's response to the comments of the Audit Committee: The proposals above were approved by all Directors present. Please refer to pages 42–43 for details on directors' recusal from proposals with their conflicts of interest involved.

(II) In addition to the items in the preceding sentence, other resolutions passed by two-thirds of all the directors but yet to be approved by the Audit Committee are as follows: none
II. In regards to the recusal of independent directors from voting due to conflict of interests, the name of the independent directors, the proposal contents, reasons for recusal due to conflict of interests and voting outcomes shall be stated.

Name of Independent Director	Proposal contents	Reasons for recusal due to conflicts of interest	Voting outcomes
Shiou-Ling Lin, Chih-Wei Wu, James Y. Chang	Review of candidate qualifications for the Company's 19th term of Directors (including Independent Directors)	Independent Directors stated were involved in the contents of motion.	Not participated in the discussion and voting
Shiou-Ling Lin, Chih-Wei Wu	Removal of the non-compete clause for the Company’s members of the 19th Board of Directors (including Independent Directors).	Independent Directors stated were involved in the contents of motion.	Not participated in the discussion and voting
Shiou-Ling Lin, Chih-Wei Wu, James Y. Chang	Appointment of members of the 4th Remuneration Committee of the Company	Independent Directors stated were involved in the contents of motion.	Not participated in the discussion and voting

III.Communication among Independent Directors, internal audit Supervisors, and CPA (including material matters, methods, and results of the Company's finance and operations).
1.The Company’s Audit Committee is composed of Independent Directors solely. The CPA reports at least once a year to the Independent Directors on the Company's financial status and internal control check, and communicates the impact of major adjustments or legislative amendments. Summary of previous communications:

communications:
Date	Communication Focus	Results
2020.03.19	1. Discussions on the review of the 2019 financial statements, and reports on the internal control test execution	1. The Audit Committee passed the annual financial statements and submitted to the board for approval,and

	and results. 2. Communication regarding key audit matters in the Audit Report. 3. Audit differences identified in the audit. 4. The impact of recent important legislative amendments and IFRS update notes	announced and declared as scheduled 2. Suggestions from Independent Directors: None
2020.11.12	1. CPA's Declaration of Independence. 2. The scope of the audit of the Group for the third quarter of 2020, and the audit report to be issued by the CPAs. 3. The expected audit items and timeline for 2020. 4. Communication regarding key audit matters for 2020. 5. Discussion on the recent updates of securities management and taxation laws and regulations.	1. The Audit Committee passed the annual financial statements and submitted to the board for approval, and announced and declared as scheduled 2. Suggestions from Independent Directors: None

The audit supervisor of the Company shall communicate at least once a year with the Independent Directors on the audit report and discuss the follow-up implementation. Summary of the communication:

Date	Communication Focus	Results
2020.03.19	1. Audit performance in 2019 2. Discussion on new projects contracting out review tasks	1. Fully inform the Independent Directors of the recommendation and improvement. 2. Opinion exchange and communication on the contracting out review task process. 3. Recommendation from Independent Directors: None

(III) Corporate Governance Implementation Status and Deviations from “the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons

Item	Implementation Status	Implementation Status	Implementation Status	Deviations from the Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies and Reasons Thereof
	Yes	No	Summary
I. Does the company establish and disclose the Corporate Governance Best Practice Principles based on “Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies”?	✓		The Company amended the Corporate Governance Best Practice Principles on March 19, 2020, and published it on the Market Observatory Post System (MOPS) and the Company's website. (http://www.cathay-red.com.tw/ tw/About/ManageRegulation)	No material discrepancy.
II. Shareholding Structure & Shareholders’ Rights (I) Does the company establish an internal operating procedure to deal with shareholders’ suggestions, doubts, disputes and litigations, and implement based on the procedure? (II) Does the company possess the list of its major shareholders as well as the ultimate owners of those shares? (III) Does the company establish and execute the risk management and firewall system within its conglomerate structure?	✓ ✓ ✓		Spokesmen and deputy spokesmen are responsible for responding and the stock affair unit is responsible for summarizing and handling the proposals or disputes of shareholders. The Company reports information regarding changes in shareholding of major shareholders to TWSE monthly in accordance with Article 25 of the Securities and Exchange Act, and makes sure that the register of shareholders and the application materials are consistent when the stock transfer is stopped to keep abreast of the shareholding of major shareholders. The Company also discloses the list of all shareholders with a stake of 5 percent or greater in the quarterly (annually) financial statements. The financial operations of the Company and its affiliates operate independently, and a subsidiary supervision operation system has been established.	No material discrepancy. No material discrepancy. No material discrepancy.

Item	Implementation Status	Implementation Status	Implementation Status	Deviations from the Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies and Reasons Thereof
	Yes	No	Summary
(IV) Does the company establish internal rules against insiders trading with undisclosed information?	✓		The Company has formulated the Codes of Ethical Conduct. Any information insiders has learned at duties that may significantly affect the price of securities transactions shall be kept strictly confidential in accordance with the provisions of the Securities and Exchange Act, and such information shall not be used for insider trading.	No material discrepancy.
III. Composition and Responsibilities of the Board of Directors (I) Does the Board develop and implement a diversified policy for the composition of its members? (II) Does the company voluntarily establish other functional committees in addition to the Remuneration Committee and the Audit Committee? (III) Does the Company establish rules and procedures for evaluating the Board's performance, conduct it annually, submit the result of evaluation to the Board of Directors, and refer to the information when considering individual director's remuneration and renewal nomination?	✓ ✓	✓	The Company has established a diversified policy for the composition of the Board in Corporate Governance Best Practice Principles, taken into account the gender of members, covered all professional fields, and led to a prosperous development of the operations of the Company. Please refer to page 45, "V. Measures taken to strengthen the functions of the Board for the current year and the most recent year and the implementation:" In addition to the Remuneration Committee and the Audit Committee set up in accordance with the law, the Company will establish other functional committees if necessary. The Company has formulated rules and procedures for evaluating the Board’s performance and conducts it annually. Please refer to page 44 "IV. The Linkage between Remuneration and Performance Evaluation of Directors and Managers."	No material discrepancy. No material discrepancy. No material discrepancy.

Item			Implementation Status	Deviations from the Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies and Reasons Thereof
	Yes	No	Summary
(IV) Does the company regularly evaluate the independence of CPAs?	✓		The Company recruits CPAs once a year, obtains the accountant's Independence Statement, and fully evaluates their independence and competency by the Board of Directors. The major evaluation items are as follows: Independence: 1.Does the CPA firm reach a certain scale? 2.Has the CPA been providing auditing service consecutively for less than seven years? 3.Does the nature and degree of non-audit services provided by the CPAs not affect the independence? 4.Is the CPA's auditing and attestation fee reasonable? Is there any "Contingent Fee" agreement? 5.Does the audit firm, its affiliates, and the audit engagement team members not have a loan or guarantee to or from the Company? 6.Has the Company not employed the personnel once served as the CPA auditor as the senior financial executives or other personnel affecting the major decision-making of the Company? Competency: 1.Does the CPA firm have a good reputation? 2.Is the CPA qualified for attestation? 3.Do the CPAs have no legal lawsuits, or cases corrected, or investigated by the competent authority? 4.Is the quality of the audit services provided by CPAs and key management personnel good?	No material discrepancy.

Item			Implementation Status	Deviations from the Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies and Reasons Thereof
	Yes	No	Summary
			5.Does the CPA take regular training and provide the Company with the latest professional information? 6.Does the CPA have positive interaction with management team and internal audit supervisors? Submit the assessment results above to the audit committee and the board of directors for discussion and use as a reference for the board to appoint a visa accountant. The assessment results of the recent two years have been reported to the Board of Directors for approval on November 13, 2019 and November 12, 2020, respectively.
IV. Does the Company assign adequate and appropriate persons for corporate governance, and appoint a cooperate governance supervisor to be responsible for corporate governance matters (including but not limited to providing information for Directors and supervisors to perform their duties, assisting Directors and supervisors to comply with laws and regulations, handling work related to meetings of the Board of Directors and the shareholders’ meetings, and preparing minutes of Board meetings and shareholders’ meetings)?	✓		Miao-ju Yen has served as the corporate governance supervisor upon the resolution of Board meeting held on April 25, 2019. 1. The implementation of corporate governance is as follows: (1) Handling of matters relating to the meetings of the Board of Directors and Shareholders' Meetings in compliance with law. (2) Producing meeting minutes for the meetings of the Board of Directors and Shareholders' Meetings. (3) Assisting directors in taking office and with their continuing education. (4) Providing materials necessary for directors to perform their business. (5)Assistingdirectors and	No material discrepancy.

Item			Implementation Status	Deviations from the Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies and Reasons Thereof
	Yes	No	Summary
			supervisors with compliance. (6) Handling other matters in accordance with the Articles of Association or contracts. 2. Implementation in the year: (1) Reviewed relevant procedures Amended the Audit Committee Charter Amended the Remuneration Committee Charter Amended the Director’s Remuneration Payment Standards Amended the Principles for Evaluation of Performance of Board of Directors Amended the Methods for Performance Evaluation of Board of Directors (2) Purchased Directors Liability Insurance. The most recent purchase of liability insurance for all Directors is with insured amount of US$5 million, and the period of insurance is from June 18, 2020 to June 18, 2021. (3) Evaluated the Board of Directors annually and reported to the Board of Directors. (4) Handled matters relating to the meetings of the Board of Directors and Shareholders' Meetings. 3. Training hours and content of the corporate governance supervisors at the beginning

Item			Implementation Status	Deviations from the Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies and Reasons Thereof
	Yes	No	Summary
			of their terms of office: (1) Key Information in Annual Reports and Responsibility Analysis; View of Directors and Supervisors - 3 hours (2) How to Read Annual Reports- A Class for Directors and Supervisors Without Financial Backgrounds - 3 hours (3)2019 Legal Compliance of Equity Transfer by Insiders of Listed and Unlisted Companies - 3 hours (4)2019 Prevention of Inside Trading Conference - 3 hours (5)Seminar for Effective Leveraging of the Functions of Directors - 3 hours (6)Enhance corporate governance structure with intellectual property management - the Promotion of Intellectual Property Management Obligations of the Board of Directors of Listed Companies - 2.5 hours (7)In the Face of Personal Data Protection Act, Companies' Personal Asset Management and Information Security Control Must be in Place - 2 hours (8) 2020 Annual Prevention of Insider Trading and Insider Equity Trading Promotion Seminar - 3 hours

Item			Implementation Status	Deviations from the Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies and Reasons Thereof
	Yes	No	Summary
V. Does the company establish a communication channel and build a designated section on its website for stakeholders (including but not limited to shareholders, employees, customers, and suppliers), as well as handle all the issues they care for in terms of corporate social responsibilities?	✓		Please refer to page 88.	No material discrepancy.
VI. Does the company appoint a professional shareholder service agency to deal with shareholder affairs?		✓	As the Company handles its own stock affairs and has a stock affair unit responsible for handling shareholders’ issues and affairs of shareholders’ meeting, no stock affair agency has been appointed.	No material discrepancy.
VII. Information Disclosure (I) Does the company have a corporate website to disclose both financial standings and the status of corporate governance? (II) Does the company have other information disclosure channels (e.g. building an English website, appointing designated people to handle information collection and disclosure, creating a spokesman system, webcasting investor conferences)? (III) Does the Company publish and file the annual financial statement within two months after the end of the fiscal year, and publish and file the first, second, and third quarter financial reports and the monthly operatingsituation within	✓ ✓	✓	The Company has established "Investor Information" and "Corporate Social Responsibility" for investors on the website to disclose both financial standings and the status of corporate governance. (http://www.cathay-red.com.tw/ tw/About/ManageDirectors) The Company has appointed designated people to handle information collection and disclosure, as well as created a spokesman system. Published within the prescribed filing time limit.	No material discrepancy. No material discrepancy. No material discrepancy.

Item			Implementation Status	Deviations from the Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies and Reasons Thereof
	Yes	No	Summary
the prescribed time limit?
VIII. Is there any other important information to facilitate a better understanding of the company’s corporate governance practices (e.g., including but not limited to employee rights, employee wellness, investor relations, supplier relations, rights of stakeholders, Directors’ and Supervisors’ training records, the implementation of risk management policies and risk evaluation measures, the implementation of customer relations policies, and purchasing D&O liability insurance for Directors and Supervisors)?	✓		Please refer to page 86.	No material discrepancy.
IX. Please explain the improvements which have been made in accordance with the results of the Corporate Governance Evaluation System released by the Corporate Governance Center, Taiwan Stock Exchange, and provide the priority enhancement measures. (Companies that were not evaluated need not explain)	✓		1. Improvements which have been made (1) Compiled and disclosed the annual work priorities of the Audit Committee and the Remuneration Committee on the Company's website. (2) Assigned a full-time (part-time) unit that promotes corporate ethical management, responsible for the formulation and supervision of the ethical management policy and prevention plan, and disclosed the operation and implementation of the unit on the Company’s website and annual report, and reported to the Board of Directors at least once a year. (3) Referred to the International Bill of Human	No material discrepancy.

Item			Implementation Status	Deviations from the Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies and Reasons Thereof
	Yes	No	Summary
			Rights, formulated and disclosed human rights protection policies and specific management plans. 2. Priority Enhancement Measures Develop an intellectual property management plan linked to operational goals, and disclose the implementation status on the Company's website or annual report, and report to the Board of Directors at least once a year.
X. Does the Company establish a IP management plan which is linked to operational targets, disclose the execution process on the Company's website or the annual report, and report to the Board of Directors at least once a year?		✓	The Company convenes an operation and management committee at the end of each year, invites senior executives to discuss and make decisions, approve the Company's business objectives and business plans for the next year, and issue announcements to provide the basis for the Company's units to formulate the next year's departmental work plan. In addition, the above goals will be presented in the first Board meeting of the next year, and a business goal proposal will be drawn up, and the company's new year's operating priorities and business goals will be submitted to the board for discussion and approval. The operating priorities and business goal and plan will be disclosed publicly through the Company spokesperson system via roadshow.	As the Company's operating objectives are formulated mainly for operations and business, not for research and development, there are no goals and plans for linking intellectual property management.

(IV) Composition, Responsibilities and Operations of the Remuneration Committee
Information on the Remuneration Committee Members

		May1,2021	May1,2021	May1,2021	May1,2021	May1,2021	May1,2021	May1,2021	May1,2021	May1,2021	May1,2021	May1,2021	May1,2021	May1,2021
Identity (Note1)	Criteria Name	Having at least 5 years work experience and professional qualifications listed below			Independence Criteria (Note 2)										Number of Other Public Companie s in Which the Individual is Concurrent ly Serving as an Remunerat ion Committee Member	Rem arks
		An Instructor or Higher Position in a Department of Commerce, Law, Finance, Accounting, or Other Academic Department Related to the Business Needs of the Company in a Public or Private Junior College, College or University	A Judge, Public Prosecutor, Attorney, Certified Public Accountant, or Other Professional or Technical Specialist Who has Passed a National Examination and been Awarded a Certificate in a Profession Necessary for the Business of the Company	Have Work Experienc e in the Areas of Commerc e, Law, Finance, or Accountin g, or Otherwise Necessary for the Business of the Company	1	2	3	4	5	6	7	8	9	10
Indepen dent Director	Shiou-Lin g Lin														1
Indepen dent Director	Chih-Wei Wu														1
Indepen dent Director	James Y. Chang														None

Note 1: Please fill in as a Director, Independent Director or Others.
Note 2: Please tick the corresponding boxes that apply to a member during the two years prior to being elected or during the term(s) of office. 
(1) Not an employee of the Company or any of its affiliates.
(2) Not a Director or Supervisor of the Company or any of its affiliates. Not applicable in cases where the person is an Independent Director of the Company, its parent company, any subsidiary or any subsidiaries of the same parent company as appointed in accordance with the Act or with the laws of the country of the parent or subsidiary.

(3) Not a natural-person shareholder who holds shares, together with those held by the person’s spouse, minor children, or held by the person under others’ names, in an aggregate amount of 1% or more of the total number of outstanding shares of the Company or ranking in the top 10 in holdings.
(4) Not a spouse, relative within the second degree of kinship, or lineal relative within the third degree of kinship, of the manager listed in (1) or any person listed in (2) and (3).
(5) Not a Director, Supervisor, or employee of a corporate shareholder who directly holds 5% or more of the total number of outstanding shares of the Company or who holds shares ranking in the top five holdings or who appointed representative to be company Director or Supervisor in accordance with Article 27 paragraph 1 or 2, Company Act. Not applicable in cases where the person is an Independent Director of the Company, its parent company, any subsidiary or any subsidiaries of the same parent company as appointed in accordance with the Act or with the laws of the country of the parent or subsidiary.
(6) Not a Director, Supervisor, or employee who controlled another company’s majority of the company's director seats or voting shares. Not applicable in cases where the person is an Independent Director of the Company, its parent company, any subsidiary or any subsidiaries of the same parent company as appointed in accordance with the Act or with the laws of the country of the parent or subsidiary.
(7) Not a chairperson, general manager, or person holding an equivalent position of the company and a person in any of those positions at another company or institution are the same person or are spouses. Not applicable in cases where the person is an Independent Director of the Company, its parent company, any subsidiary or any subsidiaries of the same parent company as appointed in accordance with the Act or with the laws of the country of the parent or subsidiary.
(8) Not a director, supervisor, officer, or shareholder holding five percent or more of the shares, of a specified company or institution that has a financial or business relationship with the company. Not applicable in cases where the specific company or institution hold more than twenty percent and not more than fifty percent of the company’s issued shares, and where the person is an Independent Director of the Company, its parent company, any subsidiary or any subsidiaries of the same parent company as appointed in accordance with the Act or with the laws of the country of the parent or subsidiary.
(9) Not a professional individual who, or an owner, partner, director, supervisor, or officer of a sole proprietorship, partnership, company, or institution that, provides auditing services to the company or any affiliate of the company, or that provides commercial, legal, financial, accounting or related services to the company or any affiliate of the company for which the provider in the past 2 years has received cumulative compensation exceeding NT$500,000, or a spouse thereof. This restriction does not apply to a member of the remuneration committee, public tender offer review committee, or special committee for merger/consolidation and acquisition, who exercises powers pursuant to the Stock Exchange Act or to the Business Mergers and Acquisitions Act or related laws or regulations.
(10) Not a person of any conditions defined in Article 30 of the Company Law.

Operational status of the Remuneration Committee
(1) The Company's 3rd Remuneration Committee consists of 3 members. The term of the 3rd Remuneration Committee: From June 30, 2017 to June 15, 2020, the Remuneration Committee met twice (A) in the most recent year. The qualifications and attendance of the members are as follows (statistical period: 2020.1.1–2020.6.23):

Position	Name	Attendance in person (B)	Attendance Rate (%)【B/A】(Note)
Convener	Shiou-Ling Lin	2	100%
Committee Member	Chih-Wei Wu	2	100%
Committee Member	James Y. Chang	2	100%

Notes:

(1) If any Remuneration Committee members resign from the Company before the end of the year, the date of resignation shall be stated in the remark column. The Attendance Rate (%) shall be calculated by Attendance in Person during the term of service.
(2) If any Remuneration Committee members are reelected before the end of the year, both newly elected and prior members should be filled in, and their identities and the date of re-election shall be stated in the remark column. The Attendance Rate (%) is calculated by Attendance in Person during the term of service.

The Company's 4th Remuneration Committee consists of 3 members.

The term of the 4th Remuneration Committee: From June 24, 2020 to June 11, 2023, the Remuneration Committee met once (A) in the most recent year. The qualifications and attendance of the members are as follows (statistical period: 2020.6.24-2020.12.31):

Position	Name	Attendance in person (B)	Attendance by proxy	Attendance Rate (%)【B/A】(Note)
Convener	Shiou-Ling Lin	1	0	100%
Committee Member	Chih-Wei Wu	0	1	0%
Committee Member	James Y. Chang	1	0	100%

Notes:

(1) If any Remuneration Committee members resign from the Company before the end of the year, the date of resignation shall be stated in the remark column. The Attendance Rate (%) shall be calculated by Attendance in Person during the term of service.
(2) If any Remuneration Committee members are reelected before the end of the year, both newly elected and prior members should be filled in, and their identities and the date of re-election shall be stated in the remark column. The Attendance Rate (%) is calculated by Attendance in Person during the term of service.

(2) Important resolutions of the Remuneration Committee:

The Company has stipulated the remuneration policy, scope, types, and regular review system of Directors’ and managers’ remuneration in the remuneration distribution standards. Each year, the remuneration of Directors and managers is reported to the Remuneration Committee based on the result of performance review and industrial standards and then submitted to the Board of Directors for approval. The Company will regularly evaluate the remuneration of Directors and managers every three years.

Remuneration Committee	Date	Important resolutions
7th meeting of the 3rd term	2020.1.21	1. Approval of the proposal for the distribution of year-end bonus and special incentives to Executive Directors and managers participating in businesses in 2019. 2. Approval of the assessment of the compensation of Independent Directors and Executive Directors participating in businesses in 2019. 3. Approval of the assessment of managers’ compensation in 2019. Results: The important resolutions above were approved by all Directors present without any demur. Company’s response: Submitted to the Board meeting and approved by all Directors present without any demur. (Note: For the directors' recusal from proposals with conflicts of interest,see details onpages 42-43)
8th meeting of the 3rd term	2020.3.19	1. Approval the amendment of the Company’s Remuneration Committee Charter 2. Approval of amendments to the Manager's Performance Evaluation Standards of the Company 3. Approval of the distribution of employee bonus and remuneration of Directors for 2019 Results: The important resolutions above were approved by all Directors present without any demur. Company’s response: Submitted to the Board meeting and approved by all Directors present without any demur. (Note: For the directors' recusal from proposals with conflicts of interest,see details onpages 42-43)
1st meeting of the 4th term	2020.7.16	1. Approval the review of the Company’s Remuneration Committee Charter 2. Approval of the review of the Company's Director’s Remuneration Payment Standards, Directors Performance Appraisal Standards, Manager’s Remuneration Payment Standards, and Manager’s Performance Appraisal Standards 3. Approval of the assessment and determination of the compensation of Independent Directors and Executive Directors participating in businesses in 2020. 4. Approval of the review of the Company's Methods for

Remuneration Committee	Date	Important resolutions
		Performance Evaluation of Board of Directors Results: The important resolutions above were approved by all Directors present without any demur. Company’s response: Submitted to the Board meeting and approved by all Directors present without any demur. (Note: For the directors' recusal from proposals with conflicts of interest,see details onpages 42-43)

Other matters to be recorded:
(1) If the Board of Directors refuses to adopt or amend a suggestion of the remuneration committee, the date of the meeting, session, content of the motion, resolution by the board of directors, and the Company’s response to the remuneration committee’s opinion (e.g., if the remuneration passed by the Board of Directors exceeds the suggestion of the remuneration committee, the circumstances and cause for the difference shall be specified) shall be specified: None.
(2) If there were resolutions of the remuneration committee to which members objected or expressed reservations, and for which there is a record or declaration in writing, the date of the meeting, session, content of the motion, all members’ opinions and the response to members’ opinion shall be specified: None.

(V) Corporate Social Responsibility Implementation Status and Deviations from “the Corporate Social Responsibility Best Practice Principles for TWSE/TPEx Listed Companies” and Reasons

Item			ImplementationStatus	Deviations from the Corporate Social Responsibility Best Practice Principles for TWSE/TPEx-Listed Companies and Reasons
	Yes	No	Summary
I. Does the company assess ESG risks associated with its operations based on the principle of materiality, and establish related risk management policies or strategies?	✓		The Company's 2020 CSR Report has dedicated chapter (CH1, Section 1.2, pages 19-22) on business risk identification. After comparing the risk issues with the major issues, the Company's annual material issues has been listed, and management policies and guidelines proposed in the subsequent chapters. The Company establishes the CSR Committee according to the organization rules of the CSR Committee, and formulates the CSR policies and sets up five special groups according to the task characteristics, including corporate governance group, customer care group, employee care group, environmental protection group, and social benefit group and their functional authorities are shown as follows: 1. According to international trends, concerns of stakeholders, and specific issues in the operation regions, study the overall CSR strategies of the Company, formulate policies, and supervise the Company’s adjustments. 2. Supervise the various measures of the CSR topics of each special group of the Committee and review the results regularly. 3. Externally disclose the Company’s environment, society, and governance. 4. Supervise the official website to set up a platform for CSR. 5. Assist and coordinate the Company and the special groups of the Committee to handle difficult matters. 6.Reviewthe Company’s CSR	No material discrepancy.

Item	ImplementationStatus	ImplementationStatus	ImplementationStatus	Deviations from the Corporate Social Responsibility Best Practice Principles for TWSE/TPEx-Listed Companies and Reasons
	Yes	No	Summary
			report. In addition, the Board of Directors of the Company passed the 2020 CSR strategy plan resolution of the Company on March 19, 2020 as the policies for implementing the annual CSR objectives. On the same day, the Company’s 2019 review report on the implementation of CSR was submitted to the Board of Directors.
II. Does the Company have a dedicated (or concurrent) unit set up to promote corporate social responsibility and have the senior management authorized by the board of directors to handle matters and report the processing results to the board of directors?	✓		In order to effectively promote the implementation of CSR, the Company establishes the CSR Committee and appoints a Chairman served by the President of the Company and the committee members are served by senior executive. In accordance with the task characteristics, the Committee has established five special groups, including corporate governance group, customer care group, employee care group, environment protection group, and social benefit group with members of different departments of the Company. The President Office of the Company is appointed as the specific promotion unit of the committee to assist in coordinating the meeting, and submit regular reports on implementation to the Board of Directors at regular intervals. The specific promotion unit submitted the implementation review report and publication report to the Board of Directors respectively in March and August, 2020.	No material discrepancy.
III. Environmental issues (I) Has the company set an environmental management system designed to be line line with industry characteristics?	✓		The Company perceives that the environment protection is an important issue for people all over the world to work together and faces up to the importance of global warming to the ecological impact and environmentalprotection.The	No material discrepancy.

Item	ImplementationStatus	ImplementationStatus	ImplementationStatus	Deviations from the Corporate Social Responsibility Best Practice Principles for TWSE/TPEx-Listed Companies and Reasons
	Yes	No	Summary
			Company is in the construction investment industry with no qualification as a construction plant and entrusts the related businesses to the professional engineering management consulting firm and sets up Technology Department to manage the supervision, coordination, and management of construction of construction companies, actively promotes actual environmental protection activities such as energy conservation and carbon reduction to fulfill the social responsibilities of enterprises.
(II) Does the company endeavor to utilize all resources more efficiently and use renewable materials that have low impact on the environment?	✓		In order to maintain the environment and care for the environment protection, the Company uses building material equipment with low impact on the environmental load. 1. Use energy-saving T5, LED lamps. 2. Set up a rainwater recovery system and use water-saving toilets, faucets and other appliances. 3. Set energy-saving sensitization control and solar power generation equipment. 4. Replace the traditional ballast with the electronic energy-saving ballast. 5. Increase window opening and light guiding in architectural planning. 6. Increase ventilation and heat convection in equipment planning, and use natural ventilation to reduce heat. 7. Use frequency conversion and energy saving host as air conditioning equipment. 8. Carry out shade tree planting greendesignon roofandin	No material discrepancy.

Item			ImplementationStatus	Deviations from the Corporate Social Responsibility Best Practice Principles for TWSE/TPEx-Listed Companies and Reasons
	Yes	No	Summary
			garden. 9. Give priority to use green building material seal for interior and exterior decoration. 10. The new project of the building aims to obtain the green building certificate. In 2020, 3 projects have obtained the green building candidate certificate or mark. 11. Require builders to strengthen environmental maintenance on the site, including air pollution prevention, noise control and water pollution prevention.
(III) Has the company evaluated the current and future potential risks and opportunities of climate change, and adopted countermeasures related to climate issues? (IV) Does the company collect data for greenhouse gas emissions, water usage and waste quantity in the past two years, and set energy conservation, greenhouse gas emissions reduction, water usage reduction, and other waste management policies?	✓	✓	The Company has identified a total of 19 business risk issues through questionnaires, including a total of 3 environmental aspects, including extreme weather events. The risk level is low and acceptable for the Company. The Company has not taken corresponding measures to regarding this issue. The Company pays close attention to the impact of climate change on operational activities and formulates corporate energy conservation and carbon reduction and GHG reduction policies: 1. Take relevant energy conservation measures cooperating with the Autonomous Regulations for Counseling Management of Energy Conservation and Carbon Reduction of Business formulated by Industry Development Bureau of Taipei Municipal Government. 2. Control the paper use for affairs and use of various printed materials, and introduce paperless measures. 3. Promote no tie at work, and set the office temperature to 26 . ℃ 4.Provide the automatic power	Minor discrepancy. Assessment only without corresponding measures. No material discrepancy.

Item	ImplementationStatus	ImplementationStatus	ImplementationStatus	Deviations from the Corporate Social Responsibility Best Practice Principles for TWSE/TPEx-Listed Companies and Reasons
	Yes	No	Summary
			saving controller and set the mechanism for lighting off in midday rest and closing time. 5. Invite professional organizations every half year to handle office lighting and CO2 environmental inspection. 6. Continue to implement ISO 14001 environmental management and ISO 14064-1 GHG management system, establish an office water electricity consumption measurement mechanism, and establish an energy concept. The Company introduced ISO 14064-1:2018 in 2020 to conduct 2019 internal GHG checking. Through the inspection process and results, the Company understands its greenhouse gas emissions. In the future, we are committed to GHG reduction, slow down the trend of global warming, and be responsible as a part of the global village. The on-site total weight of waste, relevant energy utilization policies, and green office space are set out in the 2019 CSR Report (pages 77–79).
IV. Social issues (I) Does the company formulate appropriate management policies and procedures according to relevant regulations and the International Bill of Human Rights?	✓		The Company has referred to the principles as in the Universal Declaration of Human Rights, the United Nations Guiding Principles on Business and Human Rights, the United Nations Global Compact, and the International Labor Organization’s Declaration on Fundamental Principles and Rights at Work, and formulated the Company's declaration of human rights while identifying relevant stakeholders, implementing management mitigation measures, and placing relevant information on the officialwebsiteasa reference	No material discrepancy.

Item	ImplementationStatus	ImplementationStatus	ImplementationStatus	Deviations from the Corporate Social Responsibility Best Practice Principles for TWSE/TPEx-Listed Companies and Reasons
	Yes	No	Summary
			for employees and the public. The Company has also referred to the United Nations Convention on the Rights of Persons with Disabilities, the Convention on the Elimination of All Forms of Discrimination against Women, and the Convention on Human Rights for Children and abides by the relevant labor laws and regulations. When it comes to the working conditions regarding general employees, intern hiring, working hours, salary, gender equality, and prevention of sexual harassment, the Company practices in accordance with the law, and has formulated the Code of Ethical Conduct, the Code of Integrity Management, employee service codes, and handling methods for reporting illegal and unethical or dishonest behaviors, and amended the “Working Codes” and announced them in accordance to related laws and regulations. The Company also evaluates the labor laws and regulations on a regular basis to ensure compliance with relevant labor laws and international human rights conventions.
(II) Has the company formulated and implemented reasonable employee benefit measures (including remuneration, rest and annual leave, and other benefits), and appropriately reflected the operating performance or achievements in the employee remuneration?	✓		According to the Company’s Articles of Association, if there is any profit in the year, 0.1% to 1% of the profit shall be distributed as the employee bonus. However, if the Company still has accumulated losses, it shall retain the amount for loss in advance. The employee performance objective setting, tracking and assessment are carried out according to the policies and annual objectives, and the compensation and post adjustment are performed according to the assessment result, and the bonus is calculated according to the employee’s performance byrule	No material discrepancy.

Item	ImplementationStatus	ImplementationStatus	ImplementationStatus	Deviations from the Corporate Social Responsibility Best Practice Principles for TWSE/TPEx-Listed Companies and Reasons
	Yes	No	Summary
			each year.
(III) Does the company provide a healthy and safe working environment and organize training on health and safety for its employees on a regular basis?	✓		1. The Company performs office environment testing every six months (June 16, 2020 and December 15, 2020), including the measurement of lamp illuminance and CO2 concentration in order to provide an excellent workplace environment with adequate illumination and good air quality with employees. 2. The Company arranges all employees to accept health check every year (March to May, 2020), and holds health and safety lectures (November 20 and November 27, 2020) to provide health information and consulting services for employees to ensure that each employee can be in best status and has physical and psychological health. 3. The Company strictly implements the automatic check plan for official vehicles every month, and completes the records of daily point inspections and monthly regular inspections to ensure the safety of official vehicles used by employees.	No material discrepancy.
			4. The Company arranges 7 colleagues who accepted emergency personnel training in the office spaces and prepares general standing drugs and related medical supplies, first-aid equipment (such as: AED) to cope with the unexpected situations of employees when working in workplaces. 5. The Company does legally offer the safety and health education training courses for occupational safety and health business executives,new employees and

Item	ImplementationStatus	ImplementationStatus	ImplementationStatus	Deviations from the Corporate Social Responsibility Best Practice Principles for TWSE/TPEx-Listed Companies and Reasons
	Yes	No	Summary
			ordinary employees, and carries out various safety measures drills or tests (building security check and fire drill) coordinating with building management units in the office spaces to strengthen the occupational safety concept of employees and promote the maintenance of work environment safety, and then implement the safety management of workplace work. 6. The Company has formulated Executive Measures for Maternal Health Protection of Female Workers, Prevention Plan for Illegal Immunization in Performing Jobs, Plan for Prevention of Sexual Harm and Plan for Prevention of Diseases caused by Abnormal Workload to maintain the physical and psychological health of employees and avoid unnecessary work injuries. In 2020, there were no occupational injury cases in the whole Company.
(IV) Does the company establish effective career development and training plans for its employees?	✓		The Company plans and implements assessment of core functions and personality traits of employee and executive function feedback assessment in the long term, establishes various career capacity databases of employees and effectively plan a series of development training plans for weaker projects of employees such as decision-making, organization, team, performance, innovation, execution, leadership and creativity.	No material discrepancy.
(V) Does the company follow relevant laws and regulations and international standards, and formulate relevant	✓		The Company follows relevant laws and regulations and various consumer protection laws and regulations, and has established strict protection methods for	No material discrepancy.

Item	ImplementationStatus	ImplementationStatus	ImplementationStatus	Deviations from the Corporate Social Responsibility Best Practice Principles for TWSE/TPEx-Listed Companies and Reasons
	Yes	No	Summary
consumer protection policies and complaint procedures with regard to customer health and safety, customer privacy, marketing and labeling of products and services? (VI) Does the company formulate and implement supplier management policies that require suppliers to follow relevant regulations on environmental protection, occupational safety and health, or labor human rights?	✓		customer personal information confidentiality measures, which are signed by all employees. If the consumer has any appeal about the equity, the Company can provide prompt handling and reply through the email of special parts of affiliate of the Company’s website or service department. The Company actively implements the protection of consumer rights, and there are also dedicated units to handle customer complaint cases, as detailed in the 2020 CSR Report (pages 34–39) The clause above is involved in Paragraph 3, Article 22 of the Company’s Corporate Social Responsibility Code, which has been fully notified to all units and subsidiaries of the Company and incorporated into the contract with the main suppliers, subject to the strict implement and execution.	No material discrepancy.
V. Does the company refer to general accepted international standards or guidelines for the preparation of reports such as CSR reports to disclose non-financial information? Are the reports certified or assured by a third-party accreditation body?	✓		The Company not only follows the guidelines of GRI Standards for its CSR reports published, but also refers to the Disclosures for the sector and the United Nations Sustainable Development Goals for disclosure, and all the information is verified by Ernst & Young.	No material discrepancy.
VI. Where the company has established its own Corporate Social Responsibility Best Practice Principles in accordance with the Corporate Social Responsibility Best Practice Principles for TWSE/GTSM Listed Companies, please specify the difference between its operations and the principles formulated: There is no difference, and the relevant operations are carried out in accordance withthe principles.
VII. Other important information to facilitate better understanding of the Company’s implementation of corporate social responsibility: Please refer to (VIII) Corporate Responsibility and Ethical Behavioronpage132.

Note 1: If Implementation Status is specified “Yes,” please explain the key policies, strategies and measures taken and the current progress; if Implementation Status is specified “No,” please provide reasons and explain any policy, strategy and measure planned for the future.
Note 2: If the company has prepared a CSR report, Implementation Status may be completed by providing page references to the CSR report instead.
Note 3: Materiality principle refers to environmental, social and corporate governance issues that are of material impact to the Company's investors and stakeholders.

(VI) Enforce ment of business integrity, deviation and causes of deviation from Ethical Corporate Management Best Practice Principles for TWSE/TPEX Listed Companies

Ethical Corporate Management

Item	Implementation Status	Implementation Status	Implementation Status	Deviations from the Integrity Management Best Practice Principles for TWSE/TPEx Listed Companies, and theReasons
	Yes	No	Summary
I. Establishment of ethical corporate management policies and programs (I) Has the company formulated the integrity management policy approved by the board of directors, and stated in the regulations and external documents the policies and practices of integrity management, as well as the commitment of the board of directors and management to actively implement the operation policy?	✓		In order to establish a corporate culture of integrity management and sound the development, and to implement a good corporate governance and risk management & control mechanism, the Company has developed the Code of Integrity Management according to Integrity Management Best Practice Principles for TWSE/TPEx Listed Companies, which was approved by the Board of Directors, disclosed and announce on the internal and external website.	No material discrepancy.

Item	Implementation Status	Implementation Status	Implementation Status	Deviations from the Integrity Management Best Practice Principles for TWSE/TPEx Listed Companies, and theReasons
	Yes	No	Summary
(II) Does the company establish a risk assessment mechanism against unethical conduct, analyze and assess on a regular basis business activities within its business scope which are at a higher risk of being involved in unethical conduct, and establish prevention programs accordingly, which shall at least include those specified in Paragraph 2, Article 7 of the "Ethical Corporate Management Best Practice Principles for TWSE/GTSM Listed Companies"?	✓		The Company's Code of Integrity Management covers all the activities stated in Article 2, Paragraph 7 of the Ethical Corporate Management Best-Practice Principles for TWSE/TPEx Listed Companies. The internal audit unit should be based on the evaluation result of unethical conduct to formulate related audit plans and verify the preventional measures. In addition, anyone who finds that the personnel of the Company has violated the integrity management can report to the integrity management unit (CSR committee) of the Company through an independent report mailbox ([email protected]) or directly. After the case is filed, the management unit will conduct investigation and processing according to certain procedures, and report the results to the Board of Directors.	No material discrepancy.

Item			Implementation Status	Deviations from the Integrity Management Best Practice Principles for TWSE/TPEx Listed Companies, and theReasons
	Yes	No	Summary
(III) Does the company specify in its prevention programs the operating procedures, guidelines, punishments for violations, and a grievance system and implement them and review the prevention programs on a regular basis?	✓		The Company has established a Code of Ethics and the Code of Integrity Management, forbidding the unethical conduct against the Company, the Company’s Directors, Managers, employees, appointees and the material controllers of the Company such as offering or accepting bribes, providing illegal political contributions, or improper charitable donation or sponsorship, providing or accepting unreasonable gifts, reception or other improper interests, disclosing the Company’s trade secrets, trespassing against intellectual property rights, working on unfair competition, or providing products and services with damage to consumers or other interested parties. The Company reviews and amends the relevant policies regularly; the Codes of Ethical Conduct was late amended on June 30, 2017, and Code of Integrity Management on November 13, 2019.	No material discrepancy.

Item	Implementation Status	Implementation Status	Implementation Status	Deviations from the Integrity Management Best Practice Principles for TWSE/TPEx Listed Companies, and theReasons
	Yes	No	Summary
II. Fulfill operations integrity policy (I) Does the company evaluate business partners’ ethical records and include ethics-related clauses in business contracts? (II) Does the company set up a dedicated (part-time) unit that promotes integrity management under the Board of Directors, and regularly (at least once a year) report to the board on its integrity management policies and the implementation of unethical conducts prevention plan?	✓ ✓		The Company conducts business activities on the basis of the principle of integrity management and in a fair and transparent manner. Before cooperation, the Company considers the legality of agents, suppliers, customers or other transaction objects and whether they involve unethical conducts, to avoid transactions with those involved in unethical conducts. The contract between the Company and its agents, suppliers, customers or other transaction objects shall include the clause where the counterpart complying with integrity management policies and transaction is involved in a unethical conduct, the contract may be terminated or rescinded at any time. The Board of Directors appointed CSR Committee as the dedicated unit to promote the integrity management of the Company, and report the execution status on an annual basis. (The review of the effectiveness of the implementation of integrity management in 2020 and the review of the effectiveness of the implementation of corporate social responsibility were reported to the Board of Directors on March 18, 2021. )	No material discrepancy. No material discrepancy.

Item	Implementation Status	Implementation Status	Implementation Status	Deviations from the Integrity Management Best Practice Principles for TWSE/TPEx Listed Companies, and theReasons
	Yes	No	Summary
(III) Does the company establish policies to prevent conflicts of interest and provide appropriate communication channels, and implement it?	✓		According to the Company’s Code of Integrity Management, Directors shall be highly self-disciplined. Where the proposal listed in the Board meeting is related to their own interests, they shall state clearly the important contents of their own interests at the Board meeting. Where there are damages to the Company’s interests, they shall express their opinions and give a reply, but not participate in the discussion and voting, during which they shall avoid but not exercise the right to vote on behalf of other directors. In addition, according to the Code of Ethics, the Company’s Directors and managers, in order to prevent conflicts of interest, shall handle official business in an objective and efficient manner, but not make improper benefits for themselves, their spouse, parents, children or relatives within the second degree of kinship by their positions in the Company. The Company shall pay special attention to preventing conflicts of interest, and state clearly whether there is a potential conflict of interest with the Company through official documents, meetings and internal communications when the Company lends funds to or provides guarantees for, has material asset transaction with or purchases goods from or sells goods to the company in which the aforementioned personnel works.	No material discrepancy.

Item	Implementation Status	Implementation Status	Implementation Status	Deviations from the Integrity Management Best Practice Principles for TWSE/TPEx Listed Companies, and theReasons
	Yes	No	Summary
(IV) Has the company established effective systems for both accounting and internal control, and the internal audit unit base on the assessment result of the risk of unethical conduct to formulate auditing plan so the unit can the verify the implementation of prevention plan or verified by CPAs? (V) Does the company regularly hold internal and external educational trainings on operational integrity?	✓ ✓		The Company's accounting system and internal control system are designed and implemented in accordance with the code of ethical management and should be reviewed at any time to ensure its continuous and effective implementation. Both the internal audit and regular CPAs internal control audit are conducted in normal procedures. Integrity is the core value of the Company. In the monthly executive and internal department meeting, each supervisor provides education and training for their employees according to Code of Integrity Management. In 2020, the Company also organized an education and training seminar for all employees of the Company, for a duration of 1.5 hours with 145 participants. Information on the actions of strengthening integrity management is also disclosed in the Corporate Governance section of the Company's official website.	No material discrepancy. No material discrepancy.
III. The operation of the Company's whistleblowing system (I) Does the company establish both a reward/whistle-blowing system and convenient whistle-blowing channels? Are appropriate personnel assigned to the accused party? (II) Has the company established standard operating procedures and confidentiality measures for the investigation of reported incidents?	✓ ✓		Anyone can make a report through the independent report mailbox ([email protected]) or directly to the Company's ethical management unit (CSR Committee). No reporting mail received in 2020. The provisions of Article 19 of the Company's Code of Integrity Management specify a reporting system, a whistle blowing clause, and a handling procedure for a dedicated unit, with an independent and confidential mechanism.	No material discrepancy. No material discrepancy.

Item	Implementation Status	Implementation Status	Implementation Status	Deviations from the Integrity Management Best Practice Principles for TWSE/TPEx Listed Companies, and theReasons
	Yes	No	Summary
(III) Does the company provide proper whistleblower protection?	✓		The provisions of Subparagraph 2, Article 19 of the Company's Code of Ethical Management have stipulated a whistle-blower protection clause that the whistle-blower will not be treated inappropriately.	No material discrepancy.
IV. Enhancing Information Disclosure (I) Does the company disclose its ethical corporate management policies and the results of its implementation on the company’s website and MOPS?	✓		The Company has disclosed relevant information on the website and MOPS.	No material discrepancy.
V. If the company has established the ethical corporate management policies based on the Ethical Corporate Management Best-Practice Principles for TWSE/TPEx Listed Companies, please describe any discrepancy between the policies and their implementation. No material discrepancy, follow the principlesfor related operations.
VI. Other important information to facilitate a better understanding of the Company’s ethical corporate management policies (e.g. review and amendment of the Company's code of ethical management): the Company approved the Code of Integrity Management at the Board meeting on November 13, 2019. The main amendment was to appoint a responsible unit and establish an independent reporting system, showingthe Company’s determination inethical management.

VI. Other important information to facilitate a better understanding of the Company’s ethical corporate management policies (e.g. review and amendment of the Company's code of ethical management): the Company approved the Code of Integrity Management at the Board meeting on November 13, 2019. The main amendment was to appoint a responsible unit and establish an independent reporting system, showing the Company’s determination in ethical management.

Note : Regardless “Yes” or “No”, the status shall be stated in the Remarks section.

(VII) Access to the Company's Corporate Governance Best Practice Principles and relevant regulations:
The Company’s relevant regulations regarding corporate governance have been disclosed on the MOPS (website: http://mops.twse.com.tw)
(VIII) Does the company have other important information to facilitate better understanding of its corporate governance operations
(including but not limited to employees’ rights, employee care, investor relations, supplier relations, stakeholders’ rights, directors’ and supervisors’ continuing education, the implementation of risk management policies and risk measurement standards, the implementation of customer policies, and the Company's purchase of liability insurance for directors and supervisors)?
(1) Status of employee rights and employee welfare: Please refer to V. (I) Employee Welfare to (IV) Labor Management Agreements and Employee Rights/Interests Maintenance on pages 129–130.

(2) Investor Relations: Please refer to pages 56-57 and 62 for II. Shareholding Structure & Shareholders’ Rights and VII. Information Disclosure.
(3) Supplier Relations: The Company cooperates with suppliers with mutual trust and mutual benefit, and maintains their rights and obligations and maintains a good supply and demand relationship.
(4) Rights of Stakeholders: Please refer to page 88 for (9) Establishment of Communication Channels for Stakeholders.
(5) Directors’ and Supervisors’ Training Records (statistical period: January 1, 2020-December 31, 2020):

Name	Organizer	Course	Training Hours
Ching-Kuei Chang	Taiwan Corporate Governance Association	Would Taking a Gun Violate the Trade Secrets Act? ─Trade Secrets and Corporate Governance	3
Ching-Kuei Chang	Securities & Futures Institute	2020 Prevention of Insider Trading and Insider Equity Trading Seminar	3
Lee Hung Ming	Taiwan Corporate Governance Association	[CGP-Advanced] The Role of Institutional Investors in Improving Corporate Governance	3
Lee Hung Ming	Securities & Futures Institute	2020 Prevention of Insider Trading and Insider Equity Trading Seminar	3
Chung-Yan Tsai	Securities & Futures Institute	2020 Prevention of Insider Trading and Insider Equity Trading Seminar	3
Chung-Yan Tsai	Taiwan Corporate Governance Association	[Audit Committee Series Courses] How Does the Audit Committee Implement Financial Reports	3
Daniel Tung	Securities & Futures Institute	2020 Prevention of Insider Trading and Insider Equity Trading Seminar	3
Daniel Tung	Taiwan Stock Exchange (TWSE)	2020 Seminar on Corporate Governance and Ethical Corporate Management for Directors and Supervisors	3
Chung-Chang Chu	Taiwan Insurance Institute	Seminar on Corporate Governance for Directors (Independent Directors) and Supervisors and Corporate Governance Officers	3
Chung-Chang Chu	Taiwan Corporate Governance Association	A Complete Guide to Information Security for Directors and Supervisors	3
Chin-Liang Lin	Taiwan Corporate Governance Association	Civil and Criminal Liability of Directors of Public Companies	3
Chin-Liang Lin	Taiwan Corporate Governance Association	How to Use Impact Investment to Enhance Corporate Value	3

Name	Organizer	Course	Training Hours
Shiou-Ling Lin	Zong Dao Association of Leadership and Culture	Enhancement of Corporate Governance and Corporate Social Responsibility Culture	3
Shiou-Ling Lin	Independent Director Association Taiwan	The Key Significance of Information Security Strategy to Enterprise Development and Information Security Governance and Protection	3
Chih-Wei Wu	Taiwan Corporate Governance Association	How to Use Impact Investment to Enhance Corporate Value	3
Chih-Wei Wu	Taiwan Corporate Governance Association	Prevention of Insider Trading	3
James Y. Chang	Taiwan Stock Exchange (TWSE)	2020 Seminar on Corporate Governance and Ethical Corporate Management for Directors and Supervisors	3
James Y. Chang	Taiwan Corporate Governance Association	[Audit Committee Series Courses] Advanced Practice Sharing of Audit Committee-M&A Review and Directors’ Responsibilities	3

(6) The implementation of risk management policies and risk evaluation measures: Please refer to pages 377-380 for VI. Assessment of Risk Items in the Most Recent Years and as of the Date of Publication of the Annual Report.
(7) The implementation of customer relations policies: the Company has a customer service line and dedicates personnel to handle problems related to customers.
(8) Purchasing insurance for Directors and Supervisors: the Company has purchased D&O insurance for Directors and Supervisors.
(9) Does the company establish communication channels with stakeholders (including but not limited to shareholders, employees, customers, suppliers, etc.), and set up a dedicated area for stakeholders on the company’s website, and respond to important corporate social responsibility issues that stakeholders are concerned about appropriately?

Stakeholders	Important issues of concern	Main responsibility of the Company	Communication channels
Shareholders /investors/fin ancial institutions	Integrity management Economic performance Corporate governance Sustainable development of the Company Risk management	Commercial behaviors in a fair, honest and transparent manner Providing instant, synchronized, and correct company information in a timely manner, and strive to the symmetric disclosure of investment information Implementing long-term stable dividend policy and providing appropriate return on investment Maintaining good corporate credit and operations with robust financial strategy Following the latest laws and regulations and policy revisions of the competent authorities, and promptly responding to and adjust the information disclosure form and content of the Company to meet regulatory requirements. Focusing on market demand and prosperity changes, adjusting business strategies in a timely manner, identifying the Company’s financial and non-financial risks and review countermeasures	Contact Person: Mr. Tsai, Operation Management Department Tel: 02-23779968#5311 Email: [email protected] Surveying CSR issues regularly Updating designated sections of the official website Convening annual shareholders’ meetings Convening law conferences Announcing annual reports/quarterly financial reports Simultaneously disclose the instant material news on Market Observation Post System of stock exchange and release news or convene a press conference at irregular intervals as required to explain the situation.
Employee	Occupational health and safety Labor-manage ment relations Training and education Employee benefits Sustainable development of the Company	Safe and healthy working environment Promote employee health and physical and mental balance Ensure and respect human rights Establish a transparent and smooth communication mechanism Legal and equitable valuation and treatment Attach importance to education and training Diverse employee benefits and care plan Focus on talent cultivation and employee development Gender equality protection	Contact Person Mr. Chen, Operation Management Department Mr. Chao, Human Resources Section Tel: 02-23779968 #5352 and #5110 Email: [email protected] [email protected] Surveying CSR issues regularly Updating designated sections of the official website Holding labor management conferences Holding symposiums and publicity meetings Employee meeting

Client/consu mer	Customer health and safety Customer satisfaction Legal compliance Customer privacy Innovation and development	Provide products and services with market competitive and high quality Improve customer satisfaction and establish long-term, close and trustful partnership with customers with four guarantees, including clearly-established ownership, construction in line with the drawings, timely completion, and sustainable service Advocate all employees to comply with confidentiality agreements and employee response rules for customers Focus on issues such as climate change and population aging, and invest in energy conservation and carbon reduction, full-aging, green (including smart) buildings and master the development of new building materials, new construction methods and design.	Contact Person: Miss Chen, Technology Department Tel: 02-23779968#5740 Email: [email protected] Surveying CSR issues regularly Updating designated sections of the official website Unscheduled customer satisfaction survey Direct communication
Partners (suppliers/bu ilding contractors/s ales agents)	Supplier CSR promotion Purchasing Policies Sustainable development of the Company	Understand and provide assistance for the companies to implement CSR Legal and fair trade. Understand the environmental, safety and health matters and specification details. Build long-term and mutually-trust business partnership with suppliers.	Contact Person: Ms. Cheng, President Office Tel: 02-23779968#5800 Email: CSR: [email protected] Integrity: [email protected] Surveying CSR issues regularly Updating designated sections of the official website Unscheduled conferences / training sessions Regular suppliers assessment Organize supplier observation tour Direct communication
Government agencies	Integrity management Legal compliance Environmenta l protection Public safety	Good corporate citizens should follow government regulations, cooperate with government policies, and maintain good relations with the government.	Contact Person: Ms. Cheng, President Office Tel: 02-23779968#5800 Email: [email protected] Surveying CSR issues regularly Updating designated sections of the official website Official correspondences Irregular discussion meeting/review meeting

Stakeholders	Important issues of concern	Main responsibility of the Company	Communication channels
Media	Legal compliance Economic performance Social welfare Environmenta l protection Public safety	Maintain the correctness and immediacy of external communication information, and seek to be transparent and open. Maintain the brand image of the Company.	Contact Person: Ms. Cheng, President Office Tel: 02-23779968#5800 Email: [email protected] Surveying CSR issues regularly Updating designated sections of the official website Nonscheduled press conference Product launch conference
Community residents/nei ghboring rooms	Community participation Sewage and waste emissions Community impact Community development Community charity	Maintain good relationships with adjacent houses and community residents in various means (such as identification of adjacent houses and cleaning and repair of exterior walls). Pay attention to site pollution prevention and control and reduce construction dust Smooth communication channels reducing the adjacent loss events. Invest in public benefit programs like community care and community libraries.	Contact Person: Ms. Cheng, President Office Tel: 02-23779968#5800 Email: [email protected] Surveying CSR issues regularly Updating designated sections of the official website Neighborhood visit Community care activities On-site communication of responsible personnel

(IX) Implementation of Internal Control System

Internal Control System Statement

Cathay Real Estate Development Co., Ltd.

Internal Control System Statement

Date: March 19, 2021

Based on the results of self-evaluation, the Company’s statement on the internal control system for 2020 is as follows:
I. The Company is positive about that the establishment, implementation and maintenance of the internal control system is the responsibility of the Board of Directors and Managers and has thus established the system. The purpose is to achieve various objectives in operation result and efficiency (including profitability, performance, and protection of assets and safety); to ensure the reliability, timeliness, transparency and regulatory compliance (including relevant laws and regulations) of reporting, as well as to provide reasonable assurance.
II. The internal control system is congenitally limited. Regardless of how perfect the design is, an effective internal control system can only provide reasonable assurance for the achievement of the above three objectives; meanwhile, due to changes in the environment and conditions, the effectiveness of the internal control system may be changed. However, the Company’s internal control system has a self-supervision mechanism. Once the deficiency is recognized, the Company will take corrective actions.
III. The Company judges whether the design and implementation of the internal control system are effective based on the judgment items against the effectiveness of the internal control system as stipulated in the Criteria for Establishment of Internal Control System of Public Companies (hereinafter referred to as Criteria). The criteria adopted by the Regulations identify 5 components of internal control based on the process of management control: 1. control environment; 2. risk assessment; 3. control activities; 4. information and communication; and 5. monitoring operations. Each constituent element includes a number of categories. Please refer to the provisions of the Criteria for the above items.
IV. The Company has already adopted the aforementioned ICS judgment items to evaluate the effectiveness of ICS design and implementation.
V. Based on the results of the determination in the preceding paragraph, the Company is of the opinion that, as of December 31, 2020, the internal control system (including the supervision and management of subsidiaries), including the design and implementation of the internal control system relating to the effectiveness and efficiency of the operations, reliability, timeliness, and transparency of reporting, and compliance with applicable laws and regulations, is effective and can reasonably assure the achievement of the foregoing goals.
VI. This Statement will become the main content of the Company’s annual report and prospectus, and will be made public. The falsehood, concealment or other illegality

in the above content made public will entail legal liability under Articles 20, 32, 171 and 174 of the Securities and Exchange Law.

VII. This statement was passed by the Board of Directors in the meeting held on March 18, 2021. Of the nine directors present, none of them expressed dissenting opinions, and all of them approved the content of this statement.

Cathay Real Estate Development Co., Ltd.

Chairman: Ching-Kuei Chang

President: Lee Hung Ming

Any CPA commissioned to conduct a project review of the ICS shall disclose the CPA’s audit report: None.
(X) In the most recent year and as of the publication date of the annual report, penalties imposed on the company and its internal personnel in accordance with the law, penalties imposed on the company's internal personnel for violating the provisions of the internal control system, major deficiencies, and improvements thereto: None.
(XI) Important resolutions of the shareholders' meetings and the Board meetings in the most recent year and as of the publication date of the annual report:

Shareholders’ Meeting/Board Meeting	Date	Important Resolutions
The 18th meeting of the 18th Board	2020.1.21	1. Approval of authorizing the Chairman to apply for credit from financial institutions within NT$50 billion 2. Approval of the business objectives for 2020 3. Approval of the proposal for the distribution of year-end bonus and special incentives to Executive Directors and managers participating in businesses in 2019 4. Approval of the assessment of the compensation of Independent Directors and Executive Directors participating in businesses in 2019 5. Approval of the assessment of managers’ compensation in 2019 6. Approval of the urban renewal co-development agreement with the affiliate of Lin Yuan Building Urban Renewal Project 7. Approval of contracting the project Cathay Lagom of the Company in New Taipei City Xindian to related party San-Ching Engineering Co., Ltd. 8. Approval of amendments to the Company’s Articles of Association Note: The important resolutions above have been implemented.
The 19th meeting of the 18th Board	2020.3.19	1. Approval of the 2019 Internal Control System Statement issued by the Company to the Securities and Futures Bureau of Financial Supervisory Commission 2. Approval of the 2020 Corporate Social Responsibility Strategy Plan 3. Approval of the 2019 Business Report 4. Approval of the proposal for distribution of remuneration to employees and Directors for 2019 5. Approval of 2019 Individual financial report and consolidated financial report 6. Approval of the re-election of Directors of the Company 7. Approval of the matters related to stipulating the particulars the 2020 Annual Shareholders' Meeting: date,

Shareholders’ Meeting/Board Meeting	Date	Important Resolutions
		site, acceptance of shareholders’ proposals, and the nomination period of director candidates 8. Approval of the dissolution of the reinvestment subsidiary Cathay Real Estate Holding Corporation (BVI) 9. Approval of the amendment to the Rules of the Meetings of the Board of Directors 10. Approval of the amendments to the Company's Remuneration Committee Charter 11. Approval of the amendments to the Company's Code of Practice of Corporate Governance 12. Approval of the amendments to the Company's Managers’ Performance Evaluation Standards Note: The important resolutions above have been implemented.
The 20th meeting of the 18th Board	2020.4.23	1. Approval of earnings distribution for 2019 2. Approval of the review of candidate qualifications for the Company's 19th term of Directors (including Independent Directors) 3. Approval of the removal of the non-compete clause for the Company’s members of the 19th Board of Directors (including Independent Directors). 4. Approval of the agenda of 2020 Annual Shareholders’ Meeting, change of meeting location and authorize the Chairman to change meeting location based on the status of COVID-19 outbreak 5. Approval of the amendments to the relevant provisions of the Company's Internal Control System and Internal Audit Implementation Rules governing the ability to self-prepare financial reports 6. Approval of the amendments to the Internal Control System and Internal Audit Implementation Rules for Stock Affairs Unit 7. Approval of the amendments to the Company's Audit Committee Charter Note: The important resolutions above have been implemented.
2002 shareholders' meeting	2020.6.12	1. Approval of 2019 business report and financial statements (including consolidated financial statements). 2. Approval of 2019 earnings distribution proposal 3. Approval of the re-election of Directors of the Company (nine directors in total). Representative of He Xin Industrial Co., Ltd.: Ching-Kuei Chang, Representative of He Xin Industrial Co.,Ltd.: Lee Hung

Shareholders’ Meeting/Board Meeting	Date	Important Resolutions
		Ming Representative of He Xin Industrial Co., Ltd.: Chung-Yan Tsai Representative of Cathay Charity Foundation: Daniel Tung Representative of Cathay Real Estate Foundation: Chung-Chang Chu Representative of Employee Benefit Committee of Cathay Real Estate: Chin-Liang Lin Shiou-Ling Lin (Independent Director) Chih-Wei Wu (Independent Director) James Y. Chang (Independent Director) 4. Approval of removal of the non-compete clause for the Company’s members of the 19th Board of Directors. Note: The above matters have been approved at the Shareholders’ Meeting. For the implementation of the Shareholders’ Meeting, please refer to Page 110-111.
The 1st extraordinary meeting of the 19th Board	2020.6.12	1. Approval of the Company's election of the Chairman of the 19th Board Note: The important resolutions above have been implemented.
The 1st meeting of the 19th Board	2020.6.24	1. Approval of the base date of 2019 cash dividend distribution 2. Approval of authorizing the Chairman to apply for credit from financial institutions within NT$50 billion 3. Approval of fully authorizing the Chairman to handle pursuant to Subparagraph 6, Article 22 of the Company's Articles of Association 4. Approval of the appointment of members of the 4th Remuneration Committee of the Company 5. Approval of the proposal for establishment of a new joint venture with Mitsui Fudosan Taiwan Co., Ltd. 6. Approval of the review of the Company's Audit Committee Charter Note: The important resolutions above have been implemented.
The 2nd meeting of the 19th Board	2020.7.16	1. Approval of the review of the Company's Remuneration Committee Charter 2. Approval of the review of the Company's Director’s Remuneration Payment Standards, Directors Performance Appraisal Standards, Manager’s Remuneration Payment Standards, and Manager’s Performance Appraisal Standards 3. Approval of the assessment of remuneration of Independent Directors and Executive Directors

Shareholders’ Meeting/Board Meeting	Date	Important Resolutions
		participating in businesses in 2020 4. Approval of the review of the Company's Methods for Performance Evaluation of Board of Directors Note: The important resolutions above have been implemented.
The 3rd meeting of the 19th Board	2020.8.12	1. Approval of the proposal for establishment of Bannan Realty Co., Ltd. as a joint venture with Mitsui Fudosan Taiwan Co., Ltd. 2. Approval of the proposal for joint venture with Cathay Life Insurance Co.,Ltd. to establish a solar energy company 3. Approval of the proposal for contracting the Company's Cathay Chuan Ching project in Taoyuan District, Taoyuan City to San-Ching Engineering Co., Ltd. Note: The important resolutions above have been implemented.
The 4th meeting of the 19th Board	2020.11.12	1. Approval of the proposal for filing the Company's 2021 audit plan to the Securities and Futures Bureau of the Financial Supervisory Commission 2. Approval of the proposal for CPA replacement and remuneration for 2021 3. Approval of the proposal for sales of properties, lands and parking lots of Company's pre-sale projects to related parties 4. Approval of the proposal for contracting the old house demolition work of the "Lin Yuan Building Urban Renewal Project" in Daan District, Taipei City, to San-Ching Engineering Co., Ltd. 5. Approval of the proposal for disposal of the land at Land No. 132, Jinhua Section, Anping District, Tainan City, to its related party, Jinhua Realty Co., Ltd. 6. Approval of the removal of the non-compete clause for managers of the Company Note: The important resolutions above have been implemented.
The 5th meeting of the 19th Board	2021.1.27	1. Approval of authorizing the Chairman to apply for credit from financial institutions within NT$50 billion 2. Approval of the 2021 business objectives 3. Approval of the proposal for paying year-end bonus and special incentives to Directors and managers participating in businesses in 2020 4. Approval of the assessment of remuneration of Independent Directors and Executive Directors participating in businesses in 2020 Note: The important resolutions above have been

Shareholders’ Meeting/Board Meeting	Date	Important Resolutions
		implemented.
The 6th meeting of the 19th Board	2021.3.18	1. Approval of the proposal for filing the Company's Internal Control System Statement of 2020 to the Securities and Futures Bureau of the Financial Supervisory Commission 2. Approval of the 2021 Corporate Social Responsibility Strategy Plan 3. Approval of the 2020 Business Report 4. Approval of the distribution of remuneration to employees and Directors for 2020 5. Approval of the instructions for preparation of the individual financial report and consolidated financial report for 2020 6. Approval of the matters related to stipulating the particulars, date, and site of the 2021 Annual Shareholders’ Meeting and acceptance of shareholders’ proposals. 7. Approval of the amendment to the Company's Articles of Association 8. Approval of the amendment to the Company's Rules of Procedure for Shareholders' Meetings Note: The important resolutions above have been implemented.
The 7th meeting of the 19th Board	2021.4.28	1. Approval of earnings distribution for 2020 2. Approval of removal of the non-compete clause for the Company’s Directors. 3. Approval of the agenda of the Company's 2021 Annual Shareholders’ Meeting 4. Approval of the amendments to the Internal Control System and Internal Audit Implementation Rules for Stock Affairs Unit. 5. Approval of the proposal for sales of properties, lands and parking lots of Company's pre-sale projects to related parties 6. Approval of the proposal for contracting the Company's Cathay XiJing project in Taoyuan District, Taoyuan City, to San-Ching Engineering Co., Ltd. 7. Approval of the proposal for acquisition of the right-of-use assets of Taipei International Building, Taichung Chung-Gang Building, and Kaoshiung Zhong-Zheng Building from related parties. Note: The important resolutions above have been implemented.

(XII) In recent years and as of the date of publication of the annual report, directors (including independent directors) or supervisors have different opinions on important resolutions passed by the board of directors, for which there is a record or declaration in writing: None.
(XIII) Summary of the resignation and dismissal of the Company’s relevant personnel (including Chairman, President, accounting manager, financial manager, internal audit officer, corporate governance officer, and R&D manager) in the most recent year and as of the publication date of the annual report: None.

IV. Information of CPA Fees

Table of Audit Fee Range

							Unit: NT$ thousands	Unit: NT$ thousands	Unit: NT$ thousands
Accounting Firm	Name of CPA	Audit Fee	Non-Audit Fee					CPA Audit Period (Note1)	Remarks
			System of Design	Company Registration	Human Resource	Others (Note 2)	Subtotal
Ernst & Young Taiwan	Jung-Huang, Hsu	3,382	0	0	0	835	835	2020.1.1~ 2020.12.31	(1) Consolidated business report of affiliates (2) Affiliation report (3) Computer control environment assessment (4) Dividend policy (5) Review of annual report (6) English financial statements (7) CSR assurance report
	Chien-Tse, Huang

Note 1: If the Company has changed CPA or Accounting Firm during the current fiscal year, the company shall report the information regarding the audit period covered by each CPA and the replacement reason. The audit and non-audit fees paid to the former and succeeding CPA or firm shall also be disclosed.
Note 2: Non-audit fees shall be annotated separately according to the service items. If the “Others” of the non-audit fees reach 25% of the total non-audit fees, the service contents shall be annotated in the column of remarks.
(I) Those who pay the CPA, the accounting firm in which the CPA works and its related companies the non-audit fees accounting for more than 1/4 of the audit fees: None.
(II) The accounting firm is replaced and the audit fee paid in the year of replacement is less than that in the previous year before replacement: None.
(III) The audit fee is more than 15% less than that in the previous year: None.

V. Information on the Changes in CPAs: None.

VI. The Company’s Chairman, President and Managers in charge of finance or accounting matters who has, in the most recent year, held a position in the Company’s independent auditing firm or its affiliates: None.

100

VII. Conditions of changes in equity transfer and equity pledge of the Chairman, Supervisors, managers, and shareholders who hold more than 10% of shares in the most recent year as of the date of publication of the Annual Report

(I) Changes in Shareholding of Directors, Supervisors, Managers and Major Shareholders

Position	Name	20	20	The Current Year	up to May 1, 2021
		Increase (Decrease) in Shareholdings	Increase (Decrease) in Shareholdings Pledged	Increase (Decrease) in Shareholdings	Increase (Decrease) in Shareholdings Pledged
Chairman	He Xin Industrial Co., Ltd. Representative: Ching-Kuei Chang	0	0	0	0
Director	He Xin Industrial Co., Ltd. Representative: Chung-Yan Tsai	0	0	0	0
Director	He Xin Industrial Co., Ltd. Representative: Lee Hung Ming	0	0	0	0
Director	Cathay Charity Foundation Representative: Daniel Tung	0	0	0	0
Director	Representative of Cathay Real Estate Foundation: Chung-ChangChu	0	0	0	0
Director	Employee Welfare Committee of Cathay Real Estate Development Co., Ltd. Representative: Chin-LiangLin	0	0	0	0
Independent Director	Shiou-Ling Lin	0	0	0	0
Independent Director	Chih-Wei Wu	0	0	0	0
Independent Director	James Y. Chang	0	0	0	0
Major shareholder holding 10% of shares	Employee Pension Fund Management Committee of Cathay Life Insurance Co., Ltd.	0	0	0	0
Major shareholder holding 10% of shares	Wan Pao Development Co., Ltd.	0	0	0	0
President	Lee Hung Ming	0	0	0	0
Senior Executive Vice President	Chung-Yan Tsai	0	0	0	0

101

Position	Name	2	020	The Current Year	up to May 1, 2021
		Increase (Decrease) in Shareholdings	Increase (Decrease) in Shareholdings Pledged	Increase (Decrease) in Shareholdings	Increase (Decrease) in Shareholdings Pledged
Senior Executive Vice President	Daniel Tung	0	0	0	0
Executive Vice President	Chin-Liang Lin	0	0	0	0
Senior Vice President	Ku, Shang-Chieh	0	0	0	0
Senior Vice President	Kuo, Chun- Ho	0	0	0	0
Senior Vice President	Chun-An Lin	0	0	0	0
Manager of Operation Management Department	Lo, Yu-Chi	0	0	0	0
Corporate Governance Executive	Yen, Miao-ju	0	0	0	0

(II) Shares Trading and Shares Pledge with Related Parties: None.

102

VIII. Relationship Among the Company’s Top Ten Shareholders

Book closed on April 13, 2021 in share; %

Name (Note 1)	Current Shareholding	Current Shareholding	Spouse’s/minor’s Shareholding	Spouse’s/minor’s Shareholding	Shareholding by Nominee Arrangement	Shareholding by Nominee Arrangement	Name and Relationship Between the Company’s Top Ten Shareholders, or Spouses or Relatives Within Two Degrees (Note 3)	Name and Relationship Between the Company’s Top Ten Shareholders, or Spouses or Relatives Within Two Degrees (Note 3)
	Shares	Percentage	Shares	Percentage	Shares	Percentage	Title (or Name)	Relationship
Employee Pension Fund Management Committee of Cathay Life Insurance Co., Ltd. Representative: Li-Qiu Wang	288,067,626	24.84%	0	0	0	0	Cathay Life Insurance Co., Ltd.	Promotor of the fund
	0	0%
Wan Pao Development Co., Ltd. Representative: Weng-Chuan Lin	204,114,882	17.60%	0	0	0	0	Lin Yuan Investment Co., Ltd. Wan-Da Investment Co., Ltd	The Chairman is the same person
	0	0
Fubon Life Insurance Co., Ltd. Representative: Tsai, Ming-Hsing	87,133,000	7.51%	0	0	0	0	None	None
	0	0
Cathay Life Insurance Co., Ltd. Representative: Huang, Tiao-Kuei	68,646,584	5.92%	0	0	0	0	Employee Pension Fund Management Committee of Cathay Life Insurance Co., Ltd.	Promotee of this company
	0	0
Lin Yuan Investment Co., Ltd. Representative: Weng-Chuan Lin	54,094,814	4.67%	0	0	0	0	Wan Pao Development Co., Ltd. Wan-Da Investment Co., Ltd	The Chairman is the same person
	0	0
He Xin Industrial Co., Ltd. Representative: Huang,Chung-Hsin	22,000,000	1.90%	0	0	0	0	None	None
	0	0
Wan-Da Investment Co., Ltd Representative: Weng-Chuan Lin	18,351,652	1.58%	0	0	0	0	Wan Pao Development Co., Ltd. Lin Yuan Investment Co., Ltd.	The Chairman is the same person
	0	0
SKYWAVE System Corp. Representative: Chen,Cheng-Chih	17,500,000	1.51%	0	0	0	0	None	None
	0	0

103

Taiwan Life Insurance Co., Ltd. Representative: Huang, Ssu-Kuo	16,335,000	1.41%	0	0	0	0	None	None
	0	0
Norwegian Central Bank Investment Account under custody of Citibank Taiwan Ltd.	9,111,700	0.79%	0	0	0	0	None	None
	0	0

Note 1: All the top ten shareholders shall be listed. For shareholders who are juridical persons, their names and the name of their representatives shall be listed separately.
Note 2: The calculation of percentage refers to the calculation of the percentage in their own name or in the name of their spouse and the minor children or others.
Note 3: Relationships between the aforementioned shareholders, including juridical persons and natural persons, shall be disclosed based on the financial reporting standards used by the issuer.

104

IX. Investment of the Company, the Company’s subsidiary, the Company ＇ s Directors, Supervisors, Managers and Subsidiaries Directly or Indirectly Controlled by the Company on the Re-investment Business, and Total Shareholding Ratio

			March 31,2021 Unit: Shares;%	March 31,2021 Unit: Shares;%	March 31,2021 Unit: Shares;%	March 31,2021 Unit: Shares;%
Investee (Note)	Investments by the Company		Investments of Directors, Supervisors, managers and subsidiaries directly or indirectly controlled		Comprehensive investment
	Number of Shares	Shareholding Ratio	Number of Shares	Shareholdi ng Ratio	Number of Shares	Shareholdi ng Ratio
Cathay Real Estate Management Co., Ltd.	5,000,000	100.00%	0	0	5,000,000	100.00%
Cathay Healthcare Management Co. Ltd.	46,750,000	85.00%	0	0	46,750,000	85.00%
Cathay Hospitality Management Co., Ltd.	65,000,000	100.00%	0	0	65,000,000	100.00%
Cathay Hospitality Consulting Co., Ltd.	75,000,000	100.00%	0	0	75,000,000	100.00%
Lin Yuan Property Management Co. Ltd.	1,530,000	51.00%	0	0	1,530,000	51.00%
Cymbal Medical Network Co., Ltd.	15,000,000	100.00%	0	0	15,000,000	100.00%
Xin-De Co., Ltd.	0	0	8,000,000	100%	8,000,000	100.00%
Cymlin Co., Ltd.	0	0	7,600,000	100%	7,600,000	100.00%
Jinhua Realty Co., Ltd.	40,800,000	51.00%	0	0	40,800,000	51.00%
Bannan Realty Co., Ltd.	40,800,000	51.00%	0	0	40,800,000	51.00%

Note: Investment by the Company using the equity method.

105

Chapter 4 Funding Status

I. Capital and Shares

(I) Source of Capital

Year /Month	Par Value (NT$)	Authorized Capital	Authorized Capital	Paid-in Capital	Paid-in Capital	Remarks	Remarks	Remarks
		Number of Shares	Amount (NT$)	Number of Shares	Amount (NT$)	Source of Capital	Capital Increased by Other than Cash	Others
1964.12	10	10,000,000	100,000,000	10,000,000	100,000,000	Establishment in Cash	None	September 14, 1964 Jing Xin Zi No. 0731
1969.08	10	11,500,000	115,000,000	11,500,000	115,000,000	Capital increased by surplus 1,500,000 new shares issued	None	May 28, 1969 Zheng Guan (58) Fa Zi No. 0559
1970.12	10	11,960,000	119,600,000	11,960,000	119,600,000	Capital increased by surplus and capital surplus 460,000 new shares issued	None	September 29, 1970 Zheng Guan (59) Fa Zi No. 0920
1971.10	10	20,000,000	200,000,000	20,000,000	200,000,000	Capital increased by cash 8,040,000 new shares issued	None	June 4, 1971 Zheng Guan (60) Fa Zi No. 0467
1972.08	10	25,000,000	250,000,000	25,000,000	250,000,000	Capital increased by cash and capital increased by surplus 5,000,000 new shares issued	None	June 20, 1972 Zheng Guan (61) Fa Zi No. 0480
1973.09	10	50,000,000	500,000,000	50,000,000	500,000,000	Capital increased by cash and capital increased by surplus and capital surplus 25,000,000 new shares issued	None	June 2, 1973 Zheng Guan (62) Fa Zi No. 0656
1974.09	10	55,250,000	552,500,000	55,250,000	552,500,000	Capital increased by surplus and capital surplus 5,250,000 new shares issued	None	August 17, 1974 Zheng Guan (63) Yi Zi No. 1371
1976.11	10	70,000,000	700,000,000	70,000,000	700,000,000	Capital increased by cash and capital increased by surplus 14,750,000 new shares increased	None	August 9, 1976 Zheng Guan (65) Yi Zi No. 0991
1978.09	10	110,000,000	1,100,000,000	110,000,000	1,100,000,000	Capital increased by cash and capital increased by surplus 40,000,000 new shares issued	None	June 20, 1978 Zheng Guan (67) Yi Zi No. 0671
1979.10	10	126,200,000	1,262,000,000	126,200,000	1,262,000,000	Capital increased by surplus 16,200,000 new shares issued	None	September 6, 1979 Zheng Guan (68) Yi Zi No. 28893
1980.09	10	140,000,000	1,400,000,000	140,000,000	1,400,000,000	Capital increased by surplus 13,800,000 new shares issued	None	July 7, 1980 Zheng Guan (69) Yi Zi No. 0822
1981.10	10	161,000,000	1,610,000,000	161,000,000	1,610,000,000	Capital increased by surplus 21,000,000 new shares issued	None	August 10, 1981 Zheng Guan (70) Yi Zi No. 0256
1983.12	10	165,830,000	1,658,300,000	165,830,000	1,658,300,000	Capital increased by capital surplus 4,830,000 new shares issued	None	November 16, 1983 (72) Tai Cai Zheng (1) No. 2538
1984.10	10	170,804,900	1,708,049,000	170,804,900	1,708,049,000	Capital increased by capital surplus 4,974,900 new shares issued	None	October 1, 1984 (73) Tai Cai Zheng (1) No. 2778
1985.10	10	191,301,488	1,913,014,880	191,301,488	1,913,014,880	Capital increased by surplus 20,496,588 new shares issued	None	October 8, 1985 (74) Tai Cai Zheng (1) No. 14836
1986.12	10	210,431,636	2,104,316,360	210,431,636	2,104,316,360	Capital increased by surplus and capital surplus 19,130,148 new shares issued	None	October 16, 1986 (75) Tai Cai Zheng (1) No. 14881
1987.10	10	231,474,799	2,314,747,990	231,474,799	2,314,747,990	Capital increased by surplus 21,043,163 new shares issued	None	July 8, 1987 (76) Tai Cai Zheng (1) No. 00641
1988.09	10	266,196,018	2,661,960,180	266,196,018	2,661,960,180	Capital increased by surplus 34,721,219 new shares issued	None	June 30, 1988 (77) Tai Cai Zheng (1) No. 08548
1989.10	10	306,125,420	3,061,254,200	306,125,420	3,061,254,200	Capital increased by surplus 39,929,402 new shares issued	None	July 20, 1989 (78) Tai Cai Zheng (1) No. 25500
1991.03	10	413,025,480	4,130,254,800	413,025,480	4,130,254,800	Capital increased by cash and capital increased by surplus 106,900,060 new shares issued	None	October 19, 1990 (79) Tai Cai Zheng (1) No. 02712
1991.09	10	578,235,672	5,782,356,720	578,235,672	5,782,356,720	Capital increased by surplus 165,210,192 new shares issued	None	June 29, 1991 (80) Tai Cai Zheng (1) No. 01346
1992.09	10	722,794,590	7,227,945,900	722,794,590	7,227,945,900	Capital increased by surplus and capital surplus 144,558,918 new shares issued	None	June 30, 1992 (81) Tai Cai Zheng (1) No. 01463
1993.09	10	867,353,507	8,673,535,070	867,353,507	8,673,535,070	Capital increased by surplus and capital surplus 144,558,917 new shares issued	None	June 18, 1993 (82) Tai Cai Zheng (1) No. 01468
1994.09	10	1,085,918,347	10,859,183,470	1,085,918,347	10,859,183,470	Capital increased by surplus and capital surplus 218,564,840 new shares issued	None	83年6月24日 (83) Tai Cai Zheng (1) No. 28893
1995.09	10	1,303,102,016	13,031,020,160	1,303,102,016	13,031,020,160	Capital increased by surplus and capital surplus 217,183,669 new shares issued	None	June 13, 1995 (84) Tai Cai Zheng (1) No. 35033
1996.05	10	1,433,412,217	14,334,122,170	1,433,412,217	14,334,122,170	Capital increased by surplus 130,310,201 new shares issued	None	June 8, 1996 (85) Tai Cai Zheng (1) No. 36644
1997.08	10	1,519,416,950	15,194,169,500	1,519,416,950	15,194,169,500	Capital increased by surplus 86,004,733 new shares issued	None	June 11, 1997 (86) Tai Cai Zheng (1) No. 46297
1998.08	10	1,595,387,797	15,953,877,970	1,595,387,797	15,953,877,970	Capital increased by capital surplus 75,970,847 new shares issued	None	June 15, 1998 (87) Tai Cai Zheng (1) No. 51500
1999.08	10	1,675,157,186	16,751,571,860	1,675,157,186	16,751,571,860	Capital increased by surplus and capital surplus 79,769,389 new shares issued	None	June 9, 1999 (88) Tai Cai Zheng (1) No. 53897
2001.04	10	1,675,157,186	16,751,571,860	1,619,823,186	16,198,231,860	The first capital decrease in treasury stock 55,334,000 shares	None	February 8, 2001 (90) Tai Cai Zheng (3) No. 105264
2001.11	10	1,619,823,186	16,198,231,860	1,606,107,186	16,061,071,860	The second capital decrease in treasury stock 13,716,000 shares	None	October 9, 2001 (90) Tai Cai Zheng (3) No. 159903
2002.01	10	1,606,107,186	16,061,071,860	1,570,971,186	15,709,711,860	The third capital decrease in treasury stock 35,136,000 shares	None	November 29, 2001 (90) Tai Cai Zheng (3) No. 172262
2002.12	10	1,570,971,186	15,709,711,860	1,567,186,186	15,671,861,860	The fourth capital decrease in treasury stock 3,785,000 shares	None	December 11, 2002 (91) Tai Cai Zheng (3) No. 0910164510
2003.09	10	1,656,515,798	16,565,157,980	1,656,515,798	16,565,157,980	Capital increased by surplus and capital surplus 89,329,612 new shares issued	None	July 17, 2003 (92) Tai Cai Zheng (1) No. 0920132017
2016.10	10	2,000,000,000	20,000,000,000	1,159,561,059	11,595,610,590	Capital decreased by 496,954,739 shares in cash	None	July 28, 2016 Jin Guan ZhengFa Zi No. 1050028001

106

Share Type	Authorized Capital (Shares)	Authorized Capital (Shares)	Authorized Capital (Shares)	Remarks
	Outstanding Shares (stocks listed on Taiwan Stock Exchange)	Un-issued Shares	Total Shares
Common Shares	1,159,561,059	840,438,941	2,000,000,000

Information on the shelf registration system: None.

(II) Status of Shareholders

Status of Shareholders	Status of Shareholders	Status of Shareholders	Status of Shareholders	Status of Shareholders	Status of Shareholders	Status of Shareholders
As of April 13,2021
Status of Shareholders Item	Governme nt Agencies	Financial Institutions	Other Juridical Persons	Domestic Natural Persons	Foreign Institutions & Natural Persons	Total Shares
Number of Shareholders	1	39	154	49,841	251	50,286
Number of SharesHeld	26	196,603,158	640,649,814	226,084,172	96,223,889	1,159,561,059
Shareholding Ratio	0.00%	16.95%	55.25%	19.50%	8.30%	100.00%

(III) Shareholding Distribution Status

1. Common Shares

			As of April 13,2021 Shareholding Ratio 0.70% 3.34% 2.39% 1.32% 1.17% 1.47% 1.90% 2.48% 2.50% 2.04% 0.86% 0.68% 0.54% 78.61% 100.00%
Class of Shareholding (Shares)	Number of Shareholders	Shares	Shareholding Ratio
1 to 999	26,047	8,137,469	0.70%
1,000 to 5,000	16,635	38,718,338	3.34%
5,001 to 10,000	3,641	27,718,910	2.39%
10,001 to 15,000	1,210	15,280,968	1.32%
15,001 to 20,000	748	13,500,086	1.17%
20,001 to 30,000	679	17,019,932	1.47%
30,001 to 50,000	548	21,981,384	1.90%
50,001 to 100,000	395	28,781,559	2.48%
100,001 to 200,000	201	29,030,677	2.50%
200,001 to 400,000	87	23,674,712	2.04%
400,001 to 600,000	21	9,985,677	0.86%
600,001 to 800,000	11	7,900,734	0.68%
800,001 to 1,000,000	7	6,300,719	0.54%
1,000,001 or over	56	911,529,894	78.61%
Total Shares	50,286	1,159,561,059	100.00%

Preference Shares: None

107

(IV) List of Major Shareholders

List of Major Shareholders	List of Major Shareholders	List of Major Shareholders
As of April 13,2021
Share Shareholder＇s Name	Shareholding (Shares)	Shareholding Ratio
Employee Pension Fund Management Committee of CathayLife Insurance Co.,Ltd.	288,067,626	24.84%
Wan Pao Development Co., Ltd.	204,114,882	17.60%
Fubon Life Insurance Co., Ltd.	87,133,000	7.51%
Cathay Life Insurance Co., Ltd.	68,646,584	5.92%

Note 1: Shareholders who hold more than 5% of the shares are disclosed.

Note 2: Please refer to page 103-104 for the list of top 10 shareholders with the largest shareholdings, as well as the number of share held and percentage.

(V) Market Price, Net Worth, Earnings, and Dividends per Share

Unit: NT$

					Unit: NT$
Item		Year	2019	2020	Current Year up to May 1, 2021 (Note 8)
Market Price per Share (Note 1)	Highest M	arket Price	30.35	22.40	22.70
	Lowest Ma	rket Price	19.20	15.10	18.50
	Average M	arket Price	23.73	19.58	20.36
Net Value per Share (Note 2)	Before Dis	tribution	21.02	21.09	20.17
	After Distr	ibution	20.02	(Note 10)	(Note 11)
Earnings per Share	Weighted A	verage Shares (shares)	1,159,561,059	1,159,561,059	1,159,561,059
	Earnings p	er Share(Note 3)	1.18	1.28	(0.01)
Dividends per Share	Cash Divid	ends	1	(Note 10)	(Note 11)
	Free allotment	Dividends from Retained Earnings	0	(Note 10)	(Note 11)
		Dividends from Capital Surplus	0	(Note 10)	(Note 11)
	Accumulat 4)	ed Undistributed Dividends(Note	0	0	0
Return on Investmen	Price/Earni	ngs Ratio (note 5)	18.98	15.33	(Note 11)
	Price/Divid	end Ratio (note 6)	22.40	(Note 10)	(Note 11)
	Cash Divid	end Yield Rate (Note 7)	4.46%	(Note 10)	(Note 11)

Note 1: List the annual highest and lowest market price of common shares, and calculate the annual average market price based on the annual transaction value and quantity.
Note 2: Please use the number of the issuing shares in the year end as the base wi th the distribution decision resolved at the shareholders’ meeting held in the following year.
Note 3: For retroactive adjustment made for stock dividends, both before and adjustments earnings per share should be disclosed.

108

Note 4: For securities issued with terms that en title the holder to accumulate the unpaid dividend during the current year, for receiving in an earning generating fiscal year, the accumulated unpaid amount shall also be disclosed.
Note 5: Price / Earnings Ratio = Average closing price per share in the year/ Earnings per share Note 6: Price / Dividend Ratio = Average closing price per share in the year/Cash dividends per share
Note 7: Cash Dividend Yield Rate = Cash dividend per share / Average closing price per share in the year
Note 8: Net value per share and earnings per share are the data in the first quarter of 2021 reviewed by CPAs; the remaining fields are the data in the current year up to the date of the publication of the annual report.

Note 9: Data of 2019 and 2020 was audited by CPAs, and data of Q1, 2021 was reviewed by CPAs. Note 10: The distribution of earnings for 2020 has not yet been approved by the shareholders' meeting. Note 11: Not applicable in specific seasons.

109

(VI) The Company's Dividend Policy and Implementation Status
If the Company earns profit for the year, 0.1% to 1% of it shall be distributed as employee compensation, and no more than 1% as Director and Supervisor compensation. However, the Company’s accumulated losses, if any, shall first be covered.
If there is surplus after the Company’s annual final accounting, besides paying taxes according to the law, the Company shall first offset its previous years’ losses, and set aside legal reserve, set aside or reverse special reserve according to the law, and then allocate 30% to 100% as shareholders dividends and bonus. The remaining, together with the beginning undistributed earnings, shall be the distributable profit. The Board of Directors shall prepare earnings distribution proposal, and submit it at the shareholders’ meeting for approval. The distribution ratio of the above shareholders’ dividends and bonus shall be planned depending on the current year’s major financial or working capital, and may be adjusted upon resolution of the shareholders’ meeting against the proposal of the Board of Directors.
In response to the economy and market environment changes, the Company adopts a diversified investment approach to increase profitability. In consideration of long-term financial planning and future funding requirements, the residual dividend policy is adopted for dividend policy, so as to achieve steady growth and sustainable operation.
Based on the Company’s operational planning and capital investment, as well as taking into account shareholders’ cash inflow requirements and avoiding over expansion of share capital, profit is to be first distributed in a form of cash dividend, followed by stock dividend. However, cash dividend distribution ratio shall not be less than 50% of total dividend.

The principles above have been approved by the Board meeting and shareholders’ meeting and set out in the Articles of Association. The future dividends shall be allocated in accordance with the dividend policy set out in the Articles of Association.

Distribution of dividends proposed at the most recent shareholders' meeting The proposal for the distribution of 2020 earnings was passed at the meeting of the Board of Directors on April 28, 2021:

As for the Company's 2020 earnings distribution proposal, a dividend of NT$1.0 per share will be fully distributed in cash.

Significant changes in the expected dividend policy: None.
(VII) Status of Resolutions Made by Shareholders' Meetings
The following matters have been approved at the shareholders’ meeting on June 12, 2020 and hence implemented:
(1) 2019 Business Report and Financial Statements
(2) 2019 Eearnings Distribution Proposal

Status: July 21, 2020 was the ex-dividend base date, and a cash dividend of NT$1,159,561,059 was distributed (NT$1 per share) at the payment date of August 11, 2020. The Company had completed the payment.

(3) Proposal to lift the non-compete clause for newly elected directors

110

Status: The non-compete clause was lifted for Director Ching-Kuei Chang, Director Lee Hung Ming, Director, Chung-Yan Tsai, Director Chung-Chang Chu, Director Daniel Tung, Director Chin-Liang Lin, Independent Director Shiou-Ling Lin, and Independent Director Chih-Wei Wu, and announced on the Market Observatory Post System on June 12, 2020.

(VIII) The impacts of issuing stock grants in this shareholder’s meeting on the Company’s operational performance and earnings per share: None
(IX) Compensation of employees, directors, and supervisors
The percentage or scope of compensation of employees, Directors and Supervisors as set out in the Articles of Association: Please refer to the dividend policy in Article (6) above.
Accounting treatment for any discrepancy between the estimate foundation of current compensation of employees, Directors and Supervisors, calculation foundation of the number of shares in the compensation of employees allocated in stocks and the actual amount allocated and the number estimated: the estimation shall be made by the after-tax net profit as of 2020 in consideration of legal reserve and other factors on the basis of the percentage set out in the Articles of Association. However, if there is a discrepancy between the actual allocated amount proposed by the shareholders’ meeting and the estimated number afterward, it will be listed as the profit and loss in 2021.
Employee compensation distribution proposals adopted in board of directors meeting on March 18, 2021:
(1) Compensation of employees, Directors and supervisors allocated in cash or stock: Employees were paid with NT$1,652,000 and Directors NT$2,400,000, both in cash.
(2) Ratio of employee compensation allocated in stock to the total of after-tax net profit in the current parent company only or individual financial report and the employee compensation: None
The 2020 distribution of employee bonuses and compensation of Directors and supervisors in 2019:

The employee bonus of NT$1,509,000 and the compensation of Directors of NT$2,400,000 were distributed in cash in line with the resolution of the Board of Directors.

(X) Buyback of Treasury Stock: None.

II. Issuance of Corporate Bonds

suance of Corporate Bonds
Corporate Bond Type (Note 2)	The 1st (Period 2015-1) Secured Corporate Bonds (Note 5)
Issue Date	July24, 2015
Par Value	NT$1 million
Issuingand Transaction Location(Note 3)	Not Applicable
Issue Price(NT$)	Issue by par value
Total Price	NT$3 billion

111

Coupon Rate	Coupon Rate	Fixed annual rate 1.40%
Term		5years Maturity: July24, 2020
Guarantee Agency		The Shanghai Commercial & Saving Bank, Ltd. Hsi-SungBranch,ChangHwa Bank Ltd.
Trustee		Trust Department, Far Eastern International Bank
UnderwritingInstitution		Not Applicable
Certificated Lawyer		Lawyer Kuo, Hui-Chi, Yi ChengLaw Firm
CPA		CPA Lin, Li-Huang, Ernst & Young
Repayment Method		Repayment in lumpsum upon maturity
Outstanding principal		NT$3 billion
Terms of redemption or advance repayment		Not Applicable
Restrictive clause(Note 4)		None
Name of credit rating agency, rating date, ratingof corporate bonds		None
Other rights attached	As of the printing date of this annual report, converted amount of (exchanged or subscribed) ordinary shares, GDRs or other securities	Not Applicable
	Issuance and conversion (exchange or subscription) method	Not Applicable
Issuance and conversion, exchange or subscription method, issuing condition dilution, and impact on existing shareholders’ equity		Not Applicable
Transfer agent		None

Note 1: The disposal of corporate bond includes the public offering and private offering of corporate bonds in the process. The public offering of corporate bond in the process refers to those going into effect upon the approval of the Meeting; and the private offering of corporate bond in the process refers to those passed upon the approval of the Board Meeting.
Note 2: The number of column is adjusted depending on the actual number of disposal.
Note 3: For overseas corporate bonds.
Note 4: Limiting the issuance of cash dividends and foreign investment or maintenance of a certain proportion of assets required.
Note 5: Private offering should be indicated in a clear manner.
Note 6: For convertible corporate bonds, exchangeable corporate bonds, corporate bonds issued by shelf registration or corporate bonds with warrant, the information all of which shall be disclosed depending on the nature in the form of a table.

III. Issuance of Preferred Stocks: None.

IV. Issuance of Overseas Depository Receipts: None

V. Issuance of Employee Stock Options: None.

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VI. Issuance of New Restricted Employee Shares: None

VII. New Shares Issuance in Connection with Mergers and Acquisitions:

The Company acquired 51% of Lin Yuan Property Management Co., Ltd.’ voting shares on May 15, 2020 and gained control over the entity. The basic information of the acquired company is as follow:

Unit: NT$ thousands

		Unit: NT$ thousands
CompanyName		Lin Yuan PropertyManagement Co.,Ltd.
Company Address		2F., No. 152, Songjiang Rd., Zhongshan Dist., Taipei City,Taiwan(R.O.C.)
Person in charge		Pan CingMing
Paid-in capital		30,000
Main business items		Property management, manpower dispatch and parkinglots operation sevice.
Main products		Property management, manpower dispatch and parkinglots operation sevice.
Financial information for the most recent year	Assets	373,113
	Liabilities	257,887
	Equity	115,226
	Operatingrevenues	1,100,377
	Gross margin	109,033
	Operatingincome	77,606
	Net income	62,913
	Earnings Per Share (In dollars)	20.97

VIII. Fund Utilization Plans and Implementation

(1) Finance Plans:

For each uncompleted public issue or private placement of securities, and for such issues and placements that were completed in the most recent three years but have not yet fully yielded the planned benefits: None.

(2) Implementation:

With the purpose of repaying the short-term bank loans and adjusting the financial structure, the Company issued the first secured ordinary corporate bond of NT$3 Billion for 2015 on July 24, 2015. The funds raised have been implemented completely according to the application plan in Q3, 2015.

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Chapter 5 Operational Highlights

I. Business Activities

(I) Business Scope

Main of business operations of the Company
(1) Retail sale of Medical Equipments
(2) Department Stores.
(3) Car Rental and Leasing.
(4) Parking Garage Business.
(5) Residence and Buildings Lease Construction and Development.
(6) Industrial Factory Buildings Lease Construction and Development.
(7) Specialized Field Construction and Development.
(8) Public Works Construction and Investment.
(9) New County and Community Construction and Investment.
(10) Land Levy and Delimit.
(11) Reconstruction within the Renewal Area.
(12) Renovation, or Maintenance within the Renewal Area.
(13) Construction Management.
(14) Real Estate Commerce.
(15) Real Estate Rental and Leasing.
(16) Management Consulting Services.
(17) Other Consultancy.
(18) All business items that are not prohibited or restricted by law, except those that are subject to special approval.
Proportion of Consolidated Business Activities in 2020

	Unit: NT$ thousands	Unit: NT$ thousands
Item	Amount	Percentage
Leasing revenue	464,413	3.32%
Construction revenue	11,356,913	81.27%
Service revenue	2,023,608	14.48%
Other operating revenues	128,677	0.93%
Total Shares	13,973,611	100.00%

3. Main Products and New Products Development

The Company’s current main product is the investment in the construction of

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residential buildings with elevators for sales. In the first half of 2021, the Company plans to launch "Cathay Relaxing Sunny Day" in Nangang District and the "Dunnan Lin Yuan" in Daan District in Taipei City; "Cathay Of Riverside" in Sanchong District, New Taipei City; "Cathay XiJing" in Taoyuan City, "Cathay The Park" in Nantun District and a land construction project on Shanxi Road in Beitun District in Taichung City, and "UNi PARK" in cooperation with Japanese company Mitsui & Co., Ltd. in Anping District in Tainan City. In the second half of the year, it is expected to launch "Cathay Leisurely Place" in Nangang District and a land construction project on Wenlin North Road in Beitou District in Taipei City, and will be open for sale depending on the economy and market conditions.

(II) Industry Overview

1. Current state and development of the industry

In recent years, Taiwan’s housing market has caused public grievances due to the rapid rise in housing prices. Under the government’s implementation of a series of housing policies (luxury tax, real price registration, and Integrated Housing and Land Tax), short-term investors in the real estate market have gradually withdrawn from the market and the buyers for self occupation purposes have gradually dominated the market. In the absence of market confidence, the number of buildings transferred nationwide in 2016 hit a record low, and the overall real estate market entered an adjustment period. However, after 2017, although the housing market is only supported by the demand for self-occupation, the sellers seek to close deals and revise prices at the same time. Housing prices are no longer too high to afford. The number of domestic buildings sold and transferred begun to increase year by year, and the balance of building and residential loans has been increased year by year. In 2020, due to the raging of the global pandemic, the boarder blockade measures resulted in abundant domestic hot money and a wave of buying momentum. The number of domestic buildings sold and transferred reached more than 320,000, an annual increase of 8.7%, setting a new high over the past seven years.

On the supply and demand side of the overall housing market: On the supply side, since the overall housing market in 2020 was better than in 2019, the industry’s confidence in launching new projects increased. It is expected that the momentum in 2020 will continue in 2021 with stable increase in supply of new projects. As for the demand side, the rigid demand accompanied by a large amount of hot money led to a wave of housing boom last year. However, the current COVID-19 pandemic is still severe, and the government implemented a sound housing market policy at the end of last year, some investors turned to a wait-and-see approach. It is expected that the market will continue to be supported by home buyers for self-occupation purposes in 2021, and the market will be closely linked with the global pandemic situation. On the whole, the real estate market in 2021 will continue the trend of 2020, showing an upward trend in prices with stable transaction volume, while closely linked to the trend of the pandemic. If the pandemic is gradually alleviated in the future, it may lead to a new wave of hot money into the housing market.

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2. Relationship with Up-, Mid- and Downstream Companies

Item	Remarks/specify details		Schema	Schema	Schema
Upstream	Financial institution that includes land, construction industry (including supply industries such as building materials and raw materials) and capital supply.		Construction company Agency company Construction management Business company House-purchase group ord Building Financial institutions
		Landl	ord	Building	Financial institutions

Midstream	Construction companies oriented, and sales related industries (such as advertising agency companies and construction manager companies).
Downstream	General house-purchase group and business companies oriented.

3. Product Trends

(1) Architectural brand leadership

With the improvement of the standard of national lives, customers are requiring a higher standard of building facade, structure planning, construction quality and other details. Therefore, the excellent customer service and brand image catering for consumers will become one of the key points to sell products in the future.

(2) Futuristic design

Due to changes in consumer demand patterns, strengthening the product functions such as health, technology, environmental protection, leisure, safety, comfort and high

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quality, considering the future development, and enhancing the value of construction will become the mainstream trend in the future.

(3) Economical and environment-friendly construction

In the era where the raw materials increase gradually, how to ensure construction quality, protect the environment and save materials will become the focus of high-quality buildings in the future.

(4) Integrated community living function

In the future, the integrated living functions will be emphasized in new communities. Baby sitting, fitness, catering, conference, recreation and entertainment will be the necessary living functions in communities.

4. Product Competition

The product design of the real estate market must conform to local characteristics, but there shall be difference between regional projects. With changes in market demand, the product types shall be adjusted rapidly and timely, and market segmentation shall be done based on regional customer characteristics, in order to expand the Company's operating scale with diverse products. In recent years, the Company has been developing projects mainly in the metropolitan areas like Taipei-Keelung metropolitan area, Taoyuan, Hsinchu, Taichung, Tainan and Kaohsiung. The adamant management team, sound financial planning, professional R&D and design, and solid engineering construction are the maximum competitive condition of the Company. In addition, the Company emphasizes permanent after-sales service and has established a good reputation and brand image in the market.

(III) Technology and R&D Overview

In order to strengthen the transparency of the real estate market information, improve the development of the real estate market, and fulfill the corporate social responsibility, the Company has been preparing the Cathay Real Estate Index with Taiwan Real Estate Research Center of National Chengchi University from the end of 2002 for 19 years in 2021. More than NT$3 million of budget is invested in the preparation every year, and it has become one of the important sources of reference of domestic real estate information. In terms of R&D of product technology, we have invested lots of manpower and funds in the fields of planning, design, building materials and equipment. Therefore, the projects developed by the Company can be favored by customers and sold well in a short period of time. In recent years, with the purpose of breaking through design thinking, we also introduced foreign design teams to enable the Company's products to be more competitive.

1. Industry Trends

(1) Changes in the real estate business cycle
(2) Evolution of the real estate market products
(3) Quarterly Report of Cathay Real Estate Index

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2. Architectural technology

(1) Control of architecture construction cost
(2) Discussion on the standard construction period
(3) Discussion on construction laws and building products
(4) Discussion on building construction specifications
(5) Discussion on green building design
(6) Discussion on intelligent construction equipment
(7) Discussion on earthquake-resistant buildings
(8) Discussion on energy-saving and carbon-reduced equipment
(IV) Long-term and Short-term Development

1. Long-term Development

(1) Branding

Implement the Company’s core values, business philosophy and four guarantees, keep initiative, innovate services, and pursuit of excellence, in order to achieve the philosophy of sustainable management and sustainable service. The Company continues executing the brand optimization and implement action plan, leverage Cathay's advantages, ensure the comprehensive quality, and engage in digital transformation based on the new thinking of “Quality Lifetime House”, and maintain and continue the brand value through sustainable services.

(2) Land Development

After the strengthening and stabilizing the core business, we have also introduced our business philosophy and integrated digital technology into the development of real estate and created added value to enhance our competitive edge, expand the business scale, diversify development models, actively participate in the development of commercial and complex buildings, and stride forward toward the vision of becoming a comprehensive developer.

(3) Product Planning

Continue to deepen product planning and design capabilities, focus on the consumers' demands and place customers at the center, and comply with the relevant regulations of green buildings, environmental protection, and energy conservation, while emphasizing digital technology, earthquake resistance, environmental protection, safety, energy conservation, and practicality to meet future product trends.

(4) Marketing

Build and improve the customer database management system using digital integration and big data analysis, in order to keep abreast of the marketing trends, integrate the Group's resources and synergies, diversify the contents of plans, and create a new sales strategy

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(5) Customer Service

Use the customer database management system for data analysis and integrate group resources to expand the scope of customer services, strengthen the app functions for customer services, enhance customer services, to meet customers' diverse needs so as to strengthen the Company's brand value and reputation.

Short-term Development

(1) Branding

“Value Creation and Deepening the Brand”, the Company actively differentiates its products and creates brand advantages to obtain recognition from its customers and avoid homogenous price wars.

(2) Project Development

The Company will continue to maintain the basic reserve of projects, engage in joint ventures with overseas investors for development, and develop land in diversified ways, such as bidding for more public and private urban renewal projects. On the other hand, we will prudently operate the existing re-investing business step by step and actively work on efficiency optimization and site expansion to increase the service capacity and expand the territory. In addition, we will actively evaluate the layout of the new blue-sea business in order to move towards diversified operations.

(3) Product Planning

With sophisticated and practical planning and design concepts, combined with digital technology, environmental protection and energy-saving technologies, we will increase the intimate and added value of products in line with the needs of various target customers to enhance the product competitiveness.

(4) Marketing

Innovate marketing strategies, and break through market competition by combining the professional resources of architects, designers, sales agents, and relevant fields, diversify the contents of plans, and integrate the Group’s synergies.

(5) Customer Service

Combine the resources of the Group with digital technology, strengthen the app functions for customer services, and improve service quality and efficiency.

II. Market and Sales Overview

(I) Market Analysis

1. Sales (Service) Region

The Company has business points in Taipei, Taichung, Tainan and Kaohsiung, and its business area includes the main metropolitan area of Taiwan. The supply and demand of the major metropolitan areas in Taiwan in the past two years are shown in the table below.

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	2019	2019	2020	2020
	Launched amount (100 Million)	30-day sales rate (%)	Launched amount (100 Million)	30-day sales rate (%)
Taipei	1,790	12.41	2,386	10.67
New Taipei	3,829	10.88	3,449	10.56
Taoyuan	1,895	9.68	1,985	10.53
Hsinchu	567	10.37	586	13.90
Taichung	1,820	13.88	1,913	12.90
Tainan	764	13.11	987	11.84
Kaohsiung	2,060	10.92	1,943	13.68
Nationwide	12,725	11.51	13,249	11.84

Data source: Quarterly Report of Cathay Real Estate Index. 30-day sales rate refers to the sales situation in the month of launch, excluding subsequent sales.

2. Market Share

The Company’s market share in the last two years is detailed in the table below.

Unit: NT$ thousands

Company Name	2019 revenue	2019 revenue	2020 revenue	2020 revenue
	Amount	Rank	Amount	Rank
Kantons	8,117,436	11	27,181,548	1
Farglory	19,347,316	3	25,692,155	2
Highwealth	20,373,762	1	18,157,516	3
Dacin	10,760,885	6	15,112,348	4
Guochan	12,728,434	4	14,494,761	5
Genji	11,362,618	5	14,103,408	6
Kuo Yang	1,393,666	-	13,789,342	7
Cathay	9,736,609	8	13,336,228	8
BES Engineering	10,209,045	7	11,860,058	9
Ruentex	8,773,188	10	11,530,175	10
Huaku	19,800,557	2	11,295,781	11
Chonghong	8,793,221	9	8,583,158	12
King's Town	5,804,813	15	8,489,962	13
Prince	5,680,054	16	7,306,687	14
Chien Kuo	4,756,126	18	6,753,748	15
Xinya	7,313,749	13	6,299,072	16
HuangHsiang	2,704,945	16	5,865,975	17
HwangChang	5,335,865	17	5,665,968	18
ZongTai	3,690,892	20	4,617,207	19
Sakura	7,431,114	12	4,616,492	20

Data source: Market Observatory

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3. Future supply & demand and growth of the market

According to the quarterly research of Cathay Real Estate Index, the trend of the Cathay Real Estate Index in 2020 indicated that the prices of the national housing market recorded an increase in prices and transaction volume, and the housing market was recovering, with better overall performance as compared with 2019. Looking ahead to the market trend in 2021, it should be able to continue the housing market boom in 2020, showing a steady trend in both prices and transaction volume, but the global pandemic situation will be an indicator that requires continued attention.

On the supply and demand side of the real estate market, last year’s transaction volume was better than that in 2019, and the industry’s confidence in launching new projects increased. It is expected that the increase in supply of new projects will be stable in 2021. On the demand side, the rigid demand accompanied by a large amount of hot money led to a wave of housing boom last year, and the government promulgated a sound housing market policy at the end of last year in an attempt to curb investment; thus, it is expected that the market will continue to be supported by home buyers for self-occupation purposes in 2021.

Overall, this year's real estate growth is affected by the global pandemic situation and the domestic government's sound housing market policy. However, with the support of rigid demand, the supply and demand are expected to remain stable. The important factors affecting the operation of the real estate market this year are summarized as follows:

(1) International situation

Last year, the border blockade measures were implemented due to the raging of COVID-19, and the return of overseas Taiwanese business capital filled the domestic market with abundant hot money, so there was a wave of buying momentum in the second half of the year. Looking ahead to this year, although the situation is still uncertain, positive news, such as research and development of vaccines, is gradually released, and the pandemic is expected to be gradually mitigated, which is expected to boost the housing market.

(2) Policy

At the end of last year, the government promulgated a sound housing market policy, mainly for accelerating the promotion of "real price registration 2.0", strengthening the transparency of housing market information, and curbing improper property speculation in the pre-sale market, without affecting home buyers for self-occupation purposes. The interest rates are still low at this stage. Thus, it is expected that the market will continue to be supported by home buyers for self-occupation purposes in 2021.

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(3) Economic growth rate

The Directorate-General of Budget, Accounting and Statistics estimates that the economic growth rate in 2021 will be 4.64%.

(4) Interest rate and price

The interest rate will remain low. In the term of price, the Directorate-General of Budget, Accounting and Statistics estimates that the Consumer Price Index (CPI) in 2021 will increase by 1%–1.5%.

Competitive Niches
(1) Excellent brand image
(2) Steady financial situation
(3) Professional R&D and design
(4) Solid engineering construction
(5) Permanent after-sales service
Favorable and Unfavorable Factors in the Long Term and Strategies
(1) Favorable Factors
a. The current interest rate is still low, and under the mindset of “land bringing wealth” and the expected price increase, real estate is still a general investment and hedging tool.
b. In recent years, the government has positively promoted various economic revitalization programs, major constructions, and Taiwanese investment return from China to drive industrial development and provide many opportunities for construction, which will stimulate the real estate market.
(2) Unfavorable Factors
a. With the decreased land resources and increased land price, the land acquisition costs are increased in Great Taipei Essence Zone.
b. The high demand arising from the launch of major construction projects and the return of overseas Taiwanese business capital to build factories leads to a rise in prices of raw materials and wages, which increases construction costs.
c. There are still many international uncertainties, including the pandemic, the subsequent development of the cross-strait relations, and the progress of the US-China trade negotiations, which may affect the future direction of the housing market.
(3) Countermeasures
a. Evaluate development projects prudently and strengthen product planning to increase added value and to reduce the impact of increasing costs.
b. In addition to the downtown essence zone, the potential suburb lands shall be actively evaluated and purchased and the diversified land development methods shall be expanded, such as joint construction or urban renewal business.

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  - c. Make effective use of the advantages of the Group’s value chain and properly deploy new business investments to strengthen diversified operations and achieve synergy.

(II) Production Procedures of Main Products
Major Products and Their Main Uses

The Company invests in and constructs various types of products in the major metropolitan areas of North, Central and South Taiwan based on the different demands of customers in each region. The main products can, depending on their functions, be divided into two categories, residential buildings and commercial buildings. The residential buildings are residence-purposed, including open-air villas and high-quality residential buildings with elevator; and the commercial buildings are commerce-purposed, such as shopping malls, high-end office buildings and integrated commercial buildings.

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2. Production Procedures of Main Products

==> picture [274 x 313] intentionally omitted <==

----- Start of picture text -----

Regulatory Investigation Construction site selection Foundation investigation
1. Urban planning 1. Natural environment
2. Building regulations 2. Traffic environment
Preliminary plan 3. Location environment
Property investigation
Market investigation
1. Ownership Alternative plan
1. Urban development trends
2. Other rights
2. Economic industry trends
3. Site investigation
3. Market supply and demand analysis
Business plan
4. Market price
1. Architectural design
2. Structural design Design and budget 1. Fund plan
3. Equipment design 2. Income and expenditure plan
4. Estimate of project 3. Matching plan
5. Construction budget Pre-sales preparation
Application for construction license
Public sale
1. Pre-sales research and discussion
2. Advertising plan
3. Staffing
Certificate acquisition Construction, management 4. Site layout
Transfer of property House delivery Loan application
After-sales service
----- End of picture text -----

(III) Supply Status of Main Materials

The main raw materials of the Company are land. In addition to the methods of obtaining land through purchasing National Property Administration and other government units, the raw materials of land are mainly obtained through the introduction of land intermediators or through joint construction with landlords. In addition, project evaluations are carried out for relevant development methods, such as urban renewal, joint development with MRT systems, state-owned land superficies right setting, and BOT, to increase the scale of the Company's development sources.

At present, in consideration of acquisition of raw materials of land, the Company mainly purchases the urban high-quality sections and the land in rezoning areas, supplemented by the land with complete living functions in the suburbs. At present, in

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addition to actively participating in the public auction of land by government units, the Company learns about the location, property rights and quantity of relevant land materials in specific areas through the open space survey method, and actively requests the land intermediators for broking to obtain raw materials of land in due course for the Company's operations.

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(IV) Major Suppliers Commanding 10%-plus Share of Annual Order Volume in the Most Recent Two Years

Major Suppliers in the Last Two Calendar Years

Major Suppliers in the Last Two Calendar Years	Major Suppliers in the Last Two Calendar Years	Major Suppliers in the Last Two Calendar Years	Major Suppliers in the Last Two Calendar Years	Major Suppliers in the Last Two Calendar Years	Major Suppliers in the Last Two Calendar Years	Major Suppliers in the Last Two Calendar Years	Major Suppliers in the Last Two Calendar Years	Major Suppliers in the Last Two Calendar Years	Major Suppliers in the Last Two Calendar Years	Major Suppliers in the Last Two Calendar Years	Major Suppliers in the Last Two Calendar Years	Major Suppliers in the Last Two Calendar Years
Unit: NT$ thousands
Item	2019				2020				2021(As of March 31)
	Name	Amount	Percentage to the total annual net purchases (%)	Relation with Issuer	Name	Amount	Percentage to the total annual net purchases (%)	Relation with Issuer	Name	Amount	Percentage to the total net purchases up to the end of the previous quarter of the current year (%)	Relation with Issuer
1	San Ching Engineering Co.,Ltd.	1,467,349	19.22	Affiliated enterprises	San Ching Engineering Co.,Ltd.	1,901,357	17.58	Affiliated enterprises	San Ching Engineering Co.,Ltd.	550,310	30.10	Affiliated enterprises

	Others	6,168,178	80.78		Others	8,913,514	82.42		Others	1,278,074	69.90
	Net purchases	7,635,527	100.00		Net purchases	10,814,871	100.00		Net purchases	1,828,384	100.00
Reasons for Changes	Fund of project under construction				Fund of project under construction				Fund of project under construction

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Major Clients in the Last Two Calendar Years

Unit: NT$ thousands

									Unit: NT$ thousands	Unit: NT$ thousands	Unit: NT$ thousands	Unit: NT$ thousands
Item	2019				2020				2021(As of March 31)
	Name	Amount	Percentage to the total annual net sales (%)	Relation with Issuer	Name	Amount	Percentage to the total annual net sales (%)	Relation with Issuer	Name	Amount	Percentage to the total net sales up to the end of the previous quarter of the current year (%)	Relation with Issuer
1	None				None				None

	Others	9,736,609	100.00		Others	13,336,228	100.00		Others	2,087,511	100.00
	Net sales	9,736,609	100.00		Net sales	13,336,228	100.00		Net sales	2,087,511	100.00
Reasons for Changes	None				None				None

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(V) Production in the Last Two Years

				Unit: NT$thousands	Unit: NT$thousands	Unit: NT$thousands
Year Production volume Output Major Products (orby department)	201		9	2020
	Capacity	Quantity	Amount	Capacity	Quantity	Amount
Apartments, shops, buildings	-	A batch	7,088,054	-	A batch	10,167,505
Rental and Leasing	-	-	320,916	-	-	322,700
Total Shares	-	A batch	7,408,970	-	A batch	10,490,205

(VI) Sales in the Last Two Years

						Unit: NT$thousands	Unit: NT$thousands	Unit: NT$thousands
Year Sales Output Major Products (or bydepartment)		2019				2020
		Local	Export			Local	Export
	Quantity	Amount	Quant ity	Amou nt	Quantity	Amount	Quant ity	Amou nt
Apartments, shops, buildings	327	9,296,499	-	-	603	12,971,111	-	-
Rental and Leasing	-	440,110	-	-	-	365,117	-	-
Others	-	-	-	-	-	-	-	-
Total Shares	327	9,736,609	-	-	603	13,336,228	-	-

III. Information Regarding Employees in the Most Recent Two Years and

as of the Date of Publication of Annual Report

	Year	2019	2020	Current year as of April 30,2021
Number of	Office clerk	141	148	147
Employees	Total Shares	141	148	147
Average Age		43.6	43.3	43.2
Average Year of Services		13.18	12.9	12.85
	Ph.D.	0%	0%	0%
	Master's	32.6%	35.1%	34.7%
Education	Bachelor’s Degree	61.7%	60.1%	60.5%
	Senior High School	5.7%	4.8%	4.8%
	Below Senior High School	0%	0%	0%

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IV. Environmental Protection Expenditure

(I) The Company is in the construction investment industry but not a building company. We entrust the professional engineering companies in the building industry to be responsible for the building and construction of the houses and do not cause immediate and direct environmental protection problems. The construction industry is prone to producing dust, waste soil and noise which only impact the environment near the construction site during the construction period, and does not cause material pollution to the ecology like the manufacturing industry. Nonetheless, the Company still attaches great importance to environmental protection, and strongly urges the contractors to pay more attention to the waste soil dumping according to the management method of the building management unit of the government and manages various matters such as waste disposal, construction time and volume control and strictly takes site safety and health measures to meet standards.
(II) The Company adheres to the care of environmental protection work and implements the goal of environment beautifying and prosperity promotion. In terms of specific actions, the Company establishes the dedicated service units to assist in beautifying and managing the community environment. In the face of the increasing public attention to environmental protection issues, the Company will continue to strengthen its efforts in this direction.
(III) The Company has adopted the design of green building and energy saving and carbon reduction in the architectural design as much as possible to make efforts to the environmental protection of the earth and also to give building vitality.

V. Labor Relations

(I) Employee Wellness

The Company has always attached great importance to harmonious labor-management relations. In terms of care to the employees, in addition to reasonable treatments and various on-the-job educations, the Company has established the Employees’ Welfare Committee to promote employee benefits including subsidies for marriage, childbirth, children, education, birthday, language training, leisure and entertainment, as well as hiking activities, health examination and family day so as to ensure the physical and mental protection of employees. In 2020, the accumulated expenditure on employees’ welfare was NT$31,629,000.

(II) Advanced studies and training of employees

The implementation of Company’s education and training:

In 2020, besides continuing to intensifying the core and management functions such as accountability and cultivation, the Company held the general courses such as market research and house delivery acceptance to comprehensively increase the basic professional

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knowledge of colleagues. The total training hours were 6,387.5 and the total cost was NT$1,355,000.

Course items	Number of Trainee	Total hours
Professional training	696	4,605
General training	286	1,024.5
Function
	288	758
development

Total	1,270	6,387.5

(III) Retirement System and Implementation

After the implementation of the Labor Pension Act, the regulations of pension in the Labor Standard Law applicable to the employees who are employed before July 1, 2005, or the pension system applicable to this Act shall be selected, and the working seniority before the applicable Act shall be retained. For the employees who are employed after July 1, 2005, the pension system of the Labor Pension Act is applicable. After the implementation of the Labor Pension Act, the Labor Retirement Reserves Supervision Committee established by the Company in accordance with the law still operates as usual, and 2% of the total salary of employees is drawn as the retirement reserves according to the regulations of the Labor Standard Law, until the Labor Standard Law is applicable to no employee. For the employees who the Labor Pension Act is applicable to, the funded rate of pension borne by the Company for the employees monthly shall not be lower than 6% of the monthly salary of the employees.

(IV) Labor management agreements and employee rights/interests maintenance

In respect of the maintenance of employee rights/interests, the Company provides retirement allowance, severance pay, and pension for employee pension in addition to various perfect benefit measures, and other measures are clearly stated in the Articles of Association and there are preferential measures for employees to buy house, so as to stabilize and care for the lives of employees.

Important labor agreement: None.

(V) Names and number of employees holding professional licenses

		Number of
License type	Sponsoring Organization
		Shareholders

Architect	Examination authority	8
CPA	Examination authority	2
Real estate broker	Examination authority	10
Land administration agent	Examination authority	5

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Appraiser	Examination authority	1
Civil engineer	Examination authority	1
Geotechnical engineer	Examination authority	1
British Royal Chartered	Royal Institution of Chartered Surveyors
		1
Surveyor	(RICS)

(VI) Employee behavior or ethics code

In order to standardize employees to follow the same codes of conduct, the Company makes the Personnel Management Rules in the Articles of Associations to define the service codes for employees. It is stipulated that the employees shall follow the laws and regulations, strictly abide by the discipline, and be devoted to their duties and they shall not engage in improper acquisition or transaction, or make a profit for themselves or others using official post convenience.

The management rules also specify incentives and disincentives to encourage outstanding employees or those who are meritorious to prevent wrongdoing; and to punish those who violate discipline and neglect their duties.

Accordingly, the communication between management and employees is based on consensus, which is beneficial to the promotion of the Company’s business and the management of the organization.

(VII) Protective measures for the working environment and personal safety of employees

The Company's office space is designed in accordance with relevant building regulations and labor health and safety regulations. The relevant measures are as follows:

According to Article 34 of Occupational Health and Safety Act, the Code of Practice of Health and Safety of the Company is formulated to prevent occupational disasters and ensure the safety and health of employees.
Set up key points for emergency relief for employees affected by natural disasters, and assist employees who encounter natural disasters to solve difficulties and overcome difficulties.
Formulate the contingency plan for material accidents of the Company, set up a contingency team and take urgent and necessary measures for casualties and material accidents to minimize the injury. The daily safety maintenance and building management are all handled by the building management company in accordance with the management standard specifications formulated by itself. Except for connecting with the police security units, it allocates the security personnel to guard the office space.

In order to protect the work rights and interests of employees, and to ensure the physical and mental health of female colleagues after pregnancy, childbirth and breastfeeding, as well as to prevent employees against unlawful infringements from the

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behaviors of others due to the performance of their duties, the Company has established “Sexual Harassment Prevention Measures”, “Appeal and Punishment, Executive Measures for Maternal Health Protection of Women Workers”, “Plan on Prevention of Unlawful Infringement during Performance of Duties”, “Plan on Prevention of Sexual Damages Due to Human Factors” and “Plan on Prevention of Diseases caused by Abnormal Workload” to eliminate sexual discrimination and maintain the equal job opportunities for both men and women, prevent the employees form sexual harassment, workplace violence and achieve the purpose of maternal health protection and avoid the work environment in which the employees will be attacked by illness due to abnormal workload or repetitive operations.

In addition, the Company implements chartered workplace health care services since 2020, based on the concept of protecting labor rights and enhancing labor competitiveness. The services provide professional consultation for employees to promote physical and mental health maintenance, and also identify and evaluate the hazardous factors within the working environment, operations, and organizations that affect the physical and mental health of employees, and put forward plans and recommendations for the improvement of operating environment and sanitation facilities.

(VIII) Corporate responsibility and ethical behavior

Society is the land on which enterprises can grow. The success of a enterprise depends on a stable society. Enterprises should take care of society with practical actions to fulfill social functions and responsibilities. Therefore, since the establishment of the Company, we have adhered to the concept of taking it from the society and using it in society and operating the enterprise for giving back to the society, so that the value of the Company is doubled.

Over the years, the Company has often sponsored various public benefit activities, made donation for disaster relief, and undertaken the social responsibility of corporate citizens. In 1982, we established Cathay Cultural Foundation which has long held cultural and educational activities, passed on local culture, and subsidized the disadvantaged. We also set up 9 libraries in Taiwan to hold cultural activities. Foundation has sponsored the Cathay Excellence Awards Plan, Teach For Taiwan and other activities and hopes to continue to sponsor education and learning to cultivate young people for the future. We support the public benefit in the long term and assist in holding new resident care activities, summer blood donation, children's growth camp, Christmas warming and other activities to give back to the society with action.

1. Lin Yuan Libraries

Cathay Cultural Foundation has set up 9 libraries in Taiwan. The internal open area is more than 500 ㎡ , and each library has more than 2,000 books. Various newspapers and magazines can be subscribed and free teaching activities are held regularly to provide a good reading environment for the public to freely learn and live in deep culture and promote neighborhood friendship and community harmony.

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Joint activities of public benefit group
(1) New resident care activities in Taiwan of Cathay

Assist Taiwan's new residents and their next generation to adapt to life in Taiwan, eliminate barriers in adaptation, organize a series of courses on new resident care plan, hammer at deepening education, provide channels for the mutual support of new residents, and inspire the new generation to accept multi-culture and face self-worth and construct a positive communication bridge between two generations.

(2) Summer Blood Donation Activities

Establish a number of blood donation points in the summer time, and make about 476 promotions to ease the summer time blood shortage, and lead the prevailing blood donation benevolences.

(3) Children's Growth Camp and Dream Realization Plan

Every summer, Cathay Public Benefit Group organizes camps to expand and diversify children's horizons and inspire them to engage in self-exploration. However, in response to the development of the pandemic, the group suspended the 7th Growth Camp and Dream Realization Plan, and instead it organized events near each school to demonstrate the outcome of the Dream Realization Plan.

(4) Christmas Warming

Cathay Public Benefit Group has long been caring for the children, the elder and the next generation of indigenous peoples and collected love supplies from December to January and sent them to the by-places, continuously providing warmth and support in every corner in winter.

Activities related to talent teaching

Hold indoor teaching activities to provide people with the opportunities to learn various talents and skills, discover pleasure in new life, and harmonize neighborhoods by learning and interacting. Teach through lively activities, cultivate second expertise, and enrich daily life.

Sponsorship Activities
(1) Cathay Excellence Awards Plan

In order to encourage students from senior high and vocational schools and above to participate in specific research and public welfare proposals in line with the current trends, the Company invested NT$400,000 in this plan to reward students with special merits and contributions, and to reward senior high school students from underprivileged backgrounds with outstanding academic performance to study with peach of mind.

(2) Teach For Taiwan (TFT) Cooperation Scheme

"Caring for children in rural areas" is one of the Cathay Public Benefit Group's strategies. In order to effectively extend the influence of public welfare, the group

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supports TFT to recruit and train teachers for rural areas and encourages young talents to step into the classroom to create an equal and high-quality educational environment for children in rural areas, flip education, and improve the quality of education in rural areas.

(IX) The current and future possible estimate amount for the losses caused by labor management disputes as of the date of publication of the annual report and the corresponding measures:

In the most recent two years, the Company has not suffered losses due to labor management disputes. Based on the concept that employees and employers are coexisting, the Company will work harder to maintain the harmony of labor management relations and hope to promote the unity and harmony of the whole society to create a glorious future.

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VI. Important Contracts

mportant	Contracts
Agreement	Parties	Period	Major Contents	Restric tions
Construction contract	San Ching Engineering Co., Ltd.	March 31, 2020 ~ December 10, 2022	Four projects including the one at Land No. 51, Sixin Section, Xindian District, New Taipei City	None
	San Ching Engineering Co., Ltd.	October 11, 2020 ~ September 30, 2023	Two projects including the one at Land No. 268, Sanmin Section, Taoyuan District, Taoyuan City	None
Real estate transaction	Natural person	January 13, 2020	Contract for acquisition of the construction land at the Jinhua Section, Anping District, Tainan City	None
	Natural person	January 21, 2020	Contract for acquisition of the construction land at the Renping Section, Beitun District, Taichung City	None
	Natural person	July 10, 2020	Contract for acquisition of the construction land at the Ruanciao Section, Beitou District, Taipei City	None
	Natural person	October 8, 2020	Contract for acquisition of the construction land at the Muzha Section, Wenshan District, Taipei City	None
	Natural person	October 21, 2020	Contract for acquisition of the construction land at the Tammei Section, Neihu District, Taipei City	None
	Jinhua Realty Co., Ltd.	November 12, 2020	Contract for disposal of the construction land at the Jinhua Section, Anping District, Tainan City	None

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Chapter 6 Financial Information

I. Five-Year Condensed Balance Sheet and Condensed Statement of Comprehensive Income

(I) Condensed Balance Sheet

Based on International Financial Reporting Standards (Parent Company Only)

		Unit: NT$thousands	Unit: NT$thousands	Unit: NT$thousands	Unit: NT$thousands	Unit: NT$thousands
Year Item		Financial Summary for The Last Five Years (Note 1)
		2016	2017	2018	2019	2020
Current assets		$34,049,676	$32,827,177	$30,748,510	$31,458,872	$32,632,135
Property, plant and equipment		84,896	65,471	66,611	72,394	62,785
Intangible	assets	786	1,124	778	1,533	2,980
Other asse	ts	14,582,738	13,793,973	15,876,202	16,082,198	16,414,808
Total asset	s	48,718,096	46,687,745	46,692,101	47,614,997	49,112,708
Current liabilities	Before distribution	11,064,521	11,487,107	17,372,072	18,172,212	19,240,553
	After distribution	12,803,863	12,878,580	19,807,150	19,331,773	(Note 2)
Non-current liabilities		14,675,016	12,432,136	4,245,293	5,064,693	5,416,931
Total liabilities	Before distribution	25,739,537	23,919,243	21,617,365	23,236,905	24,657,484
	After distribution	27,478,879	25,310,716	24,052,443	24,396,466	(Note 2)
Equity attributable to shareholders of the parent		22,978,559	22,768,502	25,074,736	24,378,092	24,455,224
Capital stock		11,595,611	11,595,611	11,595,611	11,595,611	11,595,611
Capital surplus		10,407	18,063	25,783	31,628	39,515
Retained earnings	Before distribution	11,064,867	10,770,163	13,373,271	12,311,946	12,646,352
	After distribution	9,325,525	9,378,690	10,938,193	11,152,385	(Note 2)
Other equity interest		307,674	384,665	80,071	438,907	173,746
Treasury stock		0	0	0	0	0
Non-controlling interest		0	0	0	0	0
Total equity	Before distribution	22,978,559	22,768,502	25,074,736	24,378,092	24,455,224
	After distribution	21,239,217	21,377,029	22,639,658	23,218,531	(Note 2)

Note 1: Financial statements of the Company in 2016 to 2020 were audited. No relevant information in Q1, 2021. Note 2: The distribution of earnings for 2020 has not yet been approved by the shareholders' meeting. Note 3: The Company did not conduct any revaluation of assets in 2016 to 2020.

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2. Based on International Financial Reporting Standards (Consolidated)

Unit: NT$ thousands

Year Item	Year Item	Financial Summary for the Last Five Years	Financial Summary for the Last Five Years	Financial Summary for the Last Five Years	Financial Summary for the Last Five Years	Financial Summary for the Last Five Years	As of March 31, 2021 Financial summary (Note1)
		2016	2017	2018	2019	2020
Current assets		$34,984,049	$34,083,427	$32,529,906	$32,654,308	$36,552,869	$35,567,063
Property, plant and equipment		1,131,539	1,136,419	1,858,494	4,614,222	5,197,866	4,732,895
Intangible	assets	30,936	33,008	20,416	24,210	33,407	36,807
Other asse	ts	19,283,152	18,508,334	14,362,572	16,443,390	17,712,786	17,586,488
Total asset	s	55,429,676	53,761,188	48,771,388	53,736,130	59,496,928	57,923,253
Current liabilities	Before distribution	12,716,135	12,729,074	18,777,777	19,819,000	23,158,275	21,844,281
	After distribution	14,455,477	14,120,547	21,212,855	20,978,561	(Note 2)	(Note 2)
Non-current liabilities		19,134,014	17,807,952	4,652,062	9,435,080	10,939,525	10,372,114
Total liabilities	Before distribution	31,850,149	30,537,026	23,429,839	29,254,080	34,097,800	32,216,395
	After distribution	33,589,491	31,928,499	25,864,917	30,413,641	(Note 2)	(Note 2)
Equity attributable to shareholders of the parent		22,978,559	22,768,502	25,074,736	24,378,092	24,455,224	24,756,055
Capital stock		11,595,611	11,595,611	11,595,611	11,595,611	11,595,611	11,595,611
Capital surplus		10,407	18,063	25,783	31,628	39,515	39,391
Retained earnings	Before distribution	11,064,867	10,770,163	13,373,271	12,311,946	12,646,352	12,635,475
	After distribution	9,325,525	9,378,690	10,938,193	11,152,385	(Note 2)	(Note 2)
Other equity interest		307,674	384,665	80,071	438,907	173,746	485,578
Treasury stock		0	0	0	0	0	0
Non-controlling interest		600,968	455,660	266,813	103,958	943,904	950,803
Total equity	Before distribution	23,579,527	23,224,162	25,341,549	24,482,050	25,399,128	25,706,858
	After distribution	21,840,185	21,832,689	22,906,471	23,322,489	(Note 2)	(Note 2)

Note 1: Financial statements of the Company in 2016 to 2020 were audited. Financial information as of March 31, 2021 has been reviewed by CPAs.

Note 2: The distribution of earnings for 2020 has not yet been approved by the shareholders' meeting. Note 3: The Company did not conduct any revaluation of assets in 2016 to 2020.

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(II) Condensed Statement of Comprehensive Income

1. Based on International Financial Reporting Standards (Parent Company Only)

	Unit: Thousand NT$(earningsper share: NT$)	Unit: Thousand NT$(earningsper share: NT$)	Unit: Thousand NT$(earningsper share: NT$)	Unit: Thousand NT$(earningsper share: NT$)	Unit: Thousand NT$(earningsper share: NT$)
Year Item	Financial Summary for The Last Five Years (Note 1)
	2016	2017	2018	2019	2020
Operating revenue	$17,408,316	$10,610,084	$12,812,525	$9,736,609	$13,336,228
Gross profit	4,467,141	2,354,577	3,268,503	2,327,639	2,846,023
Operating income (loss)	3,880,079	1,667,343	2,340,979	1,400,160	1,852,477
Non-operating income and expenses	(340,346)	(295,471)	1,493,829	104,527	(204,241)
Income before tax	3,539,733	1,371,872	3,834,808	1,504,687	1,648,236
Income from operations of continued segments - after tax	3,017,907	1,444,638	3,609,611	1,370,505	1,483,980
Income from discontinued operations	0	0	0	0	0
Net income (loss)	3,017,907	1,444,638	3,609,611	1,370,505	1,483,980
Other comprehensive income (income after tax)	(332,791)	76,991	(335,754)	362,084	(255,174)
Total comprehensive income	2,685,116	1,521,629	3,273,857	1,732,589	1,228,806
Net income attributable to shareholders of the parent	3,017,907	1,444,638	3,609,611	1,370,505	1,483,980
Net income attributable to non-controlling interests	0	0	0	0	0
Comprehensive income attributable to Shareholders of the parent	2,685,116	1,521,629	3,273,857	1,732,589	1,228,806
Comprehensive income attributable to non-controlling interest	0	0	0	0	0
Earnings per share	2.06	1.25	3.11	1.18	1.28

Note 1: Financial statements of the Company in 2016 to 2020 were audited. No relevant information in Q1, 2021.

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2. Based on International Financial Reporting Standards (Consolidated)

	Unit: Thousand NT$(earningsper share: NT$)	Unit: Thousand NT$(earningsper share: NT$)	Unit: Thousand NT$(earningsper share: NT$)	Unit: Thousand NT$(earningsper share: NT$)	Unit: Thousand NT$(earningsper share: NT$)	Unit: Thousand NT$(earningsper share: NT$)
Year Item	Financial Summary for the Last Five Years					As of March 31, 2021 Financial summary (Note 1)
	2016	2017	2018	2019	2020
Operating revenue	$18,695,526	$12,270,182	$14,294,770	$11,623,928	$13,973,611	$2,759,948
Gross profit	4,509,997	2,586,811	3,718,199	3,162,589	3,158,762	525,843
Operating income (loss)	3,402,230	1,341,775	2,228,233	1,499,287	1,551,329	47,072
Non-operating income and expenses	(69,222)	(150,297)	2,280,747	71,051	133,955	(43,334)
Income before tax	3,333,008	1,191,478	4,508,980	1,570,338	1,685,284	3,738
Income from operations of continued segments - after tax	2,838,245	1,241,625	4,241,797	1,400,358	1,516,787	(3,978)
Income from discontinued operations	0	0	0	0	0	0
Net income (loss)	2,838,245	1,241,625	4,241,797	1,400,358	1,516,787	(3,978)
Other comprehensive income (income after tax)	(423,429)	103,720	(260,946)	331,893	(256,312)	311,832
Total comprehensive income	2,414,816	1,345,345	3,980,851	1,732,251	1,260,475	307,854
Net income attributable to shareholders of the parent	3,017,907	1,444,638	3,609,611	1,370,505	1,483,980	(10,877)
Net income attributable to non-controlling interests	(179,662)	(203,013)	632,186	29,853	32,807	6,899
Comprehensive income attributable to Shareholders of the parent	2,685,116	1,521,629	3,273,857	1,732,589	1,228,806	300,955
Comprehensive income attributable to non-controlling interest	(270,300)	(176,284)	706,994	(338)	31,669	6,899
Earnings per share	2.06	1.25	3.11	1.18	1.28	(0.01)

Note 1: Financial statements of the Company in 2016 to 2020 were audited. Financial information as of March 31, 2021 has been reviewed by CPAs.

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(III) Auditors’ Opinions

Year	Accounting Firm	CPA	Audit Opinion
2016	Ernst & Young Taiwan	Lin, Li-Huang, Huang, Chien-Tse	Standard unqualified opinion
2017	Ernst & Young Taiwan	Lin, Li-Huang, Huang, Chien-Tse	Standard unqualified opinion
2018	Ernst & Young Taiwan	Jung-Huang Hsu, Chien-Che Huang (Note 1)	Standard unqualified opinion
2019	Ernst & Young Taiwan	Jung-Huang Hsu, Chien-Che Huang	Standard unqualified opinion
2020	Ernst & Young Taiwan	Jung-Huang Hsu, Chien-Che Huang	Standard unqualified opinion

Note 1: In 2018, due to the internal regularization of employment of the firm, the CPA was changed from Li-Huang Lin to Jung-Huang Hsu.

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II. Financial Analysis for The Last Five Years

(I) Based on International Financial Reporting Standards (Parent Company Only)

Items	Year	Financial Summary for The Last Five Years (Note 1)	Financial Summary for The Last Five Years (Note 1)	Financial Summary for The Last Five Years (Note 1)	Financial Summary for The Last Five Years (Note 1)	Financial Summary for The Last Five Years (Note 1)
		2016	2017	2018	2019	2020
Financial structure (%)	Debt ratio	52.83	51.23	46.30	48.80	50.21
	Ratio of long-term capital to property, plant and equipment	44,352.61	53,765.36	44,016.68	40,670.08	47,578.67
Solvency (%)	Current ratio	307.74	285.77	177.00	173.12	169.60
	Quick ratio	37.00	33.11	26.70	27.07	28.19
	Interest earned ratio	13.23	5.85	16.48	7.23	8.76
Operating performance	Accounts receivable turnover(times)	372.16	168.80	76.78	55.97	72.65
	Average collection period	0.98	2.16	4.75	6.52	5.02
	Inventory turnover (times)	0.40	0.28	0.35	0.28	0.39
	Accounts payable turnover(times)	18.07	10.16	11.20	7.92	11.90
	Average days in sales	912.50	1,303.57	1,042.85	1,303.57	935.89
	Property, plant and equipment turnover (times)	199.39	141.12	194.01	140.09	197.31
	Total assets turnover (times)	0.34	0.22	0.27	0.21	0.28
Profitability	Return on total assets (%)	5.84	3.04	7.73	2.92	3.19
	Return on stockholders’ equity (%)	12.51	6.32	15.09	5.54	6.08
	Pre-tax income to paid-incapital(%)	30.53	11.83	33.07	12.98	14.21
	Profit ratio (%)	17.34	13.62	28.17	14.08	11.13
	Earnings per share (NT$)	2.06	1.25	3.11	1.18	1.28
Cash flow (%)	Cash flow ratio	60.83	12.03	14.48	7.99	12.99
	Cash flow adequacy ratio	54.67	67.36	70.74	113.43	134.77
	Cash reinvestment ratio	24.08	(1.39)	6.29	(5.41)	7.06
Leverage	Operating leverage	1.11	1.22	1.15	1.23	1.22
	Financial leverage	1.00	1.00	1.00	1.01	1.04

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Analysis of financial ratio differences for the last two years. (Not required if the difference does not exceed 20%)

The interest earned ratio increased by 21% due to the increase in net profit before income tax and interest expenses of the period.
The accounts receivable turnover increased by 30% due to the increase in net sales of the period.
Average collection period decreased by 23% due to the increase in the accounts receivable turnover of the period.
The inventory turnover increased by 39% due to the increase in the cost of sales of the period.
The accounts payable turnover (times) increased by 50% due to the increase in cost of sales of the period.
The average days in sales decreased by 28% due to the increase in the inventory turnover of the period.
The property, plant and equipment turnover increased by 41% due to the increase in net sales of the period.
The total assets turnover increased by 33% due to the increase in net sales of the period.
Profit ratio decreased by 21% due to the increase in net sales of the period.
Cash flow ratio increased by 63% due to the increase in net cash inflow from operating activities.
The cash reinvestment ratio increased by 230% due to the increase in net cash inflow from operating activities of the period.

Note 1: No relevant information in Q1, 2021.

1. Financial Structure

(1) Debt Ratio = Total Liabilities/Total Assets.
(2) Ratio of Long-term Capital to Property, Plant and Equipment = (Total Equity + Non-current Liabilities)/Net Property, Plant and Equipment.
Solvency
(1) Current Ratio = Current Assets/Current Liabilities.
(2) Quick Ratio = (Current Assets - Inventories - Prepaid Expenses) / Current Liabilities.
(3) Interest Earned Ratio = Net Profit before Tax and Interest/Interest Expenses.
Operating Performance
(1) Accounts Receivable Turnover (including bills receivable resulting from accounts receivable and business operations) = Net sales/Average accounts receivable balance in various periods (including bills receivable resulting from accounts receivable and business operations).
(2) Average Collection Period = 365/Accounts Receivable Turnover.
(3) Inventory Turnover = Cost of Sales/Average Inventory.
(4) Accounts Payable Turnover (including bills payable resulting from accounts payable and business operations) = Cost of sales/Average accounts payable balance in various periods (including bills payable resulting from accounts payable and business operations).
(5) Average Days in Sales = 365/Inventory Turnover.
(6) Property, Plant and Equipment Turnover = Net Sales/Average Net Property, Plant, and Equipment.
(7) Total Assets Turnover = Net Sales/Average Total Assets.
Profitability
(1) Return on Total Assets = Net Income (Loss) + Interest Expenses x (1 - interest rates)]/Average Total Assets.
(2) Return on Stockholders’ Equity = Net Income (Loss)/Average Total Equity.
(3) Profit Ratio = Net Income (Loss)/Net Sales.
(4) Earnings per Share = [Net Income (Loss) Attributable to Shareholders of the Parent – Dividends on Preferred Stock] / Weighted Average Number of Shares Issued.

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5. Cash Flow

(1) Cash Flow Ratio = Net Cash Flow from Operating Activities/Current Liabilities. (2) Cash Flow Adequacy Ratio = Net Cash Flow from Operating Activities in the Most Recent Five Years/(Capital Expenditures + Inventory Increase + Cash Dividend) in the Most Recent Five Years.
(3) Cash Reinvestment Ratio = (Net Cash Flow from Operating Activities – Cash Dividend)/(Gross Value of Property, Plant and Equipment + Long-term Investment + Other Non-current Assets + Working Capital).
Leverage
(1) Operating Leverage = (Net Operating Revenue - Variable Operating Costs and Expenses)/Operating Income.
(2) Financial Leverage = Operating Income/(Operating Income - Interest Expenses).

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(II) Based on International Financial Reporting Standards (Consolidated)

Items	Year	Financial Summary for The Last Five Years	Financial Summary for The Last Five Years	Financial Summary for The Last Five Years	Financial Summary for The Last Five Years	Financial Summary for The Last Five Years	As of March 31, 2021 Financial Information
		2016	2017	2018	2019	2020
Financial structure (%)	Debt ratio	57.46	56.80	48.04	54.44	57.31	55.62
	Ratio of long-term capital to property, plant and equipment	3,774.82	3,610.65	1,613.87	735.06	699.11	762.30
Solvency (%)	Current ratio	275.12	267.76	173.24	164.76	157.84	162.82
	Quick ratio	36.83	36.39	32.03	28.53	30.71	26.10
	Interest earned ratio	7.51	3.02	12.73	5.02	5.54	0.74
Operating performance	Accounts receivable turnover(times)	91.32	47.94	36.74	29.33	34.49	28.99
	Average collection period	3.99	7.61	9.93	12.44	10.58	12.59
	Inventory turnover (times)	0.44	0.33	0.39	0.32	0.39	0.31
	Accounts payable turnover(times)	11.56	8.08	10.34	8.39	10.76	9.16
	Average days in sales	829.54	1,106.06	935.89	1,140.62	935.89	1,177.41
	Property, plant and equipment turnover (times)	16.25	10.82	9.55	3.59	2.85	2.22
	Total assets turnover (times)	0.32	0.22	0.28	0.23	0.25	0.19
Profitability	Return on total assets (%)	5.15	2.65	8.48	2.95	2.99	0.31
	Return on stockholders＇ equity (%)	11.44	5.31	17.47	5.62	6.08	0.00
	Pre-tax income to paid-incapital(%)	28.74	10.28	38.89	13.54	14.53	0.13
	Profit ratio (%)	15.18	10.12	29.67	12.05	10.85	0.00
	Earnings per share (NT$)	2.06	1.25	3.11	1.18	1.28	(0.01)
Cash flow (%)	Cash flow ratio	49.82	7.55	13.47	11.52	7.78	(4.11)
	Cash flow adequacy ratio	45.40	52.00	57.56	64.32	61.88	54.43
	Cash reinvestment ratio	21.74	(2.78)	5.95	(0.69)	2.68	(3.76)
Leverage	Operating leverage	1.27	1.68	1.40	1.68	1.64	7.49
	Financial leverage	1.07	1.22	1.06	1.10	1.17	(4.68)

Note 1: Due to the denominator or numerator of the calculation formula is zero or negative, the item is not calculated.

144

Analysis of financial ratio differences for the last two years. (Not required if the difference does not exceed 20%)

Inventory turnover increased by 22% due to the increase in the cost of sales of the period.
The accounts payable turnover (times) increased by 28% due to the increase in the cost of sales of the period.
Property, plant and equipment turnover (times) decreased by 21% due to the increase in the property, plant and equipment of the period.
The cash flow ratio decreased by 32% due to the decrease in net cash flow from operating activities of the period.
Reinvestment ratio increased by 488% due to the increase in net cash inflow from operating activities of the period.
Financial Structure
(1) Debt Ratio = Total Liabilities/Total Assets.
(2) Ratio of Long-term Capital to Property, Plant and Equipment = (Total Equity + Non-current Liabilities)/Net Property, Plant and Equipment.
Solvency
(1) Current Ratio = Current Assets/Current Liabilities.
(2) Quick Ratio = (Current Assets - Inventories - Prepaid Expenses) / Current Liabilities.
(3) Interest Earned Ratio = Net Profit before Tax and Interest/Interest Expenses.
Operating Performance
(1) Accounts receivable (including accounts receivable and notes receivable generated from operations) turnover = Net sales/Average balance of accounts receivable (including accounts receivable and notes receivable generated from operations) for each period.
(2) Average Collection Period = 365/Accounts Receivable Turnover.
(3) Inventory Turnover = Cost of Sales/Average Inventory.
(4) Accounts Payable Turnover (including bills payable resulting from accounts payable and business operations) = Cost of sales/Average accounts payable balance in various periods (including bills payable resulting from accounts payable and business operations).
(5) Average Days in Sales = 365/Inventory Turnover.
(6) Property, Plant and Equipment Turnover = Net Sales/Average Net Property, Plant, and Equipment.
(7) Total Assets Turnover = Net Sales/Average Total Assets.
Profitability
(1) Return on Total Assets = Net Income (Loss) + Interest Expenses x (1 - interest rates)]/Average Total Assets.
(2) Return on Stockholders’ Equity = Net Income (Loss)/Average Total Equity.
(3) Profit Ratio = Net Income (Loss)/Net Sales.
(4) Earnings per Share = [Net Income (Loss) Attributable to Shareholders of the Parent – Dividends on Preferred Stock] / Weighted Average Number of Shares Issued.
Cash Flow
(1) Cash Flow Ratio = Net Cash Flow from Operating Activities/Current Liabilities.
(2) Cash Flow Adequacy Ratio = Net Cash Flow from Operating Activities in the Most Recent Five Years/(Capital Expenditures + Inventory Increase + Cash Dividend) in the Most Recent Five Years.
(3) Cash Reinvestment Ratio = (Net Cash Flow from Operating Activities – Cash Dividend)/(Gross Value of Property, Plant and Equipment + Long-term Investment + Other Non-current Assets + Working Capital).
Leverage
(1) Operating Leverage = (Net Operating Revenue - Variable Operating Costs and Expenses)/Operating Income.
(2) Financial Leverage = Operating Income/(Operating Income - Interest Expenses).

145

III. Audit Committee’s Audit Report in the Most Recent Year

Audit Committee’s Report

The Board of Directors prepared the Company’s 2020 Business Report, Financial Statements (including consolidated financial statements), and an earnings proposal, of which the Financial Statements (including consolidated financial statements) have been audited and certified by Jung-Huang Hsu and Chien-Tse Huang, CPAs at Ernst & Young, by whom an audit report has been issued.

The above mentioned reports and statements produced and submitted by the Board of Directors have been audited by the Audit Committee in accordance with Article 14-4 of the Securities and Exchange Act and Article 219 of the Company Act, and there is no inconformity. Meanwhile, the report has been prepared as required. Please check and approve.

Sincerely

Cathay Real Estate Development Co., Ltd.

Audit Committee

Convener: Shiou-Ling Lin

April 28, 2021

146

IV. Parent Company only Financial Report Audited and Certified by CPAs in the Most Recent Year

CATHAY REAL ESTATE DEVELOPMENT CO., LTD.

Parent Company Only Financial Statements

For the Years Ended

December 31, 2020 and 2019

Report of Independent Auditors

The reader is advised that parent company only financial statements have been prepared originally in Chinese. In the event of a conflict between these financial statements and the original Chinese version or difference in interpretation between the two versions, the Chinese language financial statements shall prevail.

147

Independent Auditors’ Report Translated from Chinese

To the Board of Directors and Stockholders of Cathay Real Estate Development Co., Ltd.

Opinion

We have audited the accompanying parent company only balance sheets of Cathay Real Estate Development Co., Ltd. (the “Company”) as of December 31, 2020 and 2019, and the related parent company only statements of comprehensive income, changes in equity and cash flows for the years ended December 31, 2020 and 2019, and notes to the parent company only financial statements, including the summary of significant accounting policies (together “the parent company only financial statements”).

In our opinion, the parent company only financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and its financial performance and cash flows for the years ended December 31, 2020 and 2019, in conformity with the requirements of the Regulations Governing the Preparation of Financial Reports by Securities Issuers.

Basis for Opinion

We conducted our audits in accordance with the Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants and auditing standards generally accepted in the Republic of China. Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the parent company only Financial Statements section of our report. We are independent of the Company in accordance with the Norm of Professional Ethics for Certified Public Accountant of the Republic of China (the “Norm”), and we have fulfilled our other ethical responsibilities in accordance with the Norm. Based on our audits, we believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of 2020 parent company only financial statements. These matters were addressed in the context of our audit of the parent company only financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

148

Revenue Recognition

The Company is primarily engaged in entrusting construction company in construction and planning of public housing and commercial offices for sale and rental. Since the company’s construction income is classified as operating revenue based on sale of goods, the relevant profit and loss are recognized when the ownership transferred. Due to the significance of the construction income in the parent company only financial statements, with respect to a significant proportion within operating revenue, and need to judge and determine performance obligation and the timing of satisfaction, the construction revenue is determined to be a key audit matter.

The audit procedures we performed regarding construction revenue recognition included but not limited to: evaluate the appropriateness of the construction income recognition policies; realize the transaction process and perform the tests of control on the effectiveness of control points during internal control audit; select samples to perform transaction test of details and verify major clauses and conditions in the construction contract; review the transaction conditions and confirm the appropriateness of the timing the performance obligation is recognized.

We also assess whether the Company properly disclose information relating the construction income of financial statement. Please refer Note 4 and Note 6.

Valuation of Construction Land

The construction land of the Company shall be measured at the lower of cost and net realized value, and the net realizable value of the construction land is determined based on the management’s judgement and estimation. Due to the significance of construction land in the parent company only financial statements, the valuation of construction land is determined to be a key audit matter.

The audit procedures we performed regarding construction land valuation included but not limited to: evaluate the appropriateness of the construction land accounting policies; realize the transaction process and perform tests of control on the effectiveness of control points during internal control audit; select samples to analyze the management valuation process and the key valuation parameters, and evaluate the reasonableness on the basis of working paper and relevant documentation corresponding to construction land valuation which included in inventories.

We also assess whether the company properly disclose information relating the construction land valuation of financial statement. Please refer Note 4, Note 5 and Note 6.

149

Responsibilities of Management and Those Charged with Governance for the Parent Company Only Financial Statements

Management is responsible for the preparation and fair presentation of the parent company only financial statements in accordance with the requirements of the Regulations Governing the Preparation of Financial Reports by Securities Issuers and for such internal control as management determines is necessary to enable the preparation of parent company only financial statements that are free from material misstatement, whether due to fraud or error.

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

Those charged with governance, including audit committee, are responsible for overseeing the financial reporting process of the Company.

Auditor’s Responsibilities for the Audit of the Parent Company Only Financial Statements

Our objectives are to obtain reasonable assurance about whether the parent company only 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 auditing standards generally accepted in the Republic of China 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 parent company only financial statements.

As part of an audit in accordance with auditing standards generally accepted in the Republic of China, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

150

Identify and assess the risks of material misstatement of the parent company only financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the internal control of the Company.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the ability to continue as a going concern of the Company. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the parent company only financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Company to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the parent company only financial statements, including the accompanying notes, and whether the parent company only financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Company to express an opinion on the parent company only financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

We communicate with those charged with governance 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.

151

We also provide those charged with governance 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 those charged with governance, we determine those matters that were of most significance in the audit of 2020 parent company only financial statements 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.

Hsu, Jung Huang Huang, Chien Che Ernst & Young, Taiwan March 18, 2021

Notice to Readers

The accompanying parent company only financial statements are intended only to present the financial position, results of operations and cash flows in accordance with accounting principles and practices generally accepted in the Republic of China and not those of any other jurisdictions. The standards, procedures and practices to audit such parent company only financial statements are those generally accepted and applied in the Republic of China.

Accordingly, the accompanying parent company only financial statements and report of independent accountants are not intended for use by those who are not informed about the accounting principles or auditing standards generally accepted in the Republic of China, and their applications in practice. As the financial statements are the responsibility of the management, Ernst & Young cannot accept any liability for the use of, or reliance on, the English translation or for any errors or misunderstandings that may derive from the translation.

152

English Translation of Financial Statements Originally Issued in Chinese

CATHAY REAL ESTATE DEVELOPMENT CO., LTD.

Parent Company Only Balance Sheets

December 31, 2020 and 2019

			(Expressed in thousan	(Expressed in thousan	ds of New Taiwan Dollars)	ds of New Taiwan Dollars)
Assets			December 31, 2020		December 31, 2019
Code	Items	Notes	Amount	�	Amount	�
1100 1120 1150 1170 1200 1220 130x 1410 1470 1480 11xx 1517 1550 1600 1755 1760 1780 1840 1900 15xx 1xxx	Current Assets Cash and cash equivalents Financial assets at fair value through other comprehensive income-current Notes receivable, net Accounts receivable, net Others receivables Current tax assets Inventories Prepayments Others current assets Incremental costs of obtaining contracts-current Total current assets Non-currents Assets Financial assets at fair value through other comprehensive income-non-current Investment accounted for using equity method Property, plant and equipment Right-of-use assets Investment properties, net Intangible assets Deferred tax assets Other non-currents assets Total non-currents assets Total Assets	4, 6(1) & 7 4 & 6(2) 4 & 6(3), (20) 4, 6(4), (20) & 7 7 4 4, 6(5) & 7 4, 6(5), (19) 4 & 6(2) 4 & 6(6) 4, 6(7) &7 4, 6(21) &7 4 & 6(8) 4 & 6(9) 4 & 6(25) 6(10) &�	$1,969,434 2,437,036 31,527 240,921 13,009 - 27,204,407 2,928 99,844 633,029	4 5 - 1 - - 55 - - 1	$1,638,228 2,454,341 39,048 55,615 9,568 59 26,538,616 1,228 50,409 671,760	4 5 - - - - 56 - - 1
			32,632,135	66	31,458,872	66
			2,074,071 2,093,701 62,785 16,346 10,648,019 2,980 330,426 1,252,245	4 4 - - 22 - 1 3	2,234,695 1,542,646 72,394 38,373 10,891,199 1,533 428,022 947,263	5 3 - - 23 - 1 2
			16,480,573	34	16,156,125	34
			$49,112,708	100	$47,614,997	100

(The accompanying notes are an integral part of these parent company only financial statements)

153

English Translation of Financial Statements Originally Issued in Chinese

CATHAY REAL ESTATE DEVELOPMENT CO., LTD.

Parent Company Only Balance Sheets (continued)

December 31, 2020 and 2019

			(Expressed in thousan	(Expressed in thousan	ds of New Taiwan Dollars)	ds of New Taiwan Dollars)
Liabilities and Equity			December 31, 2020		December 31, 2019
Code	Items	Notes	Amount	�	Amount	�
2100 2110 2130 2150 2170 2180 2200 2230 2280 2300 2320 21xx 2540 2570 2580 2600 25xx 2xxx 3100 3110 3200 3300 3310 3320 3350 3400 3xxx	Current Liabilities Short-term loans Short-term notes payable Contract liabilities-current Notes payable Accounts payable Accounts payable-related parties Other payables Current tax liabilities Lease liabilities-current Other current liabilities Long-term loans-current portion Total current liabilities Non-Current Liabilities Long-term loans Deferred tax liabilities Lease liabilities-non-current Other non-current liabilities Total non-current liabilities Total Liabilities Equity Capital stock Common stock Capital surplus Retained earnings Legal capital reserve Special capital reserve Unappropriated retained earnings �Total retained earnings Other equity Total Equity Total Liabilities and Equity	4, 6(11) & 7 4 & 6(12) 4 & 6(19) 7 4 4, 6(21) & 7 4 & 6(13), (14) 4 & 6(14) 4 & 6(25) 4, 6(21) & 7 6(15) & 7 4 6(16) 6(17) 6(18)	$6,610,000 1,418,854 4,421,199 60,802 856,757 49,026 322,956 21,588 12,317 67,054 5,400,000	13 3 9 - 2 - 1 - - - 11	$6,900,000 499,540 3,526,415 144,213 440,989 211,266 189,958 59,821 19,300 180,710 6,000,000	15 1 8 - 1 - - - - - 13
			19,240,553	39	18,172,212	38
			5,229,741 10,049 2,100 175,041	11 - - -	4,799,510 10,049 13,952 241,182	10 - - 1
			5,416,931	11	5,064,693	11
			24,657,484	50	23,236,905	49
			11,595,611 39,515 4,489,507 504,189 7,652,656	24 - 9 1 16	11,595,611 31,628 4,352,457 504,189 7,455,300	24 - 9 1 16
			12,646,352 173,746	26 -	12,311,946 438,907	26 1
			24,455,224	50	24,378,092	51
			$49,112,708	100	$47,614,997	100

(The accompanying notes are an integral part of these parent company only financial statements)

154

English Translation of Financial Statements Originally Issued in Chinese

CATHAY REAL ESTATE DEVELOPMENT CO., LTD.

Parent Company Only Statements of Comprehensive Income

For the Years Ended December 31, 2020 and 2019

(Expressed in thousands of New Taiwan Dollars, except for earnings per share)

			(Expressed in thous	(Expressed in thous	ands of New Taiwan Dollars)	ands of New Taiwan Dollars)
Code	Items	Notes	2020		2019
			Amount	�	Amount	�
4000 5000 5900 5910 5920 5950 6000 6200 6450 6900 7000 7100 7010 7020 7050 7070 7900 7950 8200 8300 8310 8311 8316 8330 8349 8360 8380 8500 9750 9850	Operating revenues Operating costs Gross margin Unrealized sales profit Realized sales profit Gross margin, net Operating expenses �Administrative expenses �Expected credit profit (loss) ��Total operating expenses Operating income Non-operating income and expenses �Interest income �Other income �Other gains or losses �Finance costs Share of profit or loss of subsidiaries, associates and joint ventures ��Total non-operating income and expenses Income before Income tax Income tax (expense) benefit Net income Other comprehensive income �Not to be reclassified to profit or loss in subsequent periods ��Remeasurements of defined benefit plans ��Valuation gain (losses) on equity instruments at fair value through other comprehensive income Share of the other comprehensive income of associates and joint ventures accounted for using the equity method – not to be reclassified to profit or loss in subsequent periods ��Income tax related to items not be reclassified to profit or loss in subsequent periods �To be reclassified to profit or loss in subsequent periods Share of the other comprehensive income of associates and joint ventures accounted for using the equity method ��– to be reclassified to profit or loss in subsequent periods Other comprehensive (losses) income, net of tax Total comprehensive income Earnings Per Share (In dollars) Basic earnings per share Diluted earnings per share	4, 6(8), (19), (21) & 7 4, 6(5), (7), (8), (15),(21),(22) & 7 4, 6(7),(8),(15),(21),(22) & 7 4 & 6(20) 4, 6(23) & 7 4 & 6(6) 4 & 6(25) 6(24), (25) 6(26)	$13,336,228 (10,490,205) 2,846,023 (30,259) 41 2,815,805 (963,362) 34 (963,328) 1,852,477 1,156 178,979 87,799 (72,909) (399,266) (204,241) 1,648,236 (164,256) 1,483,980 (733) (164,942) (1,480) 146 (88,165) (255,174) $1,228,806 $1.28 $1.28	100 (79) 21 - - 21 (7) - (7) 14 - 1 1 (1) (3) (2) 12 (1) 11 - (1) - - (1) (2) 9	$9,736,609 (7,408,970) 2,327,639 - 41 2,327,680 (927,488) (32) (927,520) 1,400,160 2,613 175,854 (13,254) (9,911) (50,775) 104,527 1,504,687 (134,182) 1,370,505 (6,710) 368,350 675 1,342 (1,573) 362,084 $1,732,589 $1.18 $1.18	100 (76) 24 - - 24 (10) - (10) 14 - 2 - - (1) 1 15 (1) 14 - 4 - - - 4 18

(The accompanying notes are an integral part of these parent company only financial statements)

155

	Total Equity	3XXX	$25,074,736 - (2,435,078) 5,845 1,370,505 362,084	1,732,589 -	24,378,092 - (1,159,561) 7,887 1,483,980 (255,174)	1,228,806 -	$24,455,224
Other Equity	Remeasurements of Defined Benefit Plans	3445	$23,940 - - - - (4,693)	(4,693) -	19,247 - - - - (2,066)	(2,066) -	$17,181
	Unrealized (Losses) Gains from Financial Assets at Fair Value through Other Comprehensive Income	3420	$(33,607) - - - - 368,350	368,350 (3,248)	331,495 - - - - (164,943)	(164,943) (9,987)	$156,565
	Exchange Differences Resulting from Translating the Financial Statements of Foreign Operations	3410	$89,738 - - - - (1,573)	(1,573) -	88,165 - - - - (88,165)	(88,165) -	$-
Retained Earnings	Unappropriated Retained Earnings	3350	$8,877,586 (360,961) (2,435,078) - 1,370,505 -	1,370,505 3,248	7,455,300 (137,050) (1,159,561) - 1,483,980 -	1,483,980 9,987	$7,652,656
	Special Capital Reserve	3320	$504,189 - - - - -	- -	504,189 - - - - -	- -	$504,189
	Legal Capital Reserve	3310	$3,991,496 360,961 - - - -	- -	4,352,457 137,050 - - - -	- -	$4,489,507
	Capital Surplus	3200	$25,783 - - 5,845 - -	- -	31,628 - - 7,887 - -	- -	$39,515
	Capital Stock	3100	$11,595,611 - - - - -	- -	11,595,611 - - - - -	- -	$11,595,611
	Items		Balance on January 1, 2019 Appropriation and distribution of earnings for the year 2018 �Legal capital reserve �Cash dividends on common stock Changes in other capital surplus Net income for the year ended December 31, 2019 Other comprehensive income (loss), net of tax for the year ended December 31, 2019 Total comprehensive income (loss) Disposal of equity instruments investments measured at fair value through other comprehensive income Balance on December 31, 2019 Appropriation and distribution of earnings for the year 2019 �Legal Capital Reserve �Cash dividends on common stock Changes in other capital surplus Net income for the year ended December 31, 2020 Other comprehensive income (loss), net of tax for the year ended December 31, 2020 Total comprehensive income (loss) Disposal of equity instruments investments measured at fair value through other comprehensive income Balance on December 31, 2020
	Code		A1 B1 B5 C17 D1 D3 D5 Z1 B1 B5 C17 D1 D3 D5 Z1 Q1 Q1

156

English Translation of Financial Statements Originally Issued in Chinese CATHAY REAL ESTATE DEVELOPMENT CO., LTD. Parent Company Only Statements of Cash Flows For the Years Ended December 31, 2020 and 2019

==> picture [363 x 477] intentionally omitted <==

----- Start of picture text -----

(Expressed in thousands of New Taiwan Dollars)
2020 2019
Code Items Amount Amount
AAAA Cash flows from operating activities
A10000 Net income before tax $1,648,236 $1,504,687
A20000 Adjustments:
A20100 Depreciation 224,971 212,170
A20200 Amortization 877 734
A20300 Expected credit loss (gain) (34) 32
A20900 Interest expenses 72,909 9,911
A21200 Interest income (1,156) (2,613)
A21300 Dividend income (117,922) (97,167)
A22400 Share of profit or loss of subsidiaries, associates and joint ventures 399,266 50,775
A22500 Loss (gain) on disposal of property, plant and equipment (972) (2,338)
A23100 Loss (gain) on disposal of investments (87,569) -
A23900 Unrealized sales profit (loss) 30,259 -
A29900 Others (2,575) -
A30000 Changes in operating assets and liabilities:
A31130 Decrease (increase) in notes receivable 7,521 (15,884)
A31150 Decrease (increase) in accounts receivable (185,272) 272,916
A31180 Decrease (increase) in other receivables (3,439) (7,374)
A31200 Decrease (increase) in inventories (542,168) (540,272)
A31230 Decrease (increase) in prepayments (1,700) 117,845
A31240 Decrease (increase) in other current assets (49,435) 304,431
A31270 Decrease (increase) in incremental costs of obtaining contracts 38,731 (190,163)
A31990 Decrease (increase) in other operating assets 61,809 242,278
A32125 Increase (decrease) in contract liabilities 894,784 (99,914)
A32130 Increase (decrease) in notes payable (83,411) 53,828
A32150 Increase (decrease) in accounts payable 415,767 48,539
A32160 Increase (decrease) in accounts payable-related parties (162,240) (379,268)
A32180 Increase (decrease) in other payables 158,946 (6,922)
A32230 Increase (decrease) in other current liabilities (113,656) 66,051
A33000 Cash inflow generated from operations 2,602,527 1,542,282
A33100 Interested received 1,154 1,307
A33500 Income taxes paid (104,687) (92,101)
AAAA Net cash generated by operating activities 2,498,994 1,451,488
BBBB Cash flow from investing activities
B00010 Acquisition of financial assets at fair value through other comprehensive income - (67,123)
B00030 Return of capital deduction from financial assets at fair value through other comprehensive income - 4,975
B01800 Acquisition of investment accounted for using equity method (1,119,247) (400,000)
B01900 Disposal of investment accounted for using equity method 8,796 -
B02400 Return of capital deduction from investment accounted for using equity method - 354,661
B02700 Acquisition of property, plant and equipment (17,561) (26,153)
B02800 Disposal of property, plant and equipment 7,957 4,141
B04500 Acquisition of intangible assets (2,324) (1,489)
B05350 Acquisition of right-of-use assets - (7,606)
B06700 Increase in other non-current assets (304,982) -
B06800 Decrease in other non-current assets - 107,231
B07600 Dividends received 261,279 103,453
BBBB Net cash generated by (used in) investing activities (1,166,082) 72,090
CCCC Cash flow from financing activities
C00200 Decrease in short-term loans (290,000) (1,250,000)
C00500 Increase in short-term notes payable 919,314 499,540
C01600 Proceeds from long-term loans 3,729,741 4,799,510
C01700 Repayment of long-term loans (3,899,510) (2,198,050)
C04020 Repayment of principal of lease liabilities (20,223) (9,677)
C04400 Decrease in other non-current liabilities (66,874) (2,722)
C04500 Payment of cash dividends (1,159,561) (2,435,078)
C05600 Interests paid (214,164) (214,335)
C09900 Other financing activities (429) -
CCCC Net cash used in financing activities (1,001,706) (810,812)
EEEE Net increase in cash and cash equivalents 331,206 712,766
E00100 Cash and cash equivalents, beginning of period 1,638,228 925,462
E00200 Cash and cash equivalents, end of period $1,969,434 $1,638,228
----- End of picture text -----

(The accompanying notes are an integral part of these parent company only financial statements)

157

English Translation of I Financial Statements Originally Issued in Chinese

Cathay Real Estate Development Co., Ltd.

Notes to Parent Company Only Financial Statements For the Years Ended December 31, 2020 and 2019

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

1. HISTORY AND ORGANIZATION

Cathay Real Estate Development Co., Ltd. (the “Company”) was incorporated on December 1, 1964. The main businesses of the company are entrusted the manufacturer to build residential and commercial buildings for leasing or selling.

The Company is located at 2F., No. 218, Sec. 2, Dunhua S. Rd., Da’an Dist., Taipei City 106, Taiwan (R.O.C.) and has been listed on Taiwan Stock Exchange (TWSE) since October 1967.

2. DATE AND PROCEDURES OF AUTHORIZATION OF FINANCIAL STATEMENTS FOR ISSUE

The parent company only financial statements for the years ended December 31, 2020 and 2019 were authorized for issue by the Board of Directors on March 18, 2021.

3. APPLICATION OF NEWLY ISSUED OR REVISED STANDARDS AND INTERPRETATIONS

(1) Changes in accounting policies resulting from applying for the first time certain standards and amendments

The Company applied for the first time International Financial Reporting Standards, International Accounting Standards, and Interpretations issued, revised or amended which are endorsed by Financial Supervisory Commission (“FSC”) and become effective for annual periods beginning on or after January 1, 2020. The adoption of these new standards and amendments had no material impact on the Company.

(2) Standards or interpretations issued, revised or amended, by International Accounting Standards Board (“IASB”) which are endorsed by FSC, but not yet adopted by the Company as at the end of the reporting period are listed below.

Items	New,Revised or Amended Standards and Interpretations	Effective Date issued byIASB
1	Interest Rate Benchmark Reform - Phase 2 (Amendments to IFRS 9, IAS 39, IFRS 7,IFRS 4 and IFRS 16)	1 January 2021

158

English Translation of Financial Statements Originally Issued in Chinese

A. Interest Rate Benchmark Reform - Phase 2 (Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16)

The final phase amendments mainly relate to the effects of the interest rate benchmark reform on the companies’ financial statements:

a. A company will not have to derecognize or adjust the carrying amount of financial instruments for changes to contractual cash flows as required by the reform, but will instead update the effective interest rate to reflect the change to the alternative benchmark rate;
b. A company will not have to discontinue its hedge accounting solely because it makes changes required by the reform, if the hedge meets other hedge accounting criteria; and
c. A company will be required to disclose information about new risks arising from the reform and how it manages the transition to alternative benchmark rates.

The abovementioned amendments that are applicable for annual periods beginning on or after January 1, 2021 have no material impact on the Company.

(3) Standards or interpretations issued, revised or amended, by IASB which are not endorsed by FSC, and not yet adopted by the Company as at the end of the reporting period are listed below.

Items	New,Revised or Amended Standards and Interpretations	Effective Date issued byIASB
1	IFRS 10 “Consolidated Financial Statements” and IAS 28 “Investments in Associates and Joint Ventures” - Sale or Contribution of Assets between an Investor and its Associate or Joint Ventures	To be determined by IASB
2	IFRS 17 “Insurance Contracts”	1 January2023
3	Classification of Liabilities as Current or Non-current – Amendments to IAS 1	1 January2023
4	Narrow-scope amendments of IFRS, including Amendments to IFRS 3, Amendments to IAS 16,Amendments to IAS 37 and the Annual Improvements	1 January 2022
5	Disclosure Initiative - AccountingPolicies - Amendments to IAS 1	1 January2023
6	Definition of AccountingEstimates - Amendments to IAS 8	1 January2023

A. IFRS 10“Consolidated Financial Statements” and IAS 28“Investments in Associates and Joint Ventures” - Sale or Contribution of Assets between an Investor and its Associate or Joint Ventures

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The amendments address the inconsistency between the requirements in IFRS 10 Consolidated Financial Statements and IAS 28 Investments in Associates and Joint Ventures , in dealing with the loss of control of a subsidiary that is contributed to an associate or a joint venture. IAS 28 restricts gains and losses arising from contributions of non-monetary assets to an associate or a joint venture to the extent of the interest attributable to the other equity holders in the associate or joint ventures. IFRS 10 requires full profit or loss recognition on the loss of control of the subsidiary. IAS 28 was amended so that the gain or loss resulting from the sale or contribution of assets that constitute a business as defined in IFRS 3 between an investor and its associate or joint venture is recognized in full.

IFRS 10 was also amended so that the gains or loss resulting from the sale or contribution of a subsidiary that does not constitute a business as defined in IFRS 3 between an investor and its associate or joint venture is recognized only to the extent of the unrelated investors’ interests in the associate or joint venture.

B. IFRS 17 “Insurance Contracts”

IFRS 17 provides a comprehensive model for insurance contracts, covering all relevant accounting aspects (including recognition, measurement, presentation and disclosure requirements). The core of IFRS 17 is the General (building block) Model, under this model, on initial recognition, an entity shall measure a group of insurance contracts at the total of the fulfilment cash flows and the contractual service margin. The fulfilment cash flows comprise of the following:

a. estimates of future cash flows;
b. Discount rate: an adjustment to reflect the time value of money and the financial risks related to the future cash flows, to the extent that the financial risks are not included in the estimates of the future cash flows; and
c. a risk adjustment for non-financial risk.

The carrying amount of a group of insurance contracts at the end of each reporting period shall be the sum of the liability for remaining coverage and the liability for incurred claims.

Other than the General Model, the standard also provides a specific adaptation for contracts with:

a. direct participation features (the Variable Fee Approach);
b. simplified approach (Premium Allocation Approach) mainly for short-duration contracts.

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IFRS 17 was issued in May 2017 and it was amended in June 2020. The amendments include deferral of the date of initial application of IFRS 17 by two years to annual beginning on or after 1 January 2023 (from the original effective date of 1 January 2021); provide additional transition reliefs; simplify some requirements to reduce the costs of applying IFRS 17 and revise some requirements to make the results easier to explain. IFRS 17 replaces an interim Standard – IFRS 4 Insurance Contracts – from annual reporting periods beginning on or after 1 January 2023.

C. Classification of Liabilities as Current or Non-current - Amendments to IAS 1

These are the amendments to paragraphs 69-76 of IAS 1 Presentation of Financial statements and the amended paragraphs related to the classification of liabilities as current or non-current.

D. Narrow-scope amendments of IFRS, including Amendments to IFRS 3, Amendments to IAS 16, Amendments to IAS 37 and the Annual Improvements
a. Updating a Reference to the Conceptual Framework (Amendments to IFRS 3) The amendments updated IFRS 3 by replacing a reference to an old version of the Conceptual Framework for Financial Reporting with a reference to the latest version, which was issued in March 2018. The amendments also added an exception to the recognition principle of IFRS 3 to avoid the issue of potential “day 2” gains or losses arising for liabilities and contingent liabilities. Besides, the amendments clarify existing guidance in IFRS 3 for contingent assets that would not be affected by replacing the reference to the Conceptual Framework.
b. Property, Plant and Equipment: Proceeds before Intended Use (Amendments to IAS 16)

The amendments prohibit a company from deducting from the cost of property, plant and equipment amounts received from selling items produced while the company is preparing the asset for its intended use. Instead, a company will recognize such sales proceeds and related cost in profit or loss.

c. Onerous Contracts - Cost of Fulfilling a Contract (Amendments to IAS 37)

The amendments clarify what costs a company should include as the cost of fulfilling a contract when assessing whether a contract is onerous.

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d. Annual Improvements to IFRS Standards 2018 - 2020

Amendment to IFRS 1

The amendment simplifies the application of IFRS 1 by a subsidiary that becomes a first-time adopter after its parent in relation to the measurement of cumulative translation differences.

Amendment to IFRS 9 Financial Instruments

The amendment clarifies the fees a company includes when assessing whether the terms of a new or modified financial liability are substantially different from the terms of the original financial liability.

Amendment to Illustrative Examples Accompanying IFRS 16 Leases

The amendment to Illustrative Example 13 accompanying IFRS 16 modifies the treatment of lease incentives relating to lessee’s leasehold improvements.

Amendment to IAS 41

The amendment removes a requirement to exclude cash flows from taxation when measuring fair value thereby aligning the fair value measurement requirements in IAS 41 with those in other IFRS Standards.

E. Disclosure Initiative - Accounting Policies - Amendments to IAS 1

The amendments improve accounting policy disclosures that to provide more useful information to investors and other primary users of the financial statements.

F. Definition of Accounting Estimates - Amendments to IAS 8

The amendments introduce the definition of accounting estimates and included other amendments to IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors to help companies distinguish changes in accounting estimates from changes in accounting policies.

The abovementioned standards and interpretations issued by IASB have not yet endorsed by FSC at the date when the Company financial statements were authorized for issue, the local effective dates are to be determined by FSC. The new or amended standards and interpretations have no material impact on the Company.

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4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(1) Statement of compliance

The parent company only financial statements of the Company for the years ended December 31, 2020 and 2019 have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers (“the Regulations”).

(2) Basis of preparation

The Company prepares parent company only financial reports based on the Regulations Governing the Preparation of Financial Reports by Securities Issuers. According to the provisions of Article 21, the profit or loss during the period and other comprehensive income presented in parent company only financial reports shall be the same as the allocations of profit or loss during the period and of other comprehensive income attributable to owners of the parent presented in the financial reports prepared on a consolidated basis, and the owners' equity presented in the parent company only financial reports shall be the same as the equity attributable to owners of the parent presented in the financial reports prepared on a consolidated basis. Therefore, the investment of subsidiaries is expressed as “investment using the equity method” and adjusted for necessary evaluation.

The parent company only financial statements have been prepared on a historical cost basis, except for financial instruments that have been measured at fair value. The parent company only financial statements are expressed in thousands of New Taiwan Dollars (“NT$”) unless otherwise stated.

(3) Foreign currency transactions

The Company’s parent company only financial statements are presented in NT$, which is also the Company’s functional currency.

Transactions in foreign currencies are initially recorded by the Company entities at their respective functional currency rates prevailing at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the functional currency closing rate of exchange ruling at the reporting date. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value is determined. Non-monetary items that are measured at historical cost in a foreign currency are translated using the exchange rates as at the dates of the initial transactions.

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All exchange differences arising on the settlement of monetary items or on translating monetary items are taken to profit or loss in the period in which they arise except for the following:

A. Exchange differences arising from foreign currency borrowings for an acquisition of a qualifying asset to the extent that they are regarded as an adjustment to interest costs are included in the borrowing costs that are eligible for capitalization.
B. Foreign currency items within the scope of IFRS 9 Financial Instruments are accounted for based on the accounting policy for financial instruments.
C. Exchange differences arising on a monetary item that forms part of a reporting entity’s net investment in a foreign operation is recognized initially in other comprehensive income and reclassified from equity to profit or loss on disposal of the net investment.

When a gain or loss on a non-monetary item is recognized in other comprehensive income, any exchange component of that gain or loss is recognized in other comprehensive income. When a gain or loss on a non-monetary item is recognized in profit or loss, any exchange component of that gain or loss is recognized in profit or loss.

(4) Translation of financial statements in foreign currency

The assets and liabilities of foreign operations are translated into NT$ at the closing rate of exchange prevailing at the reporting date and their income and expenses are translated at an average rate for the period. The exchange differences arising on the translation are recognized in other comprehensive income. On the disposal of a foreign operation, the cumulative amount of the exchange differences relating to that foreign operation, recognized in other comprehensive income and accumulated in the separate component of equity, is reclassified from equity to profit or loss when the gain or loss on disposal is recognized. The following are accounted for as disposals even if an interest in the foreign operation is retained by the Company: the loss of control over a foreign operation, the loss of significant influence over a foreign operation, or the loss of joint control over a foreign operation.

On the partial disposal of a subsidiary that includes a foreign operation that does not result in a loss of control, the proportionate share of the cumulative amount of the exchange differences recognized in other comprehensive income is re-attributed to the non-controlling interests in that foreign operation. In partial disposal of an associate or jointly controlled entity that includes a foreign operation that does not result in a loss of significant influence or joint control, only the proportionate share of the cumulative amount of the exchange differences recognized in other comprehensive income is reclassified to profit or loss.

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Any goodwill and any fair value adjustments to the carrying amounts of assets and liabilities arising on the acquisition of a foreign operation are treated as assets and liabilities of the foreign operation and expressed in its functional currency.

(5) Current and non-current distinction

The following asset is classified as current. All other assets are classified as non-current:

A. The Company expects to realize the asset, or intends to sell or consume it, in its normal operating cycle
B. The Company holds the asset primarily for trading
C. The Company expects to realize the asset within twelve months after the reporting period
D. The asset is cash or cash equivalent unless the asset is restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period

The following liability is classified as current. All other liabilities are classified as non-current:

A. The Company expects to settle the liability in its normal operating cycle
B. The Company holds the liability primarily for trading
C. The liability is due to be settled within twelve months after the reporting period
D. The Company does not have an unconditional right to defer settlement of the liability for at least twelve months after the reporting period. Terms of a liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not affect its classification

(6) Cash and cash equivalents

Cash and cash equivalents comprises cash on hand, demand deposits and short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value (including time deposits with maturing of less than 12 months).

(7) Financial instruments

Financial assets and financial liabilities are recognized when the Company becomes a party to the contractual provisions of the instrument.

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Financial assets and financial liabilities within the scope of IFRS 9 Financial Instruments are recognized initially at fair value plus or minus, in the case of investments not at fair value through profit or loss, directly attributable transaction costs.

A. Financial instruments: Recognition and Measurement

The Company accounts for regular way purchase or sales of financial assets on the trade date.

The Company classified financial assets as subsequently measured at amortized cost, fair value through other comprehensive income based on both:

a. the Company’s business model for managing the financial assets and
b. the contractual cash flow characteristics of the financial asset.

Financial assets measured at amortized cost

A financial asset is measured at amortized cost if both of the following conditions are met and presented as notes receivable, accounts receivable, financial assets measured at amortized cost and other receivables etc., on balance sheet as at the reporting date:

a. the financial asset is held within a business model whose objective is to hold financial assets to collect contractual cash flows and
b. the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

Such financial assets are subsequently measured at amortized cost (the amount at which the financial asset is measured at initial recognition minus the principal repayments, plus or minus the cumulative amortization using the effective interest method of any difference between the initial amount and the maturity amount and adjusted for any loss allowance) and is not part of a hedging relationship. A gain or loss is recognized in profit or loss when the financial asset is derecognized, through the amortization process or to recognize the impairment gains or losses.

Interest revenue is calculated by using the effective interest method. This is calculated by applying the effective interest rate to the gross carrying amount of a financial asset except for:

a. purchased or originated credit-impaired financial assets. For those financial assets, the Company applies the credit-adjusted effective interest rate to the amortized cost of the financial asset from initial recognition.

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b. financial assets that are not purchased or originated credit-impaired financial assets but subsequently have become credit-impaired financial assets. For those financial assets, the Company applies the effective interest rate to the amortized cost of the financial asset in subsequent reporting periods.

Financial asset measured at fair value through other comprehensive income

A financial asset is measured at fair value through other comprehensive income if both of the following conditions are met:

a. the financial asset is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets and
b. the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

Recognition of gain or loss on a financial asset measured at fair value through other comprehensive income are described as below:

a. A gain or loss on a financial asset measured at fair value through other comprehensive income should be recognized in other comprehensive income, except for impairment gains or losses and foreign exchange gains and losses, until the financial asset is derecognized or reclassified.
b. When the financial asset is derecognized, the cumulative gain or loss previously recognized in other comprehensive income should be reclassified from equity to profit or loss as a reclassification adjustment.
c. Interest revenue calculated by using the effective interest method (effective interest rate times the carrying amount of the financial asset) or the method stated below should be recognized in profit or loss.
i. For purchased or originated credit-impaired financial assets, the Company applies the credit-adjusted effective interest rate to the amortized cost of the financial asset.
ii. For financial assets that are not purchased or originated credit-impaired financial assets but subsequently become credit-impaired financial assets, the Company applies the effective interest rate to the amortized cost of the financial asset in subsequent reporting periods.

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equity is transferred directly to the retained earnings) and these investments should be presented as financial assets measured at fair value through other comprehensive income on the balance sheet. Dividends on such investment are recognized in profit or loss unless the dividends clearly represents a recovery of part of the cost of investment.

B. Impairment of financial assets

The Company recognizes a loss allowance for expected credit losses on debt instrument investments measured at fair value through other comprehensive income and financial asset measured at amortized cost. The loss allowance on debt instrument investments measured at fair value through other comprehensive income is recognized in other comprehensive income and not reduce the carrying amount in the statement of financial position.

The Company measures expected credit losses of a financial instrument in a way that reflects:

a. an unbiased and probability-weighted amount that is determined by evaluating a range of possible outcomes;
b. the time value of money; and
c. reasonable and supportable information that is available without undue cost or effort at the reporting date about past events, current conditions and forecasts of future economic conditions.

The loss allowance is measured as follows:

a. At an amount equal to 12-month expected credit losses: the credit risk on a financial asset has not increased significantly since initial recognition or the financial asset is determined to have low credit risk at the reporting date. In addition, the Company measures the loss allowance for a financial asset at an amount equal to lifetime expected credit losses in the previous reporting period, but determines at the current reporting date that condition is no longer met.
b. At an amount equal to the lifetime expected credit losses: the credit risk on a financial asset has increased significantly since initial recognition or financial asset that is purchased or originated credit-impaired financial asset.
c. For trade receivables or contract assets arising from transactions within the scope of IFRS 15, the Company measures the loss allowance at an amount equal to lifetime expected credit losses.
d. For lease receivables arising from transactions within the scope of IFRS 16, The Company measures the loss allowance at an amount equal to lifetime expected credit losses.

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At each reporting date, the Company needs to assess whether the credit risk on a financial asset has been increased significantly since initial recognition by comparing the risk of a default occurring at the reporting date and the risk of default occurring at initial recognition. Please refer to Note 12 for further details on credit risk.

C. Derecognition of financial assets

A financial asset is derecognized when:

a. The rights to receive cash flows from the asset have expired
b. The Company has transferred the asset and substantially all the risks and rewards of the asset have been transferred
c. The Company has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset

On derecognition of a financial asset in its entirety, the difference between the carrying amount and the consideration received or receivable including any cumulative gain or loss that had been recognized in other comprehensive income, is recognized in profit or loss.

D. Financial liabilities and equity

Classification between liabilities or equity

The Company classifies the instrument issued as a financial liability or an equity instrument in accordance with the substance of the contractual arrangement and the definitions of a financial liability, and an equity instrument.

Equity instruments

An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. The transaction costs of an equity transaction are accounted for as a deduction from equity (net of any related income tax benefit) to the extent they are incremental costs directly attributable to the equity transaction that otherwise would have been avoided.

Financial liabilities

Financial liabilities within the scope of IFRS 9 Financial Instruments are classified as financial liabilities at fair value through profit or loss or financial liabilities measured at amortized cost.

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Financial liabilities at amortized cost

Financial liabilities measured at amortized cost include interest bearing loans and borrowings that are subsequently measured using the effective interest rate method after initial recognition. Gains and losses are recognized in profit or loss when the liabilities are derecognized as well as through amortization process of the effective interest rate method.

Amortized cost is calculated by considering any discount or premium on acquisition and fees or transaction costs.

Derecognition of financial liabilities

A financial liability is derecognized when the obligation under the liability is discharged or cancelled or expired.

When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified (whether or not attributable to the financial difficulty of the debtor), such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognized in profit or loss.

E. Offsetting of financial instruments

Financial assets and financial liabilities are offset and the net amount reported in the balance sheet if, and only if, there is a currently enforceable legal right to offset the recognized amounts and there is an intention to settle on a net basis, or to realize the assets and settle the liabilities simultaneously.

(8) Fair value

A fair value measurement assumes that the asset or liability is exchanged in an orderly transaction between market participants to sell the asset or transfer the liability at the measurement date under current market conditions. A fair value measurement assumes that the transaction to sell the asset or transfer the liability takes place either:

A. in the principal market for the asset or liability; or
B. in the absence of a principal market, in the most advantageous market for the asset or liability.

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The main or the most advantageous market must enter by the Company to conduct transaction.

An entity shall measure the fair value of an asset or a liability using the assumptions that market participants would use when pricing the asset or liability, if market participants act in their economic best interest.

A fair value measurement of a non-financial asset considers a market participant’s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.

The Company adopts the appropriate valuation technique(s) to use when measuring fair value. The valuation technique(s) used should maximize the use of relevant observable inputs and minimize unobservable inputs.

(9) Inventories

Inventories, including construction land, construction in progress and building and land for sale, are stated at the cost in the basis of the account. The construction land transfer to property under construction during actively developed and capitalize financial cost during actively developed or construction period.

Inventories are valued at lower of cost and net realizable value item by item. Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale.

The Company's contract incremental cost is the commission generated by the acquisition of the presold house contract. The customer's signing of the presold contract has not fulfilled the performance obligation because the goods promised to have not been transferred to the customer. According IFRS 15, the sales commission is the incremental cost of acquisition the presold house contract. When the house is transferred to the customer and fulfill the performance obligation, the incremental cost of obtaining the contract is be amortized.

Rendering of services is accounted in accordance with IFRS 15 but not within the scoping of inventories.

(10) Investments accounted for using the equity method

The Company's investment in subsidiaries is based on the provisions of Article 21 of the Regulations Governing the Preparation of Financial Reports by Securities Issuers, and is expressed in the equity method of investment and adjusted as necessary. The profit or loss

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during the period and other comprehensive income presented in the parent company only financial reports shall be the same as the allocations of profit or loss during the period and of other comprehensive income attributable to owners of the parent presented in the financial reports prepared on a consolidated basis, and the owners' equity presented in the parent company only financial reports shall be the same as the equity attributable to owners of the parent presented in the financial reports prepared on a consolidated basis. These adjustments mainly consider the difference raised from the accounting of investment subsidiaries in accordance with IFRS No.10 and the applicable IFRS at different levels of parent company only reporting. These adjustments are recognized in the following subjects: Investments accounted for using the equity method, share of profit of associates and joint ventures, Share of other comprehensive income of associates and joint ventures. The Company's investment in related companies using equity method excluding the assets held for sale. The company is an associates company if it has significant influence. A joint venture is a type of joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the joint venture.

Under the equity method, the investment in the associate is carried in the balance sheet at cost and adjusted thereafter for the post-acquisition change in the Company’s share of net assets of the associate. After the interest in the associate is reduced to zero, additional losses are provided for, and a liability is recognized, only to the extent that the Company has incurred legal or constructive obligations or made payments on behalf of the associate. Unrealized gains and losses resulting from transactions between the Company and the associate are eliminated to the extent of the Company’s related interest in the associate.

When changes in the net assets of an associate occur and not those that are recognized in profit or loss or other comprehensive income and do not affects the Company’s percentage of ownership interests in the associate, the Company recognizes such changes in equity based on its percentage of ownership interests. The resulting capital surplus recognized will be reclassified to profit or loss at the time of disposing the associate on a prorate basis.

When the associate issues new stock, and the Company’s interest in an associate is reduced or increased as the Company fails to acquire shares newly issued in the associate proportionately to its original ownership interest, the increase or decrease in the interest in the associate is recognized in additional paid in capital and investment in associate. When the interest in the associate is reduced, the cumulative amounts previously recognized in other comprehensive income are reclassified to profit or loss or other appropriate items. The aforementioned capital surplus recognized is reclassified to profit or loss on a prorate basis when the Company disposes of the associate.

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The financial statements of the associate are prepared for the same reporting period as the Company. Where necessary, adjustments are made to bring the accounting policies in line with those of the Company.

The Company determines at each reporting date whether there is any objective evidence that the investment in the associate is impaired in accordance with IAS 28 Investments in Associates and Joint Ventures . If this is the case the Company calculates the amount of impairment as the difference between the recoverable amount of the associate and its carrying value and recognizes the amount in the ‘share of profit or loss of an associate’ in the statement of comprehensive income in accordance with IAS 36 Impairment of Assets. In determining the value in use of the investment, the Company estimates:

A. Its share of the present value of the estimated future cash flows expected to be generated by the associate, including the cash flows from the operations of the associate and the proceeds on the ultimate disposal of the investment.
B. The present value of the estimated future cash flows expected to arise from dividends to be received from the investment and from its ultimate disposal.

Upon loss of significant influence over the associate, the Company measures and recognizes any retaining investment at its fair value. Any difference between the carrying amount of the associate upon loss of significant influence and the fair value of the retaining investment and proceeds from disposal is recognized in profit or loss. The Company recognizes its interest in the jointly controlled entities using the equity method continuously.

(11) Property, plant and equipment

Property, plant and equipment are stated at cost, net of accumulated depreciation and accumulated impairment losses, if any. Such cost includes the cost of dismantling and removing the item and restoring the site on which it is located and borrowing costs for construction in progress if the recognition criteria are met. Each part of an item of property, plant and equipment with a cost that is significant in relation to the total cost of the item is depreciated separately. When significant parts of property, plant and equipment are required to be replaced in intervals, the Company recognized such parts as individual assets with specific useful lives and depreciation, respectively. The carrying amount of those parts that are replaced is derecognized in accordance with the derecognition provisions of IAS 16 Property, plant and equipment. When a major inspection is performed, its cost is recognized in the carrying amount of the plant and equipment as a replacement if the recognition criteria are satisfied. All other repair and maintenance costs are recognized in gain or loss as incurred.

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Depreciation is calculated on a straight-line basis over the estimated economic lives of the following assets:

Buildings: 5~50 years Leased assets: 5 years

Leasehold improvements: The shorter of lease terms or economic useful lives Other equipment:3~10 years

An item of property, plant and equipment and any significant part initially recognized is derecognized upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset is recognized in profit or loss.

The assets’ residual values, useful lives and methods of depreciation are reviewed at each financial year end and adjusted prospectively, if appropriate.

(12) Investment property

The Company’s owned investment properties are measured initially at cost, including transaction costs. The carrying amount includes the cost of replacing part of an existing investment property at the time that cost is incurred if the recognition criteria are met and excludes the costs of day-to-day servicing of an investment property. Subsequent to initial recognition, other than those that meet the criteria to be classified as held for sale (or are included in a disposal group that is classified as held for sale) in accordance with IFRS 5 Noncurrent Assets Held for Sale and Discontinued Operations , investment properties are measured using the cost model in accordance with the requirements of IAS 16 Property, plant and equipment for that model. If investment properties are held by a lessee as right-of-use assets and is not held for sale in accordance with IFRS 5, investment properties are measured in accordance with the requirements of IFRS 16.

Depreciation is calculated on a straight-line basis over the estimated economic lives of the following assets:

Buildings 4~50 years

Investment properties are derecognized when either they have been disposed of or when the investment property is permanently withdrawn from use and no future economic benefit is expected from its disposal. The difference between the net disposal proceeds and the carrying amount of the asset is recognized in profit or loss in the period of derecognition.

The Company transfers to or from investment properties when there is a change in use for these assets.

Properties are transferred to or from investment properties when the properties meet, or cease to meet, the definition of investment property and there is evidence of the change in use.

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(13) Leases

The Company assesses whether the contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset for a period of time, the Company assesses whether, throughout the period of use, has both of the following:

A. the right to obtain substantially all of the economic benefits from use of the identified asset; and
B. the right to direct the use of the identified asset.

For a contract that is, or contains, a lease, the Company accounts for each lease component within the contract as a lease separately from non-lease components of the contract. For a contract that contains a lease component and one or more additional lease or non-lease components, the Company 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 standalone price of the non-lease components. The relative stand-alone price of lease and non-lease components shall be determined on the basis of the price received by the lessor, or a similar supplier, would charge the Company for that component, or a similar component, separately. If an observable stand-alone price is not readily available, The Company estimates the standalone price, maximizing the use of observable information.

For the rent concession arising as a direct consequence of the covid-19 pandemic, the Company elected not to assess whether it is a lease modification but accounted it as a variable lease payment. And this practical expedient has been applied to all eligible rent concessions.

Company as a lessee

Except for leases that meet and elect short-term leases or leases of low-value assets, the Company recognizes right-of-use asset and lease liability for all leases which the Company is the lessee of those lease contracts.

At the commencement date, the Company measures the lease liability at the present value of the lease payments that are not paid at that date. The lease payments are discounted using the interest rate implicit in the lease, if that rate can be readily determined. If that rate cannot be readily determined, the Company uses its incremental borrowing rate. At the commencement date, the lease payments included in the measurement of the lease liability comprise the following payments for the right to use the underlying asset during the lease term that are not paid at the commencement date:

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A. fixed payments (including in-substance fixed payments), less any lease incentives receivable;
B. variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the commencement date;
C. amounts expected to be payable by the lessee under residual value guarantees;
D. the exercise price of a purchase option if the Company is reasonably certain to exercise that option; and
E. payments of penalties for terminating the lease, if the lease term reflects the lessee exercising an option to terminate the lease.

After the commencement date, the Company measures the lease liability on an amortized cost basis, which increases the carrying amount to reflect interest on the lease liability by using an effective interest method; and reduces the carrying amount to reflect the lease payments made.

At the commencement date, the Company measures the right-of-use asset at cost. The cost of the right-of-use asset comprises:

A. the amount of the initial measurement of the lease liability;
B. any lease payments made at or before the commencement date, less any lease incentives received;
C. any initial direct costs incurred by the lessee; and
D. an estimate of costs to be incurred by the lessee in dismantling and removing the underlying asset, restoring the site on which it is located or restoring the underlying asset to the condition required by the terms and conditions of the lease.

For subsequent measurement of the right-of-use asset, the Company measures the right-ofuse asset at cost less any accumulated depreciation and any accumulated impairment losses. That is, the Company measures the right-of-use applying a cost model.

If the lease transfers ownership of the underlying asset to the Company by the end of the lease term or if the cost of the right-of-use asset reflects that the Company will exercise a purchase option, the Company depreciates the right-of-use asset from the commencement date to the end of the useful life of the underlying asset. Otherwise, the Company depreciates the rightof-use asset from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term.

The Company applies IAS 36 “Impairment of Assets” to determine whether the right-of-use asset is impaired and to account for any impairment loss identified.

Except for those leases that the Company accounted for as short-term leases or leases of lowvalue assets, the Company presents right-of-use assets and lease liabilities in the balance sheet and separately presents lease-related interest expense and depreciation charge in the income statement.

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For short-term leases or leases of low-value assets, the Company elects to recognize the lease payments associated with those leases as an expense on either a straight-line basis over the lease term or another systematic basis.

Company as a lessor

At inception of a contract, the Company classifies each of its leases as either an operating lease or a finance lease. A lease is classified as a finance lease if it transfers substantially all the risks and rewards incidental to ownership of an underlying asset. A lease is classified as an operating lease if it does not transfer substantially all the risks and rewards incidental to ownership of an underlying asset. At the commencement date, the Company recognizes assets held under a finance lease in its balance sheet and present them as a receivable at an amount equal to the net investment in the lease.

For a contract that contains lease components and non-lease components, the Company allocates the consideration in the contract applying IFRS 15.

The Company recognizes lease payments from operating leases as rental income on either a straight-line basis or another systematic basis. Variable lease payments for operating leases that do not depend on an index or a rate are recognized as rental income when incurred.

(14) Intangible assets

Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets acquired in a business combination is its fair value as at the date of acquisition. Following initial recognition, intangible assets are carried at cost less any accumulated amortization and accumulated impairment losses, if any. Internally generated intangible assets, excluding capitalized development costs, are not capitalized and expenditure is reflected in profit or loss for the year in which the expenditure is incurred.

The useful lives of intangible assets are assessed as either finite or indefinite.

Intangible assets with finite lives are amortized over the useful economic life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortization period and the amortization method for an intangible asset with a finite useful life is reviewed at least at the end of each financial year. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset is accounted for by changing the amortization period or method, as appropriate, and are treated as changes in accounting estimates.

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Intangible assets with indefinite useful lives are not amortized, but are tested for impairment annually, either individually or at the cash-generating unit level. The assessment of indefinite life is reviewed annually to determine whether the indefinite life continues to be supportable. If not, the change in useful life from indefinite to finite is made on a prospective basis.

Gains or losses arising from derecognition of an intangible asset are recognized in profit or loss when the asset is derecognized.

Computer software

The cost of computer software is amortized on a straight-line basis over the estimated useful life (3 years).

(15) Impairment of non-financial assets

The Company assesses at the end of each reporting period whether there is any indication that an asset in the scope of IAS 36 Impairment of Assets may be impaired. If any such indication exists, or when annual impairment testing for an asset is required, the Company estimates the asset’s recoverable amount. An asset’s recoverable amount is the higher of an asset’s or cashgenerating unit’s (“CGU”) 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 groups of assets. Where the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount.

For assets excluding goodwill, an assessment is made at each reporting date as to whether there is any indication that previously recognized impairment losses may no longer exist or may have decreased. If such indication exists, the Company estimates the asset’s or cashgenerating unit’s recoverable amount. A previously recognized impairment loss is reversed only if there has been an increase in the estimated service potential of an asset which in turn increases the recoverable amount. However, the reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognized for the asset in prior years.

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An impairment loss of continuing operations or a reversal of such impairment loss is recognized in profit or loss.

(16) Revenue recognition

The Company’s revenue arising from contracts with customers mainly includes sale of buildings and land. The accounting policies for the Company’s types of revenue are explained as follows:

Construction income

The Company entrusts construction companies in construction and planning of public housing is recognized as sales revenue in accordance with the IFRS 15 about the regulation of sales of goods. Therefore, the Company recognize profit and loss when the ownership transferred.

Before the recognition of the income, the down payment and installment received for the sale of the premises are recognized as contract liabilities in the current liabilities of the balance sheet.

(17) Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period to get ready for its intended use or sale are capitalized as part of the cost of the respective assets. All other borrowing costs are expensed in the period they occur. Borrowing costs consist of interests and other costs that an entity incurs relating to the borrowing of funds.

(18) Retirement benefits plans

All regular employees of the Company are entitled to a pension plan that is managed by an independently administered pension fund committee. Fund assets are deposited under the committee’s name in the specific bank account and hence, not associated with the Company. Therefore, fund assets are not included in the Company’s parent company only financial statements.

For the defined contribution plan, the Company will make a monthly contribution of no less than 6% of the monthly wages of the employee’s subject to the plan. The Company recognizes expenses for the defined contribution plan in the period in which the contribution becomes due.

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Post-employment benefit plan that is classified as a defined benefit plan uses the Projected Unit Credit Method to measure its obligations and costs based on actuarial assumptions. Remeasurements, comprising of the effect of the actuarial gains and losses, the effect of the asset ceiling and the return on plan assets, excluding net interest, are recognized as other comprehensive income with a corresponding debit or credit to other equity in the period in which they occur. Past service costs are recognized in profit or loss on the earlier of:

A. the date of the plan amendment or curtailment, and
B. the date that the Company recognizes restructuring-related costs or termination benefits costs

Net interest is calculated by applying the discount rate to the net defined benefit liability or asset, both as determined at the start of the annual reporting period, taking account of any changes in the net defined benefit liability (asset) during the period because of contribution and benefit payment.

(19) Income taxes

Income tax expense (income) is the aggregate amount included in the determination of profit or loss for the period in respect of current tax and deferred tax.

Current income tax

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, using the tax rates and tax laws that have been enacted or substantively enacted by the end of the reporting period. Current income tax relating to items recognized in other comprehensive income or directly in equity is recognized in other comprehensive income or equity and not in profit or loss.

The income tax for undistributed earnings is recognized as income tax expense in the subsequent year when the distribution proposal is approved by the shareholders’ meeting.

Deferred tax

Deferred tax is provided on temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.

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

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A. Where the deferred tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss.
B. In respect of taxable temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.

Deferred tax assets are recognized 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 utilized, except:

A. Where the deferred tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss.
B. In respect of deductible temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, deferred tax assets are recognized only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilized.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realized or the liability is settled, based on tax rates and tax laws that have been enacted or substantively enacted at the reporting date. The measurement of deferred tax assets and deferred tax liabilities reflects the tax consequences that would follow from the way the Company expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities. Deferred tax relating to items recognized outside profit or loss is recognized outside profit or loss. Deferred tax items are recognized in correlation to the underlying transaction either in other comprehensive income or directly in equity. Deferred tax assets are reassessed at each reporting date and are recognized accordingly.

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

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(20) Business combinations

Business combinations are accounted for using the acquisition method. The consideration transferred, the identifiable assets acquired and liabilities assumed are measured at acquisition date fair value. For each business combination, the acquirer measures any non-controlling interest in the acquiree either at fair value or at the non-controlling interest’s proportionate share of the acquiree’s identifiable net assets. Acquisition-related costs are accounted for as expenses in the periods in which the costs are incurred and are classified under administrative expenses.

If the business combination is achieved in stages, the acquisition date fair value of the acquirer’s previously held equity interest in the acquiree is remeasured to fair value at the acquisition date through profit or loss.

Any contingent consideration to be transferred by the acquirer will be recognized at the acquisition-date fair value. Subsequent changes to the fair value of the contingent consideration which is deemed to be an asset or liability, will be recognized in accordance with IFRS 9 Financial Instruments either in profit or loss or as a change to other comprehensive income. However, if the contingent consideration is classified as equity, it should not be remeasured until it is finally settled within equity.

Goodwill is initially measured as the amount of the excess of the aggregate of the consideration transferred and the non-controlling interest over the net fair value of the identifiable assets acquired and the liabilities assumed. If this aggregate is lower than the fair value of the net assets acquired, the difference is recognized in profit or loss.

After initial recognition, goodwill is measured at cost less any accumulated impairment losses. Goodwill acquired in a business combination is, from the acquisition date, allocated to each of the Company’s cash-generating units that are expected to benefit from the combination, irrespective of whether other assets or liabilities of the acquiree are assigned to those units. Each unit or group of units to which the goodwill is so allocated represents the lowest level within the Company at which the goodwill is monitored for internal management purpose and is not larger than an operating segment before aggregation.

Where goodwill forms part of a cash-generating unit and part of the operation within that unit is disposed of, the goodwill associated with the operation disposed of is included in the carrying amount of the operation. Goodwill disposed of in this circumstance is measured based on the relative recoverable amounts of the operation disposed of and the portion of the cash-generating unit retained.

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5. SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS

The preparation of the Company’s parent company only financial statements requires management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the disclosure of contingent liabilities, at the end of the reporting period. However, uncertainty about these assumption and estimate could result in outcomes that require a material adjustment to the carrying amount of the asset or liability affected in future periods.

(1) Judgement

In the process of applying the Company’s accounting policies, management has made the following judgments, which have the most significant effect on the amounts recognized in the consolidated financial statements:

Operating lease commitment-Company as the lessor

The Company has signed real estate leases for investment property portfolios. Based on the assessment of its agreed terms, the Company still retains the significant risks and rewards of ownership of these properties and treats them as operating leases.

(2) Estimates and assumptions

The key assumptions concerning the future and other key sources of estimation uncertainty at 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.

A. Fair value of financial instruments

Where the fair value of financial assets and financial liabilities recorded in the balance sheet cannot be derived from active markets, they are determined using valuation techniques including the income approach (for example the discounted cash flows model) or market approach. Changes in assumptions about these factors could affect the reported fair value of the financial instruments. Please refer to Note 12 for more details.

B. Impairment of non-financial assets

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received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date less incremental costs that would be directly attributable to the disposal of the asset or cash generating unit. The value in use calculation is based on a discounted cash flow model. The cash flows projections are derived from the budget for the next five years and do not include restructuring activities that the Company is not yet committed to or significant future investments that will enhance the asset’s performance of the cash generating unit being tested. The recoverable amount is most sensitive to the discount rate used for the discounted cash flow model as well as the expected future cash-inflows and the growth rate used for extrapolation purposes.

C. Retirement benefits plans

The cost of retirement employment benefit and the present value of the pension obligation under defined benefit pension plans are determined using actuarial valuations. An actuarial valuation involves making various assumptions. These include the determination of the discount rate, future salary increases, mortality rates and future pension increases. Please refer to Note 6 for more details.

D. Income tax

Uncertainties exist with respect to the interpretation of complex tax regulations and the amount and timing of future taxable income. Given the wide range of international business relationships and the long-term nature and complexity of existing contractual agreements, differences arising between the actual results and the assumptions made, or future changes to such assumptions, could necessitate future adjustments to tax income and expense already recorded. The Company establishes provisions, based on reasonable estimates, for possible consequences of audits by the tax authorities of the respective counties in which it operates. The amount of such provisions is based on various factors, such as experience of previous tax audits and differing interpretations of tax regulations by the taxable entity and the responsible tax authority. Such differences of interpretation may arise on a wide variety of issues depending on the conditions prevailing in the respective Company’s domicile.

Deferred tax assets are recognized for all carry forward of unused tax losses and unused tax credits and deductible temporary differences to the extent that it is probable that taxable profit will be available or there are sufficient taxable temporary differences against which the unused tax losses, unused tax credits or deductible temporary differences can be utilized. The amount of deferred tax assets determined to be recognized is based upon the likely timing and the level of future taxable profits and taxable temporary differences together with future tax planning strategies. As of December 31, 2020, the deferred income tax assets that the Company has not recognize, please refer to Note 6 for more details.

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E. Inventory evaluation

The Company must use the judgment and estimate to determine the net realizable value of the inventory at the balance sheet date, as the inventories are measured at the lower of the cost and the net realizable value. The Company assesses the amount of inventory at the balance sheet date due to market changes or no market sales value and reduces the inventory cost to the net realizable value. This inventory evaluation is mainly based on the product demand in the specific period in the future, so it may cause significant changes. Please refer to Note 6 for more details.

F. Accounts receivables-estimation of impairment loss

The Company estimates the impairment loss of accounts receivables at an amount equal to lifetime expected credit losses. The credit loss is the present value of the difference between the contractual cash flows that are due under the contract (carrying amount) and the cash flows that expects to receive (evaluate forward looking information). However, as the impact from the discounting of short-term receivables is not material, the credit loss is measured by the undiscounted cash flows. Where the actual future cash flows are lower than expected, a material impairment loss may arise. Please refer to Note 6 for more details.

6. CONTENTS OF SIGNIFICANT ACCOUNTS

(1) Cash and cash equivalents

Cash on hand and petty cash Checking accounts and demand deposit Cash equivalent-short-term notes Total	As of December 31,	As of December 31,
	2020	2019
	$291 1,439,400 529,743	$299 1,572,969 64,960
	$1,969,434	$1,638,228

The Company’s cash and cash equivalents were not pledged as collateral or restricted for uses.

(2) Financial assets at fair value through other comprehensive income

As of December 31, 2020 2019 Equity instruments investments measured at fair value through other comprehensive income-current: Listed company’s stocks $2,437,036 $2,454,341 Equity instruments investments measured at fair value through other comprehensive income-non-current: Unlisted company’s stocks $2,074,071 $2,234,695	As of December 31,	As of December 31,
	2020	2019
		$2,454,341
		$2,234,695

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The Company’s financial assets at fair value through over comprehensive income were not pledged as collateral or restricted for uses.

The Company’s dividend income related to equity instrument investments measured at fair value through other comprehensive income for the years ended December 31, 2020 and 2019 are as follow:

Related to investments held at the end of the reporting period Related to investments derecognized during the period Dividends recognized during the period	For the years ended December 31,	For the years ended December 31,
	2020	2019
	$117,922 -	$97,167 -
	$117,922	$97,167

In consideration of the Company’s investment strategy, the Company disposed, and derecognized partial equity instrument investments measured at fair value through other comprehensive income. Details on derecognition of such investments for the years ended December 31, 2020 and 2019 are as follow:

The fair value of the investments at the date of derecognition The cumulative gain or loss on disposal reclassified from other equity to retained earnings	For the years ended December 31,	For the years ended December 31,
	2020	2019
	$12,987 9,987	$4,975 3,248

(3) Notes receivable

Notes receivable arising from operating activities Less: loss allowance Notes receivable, net	As of December 31,	As of December 31,
	2020	2019
	$31,527 -	$39,048 -
	$31,527	$39,048

The Company’s notes receivables were not pledged as collateral or restricted for uses.

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The Company adopted IFRS 9 for impairment assessment. Please refer to Note 6.(20) for more details on accumulated impairment. Please refer to Note 12 for more details on credit risk.

(4) Accounts receivable and accounts receivable -related parties

Accounts receivable Less: loss allowance Subtotal Accounts receivable - related parties Less: loss allowance Subtotal Total	As of December 31,	As of December 31,
	2020	2019
	$240,887 (10)	$46,170 (44)
	240,877	46,126
	44 -	9,489 -
	44	9,489
	$240,921	$55,615

The Company’s accounts receivable and accounts receivable- related parties were not pledged as collateral or restricted for uses.

Accounts receivable are generally on 30-365-day terms. The book value of the accounts receivables held by the Company were NT$240,931 thousand and NT$55,659 thousand as of December 31, 2020 and 2019, respectively. Please refer to Note 6.(20) for more details on impairment of accounts receivable. Please refer to Note 12 for more details on credit risk.

(5) Inventories

Construction land Construction in progress Buildings and land held for sale Subtotal Prepayment for land purchases Total	As of December 31, 2020 2019 $8,497,634 $7,146,181 13,030,307 16,011,003 2,914,124 2,847,829 24,442,065 26,005,013 2,762,342 533,603 $27,204,407$26,538,616
	2020
	$8,497,634 13,030,307 2,914,124
	24,442,065 2,762,342
	$27,204,407

A. Some of the construction in progress above was contracted by the related company SanChing Engineering Co., Ltd., and the relevant transactions are detailed in Note 7.

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B. The net realizable value of the construction land held by the Company is based on the nature of the land, using either land development analysis approach, comparison method or announced current land value method. The land development analysis approach is based on the changes in land value the development and improvement bring according to the legal use and the intensity of use of the land. The approach estimates the total sales amount after development or construction, deducting the direct costs, indirect costs, capital interests and profits during the development period. The comparison method is evaluated based on the transaction price of similar lands in neighboring areas in the most recent year. The announced current land value method is based on the assessment of the current value of the land announced by the Department of Land Affairs, Ministry of the Interior.
C. Significant Construction projects were as follow:

Construction Project	Amount	Percentage of Completion
City Landmark Park Beautiful Mansion Cathay Mega+ Have a Rich Year Cathay Lagom Liberty Stationery Corp. Cathay ChuanQing	$1,309,062 1,029,794 1,010,390 1,395,238 1,203,810 2,471,512 1,231,429	67.00% 39.00% 30.00% 12.00% 23.00% 11.00% 2.00%

D. The total interests capitalized of the inventories mentioned above were NT$123,623 thousand and NT$199,612 thousand for the years ended December 31, 2020 and 2019, respectively. The interest expenses before capitalization were NT$196,532 thousand and NT$209,523 thousand, respectively.

The monthly capitalization interest rates of loans for inventories were 0.0628%~0.2763% and 0.0976%~0.2019% for the years ended December 31, 2020 and 2019, respectively.

E. To successfully construct and deliver the building and housing to the customers, the Company uses the following trust accounts for the construction in progress:

Construction Project (Amount)	Trustee	Period
Park Beautiful Mansion (NT$14,520 thousand) Tree Rivers, Cathay’s Home I (NT$57,336 thousand)	Cathay United Bank Cathay United Bank	From June 6, 2018 to the completion of the project, the license was obtained, and the first registration of the ownership was completed. From June 13, 2018 to the completion of the project, the license was obtained, and the first registration of the ownership was completed.

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Construction Project

Construction Project
(Amount)	Trustee	Period
HYGGE (NT$45,312 thousand) Tree Rivers, Cathay’s Home II (NT$32,449 thousand) City Landmark (NT$90,533 thousand) Cathay Uptown (NT$78,821 thousand) Have a Rich Year (NT$122,727 thousand) Cathay Lagom (NT$113,230 thousand) Cathay Mega+ (NT$102,069 thousand) Cathay ChuanQing (NT$124,973 thousand) Cathay Opulence (NT$279,163 thousand) Cathay XiJing (NT$ 0 thousand)	Cathay United Bank Cathay United Bank Cathay United Bank Cathay United Bank Cathay United Bank Cathay United Bank Cathay United Bank Cathay United Bank Cathay United Bank Cathay United Bank	From July 30, 2018 to the completion of the project, the license was obtained, and the first registration of the ownership was completed. From December 26, 2018 to the completion of the project, the license was obtained, and the first registration of the ownership was completed. From April 17, 2019 to the completion of the project, the license was obtained, and the first registration of the ownership was completed. From May 20, 2019 to the completion of the project, the license was obtained, and the first registration of the ownership was completed From May 31, 2019 to the completion of the project, the license was obtained, and the first registration of the ownership was completed From July 3, 2019 to the completion of the project, the license was obtained, and the first registration of the ownership was completed From August 1, 2019 to the completion of the project, the license was obtained, and the first registration of the ownership was completed. From May 5, 2020 to the completion of the project, the license was obtained, and the first registration of the ownership was completed. From July 3, 2020 to the completion of the project, the license was obtained, and the first registration of the ownership was completed. From November 9, 2020 to the completion of the project, the license was obtained, and the first registration of the ownership was completed.

As of December 31, 2020, the Company has established a deed of trust with the bank for the construction above to help manage the funds of the presold customers paid. The trust period ends after the construction is completed and the first ownership registration of the property. The balance of the managed funds by the Company in accordance with the above trust deed is NT$1,061,133 thousand, which is equal to the amount receivable of the presold contract. There is no delay in the delivery of the trust account.

F. The costs of inventories recognized in expenses amount to NT$10,167,505 thousand and NT$7,088,054 thousand for the years ended to December 31, 2020 and 2019, including the inventory valuation losses NT$0 thousand for both the years ended December 31, 2020 and 2019.

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G. Please refer to Note 8 for more details on inventory under pledged.
H. Incremental cost of the contract

The cost occurred for the acquisition of the customer's contract is the incremental cost of the contract. The incremental cost of the contract is amortized when the house is handed over to the customers.

(6) Investments accounted for using the equity method

The following table lists the investments for using the equity method of the Company:

	As of December 31,	As of December 31,	As of December 31,	As of December 31,
	2020		2019
		Percentage		Percentage
		of Ownership		of Ownership
Investee	Amount	(%)	Amount	(%)
Investment of subsidiaries:
Cathay Real Estate Management Co., Ltd.	$115,014	100%	$117,650	100%
Cathay Healthcare Management Co., Ltd.	585,785	85%	579,491	85%
Cathay Hospitality Management Co., Ltd.	132,418	100%	160,854	100%
Cathay Hospitality Consulting Co., Ltd.	332,026	100%	576,223	100%
Cathay Real Estate Holding Corporation	-	-	9,449	100%
Cymbal Medical Network Co., Ltd.	87,000	100%	98,979	100%
Lin Yuan Property Management Co., Ltd.	58,767	51%	-	-
Jinhua Realty Co., Ltd.	376,917	51%	-	-
Bannan RealtyCo.,Ltd.	405,774	51%	-	-
Total	$2,093,701		$1,542,646

The investment of subsidiaries is expressed by “Investment using the equity method” in the parent company only financial statements and adjusted their evaluation if necessary.

A. Changes of the investments for using the equity method:

Jinhua Realty Co., Ltd. and Bannan Realty Co., Ltd. were established in 2020; After acquiring 41% shares of Lin Yuan Property Management Co., Ltd. in May, 2020, the Company held 51% of its equity and gained control over the entity. Cymbal Medical Network Co., Ltd. was established in 2019.

Cathay Real Estate Holding Corporation was liquidated in August 2020.

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B. The Company acquired 51% of Lin Yuan Property Management Co., Ltd.’s voting shares on May 15, 2020. The transfer price of this transaction and the fair value of the originally held equity on the acquisition date was lower than the fair value of identifiable net asset. The difference was recognized as bargain purchase gains. Please refer to Note 6.(27).
C. The Company’s investments accounted for using the equity method were not pledged as collateral or restricted for uses.

(7) Property, plant and equipment

Owner occupied property, plant and equipment Property, plant and equipment leased out under operating leases Total	As of December 31,	As of December 31,
	2020	2019
	$5,713 57,072	$4,686 67,708
	$62,785	$72,394

A. Owner occupied property, plant and equipment

Land	Buildings	Leasehold improvement	Other equipment	Total
$1,346 - -	$1,829 - -	$19,449 - -	$15,713 302 (358)	$38,337 302 (358)
1,346 -	1,829 -	19,449 2,046	15,657 457	38,281 2,503
$1,346	$1,829	$21,495	$16,114	$40,784
Land	Buildings	Leasehold improvement	Other equipment	Total
$- - -	$341 35 -	$19,449 - -	$12,647 1,481 (358)	$32,437 1,516 (358)
- -	376 36	19,449 298	13,770 1,142	33,595 1,476
$-	$412	$19,747	$14,912	$35,071
$1,346	$1,417	$1,748	$1,202	$5,713
$1,346	$1,453	$-	$1,887	$4,686

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B. Property, plant and equipment leased out under operating leases

Cost: As of January 1, 2019 Additions Disposals As of December 31, 2019 Additions Disposals As of December 31, 2020 Depreciation and impairment: As of January 1, 2019 Depreciation Disposals As of December 31, 2019 Depreciation Disposals As of December 31, 2020 Net carrying amount: As of December 31, 2020 As of December 31, 2019	Transportation equipment
	$107,676 25,851 (16,702)
	116,825 15,058 (13,725)
	$118,158
	$46,965 17,051 (14,899)
	49,117 18,709 (6,740)
	$61,086
	$57,072
	$67,708

C. The major components of the Company’s buildings are mainly buildings, air-conditioning equipment and elevators, and are depreciated according to their durability years of 50, 5 and 15 years respectively.
D. The Company's Property, plant and equipment are not capitalized from financial costs.
E. The Company's Property, plant and equipment were not pledged as collateral or restricted for uses.

(8) Investment property

Land	Buildings	Total
$7,176,478 77,133 (100,068)	$6,267,572 115,279 (188,489)	$13,444,050 192,412 (288,557)
7,153,543 - (17,101)	6,194,362 15,327 (151,249)	13,347,905 15,327 (168,350)
$7,136,442	$6,058,440	$13,194,882

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English Translation of Financial Statements Originally Issued in Chinese

Land	Buildings	Total
$- - -	$2,321,366 181,618 (46,278)	$2,321,366 181,618 (46,278)
- - -	2,456,706 181,371 (91,214)	2,456,706 181,371 (91,214)
$-	$2,546,863	$2,546,863
$7,136,442	$3,511,577	$10,648,019
$7,153,543	$3,737,656	$10,891,199

Rental income from investment property Less: Direct operating expenses from investment property generating rental income Direct operating expenses from investment property not generating rental income Total	For theyears ended December 31,	For theyears ended December 31,
	2020	2019
	$338,788 (82,156) (37,958)	$415,372 (105,881) (13,024)
	$218,674	$296,467

The investment properties held by the Company were not valued at fair value. The amounts of the fair value were only for disclosure. The fair value of the investment properties held by the Company were NT$15,898,086 thousand and NT$16,094,191 thousand as of December 31, 2020 and 2019, respectively, which were valued by an independent external appraisal expert and internal valuation. The evaluation method was comparison method and based on the recent actual deal price or the market transaction price of the real estate nearby. Please refer to Note 8 for more details on property, plant and equipment under pledge.

(9) Intangible assets

Cost: As of January 1, 2019 Addition-acquired separately Disposals As of December 31, 2019 Addition-acquired separately As of December 31, 2020	Computer software
	$34,776 1,489 (812)
	35,453 2,324
	$37,777

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English Translation of Financial Statements Originally Issued in Chinese

Computer software Amortization and impairment: As of January 1, 2019 $33,998 Amortization 734 Disposals (812) As of December 31, 2019 33,920 Amortization 877 As of December 31, 2020 $34,797 Net carrying amount: As of December 31, 2020 $2,980 As of December 31, 2019 $1,533 Amortization expense of intangible assets were as follow: For theyears ended December 31, 2020 2019 Operating expenses $877 $734	Computer software Amortization and impairment: As of January 1, 2019 $33,998 Amortization 734 Disposals (812) As of December 31, 2019 33,920 Amortization 877 As of December 31, 2020 $34,797 Net carrying amount: As of December 31, 2020 $2,980 As of December 31, 2019 $1,533 Amortization expense of intangible assets were as follow: For theyears ended December 31, 2020 2019 Operating expenses $877 $734	Computer software
		$33,998 734 (812)
		33,920 877
		$34,797
		$2,980
		$1,533
	2020	2019
	$877	$734

(10) Other non-current assets

Construction land Prepaid expenses-equipment Refundable deposits Other non-current assets- other Total	As of December 31,	As of December 31,
	2020	2019
	$18,425 3,441 1,214,115 16,264	$18,425 1,431 911,143 16,264
	$1,252,245	$947,263

According to the 1999.3.26 (1999) Explanation Decree (6) No.19350 issued by the Securities and Futures Commission, the above construction land temporarily registered under a third party’s name was disclosed as follows:

	As of December 31,	As of December 31,			Securities
Items	2020	2019	Type	Purpose
Land Serial NO.137-2 etc., Northern shi-zhi of Hou-tsuo section, San-zhi township, New Taipei City	$18,425	$18,425	Purchases / Sales	Development	Mortgage setting and commitment

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English Translation of Financial Statements Originally Issued in Chinese

(11) Short-term loans

Unsecured bank loans Secured bank loans Total Interest rate	As of December 31,	As of December 31,
	2020	2019
	$6,610,000 -	$6,650,000 250,000
	$6,610,000	$6,900,000
	0.75%~0.89% 0.85%~1.00%

A. The Company’s unused short-term lines of credits amounted to NT$11,698,990 thousand and NT$16,154,290 thousand as of December 31, 2020 and 2019, respectively.
B. Please refer to Note 8 for more details on investment property pledged as security for short-term borrowings.

(12) Short-term notes payable

Short-term notes and bills payable Less: unamortized discount Net Interest rate	As of December 31,	As of December 31,
	2020	2019
	$1,420,000 (1,146)	$500,000 (460)
	$1,418,854	$499,540
	0.29%~0.30% 0.43%

(13) Bonds payable

Domestic secured bonds Less: current portion Net	As of December 31,	As of December 31,
	2020	2019
	$- -	$3,000,000 (3,000,000)
	$-	$-

On July 24, 2015, the Company issued the first domestic guaranteed corporate bonds with a total denomination of NT$3,000,000 thousand. The issuance period is five-year. The interest on this corporate bond is a fixed annual interest rate of 1.4%, paying interest once a year, and repaying the loan on due day.

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English Translation of Financial Statements Originally Issued in Chinese

(14) Long-term loans

Details of long-term loans as of December 31, 2020 and 2019 are as follows:

	As of December 31,2020	Interest rate(%)	Maturitydate and terms of repayment
Bank credit loans Long-term credit notes payable Subtotal Less: current portion Total	$9,900,000 729,741	0.85%~0.87% 0.29% Interest rate(%)	Effective July 2019 to July 2023, repayments on due day. Effective August 2020 to August 2023, repayments on due day. Maturitydate and terms of repayment
	10,629,741 (5,400,000)
	$5,229,741
	As of December 31,2019
Bank credit loans Long-term notes payable Subtotal Less: current portion Total	$7,400,000 399,510	0.90%~1.18% 0.43%	Effective January 2019 to July 2022, repayments on due day. Effective October 2019 to July 2021, repayments on due day.
	7,799,510 (3,000,000)
	$4,799,510

(15) Retirement employment benefits

A. Defined contribution plan

The defined contribution plan of the Company’s Employee Retirement Plan is regulated according to the provisions of the Labor Pension Act. In accordance with the Act, contributions made by the employer cannot be lower than 6% of the participant’s monthly wages. Therefore, The Company makes 6% contributions of the monthly wages to the Labor Pension personal account of the Bureau of the Labor Insurance on a regular basis.

For the years ended December 31, 2020 and 2019, the expenses related to defined contribution plan amounted to NT$4,095 thousand and NT$3,776 thousand, respectively.

B. Defined benefits plan

The defined benefit plan of the Company’s Employee Retirement Plan is regulated according to the Labor Standards Act. 2. Retirement benefits are based on such factors as the employee’s length of service and final pensionable salary. In accordance with the Act,

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English Translation of Financial Statements Originally Issued in Chinese

2 bases are given for each full year on the first 15 years of service and 1 base is given for each full year after 15 years of service. The total bases given shall not exceed 45. Under the retirement plan, the Company contributes monthly an amount equal to 2% of gross salary to the pension reserve fund, which is deposited into a designated depository account with the Bank of Taiwan. At the end of each year, if the balance in the designated labor pension reserve funds is inadequate to cover the benefit estimated to be paid in the following year, the Company should make up the difference before the end of March in the following year.

The Ministry of Labor is in charge of establishing and implementing the fund utilization plan in accordance with the Regulations for Revenues, Expenditures, Safeguard and Utilization of the Labor Retirement Fund. The pension fund is invested in-house or under emendation, based on a passive-aggressive investment strategy for long-term profitability. The Ministry of Labor establishes checks and risk management mechanism based on the assessment of risk factors including market risk, credit risk and liquidity risk, in order to maintain adequate manager flexibility to achieve targeted return without over-exposure of risk. With regard to utilization of the pension fund, the minimum earnings in the annual distributions on the final financial statement shall not be less than the earnings attainable from the amounts accrued from two-year time deposits with the interest rates offered by local banks. Treasury Funds can be used to cover the deficits after the approval of the competent authority. As the Company does not participate in the operation and management of the pension fund, no disclosure on the fair value of the plan assets categorized in different classes could be made in accordance with paragraph 142 of IAS 19. The Company expects to contribute NT$549 thousand to its defined benefit plan during the 12 months beginning after December 31, 2020.

As of December 31, 2020 and 2019, the average duration of defined benefit obligation of the Company were expected to be 8.3 years and 9.5 years.

Amounts to be recognized in profit or loss for the years ended December 31, 2020 and 2019 are summarized as follows:

Current period service cost Net interest on the net defined benefit liability (asset) Total	For theyear ended December 31,	For theyear ended December 31,
	2020	2019
	$6,400 618	$5,750 741
	$7,018	$6,491

Reconciliation of the present value of the defined benefit obligation and fair value of plan assets of the defined benefit plan is as follows:

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English Translation of Financial Statements Originally Issued in Chinese

	As of
December 31, 2020	December 31, 2019	January 1, 2019
$160,220 (80,971)	$168,903 (78,539)	$167,520 (82,081)
$79,249	$90,364	$85,439

Present value of defined benefit obligation	Fair value of plan assets	Net defined benefit liabilities (assets)
$167,520 5,750 1,522	$(82,081) - (781)	$85,439 5,750 741
7,272	(781)	6,491
3,604 9,189 -	- - (6,083)	3,604 9,189 (6,083)
12,793	(6,083)	6,710
(18,682) -	14,650 (4,244)	(4,032) (4,244)
168,903 6,400 1,164	(78,539) - (546)	90,364 6,400 618
7,564	(546)	7,018
5,114 (3,016) -	- - (1,365)	5,114 (3,016) (1,365)
2,098	(1,365)	7,33
(18,345) -	5,939 (6,460)	(12,406) (6,460)
$160,220	$(80,971)	$79,249

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The following significant actuarial assumptions are used to determine the present value of the defined benefit obligation:

Discount rate Expected rate of salary increases	As of December 31,	As of December 31,
	2020	2019
	0.32% 2.00%	0.70% 2.00%

A sensitivity analysis for significant assumption as at December 31, 2020 and 2019 was as follow:

For theyear ended December 31,	For theyear ended December 31,	For theyear ended December 31,	For theyear ended December 31,
2020		2019
Increase defined benefit obligation	Decrease defined benefit obligation	Increase defined benefit obligation	Decrease defined benefit obligation
$- 3,365 6,569 -	$3,365 - - 6,249	$- 4,223 8,107 -	$3,969 - - 7,601

The sensitivity analyses above are based on a change in a significant assumption (for example: change in discount rate or future salary), keeping all other assumptions constant. The sensitivity analyses may not be representative of an actual change in the defined benefit obligation as it is unlikely that changes in assumptions would occur in isolation of one another.

There was no change in the methods and assumptions used in preparing the sensitivity analyses compared to the previous period.

(16) Common stock

The Company’s authorized capital was NT$ 20,000,000 thousand and issued capital was NT$ 11,595,611 thousand as of December 31, 2020 and 2019, respectively. The Company has issued 1,159,561 thousand shares as of December 31, 2020 and 2019, respectively, each at a par value of NT$10. Each share has one voting right and a right to receive dividends.

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English Translation of Financial Statements Originally Issued in Chinese

(17) Capital surplus

Treasury share transactions Others - overdue dividends Total	As of December 31,	As of December 31,
	2020	2019
	$10,407 29,108	$10,407 21,221
	$39,515	$31,628

According to the Company Act, the capital reserve shall not be used except for making good the deficit of the Company. When a company incurs no loss, it may distribute the capital reserves related to the income derived from the issuance of new shares at a premium or income from endowments received by the Company. The distribution could be made in cash or in the form of dividend shares to its shareholders in proportion to the number of shares being held by each of them.

(18) Retained earnings

A. Legal reserve

According to the Company Act, the Company needs to set aside amount to legal reserve unless where such legal reserve amounts to the total authorized capital. The legal reserve can be used to make good the deficit of the Company. When the Company incurs no loss, it may distribute the portion of legal serve which exceeds 25% of the paid-in capital by issuing new shares or by cash in proportion to the number of shares being held by each of the shareholders.

B. Special reserve

After the adoption of International Financial Reporting Standards, in accordance with Letter FSC No. 1010012865 issued by FSC on April 6, 2012, at the first-time adoption of IFRSs, an entity shall appropriate a corresponding amount to special reserve same as the IFRS adjustment, in which case an entity elects to use exemption application specified in IFRS 1 and resets unrealized revaluation increment and cumulative translation differences under shareholders’ equity to zero, and its retained earnings is being increased accordingly. However, if the retained earnings’ arising from IFRS adjustment at the first-time adoption is insufficient, special reserve shall be appropriated by the amount that retained earnings increase from the IFRS adjustment.

At the first-time adoption of IFRSs, special reverse set aside by The Company was NT$504,189 thousand. As of December 31, 2020, there were no use, disposition or reclassification of related assets and there is no need to revolving special reserve to retained earnings.

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English Translation of Financial Statements Originally Issued in Chinese

C. Retained earnings and dividend policies

Pursuant to the Company’s Articles of Incorporation, current year’s earnings, if any, shall be appropriated in the following order:

a. Payments of all taxes, if any
b. To offset prior year’s deficit, if any
c. To set aside 10% of the remaining amount as legal reserve
d. To set aside special reserve, if required
e. The remaining amount (the “appropriable after-dividend earnings”), if any, combination with prior year’s accumulated unappropriated earnings is appropriated based on the appropriation of shareholders’ bonuses plan drafted by the board of directors under the ordinary shareholders’ meeting.

In response to the changes in the economy and the markets, The Company is developing towards diversified investment to increase profitability. Considering long-term financial planning and cash flows, the dividend policy adopts the residual dividend policy for stable growth and sustainable operation. According to the Company’s operating plan, capital investment and the shareholders' demand for cash inflows, and avoiding excessive inflationary capital, the surplus distribution is given priority by cash dividends, and the stock dividends are also issued, but the cash dividend distribution ratio cannot less than 50% of the total dividend.

D. For the years ended December 31, 2019 and 2018, the details of earnings distribution and dividends per share were resolved by the shareholder’s meeting on June 12, 2020 and June 14, 2019, were as follows:

Legal reserve Common stock - cash dividend	Appropriation of earnings (in thousand NT dollars)	Appropriation of earnings (in thousand NT dollars)	Cash Dividend per share (NT dollars)	Cash Dividend per share (NT dollars)
	2019	2018	2019	2018
	$137,050 1,159,561	$360,961 2,435,078	$1.0	$2.1

E. Please refer to Note 6.(22) for details of bonus to employees and directors.

(19) Operating revenues

Revenue from contracts with customers Sales of buildings and land Rental income Total	For theyears ended December 31,	For theyears ended December 31,
	2020	2019
	$12,971,111 365,117	$9,296,499 440,110
	$13,336,228	$9,736,609

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English Translation of Financial Statements Originally Issued in Chinese

The relevant information of the Company’s revenue are as follows:

A. Disaggregation of revenue

For the year ended December 31, 2020

Rental income Sales of buildings and lands Total Revenue recognition point: At a point in time Over time Total	Property and real estate investment development department
	$365,117 12,971,111
	$13,336,228
	$12,971,111 365,117
	$13,336,228

For the year ended December 31, 2019

Rental income Sales of buildings and lands Total Revenue recognition point: At a point in time Over time Total	Property and real estate investment development department
	$440,110 9,296,499
	$9,736,609
	$9,296,499 440,110
	$9,736,609

B. Contract balances

Contract liabilities – current

Sales of goods		As of
	December 31, 2020	December 31, 2019	January 1, 2019
	$4,421,199	$3,526,415	$3,626,329

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English Translation of Financial Statements Originally Issued in Chinese

For the years ended December 31, 2020 and 2019, the movement in the contract liabilities are as follows:

Revenue recognized during the year that was included in the balance at the beginning of the year Increase in receipt in advance during the period	For theyears ended December 31,	For theyears ended December 31,
	2020	2019
	$(1,578,105) 2,472,889	$(2,029,261) 1,929,347

C. Assets recognized from the revenue from contracts with customers

Incremental costs of obtaining contracts

Sales of goods	As of December 31,	As of December 31,
	2020	2019
	$633,029	$671,760

The amortized amount of the incremental cost of the Company’s acquisition of the contract for the years ended December 31, 2020 and 2019 were NT$279,282 thousand and NT$157,247 thousand, respectively.

(20) Expected credit losses/ (gains)

Operating expenses-expected credit losses/ (gains) Accounts receivable	For theyears ended December 31,	For theyears ended December 31,
	2020	2019
	$(34)	$32

Please refer to Note 12 for information of credit risks.

The Company measures the loss allowance of receivables (including notes and accounts receivable) at an amount equal to lifetime expected credit losses. The Company considers The grouping of accounts receivable by counterparties’ credit rating, by geographical region and by industry sector and its loss allowance is measured by using a provision matrix. The details of the loss allowance measured as of December 31, 2020 and 2019 was as follows:

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English Translation of Financial Statements Originally Issued in Chinese

December 31, 2020

Neither past due (Note)			Past due			Total
	Within 30 days	31-90 days	91-270 days	271- 365days	Over 365 days
$271,610 -	$848 1.14%	$- -	$- -	$- -	$- -	$272,458 10
-	10	-	-	-	-
$271,610	$838	$-	$-	$-	$-	$272,448

December 31, 2019

Neither past due (Note)			Past due			Total
	Within 30 days	31-90 days	91-270 days	271- 365days	Over 365 days
$48,677 -	$1,735 0.01%	$2,518 0.05%	$41,777 0.10%	$- -	$- -	$94,707 44
-	-	2	42	-	-
$48,677	$1,735	$2,516	$41,735	$-	$-	$94,663

Note: The Company’s notes receivable is not overdue.

For the years ended December 31, 2020 and 2019, the movement in the provision for impairment of notes receivable and accounts receivable are as follows:

As of January 1, 2019 Addition/(reversal) for the current period Amounts written off during the period as uncollectible As of December 31, 2019 Addition/(reversal) for the current period Amounts written off during the period as uncollectible As of December 31, 2020	Notes receivable	Accounts receivable
	$- - -	$12 32 -
	- - -	44 (34) -
	$-	$10

(21) Operating leases

A. Operating lease commitments - Company as lessee

The Company leases various property, including land and buildings. These leases have terms between two and three years.

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The effect that leases have on the financial position, financial performance and cash flows of the Company are as follow:

a. Amounts recognized in the balance sheet
(a) Right-of-use asset

The carrying amount of right-of-use asset

Land Buildings Total	As of December 31,	As of December 31,
	2020	2019
	$8,263 8,083	$15,513 22,860
	$16,346	$38,373

For the years ended December 31, 2020 and 2019, the Company’s additions to rightof-use assets amounting to NT$1,388 thousand and NT$7,606 thousand, respectively.

(b) Lease liability

Lease liability Current Non-current	As of December 31,	As of December 31,
	2020	2019
	$14,417	$33,252
	$12,317 2,100	$19,300 13,952

Please refer to Note 6.(23).D for the interest on lease liability recognized during the years ended December 31, 2020 and 2019 and refer to Note 12.(5) for the maturity analysis for lease liabilities as of December 31, 2020 and 2019.

b. Amounts recognized in the income statement

Depreciation charge for right-of-use assets

Land Buildings Total	For theyears ended December 31,	For theyears ended December 31,
	2020	2019
	$7,250 16,165	$4,542 7,443
	$23,415	$11,985

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English Translation of Financial Statements Originally Issued in Chinese

c. Income and costs relating to leasing activities

The expense relating to short-term leases The expense relating to leases of low-value assets (Not including the expense relating to short- term leases of low-value assets) The expense relating to variable lease payments not included in the measurement of lease liabilities	For theyears ended December 31,	For theyears ended December 31,
	2020	2019
	$278 - -	$8,602 - -

As of December 31, 2020 and 2019, the short-term lease portfolio promised by the Company and the types of lease targets related to the aforementioned short-term lease expenses are similar.

d. Cash outflow relating to leasing activities

During the years ended December 31, 2020 and 2019, the Company’s total cash outflow for leases amounting to NT$20,927 thousand and NT$25,885 thousand, respectively.

B. Company as lessor

Please refer to Note 6.(8) for details on the Company’s owned investment properties. Leases of owned investment properties are classified as operating leases as they do not transfer substantially all the risks and rewards incidental to ownership of underlying assets.

Lease income for operating leases Income relating to fixed lease payments and variable lease payments that depend on an index or a rate	For the years ended December 31,	For the years ended December 31,
	2020	2019
	$365,117	$440,110

Please refer to Note 6.(7) for relevant disclosure of property, plant and equipment for operating leases under IFRS 16. For operating leases entered by the Company, the undiscounted lease payments to be received and a total of the amounts for the remaining years as of December 31, 2020 and 2019 are are as follow:

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English Translation of Financial Statements Originally Issued in Chinese

Not later than 1 year Later than 1 year and not later than 2 years Later than 2 year and not later than 3 years Later than 3 year and not later than 4 years Later than 4 year and not later than 5 years Later than five years Total	As of December 31,	As of December 31,
	2020	2019
	$210,897 210,037 210,037 210,037 210,037 87,516	$212,461 210,897 210,037 210,037 210,037 297,744
	$1,138,561	$1,351,213

(22) Summary statement of employee benefits, depreciation and amortization expenses by function is as follows:

Function Description	For theyear	ended December 31,2020	ended December 31,2020	For theyear	ended December 31,2019	ended December 31,2019
	Operating Cost	Operating Expense	Total	Operating Cost	Operating Expense	Total
Employee benefits expense
Salaries and wages	$32,285	$155,055	$187,340	$33,914	$135,040	$168,954
Labor and health insurance	-	12,424	12,424	-	12,489	12,489
Pension	-	11,113	11,113	-	10,267	10,267
Director’s remuneration	-	7,800	7,800	-	7,755	7,755
Depreciation and depletion	200,080	24,891	224,971	198,669	13,501	212,170
Amortization	-	877	877	-	734	734

A. On December 31, 2020 and 2019, the numbers of employees were 148 and 145 respectively, among which the numbers of directors who have not served as employees were both 4.
B. The average employee benefits expense for the years ended December 31, 2020 and 2019 were NT$1,464 thousand and NT$1,360 thousand, respectively. (“Total employee benefits expense for the year - Total director’s remuneration for the year” / “Number of employees for the year - Number of directors who have not served as employees for the year”)
C. The average salaries and wages for the years ended December 31, 2020 and 2019 were NT$1,301 thousand and NT$1,198 thousand, respectively (“Total salaries and wages for the year” / “Number of employees for the year - Number of directors who have not served as employees for the year”). The average salaries and wages increased by 8.60% (“Average salaries and wages for the year - Average salaries and wages last year” / “Average salaries and wages last year”).

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D. The Company established an audit committee instead of supervisors.
E. The Company’s policy of salaries and wages for directors, managers and employees is as follows: In order to attract, keep and motivate talents for the balance of sustainable running and risk control, the Company follows “Directors’ Remuneration Guidelines”, “Managers’ Remuneration Guidelines”, employees’ salaries regulations and other related regulations to decide salaries and wages. Also, the Company comprehensively considers individuals’ responsibility, the market, contribution, performance and expected or realized risks. Related regulations are modified and reviewed on regular basis based on actual operation.
F. Employees’ Compensation and Directors’ Remuneration

According to the Company’s Articles of Incorporation, 0.1% to 1% and lower than 1% of the profit of the period should be distributed as compensation for employees and directors’ remuneration. However, if there is accumulated deficit, the deficit should be covered first. The Group may, by a resolution adopted by a majority vote at a meeting of Board of Directors attended by two-thirds of the total number of directors, have the profit distributable as employees’ compensation in the form of shares or in cash; and in addition, there to a report of such distribution is submitted to the shareholders’ meeting. Information on the board of directors’ resolution regarding the employee compensation can be obtained from the “Market Observation Post System” on the website of the TWSE.

The Company’s employees’ compensation and directors’ remuneration was NT$1,652 thousand and NT$2,400 thousand, estimated as 0.1% and lower than 1% of the Company’s net profit and recognized as compensation for employees and directors’ remuneration for the year ended December 31, 2020. The amount of employees’ compensation and directors' remuneration recognized in the year ended December 31, 2019 was NT$1,509 thousand and NT$2,400 thousand, respectively. The aforementioned amounts were listed under salary expenses. If the abovementioned employees’ compensation and directors’ remuneration estimations are different from the actual distributed amount resolved by the board of director’s meeting, the difference will be recognized as profit or loss in the next period.

The Company’s the board of director’s meeting on March 19, 2020 resolved to distribute NT$1,509 thousand and NT$2,400 thousand of employee’s and director’s compensation in cash. There are no material differences exist between the estimated amount and the actual distribution.

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(23) Non-operating income and expenses

A. Interest income

Deposit interest Others Total

For theyears ended December 31,	For theyears ended December 31,
2020	2019
$726 430	$1,926 687
$1,156	$2,613

B. Other income

Dividend income Other Total	For theyears ended December 31,	For theyears ended December 31,
	2020	2019
	$117,922 61,057	$97,167 78,687
	$178,979	$175,854

C. Other gains and losses

Gains on disposal and abandon of property, plant and equipment Gains on disposal of investment Other Total	For theyears ended December 31,	For theyears ended December 31,
	2020	2019
	$972 87,569 (742)	$2,338 - (15,592)
	$87,799	$(13,254)

D. Finance costs

Interest on borrowings from bank Interest on lease liabilities Total	For theyears ended December 31,	For theyears ended December 31,
	2020	2019
	$72,483 426	$9,734 177
	$72,909	$9,911

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English Translation of Financial Statements Originally Issued in Chinese

(24) Components of other comprehensive income

For the year ended December 31, 2020

Items that will not be reclassified to profit or loss: Remeasurements of defined benefit plans Unrealized gains (losses) from equity instruments investments measured at fair value through other comprehensive income Share of other comprehensive income of associates and joint ventures accounted for using equity method Items that may be reclassified subsequently to profit or loss: Share of other comprehensive income of associates and joint ventures accounted for using equity method Total of other comprehensive income	Arising during theperiod	Reclassification adjustments duringtheperiod	Other comprehensive income,before tax	Income tax relating to components of other comprehensive income	Other comprehensive income,net of tax
	$(733) (164,942) (1,480) (596)	$- - - (87,569)	$(733) (164,942) (1,480) (88,165)	$146 - - -	$(587) (164,942) (1,480) (88,165)
	$(167,751)	$(87,569)	$(255,320)	$146	$(255,174)

For the year ended December 31, 2019

Items that will not be reclassified to profit or loss: Remeasurements of defined benefit plans Unrealized gains (losses) from equity instruments investments measured at fair value through other comprehensive income Share of other comprehensive income of associates and joint ventures accounted for using equity method Items that may be reclassified subsequently to profit or loss: Share of other comprehensive income of associates and joint ventures accounted for using equity method Total of other comprehensive income	Arising during theperiod	Reclassification adjustments duringtheperiod	Other comprehensive income,before tax	Income tax relating to components of other comprehensive income	Other comprehensive income,net of tax
	$(6,710) 368,350 675 (1,573)	$- - - -	$(6,710) 368,350 675 (1,573)	$1,342 - - -	$(5,368) 368,350 675 (1,573)
	$360,742	$-	$360,742	$1,342	$362,084

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English Translation of Financial Statements Originally Issued in Chinese

(25)Income taxes

The major components of income tax expense were as follows:

Income tax recognized in profit or loss

For theyears ended December 31, 2020 2019 Current income tax expense (income): Current income tax payable $3,857 $59,927 Current land value increment tax charge 65,158 91,994 Adjustments in respect of current income tax of prior periods (2,501) - Deferred tax expense (income): Deferred tax expense (income) relating to origination and reversal of temporary differences 97,742 (17,739) Total income tax expense (income) $164,256 $134,182 Income tax relating to components of other comprehensive income For theyears ended December 31, 2020 2019 Deferred tax expense (income): Remeasurements of defined benefit plans $(146) $(1,342)	For theyears ended December 31,	For theyears ended December 31,
	2020	2019
	$3,857 65,158 (2,501) 97,742	$59,927 91,994 - (17,739)
	$164,256	$134,182
Deferred tax expense (income): Remeasurements of defined benefit plans
	2020	2019
	$(146)	$(1,342)

Reconciliation between tax expense and the product of accounting profit multiplied by applicable tax rates was as follows:

For theyears ended December 31, 2020 2019 Accounting profit (loss) before tax from continuing operations $1,648,236 $1,504,687 Tax at the domestic rates applicable to profits in the country concerned $329,647 $300,937 Tax effect of revenues exempt from taxation (219,430) (266,524) Tax effect of non-deductible expenses 118,072 23,208 Tax effect of deferred tax assets/liabilities (130,547) (75,360) Surtax on undistributed retain earnings 3,857 59,927 Adjustments in respect of current income tax of prior periods (2,501) - Current land value increment tax 65,158 91,994 Total income tax expense (income) recognized in profit or loss $164,256 $134,182	For theyears ended December 31,	For theyears ended December 31,
	2020	2019
	$1,648,236	$1,504,687
		$300,937 (266,524) 23,208 (75,360) 59,927 - 91,994
	$164,256	$134,182

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English Translation of Financial Statements Originally Issued in Chinese

Deferred tax assets (liabilities) relate to the following:

For the year ended December 31, 2020

Beginningbalance	Deferred tax income (expense) recognized in profit or loss	Deferred tax income (expense) recognized in other comprehensive income	Endingbalance
$(10,049) 96,746 101,539 2,332 64,158 112 1,400 28,665 13,751 7 119,312	$- (3,094) (2,744) (97) (64,158) 6,044 - (25,796) (2,222) - (5,675)	$- - - - - - - - 146 - -	$(10,049) 93,652 98,795 2,235 - 6,156 1,400 2,869 11,675 7 113,637
$417,973	$(97,742)	$146	$320,377

$428,022			$330,426
$(10,049)			$(10,049)

For the year ended December 31, 2019

Temporary differences Revaluations of investment property to fair value as deem cost at the date of transition to IFRS - land value increment tax Revaluations of investment property to fair value as deem cost at the date of transition to IFRS Depreciation difference for tax purpose - investment property Depreciation difference for tax purpose of property, plants and Equipment - interest capitalization Investments accounted for using equity method	Beginningbalance	Deferred tax income (expense) recognized in profit or loss	Deferred tax income (expense) recognized in other comprehensive income	Endingbalance
	$(10,049) 96,746 101,539 2,430 70,016	$- - - (98) (5,858)	$- - - - -	$(10,049) 96,746 101,539 2,332 64,158

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Beginningbalance	Deferred tax income (expense) recognized in profit or loss	Deferred tax income (expense) recognized in other comprehensive income	Endingbalance
120 1,400 28,665 12,766 7 95,252	(8) - - (357) - 24,060	- - - 1,342 - -	112 1,400 28,665 13,751 7 119,312
$398,892	$17,739	$1,342	$417,973

$408,941			$428,022
$(10,049)			$(10,049)

The following table contains information of the unused tax losses of the Company:

Year	Tax losses for theperiod	Unused tax losses as of December 31,	Unused tax losses as of December 31,	Expirationyear
		2020	2019
2018	1,086,163	$262,954	$968,658	2019~2028

Unrecognized deferred tax assets

As of December 31 2020, and 2019, the deferred tax assets have not been recognized amount to NT$52,591 thousand and NT$193,732 thousand, respectively.

The assessment of income tax returns

The Company’s income tax return has been assessed and approved by the tax authorities through 2018.

(26) Earnings per share

Basic earnings per share amounts are calculated by dividing net profit for the year attributable to ordinary equity holders of the parent entity by the weighted average number of ordinary shares outstanding during the year.

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Diluted earnings per share amounts are calculated by dividing the net profit attributable to ordinary equity holders of the parent entity by the weighted average number of ordinary shares outstanding during the year plus the weighted average number of ordinary shares that would be issued on conversion of all the dilutive potential ordinary shares into ordinary shares.

A. Basic earnings per share Profit attributable to ordinary equity holders of the Company (in thousands) Weighted average number of ordinary shares outstanding for basic earnings per share (in thousands) Basic earnings per share (NT$) B. Diluted earnings per share Profit attributable to ordinary equity holders of the Company (in thousand NT$) Weighted average number of ordinary shares outstanding for basic earnings per share (in thousands) Effect of dilution: Employee compensation-stock (in thousands) Weighted average number of ordinary shares outstanding after dilution (in thousands) Diluted earnings per share (NT$)	For theyears ended December 31,	For theyears ended December 31,
	2020	2019
	$1,483,980	$1,370,505
	1,159,561	1,159,561
	$1.28	$1.18
	$1,483,980 1,159,561 111	$1,370,505 1,159,561 117
	1,159,672	1,159,678
	$1.28	$1.18

There have been no other transactions involving ordinary shares or potential ordinary shares between the reporting date and the date of completion of the financial statements.

(27) Business combinations

Acquisition of Lin Yuan Property Management Co., Ltd.

On May 15, 2020, the Company acquired 51% of voting shares of Lin Yuan Property Management Co., Ltd., which provides services such as property management, manpower dispatch and parking lots operation. The Company acquired Lin Yuan Property Management Co., Ltd. to develop intellectual buildings and parking lots, expand real estate management market and increase investment profits.

The Company has elected to measure the non-controlling interest by its proportion of the fair value of the acquiree’s identifiable assets.

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English Translation of Financial Statements Originally Issued in Chinese

The fair value of the identifiable assets and liabilities of Lin Yuan Property Management Co., Ltd. as at the date of acquisition were:

Assets Cash and cash equivalents Accounts receivable Prepayments Others current assets Others equipment Investment property Intangible assets Deferred tax assets Other non-currents assets Subtotal Liabilities Accounts payable Other payables Current tax liabilities Other current liabilities Other Non-current liabilities Subtotal Identifiable net assets Bargain purchase gain is calculated as follows: Purchase consideration Add: fair value of the equity the Company originally held on acquisition date Add: non-controlling interests at fair value Less: identifiable net assets at fair value Bargain purchase gain Analysis of cash flows on acquisition: Cash paid Net cash acquired with the subsidiary Net cash flow	Fair value recognized on the acquisition date
	$202,436 58,249 386 5,000 236 9,480 169 15,097 1,753
	292,806
	43,800 26,696 10,520 2,201 74,670
	157,887
	$134,919
	$53,247 12,987 66,110 (134,919)
	$(2,575)
	$53,247 (202,436)
	$(149,189)

215

English Translation of Financial Statements Originally Issued in Chinese

From the acquisition date May 15, 2020 to December 31, 2020, Lin Yuan Property Management Co., Ltd. has contributed NT$20,547 thousand to the profit for the year from continuing operations. If the combination had taken place at the beginning of the year, the profit for the year from continuing operations for the Company would have been NT$1,495,519 thousand.

7. RELATED PARTY TRANSACTIONS

Information of the related parties that had transactions with the Company during the financial reporting period is as follows:

(1) Name and nature of relationship of the related parties

Name of the relatedparties

Nature of
relationship of the
relatedparties

Cathay Hospitality Management Co., Ltd. (Cathay Hospitality)
Cathay Hospitality Consulting Co., Ltd. (Cathay Hospitality Consulting)
Jinhua Realty Co., Ltd. (Jinhua Realty)
Bannan Realty Co., Ltd (Bannan Realty)
Lin Yuan Property Management Co., Ltd. (Lin Yuan Property)
Cathay Life Insurance Co., Ltd. (Cathay Life Insurance)
Cathay United Bank Co., Ltd. (Cathay United Bank)
Cathay Century Insurance Co., Ltd. (Cathay Century Insurance)
San Ching Engineering Co., Ltd. (San Ching Engineering)
Lin Yuan Investment Co., Ltd. (Lin Yuan Investment)
Nangang International One Co., Ltd. (Nangang One)
Nangang International Two Co., Ltd. (Nangang Two)

Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary (Note)
Others
Others
Others
Others
Others
Others
Others

Note � Lin Yuan Property Management Co., Ltd. was acquired by the Company on May 15, 2020 and became the Company’s subsidiary.

(2) Significant transactions with the related parties

The Company's related party transactions would not be disclosed when the individual amount is less than 3 million.

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English Translation of Financial Statements Originally Issued in Chinese

A. Cash in banks and short-term loans

Name of the relatedparties	Type	For theyear ended December 31,2020	For theyear ended December 31,2020	For theyear ended December 31,2020	For theyear ended December 31,2020
		Maximum amount	Year ended balance	Interest rate (%)	Interest income (expenses)
Others: Cathay United Bank Name of the relatedparties	Demand deposit Checking accounts Securities accounts Short-term loan Type	$5,248,560 $1,217,710 0.05% $37 3,492,959 110,652 - - 1,050,098 17,518 0.01% 6 250,000 - 1.00% (60) For theyear ended December 31,2019
		Maximum amount	Year ended balance	Interest rate (%)	Interest income (expenses)
Others: Cathay United Bank	Demand deposit Checking accounts Securities accounts Short-term loan	$5,183,804 2,225,101 866,483 2,040,000	$785,344 54,477 169,914 250,000	0.05% - 0.01% 1.00%	$352 - 11 (1,160)

B. Purchase

Name of the relatedparties	Type	For the years ended December 31,	For the years ended December 31,
		2020	2019
Others: San Ching Engineering Cathay United Bank Total	Building constructing or expansion Management fee of trust service	$1,901,357 7,732	$1,467,349 4,936
		$1,909,089	$1,472,285

a. The purchase price to the above related parties was determined through agreement based on the market rates.
b. The total price of the commissioned construction and consultancy contracts signed by the Company and San Ching Engineering was NT$7,325,649 thousand and NT$10,111,544 thousand as of December 31, 2020 and 2019, respectively.

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English Translation of Financial Statements Originally Issued in Chinese

C. Sales

a. Sales revenue

Name of the relatedparties	Type	For the years ended December 31,	For the years ended December 31,
		2020	2019
Subsidiary: Jinhua Realty	Sales of construction land	$1,614,198	$-

The transaction price and collection terms above were not significantly different from those with the non-related parties.

b. Rental Income

Name of the relatedparties	Type	For the years ended December 31,	For the years ended December 31,
		2020	2019
Subsidiary: Cathay Hospitality Cathay Hospitality Consulting Others: Cathay Life Insurance Cathay United Bank San Ching Engineering Total	Office and vehicles rental Office and vehicles rental Office and vehicles rental Office and vehicles rental Vehicles rental	$32,815 30,964 7,977 18,594 2,641	$31,555 30,295 8,057 18,438 3,388
		$92,991	$91,733

The rental period is 2 to 5 years and rents are collected monthly according to the contract.

D. Notes and accounts receivable – related parties

The debt between the Company and the related parties (both uninterested) are as follows:

Name of the relatedparties	As of December 31,	As of December 31,
	2020	2019
Others: Nangang One Nangang Two Total	$- -	$3,696 4,704
	$-	$8,400

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English Translation of Financial Statements Originally Issued in Chinese

E. Notes and accounts payable – related parties

The debt between the Company and the related parties (both uninterested) are as follows:

Name of the relatedparties	As of December 31,	As of December 31,
	2020	2019
Others: San Ching Engineering	$48,574	$210,853

F. Lease - related parties
a. Right-of-use assets

Others: Cathay Life Insurance	As of December 31,	As of December 31,
	2020	2019
	$8,083	$22,861

The Company acquired right-of-use assets from Cathay Life Insurance amounting to NT$1,388 thousand and NT$30,304 thousand for the years ended December 31, 2020 and 2019, respectively.

b. Lease liabilities

Others: Cathay Life Insurance c. Interest expenses	As of December 31,	As of December 31,
	2020	2019
	$8,168	$22,920

Others: Cathay Life Insurance	For the years ended December 31,	For the years ended December 31,
	2020	2019
	$275	$177

G. Others
a. Other receivables

Name of therelated parties	Items	As of December31,	As of December31,
		2020	2019
Subsidiary: Bannan Realty	Business commission fee	$4,719	$-

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English Translation of Financial Statements Originally Issued in Chinese

b. Refundable deposits

Name of the relatedparties	Items	As of December 31,	As of December 31,
		2020	2019
Others: Cathay Life Insurance Lin Yuan Investment Total	Rent deposit Joint construction deposit	$4,090 8,000	$3,959 -
		$12,090	$3,959

c. Guarantee deposit received

Name of the relatedparties	Items	As of December 31,	As of December 31,
		2020	2019
Others: Cathay United Bank	Rent deposit	$4,446	$4,625

d. Construction in progress

In 2020, the Company executed the urban renewal project of Lin Yuan Building and paid NT$3,960 thousand for landlords’ relocation fee and rent subsidy, which was listed in Inventory-construction in progress.

2019: None.

H. Other income

Name of the relatedparties	Items	For the years ended December 31,	For the years ended December 31,
		2020	2019
Subsidiary� Bannan Realty Others: Cathay Life Insurance Cathay United Bank Nangang One Nangang Two Total	Business commission fee Management fee and planning fee Management fee and planning fee Consulting service Consulting service	$4,719 3,445 4,852 - -	$- 4,280 4,846 7,040 8,960
		$13,016	$25,126

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English Translation of Financial Statements Originally Issued in Chinese

I. Operating costs

Name of the relatedparties	Items	For the years ended December 31,	For the years ended December 31,
		2020	2019
Subsidiary: Lin Yuan Property Others: Cathay Century Total	Management and repairing fee Insurance fee	$40,183 6,041	$38,656 6,182
		$46,224	$44,838

J. Operating expenses

Name of the relatedparties	Items	For the years ended December 31,	For the years ended December 31,
		2020	2019
Others: Cathay Life Insurance San Ching Engineering Total	Office renting Service fee	$278 2,410	$16,162 10,901
		$2,688	$27,063

K. Property transaction

The property transaction between the Company and the related parties are as follows:

For the	year ended December 31,2020
Name of the relatedparties	Subject matter	Purchaseprice
Subsidiary:
Lin Yuan Property	Business facilities	$15,327
Others:
San ChingEngineering	Shares of Lin Yuan Property	53,247
Total		$68,574

For theyear ended December 31,2019
Name of the relatedparties	Subject matter	Purchaseprice
Subsidiary:
Lin Yuan Property	Business facilities	$7,759

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English Translation of Financial Statements Originally Issued in Chinese

L. Key management personnel compensation

Short-term employee benefits Post-employment benefits Total	For theyears ended December 31,	For theyears ended December 31,
	2020	2019
	$36,049 323	$24,945 108
	$36,372	$25,053

8. PLEDGED ASSETS

The following assets were pledged to banks as collaterals for bank loans:

Items	As of December 31, 2020 2019 Secured liabilities	As of December 31, 2020 2019 Secured liabilities
	2020
Inventories Investment property Total	$2,640,000 8,057,172	$3,897,159 Short-term loan & Long-term loan 8,057,172 Short-term loan & Long-term loan $11,954,331
	$10,697,172

Pledged or mortgaged assets are expressed in terms of collateral amounts.

9. SIGNIFICANT COMMITMENTS AND CONTINGENT LIABILITIES

(1) Significant contract

Besides Note 7.(2).B, as of December 31, 2020, the total contract price of the construction contracts signed by the Company with non-related parties was NT$9,037,011 thousand, in which NT$4,846,793 thousand was not paid.

(2) Others

Guarantee notes issued for borrowings (financing) were NT$40,505,300 thousand as of December 31, 2020.

10. SIGNIFICANT DISASTER LOSSES

None.

11. SIGNIFICANT SUBSEQUENT EVENTS

None.

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English Translation of Financial Statements Originally Issued in Chinese

12. OTHERS

(1) Categories of financial instruments

Financial Assets

Financial assets at fair value through other comprehensive income Financial assets at amortized cost: Cash and Cash equivalents Notes receivable Accounts receivable Other receivables Refundable deposits Subtotal Total Financial Liabilities	As of December 31,	As of December 31,
	2020	2019
	$4,511,107 1,969,143 31,527 240,921 13,009 1,214,115	$4,689,036 1,637,929 39,048 55,615 9,568 911,143
	3,468,715	2,653,303
	$7,979,822	$7,342,339

Financial liabilities at amortized cost: Short-term loans Short-term notes payable Accounts payables Bonds payable (including current portion) Long-term loans (including current portion) Lease liabilities Guarantee deposit received Total	As of December 31,	As of December 31,
	2020	2019
	$6,610,000 1,418,854 1,289,541 - 10,629,741 14,417 82,459	$6,900,000 499,540 986,426 3,000,000 7,799,510 33,252 137,444
	$20,045,012	$19,356,172

(2) Financial risk management objectives and policies

The Company’s principal financial risk management objective is to manage the market risk, credit risk and liquidity risk related to its operating activates. The Company identifies measures and manages the above-mentioned risks based on the Company’s policy and risk appetite.

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English Translation of Financial Statements Originally Issued in Chinese

The Company has established appropriate policies, procedures and internal controls for financial risk management. Before entering into significant transactions, due approval process by the board of directors and audit committee must be carried out based on related protocols and internal control procedures. The Company consistently complies with its financial risk management policies.

(3) Market risk

Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of the changes in market price. Market risk comprises currency risk, interest rate risk and other price risk (such as equity instrument).

In practice, it is rarely the case that a single risk variable will change independently from other risk variable, and there are usually interdependencies between risk variables. However, the sensitivity analysis disclosed below does not consider the interdependencies between risk variables.

Foreign currency risk

The Company’s exposure to the risk of changes in foreign exchange rates relates primarily to the Company’s net investments in foreign subsidiaries. Furthermore, as net investments in foreign subsidiaries are for strategic purposes, they are not hedged by the Company.

The Company mainly engaged in various business activities in Taiwan, and the foreign currency held is not significant. Therefore, the Company’s risk due to changes in foreign currency exchange rates is not significant.

Interest rate risk

Interest rate risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company’s exposure to the risk of changes in market interest rates relates primarily to the Company’s investments with bank borrowings with variable interest rates.

The interest rate sensitivity analysis is performed on items exposed to interest rate risk as at the end of the reporting period, including investments and borrowings with variable interest rates and interest rate swaps. At the reporting date, a change of 10 basis points of interest rate in a reporting period could cause the profit to decrease/increase by NT$8,029 thousand and NT$7,400 thousand for the years ended December 31, 2020 and 2019, respectively.

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English Translation of Financial Statements Originally Issued in Chinese

Equity price risk

The Company’s listed and unlisted equity securities are susceptible to market price risk arising from uncertainties about future values of the investment securities. The Company’s listed and unlisted equity securities are classified under held for financial assets at fair value through other comprehensive income. The Company manages the equity price risk through diversification and placing limits on individual and total equity instruments. Reports on the equity portfolio are submitted to the Company’s senior management on a regular basis. The Company’s Board of Directors reviews and approves all equity investment decisions.

When the price of the listed equity securities at fair value through other comprehensive income increases/decreases 5%, it could have impacts of NT$206,400 thousand and NT$218,560 thousand for the years ended December 31, 2020 and 2019 on the equity attributable to the Company.

Please refer to Note 12.(8) for sensitivity analysis information of other equity instruments or derivatives that are linked to such equity instruments whose fair value measurement is categorized under Level 3.

(4) Credit risk management

Credit risk is the risk that a counterparty will not meet its obligations under a contract, leading to a financial loss. The Company is exposed to credit risk from operating activities (primarily for accounts receivable and notes receivable) and from its financing activities, including bank deposits and other financial instruments.

Customer credit risk is managed by each business unit subject to the Company’s established policy, procedures and control relating to credit risk management. Credit limits are established for all counter parties based on their financial position, rating from credit rating agencies, historical experience, prevailing economic condition and the Company’s internal rating criteria etc. Certain counter parties’ credit risk will also be managed by taking credit enhancing procedures, such as requesting for prepayment or insurance.

As of December 31, 2020 and 2019, accounts receivable from top ten customers represented low percentage of the total accounts receivable of the Company. The credit concentration risk of other accounts receivable is insignificant.

Credit risk from balances with banks, fixed income securities and other financial instruments is managed by the Company’s treasury department in accordance with the Company’s policy. The Company only transacts with counterparties approved by the internal control procedures, which are banks and financial institutions, companies and government entities with good credit rating and no material default risk. Therefore, there is no significant credit risk for these counterparties.

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English Translation of Financial Statements Originally Issued in Chinese

(5) Liquidity risk management

The Company’s objective is to maintain a balance between continuity of funding and flexibility using cash and cash equivalents, highly liquid equity investments, bank borrowings, convertible bonds and finance leases. The table below summarizes the maturity profile of the Company’s financial liabilities based on the contractual undiscounted payments and contractual maturity. The payment amount includes the contractual interest. The undiscounted payment relating to borrowings with variable interest rates is extrapolated based on the estimated interest rate yield curve as of the end of the reporting period.

Non-derivative financial instruments

	As of December 31,	As of December 31,	2020
Less than 1year	2 to 3years	4 to 5years	> 5years	Total
$13,533,145 1,289,541 12,317 24,093	$5,274,869 $- - - 2,100 - 38,609 11,467 As of December 31,		$- - - 8,290 2019	$18,808,014 1,289,541 14,417 82,459
Less than 1year	2 to 3years	4 to 5years	> 5years	Total
$10,505,616 986,426 3,042,000 19,300 33,752	$4,878,196 - - 13,952 36,454	$- - - - 11,045	$- - - - 56,193	$15,383,812 986,426 3,042,000 33,252 137,444

(6) Reconciliations of the liabilities from financing activities

Reconciliations of the liabilities for the year ended December 31, 2020:

As of January 1, 2020 Cash flows Non-cash changes Interest on lease liabilities Other (Note) As of December 31, 2020	Short-term borrowings	Short-term notes and bills payable	Long-term borrowings and Bonds payable (including currentportion)	Lease liabilities	Total
	$6,900,000 (290,000) - -	$499,540 919,314 - -	$10,799,510 (169,769) - -	$33,252 (20,649) 426 1,388	$18,232,302 438,896 426 1,388
	$6,610,000	$1,418,854	$10,629,741	$14,417	$18,673,012

Note: Lease liabilities that meet the lease recognition requirements in this period.

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Reconciliations of the liabilities for the year ended December 31, 2019:

As of January 1, 2019 Cash flows Non-cash changes Interest on lease liabilities Other (Note) As of December 31, 2019	Short-term borrowings	Short-term notes and bills payable	Long-term borrowings and Bonds payable (including currentportion)	Lease liabilities	Total
	$8,150,000 (1,250,000) - -	$- 499,540 - -	$8,198,050 2,601,460 - -	$- (9,677) 177 42,752	$16,348,050 1,841,323 177 42,752
	$6,900,000	$499,540	$10,799,510	$33,252	$18,232,302

Note: Lease liabilities that meet the lease recognition requirements in this period.

(7) Fair values of financial instruments

A. The methods and assumptions applied in determining the fair value of financial instruments:

The fair value of the financial assets and liabilities are included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. The following methods and assumptions were used to estimate the fair values:

a. The carrying amount of cash and cash equivalents, trade receivables, accounts payable and other current liabilities approximate their fair value due to their short maturities.
b. For financial assets and liabilities traded in an active market with standard terms and conditions, their fair value is determined based on market quotation price (including listed equity securities and bonds) at the reporting date.
c. Equity instruments that are not actively traded in the market (including shares of publicly issued companies in an inactive market and shares of undisclosed companies) are estimated by market method and are derived from market transactions of the same or comparable company equity instruments. The fair value is derived from the price and other relevant information (such as lack of liquidity discount factor, similar company stock price-to-earnings ratio, similar company's stock price-to-equity ratio).

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English Translation of Financial Statements Originally Issued in Chinese

B. Fair value of financial instruments measured at amortized cost

The carrying amount of the Company’s financial instruments measured at amortized cost (including cash and cash equivalents, receivables, payables and other current liabilities) measured at amortized cost approximate their fair value.

(8) Fair value measurement hierarchy

A. Fair value measurement hierarchy

All asset and liabilities for which fair value is measured or disclosed in the financial statements are categorized within the fair value hierarchy, based on the lowest level input that is significant to the fair value measurement as a whole. Level 1, 2 and 3 inputs are described as follows:

Level 1 – Quoted (unadjusted) market prices in active markets for identical assets or liabilities that the entity can access at the measurement date

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

Level 3 – Unobservable inputs for the asset or liability

For assets and liabilities that are recognized in the financial statements on a recurring basis, the Company determines whether transfers have occurred between Levels in the hierarchy by re-assessing categorization at the end of each reporting period.

B. Fair value measurement hierarchy of the Company’s assets and liabilities

The Company does not have assets that are measured at fair value on a non-recurring basis. Fair value measurement hierarchy of the Company’s assets and liabilities measured at fair value on a recurring basis is as follows:

As of December 31, 2020

Financial assets: Financial assets at fair value through other comprehensive income Stocks	Level 1	Level 2	Level 3	Total
	$2,437,036	$1,690,972	$383,099	$4,511,107

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English Translation of Financial Statements Originally Issued in Chinese

As of December 31, 2019

Financial assets: Financial assets at fair value through other comprehensive income Stocks	Level 1	Level 2	Level 3	Total
	$2,454,341	$1,916,850	$317,845	$4,689,036

The Company had no assets and liabilities recurring measured at fair value transferring between Level 1and Level 2 for the years ended December 31, 2020 and 2019.

Reconciliation for recurring fair value measurements in Level 3 of the fair value hierarchy for movements during the period is as follows:

	Asset measured at fair
	value through other
	comprehensive income
	Stocks
As of January 1, 2020	$317,845
Total gains and losses recognized for the year ended 31,
December 2020:
Amount recognized in OCI	78,241
Disposals	(12,987)
As of December 31, 2020	$383,099
	Asset measured at fair
	value through other
	comprehensive income
	Stocks
As of January 1, 2019	$319,451
Total gains and losses recognized for the year ended 31,
December 2019:
Amount recognized in OCI	3,369
Disposals	(4,975)
As of December 31, 2019	$317,845

Total gains and losses recognized in profit or loss is NT$75,136 thousand and NT$3,326 thousand for the years ended December 31, 2020 and 2019, respectively.

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Information on significant unobservable inputs to valuation

Description of significant unobservable inputs to valuation of recurring fair value measurements categorized within Level 3 of the fair value hierarchy is as follows:

As of December 31, 2020

Financial assets� Financial assets at fair value through other comprehensive income Stocks As of Financial assets� Financial assets at fair value through other comprehensive income Stocks	Valuation technique	Material unobservable inputs	Quantitative information	Inputs and the fair value relationship	Inputs and the fair value relationship’s sensitivity analysis value relationship
	Market approach Discount for lack of marketability Assets approach P/E ratio of similar entities December 31, 2019 Valuation technique Material unobservable inputs		30%~50% 0%~30% Quantitative information	The higher the discount for lack of marketability, the lower the fair value of the stocks The higher the P/E ratio of similar entities, the higher the fair value of the stocks Inputs and the fair value relationship	10% increase (decrease) in the discount for lack of marketability would result in decrease (increase) in the Company’s equity by NT$34,998 thousand 10% increase (decrease) in the P/E ratio of similar entities would result in increase (decrease) in the Company’s equity by NT$17,530 thousand Inputs and the fair value relationship’s sensitivity analysis value relationship
	Market approach Assets approach	Discount for lack of marketability P/E ratio of similar entities	0%~30% 0%~30%	The higher the discount for lack of marketability, the lower the fair value of the stocks The higher the P/E ratio of similar entities, the higher the fair value of the stocks	10% increase (decrease) in the discount for lack of marketability would result in decrease (increase) in the Company’s equity by NT$18,863 thousand 10% increase (decrease) in the P/E ratio of similar entities would result in increase (decrease) in the Company’s equity by NT$18,579 thousand

230

English Translation of Financial Statements Originally Issued in Chinese

(9) Significant assets and liabilities denominated in foreign currencies

The Company did not hold major foreign currency financial assets and liabilities as of December 31, 2020.

Financial assets	As of December 31,2019	As of December 31,2019	As of December 31,2019
	Foreign currency	Exchange rate	NTD
	$313	30.201	$9,449
Investment accounted for using equity method USD

(10) Capital management

The primary objective of the Company’s capital management is to ensure that it maintains a strong credit rating and healthy capital ratios to support its business and maximize shareholder value. The Company manages its capital structure and adjusts it, considering changes in economic conditions. To maintain or adjust the capital structure, the Company may adjust dividend payment to shareholders, return capital to shareholders or issue new shares.

13. OTHER DISCLOSURE

(1) Significant transaction information

A. Financings provided to others: None.
B. Endorsement/guarantee provided to others: None
C. Securities held as of December 31, 2020 (not including subsidiaries, associates and joint ventures): Please refer to Table 2.
D. Individual securities acquired or disposed of with accumulated amount exceeding NT$300 million or 20% of the paid-in capital: Please refer to Table 3.
E. Acquisition of property with the amount exceeding NT$300 million or 20% of the paid-in capital: Please refer to Table 4.
F. Disposal of property with amount exceeding NT$300 million or 20% of the paid-in capital: Please refer to Table 5.
G. Purchases or sales of goods from or to related parties exceeding NT$100 million or 20% of the paid-in capital or more: Please refer to Table 6.
H. Receivables from related parties with amounts exceeding NT$100 million or 20% of the paid-in capital: None.
I. Derivative financial instruments undertaken: None.
J. Significant intercompany transactions between consolidated entities: Please refer to Table 7.

231

English Translation of Financial Statements Originally Issued in Chinese

(2) Investee information

A. Financings provided to others: None.
B. Endorsement/guarantee provided to others: Please refer to Table 1.
C. Securities held as of December 31, 2020 (not including subsidiaries, associates and joint ventures): Please refer to Table 8.
D. Individual securities acquired or disposed of with accumulated amount exceeding NT$300 million or 20% of the paid-in capital: None.
E. Acquisition of property with the amount exceeding NT$300 million or 20% of the paid-in capital: None.
F. Disposal of property with amount exceeding NT$300 million or 20% of the paid-in capital: None.
G. Purchases or sales of goods from or to related parties exceeding NT$100 million or 20% of the paid-in capital or more: None.
H. Receivables from related parties with amounts exceeding NT$100 million or 20% of the paid-in capital: None.
I. Derivative financial instruments undertaken: None.
J. Names, locations and related information of investee companies: Please refer to Table 9.

(3) Investment in Mainland China

Please refer to Table 10.

(4) Information on Major Shareholders

Please refer to Table 11.

14. OPERATING SEGMENT INFORMATION

The Company is not required to prepare operating segment information according to article 22, Regulations Governing the Preparation of Financial Reports by Securities Issuers. The Company has disclosed the operating segment information in the consolidated financial statement.

232

Unit�NT$1000

,
Note1�The Company and its subsidiaries are coded as follows:
(1) The Company is coded "0".
(2) The subsidiaries are coded starting from "1" in the order.
Note2�Relationship between the endorser/guarantor and the party being endorsed/guaranteed is classified into the following seven categories:
(1) Having business relationship.
(2) The endorser/guarantor parent company owns directly more than 50% voting shares of the endorsed/guaranteed subsidiary.
(3) The endorser/guarantor parent company and its subsidiaries jointly own more than 50% voting shares of the endorsed/guaranteed company.
(4) The endorser/guarantor company and endorsed/guaranteed company both are owned directly or indirectly more than 90% voting shares by the company.
(5) Mutual guarantee of the trade as required by the construction contract.
(6) Due to joint venture, each shareholder provides endorsements/guarantees to the endorsed/guaranteed company in proportion to its ownership.
(7) The performance guarantees for the sale of pre-sales contracts under the Consumer Protection Law are jointly guaranteed
Note3�Fill in limit on endorsements/guarantees provided for a single party and ceiling on total amount of endorsements/guarantees provided as prescribed in the endorser/guarantor company’s
“Procedures for Provision of Endorsements and Guarantees”, and state each individual party to which the endorsements/guarantees have been provided and the calculation for ceiling on total amount
of endorsements/guarantees provided in the footnote.
Note4�Fill in the year-to-date maximum outstanding balance of endorsements/guarantees provided.
Note5�Once endorsement/guarantee contracts or promissory notes are signed/issued by the endorser/guarantor company to the banks, the endorser/guarantor company bears endorsement/guarantee liabilities. And all other
events involve endorsements and guarantees should be included in the balance of outstanding endorsements and guarantees.
Note6�Fill in the actual amount of endorsements/guarantees used by the endorsed/guaranteed company.
Note7�Fill in ‘Y’ for those cases of provision of endorsements/guarantees by listed parent company to subsidiary and provision by subsidiary to listed parent company, and provision to the party in Mainland China.
Limit of the
Endorsement /
Guarantee
Amount for
Receiving Party
(Note3)
Amount of
Collateral
Percentage
Parent
Company
Endorsed /
Guaranteed for
the
Subsidiaries
(Note7)
Subsidiaries
Endorsed/
Guaranteed
for the
Parent
Company
(Note7)
Endorsement or
Guarantee for
Entities in
China (Note7)
No.
(Note1)
Receiving Party
Company
Name
Limit on the
Endorsement/
Guarantee
Amount
(Note3)
Endorser/
Guarantor
N
Y
1
Cathay Healthcare
Management
Co.,Ltd.
Hangzhou Kunning
Health Consulting
Limited
3
Y
$28,508
$-
$-
0.00%
Note
A. Limit of the Endorsement / Guarantee Amount for Receiving Party�NT$689,157 thousand 30%
B. Limit on the Endorsement/Guarantee Amount�NT$689,157 thousand60%
$413,494
Relationship
(Note2)
Maximum
Balance for the
Period (Note4)
Ending
Balance
(Note5)
Actual Amount
Borrowed
(Note6)
$-
$206,747

233

		Note Market Value		$2,437,036		114,830			1,690,973		-		25,922		92,965		45		74,828		74,508
	As of December 31, 2020	Carrying Value Percentage of Ownership (�)		$2,437,036 0.44%		114,830 11.00%			3.68% 1,690,973		3.23% -		10.00% 25,922		1.72% 92,965		45 3.33%		74,828 4.99%		4.99% 74,508
		Shares Holding Company Type and Name of the Securities (Note) Relationship Financial Statement Account	Stock� Cathay Financial Holdings Co., Ltd. 57,681,332 Cathay Real Estate Development Co., Ltd. Others Financial assets at fair value through other comprehensive income–current		Stock� Financial assets at fair value	Symphox Information Co., Ltd. 5,489,000 � Others through other comprehensive income–non-current		Stock�	Taiwan Star Telecom Co., Ltd. � None � 195,000,000	Stock�	Gong Cheng Industrial Co. � None � 1,580,083	Stock�	Gian Feng Investment Co., Ltd. � None � 2,000,000	Stock�	MetroWalk international Co., Ltd. � None � 3,448,276	Stock�	Budworth Investments Limited � None � 30,314	Stock�	Nangang International One Co., Ltd. � Others � 7,485,000	Stock�	Nangang International Two Co., Ltd. Others � 7,485,000 �

234

Unit�NT$1,000	Gain / Loss Shares Amount As of December 31, 2020	$408,000 $- 40,800,000	$408,000 $- 40,800,000
	Shares Amount Shares (In thousand) Amount Shares Price Book Cost Company Securities Category (Note 1) Financial Statement Account Counterparty (Note 2) Relationship (Note 2) As of January 1, 2020 Purchase (Note 3) Sell (Note 3)	Cathay Real Estate Development Co., Ltd. The stocks of Jinhua Realty Co., Ltd. Investments accounted for using equity method (Note5) Subsidiary - $- 40,800,000 $408,000 - $- $-	Subsidiary - $- 40,800,000 $408,000 The stocks of Bannan Realty Co., Ltd. Investments accounted for using equity method � (Note5) - $- $-	Note 1� Marketable securities in the table refer to stocks, bonds, beneficiary certificates and other relatedderivative securities.	Note 2�Fill in the columns the counterparty and relationship if securities are accounted for under the equity method; otherwise leave the columns blank.	Note 3� The accumulated consideration of acquisition or sale should be calculated separately at their market values to verify whether they individually reach NT$300 million or 20% of paid-in capital or more.	Note 4� The Company' s paid-in capital means the parent's paid-in capital. If the stock has no par value or the par value do not equal to NT$10, according to the regulation of 20% paid-in capital transaction amount,	the par value will be calculated by 10% of the total parent equity.	Note 5�Initial acquisition.

235

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----- Start of picture text -----

Others None None None None None
NT$1,000
�
Unit Purpose of Acquisition and Current Condition Construction Construction Construction Construction Construction
parties parties parties parties parties
References for
Determining Price Negotiation by two Negotiation by two Negotiation by two Negotiation by two Negotiation by two
Amount $- - - - -
- - - - -
Date of Transfer
the Counterparty - - - - -
with the Company
Relationship
- - - - -
Disclosure of Information on Previous Transfer of Property is Required for Related Parties who are also Owner
with the Company None None None None None
Relationship
Counterparty Legal person Individual Individual Individual Individual
Legal person and
agreement agreement agreement agreement agreement
Installment by Installment by Installment by Installment by Installment by
Status of Payment
697,376
Transaction Amount $1,500,000 1,518,151 1,399,701 1,160,998
Date
Transaction 2020.01.13 2020.01.21 2020.07.10 2020.09.30 2020.10.21
City
Taipei City
Property Name
Taichung City (Note)
Land Serial No.132, Jinhua Section, Anping District, Tainan City Land Serial No. 256,257,273, Renping Section, Beitun District, Land Serial No. 74, Ruanqiao Section, Beitou District, Taipei City Land Serial No. 433 etc., Muzha Section, Wenshan District, Taipei Land Serial No. 112, Section 5, Tammei Section, Neihu District,
Ltd. � � � �
Company
Cathay Real Estate Development Co.,
----- End of picture text -----

236

Unit�NT$1000

,
Cathay Real Estate
Development Co.,
Ltd.
Land Serial No. 132, Jinhua
Section, Anping District, Tainan
City
2020.11.12
2020.1.13
$1,583,939
$1,614,198
Installment by
agreement
$30,259
Jinhua Realty
Co., Ltd.
Subsidiary
The Company's
operation plan
Valuation report
from Real estate
appraiser
None
Note�The disposal of profit and loss are recognized as the unrealized sales profit of the related parties.
Disposal of profit
and loss (Note)
Counterparty
Relationship
with the
Company
Purpose of
Disposal
References for
Determining
Price
Others
Company
Property Name
Transaction
Date
Original date of
property
acquisition
Carrying
Value
Transaction
Amount (Contract
price )
Status of Receivable

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----- Start of picture text -----

NT$1,000
� Note
Unit Constuction Obtain deposal benefits
(Note)
-
payable 5.03%
notes/accounts
Percentage of total
-
Notes/accounts payable $48,574
Balance
Credit term - -
$- -
party transactions
Differences in transaction terms compared to third Unit price
Credit term
Not applicable Not applicable
(sales) 17.58% 12.10%
Percentage of total purchases
Amount $1,901,357 $1,614,198
Transaction
Purchases (Sales) Construnction-in-progress Land held for construction site
Relationship with the counterparty Associate Subsidiary
Counterparty
San Ching Engineering Co., Ltd Jinhua Realty Co., Ltd.
Purchaser / Seller
Cathay Real Estate Development Co., Ltd. Cathay Real Estate Development Co., Ltd.
----- End of picture text -----

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NT$1,000
�
Unit (Note 3) - - - - 0.02% - 0.01% - - - - 0.01% - - 0.01% - - - 0.19% - - 0.01% - - 11.55% 11.34% 0.22% 0.01% 0.03% - - 0.02% - - - 0.01% - - - - - - 0.01% 0.01% - 0.19% - - 0.01% - - 2.71% 0.01% 0.03% - -
Percentage of consolidated total operating revenues or total assets
Transaction terms Regular Regular Regular Regular Regular Regular Regular Regular Regular Regular Regular Regular Regular Regular Regular Regular Regular Regular Regular Regular Regular Regular Regular Regular Regular Regular Regular Regular Regular Regular Regular Regular Regular Regular Regular Regular Regular Regular Regular Regular Regular Regular Regular Regular Regular Regular Regular Regular Regular Regular Regular Regular Regular Regular Regular Regular
Transaction Amount $209 95 182 4 13,334 41 1,800 22 106 18 28 1,059 95 90 1,038 617 60 502 26,794 148 1,486 1,486 66 40 1,614,198 1,583,939 30,259 4,719 4,719 29 23 12,813 847 326 41 1,800 22 106 46 209 277 4 1,059 1,900 502 26,794 148 1,486 1,486 66 40 1,614,198 4,719 4,719 29 23
investment property
�
Account land buildings
� � related parties related parties
� �
Rental income Operating expenses-conference fee Operating expenses-entertainment expenses Other income Deferred credits-gains on Inter-affiliate accounts Realized gain from inter-affiliate accounts Cost of rental sales Other income Rental income Construction cost Operating expenses-advertising fee Rental income Operating expenses-advertising fee Construction cost Operating expenses-miscellaneous expenses Operating expenses-entertainment expenses Operating expenses-service fee Operating expenses-miscellaneous expenses Cost of rental sales Other income Other receivables Other income Rental income Guarantee deposits received Construction revenue Construction cost Unrealized profit from sales Other receivables Other income Rental income Guarantee deposits received Investment property Investment property Accumulated depreciation Cost of rental sales Management fee income Operating expenses-service fee Rent Service income Rent Hospitality income Operating expenses-miscellaneous expenses Rent Hospitality income Technical service income Maintenance income Operating expenses-service fee Accounts payable Operating expenses-service fee Rent Refundable deposits Land held for construction site Accounts payable Operating expenses-service fee Rent Refundable deposits
1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2
(Note 2)
Relationship
English Translation of Financial Statements Originally Issued in Chinese
Counterparty
Jinhua Realty Co., Ltd. Jinhua Realty Co., Ltd. Jinhua Realty Co., Ltd. Jinhua Realty Co., Ltd. Jinhua Realty Co., Ltd. Jinhua Realty Co., Ltd. Jinhua Realty Co., Ltd. Bannan Realty Co., Ltd. Bannan Realty Co., Ltd. Bannan Realty Co., Ltd. Bannan Realty Co., Ltd.
Cathy Hospitality Consulting Co., Ltd. Cathy Hospitality Consulting Co., Ltd. Cathy Hospitality Consulting Co., Ltd. Cathy Hospitality Consulting Co., Ltd. Cathay Real Estate Management Co., Ltd. Cathay Real Estate Management Co., Ltd. Cathay Real Estate Management Co., Ltd. Cathay Real Estate Management Co., Ltd. Cathay Healthcare Management Co., Ltd. Cathay Healthcare Management Co., Ltd. Cathay Healthcare Management Co., Ltd. Cathay Hospitality Management Co., Ltd. Cathay Hospitality Management Co., Ltd. Cathay Hospitality Management Co., Ltd. Cathay Hospitality Management Co., Ltd. Cathay Hospitality Management Co., Ltd. Cathay Hospitality Management Co., Ltd. Lin Yuan Property Management Co., Ltd. Lin Yuan Property Management Co., Ltd. Lin Yuan Property Management Co., Ltd. Cathay Real Estate Development Co., Ltd. Cathay Real Estate Development Co., Ltd. Cathay Real Estate Development Co., Ltd. Cathay Real Estate Development Co., Ltd. Cathay Real Estate Development Co., Ltd. Cathay Real Estate Development Co., Ltd. Cathay Real Estate Development Co., Ltd. Cathay Real Estate Development Co., Ltd. Cathay Real Estate Development Co., Ltd. Cathay Real Estate Development Co., Ltd. Cathay Real Estate Development Co., Ltd. Cathay Real Estate Development Co., Ltd. Cathay Real Estate Development Co., Ltd. Cathay Real Estate Development Co., Ltd. Cathay Real Estate Development Co., Ltd. Cathay Real Estate Development Co., Ltd. Cathay Real Estate Development Co., Ltd. Cathay Real Estate Development Co., Ltd. Cathay Real Estate Development Co., Ltd. Cathay Real Estate Development Co., Ltd. Cathay Real Estate Development Co., Ltd. Cathay Real Estate Development Co., Ltd. Cathay Real Estate Development Co., Ltd. Cathay Real Estate Development Co., Ltd. Cathay Real Estate Development Co., Ltd. �
Company name
Jinhua Realty Co., Ltd. Jinhua Realty Co., Ltd. Jinhua Realty Co., Ltd. Jinhua Realty Co., Ltd. Jinhua Realty Co., Ltd. Bannan Realty Co., Ltd. Bannan Realty Co., Ltd. Bannan Realty Co., Ltd. Bannan Realty Co., Ltd.
Cathay Real Estate Development Co., Ltd. Cathay Real Estate Development Co., Ltd. Cathay Real Estate Development Co., Ltd. Cathay Real Estate Development Co., Ltd. Cathay Real Estate Development Co., Ltd. Cathay Real Estate Development Co., Ltd. Cathay Real Estate Development Co., Ltd. Cathay Real Estate Development Co., Ltd. Cathay Real Estate Development Co., Ltd. Cathay Real Estate Development Co., Ltd. Cathay Real Estate Development Co., Ltd. Cathay Real Estate Development Co., Ltd. Cathay Real Estate Development Co., Ltd. Cathay Real Estate Development Co., Ltd. Cathay Real Estate Development Co., Ltd. Cathay Real Estate Development Co., Ltd. Cathay Real Estate Development Co., Ltd. Cathay Real Estate Development Co., Ltd. Cathay Real Estate Development Co., Ltd. Cathay Real Estate Development Co., Ltd. Cathay Real Estate Development Co., Ltd. Cathay Real Estate Development Co., Ltd. Cathay Real Estate Development Co., Ltd. Cathay Real Estate Development Co., Ltd. Cathay Real Estate Development Co., Ltd. Cathay Real Estate Development Co., Ltd. Cathay Real Estate Development Co., Ltd. Cathay Real Estate Development Co., Ltd. Cathay Real Estate Development Co., Ltd. Cathay Real Estate Development Co., Ltd. Cathay Real Estate Development Co., Ltd. Cathay Real Estate Management Co., Ltd. Cathay Real Estate Management Co., Ltd. Cathay Real Estate Management Co., Ltd. Cathay Real Estate Management Co., Ltd. Cathay Real Estate Management Co., Ltd. Cathay Real Estate Management Co., Ltd. Cathay Healthcare Management Co., Ltd. Cathay Healthcare Management Co., Ltd. Cathy Hospitality Consulting Co., Ltd. Cathy Hospitality Consulting Co., Ltd. Cathy Hospitality Consulting Co., Ltd. Cathay Hospitality Management Co., Ltd. Cathay Hospitality Management Co., Ltd. Lin Yuan Property Management Co., Ltd. Lin Yuan Property Management Co., Ltd. Lin Yuan Property Management Co., Ltd. The caculation for the Percentage of consolidated total operating revenues or total assets, if it recognized to assets or liabilities and it should be calualted by the ending balance for the consolidated assets. If it recoginzed to profit or loss and it should be caculated by the ending balance for the consolidated revenue.
The Company and its subsidiaries are coded as follows The Types of the transactions are coded as follows:
No. 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 1 1 1 1 1 2 2 3 3 3 4 4 5 5 5 6 6 6 6 6 7 7 7 7 � � �
Table 7: Significant intercompany transactions between consolidated entities (Note 1) Note1 (1) The Company is coded "0". (2) The subsidiaries are coded starting from "1" in the order. Note2 (1) The Company to subsidiaries is coded "1". (2) Subsidiaries to The Company is coded "2". (3) Subsidiaries to Subsidiaries is coded "3". Note3
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Note
$150 149
Unit: NT$1,000 ; Share Market Value
� ) 0.01% 0.01%
Percentage of Ownership (
$150 149
As of December 31, 2020
Carrying Value
15,000 15,000
Shares
�
Financial Statement Account
comprehensive income-non-current
Financial assets at fair value through other
Others Others
Relationship
Securities(Note)
Type and Name of the
Stocks Nangang International One Co., Ltd. Stocks Nangang International Two Co., Ltd.
�
Marketable securities in the table refer to stocks, bonds, beneficiary certificates and other related derivative securities.
�
Holding Company Cathay Hospitality
Management Co., Ltd. Note
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Note
Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Second-tier subsidiary Second-tier subsidiary Second-tier subsidiary Second-tier subsidiary Third-tier subsidiary
Share of $(376) 27,576 90,647 (278,435) (244,197) (11,979) 20,549 (824) (2,227) (5,509) (204) - - -
Profits/Losses
Note3
income $(376) 27,576 106,646 (286,161) (257,350) (11,979) 40,288 (1,616) (4,366) (5,509) (204) - - -
Investees company net
$- 115,014 585,785 132,418 332,026 87,000 58,767 376,917 405,774 74,328 25,796 - - -
Amount
- - - -
Percentage 100.00% 85.00% 100.00% 100.00% 100.00% 51.00% 51.00% 51.00% 100.00% 100.00%
At the end of period Number of shares - 5,000,000 46,750,000 65,000,000 75,000,000 10,000,000 1,530,000 40,800,000 40,800,000 8,000,000 2,600,000 - - -
2019 $242,747 50,000 467,500 400,000 750,000 100,000 - - - 80,000 - 103,122 2,641 (USD 90) 103,122
Balance at (USD 9,592) (USD 3,400) (USD 3,400)
December 31,
$- - - -
Original cost
50,000 467,500 650,000 750,000 100,000 68,809 408,000 408,000 80,000 26,000
2020
Balance at
December 31,
Goods industry industry Investing
Main Business Consultancy Service industry Service industry service industry
General trade and investing Construction management Wholesale of Drugs, Medical Apartment building management Housing and Building Development and Rental industry Housing and Building Development and Rental Manpower dispatch and leasing Manpower dispatch and leasing General trade and investing Business management
Region Islands ROC ROC ROC ROC ROC ROC ROC ROC ROC ROC Islands
British Virgin British Virgin Cayman Islands Cayman Islands
Management Management Management Co., Management
Consulting
Investee RealEstate Healthcare Hospitality Hospitality Property
Yuan
Cathay Real Estate Holding Corporation Cathay Co., Ltd. Cathay Co., Ltd. Cathay Co., Ltd. Cathay Ltd Cymbal Medical Network Co., Ltd. Lin Co., Ltd. Jinhua Realty Co., Ltd. Bannan Realty Co., Ltd. Xing De Co., Ltd. Cymlin Co., Ltd. Cathay Healthcare Management Limited (BVI) CCH Commercial Company Limited Cathay Healthcare Management Limited (Cayman)
Investor
Cathay Real Estate Development Co., Ltd. Cathay Real Estate Development Co., Ltd. Cathay Real Estate Development Co., Ltd. Cathay Real Estate Development Co., Ltd. Cathay Real Estate Development Co., Ltd. Cathay Real Estate Development Co., Ltd. Cathay Real Estate Development Co., Ltd. Cathay Real Estate Development Co., Ltd. Cathay Real Estate Development Co., Ltd. Cymbal Medical Network Co., Ltd. Cymbal Medical Network Co., Ltd. Cathay Healthcare Management Co., Ltd Cathay Real Estate Holding Corporation Cathay Healthcare Management Limited (BVI) Note 1: If a public company has holding company in other country and had issued consolidated financial statement under local regulations, about these investee could disclosed their holding company’s relevant information. Note 2: If not belong to Note 1, filled in by the following rules: (1) In “Investee”, “Region”, “Main Business”, “Original cost” and “At the end of period” columns should filled in in order follow the company invest directly or invest indirectly and explain each relationship in “Note” column. (2) In“Investees company net income” column should filled in each investee net income. (3) In“Share of Profits/Losses”column only need to filled in the company recognized each subsidiaries and the company under equity method’s profits or loss. Make sure it had contained each subsidiaries had contained their investee profit or loss in their net income. Note 3: Excluding the current profit and loss before the acquisition.
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241

; USD$1,000
Outflow
Inflow(Note3)
$225,604
(2)
$8,945
$8,945
(USD 7,300)
CCH REIM (HK)
Company Limited
(USD 300)
(USD 300)
$115,827
$103,122
$12,705
$115,827
$(16,606)
(USD 3,820)
(USD 3,400)
(USD420)
(USD 3,820)
(b).2
Unit�NT$1,000
Hangzhou Kunning
Health Consulting
Limited(Note3)
Consultancy
$(19,536)
(1)
$-
Investees
company net
income
Business
management
Accumulated
Inward
Remittance of
Earnings as of
December 31,
2020
Investment Flows
$-
$-
$-
0.00%
$-
$-
Tailin Management
Consulting (Shanghai)
Limited
Investee company
Method of
Investment
(Note1)
Accumulated
Outflow of
Investment from
Taiwan as of
January 1, 2020
Main
Businesses
Total Amount
of Paid-in
Capital
-
85%
$-
-
Accumulated
Outflow of
Investment from
Taiwan as of
December 31,
2020
Percentage of
Ownership
Share of
Profits/Losses
(Note2)
Carrying
Amount as of
December 31,
2020

Note1: The methods for engaging in investment in Mainland China include the following:
(1) Directly invested in China
(2) Investment in Mainland China companies through a company invested and established in a third region
(3) Other method
Note2: Investees company net income:
(a) If the investees is uder preparation, should take note.
(b) If the investees' net income is base on these three condition, should take note.
(1) The investes' finance statement has certification by the CPA firm in Taiwan which has partnership with international CPA firm.
(2) The investes' finance statement has certification by the parenent company in Taiwan.
(3) Others.
Note3: Currently being dissolved and liquidated
Accumulated Investment in Mainland
China
Investment Amounts Authorized by
Investment Commission, MOEA
Upper Limit on Investment
$14,673,134
(USD 3,820)
(USD 142,182)
$115,827
$4,053,324

242

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24.84% 17.60% 7.51% 6.22%
Ownership Percentage
288,067,626 204,114,882 87,133,000 72,200,584
Total Shares Owned
Shares
Shareholders
Employee Pension Management Committee of Cathay Life Insurance Co., Ltd. Wan Pao Development Co., Ltd. Fubon Life Insurance Co., Ltd. Cathay Life Insurance Co., Ltd.
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243

English Translation of Financial Statements Originally Issued in Chinese

CATHAY REAL ESTATE DEVELOPMENT CO., LTD.

THE CONTENTS OF STATEMENTS OF MAJOR ACCOUNTING ITEMS

Statement of Assets, Liabilities and Equity Items
Statement of cash and cash equivalents
Statement financial assets at fair value through other comprehensive income-current
Statement of notes receivable
Statement of accounts receivable
Statement of inventories
Statement of inventories�construction in progress�buildings and land
Statement of changes in financial assets at fair value through other comprehensive income-non-current
Statement of changes in investments accounted for using equity method
Statement of changes in property, pland and equipment
Statement of changes in accumulated depreciation of property, plant and equipment
Statement of changes in right-of-use assets
Statement of changes in accumulated depreciation of right-of-use assets
Statement of changes in investment property
Statement of changes in accumulated depreciation of investment property
Statement of changes in intangible assets
Statement of deferred tax assets/liabilities
Statement of other non-currents assets
Statement of short-term loans
Statement of short-term notes payable
Statement of contract liabilities-current
Statement of notes payable
Statement of accounts payable
Statement of other payables
Statement of lease liabilities
Statement of long-term loans
Statement of other non-current liabilities
Statement of Profit and Loss Items
Statement of operating revenues
Statement of operating costs
Statement of operating expenses
Statement of other income
Statement of other gains and losses
Statement of finance costs
Statement of summary statement of employee benefits, depreciation and amortization expenses by function
Item

Statement Index
1
2
3
4
5
5.1
6
7
Note 6 (7)
Note 6 (7)
8
9
Note 6 (8)
Note 6 (8)
Note 6 (9)
Note 6 (25)
10
11
12
13
14
15
16
17
18
19
20
21
22
Note 6 (23)
Note 6 (23)
Note 6 (23)
Note 6 (22)

244

English Translation of Financial Statements Originally Issued in Chinese

CATHAY REAL ESTATE DEVELOPMENT CO., LTD.

1.Statement of Cash and Cash Equivalents

December 31, 2020

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(Expressed in thousands of New Taiwan Dollars)
Items Description Amount Notes
Cash on hand and petty Cash $291
Bank deposits 1,439,400
Cash equivalent date due: January 8, 2021 529,743
interest rate:0.2%
Total $1,969,434
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245

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----- Start of picture text -----

Note
Amount $2,437,036
Fair Value
$42.25
Price
(Expressed in thousands of New Taiwan Dollars)
Accumulated impairment Not applicable
Cost
Acquisition $2,103,800
Interest Rate -
Amount $576,813
(NTD) $10
December 31, 2020 Par Value
Share
57,681,332
CATHAY REAL ESTATE DEVELOPMENT CO., LTD.
English Translation of Financial Statements Originally Issued in Chinese
Description Listed stock
2. Statement of Financial Assets at Fair Value through Other Comprehensive Income-Current
Type and Name of the Securities
Cathay Financial Holdings Co., Ltd
Financial assets at fair value through other comprehensive income– current
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246

English Translation of Financial Statements Originally Issued in Chinese

CATHAY REAL ESTATE DEVELOPMENT CO., LTD.

3. Statement of Notes Receivable

December 31, 2020

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(Expressed in thousands of New Taiwan Dollars)
Items Description Amount Notes
HYGGE Premises ticket of buildings and land $980
Cathay Plus+ Premises ticket of buildings and land 1,981
City Landmark Premises ticket of buildings and land 500
Others Premises ticket of buildings , land and rent 28,066 The amount of individual
item in others does not
exceed 5% of the account
balance.
Subtotal 31,527
Less: loss allowance -
Net amount $31,527
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247

English Translation of Financial Statements Originally Issued in Chinese

CATHAY REAL ESTATE DEVELOPMENT CO., LTD.

Statement of Accounts Receivable

December 31, 2020

(Expressed in thousands of New Taiwan Dollars)

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Items Description Amount Notes
Third parties
Housing sales $240,039
Others 848 The amount of individual item in
others does not exceed 5% of the
account balance.
Subtotal 240,887
Less: loss allowance (10)
Net amount 240,877
Related parties
Others 44 The amount of individual item in
others does not exceed 5% of the
account balance.
Less: loss allowance -
Net amount 44
Total $240,921
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248

English Translation of Financial Statements Originally Issued in Chinese

CATHAY REAL ESTATE DEVELOPMENT CO., LTD.

Statement of Inventories

December 31, 2020

(Expressed in thousands of New Taiwan Dollars)

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Amount
Net Realizable
Items Description Cost Notes
Value
Construction land $8,497,634 $14,200,670 Lower cost and
net realizable value
Construction in progress Buildings and 13,030,307 20,554,731 Lower cost and
land net realizable value
Please refer schedule 5.1
Buildings and land held for 2,914,124 3,730,298 Lower cost and
sale net realizable value
Subtotal 24,442,065 38,485,699
Prepayment for Land 2,762,342 2,762,342 Listed at cost. However, the
Purchases Company’s list prices for
housing are all greater than
the estimated cost of real
estate
Net Amount $27,204,407 $41,248,041
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249

English Translation of Financial Statements Originally Issued in Chinese

CATHAY REAL ESTATE DEVELOPMENT CO., LTD.

5.1. Statement of Inventories � Construction in Progress � Buildings and Land For the year ended December 31, 2020

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(Expressed in thousands of New Taiwan Dollars)
Project name Beginning Balance asof January 1, 2020 Addition Cost ofConstruction Building and land heldReduction (Transfer to Ending balance as ofDecember 31, 2020 Note
for sale)
Tree Rivers, Cathay’s Home II $1,435,625 $268,732 $- $1,704,357
Tree Rivers, Cathay’s Home I 1,066,834 230,012 - 1,296,846
Taoyuan City Central Road Section 2 1,958,826 19,039 - 1,977,865
Liberty Stationery Corp. 451,013 447,507 - 898,520
Cathay Uptown 740,372 155,803 - 896,175
Cathay the Seeds of Happiness 2,067,245 974,655 3,041,900 -
Cathay Plus+ 1,398,082 528,119 1,926,201 -
Cathay Mega+ 1,064,863 325,512 - 1,390,375
City Landmark 1,878,793 432,638 - 2,311,431
Cathay O2 Fu Building 2,434,370 298,383 2,732,753 -
Others 1,514,980 1,866,526 826,768 2,554,738
Total $16,011,003 $5,546,926 $8,527,622 $13,030,307
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250

(Expressed in thousands of NT and USD)
English Translation of Financial Statements Originally Issued in Chinese
CATHAY REAL ESTATE DEVELOPMENT CO., LTD.
6. Statement of Financial Asset Measured at Fair Value through Other Comprehensive Income- Non-Current
For the year ended December 31, 2020

Addition
Disposal
Unrealized
evaluation gains
and losses
Ending balance as of
December 31, 2020
Type and Name of the Securities
Share
Fair Value
Share
Amount
Share
Fair Value
Note
Stock
Gong Cheng Industrial Co., Ltd.
1,580,083
$-
-
$-
-
$-
$-
1,580,083
$-
None
MetroWalk internatinal Co., Ltd.
3,448,276
77,379
-
-
-
-
15,586
3,448,276
92,965
"
Gian Feng Investment Co., Ltd.
2,000,000
26,160
-
-
-
-
(238)
2,000,000
25,922
"
Budworth Investment Limited
30,314
45
-
-
-
-
-
30,314
45
"
Nangang International One Co., Ltd.
7,485,000
74,957
-
-
-
-
(129)
7,485,000
74,828
"
Nangang International Two Co., Ltd.
7,485,000
74,751
-
-
-
-
(243)
7,485,000
74,508
"
Lin Yuan Property Management Co., Ltd.
300,000
9,882
-
-
300,000
12,987
3,105
-
-
"
Note1
Symphox Information Co., Ltd.
5,489,000
54,671
-
-
-
-
60,159
5,489,000
114,830
"
Taiwan Star Telecom Co., Ltd.
195,000,000
1,916,850
-
-
-
-
(225,877)
195,000,000
1,690,973
"
Total
$2,234,695
$-
$12,987
$(147,637)
$2,074,071
Note1�The disposal in the current period is to obtain control after increasing the shareholding, and transfer it to the investments accounted for using the equity method.
Beginning Balance as of
January 1, 2020
Amount
Share
Amount
Guarantee or
pledged

251

CATHAY REAL ESTATE DEVELOPMENT CO., LTD. For the year ended December 31, 2020 (Expressed in thousands of New Taiwan Dollars) English Translation of Financial Statements Originally Issued in Chinese 7. Statement of Changes in Investments Accounted for Using the Equity Method	Market Value Beginning Balance as of January 1, 2020 Ending balance as of December 31, 2020 Addition Disposal	Investee Shares Percentage of Ownership (%) Amount Shares Shares Shares Percentage of Ownership (%) Unit Price Amount Cathay Real Estate Management Co., Ltd. 5,000,000 100.00% $117,650 - $27,576 (Note1) - $30,212 (Note2,5) 5,000,000 100.00% $115,014 $23.00 $115,014 None Cathay Healthcare Management Co., Ltd. 46,750,000 85.00% 579,491 - 90,647 (Note1) - 84,353 (Note2,3,5) 46,750,000 85.00% 585,785 12.53 585,785 " Cathay Hospitality Management Co., Ltd. 40,000,000 100.00% 160,854 25,000,000 250,000 (Note4) - 278,436 (Note1,8) 65,000,000 100.00% 132,418 1.81 132,418 " Cathay Hospitality Consulting Co., Ltd. 75,000,000 100.00% 576,223 - - - - 244,197 (Note1) 75,000,000 100.00% 332,026 4.03 332,026 " Cathay Real Estate Holding Corporation 9,591,891 100.00% 9,449 - - - 9,591,891 9,449 (Note1,3,7) - - - - - " Cymbal Medical Network Co., Ltd. 10,000,000 100.00% 98,979 - - - - 11,979 (Note1) 10,000,000 100.00% 87,000 8.70 87,000 " Lin Yuan Property Management Co., Ltd. - - - 1,530,000 89,358 (Note1,4,6) - 30,591 (Note2,5) 1,530,000 51.00% 58,767 38.41 58,767 " Jinhua Realty Co., Ltd. - - - 40,800,000 408,000 (Note4) - 31,083 (Note1,9) 40,800,000 51.00% 376,917 9.98 376,917 " Bannan Realty Co., Ltd. - - - 40,800,000 408,000 (Note4) - 2,226 (Note1) 40,800,000 51.00% 405,774 9.95 405,774 " Total $1,542,646 $1,273,581 $722,526 $2,093,701 NOTE 1�Share of profit or loss of subsidiaries, associates and joint ventures and profit or loss from IFRS 16. NOTE 2�Cash dividend from Investee. NOTE 3�Recognition of cumulative translation adjustment of Investee. NOTE 4�Increase of the invesetment in the current period. NOTE 5�Remeasurements of defined benefit plans. NOTE 6�Bargain purchase gain NOTE 7�Liquidation in the current period NOTE8�Adjustment of unrealized gain or loss on financial instrument NOTE 9�Parent-subsidiary relationship adjustment of unrealized intragroup profits and losses Notes Guarantee or pledged Amount Amount Amount

252

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Note
Ending balance as of December 31, 2020 $20,055 31,691 $51,746
$- - $-
(Expressed in thousands of New Taiwan Dollars)
Disposal
$- 1,388 $1,388
Addition
$20,055 30,303 $50,358
January 1, 2020
Beginning Balance as of
Item
Land Builiding Total
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253

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Note
$11,792 23,608 $35,400
Ending balance as of December 31, 2020
(Expressed in thousands of New Taiwan Dollars) $- - $-
Disposal
$7,250 16,165 $23,415
Addition
$4,542 7,443 $11,985
January 1, 2020
Beginning Balance as of
Item
Land Builiding Total
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254

English Translation of Financial Statements Originally Issued in Chinese

CATHAY REAL ESTATE DEVELOPMENT CO., LTD.

Statement of Other Non-Current Assets

December 31, 2020

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(Expressed in thousands of New Taiwan Dollars)
Items Description Amount Notes
Guarantee deposits paid
Third parties
Muzha Deposit $98,170
Nangang Deposit 194,601
Beitou Deposit 330,337
Xindian(I) Deposit 100,980
Xindian(II) Deposit 164,820
Other 313,117 The amount of individual item
in others does not exceed 5% of
the account balance.
Subtotal 1,202,025
Related parties
Others Deposit of Rent 12,090 The amount of individual item
in others does not exceed 5% of
the account balance.
Subtotal 12,090
Total 1,214,115
Land held for construction site the farm required in the 18,425
name of third party
Prepaid equipment 3,441
Other non-current assets 16,264
Total 1,252,245
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255

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Notes
Association guarantor is the Chairman of the Company Association guarantor is the Chairman of the Company Association guarantor is the Chairman of the Company Association guarantor is the Chairman of the Company Association guarantor is the Chairman of the Company Association guarantor is the Chairman of the Company
" " " " "
None
pledged
Guarantee or
(Expressed in thousands of New Taiwan Dollars)
Limited $1,450,000 1,500,000 900,000 3,000,000 500,000 1,150,000
Interest rate 0.75%~0.89% 0.75%~0.89% 0.75%~0.89% 0.75%~0.89% 0.75%~0.89% 0.75%~0.89%
Priod
December 31, 2020 2020/7~2021/1 2020/12~2021/1 2020/10~2021/3 2020/10~2021/4 2020/5~2021/5 2020/8~2021/8
11. Statement of Short-Term Loans
$1,450,000 650,000 860,000 2,000,000 500,000 1,150,000 $6,610,000
CATHAY REAL ESTATE DEVELOPMENT CO., LTD. Ending Balance
English Translation of Financial Statements Originally Issued in Chinese
Bank
Mizuho Bank Bank of China Sumitomo Mitsui Bank China Construction Bank Agricultural Bank of Taiwan Hua Nan Commercial Bank Total
Type
Credit loan
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256

12. Statement of Short-Term Notes Payable December 31, 2020 (Expressed in thousands of New Taiwan Dollars) English Translation of Financial Statements Originally Issued in Chinese CATHAY REAL ESTATE DEVELOPMENT CO., LTD.	Issued amount unamortized discount Book value Notes Short-term notes DBS Bank 2020.11~2021.04 0.29%~0.30% $1,000,000 $921 $999,079 The Shanghai Commercial & Savings Bank 2020.09~2021.03 0.29%~0.30% 420,000 225 419,775 Total $1,420,000 $1,146 $1,418,854 Items Amount Interest rate Priod Bank

257

English Translation of Financial Statements Originally Issued in Chinese

CATHAY REAL ESTATE DEVELOPMENT CO., LTD.

Statement of Contract Liabilities-Current

December 31, 2020

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(Expressed in thousands of New Taiwan Dollars)
Items Description Amount Notes
Advance Real Estate Receipts
Tree Rivers, Cathay’s Home II $362,022
Tree Rivers, Cathay’s Home I 335,296
Cathay The Seeds of Happiness 523,949
Park Beautiful Mansion 305,170
HYGGE 268,473
Cathay Uptown 275,386
Cathay Opulence 281,985
Have a Rich Year 237,331
Cathay Mega+ 283,118
City Landmark 661,692
Others Advance real estate receipts 886,777 The amount of individual
and rent item in others does not
exceed 5% of the account
balance.
Total $4,421,199
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258

English Translation of Financial Statements Originally Issued in Chinese

CATHAY REAL ESTATE DEVELOPMENT CO., LTD.

14. Statement of Notes Payable

December 31, 2020

(Expressed in thousands of New Taiwan Dollars)

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Items Description Amount Notes
Shin Nan Natural Gas Co.,
$4,392
Ltd.
Others 56,410 The amount of individual item in
others does not exceed 5% of the
account balance.
Total $60,802
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259

English Translation of Financial Statements Originally Issued in Chinese

CATHAY REAL ESTATE DEVELOPMENT CO., LTD.

Statement of Accounts Payable

December 31, 2020

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(Expressed in thousands of New Taiwan Dollars)
Items Description Amount Notes
(1)Transaction with third parties
Cathay Fu Tu Final cost payable $76,273
Cathay The Seeds of Happiness Final cost payable 328,742
Cathay Shui Hsiu Final cost payable 65,874
Cathay Plus+ Final cost payable 142,555
Cathay O2 Fu Building Final cost payable 73,326
The amount of individual item in
Others 169,987 others does not exceed 5% of the
account balance.
Total $856,757
(2)Transaction with related parties
San Ching Engineering
Final cost payable
and warranty payable $48,574
Others 452 The amount of individual item in
others does not exceed 5% of the
account balance.
Total $49,026
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260

English Translation of Financial Statements Originally Issued in Chinese

CATHAY REAL ESTATE DEVELOPMENT CO., LTD.

16. Detail List of Other Payable

December 31, 2020

(Expressed in thousands of New Taiwan Dollars)

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Items Description Amount Notes
Payroll and bonus payable $62,912
Commission payable 58,436
Cost of rental sales 16,610
Dividend payable 47,662
Dividend refundable 30,090
Business tax payable 78,887
Others 28,359 The amount of individual item in
others does not exceed 5% of the
account balance.
Total $322,956
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261

English Translation of Financial Statements Originally Issued in Chinese

CATHAY REAL ESTATE DEVELOPMENT CO., LTD.

Statement of Lease Liabilities

December 31, 2020

(Expressed in thousands of New Taiwan Dollars)

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Item Description Rental Period Discount Rate Ending Balance Note
Land Advertising land 2019.08.01~2022.07.31 1.62% $6,249
Building Office builiding 2019.07.01~2021.06.30 1.57%~1.64% 8,168
Total $14,417
Current $12,317
Non-current 2,100
Total $14,417
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262

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Note
Association guarantor is the Chairman of the Company. Association guarantor is the Chairman of the Company. Association guarantor is the Chairman of the Company. Association guarantor is the Chairman of the Company.
" " "
None
pledged
(Expressed in thousands of New Taiwan Dollars) Guarantee or
0.29%
Interest Rate 0.85%~0.87% 0.85%~0.87% 0.85%~0.87%
Period
December 31, 2020
2019.07~2021.07 2020.07~2023.07 2019.07~2022.07 2020.08~2023.08
18. Statement of Long-Term Loans
CATHAY REAL ESTATE DEVELOPMENT CO., LTD. Amount $2,400,000 6,000,000 1,500,000 729,741 10,629,741 (5,400,000) $5,229,741
English Translation of Financial Statements Originally Issued in Chinese
Description
Creditor
Chang Hwa Commercial Bank Hua Nan Commercial Bank Far Eastern International Bank The Shanghai Commercial & Savings Bank Subtotal Less : current portion Total
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263

English Translation of Financial Statements Originally Issued in Chinese

CATHAY REAL ESTATE DEVELOPMENT CO., LTD.

Statement of Other Non-Current Liabilities

December 31, 2020

(Expressed in thousands of New Taiwan Dollars)

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Items Description Amount Note
Net defined benefit liability $79,249
Guarantee deposits received
Third parties
Home Media Group Ltd. Housing deposit 12,237
Din Tai Fung Co., Ltd. Housing deposit 6,000
Others Housing deposit 58,038 The amount of individual item
in others does not exceed 5% of
the account balance.
Subtotal 76,275
Related parties
Cathay United Bank Co., Ltd. Housing deposit 4,446
Others Housing deposit 1,738 The amount of individual item
in others does not exceed 5% of
the account balance.
Subtotal 6,184
Subtotal 82,459
Other liabilities Deferred credits- unrealized gains 13,333
on inter-afffiliate accounts
Total $175,041
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264

English Translation of Financial Statements Originally Issued in Chinese

CATHAY REAL ESTATE DEVELOPMENT CO., LTD.

Statement of Operating Revenues

For the year ended December 31, 2020

(Expressed in thousands of New Taiwan Dollars)

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Items Description Amount Notes
Rental Income $365,117
Land Income 7,608,561
Building Income 5,362,550
Total $13,336,228
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265

English Translation of Financial Statements Originally Issued in Chinese

CATHAY REAL ESTATE DEVELOPMENT CO., LTD.

Statement of Operating Costs

For the year ended December 31, 2020

(Expressed in thousands of New Taiwan Dollars)

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Items Description Amount Notes
Lease costs $322,700
Land costs 5,878,900
Building costs 4,288,605
Total $10,490,205
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266

English Translation of Financial Statements Originally Issued in Chinese

CATHAY REAL ESTATE DEVELOPMENT CO., LTD.

Statement of Operating Expenses

For the year ended December 31, 2020

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(Expressed in thousands of New Taiwan Dollars)
Items Description Amount Notes
Selling expenses Advertising etc. $569,850
Salary and wages 175,509
Taxes 85,597
Expected credit gains (34)
The amount of individual item
Other expenses 132,406
in others does not exceed 5% of
the account balance.
Total $963,328
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267

V. Consolidated Financial Report Audited and Certified by CPAs in the Most Recent Year

CATHAY REAL ESTATE DEVELOPMENT CO., LTD.

AND SUBSIDIARIES

Consolidated Financial Statements

For the Years Ended December 31, 2020 And 2019

Report of Independent Auditors

The reader is advised that these consolidated financial statements have been prepared originally in Chinese. In the event of a conflict between these financial statements and the original Chinese version or difference in interpretation between the two versions, the Chinese language financial statements shall prevail.

268

Independent Auditors’ Report Translated from Chinese

To the Board of Directors and Stockholders of Cathay Real Estate Development Co., Ltd.

Opinion

We have audited the accompanying consolidated balance sheets of Cathay Real Estate Development Co., Ltd. (the “Company”) and its subsidiaries as of December 31, 2020 and 2019, and the related consolidated statements of comprehensive income, changes in equity and cash flows for the years ended December 31, 2020 and 2019, and notes to the consolidated financial statements, including the summary of significant accounting policies (together “the consolidated financial statements”).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of the Company and its subsidiaries as of December 31, 2020 and 2019, and their consolidated financial performance and cash flows for the years ended December 31, 2020 and 2019, in conformity with the requirements of the Regulations Governing the Preparation of Financial Reports by Securities Issuers and International Financial Reporting Standards, International Accounting Standards, Interpretations developed by the International Financial Reporting Interpretations Committee or the former Standing Interpretations Committee as endorsed by Financial Supervisory Commission of the Republic of China.

Basis for Opinion

We conducted our audits in accordance with the Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants and auditing standards generally accepted in the Republic of China. Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Company and its subsidiaries in accordance with the Norm of Professional Ethics for Certified Public Accountant of the Republic of China (the “Norm”), and we have fulfilled our other ethical responsibilities in accordance with the Norm. Based on our audits, we believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

269

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of 2020 consolidated financial statements. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Revenue recognition

The Company and its subsidiaries is primarily engaged in entrusting construction company in construction and planning of public housing and commercial offices for sale. Since the Company’s construction income is classified as operating revenue based on sale of goods, the relevant profit and loss are recognized when the ownership transferred. Due to the significance of the construction income in the financial statements, with respect to a significant proportion within operating revenue, and need to judge and determine performance obligation and the timing of satisfaction, the construction revenue is determined to be a key audit matter.

We also assess whether the Company properly disclose information relating the construction income of financial statement. Please refer Note 4.(17) and Note 6.(18).

Valuation of Construction Land

The construction land of the Company and its subsidiaries shall be measured at the lower of cost and net realized value, and the net realizable value of the construction land is determined based on the management’s judgement and estimation. Due to the significance of construction land in the financial statements, the valuation of construction land is determined to be a key audit matter.

We also assess whether the company properly disclose information relating the construction land valuation of financial statement. Please refer Note 4.(9), Note 5.(2).(E) and Note 6.(5).

270

Responsibilities of Management and Those Charged with Governance for the Consolidated Financial Statements

Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with the requirements of the Regulations Governing the Preparation of Financial Reports by Securities Issuers and International Financial Reporting Standards, International Accounting Standards, Interpretations developed by the International Financial Reporting Interpretations Committee or the former Standing Interpretations Committee as endorsed by Financial Supervisory Commission of the Republic of China and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

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

Those charged with governance, including audit committee or supervisors, are responsible for overseeing the financial reporting process of the Company and its subsidiaries.

Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements

Our objectives are to obtain reasonable assurance about whether the consolidated 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 auditing standards generally accepted in the Republic of China 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 consolidated financial statements.

271

Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the internal control of the Company and its subsidiaries.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the ability to continue as a going concern of the Company and its subsidiaries. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Company and its subsidiaries to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the consolidated financial statements, including the accompanying notes, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Company and its subsidiaries to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

272

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of 2020 consolidated financial statements 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.

We have audited and expressed an unqualified opinion on the parent company only financial statements of the Company as of and for the years ended December 31, 2020 and 2019.

Hsu, Jung Huang Huang, Chien Che Ernst & Young, Taiwan March 18, 2021

Notice to Readers

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

Accordingly, the accompanying consolidated financial statements and report of independent accountants are not intended for use by those who are not informed about the accounting principles or auditing standards generally accepted in the Republic of China, and their applications in practice. As the financial statements are the responsibility of the management, Ernst & Young cannot accept any liability for the use of, or reliance on, the English translation or for any errors or misunderstandings that may derive from the translation.

273

English Translation of Financial Statements Originally Issued in Chinese

CATHAY REAL ESTATE DEVELOPMENT CO., LTD. AND SUBSIDIARIES

Consolidated Balance Sheets

December 31, 2020 and 2019

			(Expressed in thousan	(Expressed in thousan	ds of New Taiwan Dollars)	ds of New Taiwan Dollars)
Assets			December 31, 2020		December 31, 2019
Code	Items	Notes	Amounts	�	Amounts	�
1100 1120 1150 1170 1200 1220 130x 1410 1470 1480 11xx 1517 1600 1755 1760 1780 1840 1900 15xx 1xxx	Current Assets Cash and cash equivalents Financial assets at fair value through other comprehensive income-current Notes receivable, net Accounts receivable, net Others receivables Current tax assets Inventories Prepayments Others current assets Incremental costs of obtaining contracts-current Total current assets Non-current Assets Financial assets at fair value through other comprehensive income-non-current Property, plant and equipment Right-of-use assets Investment properties, net Intangible assets Deferred tax assets Other non-currents assets Total non-currents assets Total Assets	4, 6(1) & 7 4 & 6(2) 4 & 6(3),(19) 4, 6(4),(19) & 7 4 4, 6(5) & 7 7 4, 6(5),(18) 4 & 6(2) 4 & 6(6) 4, 6(20) & 7 4 & 6(7) 4 & 6(8) 4 & 6(24) 6(9) & 7	$3,395,624 2,437,036 32,406 471,478 30,590 61 28,989,058 451,391 112,196 633,029	6 4 - 1 - - 48 1 - 1	$2,123,443 2,454,341 40,032 266,410 32,220 145 26,551,128 448,484 66,345 671,760	4 5 - - - - 50 1 - 1
			36,552,869	61	32,654,308	61
			2,074,370 5,197,866 5,133,962 8,369,250 33,407 479,335 1,655,869	3 9 9 14 - 1 3	2,234,994 4,614,222 4,032,193 8,644,878 24,210 544,270 987,055	4 9 7 16 - 1 2
			22,944,059	39	21,081,822	39
			$59,496,928	100	$53,736,130	100

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

274

English Translation of Financial Statements Originally Issued in Chinese

CATHAY REAL ESTATE DEVELOPMENT CO., LTD. AND SUBSIDIARIES

Consolidated Balance Sheets (Continued)

December 31, 2020 and 2019

(Expressed in thousands of New Taiwan Dollars)

Liabilities and Equity	Liabilities and Equity	Liabilities and Equity	December 31, 2020	December 31, 2020	December 31, 2019	December 31, 2019
Code	Items	Notes	Amounts	�	Amounts	�
2100 2110 2130 2150 2170 2180 2200 2230 2280 2300 2320 21xx 2540 2570 2580 2600 25xx 2xxx 3100 3110 3200 3300 3310 3320 3350 3400 31xx 36xx 3xxx	Current Liabilities Short-term loans Short-term notes payable Contract liabilities-current Notes payable Accounts payable Accounts payable-related parties Other payables Current tax liabilities Lease liabilities-current Other current liabilities Long-term loans-current portion Total current liabilities Non-Current Liabilities Long-term loans Deferred tax liabilities Lease liabilities-non-current Other non-current liabilities Total non-current liabilities Total Liabilities Equity attributable to stockholders of the parent Capital stock Common stock Capital surplus Retained earnings Legal capital reserve Special capital reserve Unappropriated retained earnings Total retained earnings �Other equity Total equity attributable to stockholders of the parent Non-controlling interests Total Equity Total Liabilities and Equity	4, 6(10) & 7 4 & 6(11) 3 & 6(18) 7 4 4, 6(20) & 7 4 & 6(12),(13) 4 & 6(13) 4 & 6(24) 4, 6(20) & 7 6(14) & 7 4 6(15) 6(16) 6(17) 6(17)	$7,351,000 3,090,501 4,506,622 60,802 1,028,322 50,716 1,163,616 56,243 349,495 100,958 5,400,000	12 5 8 - 2 - 2 - 1 - 9	$7,263,000 1,034,540 3,575,923 144,213 513,373 213,133 501,797 84,308 290,712 198,001 6,000,000	14 2 7 - 1 - 1 - 1 - 11
			23,158,275	39	19,819,000	37
			5,509,741 10,049 5,160,464 259,271	9 - 9 -	5,102,682 10,049 4,082,899 239,450	9 - 8 -
			10,939,525	18	9,435,080	17
			34,097,800	57	29,254,080	54
			11,595,611 39,515 4,489,507 504,189 7,652,656	20 - 7 1 13	11,595,611 31,628 4,352,457 504,189 7,455,300	22 - 8 1 14
			12,646,352 173,746	21 -	12,311,946 438,907	23 1
			24,455,224 943,904	41 2	24,378,092 103,958	46 -
			25,399,128	43	24,482,050	46
			$59,496,928	100	$53,736,130	100

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

275

CATHAY REAL ESTATE DEVELOPMENT CO., LTD. AND SUBSIDIARIES

English Translation of Financial Statements Originally Issued in Chinese

Consolidated Statements of Comprehensive Income

For the Years Ended December 31, 2020 and 2019

(Expressed in thousands of New Taiwan Dollars, except for earnings per share)

(Expressed in thousands of New Taiwan Dollars)

Code	Items	Notes	2020	2020	2019	2019
			Amount	�	Amount	�
4000 5000 5900 6000 6200 6450 6900 7000 7100 7010 7020 7050 7900 7950 8200 8300 8310 8311 8316 8349 8360 8361 8370 8500 8600 8610 8620 8700 8710 8720 9750 9850	Operating revenues Operating costs Gross margin Operating expenses �Administrative expenses �Expected credit profit (loss) ��Total operating expenses Operating income Non-operating income and expenses �Interest income �Other income �Other gains or losses �Finance costs ��Total non-operating income and expenses Income before Income tax Income tax (expense) benefit Net income Other Comprehensive Income �Not to be reclassified to profit or loss in subsequent periods ��Remeasurements of defined benefit plans ��Valuation gain (losses) on equity instruments at fair value through other comprehensive income ��Income tax related to items not be reclassified to profit or loss in subsequent periods �To be reclassified to profit or loss in subsequent periods ��Exchange differences resulting from translating the financial statements of foreign operations Share of the other comprehensive income of associates and joint ventures accounted for using the equity method – to be reclassified to profit or loss in subsequent periods �Other comprehensive (losses) income, net of tax Total comprehensive (losses) income Net income (losses) attributable to: �Shareholders of the parent �Non-controlling interests Total comprehensive income (losses) attributable to: �Shareholders of the parent �Non-controlling interests Earnings Per Share (In dollars) Basic earnings per share Diluted earnings per share	4, 6(7),(18),(20) & 7 6(5),(7),(8),(14),(20),(21) & 7 6(7),(8),(14),(20),(21) & 7 4 & 6(19) 4, 6(22) & 7 4 & 6(24) 6(23),(24) 6(25)	$13,973,611 (10,814,849)	100 (77)	$11,623,928 (8,461,339)	100 (73)
			3,158,762	23	3,162,589	27
			(1,607,467) 34	(12) -	(1,663,270) (32)	(14) -
			(1,607,433)	(12)	(1,663,302)	(14)
			1,551,329	11	1,499,287	13
			3,083 276,733 73,854 (219,715)	- 2 1 (2)	4,665 180,394 27,322 (141,330)	- 2 - (1)
			133,955	1	71,051	1
			1,685,284 (168,497)	12 (1)	1,570,338 (169,980)	14 (2)
			1,516,787	11	1,400,358	12
			(3,934) (164,942) 786 (88,222) -	- (1) - (1) -	(5,937) 368,350 1,187 (30,917) (790)	- 3 - - -
			(256,312)	(2)	331,893	3
			$1,260,475	9	$1,732,251	15
			$1,483,980 32,807	11 -	$1,370,505 29,853	12 -
			$1,516,787	11	$1,400,358	12
			$1,228,806 31,669	9 -	$1,732,589 (338)	15 -
			$1,260,475	9	$1,732,251	15
			$1.28		$1.18
			$1.28		$1.18

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

276

		Total Equity	3XXX	$25,341,549 - (2,435,078) 5,845 1,400,358 331,893	1,732,251 (162,517) -	24,482,050 - (1,159,561) 7,887 1,516,787 (256,312)	1,260,475 808,277 -	$25,399,128
		Non-Controlling Interests	36XX	$266,813 - - - 29,853 (30,191)	(338) (162,517) -	103,958 - - - 32,807 (1,138)	31,669 808,277 -	$943,904
Equity attributable to stockholders of the parent		Total	31XX	$25,074,736 - (2,435,078) 5,845 1,370,505 362,084	1,732,589 - -	24,378,092 - (1,159,561) 7,887 1,483,980 (255,174)	1,228,806 - -	$24,455,224
	Other Equity Retained Earnings	Remeasurements of Defined Benefit Plans	3445	$23,940 - - - - (4,693)	(4,693) - -	19,247 - - - - (2,066)	(2,066) - -	$17,181
		Unrealized (Losses) Gains from Financial Assets at Fair Value Through Other Comprehensive Income	3420	$(33,607) - - - - 368,350	368,350 - (3,248)	331,495 - - - - (164,943)	(164,943) - (9,987)	$156,565
		Exchange Differences Resulting from Translating the Financial Statements of Foreign Operations	3410	$89,738 - - - - (1,573)	(1,573) - -	88,165 - - - - (88,165)	(88,165) - -	$-
		Unappropriated Retained Earnings	3350	$8,877,586 (360,961) (2,435,078) - 1,370,505 -	1,370,505 - 3,248	7,455,300 (137,050) (1,159,561) - 1,483,980 -	1,483,980 - 9,987	$7,652,656
		Special Capital Reserve	3320	$504,189 - - - - -	- - -	504,189 - - - - -	- - -	$504,189
		Legal Capital Reserve	3310	$3,991,496 360,961 - - - -	- - -	4,352,457 137,050 - - - -	- - -	$4,489,507
		Capital Surplus	3200	$25,783 - - 5,845 - -	- - -	31,628 - - 7,887 - -	- - -	$39,515
		Capital Stock	3100	$11,595,611 - - - - -	- - -	11,595,611 - - - - -	- - -	$11,595,611
		Items		Balance on January 1, 2019 Appropriation and distribution of earnings for the year 2018 �Legal capital reserve �Cash dividends on common stock Changes in other capital surplus Net income for the year ended December 31, 2019 Other comprehensive income (loss), net of tax for the year ended December 31, 2019 Total comprehensive income (loss) Changes in non-controlling interests Disposal of financial instruments at fair value through other comprehensive income Balance on December 31, 2019 Appropriation and distribution of earnings for the year 2019 �Legal capital reserve �Cash dividends on common stock Changes in other capital surplus Net income for the year ended December 31, 2020 Other comprehensive income (loss), net of tax for the year ended December 31, 2020 Total comprehensive income (loss) Changes in non-controlling interests Disposal of financial instruments at fair value through other comprehensive income Balance on December 31, 2020
		Code		A1 B1 B5 C17 D1 D3 D5 O1 Q1 Z1 B1 B5 C17 D1 D3 D5 O1 Q1 Z1

277

English Translation of Financial Statements Originally Issued in Chinese

CATHAY REAL ESTATE DEVELOPMENT CO., LTD. AND SUBSIDIARIES Consolidated Statements of Cash Flows

For the Years Ended December 31, 2020 and 2019

==> picture [377 x 479] intentionally omitted <==

----- Start of picture text -----

(Expressed in thousands of New Taiwan Dollars)
2020 2019
Code Items Amount Amount
AAAA Cash flows from operating activities
A10000 Net income before tax $1,685,284 $1,570,338
A20000 Adjustments:
A20100 Depreciation 888,272 756,620
A20200 Amortization 14,587 12,310
A20300 Expected credit loss (gain) (34) 32
A20900 Interest expenses 219,715 141,330
A21200 Interest income (3,083) (4,665)
A21300 Dividend income (117,922) (97,167)
A22500 Loss (gain) on disposal of property, plant and equipment 9,195 2,496
A22600 Property, plant and equipment transfer to expense - 51
A22800 Loss (gain) on disposal of intangible assets 973 -
A23100 Loss (gain) on disposal of investments (87,423) (45,221)
A29900 Others (2,575) -
A30000 Changes in operating assets and liabilities:
A31130 Decrease (increase) in notes receivable 7,626 (15,823)
A31150 Decrease (increase) in accounts receivable (146,785) 197,192
A31180 Decrease (increase) in other receivables (7,311) 390,837
A31200 Decrease (increase) in inventories (2,313,894) (540,491)
A31230 Decrease (increase) in prepayments (2,522) 62,545
A31240 Decrease (increase) in other current assets (40,851) 315,810
A31270 Decrease (increase) in incremental costs of obtaining contracts 38,731 (190,163)
A31990 Decrease (increase) in other operating assets 64,522 242,278
A32125 Increase (decrease) in contract liabilities 930,699 (75,689)
A32130 Increase (decrease) in notes payable (83,411) 53,828
A32150 Increase (decrease) in accounts payable 471,148 51,988
A32160 Increase (decrease) in accounts payable-related parties (162,417) (382,577)
A32180 Increase (decrease) in other payables 661,071 (102,098)
A32230 Increase (decrease) in other current liabilities (99,390) 75,270
A33000 Cash inflow generated from operations 1,924,205 2,419,031
A33100 Interested received 3,229 4,708
A33500 Income taxes paid (126,180) (139,618)
AAAA Net cash generated by operating activities 1,801,254 2,284,121
BBBB Cash flow from investing activities
B00010 Acquisition of financial assets at fair value through other comprehensive income - (67,123)
B00030 Return of capital deduction from financial assets at fair value through other comprehensive income - 4,975
B01900 Disposal of investments accounted for using the equity method 8,795 1,748
B02200 Net cash flow from acquisition of subsidiaries 149,189 -
B02700 Acquisition of property, plant and equipment (950,540) (508,922)
B02800 Disposal of property, plant and equipment 8,446 6,341
B04500 Acquisition of intangible assets (24,242) (11,623)
B05350 Acquisition of right-of-use asset - (7,606)
B06700 Increase in other non-current assets (642,408) -
B06800 Decrease in other non-current assets - 89,166
B07600 Dividends received 117,922 97,167
BBBB Net cash used in investing activities (1,332,838) (395,877)
CCCC Cash flow from financing activities
C00100 Increase in short-term loans 88,000 -
C00200 Decrease in short-term loans - (1,452,000)
C00500 Increase in short-term notes payable 2,055,961 774,540
C01600 Proceeds from long-term debt 4,009,741 5,102,682
C01700 Repayment of long-term loans (4,202,682) (2,605,285)
C04020 Repayment of principal of lease liabilities (308,628) (229,542)
C04400 Decrease in other non-current liabilities (58,782) (1,077)
C04500 Payment of cash dividends (1,159,561) (2,435,078)
C05600 Interests paid (361,382) (346,439)
C05800 Change in non-controlling interests 742,167 (162,517)
C09900 Other financing activities (429) -
CCCC Net cash generated by (used in) financing activities 804,405 (1,354,716)
DDDD Effect of currency exchange rate on cash and cash equivalents (640) (30,242)
EEEE Net increase in cash and cash equivalents 1,272,181 503,286
E00100 Cash and cash equivalents, beginning of period 2,123,443 1,620,157
E00200 Cash and cash equivalents, end of period $3,395,624 $2,123,443
----- End of picture text -----

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

278

English Translation of Financial Statements Originally Issued in Chinese

Cathay Real Estate Development Co., Ltd.

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Notes to Consolidated Financial Statements

For the Years Ended December 31, 2020 and 2019

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

1. HISTORY AND ORGANIZATION

Cathay Real Estate Development Co., Ltd. (the “Company”) was incorporated on December 1, 1964. The main businesses of The Group are entrusting the manufacturer to build residential and commercial buildings for leasing and selling.

The Company is located at 2F., No. 218, Sec. 2, Dunhua S. Rd., Da’an Dist., Taipei City 106, Taiwan (R.O.C.) and has been listed on Taiwan Stock Exchange (TWSE) since October 1967.

2. DATE AND PROCEDURES OF AUTHORIZATION OF FINANCIAL STATEMENTS FOR ISSUE

The consolidated financial statements of the Company and its subsidiaries (“the Group”) for the years ended December 31, 2020 and 2019 were authorized for issue by the Board of Directors on March 18, 2021.

3. APPLICATION OF NEWLY ISSUED OR REVISED STANDARDS AND INTERPRETATIONS

(1) Changes in accounting policies resulting from applying for the first time certain standards and amendments

The Group applied for the first time International Financial Reporting Standards, International Accounting Standards, and Interpretations issued, revised or amended which are recognized by Financial Supervisory Commission (“FSC”) and become effective for annual periods beginning on or after 1 January 2020. The remaining new standards and amendments had no material impact on the Group.

(2) Standards or interpretations issued, revised or amended, by International Accounting Standards Board (“IASB”) which are endorsed by FSC, but not yet adopted by the Group as at the end of the reporting period are listed below.

Items	New,Revised or Amended Standards and Interpretations	Effective Date issued byIASB
1	Interest Rate Benchmark Reform - Phase 2 (Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16)	1 January 2021

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English Translation of Financial Statements Originally Issued in Chinese

A. Interest Rate Benchmark Reform - Phase 2 (Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16)

The final phase amendments mainly relate to the effects of the interest rate benchmark reform on the companies’ financial statements:

a. A company will not have to derecognize or adjust the carrying amount of financial instruments for changes to contractual cash flows as required by the reform, but will instead update the effective interest rate to reflect the change to the alternative benchmark rate;
b. A company will not have to discontinue its hedge accounting solely because it makes changes required by the reform, if the hedge meets other hedge accounting criteria; and
c. A company will be required to disclose information about new risks arising from the reform and how it manages the transition to alternative benchmark rates.

The abovementioned amendments that are applicable for annual periods beginning on or after January 1, 2021 have no material impact on the Group.

(3) Standards or interpretations issued, revised or amended, by IASB which are not endorsed by FSC, and not yet adopted by the Group as at the end of the reporting period are listed below.

Items	New,Revised or Amended Standards and Interpretations	Effective Date issued byIASB
1	IFRS 10 “Consolidated Financial Statements” and IAS 28 “Investments in Associates and Joint Ventures” - Sale or Contribution of Assets between an Investor and its Associate or Joint Ventures	To be determined by IASB
2	IFRS 17 “Insurance Contracts”	1 January2023
3	Classification of Liabilities as Current or Non-current – Amendments to IAS 1	1 January2023
4	Narrow-scope amendments of IFRS, including Amendments to IFRS 3, Amendments to IAS 16,Amendments to IAS 37 and the Annual Improvements	1 January 2022
5	Disclosure Initiative - AccountingPolicies - Amendments to IAS 1	1 January2023
6	Definition of AccountingEstimates - Amendments to IAS 8	1 January2023

A. IFRS 10“Consolidated Financial Statements” and IAS 28“Investments in Associates and Joint Ventures” - Sale or Contribution of Assets between an Investor and its Associate or Joint Ventures

280

English Translation of Financial Statements Originally Issued in Chinese

B. IFRS 17 “Insurance Contracts”

a. estimates of future cash flows;
b. Discount rate: an adjustment to reflect the time value of money and the financial risks related to the future cash flows, to the extent that the financial risks are not included in the estimates of the future cash flows; and
c. a risk adjustment for non-financial risk.

The carrying amount of a group of insurance contracts at the end of each reporting period shall be the sum of the liability for remaining coverage and the liability for incurred claims.

Other than the General Model, the standard also provides a specific adaptation for contracts with:

a. direct participation features (the Variable Fee Approach);
b. simplified approach (Premium Allocation Approach) mainly for short-duration contracts.

281

English Translation of Financial Statements Originally Issued in Chinese

C. Classification of Liabilities as Current or Non-current - Amendments to IAS 1

These are the amendments to paragraphs 69-76 of IAS 1 Presentation of Financial statements and the amended paragraphs related to the classification of liabilities as current or non-current.

D. Narrow-scope amendments of IFRS, including Amendments to IFRS 3, Amendments to IAS 16, Amendments to IAS 37 and the Annual Improvements
a. Updating a Reference to the Conceptual Framework (Amendments to IFRS 3) The amendments updated IFRS 3 by replacing a reference to an old version of the Conceptual Framework for Financial Reporting with a reference to the latest version, which was issued in March 2018. The amendments also added an exception to the recognition principle of IFRS 3 to avoid the issue of potential “day 2” gains or losses arising for liabilities and contingent liabilities. Besides, the amendments clarify existing guidance in IFRS 3 for contingent assets that would not be affected by replacing the reference to the Conceptual Framework.
b. Property, Plant and Equipment: Proceeds before Intended Use (Amendments to IAS 16)

c. Onerous Contracts - Cost of Fulfilling a Contract (Amendments to IAS 37) The amendments clarify what costs a company should include as the cost of fulfilling a contract when assessing whether a contract is onerous.

282

English Translation of Financial Statements Originally Issued in Chinese

d. Annual Improvements to IFRS Standards 2018 - 2020

Amendment to IFRS 1

The amendment simplifies the application of IFRS 1 by a subsidiary that becomes a first-time adopter after its parent in relation to the measurement of cumulative translation differences.

Amendment to IFRS 9 Financial Instruments

Amendment to Illustrative Examples Accompanying IFRS 16 Leases

The amendment to Illustrative Example 13 accompanying IFRS 16 modifies the treatment of lease incentives relating to lessee’s leasehold improvements.

Amendment to IAS 41

E. Disclosure Initiative - Accounting Policies - Amendments to IAS 1

The amendments improve accounting policy disclosures that to provide more useful information to investors and other primary users of the financial statements.

F. Definition of Accounting Estimates - Amendments to IAS 8

The abovementioned standards and interpretations issued by IASB have not yet endorsed by FSC at the date when the Group’s financial statements were authorized for issue, the local effective dates are to be determined by FSC. The new or amended standards and interpretations have no material impact on the Group.

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English Translation of Financial Statements Originally Issued in Chinese

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(1) Statement of compliance

The consolidated financial statements of the Group for the years ended December 31, 2020 and 2019 have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers (“the Regulations”) and International Financial Reporting Standards, International Accounting Standards, Interpretations issued by the International Financial Reporting Interpretations Committee or the former Standing Interpretations Committee as endorsed by the FSC (“TIFRS”).

(2) Basis of preparation

The consolidated financial statements have been prepared on a historical cost basis, except for financial instruments that have been measured at fair value. The consolidated financial statements are expressed in thousands of New Taiwan Dollars (“NT$”) unless otherwise stated.

(3) Basis of consolidation

A. Preparation principle of consolidated financial statements

Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Specifically, the Group controls an investee if and only if the Group has:

a. power over the investee (i.e. existing rights that give it the current ability to direct the relevant activities of the investee)
b. exposure, or rights, to variable returns from its involvement with the investee, and
c. the ability to use its power over the investee to affect its returns

When the Group has less than a majority of the voting or similar rights of an investee, the Group considers all relevant facts and circumstances in assessing whether it has power over an investee, including:

a. the contractual arrangement with the other vote holders of the investee
b. rights arising from other contractual arrangements
c. the Group’s voting rights and potential voting rights

The Group re-assesses whether it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control.

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English Translation of Financial Statements Originally Issued in Chinese

Subsidiaries are fully consolidated from the acquisition date, being the date on which the Group obtains control, and continue to be consolidated until the date that such control ceases. The financial statements of the subsidiaries are prepared for the same reporting period as the parent company, using uniform accounting policies. All intra-group balances, income and expenses, unrealized gains and losses and dividends resulting from intra-group transactions are eliminated in full.

A change in the ownership interest of a subsidiary, without a change of control, is accounted for as an equity transaction.

Total comprehensive income of the subsidiaries is attributed to the owners of the parent and to the non-controlling interests even if this results in the non-controlling interests having a deficit balance.

If the Group loses control of a subsidiary, it:

a. derecognizes the assets (including goodwill) and liabilities of the subsidiary;
b. derecognizes the carrying amount of any non-controlling interest;
c. recognizes the fair value of the consideration received;
d. recognizes the fair value of any investment retained;
e. recognizes any surplus or deficit in profit or loss; and
f. reclassifies the parent’s share of components previously recognized in other comprehensive income to profit or loss.

B. The consolidated entities are listed as follows:

Investor	Subsidiaries	Main business	Percentage of	ownership (%)
			December 31, 2020	December 31, 2019
The Company The Company The Company The Company The Company The Company The Company The Company The Company	Cathay Real Estate Management Co., Ltd. Cathay Healthcare Management Co., Ltd. Cathay Hospitality Management Co., Ltd. Cathay Hospitality Consulting Co., Ltd. Cymbal Medical Network Co., Ltd. Cathay Real Estate Holding Corporation Lin Yuan Property Management Co., Ltd. Jinhua Realty Co., Ltd. Bannan Realty Co., Ltd.	Construction management Consultancy Service industry Service industry Wholesale of Drugs, Medical Goods General trade & investing Apartment building management service industry Residential and building development leasing and sale industry Residential and building development leasing and sale industry	100.00% 85% 100.00% 100.00% 100.00% - 51.00% 51.00% 51.00%	100.00% 85% 100.00% 100.00% 100.00% 100.00% - - -

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Investor	Subsidiaries	Main business	Percentage of	ownership (%)
			December 31, 2020	December 31, 2019
Cymbal Medical Network Co., Ltd. Cymbal Medical Network Co., Ltd. Cathay Healthcare Management CO., LTD Cathay Healthcare Management CO., LTD Cathay Real Estate Holding Corporation Cathay Healthcare Management Limited (BVI) Cathay Healthcare Management Limited (Cayman)	Cymder Co., Ltd. Cymlin Co., Ltd. Cathay Healthcare Management Limited (BVI) Hangzhou Kunning Health Consulting Limited Ltd. CCH Commercial Company Limited Cathay Healthcare Management Limited (Cayman) Hangzhou Kunning Health Consulting Limited Ltd.	Manpower dispatch and leasing industry Manpower dispatch and leasing industry General trade & investing Consultancy Investing Business management Consultancy	100.00% 100.00% - - - - -	100.00% - 100.00% 100.00% 66.67% 100.00% Note 1

Note 1: Due to the need for business development, the subsidiary Cathay Healthcare Management Co., Ltd. has changed the investment structure and invested in Hangzhou Kunning Health Consulting Limited Ltd. directly, which was approved by Investment Commission, MOEA.

C. The changing of the subsidiaries:

Subsidiaries added in the current consolidated financial statements � Cymlin Co., Ltd, Jinhua Realty and Bannan Realty were established in 2020, and the Group has included them as consolidated entities since it obtained control on the acquisition date. After acquiring 41% shares of Lin Yuan Property Management Co., Ltd. in May, 2020, the Group held 51% of its equity and gained control over the entity and included it as a consolidated entity since then.

Subsidiaries excluded from the current consolidated financial statements � CCH Commercial Company Limited, Cathay Real Estate Holding Corporation, Cathay Healthcare Management Limited (BVI), Cathay Healthcare Management Limited (Cayman) and Hangzhou Kunning Health Consulting Limited Ltd. were liquidated. The Group has lost control of the aforementioned subsidiaries since the date of liquidation and has not included them as the consolidated entities since then.

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a. The analysis of assets and liabilities at the date of loss of control is as follows:

Cash and cash equivalents Other receivables Other payables Disposal of net assets	$11,978 494 (446)
	$12,026

b. The benefit (loss) of excluding the subsidiary

The fair value of the remaining investment on the date of loss of control Disposal of net assets Conversion adjustment Disposal of benefits	$11,880 (12,026) 87,569
	$87,423

(4) Foreign currency transactions

The Group’s consolidated financial statements are presented in NT$, which is also the Group’s functional currency. Each entity in the Group determines its own functional currency and items included in the financial statements of each entity are measured using that functional currency.

Transactions in foreign currencies are initially recorded by the Group entities at their respective functional currency rates prevailing at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the functional currency closing rate of exchange ruling at the reporting date. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value is determined. Non-monetary items that are measured at historical cost in a foreign currency are translated using the exchange rates as at the dates of the initial transactions.

All exchange differences arising on the settlement of monetary items or on translating monetary items are taken to profit or loss in the period in which they arise except for the following:

A. Exchange differences arising from foreign currency borrowings for an acquisition of a qualifying asset to the extent that they are regarded as an adjustment to interest costs are included in the borrowing costs that are eligible for capitalization.
B. Foreign currency items within the scope of IFRS 9 Financial Instruments are accounted for based on the accounting policy for financial instruments.
C. Exchange differences arising on a monetary item that forms part of a reporting entity’s net investment in a foreign operation is recognized initially in other comprehensive income and reclassified from equity to profit or loss on disposal of the net investment.

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(5) Translation of financial statements in foreign currency

The assets and liabilities of foreign operations are translated into NT$ at the closing rate of exchange prevailing at the reporting date and their income and expenses are translated at an average rate for the period. The exchange differences arising on the translation are recognized in other comprehensive income. On the disposal of a foreign operation, the cumulative amount of the exchange differences relating to that foreign operation, recognized in other comprehensive income and accumulated in the separate component of equity, is reclassified from equity to profit or loss when the gain or loss on disposal is recognized. The following are accounted for as disposals even if an interest in the foreign operation is retained by the Group: the loss of control over a foreign operation, the loss of significant influence over a foreign operation, or the loss of joint control over a foreign operation.

(6) Current and non-current distinction

The following asset is classified as current. All other assets are classified as non-current:

A. The Group expects to realize the asset, or intends to sell or consume it, in its normal operating cycle
B. The Group holds the asset primarily for the purpose of trading
C. The Group expects to realize the asset within twelve months after the reporting period
D. The asset is cash or cash equivalent unless the asset is restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period

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The following liability is classified as current. All other liabilities are classified as non-current:

A. The Group expects to settle the liability in its normal operating cycle
B. The Group holds the liability primarily for the purpose of trading
C. The liability is due to be settled within twelve months after the reporting period
D. The Group does not have an unconditional right to defer settlement of the liability for at least twelve months after the reporting period. Terms of a liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not affect its classification

(7) Cash and cash equivalents

(8) Financial instruments

Financial assets and financial liabilities are recognized when the Group becomes a party to the contractual provisions of the instrument.

Financial assets and financial liabilities within the scope of IFRS 9 Financial Instruments are recognized initially at fair value plus or minus, in the case of investments not at fair value through profit or loss, directly attributable transaction costs.

A. Financial instruments: Recognition and Measurement

The Group accounts for regular way purchase or sales of financial assets on the trade date.

The Group classified financial assets as subsequently measured at amortized cost, fair value through other comprehensive income on the basis of both:

a. the Group’s business model for managing the financial assets and
b. the contractual cash flow characteristics of the financial asset.

Financial assets measured at amortized cost

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a. the financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows and
b. the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

Interest revenue is calculated by using the effective interest method. This is calculated by applying the effective interest rate to the gross carrying amount of a financial asset except for:

a. purchased or originated credit-impaired financial assets. For those financial assets, the Group applies the credit-adjusted effective interest rate to the amortized cost of the financial asset from initial recognition.
b. financial assets that are not purchased or originated credit-impaired financial assets but subsequently have become credit-impaired financial assets. For those financial assets, the Group applies the effective interest rate to the amortized cost of the financial asset in subsequent reporting periods.

Financial asset measured at fair value through other comprehensive income

A financial asset is measured at fair value through other comprehensive income if both of the following conditions are met:

a. the financial asset is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets and
b. the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

Recognition of gain or loss on a financial asset measured at fair value through other comprehensive income are described as below:

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a. A gain or loss on a financial asset measured at fair value through other comprehensive income should be recognized in other comprehensive income, except for impairment gains or losses and foreign exchange gains and losses, until the financial asset is derecognized or reclassified.
b. When the financial asset is derecognized, the cumulative gain or loss previously recognized in other comprehensive income should be reclassified from equity to profit or loss as a reclassification adjustment.
c. Interest revenue calculated by using the effective interest method (effective interest rate times the carrying amount of the financial asset) or the method stated below should be recognized in profit or loss.
i. For purchased or originated credit-impaired financial assets, the Group applies the credit-adjusted effective interest rate to the amortized cost of the financial asset.
ii. For financial assets that are not purchased or originated credit-impaired financial assets but subsequently become credit-impaired financial assets, the Group applies the effective interest rate to the amortized cost of the financial asset in subsequent reporting periods.

Besides, for certain equity investments within the scope of IFRS 9 that is neither held for trading nor contingent consideration recognized by an acquirer in a business combination to which IFRS 3 applies, the Group made an irrevocable election to present the changes of the fair value in other comprehensive income at initial recognition. Amounts presented in other comprehensive income shall not be subsequently transferred to profit or loss (when disposal of such equity instrument, its cumulated amount included in other components of equity is transferred directly to the retained earnings) and these investments should be presented as financial assets measured at fair value through other comprehensive income on the balance sheet. Dividends on such investment are recognized in profit or loss unless the dividends clearly represents a recovery of part of the cost of investment.

B. Impairment of financial assets

The Group recognizes a loss allowance for expected credit losses on debt instrument investments measured at fair value through other comprehensive income and financial asset measured at amortized cost. The loss allowance on debt instrument investments measured at fair value through other comprehensive income is recognized in other comprehensive income and not reduce the carrying amount in the statement of financial position.

The Group measures expected credit losses of a financial instrument in a way that reflects:

a. an unbiased and probability-weighted amount that is determined by evaluating a range of possible outcomes;

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b. the time value of money; and
c. reasonable and supportable information that is available without undue cost or effort at the reporting date about past events, current conditions and forecasts of future economic conditions.

The loss allowance is measured as follows:

a. At an amount equal to 12-month expected credit losses: the credit risk on a financial asset has not increased significantly since initial recognition or the financial asset is determined to have low credit risk at the reporting date. In addition, the Group measures the loss allowance for a financial asset at an amount equal to lifetime expected credit losses in the previous reporting period, but determines at the current reporting date that condition is no longer met.
b. At an amount equal to the lifetime expected credit losses: the credit risk on a financial asset has increased significantly since initial recognition or financial asset that is purchased or originated credit-impaired financial asset.
c. For trade receivables or contract assets arising from transactions within the scope of IFRS 15, the Group measures the loss allowance at an amount equal to lifetime expected credit losses.
d. For lease receivables arising from transactions within the scope of IFRS 16, the Group measures the loss allowance at an amount equal to lifetime expected credit losses.

At each reporting date, the Group needs to assess whether the credit risk on a financial asset has been increased significantly since initial recognition by comparing the risk of a default occurring at the reporting date and the risk of default occurring at initial recognition. Please refer to Note 12 for further details on credit risk.

C. Derecognition of financial assets

A financial asset is derecognized when:

a. The rights to receive cash flows from the asset have expired
b. The Group has transferred the asset and substantially all the risks and rewards of the asset have been transferred
c. The Group has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset

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D. Financial liabilities and equity

Classification between liabilities or equity

The Group classifies the instrument issued as a financial liability or an equity instrument in accordance with the substance of the contractual arrangement and the definitions of a financial liability, and an equity instrument.

Equity instruments

An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all its liabilities. The transaction costs of an equity transaction are accounted for as a deduction from equity (net of any related income tax benefit) to the extent they are incremental costs directly attributable to the equity transaction that otherwise would have been avoided.

Financial liabilities

Financial liabilities at amortized cost

Amortized cost is calculated by considering any discount or premium on acquisition and fees or transaction costs.

Derecognition of financial liabilities

A financial liability is derecognized when the obligation under the liability is discharged or cancelled or expires.

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new liability, and the difference in the respective carrying amounts and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognized in profit or loss.

E. Offsetting of financial instruments

(9) Fair value

A. in the principal market for the asset or liability; or
B. in the absence of a principal market, in the most advantageous market for the asset or liability.

The main or the most advantageous market must enter by the Group to conduct transaction.

The Group adopts the appropriate valuation technique(s) to use when measuring fair value. The valuation technique(s) used should maximize the use of relevant observable inputs and minimize unobservable inputs.

(10) Inventories

Inventories, including construction land, construction in progress and building and land for sale are stated at the cost in the basis of the account. The construction land transfer to property under construction during actively developed and capitalize financial cost during actively developed or construction period.

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The Group's contract incremental cost is the commission generated by the acquisition of the presold house contract. The customer's signing of the presold contract has not fulfilled the performance obligation because the goods promised to have not been transferred to the customer. According IFRS 15, the sales commission is the incremental cost of acquisiting the presold house contract. When the house is transferred to the customer and fulfill the performance obligation, the incremental cost of obtaining the contract is be amortized.

Rendering of services is accounted in accordance with IFRS 15 but not within the scoping of inventories.

(11) Investments accounted for using the equity method

The Group’s investment in its associate is accounted for using the equity method other than those that meet the criteria to be classified as held for sale. An associate is an entity over which the Group has significant influence. A joint venture means the Group has rights to the net assets of the joint agreement.

Under the equity method, the investment in the associate is carried in the balance sheet at cost and adjusted thereafter for the post-acquisition change in the Group’s share of net assets of the associate. After the interest in the associate is reduced to zero, additional losses are provided for, and a liability is recognized, only to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of the associate. Unrealized gains and losses resulting from transactions between the Group and the associate are eliminated to the extent of the Group’s related interest in the associate.

When changes in the net assets of an associate occur and not those that are recognized in profit or loss or other comprehensive income and do not affects the Group’s percentage of ownership interests in the associate, the Group recognizes such changes in equity based on its percentage of ownership interests. The resulting capital surplus recognized will be reclassified to profit or loss at the time of disposing the associate on a prorate basis.

When the associate issues new stock, and the Group’s interest in an associate is reduced or increased as the Group fails to acquire shares newly issued in the associate proportionately to its original ownership interest, the increase or decrease in the interest in the associate is recognized in additional paid in capital and investment in associate. When the interest in the associate is reduced, the cumulative amounts previously recognized in other comprehensive income are reclassified to profit or loss or other appropriate items. The aforementioned capital surplus recognized is reclassified to profit or loss on a prorate basis when the Group disposes of the associate.

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The financial statements of the associate are prepared for the same reporting period as the Group. Where necessary, adjustments are made to bring the accounting policies in line with those of the Group.

The Group determines at each reporting date whether there is any objective evidence that the investment in the associate is impaired in accordance with IAS 28 Investments in Associates and Joint Ventures . If this is the case the Group calculates the amount of impairment as the difference between the recoverable amount of the associate and its carrying value and recognizes the amount in the ‘share of profit or loss of an associate’ in the statement of comprehensive income in accordance with IAS 36 Impairment of Assets. In determining the value in use of the investment, the Group estimates:

A. Its share of the present value of the estimated future cash flows expected to be generated by the associate, including the cash flows from the operations of the associate and the proceeds on the ultimate disposal of the investment.
B. The present value of the estimated future cash flows expected to arise from dividends to be received from the investment and from its ultimate disposal.

Because goodwill that forms part of the carrying amount of an investment in an associate is not separately recognized, it is not tested for impairment separately by applying the requirements for impairment testing goodwill in IAS 36 Impairment of Assets.

Upon loss of significant influence over the associate, the Group measures and recognizes any retaining investment at its fair value. Any difference between the carrying amount of the associate upon loss of significant influence and the fair value of the retaining investment and proceeds from disposal is recognized in profit or loss. The Group recognizes its interest in the jointly controlled entities using the equity method continuously.

(12) Property, plant and equipment

Property, plant and equipment are stated at cost, net of accumulated depreciation and accumulated impairment losses, if any. Such cost includes the cost of dismantling and removing the item and restoring the site on which it is located and borrowing costs for construction in progress if the recognition criteria are met. Each part of an item of property, plant and equipment with a cost that is significant in relation to the total cost of the item is depreciated separately. When significant parts of property, plant and equipment are required to be replaced in intervals, the Group recognized such parts as individual assets with specific useful lives and depreciation, respectively. The carrying amount of those parts that are replaced is derecognized in accordance with the derecognition provisions of IAS 16 Property, plant and equipment. When a major inspection is performed, its cost is recognized in the carrying amount of the plant and equipment as a replacement if the recognition criteria are satisfied. All other repair and maintenance costs are recognized in gain or loss as incurred.

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Depreciation is calculated on a straight-line basis over the estimated economic lives of the following assets:

Buildings: 5~50 years Leased assets: 5 years Leasehold improvements: The shorter of lease terms or economic useful lives Right-of-use assets: 1 � 25 years Other equipment: 2~26 years

The assets’ residual values, useful lives and methods of depreciation are reviewed at each financial year end and adjusted prospectively, if appropriate.

(13) Investment property

The Group’s owned investment properties are measured initially at cost, including transaction costs. The carrying amount includes the cost of replacing part of an existing investment property at the time that cost is incurred if the recognition criteria are met and excludes the costs of day-to-day servicing of an investment property. Subsequent to initial recognition, other than those that meet the criteria to be classified as held for sale (or are included in a disposal group that is classified as held for sale) in accordance with IFRS 5 Non-current Assets Held for Sale and Discontinued Operations , investment properties are measured using the cost model in accordance with the requirements of IAS 16 Property, plant and equipment for that model. If investment properties are held by a lessee as right-of-use assets and is not held for sale in accordance with IFRS 5, investment properties are measured in accordance with the requirements of IFRS 16.

Depreciation is calculated on a straight-line basis over the estimated economic lives of the following assets:

Buildings 1 � 50 years

The Group transfers to or from investment properties when there is a change in use for these assets.

Properties are transferred to or from investment properties when the properties meet, or cease to meet, the definition of investment property and there is evidence of the change in use.

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(14) Leases

The Group assesses whether the contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset for a period of time, the Group assesses whether, throughout the period of use, has both of the following:

A. the right to obtain substantially all of the economic benefits from use of the identified asset; and
B. the right to direct the use of the identified asset.

For a contract that is, or contains, a lease, the Group accounts for each lease component within the contract as a lease separately from non-lease components of the contract. For a contract that contains 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. The relative stand-alone price of lease and non-lease components shall be determined on the basis of the price received by the lessor, or a similar supplier, would charge the Group for that component, or a similar component, separately. If an observable stand-alone price is not readily available, the Group estimates the stand-alone price, maximizing the use of observable information.

For the rent concession arising as a direct consequence of the covid-19 pandemic, the Group elected not to assess whether it is a lease modification but accounted it as a variable lease payment. And this practical expedient has been applied to all eligible rent concessions.

Group as a lessee

Except for leases that meet and elect short-term leases or leases of low-value assets, the Group recognizes right-of-use asset and lease liability for all leases which the Group is the lessee of those lease contracts.

At the commencement date, the Group measures the lease liability at the present value of the lease payments that are not paid at that date. The lease payments are discounted using the interest rate implicit in the lease, if that rate can be readily determined. If that rate cannot be readily determined, the Group uses its incremental borrowing rate. At the commencement date, the lease payments included in the measurement of the lease liability comprise the following payments for the right to use the underlying asset during the lease term that are not paid at the commencement date:

A. fixed payments (including in-substance fixed payments), less any lease incentives receivable;

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B. variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the commencement date;
C. amounts expected to be payable by the lessee under residual value guarantees;
D. the exercise price of a purchase option if the Group is reasonably certain to exercise that option; and
E. payments of penalties for terminating the lease, if the lease term reflects the lessee exercising an option to terminate the lease.

After the commencement date, the Group measures the lease liability on an amortized cost basis, which increases the carrying amount to reflect interest on the lease liability by using an effective interest method; and reduces the carrying amount to reflect the lease payments made.

At the commencement date, the Group measures the right-of-use asset at cost. The cost of the right-of-use asset comprises:

A. the amount of the initial measurement of the lease liability;
B. any lease payments made at or before the commencement date, less any lease incentives received;
C. any initial direct costs incurred by the lessee; and
D. an estimate of costs to be incurred by the lessee in dismantling and removing the underlying asset, restoring the site on which it is located or restoring the underlying asset to the condition required by the terms and conditions of the lease.

For subsequent measurement of the right-of-use asset, the Group measures the right-of-use asset at cost less any accumulated depreciation and any accumulated impairment losses. That is, the Group measures the right-of-use applying a cost model.

If the lease transfers ownership of the underlying asset to the Group by the end of the lease term or if the cost of the right-of-use asset reflects that the Group will exercise a purchase option, the Group depreciates the right-of-use asset from the commencement date to the end of the useful life of the underlying asset. Otherwise, the Group depreciates the right-of-use asset from the commencement date to the earlier of the end of the useful life of the right-ofuse asset or the end of the lease term.

The Group applies IAS 36 “Impairment of Assets” to determine whether the right-of-use asset is impaired and to account for any impairment loss identified.

Except for those leases that the Group accounted for as short-term leases or leases of lowvalue assets, the Group presents right-of-use assets and lease liabilities in the balance sheet and separately presents lease-related interest expense and depreciation charge in the income statement.

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For short-term leases or leases of low-value assets, the Group elects to recognize the lease payments associated with those leases as an expense on either a straight-line basis over the lease term or another systematic basis.

Group as a lessor

At inception of a contract, the Group classifies each of its leases as either an operating lease or a finance lease. A lease is classified as a finance lease if it transfers substantially all the risks and rewards incidental to ownership of an underlying asset. A lease is classified as an operating lease if it does not transfer substantially all the risks and rewards incidental to ownership of an underlying asset. At the commencement date, the Group recognizes assets held under a finance lease in its balance sheet and present them as a receivable at an amount equal to the net investment in the lease.

For a contract that contains lease components and non-lease components, the Group allocates the consideration in the contract applying IFRS 15.

The Group recognizes lease payments from operating leases as rental income on either a straight-line basis or another systematic basis. Variable lease payments for operating leases that do not depend on an index or a rate are recognized as rental income when incurred.

(15) Intangible assets

The useful lives of intangible assets are assessed as either finite or indefinite.

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Gains or losses arising from derecognition of an intangible asset are recognized in profit or loss when the asset is derecognized.

Computer software

The cost of computer software is amortized on a straight-line basis over the estimated useful life (1 to 6 years).

Trademark

The cost of trademark is amortized on a straight-line basis over the estimated useful life which is prescribed by law.

(16)Impairment of non-financial assets

The Group assesses at the end of each reporting period whether there is any indication that an asset in the scope of IAS 36 Impairment of Assets may be impaired. If any such indication exists, or when annual impairment testing for an asset is required, the Group estimates the asset’s recoverable amount. An asset’s recoverable amount is the higher of an asset’s or cashgenerating unit’s (“CGU”) 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 groups of assets. Where the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount.

For assets excluding goodwill, an assessment is made at each reporting date as to whether there is any indication that previously recognized impairment losses may no longer exist or may have decreased. If such indication exists, the Group estimates the asset’s or cashgenerating unit’s recoverable amount. A previously recognized impairment loss is reversed only if there has been an increase in the estimated service potential of an asset which in turn increases the recoverable amount. However, the reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognized for the asset in prior years.

A cash generating unit, or groups of cash-generating units, to which goodwill has been allocated is tested for impairment annually at the same time, irrespective of whether there is

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any indication of impairment. If an impairment loss is to be recognized, it is first allocated to reduce the carrying amount of any goodwill allocated to the cash generating unit (group of units), then to the other assets of the unit (group of units) pro rata based on the carrying amount of each asset in the unit (group of units). Impairment losses relating to goodwill cannot be reversed in future periods for any reason.

An impairment loss of continuing operations or a reversal of such impairment loss is recognized in profit or loss.

(17) Revenue recognition

The Group’s revenue arising from contracts with customers mainly includes sale of buildings and land and rendering of services. The accounting policies for the Group’s types of revenue are explained as follows:

Construction income

The Group entrusts construction companies in construction and planning of public housing is recognized as sales revenue in accordance with the IFRS 15 about the regulation of sales of goods. Therefore, the Group recognize profit and loss when the ownership transferred.

Before the recognition of the income, the down payment and installment received for the sale of the premises are recognized as contract liabilities in the current liabilities of the balance sheet.

Sales of goods

The Group recognized the sales revenue when the merchandise transport to the customer and the control of merchandise transfer to the customers (The customers owns the right to control the merchandise and the residual benefit to the merchandise.)

The Group recognized the account receivable when the merchandise’s control transfer to the customers and has the right to charge, the account receivable usually has a short period to recover and do not have a significant financial component.

Rendering of services

The Group’s service revenue mainly generated from providing consulting, accommodation and dining service. The revenue recognized when the service completed. The cost of the service recognized when the transaction occurred � the expenses recognized in the current period in accordance with accrual basis.

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(18) Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period to get ready for its intended use or sale are capitalized as part of the cost of the respective assets. All other borrowing costs are expensed in the period they occur. Borrowing costs consist of interest and other costs that an entity incurs relating to the borrowing of funds.

(19) Retirement benefits plans

All regular employees of The Group and its domestic subsidiaries are entitled to a pension plan that is managed by an independently administered pension fund committee. Fund assets are deposited under the committee’s name in the specific bank account and hence, not associated with The Group and its domestic subsidiaries. Therefore, fund assets are not included in the Group’s consolidated financial statements. Pension benefits for employees of the overseas subsidiaries and the branches are provided in accordance with the respective local regulations.

For the defined contribution plan, The Group and its domestic subsidiaries will make a monthly contribution of no less than 6% of the monthly wages of the employee’s subject to the plan. The Group and its subsidiaries recognizes expenses for the defined contribution plan in the period in which the contribution becomes due. Overseas subsidiaries and branches make contribution to the plan based on the requirements of local regulations.

A. the date of the plan amendment or curtailment, and

B. the date that the Group recognizes restructuring-related costs or termination benefits costs

(20) Income taxes

Income tax expense (income) is the aggregate amount included in the determination of profit or loss for the period in respect of current tax and deferred tax.

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Current income tax

The income tax for undistributed earnings is recognized as income tax expense in the subsequent year when the distribution proposal is approved by the shareholders’ meeting.

Deferred tax

Deferred tax is provided on temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.

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

A. Where the deferred tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss.
B. In respect of taxable temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.

A. Where the deferred tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss
B. In respect of deductible temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, deferred tax assets are recognized only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilized

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realized or the liability is settled, based on tax rates and tax laws

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that have been enacted or substantively enacted at the reporting date. The measurement of deferred tax assets and deferred tax liabilities reflects the tax consequences that would follow from the way the Group expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities. Deferred tax relating to items recognized outside profit or loss is recognized outside profit or loss. Deferred tax items are recognized in correlation to the underlying transaction either in other comprehensive income or directly in equity. Deferred tax assets are reassessed at each reporting date and are recognized accordingly.

(21) Business combinations

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irrespective of whether other assets or liabilities of the acquiree are assigned to those units. Each unit or group of units to which the goodwill is so allocated represents the lowest level within the Group at which the goodwill is monitored for internal management purpose and is not larger than an operating segment before aggregation.

5. SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS

The preparation of the Group’s consolidated financial statements require management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the disclosure of contingent liabilities, at the end of the reporting period. However, uncertainty about these assumption and estimate could result in outcomes that require a material adjustment to the carrying amount of the asset or liability affected in future periods.

(1) Judgement

In the process of applying the Group’s accounting policies, management has made the following judgments, which have the most significant effect on the amounts recognized in the consolidated financial statements:

Financing lease commitment-Group as the lessor

The Group has signed real estate leases for investment real property portfolios. Based on the assessment of its agreed terms, the Group still retains the significant risks and rewards of ownership of these properties and treats them as operating leases.

(2) Estimates and assumptions

A. Fair value of financial instruments

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or market approach. Changes in assumptions about these factors could affect the reported fair value of the financial instruments. Please refer to Note 12 for more details.

B. Impairment of non-financial assets

An impairment exists when the carrying value of an asset or cash generating unit exceeds its recoverable amount, which is the higher of its fair value less costs to sell and its value in use. The fair value less costs to sell calculation is based on 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 less incremental costs that would be directly attributable to the disposal of the asset or cash generating unit. The value in use calculation is based on a discounted cash flow model. The cash flows projections are derived from the budget for the next five years and do not include restructuring activities that the Group is not yet committed to or significant future investments that will enhance the asset’s performance of the cash generating unit being tested. The recoverable amount is most sensitive to the discount rate used for the discounted cash flow model as well as the expected future cash-inflows and the growth rate used for extrapolation purposes.

C. Retirement benefits plans

D. Income tax

Uncertainties exist with respect to the interpretation of complex tax regulations and the amount and timing of future taxable income. Given the wide range of international business relationships and the long-term nature and complexity of existing contractual agreements, differences arising between the actual results and the assumptions made, or future changes to such assumptions, could necessitate future adjustments to tax income and expense already recorded. The Group establishes provisions, based on reasonable estimates, for possible consequences of audits by the tax authorities of the respective counties in which it operates. The amount of such provisions is based on various factors, such as experience of previous tax audits and differing interpretations of tax regulations by the taxable entity and the responsible tax authority. Such differences of interpretation may arise on a wide variety of issues depending on the conditions prevailing in the respective Group’s domicile. Deferred tax assets are recognized for all carry forward of unused tax losses and unused

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tax credits and deductible temporary differences to the extent that it is probable that taxable profit will be available or there are sufficient taxable temporary differences against which the unused tax losses, unused tax credits or deductible temporary differences can be utilized. The amount of deferred tax assets determined to be recognized is based upon the likely timing and the level of future taxable profits and taxable temporary differences together with future tax planning strategies. As of December 31, 2020, the deferred income tax assets that the Group has not recognize, please refer to Note 6 for more details.

E. Inventory evaluation

The Group must use the judgment and estimates to determine the net realizable value of the inventory at the balance sheet date, as the inventories are measured at the lower of the cost and the net realizable value. The Group assesses the amount of inventory at the balance sheet date due to market changes or no market sales value, and reduces the inventory cost to the net realizable value. This inventory evaluation is mainly based on the product demand in the specific period in the future, so it may cause significant changes. Please refer to Note 6 for more details.

F. Accounts receivables-estimation of impairment loss

The Group estimates the impairment loss of accounts receivables at an amount equal to lifetime expected credit losses. The credit loss is the present value of the difference between the contractual cash flows that are due under the contract (carrying amount) and the cash flows that expects to receive (evaluate forward looking information). However, as the impact from the discounting of short-term receivables is not material, the credit loss is measured by the undiscounted cash flows. Where the actual future cash flows are lower than expected, a material impairment loss may arise. Please refer to Note 6 for more details.

6. CONTENTS OF SIGNIFICANT ACCOUNTS

(1) Cash and cash equivalents

Cash on hand and petty cash Checking accounts and demand deposit Time deposits Cash equivalent-short-term notes Total	As of December 31,	As of December 31,
	2020	2019
	$4,365 2,639,666 221,850 529,743	$5,152 1,922,906 88,500 106,885
	$3,395,624	$2,123,443

The Group’s cash and cash equivalents were not pledged as collateral or restricted for uses.

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(2) Financial assets at fair value through other comprehensive income

As of December 31, 2020 2019 Equity instruments investments measured at fair value through other comprehensive income-current: Listed company’s stocks $2,437,036 $2,454,341 Equity instruments investments measured at fair value through other comprehensive income-non-current: Unlisted company’s stocks $2,074,370 $2,234,994	As of December 31,	As of December 31,
	2020	2019
		$2,454,341
		$2,234,994

The Group’s financial assets at fair value through over comprehensive income were not pledged as collateral or restricted for uses.

The Group’s dividend income related to equity instrument investments measured at fair value through other comprehensive income for the years ended December 31, 2020 and 2019 are as follow:

Related to investments held at the end of the reporting period Related to investments derecognized during the period Dividends recognized during the period	For the years ended December 31,	For the years ended December 31,
	2020	2019
	$117,922 -	$97,167 -
	$117,922	$97,167

In consideration of the Group’s investment strategy, the Group disposed, and derecognized partial equity instrument investments measured at fair value through other comprehensive income. Details on derecognition of such investments for the years ended December 31, 2020 and 2019 are as follow:

The fair value of the investments at the date of derecognition The cumulative gain or loss on disposal reclassified from other equity to retained earnings	For the years ended December 31,	For the years ended December 31,
	2020	2019
	$12,987 9,987	$4,975 3,248

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(3) Notes receivable

Notes receivable arising from operating activities Less: loss allowance Notes receivable, net	As of December 31,	As of December 31,
	2020	2019
	$32,406 -	$40,032 -
	$32,406	$40,032

The Group’s notes receivables were not pledged as collateral or restricted for uses.

The Group adopted IFRS 9 for impairment assessment. Please refer to Note 6.(19) for more details on accumulated impairment. Please refer to Note 12 for more details on credit risk.

(4) Accounts receivable and accounts receivable -related parties

Accounts receivable Less: loss allowance Subtotal Accounts receivable - related parties Less: loss allowance Subtotal Total	As of December 31,	As of December 31,
	2020	2019
	$466,068 (10)	$253,454 (44)
	466,058	253,410
	5,420 -	13,000 -
	5,420	13,000
	$471,478	$266,410

The Group’s accounts receivable and accounts receivable - related parties were not pledged as collateral or restricted for uses.

Accounts receivable are generally on 30-365-day terms. The book value of the accounts receivables held by the Group were NT$471,488 thousand and NT$266,454 thousand as of December 31, 2020 and 2019, respectively. Please refer to Note 6.(19) for more details on impairment of accounts receivable. Please refer to Note 12 for more details on credit risk management.

(5) Inventories

Construction land Construction in progress	As of December 31,
	2020 2019
	$10,081,987 $7,146,181 13,215,355 16,011,003

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Buildings and land held for sale Others Subtotal Prepayment for land purchases Total	As of December 31,	As of December 31,
	2020	2019
	2,914,124 15,250	2,847,829 12,512
	26,226,716 2,762,342	26,017,525 533,603
	$28,989,058	$26,551,128

A. Some of the construction in progress above was contracted by the related company SanChing Engineering Co., Ltd., and the relevant transactions are detailed in Note 7.
B. The net realizable value of the construction land held by the Company is based on the nature of the land, using either land development analysis approach, comparison method or announced current land value method. The land development analysis approach is based on the changes in land value the development and improvement bring according to the legal use and the intensity of use of the land. The approach estimates the total sales amount after development or construction, deducting the direct costs, indirect costs, capital interests and profits during the development period. The comparison method is evaluated based on the transaction price of similar lands in neighboring areas in the most recent year. The announced current land value method is based on the assessment of the current value of the land announced by the Department of Land Affairs, Ministry of the Interior.
C. Significant Construction projects were as follow:

Construction Project	Amount	Percentage of Completion
City Landmark Park Beautiful Mansion Cathay Mega+ Have a Rich Year Cathay Lagom Liberty Stationery Corp. Cathay ChuanQing	$1,309,062 1,029,794 1,010,390 1,395,238 1,203,810 2,471,512 1,231,429	67.00% 39.00% 30.00% 12.00% 23.00% 11.00% 2.00%

D. The total interest capitalizes of the inventories mentioned above was found to be NT$124,036 thousand and NT$199,612 thousand for the years ended December 31, 2020 and 2019, respectively. The interest expense before capitalizing were NT$343,751 thousand and NT$340,942 thousand, respectively.

The monthly capitalization interest rate of loan for inventories were 0.0383%~0.2763% and 0.0976%~0.2019% for the years ended December 31, 2020 and 2019, respectively.

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E. To successfully construct and deliver the building and housing to the customers, the Group uses the following trust accounts for the construction in progress:

Construction Project (Amount)	Trustee	Period
Park Beautiful Mansion (NT$14,520 thousand) Tree Rivers, Cathay’s Home I (NT$57,336 thousand) HYGGE (NT$45,312 thousand) Tree Rivers, Cathay’s Home II (NT$32,449 thousand) City Landmark (NT$90,533 thousand) Cathay Uptown (NT$78,821 thousand) Have a Rich Year (NT$122,727 thousand) Cathay Lagom (NT$113,230 thousand) Cathay Mega+ (NT$102,069 thousand) Cathay ChuanQing (NT$124,973 thousand) Cathay Opulence (NT$279,163 thousand) Cathay XiJing (NT$ 0 thousand)	Cathay United Bank Cathay United Bank Cathay United Bank Cathay United Bank Cathay United Bank Cathay United Bank Cathay United Bank Cathay United Bank Cathay United Bank Cathay United Bank Cathay United Bank Cathay United Bank	From June 6, 2018 to the completion of the project, the license was obtained, and the first registration of the ownership was completed. From June 13, 2018 to the completion of the project, the license was obtained, and the first registration of the ownership was completed. From July 30, 2018 to the completion of the project, the license was obtained, and the first registration of the ownership was completed. From December 26, 2018 to the completion of the project, the license was obtained, and the first registration of the ownership was completed. From April 17, 2019 to the completion of the project, the license was obtained, and the first registration of the ownership was completed. From May 20, 2019 to the completion of the project, the license was obtained, and the first registration of the ownership was completed From May 31, 2019 to the completion of the project, the license was obtained, and the first registration of the ownership was completed From July 3, 2019 to the completion of the project, the license was obtained, and the first registration of the ownership was completed From August 1, 2019 to the completion of the project, the license was obtained, and the first registration of the ownership was completed. From May 5, 2020 to the completion of the project, the license was obtained, and the first registration of the ownership was completed. From July 3, 2020 to the completion of the project, the license was obtained, and the first registration of the ownership was completed. From November 9, 2020 to the completion of the project, the license was obtained, and the first registration of the ownership was completed.

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As of December 31, 2020, the Group has established a deed of trust with the bank for the construction above to help manage the funds of the presold customers paid. The trust period ends after the construction is completed and the first ownership registration of the property. The balance of the managed funds by the Group in accordance with the above trust deed is NT$1,061,133 thousand, which is equal to the amount receivable of the presold contract. There is no delay in the delivery of the trust account.

F. The cost of inventories recognized in expenses amounts to NT$8,583,459 thousand and NT$7,088,054 thousand for the years ended to December 31, 2020 and 2019, including the inventory valuation losses NT$0 thousand for both the years ended December 31, 2020 and 2019.
G. Please refer to Note 8 for more details on inventory under pledged.
H. Incremental cost of the contract

(6) Property, plant and equipment

Owner occupied property, plant and equipment Property, plant and equipment leased out under operating leases Total	As of December 31,	As of December 31,
	2020	2019
	$4,656,443 541,423	$4,050,958 563,264
	$5,197,866	$4,614,222

A. Owner occupied property, plant and equipment

Cost As of January 1, 2019 Additions Disposals Transfer Exchange differences As of December 31, 2019 Additions Acquisitions through business combinations	Land	Buildings	Leasehold Improvement	Other equipment	Construction in progress and equipment awaiting examination Total	Construction in progress and equipment awaiting examination Total
	$1,346 - - 1,615,343 -	$1,829 - - 1,176,636 -	$913,553 53,389 - 541,182 -	$377,973 30,104 (5,024) 101,609 (38)	$517,865 348,540 - (646,186) -	$1,812,566 432,033 (5,024) 2,788,584 (38)
	1,616,689 - -	1,178,465 2,713 -	1,508,124 525,159 -	504,624 61,035 236	220,219 309,881 -	5,028,121 898,788 236

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Land	Buildings	Leasehold Improvement	Other equipment	Construction in progress and equipment awaiting examination Total	Construction in progress and equipment awaiting examination Total
- - -	- - -	(1,535) 30,790 -	(4,682) 18,351 (32)	- (74,139) -	(6,217) (24,998) (32)
$1,616,689	$1,181,178	$2,062,538	$579,532	$455,961	$5,895,898
$- - - - -	$341 36 - 283,121 -	$241,119 127,912 - - -	$259,994 69,246 (4,898) 305 (13)	$- - - - -	$501,454 197,194 (4,898) 283,426 (13)
- - - -	283,498 43,692 - -	369,031 153,237 (663) -	324,634 70,188 (4,143) (19)	- - - -	977,163 267,117 (4,806) (19)
$-	$327,190	$521,605	$390,660	$-	$1,239,455
$1,616,689	$853,988	$1,540,933	$188,872	$455,961	$4,656,443
$1,616,689	$894,967	$1,139,093	$179,990	$220,219	$4,050,958

B. Property, plant and equipment leased out under operating lease

Leasehold Improvement	Other equipment	Transportation equipment	Total
$355,155 21,722 -	$373,576 29,316 (17,089)	$107,675 25,851 (16,702)	$836,406 76,889 (33,791)
376,877 385,803 4,080 32,614 (2,953) (15,767)		116,824 15,058 (13,724)	879,504 51,752 (32,444)
$378,004	$402,650	$118,158	$898,812
$96,371 16,741 -	$145,688 18,505 (10,181)	$46,965 17,050 (14,899)	$289,024 52,296 (25,080)
113,112 154,012 17,087 21,567 (340) (9,135)		49,116 18,709 (6,739)	316,240 57,363 (16,214)
$129,859	$166,444	$61,086	$357,389
$248,145	$236,206	$57,072	$541,423
$263,765	$231,791	$67,708	$563,264

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C. The major components of the Group’s buildings are mainly buildings, air-conditioning equipment and elevators, and are depreciated according to their durability years of 50, 5 and 15 years respectively.
D. The Group’s Property, plant and equipment are not capitalized from financial costs.
E. The Group’s Property, plant and equipment were not pledged as collateral or restricted for uses.

(7) Investment property

Lands	Buildings	Right-of-use assets	Total
$7,183,789 $6,270,045 $- (100,068) (188,489) - (1,538,209) (1,061,357) (Note)306,104			$13,453,834 (288,557) (2,293,462)
5,545,512 5,020,199 306,104 - 12,615 - 7,851 1,629 - (17,102) (151,249) -			10,871,815 12,615 9,480 (168,351)
$5,536,261	$4,883,194	$306,104	$10,725,559
$- - - -	$2,321,669 $- 181,691 - (46,279) - (283,121) (Note)52,977		$2,321,669 181,691 (46,279) (230,144)
- - -	2,173,960 52,977 137,832 82,754 (91,214) -		2,226,937 220,586 (91,214)
$-	$2,220,578	$135,731	$2,356,309
$5,536,261	$2,662,616	$170,373	$8,369,250
$5,545,512	$2,846,239	$253,127	$8,644,878

Note: New additions applicable to IFRS 16.

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Rental income from investment property Less: Direct operating expenses from investment property generating rental income Direct operating expenses from investment property not generating rental income Total	For theyears ended December 31,	For theyears ended December 31,
	2020	2019
	$276,738 (71,444) (37,958)	$356,034 (94,251) (13,024)
	$167,336	$248,759

The investment properties held by the Group were not valued at fair value. The amounts of the fair value were only for disclosure. The fair value of the investment properties held by the Group were NT$13,017,633 thousand and NT$13,215,287 thousand as of December 31, 2020 and 2019, respectively, which were valued by an independent external appraisal expert and internal valuation. The evaluation method was comparison method and based on the actual deal price or the market transaction price of the real estate nearby.

Please refer to Note 8 for more details on property, plant and equipment under pledge.

(8) Intangible assets

Computer software	Trademark	Total
$126,003 11,344 (812) 4,355 (1)	$4,456 279 - 126 -	$130,459 11,623 (812) 4,481 (1)
140,889 23,745 169 (1,995) 346	4,861 497 - - -	145,750 24,242 169 (1,995) 346
$163,154	$5,358	$168,512
$106,254 11,989 (812)	$3,789 321 -	$110,043 12,310 (812)

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Computer software	Trademark	Total
(1)	-	(1)
117,430 14,317 (1,022)	4,110 270 -	121,540 14,587 (1,022)
$130,725	$4,380	$135,105
$32,429	$978	$33,407
$23,459	$751	$24,210

Amortization expense of intangible assets were as follow:

Operating expenses Operating costs Total	For theyears ended December 31,	For theyears ended December 31,
	2020	2019
	$12,243 2,344	$8,329 3,981
	$14,587	$12,310

(9) Other non-current assets

Construction land Prepaid expense - equipment Refundable deposits Other financial assets Other non-current assets - other Total	As of December 31,	As of December 31,
	2020	2019
	$18,425 32,851 1,533,892 46,400 24,301	$18,425 1,431 941,709 - 25,490
	$1,655,869	$987,055

Items	As of December 31,	As of December 31,	Type	Purpose	Securities
	2020	2019
Land Serial NO.137-2 etc., Northern shi-zhi of Hou-tsuo section, San-zhi township, New Taipei City $18,425		$18,425	Purchases / Sales	Development	Mortgage setting and commitment

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(10)Short-term loans

Unsecured bank loans Secured bank loans Total Interest rate	As of December 31,	As of December 31,
	2020	2019
	$7,351,000 -	$7,013,000 250,000
	$7,351,000	$7,263,000
	0.75%~1.25% 0.85%~1.26%

A. The Group’s unused short-term lines of credits amounted to NT$12,767,990 thousand and NT$17,540,290 thousand as of December 31, 2020 and 2019, respectively.
B. Please refer to Note 8 for investment property pledged as collateral for short-term loans.

(11)Short-term notes payable

Short-term notes and bills payable Less: unamortized discount Net Interest rate	As of December 31,	As of December 31,
	2020	2019
	$3,097,000 (6,499)	$1,035,000 (460)
	$3,090,501	$1,034,540
	0.29%~0.70% 0.43%~1.42%

(12)Bonds payable

Domestic secured bonds Less: current portion Net	As of December 31,	As of December 31,
	2020	2019
	$- -	$3,000,000 (3,000,000)
	$-	$-

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(13)Long-term loans

Details of long-term loans as of December 31, 2020 and 2019 are as follows:

	As of December 31,2020	Interest rate(%)	Maturitydate and terms of repayment
Bank credit loans Long-term credit notes payable Subtotal Less: current portion Total	$10,180,000 729,741	0.85%~1.00% 0.29% Interest rate(%)	Effective July 2019 to July 2023, repayments on due day. Effective August 2020 to August 2023, repayments on due day. Maturitydate and terms of repayment
	10,909,741 (5,400,000)
	$5,509,741
	As of December 31,2019
Bank credit loans Long-term notes payable Subtotal Less: current portion Total	$7,564,000 538,682	0.90%~1.18% 0.43%~1.2%	Effective January 2019 to July 2022, repayments on due day. Effective December 2018 to September 2021, repayments on due day.
	8,102,682 (3,000,000)
	$5,102,682

(14)Retirement employment benefits

A. Defined contribution plan

The defined contribution plan of the Company and its domestic subsidiaries’ Employee Retirement Plan is regulated according to the provisions of the Labor Pension Act. In accordance with the Act, contributions made by the employer cannot be lower than 6% of the participant’s monthly wages. Therefore, The Group makes 6% contributions of the monthly wages to the Labor Pension personal account of the Bureau of the Labor Insurance on a regular basis.

Subsidiaries in China are required to pay pension insurance premiums according to the local government's laws and regulations, paying a certain proportion of the total salary of the employees. A Certain proportion of the total salary of the employees is paid to the relevant government department and saved in separate accounts of each employee.

Other foreign subsidiaries of the Group provide pensions to relevant pension management undertakings in accordance with local laws and regulations.

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For the years ended December 31, 2020 and 2019, the expenses related to defined contribution plan amounted to NT$33,609 thousand and NT$29,438 thousand, respectively.

B. Defined benefits plan

The defined benefit plan of the Company and its domestic subsidiaries’ Employee Retirement Plan is regulated according to the Labor Standards Act. 2. Retirement benefits are based on such factors as the employee’s length of service and final pensionable salary. In accordance with the Act, 2 bases are given for each full year on the first 15 years of service and 1 base is given for each full year after 15 years of service. The total bases given shall not exceed 45. Under the retirement plan, the Company and its domestic subsidiaries contributes monthly an amount equal to 2% of gross salary to the pension reserve fund, which is deposited into a designated depository account with the Bank of Taiwan. At the end of each year, if the balance in the designated labor pension reserve funds is inadequate to cover the benefit estimated to be paid in the following year, the Company and its domestic subsidiaries should make up the difference before the end of March in the following year.

The Ministry of Labor is in charge of establishing and implementing the fund utilization plan in accordance with the Regulations for Revenues, Expenditures, Safeguard and Utilization of the Labor Retirement Fund. The pension fund is invested in-house or under mandation, based on a passive-aggressive investment strategy for long-term profitability. The Ministry of Labor establishes checks and risk management mechanism based on the assessment of risk factors including market risk, credit risk and liquidity risk, in order to maintain adequate manager flexibility to achieve targeted return without over-exposure of risk. With regard to utilization of the pension fund, the minimum earnings in the annual distributions on the final financial statement shall not be less than the earnings attainable from the amounts accrued from two-year time deposits with the interest rates offered by local banks. Treasury Funds can be used to cover the deficits after the approval of the competent authority. As the Company does not participate in the operation and management of the pension fund, no disclosure on the fair value of the plan assets categorized in different classes could be made in accordance with paragraph 142 of IAS 19. The Group expects to contribute NT$1,807 thousand to its defined benefit plan during the 12 months beginning after December 31, 2020.

As of December 31, 2020 and 2019, the average duration of defined benefit obligation of the Group were expected to be 12.9 years and 14.2 years.

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Amounts to be recognized in profit or loss for the years ended December 31, 2020 and 2019 are summarized as follows:

Current period service cost Net interest on the net defined benefit liability (asset) Total	For theyear ended December 31,	For theyear ended December 31,
	2020	2019
	$14,965 1,265	$7,587 811
	$16,230	$8,398

Reconciliation of the present value of the defined benefit obligation and fair value of plan assets of the defined benefit plan is as follows:

	As of
December 31, 2020	December 31, 2019	January 1, 2019
$381,746 (208,248)	$184,927 (86,541)	$182,065 (89,715)
$173,498	$98,386	$92,350

Reconciliation of net defined benefit liabilities (assets):

Present value of defined benefit obligation	Fair value of plan assets	Net defined benefit liabilities (assets)
$182,065 7,587 1,656	$(89,715) - (845)	$92,350 7,587 811
9,243	(845)	8,398
4,222 8,079 -	- - (6,364)	4,222 8,079 (6,364)
12,301	(6,364)	5,937
(18,682) -	14,650 (4,267)	(4,032) (4,267)
184,927	(86,541)	98,386

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Present value of defined benefit obligation	Fair value of plan assets	Net defined benefit liabilities (assets)
201,190 14,965 2,573	(106,421) - (1,308)	94,769 14,965 1,265
17,538	(1,308)	16,230
12,566 (3,347) -	- - (5,285)	12,566 (3,347) (5,285)
9,219	(5,285)	3,934
(31,128) -	18,272 (26,965)	(12,856) (26,965)
$381,746	$(208,248)	$173,498

The following significant actuarial assumptions are used to determine the present value of the defined benefit obligation:

Discount rate Expected rate of salary increases	As of December 31,	As of December 31,
	2020	2019
	0.26%~0.38% 0.50%~2.50%	0.66%~0.78% 1.00%~2.50%

A sensitivity analysis for significant assumption as of December 31, 2020 and 2019 was as follow:

For theyear ended December 31,	For theyear ended December 31,	For theyear ended December 31,	For theyear ended December 31,
2020		2019
Increase defined benefit obligation	Decrease defined benefit obligation	Increase defined benefit obligation	Decrease defined benefit obligation
$- 7,913 15,628 -	$7,887 - - 14,854	$- 4,694 9,021 -	$4,404 - - 8,447

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There was no change in the methods and assumptions used in preparing the sensitivity analyses compared to the previous period.

(15)Common stock

(16)Capital surplus

Treasury share transactions Others - overdue dividends Total	As of December 31,	As of December 31,
	2020	2019
	$10,407 29,108	$10,407 21,221
	$39,515	$31,628

(17)Retained earnings and non-controlling interests

A. Legal reserve

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English Translation of Financial Statements Originally Issued in Chinese

B. Special reserve

C. Retained earnings and dividend policies

Pursuant to the Company’s Articles of Incorporation, current year’s earnings, if any, shall be appropriated in the following order:

a. Payments of all taxes, if any
b. To offset prior year’s deficit, if any
c. To set aside 10% of the remaining amount as legal reserve
d. To set aside special reserve, if required
e. The remaining amount (the “appropriable after-dividend earnings”), if any, combination with prior year’s accumulated unappropriated earnings is appropriated based on the appropriation of shareholders’ bonuses plan drafted by the board of directors under the ordinary shareholders’ meeting.

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English Translation of Financial Statements Originally Issued in Chinese

D. For the years ended December 31, 2019 and 2018, the details of earnings distribution and dividends per share were resolved by the shareholder’s meeting on June 12, 2020 and June 14, 2019, were as follows:

Legal reserve Common stock - cash dividend	Appropriation of earnings (in thousand NT dollars)	Appropriation of earnings (in thousand NT dollars)	Cash Dividend per share (NT dollars)	Cash Dividend per share (NT dollars)
	2019	2018	2019	2018
	$137,050 1,159,561	$360,961 2,435,078	$1.0	$2.1

E. Please refer to Note 6.(21) for details of bonus to employees and directors.
F. Non-controlling interests

For theyears ended December 31, 2020 2019 Beginning balance $103,958 $266,813 Net income (losses) attributed to the non-controlling interests 32,807 29,853 Other comprehensive income attributed to the non-controlling interests: Exchange differences resulting from translating the financial statements of a foreign operation (57) (30,134) Remeasurements of defined benefit plans (1,351) (57) Income tax (benefit) expense relating to items that will not be reclassified to profits/losses 270 - Acquisition of new shares in a subsidiary not in proportionate to ownership interests 3,000 - Reduction of capital by subsidiary - (150,720) Dividends distributed by subsidiary (43,138) (11,797) Non-controlling interests in newly established subsidiary 850,110 - Subsidiary liquidation (1,695) - Ending balance $943,904 $103,958	For theyears ended December 31,	For theyears ended December 31,
	2020	2019
		$266,813 29,853 (30,134) (57) - - (150,720) (11,797) - -
	$943,904	$103,958

(18)Operating revenues

Revenue from contracts with customers Sales of buildings and land Service income	For theyears ended December 31,	For theyears ended December 31,
	2020	2019
	$11,356,913 2,023,608	$9,296,499 1,717,128

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English Translation of Financial Statements Originally Issued in Chinese

Others Subtotal Rental income Total	For theyears ended December 31,	For theyears ended December 31,
	2020	2019
	128,677	71,054
	13,059,198	11,084,681
	464,413	539,247
	$13,973,611	$11,623,928

The relevant information of the Group’s revenue are as follows:

A. Disaggregation of revenue

For the year ended December 31, 2020

Property and real estate Investment development department	Others	Total
$300,594 11,356,913 - - -	$163,819 - 2,023,608 68,154 60,523	$464,413 11,356,913 2,023,608 68,154 60,523
$11,657,507	$2,316,104	$13,973,611
$11,356,913 300,594	$2,152,285 163,819	$13,509,198 464,413
$11,657,507	$2,316,104	$13,973,611

For the year ended December 31, 2019

Property and real estate Investment development department	Others	Total
$379,401 9,296,499 - - -	$159,846 - 1,717,128 70,341 713	$539,247 9,296,499 1,717,128 70,341 713
$9,675,900	$1,948,028	$11,623,928
$9,296,499 379,401	$1,788,182 159,846	$11,084,681 539,247
$9,675,900	$1,948,028	$11,623,928

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English Translation of Financial Statements Originally Issued in Chinese

B. Contract balances

Contract liabilities - current

	As of
December 31, 2020	December 31, 2019	January 1, 2019
$4,421,199 85,423	$3,526,415 49,508	$3,626,329 25,283
$4,506,622	$3,575,923	$3,651,612

For the years ended December 31, 2020 and 2019, the movement in the contract liabilities are as follows:

Revenue recognized during the year that was included in the balance at the beginning of the year Increase in receipt in advance during the period	For theyears ended December 31,	For theyears ended December 31,
	2020	2019
	$(1,591,868) 2,522,567	$(2,042,240) 1,966,551

C. Assets recognized from the revenue from contracts with customers

Incremental costs of obtaining contracts

Incremental costs of obtaining contracts
Sales of goods	As of December 31,
	2020	2019
	$633,029	$671,760

The amortized amount of the incremental cost of the Group’s acquisition of the contract for the years ended December 31, 2020 and 2019 were NT$279,282 thousand and NT$157,247 thousand, respectively.

(19)Expected credit losses/(gains)

Operating expenses - expected credit losses/ (gains) Accounts receivable	For theyears ended December 31,	For theyears ended December 31,
	2020	2019
	$(34)	$32

Please refer to Note 12 for information of credit risks.

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English Translation of Financial Statements Originally Issued in Chinese

The Group measured the loss allowance of receivables (including notes and accounts receivable) at an amount equal to lifetime expected credit losses. On December 31, 2020, the different customer segments do not have significantly different loss patterns. Therefore no distinction between groups. On December 31, 2019, the Group considered the grouping of accounts receivable by counterparties’ credit rating, by geographical region and by industry sector and its loss allowance is measured by using a provision matrix. The details of the loss allowance measured as of December 31, 2020 and 2019 was as follows:

December 31, 2020

Neither past due (Note)			Past due			Total
	Within 30 days	31-90 days	91-270 days	271- 365days	Over 365 days
$503,046 -	$848 1.14%	$- -	$- -	$- -	$- -	$503,894 10
-	10	-	-	-	-
$503,046	$838	$-	$-	$-	$-	$503,884

December 31, 2019

Neither past due (Note)			Past due			Total
	Within 30 days	31-90 days	91-270 days	271- 365days	Over 365 days
$258,157 -	$1,735 0.01%	$2,518 0.05%	$41,777 0.10%	$- -	$- -	$304,187 44
-	-	2	42	-	-
258,157	1,735	2,516	41,735	-	-	304,143
Neither past due (Note)			Past due			Total
	Within 30 days	31-90 days	91-270 days	271- 365days	Over 365 days
2,299 -	- -	- -	- -	- -	- -	2,299 -
-	-	-	-	-	-
2,299	-	-	-	-	-	2,299
$260,456	$1,735	$2,516	$41,735	$-	$-	$306,442

Note: The Group’s notes receivable was not overdue.

For the years ended December 31, 2020 and 2019, the movement in the provision for impairment of notes receivable and accounts receivable are as follows:

328

English Translation of Financial Statements Originally Issued in Chinese

As of January 1, 2019 Addition/(reversal) for the current period Amounts written off during the period as uncollectible As of December 31, 2019 Addition/(reversal) for the current period Amounts written off during the period as uncollectible As of December 31, 2020	Notes receivable	Accounts Receivable
	$- - -	$12 32 -
	- - -	44 (34) -
	$-	$10

(20)Operating leases

A. Operating lease commitments - Group as lessee

The Group leases various property (buildings) and transportation equipment. These leases have terms of between one and twenty years.

The effect that leases have on the financial position, financial performance and cash flows of the Group are as follow:

a. Amounts recognized in the balance sheet
(a) Right-of-use assets

The carrying amount of right-of-use asset

Land Buildings Total	As of December 31,	As of December 31,
	2020	2019
	$8,264 5,125,698	$15,513 4,016,680
	$5,133,962	$4,032,193

For the years ended December 31, 2020 and 2019, the Group’s additions to right-ofuse assets amounting to NT$1,444,976 thousand and NT$46,431 thousand, respectively.

(b) Lease liability

Lease liability Current Non-current	As of December 31,	As of December 31,
	2020	2019
	$5,509,959	$4,373,611
	$349,495 5,160,464	$290,712 4,082,899

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English Translation of Financial Statements Originally Issued in Chinese

Please refer to Note 6.(22).D for the interest on lease liability recognized during the years ended December 31, 2020 and 2019 and refer to Note 12.(5) for the maturity analysis for lease liabilities as of December 31, 2020 and 2019.

b. Amounts recognized in the statement of profit or loss

Depreciation charge for right-of-use assets

Land Buildings Total	For the years ended December 31,	For the years ended December 31,
	2020	2019
	$7,249 335,957	$4,542 320,897
	$343,206	$325,439

c. Income and costs relating to leasing activities

The expense relating to short-term leases The expense relating to leases of low-value assets (Not including the expense relating to short-term leases of low-value assets) The expense relating to variable lease payments not included in the measurement of lease liabilities	For the years ended December 31,	For the years ended December 31,
	2020	2019
	$6,588 605 30,516	$98,327 1,550 4,971

As of December 31, 2020 and 2019, the short-term lease portfolio promised by the Group and the types of lease targets related to the aforementioned short-term lease expenses are similar.

In 2020, the Group recognized the relevant rent concessions arising from a direct consequence of the covid-19 pandemic as other income NT$27,445 thousand to reflect changes in variable lease payments that have applied related practical expedients.

d. Cash outflow relating to leasing activities

For the years ended December 31, 2020 and 2019, the Group’s total cash outflow for leases amounting to NT$480,667 thousand and NT$459,489 thousand, respectively.

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English Translation of Financial Statements Originally Issued in Chinese

e. Other information relating to leasing activities

Variable lease payments

Some of the Group’s property lease agreements contain variable payment terms that are linked to certain percentages of sales generated from the leased stores, which is very common in the industry of the Group. The variable rent was calculated by the higher amount of fixed payment and payment which calculated by certain percentages of sales under the lease agreements. As such variable lease payments do not meet the definition of lease payments, those payments are not included in the measurement of the assets and liabilities. If the payment which calculated by certain percentages of sales under the lease agreements is higher than the fixed payment, the Group expects the consequence that, for every sales increase of NT$100 thousand, the rental payments will increase by NT$25 thousand.

B. Group as lessor

Please refer to Note 6.(7) for details on the Group’s owned investment properties. Leases of owned investment properties are classified as operating leases as they do not transfer substantially all the risks and rewards incidental to ownership of underlying assets.

Lease income for operating leases Income relating to fixed lease payments and variable lease payments that depend on an index or a rate	For the years ended December 31,	For the years ended December 31,
	2020	2019
	$464,559	$539,247

Please refer to Note 6.(6) for relevant disclosure of property, plant and equipment for operating leases under IFRS 16. For operating leases entered by the Group, the undiscounted lease payments to be received and a total of the amounts for the remaining years as of December 31, 2020 and 2019 are as follow:

Not later than 1 year Later than 1 year and not later than 2 years Later than 2 year and not later than 3 years Later than 3 year and not later than 4 years Later than 4 year and not later than 5 years Later than five years Total	As of December 31,	As of December 31,
	2020	2019
	$298,600 297,227 288,051 286,095 286,095 234,309	$289,634 287,267 286,097 284,910 283,143 511,739
	$1,690,377	$1,942,790

331

English Translation of Financial Statements Originally Issued in Chinese

(21)Summary statement of employee benefits, depreciation and amortization expenses by function is as follows:

Function Description	For theyear	ended December 31,2020	ended December 31,2020	For theyear	ended December 31,2019	ended December 31,2019
	Operating Cost	Operating Expense	Total	Operating Cost	Operating Expense	Total
Employee benefits expense
Salaries and wages	$478,920	$356,402	$835,322	$340,947	$323,889	$664,836
Labor and health insurance	48,633	32,260	80,893	29,896	28,833	58,729
Pension	27,189	22,650	49,839	18,369	19,467	37,836
Other employee benefits expense	24,046	21,447	45,493	24,919	20,036	44,955
Depreciation and depletion	429,148	459,124	888,272	512,178	244,442	756,620
Amortization	2,344	12,243	14,587	3,981	8,329	12,310

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English Translation of Financial Statements Originally Issued in Chinese

(22)Non-operating income and expenses

A. Interest income

For the years ended December 31,

Deposit interest Others Total	2020	2019
	$1,766 1,317	$3,979 686
	$3,083	$4,665

B. Other income

Dividend income Rental income Bargain purchase gain Others Total	For theyears ended December 31,	For theyears ended December 31,
	2020	2019
	$117,922 146 2,575 156,090	$97,167 - - 83,227
	$276,733	$180,394

C. Other gains and losses

Gains (losses) on disposal and abandon of property, plant and equipment Gains (losses) on disposal of investment Loss of disposal intangible assets Foreign exchange gains (losses), net Others Total	For theyears ended December 31,	For theyears ended December 31,
	2020	2019
	$(9,195) 87,423 (973) 70 (3,471)	$(2,496) 45,221 - 223 (15,626)
	$73,854	$27,322

D. Finance costs

Interest on borrowings from bank Interest on lease liabilities Total	For theyears ended December 31,	For theyears ended December 31,
	2020	2019
	$85,384 134,331	$23,837 117,493
	$219,715	$141,330

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English Translation of Financial Statements Originally Issued in Chinese

(23)Components of other comprehensive income

For the year ended December 31, 2020

Arising during theperiod	Reclassification adjustments duringtheperiod	Other comprehensive income,before tax	Income tax relating to components of other comprehensive income Other comprehensive income,net of tax	Income tax relating to components of other comprehensive income Other comprehensive income,net of tax
$(3,934) (164,942) (653)	$- - (87,569)	$(3,934) (164,942) (88,222)	$786 - -	$(3,148) (164,942) (88,222)
$(169,529)	$(87,569)	$(257,098)	$786	$(256,312)

Items that will not be reclassified to profit or losses: Remeasurements of defined benefit plans Unrealized gains (losses) from equity instruments investments measured at fair value through other comprehensive income Items that may be reclassified subsequently to profit or losses: Exchange differences arising from translation of the financial statements of foreign operations Share of other comprehensive income of associates and joint ventures accounted for using equity method Total of other comprehensive income	Arising during theperiod	Reclassification adjustments duringtheperiod	Other comprehensive income,before tax	Income tax relating to components of other comprehensive income Other comprehensive income,net of tax	Income tax relating to components of other comprehensive income Other comprehensive income,net of tax
	$(5,937) 368,350 (29,477) (790)	$- - (1,440) -	$(5,937) 368,350 (30,917) (790)	$1,187 - - -	$(4,750) 368,350 (30,917) (790)
	$332,146	$(1,440)	$330,706	$1,187	$331,893

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English Translation of Financial Statements Originally Issued in Chinese

(24)Income taxes

The major components of income tax expense (income) were as follows:

Income tax expense (income) recognized in profit or loss

For theyears ended December 31, 2020 2019 Current income tax expense (income): Current income tax payable $25,022 $104,832 Current land value increment tax charge 65,158 91,995 Adjustments in respect of current income tax of prior periods (2,501) 3 Deferred tax expense (income): Deferred tax expense (income) relating to origination and reversal of temporary differences 80,818 (26,850) Total income tax expense (income) $168,497 $169,980 Income tax relating to components of other comprehensive income For theyears ended December 31, 2020 2019 Deferred tax expense (income): Remeasurements of defined benefit plans $(786) $1,187	For theyears ended December 31,	For theyears ended December 31,
	2020	2019
	$25,022 65,158 (2,501) 80,818	$104,832 91,995 3 (26,850)
	$168,497	$169,980
Deferred tax expense (income): Remeasurements of defined benefit plans
	2020	2019
	$(786)	$1,187

Reconciliation between tax expense and the product of accounting profit multiplied by applicable tax rates was as follows:

Accounting profit (loss) before tax from continuing operations Tax at the domestic rates applicable to profits in the country concerned Tax effect of revenues exempt from taxation Tax effect of non-deductible expense Tax effect of deferred tax assets/liabilities Surtax on undistributed retain earnings Adjustments in respect of current income tax of prior periods Current land value increment tax Total income tax expense (income) recognized in profit or loss	For theyears ended December 31,	For theyears ended December 31,
	2020	2019
	$1,685,284	$1,570,338
	$337,057 (303,394) 117,295 (48,996) 3,878 (2,501) 65,158	$290,496 (266,525) 23,214 (29,130) 59,927 3 91,995
	$168,497	$169,980

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English Translation of Financial Statements Originally Issued in Chinese

Deferred tax assets (liabilities) relate to the following:

For the year ended December 31, 2020

Beginningbalance	Deferred tax income (expense) recognized in profit or loss	Deferred tax income (expense) recognized in other comprehensive income	Resulted from the merger	Endingbalance
$(10,049) 96,746 101,539 2,332 70,897 112 1,400 28,665 15,356 7 119,312 524 107,380	$- (3,094) (2,747) (97) (70,897) 6,044 - (25,795) (551) - (5,675) - 21,994	$- - - - - - - - 786 - - - -	$- - 74 - - - - - 15,023 - - - -	$(10,049) 93,652 98,866 2,235 - 6,156 1,400 2,870 30,614 7 113,637 524 129,374
$534,221	$(80,818)	$786	$15,097	$469,286

$544,270				$479,335
$(10,049)				$(10,049)

For the year ended December 31, 2019

Temporary differences Revaluations of investment property to fair value as deem cost at the date of transition to IFRS - land value increment tax Revaluations of investment property to fair value as deem cost at the date of transition to IFRS	Beginningbalance	Deferred tax income (expense) recognized in profit or loss	Deferred tax income (expense) recognized in other comprehensive income	Endingbalance
	$(10,049) 96,746	$- -	$- -	$(10,049) 96,746

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English Translation of Financial Statements Originally Issued in Chinese

Beginningbalance	Deferred tax income (expense) recognized in profit or loss	Deferred tax income (expense) recognized in other comprehensive income	Endingbalance
101,539 2,429 83,066 120 1,400 28,665 14,149 7 95,252 524 92,336	- (97) (12,169) (8) - - 20 - 24,060 - 15,044	- - - - - - 1,187 - - - -	101,539 2,332 70,897 112 1,400 28,665 15,356 7 119,312 524 107,380
$506,184	$26,850	$1,187	$534,221

$516,233			$544,270
$(10,049)			$(10,049)

The following table contains information of the unused tax losses of the Group:

Year	Tax losses for theperiod	Unused tax losses as of December 31,	Unused tax losses as of December 31,	Expirationyear
		2020	2019
2012 2013 2014 2015 2016 2017 2018 2019 2020 Total	$16,888 65,058 77,749 183,168 268,254 448,004 1,230,615 273,928 615,480	$16,888 65,058 77,749 183,168 268,254 165,360 368,694 244,232 615,684	$16,888 65,058 77,749 183,168 268,254 165,360 1,074,398 244,394 -	2022 2023 2024 2025 2026 2027 2028 2029 2030
		$2,005,087	$2,095,269

Unrecognized deferred tax assets

As of December 31, 2020 and 2019, the deferred tax assets have not been recognized amount to NT$269,699 thousand and NT$349,980 thousand, respectively.

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English Translation of Financial Statements Originally Issued in Chinese

The assessment of income tax returns

As of December 31, 2020, the assessment of the income tax returns of the Group and its subsidiaries was as follows:

The Company Subsidiary- Cathay Real Estate Management Co., Ltd. Subsidiary- Cathay Healthcare Management Co., Ltd. Subsidiary- Cathay Hospitality Management Co., Ltd. Subsidiary- Cathay Hospitality Consulting Co., Ltd. Subsidiary- Cymbal Medical Network Co., Ltd. Subsidiary- Cymder Co., Ltd. Subsidiary- Lin Yuan Property Management Co., Ltd.	The assessment of income tax returns
	Assessed and approved up to 2018 Assessed and approved up to 2019 Assessed and approved up to 2018 Assessed and approved up to 2017 Assessed and approved up to 2018 Assessed and approved up to 2019 Assessed and approved up to 2019 Assessed and approved up to 2018

Subsidiaries-Jinhua Realty Co., Ltd, Bannan Realty Co., Ltd and Second-Subsidiary Cymlin Co., Ltd, were established in 2020. As of December 31, 2020, they have not yet filed income tax return.

(25)Earnings per share

A. Basic earnings per share Profit attributable to ordinary equity holders of the Company (in thousands) Weighted average number of ordinary shares outstanding for basic earnings per share (in thousands) Basic earnings per share (NT$) B. Diluted earnings per share Profit attributable to ordinary equity holders of the Company (in thousand NT$)	For theyears ended December 31,	For theyears ended December 31,
	2020	2019
	$1,483,980	$1,370,505
	1,159,561	1,159,561
	$1.28	$1.18
	$1,483,980	$1,370,505

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English Translation of Financial Statements Originally Issued in Chinese

Weighted average number of ordinary shares outstanding for basic earnings per share (in thousands) Effect of dilution: Employee compensation-stock (in thousands) Weighted average number of ordinary shares outstanding after dilution (in thousands) Diluted earnings per share (NT$)	For theyears ended December 31,	For theyears ended December 31,
	2020	2019
	1,159,561 111	1,159,561 117
	1,159,672	1,159,678
	$1.28	$1.18

There have been no other transactions involving ordinary shares or potential ordinary shares between the reporting date and the date of completion of the financial statements.

(26)Business combinations

Acquisition of Lin Yuan Property Management Co., Ltd.

On May 15, 2020, the Group acquired 51% of voting shares of Lin Yuan Property Management Co., Ltd., which provides services such as property management, manpower dispatch and parking lots operation. The Group acquired Lin Yuan Property Management Co., Ltd. to develop intellectual buildings and parking lots, expand real estate management market and increase investment profits.

The Group has elected to measure the non-controlling interest by its proportion of the fair value of the acquiree’s identifiable assets.

The fair value of the identifiable assets and liabilities of Lin Yuan Property Management Co., Ltd. as at the date of acquisition were:

Assets Cash and cash equivalents Accounts receivable Prepayments Others current-assets Others equipment Investment property Intangible assets Deferred tax assets Other non-currents assets Subtotal	Fair value recognized on the acquisition date
	$202,436 58,249 386 5,000 236 9,480 169 15,097 1,753
	292,806

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English Translation of Financial Statements Originally Issued in Chinese

Liabilities Accounts payable Other payables Current tax liabilities Other-current liabilities Other non-current liabilities Subtotal Identifiable net assets Bargain purchase gain is calculated as follows: Purchase consideration Add: fair value of the equity the Company originally held on acquisition date Add: non-controlling interests at fair value Less: identifiable net assets at fair value Bargain purchase gain Analysis of cash flows on acquisition: Cash paid Net cash acquired with the subsidiary Net cash flow	Fair value recognized on the acquisition date
	43,800 26,696 10,520 2,201 74,670
	157,887
	$134,919
	$53,247 12,987 66,110 (134,919)
	$(2,575)
	$53,247 (202,436)
	$(149,189)

From the acquisition date May 15, 2020 to December 31, 2020, Lin Yuan Property Management Co., Ltd. has contributed NT$40,288 thousand to the profit from continuing operations. If the combination had taken place at the beginning of the year, the operating revenue and the profit from continuing operations for the Company would have been NT$14,374,378 thousand and NT$1,539,412 thousand.

(27)Others

The operation of the Group’s subsidiaries Cathay Hospitality Management Co., Ltd. and Cathay Hospitality Consulting Co., Ltd. was affected by covid-19 pandemic, resulting in decrease in operating revenue and profit. The management continues to pay attention to the impact of the incident on the companies and responds to it by adjusting operating strategies, broadening source of revenue and reducing expenditures, in order to reduce the impact of covid-19 pandemic.

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English Translation of Financial Statements Originally Issued in Chinese

7. RELATED PARTY TRANSACTIONS

Information of the related parties that had transactions with the Group during the financial reporting period is as follows:

(1) Name and nature of relationship of the related parties

Name of the relatedparties

Nature of relationship
of the relatedparties

Lin Yuan Property Management Co., Ltd. (Lin Yuan Property)
Cathay Life Insurance Co., Ltd. (Cathay Life Insurance)
Cathay United Bank Co., Ltd. (Cathay United Bank)
Cathay Century Insurance Co., Ltd. (Cathay Century Insurance)
San Ching Engineering Co., Ltd. (San Ching Engineering)
Symphox Information Co., Ltd. (Symphox Information)
Seaward Card Co., Ltd. (Seaward Card)
Nangang International One Co., Ltd. (Nangang One)
Nangang International Two Co., Ltd. (Nangang Two)
Lin Yuan Investment Co., Ltd. ( Lin Yuan Investment)

Subsidiary (Note)
Others
Others
Others
Others
Others
Others
Others
Others
Others

Note � Lin Yuan Property Management Co., Ltd. was acquired by the Group on May 15, 2020 and became the Group’s subsidiary.

(2) Significant transactions with the related parties

The Group's related party transactions would not be disclosed when the individual amount is less than 3 million.

A. Cash in banks and short-term loan

Name of the relatedparties	Type	For theyear ended December 31,2020	For theyear ended December 31,2020	For theyear ended December 31,2020	For theyear ended December 31,2020
		Maximum amount	Year ended balance	Interest rate (%)	Interest income (expenses)
Others: Cathay United Bank	Demand deposit Checking accounts Securities accounts Time deposits Short-term loan	$8,659,764 3,508,379 1,050,098 321,200 250,000	$2,678,656 113,095 17,518 268,250 -	0.01%~0.05 % - 0.01% 0.50%~1.02 % 1.00%	$108 - 6 1,434 (60)

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English Translation of Financial Statements Originally Issued in Chinese

Name of the relatedparties	Type	For theyear ended December 31,2019	For theyear ended December 31,2019	For theyear ended December 31,2019	For theyear ended December 31,2019
		Maximum amount	Year ended balance	Interest rate (%)	Interest income (expenses)
Others: Cathay United Bank	Demand deposit Checking accounts Securities accounts Time deposits Short-term loan	$6,163,728 2,227,481 866,483 165,200 2,040,000	$1,100,961 56,854 169,914 88,500 250,000	0.05% - 0.01% 0.75%~1.02% 1.00%	$504 - 11 810 (1,160)

B. Purchase

Name of the relatedparties	Type	For the years ended December 31,	For the years ended December 31,
		2020	2019
Others: San Ching Engineering Cathay United Bank Total	Building constructing or expansion Management fee of trust service	$1,901,357 7,732	$1,467,349 4,936
		$1,909,089	$1,472,285

a. The purchase price to the above related parties was determined through agreement based on the market rates.
b. The total price of the commissioned construction and consultancy contracts signed by the Group and San Ching Engineering was NT$7,325,649 thousand and NT$10,111,544 thousand as of December 31, 2020 and 2019, respectively.

C. Sales

a. Rental Income

Name of the relatedparties	Type	For the years ended December 31,	For the years ended December 31,
		2020	2019
Others: Cathay Life Insurance Cathay United Bank San Ching Engineering Total	Office and vehicles rental Office and vehicles rental vehicles rental	$7,977 18,594 2,641	$8,057 18,438 3,388
		$29,212	$29,883

The rental period is 2 to 5 years and rents are collected monthly according to the contract.

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English Translation of Financial Statements Originally Issued in Chinese

b. Service revenue

Name of the relatedparties	For the years ended December 31,	For the years ended December 31,
	2020	2019
Others: Cathay Life Insurance Cathay United Bank Symphox Information Cathay Century Insurance Total	$526,239 60,408 2,245 3,203	$41,358 20,097 4,529 929
	$592,095	$66,913

The service revenues are generated from the subsidiary Cathay Healthcare Management providing health inspection services, Cathay Hospitality providing housing services, and subsidiary Lin Yuan Property providing technology and maintenance services.

D. Notes and accounts receivable – related parties

The debt between the Group and the related parties (both uninterested) are as follows:

Name of the relatedparties	As of December 31,	As of December 31,
	2020	2019
Others: Cathay United Bank Nangang One Nangang Two Total	$4,686 - -	$300 3,696 4,704
	$4,686	$8,700

E. Notes and accounts payable – related parties

The debt between the Group and the related parties (both uninterested) are as follows:

Name of the relatedparties	As of December 31,	As of December 31,
	2020	2019
Others: San Ching Engineering Lease - related parties a. Right-of-use assets Others: Cathay Life Insurance	$48,574	$210,853
	As of December 31, 2020 2019 $5,073,435 $4,175,150
		2019
		$4,175,150

F. Lease - related parties

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The Group acquired right-of-use assets from Cathay Life Insurance amounting to NT$1,272,946 thousand and NT$185,758 thousand for the years ended December 31, 2020 and 2019, respectively.

b. Lease liabilities

Others: Cathay Life Insurance	As of December 31,	As of December 31,
	2020	2019
	$5,253,645	$4,267,238

c. Interest expenses

Others: Cathay Life Insurance	For the years ended December 31,	For the years ended December 31,
	2020	2019
	$112,717	$115,075

d. Other income

Others: Cathay Life Insurance	For the years ended December 31,	For the years ended December 31,
	2020	2019
	$27,445	$-

The other income is the collection of related rent concessions due to the covid-19 pandemic.

G. Others

a. Refundable deposits

Name of the related parties	Type	As of December 31,	As of December 31,
		2020	2019
Others: Cathay Life Insurance Lin Yuan Investment Total	Rent deposit Joint construction deposit	$33,748 8,000	$22,707 -
		$41,748	$22,707

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b. Guarantee deposit received

Name of the related parties	Type	As of December 31,	As of December 31,
		2020	2019
Others: Cathay United Bank	Rent deposit	$4,446	$4,625

c. Other current assets-restricted assets

Name of the related parties	Type	As of December 31,	As of December 31,
		2020	2019
Others: Cathay United Bank	Engineering guarantee� Performance bond	$6,250	$-

d. Construction in progress

2019: None.

H. Other income

Name of the related parties	Items	For the years ended December 31,	For the years ended December 31,
		2020	2019
Others: Cathay Life Insurance Cathay United Bank Nangang One Nangang Two Total	Management fee and planning fee Management fee and planning fee Consulting service Consulting service	$3,445 4,852 - -	$4,280 4,846 7,040 8,960
		$8,297	$25,126

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English Translation of Financial Statements Originally Issued in Chinese

I. Operating costs

Name of the related parties	Items	For the years ended December 31,	For the years ended December 31,
		2020	2019
Subsidiary: Lin Yuan Property Other: Cathay Century Insurance Cathay Life Insurance Cathay Life Insurance Cathay Life Insurance Symphox Information Total	Management and repairing fee Insurance fee Management fee Insurance fee Others Others	$13,390 6,041 62,066 3,190 7,704 5,603	$38,656 6,182 69,490 1,502 - 3,677
		$97,994	$119,507

J. Operating expenses

Name of the related parties	Items	For the years ended December 31,	For the years ended December 31,
		2020	2019
Others: Cathay Life Insurance Cathay United Bank San Ching Engineering Seaward Card Total	Insurance and selling expenses Sales, postage and phone fee Service fee Temporary worker service	$16,986 1,390 - 4,827	$16,317 3,040 10,901 3,655
		$23,203	$33,913

K. Property transactions

For the	year ended December 31,2020
Name of the relatedparties	Subject matter	Purchaseprice
Others:
San Ching Engineering	Shares of Lin Yuan Property	$53,247

For theyear ended December 31,2019
Name of the relatedparties	Subject matter	Purchaseprice
Subsidiary:
Lin Yuan Property	Business facilities	$7,759

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L. Key management personnel compensation

Short-term employee benefits Post-employment benefits Total	For theyears ended December 31,	For theyears ended December 31,
	2020	2019
	$71,496 1,351	$57,424 1,186
	$72,847	$58,610

8. PLEDGED ASSETS

The following assets were pledged to banks as collaterals for bank loans:

	As of December 31,	As of December 31,
Items	2020	2019	Secured liabilities
Negotiable certificate of deposit Inventories Investment property Total	$7,470 4,080,000 8,057,172	$- 3,897,159 8,057,172	Engineering guarantee�Performance bond Short-term loan & Long-term loan Short-term loan & Long-term loan
	$12,144,642	$11,954,331

Pledged or mortgaged assets are expressed in terms of collateral amounts.

9. SIGNIFICANT COMMITMENTS AND CONTINGENT LIABILITIES

(1) Significant contract

Besides Note 7.(2).B, as of December 31, 2020, the total contract price of the construction contracts signed by the Group with non-related parties was NT$9,037,011 thousand, in which NT$4,846,793 thousand was not paid.

(2) Others

Guarantee notes issued for borrowings (financing) were NT$47,905,300 thousand as of December 31, 2020.

10.SIGNIFICANT DISASTER LOSSES

None.

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11.SIGNIFICANT SUBSEQUENT EVENTS

None.

12.OTHERS

(1) Categories of financial instruments

Financial Assets

Financial assets at fair value through other comprehensive income Financial assets at amortized cost: Cash and Cash equivalents Notes receivable Accounts receivable Other receivables Refundable deposits Subtotal Total Financial Liabilities	As of December 31,	As of December 31,
	2020	2019
	$4,511,406	$4,689,335
	3,391,259 32,406 471,478 30,590 1,533,892	2,118,291 40,032 266,410 32,220 941,709
	5,459,625	3,398,662
	$9,971,031	$8,087,997

Financial liabilities at amortized cost: Short-term loans Short-term notes payable Accounts payables Bonds payable (including current portion) Long-term loans (including current portion) Lease liabilities Guarantee deposit received Total	As of December 31,	As of December 31,
	2020	2019
	$7,351,000 3,090,501 2,303,456 - 10,909,741 5,509,959 85,773	$7,263,000 1,034,540 1,372,516 3,000,000 8,102,682 4,373,611 141,063
	$29,250,430	$25,287,412

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(2) Financial risk management objectives and policies

The Group’s principal financial risk management objective is to manage the market risk, credit risk and liquidity risk related to its operating activates. The Group identifies measures and manages the above-mentioned risks based on the Group’s policy and risk appetite.

The Group has established appropriate policies, procedures and internal controls for financial risk management. Before entering into significant transactions, due approval process by the Company’s board of directors and audit committee must be carried out based on related protocols and internal control procedures. The Group consistently complies with its financial risk management policies.

(3) Market risk

Foreign currency risk

The Group’s exposure to the risk of changes in foreign exchange rates relates primarily to the Group’s net investments in foreign subsidiaries. Furthermore, as net investments in foreign subsidiaries are for strategic purposes, they are not hedged by the Group.

The Group mainly engaged in various business activities in Taiwan, and the foreign currency held is not significant. Therefore, the Group’s risk due to changes in foreign currency exchange rates is not significant.

Interest rate risk

Interest rate risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Group’s exposure to the risk of changes in market interest rates relates primarily to the Group’s investments with bank borrowings with variable interest rates.

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The interest rate sensitivity analysis is performed on items exposed to interest rate risk as at the end of the reporting period, including investments and borrowings with variable interest rates and interest rate swaps. At the reporting date, a change of 10 basis points of interest rate in a reporting period could cause the profit to decrease/increase by NT$10,442 thousand and NT$8,298 thousand for the years ended December 31, 2020 and 2019, respectively.

Equity price risk

The Group’s listed and unlisted equity securities are susceptible to market price risk arising from uncertainties about future values of the investment securities. The Group’s listed and unlisted equity securities are classified under held for financial assets at fair value through other comprehensive income. The Group manages the equity price risk through diversification and placing limits on individual and total equity instruments. Reports on the equity portfolio are submitted to the Group’s senior management on a regular basis. The Group’s Board of Directors reviews and approves all equity investment decisions.

(4) Credit risk management

Credit risk is the risk that a counterparty will not meet its obligations under a contract, leading to a financial loss. The Group is exposed to credit risk from operating activities (primarily for accounts receivable and notes receivable) and from its financing activities, including bank deposits and other financial instruments.

Customer credit risk is managed by each business unit subject to the Group’s established policy, procedures and control relating to credit risk management. Credit limits are established for all counter parties based on their financial position, rating from credit rating agencies, historical experience, prevailing economic condition and the Group’s internal rating criteria etc. Certain counter parties’ credit risk will also be managed by taking credit enhancing procedures, such as requesting for prepayment or insurance.

As of December 31, 2020 and 2019, accounts receivable from top ten customers represented low percentage of the total accounts receivable of the Group, respectively. The credit concentration risk of other accounts receivable is insignificant.

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English Translation of Financial Statements Originally Issued in Chinese

Credit risk from balances with banks, fixed income securities and other financial instruments is managed by the Group’s treasury department in accordance with the Group’s policy. The Group only transacts with counterparties approved by the internal control procedures, which are banks and financial institutions, companies and government entities with good credit rating. Consequently, there is no significant credit risk for these counterparties.

(5) Liquidity risk management

The Group’s objective is to maintain a balance between continuity of funding and flexibility using cash and cash equivalents, highly liquid equity investments, bank borrowings, convertible bonds and finance leases. The table below summarizes the maturity profile of the Group’s financial liabilities based on the contractual undiscounted payments and contractual maturity. The payment amount includes the contractual interest. The undiscounted payment relating to borrowings with variable interest rates is extrapolated based on the estimated interest rate yield curve as of the end of the reporting period.

Non-derivative financial instruments

	As of December 31,2020	As of December 31,2020	As of December 31,2020
Less than 1year	2 to 3years	4 to 5years		Total
$15,945,792 2,303,456 349,495 27,407				$21,499,361 2,303,456 5,509,959 85,773
Less than 1year	2 to 3years	4 to 5years	> 5years $- - - 3,038,067 56,773	Total
$11,403,615 1,372,516 3,042,000 290,712 34,522	$5,184,940 - - 578,106 38,524	$- - - 466,726 11,244		$16,588,555 1,372,516 3,042,000 4,373,611 141,063

Note: Further information on the maturity analysis of lease liabilities:

As of December 31, 2020 Maturities Less than 1 year 1 to 5years 6 to 10years 10 to 15years >15years Total Lease liabilities $349,495 $1,292,118 $1,664,277 $1,486,703 $717,366 $5,509,959	As of December 31, 2020 Maturities Less than 1 year 1 to 5years 6 to 10years 10 to 15years >15years Total Lease liabilities $349,495 $1,292,118 $1,664,277 $1,486,703 $717,366 $5,509,959		Maturities	Maturities
	Less than 1 year	1 to 5years	6 to 10years	10 to 15years	>15years	Total

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English Translation of Financial Statements Originally Issued in Chinese

As of December 31, 2019

As of December 31, 2019	31, 2019
Maturities Less than 1 year 1 to 5years 6 to 10years 10 to 15years >15years Total Lease liabilities $290,712 $1,044,832 $1,241,550 $1,316,146 $480,371 $4,373,611			Maturities
	Less than 1 year	1 to 5years	6 to 10years	10 to 15year	s >15years	Total

(6) Reconciliations of the liabilities from financing activities

Reconciliations of the liabilities for the year ended December 31, 2020:

As of January 1, 2020 Cash flows Non-cash changes Interest on lease liability Other (Note) As of December 31, 2020	Short-term loans	Short-term notes and billspayable	Long-term loans (including currentportion) $11,102,682 (192,941) - - $10,909,741	Lease liabilities $4,373,611 (442,959) 134,331 1,444,976 $5,509,959	Total liabilities from financing activities
	$7,263,000 88,000 - -	$1,034,540 2,055,961 - -			$23,773,833 1,508,061 134,331 1,444,976
	$7,351,000	$3,090,501			$26,861,201

Note: Lease liabilities that meet the recognition of lease requirements in this period.

Reconciliations of the liabilities for the year ended December 31, 2019:

As of January 1, 2019 Cash flows Non-cash changes Interest on lease liability Other (Note) As of December 31, 2019	Short-term loans	Short-term notes and billspayable	Long-term loans (including currentportion) $8,605,285 2,497,397 - - $11,102,682	Lease liabilities $4,404,063 (347,035) 117,493 199,090 $4,373,611	Total liabilities from financing activities
	$8,715,000 (1,452,000) - -	$260,000 774,540 - -			$21,984,348 1,472,902 117,493 199,090
	$7,263,000	$1,034,540			$23,773,833

Note: Lease liabilities that meet the recognition of lease requirements in this period.

(7) Fair values of financial instruments

A. The methods and assumptions applied in determining the fair value of financial instruments:

The fair value of the financial assets and liabilities are included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than

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English Translation of Financial Statements Originally Issued in Chinese

in a forced or liquidation sale. The following methods and assumptions were used to estimate the fair values:

a. The carrying amount of cash and cash equivalents, trade receivables, accounts payable and other current liabilities approximate their fair value due to their short maturities.
b. For financial assets and liabilities traded in an active market with standard terms and conditions, their fair value is determined based on market quotation price (including listed equity securities and bonds) at the reporting date.
c. Equity instruments that are not actively traded in the market (including shares of publicly issued companies in an inactive market and shares of undisclosed companies) are estimated by market method and are derived from market transactions of the same or comparable company equity instruments. The fair value is derived from the price and other relevant information (such as lack of liquidity discount factor, similar company stock price-to-earnings ratio, similar company's stock price-to-equity ratio).
B. Fair value of financial instruments measured at amortized cost

The carrying amount of the Group’s financial instruments measured at amortized cost (including cash and cash equivalents, receivables, payables and other liabilities) measured at amortized cost approximate their fair value.

(8) Fair value measurement hierarchy

A. Fair value measurement hierarchy

Level 1 – Quoted (unadjusted) market prices in active markets for identical assets or liabilities that the entity can access at the measurement date

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

Level 3 – Unobservable inputs for the asset or liability

For assets and liabilities that are recognized in the financial statements on a recurring basis, the Group determines whether transfers have occurred between Levels in the hierarchy by re-assessing categorization at the end of each reporting period.

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English Translation of Financial Statements Originally Issued in Chinese

B. Fair value measurement hierarchy of the Group’s assets and liabilities

The Group does not have assets that are measured at fair value on a non-recurring basis. Fair value measurement hierarchy of the Group’s assets and liabilities measured at fair value on a recurring basis is as follows:

As of December 31, 2020

Financial assets: Financial assets at fair value through other comprehensive income Stocks	Level 1	Level 2	Level 3	Total
	$2,437,036	$1,690,972	$383,398	$4,511,406

As of December 31, 2019 Financial assets: Financial assets at fair value through other comprehensive income Stocks	Level 1	Level 2	Level 3	Total
	$2,454,341	$1,916,850	$318,144	$4,689,335

The Group had no assets and liabilities recurring measured at fair value transferring between Level 1 and Level 2 for the years ended December 31, 2020 and 2019.

Reconciliation for recurring fair value measurements in Level 3 of the fair value hierarchy for movements during the period is as follows:

	Asset measured at fair
	value through other
	comprehensive income
	Stocks
As of January 1, 2020	$318,144
Total gains and losses recognized for the year ended
December 31, 2020:
Amount recognized in OCI	78,241
Disposals	(12,987)
As of December 31, 2020	$383,398

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English Translation of Financial Statements Originally Issued in Chinese

	Asset measured at fair
	value through other
	comprehensive income
	Stocks
As of January 1, 2019	$319,751
Total gains and losses recognized for the year ended
December 31, 2019:
Amount recognized in OCI	3,368
Disposals	(4,975)
As of December 31, 2019	$318,144

Total gains and losses recognized in profit or loss is NT$75,136 thousand and NT$3,325 thousand for the years ended December 31, 2020 and 2019, respectively.

Information on significant unobservable inputs to valuation

Description of significant unobservable inputs to valuation of recurring fair value measurements categorized within Level 3 of the fair value hierarchy is as follows:

As of December 31, 2020

Financial assets� Financial assets at fair value through other comprehensive income Stocks	Valuation technique	Material unobservable inputs	Quantitative information	Inputs and the fair value relationship	Inputs and the fair value relationship’s sensitivityanalysis value relationship
	Market approach Assets approach	Discount for lack of marketability P/E ratio of similar entities	30%~50% 0%~30%	The higher the discount for lack of marketability, the lower the fair value of the stocks The higher the P/E ratio of similar entities, the higher the fair value of the stocks	10% increase (decrease) in the discount for lack of marketability would result in decrease (increase) in the Company’s equity by NT$34,998 thousand 10% increase (decrease) in the P/E ratio of similar entities would result in increase (decrease) in the Company’s equity by NT$17,560 thousand

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English Translation of Financial Statements Originally Issued in Chinese

As of December 31, 2019

Financial assets� Financial assets at fair value through other comprehensive income Stocks	Valuation technique	Material unobservable inputs	Quantitative information	Inputs and the fair value relationship	Inputs and the fair value relationship’s sensitivityanalysis value relationship
	Market approach Assets approach	Discount for lack of marketability P/E ratio of similar entities	0%~30% 0%~30%	The higher the discount for lack of marketability, the lower the fair value of the stocks The higher the P/E ratio of similar entities, the higher the fair value of the stocks	10% increase (decrease) in the discount for lack of marketability would result in decrease (increase) in the Company’s equity by NT$18,863 thousand 10% increase (decrease) in the P/E ratio of similar entities would result in increase (decrease) in the Company’s equity by NT$18,609 thousand

(9) Significant assets and liabilities denominated in foreign currencies

The Group did not hold major foreign currency financial assets and liabilities as of December 31, 2020 and 2019.

(10) Capital management

The primary objective of the Group’s capital management is to ensure that it maintains a strong credit rating and healthy capital ratios to support its business and maximize shareholder value. The Group manages its capital structure and adjusts it, considering changes in economic conditions. To maintain or adjust the capital structure, the Group may adjust dividend payment to shareholders, return capital to shareholders or issue new shares.

13.OTHER DISCLOSURE

(1) Significant transaction information

A. Financings provided to others: None.
B. Endorsement/guarantee provided to others: None
C. Securities held as of December 31, 2020 (not including subsidiaries, associates and joint ventures): Please refer to Table 2.
D. Individual securities acquired or disposed of with accumulated amount exceeding NT$300 million or 20% of the capital stock: Please refer to Table 3.

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E. Acquisition of property with the amount exceeding NT$300 million or 20% of the paid-in capital: Please refer to Table 4.
F. Disposal of property with amount exceeding NT$300 million or 20% of the paid-in capital: Please refer to Table 5.
G. Purchases or sales of goods from or to related parties exceeding NT$100 million or 20% of the paid-in capital or more: Please refer to Table 6.
H. Receivables from related parties with amounts exceeding NT$100 million or 20% of the paid-in capital: None.
I. Derivative financial instruments undertaken: None.
J. Significant intercompany transactions between consolidated entities: Please refer to Table 7.

(2) Investee information

A. Financings provided to others: None.
B. Endorsement/guarantee provided to others: Please refer to Table 1.
C. Securities held as of December 31, 2020 (not including subsidiaries, associates and joint ventures): Please refer to Table 8.
D. Individual securities acquired or disposed of with accumulated amount exceeding NT$300 million or 20% of the capital stock: None.
E. Acquisition of property with the amount exceeding NT$300 million or 20% of the paid-in capital: None.
F. Disposal of property with amount exceeding NT$300 million or 20% of the paid-in capital: None.
G. Purchases or sales of goods from or to related parties exceeding NT$100 million or 20% of the paid-in capital or more: None.
H. Receivables from related parties with amounts exceeding NT$100 million or 20% of the paid-in capital: None.
I. Derivative financial instruments undertaken: None.
J. Names, locations and related information of investee companies: Please refer to Table 9.

(3) Investment in Mainland China

Please refer to Table 10.

(4) Information on Major Shareholders

Please refer to Table 11.

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English Translation of Financial Statements Originally Issued in Chinese

14.OPERATING SEGMENT INFORMATION

For management purposes, the Group is organized into business units based on its products and services and has two reportable segments as follows:

Movable property and real estate development department: The main businesses of the department are entrusted the manufacturer to build residential and commercial buildings for leasing or selling.

The operating segment information does not summarize more than one operating segment.

Management monitors the operating results of its business units separately for the purpose of making decisions about resource allocation and performance assessment. Segment performance is evaluated based on operating profit or loss and is measured consistently with operating profit or loss in the consolidated financial statements. However, income taxes are managed on a group basis and are not allocated to operating segments.

The transfer prices between operating segments are on an arm’s length basis in a manner like transactions with third parties.

(1) Information about profit or loss, assets and liabilities of reportable segment

The Group’s profit or loss information of operating segments for the years ended December 31, 2020 and 2019 is as follows:

Information for the year ended December 31, 2020

Movable

property and real estate development department	Others	Adjustment and eliminations	Consolidated amount
$11,657,507 1,678,721	$2,316,104 447,411	$- (2,126,132)	$13,973,611 -
$13,336,228	$2,763,515	$(2,126,132)	$13,973,611
$1,648,236	$(360,151)	$397,199	$1,685,284
$1,156 72,909 225,848 (399,266) 87,569 117,922	$1,927 173,881 733,910 (5,336) (146) -	$- (27,075) (56,899) 404,602 - -	$3,083 219,715 902,859 - 87,423 117,922

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Information for the year ended December 31, 2019

Movable

	Movable
Revenue External customer Inter-segment Total revenue Segment profit Interest income Interest expense Depreciation and amortization Loss (gain) of investments accounted for using equity method Loss (gain) on disposal of investments Dividend income	property and real estate development department	Others	Adjustment and eliminations	Consolidated amount
	$9,675,900 60,709	$1,948,028 2,217	$- (62,926)	$11,623,928 -
	$9,736,609	$1,950,245	$(62,926)	$11,623,928
	$1,504,687	$(59,504)	$125,155	$1,570,338
	$2,613 9,911 212,904 (50,775) - 97,167	$2,052 159,413 612,672 (50,125) 45,221 -	$- (27,994) (56,646) 100,900 - -	$4,665 141,330 768,930 - 45,221 97,167

Capital expenditures for non-current assets were incurred because of the corporate headquarters building and is not included in segment information.

The following table presents segment assets and liabilities of the Group’s operating segments as of December 31, 2020 and 2019:

Movable

	Movable
Assets of December 31, 2020 Assets of December 31, 2019	property and real estate development department	Others	Adjustment and eliminations	Consolidated amount
	$49,112,708	$13,552,249	$(3,168,029)	$59,496,928
	$47,614,997	$8,797,840	$(2,676,707)	$53,736,130

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English Translation of Financial Statements Originally Issued in Chinese

Liabilities of December 31, 2020 Liabilities of December 31, 2019	Movable property and real estate development department	Others	Adjustment and eliminations	Consolidated Amount
	$24,657,484	$10,429,394	$(989,078)	$34,097,800
	$23,236,905	$7,054,337	$(1,037,162)	$29,254,080

External revenue, segment profit and loss and total assets provided to the chief operating decision maker are measured in the same way as the revenue, net profit after tax, and total assets in the financial report. Therefore no reconciliation is needed.

(2) Area-specific information

The Group did not have foreign segments that contributed 10% or more to the Group’s revenue and assets for the years ended December 31, 2020 and 2019.

(3) Major customer information

The Group’s net sales to a single customer for the years ended December 31, 2020 and 2019 both did not exceed 10% of the consolidated net sales revenue.

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, Endorsement or Guarantee for Entities in China (Note7)	, Endorsement or Guarantee for Entities in China (Note7)	Y	A. Limit of the Endorsement / Guarantee Amount for Receiving Party�NT$689,157 thousand 30% B. Limit on the Endorsement/Guarantee Amount�NT$689,157 thousand60%
Subsidiaries Endorsed/ Guaranteed for the Parent Company (Note7)		N
Parent Company Endorsed / Guaranteed for the Subsidiaries (Note7)		Y
	Limit on the Endorsement/Gua rantee Amount (Note3)	$413,494
	Percentage	0.00%
	Amount of Collateral	$-
	Actual Amount Borrowed (Note6)	$-
	Ending Balance (Note5)	$-
	Maximum Balance for the Period (Note4)	$28,508
	Limit of the Endorsement / Guarantee Amount for Receiving Party (Note3)	$206,747
Receiving Party	Relationship (Note2)	3
	Company Name	Hangzhou Kunning Health Consulting Limited
	Endorser/ Guarantor	Cathay healthcare management co.,Ltd.
	No. (Note1)	1	Note

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	Note
As of December 31, 2020	Market Value	$2,437,036	114,830	1,690,973	-	25,922	92,965	45	74,828	74,508
	Percentage of Ownership (�)	0.44%	11.00%	3.68%	3.23%	10.00%	1.72%	3.33%	4.99%	4.99%
	Carrying Value	$2,437,036	114,830	1,690,973	-	25,922	92,965	45	74,828	74,508
	Shares	57,681,332	5,489,000	195,000,000	1,580,083	2,000,000	3,448,276	30,314	7,485,000	7,485,000
	Financial Statement Account	Financial assets at fair value through other comprehensive income–current	Financial assets at fair value through other comprehensive income–non-current	�	�	�	�	�	�	�
	Relationship	Others	Others	None	None	None	None	None	Others	Others
	Type and Name of the Securities (Note)	Stock� Cathay Financial Holdings Co., Ltd.	Stock� Symphox Information Co., Ltd.	Stock� Taiwan Star Telecom Co., Ltd.	Stock� Gong Cheng Industrial Co.	Stock� Gian Feng Investment Co., Ltd.	Stock� MetroWalk international Co., Ltd.	Stock� Budworth Investments Limited	Stock� Nangang International One Co., Ltd.	Stock� Nangang International Two Co., Ltd.
	Holding Company	Cathay Real Estate Development Co., Ltd.	�	�	�	�	�	�	�	�

362

As of December 31, 2020	Amount	$408,000	$408,000
	Shares	40,800,000	40,800,000
Sell (Note 3)	Gain / Loss	$-	$-
	Book Cost	$-	$-
	Price	$-	$-
	Shares	-	-
Purchase (Note 3)	Amount	$408,000	$408,000
	Shares (In thousand)	40,800,000	40,800,000
As of January 1, 2020	Amount	$-	$-
	Shares	-	-
Relationship (Note 2)		Subsidiary	Subsidiary
Counterparty (Note 2)		(Note5)	(Note5)
Financial Statement Account		Investments accounted for using equity method	Investments accounted for using equity method
Securities Category (Note 1)		The stocks of Jinhua Realty Co., Ltd.	The stocks of Bannan Realty Co., Ltd.
Company		Cathay Real Estate Development Co., Ltd.	�

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Others	Others	None	None	None	None	None
Purpose of Acquisition and Current Condition		Construction	Construction	Construction	Construction	Construction
References for Determining Price		Negotiation by two parties	Negotiation by two parties	Negotiation by two parties	Negotiation by two parties	Negotiation by two parties
Disclosure of Information on Previous Transfer of Property is Required for Related Parties who are also the Counterparty	Amount	$-	-	-	-	-
	Date of Transfer	-	-	-	-	-
	Relationship with the Company	-	-	-	-	-
	Owner	-	-	-	-	-
Relationship	with the Company	None	None	None	None	None
	Counterparty	Legal person	Individual	Individual	Individual	Legal person and Individual
	Status of Payment	Installment by agreement	Installment by agreement	Installment by agreement	Installment by agreement	Installment by agreement
Transaction Amount		$1,500,000	1,518,151	697,376	1,399,701	1,160,998
Transaction Date		2020.01.13	2020.01.21	2020.07.10	2020.09.30	2020.10.21
Property Name		Land Serial No.132, Jinhua Section, Anping District, Tainan City	Land Serial No. 256,257,273, Renping Section, Beitun District, Taichung City (Note)	Land Serial No. 74, Ruanqiao Section, Beitou District, Taipei City	Land Serial No. 433 etc., Muzha Section, Wenshan District, Taipei City	Land Serial No. 112, Section 5, Tammei Section, Neihu District, Taipei City
Company		Cathay Real Estate Development Co., Ltd.	�	�	�	�

364

Unit�NT$1000	, Others	None	Note�The disposal of profit and loss are recognized as the unrealized sales profit of the related parties.
	References for Determining Price	Valuation report from Real estate appraiser
	Purpose of Disposal	The Company's operation plan
	Relationship with the Company	Subsidiary
	Counterparty	Jinhua Realty Co., Ltd.
	Disposal of profit and loss (Note)	$30,259
	Status of Receivable	Installment by agreement
	Transaction Amount (Contract price )	$1,614,198
	Carrying Value	$1,583,939
	Original date of property acquisition	2020.1.13
	Transaction Date	2020.11.12
	Property Name	Land Serial No. 132, Jinhua Section, Anping District, Tainan City
	Company	Cathay Real Estate Development Co., Ltd.

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,	Note	Construction Obtain deposal benefits
Notes/accounts payable	Percentage of total notes/accounts payable	4.26% (Note) -
	Balance	$48,574 -
Differences in transaction terms compared to third party transactions	Credit term	- -
	Unit price	$- -
Transaction	Credit term	Not applicable Not applicable
	Percentage of total purchases (sales)	17.58% 11.55%
	Amount	$1,901,357 1,614,198
	Purchases (Sales)	Construnction-in-progress Land held for construction site
Relationship with the counterparty		Associate Subsidiary
Counterparty		San Ching Engineering Co., Ltd Jinhua Realty Co., Ltd.
Purchaser / Seller		Cathay Real Estate Development Co., Ltd. Cathay Real Estate Development Co., Ltd.

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Percentage of consolidated total operating revenues or total assets (Note 3) Transaction Account Amount Transaction terms	-	-	-	-	0.02%	-	0.01%	-	-	-	-	0.01%	-	-	0.01%	-	-	-	0.19%	-	-	0.01%	-	-	11.55%	11.34%	0.22%	0.01%	0.03%	-	-	0.02%	-	-	-	0.01%	-	-	-	-	-	-	0.01%	0.01%	-	0.19%	-	-	0.01%	-	-	2.71%	0.01%	0.03%	-	-
	Regular	Regular	Regular	Regular	Regular	Regular	Regular	Regular	Regular	Regular	Regular	Regular	Regular	Regular	Regular	Regular	Regular	Regular	Regular	Regular	Regular	Regular	Regular	Regular	Regular	Regular	Regular	Regular	Regular	Regular	Regular	Regular	Regular	Regular	Regular	Regular	Regular	Regular	Regular	Regular	Regular	Regular	Regular	Regular	Regular	Regular	Regular	Regular	Regular	Regular	Regular	Regular	Regular	Regular	Regular	Regular
	$209	95	182	4	13,334	41	1,800	22	106	18	28	1,059	95	90	1,038	617	60	502	26,794	148	1,486	1,486	66	40	1,614,198	1,583,939	30,259	4,719	4,719	29	23	12,813	847	326	41	1,800	22	106	46	209	277	4	1,059	1,900	502	26,794	148	1,486	1,486	66	40	1,614,198	4,719	4,719	29	23
	Rental income	Operating expenses-conference fee	Operating expenses-entertainment expenses	Other income	Deferred credits-gains on Inter-affiliate accounts	Realized gain from inter-affiliate accounts	Cost of rental sales	Other income	Rental income	Construction cost	Operating expenses-advertising fee	Rental income	Operating expenses-advertising fee	Construction cost	Operating expenses-miscellaneous expenses	Operating expenses-entertainment expenses	Operating expenses-service fee	Operating expenses-miscellaneous expenses	Cost of rental sales	Other income	Other receivables	Other income	Rental income	Guarantee deposits received	Construction revenue	Construction cost	Unrealized profit from sales	Other receivables	Other income	Rental income	Guarantee deposits received	Investment property�land	Investment property�buildings	Accumulated depreciation�investment property	Cost of rental sales	Management fee income	Operating expenses-service fee	Rent	Service income	Rent	Hospitality income	Operating expenses-miscellaneous expenses	Rent	Hospitality income	Technical service income	Maintenance income	Operating expenses-service fee	Accounts payable�related parties	Operating expenses-service fee	Rent	Refundable deposits	Land held for construction site	Accounts payable�related parties	Operating expenses-service fee	Rent	Refundable deposits
Relationship (Note 2)	1	1	1	1	1	1	1	1	1	1	1	1	1	1	1	1	1	1	1	1	1	1	1	1	1	1	1	1	1	1	1	2	2	2	2	2	2	2	2	2	2	2	2	2	2	2	2	2	2	2	2	2	2	2	2	2
Counterparty	Cathy Hospitality Consulting Co., Ltd.	Cathy Hospitality Consulting Co., Ltd.	Cathy Hospitality Consulting Co., Ltd.	Cathy Hospitality Consulting Co., Ltd.	Cathay Real Estate Management Co., Ltd.	Cathay Real Estate Management Co., Ltd.	Cathay Real Estate Management Co., Ltd.	Cathay Real Estate Management Co., Ltd.	Cathay Healthcare Management Co., Ltd.	Cathay Healthcare Management Co., Ltd.	Cathay Healthcare Management Co., Ltd.	Cathay Hospitality Management Co., Ltd.	Cathay Hospitality Management Co., Ltd.	Cathay Hospitality Management Co., Ltd.	Cathay Hospitality Management Co., Ltd.	Cathay Hospitality Management Co., Ltd.	Cathay Hospitality Management Co., Ltd.	Lin Yuan Property Management Co., Ltd.	Lin Yuan Property Management Co., Ltd.	Lin Yuan Property Management Co., Ltd.	Jinhua Realty Co., Ltd.	Jinhua Realty Co., Ltd.	Jinhua Realty Co., Ltd.	Jinhua Realty Co., Ltd.	Jinhua Realty Co., Ltd.	Jinhua Realty Co., Ltd.	Jinhua Realty Co., Ltd.	Bannan Realty Co., Ltd.	Bannan Realty Co., Ltd.	Bannan Realty Co., Ltd.	Bannan Realty Co., Ltd.	Cathay Real Estate Development Co., Ltd.	Cathay Real Estate Development Co., Ltd.	Cathay Real Estate Development Co., Ltd.	Cathay Real Estate Development Co., Ltd.	Cathay Real Estate Development Co., Ltd.	Cathay Real Estate Development Co., Ltd.	Cathay Real Estate Development Co., Ltd.	Cathay Real Estate Development Co., Ltd.	Cathay Real Estate Development Co., Ltd.	Cathay Real Estate Development Co., Ltd.	Cathay Real Estate Development Co., Ltd.	Cathay Real Estate Development Co., Ltd.	Cathay Real Estate Development Co., Ltd.	Cathay Real Estate Development Co., Ltd.	Cathay Real Estate Development Co., Ltd.	Cathay Real Estate Development Co., Ltd.	Cathay Real Estate Development Co., Ltd.	Cathay Real Estate Development Co., Ltd.	Cathay Real Estate Development Co., Ltd.	Cathay Real Estate Development Co., Ltd.	Cathay Real Estate Development Co., Ltd.	Cathay Real Estate Development Co., Ltd.	Cathay Real Estate Development Co., Ltd.	Cathay Real Estate Development Co., Ltd.	Cathay Real Estate Development Co., Ltd.
Company name	Cathay Real Estate Development Co., Ltd.	Cathay Real Estate Development Co., Ltd.	Cathay Real Estate Development Co., Ltd.	Cathay Real Estate Development Co., Ltd.	Cathay Real Estate Development Co., Ltd.	Cathay Real Estate Development Co., Ltd.	Cathay Real Estate Development Co., Ltd.	Cathay Real Estate Development Co., Ltd.	Cathay Real Estate Development Co., Ltd.	Cathay Real Estate Development Co., Ltd.	Cathay Real Estate Development Co., Ltd.	Cathay Real Estate Development Co., Ltd.	Cathay Real Estate Development Co., Ltd.	Cathay Real Estate Development Co., Ltd.	Cathay Real Estate Development Co., Ltd.	Cathay Real Estate Development Co., Ltd.	Cathay Real Estate Development Co., Ltd.	Cathay Real Estate Development Co., Ltd.	Cathay Real Estate Development Co., Ltd.	Cathay Real Estate Development Co., Ltd.	Cathay Real Estate Development Co., Ltd.	Cathay Real Estate Development Co., Ltd.	Cathay Real Estate Development Co., Ltd.	Cathay Real Estate Development Co., Ltd.	Cathay Real Estate Development Co., Ltd.	Cathay Real Estate Development Co., Ltd.	Cathay Real Estate Development Co., Ltd.	Cathay Real Estate Development Co., Ltd.	Cathay Real Estate Development Co., Ltd.	Cathay Real Estate Development Co., Ltd.	Cathay Real Estate Development Co., Ltd.	Cathay Real Estate Management Co., Ltd.	Cathay Real Estate Management Co., Ltd.	Cathay Real Estate Management Co., Ltd.	Cathay Real Estate Management Co., Ltd.	Cathay Real Estate Management Co., Ltd.	Cathay Real Estate Management Co., Ltd.	Cathay Healthcare Management Co., Ltd.	Cathay Healthcare Management Co., Ltd.	Cathy Hospitality Consulting Co., Ltd.	Cathy Hospitality Consulting Co., Ltd.	Cathy Hospitality Consulting Co., Ltd.	Cathay Hospitality Management Co., Ltd.	Cathay Hospitality Management Co., Ltd.	Lin Yuan Property Management Co., Ltd.	Lin Yuan Property Management Co., Ltd.	Lin Yuan Property Management Co., Ltd.	Jinhua Realty Co., Ltd.	Jinhua Realty Co., Ltd.	Jinhua Realty Co., Ltd.	Jinhua Realty Co., Ltd.	Jinhua Realty Co., Ltd.	Bannan Realty Co., Ltd.	Bannan Realty Co., Ltd.	Bannan Realty Co., Ltd.	Bannan Realty Co., Ltd.
No. (Note 1)	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	1	1	1	1	1	1	2	2	3	3	3	4	4	5	5	5	6	6	6	6	6	7	7	7	7

367

	Note
As of December 31, 2020	Market Value	$150	149
	Percentage of Ownership (�)	0.01%	0.01%
	Carrying Value	$150	149
	Shares	15,000	15,000
	Financial Statement Account	Financial assets at fair value through other comprehensive income-non-current	�
	Relationship	Others	Others
	Type and Name of the Securities(Note)	Stocks Nangang International One Co., Ltd.	Stocks Nangang International Two Co., Ltd.
	Holding Company	Cathay Hospitality Management Co., Ltd.	�

368

,	Note	Subsidiary	Subsidiary	Subsidiary	Subsidiary	Subsidiary	Subsidiary	Subsidiary	Subsidiary	Subsidiary	Second-tier subsidiary	Second-tier subsidiary	Second-tier subsidiary	Second-tier subsidiary	Third-tier subsidiary
,	Share of Profits/Losses	$(376)	27,576	90,647	(278,435)	(244,197)	(11,979)	20,549	(824)	(2,227)	(5,509)	(204)	-	-	-
	Investees company net income	$(376)	27,576	106,646	(286,161)	(257,350)	(11,979)	40,288 Note3	(1,616)	(4,366)	(5,509)	(204)	-	-	-
At the end of period	Amount	$-	115,014	585,785	132,418	332,026	87,000	58,767	376,917	405,774	74,328	25,796	-	-	-
	Percentage	-	100.00%	85.00%	100.00%	100.00%	100.00%	51.00%	51.00%	51.00%	100.00%	100.00%	-	-	-
	Number of shares	-	5,000,000	46,750,000	65,000,000	75,000,000	10,000,000	1,530,000	40,800,000	40,800,000	8,000,000	2,600,000	-	-	-
Original cost	Balance at December 31, 2019	$242,747 (USD 9,592)	50,000	467,500	400,000	750,000	100,000	-	-	-	80,000	-	103,122 (USD 3,400)	2,641 (USD 90)	103,122 (USD 3,400)
	Balance at December 31, 2020	$-	50,000	467,500	650,000	750,000	100,000	68,809	408,000	408,000	80,000	26,000	-	-	-
	Main Business	General trade and investing	Construction management	Consultancy	Service industry	Service industry	Wholesale of Drugs, Medical Goods	Apartment building management service industry	Housing and Building Development and Rental industry	Housing and Building Development and Rental	Manpower dispatch and leasing industry	Manpower dispatch and leasing industry	General trade and investing	Investing	Business management
	Region	British Virgin Islands	ROC	ROC	ROC	ROC	ROC	ROC	ROC	ROC	ROC	ROC	British Virgin Islands	Cayman Islands	Cayman Islands
	Investee	Cathay Real Estate Holding Corporation	Cathay Real Estate Management Co., Ltd.	Cathay Healthcare Management Co., Ltd.	Cathay Hospitality Management Co., Ltd.	Cathay Hospitality Consulting Co., Ltd	Cymbal Medical Network Co., Ltd.	Lin Yuan Property Management Co., Ltd.	Jinhua Realty Co., Ltd.	Bannan Realty Co., Ltd.	Xing De Co., Ltd.	Cymlin Co., Ltd.	Cathay Healthcare Management Limited (BVI)	CCH Commercial Company Limited	Cathay Healthcare Management Limited (Cayman)
	Investor	Cathay Real Estate Development Co., Ltd.	Cathay Real Estate Development Co., Ltd.	Cathay Real Estate Development Co., Ltd.	Cathay Real Estate Development Co., Ltd.	Cathay Real Estate Development Co., Ltd.	Cathay Real Estate Development Co., Ltd.	Cathay Real Estate Development Co., Ltd.	Cathay Real Estate Development Co., Ltd.	Cathay Real Estate Development Co., Ltd.	Cymbal Medical Network Co., Ltd.	Cymbal Medical Network Co., Ltd.	Cathay Healthcare Management Co., Ltd	Cathay Real Estate Holding Corporation	Cathay Healthcare Management Limited (BVI)

369

, Accumulated Inward Remittance of Earnings as of December 31, 2020	, Accumulated Inward Remittance of Earnings as of December 31, 2020	-	-	Note1: The methods for engaging in investment in Mainland China include the following: (1) Directly invested in China (2) Investment in Mainland China companies through a company invested and established in a third region (3) Other method Note2: Investees company net income: (a) If the investees is uder preparation, should take note. (b) If the investees' net income is base on these three condition, should take note. (1) The investes' finance statement has certification by the CPA firm in Taiwan which has partnership with international CPA firm. (2) The investes' finance statement has certification by the parenent company in Taiwan. (3) Others. Note3: Currently being dissolved and liquidated Accumulated Investment in Mainland China Investment Amounts Authorized by Investment Commission, MOEA Upper Limit on Investment $115,827 $4,053,324 $14,673,134 (USD 3,820) (USD 142,182)	Note1: The methods for engaging in investment in Mainland China include the following: (1) Directly invested in China (2) Investment in Mainland China companies through a company invested and established in a third region (3) Other method Note2: Investees company net income: (a) If the investees is uder preparation, should take note. (b) If the investees' net income is base on these three condition, should take note. (1) The investes' finance statement has certification by the CPA firm in Taiwan which has partnership with international CPA firm. (2) The investes' finance statement has certification by the parenent company in Taiwan. (3) Others. Note3: Currently being dissolved and liquidated Accumulated Investment in Mainland China Investment Amounts Authorized by Investment Commission, MOEA Upper Limit on Investment $115,827 $4,053,324 $14,673,134 (USD 3,820) (USD 142,182)
Carrying Amount as of December 31, 2020		$-	$-
Share of Profits/Losses (Note2)		$-	$(16,606) (b).2
Percentage of Ownership		0.00%	85%
Investees	company net income	$-	$(19,536)
Accumulated Outflow of Investment	from Taiwan as of December 31, 2020	$-	$115,827 (USD 3,820)
Investment Flows	Inflow(Note3)	$8,945 (USD 300)	$-	Upper Limit on Investment	$14,673,134
	Outflow	$-	$12,705 (USD420)
Accumulated Outflow of Investment	from Taiwan as of January 1, 2020	$8,945 (USD 300)	$103,122 (USD 3,400)
Method of Investment (Note1)		(2) CCH REIM (HK) Company Limited	(1)	Investment Amounts Authorized by Investment Commission, MOEA	$4,053,324 (USD 142,182)
Total Amount of Paid-in Capital		$225,604 (USD 7,300)	$115,827 (USD 3,820)
Main Businesses		Business management	Consultancy	Accumulated Investment in Mainland China	$115,827 (USD 3,820)
Investee company		Tailin Management Consulting (Shanghai) Limited	Hangzhou Kunning Health Consulting Limited(Note3)

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Ownership Percentage	24.84% 17.60% 7.51% 6.22%
Total Shares Owned	288,067,626 204,114,882 87,133,000 72,200,584
Shares Shareholders	Employee Pension Management Committee of Cathay Life Insurance Co., Ltd. Wan Pao Development Co., Ltd. Fubon Life Insurance Co., Ltd. Cathay Life Insurance Co., Ltd.

371

VI. Financial Difficulties Occurred to the Company and its Affiliated Enterprises in the Most Recent Years and as of the Date of Publication of Annual Report and the Impact on the Company’s Financial Status: None.

372

Chapter 7 Review of Financial Conditions, Operating Results, and Risk Evaluation

I. Comparison and Analysis of Financial Status

omparison and Analysis of Financial Status	omparison and Analysis of Financial Status	omparison and Analysis of Financial Status
			Unit: NT$ thousands
Year Descriptions	2019	2020	Difference
			Amount	%
Current assets	32,654,308	36,552,869	3,898,561	11.94%
Property, plant and equipment	4,614,222	5,197,866	583,644	12.65%
Intangible assets	24,210	33,407	9,197	37.99%
Other assets	16,443,390	17,712,786	1,269,396	7.72%
Total assets	53,736,130	59,496,928	5,760,798	10.72%
Current liabilities	19,819,000	23,158,275	3,339,275	16.85%
Non-current liabilities	9,435,080	10,939,525	1,504,445	15.95%
Total liabilities	29,254,080	34,097,800	4,843,720	16.56%
Capital stock	11,595,611	11,595,611	0	0.00%
Capital surplus	31,628	39,515	7,887	24.94%
Retained earnings	12,311,946	12,646,352	334,406	2.72%
Other equityinterest	438,907	173,746	(265,161)	-60.41%
Non-controllinginterest	103,958	943,904	839,946	807.97%
Total equity	24,482,050	25,399,128	917,078	3.75%
(1) The main reasons for the significant changes of more than 20% in assets, liabilities and shareholders’ equities in the most recent two years: Intangible assets: Mainly caused by an increase in computer software. Capital surplus: Mainly caused by the transfer-in of overdue dividends. Other equity: Due to the increase in unrealized losses on financial assets measured at fair value through other comprehensive income. Non-controlling interests: Mainly caused by an increase in non-controlling interests. (2) Effect of the aforesaid changes: No material impact. (3) Future response actions: Not applicable.

373

II. Comparison and Analysis of Operation Results

omparison and Analysis of Operation Results	omparison and Analysis of Operation Results	omparison and Analysis of Operation Results
			Unit: NT$ thousands
Year Descriptions	2019	2020	Difference
			Amount	%
Operating revenue	11,623,928	13,973,611	2,349,683	20.21%
Operating costs	(8,461,339)	(10,814,849)	(2,353,510)	27.81%
Gross profit	3,162,589	3,158,762	(3,827)	-0.12%
Operating expenses	(1,663,302)	(1,607,433)	55,869	-3.36%
Operating profit	1,499,287	1,551,329	52,042	3.47%
Non-operating Income and expense	71,051	133,955	62,904	88.53%
Income before tax	1,570,338	1,685,284	114,946	7.32%
Income tax (expense) profit	(169,980)	(168,497)	1,483	-0.87%
Net income	1,400,358	1,516,787	116,429	8.31%
Other comprehensive income(after tax)	331,893	(256,312)	(588,205)	-177.23%
Total comprehensive income	1,732,251	1,260,475	(471,776)	-27.23%
(I) The main reasons for the significant changes of more than 20% in operating revenue, net operating profit and income before tax in the most recent two years: Operating revenue: Caused by the increase in housing sales income. Operating cost: Caused by the increase in housing sales cost. Non-operating income and profits: Caused by the increase in other income. Other comprehensive income (income after tax): Caused by the increase in the unrealized losses on valuation of the investment in equity instruments at fair value through other comprehensive income. Total comprehensive income: Caused by the increase in other comprehensive losses in the current period. (II) Effect of the aforesaid changes: No material impact. (III) Future response actions: Not applicable.

374

III. Analysis and Explanation of Changes in Cash Flow in the Most Recent Year

(I) Cash inflow from operating activities was NT$1,801,254,000: Mainly due to increase in inventories, contract liabilities, and other payables.
(II) Cash outflow from investing activities was NT$1,332,838,000: Mainly due to acquisition of property, plant and equipment.
(III) Cash inflow from financing activities was NT$804,405,000: Mainly due to the distribution of cash dividends and repayment of long-term borrowings.
(IV) Improvement plan for the lack of liquidity: Accelerating business development and increasing cash inflow.
(V) Liquidity analysis for the coming year:

Liquidity analysis for the coming year:	Liquidity analysis for the coming year:	Liquidity analysis for the coming year:	Liquidity analysis for the coming year:
				Unit: NT$thousands
Estimated Cash and Cash Equivalents, Beginning of Year	Net Cash Flow from Operating Activities	Estimated Cash Outflow (Inflow)	Cash Surplus (Deficit)	Remedyfor Cash Deficit
				Investment Plans for the Coming Year	Financing Plans
3,395,624	9,103,694	(10,237,395)	2,261,923	-	-
Cash Flow Analysis for the Coming Year 1. Product sales and rental income in 2021 are expected to result in cash inflows from operating activities. 2. Expenditures for construction in progress, investments in other companies, land purchase, dividend and sales advertisements in 2021 are expected to result in cash outflows.

IV. Impact of Major Capital Expenditures on Financial Business in the Most Recent Year

In order to enhance the brand value, the Company established real estate development companies Jinhua Realty Co., Ltd. and Bannan Realty Co., Ltd., through a joint venture with Mitsui Fudosan Taiwan Co., Ltd., an investee of the Japanese Mitsui Fudosan Co., Ltd. to engage in the development of construction projects through the construction planning and design and exchanges on construction quality and techniques between both parties. In addition, the Company increase in the shares of Lin Yuan Property Management Co. Ltd. and increased the capital of Cathay Hospitality Management Co., Ltd., in a total investment of approximately NT$1.12 billion, accounting for 4.58% of the Company's net worth with no significant impact. Diversified development by investments in other companies is expected to increase the Company ＇ s investment income.

375

V. Investment Policy in the Most Recent Year, Main Causes for the Profits or Losses, Improvement Plans and Investment Plans for the Coming Year

(I) Investment Policy

The Company adheres to the business belief, implements the core values, and uses the Group ＇ s advantages and resources to create a diversified business. In addition to investing in real estate-related business, including construction management, building management, urban renewal, and set up joint ventures with an internationally renowned real estate company to establish real estate development companies, the Company has expanded to life industries, such as health care management, hotel management, e-commerce, 5G mobile communications, and integrated medical clinic channel system, to creates the Company's diversified income, while regularly reviewing the performance of investment to dispose of investments at high prices so as to realize profits.

(II) Main Causes for Profits or Losses and Improvement Plans

The investment loss recognized under the equity method in 2020 was NT$400 million, mainly for operating losses on the hotel business. In addition, the full-year dividend income from financial assets at fair value through other comprehensive income was NT$118 million. The performance improved subsequently as the revenue from the investment in businesses gradually increased.

(III) Investment Plans for the Coming Year

Affected by the global COVID-19 pandemic, the global demand declined, economic growth slowed, unemployment increased, and international financial markets were turbulent. Although governments have rapidly cut interest rates to reduce the interest burden on companies and stabilize the stock market, pandemic prevention and control measures still impacted the local economies of all countries. In the future, the investment plan will be to continue to expand the medical care and health industry and seek targets with good fundamentals and fixed income to reduce investment risks.

1. Health management business

Enhance the service quality of the existing physical examination centers and postpartum care homes, and evaluate the locations for establishment of additional physical examination centers and postpartum care homes in major metropolitan areas. It is expected that the postpartum care homes in Neihu and Hsinchu and the Hsinchu physical examination center will open at the end of 2021 to expand the scale of revenue and provide high-quality and diversified services.

2. Clinic channel business

In view of the increasing public attention to medical care and healthcare needs, the Company will use group resources in the future to build a health insurance clinic channel system and expand comprehensive health services. Last year, a clinic channel was established on Xinyi Road in Taipei City. It is expected to open another one in Hsinchu

376

by the end of 2021.

Hotel business

Improve the service quality and reputation of the existing Minsheng Branch, Taipei, Zhongxiao Branch, Taipei, Ximen Branch, Tainan, Zhongshan Branch, Kaohsiung, of Hotel Cozzi; Courtyard by Marriott Taipei Downtown, and Cozzi Blu in Taoyuan to provide diversified services and improve operating performance.

VI. Assessment of Risk Items in the Most Recent Years and as of the Date of Publication of Annual Report

(I) Effects of Changes in Interest Rates, Foreign Exchange Rates and Inflation on Corporate Finance, and Future Response Measures:
Interest rates: In response to the global impact of the pandemic in 2020, the Central Bank cut the interest rate by 0.25%, hoping to increase market liquidity and mitigate the impact of the pandemic on our country's economic and trade performance. Looking ahead to 2021, the pandemic is still severe, and whether the interest rate policy of the domestic Central Bank will be adjusted will continue to be observed. However, the interest rate at this stage is at a historically low level, which still provides an incentive for the buying momentum in the real estate market.
Exchange rate: The New Taiwan dollar appreciated 5.61% in 2020, and the exchange rate against the U.S. dollar climbed to a record high in nearly 23 years. However, because real estate is mostly domestic demand-oriented, the direct impact of exchange rate changes on real estate is relatively small.
Inflation: In 2020, due to the impact of the plunge in international crude oil prices and the impact of the pandemic, and the domestic consumption contraction, the price index decreased by 0.23% a year, which was rarely seen. However, the current domestic control of the pandemic is still appropriate, the inflation is still moderate, and the Company also collects adequate land-related information and raw material prices, so it has little impact on the Company.
Raw materials: In addition to the increase in the number of residential construction sites in the six special municipalities in 2020, with the return of overseas Taiwanese businesspeople to expand their factories, and the continuous launch of public projects in various places, the large demand has driven the prices of raw materials and wages to increase, and the costs of construction projects are expected to increase compared with previous years.
Countermeasures: The Company closely monitors the development of the economic indicators above, continues to analyze their impact on the real estate market, and evaluates and adjusts its business strategy. In the raw material part, the Company also strictly controls the construction cost, while taking into account the quality and the completion schedule in response to the changes in the overall situation in order to create

377

the maximum operating profit for the Company.

(II) Policies, Main Causes of Gain or Loss and Future Response Measures with Respect to High-risk, High-leveraged Investments, Lending or Endorsement Guarantees, and Derivatives Transactions

None.

(III) Future Research & Development Projects and Corresponding Budget
Research Projects
Continue the research work of the Cathay Real Estate Index and publish relevant research information at the beginning of each quarter. In addition, in response to the rapid changes in the market, make more efforts in employee training, and strengthen professional education and training, to continue the Company ＇ s core values, and enhance the Company ＇ s brand and corporate competitive advantage.
Expected Research Expenditure
A budget of NT$10.51 million is determined for the professional training of employees and the research of Cathay Real Estate Index.
(IV) Effects of and Response to Changes in Policies and Regulations Relating to Corporate Finance and Sales: In addition to complying with government laws and regulations, the Company also collects, organizes and analyzes the changes in important policies and laws at home and abroad to grasp opportunities and take response measures. Meanwhile, the Company also adheres to the principle of prudent operation, and creates the largest niche for sustainable development.
(V) Effects of and Response to Changes in Technology and the Industry Relating to Corporate Finance and Sales: The Company explores and adopts the application of technology in the Company’s products in face of the customer demands and ever-changing technology, to continuously enhance the Company’s competitiveness. Meanwhile, the Company invests a lot of manpower and financial resources in research on the changes in the industry to improve the Company’s operating performance and profitability.
(VI) The Impact of Changes in Corporate Image on Corporate Risk Management, and the Company’s Response Measures: Since its establishment, the Company has been abided by the tenet of serving the society, benefiting the people, beautifying the environment, and promoting prosperity, and deeply developed the society and established a good corporate image, winning various social honors and affirmations. In addition, the Company has also established a cultural and educational foundation for social welfare activities, enhancing the corporate image.
(VII) Expected Benefits from, Risks Relating to and Response to Merger and Acquisition Plans: The Company has no ongoing merger and acquisition activities, so there is no possible risk and response measure.

378

(VIII) Expected Benefits from, Risks Relating to and Response to Factory Expansion Plans: The Company has no factory expansion plans, so there is no possible risk and response measure.
(IX) Risks Relating to and Response to Excessive Concentration of Purchasing Sources and Excessive Customer Concentration: The Company is a good builder that can keep abreast of various purchase costs, reduce the operational impact brought by rising costs, and prudently appraise, select and audit each project constructor and deliberate the price; the Company also specializes in marketing research, so it can keep abreast of market trends, create the best sales results against most individual customers; there is no centralized risk in purchase and sales.
(X) Effects of, Risks Relating to and Response to Large Share Transfers or Changes in Shareholdings by Directors, Supervisors, or Shareholders with Shareholdings of over 10%: the above-mentioned personnel and shareholders all hold the stock equity of the Company for a long term, and they support the Company’s operations, so they do not have the intention of transferring a large number of equities and there is no risk generated.
(XI) Effects of, Risks Relating to and Response to the Changes in Management Rights: The Company’s equity structure is stable for a long time, and is managed steadily by professional managers, and there is no risk of change in management rights.
(XII) For major ongoing lawsuits, non-lawsuits or administrative lawsuits caused by Directors, Supervisors or shareholders with over 10% shareholdings, the Company, the Company’s Directors, Supervisors or shareholders with over 10% shareholdings and the subsidiaries shall be specified. Where the results may have significant impact on the stockholders’ equity or security price, the fact in contention, object amount, date of beginning of litigation, main parties involved and disposal up to the date of publication of the annual report shall be disclosed: None.

(XIII) Other Major Risks and Response Measures

Information security risks: (1) Information security architecture and policy: The Company attaches great importance to information security risk management. To ensure operation and customer information security, the Company established the Information Security Policy in 2004 and makes evaluation annually. (2) Specific management plans: Conduct the simulation drilling and make records of the system, and introduce the IT resource management system into the system control part, including software security management, peripheral device security management and file directory monitoring management, which transmits the USB transmission file list every day, regularly checks whether the Company's computers are installed with high-risk software every month, as well as conducts social engineering drills and host vulnerability scans from time to time to prevent the Company's and clients' confidential information from being leaked. The internal auditor, twice a year, and accounting firm, at least once a year, check the information security policy,

379

organization and rights & responsibilities, asset classification control, personnel management and education & training, physical and security environment management, computer system security management, network security management and system storage to ensure the Company ＇ s sustainable business operation.

VII. Other Important Items: None.

380

Chapter 8 Special Disclosure

I. Information Regarding Affiliate Enterprises

(I) Consolidated Business Report of Affiliated Companies for the year ended December 31, 2020
Organization Chart of Affiliated Companies

==> picture [336 x 144] intentionally omitted <==

2. Information about Affiliated Companies

Unit: NT$ Thousands

				Unit: NT$Thousands
Company name	Establishment date	Address	Paid-in capital	Main business or production items
Cathay Real Estate Develop ment Co., Ltd.	1964.12.01	2F, No. 218, Dunhua South Road, Taipei City	$11,595,611	1. Retail sale of Medical Equipments 2. Department Stores 3. Car Rental and Leasing 4. Parking Garage Business 5. Residence and Buildings Lease Construction and Development 6. Industrial Factory Buildings Lease Construction and Development 7. Specialized Field Construction and Development 8. Public Works Construction and Investment 9. New County and Community Construction and Investment 10. Land Levy and Delimit 11. Reconstruction within the Renewal Area 12. Renovation, or Maintenance within the Renewal Area 13. Construction Management 14. Real Estate Commerce 15. Real Estate Rental and Leasing

381

Company name	Establishment date	Address	Paid-in capital	Main business or production items
				16. Management Consulting Services 17. Other Consultancy 18. All business items that are not prohibited or restricted by law, except those that are subject to special approval.
Cathay Real Estate Managem ent Co., Ltd.	2005.03.11	2F, No. 218, Dunhua South Road, Taipei City	$50,000	1. Construction Management 2. Real Estate Commerce 3. Real Estate Rental and Leasing 4. Investment Consultancy 5. Management Consulting Services 6. Agency Services 7. Reconstruction within the Renewal Area 8. Renovation, or Maintenance within the Renewal Area 9. All business items that are not prohibited or restricted by law, except those that are subject to special approval.
Cathay Healthcar e Managem ent Limited	2011.03.25	7F, No. 333, Section 2, Dunhua South Road, Taipei City	$550,000	1. Cosmetics Manufacturing 2. Computing Equipments Installation Construction 3. Wholesale of Food and Grocery 4. Wholesale of Articles for Daily Use 5. Wholesale of Cosmetics 6. Wholesale of Stationery Articles, Musical Instruments and Educational Entertainment Articles 7. Wholesale of Other Products 8. Retail sale of Food Products and Groceries 9. Retail Sale of Articles for Daily Use 10. Retail Sale of Cosmetics 11. Retail Sale of the Second Type Patent Medicine 12. Retail sale of Stationery Articles, Musical Instruments and Educational Entertainment Articles 13. International Trade 14. Restaurants 15. Intellectual Property 16. Food Consultancy 17. Management Consulting Services 18. Other Consultancy 19. Software Design Services 20. Data Processing Services 21. Digital Information Supply Services 22. Biotechnology Services 23. Manpower Dispatching Services 24. Exhibition Services 25. Rental and Leasing Business 26. Agency Services 27. Beauty Shops 28. Beauty Treatment

382

Company name	Establishment date	Address	Paid-in capital	Main business or production items
				29. Athletics and Recreational Sports Stadium 30. Wholesale of Drugs, Medical Goods 31. Retail Sale of Drugs, Medical Goods 32. Real Estate Rental and Leasing 33. All business items that are not prohibited or restricted by law, except those that are subject to special approval.
Cathay Hospitalit y Managem ent Co., Ltd.	2012.03.27	15F, No. 319, Section 2, Dunhua South Road, Taipei City	$650,000	1. Hotels and Motels 2. Food Consultancy 3. Management Consulting Services 4. Artwork Consultation Services 5. Product Designing 6. Landscape and Interior Designing 7. Floriculture Designing 8. Manpower Dispatching Services 9. Supermarkets 10. Convenient Stores 11. International Trade 12. Residence and Buildings Lease Construction and Development 13. All business items that are not prohibited or restricted by law, except those that are subject to special approval.
Chairman of Cathay Hospitalit y Consultin g Co., Ltd.	2018.01.05	15F, No. 319, Section 2, Dunhua South Road, Taipei City	$750,000	1. Hotels and Motels 2. Food Consultancy 3. Management Consulting Services 4. Artwork Consultation Services 5. Product Designing 6. Landscape and Interior Designing 7. Floriculture Designing 8. Manpower Dispatching Services 9. Supermarkets 10. Convenient Stores 11. International Trade 12. Residence and Buildings Lease Construction and Development 13. Beverage Stores 14. Restaurants 15. Other Food and Beverage Services 16. Wholesale of Tobacco Products and Alcoholic Beverages 17. Wholesale of Nonalcoholic Beverages 18. Wholesale of Food and Grocery 19. Retail sale of Food Products and Groceries 20. Retail Sale of Tobacco and Alcoholic Beverages International Tourism Hotel 22. ZZ99999 All business not prohibited or restricted by law, except for those subject to specialapproval.

383

Company name	Establishment date	Address	Paid-in capital	Main business or production items
Lin Yuan Property Managem ent Co. Ltd.	2000.07.01	2F, No. 152 Songjiang Road, Zhongsha n District, Taipei City	$30,000	1. Condominium Buildings Management Service 2. Manpower Dispatching Services 3. Parking Garage Business 4. Rental Housing Management Business 5. All business items that are not prohibited or restricted by law, except those that are subject to special approval.
Cymbal Medical Network Co., Ltd.	2019.06.26	7F, No. 333, Section 2, Dunhua South Road, Taipei City	$100,000	1. Cosmetics Manufacturing 2. Computing Equipments Installation Construction 3. Wholesale of Food and Grocery 4. Wholesale of Articles for Daily Use 5. Wholesale of Cosmetics 6. Wholesale of Stationery Articles, Musical Instruments and Educational Entertainment Articles 7. Wholesale of Precision Instruments 8. Wholesale of Other Products 9. Retail sale of Food Products and Groceries 10. Retail Sale of Articles for Daily Use 11. Retail Sale of Cosmetics 12. Retail Sale of the Second Type Patent Medicine 13. Retail sale of Stationery Articles, Musical Instruments and Educational Entertainment Articles 14. Retail Business Without Shop 15. International Trade 16. Intellectual Property 17. Investment 18. Venture Investment 19. Real Estate Rental and Leasing 20. Food Consultancy 21. Management Consulting Services 22. Other Consultancy 23. Software Design Services 24. Data Processing Services 25. Digital Information Supply Services 26. Manpower Dispatching Services 27. Exhibition Services 28. Rental and Leasing Business 29. Agency Services 30. Wholesale of Drugs, Medical Goods 31. Retail Sale of Drugs, Medical Goods 32. Wholesale of Western Pharmaceutical 33. Retail Sale of Western Pharmaceutical 34. General Advertisement Service 35. ZZ99999 All business not prohibited or restricted by law, except for those subject to specialapproval

384

Company name	Establishment date	Address	Paid-in capital	Main business or production items
Xin-De Co., Ltd.	2019.07.04	7F, No. 333, Section 2, Dunhua South Road, Taipei City	$83,000 (Including $80,000 for ordinary shares and $3,000 for preference shares)	1. Cosmetics Manufacturing 2. Computing Equipments Installation Construction 3. Wholesale of Food and Grocery 4. Wholesale of Articles for Daily Use 5. Wholesale of Cosmetics 6. Wholesale of Stationery Articles, Musical Instruments and Educational Entertainment Articles 7. Wholesale of Precision Instruments 8. Wholesale of Other Products 9. Retail sale of Food Products and Groceries 10. Retail Sale of Articles for Daily Use 11. Retail Sale of Cosmetics 12. Retail Sale of the Second Type Patent Medicine 13. Retail sale of Stationery Articles, Musical Instruments and Educational Entertainment Articles 14. Retail Business Without Shop 15. International Trade 16. Intellectual Property 17. Investment 18. Venture Investment 19. Real Estate Rental and Leasing 20. Food Consultancy 21. Management Consulting Services 22. Other Consultancy 23. Software Design Services 24. Data Processing Services 25. Digital Information Supply Services 26. Manpower Dispatching Services 27. Exhibition Services 28. Rental and Leasing Business 29. Agency Services 30. Wholesale of Drugs, Medical Goods 31. Retail Sale of Drugs, Medical Goods 32. Retail Sale of Cloths, Garments, Shoes, Hats, Umbrellas and Clothing Accessories 33. Athletics and Recreational Sports Stadium 34. Sports Training 35. ZZ99999 All business not prohibited or restricted by law, except for those subject to special approval

385

Company name	Establishment date	Address	Paid-in capital	Main business or production items
Cymlin Co., Ltd.	2020.02.13	7F, No. 333, Section 2, Dunhua South Road, Taipei City	$26,000	1. Cosmetics Manufacturing 2. Computing Equipments Installation Construction 3. Wholesale of Food and Grocery 4. Wholesale of Articles for Daily Use 5. Wholesale of Cosmetics 6. Wholesale of Stationery Articles, Musical Instruments and Educational Entertainment Articles 7. Wholesale of Precision Instruments 8. Wholesale of Other Products 9. Retail sale of Food Products and Groceries 10. Retail Sale of Articles for Daily Use 11. Retail Sale of Cosmetics 12. Retail Sale of the Second Type Patent Medicine 13. Retail sale of Stationery Articles, Musical Instruments and Educational Entertainment Articles 14. Retail Business Without Shop 15. International Trade 16. Intellectual Property 17. Investment 18. Venture Investment 19. Real Estate Rental and Leasing 20. Food Consultancy 21. Management Consulting Services 22. Other Consultancy 23. Software Design Services 24. Data Processing Services 25. Digital Information Supply Services 26. Manpower Dispatching Services 27. Exhibition Services 28. Rental and Leasing Business 29. Agency Services 30. ZZ99999 All business not prohibited or restricted by law, except for those subject to special approval
Jinhua Realty Co., Ltd.	2020.08.19	2F, No. 218, Section 2, Dunhua South Road, Da'an District, Taipei City	$800,000	1. Residence and Buildings Lease Construction and Development 2. Industrial Factory Buildings Lease Construction and Development 3. Specialized Field Construction and Development 4. Public Works Construction and Investment 5. New County and Community Construction and Investment

386

Company name	Establishment date	Address	Paid-in capital	Main business or production items
				6. Land Levy and Delimit 7. Reconstruction within the Renewal Area 8. Renovation, or Maintenance within the Renewal Area 9. Construction Management 10. Real Estate Commerce 11. Real Estate Rental and Leasing 12. Management Consulting Services 13. Other Consultancy 14. Parking Garage Business 15. International Trade 16. Retail Business Without Shop 17. Wholesale of Refractory Materials 18. Department Stores 19. ZZ99999 All business not prohibited or restricted by law, except for those subject to special approval
Bannan Realty Co., Ltd.	2020.09.26	2F, No. 218, Section 2, Dunhua South Road, Da'an District, Taipei City	$800,000	1. Residence and Buildings Lease Construction and Development 2. Industrial Factory Buildings Lease Construction and Development 3. Specialized Field Construction and Development 4. Public Works Construction and Investment 5. New County and Community Construction and Investment 6. Land Levy and Delimit 7. Reconstruction within the Renewal Area 8. Renovation, or Maintenance within the Renewal Area 9. Construction Management 10. Real Estate Commerce 11. Real Estate Rental and Leasing 12. Management Consulting Services 13. Other Consultancy 14. Parking Garage Business 15. Retail Business Without Shop 16. Department Stores 17. International Trade 18. Wholesale of Refractory Materials 19. ZZ99999 All business not prohibited or restricted by law, except for those subject to special approval

387

For those who are concluded in the controlling and subordinate relation, the information of the same shareholder

Unit: NT$ thousands; share; %

Constructive reason	Name (Note 1)	Shareholding (Note 2)	Shareholding (Note 2)	Establishment date	Address	Paid-in capital	Main business items
		Shares	Shareholding Ratio
Not Applicable

Note 1: If the institutional shareholder is the same, fill in the name of the juridical person; if the natural person shareholder is the same, fill in the name of the natural person. Natural person shareholders only fill in the constructive reason, name and shareholding.

Note 2: Shareholding refers to shares of controlling companies held by the shareholders.

Directors, Supervisors and President of Affiliated Companies

Unit: shares; %

			Unit: shares;%	Unit: shares;%
Company name	Position	Name or representative	Shareholding
			Shares	Shareholdi ngRatio
Cathay Real Estate Development Co., Ltd.	Chairman	Representative of He Xin Industrial Co.,Ltd.: Ching-Kuei Chang	22,000,000	1.90%
	Director and President	Representative of He Xin Industrial Co.,Ltd.: Lee HungMing	22,000,000	1.90%
	Director	Representative of He Xin Industrial Co.,Ltd.: Chung-Yan Tsai	22,000,000	1.90%
	Director	Representative of Cathay Charity Foundation: Daniel Tung	5,941,332	0.51%
	Director	Representative of Cathay Real Estate Foundation: Chung-ChangChu	2,353,690	0.20%
	Director	Employee Benefit Committee of Cathay Real Estate Development Co.,Ltd.: Chin-LiangLin	2,754,800	0.24%
	Independent Director	Shiou-Ling Lin	0	0
	Independent Director	Chih-Wei Wu	0	0
	Independent Director	James Y. Chang	0	0
Cathay Real Estate Management Co., Ltd.	Chairman	Representative of Cathay Real Estate Development Co., Ltd.: Ching-Kuei Chang	5,000,000	100%
	Director and President	Representative of Cathay Real Estate Development Co., Ltd.: Lee Hung Ming	5,000,000	100%
	Director	Representative of Cathay Real Estate Development Co., Ltd.: Chin-Liang Lin	5,000,000	100%
	Supervisors	Representative of Cathay Real Estate Development Co., Ltd.: Ming-Hui Wu	5,000,000	100%

388

Company name	Position	Name or representative	Shareholding	Shareholding
			Shares	Shareholdi ngRatio
Cathay Healthcare Management Co., Ltd.	Chairman	Representative of Cathay Real Estate Development Co., Ltd.: Ching-Kuei Chang	46,750,000	85%
	Director and President	Representative of Cathay Real Estate Development Co., Ltd.: Chen, Chung-Yu	46,750,000	85%
	Vice Chairman	Representative of Cathay Real Estate Development Co., Ltd.: Chung-Yan Tsai	46,750,000	85%
	Supervisors	Cathay Venture Capital Co., Ltd.: Ming-Hui Wu	8,250,000	15%
Cathay Hospitality Management Co., Ltd.	Chairman	Representative of Cathay Real Estate Development Co., Ltd.: Lee Hung Ming	65,000,000	100%
	Director and President	Representative of Cathay Real Estate Development Co., Ltd.: Wan-Hua Chuang	65,000,000	100%
	Director	Representative of Cathay Real Estate Development Co., Ltd.: Chin-Liang Lin	65,000,000	100%
	Supervisors	Representative of Cathay Real Estate Development Co., Ltd.: Tso-Hsing Hsu	65,000,000	100%
Cathay Hospitality Consulting Co., Ltd.	Chairman	Representative of Cathay Real Estate Development Co., Ltd.: Lee Hung Ming	75,000,000	100%
	Director and President	Representative of Cathay Real Estate Development Co., Ltd.: Wan-Hua Chuang	75,000,000	100%
	Director	Representative of Cathay Real Estate Development Co., Ltd.: Chin-Liang Lin	75,000,000	100%
	Supervisors	Representative of Cathay Real Estate Development Co., Ltd.: Tso-Hsing Hsu	75,000,000	100%
Lin Yuan Property Management Co. Ltd.	Chairman and President	Representative of Cathay Real Estate Development Co., Ltd.: Ching-Ming Pan	1,530,000	51%
	Director	Representative of Cathay Real Estate Development Co., Ltd.: Ying-Hsiang Kao	1,530,000	51%
	Director	Representative of Cathay Real Estate Development Co., Ltd.: Wan-Chih Hsu	1,530,000	51%

389

Company name	Position	Name or representative	Shareholding	Shareholding
			Shares	Shareholdi ngRatio
	Director	Representative of Cathay Life Insurance Company, Ltd.: Min-Hung Shih	1,470,000	49%
	Director	Representative of Cathay Life Insurance Company, Ltd.: I-Hui Chien	1,470,000	49%
	Supervisors	Hsu-FengCheng	0	0
Cymbal Medical Network Co., Ltd.	Chairman	Representative of Cathay Real Estate Development Co., Ltd.: Ching-Kuei Chang	10,000,000	100%
	Director and President	Representative of Cathay Real Estate Development Co., Ltd.: Chen, Chung-Yu	10,000,000	100%
	Director	Representative of Cathay Real Estate Development Co., Ltd.: Chung-Yan Tsai	10,000,000	100%
	Supervisors	Representative of Cathay Real Estate Development Co., Ltd.: Ming-Hui Wu	10,000,000	100%
Xin-De Co., Ltd.	Chairman	Representative of Cymbal Medical Network Co., Ltd.: Ching-Kuei Chang	8,000,000	100%
	Director and President	Representative of Cymbal Medical Network Co.,Ltd.: Chung-Yu Chen	8,000,000	100%
	Director	Representative of Cymbal Medical Network Co.,Ltd.: Chung-Yan Tsai	8,000,000	100%
	Supervisors	Ming-Hui Wu	0	0
Cymlin Co., Ltd.	Chairman	Representative of Cymbal Medical Network Co., Ltd.: Ching-Kuei Chang	2,600,000	100%
	Director and President	Representative of Cymbal Medical Network Co.,Ltd.: Chung-Yu Chen	2,600,000	100%
	Director	Representative of Cymbal Medical Network Co.,Ltd.: Chung-Yan Tsai	2,600,000	100%
	Supervisors	Representative of Cymbal Medical Network Co.,Ltd.: Ming-Hui Wu	2,600,000	100%
Jinhua Realty Co., Ltd.	Chairman and President	Representative of Cathay Real Estate Development Co., Ltd.: Chin-Liang Lin	40,800,000	51%
	Director	Representative of Cathay Real Estate Development Co., Ltd.: Chun-Ho Kuo	40,800,000	51%
	Director	Representative of Cathay Real Estate Development Co., Ltd.: Ting-Chien Huang	40,800,000	51%

390

Company name	Position	Name or representative	Shareholding	Shareholding
			Shares	Shareholdi ngRatio
	Director	Representative of Mitsui Fudosan Taiwan Co.,Ltd.: Hiroshi Ono	39,200,000	49%
	Director	Representative of Mitsui Fudosan Taiwan Co.,Ltd.: Keishiro Omori	39,200,000	49%
	Supervisors	Chun-An Lin	0	0
	Supervisors	Kensuke Kihara	0	0
Bannan Realty Co., Ltd.	Chairman and President	Representative of Cathay Real Estate Development Co.,Ltd.: Daniel Tung	40,800,000	51%
	Director	Representative of Cathay Real Estate Development Co., Ltd.: Chun-He Kuo	40,800,000	51%
	Director	Representative of Cathay Real Estate Development Co., Ltd.: Shang-Chieh Ku	40,800,000	51%
	Director	Representative of Mitsui Fudosan Taiwan Co.,Ltd.: Hiroshi Ono	39,200,000	49%
	Director	Representative of Mitsui Fudosan Taiwan Co.,Ltd.: Keishiro Omori	39,200,000	49%
	Supervisors	Chun-An Lin	0	0
	Supervisors	Kensuke Kihara	0	0

391

5. Operational Highlights of Affiliated Companies

Operational Highlights of Affiliated Companies	Operational Highlights of Affiliated Companies	Operational Highlights of Affiliated Companies	Operational Highlights of Affiliated Companies	Operational Highlights of Affiliated Companies	Operational Highlights of Affiliated Companies	Operational Highlights of Affiliated Companies	Operational Highlights of Affiliated Companies	Operational Highlights of Affiliated Companies
Unit: NT$Thousands Company name Capital amount Total assets Total liabilities Net worth Operating revenue Operating income (loss) Current income (after-tax) Earnings per share (after- tax) Cathay Real Estate Development Co.,Ltd. $11,595,611 $49,112,708 $24,657,484 $24,455,224 $13,336,228 $1,852,477 $1,483,980 $1.28 Cathay Real Estate Management Co.,Ltd. 50,000 128,103 13,089 115,014 63,472 33,871 27,576 5.52 Cathay Healthcare Management Co., Ltd 550,000 1,525,350 836,193 689,157 575,935 146,461 106,646 1.94 Cathay Hospitality Management Co.,Ltd. 650,000 3,463,864 3,346,512 117,352 513,174 (246,958) (286,161) (6.76) Chairman of Cathay Hospitality Consulting Co.,Ltd. 750,000 5,014,059 4,712,098 301,961 505,460 (246,637) (257,350) (3.43) Lin Yuan Property Management Co. Ltd. 30,000 373,113 257,887 115,226 1,100,377 77,606 62,913 20.97 Cymbal Medical Network Co.,Ltd. 100,000 117,650 30,650 87,000 358 (6,006) (11,979) (1.20) Xin-De Co., Ltd. 80,000 (ordinary) 3,000 (preference) 108,014 30,686 77,328 725 (5,301) (5,509) (0.69) Cymlin Co., Ltd. 26,000 25,872 76 25,796 - (233) (204) (0.08) Jinhua Realty Co., Ltd. 800,000 1,994,595 1,196,211 798,384 - (2,026) (1,616) (0.02) Bannan Realty Co., Ltd. 800,000 801,629 5,995 795,634 - (5,476) (4,366) (0.05)
Company name	Capital amount	Total assets	Total liabilities	Net worth	Operating revenue	Operating income (loss)	Current income (after-tax)	Earnings per share (after- tax)
Cathay Real Estate Development Co.,Ltd.	$11,595,611	$49,112,708	$24,657,484	$24,455,224	$13,336,228	$1,852,477	$1,483,980	$1.28
Cathay Real Estate Management Co.,Ltd.	50,000	128,103	13,089	115,014	63,472	33,871	27,576	5.52
Cathay Healthcare Management Co., Ltd	550,000	1,525,350	836,193	689,157	575,935	146,461	106,646	1.94
Cathay Hospitality Management Co.,Ltd.	650,000	3,463,864	3,346,512	117,352	513,174	(246,958)	(286,161)	(6.76)
Chairman of Cathay Hospitality Consulting Co.,Ltd.	750,000	5,014,059	4,712,098	301,961	505,460	(246,637)	(257,350)	(3.43)
Lin Yuan Property Management Co. Ltd.	30,000	373,113	257,887	115,226	1,100,377	77,606	62,913	20.97
Cymbal Medical Network Co.,Ltd.	100,000	117,650	30,650	87,000	358	(6,006)	(11,979)	(1.20)
Xin-De Co., Ltd.	80,000 (ordinary) 3,000 (preference)	108,014	30,686	77,328	725	(5,301)	(5,509)	(0.69)
Cymlin Co., Ltd.	26,000	25,872	76	25,796	-	(233)	(204)	(0.08)
Jinhua Realty Co., Ltd.	800,000	1,994,595	1,196,211	798,384	-	(2,026)	(1,616)	(0.02)
Bannan Realty Co., Ltd.	800,000	801,629	5,995	795,634	-	(5,476)	(4,366)	(0.05)

392

Business Activities of Affiliated Companies
(1) Overall business scope of all affiliated companies
Cathay Real Estate Development Co., Ltd.: Construction Industry.
Cathay Real Estate Management Co., Ltd.: Construction Management Industry.
Cathay Healthcare Management Co., Ltd: Consulting service industry.
Cathay Hospitality Management Co., Ltd.: Service Industry.
Cathay Hospitality Consulting Co., Ltd.: Service Industry.
Lin Yuan Property Management Co. Ltd.: Apartment Buildings Management Service Industry
Cymbal Medical Network Co., Ltd.: Wholesale of Drugs, Medical Goods
Xin-De Co., Ltd.: Manpower Dispatching Services and Leasing Industry
Cymlin Co., Ltd.: Manpower Dispatching Services and Leasing Industry
Jinhua Realty Co., Ltd.: Housing and Building Development and Rental Industry
Bannan Realty Co., Ltd.: Housing and Building Development and Rental Industry
(2) Division of labor for exchange and cooperation of overall related companies:

The main business of Cathay Real Estate Development Co., Ltd. is entrusting manufacturers to build public housing and commercial building for leasing and sales. It is independent of each subsidiary and has no division of labor.

393

(II) Affiliation report

Declaration

Declaration

The 2020 affiliation report of the Company (from January 1, 2020 to December 31, 2020) was prepared according to “ Criteria Governing for Preparation of Affiliation Reports, Consolidated Business Reports, and Consolidated Financial Statements of Affiliation Enterprises ＂ and the information disclosed is not inconsistent with the relevant information disclosed in the notes to the financial statements during the above-mentioned period.

Hereby declare

Company name: Cathay Real Estate Development Co., Ltd.

Chairman: Ching-Kuei Chang

March 18, 2021

394

2. Opinions of declaration

Letter

Addressee: Cathay Real Estate Development Co., Ltd.

Subject: Opinions on whether the declaration issued by the management authority of the Company for the 2020 affiliation reports is reasonable in all material respects.

Explanation: The Company ＇ s 2020 affiliation reports have been prepared by the management authority of your company and it has issued a declaration showing that the above report is prepared according to “ Criteria Governing for Preparation of Affiliation Reports, Consolidated Business Reports, and Consolidated Financial Statements of Affiliation Enterprises ＂ and the information disclosed is not inconsistent with the relevant information disclosed in the notes to the 2020 financial report.

In my opinion, the declaration issued by the management authority of your company for the 2020 related company report is reasonable in all material respects.

Ernst & Young Taiwan

Jung-Huang Hsu CPA: Chien-Tse Huang

March 18, 2021

395

Overview of the Relationship between Subordinate Companies and the Controlling Company

					Unit: shares;%	Unit: shares;%
Name of Holding Company	Reasons	Shareholding and setting situations of the controlling company			Appointment of personnel by the holding Company Shareholdings by Directors, Supervisors or Managers
		Shares	Shareholding Ratio	Number of Shares Set	Position	Name
He Xin Industrial Co., Ltd.	The representative is the Chairman, President and Director of the Company	22,000,000	1.90%	0	Chairman Director and President Director	Ching-Kuei Chang Lee Hung Ming Chung-Yan Tsai

Note: When the controlling company of the subordinate company is a subordinate company of the other company, the relevant information of the other company shall also be filled in. This also applies to the situation that the other company is the subsidiary company of the other company. All in the same manner.

4. Business transaction

(1) Purchase-sales transaction: None.
(2) Property transaction: None.
(3) Capital financing: None.
(4) Asset leasing: None.
(5) Endorsement and guarantee: None.

396

II. Private Placement Securities in the Most Recent Years and as of the Date of Publication of the Annual Report: None.
III. Shares of the Company Held or Disposed of by Subsidiaries in the Most Recent Years and as of the Date of Publication of the Annual Report: None.
IV. Other Necessary Supplementary Explanations: None.
V. Events That Have Significant Influence on Shareholders’ Equity or on the Price of Securities as Specified in Subparagraph 2, paragraph 2, Article 36 of Securities and Exchange Act in the Most Recent Year as of the Date of Publication of the Annual Report: None.

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AI assistant

CATHAY RED — Annual Report 2020

52129_rns_2021-08-02_1e423d34-9550-4b36-90cd-8df3a111f48f.pdf

2020 Annual Report

Printed on May 1, 2021

Contents

Chapter 1 Letter to Shareholders

I. 2020 Operating Results

(II) Budget Implementation

(IV) Research and Development Status

II. Outline of 2021 Business Plan

(I) Business Objectives, Expected Sales and the Reasons Thereof for 2020

1. Five years of in-depth development

2. Ten years of new horizons

III. Development Strategies

IV. The Impact of the External Competition Environment, Regulatory Environment, and Macroeconomic Conditions

(II) Regulatory Environment

1. Laws and regulations of urban planning

2. Other Laws and Regulations

(III) Macroeconomic Conditions

Chapter 2 Company Profile

I. Date of Incorporation

II. Company History

Chapter 3 Report on Corporate Governance

I. Organization

4. Project I and II

II. Information Regarding Directors, Supervisors, President, Executive Vice President, Senior Vice President and Heads of All Departments and Branches

III. Implementation of Corporate Governance

(II) Audit Committee activities

3. Appointment of CPA

(2) Important resolutions of the Remuneration Committee:

Ethical Corporate Management

(IX) Implementation of Internal Control System

IV. Information of CPA Fees

Table of Audit Fee Range

V. Information on the Changes in CPAs: None.

VII. Conditions of changes in equity transfer and equity pledge of the Chairman, Supervisors, managers, and shareholders who hold more than 10% of shares in the most recent year as of the date of publication of the Annual Report

VIII. Relationship Among the Company’s Top Ten Shareholders

I. Capital and Shares

(II) Status of Shareholders

(III) Shareholding Distribution Status

1. Common Shares

(IV) List of Major Shareholders

(V) Market Price, Net Worth, Earnings, and Dividends per Share

II. Issuance of Corporate Bonds

III. Issuance of Preferred Stocks: None.

IV. Issuance of Overseas Depository Receipts: None

V. Issuance of Employee Stock Options: None.

VI. Issuance of New Restricted Employee Shares: None

VII. New Shares Issuance in Connection with Mergers and Acquisitions:

VIII. Fund Utilization Plans and Implementation

(1) Finance Plans:

Chapter 5 Operational Highlights

I. Business Activities

3. Main Products and New Products Development

(II) Industry Overview

1. Current state and development of the industry

2. Relationship with Up-, Mid- and Downstream Companies

3. Product Trends

(1) Architectural brand leadership

(2) Futuristic design

(3) Economical and environment-friendly construction

(4) Integrated community living function

4. Product Competition

(III) Technology and R&D Overview

1. Industry Trends

2. Architectural technology

1. Long-term Development

(1) Branding

(3) Product Planning

(4) Marketing

(5) Customer Service

(1) Branding

II. Market and Sales Overview

1. Sales (Service) Region

2. Market Share

3. Future supply & demand and growth of the market

(1) International situation

(2) Policy

2. Production Procedures of Main Products

CATHAY RED Annual Report 2020